You are here » Home » Companies » Company Overview » Karma Energy Ltd

Karma Energy Ltd.

BSE: 533451 Sector: Infrastructure
NSE: KARMAENG ISIN Code: INE725L01011
BSE LIVE 15:27 | 18 Aug 37.00 -1.95
(-5.01%)
OPEN

36.70

HIGH

39.20

LOW

36.70

NSE 15:28 | 18 Aug 38.90 0.60
(1.57%)
OPEN

39.00

HIGH

39.30

LOW

38.00

OPEN 36.70
PREVIOUS CLOSE 38.95
VOLUME 62
52-Week high 74.85
52-Week low 17.60
P/E 22.29
Mkt Cap.(Rs cr) 43
Buy Price 37.00
Buy Qty 5.00
Sell Price 39.20
Sell Qty 15.00
OPEN 36.70
CLOSE 38.95
VOLUME 62
52-Week high 74.85
52-Week low 17.60
P/E 22.29
Mkt Cap.(Rs cr) 43
Buy Price 37.00
Buy Qty 5.00
Sell Price 39.20
Sell Qty 15.00

Karma Energy Ltd. (KARMAENG) - Director Report

Company director report

TO THE MEMBERS OF KARMA ENERGY LIMITED

The Directors are pleased to present this Ninth Annual Report and the Audited Statementof Accounts for the year ended March 312016.

1. FINANCIAL RESULTS

(Rs. in lakh)

Particulars 2015-2016 2014-2015
Total Income including exceptional items 1435.50 1665.21
Profit / (Loss) Before Depreciation 355.90 67.30
Less : Depreciation 500.16 490.00
Profit Before Tax (144.26) (422.70)
Less : Income Tax 105.00 8.94
Less : Deferred Tax (95.04) (118.61)
Profit / (Loss) After Tax (154.22) (313.03)
Add : Balance brought forward from previous year 68.28 375.30
Balance Available for appropriation (85.95) 62.27
Director's Recommendation for Appropriation :
Transfer to General Reserve - Depreciation Adjustment as per Schedule II of Co's Act

--

(6.01)
Proposed Dividend on Equity Shares NIL (2014-2015: NIL)

--

--

Dividend Tax -- --
Surplus Carried to Balance Sheet (85.95) 68.28

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 any dividend (previous year Rs.NIL per share) forfinancial year 2015-16 on account of loss for the year. Pursuant to loss for the year thecompany has also not transferred any amount to Reserves.

3. FIXED DEPOSITS

Your Company has not accepted any Fixed Deposits within the meaning of Section 73 ofthe Companies Act 2013.

4. PERFORMANCE

During the year the Total Income of the Company was Rs.1435.50 Lakh as compared toRs.1665.21 Lakh in the previous year. The Profit before depreciation achieved wasRs.355.90 Lakh (Previous year Rs.67.30 Lakh). The Profit / (Loss) after Tax registered was(Rs.154.22 Lakh) (Previous year {Rs.313.03 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 lower than theprevious year except in Theni District in Tamil Nadu and Satara District in Maharashtra.Overall the drop in generation as compared to the previous year is about 4.74%. This isprimarily on account of cyclic pattern of wind.

In Andhra Pradesh where the company has a 7.5 MW even though Hon'ble State ElectricityRegulatory Commission APERC had issued a final tariff order on 06.09.2014 fixing thetariff at Rs.3.37 per unit the state utilities viz. Southern Power Distribution Companyof Telangana (TSSPDCL) and Southern Power Distribution Company of Andhra Pradesh (APSPDCL)have not paid the difference in tariff of Rs.1.685 for the generation fed into the gridfrom January 2011 to May 2014. The state got bifurcated with effect from 02.06.2014 andeven though during the said period the company was selling power to the present TSSPDCLthey have not been paying for the dues by stating that the power generation unit of thecompany is in Andhra Pradesh. APSPDCL has accepted their liability to the tune of 17.45%of the dues on the basis of a Notification issued by APERC as a transitional measurearising from bifurcation of the state subject to TSSPDCL effecting payment of the balance82.55%. The net effect is about Rs.3.81 crore is pending realization for over two to threeyears.

As far as 18 MW wind farm in Satara district Maharashtra is concerned MERC has issueda favourable order for financial year 2014-15 paving way for sale of power to thirdparties for the said financial year. Hence company would be realizing the generation duesof about Rs.14 crore plus after almost two years. In 2015-16 the Hon'ble High Court ofBombay issued an adverse order upholding a new Distribution Open Access Regulations 2014issued by MERC which was contended to be not in accordance with Electricity Act by thewind power association and others. Consequently the company has been forced to sell powerto state utility MSEDCL at a low preferential tariff of Rs.2.52 per unit. For thefinancial year 2016-17 sale of power to third parties have been made feasible by MERC byissuance of a new Distribution Open Access Regulations 2016 which is fair and encouragingto renewable energy sector.

Sale of RECs have been low only with considerably less off take in the market. Thecompany has unsold RECs valued at Rs.266.63 lakh.

Even though the Central Government has been aiming for high capacity addition inrenewable energy sector at state levels the machineries are not moving in unison.Consequently the uncertainties continue. The state utilities despite about active 20 yearsof renewable energy in the country still considers renewable energy especially infirmpower like wind and solar as untouchable even though they do buy the power since the samehas been forced on them in the form of renewable purchase obligations by the respectiveState Electricity Regulatory Commissions in compliance with the provisions of ElectricityAct 2003. A valid apprehension of the state utilities is on account of unpredictabilityof infirm power and hence scheduling and forecasting posing a challenge for gridmanagement. Indian Wind Power Association in Tamil Nadu is attempting to mitigate thisproblem by working with state utility and central government agency to collect data from alarge area of wind farms and attempting to schedule and forecast wind power from the saidlarge number of wind farms in aggregate. Adding to the development woes are the potentialwind farm sites are now predominantly in the forest area and obtaining approvals is a longprocess running to few years and further inconsistency shown by state electricityregulatory commissions in framing regulations as well as issuance of orders.

5. SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES

Your company has 8 subsidiary companies namely Almi HydroElectric Projects Ltd BaledhEnergy Projects Ltd Batot Hydro Power Ltd Brahmanvel Energy Ltd Greenweiz Projects LtdJoiner Hydro Power Projects Ltd Khandesh Energy Projects Ltd and Vajharpada Energy Ltd.All subsidiary companies are SPV's executing power projects which are in different stagesof development except Greenweiz Projects Limited is in the business of carrying outoperation & maintenance of wind farms. Batot's 3.5 MW Project was re-commissioned inmid June 2013 had a promising start at the beginning of the financial year with generationclocking high levels but subsequently the generation slowed down due to lack of water butstill achieved about 78.7% of the expected generation. After two consecutive years ofdrought a good monsoon would augur well for both wind power and 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.

No subsidiary company has ceased to be a subsidiary during the year.

Weizmann Corporate Services Ltd. is the only Associate company.

6. DIRECTORS AND KEY MANAGEMENT PERSONNEL

Shri Chetan D. Mehra was designated as Vice Chairman of the Company by the Board ofDirectors at their meeting held on 9th February 2016.

In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company the Directors Shri Chetan D Mehra and Shri Vinesh N Davdaretires by rotation and being eligible have offered themselves for re-appointment.

The Managing Director of the company Shri G N Kamath was reappointed for a period ofone year with effect from 1st December 2015 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 Company had 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.

During the year no directors have resigned from the Board.

The Board of Directors had four meetings during financial year 2015-16.

Mr. T V Subramanian is the Chief Financial Officer appointed by the Board of Directors.

7. STATEMENT INDICATING THE MANNER IN WHICH FORMAL

EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEESAND INDIVIDUAL DIRECTORS

Pursuant to provisions of the Companies Act and the Listing Regulations the Board hascarried out the annual performance evaluation of its own performance performance of theChairman the Committees and independent Directors without participation of the relevantDirector. The Nomination and Remuneration Committee of the Board continuously evaluate theperformance of the Board and provide feedback to the Chairman of the Board. Theindependent directors had a separate meeting without the presence of any non independentdirectors and management and considered and evaluated the Board's performance performanceof the Chairman and other non independent directors and shared their views with theChairman.

8. 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 link http://www.karmaenergy.co/fid.html DuringF.Y. 2015-16 no new independent directors have been appointed by the company.

9. EXTRACT OF ANNUAL RETURN AS PER SECTION 92(3) OF COMPANIES ACT 2013

An extract of Annual Return as at 31.03.2016 pursuant to section 92(3) of the CompaniesAct 2013 and forming part of this Report is attached as Annexure - I to this Report.

10. 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 ;

11. STATEMENT OF DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION 149(7) OF THECOMPANIES ACT 2013

The Board confirms the receipt of statement of declaration from independent directorsu/s.149(7) of the Companies Act 2013 on the matters of criteria of independent Directoru/s. 149(6) of the Act.

12. COMPANY’S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION INCLUDING CRITERIAFOR DETERMINING QUALIFICATIONS POSITIVE ATTRIBUTES INDEPENDENCE OF A DIRECTOR KEYMANAGERIAL 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 company'sbusiness 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 company - http://www.karmaenergy.co/nnrp.html

13. 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 and are compiled with.

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.

14. 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.

15. 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.

16. 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 arm's 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.

17. 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.htmlThe policy includes the specific transactions requiring prior approval of the AuditCommittee the Board of Directors Special Resolution by members at General Meetingdetermining the materiality of the transaction with the related party both under CompaniesAct and Listing Regulations and also the procedures to be followed in complying with thestatutory provisions in respect of related party transaction if any.

18. STATEMENT INDICATING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY FORTHECOMPANY

The Company has framed its Risk Management Policy detailing the identification ofelements of risks monitoring and mitigation of the risks. The company is also constituteda Risk Management Committee for the above purpose. The company has laid down detailedprocess in planning decision making organizing and controlling.

The Risk Management Policy has been hosted on the company's website http://www.karmaenergy.co/rmp.html

19. 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. 2015-16.

20. 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 company's website http://www.karmaenergy.co/wbp.html

21. 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 WHICHTHE FINANCIAL 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.

22. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATION IN FUTURE

No significant or material orders have been passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future. On thecontrary there have been two favourable order / regulation issued by Maharashtra StateElectricity Regulatory Commission during 2015-16 viz. permitting open access i.e. sale tothird parties in Maharashtra for F.Y. 2014-15 and issuance of new Distribution Open AccessRegulations 2016 virtually reverting to the position which existed prior to issuance of aDistribution Open Access Regulations 2014 from 25.06.2014. Consequently sale to thirdparties are permitted again under the new Regulations of 2016. Only for financial year2015-16 due to issuance of Distribution Open Access Regulations 2014 the company wasdeprived of sale of power to third parties in Maharashtra and had to sell the wind powerto the state utility at the low preferential tariff determined by State ElectricityRegulatory Commission.

23. DETAILS IN RESEPCT OF ADEQUACY OF INTERNAL CONTROLS WITH RESPECT TO THE FINANCIALSTATEMENTS

The company has an internal control system commensurate with the size scale and natureof 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.

24. ISSUE OF NEW EQUITY SHARES DURING THE YEAR

The company has not issued any new equity shares during the year.

25. AUDITORS

In the Seventh Annual General Meeting (AGM) of the company held on September 11 2014Messrs. 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. In terms of the provisions of the CompaniesAct 2013 appointment of Auditors are required to be ratified by the shareholders inevery AGM until the expiry of the period of original appointment.

In view of the above the Board of Directors recommend ratification of appointment ofMessrs. U.B. Sura & Co. Chartered Accountants and Messrs. Shyam C. Agrawal & Co.Chartered Accountants as Joint Statutory Auditors of the Company by the members for theperiod from the conclusion of the ensuing Ninth AGM till conclusion of the Tenth AnnualGeneral Meeting.

26. 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 2015-16 and whose report of 11th May 2016 is attached asAnnexure - IV. There are no adverse observations made by the Auditor.

27. AUDITORS’ REPORT

The observations of the Auditors in their report read with notes annexed to theaccounts are self-explanatory.

28. CORPORATE GOVERNANCE

Your Company has complied with Corporate Governance requirement as per SEBI (ListingObligations & Disclosure Requirement) Regulations 2015. A report on CorporateGovernance forms part of this report as Annexure - II. A certificate from the StatutoryAuditors of the Company confirming compliance of the Corporate Governance is appended tothe Report on Corporate Governance.

29. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the Listing Agreement withthe Stock Exchanges is attached to this Report as Annexure - III.

30. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTIONPROHIBITION AND REDRESSAL) Act 2013.

The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof 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.

31. ACKNOWLEDGEMENT

Your Directors express their grateful appreciation for the assistance and co-operationreceived from Government Authorities Bankers Lending Institutions Suppliers andCustomers 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 Dharmendra G. Siraj
Date : 25th May 2016 Chairman