To The Members
Your Directors have pleasure in presenting their Eighteenth Annual Report on thebusiness and operations of the Company together with Audited Statement of Accounts for theyear ended 31st March 2018.
1 . FINANCIAL PERFORMANCE :
| || |
(Rs. in Million)
|Particulars ||Standalone |
| ||Financial Year 2017-18 ||Financial Year 2016-17 |
|Total Income ||329.44 ||253.74 |
|Total Expenditure ||187.00 ||171.21 |
|Profit for the year before taxation ||142.44 ||82.53 |
|Provision for tax (including Deferred Tax) ||(12.67) ||9.25 |
|Profit for the year before taxation ||155.11 ||73.28 |
|Adjustments / Excess / (short) for taxation and tax payments ||3.11 ||(0.26) |
|Profit attributable to Equity holder ||158.22 ||73.02 |
|Items of other comprehensive income (net of Tax) ||1.19 ||1.00 |
|Total ||159.41 ||74.02 |
|Balance of profit / (Loss) from previous year ||661.35 ||587.33 |
|Balance available for appropriation ||820.76 ||661.35 |
|Appropriations ||- ||- |
|Surplus retained in statement of profit and loss ||820.76 ||661.35 |
2 . SHARE CAPITAL
The paid-up Equity Share Capital as on 31st March 2018 stood at Rs.188.34Million. During the year under review the Company has not issued shares with differentialvoting rights nor has granted any stock options or sweat equity. As on 31stMarch 2018 none of the Directors of the Company hold instruments convertible into equityshares of the Company.
3 . DIVIDEND
Your Directors do not recommend any dividend on the equity shares for the year ended 31stMarch 2018.
4 . MANAGEMENT DISCUSSION AND ANALYSIS
International Scenario :
The overall capacity of all wind turbines installed worldwide by the end of 2017reached 539291 Megawatt according to preliminary statistics published by WWEA. 52552Megawatt were added in the year 2017 slightly more than in 2016 when 51402 Megawatt wentonline. This is the third largest number ever installed within one year after the recordyears 2015 and 2014. However the annual growth rate of only 10.80% is the lowest growthever since the industrial deployment of wind turbines started end of the 20thcentury.
All wind turbines installed by end of 2017 can cover more than 5% of the globalelectricity demand. For many countries wind power has become a pillar in their strategiesto phase out fossil and nuclear energy. In 2017 Denmark set a new world record with 43%of its power coming from wind. An increasing number of countries have reached adouble-digit wind power share including Germany Ireland Portugal Spain Sweden orUruguay.
Domestic Scenario :
The government in its latest budget announcement reduced the AD from 80% to 40%.Furthermore the GBI could come to an end at the end of the financial year. These twofactors contributed to a rush of installations at the end of the fiscal year. However thefirst auctions for wind power were held in early 2018 successfully. We expectinstallations during 2018 to reach approximately 5000 MW. A further 4-5 GW tender isexpected during 2018 a positive step towards reaching the 2022 target of 60 GW.
Company's Performance :
The Company has taken necessary steps to partially restore wind farm operations.
During the year sale of RECs generated by the projects has helped your company earnadditional revenue.
5 . COMPANY PERFORMANCE
During the Financial Year under review your Company earned total income of Rs.32.94Crores (previous years Rs.25.37 Crores). The net Profit after tax is Rs.15.51 Crores(previous year's profit of Rs.7.33 Crores).
6 . OPERATIONS OF THE COMPANY
The operations at Wind Farm site were affected due to disputes with service provider.The management has operationalised part of the wind farm with the help of other serviceprovider. Despite such problems the Company was able to generate 12.46 Million (Net)Units of power.
7 . HUMAN RESOURCES
As on 31st March 2018 the Company has 9 employees. The relations withCompany's employees are cordial.
8 . CONCERNS AND THREATS
The Company operates in a highly regulated environment. Any change in GovernmentPolicies will adversely affect the operations of the Company.
The Company depends on the service provider for operations and maintenance of WindTurbines. Certain litigations against the service providers are pending before thejudicial / quasi judicial authorities. Unfavourable outcome of these litigations ordisputes with service provider will adversely affect our operations.
9 . INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has adequate internal control systems to ensure operational efficiency andaccuracy in financial reporting and compliance of various laws and regulations.
The internal control system is supported by the internal audit process. The internalaudit is conducted by a Chartered Accountant in practice. The Audit Committee of the Boardreviews the Internal Audit process and the adequacy and effectiveness of internal auditand controls periodically.
10. CAUTIONARY STATEMENT
Statements in this Report particularly those which relate to Management Discussion andAnalysis describing the Company's objectives projections estimates and expectations mayconstitute "forward looking statements" within the meaning of applicable lawsand regulations. Actual results might differ materially from those either expressed orimplied.
11. SUBSIDIARY COMPANIES
The Company has four subsidiary companies as on 31st March 2018.
The details are given in Annexure 'I'
12. PARTICULARS OF INFORMATION FORMING
PART OF THE BOARD'S REPORT PURSUANT TO SECTION 134 OF THE COMPANIES ACT 2013 RULE 8OF THE COMPANIES (ACCOUNTS) RULES 2014 AND RULE 5 OF THE COMPANIES (APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014
The details are given in Annexure 'II'
13 EXTRACT OF ANNUAL RETURN
The details forming part of the extract of Annual Return in Form MGT - 9 is annexedherewith as
Annexure 'III' to this Report.
14. NUMBER OF MEETINGS OF THE BOARD
During the year under review five Board Meetings were convened and held. The detailsof which are given in the Corporate Governance Report. The intervening gap between theMeetings was within the period prescribed under the Companies Act 2013 and the SecuritiesExchange Board of India (Listing
Obligations & Disclosure Requirements) Regulations 2015 hereinafter called"Regulations 2015".
15. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(5) of the Companies Act 2013 in respectof Directors' Responsibility Statement your Directors' state that:
a) in the preparation of the Annual Financial Statements for the year ended 31stMarch 2018 the applicable accounting standards have been followed along with the properexplanation relating to material departures;
b) accounting policies as mentioned in Note - 1 to the Financial Statements have beenselected and applied consistently. Further judgments and estimates have been made that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at 31st March 2018 and of the profit of the Company for the yearended on that date;
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the Annual Financial Statements have been prepared on a going concern basis;
e) proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively; and
f) proper systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.
16. A STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and 'Regulations2015'.
17. COMPANY'S POLICY ON DIRECTORS' AND KMP'S APPOINTMENT AND REMUNERATION
Director's appointment and remuneration is done as per the policy for selection andappointment of Directors Key Managerial Personnel and Senior Management Personnel andtheir remuneration. The policy is appended as Annexure 'IV' to this Report.
18. ACCOUNTS AND AUDIT
a . Statutory Auditors
M/s. Joshi Apte & Co. Chartered Accountant Pune (Firm Registration No.104370W)are the auditors of the Company and will continue the audit for Financial year 2018-19.
b. Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial
Personnel) Rules 2014 the Company has appointed M/s. SVD & Associates CompanySecretaries to undertake the Secretarial Audit of the Company. The Report of theSecretarial Audit is annexed herewith as Annexure 'V' to this Report.
c. CONSOLIDATED ACCOUNTS
The Consolidated Accounts of the Company with its subsidiaries for the year ended 31stMarch 2018 are enclosed. this Report.
19. EXPLANATION ON COMMENTS ON STATUTORY AUDITORS' AND SECRETARIAL AUDITORS' REPORTS
There are no qualifications reservations or adverse remarks or disclaimers made byM/s. Joshi Apte & Co. Statutory Auditors in their Audit Report on standaloneaccounts. M/s. SVD & Associates Practicing Company Secretary in their SecretarialAudit Report have made certain qualifications. The auditor's qualifications and Boardsexplanation thereto are summarized as under:
20. PARTICULARS OF LOANS GUARANTEES OR INVESTMENT UNDER SECTION 186
During the year the Company has not made any investments other than the CurrentInvestments. The closing balances of investments which would be covered under Section 186of the Companies Act 2013 are disclosed in the Schedule of Non-Current Investments inthe Financial Statements. The company has not granted any loans and issued corporateguarantees during the year.
21. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO INSUB-SECTION (1) OF SECTION 188 OF THE COMPANIES ACT 2013
Pursuant to the provisions of Section 134 of the Companies Act 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014 the particulars of contracts or arrangementsentered into by the Company with Related Parties have been done at arm's length and are inthe ordinary course of business. Particulars are being provided in Form AOC- 2 in Annexure'VI' Related Party Disclosures as per AS -18 have been provided in to Note No.26 to theFinancial Statements.
22. STATE OF COMPANY'S AFFAIRS
Discussion on state of Company's affairs has been covered in the Management Discussionand Analysis.
23. AMOUNTS PROPOSED TO BE CARRIED TO RESERVES
Particulars of the amounts proposed to be carried to reserves have been covered as partof the financial performance of the Company.
24. MATERIAL CHANGES AND COMMITMENTS BETWEEN THE DATE OF THE BALANCE SHEET AND THE DATEOF REPORT
There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the Financial Year of the Company towhich the Financial Statements relate and the date of the report except as disclosedelsewhere in this report.
25. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Conservation of Energy and Technology Absorption
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under Section 134(3)(m) of theCompanies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 are annexedherewith as Annexure 'VII' to this report.
26. RISK MANAGEMENT POLICY
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified are systematically addressedthrough mitigating actions on a continuing basis. These are discussed at the meetings ofthe Audit Committee and the Board of Directors of the Company.
27. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has constituted a Corporate Social Responsibility (CSR) Committee inaccordance with Section 135 of the Companies Act 2013. The details of the CSR Policy andinitiatives taken by the Company towards CSR during the year are annexed as
Annexure 'VIII' to this Report.
28. BOARD EVALUATION
Pursuant to provisions of the Companies Act 2013 Rules thereunder and 'Regulations2015' the Board has carried out evaluation of its own performance and that of itsCommittees and individual Directors.
29. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES ASSOCIATES ANDJOINT VENTURE COMPANIES:
The details are given in Annexure 'I'
30. CHANGE IN THE NATURE OF BUSINESS IF ANY
There has been no change in the nature of business during the Financial Year underreview.
31. DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVERESIGNED DURING THE YEAR
Directors appointed during the year
|Name of Director ||Designation ||Term of appointment |
|Mr. A. B. Kalyani ||Director ||Re-appointed with effect from 6th November 2017 subject to retirement by rotation |
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under subsection (6) of Section 149 of the Companies Act 2013 and 'Regulations 2015'.
32. Employees designated as Key Managerial Personnel (KMP) during the year
33. Directors and KMP's resigned during the year
None of the Directors and KMPs resigned during the year ended 31st March2018.
34. Directors proposed to be appointed and reappointed at the ensuing Annual GeneralMeeting
1) Mr. B. N. Kalyani (DIN : 00089380) retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for reappointment.
2) Mr. S. K. Adivarekar (DIN : 06928271) was appointed as Independent Director by theBoard on 30th May 2018 subject to the approval of members in the ensuingAnnual General Meeting. A resolution to consider and approve his appointment is includedin the Notice of 18th Annual General Meeting.
3) Mr. B. B. Hattarki (DIN : 00145710) has completed the age of 75 years. As perSecurities and Exchange Board of India (SEBI) (Listing Obligations and DisclosureRequirements) (Amendment) Regulations 2018 members approval is sought for hisreappointment by way special resolution in the 18th Annual General Meeting.
The brief resumes and other details relating to Directors who are proposed to bere-appointed as required to be disclosed under 'Regulations 2015' form part of the Notesand Statement setting out material facts annexed to the Notice of the Annual GeneralMeeting.
35. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES JOINTVENTURES OR ASSOCIATE COMPANIES DURING THE YEAR
36. DETAILS OF DEPOSITS WHICH ARE NOT IN COMPLIANCE WITH THE REQUIREMENTS OF CHAPTER VOF THE COMPANIES ACT 2013
37. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
The Company has neither received nor is aware of any such order from Regulators Courtsor Tribunals during the year.
38. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS
The Company has suitable internal control system comprising of proper checks andbalances policies and procedures. This includes code of conduct whistle blower policyMIS and internal audit mechanism.
The Audit Committee along with Management review the internal audit and internalcontrols on a regular basis.
39. COMPOSITION OF AUDIT COMMITTEE
The composition of the Audit Committee has been mentioned in the Corporate GovernanceReport annexed to this Report.
40. VIGIL MECHANISM
The Company has formulated and implemented the Whistle Blower Policy / Vigil Mechanism.This has provided a mechanism for directors and employees of the Company and other personsdealing with the Company to report to the Chairman of the Audit Committee; any instance ofunethical behavior actual or suspected fraud or violation of the Company's code ofconduct. The aforesaid policy has also been uploaded on the Company's website.
41. CASH FLOW
A Cash Flow Statement for the year ended 31st March 2018 is attached to theBalance Sheet.
42. CORPORATE GOVERNANCE
A report on the Corporate Governance along with the certificate of compliance from theAuditors forms part of the Annual Report.
43. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
In terms of provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 the Company has formulated a Policy to preventSexual Harassment of Women at Workplace. During the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
Your Directors wish to place on record their appreciation for the contribution madeand support provided to the Company by the shareholders employees and bankers during theyear under the report.
| ||For and on behalf of the Board of Directors || |
| ||For ||BF Utilities Limited |
| ||B.B. Hattarki ||A.B. Kalyani |
|Pune ||Director ||Director |
|20th July 2018 ||DIN:00145710 ||DIN:00089430 |