Kalpataru Power Transmission Ltd Directors Report.

DEAR MEMBERS,

Your Directors are pleased to present the 40th ANNUAL REPORT of Kalpataru Power Transmission Limited ("the Company") together with the Audited Financial Statements (standalone and consolidated) for the financial year ended March 31, 2021.

FINANCIAL HIGHLIGHTS

(Rs. in Crores)

Particulars Consolidated Standalone
2020-21 2019-20 2020-21 2019-20
Revenue from Operations 12,949.44 12,675.84 7,670.70 7,904.03
Profit before Depreciation, Tax and amortization expense 1,141.27 1,006.65 777.57 752.21
Less: Depreciation and amortization expenses 373.45 339.64 114.60 110.48
Profit before Tax and Exceptional Items 767.82 667.01 662.97 641.73
Exceptional items 209.64 4.06 168.35 23.94
Share of Profit / (Loss) from Joint Venture (32.21) (23.38) -
Tax Expense 283.21 258.10 216.10 202.62
Profit for the period 662.04 389.59 615.22 463.05
Other Comprehensive Income (net of tax)
Items that will be reclassified subsequently to Profit or Loss 8.89 (37.72) 15.50 (24.44)
Items that will not be reclassified subsequently to Profit or Loss 0.70 (1.51) (0.07) 0.51
Total Comprehensive Income for the period 671.63 350.36 630.65 439.12
Retained Earnings – Opening balance 1,943.35 1,752.96 2,201.00 1,868.29
Add: Profit for the period 671.02* 389.59* 615.22 463.05
Add: Impact of Ind AS 116 (net of taxes) - (2.36) - (1.18)
Less: Acquisition of non-controlling interest - 58.12 - -
Less: Dividends 0.63 46.04 - 46.04
Less: Interim Dividend 126.57 54.15 126.57 54.15
Less: Corporate Tax on Dividend - 20.59 - 18.97
Less: Transfer to Debenture Redemption Reserve - 5.47 - -
Less: Transfer to General Reserve 12.25 12.25 10.00 10.00
Less: Transfer to Capital Redemption Reserve 1.16 - 1.16 -
Less: Transfer to other reserves 0.21 0.22 - -
Retained Earnings – Closing balance 2,473.55 1,943.35 2,678.49 2,201.00

 

* Profit for the year attributable to Owners of the Company

OUR RESPONSE TO COVID-19

In FY 2020, as the COVID-19 pandemic first broke, your Company promptly reacted by providing the required support to its employees, clients and the community. Our people are our biggest strength and protecting their health and well-being, including those at remote project sites is crucial to us. Your Company took numerous initiatives to protect its employees health, financial and emotional wellbeing in these unprecedented times. Your Company initiated the "Kalpa Aapada Seva Project", a large-scale program for combating and containing COVID-19. We adopted a holistic strategy to safeguard and support our employees, vendors, subcontractors, local communities and frontline workers. Your Company had collaborated with residential doctors for various health & well-being sessions. Health and wellbeing webinars and virtual conferences for topics like Ergonomics and Spine Health Session, Stress Management and Emotional Wellbeing, COVID Awareness, Emotional Intelligence, Eye Care, were conducted. In addition, to help employees create immunity against COVID, medicines as prescribed by

Government of India were distributed to all employees. Our relief efforts are delivering assistance on-the-ground, such as engagement with NGOs to provide over 50,000 meals to vulnerable communities and distribution of dry ration kits to migrant and daily wage workers in India. Part of our support to the local communities, your Company distributed medicines, masks, sanitizers etc. to the local health centers and communities, constructed a medical room facility, contributed to the social solidarity fund for fight against the corona virus and supported the local communities by distributing basic amenities like food, books, stationery, masks, sanitizers etc. at various International locations. Your Company helped to establish a 1,000 bed dedicated COVID hospital equipped with intensive care units (ICUs) testing lab and dialysis center at Thane, Maharashtra. At various site locations, our teams have procured medical equipment, PPE kits, gloves, masks and sanitizer and handed them to the local Government Hospitals and health care centers. For our partners - vendors, suppliers and subcontractors who have been most exposed to the crisis, we shorten the lead time for payments with systematic immediate payments. Your Company have ensured that all our subcontractor workers were retained at site with ensured hygiene standards at labour camps with daily needs as per government guidelines.

OPERATIONAL HIGHLIGHTS

First quarter of the Financial Year was mostly under lockdown imposed for containment and curtailment of novel Corona virus (COVID-19). However, your Company continued with its robust performance during the year.

During FY 2020-21, the Standalone revenue of your Company decreased by about 3% to RS. 7,670.70 Crores as against RS. 7904.03 Crores in the previous financial year. Total Export revenue (including overseas projects) was RS. 3,550 Crores or approx. 46% of revenues. The Standalone net profit for the year increased by 33% to RS. 615.22 Crores as against RS. 463.05 Crores in the previous financial year. The Company successfully delivered on the Profitability front with Core EBIDTA 10.5% at about RS. 808 Crores with margins (PAT) on standalone level at 8% primarily driven by operational excellence while the initiatives for cost rationalizations and productivity enhancement continue to gain momentum. Your Company has supplied 1,57,095 MTs of Transmission Line Towers during the year under review. Your Company has a standalone order book of RS. 13,890 Crores excluding fairly placed bids. Your Company has received Orders in excess of RS. 8,440 Crores (including orders received by Linjemontage I Grastorp AB) in the current financial year 2020-21. The consolidated revenue of your Company increased by about 2% to RS. 12,949.44 Crores as against RS. 12,675.84 Crores in the previous financial year.

The consolidated net profit for the year increased by about 70% to RS. 662.04 Crores as against RS. 389.59 Crores in the previous financial year mainly on account of exceptional gain and Operational excellence by the Group. COVID-19 global pandemic induced lockdown was imposed pan-India in the initial part of FY 2020-21. The second wave of COVID-19 started showing its impact in the last quarter and is still continuing till the date of this report. Due to the project-based nature of business, there was no material adverse impact on operations or finances of the Company during FY 2020-21.

AWARDS & RECOGNITION:

Your Company has been honoured with various Awards, accolades and recognitions during the year under review, some of which are elaborated hereunder:

A) Bronze Trophy was conferred to the Companys Gandhinagar manufacturing plant and 765 KV D/C Vindhyachal – Varanasi Transmission Line project at the NSC India Award, 2020 by the National Safety Council set up by the Ministry of Labour, Govt. of India.

B) Platinum Award was conferred to the Company at 45th International Convention on Quality concepts at Dhaka, Bangladesh by BANGLADESH SOCIETY OF TOTAL QUALITY MANAGEMENT (BSTQM). The Theme for the Convention was "Unlocking imagination through QCC".

C) Your Companys Uniara Power Plant was conferred with appreciation certificate and recognition from District Administration as well as State Medical & Health Department for remarkable local contribution in fighting COVID-19 crisis.

D) Your Companys Raipur manufacturing plant was conferred with "Greentech Safety Excellence Award, 2020" from Greentech Foundation.

E) Your Companys Raipur Manufacturing Unit was conferred with "Gold Award" by Grow Care India for exemplary performance in Safety, Operations and Environment Protection.

F) Your Companys Raipur Plant was conferred with Runners Up position for excellence in Safety, Health & environment (SHE) practices at the CII Chhattisgarh SHE Awards 2020-21.

G) Your Companys Raipur manufacturing plant was also conferred with Silver Medallion at IMEXI (Integrated Manufacturing Excellence initiatives) Prize Ceremony organized by Kaizen Hansei, a strategic partner of the Kaizen Institute, India.

H) Your Companys Gandhinagar Manufacturing Plant was conferred with Gold Trophy in the category "Challenges & Initiatives post COVID-19" by the Surat Chapter of Quality Circle Forum of India (QCFI) at Chapter Convention on Quality Concepts, 2020.

I) Confederation of Indian Industries - South Region has recognized the Companys 765 kV D/C (HEXA) Virudhunagar – Coimbatore Transmission line Project as 3 Star rated project in appreciation of its EHS practices.

J) National Safety Council of India bestowed Merit Certificate to your Company for best EHS Practices during execution of 765 KV DC Bikaner – Khetri Transmission Line Project.

K) Your Company received special recognition on attaining "The Expert Panel Evaluation Milestone" at the BML Munjal Award – 2020. The BML Munjal Awards for Business Excellence through Learning & Development recognizes organizations who have demonstrated business excellence through innovation in learning & development.

L) Your Company was recognized with the Gold Trophy & National Award for HR Best Practices - 2019 and received "Certificate of Merit" from National Institute of Personnel Management (NIPM). Participating companies were evaluated on various aspects of HR like People Strategy, Innovative HR Practices, Learning & Organizational Development, HR Technology etc.

M) At Rail Infra and Mobility Business Digital Awards, 2020, your Company was conferred with Certificate of Appreciation for being selected as "Electrical Solution Provider of the Year" in the Corporate (Rail Business) category. Further, President (Railways) of the Company was selected as Rail Business Leader of the year at said awards.

N) 13 Artisans and Supervisors of your Companys Railways business received Awards & Certificates at 12th Edition of CIDC Vishwakarma Awards.

O) The World HRD Congress has recognized your Company under the category Best Leadership Development Program for Middle Management for long-term leadership development intervention Leadership Excellence and Pride (LEAP) along with the Talent Development and Review Council (TDRC).

P) Indian Society for Training & Development, the leading body for Training & Development in India has recognized your Company at the 30th National Award for Innovative Training Practices for the year 2019-20. This award recognizes that innovative training practices and sustainable processes to continually improve such practices prevails in your Company.

Q) Various Clients of the Company recognized its EHS practices and provided below certificates of appreciation:

• BharatPetroleumCorporationLimitedgrantedcertificate of Appreciation to your Company in appreciation of achievement of 12 million LTA Free man hours.

• Power Grid Corporation of India Limited granted certificate of Appreciation to your Company for 765 kV Ajmer – Bikaner Transmission line Project in recognition of significant achievement of "Zero Accident" during the period from October, 2019 to March, 2021 without any Loss time accident and maintaining improved EHS Standards .

• Indian Oil Corporation Limited granted Certificate of Appreciation for winning first position in exhibiting best safety performances while executing construction and laying of Paradeep Hyderabad Pipeline Project for the year 2020. For the same project, KPTL also received appreciation certificate for achieving 2 million safe man hours. It also granted Certificate of Appreciation on achieving 1.5 million safe man hours without LTI between January, 2020 to January, 2021 during the execution of ETBPNMTPL R-LNG Pipeline Project.

• GAIL (India) Limited granted Certificate of Appreciation to your Company on achieving 1 million safe man hours without LTI between February, 2019 to January, 2021 during the execution of Dabhi Durgapur Pipeline Project.

• Da Afghanistan Breshna Sherkat (DABS) granted Certificate of Appreciation to certain official(s) of your Company for EHS performance during execution of 220 kV Sheberghan to Andkhoy Transmission Line Project.

MATERIALCHANGESANDCOMMITMENTAFFECTING FINANCIAL POSITION OF YOUR COMPANY

There are no material changes and commitments, affecting the financial position of your Company which has occurred between end of financial year 2020-21 and the date of Directors Report.

DIVIDEND

Your Company has declared and paid an Interim Dividend of RS. 8.50 (425%) per equity share of RS. 2 each on February 13, 2021. In addition, your Board has recommended a Final Dividend of RS. 1.50 (75%) per equity share of RS. 2 each for the year ended March 31, 2021.

TRANSFER TO RESERVES

Your Company has transferred following amounts to various reserves during the financial year ended March 31, 2021:

Amount transferred to Amount in (Rs. in Crores)
General Reserve 10.00
Capital Redemption Reserve 1.16

PERFORMANCE AND FINANCIAL POSITION OF EACH SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES

A statement containing the salient features of financial statements of the subsidiary, associate and joint venture companies in terms of provisions of Section 129(3) of the Companies Act, 2013 in the prescribed Form AOC-1 is annexed to Consolidated Financial Statements and hence not repeated here for the sake of brevity.

The brief details of the activities carried out by key subsidiaries /new subsidiaries of your Company is provided below.

JMC Projects (India) Ltd. ("JMC Projects" or "JMC")

JMC is one of the leading construction companies in India, with more than RS. 3,650 Crores revenue, having presence in

South Asia, East Asia and East Africa. It is certified under ISO 9001:2015, Environmental Management System (EMS) conforming to ISO 14001:2015 and Occupational Health & Safety Management system (OHSMS) conforming to ISO 45001:2018 at all offices and projects.

The companys presence spans across residential complexes and townships, hospitals, hotels, commercial complexes, institutions, factories and buildings, water supply and irrigation projects, roads and highways, airports, flyovers and elevated corridors, metro rail and other urban infrastructure projects, industrial units and power plants. JMCs integrated capabilities span the spectrum of ‘EPC solutions with Safety, Quality and On-time delivery as the 3 pillars.

Over three decades of a strong, customer-focused approach and a sharp focus on world-class quality have enabled JMC to maintain a leadership position in its major lines of business. Characterized by professionalism, high standards of corporate governance and sustainability, JMC continues to evolve, seeking better ways of engineering to meet emerging challenges leveraging the power of People- Processes-Technology (PPT).

For the FY 2020-21, JMC has received new contracts of more than RS. 7900 Crores including a project in Mongolia.

As of March 31, 2021, the aggregate value of orders on hand of JMC stands at approx. RS. 14,009 Crores. Your Companys shareholding in JMC stands at 67.75% during the year under review.

Shree Shubham Logistics Ltd ("SSLL"):

SSLL undertakes an array of activities in the post-harvest value chain primarily for agri-commodities and is currently present in 10 states and managing inventories above 1.5 million MT. The activities include warehousing, collateral management, facilitation, testing & certification and pest management. The activities are aimed at a wide spectrum of market participants dealing in agri-commodities, including farmers, traders & aggregators, government agencies, banks and electronic commodities exchanges. Through the integrated business model, SSLL believes that they are able to create value in the post-harvest value chain. Your Company holds 100% equity shares of SSLL. During the year under review, SSLL has been awarded a new contract for 10 years by RSWC under PPP model for managing and operating its warehouses witRs. 48 locations and capacity of 7.18 lac MT.

Linjemontage I Grastorp AB ("LMG"):

LMG, a Swedish EPC company headquartered in Grastorp, Sweden along with its two wholly owned subsidiaries were acquired by the Companys wholly owned subsidiary in Sweden namely Kalpataru Power Transmission Sweden AB in March 2019. During the year under review, LMG along with its two subsidiaries has bagged Orders of approx. RS. 565 Crores and has an Order Book of approx. RS. 1071 Crore as on March 31, 2021. This year the performance of the company has been impressive. Whilst on one side it has further strengthened its position in the European markets and achieved a significant growth in revenue of about 83.60%, it has also observed an approx. 133% improvement in the net profit. LMG continues to add more capabilities like entry into 400 kV transmission lines business, expanding its presence to many regions in Sweden including North of Sweden and adding new services. The team size at LMG has also been scaled up and it has emerged as one of the top suppliers in terms of quality of service and safety.

Fasttel Engenharia Ltda. ("Fasttel"):

On January 27, 2021, your company incorporated a wholly owned subsidiary namely Kalpataru Power Do Brasil Participacoes Ltda ("KPBPL"). KPBPL entered into definitive Agreement to acquire 51% stake in Fasttel, a Brazilian EPC company. Fasttel, founded in 1988, is based in Curitiba city in the state of Parana in southern part of Brazil and specializes in Engineering, Procurement, and Construction (EPC) and maintenance of power transmission lines, substations and distribution systems across various voltage range up to 750 kV. The company mainly operates into three business areas, comprising of EPC of substations, transmission and distribution network services with revenue of around USD 47 Million in 2020 and has a profitable track record. The acquisition of Fasttel is of strategic fit to KPTL in order to capture local market opportunities in Brazil and expand business in Latin American market. On April 7, 2021, KPBPL completed the acquisition of 51% stake in Fasttel along with management control. As on acquisition date, Fasttel had a strong Order Book of approx. RS. 669 Crores. During the year under review, two new companies namely Kalpataru Power Senegal SARL, in the Republic of Senegal and Kalpataru Power DO Brasil Participacoes Ltda., in Brazil were incorporated as Wholly Owned Subsidiaries of your Company. Fasttel became 51% step-down subsidiary of the Company w.e.f. April 7, 2021.

During the year under review, Jhajjar KT Transco Private Limited ceased to be a Joint Venture Company of the Company. Accordingly, as on the date of this Report your Company has 26 direct and indirect subsidiaries and 1 joint venture company. Pursuant to provisions of section 129 of the Companies Act, 2013, your Company shall place Consolidated Financial statements before the members for its approval. Further, pursuant to provisions of Section 136 of the Companies Act, 2013, your Company will make available the Annual Accounts of the Subsidiary Companies and the related information to any Members of the Company who may be interested in obtaining the same. The Annual Accounts of the Subsidiary companies are also uploaded on the website of the Company i.e. www.kalpatarupower.com and will also be kept open for inspection at the Registered Office of your Company and that of the respective Subsidiary company.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Audited Consolidated Financial Statements for the year under review pursuant to Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Consolidated Financial Statements presented by your Company have been prepared as per Ind AS and include the financial results of its Subsidiary companies, Associates and Joint Venture companies.

DIVESTMENT/MONETIZATION OF TRANSMISSION LINE SPVs

On July 3, 2019, your Company entered into 3 (three) binding agreements with CLP India Private Limited ("CLP") to sell its stake in 3 (three) power transmission assets namely, Kalpataru Satpura Transco Private Limited ("KSTPL"), Alipurduar Transmission Limited ("ATL") and Kohima-Mariani Transmission Limited ("KMTL") (referred jointly as SPVs), for an estimated enterprise value of RS. 3,275 Crores. The transaction was subject to requisite approvals and compliances (conditions precedents).

Though the Company completed the sale of its entire stake in KSTPL on November 20, 2019, however, due to non-fulfilment of the conditions precedent, the binding agreement for sale of stake in ATL was terminated w.e.f May 1, 2020. Subsequently, your Company entered into definitive agreements with Adani Transmission Limited to sell its stake in ATL, subject to requisite approvals and compliances of conditions. On November 26, 2020, the Company completed the sale and transfer of ~49% of the total equity shares of ATL with an agreement to sell the balance 51% after obtaining requisite regulatory and other approvals and in a manner consistent with Transmission Service Agreement.

Furthermore, your Company entered into definitive agreement on May 29, 2020 with India Grid Trust, an infrastructure investment trust, to sell its stake in Jhajjar KT Transco Private Limited ("JKTPL"), subject to receipt of relevant approvals and compliances of conditions. Your Company completed the sale of its entire stake in JKTPL on October 5, 2020.

During FY 2020-21, all the three Elements of KMTL Project were successfully commissioned and the Company is in advanced stage of completion of sale of KMTL to CLP as per terms of definitive agreement and in a manner consistent with Transmission Service Agreement.

BUY BACK OF EQUITY SHARES

The Board of Directors of the Company at its meeting held on May 20, 2020 approved the buy-back by the Company of its equity shares of face value of RS. 2/- each ("Equity Shares") from the open market through the stock exchange mechanism in compliance with Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018, and the Companies Act, 2013, and other applicable rules / law, at a maximum price of RS. 275/- per Equity Share ("Maximum Buyback Price") payable in cash, for an aggregate maximum amount not exceeding RS. 200 Crores. During the Buyback period, the Company bought back a total of 58,06,262 Equity Shares, utilizing a total of RS. 142.69 Crores (excluding Transaction Costs). The Equity Shares were bought back at an average price of RS. 245.75 per Equity Share. The Buyback of the Company was closed on November 27, 2020 (being last working day) and all the formalities including payments and extinguishment of shares were completed within stipulated time. Post completion of Buyback, the Equity Share Capital of the Company reduced to RS. 29,78,18,416 comprising of 14,89,09,208 Equity shares of RS. 2 each.

DIRECTORS

At the 39th Annual General Meeting held on August 12, 2020, the shareholders approved the re-appointment of:

(i) Mr. Manish Mohnot (DIN: 01229696) as the Managing Director & CEO for a period of 5 years effective from April 1, 2020; and

(ii) Ms. Anjali Seth (DIN: 05234352) as an Independent Director of the Company to hold office for a second term of 5 (five) consecutive years, commencing from May 19, 2020 and ending on May 18, 2025.

Your Board is of the opinion that the Independent Director re-appointed during the year possesses integrity, expertise, experience and proficiency.

Further, during the year under review, Mr. K. V. Mani (DIN: 00533148), Independent Director of the Company ceased to be Director w.e.f. January 20, 2021 due to his sudden demise. Mr. Imtiaz Kanga (DIN: 00136272), Non-Executive Non-Independent Director of the Company resigned from the Board w.e.f. April 19, 2021 due to personal reasons driven by some family commitments. Your Directors place on record their sincere appreciation for the contribution made by Late Mr. K. V. Mani and Mr. Imtiaz I. Kanga during their tenure as Directors of the Company. Your Company has received declarations from all the Independent Directors confirming that they meet with the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and under Regulation 16 (1) (b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and they have registered their names in the Independent Directors Databank. Further, pursuant to Section 164(2) of the Companies Act, 2013, all the Directors have provided declarations in Form DIR- 8 that they have not been disqualified to act as a Director. In terms of Section 152 of the Companies Act, 2013, Mr. Parag Munot (DIN: 00136337), being the longest in the office, shall retire by rotation at the ensuing AGM and being eligible, offers himself for reappointment. The Board of Directors of the Company at the recommendation of Nomination and Remuneration Committee has recommended for his reappointment.

In its meeting held on May 11, 2021, the Board of Directors, at the recommendation of Nomination and Remuneration Committee, has approved the re-appointment of Mr. Sanjay Dalmia, (DIN: 03469908) as Executive Director of the Company for a further period of 3 years effective from August 8, 2021 subject to approval of shareholders of the Company. A brief resume of directors being appointed / re-appointed along with the nature of their expertise, their shareholding in your Company and other details as stipulated under Regulation 36 (3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is appended as an annexure to the Notice of the ensuing Annual General Meeting.

BOARD MEETINGS

During the year under review, the Board met Six (6) times on May 20, 2020, August 12, 2020, August 24, 2020, November 4, 2020, December 8, 2020 and February 13, 2021. The number of Meetings of the Board that each Director attended is provided in the Report on Corporate Governance, appended to, and forming part of, this Report.

COMMITTEES

In order to adhere to the best corporate governance practices, to effectively discharge its functions and responsibilities and in compliance with the requirements of applicable laws, your Board has constituted several Committees including the following:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

• Corporate Social Responsibility Committee

• Risk Management Committee

• Share Transfer Committee

• Executive Committee

The details with respect to the compositions, powers, roles, terms of reference etc. of relevant Committees are given in detail in the ‘Report on Corporate Governance of your Company which forms part of this Report. The dates on which Meeting of Board Committees were held during the financial year under review and the number of Meetings of the Board Committees that each Director attended is provided in the ‘Report on Corporate Governance. The minutes of the Meetings of all Committees are circulated to the Board for discussion and noting.

During the year, all recommendation of the committees were approved by the Board.

KEY MANAGERIAL PERSONNEL (KMP)

Mr. Manish Mohnot, Managing Director & CEO, Mr. Ram Patodia, Chief Financial Officer and Mr. Rajeev Kumar, Company Secretary are the Key Managerial Personnel (KMPs) as per provisions of Companies Act, 2013. There has been no change in KMP during the year under review.

CORPORATE GOVERNANCE

Your Company believes that robust Corporate Governance practices are critical for enhancing and retaining stakeholders trust and confidence. Your Company always ensures that its performance goals and targets are achieved in compliance with its sound corporate governance practices. The efforts of your Company are always focused on long term value creation. Inherent to such an objective is to continuously engage and deliver value to all its stakeholders including members, customers, partners, employees, lenders and the society at large. The Report on Corporate Governance, as stipulated under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached. The Report on Corporate Governance also contains certain disclosures required under Companies Act, 2013 for the year under review. A certificate from M/s. B S R & Co. LLP, Statutory Auditors of the Company confirming compliance to the conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed to Report on Corporate Governance.

MANAGEMENT DISCUSSION AND ANALYSIS

As per Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Management Discussion and Analysis Report outlining the business of your Company forms part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

Your Company has been always at forefront of voluntary CSR even before the provisions of Companies Act, 2013 have made it imperative to institutionalize the CSR activities. Kalpataru Foundation and Kalpataru Welfare Trust are the two CSR arms of the Company. Our vision is to enhance the quality of life of people from marginalised and vulnerable communities, by empowering them and catalysing change through innovative and sustainable solutions. In the communities we operate, be at Mumbai or Gandhinagar or Raipur or any Project location, your Company takes pride in working with all sections of society, selecting projects with infinite care, and working in areas that are needs of the Target beneficiaries. Your Company cherish the Kalpataru Spirit of maximizing societal value for needy. Your Company has formed the CSR Committee as per the requirement of the Companies Act, 2013. On recommendation of CSR Committee, the Board of Directors of your Company has approved the CSR Policy which is available on the website of your Company at www.kalpatarupower.com. The brief outline of the Corporate Social Responsibility (CSR) Policy of your Company and the initiatives undertaken by your Company on CSR activities during the year are set out in Annexure A of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 (as amended from time to time).

BUSINESS RESPONSIBILITY REPORT

As stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance perspective forms part of this Annual Report.

VIGIL MECHANISM

The details of Vigil mechanism ("Whistle Blower Policy") of the Company are given in the ‘Report on Corporate Governance, appended to, and forming part of, this Report.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal Financial Controls are an integrated part of the risk management process, addressing financial risks and financial reporting risks. The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

Assurance on the effectiveness of internal financial controls is obtained through management reviews, continuous monitoring by functional experts and testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively considering the nature of our industry and are operating as intended.

STATUTORY AUDITORS AND AUDITORS REPORT

M/s. B S R & Co. LLP (Firm Registration No. 101248W/W-100022), Chartered Accountants, have been appointed as Statutory Auditors of the Company at the 37th Annual General Meeting held on August 7, 2018 to hold office from the conclusion of 37th Annual General Meeting (AGM) till the conclusion of the 42nd Annual General Meeting of the Company, subject to compliance of the various provisions of Companies Act, 2013.

Statutory Auditors comments on the Annual Financial Statements of the Company for year ended March 31, 2021, both on Standalone and Consolidated basis, are self-explanatory and do not require any explanation as per provisions of Section 134(3)(f) of the Companies Act, 2013. There were no qualifications, reservation or adverse remark or disclaimer made by Statutory Auditor in their reports on the Standalone and the Consolidated Annual Financial Statement of the Company for the year under review.

SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013, your Company had appointed Mr. Urmil Ved, Practising Company Secretary, Gandhinagar, as its Secretarial Auditor to conduct the Secretarial Audit of your Company for FY 2020-21. The Report of the Secretarial Auditor for the FY 2020-21 is annexed to this report as Annexure B.

There were no qualifications, reservation or adverse remark or disclaimer made by Secretarial Auditor in its report.

COST AUDITOR

The Company has maintained cost records as specified by Central Government under Section 148(1) of Companies Act, 2013 and such records have been audited by the Cost Auditor pursuant to Companies (Cost Records and Audit) Rules, 2014. Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the cost records in respect of Electricity and Steel products of the Company need to be audited. In compliance to the above, the Board of Directors upon the recommendation of the Audit Committee, appointed M/s. K. G. Goyal & Associates, Cost Accountants, as the Cost Auditor of your Company for the FY 2020-21.

RISK MANAGEMENT FRAMEWORK

Your Company has an elaborate Risk Management Framework, which is designed to enable risks to be identified, assessed and mitigated appropriately. Your Company monitors, manages and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. Your Companys SOPs, Organizational structure, management systems, code of conduct, policies and Values together govern how your Company conducts its business and manage associated risks. Your Company also has a separate Bribery Risk assessment framework which also defines the key mitigation actions. The Risk Management framework enables the management . to understand the risk environment and assess the specific risks and potential exposure to the Company, determine how to deal best with these risks to manage overall potential exposure, monitor and seek assurance of the effectiveness of the management of these risks and intervene for improvement where necessary and report throughout the management chain upto the Risk Management Committee on a periodic basis about how risks are being monitored, managed, assured and improvements are made.

PARTICULARS OF REMUNERATION

A. The ratio of the remuneration of each director to the median employees remuneration and other details in terms of Section 197(12), of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, are forming part of this report as Annexure C1.

B. In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names of the top ten employees in terms of remuneration drawn and names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms part of this Report.

Having regard to the provisions of the second proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said Annexure is open for inspection at the Registered office of your Company. Any member interested in obtaining copy of the same may write to Company Secretary.

PERFORMANCE EVALUATION

The criteria for performance evaluation and the statement indicating the manner in which formal annual evaluation of the Board, its Committee and of individual Directors has been made are given in the "Report on Corporate Governance", which forms part of this Report.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES AND INDEPENDENCE OF A DIRECTOR

Your Company‘s policy on remuneration for the Directors, Key Managerial Personnel and other employees are forming part of this Report and is annexed as Annexure D1. The same is also placed on website of the Company www.kalpatarupower.com. There has been no change in the said Policy during the year under review. Your Companys policy on Directors appointment including criteria for determining qualifications, positive attributes, independence of a director are forming part of this Report and is annexed as Annexure D2.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE INFLOW & OUTFLOW

Information required to be disclosed under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed hereto as Annexure E and forms part of this Report.

DIVIDEND DISTRIBUTION POLICY

In terms of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2016, your Company has formulated Dividend Distribution Policy and the same is annexed to this report as Annexure F and is also available on the website of the Company i.e. www.kalpatarupower.com.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement (Please refer to Note No. 38 to the Standalone Financial Statements).

ANNUAL RETURN

The Annual Return of the Company as on March 31, 2021 is available on the website of Company ie. www.kalpatarupower.com

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in its 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 which could be considered material in accordance with the policy of the Company on materiality of related party transactions or which is required to be reported in Form No. AOC-2 in terms of Section 134(3)(Rs.) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

The policy on materiality of Related Party Transactions is uploaded on the website of your Company and the link for the same is provided in the ‘Report on Corporate Governance. There were no materially significant related party transactions entered into by the Company which could have potential conflict with interest of the Company at large.

Attention of Members is drawn to the disclosure of transactions with related parties set out in Note No. 42 of Standalone Financial Statements, forming part of the Annual Report.

DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company has zero tolerance towards any action of any executive which may fall under the ambit of ‘Sexual Harassment at workplace and is fully committed to uphold and maintain the dignity of every woman working in your Company. The Anti Sexual Harassment Policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints.

Your Company has complied with provisions relating to the Constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There were no complaints pending as on the beginning of the financial year and no new complaints were received during the financial year under review.

POLICY ON CODE OF CONDUCT AND ETHICS

As an organization, your Company places a great importance in the way business is conducted and the way each employee performs his/her duties. Your Company encourages transparency in all its operations, responsibility for delivery of results, accountability for the outcomes of actions, participation in ethical business practices and being responsive to the needs of our people and society. Towards this end, your Company has laid down a Kalpataru Code of Conduct ("KCoC") applicable to all the employees of your Company. The Code provides for the matters related to governance, compliance, ethics and other matters. Your Company has adopted strong anti-bribery anti-corruption policy and practices and has also been certified with ISO:37001 for establishing Anti Bribery Management System across the organization.

STATEMENT OF DIRECTORS RESPONSIBILITY

Pursuant to requirement under Section 134(3)(c) of the Companies Act, 2013 (Act), your Directors confirm that:

(a) in the preparation of the annual accounts for the year ended on March 31, 2021, the applicable accounting standards read with requirement set out under Schedule III to the Act, have been followed and there are no material departures from the same;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2021 and of the profit of the company for the year ended on that date;

(c) they 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;

(d) they had prepared the annual accounts on a going concern basis;

(e) they, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively and;

(f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants, including audit of internal financial controls over financial reporting by the statutory auditors, and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Companys internal financial controls were adequate and effective during FY 2020-21. The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively.

SECRETARIAL STANDARDS

The Company has followed the applicable Secretarial Standards ie. SS-1 and SS-2, relating to ‘Meetings of Board of Directors and ‘General Meetings respectively.

GENERAL

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

• Details relating to deposits covered under Chapter V of the Companies Act, 2013.

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

• Issue of shares (including sweat equity shares) to employees of the Company under any scheme or any stock options scheme

• Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

• No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.

• No fraud has been reported by the Auditors to the Audit Committee or the Board.

• There has been no change in the nature of business of the Company.

• There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016.

• There was no instance of onetime settlement with any Bank or Financial Institution

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank all the Government and Regulatory Authorities, Financial Institutions, Banks, Debenture holders and Debenture Trustee, JV Partners, Consortium Partners, Customers, Vendors, Suppliers, SubContractors and Members and all other stakeholders for their valuable continuous support. The Board of Directors also wish to place on record its sincere appreciation for the committed services by the Companys executives, staff and workers. Your Directors also appreciate and acknowledge the confidence reposed in them by members of the Company.

On behalf of the Board of Directors
Mofatraj P. Munot
Place: Mumbai Executive Chairman
Date: May 11, 2021 DIN: 00046905