DIRECTORS' REPORT The Members The Directors of your Company are pleased to present the Twentieth Annual Report together with the Audited Financial Statements of the Company for the Year ended 31st March, 2015. 1. COMPANY'S PLANTS AND OPERATIONS At present, your Company has three operative Hydro Power Plants and two operative Thermal Power Plants, namely: i) 300 MW Jaypee Baspa-II Hydro Power Plant in Himachal Pradesh; ii) 400 MW Jaypee Vishnuprayag Hydro Power Plant in Uttarakhand; iii) 1091 MW Jaypee Karcham Wangtoo Hydro Power Plant in Himachal Pradesh; iv) 500 MW - Phase I (of 1200 MW) Jaypee Bina Thermal Power Plant in Madhya Pradesh; and v) 1320 MW Jaypee Nigrie Super Thermal Power Plant in Nigrie, Distt. Singrauli, Madhya Pradesh. Besides the above mentioned power projects, the Company has implemented Jaypee Nigrie Cement Grinding Unit at Nigrie (M.P.) with capacity of 2 MTPA, the commissioning activities of which has started and its commercial operations are expected to commence shortly. Following the cancellation of coal blocks in terms of judgment dated 25th August, 2014 read with order dated 24th September, 2014 of Hon'ble Supreme Court of India, the Central Government conducted e-auction of coal mines in which your Company participated and was allotted Amelia (North) Coal Mine in Distt. Singrauli, Madhya Pradesh, during the year. The Plant Availability and Energy Generation of each of the Hydro Power Plants & Thermal Power Plants for the Financial Year 2014-15 were as under: 300 MW Jaypee Baspa-II Hydro Power Plant The average tariff for Baspa-II Hydro Power Plant for the year under report, as per the Multi Year Tariff (MYT) order dated 15th July, 2011, order dated 6th September, 2012 and in accordance with the Power Purchase Agreement (PPA) works out to Rs.2.77 per unit. The total generation of energy during the year was 1256.96 MUs including 12% free Power to State Electricity Board/Government of Himachal Pradesh and also auxiliary consumption/transformer losses. The Net Saleable Energy during the year was 1100.47 MUs, out of which 1056.92 MUs was Primary Energy and 43.55 MUs was Secondary Energy 400 MW Jaypee Vishnuprayag Hydro Power Plant The average tariff during the year under report for 400 MW Vishnuprayag Hydro Power Plant works out to Rs. 2.47 per unit. The total generation of energy during the year was 1815.92 MUs (including 22.15 MUs deemed generation). The net saleable energy during the year was 1573.96 MUs out of which Primary Energy was 1545.87 MUs and Secondary Energy was 28.09 MUs. Generation of Power at 400 MW Jaypee Vishnuprayag H.E.P was suspended since 16th June, 2013 due to Force Majeure\event. Generation of power resumed w.e.f. 12th April, 2014 (07:45 A.M.). 1091 MW Jaypee Karcham Wangtoo Hydro Power Plant The average realization for the year under report works out to Rs.3.93 per unit. The total generation of energy during the year was 4240.25 MUs including 531.84 MUs free Power to State Government and also auxiliary consumption/transformer losses. The Net Saleable Energy during the year was 3708.41 MUs. The performance of the Company's operative Hydro Power Plants, their plant availability and the Energy Generation during the year under report was satisfactory. 500 MW Phase I (of 1200 MW) Jaypee Bina Thermal Power Plant The Directors of your Company are pleased to report that based on the tariff petition filed by the Company, MPERC has approved final tariff for Unit-I and Unit-II on 26th November, 2014. Your Company is supplying 70% of the installed capacity on long-term basis to Govt. of Madhya Pradesh/Madhya Pradesh Power Management Company Ltd., in terms of the Power Purchase Agreement executed with them and balance of installed capacity is being sold as merchant power. 1320 MW Jaypee Nigrie Super Thermal Power Plant (JNSTPP) The Directors of your Company are pleased to inform that two units of 660 MW each have successfully achieved commercial operation on 3rd September, 2014 and 21st February, 2015 respectively. Further, as mentioned above, your Company has acquired coal mine at Amelia (North) through e-auction conducted by Government of India for meeting part of the coal requirement of JNSTPP. Madhya Pradesh Electricity Regulatory Commission has approved the provisional blended tariff of JNSTPP. Your Company is supplying 37.5% of the installed capacity on long term basis to Government of Madhya Pradesh and Madhya Pradesh Power Management Company Limited in terms of Power Purchase Agreement executed with them and the balance capacity is sold on merchant basis. Jaypee Nigrie Cement Grinding Unit at Nigrie The commissioning activities of 2 MTPA Jaypee Nigrie Cement Grinding Unit at Nigrie, Distt. Singrauli in Madhya Pradesh, having estimated project cost of Rs. 335 crore has started and commercial operations are expected to commence shortly. An expenditure of approximately Rs. 299.56 crore had been incurred till 31st March, 2015. The statutory approvals required for the current stage of the project are in place. Verified/Certified Emmission Reductions (VERs/CERs) As reported earlier, 1091 MW Jaypee Karcham Hydro Power Plant has already been registered by UNFCCC as a CDM Project w.e.f 1st January, 2013 for ten years upto 31st December, 2022. The Project has been validated and verified by TUV NORD, Germany for issue of VERs for the period from 13th May, 2011 to 11th April, 2012. The project is validated by TUV NORD JI/CDM Certification Programme, Germany as compliant with World Commission on Dams (WCD) Recommendations. As reported in the Annual Report for financial year 2013-14, the Company had sold from time to time 34,79,664 VERs aggregating Rs. 28.95 crores in respect of Jaypee Baspa-II Hydro Power Plant and 94,90,664 VERs aggregating Rs. 213.24 crores in respect of Jaypee Vishnuprayag Hydro Power Plant. No further VERs could be sold in respect of the aforesaid plants during the financial year 2014-15. 2. SHARE CAPITAL The paid up equity share capital as at 31st March, 2015 is Rs. 29,38,00,30,840. During the year under review, your Company has not issued any shares with differential rights, sweat equity shares and equity shares under employees stock option scheme. Your Company has not bought back its own shares during the year under review. 3. DIVIDEND In order to conserve resources for meeting the Company's requirements for ongoing works/investment in subsidiaries executing power projects, the Directors of your Company express their inability to recommend any dividend for the Financial Year 2014-15. 4. TRANSFER TO RESERVES The Company proposes to transfer an amount of Rs. 2160 lacs to the Debenture Redemption Reserve. An amount of Rs. 11561 lacs is proposed to be retained as Surplus. 5. DIVESTMENT OF HYDRO POWER PROJECTS Following the withdrawal from the acquisition transaction of 300 MW Jaypee Baspa-II Hydro electric plant and 1091 MW Jaypee Karcham Wangtoo Hydro-electric plant by TAQA India Power Ventures Private Limited, the Board of Directors of the Company in their meeting held on 15th November, 2014 considered and approved the Scheme of Arrangement (Scheme) for transfer of businesses in relation to two of the Company's operating Hydroelectric Power plants namely, 300 MW Jaypee Baspa-II Hydro electric plant and 1091 MW Jaypee Karcham Wangtoo Hydroelectric plant, to Himachal Baspa Power Company Limited (HBPCL), a subsidiary of the Company, as a going concern, on slump exchange basis, subject to sanction of the said Scheme by the Hon'ble High Court of Himachal Pradesh at Shimla and such other approvals, as may be required. The Scheme received "No Objection" from the Stock Exchanges/ SEBI. Thereafter, the Hon'ble High Court of Himachal Pradesh at Shimla directed to convene the meetings of Shareholders and Creditors of the Company on 28th February, 2015 where the said Scheme was approved by them. The Company has filed a Petition before the Hon'ble High Court of Himachal Pradesh at Shimla for sanction of the said Scheme,which is pending as Pursuant to the approval accorded by the Board of Directors in its meeting held on 16th November, 2014, the Company entered into a Securities Purchase Agreement with JSW Energy Limited (JSW) regarding sale of securities of HBPCL to JSW for a base Enterprise Value of Rs.9700 crores, subject to mutually agreed adjustments and satisfaction of conditions precedent as per Securities Purchase Agreement & sanction of the said Scheme of Arrangement by the Hon'ble High Court. The proposed divestment of projects will help the Company in deleveraging its Balance Sheet including reduction of debt and interest outgo. 6. SUBSIDIARIES The Company has following subsidiaries: i) Jaypee Powergrid Limited; ii) Prayagraj Power Generation Company Limited; iii) Jaypee Arunachal Power Limited; iv) Sangam Power Generation Company Limited; v) Jaypee Meghalaya Power Limited; vi) Himachal Baspa Power Company Limited; and vii) Himachal Karcham Power Company Limited. The status of the projects implemented / being implemented through aforesaid subsidiaries is summarised below: i) Jaypee Powergrid Limited (JPL) Jaypee Powergrid Limited (JPL), a joint venture of Jaiprakash Power Ventures Limited and Power Grid Corporation of India Limited (a Central Government Power Utility Undertaking) has set up 217 kms. long 400 kV Quad Bundle Conductor Double Circuit Transmission Line for evacuation of Power from the pothead yard of 1091 MW Karcham Wangtoo Plant in the State of Himachal Pradesh to Abdullapur in the State of Haryana and LILO with the existing Baspa-Jhakri Double circuit line. The cumulative availability of transmission system for FY. 2014-15 was 99.98%. During the Financial Year 2014-15, JPL earned an aggregate transmission tariff of Rs.195.47 crore. JPL declared two interim dividends aggregating 13% during FY 2014-15 and paid dividend of Rs.28.86 crore to the Company. ii) Prayagraj Power Generation Company Limited (PPGCL) Prayagraj Power Generation Company Limited, acquired from Uttar Pradesh Power Corporation Limited (UPPCL) through competitive bidding process, is implementing 1980 MW (3x660 MW) Thermal Power Project (with permission to add two additional generation units of 660MW each) in Tehsil Bara of District Allahabad, Uttar Pradesh. Power Purchase Agreement with UPPCL has been executed for 25 years for 90% sale of power with balance 10% to be sold on merchant basis. Fuel supply agreement between PPGCL & NCL has been executed on 29th August, 2013 for coal linkages for Phase-I of 1980 MW. All statutory / regulatory approvals required for the project are in place. The supplies from BHEL for Boiler, Turbine and Generator for Phase-I of the Project are in progress. All major packages have been awarded and supply of materials is in progress. The delay in receiving startup power has delayed the commissioning activities of the power plant. Startup power was finally received on 10th November, 2014 and pre-commissioning activities related to Unit-1 have commenced thereafter. The revised Project Cost of Rs. 13,870 crores, as approved by the lenders, would be financed through Rs. 4,021 crores as equity and Rs. 9849 crore as debt. PPGCL is in the process of arranging additional debt requirement of Rs.1,764 crores of the revised project cost. An expenditure of approximately Rs.11,540 crore has been incurred on the implementation of the Project upto 31st March, 2015. Boiler light up of Unit-I has been achieved on 31st March, 2015. At the current stage of the implementation of the project, it is envisaged to achieve COD of the project by March, 2016. iii) Jaypee Arunachal Power Limited (JAPL) Jaypee Arunachal Power Limited (JAPL), a wholly owned subsidiary of the Company is implementing 2700 MW Lower Siang and 500 MW Hirong H.E. Projects in the State of Arunachal Pradesh. Your Company alongwith its associates will ultimately hold 89% of the Equity of JAPL and the balance 11% will be held by the Government of Arunachal Pradesh. As already reported, for the 2700 MW Lower Siang Hydro Electric Project, CEA approval was obtained in February, 2010 and the concurrence has been extended by CEA for another three years. Land acquisition is in progress. In-principle Approval has been granted and Power Purchase Agreement (PPA) is to be submitted for final approval with respect to the grant of Mega Power status of the project. Draft Rehabilitation & Resettlement Plan has been submitted to the State Government. The State Government has recommended the forest clearance case to Ministry of Environment and Forest (MOEF) and the same is under examination by Regional unit of MOEF since February, 2015. For 500 MW Hirong Hydro Electric Project, CEA has accorded Techno-Economic Concurrence on 10th April, 2013. For the Environmental/Forest Clearance of the Project, the EIA & EMP reports have been submitted to MoEF. The State Government has recommended the forest clearance case to Ministry of Environment and Forest (MOEF) and the same is under examination by Regional Unit of MOEF since February, 2015. An aggregate amount of Rs. 228.29 crore has been spent on the Projects upto 31st March, 2015. v) Sangam Power Generation Company Limited (SPGCL) Sangam Power Generation Company Limited was acquired from Uttar Pradesh Power Corporation Limited (UPPCL) through competitive bidding process, for the implementation of 1980 MW (2 x 660 MW) (with permission to add one additional generation unit of 660 MW) Thermal Power Project in Tehsil Karchana of District Allahabad, Uttar Pradesh. SPGCL executed Deed of Conveyance with Uttar Pradesh Power Corporation Limited (UPPCL) but the District Administration could not hand over physical possession of land to SPGCL due to agitation of local villagers. As such, no physical activity could be started on the ground. SPGCL has written to UPPCL and all procurers that the Power Purchase Agreement is rendered void and cannot be enforced. As such, SPGCL's claims be settled amicably for closing the agreement(s). As already reported, necessary documents in support of the company's claim have been furnished to UPPCL which is under their review. An aggregate amount of Rs. 548.60 crore has been spent on the Project upto 31st March, 2015. ) Jaypee Meghalaya Power Limited (JMPL) Jaypee Meghalaya Power Limited was incorporated by your Company as its wholly owned subsidiary to implement 270 MW Umngot H.E.P. in the Umngot River Basin of Meghalaya and 450 MW Kynshi-II Hydro-Electric Power Projects in the Kynshi River Basin on BOOT (Build, Own, Operate and Transfer) basis. Your Company along with its associates will ultimately hold 74% of the equity of JMPL and the balance 26% will be held by the Government of Meghalaya. With respect to 450 MW Kynshi-II, the field work of survey & investigation and EIA studies have already been completed. Drilling and drifting in power house area have been completed. The revised proposal for Kynshi-II HEP with involvement of lesser forest area has been submitted to State Government and Ministry of Environment and Forest (MOEF). Based on the observation of MOEF, Uranium Corporation of India issued No Objection Certificate with respect to uranium deposit in the vicinity of the Project. Accordingly revised proposal for issuance of terms of reference for Environment Impact Assessment studies is under preparation. The control levels i.e. full reservoir level & tail reservoir level for Kynshi-II Project have been approved by State Government. Approval of Central Electricity Authority has been accorded to the water availability series for power potential studies. With respect to the 270 MW Umngot H.E.P, the State Government has advised that the project will not be operationalized as per Memorandum of Agreement till further orders. The matter is being pursued with the State Government for permission to resume the works. An aggregate amount of Rs. 8.50 crore has been spent on the Projects upto 31st March, 2015. vi) Himachal Baspa Power Company Limited (HBPCL) Himachal Baspa Power Company Limited (HBPCL) was incorporated on 14th March, 2014 and it received Certificate of Commencement of Business on 24th March, 2014. HBPCL is 99% subsidiary of the Company. As mentioned hereinabove, pursuant to the proposed Scheme of Arrangement between the Company and HBPCL, 300 MW Jaypee Baspa-II Hydro Power Plant and 1091 MW Jaypee Karcham Wangtoo Hydro Power Plant are proposed to be transferred and vested in this company after the Scheme becomes effective. vii) Himachal Karcham Power Company Limited (HKPCL) Himachal Karcham Power Company Limited (HKPCL) was incorporated on 14th March, 2014 and it received Certificate of Commencement of Business on 24th March, 2014. HKPCL is a wholly owned subsidiary of the Company and presently it is not carrying on any operations. 7. REPORT ON PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES No company has ceased to be subsidiary, associate or joint venture of the Company during the year under review. The performance and financial position of each of the subsidiaries, associates and joint venture company for the year ended 31st March, 2015 is attached in the prescribed format AOC-1 as set out in "Annexure-A" and forms part of the Directors' Report. In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on the website www.jppowerventures.com . These documents will also be available for inspection during business hours at the Registered Office of your Company. The Policy for determining material subsidiaries as approved may be accessed on the Company's website at the weblink: http://jppowerventures.com/index.php/policies>. 8. DIRECTORATE AND KEY MANAGERIAL PERSONNEL 8.1 During the year under report, the following changes took place in the Board of the Company: a) As already reported in the Annual Report for Financial Year 2013-14, Shri S.D. Nailwal and Ms. Sunita Joshi were appointed as Additional Directors with effect from 17th May, 2014 and their appointments/confirmation as Directors were approved by the members in the Annual General Meeting held on 20th September, 2014. b) Dr.R.C.Vaish ceased to be Director consequent upon his resignation w.e.f 29th September, 2014; c) Shri S.C.Bhargava ceased to be Director consequent upon his resignation w.e.f 31st March, 2015; d) Shri K.N. Bhandari, Shri Arun Balakrishnan, Shri S.L. Mohan and Shri Atanu Sen have been appointed as Additional Directors (Independent) w.e.f 30th September, 2014. In accordance with the provisions of Section 149 and other applicable provisions of the Companies Act, 2013, the Resolutions for approval of their respective appointment as Independent Directors have been included in the Notice for ensuing Annual General Meeting. e) Shri Subroto Gupta ceased to be the Nominee Director consequent upon his resignation / withdrawal of his nomination by IDBI Bank w.e.f. 6th September, 2014 and Shri Umesh Jain has been appointed as Nominee Director consequent upon his nomination by IDBI Bank Ltd. w.e.f. 30th September, 2014; and f) Shri K.P. Rau has been appointed as Additional Director (Independent) w.e.f 30th May, 2015 in place of Shri S.C. Bhargava and the Resolution for his appointment as Independent Director has been included in the Notice for ensuing Annual General Meeting. The Board places on record its appreciation for the valuable contribution of Dr. R. C. Vaish, Shri S. C. Bhargava and Shri Subroto Gupta during their respective tenures as Directors of the Company. 8.2 Shri Manoj Gaur, Shri Suren Jain and Shri Praveen Kumar Singh would retire as Directors by rotation at the ensuing Annual General Meeting and being eligible, they offer themselves for re-appointment. 8.3 During the year under report, the Board met seven times, the details whereof are given in Report on Corporate Governance. The meetings of Board of Directors were held on 17th May, 2014, 26th July, 2014, 30th September, 2014, 8th November, 2014, 15th November, 2014, 16th November, 2014 and 9th February, 2015. 8.4 All Independent Directors have given declaration that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. 8.5 Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the Committees constituted by it. The manner in which the formal annual evaluation has been carried out has been explained in the Report on Corporate Governance. 8.6 Pursuant to the provisions of Section 203 of the Companies Act, 2013 read with Rule 8 & Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has confirmed and noted Shri Sunil Kumar Sharma, Vice-Chairman & CEO, Shri Suren Jain, Managing Director & CFO, Shri Praveen Kumar Singh, Whole-time Director and Shri M. M. Sibbal, Senior General Manager and Company Secretary as Key Managerial Personnel of the Company. 8.7 Nomination & Remuneration Policy: The Board has, on the recommendation of the Nomination & Remuneration Committee adopted a policy for selection and appointment of Directors, Senior Management and their remuneration. Brief features of the said Policy are: a) Nomination and Remuneration Committee shall formulate the criteria for determining qualifications, positive attributes and independence of a Director; b) Nomination and Remuneration Committee shall identify persons who are qualified to become Director and persons who may be appointed in Key Managerial and Senior Management positions; c) While selecting Independent Directors, the Nomination and Remuneration Committee shall identify persons of integrity who possess relevant expertise and experience required for the position; d) Non-Executive/Independent Director may receive remuneration by way of sitting fees for attending meetings of Board or Committee thereof, an amount as may be approved by the Board of Directors within the limits prescribed under the Companies Act, 2013 and the Rules made thereunder, provided that the amount of such fees shall not exceed Rs. one lac per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time. The sitting fees for Independent Directors and Woman Directors shall not be less than the sitting fee payable to other directors; e) An Independent Director shall not be entitled to any stock option of the Company; f) Other employees of the Company shall be paid remuneration as per the Company's HR policies. The break up of the pay scale and quantum of perquisites including employer's contribution to PF, pension scheme, medical expenses, etc. shall be as per the Company's HR policy. The Company shall reimburse actual expenditure incurred by the Directors in the performance of their duties as per the rules and policies of the Company. Remuneration of other employees shall be reviewed/ decided on an annual basis or earlier if deemed necessary, based on performance appraisal of individual employees taking into account several factors such as job profile, qualifications, seniority, experience, commitment including time commitment, performance and their roles and duties in the organisation. g) The age, term of appointment and retirement of Managing Director/Whole-time Director shall be determined in accordance with the provisions of Companies Act, 2013 read with Rules made thereunder; h) Managing Director/Whole-time Director and Key Managerial Personnel shall be paid the remuneration within the overall limit prescribed under the Companies Act, 2013 and the Rules made thereunder as recommended by the Nomination and Remuneration Committee subject to the approval of the Board; i) The Company shall provide suitable training to Independent Directors to familiarize them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the company operates, business model of the Company, etc.; 9. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES All Related Party Transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. During the year, the Company had not entered into any contract/ arrangement/transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transaction. The policy on Related Party Transactions and dealing with Related Party Transactions as approved by the Board may be accessed on the Company's website at <http://jppowerventures.com/index.php/policies>. The details of Related Party Transactions as required under Accounting Standard-18 are provided in the accompanying financial statements forming part of this Annual Report. Form AOC-2 pursuant to Section 134 (3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as "Annexure-B" to this Report. 10. US$ 200 MILLION FCCBs The Company issued 5% Foreign Currency Convertible Bonds (FCCBs) aggregating to US$ 200 million on 12th February, 2010 which were due for redemption on 13th February, 2015. No conversion of bonds into equity shares had taken place upto 13th February, 2015. The Company entered into a Standstill and Voting Agreement on 3rd March, 2015 with the Bondholders for reschedulement of FCCBs which was subsequently approved by the Bondholders of 93.48% of outstanding principal amount of Bonds and also by Reserve Bank of India. The details in respect of the reschedulement are given in the Notes to the Financial Statements. 11. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant and material orders passed by the Regulators/Courts which may impact the going concern status of the Company and its future operations. 12. AUDITORS 12.1 Statutory Auditors As the members are aware in accordance with the provisions of Section 139 of the Companies Act, 2013 and the Rules made thereunder, M/s. R. Nagpal Associates, Chartered Accountants (Firm Registration No. 002626N), were appointed as Statutory Auditors of the Company in the last Annual General Meeting (AGM) for a period of three consecutive years till the conclusion of Twenty Second AGM of the Company to be held in the year 2017. The appointment of Statutory Auditors has to be ratified at every AGM. The Statutory Auditors, being eligible, offer themselves for re-appointment. The Company has obtained a written consent and a certificate from the Statutory Auditors to the effect that their re-appointment, if made, would be in accordance with the conditions as may be prescribed and they fulfill the criteria laid down in Section 141 of the Companies Act, 2013. Based on the recommendations of the Audit Committee, the Board has recommended the ratification of appointment of M/s. R. Nagpal Associates, Chartered Accountants as Statutory Auditors of the Company to hold office till the conclusion of theTwenty Second Annual General Meeting to be held in the year 2017, subject to ratification of their appointment in every AGM. 12.2 Cost Auditors For the financial year 2014-15, the Board of Directors of the Company had re-appointed, on the recommendation of the Audit Committee, M/s. Kabra & Associates, Cost Accountants (Firm Registration No. 0075) as Cost Auditors for auditing the Cost Accounts in respect of 'Generation, transmission, distribution and supply of Electricity', other than for Captive Generation' pertaining to various Power Plants of the Company. The Cost Audit Report relating to the Power plants of the Company, for the Financial Year ended 31st March, 2014 has been filed within due date, with the Cost Audit Branch of the Ministry of Corporate Affairs. The Cost Audit Report for the Financial Year 2014-15 will be filed within the due date. For the Financial Year 2015-16, the Board of Directors of the Company have on the recommendation of Audit Committee, re-appointed M/s. Kabra & Associates, Cost Accountants as Cost Auditors of the Company for auditing the Cost Records relating to 'Generation, transmission, distribution and supply of Electricity', other than for Captive Generation and the Resolution for ratification of their remuneration has been included in the Notice for ensuing Annual General Meeting. 12.3 Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board on the recommendations of the Audit Committee, has appointed M/s. SGS Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year ended 31st March, 2016. Secretarial Audit Report for the financial year ended on 31st March, 2015, issued by M/s. SGS Associates, Company Secretaries, in form MR-3 forms part of this report and marked as "Annexure-C". The said report does not contain any qualification or observation requiring explanation or comments from Board under section 134(3)(f)(ii) of the Companies Act, 2013. 13. AUDITORS' REPORT The observation of Auditors' and Notes to the financial statements are self- explanatory. The Directors wish to state that the qualification of Statutory Auditors in para (ix) to Annexure referred to in para 1 of their Report on the stand-alone financial statements pertains to repayment of principal amount of Loan and interest on loans. The Directors wish to state that outstanding amount of loans from banks and financial institutions as mentioned in current liabilities (current maturities of long term debts) as at 31st March, 2015 includes repayment of principal amount of loans overdue of Rs. 9300 lacs which was due for repayment on 31st March, 2015. Further, the interest of Rs.13463 lacs on various loans for the period February and March, 2015 was overdue for payment as on 31st March, 2015. This was on account of general economic conditions which lead to inordinate delay in realization of payments against sale of power from power procurers. On the date of adoption of Accounts by the Board of Directors, principal amount of loans overdue as above were brought down to Rs. 5000 lacs, while interest overdue as above for February and March, 2015 had been fully cleared. The Directors further wish to state that the "Qualified Opinion" of the Independent Auditors' Report on consolidated financial statements pertains to wholly owned subsidiary of the Company i.e. Sangam Power Generation Company Limited (SPGCL), incorporated for implementation of Thermal Power project at Karchana, Distt. Allahabad (U.P.) with 2 x 660 MW capacity. SPGCL had executed conveyance deeds in respect of the land for the project but physical possession of the land could not be handed over by the District Administration due to continuous agitation by the local villagers. Despite various steps having been taken by SPGCL for implementation of the project, no physical activity could be started on the ground because of non-availability of the land for the reasons beyond the control of SPGCL. SPGCL is in correspondence with U.P Power Corporation Limited and State Government to close Power Purchase Agreement/ other agreements and refund of amounts incurred by it and the matter is under examination of the authorities. However, the management of SPGCL does not expect any material adjustment in carrying value assets including Capital Work in Progress. The Auditors were unable to comment on whether any adjustment in carrying value of assets and liabilities were to be made and its possible effects on SPGCL. However, the management of SPGCL expects that the claims filed by SPGCL would be amicably settled soon. In reply to para relating to Emphasis of matter of their Report on consolidated financial statements, it is stated here that since SPGCL is lying dormant without any source of income, it could not appoint any Key Managerial Personnel to meet the requirements of Companies Act, 2013. 14. EXTRACT OF ANNUAL RETURN Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended 31st March, 2015 made under provisions of Section 92(3) of the Act is attached as "Annexure-D" which forms part of this Report. 15. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS Your Company being an infrastructure Company, the provisions of Section 186 of the Companies Act, 2013 except for making investments are not attracted. Particulars of investments are given in Note Nos. 15 & 18 to the financial statements. However, particulars of loans given, guarantees given and securities provided covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Statements. 16. RISK MANAGEMENT The Company has developed and implemented a Risk Management Policy which inter-alia: a) defines framework for identification, assessment, monitoring, mitigation and reporting of risks; and b) ensures that all the current and future material risk exposures are identified, assessed, quantified, appropriately mitigated, minimized, managed and critical risks which impact the achievement of Company's objective or threatens its existence are periodically reviewed. 17. MATERIAL CHANGES AND COMMITMENTS In terms of Section 134(3) (i) of the Companies Act, 2013, it is reported that, except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company's financial position have occurred between the end of the financial year of the Company and date of this report. 18. CORPORATE SOCIAL RESPONSIBILITY As part of its initiatives under "Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of promoting education, employment oriented vocational training, healthcare, rural area development, empowerment of women, environment sustainability etc. These projects are in accordance with the activities covered under Schedule VII of the Companies Act, 2013. The Annual Report on CSR activities is annexed herewith as "Annexure-E". 19. CORPORATE GOVERNANCE Report on Corporate Governance and Management Discussion & Analysis Report, in terms of Clause 49 of the Listing Agreement are annexed and form part of this Annual Report. A certificate from the Auditors confirming compliance with the conditions of Corporate Governance is also annexed. 20. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors, based on the representation received from the operating management, certification by CEO and CFO to the Board of Directors and after due enquiry, confirm in respect of the Audited Annual Accounts for the year ended 31st March, 2015 that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed and that there were no material departures; b) the Directors had, in consultation with the Statutory Auditors, selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the year ended 31st March, 2015 and the profit of the Company for that period; c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the Directors had prepared the annual accounts on a going concern basis; e) the Directors had laid proper internal financial controls to be followed and that such internal financial controls were adequate and were operating effectively; and f) Directors had devised proper systems to ensure compliance with the provisions of all applicable laws that such systems were adequate, operating effectively and the same are being strengthened on continuous basis from time to time. 21. WHISTLE BLOWER POLICY AND VIGIL MECHANISM The Company has in terms of the provisions of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, formulated Whistle Blower Policy and Vigil Mechanism for Directors and employees under which protected disclosures can be made by a whistle blower. 22. INTERNAL FINANCIAL CONTROL The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for insufficiency or inadequacy of such controls. The information about internal financial controls is set out in the Management Discussion & Analysis Report which forms part of this Report. 23. DEPOSITS The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the details relating to deposits as also requirement for furnishing of details of deposits which are not in compliance with Chapter V of the Act is not applicable. 24. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES In terms of the provisions of Section 197(12) of the Companies Act, 2013 ("the Act") read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules forms part of this Annual Report and is provided as "Annexure- F(I)" in this report. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as "Annexure- F(II)" to this Report. 25. PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134 of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure-G". 26. ACKNOWLEDGEMENT The Board places on record its sincere appreciation and gratitude to various Departments and Undertakings of the Central Government, Govt. of Himachal Pradesh, Govt. of Uttarakhand, Govt. of Uttar Pradesh, Govt. of Madhya Pradesh, Govt. of Arunachal Pradesh, Govt. of Meghalaya, HPSEB, UPPCL, MPPMCL, APTEL, CERC, HPERC, UPERC, MPERC, Financial Institutions, Banks, Rating Agencies and other authorities for their continued co-operation and support to the Company. The Board sincerely acknowledges the faith and confidence reposed by the members in the Company. For and on behalf of the Board MANOJ GAUR Chairman [DIN: 00008480] Place : Noida Date : 30th May, 2015 |