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Karma Energy Ltd.

BSE: 533451 Sector: Infrastructure
NSE: KARMAENG ISIN Code: INE725L01011
BSE 00:00 | 03 Dec 19.30 0.30
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NSE 00:00 | 03 Dec 19.55 0.45
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OPEN 19.65
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VOLUME 1654
52-Week high 36.75
52-Week low 9.01
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Mkt Cap.(Rs cr) 22
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OPEN 19.65
CLOSE 19.00
VOLUME 1654
52-Week high 36.75
52-Week low 9.01
P/E
Mkt Cap.(Rs cr) 22
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Karma Energy Ltd. (KARMAENG) - Director Report

Company director report

TO THE MEMBERS OF KARMA ENERGY LIMITED

The Directors are pleased to present this Thirteenth Annual Report and theAudited Statement of Accounts for the year ended March 31 2020.

1. FINANCIAL RESULTS

(Rs. in lakh)

Particulars 2019-2020 2018-2019
Total Income including exceptional items 3686.72 3106.65
Profit / (Loss) Before Depreciation 562.27 (87.45)
Less : Depreciation 542.46 496.48
Profit / (Loss) Before Tax 19.81 (583.93)
Less : Income Tax 127.60 9.08
Less : Deferred Tax (124.95) (167.81)
Profit / (Loss) After Tax 17.16 (425.20)
Other Comprehensive Income Net of Tax (209.24) (2169.63)
Total Comprehensive Income for the year (192.08) (2594.83)

The consolidated Financial Statements of the Company and its subsidiaries andassociates prepared in accordance with Indian Accounting Standards (IND AS) including theRules notified under the relevant provisions of the Companies Act 2013 form part of theAnnual Report and Accounts.

2. DIVIDEND AND RESERVES

Your Directors have not recommended dividend (previous year Rs. NIL per share) forfinancial year 2019-20 on account of the need to conserve the resources as the paymentsfrom the utilities have been considerably delayed in all the states where the company isselling power to state utilities and regulatory changes are adversely affecting therevenues.

No amounts have been transferred to Reserves during the year.

3. SHARE CAPITAL

The Paid Up Equity Capital of the Company as on 31.03.2020 is Rs.115699180/-. Thecompany has not issued any new equity shares during the year.

4. FIXED DEPOSITS

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

5. PERFORMANCE

During the year the Total Income of the Company was Rs.3686.72 Lakh as compared toRs.3106.65 Lakh in the previous year. The primary reason for increase is on account of thefact that there was a bumper off take of Renewable Energy Certificates (RECs) in 2019-20and revenue recorded on account of same was Rs.7.48 Crore against which the sale in2018-19 was about Rs.2.21 Crore

The Profit before depreciation registered was Rs. 562.27 Lakh (Previous year loss ofRs.87.45 Lakh). The Profit after Tax was Rs.17.16 Lakh (Previous year loss of Rs.425.20Lakh). As per the IND AS other comprehensive loss for the year 2019-2020 was Rs. 209.24Lakh (Previous year loss of Rs.2169.63 Lakh) and total comprehensive loss for the year wasRs. 192.08 Lakh (Previous Year loss of Rs. 2594.83 Lakh). The company has not transferredany 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.

With respect to realization of generation proceeds from state utilities there waslittle improvement in 2019-20 however the Company could realize old dues of 3-5 years inTamil Nadu and Andhra Pradesh in the first four months of 2020-21. As far as Company'sWind Electric Generators (WEGs) in Maharashtra is concerned the open access charges havebeen sky rocketing. The adverse effect stands compounded with restriction on Banking toone month as against 12 months which was in vogue for more than two decades. Further theintroduction of forecasting and scheduling for every 15 minutes time block and deviationsresulting in levy of penalties both at pooling station level and State periphery levelshas led to an estimate that wind site where the Company has opted access may recordnegative net earnings.

In respect of Company's WEGs in Andhra Pradesh is concerned the rough weathercontinues. The generation proceeds received only at 50% of the tariff for the periodJanuary 2011 to May 2014 has been held up due to the state bifurcation imbroglio and thematter now is pending before CERC after AP High Court rejected the writ petition.

For two phases of 3 MW each the Power Purchase Agreement (PPA) generation dues werereceived in July 2020 after nil realization for 4-5 years. For the balance 1.5 MW PPAexecution process in in progress.

6. SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES

Your company has 2 subsidiary companies viz. Batot Hydro Power Ltd and GreenweizProjects Limited.

Greenweiz Projects Limited is in the business of carrying out operation &maintenance of wind farms. This Company is in the process of being amalgamated with KarmaEnergy Ltd with effect from the Appointed date April 12019 and is awaiting Order fromNCLT.

Batot Hydro Power Limited is operating its 3.5 MW small hydro power Project. The hydropower generation in 2019-20 was at 120.86 lakh units as against 122.74 lakh units in theprevious year reflecting a marginal decrease. The profit before tax was Rs.1.46 lakh asagainst a loss of Rs.123.70 lakh in the previous year.

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 of 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-3A of the subject rules are being forwarded to all the members of the company withcomplete set of financial statements being available on the website of the companywww.karmaenergy.com. 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.

7. DIRECTORS AND KEY MANAGEMENT PERSONNEL

In accordance with the provisions of the Companies Act 1956 and the Articles ofAssociation of the Company the Director Shri Dharmendra G Siraj retires by rotation andbeing eligible has offered himself for re-appointment.

The Managing Director of the company Mr. G N Kamath was re-appointed for a period ofone year with effect from 1st December 2019 subject to approval of shareholdersby special resolution and the ensuing Annual General Meeting. The confirmation ofre-appointment of Mr. G N Kamath as Managing Director for a period of one year and abovewould be included in Notice 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 K M Vussonji Shri B S Shetty and Smt.Smita V Davda who were / are appointed for a term of five consecutive years at therelevant Annual General Meetings.

The Board of Directors had five board meetings during financial year 2019-20.

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

8. COMMITTEES

The Audit Committee members are -

Mr. B S Shetty – Independent Director - Chairman
Mr. Kishore M Vussonji – Independent Director - Member
Smt. Smita V Davda – Independent Director - Member

The Nomination and Remuneration Committee members are :

Mr. Kishore M Vussonji - Independent Director - Chairman
Mr. D G Siraj – Non Independent Director - Member
Smt. Smita V Davda – Independent Director - Member

The Stakeholders Relationship Committee members are -

Mr. Chetan D Mehra - Non Independent Director - Chairman
Mr. D G Siraj – Non Independent Director - Member
Smt. Smita V Davda – Independent Director - Member

8a. The Board of Directors had accepted all the recommendations of the AuditCommittee during the Financial Year.

9. 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 Board aswell as the Nomination and Remuneration Committee carried out the annual performanceevaluation of Board's own performance performance of the Chairman of the Board theCommittees and independent Directors without participation of the relevant Director. TheNomination and Remuneration Committee of the Board continuously evaluated the performanceof the Board and provided feedback to the Chairman of the Board. The independent directorshad a separate meeting without the presence of any non-independent directors andmanagement and considered and evaluated the Board's performance performance of theChairman and other non- independent directors and shared their views with the Chairman.

10. 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 The Company during Board Meetings itself updates allthe Directors including Independent Directors on every aspect of the operations of theCompany.

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

An extract of Annual Return as at 31.03.2020 pursuant to section 92(3) of the CompaniesAct 2013 and forming part of this Report is attached as Annexure-I to this Report.

12. 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 ;

13. 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. Further Independent Directors have complied with code forindependent Directors prescribed in Schedule IV to the Act.

14. COMPANY'S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FORDETERMINING 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. The Company amends it policies basedon developments in the regulatory forum and also to strengthen its corporate governancecompliances.

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 be governed by Code of Conduct detailed in Schedule IVof 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

15. 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 top 10 employees in terms of remuneration drawn and otherDisclosures pertaining to remuneration are set out in the said rules are provided in theAnnual Report as Annexure-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 can be made available to any member interested in obtaining suchinformation on request in writing to the Company Secretary.

16. 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.

17. 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.

18. 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.

19. 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 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.

20. STATEMENT INDICATING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY FORTHE COMPANY

The Company has framed its Risk Management Policy detailing the identification 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

21. 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. 2019-20.

22. 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

23. 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.

24. 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.

25. 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 properly safeguarded and protectedagainst loss from unauthorized use or disposal all transactions are authorized recordedand reported correctly. The company has also an internal audit system for periodical auditof the internal control systems of the company.

26. ISSUE OF NEW EQUITY SHARES DURING THE YEAR

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

27. AUDITORS

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 five years to hold office from the conclusion of the TenthAGM until the conclusion of the Fifteenth AGM of the company. The Auditors have given acertificate that they are not disqualified and are eligible to be continued as StatutoryAuditors of the Company.

28. SECRETARIAL AUDIT

Pursuant to requirement of section 204 of the Companies Act 2013 the company hadappointed Shri Martinho Ferraro – Practicing Company Secretary (COP 5676) asSecretarial Auditor for financial year 2019-20 and whose report of 28.07.2020 is attachedas Annexure-VI. There are no adverse observations made by the Auditor.

29. AUDITORS' REPORT

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

30. REPORTING OF FRAUDS

There was no instance of frauds during the year under review which required theStatutory Auditors to report there on.

31. COST RECORDS AND AUDIT THEREOF

Maintenance of Cost records pursuant to Companies (Cost Records and Audit) Rules 2014as amended from time to time is not applicable to the Company for this financial year2019-20.

32. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

As required u/s.124 of the Companies Act 2013 the unclaimed dividend amountaggregating to Rs. 133908/- pertaining to the financial year ended on 31.03.2012 lyingwith the company for the period of seven years were transferred during the financial year2019-20 to IEPF established by the Central Government.

Further as required u/s.124 of the Act 13081 equity shares in respect of whichdividend has not been claimed by the members for seven consecutive years or more havebeen transferred by the company to the Investor Education and Protection Fund Authority(IEPF) during the financial year 2019-20. Details of shares transferred have been uploadedon the website of IEPF as well as the company.

33. CREDIT RATING

Brickwork Rating has reaffirmed a rating of BWR BBB- {Outlook Stable} in respect of theborrowings by the Company from Banks.

34. CORPORATE GOVERNANCE

Your Company has complied with Corporate Governance requirements as per prescribedunder the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Areport on Corporate Governance forms part of this report as Annexure - II. A certificatefrom the Statutory Auditors of the Company confirming compliance of the CorporateGovernance is appended to the Report on Corporate Governance.

35. 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-VII.

36. 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 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.

37. DISCLOSURE ON COMPLIANCE WITH SECRETARIAL STANDARDS

The Directors confirm that the Secretarial Standards issued by the Institute ofCompanies Secretaries of India have been complied with.

38. 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 Chetan D. Mehra
Date : August 10 2020 Vice Chairman (DIN :00022021)

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