CESC Ltd Directors Report.

Dear Members,

The Board of Directors Is pleased to present the Forty-third Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended March 31, 2021.

FINANCIAL RESULTS

The Companys financial performance (standalone and consolidated) for the year ended March 31, 2021 is summarised below:

Particulars

Standalone

Consolidated

2020-21 2019-20 2020-21 2019-20
Income from operations 6,921 7,836 11,639 12,159
Other Income 180 146 235 219
Total Income 7,101 7,982 11,874 12,378
Profit before regulatory Income and Tax 390 587 1,328 1137
Regulatory Income 457 532 424 630
Profit before tax 847 1,119 1,752 1,767
Profit for the year 814 918 1,363 1,309
Other comprehensive loss (33) (33) (29) (38)
Total comprehensive income 781 885 1,334 1,271

Highlights of Companys performance and the state of Companys Affairs for the year ended March 31, 2021 are as under:

Standalone

During the year under review, total income was Rs. 7,101 crore as against Rs. 7,982 crore for the previous year. Profit before tax was Rs. 847 crore and Profit after tax (PAT) was at Rs. 814 crore. Total Comprehensive Income for the year after all other adjustments was Rs. 781 crore.

Retained Earnings as on March 31, 2021 was Rs. 10,353 crore (Previous year Rs. 10,432 crore) after adjustment for dividend, unforeseen exigencies and other items. Please refer Note 20 in the Standalone Financial Statements for necessary details.

Consolidated

Total consolidated income was Rs. 11,874 crore as against Rs. 12,378 crore for the previous year. Profit before tax was Rs. 1,752 crore and Profit after tax (PAT) was at Rs. 1,363 crore. Total Comprehensive Income for the year after all other adjustments was Rs. 1,334 crore.

DIVIDEND

During the year, an interim dividend of 450% i.e. Rs. 45 per equity share was paid within the permissible timeline after deducting the tax at source pursuant to the Finance Act, 2020. As per the Finance Act, 2020 dividend income is taxable in the hands of the members w.e.f. April 1, 2020 and the Company is required to deduct tax at source (TDS) from dividend paid to the Members at prescribed rates as per the Income-tax Act, 1961. The above dividend is the highest in Companys history and was declared in terms of the Dividend Distribution Policy of the Company.

The Notice convening the ensuing Annual General Meeting ("AGM") of the Members of the Company includes an item for confirmation of the said interim dividend.

According to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the top 1000 listed entities based on market capitalization, calculated as on March 31 of every financial year are required to formulate a dividend distribution policy which shall be disclosed on the website of the listed entity and a web-link shall also be provided in their annual reports. Accordingly, the Dividend Distribution Policy of the Company can be accessed using the following link https://www.cesc.co.in/wp-content/uploads/policies/Dividend Policv.pdf.

ALTERATION OF ARTICLES OF ASSOCIATION

During the year under review, Article 88 of the Articles of Association of the Company was altered for increasing the maximum number of Directors to fifteen from the earlier level of ten after obtaining requisite approval of the Members of the Company via postal ballot.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis for the year under review, as stipulated under the Listing Regulations, is presented in a separate section and forming a part of this report as Annexure A.

SUBSIDIARIES

As on March 31, 2021, the Company had nineteen subsidiaries including Noida Power Company Limited which became a subsidiary of the Company during the financial year 2020-21. Broad details of operations of the subsidiaries of the Company are given in Management Discussion & Analysis, which forms a part of this report.

A separate statement containing salient features of the financial statements of subsidiary companies, as per Section 129(3) of the Act, is attached to the consolidated financial statements.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the provisions of the Companies Act, 2013 ("the Act"), applicable Accounting Standards and the Listing Regulations, consolidated financial statements of the Company and of all its subsidiaries for the year 2020-21, duly audited by Messrs S. R. Batliboi & Co. LLP, Chartered Accountants, Companys Auditors, forming a part of the Annual Report and shall be laid before the AGM of the Company as required under the Act.

The audited financial statements including the consolidated financial statements of the Company and all other documents required to be attached thereto, are available on the Companys website and can be accessed at https://www.cesc.co.in/?cat=16.

The financial statements of the subsidiaries, as required, are available on Companys website and can be accessed at: https://www.cesc.co.in/?cat=25

The Company has formulated a Policy for determining Material Subsidiaries. The Policy is available on the Companys website and can be accessed at: https://www.cesc.co.in/wp-content/uploads/ policies/ POLICYONMATERIALSUBSIDIARIES. pdf

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In terms of the provisions of Section 152 of the Act and Article 102 of the Articles of Association of the Company, Mr. Rabi Chowdhury retires as a Director of the Company at the forthcoming AGM and, being eligible, offers himself for re-appointment as a Director.

Mr. Debanjan Mandal was appointed as an Additional Director, in the category of Non-Executive Independent Director for a period of five years with effect from May 10, 2021. Mr. Mandal would hold office as such till the date of ensuing AGM of the Company. In the opinion of the Board, Mr. Mandal possesses requisite expertise, integrity and experience, including proficiency for appointment as an Independent Director of the Company and the Board considers that, given his professional background and experience, his association would be beneficial to the Company. The Company has received requisite notice from a member proposing the candidature of Mr. Debanjan Mandal to the office of Director of the Company in accordance with the relevant provisions of the Act.

It is also proposed to seek shareholders approval by means of a Special Resolution for continuation of the Directorship of Mr. Pradip Kumar Khaitan as a Non-Executive Non-Independent Director of the Company in accordance with the requirement of Regulation 17(1A) of the Listing Regulations.

The Board of Directors, on the recommendation of the Nomination and Remuneration Committee ("NRC"), has recommended re-appointment/appointment/ continuation of Directorship of the above Directors.

Notice of the AGM includes appropriate Resolutions seeking your approval in respect of all the above appointments.

The details on Directors re-appointments /appointments and remuneration including criteria for determining qualifications, positive attributes, independence of Director and also remuneration for Key Managerial Personnel and other employees forms part of Corporate Governance Report of this Annual Report.

During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees and commission, as applicable, received by them.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence prescribed under the Act and the Listing Regulations.

In terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, Independent Directors of the Company have registered their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs.

Four meetings of the Board of Directors were held during the year on June 29, 2020, September 8, 2020, November 6, 2020 and January 13, 2021.

Changes in Key Managerial Personnel

Mr. Subhasis Mitra ceased to be the Company Secretary of the Company with effect from May 10, 2021 and Mr. Jagdish Patra was appointed in his place as the Company Secretary and Compliance Officer of the Company with effect from the same date. Except the above, there is no other change in Key Managerial Personnel.

SECRETARIAL STANDARDS

The Company has followed the applicable Secretarial Standards (SS), i.e. SS-1 and SS-2, relating to Meetings of the Board of Directors and General Meetings respectively.

CRITERIA ON BOARD DIVERSITY AND DIRECTOR ATTRIBUTES AND REMUNERATION POLICY FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with Part D of Schedule II to the Listing Regulations, the NRC is responsible for determining qualification, positive attributes and independence of a Director. The NRC is also responsible for recommending to the Board, a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees. In line with this requirement, the Board has adopted the Policy on Remuneration for Directors, Key Managerial Personnel and other employees.

COMMITTEES OF THE BOARD

The various Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority.

The following statutory Committees constituted by the Board according to their respective roles and defined scope:

• Audit Committee

• Nomination and Remuneration Committee

• Corporate Social Responsibility Committee

• Stakeholders Relationship Committee

• Risk Management Committee

Details of the composition, terms of reference and number of meetings held for respective committees are given in the Report on Corporate Governance.

The Company has adopted a Code of Conduct and Ethics for its Directors and Senior Management Personnel. The same can be accessed at https://www.cesc.co.in/wp-content/uploads/2014/02/ Code-of-Conduct.pdf.

All Directors and Senior Management Personnel have affirmed the compliance with the said Code of Conduct and Ethics.

The Managing Directors have also confirmed and certified the same and the certification is given elsewhere in the report.

EQUITY CAPITAL AND DEBT SECURITIES

Equity Shares

There was no change in the equity share capital of the Company during the year.

The Company had, voluntarily delisted its equity shares from The Calcutta Stock Exchange Limited with effect from November 23, 2020. The equity shares of the Company are continue to be listed on BSE Limited (BSE) and the National Stock Exchange of India Ltd (NSE). The Company has paid the requisite listing fees to the Stock Exchanges up to the financial year 2021-22.

Sub-division of equity shares of the Company

Your Board of Directors at its meeting held on June 16, 2021 considered a proposal to sub-divide each equity share of face value of Rs. 10/- into 10 equity shares of the face value of Re. 1/- each, fully paid up, subject to approval of the members at the forthcoming AGM and such other approvals as may be necessary.

The Notice of the AGM includes an appropriate resolution seeking your approval for the above purpose.

Issue of Debentures

During the year, the Company had issued and allotted, on private placement basis, the following Non-Convertible Debentures ("NCDs"):

(i) secured, listed NCDs aggregating to Rs. 500 crore, and

(ii) secured, unlisted NCDs aggregating to Rs. 250 crore,

for cash at par, in compliance with the applicable circulars of the Securities and Exchange Board of India on issue of debt securities by certain large corporates.

The funds raised through NCDs have been utilised as per terms of the issue.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors hereby state and confirm that:

i) in the preparation of the accounts for the financial year ended March 31, 2021, the applicable accounting standards have been followed alongwith proper explanation relating to the material departures, if any;

ii) the Directors 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 affairs of the Company at the end of the financial year and of the profit of the Company for that period;

iii) the Directors have 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 have prepared the annual accounts on a going concern basis;

v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the related requirements set out in the Listing Regulations. The report on Corporate Governance is given in the report as Annexure B and Additional Shareholder Information as Annexure C, as stipulated under the Listing Regulations, alongwith the Auditors Certificate thereon.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS

No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and your Companys operations in future.

CORPORATE SOCIAL RESPONSIBILITY

As a responsible utility serving the city of Kolkata for more than 100 years, your Company has a commitment to serve the society. As the Company continues to play a dynamic role in Indias power sector, our community engagements are creating value in a manner that is environmentally sustainable and socially uplifting. Through the CSR initiatives, your Company is dedicated to the cause of providing, access to basic services, empowering people, educating them and improving their quality of life. The Company undertakes programmes based on identified needs of the community around healthcare, education, safe drinking water and sanitation as well as through livelihood generation and skill development.

Through Roshni Project, the Company facilitates underprivileged children in urban slums to acquire quality education with level- appropriate reading and writing ability. Child-friendly environment in government schools is created through provision of safe drinking water and sanitation facilities under Nirmal Abhiyan Project. Further, CESC School Building Project aims at providing conducive environment for learning and development in schools through development of school buildings, classrooms, laboratories, playgrounds and libraries. The Companys Hamari Awaaz Project seeks to create child friendly communities in urban slums by mobilising, sensitising and empowering communities to fight

against child labour and other forms of child abuse and foster child protection. Improvement of health and nutrition status of pregnant women, lactating mothers, adolescent girls and children in 0-6 years age group through Suswasthya Project is another focus area of CESCs CSR initiatives. Under the Nirmal Kolkata projects, community-based water and sanitation initiatives have been undertaken for protection of environment and promotion of sustainable development. CESC supports skill development projects, such as, Saksham, Udaan and Prayas in several locations for employment generation among underprivileged youths. Across the different programme areas focused by the Company, its endeavour is to reach out to the disadvantaged and the marginalised sections of the society, and thereby, contributing to the regional and national development goals.

CESC has also been actively supporting a project undertaken by the RP-Sanjiv Goenka Group CSR Trust of which CESC is a part for setting up in Kolkata, a school of international standard. The construction work for the school building is in progress.

In terms of recent amendments in Companies (Corporate Social Responsibility Policy) 2014, as amended, the Company has revised its Corporate Social Responsibility Policy, a brief outline of which along with the required disclosures are annexed elsewhere in this report. The CSR Policy is uploaded on Companys website and can be accessed at https://www.cesc.co.in/wp-content/uploads/ policies/CSR Policv.pdf. A detailed section on the activities undertaken during the year under review is included in Annexure D and forming a part of this report.

BUSINESS RESPONSIBILITY REPORT

Environment Social and Governance (ESG) risks arising from businesses are one of the central issues facing the world. Consumption patterns have been changing globally as a result of the changing lifestyles, increasing production volumes, and making natural resource depletion a global as well as a local issue. Spurred by the Paris Agreement in 2015, and the adoption of United Nations Sustainable Development Goals, the transition to a low carbon economy has been underway. It is essential to be mindful of the fact that businesses around the world are not waiting for this transition to happen. CESC has been a stakeholder centric organization and we, at CESC, are committed to adopt ESG risk mitigation measures by developing strategies for integrating sustainability in every sphere of our operations. We recognize that more and more stakeholders from market leaders, investors, regulatory bodies to consumers are becoming aware of ESG parameters and their subsequent risks, if not addressed.

As stipulated under the Listing Regulations, the Business Responsibility Report (BRR) describing the initiatives taken by the Company from an environmental, social and governance perspective, is given in the report as Annexure -E.

RELATED PARTY TRANSACTIONS

All contracts / arrangements / transactions entered by the Company during the financial year under review with related parties, were in ordinary course of business and on an arms length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties having potential conflict with the interests of the Company and which could be considered materially significant. Therefore, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for the financial year 2020-21 and hence the same is not provided. The Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board is available on the Companys website and can be accessed at https://www.cesc.co.in/wp-content/uploads/ policies/RELATED PARTIES POLICY.pdf

Transactions with related parties entered into in the normal course of business are periodically placed before the Audit Committee of the Board for its approval. Members may please refer to Note 42 to the Standalone Financial Statements for requisite disclosure in respect of related parties and transactions entered into with them during the year.

RISK MANAGEMENT

Your Board has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. Furthermore, your Company has set up a robust internal audit function which reviews and ensures sustained effectiveness of internal financial controls by adopting a systematic approach to its work. Detailed discussion on risk management is covered in Management Discussion and Analysis in Annexure A and Report on Corporate Governance in Annexure B of the Annual Report.

In view of the amendments in the Listing Regulations, the Board of Directors of your Company modified the terms of reference of the Risk Management Committee to that extent.

Your Companys internal control systems are an integral part of the risk management process and commensurate with the nature of its business, the size and complexity of its operations and such internal financial controls with reference to the Financial Statements are adequate. Your Company has implemented robust processes to ensure that all internal financial controls are effectively working.

AUDITORS AND AUDITORS REPORT

Messrs S R Batliboi & Co. LLP, Chartered Accountants, (Firm Registration No.301003E/E300005) was appointed as the Auditors of the Company for a term of five consecutive years, at the Thirty-ninth AGM of the Company. The Auditors have confirmed that they are not disqualified from continuing as Auditor of the Company.

The standalone and the consolidated financial statements of the Company have been prepared in accordance with Indian Accounting

Standards notified under Section 133 of the Act.

The Auditors Report annexed to the financial statements for the year under review does not contain any qualification, reservation, adverse remark or disclaimer. The Auditors have not reported any instance of fraud referred to in Section 134(3)(ca) of the Act.

COST AUDITORS AND COST AUDIT REPORT

The Board has re-appointed Messers Shome & Banerjee, Cost Accountants (Firm Registration No 000001) as Cost Auditors for conducting the audit of cost records of the Company for the financial year 2021-22 under Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014. A resolution seeking approval of the Members for ratifying the remuneration of Rs. 7,00,000 (Rupees Seven lakh) plus applicable taxes, travel and actual out-of-pocket expenses payable to the Cost Auditors for financial year 2021-22 is included in the Notice to the ensuing AGM.

The Company is required to maintain cost records as specified by the Central Government under Section 148(1) of the Act and such records are made and maintained accordingly.

SECRETARIAL AUDIT REPORT

The Board had appointed Messrs. S.M. Gupta & Co., Company Secretaries, as the Secretarial Auditors of the Company to conduct the secretarial audit for the financial year 2020-21.

The Secretarial Audit Report for the financial year ended March 31, 2021 is annexed as Annexure F in this Report.

As per the requirements of the Listing Regulations, Practicing Company Secretaries of the material unlisted subsidiaries of the Company have undertaken secretarial audit for the financial year 2020-21. The Secretarial Audit Reports of such material unlisted subsidiaries confirms that they have complied with the provisions of the Act, Rules, Regulations, and Guidelines and that there were no deviations or non-compliances. Secretarial Audit Reports of Noida Power Company Limited, Haldia Energy Limited and Dhariwal Infrastructure Limited , three material unlisted subsidiaries of the Company, are also forming part of the Report and attached as Annexures F1, F2 and F3.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Your Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour. In line with the Companys code of conduct, any actual or potential violation, howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. The role of the employees in pointing out such violations of the Companys code of conduct cannot be undermined.

In view of this above, your Company has established a robust Vigil Mechanism and a Whistle-blower policy in accordance with provisions of the Act and Listing Regulations for reporting genuine concerns over happening of instances of any irregularity, unethical practice and/or misconduct for Directors, employees and stakeholders. The details of the said policy have been disclosed on the Companys website www.cesc.co.in. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chairman of the Audit Committee of the Company through the Company Secretary for redressal. No person had been denied access to the Chairman of the Audit Committee and there was no such reporting during the financial year 2020-21.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Your Company, being an infrastructure company, is exempt from the provisions applicable to loans, guarantees, security and investments under Section 186 (11) of the Act. Therefore, no details are required to be provided.

FIXED DEPOSITS

The Company during the year, has not accepted any deposit and, as such no amount of principal or interest was outstanding as on the date of the Balance Sheet.

CONSERVATION OF ENERGY, RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to conservation of energy, research & development, technology absorption and foreign exchange earnings and outgo, as required under Section 134 of Act read with the Companies (Accounts) Rules, 2014 is given in Annexure-G, forming a part of this report.

ANNUAL RETURN

Pursuant to Section 92 of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return is available on the website of the Company on the following link at https://www.cesc.co.in/wp-content/uploads/annreport/Annual Return.pdf.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information 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 attached as Annexure - H. Details of employee remuneration as required under provisions of Section 197 of the Act and Rule 5(2) and 5(3) of the aforesaid Rules are provided in the said Annexure I. In terms of proviso to Section 136(1) of the Act, the Annual Report is being sent to the Members excluding the Annexure I. The said statement is also available for inspection with the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary at secretarial@rpse.in.

None of the employees listed in the said Annexure are related to any Director of the Company.

The Company has in place a Remuneration Policy for Directors, Key

Managerial Personnel and other employees, duly recommended by the Nomination and Remuneration Committee and approved by the Board. Other details relating to remuneration paid during the year to Directors and Key Managerial Personnel are furnished in the Report on Corporate Governance which forms a part of this report.

INDUSTRIAL RELATIONS

Industrial relations in the Company, during the year, continued to be cordial. A detailed section on the Companys Human Resource initiatives is included in of the Management Discussion and Analysis forming a part of this report.

COVID 19 PANDEMIC

India and other global markets experienced significant disruption in operations resulting from uncertainty caused by the worldwide outbreak of Coronavirus pandemic. The Companys business includes Generation and Distribution of power within its licensed area in the state of West Bengal, India. Considering power supply being an essential service, management believes that there is not much of a long term impact likely due to this pandemic on the business of the Company , its subsidiaries and joint venture except some lower demand and its consequential impact on supply and collection from consumers, which are believed to be temporary in nature. The Company has duly ensured compliance with specific regulatory directives issued in the related matter.

The Company is taking all necessary steps and precautionary measures to ensure smooth functioning of its operations/business and to ensure the safety and well-being of all its employees. The Company is closely monitoring developments, its operations, liquidity and capital resources and is actively working to minimize the impact of this unprecedented situation.The Company is also monitoring the operations of its subsidiaries and joint venture, basis which, no impairment is required to be recognised in respect of such investments.

ACKNOWLEDGEMENT

The Board of Directors wishes to place on record its deep sense of appreciation for the committed services by all the employees of the Company, co-operation received from the shareholders, business partners, financial institutions, banks, consumers and vendors during the year under review.

The Directors are also thankful to the Government of India, the various ministries of the State Governments, the central and state electricity regulatory authorities, communities in the neighbourhood of our operations, municipal authorities of Kolkata and local authorities in areas where we are operational in India for all the support rendered during the year.

The Directors regret the loss of lives due to COVID-19 pandemic and are deeply grateful and have immense respect for every person who risked their life and safety, to fight this pandemic. Finally, we appreciate and value the contributions made by all our employees and their families for making the Company what it is.

Your Directors are also grateful for your continued encouragement and support.

On behalf of the Board of Directors

Dr. Sanjiv Goenka

Chairman

DIN: 00074796

Place : Kolkata

Date : June 16, 2021