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Adani Power Ltd.

BSE: 533096 Sector: Infrastructure
NSE: ADANIPOWER ISIN Code: INE814H01011
BSE LIVE 15:59 | 02 Dec 29.05 -0.05
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28.90

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29.55

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28.45

NSE LIVE 15:59 | 02 Dec 29.15 0.05
(0.17%)
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29.00

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29.65

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OPEN 28.90
PREVIOUS CLOSE 29.10
VOLUME 1506525
52-Week high 36.10
52-Week low 22.45
P/E 8.99
Mkt Cap.(Rs cr) 10170.09
Buy Price 29.15
Buy Qty 12500.00
Sell Price 0.00
Sell Qty 0.00
OPEN 28.90
CLOSE 29.10
VOLUME 1506525
52-Week high 36.10
52-Week low 22.45
P/E 8.99
Mkt Cap.(Rs cr) 10170.09
Buy Price 29.15
Buy Qty 12500.00
Sell Price 0.00
Sell Qty 0.00

Adani Power Ltd. (ADANIPOWER) - Director Report

Company director report

Dear Shareholders

Your Directors are pleased to present the 20th Annual Report along with theaudited financial Statements of your Company for the financial year ended 31stMarch 201 6.

Financial Performance:

The financial highlight is depicted below:

( Rs. in crores)
Particulars

Consolidated Results

Standalore Results

2015-16 2014-15 2015-16 2014-15
Revenue from operations 25231.57 18823.73 12704.15 10624.61
Other Income 201.78 241.41 522.86 412.40
Total revenue 25433.35 19065.14 13227.01 11037.01
Operating and Administrative expenses 16678.63 13664.36 9327.06 8162.57
Operating Profit before Interest Depreciation and Tax 8754.72 5400.78 3899.95 2874.44
Depreciation and Amortization expenses 2336.17 1818.19 976.93 881.37
Profit /(Loss) before finance costs and exceptional items 6418.55 3582.59 2923.02 1993.07
Finance Costs 5964.16 4863.53 2951.50 2497.62
Exceptional Item - 16.85 - (211.87)
Profit /(Loss) before tax 454.38 (1297.79) (28.48) (292.68)
Tax expenses (34.10) - (34.10) -
Net Profit / (Loss) before Minority Interest 488.48 (1297.79) 5.62 (292.68)
Add/ (Less) share of Minority Interest - - - -
Net Profit / (Loss) for the year after Minority Interest 488.48 (1297.79) 5.62 (292.68)
Surplus brought forward from previous year - - - -
Balance available for appropriation 488.48 (1297.79) 5.62 (292.68)
Profit / (Loss) after Tax 488.48 (1297.79) 5.62 (292.68)
Profit/(Loss) after tax from discontinuing operations - 482.16 - 224.05
Profit / (Loss) from Total Operations for the year 488.48 (815.63) 5.62 (68.63)
Balance carried to Balance Sheet 488.48 (815.63) 5.62 (68.63)

Performance Highlights:

Consolidated:

The key aspects of your Company's consolidated performance during the financial year2015-16 are as follows:

Revenue

The consolidated total revenue of your Company for FY 2015-16 stood at Rs. 25433.35crores as against Rs. 19065.14 crores for FY 2014-15 showing an increase of 33%. Therevenue is higher in FY 2015-16 due to improved operational performance and additionalrevenue generated by Udupi Power Corporation Limited (UPCL) which was acquired during theFY 2015-16. The increase in revenue was partially offsetted by revenue from transmissionbusiness which got demerged in FY 2014-15.

Your Company has sold 64.6 billion units of electricity during FY 2015-16 as against50.7 billion units in FY 2014-15 with increase in Plant Load Factor (PLF) from 70% in theprevious year to 76% in the year 2015-16. During the year Mundra Plant's generation of33.1 billion units is the highest by any thermal power plant in the country.

Operating and Administrative Expenses The consolidated Operating and administrativeexpenses of Rs. 16678.63 crores during FY 2015-16 which has increased by 22% from Rs.13664.37 crores in FY 2014-15 is mainly due to higher power generation and expenses ofUPCL acquired during the year. The percentage of Operating and administrative expenses tototal revenue has decreased to 66% in FY 2015-16 from 72% in FY 201415 largely due toreduction in coal prices and higher operational efficiency.

Depreciation and Amortization Expenses The consolidated Depreciation and AmortizationExpenses of Rs. 2336.17 crores during FY 2015-16 which has increased by 28% from Rs.1818.99 crores in FY 2014-15 mainly due to Depreciation and Amortization Expenses ofUPCL.

Finance Costs

The consolidated Finance costs of Rs. 5964.16 crores during FY 2015-16 which hasincreased by 23% from Rs. 4863.53 crores in FY 2014-15 mainly due to finance cost onborrowings of UPCL and interest on borrowings during the year to finance the acquisitionplan of the Company. There has been reduction in interest expense in FY 2015-16 due torefinancing of rupee term loans of the Company and its subsidiaries

Net Profit/ (Loss)

Consolidated Net Profit for the year was Rs. 48848 crores as compared to Net Loss ofRs. 815.63 crores in FY 201415. During the year profit after tax (PAT) includes PAT ofRs. 151 crores contributed by UPCL and improved operating margins and higher sales volume.

Standalone:

The key aspects of your Company's standalone performance during the financial year2015-16 are as follows:

Revenue

The total revenue of your Company for FY 2015-16 stood at Rs. 13227.01 crores asagainst Rs. 11037.01 crores for FY 2014-15 showing an increase of 20% on account ofhigher sale of units from 27.7 billion units to 30.3 billion units. The revenue during FY2015-16 is also higher on account of revenue due to recognition of revenue in the natureof change in law.

Operating and Administrative Expenses The Operating and administrative expenses of Rs.9327.06 crores during FY 2015-16 which has increased by 14% from Rs. 8162.57 crores inFY 2014-15 is mainly due to higher power generation. The percentage of Operating andadministrative expenses to revenue has decreased to 71% in FY 2015-16 from 74 % in FY2014-15 largely due to reduction in coal prices and higher operational efficiency.

Depreciation and Amortization Expenses The consolidated Depreciation and AmortizationExpenses of Rs. 976.93 crores during FY 2015-16 has increased by 11% from Rs. 881.37crores in FY 2014-15.

Finance Costs

The Finance costs increased by 18% from Rs. 2497.62 crores in in FY 2014-15 to Rs.2951.50 crores in FY 2015- 16. Finance costs has increased mainly on account of intereston borrowings during the year to finance the acquisition plan of the Company. There hasbeen reduction in interest expense in FY 2015-16 due to refinancing of rupee term loans.

Net Profit/ (Loss)

Net Profit after tax for the year was Rs. 5.62 crores as compared to Net Loss of Rs.68.63 crores in FY 2014-15. The increase in net profit during the year is mainly due toimproved operating margins and higher sales volume.

The Company (along with subsidiaries) continued to maintain its leadership position asIndia's largest private sector power producer with installed capacity of 10480 MW. TheCompany also set a record in power generation by achieving full load of 4620 MW at Mundrapower plant. Despite slowdown experienced by various industrial sectors your Companycould achieve this.

The detailed financial and operational performance of your Company has beencomprehensively discussed in the Management Discussion and Analysis Report which formspart of this Report.

Material Changes and Commitments:

The material change which has occurred between the end of financial year of the companyand the date of this report is the receipt of the APTEL order dated 7th April2016 in the ongoing matter of Compensatory Tariff the details and the financial effect ofwhich is described in Note No. 34 of the Notes to the consolidated audited financialstatements and in Note No. 32 of the Notes to the standalone audited financial statements.

Key Developments:

Demerger of Power Undertaking of Adani Enterprises Limited with the Company:

As per the approved Scheme of arrangement Solar Power Undertaking of Adani EnterprisesLimited (AEL) has been merged into the Company along with its assets and liabilities fromthe appointed date of 1st April 2015. Pursuant to the merger of the SolarPower Undertaking of AEL into Company and based on fair valuation done the Company hasissued and allotted 63916831 new equity shares of Rs. 10 each to the equity shareholdersof AEL in the ratio of 18596 equity shares in Company for every 10000 equity shares heldby the equity shareholder in AEL. The equity shares held by AEL in Company has beencancelled on approval of the said scheme by the Hon'ble High Court of Gujarat vide itsorder dated 7th May 2015.

The Scheme with effect from 1st April 2015 inter alia provided forDemerger of the solar power Undertaking of

AEL comprising the undertaking businesses activities operations assets (moveableand immoveable) and liabilities pertaining to the Bitta Solar Plant and the shareholdingof AEL into the Company.

Accordingly 2045206831 equity shares of Rs. 10/- each of the Company were issuedand allotted to the eligible shareholders of AEL on 8th June 2015. Furtherpursuant to the scheme existing holding of 1981290000 equity shares of Rs. 10/- each ofAEL in the Company was extinguished and cancelled.

The equity shares of the Company so issued pursuant to the Scheme were listed andadmitted for trading on BSE Limited and National Stock Exchange of India Limited witheffect from 15th June 2015.

Acquisition of Udupi Power Corporation Limited (UPCL)

During the year the Company has completed the acquisition of Udupi Power CorporationLimited (UPCL) by purchase of 100% equity shares and preference shares at an aggregatecost of Rs. 2256.03 Crores. Consequently UPCL has become the wholly owned subsidiary ofAdani Power Limited w.e.f. 20th April 2015. UPCL is located in state ofKarnataka and has operational thermal power generation capacity of 1200 MW with fullcapacity tied up under long term PPA's and having a captive jetty of 4 million tons perannum.

Acquisition of Korba West Power Company Limited (KWPCL)

Your Company had executed a share purchase agreement with the owners of Korba WestPower Company Limited (KWPCL) for acquisition of 100% stake in KWPCL during the previousyear. KWPCL owns a 600 MW Coal based thermal power plant in state of Chhattisgarh. Thesaid acquisition is subject to certain consents pending to be received.

Allotment of Jitpur Coal Block

During the year vesting of the coal block to the company at Jitpur in the state ofJharkhand has been completed. For the said purpose the Company executed "The CoalMine Development and Production Agreement" with the Government of India in theprevious year. The company has already initiated the process for development of the saidmine.

Preferential Issue of Equity Shares During the year under review the Company madepreferential issue of 398100000 equity shares to Promoter / Promoter group at Rs. 28/-each (including premium of Rs. 18/- each) as per the SEBI (ICDR) Regulations and otherapplicable provisions of the Companies Act 2013. The entire issue proceeds were utilizedfor Augmenting Long Term Capital to repay the Group Company Loans and for generalcorporate purpose.

Consequent upon preferential issue of equity shares the paid up share capital of theCompany has been increased from Rs. 2935.84/- crores (2935838941 equity shares of '10/- each) to Rs. 3333.94 crores (3333938941 equity shares of Rs. 10/- each).

Preferential Issue of Convertible Warrants The preferential issue of 523000000Warrants convertible into equivalent number of equity shares of Rs. 10 each at a price ofRs. 32.54/- each (including premium of Rs. 22.54/- each) was approved by the board ofdirectors on 6th April 2016 for issuance to the promoter group entities asper the provisions of SEBI (ICDR) Regulations and in accordance with the applicableprovisions of the Companies Act 2013. The approval of the shareholders is in process. Thefunds to be availed by this preferential issue is proposed to be utilized for augmentinglong term capital to repay the group company loans and general corporate purpose asexplained in the postal ballot notice sent to the members for their approval.

Dividend:

In view of inadequate net profit of Rs. 5.62 crores for the financial year 2015-16 anddue to accumulated losses your Directors have not recommended any dividend on EquityShares for the year under review.

Fixed Deposits:

During the year under review your Company has not accepted any fixed deposits withinthe meaning of Section 73 of the Companies Act 2013 read with rules made there under.

Particulars of loans guarantees or investments:

The provisions of Section 186 of the Companies Act 2013 with respect to a loanguarantee or security is not applicable to the Company as the Company is engaged inproviding infrastructural facilities and is exempted under Section 186 of the CompaniesAct 2013. The details of investments made during the year under review are disclosed inthe financial statements.

IND AS road map

Your company and its subsidiaries will adopt IND AS with effect from 1stApril 2016 pursuant to Ministry of Corporate Affairs notification dated 16thFebruary 2015 notifying the Companies (Indian Accounting Standards) Rules 2015. In2015-16 your Company has substantially completed the assessment of the impact of thechange to IND AS.

Vigil Mechanism / Whistle Blower Policy The Company has adopted a whistle blower policyand has established the necessary vigil mechanism for employees and Directors to reportconcerns about unethical behaviour. No person has been denied access to the Chairman ofthe Audit Committee. The said policy is uploaded on the website of the Company at http://www.adanipower.com/investors/investor-download.

Subsidiary Companies:

Your Company has total 6 (direct and indirect) subsidiaries as on 31stMarch 2016.

During the year under review the following changes have taken place:

A. During the year the Company has completed the acquisition of Udupi PowerCorporation Limited (UPCL) due to which UPCL has become the wholly owned subsidiary ofAdani Power Limited w.e.f. 20th April 2015.

B. Adani Power (Jharkhand) Limited (APJL) was incorporated on 18th December2015 as Wholly Owned Subsidiary of the Company.

Financial Performance of subsidiaries

• Adani Power Maharashtra Limited (APML): Adani Power's Tiroda Power Plant has atotal installed capacity of 3300 MW. PLF for the year was 69%. The Tiroda plantcontributed Rs. 7884 cr. towards the total consolidated revenue Rs. 2813 cr. towardsthe consolidated EBIDTA and Rs. 139 cr. to the consolidated profit during the year.

• Adani Power Rajasthan Limited (APRL): Adani Power's Kawai Power Plant has atotal installed capacity of 1320 MW. PLF for the year was 75%. The Kawai plantcontributed Rs. 4159 cr. towards the total consolidated revenue Rs. 1447 cr. towardsthe consolidated EBIDTA and Rs. 260 cr. profit to the consolidated profit during the year.

• Udupi Power Corporation Limited (UPCL): Adani Power's Udupi Power Plant has atotal installed capacity of 1200 MW. PLF for the year was 77%. The Udupi plantcontributed Rs. 2953 cr. towards the total consolidated revenue Rs. 1148 cr. towardsthe consolidated EBIDTA and Rs. 151 cr. profit to the consolidated profit during the year.

• Consolidated financial statements

The audited consolidated financial statements of your Company as on 31stMarch 2016 have been prepared in accordance with the relevant Accounting Standardsissued by the Institute of Chartered Accountants of India and Regulation 33 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and also in accordancewith the applicable provisions of the Companies Act 2013 and form part of this AnnualReport. The Financial Statements as stated above are also available on the website of theCompany and can be accessed at http://www.adanipower.com/investors/ financials.

Pursuant to the provisions of Section 129 134 and 136 of the Companies Act 2013 readwith rules framed thereunder and pursuant to Regulation 33 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Company had preparedconsolidated financial statements of the Company and its subsidiaries and a separatestatement containing the salient features of financial statements of subsidiaries jointventures and associates in Form AOC-1 are forming part of the Annual Report.

The annual financial statements and related detailed information of the subsidiarycompanies shall be made available to the shareholders of the holding and subsidiarycompanies seeking such information on all working days during business hours. Thefinancial statements of the subsidiary companies shall also be kept open for inspection byany shareholder/s during working hours at the Company's registered office and that of therespective subsidiary companies concerned. The separate audited financial statements inrespect of each of the subsidiary companies are also available on the website of theCompany. In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including consolidated financial statements and related information of theCompany and audited financial statements of each of its subsidiaries are available on ourwebsite www.adanipower.com. Details of developments of subsidiaries of the Company arecovered in the Management Discussion and Analysis Report which forms part of this Report.

Directors and Key Managerial Personnel:

Appointment of Directors:

Mr. Raminder Singh Gujral (DIN: 07175393) was appointed as a Director of the Company inthe previous Annual General Meeting of the Company held on 11th August 2015 tohold office as an independent Director for a period of 5 (five) consecutive years up toAugust 2020.

Pursuant to the provisions of Section 149 of the Act. Mrs. Nandita Nagpal Vohra wasappointed as a Director of the Company at the Annual General Meeting of the Company heldon 11th August 2015 to hold office as an Independent Director. Mrs. NanditaVohra was earlier appointed as an Additional Director w.e.f. 30th March 2015.

The Board welcomes him and looks forward to his valued contribution to your Company.

Cessation of Directorship:

Mr. Vijay Ranchan (DIN: 01602023) has been retired and ceased to be a Director w.e.f.1st January 2016. The Board places on record its sincere appreciation for the valuablecontribution and guidance rendered by Mr. Vijay Ranchan during his tenure with theCompany.

Directors retire by rotation:

Pursuant to the requirements of the Companies Act 2013 and Articles of Association ofthe Company Mr. Vneet S Jaain (DIN: 00053906) retires by rotation at the ensuing AnnualGeneral Meeting and being eligible for re-appointment has shown his willingness forre-appointment.

The Board recommends the re-appointment of above director for your approval.

Mr. Vneet S Jaain (DIN: 00053906) who was earlier re-appointed as Executive Director ofthe Company at the previous Annual General Meeting of the Company held on 11thAugust 2015 for a further period of three years i.e. up to 13th May 2018 hasbeen re-designated as Whole-time Director of the Company during the year under review.

Brief details of Mr. Vneet S Jaain who is proposed to be re-appointed as requiredunder the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isprovided in the Notice of Annual General Meeting forming part of this Annual Report.

Independent Directors:

The terms and conditions of appointment of Independent Directors are in accordance withthe applicable Regulations of the SEBI (Listing Obligations abd Disclosure Requirements)Regulations 2015 and also as per the provisions of the Companies Act 2013("Act") read with Schedule IV to the Act.

Your Company has received annual declarations from all the Independent Directors of theCompany confirming that they meet with the criteria of Independence provided in Section149(6) of the Companies Act 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 and there has been no change in thecircumstances which may affect their status as Independent Director during the year.

Appointment and Resignation of Key Managerial Personnel:

During the year under review Mr. Rajesh Shah resigned as Company Secretary of theCompany w.e.f. 9th August 2015. The Board places on record its deepappreciation of the valuable services provided by him during his tenure.

Mr. Deepak Pandya a qualified Company Secretary was appointed as Company Secretary ofthe Company w.e.f. 10th August 2015.

Directors' Responsibility Statement:

Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability state the following:

a. that in the preparation of the annual financial statements the applicableaccounting standards have been followed along with proper explanation relating to materialdepartures if any;

b. that such accounting policies have been selected and applied consistently andjudgement and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31st March2016 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively;

f. that proper systems to ensure compliance with the provisions of all applicable lawswere in place and were adequate and operating effectively.

Number of Board Meetings:

The Board of Directors met 4 (four) times during the year under review. The details ofBoard meetings and the attendance of the Directors are provided in the CorporateGovernance Report which forms part of this Report.

Independent Directors' Meeting:

The Independent Directors met on 6th April 2016 without the attendance ofNon-Independent Directors and members of the Management. The Independent Directorsreviewed the performance of Non-Independent Directors and the Board as a whole; theperformance of the Chairman of the Company taking into account the views of ExecutiveDirectors and Non-Executive Directors and assessed the quality quantity and timeliness offlow of information between the Company Management and the Board that is necessary for theBoard to effectively and reasonably perform their duties.

Board Evaluation:

The Board adopted a formal mechanism for evaluating its performance as well as that ofits Committees and individual Directors including the Chairman of the Board. The exercisewas carried out through a structured evaluation process covering various aspects of theBoard functioning such as composition of the Board & committees experience &competencies performance of specific duties & obligations contribution at themeetings and otherwise independent judgment governance issues etc.

Policy on Directors' appointment and remuneration:

The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Companies Act 2013 is annexed to this

Report as Annexure-E.

Internal Financial Control (IFC) system and their adequacy:

The Directors are responsible for laying down internal financial controls to befollowed by the company and that such internal financial controls are adequate and wereoperating effectively. As per Section 134(5) (e) of the Companies Act 2013 theDirectors' Responsibility Statement shall state the same.

Your Company has adopted the IFC framework as guidance for ensuring adequate controlsand its effectiveness within the company. The process of assessment of IFC would requiresetting up of an internal controls function in the organization. IFC Steering Committeehas been put in place to implement and evaluate the design and operating effectiveness ofthe IFC framework. The framework also focuses on internal controls over financialreporting (ICFR) that are put in place to develop and maintain reliable financial dataand to accurately present the same in a timely and appropriate manner. The frameworkrefers to the policies and procedures adopted by the company for ensuring orderly andefficient conduct of its business including adherence to company's policies safeguardingof its assets prevention and detection of frauds and errors accuracy and completeness ofthe accounting records timely preparation of reliable financial information.

The IT controls provide reasonable assurance of achieving the control objectivesrelated to the processing of financial information within the computer processingenvironment. IT controls ensures appropriate functioning of IT applications and systemsbuilt by the organization to enable accurate and timely processing of financial data. YourCompany deploys best in class applications and systems which streamline businessprocesses to improve performance and reduce costs. These systems provide seamlessintegration across modules and functions resulting into strong MIS platform and informeddecisionmaking by the Management.

The company has adequate and effective internal financial control in place which isbeing periodically evaluated. The Company has put in place strong internal control systemsand best in class processes commensurate with its size and scale of operations. InternalFinancial Control is a continuous process operating at all levels within the Company.

The ICFR is designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes inaccordance with applicable accounting principles and policies & procedures.

A well-established multidisciplinary Management Audit & Assurance Services consistsof professionally qualified accountants engineers and SAP experienced executives whichcarries out extensive audit throughout the year across all functional areas and submitsits reports to Management and Audit Committee about the compliance with internal controlsand efficiency and effectiveness of operation and key processes and risks. Some KeyFeatures of the Company's internal controls system are:

i. Adequate documentation of Policies & Guidelines.

ii. Preparation & monitoring of Annual Budgets thru monthly review for alloperating & service functions.

iii. Management Audit department prepares Risk Based Internal (RBIA) Scope with thefrequency of audit being decided by risk ratings of areas / functions. Risk based scope ismutually accepted by various functional heads / process owners / CEO & CFO.

iv. The entire internal audit processes are web enabled and managed on-line by AuditManagement System (AMS).

v. The Company has a strong Compliance Management System which runs on an onlinemonitoring system.

vi. Company has a well-defined Delegation of Power with authority limits for approvingrevenue & capex expenditure.

vii. Company uses ERP system to record data for accounting consolidation andmanagement information purposes and connects to different locations for efficient exchangeof information

viii. Internal Audit is carried out in accordance with auditing standards to reviewdesign effectiveness of internal control system & procedures to manage risksoperation of monitoring control compliance with relevant policies & procedure andrecommend improvement in processes and procedure.

Risk Management:

Adani Power's Risk Management Framework is designed to help the organization to meetits objective through alignment of the operating controls to the mission and vision of theGroup.

The Board of the Company has formed a risk management committee to frame implement andmonitor the risk management plan for the Company. The committee is responsible forreviewing the risk management plan and ensuring its effectiveness. The audit committee hasadditional oversight in the area of financial risks and controls.

Risk Management Framework:

To manage uncertainties due to dynamic nature of the business and achieving the statedstrategic priorities a robust risk management mechanism is a must. Key objective of therisk management process at Adani Power is to enable the company to add value to societyshareholders and employees under all adverse situations through early identificationprioritization and mitigation of risks.

The Risk Management Framework institutionalized at Adani Power strives to ensure aholistic mutually exclusive and collectively exhaustive allocation of risks byidentifying risks relating to key areas such as operational regulatory business andcommercial financial people etc. Using this framework we aim to achieve key businessobjectives both in the long term and short term while maintaining a competitiveadvantage.

A standard 3-step approach has been defined for risk management -

1) Risk Identification

2) Risk Assessment & Prioritization and

3) Risk Mitigation Risk Identification:

A broad set of seven categories of risks have been defined for comprehensivelyidentifying risk across the business. A comprehensive risk register with most likely risksfor a power business has been compiled. Each identified risk has a lead and a lag indictordefined. Lead indicators highlights potential risks before they occur thereby providingadequate time to prioritize risks and develop mitigation strategies. Lag indicators onthe other hand indicate a risk once it has already occurred allowing for speedyescalation of risk to senior management and taking steps to mitigate threats posed by theidentified risk. In order to ensure the efficacy of both lead and lag indicators clearrisk indicator thresholds have been defined wherever feasible. These thresholds are bothquantitative & qualitative in nature and will trigger the risk assessment andmitigation processes.

Risk Assessment & Prioritization:

For risks identified the Gross Risk Rating is determined based on two factors -

1. Impact of occurrence which gauges the level of impact that the risk would have onthe business

2. Likelihood which determines the probability of occurrence of a risk.

Product of likelihood and impact gives risk premium which is an indicator of severityof risk.

Risks are further prioritized based on two additional parameters:

3. Proximity which assesses whether risk is likely to manifest over short or long term

4. Controllability which gives a measure of how easily risk can be mitigated by theorganization

Based on these two parameters risks which are expected to be relevant in the near termas well as those which are highly controllable are prioritized and marked for immediatefocus with continuous monitoring.

Risk Management Process:

IT enabled risk register with a robust governance structure has been put in place forRisk Management.

Review Mechanism:

Following review mechanism are in place for periodic review of the compliance to therisk policy and tracking of mitigation plans.

• Review Compliance to Risk Policy Resolve bottlenecks to mitigate risk. Advisethe Board of Directors on risk tolerance and appetite.

• Prioritise risk from stations / departments track mitigation plan and escalateto steering committee. Prepare Steering Committee document and co-ordinate meeting.

• Review and update risk list. Track mitigation plan and share status update withCRO every month.

Share Risk

Review document with CRO.

Risk Mitigation:

Once risks have been prioritized comprehensive mitigation strategies are defined foreach of the prioritized risks. These strategies take into account potential causes of therisk and outline leading risk mitigation practices. In order to ensure the efficacy ofthis approach a robust governance structure has also been set in place. Clear roles andresponsibilities have been defined at each level right from the site champion to the APLmanagement & leadership.

All associated frameworks (risk categorization & identification): guidelines &practices (risk assessment prioritization and mitigation) and governance structure havebeen detailed out in the "Risk Management Charter" and approved by the Board ofDirectors.

Committees of Board:

Details of various committees constituted by the Board of Directors as per theprovisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015and Companies Act 2013 are given in the Corporate Governance Report and forms part ofthis report.

Sustainability and Corporate Social Responsibility:

The Annual Report on CSR activities is annexed to this Report. The CSR Policy isavailable on the website (http:// www.adanipower.com/docs/download/CSRPolicy) of thecompany.

Sustainability

As a part of our commitment to sustainability company has taken active role tominimize impact on environment and contribute to the growing energy demand.

Drivers for Sustainability:

• As a power generation company we play a positive role in economic and socialdevelopment by providing sustainable energy to meet the demand for a growing economy.

• We have a structured approach for identifying our impacts and it is integratedinto the broader risk identification and management process. It also forms the basis forour materiality definition.

• We are investing in protecting the environment and developing the communitieswithin which we operate. We are adopting business strategies that meet the needs of theenterprises and its stakeholders.

• We recognize that we need to continuously leverage on our opportunities andminimize risks by improving efficiency reducing emissions and managing waste to remaincompetitive.

The company started the process of Sustainability Reporting during the year 2014-15 andpublished its maiden report for FY 2014-15 which is available on the website of theCompany. The said report is issued based on Global Reporting Initiative (GRI) G4guidelines.

Corporate Social Responsibility Our CSR Philosophy:

• The CSR agenda is planned in consultation with the community through asystematic independent need assessment as well as through a Participatory Rural Appraisal(PRA).

• The inputs are then taken from an Advisory Committee including senior membersfrom the Adani Foundation and eminent personalities from the field.

• The CSR agenda is subsequently deliberated upon and after careful considerationthen processed by our leadership in consultation with Adani Foundation.

Community Engagement and Development:

• We approach community care with the same zeal and efficiency as we approach ourbusiness. We make strategic long-term investments which yield life-long positive change tothe communities around us. We have a committed implementation team to carefully choose andcraft initiatives in alignment with current and future needs of the nation.

• We focus on a holistic socio-economic development of the local communitiesaround our plant operations. We believe in positive relationships that are built withconstructive engagement which enhances the economic social and cultural well-being ofindividuals and regions connected to our activities. We continuously engage in dialoguesconsultation coordination and cooperation with community members to improve oursustainability performance and reduce business risks.

Implementation through Adani Foundation:

• We initially started working with communities in and around Mundra Gujarat andslowly expanded our operations in the states of Gujarat Maharashtra Rajasthan HimachalPradesh Madhya Pradesh Chhattisgarh and Odisha. We are aligning our philosophy withSustainable Development Goals in order to ensure that the lives of the marginalisedcommunities are substantially improved.

• The comprehensive aim of the Foundation is to enhance the living conditions ofthe communities in which our operations are based. Our CSR always gives prime importanceto inclusive growth and equitable development of the community.

• We ensure that all our initiatives are successfully adopted by the community byensuring their active involvement in the process of development. We carry out internal aswell as external impact assessment of the community projects.

The Annual Report on CSR activities and initiatives on Sustainability Reporting areannexed which forms part of this Report. The CSR policy is available on the website of theCompany.

Corporate Governance and Management Discussion and Analysis Report:

A separate report on Corporate Governance compliance and a Management Discussion andAnalysis Report as stipulated under the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of this Annual Report along with the requiredCertificate from a Practicing Company Secretary regarding compliance of the conditions ofCorporate Governance as stipulated under the said Regulations.

In compliance with Corporate Governance requirements as per the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 your Company has formulatedand implemented a Code of Business Conduct and Ethics for all Board members and seniormanagement personnel of the Company who have affirmed the compliance thereto.

Business Responsibility Report:

The Business Responsibility Report for the year ended 31st March 2016 asstipulated under Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is annexed which forms part of this Report.

Prevention of Sexual Harassment at Workplace:

As per the requirement of The Sexual Harassment of

Women at Workplace (Prevention Prohibition & Redressal) Act 2013 read with rulesmade thereunder your Company has constituted Internal Complaints Committee which isresponsible for redressal of complaints related to sexual harassment. During the yearunder review there were no complaints pertaining to sexual harassment.

Extract of Annual Return:

The details forming part of the extract of the Annual Return in Form MGT 9 is annexedto this Report as

Annexure - A.

Related Party Transactions:

In line with the requirements of the Companies Act 2013 and Listing Regulations yourCompany has formulated a Policy on Related Party Transactions which is also available onhttp://www.adanipower.com/investors/ investor-download. All Related Party Transactions areplaced before the Audit Committee for review and approval of the Committee on a quarterlybasis. Also the Company has obtained Prior omnibus approval for Related Party Transactionsoccurred during the year for transactions which are of repetitive nature and / or enteredin the Ordinary Course of Business and are at Arm's Length.

All the related party transactions entered into during the financial year were on anarm's length basis and were in the ordinary course of business. Your Company had notentered into any transactions with related parties which could be considered material interms of Section 188 of the Companies Act 2013. Accordingly the disclosure of relatedparty transactions as required under Section 134(3)(h) of the Companies Act 2013 in FormAOC 2 is not applicable.

During the year under review your Company has entered into transactions with relatedparties which are material as per the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and the details of said transactions are provided in theNotice of the Annual General Meeting.

Significant and material orders passed by the regulators or courts or tribunalsimpacting the going concern status of the Company:

There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status and the Company's future operations.

Auditors & Auditors' Report:

Statutory Auditors:

M/s. Deloitte Haskins & Sells Chartered Accountants (Firm Registration No.:117365W) the Statutory Auditors of the Company have been appointed as Statutory Auditorsof the Company by the Members of the Company till the conclusion of 21st AGM ofthe Company to be held in the calendar year 2017. The appointment of the said StatutoryAuditors is required to be ratified by the Members of the Company at the ensuing AnnualGeneral Meeting. Your Company has received letter from M/s. Deloitte Haskins & SellsChartered Accountants to the effect that their appointment if made would be within theprescribed limits under Section 141 of the Companies Act 2013 read with rules madethereunder and that they are not disqualified for such appointment The Board recommendsthe ratification of Statutory Auditors by the members.

Audit Qualification and Audit Report:

The Auditors' Qualification has been appropriately dealt with in Note No. 34 of theNotes to the consolidated audited financial statements and in Note No 32 of the Notes tothe standalone audited financial statements The Auditors' Report is enclosed with thefinancial statements in this Annual Report.

Cost Auditors and Cost Audit Report:

Your Company has appointed M/s Kiran J. Mehta & Co. Cost Accountants (Firm Reg.No. 100497) to conduct audit of cost records of the Company for the year ended 31stMarch 2017. The Cost Audit Report for the year 201415 was filed before the due date withthe Ministry of Corporate Affairs.

Secretarial Auditor and Secretarial Audit Report: Pursuant to the provisions of Section204 of the Companies Act 2013 and the rules made thereunder the Company had appointedMr Chirag Shah Practicing Company Secretary to undertake the Secretarial Audit of theCompany. The Secretarial Audit Report for FY 2015-16 is annexed which forms part of thisreport as Annexure - B. There were no qualifications reservation or adverse remarks givenby Secretarial Auditor of the Company in the Secretarial Audit Report of the Company.

Awards and Recognitions:

In FY 2015-16 your Company has obtained two highest level of recognition for 5S casestudy in Competition at National Conclave held by quality circle forum of India. YourCompany has also been awarded among top 100 Companies as "Great Place to Work2015" by Great Place to Work Institute

Particulars of Employees:

The information required under Section 197 of the Companies Act 2013 read with rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are provided in separate annexure forming part of this Report as Annexure - C.

The statement containing particulars of employees as required under Section 197 of theCompanies Act 2013 read with rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 will be provided upon request. In terms of Section 136of the Companies Act 2013 the Report and Accounts are being sent to the Members andothers entitled thereto excluding the information on employees' particulars which isavailable for inspection by the members at the Registered Office of the Company duringbusiness hours on working days of the Company. If any member is interested in obtaining acopy thereof such Member may write to the Company Secretary in this regard.

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo:

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Rules 2014 as amended from time to time is annexed tothis Report as Annexure - D.

Acknowledgement:

Your Directors place on record their appreciation for assistance and co-operationreceived from various Ministries and Department of Government of India and other StateGovernments financial institutions banks shareholders of the Company etc. Themanagement would also like to express great appreciation for the commitment andcontribution of its employees for their committed services.

Your Directors wish to place on record their sincere appreciation for the dedicatedefforts and consistent contribution made by the employees at all levels to ensure thatthe Company continues to grow and excel.

For and on behalf of the Board of Directors

Place : Ahmedabad Gautam S. Adani
Date : 3rd May 2016 Chairman
(DIN: 00006273)

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