TO THE MEMBERS OF KARMA ENERGY LIMITED
The Directors are pleased to present this Eleventh Annual Report and the AuditedStatement of Accounts for the year ended March 31 2018.
1 . FINANCIAL RESULTS
(Rs. in lakh)
|Particulars ||2017-2018 ||2016-2017 |
|Total Income including exceptional items ||3380.59 ||2861.50 |
|Profit / (Loss) Before Depreciation ||369.73 ||404.68 |
|Less : Depreciation ||497.98 ||498.07 |
|Profit / (Loss) Before Tax ||(128.25) ||(93.39) |
|Less : Income Tax ||101.87 ||127.87 |
|Less : Deferred Tax ||(117.88) ||(406.73) |
|Profit / (Loss) After Tax ||(112.24) ||185.47 |
|Other Comprehensive Income Net of Tax ||1976.44 ||573.41 |
|Total Comprehensive Income for the year ||1864.20 ||758.88 |
The consolidated Financial Statements of the Company and its subsidiaries andassociates prepared in accordance with Indian Accounting Standards (IND AS) including theRules noti ed under the relevant provisions of the Companies Act 2013 form part of theAnnual Report and Accounts. The Company has adopted IND AS w.e.f. 01.04.2017 the datefrom which the said standards are mandatorily applicable and accordingly has changednumber of Accounting Policies as detailed in "Signi cant Accounting Policies"forming part of Financial Statements for F.Y. 2017-18 in line with the applicable IND AS.Figures for F.Y. 2016-17 has been restated as per IND AS and therefore may not becomparable with Financials for F.Y. 2016-17 approved by the Directors and disclosed in theFinancial Statements of the previous year.
2 . DIVIDEND AND RESERVES
Your Directors have not recommended dividend (previous year Rs. NIL per share) fornancial year 2017-18 on account of the need to conserve the resources as the payments fromthe utilities have not been regular as per the due dates and in certain states paymentsitself not forthcoming due to pending regulatory approval on tariff determination forexecuting Power Purchase Agreement with the state utility. No amounts have beentransferred to Reserves during the year.
3. FIXED DEPOSITS
Your Company has not accepted any Fixed Deposits within the meaning of Section 73 ofthe Companies Act 2013.
During the year the Total Income of the Company was Rs.3380.59 Lakh as compared toRs.2861.50 Lakh in the previous year. The Profit before depreciation achieved wasRs.369.73 Lakh (Previous year Rs.404.68 Lakh). The Loss after Tax was Rs.112.24 Lakh(Previous year Profit of Rs.185.47 Lakh). As per the IND AS other comprehensive income forthe year 2017-2018 was Rs.1976.44 Lakh (Previous year Rs.573.41 Lakh) and totalcomprehensive income for the year was Rs.1864.20 Lakh (Previous Year Rs.758.88 Lakh). Thecompany has not transferred any amount to Reserves during the year.
There has been no change in the business of the company during the year as compared tothe previous year.
As far as Renewable Energy Certi cates (RECs) are concerned after 2 to 3 years of lackof off take of RECs in the Electricity Exchange market the last ve months of the nancialyear 2017-18 witnessed quantum sales of RECs resulting in the entire stock on hand tillFebruary 2018 being sold in the market fetching a sale consideration of Rs.933.36 Lakh in2017-18 as compared to Rs.145.31 Lakh in 2016-17.
With respect to realization of generation proceeds from state utilities there has beensubstantial improvement in 2017-18 as compared to the previous couple of years. As far asCompany's Wind Electric Generators (WEGs) in Maharashtra is concerned the open accessapproval was granted in time which facilitated sale of power to third parties andrealization of the proceeds on time. However the open access charges have been increasedmultiple times / new levy commenced in November 2016 as per the orders of MaharashtraState Electricity Regulatory Commission and consequently net realization has beenadversely affected but sale to third party facilitates quicker realization of thegeneration proceeds vis-a-vis sale of power to State utility.
In respect of Company's WEGs in Tamil Nadu there has been substantial improvement inrelease of payments by the state utility. However in respect of Company's WEGs in AndhraPradesh is concerned the rough weather continues. The generation proceeds received onlyat 50% of the tariff for the period January 2011 to May 2014 has been held up due to thestate bifurcation with the utility of each state passing the bucks to the othernecessitating the Company to le a writ petition in the jurisdictional High Court.
For two phases of 3 MW each the Power Purchase Agreement (PPA) had expired in August2015 and September 2016 and the Company had approached the utilities to extend the PPAhowever the tariff offered was much less than that could be derived by applying all theapplicable parameters laid down by State Electricity Regulatory Commission (APERC). Theefforts of the Company before APERC failed resulting in it approaching the AppellateTribunal for Electricity. In the meantime the state declared that they are power surplusand does not require any RE power. Considering all the facts including the litigationprocess in the country being lengthy and stretching endlessly the Company agreed with thestate utility to sell the power at the low tariff stipulated by them. However the matteris still pending before APERC. Consequently no generation proceeds are being received postthe expiry of the PPA though power is being generated and fed into their grid.
5. SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES
Your company has 5 subsidiary companies viz. Batot Hydro Power Ltd Brahmanvel EnergyLtd Greenweiz Projects Ltd Khandesh Energy Projects Ltd and Vajharpada Energy Ltd.
All subsidiary companies are SPV's executing power projects which are in differentstages of development except Greenweiz Projects Limited which in the business of carryingout operation & maintenance of wind farms. Batot is operating its 3.5 MW small hydropower Project. The generation from the project has been more or less same as that wasachieved in 2016-17.
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 thenancial statements including consolidated nancial statements along with Auditors ReportDirectors Report and other documents that is required to be attached or annexed with thenancial statements are made available for inspection at the registered of ce of thecompany during working hours for a minimum period of 21 days prior to the meeting of theshareholders. Accordingly Accounts in the Abridged Form as per prescribed Form AOC-3 ofthe subject rules are being forwarded to all the members of the company with complete setof nancial statements available at the registered of ce of the company for inspection asabove. Also salient features in the nancial statement of subsidiaries associatecompanies joint ventures compiled in Form AOC-1 of the subject Rules are attached to thenancial statements.
The Company has 2 Associate Companies viz. Weizmann Corporate Services Ltd and BaledhEnergy Projects Limited.
6. DIRECTORS AND KEY MANAGEMENT PERSONNEL
In accordance with the provisions of the Companies
Act 1956 and the Articles of Association of the Company the Director Shri Chetan DMehra retires by rotation and being eligible has offered himself for reappointment.
The Managing Director of the company Mr. G N Kamath was re-appointed for a period ofone year with St effect from 1 December 2017 subject to approval of shareholders byspecial resolution at the ensuing Annual General Meeting. The con rmation of reappointmentof Mr. G N Kamath as Managing Director for a period of one year and above would beincluded in Notice to the ensuing AGM.
During the year Shri V P Kamath an Independent
Director and Shri Vinesh N Davda a Non Executive Non Independent Director resignedfrom the Board.
Smt. Smita V Davda was a Non Independent Director since her husband Shri Vinesh N Davdawas also a Director on the Board and consequently both of them were considered as NonIndependent as per Section 149 of the Companies Act 2013. Consequent to Shri Vinesh NDavda resigning from the Board Smt. Smita V Davda was re-categorized as IndependentDirector as she was satisfying all the criteria stipulated for the same under the statute.Accordingly an item is included in the Agenda for the ensuing AGM seeking approval of themembers for Smt. Smita V Davda being considered as an Independent Director.
The Company had pursuant to Section 149(10) read with Section 152 of the Companies Act2013 has four independent directors viz. Shri Kishore M Vussonji Shri Upkar Singh KohliShri B S Shetty and Smt. Smita V. Davda who were / are appointed for a term of veconsecutive years at the relevant Annual General Meetings.
The Board of Directors had ve board meetings during
financial year 2017-18.
Mr. T V Subramanian is the Chief Financial Officer appointed by the Board of Directors.
7. RECONSTITUTION OF AUDIT & STAKEHOLDERS
Consequent to resignation of Shri V P Kamath
Chairman of Audit Committee the Audit Committee was re-constituted as below :
|Mr. B S Shetty ||Independent Director Chairman |
|Mr. U S Kohli ||Independent Director Member |
|Smt. Smita V Davda Independent Director-Member || |
The Stakeholders Relationship Committee too was reconstituted as below :
|Mr. Chetan D Mehra ||Chairman |
|Mr. Dhermendra G Siraj ||Member |
|Smt. Smita V Davda ||Member |
8. STATEMENT INDICATING THE MANNER IN WHICH
FORMAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITSCOMMITTEES AND INDIVIDUAL DIRECTORS
Pursuant to provisions of the Companies Act and the
Listing Regulations the Board as well as the Nomination and Remuneration Committeecarried out the annual performance evaluation of Board's own performance performance ofthe Chairman of the Board the Committees and independent Directors without participationof the relevant Director. The Nomination and Remuneration Committee of the Boardcontinuously evaluated the performance of the Board and provided feedback to the Chairmanof the Board. The independent directors had a separate meeting without the presence of anynon independent directors and management and considered and evaluated the Board'sperformance performance of the Chairman and other non independent directors and sharedtheir views with the Chairman.
9. FAMILIARISATION PROGRAMME ARRANGED
FOR INDEPENDENT DIRECTORS
The company as required under Schedule IV of the
Companies Act 2013 and Listing Regulations has made arrangement to facilitate theindependent directors to familiarize with the operations of the company their rolesrights responsibilities as Directors of the company considering the nature of theindustry in which the company operates business model of the company etc. The aboveaspect can be accessed by web link http://www.karmaenergy.co/ d.html. The Company duringBoard Meetings itself updates all the Directors including Independent Directors on everyaspect of the operations of the Company. During F.Y. 2017-18 Smt. Smita V Davda who wasalready a Non-Executive Director in the Company was appointed as an Independent directorsubject to approval of the Shareholders at the ensuing Annual General Meeting.
10. EXTRACT OF ANNUAL RETURN AS PER SECTION
92(3) OF COMPANIES ACT 2013
An extract of Annual Return as at 31.03.2018 pursuant
to section 92(3) of the Companies Act 2013 and forming part of this Report is attachedas Annexure-1 to this Report.
11. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) of the Companies Act 2013 your Directors con rm:
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 safeguarding the assets of the Company for preventing and detecting fraud and otherirregularities; 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 internalfinancial 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 THECOMPANIES ACT 2013
The Board con rms 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.
13. COMPANY'S POLICY ON DIRECTORS APPOINTMENT
AND REMUNERATION INCLUDING CRITERIA
FOR DETERMINING QUALIFICATIONS POSITIVE ATTRIBUTES INDEPENDENCE OF A DIRECTOR KEYMANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The company has constituted a Nomination and
Remuneration Committee with the responsibilities of formulating the criteria fordetermining quali cations positive attributes and independence of a director andrecommend to the Board a policy relating to the remuneration for the directors KeyManagerial Personnel and other employees ; Formulating criteria for evaluation ofindependent directors and the Board ; Devising policy on Board diversity ; Identifyingpersons who are quali ed to become directors and who may be appointed in senior managementin accordance with the criteria laid down and recommend to the Board their appointment andremoval. The Company amends it policies based on developments in the regulatory forum andalso to strengthen its corporate governance compliances.
Appointment and Remuneration to Managing Director
is subject to approval by members in General Meeting and shall be in accordance withSchedule V of Companies Act 2013 and ceiling as per Section 197 of the Act. Appointmentof Independent Directors to satisfy conditions u/s.149(6) of the Companies Act 2013. TheIndependent Directors shall be governed by Code of Conduct detailed in Schedule IV of theCompanies Act 2013.
The personnel selected as Board Member or Key
Management Personnel or other senior personnel of the company is based on theirrequisite quali cations skills experience and knowledge in the relevant elds.
Remuneration policy of the Company includes xation of remuneration and annualincrements based on performance knowledge position target achievement company'sbusiness plans market environment and the remuneration is segregated into monthly xedpayments annual payments contribution to social and retirement bene ts reimbursement ofexpenses incurred for discharge of of cial duties annual bonus welfare schemes likeinsurance on health for self and family accident bene ts tying up with agencies formanaging retirement bene ts 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 THE COMPANIES ACT 2013 AND THE COMPANIES(APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) 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 a statement showingthe names and other particulars of the employees drawing remuneration in excess of thelimits top 10 employees in terms of remuneration drawn and other Disclosures pertainingto remuneration are set out in the said rules are provided in the Annual Report asAnnexure-5.
Having regard to the provisions of the proviso to Section 136(1) of the Act and asadvised the Annual Report excluding the aforesaid information is being sent to themembers of the Company.
The said information is available for inspection at the registered of ce of the Companyduring working hours and any member interested in obtaining such information may write tothe 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 mattersof Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgoare as follows :
As the Company is in the eld 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 eld of wind farm development and promoting green energyit is directly contributing to reducing dependency on fossil fuel and thus conserving thefossil 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 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.
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 speci c transactions requiring prior approval of the AuditCommittee the Board of Directors Special Resolution by members at General
Meeting determining the materiality of the transaction with the related party bothunder Companies Act and Listing Regulations and also the procedures to be followed incomplying with the statutory provisions in respect of related party transaction if any.
19. STATEMENT INDICATING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY FORTHE COMPANY
The Company has framed its Risk Management Policy detailing the identi cation ofelements of risks monitoring and mitigation of the risks. The company has laid downdetailed process in planning decision making organizing and controlling.
The Risk Management Policy has been hosted on the company's websitehttp://www.karmaenergy.co/rmp.html
20. CORPORATE SOCIAL RESPONSIBILITY OF THE
The statutory requirement of complying with Corporate
Social Responsibility of the Companies Act 2013 is not applicable to the companyduring F.Y. 2017-18.
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 company's website http://www.karmaenergy.co/wbp.html
22. MATERIAL CHANGES AND COMMITMENTS IF
ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THEEND OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THEDATE OF REPORT
There are no material changes or commitments affecting thefinancial position of thecompany which have occurred between the end of thefinancial 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 ANDCOMPANY'S OPERATION IN FUTURE
No signi cant or material orders have been passed by
the regulators or courts or tribunals impacting the going concern status and company'soperations in future.
24. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL
CONTROLS WITH RESPECT TO THE FINANCIAL STATEMENTS
The company has an internal control syste 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.
25. ISSUE OF NEW EQUITY SHARES DURING THE YEAR
The company has not issued any new equity shares during the year.
In the Tenth Annual General Meeting (AGM) of the company held on August 23 2017Messrs. Batliboi & Purohit Chartered Accountants was appointed as Statutory Auditorsof the Company for a period of ve years to hold of ce from the conclusion of the Tenth AGMuntil the conclusion of the Fifteenth AGM of the company. In terms of the provisions ofthe Companies Act 2013 appointment of Auditors are required to be rati ed by theshareholders in every AGM until the expiry of the period of original appointment as perthe existing provisions of the Companies Act. However under the Companies Amendment Act2017 the requirement of rati cation in the proviso to section 139(1) of the CompaniesAct 2013 stands deleted with effect from 07.05.2018.
In view of the above there is no need for ratification of the appointment of theStatutory Auditors in the ensuing Annual General Meeting and hence there is no item in theAgenda in respect of the same.
27. SECRETARIAL AUDIT
Pursuant to requirement of section 204 of the
Companies Act 2013 the company had appointed Shri Martinho Ferraro Practicing CompanySecretary (COP 5676) as Secretarial Auditor forfinancial year 2017-18 and whose report ofMay 9 2018 is attached as Annexure-2. There are no adverse observations made by theAuditor.
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 Clause 49 ofthe Listing Agreement. A report on Corporate Governance forms part of this report asAnnexure-3. A certi cate from the Statutory Auditors of the Company con rming 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 Agreement withthe 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.
32 . 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 ||D G Siraj |
|Date :29 May 2018 ||Chairman |