Directors' Report Dear Shareowners, Your Directors present the 21st Annual Report and the audited accounts for the financial year ended March 31, 2015. Financial Performance During the financial year under review, the total Income of the Company was Rs. 36,932 lakhs against Rs. 36,612 lakhs in the previous year on a standalone basis. The Company has earned a Profit after tax of Rs. 2,510 lakhs compared to Rs. 5,648 lakhs in the previous year on a standalone basis. Dividend Your Directors have not recommended any dividend on equity shares for the year under review. Business Operations During the year 2014-15, the most significant achievement was the successful commissioning of all the six units of 660 MW each of the Sasan Ultra Mega Power Project (UMPP). We are pleased to inform you that this Power plant stands out as the largest integrated power plant in the world with dedicated coal mines to cater to its fuel requirements. The completion of the project ahead of its schedule bears testimony to the determination and hard work put in by our employees. The 2X300 MW Butibori plant in Maharashtra was also fully commissioned last year and the unit is supplying power under a long term PPA for 25 years. The Concentrated Solar Power (CSP) plant in Rajasthan with a capacity of 100 MW was also commissioned last year. We now have an operating capacity of 5945 MW as against 4525 MW in the previous year. We would report that the Company's wholly owned Subsidiary, Jharkhand Integrated Power Limited, which was developing the 3960 MW UMPP in the State of Jharkhand has issued a notice for terminating the Power Purchase Agreement (PPA) upon the Power Procurers on account of their failure to fulfill the conditions subsequent, as per the PPA entered into by the Company with them. Management Discussion and Analysis Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India is presented in a separate section forming part of this Annual Report. Non-convertible Debentures During the year under review, the Company has issued Unsecured Redeemable Non-convertible Debentures aggregating to Rs. 205 crores. Deposits The Company has not accepted any deposits from the public which comes within the purview of Section 73 of the Companies Act, 2013 (The Act) read with the Companies (Acceptance of Deposits) Rules 2014. Particulars of Investments Pursuant to the provisions of Section 186 of the Act, the details of Investments made are provided in the unabridged standalone financial statements under note nos. 3.11.1 and 3.11.2. Subsidiary and Associate Companies The Company had as on March 31, 2015, 41 Subsidiaries under it. Reliance Geothermal Power Private Limited became a subsidiary of the Company during the year. The Company does not have any Associate Company. The performance and the financial position of the major subsidiary companies, which are under operation have been discussed in the Management Discussion and Analysis Report forming a part of this Annual Report. In addition, the financial results of each of the subsidiary companies have been consolidated with that of the parent company in the consolidated financial statement. The Company's policy for determining material subsidiaries may be accessed on the Company's website at the link <http://www>. reliancepower.co.in/1106/Policy_for_Determining_Material_ Subsidiary.pdf. Consolidated Financial Statement The audited consolidated financial statement for the financial year ended March 31, 2015, based on the financial statements received from the subsidiary companies, as approved by their respective Boards of Directors have been prepared in accordance with Accounting Standard 21 (AS-21) on "Consolidated Financial Statements" read with the Accounting Standards and Rules as applicable. Directors Dr. Yogendra Narain and Shri D. J. Kakalia, were appointed through postal ballot on September 27, 2014 as Independent Directors of the Company, respectively for a period of two years and three years from the date of their appointment. Smt. Rashna Khan was also appointed as an Independent woman Director through Postal Ballot on September 27, 2014 for a period of three years from the date of her appointment. The Company has received declarations from all the Independent Directors confirming that they meet with the criteria of Independence as prescribed under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges. The details of the programs drawn up for familiarisation of the Independent Directors, the nature of the industry in which the Company operates and related matters have been put up on the website of the Company at the link <http://www.reliancepower>. co.in/2015/Familiarisation_Policy.pdf. In accordance with the provisions of the Act, Shri Sateesh Seth, Non-Executive Director retires by rotation and being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting (AGM). A brief resume of Shri Sateesh Seth along with the information regarding the nature of his expertise in specific functional areas and names of the companies in which he holds directorship and / or membership / chairmanships of Committees of the respective Boards, shareholding and relationship between Directors inter se as stipulated under Clause 49 of the Listing Agreement entered into with the Stock Exchanges in India, is given in the section on Corporate Governance Report forming part of this Annual Report. Key Managerial Personnel During the year, Shri N. Venugopala Rao, Chief Financial Officer and Shri Ramaswami Kalidas, Company Secretary and Manager were designated by the Board as the Key Managerial Personnel of the Company pursuant to the requirements of the Act. Consequent upon Shri N. Venugopala Rao being elevated to a higher role within the organisation, Shri Ashutosh Agarwala was appointed as the Chief Financial Officer of the Company and designated as Key Managerial Personnel with effect from September 26, 2014. Evaluation of Directors, Board and Committees The Company has devised a policy for performance evaluation of its individual directors, the Board and the Committees constituted by it, which includes criteria for performance evaluation. In line with the requirements of the Act and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, working of the Committees, and the directors individually. The Board performance was evaluated based on inputs received from all the Directors after considering criteria such as Board composition and structure, effectiveness of processes and information provided to the Board, etc. A separate meeting of the Independent Directors was also held during the year for evaluation of the performance of the non Independent Directors, the Board as a whole and that of the Chairman. The Nomination and Remuneration Committee has also reviewed the performance of the individual directors based on their knowledge, level of preparation and effective participation in meetings, understanding of their roles as Directors, etc. Policy on appointment and Remuneration for Directors, Key Managerial Personnel and Senior Management employees The Nomination and Remuneration Committee of the Board has devised a policy for selection and appointment of Directors, Senior Management and their remuneration. The Committee has formulated the criteria for determining the qualifications, positive attributes and independence of a Director, which has been put up on the Company's website. Further, the Committee has also devised a policy relating to remuneration for Key Managerial Personnel and senior management employees, as the Company does not have any Whole-time Director/ Managing Director on its Board at present. All the directors, being non-executive, were paid only sitting fees for attending the meetings of the Board and its Committees, The policy on the above is attached as Annexure - A. Directors' Responsibility Statement Pursuant to the requirements under Section 134(5) of the Act with respect to Directors' Responsibility Statement, it is hereby confirmed that: i. " n the preparation of the annual financial statements for the financial year ended March 31, 2015, the applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any; ii. The Directors had 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 as at March 31, 2015 and of the profit of the Company for the year ended on that date; iii. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. The Directors had prepared the annual financial statements for the financial year ended March 31, 2015 on a 'going concern' basis; v. The Directors had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively; and vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Contracts and Arrangements with Related Parties All contracts / arrangements / transactions entered into by the Company during the financial year under review with related parties were at an arm's length basis and in the ordinary course of business. There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, which may have a potential conflict with the interest of the Company at large. All Related Party Transactions were placed before the Audit Committee for approval. Omnibus approvals of the Audit Committee were obtained for the transactions which were of a repetitive nature. Transactions entered into pursuant to the omnibus approval so granted were reviewed and statements giving details of all related party transactions were placed before the Audit Committee on a quarterly basis. The policy on Related Party Transactions as approved by the Board has been uploaded on the Company's website at the link <http://ww.reliancepower>. co.in/1106/Policy_for_Related_Party_Transactions.pdf. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. Material Changes and Commitments, if any, affecting the financial position of the Company There were no material changes and commitments which materially affect the financial position of the Company between the financial year ended on March 31, 2015 and the date of this report. Meetings of the Board A calendar of Meetings is prepared and circulated in advance to the Directors. During the year, six Meetings of the Board were held, details of which are given in the Corporate Governance Report. Audit Committee The Audit Committee of the Board consists of Independent Directors namely Dr. Yogendra Narain, as the Chairman, Directors' Report Shri D. J. Kakalia and Smt. Rashna Khan, and non-independent Directors, Shri Sateesh Seth and Dr. V. K. Chaturvedi, as members. During the year, all the recommendations made by the Audit Committee were accepted by the Board. Auditors and Auditors' Report M/s. Price Waterhouse and M/s. Chaturvedi & Shah, Chartered Accountants, the Auditors of the Company hold office until the conclusion of the ensuing AGM and are eligible for re-appointment. The Company has received letters from M/s. Price Waterhouse and M/s. Chaturvedi & Shah, Chartered Accountants to the effect that their appointment, if made, would be within the prescribed limits under Section 141(3) of the Act and that they are not disqualified from appointment as statutory auditors of the Company. The observations and comments given by the Auditors in their report read together with notes on financial statements are self explanatory and hence do not call for any further comments under Section 134 of the Act. Cost Auditors Pursuant to the provisions of the Act and Companies (Audit and Auditors) Rules, 2014, the Board of Directors have appointed M/s. V. J. Talati & Co., Cost Accountants, as the Cost Auditors for conducting cost audit of the cost records maintained by the Company in respect of the operations at its 45 MW Wind Farm Power project at Vashpet, Maharashtra for the financial year ending March 31, 2016, subject to the remuneration being ratified by the members at the ensuing AGM of the Company. Secretarial Audit Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s. Ajay Kumar and Co., Company Secretaries in Practice to undertake the Secretarial Audit of the Company. There are no qualifications, reservations or adverse remarks in their Audit Report. The Audit Report of the Secretarial Auditor is attached herewith as Annexure - B. Extract of Annual Return Extract of the Annual Return of the Company in form MGT-9 is attached herewith as Annexure - C. Employees Stock Option Scheme During the year under review, the Company has not granted any Options to the employees of the Company. Employees Stock Option Scheme (ESOS) has been approved and implemented by the Company and options were granted in earlier years to the employees in accordance with the earlier guidelines applicable to such ESOS. The ESOS Compensation Committee of the Board monitors the Scheme and plans which are in line with the SEBI guidelines in this regard. The existing ESOS Scheme is in compliance with the Securities and Exchange Board of India (Share based employee benefits) Regulations, 2014 (SEBI Regulations). The Company has received a certificate from the Auditors of the Company that the ESOS Plan 2010 has been implemented in accordance with the SEBI Regulations and as per the resolution passed by the Members of the Company authorizing the issuance of the said options. Particulars of Employees and related disclosures In terms of the provisions of Section 197 of the Act read with Rule 5 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 limits set out in the said Rules are provided in Annexure to the Directors' Report. However, having regard to the provisions of Section 136 of the Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. The said information is available for inspection at the registered office of the Company on all working days, except Saturdays between 11:00 a.m. and 1:00 p.m. up to the date of AGM and any member interested in obtaining the same may write to the Company Secretary. Upon such request the information shall be furnished. Disclosures relating to the 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 in Annexure - D. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo The particulars as required to be disclosed in terms of Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, are given in the Annexure - E forming part of this Report. Corporate Governance The Company has adopted "Reliance Group-Corporate Governance Policies and Code of Conduct" which sets out the systems, process and policies conforming to the international standards. The report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement entered into with the Stock Exchanges is presented in a separate section forming part of this Annual Report. A Certificate from the auditors of the Company M/s. Price Waterhouse and M/s. Chaturvedi & Shah, Chartered Accountants conforming compliance to the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is enclosed to this Report. Vigil Mechanism In accordance with Section 177 of the Act and the Listing Agreement, the Company has formulated a Vigil Mechanism to address the genuine concerns, if any, of the directors and employees. The details of the same have been stated in the Report on Corporate Governance and the policy can also be accessed on the Company's website. Risk Management Pursuant to the requirements of Clause 49 of the Listing Agreement, the Company, during the year under review, has re-constituted a Risk Management Committee consisting of majority of directors and senior managerial personnel. The details of the Committee and its terms of reference, etc. are set out in the Corporate Governance Report forming part of this Report. The Company has a robust Business Risk Management (BRM) framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The risks are assessed for each project and mitigation measures are initiated both at the project as well as the corporate level. Compliance with provisions of Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013 The Company is committed to uphold and maintain the dignity of women employees and it has in place a policy which provides for protection against sexual harassment of women at work place and for prevention and redressal of such complaints. During the financial year no such complaints were received. Corporate Social Responsibility The Company has constituted Corporate Social Responsibility Committee in compliance with the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules 2014. The Corporate Social Responsibility Committee has formulated a Corporate Social Responsibility Policy (CSR policy) indicating the activities to be undertaken by the Company. The CSR policy may be accessed on the Company's website at the link; <http://www.reliancepower.co.in/2015/> CSR_Policy.pdf. The CSR Committee of the Board consists of Dr. Yogendra Narain as Chairman. Shri Sateesh Seth, Dr. V. K. Chaturvedi, Shri D. J. Kakalia and Smt. Rashna Khan were its members. The disclosures with respect to CSR activities forming part of this report is given as Annexure - F. Orders, if any, passed by regulators or courts or tribunals No orders have been passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations. Internal Financial Controls and their adequacy The Company has in place adequate internal financial controls across the organization. The same is subject to review periodically by the Internal Audit Cell for its effectiveness. The control measures adopted by the Company have been found to be effective and adequate to the Company's requirements. Business Responsibility Statement SEBI has mandated top 100 listed entities, based on market capitalisation on BSE Limited and National Stock Exchange of India Limited on March 31, 2012, to include Business Responsibility Report ("BRR") as part of the Annual Report. In view of FAQs issued by SEBI, the BRR has been uploaded on the website of the Company www.reliancepower.co.in . Any shareholder interested in obtaining physical copy of the BRR may write to the Company Secretary at the Registered Office of the Company. Acknowledgements Your Directors would like to express their sincere appreciation for the co-operation and assistance received from shareholders, debenture holders, debenture trustee, bankers, financial institutions, regulatory bodies and other business constituents during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff, resulting in the successful performance of the Company during the year. For and on behalf of the Board of Directors Anil Dhirubhai Ambani Chairman Mumbai May 26, 2015 |