K.P. Energy Ltd Directors Report.

To the Members,

The Directors present the 10th Annual Report on the business and operation of K.P. Energy Limited together with audited financial statement for the year ended March 31, 2019. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

1. Financial Results:

Rs. in Lacs
Name of Related Party Standalone Consolidated
2019 2018 2019 2018
Revenue from operations 15,841.00 6,009.44 15,841.00 6,009.44
Other Income 47.36 17.07 47.36 17.07
Total Income 15,888.36 6,026.51 15,888.36 6,026.51
Expenditure 12,555.43 5,017.87 12,549.49 5,017.83
Profit Earnings before interest, tax, depreciation 3,332.93 1,008.64 3,338.77 1,008.69
and amortization (EBITDA)
Finance Cost 458.04 342.54 463.88 342.59
Depreciation 383.99 287.95 383.99 287.95
Profit Before Taxation 2,490.90 378.15 2,490.9 378.15
Tax expenses (547.22) (190.33) (547.22) (190.33)
Profit for the period 1,943.68 187.82 1,943.68 187.82

(Previous period/year figures have been re-grouped/re-classified wherever required)

2. Financial and Operational Performance:

On a standalone and consolidated basis, the revenue for FY 2019 was Rs. 15,841 Lacs compare to previous years revenue of Rs. 6,009.44 Lacs which displays companys capabilities to ramp up the execution and growth. The profit after tax (PAT) attributable to shareholders for FY 2019 and FY 2018 was Rs. 1,943.68 Lacs and Rs. 187.82 Lacs respectively. The PAT attributable to shareholders for FY 2019 registers an exponential growth compare to FY 2018 PAT.

Your Company has completed commissioning of all balance 11 WTGs in the last quarter of the FY 19 and completed 50.4MW wind power project of Mahuva-I despite many challenges. This Project have remained very crucial for every team member to practically visualise the physical, social, regulatory challenges and addressing it to the final completion with perseverance. Your Company has proven its mettle in all courses of business, regulatory changes, from lull to gust and from retail to multinationals, from mountains to sea coasts, very aggressively and positively.

3. Issue of Bonus Shares

The Company has allotted 25,65,000 equity shares as fully paid-up bonus shares in the ratio of 3:10 (Three equity share for every Ten existing equity share held on the record date) to its shareholders in its Board Meeting held on May 2, 2018, pursuant to are solution passed by the shareholders on March 16, 2018 by postal ballot.

4. Dividend:

Based on the Companys performance, the Directors have recommended a final dividend of Rs. 1/- per equity share for FY 2019. The final dividend on equity shares, if approved by the members, would involve a cash outflow of Rs. 1.1115 crore, excluding dividend tax. The total dividend on equity shares including dividend tax for FY 2019 would be Rs. 1.1115 crore, resulting in a payout from the standalone profits of the Company.

5. Share Capital:

The authorised share capital of the Company was increased from Rs. 10,60,00,000/- (Rupees Ten Crores Sixty Lacs only) divided into 1,06,00,000 (One Crore Six Lacs) Equity Shares of Rs. 10/- (Rupees Ten only) each to Rs. 12,50,00,000/- (Rupees Twelve Crores Fifty Thousand only) divided into 1,25,00,000 (One Crore Twenty Five Lacs) Equity Shares of Rs. 10/- (Rupees ten only) each, by creation of additional 19,00,000 (Nineteen Lac) Equity Shares of Rs. 10/- (Rupees ten only) each ranking pari pasu in all respect with existing equity shares of the company on pursuant to the resolution passed by the shareholders of the Company on April 23, 2018 by postal ballot.

During the year under review, the paid up equity share capital of the Company was increased to Rs. 11,11,50,000 (Rupees Eleven Cores Eleven Lacs Fifty Thousand Only) divided into 1,11,15,000 (One Crore Eleven Lac Fifteen Thousand) equity shares of Rs. 10/- (Rupees Ten only) from the existing paid up capital of Rs. 8,55,00,000 (Eight Crore Fifty Five Lacs Only) divided into 85,50,000 (Eighty Five Lacs Fifty Thousand) equity shares of Rs. 10/- each pursuant to allotment of 25,65,000 equity shares as fully paid-up bonus shares on May 2, 2018.

6. Transfer to Reserve:

The company has transferred the whole amount of Profit to Reserve and surplus account as per attached audited Balance sheet for the year ended on 31st March, 2019.

7. Amount of Unpaid/Unclaimed Dividend Transfer to

Unpaid Dividend Account of the Company:

During the financial year 2018-19, Company does not required to transfer any amount of unpaid/unclaimed dividend to the Unpaid Dividend Account. The Statement of unpaid / unclaimed dividends as on March 31, 2019 is uploaded on the Companys website www.kpenergy.in.

There were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF) during the year under review.

8. Deposits from Public:

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

9. Credit Rating:

During the financial year 2018-19, CARE (Credit Analysis and Research) has reviewed the ratings assigned to the bank facilities of the Company. As on September 26, 2018, CARE (Credit Analysis and Research) has reviewed credit analysis of the bank facilities of your company and assigned rating "Triple B minus" (Stable Outlook) for long term Bank facilities of Rs. 29.06 Crores (Term Loan), Rs. 4 Crore (Cash Credit), and "Triple B minus/A three" (Stable Outlook) for Long term/Short Term bank facilities of Rs. 36 Crores and "A three" to Rs. 1.80 Crore Stand by Letter of Credit.

10. Quality Initiative:

After successful evaluation of management system processes, on-site audit, technical assessment and review of pertinent records in financial year 2018-19, your Company has been awarded ISO 9001:2015 (Quality Management System), ISO 14001:2015 (Environment Management System) and ISO BS OHSAS 18001:2007 (Occupational Health & Safety Management System) certifications from Deutsch Quality System(DQS) India, partner of UL (Underwriters Laboratories) LLC, a global safety certification company having head quarter in Northbrook, Illinois, United States.

11. Employee Stock Option Plan:

Your Company approved the Employee Stock Option Scheme to reward its employees for their past association and performance. The scheme named as ‘K.P. Energy Limited Employee Stock Option Plan Tranche - I (‘Scheme) recommended by the Board of Directors on August 28, 2017 which was approved by the Shareholders vide special resolution on September 23, 2017. Pursuant to the same, our company intend to grant up to 1,00,000 options to the employees. However, during the year under review, no option has been granted to any employee of the Company.

12. Material Changes and Commitments Affecting the Financial position of the Company:

There have been no material changes and commitments which affects the financial position of the Company which have occurred between the end of the financial year to which the Financial Statements relate and the date of this Report.

13. Directors and Key Managerial Personnel:

• Board of Directors:

The Company has Six (6) Directors consisting of two (2) Independent Directors, two (2) Non-Executive Directors, one (1) Managing Director and one (1) Whole time director. In accordance with the provisions of Section 152 and other applicable provisions of the Companies Act, 2013, Mr. Bhupendra Vadilal Shah (DIN: 06359909) Director is liable to retire by rotation and offer himself for re-appointment as Director of the company. After considering recommendations of Board, the Members of the Company at the ensuing Annual General Meeting may re-appoint Mr. Bhupendra Vadilal Shah as Director of the company. Brief profile of Mr. Bhupendra Vadilal Shah has been given in the Notice convening the 10th Annual General Meeting. There was no other change in the Directors/Key Managerial Personnel during the year 2018-19.

•Key Managerial Personnel:

The following are the Key Managerial Personnel of the Company pursuant to Section 2(51) and 203 of the Companies Act, 2013:

1. Mr. Farukbhai Gulambhai Patel, Managing Director 2. Mr. Ashish Ashwin Mithani, Whole Time Director 3. Mr. Karmit Haribhadrabhai Sheth, Company Secretary 4. Mr. Pravin Radhekant Singh, Chief Financial Officer

14. Declaration by an Independent Director(s):

Pursuant to Section 149 and other applicable provisions of the Companies Act, 2013 Mr. Sajesh Bhaskar Kolte and Mr. Raghvendra Rao Bondada are the Independent Directors of the Company. The Company has received declarations from both Independent Directors of the Company confirming that they continue to meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Independent Directors have also confirmed that they have complied with the Companys code of conduct.

15. Board Evaluation:

The Board has carried out performance evaluation of itself, its Committees and each of the Directors (without participation of the concerned Director). Independent Directors collectively evaluated the Boards performance, performance of the Chairperson and other non-independent Directors. The Nomination and Remuneration Committee also reviewed the performance of the Board, its Committees and of the Directors. The performance evaluation concluded on the note that each of the individual directors, Committees and the Board as a whole, were performing efficiently and effectively and shared a common vision to turning organization goals into reality.

16. Meetings of Board:

The Board of Directors of your Company met Eight times during the year 2018-19. The meetings were held on May 02, 2018, May 30, 2018, August 30, 2018, October 03, 2018, December 07, 2018, December 21, 2018, January 05, 2019 and March 30, 2019. The maximum time gap between any two consecutive meetings did not exceed one hundred and twenty days.

17. Committees of the Board:

The Company has constituted various Committees pursuant to the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013. Presently, the Company has following Committees of the Board of Directors:

• Audit Committee

• Nomination and Remuneration Committee • Stakeholders Relationship Committee • Corporate Social Responsibility Committee

The details with respect to the composition, meetings, powers, roles, terms of reference, etc. of these Committees are given in the ‘Report on Corporate Governance of the Company which forms part of this Annual Report.

18. Subsidiaries, Joint Ventures and Associate Companies:

As on March 31, 2019, your Company has Six (6) subsidiary companies and Six (6) project specific Special Purpose Vehicles (SPVs) in form of Limited Liability Partnership. As on March 31, 2019, there are no joint ventures/associates of the Company.

During the year, VG DTL transmission Projects Private Limited and HGV DTL Transmission Projects Private Limited became wholly owned subsidiary Company of K.P. Energy Limited dated June 21, 2018 and April 20, 2018, respectively.

The list of Subsidiaries and Associates of your Company as on March 31, 2019, is forming a part of Boards Report and the details under section 129 of the Companies Act, 2013, read with rule 5 of Companies (Accounts) Rules, 2014 regarding the performance and financial position of each of the Subsidiaries, Associates and Joint Ventures of the Company is provided in "Form AOC-1" under Annexure-IV which forms part of this report.

19. Auditors and Auditors Report:

• Statutory Auditors :

Pursuant to the provisions of Section 139 and all other applicable provisions, if any, of the Companies Act, 2013, and the Companies (Audit and Auditors) Rules, 2014, as amended from time to time, M/s. K A SANGHAVI & CO LLP, Chartered Accountants, bearing Firm Registration No. 120846W, on the recommendations of the Audit Committee were appointed as the Statutory Auditors of the Company to hold office from the conclusion of 7th Annual general Meeting until the conclusion of the 12th Annual General Meeting of the Company on such remuneration as may be determined by the Board of Directors of the Company on a year to year basis.

• Statutory Auditors Observations in Audit Report:

There has been no observation, qualification, reservation or adverse remark or disclaimer made by the statutory auditor in their Report.

• Secretarial Auditor :

Pursuant to provision of Section 204 of Companies Act, 2013 and Rules made thereunder, on the recommendations of the Audit Committee, the Board of Directors of the Company has appointed M/s. SJV & Associates, Practicing Company Secretaries, as a Secretarial Auditor of the Company to undertake the Secretarial Audit for the Financial Year 2018-19 in Meeting of Board of Directors held on May 30, 2018. A Secretarial Audit Report in "Form MR-3" given by M/s. SJV & Associates, Practicing Company Secretaries has been provided in an "Annexure II" which forms part of the this Report.

• Secretarial Auditors Observations in Secretarial Audit Report:

There is no qualification, reservation or adverse remarks or disclaimer made by the secretarial auditor in their report.

• Internal Auditor :

Pursuant to Section 138 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, on the recommendations of the Audit Committee, the Board of Directors of the Company has appointed Mr. Harsh Shaileshkumar Shah, Chartered Accountant (Membership no. 165448) as an Internal Auditor of the Company to undertake the internal Audit for the Financial Year 2018-19 in Meeting of Board of Directors held on May 30, 2018.

• Cost Auditor:

Pursuant to Section 148 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules 2014 and subject to the approval of Central Government, on the recommendations of the Audit Committee, the Board of Directors of the Company has appointed M/s. Nanty Shah & Associates, Cost Accountants as Cost Auditors to undertake the Cost Audit and maintain the Cost records for the Financial Year 2018-19 in Meeting of Board of Directors held on August 30, 2018. After considering the recommendations of Board of Directors of the Company the remuneration payable to the Cost Auditor is ratified by the members at the ensuing Annual General Meeting.

20. Corporate Social Responsibility (CSR):

The Company has constituted the Corporate Social Responsibility (CSR) Committee in accordance with Section 135(1) of the Companies Act, 2013, the Company has undertaken activities in the area of Education, Environment care & Protection, Public Infrastructure Development and Health Care and these activities are in accordance with Schedule VII of the Companies Act, 2013 and the Companys CSR policy. The Report on CSR activities as required is annexed as "Annexure III" to this report. Approved CSR policy is also available on the Companys website www.kpenergy.in.

21. Management Discussion and Analysis:

The Management Discussion and Analysis Report on the operations of the Company as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in a separate section which forms part of this Annual Report.

22. Corporate Governance:

As per Regulation 34(3) read with schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, a separate section on corporate governance practices together with a certificate from the Companys Auditors confirming compliances is annexed separately to this report.

23. Internal Financial Control Systems and their Adequacy:

The Company has a well-placed, proper and adequate internal financial control system which ensures that all the assets are safeguarded and protected and that the transactions are authorized recorded and reported correctly. The internal audit covers a wide variety of operational matters and ensures compliance with specific standard with regards to availability and suitability of policies and procedures. During the year no reportable material weakness in the design or operation were observed.

24. Vigil Mechanism/Whistle Blower Policy:

In pursuant to the provisions of section 177(9) & 177(10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company www.kpenergy.in

25. Extract of Annual Return:

As per the requirements of Section 92(3) of the Act and Rules framed thereunder, the extract of the annual return for FY 2019 is given in Annexure - I in the prescribed Form No. MGT-9, which is a part of this report. The same is available on website of the company www.kpenergy.in. The web link is provided below:

http://www.kpenergy.in/kpedata/assets/uploads/104550.pdf

26. Significant and Material Orders Passed by the Regulators or Courts:

There were no significant and material orders passed by the

Regulators/Courts that would impact the going concern status of the Company and its future operations.

27. Particulars of Loans, Guarantees or Investments:

During the financial year 2018-19, company has repaid the unsecured loan of Rs. 2,00,000 to Mr. Farukbhai Gulambhai Patel, Managing Director and Rs. 10,00,000 to Mr. Ashish Ashwin Mithani, Whole Time Director of the company which was taken during the financial year 2017-18 as per the provisions of section 185 of the Companies Act, 2013 read with The Companies (Acceptance of Deposits) Rules, 2014.

The loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review has been disclosed in the in the note to the Standalone and Consolidated Audit report which forms part of this Annual Report. Please refer to Note no. 2.25 of the Audit report.

28. Related Party Transactions:

None of the transactions with related parties falls under the scope of Section 188(1) of the Act. The information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure -V in Form No. AOC-2 and the same forms part of this report.

29. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

There was no technology absorption and no foreign exchange earnings or outgo, during the financial year 2018-19. Hence, the information as required under Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, is to be regarded as Not Applicable. The Company has not entered into any technology transfer agreement.

30. Employees Remuneration:

The provisions of Rule 5(2) & (3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 are not applicable to the Company as none of the employees has received remuneration above the limits specified in the rule 5(2) & (3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 during the financial year 2018-19. Further, the disclosures pertaining to remuneration and other details as required under section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed in "Annexure 6"

• Remuneration Policy

The Policy on Directors appointment and remuneration, including criteria for determining qualifications, positive attributes and independence of the Directors and other matters provided under subsection (3) of Section 178 of the Companies Act, 2013 is annexed as "Annexure VI" and forms an integral part of this Report.

31. Directors Responsibility Statement :

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of the Section 134(3)(c) of the Companies Act, 2013:

I. That in the preparation of the annual financial statements for the year ended March 31, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

II. That such accounting policies, as mentioned in the Financial

Statements as ‘Significant Accounting Policies have been selected and applied consistently and judgments 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 March 31, 2018 and of the profit of the Company for the year ended on that date;

III. 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;

IV. That the annual financial statements have been prepared on a going concern basis;

V. That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

VI. Those proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

32. Migration of Company from SME Platform to the Main Board of BSE Limited:

The equity shares of the company were listed on SME Platform of the BSE Limited on since February 25, 2016. Pursuant to the Regulation 106U and other relevant provisions, laid down in Chapter XB of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulation, 2009 and other applicable provisions, if any, of the Companies Act, 2013, Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulation, 2009 and the rules framed there under, including any amendment, modification, variation or re-enactment thereof, the consent of the members of the company was accorded and the Companys present listing migrated from BSE SME Platform to the Main Board of BSE Limited with effect from October 08, 2018. The annual listing fee for the year 2018- 2019 has been paid to the Exchange.

33. Health & Safety & Environment Policy:

The Company has recognized, health management, occupational safety and environment protection (HSE) as one of the most important elements in the organizations sustainable growth and has closely linked it to its cultural values. Company continually strives to create a safe working environment by being responsive, caring and committed to the various needs governing the security and well-being of employees. The HSE policy has been reviewed by the company and is also available on the Companys website www.kpenergy.in.

34. Obligation of Company Under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a Prevention of Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The Sexual Harassment Policy has been reviewed by the company and is also available on the Companys website www. kpenergy.in.

37. Other Disclosures:

• The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

• As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors Certificate thereon, and the Management Discussion and Analysis are attached, which forms part of this report.

• Neither the Managing Director nor the Whole-time Directors of the

Company receive any remuneration or commission from any of its subsidiaries.

38. Acknowledgment:

The Directors wish to place on record their appreciation for the support and cooperation, which the Company continues to receive from the government of Gujarat, the Banks / Financial Institutions, shareholders, customers and suppliers, and all persons who are directly or indirectly associated with the company.

Your Directors appreciate and value the contribution made by every member of Team KP Energy and look forward to their continued support in future.

For and on behalf of the Board of Directors of K.P. Energy Limited
Place : Surat Farukhbhai Gulambhai Patel Ashish Ashwin Mithani
Date : August 30,2019 (Managing Director) (Whole Time Director)
(DIN : 00414045) (DIN : 00152771)