TO THE MEMBERS OF KARMA ENERGY LIMITED
The Directors are pleased to present this Tenth Annual Report and the Audited Statementof Accounts for the year ended March 31 2017.
1. FINANCIAL RESULTS
(Rs. in lakh)
|Particulars ||2016-2017 ||2015-2016 |
|Total Income including exceptional items ||2861.50 ||1435.50 |
|Profit / (Loss) Before Depreciation ||416.05 ||355.90 |
|Less : Depreciation ||499.83 ||500.16 |
|Profit / (Loss) Before Tax ||(83.78) ||(144.26) |
|Less : Income Tax ||131.00 ||105.00 |
|Less : Deferred Tax ||(406.73) ||(95.04) |
|Profit / (Loss) After Tax ||191.95 ||(154.22) |
|Add : Balance brought forward from previous year ||(85.95) ||68.28 |
|Balance Available for appropriation ||106.00 ||(85.95) |
|Directors Recommendation for Appropriation : || || |
|Proposed Dividend on Equity Shares : NIL || || |
|(2015 2016: NIL ) || || |
|Dividend Tax || || |
|Surplus Carried to Balance Sheet ||106.00 ||(85.95) |
The consolidated Financial Statements of the Company and its subsidiaries andassociates prepared in accordance with Accounting Standard 21 prescribed under Companies(Accounting Standards) Rules form part of the Annual Report and Accounts.
2. DIVIDEND AND RESERVES
Your Directors have not recommended dividend (previous year Rs.NIL per share) forfinancial year 2016-17 on account of the need to conserve the resources as the paymentsfrom the utilities have not been regular as per the due dates.
3 FIXED DEPOSITS
Your Company has not accepted any Fixed Deposits within the meaning of Section 73of the Companies Act 2013.
During the year the Total Income of the Company was Rs.2861.50 Lakh as compared toRs.1435.50 Lakh in the previous year. The Profit before depreciation achieved wasRs.416.05 Lakh (Previous year Rs.355.90 Lakh). The Profit after Tax registered wasRs.191.95 Lakh (Previous year loss of Rs.154.22 Lakh). The company has not transferred anyamount to Reserves during the year.
There has been no change in the business of the company during the year as compared tothe previous year.
Generation from all its wind power plants in different states have been more than theprevious year consequent to good monsoon witnessed in 2016-17. Overall the generation washigher than the previous year by about 19%.
With respect to realization of generation proceeds from state utilities or approval tosale to third parties the same continue to be an issue in every state. In Andhra Pradeshfor the period January 2011 to May 2014 50% of the generation dues have not been receivedconsequent to the state bifurcation and the company has been forced to file a writpetition in the jurisdictional high court. In respect of period after expiry of the PPA inSeptember 2015 and September 2016 though wind power is being fed into the grid of APutility in the absence of approval of PPA by deriving a tariff considering the actualPlant Load Factor of the wind farm no payments are being realized and necessitatingfiling of an appeal before Electricity Tribunal against the order of APERC.
As far as 18 MW wind farm in Satara district Maharashtra is concerned pursuant tofavourable order issued by MERC for F.Y. 2014-15 MSEDCL has been effecting credit in 12equal installments instead of settling the credit in a short span of time in the bills ofthe customers to whom wind power is sold. However the payments are being receivedregularly every month.
For F.Y. 2016-17 due to delay in approval of medium term open access the value forwind power could not be realized for the period October 2016 to March 2017 and it is hopedthat the company would realize its dues in the next 4 to 5 months as MSEDCL has issued theapproval in mid March 2017. As far as F.Y. 2017-18 is concerned MSEDCL has issued theapproval in April 2017 itself.
As far as the wind farms in Tamil Nadu is concerned the overdues continue to be forabout 9 to 10 months and the said trend has been continuing in the last 2 to 3 years.
Sale of RECs continues to be very less and has been following the pattern of the lastcouple of years. Compounding the woes has been the reduction in floor price to Rs.1000/-per REC from Rs.1500/- per REC with effect from April 2017. The company has unsold RECsvalued at Rs.523.07 lakh.
Even though day in day out the Central Government has been pronouncing their objectiveof achieving high capacity additions and reaching targets in GWs the ground reality hasbeen totally the opposite. The state utilities have been reporting acute cash crunch andin some states like Maharashtra though projects are completed PPAs are not signed and forexisting projects the generation dues are not released in a timely manner. Further thenon-renewal of generation based incentives and withdrawal of accelerated depreciation witheffect from April 2017 has brought in a dampening effect on the industry. Further therehas been levy of additional surcharge and increase in the cross subsidy surcharge to 100%from 25% in Maharashtra.
5. SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES
Your company had 8 subsidiary companies of which during 2016-17 the company hasdivested its 100% stake in Almi HydroElectric Projects Ltd and Joiner Hydro Power ProjectsLtd and partly Baledh Energy Projects Ltd. Consequently these companies ceased to besubsidiary companies except Baledh Energy Projects Limited has become an associatecompany. Currently the company has 5 subsidiaries viz. Batot Hydro Power Ltd BrahmanvelEnergy Ltd Greenweiz Projects Ltd Khandesh Energy Projects Ltd and Vajharpada EnergyLtd.
All subsidiary companies are SPVs executing power projects which are in differentstages of development except Greenweiz Projects Limited is in the business of carrying outoperation & maintenance of wind farms. Batot is operating its 3.5 MW small hydro powerProject. Though the wind power generation has been high due to good monsoon the monsoonin Himachal Pradesh has been low and lack of snow melting resulted in lesser wateravailability and lower hydro power generation.
In accordance with Section 136 of the Companies Act 2013 read with Rule 10 of TheCompanies (Accounts) Rules 2014 a company may forward statement of accounts containingthe salient features in the prescribed form and simultaneously ensure that copies of thefinancial statements including consolidated financial statements along with AuditorsReport Directors Report and other documents that is required to be attached or annexedwith the financial statements are made available for inspection at the registered officeof the company during working hours for a minimum period of 21 days prior to the meetingof the shareholders. Accordingly Accounts in the Abridged Form as per prescribed FormAOC-3 of the subject rules are being forwarded to all the members of the company withcomplete set of financial statements available at the registered office of the company forinspection as above. Also salient features in the financial statement of subsidiariesassociate companies joint ventures compiled in Form AOC-1 of the subject Rules areattached to the financial statements. Weizmann Corporate Services Ltd. is an Associatecompany apart from Baledh Energy Projects Limited.
6. DIRECTORS AND KEY MANAGEMENT PERSONNEL
In accordance with the provisions of the Companies Act 1956 and the Articles ofAssociation of the Company the Directors Shri D G
Siraj and Shri N V Siraj retires by rotation and being eligible have offeredthemselves for re-appointment.
The Managing Director of the company Mr. G N Kamath was reappointed for a period of oneyear with effect from 1st December 2016 subject to approval of shareholders by specialresolution at the ensuing Annual General Meeting. The confirmation of reappointment of Mr.G N Kamath as Managing Director for a period of one year and above would be included inNotice to the ensuing AGM.
The Board at their meeting on 24th May 2017 appointed Mr. B. S. Shetty as AdditionalDirector as per section 161 of the Companies Act 2013 and he holds office upto the dateof ensuing Annual General Meeting. Mr. B. S. Shetty has vide experience in Finance andRenewable energy and the Company would be benefitted from his experience. The Boardrecommends his appointment as Director and also as an Independent Director since hesatisfies conditions u/s 149(6) of the Companies Act 2013 by the Shareholders at theensuing AGM.
The Company pursuant to Section 149(10) read with Section 152 of the Companies Act2013 has three independent directors viz. Shri V P Kamath Shri K M Vussonji and ShriUpkar Singh Kohli who were appointed for a term of five consecutive years at the AnnualGeneral Meeting held on 11.09.2014 apart from Mr. B. S. Shetty whose appointment asindependent director is proposed at the ensuing AGM.
During the year no directors have resigned from the Board.
The Board of Directors had four meetings during financial year 2016-17.
Mr. T V Subramanian is the Chief Financial Officer appointed by the Board of Directors.
7. RECONSTITUTION OF AUDIT COMMITTEE
The constitution of the Audit Committee was as below
Mr. V P Kamath Independent Director Chairman Mr. K M Vussonji Independent DirectorMember Mr. D G Siraj Non Independent Director Member
Pursuant to Mr. K M Vussonji expressing his desire to step down from the Committee dueto his preoccupation the Audit Committee was reconstituted at the meeting of the Board on24.05.2017 by appointing Mr. B S Shetty an Independent Director as member of the auditcommittee as he has wide experience in both finance as well as renewable energy
8. STATEMENT INDICATING THE MANNER IN WHICH FORMAL EVALUATION HAS BEEN MADE BYTHE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS
Pursuant to provisions of the Companies Act and the Listing Regulations the Boardhas carried out the annual performance evaluation of Boards own performanceperformance of the Chairman of the Board the Committees and independent Directors withoutparticipation of the relevant Director. The Nomination and Remuneration Committee of theBoard continuously evaluated the performance of the Board and provided feedback to theChairman of the Board. The independent directors had a separate meeting without thepresence of any non independent directors and management and considered and evaluated theBoards performance performance of the Chairman and other non independent directorsand shared their views with the Chairman.
9. FAMILIARISATION PROGRAMME ARRANGED FOR INDEPENDENT DIRECTORS
The company as required under Schedule IV of the Companies Act 2013 and ListingRegulations has made arrangement to facilitate the independent directors to familiarizewith the operations of the company their roles rights responsibilities as Directors ofthe company considering the nature of the industry in which the company operates businessmodel of the company etc. The above aspect can be accessed by web linkhttp://www.karmaenergy.co/fid.html During F.Y. 2016-17 no new independent directors havebeen appointed by the company.
10. EXTRACT OF ANNUAL RETURN AS PER SECTION 92(3) OF COMPANIES ACT 2013
An extract of Annual Return as at 31.03.2017 pursuant to section 92(3) of theCompanies Act 2013 and forming part of this Report is attached as Annexure-1 to thisReport.
11. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) of the Companies Act 2013 your Directors confirm:
I) that in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;
ii) that the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for that period ;
iii) that the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company for preventing and detecting fraud and other irregularities; and
iv) that the Directors had prepared the annual accounts on a going concern basis.
v) that the Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively;
vi) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively ;
12. STATEMENT OF DECLARATION GIVEN BY INDEPENDENT
DIRECTORS UNDER SECTION 149(7) OF THE COMPANIES ACT 2013
The Board confirms the receipt of statement of declaration from independentdirectors u/s.149(7) of the Companies Act 2013 on the matters of criteria of independentDirector u/s. 149(6) of the Act.
13. COMPANYS POLICY ON DIRECTORS APPOINTMENT AND
REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS POSITIVE ATTRIBUTESINDEPENDENCE OF A DIRECTOR KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The company has constituted a Nomination and Remuneration Committee with theresponsibilities of formulating the criteria for determining qualifications positiveattributes and independence of a director and recommend to the Board a policy relating tothe remuneration for the directors Key Managerial Personnel and other employees ;Formulating criteria for evaluation of independent directors and the Board ; Devisingpolicy on Board diversity ; Identifying persons who are qualified to become directors andwho may be appointed in senior management in accordance with the criteria laid down andrecommend to the Board their appointment and removal.
Appointment and Remuneration to Managing Director is subject to approval by members inGeneral Meeting and shall be in accordance with Schedule V of Companies Act 2013 andceiling as per Section 197 of the Act. Appointment of Independent Directors to satisfyconditions u/s.149(6) of the Companies Act 2013. The Independent Directors shall begoverned by Code of Conduct detailed in Schedule IV of the Companies Act 2013.
The personnel selected as Board Member or Key Management Personnel or other seniorpersonnel of the company is based on their requisite qualifications skills experienceand knowledge in the relevant fields.
Remuneration policy of the Company includes fixation of remuneration and annualincrements based on performance knowledge position target achievement companysbusiness plans market environment and the remuneration is segregated into monthly fixedpayments annual payments contribution to social and retirement benefits reimbursementof expenses incurred for discharge of official duties annual bonus welfare schemes likeinsurance on health for self and family accident benefits tying up with agencies formanaging retirement benefits like gratuity pension schemes etc.
The remuneration policy as above is also available in the website of the companyhttp://www.karmaenergy.co/nnrp.html
14. PARTICULARS OF THE EMPLOYEES AND INFORMATION CALLED FOR UNDER SECTION 197 OF THECOMPANIES ACT 2013 AND THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits and other Disclosures pertaining to remuneration are set out in thesaid rules are provided in the Annual Report as Annexure-5.
Having regard to the provisions of the first proviso to Section 136(1) of the Act andas advised the Annual Report excluding the aforesaid information is being sent to themembers of the Company. The said information is available for inspection at the registeredoffice of the Company during working hours and any member interested in obtaining suchinformation may write to the Company Secretary and the same will be furnished on request.
15. DISCLOSURE OF PARTICULARS
Pursuant to Section 134(3) of the Companies Act 2013 read with Rule 8 of the Companies(Accounts) Rules 2014 the Report on the matters of Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings and Outgo are as follows :
As the Company is in the field of Wind Farm development and not manufacturing therelevant provisions relating to conservation of technology absorption are not applicable.However as the Company is in the field of wind farm development and promoting greenenergy it is directly contributing to reducing dependency on fossil fuel and thusconserving the fossil fuel.
The earnings and outgo in foreign exchange was NIL during the year.
16. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS U/S.186 OF THE COMPANIES ACT 2013
As the Company is in the business of Wind Power Generation an infrastructure activityas per Schedule VI of the Companies Act 2013 provisions of Section 186 is notapplicable.
17. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES REFERRED TO IN SECTION188(1) OF THE COMPANIES ACT 2013
The transactions with the Related Parties are at arms length basis and thesetransactions are not of material in nature as per Section 188 of the Companies Act 2013read with Rule 15 of the Companies (Meeting of Board and its Powers) Rules 2014. Therelated party transactions are placed before the Audit Committee as also the Board forapproval.
18. POLICY ON RELATED PARTY TRANSACTIONS
The Company has framed a policy on related party transactions and the same has beenhosted on its website http://www.karmaenergy.co/rptp.html The policy includes the specifictransactions requiring prior approval of the Audit Committee the Board of DirectorsSpecial Resolution by members at General Meeting determining the materiality of thetransaction with the related party both under Companies Act and Listing Regulations andalso the procedures to be followed in complying with the statutory provisions in respectof related party transaction if any.
19. STATEMENT INDICATING DEVELOPMENT AND
IMPLEMENTATION OF RISK MANAGEMENT POLICY FOR THE COMPANY
The Company has framed its Risk Management Policy detailing the identification ofelements of risks monitoring and mitigation of the risks. The company has alsoconstituted a Risk Management Committee for the above purpose. The company has laid downdetailed process in planning decision making organizing and controlling.
The Risk Management Policy has been hosted on the companys websitehttp://www.karmaenergy.co/rmp.html
20. CORPORATE SOCIAL RESPONSIBILITY OF THE COMPANY
The statutory requirement of complying with Corporate Social Responsibility of theCompanies Act 2013 is not applicable to the company during F.Y. 2016-17.
21. ESTABLISHMENT OF VIGIL MECHANISM
The company has in place a vigil mechanism pursuant to which a Whistle Blower Policy isalso in vogue. The whistle blower policy covering all employees and directors of thecompany is hosted on the companys website http://www.karmaenergy.co/wbp.html
22. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY
WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THEFINANCIAL STATEMENTS RELATE AND THE DATE OF REPORT
There are no material changes or commitments affecting the financial position of thecompany which have occurred between the end of the financial year and the date of thisReport.
23. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS ANDCOMPANYS OPERATION IN FUTURE
No significant or material orders have been passed by the regulators or courts ortribunals impacting the going concern status and companys operations in future.
24. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL
CONTROLS WITH RESPECT TO THE FINANCIAL STATEMENTS
The company has an internal control system commensurate with the size scale andnature of its operation. The internal controls ensure that all its assets are properlysafeguarded and protected against loss from unauthorized use or disposal all transactionsare authorized recorded and reported correctly. The company has also an internal auditsystem for periodical audit of the internal control systems of the company.
25. ISSUE OF NEW EQUITY SHARES DURING THE YEAR
The company has not issued any new equity shares during the year.
In the Seventh Annual General Meeting (AGM) of the company held on September 112014 Messrs. U.B. Sura & Co. Chartered Accountants and Messrs. Shyam C. Agrawal &Co. Chartered Accountants were appointed as Joint Statutory Auditors of the Company for aperiod of three years to hold office from the conclusion of the Seventh AGM until theconclusion of the Tenth AGM of the company which is the ensuing AGM. Consequentlypursuant to the provisions under the Companies Act for Rotation of Auditors the companyis required to appoint a new Auditor for a term of five years pursuant to Section 139(2)of the Act. As per the evaluation by the Audit Committee and the Board of Directors theBoard recommends appointment of M/s. Batliboi & Purohit Chartered Accountants (FirmRegistration No. 101048W) as Statutory Auditors of the Company for a term of five yearsfrom the ensuing Annual General Meeting subject to approval of the shareholders at theforthcoming AGM. Such appointment is required to be ratified by the shareholders each yearat the respective AGM.
27. SECRETARIAL AUDIT
Pursuant to requirement of section 204 of the Companies Act 2013 the company hadappointed Shri Martinho Ferraro Practicing Company Secretary (COP 5676) as SecretarialAuditor for financial year 2016-17 and whose report of 16.05.2017 is attached asAnnexure-2. There are no adverse observations made by the Auditor.
28. AUDITORS' REPORT
The observations of the Auditors in their report read with notes annexed to theaccounts are self-explanatory.
29. CORPORATE GOVERNANCE
Your Company has complied with Corporate Governance requirement as per the Clause49 of the Listing Agreement. A report on Corporate Governance forms part of this report asAnnexure-3. A certificate from the Statutory Auditors of the Company confirming complianceof the Corporate Governance is appended to the Report on Corporate Governance.
30. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report as required under the Listing Agreementwith the Stock Exchanges is attached to this Report as Annexure-4.
31. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF
WOMEN AT WORK PLACE (PREVENTION PROHIBITION AND REDRESSAL) Act 2013.
"The Company has in place an Anti Sexual Harassment Policy in line with therequirements of The Sexual Harassment of Women at the Workplace (Prevention Prohibition& Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy. During the year no complaints havebeen received.
Your Directors express their grateful appreciation for the assistance andco-operation received from Government Authorities Bankers Lending InstitutionsSuppliers and Customers during the year under review.
Your Directors place on record their appreciation for the committed services of theexecutives and staff of the Company.
| ||For and on behalf of the Board |
|Place : Mumbai ||Chetan D. Mehra |
|Date : 26th May 2017 ||Vice Chairman |