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Adani Power

BSE: 533096|NSE: ADANIPOWER|ISIN: INE814H01011|SECTOR: Power - Generation & Distribution
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Directors Report Year End : Mar '16    « Mar 15
Dear Shareholders,
 
 The Directors are pleased to present the 20th Annual Report along with
 the audited financial Statements of your Company for the financial year
 ended 31st March, 2016
 
 Financial Performance:
 
 The financial highlight is depicted below:
 
                                                       (Rs. in crores)  
 
 Particulars              Consolidated Results      Standalone Results
 
                           2015-16     2014-15     2015-16      2014-15
 
 Revenue from operations 25,231,57   18,823,73   12,704,15    10,624,61
 
 Other Income               201,78      241,41      522,86       412,40
 
 Total revenue           25,433.35   19,065.14   13,227.01    11,037.01
 
 Operating and 
 Administrative 
 expenses                16,678,63   13,664,36    9,327,06     8,162,57
 
 Operating Profit 
 before Interest, 
 Depreciation and Tax     8,754.72    5,400.78    3,899.95     2,874.44
 
 Depreciation and
 Amortization expenses    2,336,17    1,818,19      976,93       881,37
 
 Profit/(Loss) before
 finance costs and 
 exceptional items        6,418.55    3,582.59    2,923.02     1,993.07
 
 Finance Costs            5,964,16    4,863,53    2,951,50     2,497,62
 
 Exceptional Item                -       16,85           -      (211,87)
 
 Prof it/(Loss) 
 before tax                 454.38   (1,297.79)     (28.48)     (292.68)
 
 Tax expenses               (34,10)          -      (34,10)           -
 
 Net Profit /(Loss) 
 before Minority 
 Interest                   488.48    (1,297.79)      5.62      (292.68)
 
 Add/(Less) share of 
 Minority Interest               -            -          -            -
 
 Net Profit /(Loss) 
 for the year after 
 Minority Interest          488.48    (1,297.79)      5.62      (292.68) 
 
 Surplus brought 
 forward from 
 previous year                   -            -          -            -
 
 Balance available 
 for appropriation          488.48    (1,297.79)      5.62      (292.68)
 
 Profit/(Loss) after Tax    488.48    (1,297.79)      5.62      (292.68)
 
 Profit/(Loss) after 
 tax from 
 discontinuing 
 operations                      -       482,16          -       224,05
 
 Profit / (Loss) from 
 Total Operations 
 for the year               488.48      (815.63)      5.62       (68.63)
 
 Balance carried to 
 Balance Sheet              488.48      (815.63)      5.62       (68.63)
 
 Performance Highlights:
 
 Consolidated:
 
 The key aspects of your Company''s consolidated performance during the
 financial year 2015-16 are as follows
 
 Revenue
 
 The consolidated total revenue of your Company for FY 2015-16 stood at
 Rs. 25,433,35 crores as against Rs. 19,065,14 crores for FY 2014-15
 showing an increase of 33%, The revenue is higher in FY 2015-16 due to
 improved operational performance and additional revenue generated by
 Udupi Power Corporation Limited (UPCL) which was acquired during the FY
 2015-16, The increase in revenue was partially offsetted by revenue
 from transmission business which got demerged in FY 2014-15,
 
 Your Company has sold 64,6 billion units of electricity during FY
 2015-16 as against 50,7 billion units in FY 2014-15 with increase in
 Plant Load Factor (PLF) from 70% in the previous year to 76% in the
 year 2015-16 During the year, Mundra Plant''s generation of 33,1 billion
 units is the highest by any thermal power plant in the country
 
 Operating and Administrative Expenses
 
 The consolidated Operating and administrative expenses of Rs. 16,678,63
 crores during FY 2015-16 which has increased by 22% from Rs. 13,664,37
 crores in FY 2014-15, is mainly due to higher power generation and
 expenses of UPCL, acquired during the year, The percentage of Operating
 and administrative expenses to total revenue has decreased to 66% in FY
 2015-16 from 72% in FY 2014- 15, largely due to reduction in coal
 prices and higher operational efficiency
 
 Depreciation and Amortization Expenses
 
 The consolidated Depreciation and Amortization Expenses of Rs. 2,336,17
 crores during FY 2015-16 which has increased by 28% from Rs. 1818,99
 crores in FY 2014-15, mainly due to Depreciation and Amortization
 Expenses of UPCL
 
 Finance Costs
 
 The consolidated Finance costs of Rs. 5964,16 crores during FY 2015-16
 which has increased by 23% from Rs. 4863,53 crores in FY 2014-15,
 mainly due to finance cost on borrowings of UPCL and interest on
 borrowings during the year to finance the acquisition plan of the
 Company, There has been reduction in interest expense in FY 2015-16,
 due to refinancing of rupee term loans of the Company and its
 subsidiaries
 
 Net Profit/ (Loss)
 
 Consolidated Net Profit for the year wasRs. 488,48 crores as compared
 to Net Loss of Rs. 815,63 crores in FY 2014- 15, During the year,
 profit after tax (PAT) includes PAT of Rs.151 crores contributed by
 UPCL and improved operating margins and higher sales volume
 
 Standalone:
 
 The key aspects of your Company''s standalone performance during the
 financial year 2015-16 are as follows
 
 Revenue
 
 The total revenue of your Company for FY 2015-16 stood at Rs. 13,227,01
 crores as against Rs. 11,037,01 crores for FY 2014-15 showing an
 increase of 20% on account of higher sale of units from 27,7 billion
 units to 30,3 billion units, The revenue during FY 2015-16 is also
 higher on account of revenue due to recognition of revenue in the
 nature of change in law,
 
 Operating and Administrative Expenses
 
 The Operating and administrative expenses ofRs. 9,327,06 crores during
 FY 2015-16 which has increased by 14% from Rs. 8,162,57 crores in FY
 2014-15, is mainly due to higher power generation, The percentage of
 Operating and administrative expenses to revenue has decreased to 71%
 in FY 2015-16 from 74 % in FY 2014-15, largely due to reduction in coal
 prices and higher operational efficiency
 
 Depreciation and Amortization Expenses
 
 The consolidated Depreciation and Amortization Expenses of Rs. 976,93
 crores during FY 2015-16 has increased by 11% from Rs. 881,37 crores in
 FY 2014-15,
 
 Finance Costs
 
 The Finance costs increased by 18% from Rs. 2,497,62 crores in in FY
 2014-15 to Rs. 2,951,50 crores in FY 2015-16, Finance costs has
 increased mainly on account of interest on borrowings during the year
 to finance the acquisition plan of the Company, There has been
 reduction in interest expense in FY 2015-16, due to refinancing of
 rupee term loans,
 
 Net Profit/ (Loss)
 
 Net Profit after tax for the year was Rs. 5,62 crores as compared to
 Net Loss of Rs. 68,63 crores in FY 2014-15 The increase in net profit
 during the year is mainly due to improved operating margins and higher
 sales volume
 
 The Company (along with subsidiaries) continued to maintain its
 leadership position as India''s largest private sector power producer
 with installed capacity of 10,480 MW. The Company also set a record in
 power generation by achieving full load of 4620 MWatMundra power plant,
 Despite slowdown experienced by various industrial sectors, your
 Company could achieve this,
 
 The detailed financial and operational performance of your Company has
 been comprehensively discussed in the Management Discussion and
 Analysis Report, which forms part of this Report,
 
 Material Changes and Commitments:
 
 The material change which has occurred between the end of financial
 year of the company and the date of this report is the receipt of the
 APTEL order dated 7th April, 2016 in the ongoing matter of Compensatory
 Tariff, the details and the financial effect of which is described in
 Note No, 34 of the Notes to the consolidated audited financial
 statements and in Note No, 32 of the Notes to the standalone audited
 financial statements,
 
 Key Developments:
 
 Demerger of Power Undertaking of Adani Enterprises Limited with the
 Company:
 
 As per the approved Scheme of arrangement, Solar Power Undertaking of
 Adani Enterprises Limited (AEL) has been merged into the Company along
 with its assets and liabilities from the appointed date of 1st April,
 2015, Pursuant to the merger of the Solar Power Undertaking of AEL into
 Company and based on fair valuation done, the Company has issued and
 allotted 63,916,831 new equity shares of Rs. 10 each to the equity
 shareholders of AEL in the ratio of 18596 equity shares in Company for
 every 10000 equity shares held by the equity shareholder in AEL, The
 equity shares held by AEL in Company has been cancelled on approval of
 the said scheme by the Hon''ble High Court of Gujarat vide its order
 dated 7th May 2015,
 
 The Scheme, with effect from 1st April 2015, inter alia, provided for
 Demerger of the solar power Undertaking of AEL comprising the
 undertaking, businesses, activities, operations, assets (moveable and
 immoveable) and liabilities pertaining to the Bitta Solar Plant and the
 shareholding of AEL into the Company,
 
 Accordingly, 204,52,06,831 equity shares of Rs. 10/- each of the
 Company were issued and allotted to the eligible shareholders of AEL on
 8th June, 2015, Further, pursuant to the scheme existing holding of
 198,12,90,000 equity shares of Rs. 10/- each of AEL in the Company was
 extinguished and cancelled
 
 The equity shares of the Company so issued pursuant to the Scheme were
 listed and admitted for trading on BSE Limited and National Stock
 Exchange of India Limited with effect from 15th June, 2015
 
 Acquisition of Udupi Power Corporation Limited (UPCL)
 
 During the year, the Company has completed the acquisition of Udupi
 Power Corporation Limited (UPCL) by purchase of 100% equity shares and
 preference shares at an aggregate cost of Rs. 2,256,03 Crores,
 Consequently UPCL has become the wholly owned subsidiary of Adani Power
 Limited w.e.f. 20th April, 2015, UPCL is located in state of Karnataka
 and has operational thermal power generation capacity of 1200 MW with
 full capacity tied up under long term PPAs and having a captive jetty
 of 4 million tons per annum
 
 Acquisition of Korba West Power Company Limited (KWPCL)
 
 Your Company had executed a share purchase agreement with the owners of
 Korba West Power Company Limited (KWPCL) for acquisition of 100% stake
 in KWPCL, during the previous year, KWPCL owns a 600 MW Coal based
 thermal power plant, in state of Chhattisgarh, The said acquisition is
 subject to certain consents pending to be received
 
 Allotment of Jitpur Coal Block
 
 During the year, vesting of the coal block to the company at Jitpur in
 the state of Jharkhand has been completed For the said purpose, the
 Company executed The Coa Mine Development and Production Agreement
 with the Government of India in the previous year, The company has
 already initiated the process for development of the said mine
 
 Preferential Issue of Equity Shares
 
 During the year under review, the Company made preferential issue of
 39,81,00,000 equity shares to Promoter / Promoter group at Rs. 28/-
 each (including premium of Rs. 18/- each) as per the SEBI (ICDR)
 Regulations and other applicable provisions of the Companies Act, 2013,
 The entire issue proceeds were utilized for Augmenting Long Term
 Capital, to repay the Group Company Loans and for general corporate
 purpose
 
 Consequent upon preferential issue of equity shares, the paid up share
 capital of the Company has been increased from Rs. 2,935,84/- crores
 (2,93,58,38,941 equity shares of Rs. 10/- each) to Rs. 3,333,94 crores
 (3,33,39,38,941 equity shares of Rs. 10/- each)
 
 Preferential Issue of Convertible Warrants
 
 The preferential issue of 52,30,00,000 Warrants convertible into
 equivalent number of equity shares of Rs.  10 each at a price of Rs.
 32,54/- each (including premium of Rs. 22,54/- each) was approved by
 the board of directors on 6th April, 2016, for issuance to the promoter
 group entities as per the provisions of SEBI (ICDR) Regulations and in
 accordance with the applicable provisions of the Companies Act, 2013,
 The approval of the shareholders is in process, The funds to be availed
 by this preferential issue is proposed to be utilized for augmenting
 long term capital, to repay the group company loans and genera
 corporate purpose as explained in the postal ballot notice sent to the
 members for their approval
 
 Dividend:
 
 In view of inadequate net profit of Rs. 5,62 crores for the financial
 year 2015-16 and due to accumulated losses, your Directors have not
 recommended any dividend on Equity Shares for the year under review,
 
 Fixed Deposits:
 
 During the year under review, your Company has not accepted any fixed
 deposits within the meaning of Section 73 of the Companies Act, 2013
 read with rules made there under
 
 Particulars of loans, guarantees or investments:
 
 The provisions of Section 186 of the Companies Act, 2013, with respect
 to a loan, guarantee or security is not applicable to the Company as
 the Company is engaged in providing infrastructural facilities and is
 exempted under Section 186 of the Companies Act, 2013, The details of
 investments made during the year under review are disclosed in the
 financial statements,
 
 IND AS road map
 
 Your company and its subsidiaries will adopt IND AS with effect from
 1st April, 2016 pursuant to Ministry of Corporate Affairs notification
 dated 16th February, 2015 notifying the Companies (Indian Accounting
 Standards) Rules, 2015, In 2015-16, your Company has substantially
 completed the assessment of the impact of the change to IND AS,
 
 Vigil Mechanism / Whistle Blower Policy
 
 The Company has adopted a whistle blower policy and has established the
 necessary vigil mechanism for employees and Directors to report
 concerns about unethical behaviour, No person has been denied access to
 the Chairman of the Audit Committee, The said policy is uploaded on the
 website of the Company at http:// www. adani power,
 com/investors/investor-down load
 
 Subsidiary Companies:
 
 Your Company has total 6 (direct and indirect) subsidiaries as on 31st
 March, 2016
 
 During the year under review, the following changes have taken place
 
 A, During the year, the Company has completed the acquisition of Udupi
 Power Corporation Limited (UPCL), due to which UPCL has become the
 wholly owned subsidiary of Adani Power Limited w.e.f. 20th April, 2015,
 
 B, Adani Power (Jharkhand) Limited (APJL) was incorporated on 18th
 December, 2015 as Wholly Owned Subsidiary of the Company,
 
 Financial Performance of subsidiaries
 
 - Adani Power Maharashtra Limited (APML): Adani Power''s Tiroda Power
 Plant has a total installed capacity of 3,300 MW. PLF for the year was
 69%, The Tiroda plant contributed Rs. 7,884 cr, towards the total
 consolidated revenue, Rs.2,813 cr, towards the consolidated EBIDTA and
 Rs. 139 cr, to the consolidated profit during the year,
 
 - Adani Power Rajasthan Limited (APRL): Adani Power''s Kawai Power Plant
 has a total installed capacity of 1,320 MW, PLF for the year was 75%,
 The Kawai plant contributed Rs. 4,159 cr, towards the total
 consolidated revenue, Rs. 1,447 cr, towards the consolidated EBIDTA and
 Rs. 260 cr, profit to the consolidated profit during the year,
 
 - Udupi Power Corporation Limited (UPCL): Adani Power''s Udupi Power
 Plant has a total installed capacity of 1,200 MW, PLF for the year was
 77%, The Udupi plant contributed Rs. 2,953 cr, towards the total
 consolidated revenue, Rs. 1,148 cr, towards the consolidated EBIDTA and
 Rs. 151 cr, profit to the consolidated profit during the year,
 
 - Consolidated financial statements
 
 The audited consolidated financial statements of your Company as on
 31st March, 2016, have been prepared in accordance with the relevant
 Accounting Standards issued by the Institute of Chartered Accountants
 of ndia and Regulation 33 of the SEBI (Listing Obligations and
 Disclosure Requirements) Regulations, 2015 and also in accordance with
 the applicable provisions of the Companies Act, 2013 and form part of
 this Annual Report, The Financial Statements as stated above are also
 available on the website of the Company and can be accessed at
 http://www.adanipower.com/investors/ financials,
 
 Pursuant to the provisions of Section 129, 134 and 136 of the Companies
 Act, 2013 read with rules framed thereunder and pursuant to Regulation
 33 of the SEB (Listing Obligations and Disclosure Requirements)
 Regulations, 2015, the Company had prepared consolidated financial
 statements of the Company and its subsidiaries and a separate statement
 containing the salient features of financial statements of
 subsidiaries, joint ventures and associates in Form AOC-1 are forming
 part of the Annual Report,
 
 The annual financial statements and related detailed information of the
 subsidiary companies shall be made available to the shareholders of the
 holding and subsidiary companies seeking such information on all
 working days during business hours, The financial statements of the
 subsidiary companies shall also be kept open for inspection by any
 shareholder/s during working hours at the Company''s registered office
 and that of the respective subsidiary companies concerned The separate
 audited financial statements in respect of each of the subsidiary
 companies are also available on the website of the Company, In
 accordance with Section 136 of the Companies Act, 2013, the audited
 financial statements, including consolidated financial statements and
 related information of the Company and audited financial statements of
 each of its subsidiaries, are available on our website,
 www.adanipower.com Details of developments of subsidiaries of the
 Company are covered in the Management Discussion and Analysis Report,
 which forms part of this Report, Directors and Key Managerial
 Personnel:
 
 Appointment of Directors:
 
 Mr, Raminder Singh Gujral(DIN: 07175393) was appointed as a Director of
 the Company in the previous Annual General Meeting of the Company held
 on 11th August, 2015 to hold office as an independent Director for a
 period of 5 (five) consecutive years up to August, 2020
 
 Pursuant to the provisions of Section 149 of the Act, Mrs, Nandita
 Nagpal Vohra was appointed as a Director of the Company at the Annual
 General Meeting of the Company held on 11th August, 2015 to hold office
 as an Independent Director, Mrs, Nandita Vohra was earlier appointed as
 an Additional Director w.e.f. 30th March, 2015,
 
 The Board welcomes him and looks forward to his valued contribution to
 your Company,
 
 Cessation of Directorship:
 
 Mr, Vijay Ranchan (DIN: 01602023) has been retired and ceased to be a
 Director w.e.f. 1st January, 2016, The Board places on record its
 sincere appreciation for the valuable contribution and guidance
 rendered by Mr, Vijay Ranchan during his tenure with the Company,
 
 Directors retire by rotation:
 
 Pursuant to the requirements of the Companies Act, 2013 and Articles of
 Association of the Company Mr. Vneet S Jaain (DIN: 00053906) retires by
 rotation at the ensuing Annual General Meeting and being eligible for
 re-appointment, has shown his willingness for re-appointment,
 
 The Board recommends the re-appointment of above director for your
 approval
 
 Mr. Vneet S Jaain (DIN: 00053906) who was earlier re-appointed as
 Executive Director of the Company at the previous Annual General
 Meeting of the Company held on 11th August, 2015 for a further period
 of three years i.e. up to 13th May, 2018, has been re-designated as
 Whole-time Director of the Company during the year under review,
 
 Brief details of Mr, Vneet S Jaain, who is proposed to be re-appointed,
 as required under the SEBI (Listing Obligations and Disclosure
 Requirements) Regulations, 2015 is provided in the Notice of Annual
 General Meeting forming part of this Annual Report,
 
 Independent Directors:
 
 The terms and conditions of appointment of Independent Directors are in
 accordance with the applicable Regulations of the SEBI (Listing
 Obligations abd Disclosure Requirements) Regulations, 2015 and also as
 per the provisions of the Companies Act, 2013 (Act) read with
 Schedule IV to the Act,
 
 Your Company has received annual declarations from all the Independent
 Directors of the Company confirming that they meet with the criteria of
 Independence provided in Section 149(6) of the Companies Act, 2013 and
 Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure
 Requirements) Regulations, 2015 and there has been no change in the
 circumstances which may affect their status as Independent Director
 during the year,
 
 Appointment and Resignation of Key Managerial Personnel:
 
 During the year under review, Mr, Rajesh Shah resigned as Company
 Secretary of the Company w.e.f, 9th August, 2015, The Board places on
 record its deep appreciation of the valuable services provided by him
 during his tenure, Mr, Deepak Pandya, a qualified Company Secretary,
 was appointed as Company Secretary of the Company w.e.f 10th August,
 2015.
 
 Directors'' Responsibility Statement:
 
 Pursuant to Section 134(5) of the Companies Act, 2013, the Board of
 Directors, to the best of their knowledge and ability, state the
 following
 
 a, that in the preparation of the annual financial statements, the
 applicable accounting standards have been followed along with proper
 explanation relating to material departures, if any;
 
 b, that such accounting policies have been selected and applied
 consistently and judgement and estimates have been made that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company as at 31st March, 2016 and of the profit of
 the Company for the year ended on that date;
 
 c, that proper and sufficient care has been taken 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, that the annual financial statements have been prepared on a going
 concern basis;
 
 e, that proper internal financial controls were in place and that the
 financial controls were adequate and were operating effectively;
 
 f, that proper systems to ensure compliance with the provisions of all
 applicable laws were in place and were adequate and operating
 effectively,
 
 Number of Board Meetings:
 
 The Board of Directors met 4 (four) times during the year under review.
 The details of Board meetings and the attendance of the Directors are
 provided in the Corporate Governance Report which forms part of this
 Report,
 
 Independent Directors'' Meeting:
 
 The Independent Directors met on 6th April, 2016, without the
 attendance of Non-independent Directors and members of the Management,
 The Independent Directors reviewed the performance of Non-independent
 Directors and the Board as a whole; the performance of the Chairman of
 the Company, taking into account the views of Executive Directors and
 Non-Executive Directors and assessed the quality, quantity and
 timeliness of flow of information between the Company Management and
 the Board that is necessary for the Board to effectively and reasonably
 perform their duties,
 
 Board Evaluation:
 
 The Board adopted a formal mechanism for evaluating its performance as
 well as that of its Committees and individual Directors, including the
 Chairman of the Board, The exercise was carried out through a
 structured evaluation process covering various aspects of the Board
 functioning such as composition of the Board & committees, experience &
 competencies, performance of specific duties & obligations,
 contribution at the meetings and otherwise, independent judgment,
 governance issues etc,
 
 Policy on Directors'' appointment and remuneration:
 
 The Company''s policy on Directors'' appointment and remuneration and
 other matters provided in Section 178(3) of the Companies Act, 2013 is
 annexed to this Report as Annexure-E,
 
 Internal Financial Control (IFC) system and their adequacy:
 
 The Directors are responsible for laying down internal financial
 controls to be followed by the company and that such internal financial
 controls are adequate and were operating effectively As per Section
 134(5) (e) of the Companies Act, 2013, the Directors'' Responsibility
 Statement shall state the same,
 
 Your Company has adopted the IFC framework as guidance, for ensuring
 adequate controls and its effectiveness within the company The process
 of assessment of IFC would require setting up of an internal controls
 function in the organization, IFC Steering Committee has been put in
 place to implement and evaluate the design and operating effectiveness
 of the FC framework, The framework also focuses on internal controls
 over financial reporting (ICFR) that are put in place to develop and
 maintain reliable financial data, and to accurately present the same in
 a timely and appropriate manner, The framework refers to the policies
 and procedures adopted by the company for ensuring , orderly and
 efficient conduct of its business, including adherence to company''s
 policies, safeguarding of its assets, prevention and detection of
 frauds and errors, accuracy and completeness of the accounting records,
 timely preparation of reliable financial information
 
 The IT controls provide reasonable assurance of achieving the control
 objectives related to the processing of financial information within
 the computer processing environment, IT controls ensures appropriate
 functioning of IT applications and systems built by the organization to
 enable accurate and timely processing of financial data Your Company
 deploys best in class applications and systems which streamline
 business processes, to improve performance and reduce costs, These
 systems provide seamless integration across modules and functions
 resulting into strong MIS platform and informed decision- making by the
 Management,
 
 The company has adequate and effective internal financial control in
 place which is being periodically evaluated The Company has put in
 place strong internal contra systems and best in class processes
 commensurate with its size and scale of operations, Internal Financial
 Contra is a continuous process operating at all levels within the
 Company,
 
 The ICFR is designed to provide reasonable assurance regarding the
 reliability of financial reporting and the preparation of financial
 statements for external purposes in accordance with applicable
 accounting principles and policies 8- procedures,
 
 A well-established multidisciplinary Management Audit & Assurance
 Services consists of professionally qualified accountants, engineers
 and SAP experienced executives which carries out extensive audit
 throughout the year, across all functional areas and submits its
 reports to Management and Audit Committee about the compliance with
 internal controls and efficiency and effectiveness of operation and key
 processes and risks, Some Key Features of the Company''s internal
 controls system are
 
 i, Adequate documentation of Policies & Guide lines,
 
 ii, Preparation & monitoring of Annual Budgets thru monthly review for
 all operating & service functions,
 
 iii, Management Audit department prepares Risk Based internal (RBIA)
 Scope with the frequency of audit being decided by risk ratings of
 areas / functions, Risk based scope is mutually accepted by various
 functional heads / process owners / CEO & CFO,
 
 iv The entire internal audit processes are web enabled and managed
 on-line by Audit Management System (AMS)
 
 v, The Company has a strong Compliance Management System which runs on
 an online monitoring system
 
 vi, Company has a well-defined Delegation of Power with authority
 limits for approving revenue & capex expenditure
 
 vii, Company uses ERP system to record data for accounting,
 consolidation and management information purposes and connects to
 different locations for efficient exchange of information
 
 viii, Internal Audit is carried out in accordance with auditing
 standards to review design effectiveness of internal control system &
 procedures to manage risks, operation of monitoring control, compliance
 with relevant policies & procedure and recommend improvement in
 processes and procedure,
 
 Risk Management:
 
 Adani Power''s Risk Management Framework is designed to help the
 organization to meet its objective through alignment of the operating
 controls to the mission and vision of the Group,
 
 The Board of the Company has formed a risk management committee to
 frame, implement and monitor the risk management plan for the Company,
 The committee is responsible for reviewing the risk management plan and
 ensuring its effectiveness, The audit committee has additional
 oversight in the area of financial risks and controls,
 
 Risk Management Framework:
 
 To manage uncertainties due to dynamic nature of the business and
 achieving the stated strategic priorities, a robust risk management
 mechanism is a must, Key objective of the risk management process at
 Adani Power is to enable the company to add value to society
 shareholders and employees under all adverse situations through early
 identification, prioritization and mitigation of risks,
 
 The Risk Management Framework institutionalized at Adani Power strives
 to ensure a holistic, mutually exclusive and collectively exhaustive,
 allocation of risks by identifying risks relating to key areas such as
 operational, regulatory, business and commercial, financial, people,
 etc, Using this framework we aim to achieve key business objectives,
 both in the long term and short term, while maintaining a competitive
 advantage,
 
 A standard 3-step approach has been defined for risk management -
 
 1) Risk Identification
 
 2) Risk Assessment 8- Prioritization and
 
 3) Risk Mitigation
 
 Risk Identification:
 
 A broad set of seven categories of risks have been defined for
 comprehensively identifying risk across the business, A comprehensive
 risk register with most likely risks for a power business has been
 compiled, Each identified risk has a lead and a lag indictor defined,
 Lead indicators highlights potential risks before they occur, thereby
 providing adequate time to prioritize risks and develop mitigation
 strategies, Lag indicators, on the other hand, indicate a risk once it
 has already occurred, allowing for speedy escalation of risk to senior
 management and taking steps to mitigate threats posed by the identified
 risk, In order to ensure the efficacy of both lead and ag indicators,
 clear risk indicator thresholds have been defined wherever feasible,
 These thresholds are both quantitative 8- qualitative in nature and
 will trigger the risk assessment and mitigation processes
 
 Risk Assessment 8- Prioritization:
 
 For risks identified, the Gross Risk Rating is determined based on two
 factors -
 
 1, Impact of occurrence, which gauges the level of impact that the risk
 would have on the business
 
 2, Likelihood, which determines the probability of occurrence of a
 risk, Product of likelihood and impact gives risk premium which is an
 indicator of severity of risk
 
 Risks are further prioritized based on two additional parameters
 
 3, Proximity, which assesses whether risk is likely to manifest over
 short or long term
 
 4, Controllability, which gives a measure of how easily risk can be
 mitigated by the organization
 
 Based on these two parameters, risks which are expected to be relevant
 in the near term as well as those which are highly controllable are
 prioritized and marked for immediate focus with continuous monitoring
 
 Risk Management Process:
 
 IT enabled risk register with a robust governance structure has been
 put in place for Risk Management,
 
 Review Mechanism:
 
 Following review mechanism are in place for periodic review of the
 compliance to the risk policy and tracking of mitigation plans,
 
 - Review Compliance to Risk Policy, Resolve bottlenecks to mitigate
 risk, Advise the Board of Directors on risk tolerance and appetite,
 
 - Prioritise risk from stations / departments, track mitigation plan
 and escalate to steering committee, Prepare Steering Committee document
 and co-ordinate meeting
 
 - Review and update risk list, Track mitigation plan and share status
 update with CRO every month, Share Risk Review document with CRO,
 
 Risk Mitigation:
 
 Once risks have been prioritized, comprehensive mitigation strategies
 are defined for each of the prioritized risks, These strategies take
 into account potential causes of the risk and outline leading risk
 mitigation practices, In order to ensure the efficacy of this approach,
 a robust governance structure has also been set in place, Clear roles
 and responsibilities have been defined at each level right from the
 site champion to the APL management & leadership
 
 All associated frameworks (risk categorization & identification):
 guidelines & practices (risk assessment, prioritization and mitigation)
 and governance structure have been detailed out in the Risk Management
 Charter and approved by the Board of Directors,
 
 Committees of Board:
 
 Details of various committees constituted by the Board of Directors as
 per the provisions of the SEBI (Listing Obligations and Disclosure
 Requirements) Regulations, 2015 and Companies Act, 2013 are given in
 the Corporate Governance Report and forms part of this report,
 
 Sustainability and Corporate Social Responsibility:
 
 The Annual Report on CSR activities is annexed to this Report, The CSR
 Policy is available on the website (http://
 www.adanipower.com/docs/download/CSRPolicy) of the company,
 
 Sustainability
 
 As a part of our commitment to sustainability company has taken active
 role to minimize impact on environment and contribute to the growing
 energy demand
 
 Drivers for Sustainability:
 
 - As a power generation company we play a positive role in economic and
 social development by providing sustainable energy to meet the demand
 for a growing economy
 
 - We have a structured approach for identifying our impacts and it is
 integrated into the broader risk identification and management process,
 It also forms the basis for our materiality definition
 
 - We are investing in protecting the environment and developing the
 communities within which we operate We are adopting business strategies
 that meet the needs of the enterprises and its stakeholders,
 
 - We recognize that we need to continuously leverage on our
 opportunities and minimize risks by improving efficiency reducing
 emissions and managing waste to remain competitive,
 
 The company started the process of Sustainability Reporting during the
 year 2014-15 and published its maiden report for FY 2014-15 which is
 available on the website of the Company The said report is issued based
 on Global Reporting Initiative (GRI) G4 guidelines,
 
 Corporate Social Responsibility Our CSR Philosophy:
 
 - The CSR agenda is planned in consultation with the community through
 a systematic independent need assessment, as well as through a
 Participatory Rural Appraisal (PRA)
 
 - The inputs are then taken from an Advisory Committee, including
 senior members from the Adani Foundation and eminent personalities from
 the field
 
 - The CSR agenda is subsequently deliberated upon and after careful
 consideration, then processed by our eadership in consultation with
 Adani Foundation
 
 Community Engagement and Development:
 
 - We approach community care with the same zea and efficiency as we
 approach our business, We make strategic long-term investments which
 yield life-long positive change to the communities around us, We have a
 committed implementation team to carefully choose and craft initiatives
 in alignment with current and future needs of the nation
 
 - We focus on a holistic socio-economic development of the local
 communities around our plant operations, We believe in positive
 relationships that are built with constructive engagement which
 enhances the economic, social and cultural well-being of individuals
 and regions connected to our activities, We continuously engage in
 dialogues, consultation, coordination and cooperation with community
 members to improve our sustainability performance and reduce business
 risks,
 
 Implementation through Adani Foundation:
 
 - We initially started working with communities in and around Mundra,
 Gujarat, and slowly expanded our operations in the states of Gujarat,
 Maharashtra, Rajasthan, Himachal Pradesh, Madhya Pradesh, Chhattisgarh
 and Odisha, We are aligning our philosophy with Sustainable Development
 Goals in order to ensure that the lives of the marginalised communities
 are substantially improved
 
 - The comprehensive aim of the Foundation is to enhance the living
 conditions of the communities in which our operations are based, Our
 CSR always gives prime importance to inclusive growth and equitable
 development of the community,
 
 - We ensure that all our initiatives are successfully adopted by the
 community by ensuring their active involvement in the process of
 development, We carry out internal as well as external impact
 assessment of the community projects,
 
 The Annual Report on CSR activities and initiatives on Sustainability
 Reporting are annexed which forms part of this Report, The CSR policy
 is available on the website of the Company,
 
 Corporate Governance and Management Discussion and Analysis Report:
 
 A separate report on Corporate Governance compliance and a Management
 Discussion and Analysis Report as stipulated under the SEBI (Listing
 Obligations and Disclosure Requirements) Regulations, 2015 forms part
 of this Annual Report along with the required Certificate from a
 Practicing Company Secretary regarding compliance of the conditions of
 Corporate Governance as stipulated under the said Regulations,
 
 In compliance with Corporate Governance requirements as per the SEBI
 (Listing Obligations and Disclosure Requirements) Regulations, 2015,
 your Company has formulated and implemented a Code of Business Conduct
 and Ethics forail Board members and senior management personnel of the
 Company, who have affirmed the compliance thereto
 
 Business Responsibility Report:
 
 The Business Responsibility Report for the year ended 31stMarch, 2016
 as stipulated under Regulation 34 of the SEBI (Listing Obligations and
 Disclosure Requirements) Regulations, 2015 is annexed which forms part
 of this Report,
 
 Prevention of Sexual Harassment at Workplace:
 
 As per the requirement of The Sexual Harassment of Women at Workplace
 (Prevention, Prohibition 8-Red ressal) Act, 2013 read with rules made
 thereunder, your Company has constituted Internal Complaints Committee
 which is responsible for redressal of complaints related to sexual
 harassment, During the year under review, there were no complaints
 pertaining to sexual harassment,
 
 Extract of Annual Return:
 
 The details forming part of the extract of the Annual Return in Form
 MGT 9, is annexed to this Report as Annexure - A,
 
 Related Party Transactions:
 
 In line with the requirements of the Companies Act, 2013 and Listing
 Regulations, your Company has formulated a Policy on Related Party
 Transactions which is also available on
 http://www.adanipower.com/investors/ investor-download, All Related
 Party Transactions are placed before the Audit Committee for review and
 approval of the Committee on a quarterly basis, Also the Company has
 obtained Prior omnibus approval for Related Party Transactions occurred
 during the year for transactions which are of repetitive nature and /
 or entered in the Ordinary Course of Business and are at Arm''s Length
 
 All the related party transactions entered into during the financial
 year were on an arm''s length basis and were in the ordinary course of
 business, Your Company had not entered into any transactions with
 related parties which could be considered material in terms of Section
 188 of the Companies Act, 2013, Accordingly, the disclosure of related
 party transactions as required under Section 134(3)(h) of the Companies
 Act, 2013 in Form AOC 2 is not applicable
 
 During the year under review, your Company has entered into
 transactions with related parties which are material as per the SEBI
 (Listing Obligations and Disclosure Requirements) Regulations, 2015 and
 the details of said transactions are provided in the Notice of the
 Annual General Meeting Significant and material orders passed by the
 regulators or courts or tribunals impacting the going concern status of
 the Company:
 
 There are no significant and material orders passed by the Regulators
 or Courts or Tribunals which would impact the going concern status and
 the Company''s future operations,
 
 Auditors & Auditors'' Report:
 
 Statutory Auditors:
 
 M/s, Deloitte Haskins & Sells, Chartered Accountants (Firm Registration
 No,: 117365W), the Statutory Auditors of the Company, have been
 appointed as Statutory Auditors of the Company by the Members of the
 Company till the conclusion of 21st AGM of the Company to be held in
 the calendar year 2017, The appointment of the said Statutory Auditors
 is required to be ratified by the Members of the Company at the ensuing
 Annual Genera Meeting, Your Company has received letter from M/s,
 Deloitte Haskins & Sells, Chartered Accountants, to the effect that
 their appointment, if made, would be within the prescribed limits under
 Section 141 of the Companies Act, 2013 read with rules made thereunder
 and that they are not disqualified for such appointment, The Board
 recommends the ratification of Statutory Auditors by the members,
 
 Audit Qualification and Audit Report:
 
 The Auditors'' Qualification has been appropriately dealt with in Note
 No, 34 of the Notes to the consolidated audited financial statements
 and in Note No, 32 of the Notes to the standalone audited financial
 statements, The Auditors'' Report is enclosed with the financial
 statements in this Annual Report,
 
 Cost Auditors and Cost Audit Report:
 
 Your Company has appointed M/s Kiran J, Mehta & Co,, Cost Accountants
 (Firm Reg, No, 100497) to conduct audit of cost records of the Company
 for the year ended 31st March, 2017, The Cost Audit Report for the
 year2014- 15 was filed before the due date with the Ministry of
 Corporate Affairs,
 
 Secretarial Auditor and Secretarial Audit Report:
 
 Pursuant to the provisions of Section 204 of the Companies Act, 2013
 and the rules made thereunder the Company had appointed Mr, Chirag
 Shah, Practicing Company Secretary to undertake the Secretarial Audit
 of the Company The Secretarial Audit Report for FY 2015-16 is annexed,
 which forms part of this report as Annexure - B, There were no
 qualifications, reservation or adverse remarks given by Secretarial
 Auditor of the Company in the Secretarial Audit Report of the Company
 
 Awards and Recognitions:
 
 In FY 2015-16, your Company has obtained two highest level of
 recognition for 5S case study in Competition at National Conclave held
 by quality circle forum of India Your Company has also been awarded
 among top 100 Companies as Great Place to Work 2015 by Great Place to
 Work Institute,
 
 Particulars of Employees:
 
 The information required under Section 197 of the Companies Act, 2013
 read with rule 5(1) of the Companies (Appointment and Remuneration of
 Managerial Personnel) Rules, 2014 are provided in separate annexure
 forming part of this Report as Annexure - C
 
 The statement containing particulars of employees as required under
 Section 197 of the Companies Act, 2013 read with rule 5(2) of the
 Companies (Appointment and Remuneration of Managerial Personnel) Rules,
 2014, will be provided upon request, In terms of Section 136 of the
 Companies Act, 2013, the Report and Accounts are being sent to the
 Members and others entitled thereto, excluding the information on
 employees'' particulars which is available for inspection by the members
 at the Registered Office of the Company during business hours on
 working days of the Company, If any member is interested in obtaining a
 copy thereof, such Member may write to the Company Secretary in this
 regard
 
 Conservation of Energy, Technology Absorption, Foreign Exchange
 Earnings and Outgo:
 
 The information on conservation of energy, technology absorption and
 foreign exchange earnings and outgo stipulated under Section 134(3)(m)
 of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts)
 Rules, 2014, as amended from time to time is annexed to this Report as
 Annexure - D,
 
 Acknowledgement:
 
 Your Directors place on record their appreciation for assistance and
 co-operation received from various Ministries and Department of
 Government of India and other State Governments, financial
 institutions, banks, shareholders of the Company etc, The management
 would also like to express great appreciation for the commitment and
 contribution of its employees for their committed services,
 
 Your Directors wish to place on record their sincere appreciation for
 the dedicated efforts and consistent contribution made by the employees
 at all levels, to ensure that the Company continues to grow and excel
 
                           For and on behalf of the Board of Directors
 
 Place : Ahmedabad                                     Gautam S. Adani
 
 Date : 3rd May, 2016                                         Chairman
 
                                                        (DIN: 00006273)
Source : Dion Global Solutions Limited
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