adani transmission ltd share price Directors report


Dear Shareholders,

Your Directors are pleased to present the 9th Annual Report along with the Audited Financial Statements of your Company for the financial year ended on 31st March, 2022.

Financial Performance Summary

The summarized financial performance highlight is as mentioned below:

(Rs in Crore)

Particulars Consolidated Standalone
2021-22 2020-21 2021-22 2020-21
FINANCIAL RESULTS
Total Revenue 11,861.47 10,458.93 1440.67 1,434.66
Total Expenditure other than Financial Costs and Depreciation 7051.35 5,975.97 742.06 765.34
Profit before Depreciation, Finance Costs and Tax 4,810.12 4,482.96 698.61 669.32
Finance Costs 2364.95 2,116.99 762.96 690.24
Depreciation, Amortization and Impairment Expense 1427.15 1,328.88 0.26 0.29
Profit Before Rate Regulated Activities, Tax and Deferred Assets recoverable/adjustable for the period / year 1,018.02 1,037.09 (64.61) (21.21)
Net movement in Regulatory Deferral Account Balances - Income/(Expenses) 682.47 582.81 - -
Profit Before Tax and Deferred Assets recoverable / adjustable for the period / year 1,700.49 1,619.90 (64.61) (21.21)
Total Tax Expenses 436.06 424.23 - -
Profit After Tax for the period / year but before Deferred Assets recoverable/adjustable 1,264.43 1,195.67 (64.61) (21.21)
Deferred assets recoverable/adjustable (28.68) 93.90 - -
Profit After Tax for the period / year 1,235.75 1,289.57 (64.61) (21.21)
Add / (Less) Share in Joint Venture & Associates - - - -
Net Profit / (Loss) after Joint Venture & Associates 1,235.75 1,289.57 (64.61) (21.21)
Other Comprehensive Income
- Items that will not be reclassified to profit or loss 16.37 34.24 0.08 (0.28)
- Tax relating to item that will not be reclassified to Profit & Loss (2.89) (6.03) - -
- Items that will be reclassified to profit or loss (262.79) (192.32) (120.55) (20.95)
- Tax relating to items that will be reclassified to Profit & Loss (2.44) 17.71 - -
Total Other Comprehensive Income / (Loss) for the year (Net of Tax) (251.75) (146.4) (120.47) (21.23)
Total Comprehensive Income / (Loss) for the year attributable to the Owners of the Company 987.42 1,096.01 (185.08) (42.44)
Add / (Less) Share Non-controlling interests (3.42) 47.16 - -
Net Profit / (Loss) for the year after non-controlling interests 984.00 1,143.17 (185.08) (42.44)
Balance carried to Balance Sheet 984.00 1,143.17 (185.08) (42.44)

1. There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.

2. Previous year figures have been regrouped / re-arranged wherever necessary.

Performance

Consolidated Financial Results

The Audited Consolidated Financial Statements of your Company as on 31st March 2022, prepared in accordance with the relevant applicable IND AS and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and provisions of the Companies Act, 2013 ("the Act"), forms part of this Annual Report.

The key aspects of your Companys consolidated performance during the FY 22 are as follows:

Operational Highlights

Your Company is the transmission and distribution business arm of the Adani Group, one of Indias largest business conglomerates. Adani Transmission Limited (ATL) is the countrys largest private transmission Company with a cumulative transmission network of Rs 18,795 ckt km and cumulative transformation capacity of Rs 40,001 MVA, out of which Rs14,279 ckt km and Rs 20,765 MVA is operational and Rs 4,516 ckt km and 19.236 MVA is at various stages of construction. ATL also operates a distribution business serving about 3 million+ customers in Mumbai. With Indias energy requirement set to quadruple in coming years, ATL is fully geared to create a strong and reliable power transmission network and work actively towards serving retail customers and achieving Power for All by CY 22.

Your Company has evolved over the past few years. During the year under review, your Company has acquired following four companies which will bolster its pan-India presence, consolidating further its position as the largest private sector transmission Company in India and moving it closer to its goal of 20,000 ckt km of transmission lines by CY 2022.

1. MP Power Transmission Package-II Limited

2. MPSEZ Utilities Limited

3. Karur Transmission Limited

4. Khavda-Bhuj Transmission Limited

Your Company is constantly benchmarking to be the best-in-class and is pursuing focused approach to be world-class integrated utility through development agenda coupled with de-risking of strategic and operational aspects, capital conservation, ensuring high credit quality and forging strategic partnerships for business excellence and high governance standards. Your Company is maintaining 24x7 quality power supply despite challenges posed by health and pandemic issues. The journey towards robust ESG framework and practicing culture of safety is integral to its pursuit for enhanced long-term value creation for all stakeholders.

The following are some of the operational highlights for FY 22 -

• Added 1,104 ckt kms to transmission network in FY22 on account of organic and inorganic growth taking total network to Rs18,795 ckt kms.

• Strong Transmission system availability at more than 99.70%.

• Distribution business ensured more than 99.99% supply reliability despite challenges on ground.

• Distribution losses were at 6.55% vs 7.82% in FY 2020-21 (FY 21).

• Consumer-centric initiatives in Distribution business continue with digital payment at 69.7%.

Financial Highlights:

Consolidated Performance on YoY basis -

Stable Transmission business delivered operational Revenue of RS3,217 Crore and Operational EBITDA of RS2,968 Crore in FY 22 translating into strong margin of 92%.

Distribution business Operational EBITDA grew by 1.9% in FY 22.

Performance highlights -

• Cash Profit of RS3,039 Crore, up 3.8%

• PBT at RS1,700 Crore, up 5%.

• PAT at RS1,236 Crore, 4.2% lower due to deferred tax recognition in Distribution business in FY21.

• Consolidated Operational EBITDA at RS4,659 Crore vs. RS4,233 Crore in FY21, up 10.1%

• Transmission Operational EBITDA at RS2,968 Crore, up 15.3% with a margin of 92%

• Distribution Operational EDITDA at RS1,692 Crore, up 1.9%

Standalone Financial Results:

On standalone basis, your Company registered Total Revenue of RS1,440.67 Crore in FY22 as compared to RS1,434.66 Crore in FY 21.

The detailed operational performance of your Company has been comprehensively discussed in the Management Discussion and Analysis Section, which forms part of this Annual Report.

Dividend

The Board of your Company, after considering holistically the relevant circumstances and keeping in view the tremendous growth opportunities that your Company is currently engaged with, has decided that it would be prudent not to recommend any dividend for the year under review.

Fixed Deposits

There were no outstanding deposits within the meaning of Section 73 and 74 of the Act read with rules made thereunder at the end of the financial year 2021-22 or the previous financial years. Your Company did not accept any deposit during the year under review.

Particulars of Loans, Guarantees or Investments

The provisions of Section 186 of the Act, with respect to a loan, guarantee or security are not applicable to the Company as the Company is engaged in providing infrastructural facilities which is exempted under Section 186 of the Act. The details of investments made by the Company during the year under review are disclosed in the financial statements.

Subsidiaries, Joint Ventures and Associate Companies

Your Company had 33 direct subsidiaries as on 31st March, 2021. During the year under review, the following companies were acquired / incorporated -

Acquired -

• MP Power Transmission Package-II Limited from REC Power Development and Consultancy Limited (formerly known as REC Power Distribution Company Limited).

• MPSEZ Utilities Limited from Adani Ports and Special Economic Zone Limited.

• Khavda-Bhuj Transmission Limited from PFC Consulting Limited.

• Karur Transmission Limited from PFC Consulting Limited.

New incorporation -

• ATL HVDC Limited as a wholly owned subsidiary company.

In view of the above, the total number of Subsidiaries, as on 31st March 2022 was 38.

There are no associate companies or joint venture companies within the meaning of Section 2(6) of the Act. There has been no material change in the nature of the business of the subsidiaries.

Pursuant to the provisions of Section 129, 134 and 136 of the Act read with rules framed there under and pursuant to Regulation 33 of the SEBI Listing Regulations, your Company has prepared Consolidated Financial Statements of the Company and its subsidiaries and a separate statement containing the salient features of financial statement of subsidiaries, joint ventures and associates in Form AOC-1, which forms part of this 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 for inspection by any shareholder/s during working hours at the Companys Registered Office and that of the respective subsidiary companies concerned. In accordance with Section 136 of the Act, the Audited Financial Statements, including consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on the website of the Company, www.adanitransmission.com.

Pursuant to Section 134 of the Act read with Rule 8(1) of the Companies (Accounts) Rules, 2014 the details of developments of subsidiaries of the Company are covered in the Management Discussion and Analysis Report, which forms part of this Annual Report.

Management Discussion and Analysis

The Management Discussion and Analysis for the year under review, as stipulated under the SEBI Listing Regulations, is presented in a separate section forming part of this Annual Report.

Directors and Key Managerial Personnel

As of March 31,2022, your Companys Board had seven members comprising of three Executive Directors and four independent directors.

The Board has two women Directors. The details of Board and Committee composition, tenure of Directors, areas of expertise and other details are available in the Corporate Governance Report, which forms part of this Annual Report

In accordance with the provisions of Section 152 of the Act, read with rules made thereunder and Articles of Association of the Company, Mr. Gautam S. Adani (DIN: 00006273) is liable to retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

Ms. Lisa Caroline MacCallum (DIN: 09064230) was appointed as an Additional Director (Non-Executive & Independent) of the Company w.e.f. 30th November, 2021. As an Additional Director, she holds office upto the ensuing AGM. The Company has received notice from a Member under Section 160 of the Act, proposing her appointment as a Director of the Company. In accordance with the provisions of Section 149 of the Act, Ms. Lisa Caroline MacCallum is being appointed as an Independent Director to hold office as per her tenure of appointment mentioned in the Notice of the ensuing AGM. In the opinion of the Board, she possesses requisite expertise, integrity and experience (including proficiency) for appointment as an Independent Director of the Company. Terms and conditions of appointment of Independent Directors are as per Schedule IV of the Act and SEBI Listing Regulations, and available on Companys website (www.adanitransmission.oom).

The Board recommends the appointment / re-appointment of above Directors for your approval. Brief details of Directors proposed to be appointed / re-appointed as required under Regulation 36 of the SEBI Listing Regulations are provided in the Notice of the ensuing AGM.

The Company has further received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Act and the SEBI Listing Regulations and there has been no change in the circumstances which may affect their status as Independent Director during the year.

During the year under review, the Board of Directors on the recommendation of Nomination and Remuneration Committee & Audit Committee, has appointed Mr. Rohit Soni as the Chief Financial Officer (CFO) and Key Managerial Personnel of the Company w.e.f. 6th September, 2021.

Committees of Board

During the year under review, with an objective of further strengthen the governance standards so as to match with internationally accepted better practices, the Board had reconstituted certain existing Committees to bring more independence; constituted certain new Committees and Sub-committees; and amended / adopted the terms of reference of the said Committees. Most of the Committees consist of majority of the Independent Directors.

Details of various Committees constituted by the Board, including the Committees mandated pursuant to the applicable provisions of the Act and SEBI Listing Regulations, are given in the Corporate Governance Report, which forms part of this Annual Report.

Number of meetings of the Board

The Board of Directors met 5 (five) 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 Annual Report.

Independent Directors Meeting

The Independent Directors met on 28th March, 2022, without the attendance of Non-Independent Directors and members of the management. The Independent Directors reviewed the performance of Non-Independent Directors, the Committees and the Board as a whole along with 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 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 and 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 Boards functioning such as composition of the Board and Committees, experience and competencies, performance of specific duties and obligations, contribution at the meetings and otherwise, independent judgment, governance issues etc.

At the Board Meeting that followed the above mentioned meeting of the Independent Directors, the performance of the Board, its Committees, and individual Directors was also discussed. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

Policy on Directors Appointment and Remuneration

The Companys policy on Directors appointment and remuneration and other matters ("Remuneration Policy") provided in Section 178(3) of the Act is available on the Companys website at https://www. adanitransmission.com/Investors/ Corporate-Governance.

We affirm that the remuneration paid to the Directors is as per the terms laid out in the Remuneration Policy of the Company.

Directors Responsibility Statement

Pursuant to Section 134(5)of the Act, 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 Mach, 2022 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 control 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.

Internal Financial Controls system and their adequacy

The details in respect of internal financial controls system and their adequacy are included in the Management and Discussion and Analysis Section, which forms part of this Annual Report.

Risk Management

The Board has formed a Risk Management Committee (RMC) to frame, implement and monitor the risk management plan for the Company. The RMC is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has an additional oversight in the area of financial risks and controls. The major risks identified by the businesses are systematically addressed through mitigation actions on a continual basis. Further, details are included in the separate section forming part of this Annual Report.

Board Policies

The details of the policies approved and adopted by the Board, as required under the Act and SEBI Listing Regulations are provided in Annexure - A to this report.

Corporate Social Responsibility (CSR)

Your Company has constituted a Corporate Social Responsibility (CSR) Committee and framed a CSR Policy. The brief details of CSR Committee are provided in the Corporate Governance Report, which forms part of this Annual Report. The updated CSR Policy is available on the website of the Company at https://www.adanitransmission.com/investors/ corporatenovernance. The Annual Report on CSR activities is annexed to this report.

Further, the Chief Financial Officer of the Company has certified that CSR spends of the Company for the financial year 2021-22 have been utilized for the purpose and in the manner approved by the Board.

Till 2017-18, your Company was preparing a separate Annual Report and Sustainability Report. This is the forth year that we have combined both the reports into one, presenting financial and non-financial metrics in an integrated report, for a more holistic picture of our purpose, performance and prospects.

Corporate Governance

Your Company is committed to good corporate governance practices. The Corporate Governance Report, as stipulated by the SEBI Listing Regulations, forms part of this Annual Report along with the required Certificate from Practicing Company Secretary regarding compliance of the conditions of corporate governance, as stipulated.

In compliance with corporate governance requirements as per the SEBI Listing Regulations, your Company has formulated and implemented a Code of Business Conduct and Ethics for all Board members and senior management personnel of the Company (Code of Conduct), who have affirmed the compliance thereto. The said Code of Conduct, is available on the website of the Company at https:// www.adanitransmission.com/investors/corporate- governance.

Business Responsibility and Sustainability Report

In its constant endeavor to improve corporate governance, your Company has, on a voluntary basis, transitioned to Business Responsibility and Sustainability Report (BRSR) for the year ended 31st March, 2022, which forms part of this Annual Report.

Annual Return

Pursuant to Section 134(3) (a) of the Act, the draft annual return as on March 31, 2022, prepared in accordance with Section 92(3) of the Act, is made available on the website of the Company and can be assessed using the link www.adanitransmission.com/investors/investors- downloads.

Transactions with Related Party

All transactions with related parties are placed before the Audit Committee for its approval. An omnibus approval from Audit Committee is obtained for the related party transactions which are repetitive in nature.

All related party transactions, entered into during the financial year under review, were on an arms length basis and were in the ordinary course of business. Your Company has not entered into any transactions with related parties which could be considered material in terms of Section 188 of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(Rs) of the Act, in Form AOC 2, is not applicable.

During the year under review, your Company has reported transactions with related party which are material as per Regulation 23 of the SEBI Listing Regulations and the details of the said transactions are provided in the Explanatory Statement to Notice of the ensuing AGM.

The Policy on Related Party Transactions is available on the Companys website and can be assessed using the link https://www.adanitransmission.com/ investors/corporate-governance.

General Disclosure

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions / events on these items, during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of Shares (Including Sweat Equity Shares) to employees of the Company under any scheme.

3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and the Companys operation in future.

4. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under Section 67(3)(c) of the Act).

5. Change in the nature of business of your Company.

6. Application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

7. One time settlement of loan obtained from the banks or financial institutions.

Insurance

Your Company has taken appropriate insurance for all assets against foreseeable perils.

Statutory Auditors & Auditors Report

Pursuant to the provisions of Section 139 of the Act read with rules made thereunder, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) hold office as the Statutory Auditors of the Company until the conclusion of the 10th AGM to be held in the calendar year 2023.

The Notes to the financial statements referred in the Auditors Report are self-explanatory. There are no qualifications or reservations on adverse remarks or disclaimers given by Statutory Auditors of the Company and therefore do not call for any comments under Section 134 of the Act. The Auditors Report is enclosed with the financial statements in this Annual Report.

Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Act and the rules made thereunder, your Company has re-appointed M/s. Chirag Shah & Associates, Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for FY 2021-22 is provided as Annexure-B of this report. There are no qualifications or reservations on adverse remarks or disclaimer in the said Secretarial Audit Report.

As per the requirements of the Listing Regulations, Practicing Company Secretaries of the respective material subsidiaries of the Company have undertaken secretarial audits of these subsidiaries for FY 2021-22. The Secretarial Audit Report confirms that the material subsidiaries have complied with the provisions of the Act, Rules, Regulations and Guidelines and that there were no deviations or noncompliances.

Secretarial Standards

During the year under review, your Company has complied with all the applicable provisions of Secretarial Standard-1 and Secretarial Standard-2 issued by the Institute of Company Secretaries of India.

Reporting of frauds by auditors

During the year under review, the Statutory Auditors and Secretarial Auditors have not reported any instances of fraud committed against your Company by its officers or employees to the Audit Committee or the Board, under Section 143(12) of the Act.

Particulars of Employees

Your Company, along with its operational subsidiaries, had 5,105 permanent employees on consolidated basis as on 31st March, 2022.

The percentage increase in remuneration, ratio of remuneration of each Director and Key Managerial Personnel (KMP) (as required under the Act) to the median of employees remuneration, as required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as Annexure-C of this report.

The statement containing particulars of employees as required under Section 197 of the Act read with

Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a separate annexure forming part of this report. In terms of Section 136 of the Act, the report and accounts are being sent to the Members and others entitled thereto, excluding the said annexure 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.

Prevention of Sexual Harassment at Workplace

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and rules made thereunder, your Company has constituted Internal Complaints Committees (ICCs) at all relevant locations across India to consider and resolve the complaints related to sexual harassment.

The ICCs include external members with relevant experience. The ICCs, presided by senior woman, conduct the investigations and make decisions at the respective locations. The ICCs also work extensively on creating awareness on relevance of sexual harassment issues, including while working remotely. During the year under review, there were no complaints pertaining to sexual harassment. All new employees go through a detailed personal orientation on anti sexual harassment policy adopted by the Company.

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 Act read with Rule 8 of The Companies (Accounts) Rules, 2014, as amended, is provided as Annexure-D of this report.

Acknowledgment

Your Directors are highly grateful for all the guidance, support and assistance received from the Government of India, Governments of various states in India, Financial Institutions and Banks. Your Directors thank all the esteemed shareholders, customers, suppliers and business associates for their faith, trust and confidence reposed in the Company.

Your Directors also 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 even during the challenging times of COVID-19 pandemic.

For and on behalf of the Board of Directors
Gautam S. Adani
Chairman
Date: 5th May, 2022 (DIN: 00006273)