Dear Members,

The Directors of your Company have pleasure in presenting Ninth Annual Report and the Company’s Audited Financial Statement for the Financial Year ended March 31, 2018.

1. Financial summary or highlights/ Performance of the Company (Standalone):

The financial performance of the Company for the Year ended 31st March, 2018 is as summarized below:

(Rs. In Lacs)

2. Performance Review: For the year 2017-18, the Turnover of the Company stood at Rs. 2249.09 Lakhs and loss incurred was Rs. 1135.06 Lakhs, which is mainly due to exceptional item and lower capacity utilization coupled with falling margins.

3. Extract of Annual Return: Extract of Annual Return in form MGT-9 as provided under sub-section (3) of section 92 is appended to this report as_Annexure- 1.

4. Number of meetings of the Board of Directors: During the year 2017-18, 7 meeting of the Board of Directors held.

5. Directors’ Responsibility Statement: The Directors’ Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall state that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis; and

e) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

6. Auditors’ Report: As regards Auditors remarks in the Audit report, comments of the Board of Directors are as under:

As regards Auditors remarks in the Audit report, comments of the Board of Directors are as under:

a) Auditor Remark: The Company has sent letters to customers in respect of trade receivables for confirming balances outstanding as at March 31, 2018, but in most of the cases the customers have not sent written confirmation confirming the balance outstanding as at March 31, 2018. In the absence of confirmation any provision to be made for adverse variation in the carrying amounts of trade receivable is not quantified.

Boards Comments on the same: The Board considers all outstanding balance of customers as on 31st March, 2018 as good and recoverable excepting those considered doubtful and provided for during the financial year 2017-18.

b) Auditor Remark: The Company has sent balance confirmation letters to parties who are not covered in the register maintained under section 189 of the Companies Act, 2013, but in most of the cases the Company have not received written confirmation confirming the balance outstanding as at March 31, 2018. Further in respect of loans granted, repayment of the principal amount was not as stipulated and payment of interest has also not been regular. Boards Comments on the same: The Board considers all outstanding balance of customers as on 31st March, 2018 are subject to provision.

c) Auditor Remark: The lender Bank of Bilpower Limited has pursuant to certain corporate guarantees given by the Company demanded from the Company their dues from Bilpower Limited amounting to Rs.215.82 crores. No provision has been made in the accounts for the probable loss that may arise on account of above demand of Rs.215.82 crores.

Boards Comments on the same: Bilpower Limited, the Borrower in whose favor the Company has given corporate guarantee to State Bank of India, has informed the Company that they are in negotiation with the Lender Bank for settlement/ Re-schedulement of dues and hence no provision has been made in the account.

d) Auditor Remark: The Company has not provided for interest payable to State Bank of India amounting to Rs 1484.13 Lakhs for the year ended 31st March, 2018. The Company has not made any provision for penal interest claimed by the bank. As a result the loss for the year ended 31st March, 2018 is understated by Rs. 1484.13 Lakhs & current liabilities as at 31st March, 2018 are also understated by Rs.1484.13 Lakhs and also reserves are overstated by Rs.1484.13 Lakhs. The amount of penal interest cannot be quantified as the details have not been received from the bank. Also the company has not provided interest for the financial year 2016-17, 2015-16, 2014-15 and the Company has not provided interest payable to State Bank of India amounting to Rs. 3546.23 Lakhs and as a result the accumulated losses in the Balance Sheet are understated by Rs. 5030.35 Lakhs upto 31st March, 2018.

Boards Comments on the same: Based on the Legal advice received by the Company, it has been decided not to provide any interest on liability of State Bank of India.

e) Auditor Remark: The Company has not conducted periodic physical verification of inventory at reasonable intervals, in the respect of traded stock at Mumbai Head Office, the details of finished goods stock storage location not available for our verification.

Boards Comments on the same: Management had properly observed the inventory at regular intervals.

f) As regards Auditors’ remarks in Annexure to their report under Item No. 7 a) & 7 b) with respect to nonpayment of Maharashtra VAT, Professional Tax, Excise, the same is self-explanatory.

7. Loan and Investment by Company: Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013, if any, are given in the notes to the Financial Statements.

8. Particulars of contracts or arrangements with related parties: The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm’s length transactions under third proviso thereto is given in Form No. AOC-2 as Annexure- 2.

9. Reserves: : In the financial year 2017-18 reserve maintained with the Company is Rs. (889.41) Lakhs while in year 2016-17, reserve was Rs. 1302.73.

10. Dividend: Your Directors do not recommend any dividend for the financial year 2017-18.

11. Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report: No such Material changes occurred subsequent to the close of the financial year of the Company to which the balance sheet relates and the date of the report.

12. Conservation of energy, technology absorption and foreign exchange earnings and outgo: The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows:

A. Conservation of energy:

i. the steps taken or impact on conservation of energy: NIL;

ii. the steps taken by the company for utilising alternate sources of energy: NIL;

iii. the capital investment on energy conservation equipments: NIL.

B. Technology absorption:

i. the efforts made towards technology absorption: NIL;

ii. the benefits derived like product improvement, cost reduction, product development or import substitution: NIL;

iii. in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)-

a) the details of technology imported: NIL;

b) the year of import: NIL;

c) whether the technology been fully absorbed: NIL;

d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof: NIL; and

iv. the expenditure incurred on Research and Development: NIL.

C. Foreign exchange earnings and Outgo: The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows: Inflow: Nil and Outflow: Nil

13. Risk management policy: The Company has been addressing various risks impacting the company, reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis report.

14. Change in the nature of business, if any: No

15. Directors:

A) Changes in Directors and Key Managerial Personnel:

During the year, No changes has been made in the composition of the Board of Directors.

B) Declaration by an Independent Director(s) and re- appointment, if any:

A declaration by an Independent Director that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 has been disclosed by the Independent Director to the Company.

C) Formal Annual Evaluation:

The Board has formulated a Code of Conduct policy for formal annual evaluation purpose which has been made by the Board of its own performance and that of its committees and individual directors.

16. Committee of the Board:

The Company has constituted an Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee as per the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015. A detailed note on the Board and its Committees are provided under the Corporate Governance section of this Annual Report. The Composition of the committees, as per the applicable provisions of the Acts and Rules, are as follows;

17. Details of establishment of vigil mechanism for directors and employees:

The Whistle blower policy of the Company was formulated and policy is available in the company’s website i.e. www.bilenergy.com.

18. Disclosure under the sexual harassment of women: Your Company is committed to provide and promote safe and healthy environment to all its employees without any discrimination. During the year under review, there was no case filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

19. Managerial Remuneration:

A) There is no employee covered pursuant to 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

B) There is no director who is in receipt of any commission from the company and who is a Managing Director or Whole-time Director of the Company shall receive any remuneration or commission from any Holding Company or Subsidiary Company of such Company subject to its disclosure by the Company in the Board’s Report.

C) There is no such events occurs which require disclosures in the Board of Director’s report under the heading “Corporate Governance”, relating to the financial statement:

i. all elements of remuneration package such as salary, benefits, bonuses, stock options, pension, etc., of all the directors;

ii. details of fixed component and performance linked incentives along with the performance criteria;

iii. service contracts, notice period, severance fees;

iv. stock option details, if any, and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable.

20. Details of Subsidiary/ TV/ Associate Companies: The Company has no Subsidiary/ JV/ Associate Companies during the year.

21. Deposits:

The Company has not accepted or invited any deposits during the financial year 2017- 2018.

22. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future: NIL

23. Auditors:

M/s. Dalal & Kala Associates, Chartered Accountant (firm registration number 102017W), who has been appointed as Statutory Auditor by the Company for periods 5 years from the financial year 2017-18 to 2021-22 at such remuneration plus service tax, out-of-pocket, travelling and living expenses etc., as may be mutually agreed between the Board of Directors and the Auditors.”

Vide notification dated May 7, 2018 issued by Ministry of Corporate Affairs, the requirement of seeking ratification of appointment of Statutory Auditors by members at each AGM has been done away with. Accordingly, no such item has been considered in notice of the 9th AGM.

24. Brief description of the Company’s working during the year: The Company has only one Manufacturing unit at wada.

25. Details in respect of adequacy of internal financial controls with reference to the Financial Statements: : The Company has laid down internal financial control with reference to the financial statement. The details in the respect of internal financial control and their adequancy are included in Management Discussion and Analysis, which forms part of this report.

26. Share Capital:

During the year, the Company has increased authorized share capital by 11,00,00,000 Equity Shares of Re. 1 each.

During the year, the Company has issued 10,57,08,000 Equity Bonus Shares of Re. 1 each in proportion of 1:1, to the existing shareholders of the Company on 15.01.2018.

As on 31st March, 2018, the Share Capital structure of the Company stood is as follow;

The Authorized Share Capital of the Company is Rs. 22,00,00,000/- (Rupees Twenty Two Crores only), divided into 22,00,00,000 (Twenty Two Crores) Equity Shares of Re. 1/- (Rupee One) each.

The Paid-up Share Capital of the Company is Rs. 21,14,16,000/- (Rupees Twenty-one Crores Fourteen Lakhs Sixteen Thousands only), divided into 21,14,16,000 (Twenty-one Crores Fourteen Lakhs Sixteen Thousands) Equity Shares of Re. 1 /- (Rupee one) each.

27. Secretarial Audit Report: A Secretarial Audit Report given by M/s. Bhuwnesh Bansal & Associates, a Company Secretary in practice shall be annexed with the report as Annexure- 3

28. Management’s Discussion and Analysis Report:

A detailed review of the operations, performance and future outlook of the Company and its businesses is given in the Management’s Discussion and Analysis Report, which forms part of this Report i.e. Annexure- 4

29. Corporate Governance:

We adhere to the principal of Corporate Governance mandated by the Securities and Exchange Board of India (SEBI) and have implemented all the prescribed stipulations. As required by Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed report on Corporate Governance forms part of this Report. The Auditors’ Certificate on compliance with Corporate Governance requirements by the Company is attached with the Corporate Governance Report in the Annexure- 5.

Acknowledgement:

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company’s executives, staff and workers.

By order of the Board of Directors,

For Bil Energy Systems Limited

Lalit Laxiram Agarwal

DIN: 06427436

Chairman

Mumbai, 30th May, 2018