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Updated:21 Aug, 2019, 10:14 AM IST

BSE
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Updated:21 Aug, 2019, 10:23 AM IST

Directors' Report

Dear Shareholders,

Your 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, 201 6

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 2014­15, 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 was Rs. 488,48 crores as compared to Net Loss of Rs. 815,63 crores in FY 2014­15. 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 of Rs. 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 MW at Mundra 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 PPA's 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 Coal 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 general 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,adanipower,com/investors/investor–download,

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 India 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 SEBI (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 IFC 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 control systems and best in class processes commensurate with its size and scale of operations, Internal Financial Control 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 & 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 & Guidelines,

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 & 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 lag indicators, clear risk indicator thresholds have been defined wherever feasible. These thresholds are both quantitative & qualitative in nature and will trigger the risk assessment and mitigation processes,

Risk Assessment & 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 leadership in consultation with Adani Foundation,

Community Engagement and Development:

• We approach community care with the same zeal 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 for all 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 31st March, 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 & Redressal) 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 General 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 year 2014­15 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

Gautam S. Adani

Chairman

(DIN: 00006273)

Place : Ahmedabad

Date : 3rd May, 2016

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