Dear Shareholders,
Your Directors have the pleasure in presenting the Nineteenth Annual Report together with the audited statements of accounts for the year ended 31 March 2019.
Performance Highlights
The financial performance of your Company for the year ended 31 March 2019 is summarized below:
Standalone
During the year under review, income of the Company stood at Rs.17.40 million. With higher impairement of investments and receivables and decrease of other income, the Company reported a loss of Rs. 7,319.14 million.
Consolidated
During the year under review, the consolidated revenue of the group has decreased by Rs. 29,416.66 million as a result of deconsolidation of Sai Wardha Power Generation Limited, VS Lignite Power Private Limited and KSK Mahanadi Power Company Limited pursuant to lenders decision of change in management. As a result, operating profit has also decreased by Rs. 5,527.6 million. With lower finance cost and depreciation and lower other income, loss before tax for the year stood at Rs. 3,558.61 million.
Review of Business
The operational and financial performance of each of the power plants for the financial year 2018-19 has been outlined in the "Management Discussion and Analysis Report".
Material changes and commitments
Sai Wardha Power Generation Limited, Sai Regency Power Corporation Private Limited and Sai Lilagar Power Generation Limited are under Corporate Insolvency Resolution Process ("CIRP"). The Lenders Consortium at KSK Mahanadi Power Company Limited along with Lenders consortium at the Water and Railway infrastructure SPVs have invoked the shares pledged with them as security for the financial facilities.
The above mentioned events had substantial impact on the financial position of the Company.
Further, there is no change in the nature of business of the Company.
Share Capital
The paid up equity share capital as on 31 March 2019 was Rs.4,239.86 million comprising of 42,39,85,744 (Forty Two Crore Thirty Nine Lakh Eighty Five Thousand and Seven Hundred Forty Four)equity shares of Rs.10/- each.
Subsidiaries / Joint Ventures / Associates
Details of major subsidiaries of the Company and their business operations during the year under review are covered in the Management Discussion and Analysis Report.
As per the provisions of Section 129 of the Companies Act, 2013 (hereinafter referred to as "Act") read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the Subsidiary Companies/Associate Companies/Joint Ventures has been provided in Form AOC-1.
The consolidated financial statements of the Company which includes the results of its subsidiaries, associates and joint ventures are included in this Annual Report.
Pursuant to the provisions of Section 136 of the Act, the financial statements including consolidated financial statements are being made available on the website of the Company www.ksk.co.in.The financial statements of subsidiary companies will be available for inspection during business hours at the registered o ce of the Company and also on the website of the Company.
Policy for determining material subsidiaries of the Company is available on the website of the Company at the link: http://www.ksk.co.in/ourpolicies.php.
Companies which have become or ceased to be Subsidiaries, Joint Ventures or Associate Companies during the year
During the year, financial creditors of Sai Regency Power Corporation Private Limited (Sai Regency) have led the petition for a Corporate Insolvency Resolution process ("CIRP") under the Insolvency and Bankruptcy Code, 2016 at National Company Law Tribunal, Chennai ("NCLT") and same has been admitted by NCLT on 27 March, 2019. Consequent to this, the Company has lost control in Sai Regency and it ceased to be Subsidiary of the Company.
The Lenders Consortium at KSK Mahanadi Power Company Limited (KSK Mahanadi) along with Lenders consortium at the Water and Railway infrastructure SPVs have invoked the shares pledged with them as security for the financial facilities and as a result all three Companies and Sai Power Pte. Ltd. subsidiary of KSK Mahanadi have ceased to be Subsidiaries and Associate Company respectively.
Further, financial creditor of Sai Lilagar Power Generation Limited, ("Sai Lilagar") Subsidiary of the Company has led petition for a CIRP before NCLT, Hyderabad Bench under Section 7 of the Insolvency and Bankruptcy Code 2016 ("IBC") and the same has been admitted by NCLT on 11th July, 2019.Consequent to this, the Company has lost control in Sai Lilagar and it ceased to be Subsidiary of the Company.
Corporate Governance
Pursuant to SEBI (LODR) Regulations, 2015 (hereinafter referred to as "Listing Regulations"), a detailed report on Corporate Governance is given in this Annual Report. A certificate from the Statutory Auditors of the Company regarding compliance with conditions o f Corporate Governance is attached to the Corporate Governance report.
Management Discussion and Analysis Report
A Management Discussion and Analysis report in terms of regulation 34 of Listing Regulations is provided in a separate section and forms an integral part of this Annual Report.
Directors and Key Managerial Personnel
Independent Directors & Non-Executive Directors
Mr. Abhay M Nalawade, Independent Director and Mrs. Kusuma Mani Kumari, Non-Executive Director have resigned with effect from 05 March, 2019 and 30 May, 2018 respectively.
Mr. T.L. Sankar expired on 26 December 2018. Mr. K.A. Sastry has vacated his o ce of Whole-time Director pursuant to provisions of Section 167(1)(b) of the Companies Act, 2013 with effect from 11 August 2018.
Mr. K. Bapi Raju and Ms. Alankrita Soni have been appointed as Additional Directors of the Company with effect from30 May 2018 and Mr. N.S Ramachandran has been appointed as Additional Director with effect from 30 May, 2019. Ms. Alankrita Soni, Mr. Abhay Nalawade were appointed as Independent Directors for a term of five years and Mr. K. Bapi Raju was appointed as Director at the Annual General Meeting on 29th September, 2018.
Mr. N.S Ramachandran is proposed to be appointed as Independent Director for a term of five years under the provision of section 160 of the Act at the ensuing Annual General Meeting.
In accordance with the provisions of Section 152(6) of the Act, Mr. K. Bapi Raju, Director retires by rotation at the forthcoming Annual General Meeting and being eligible, o ered himself for re-appointment.
Brief pro les of Mr. N.S. Ramachandran and Mr. K. Bapi Raju are given in notice convening the Nineteenth Annual General Meeting for reference of shareholders.
During the year, Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company.
The Company has received declaration from all Independent Directors of the Company con rming that they meet the criteria of independence as prescribed under the applicable provisions of Section 149 of the Act and under Listing Regulations.
Key Managerial Personnel
Mr. V. Sambasiva Rao, Chief Financial Officer and Mr. M.S. Phani Sekhar, Company Secretary have resigned with effect from 30 May, 2018.
Mr. Ranjith Kumara Shetty has been appointed as Company Secretary and Compliance Officer and Mr. Manjul Saha has been appointed as Chief Financial Officer with effect from 30 May, 2018 and 10 November, 2018 respectively.
Meetings of the Board
The Board met five (5) times during the year. The details are given in Corporate Governance report that forms part of this Annual report.
Performance Evaluation
As per the provisions of the Act and Listing Regulations, the Board carried out annual evaluation of the Board's performance, its Committees and individual Directors.
Board performance evaluation, evaluation of Committees and individual Directors is carried out through a questionnaire encompassing upon various areas that provide an insight and feedback into the functioning of the Board, its Committees, individual Directors and areas of development.
In a separate meeting of independent directors, performance of non-independent directors, performance of the Board as a whole, performance of the Chairman and quality, quantity and timeliness of flow of information between the Company management and the Board was evaluated.
Remuneration Policy
In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with Schedule II Part D of Listing Regulations, the Nomination and Remuneration Committee is responsible for formulating the criteria for determining qualifications, positive attributes and independence of a Director.
The Nomination and Remuneration Committee is also responsible for recommending to the Board a policy relating to the remuneration of the Directors, Key Managerial Personnel and Senior Management.
The Remuneration Policy is annexed herewith as Annexure I and the same form part of 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 is annexed herewith and marked as Annexure II.
Particulars of Employees
The particulars of employees as required to be disclosed pursuant to the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended is annexed herewith and marked as Annexure III to this Report.
Directors' Responsibility Statement
In terms of Section 134(3)(c) and 134(5) of the Act, your Board of Directors to the best of their knowledge and ability con rm that:
in the preparation of annual financial statements, the applicable accounting standards have been followed and there are no material departures;
they have 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 a airs of the Company at the end of the financial year and of the loss of the Company for that period;
proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
annual financial statements have been prepared on a going concern basis;
they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
proper systems are in place to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Audit Committee
The Audit Committee of the Company constituted in terms of Section 177(1) of the Act and Regulation 18 of the Listing Regulations comprises of - Mr. N.S Ramachandran, Ms. Alankrita Soni and Mr. S. Kishore as on date of this report. Terms of reference, meetings and attendance particulars of the Audit Committee are included in the Corporate Governance Report forming an integral part of this Annual Report.
Corporate Social Responsibility Committee
KSK has been pursuing CSR activities long before they were made mandatory under the Act. The Group's sustainability initiatives towards community are essentially focused on five thrust areas:
In compliance with requirements of Section 135 of the Act, the Company has laid down a CSR Policy. The composition of the Committee, contents of CSR Policy and report on CSR activities carried out during the financial year ended 31 March 2019 in the format prescribed under Rule 8 of Companies (Corporate Social Responsibility Policy)Rules, 2014 is annexed herewith as Annexure IV. The CSR Committee has not met during the year.
Statutory Auditors
M/s. Jawahar and Associates, Chartered Accountants, Hyderabad, (ICAI Firm Registration No. 001281S) have been appointed as Statutory Auditors of the Company to hold o ce from the conclusion of the 17th Annual General Meeting held on 25th September, 2017 for 5 consecutive years till the conclusion of the 22nd Annual General Meeting of the Company in the calendar year 2022 (subject to rati cation by the shareholders at each Annual General Meeting if so required under the Act).
Companies Amendment Act, 2017 omitted the first proviso to Section 139 of Companies Act, 2013 that requires rati cation of appointment of auditor at every annual general meeting.
Explanation to Statutory Auditors' Qualification / Comment on the Company's financial statements
The Auditors' Qualification has been appropriately dealt with in Note No. 2.6,16(v), 33 to 36 of the Notes to the standalone audited financial statements and in Note No. 2.4,8, 31(ii), 43 to 45 of the Notes to the consolidated audited financial statements. The Auditors' Report is enclosed with the financial statements in this Annual Report.
Secretarial Audit Report
Pursuant to Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr. V. Pavana Srinivasa Rao, Practising Company Secretary, Hyderabad to undertake Secretarial
Audit of the Company for the financial year 2018-19. The Secretarial Audit Report in form MR-3 received from him is annexed herewith as Annexure V to this Report.
There is no qualification, reservation, adverse remark or disclaimer by the Secretarial Auditor in his Secretarial Audit Report and hence no explanation or comments of the Board is required in this matter.
Cost Audit
The Company is not required to maintain cost records and cost audit as per section 148 of the Companies Act, 2013 and the rules framed thereunder.
Whistle Blower Policy/Vigil Mechanism
The Company has formulated a Whistle Blower Policy and has established a Vigil Mechanism for employees including Directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of Section 177(9) of the Act and Regulation 22 of Listing Regulations.
The whistle blower policy is available on the Company's website at the link:http://ksk.co.in/pdfs/Whistle-Blower-Policy.pdf.
Dividend
Your Directors have not recommended any dividend on equity shares for the year under review.
Transfer to Reserves
No amounts were proposed to be transferred to reserves for the year under review.
Deposits from Public
The Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Act and the Companies(Acceptance of Deposits) Rules, 2014.
Details of significant and material orders passed by the Regulators or Courts or Tribunals
Apart from the National Company Law Tribunal orders on Corporate Insolvency Resolution Process of Subsidiaries mentioned in this report, there are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.
Internal Control Systems
Your Directors believes that the Company's internal financial controls with reference to financial statements were adequate and effective during the financial year 2018-19.
Loans, Guarantees or Investments under Section 186 of the Act
Particulars of loans given, investments made, guarantees given and securities provided are detailed in notes to the financial statements.
Contracts and arrangements with Related Parties
The Board has approved a policy for Related Party Transactions which has been posted on the Company's website at the weblinkhttp://ksk.co.in/ourpolicies.php
There are no materially significant related party transactions made by the company with related parties which may have potential conflict with interest of the company at large. As a matter of policy, your Company carries out transactions with related parties on an arms' length basis.
Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form a part of this report.
Further, the Company has not entered into any contract or arrangement or transaction with its related parties which is not at arm's length during the financial year 31 March 2019. Suitable disclosure as required by the Indian Accounting Standards as applicable has been made in the notes to the financial statements.
Risk Management Policy
The Company's policy for Risk Management is to apply best practice in identifying, evaluating and cost-e ectively controlling risks to ensure that any residual risks are at an acceptable level. Whilst it is not possible to eliminate risk absolutely, the ort is underway to actively promote and apply best practices at all levels and to all its activities, including its dealing with external partners.
Extract of Annual Return
The extract of Annual Return in the prescribed format as per the provisions of Section 92(3) oftheCompaniesAct, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014 is enclosed herewith as an Annexure VI.
Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
There were no complaints received pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 for the year ended 31 March 2019.
Details of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
A. Conservation of Energy:
1) Steps taken or impact on conservation of energy: -N.A.
2) Steps taken by the Company for utilizing alternate sources of energy: -N.A.
3) The Capital investment on energy conservation equipments: -N.A. B. Technology Absorption: i. The E orts made towards technology absorption: NIL ii. The Bene ts derived like product improvement, cost reduction, product development or import substitution: NIL iii. Details of technology imported during the past 3 years: No technology has been imported during the past 3 years. a. The details of technology import: -NIL b. The year of import: -NIL c. Whether the technology has been fully absorbed: -NIL d. If not fully absorbed, areas where absorption has not taken place, and the reasons thereof: - NIL iv. The expenditure incurred on Research and Development: -N.A.
C. Foreign Exchange Earnings and Outgo:
Acknowledgments
Your Directors would like to place on record their grateful appreciation for the assistance and co-operation received from the Financial Institutions, Banks, Government of India, State Government, Government Authorities, Customers, Vendors and Shareholders. Your Directors also wish to place on record their deep sense of appreciation for the services of the employees of the Company. We look forward to their continued support in the future.