Directors Report of Karma Energy Ltd.

Mar 31, 2016

DIRECTORS’ REPORT TO THE MEMBERS OF KARMA ENERGY LIMITED

The Directors are pleased to present this Ninth Annual Report and the Audited Statement of Accounts for the year ended March 31, 2016.

1. FINANCIAL RESULTS

(Rs. in lakh)

Particulars	2015-2016	2014-2015
Total Income including exceptional items	1435.50	1665.21
Profit / (Loss) Before Depreciation	355.90	67.30
Less : Depreciation	500.16	490.00
Profit Before Tax	(144.26)	(422.70)
Less : Income Tax	105.00	8.94
Less : Deferred Tax	(95.04)	(118.61)
Profit / (Loss) After Tax	(154.22)	(313.03)
Add : Balance brought forward from previous year	68.28	375.30
Balance Available for appropriation	(85.95)	62.27
Director''s Recommendation for Appropriation :
Transfer to General Reserve - Depreciation Adjustment as per Schedule II of Co''s Act	--	(6.01)
Proposed Dividend on Equity Shares NIL (2014-2015: NIL )	--	--
Dividend Tax	--	--
Surplus Carried to Balance Sheet	(85.95)	68.28

The consolidated Financial Statements of the Company and its subsidiaries and associates, prepared in accordance with Accounting Standard 21 prescribed under Companies (Accounting Standards) Rules form part of the Annual Report and Accounts.

2. DIVIDEND AND RESERVES

Your Directors have not recommended any dividend (previous year Rs.NIL per share) for financial year 2015-16 on account of loss for the year. Pursuant to loss for the year the company has also not transferred any amount to Reserves.

3. FIXED DEPOSITS

Your Company has not accepted any Fixed Deposits within the meaning of Section 73 of the Companies Act, 2013.

4. PERFORMANCE

During the year the Total Income of the Company was Rs.1435.50 Lakh as compared to Rs.1665.21 Lakh in the previous year. The Profit before depreciation achieved was Rs.355.90 Lakh (Previous year Rs.67.30 Lakh). The Profit / (Loss) after Tax registered was (Rs.154.22 Lakh) (Previous year {Rs.313.03 Lakh}). The company has not transferred any amount to Reserves during the year.

There has been no change in the business of the company during the year as compared to the previous year.

Generation from all its wind power plants in different states have been lower than the previous year except in Theni District in Tamil Nadu and Satara District in Maharashtra. Overall the drop in generation as compared to the previous year is about 4.74%. This is primarily on account of cyclic pattern of wind.

In Andhra Pradesh where the company has a 7.5 MW, even though Hon''ble State Electricity Regulatory Commission APERC had issued a final tariff order on 06.09.2014 fixing the tariff at

Rs.3.37 per unit, the state utilities viz. Southern Power Distribution Company of Telangana (TSSPDCL) and Southern Power Distribution Company of Andhra Pradesh (APSPDCL) have not paid the difference in tariff of Rs.1.685 for the generation fed into the grid from January 2011 to May 2014. The state got bifurcated with effect from 02.06.2014 and even though during the staid period the company was selling power to the present TSSPDCL, they have not been paying for the dues by stating that the power generation unit of the company is in Andhra Pradesh. APSPDCL has accepted their liability to the tune of 17.45% of the dues on the basis of a Notification issued by APERC as a transitional measure arising from bifurcation of the state, subject to TSSPDCL effecting payment of the balance 82.55%. The net effect is about Rs.3.81 crore is pending realization for over two to three years.

As far as 18 MW wind farm in Satara district Maharashtra is concerned, MERC has issued a favorable order for financial year 2014-15 paving way for sale of power to third parties for the said financial year. Hence company would be realizing the generation dues of about Rs.14 crore plus after almost two years. In 2015-16, the Hon''ble High Court of Bombay issued an adverse order upholding a new Distribution Open Access Regulations, 2014 issued by MERC which was contended to be not in accordance with Electricity Act, by the wind power association and others. Consequently the company has been forced to sell power to state utility MSEDCL at a low preferential tariff of Rs.2.52 per unit. For the financial year 2016-17 sale of power to third parties have been made feasible by MERC by issuance of a new Distribution Open Access Regulations, 2016 which is fair and encouraging to renewable energy sector.

Sale of RECs have been low only with considerably less off take in the market. The company has unsold RECs valued at Rs.266.63 lakh.

Even though the Central Government has been aiming for high capacity addition in renewable energy sector, at state levels the machineries are not moving in unison. Consequently the uncertainties continue. The state utilities despite about active 20 years of renewable energy in the country, still considers renewable energy especially infirm power like wind and solar as untouchable even though they do buy the power since the same has been forced on them in the form of renewable purchase obligations by the respective State Electricity Regulatory Commissions in compliance with the provisions of Electricity Act, 2003. A valid apprehension of the state utilities is on account of unpredictability of infirm power and hence scheduling and forecasting posing a challenge for grid management. Indian Wind Power Association in Tamil Nadu is attempting to mitigate this problem by working with state utility and central government agency to collect data from a large area of wind farms and attempting to schedule and forecast wind power from the said large number of wind farms in aggregate. Adding to the development woes are the potential wind farm sites are now predominantly in the forest area and obtaining approvals is a long process running to few years and further inconsistency shown by state electricity regulatory commissions in framing regulations as well as issuance of orders.

5. SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES

Your company has 8 subsidiary companies namely Almi HydroElectric Projects Ltd, Baledh Energy Projects Ltd, Batot Hydro Power Ltd, Brahmanvel Energy Ltd, Greenweiz Projects Ltd, Joiner Hydro Power Projects Ltd, Khandesh Energy Projects Ltd and Vajharpada Energy Ltd. All subsidiary companies are SPV''s executing power projects which are in different stages of development except Greenweiz Projects Limited is in the business of carrying out operation & maintenance of wind farms. Batot''s 3.5 MW Project was re-commissioned in mid June 2013 had a promising start at the beginning of the financial year with generation clocking high levels but subsequently the generation slowed down due to lack of water but still achieved about 78.7% of the expected generation. After two consecutive years of drought, a good monsoon would augur well for both wind power and hydro power generation.

In accordance with Section 136 of the Companies Act, 2013 read with Rule 10 of The Companies (Accounts) Rules, 2014, a company may forward statement of accounts containing the salient features in the prescribed form and simultaneously ensure that copies of the financial statements including consolidated financial statements along with Auditors Report, Directors Report and other documents that is required to be attached or annexed with the financial statements are made available for inspection at the registered office of the company, during working hours for a minimum period of 21 days prior to the meeting of the shareholders. Accordingly Accounts in the Abridged Form as per prescribed Form AOC-3 of the subject rules are being forwarded to all the members of the company with complete set of financial statements available at the registered office of the company for inspection as above. Also salient features in the financial statement of subsidiaries, associate companies, joint ventures compiled in Form AOC-1 of the subject Rules are attached to the financial statements.

No subsidiary company has ceased to be a subsidiary during the year.

Weizmann Corporate Services Ltd. is the only Associate company.

6. DIRECTORS AND KEY MANAGEMENT PERSONNEL

Shri Chetan D. Mehra was designated as Vice Chairman of the Company by the Board of Directors at their meeting held on 9th February, 2016.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company the Directors Shri Chetan D Mehra and Shri Vinesh N Davda retires by rotation and, being eligible have offered themselves for re-appointment.

The Managing Director of the company Shri G N Kamath was reappointed for a period of one year with effect from 1st December 2015 subject to approval of shareholders by special resolution at the ensuing Annual General Meeting. The confirmation of reappointment of Mr. G N Kamath as Managing Director for a period of one year and above would be included in Notice to the ensuing AGM.

The Company had pursuant to Section 149(10) read with Section 152 of the Companies Act, 2013 has three independent directors viz. Shri V P Kamath, Shri K M Vussonji and Shri Upkar Singh Kohli who were appointed for a term of five consecutive years at the Annual General Meeting held on 11.09.2014.

During the year no directors have resigned from the Board.

The Board of Directors had four meetings during financial year 2015-16.

Mr. T V Subramanian is the Chief Financial Officer appointed by the Board of Directors.

7. STATEMENT INDICATING THE MANNER IN WHICH FORMAL

EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Pursuant to provisions of the Companies Act and the Listing Regulations, the Board has carried out the annual performance evaluation of its own performance, performance of the Chairman, the Committees and independent Directors without participation of the relevant Director. The Nomination and Remuneration Committee of the Board continuously evaluate the performance of the Board and provide feedback to the Chairman of the Board. The independent directors had a separate meeting without the presence of any non independent directors and management and considered and evaluated the Board''s performance, performance of the Chairman and other non independent directors and shared their views with the Chairman.

8. FAMILIARISATION PROGRAMME ARRANGED FOR INDEPENDENT DIRECTORS

The company as required under Schedule IV of the Companies Act, 2013 and Listing Regulations has made arrangement to facilitate the independent directors to familiarize with the operations of the company, their roles, rights, responsibilities as Directors of the company considering the nature of the industry in which the company operates, business model of the company, etc. The above aspect can be accessed by web link http://www.karmaenergy.co/fid.html During F.Y. 2015-16 no new independent directors have been appointed by the company.

9. EXTRACT OF ANNUAL RETURN AS PER SECTION 92(3) OF COMPANIES ACT, 2013

An extract of Annual Return as at 31.03.2016 pursuant to section 92(3) of the Companies Act, 2013 and forming part of this Report is attached as Annexure - I to this Report.

10. DIRECTORS’ RESPONSIBILITY STATEMENT

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

i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii) that the Directors had 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 loss of the Company for that period ;

iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities; and

iv) that the Directors had prepared the annual accounts on a going concern basis.

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

vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively ;

11. STATEMENT OF DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION 149(7) OF THE COMPANIES ACT, 2013

The Board confirms the receipt of statement of declaration from independent directors u/s.149(7) of the Companies Act, 2013 on the matters of criteria of independent Director u/s. 149(6) of the Act.

12. COMPANY’S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

The company has constituted a Nomination and Remuneration Committee with the responsibilities of formulating the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy relating to the remuneration for the directors, Key Managerial Personnel and other employees; Formulating criteria for evaluation of independent directors and the Board; Devising policy on Board diversity; Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board their appointment and removal.

Appointment and Remuneration to Managing Director is subject to approval by members in General Meeting and shall be in accordance with Schedule V of Companies Act, 2013 and ceiling as per Section 197 of the Act. Appointment of Independent Directors to satisfy conditions u/s.149(6) of the Companies Act, 2013. The Independent Directors shall be governed by Code of Conduct detailed in Schedule IV of the Companies Act, 2013.

The personnel selected as Board Member or Key Management Personnel or other senior personnel of the company is based on their requisite qualifications, skills, experience and knowledge in the relevant fields.

Remuneration policy of the Company includes fixation of remuneration and annual increments based on performance, knowledge, position, target achievement, company''s business plans, market environment and the remuneration is segregated into monthly fixed payments, annual payments, contribution to social and retirement benefits, reimbursement of expenses incurred for discharge of official duties, annual bonus, welfare schemes like insurance on health for self and family, accident benefits, tying up with agencies for managing retirement benefits like gratuity, pension schemes, etc.

The remuneration policy as above is also available in the website of the company - http://www.karmaenergy.co/nnrp.html

13. PARTICULARS OF THE EMPLOYEES AND INFORMATION CALLED FOR UNDER SECTION 197 OF THE COMPANIES ACT, 2013 AND THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES,

2014

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 and other particulars of the employees drawing remuneration in excess of the limits and other Disclosures pertaining to remuneration are set out in the said rules and are compiled with.

Having regard to the provisions of the first 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 information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

14. DISCLOSURE OF PARTICULARS

Pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 the Report on the matters of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are as follows :

As the Company is in the field of Wind Farm development and not manufacturing, the relevant provisions relating to conservation of technology absorption are not applicable. However as the Company is in the field of wind farm development and promoting green energy, it is directly contributing to reducing dependency on fossil fuel and thus conserving the fossil fuel.

The earnings and outgo in foreign exchange was NIL during the year.

15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS U/S.186 OF THE COMPANIES ACT, 2013

As the Company is in the business of Wind Power Generation an infrastructure activity as per Schedule VI of the Companies Act, 2013, provisions of Section 186 is not applicable.

16. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT, 2013

The transactions with the Related Parties are at arm''s length basis and these transactions are not of material in nature as per Section 188 of the Companies Act, 2013 read with Rule 15 of the Companies (Meeting of Board and its Powers) Rules, 2014. The related party transactions are placed before the Audit Committee as also the Board for approval.

17. POLICY ON RELATED PARTY TRANSACTIONS

The Company has framed a policy on related party transactions and the same has been hosted on its website http://www.karmaenergy.co/rptp.html The policy includes the specific transactions requiring prior approval of the Audit Committee, the Board of Directors, Special Resolution by members at General Meeting, determining the materiality of the transaction with the related party both under Companies Act and Listing Regulations, and also the procedures to be followed in complying with the statutory provisions in respect of related party transaction, if any.

18. STATEMENT INDICATING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY FOR THECOMPANY

The Company has framed its Risk Management Policy detailing the identification of elements of risks, monitoring and mitigation of the risks. The company is also constituted a Risk Management Committee for the above purpose. The company has laid down detailed process in planning, decision making, organizing and controlling.

The Risk Management Policy has been hosted on the company''s website http://www.karmaenergy.co/rmp.html

19. CORPORATE SOCIAL RESPONSIBILITY OF THE COMPANY

The statutory requirement of complying with Corporate Social Responsibility of the Companies Act, 2013 is not applicable to the company during F.Y. 2015-16.

20. ESTABLISHMENT OF VIGIL MECHANISM

The company has in place a vigil mechanism pursuant to which a Whistle Blower Policy is also in vogue. The whistle blower policy covering all employees and directors of the company is hosted on the company''s website http://www.karmaenergy.co/wbp.html

21. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF REPORT

There are no material changes or commitments affecting the financial position of the company which have occurred between the end of the financial year and the date of this Report.

22. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATION IN FUTURE

No significant or material orders have been passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future. On the contrary there have been two favorable order / regulation issued by Maharashtra State Electricity Regulatory Commission during 2015-16 viz. permitting open access i.e. sale to third parties in Maharashtra for F.Y. 2014-15 and issuance of new Distribution Open Access Regulations, 2016 virtually reverting to the position which existed prior to issuance of a Distribution Open Access Regulations, 2014 from 25.06.2014. Consequently sale to third parties are permitted again under the new Regulations of 2016. Only for financial year 2015-16 due to issuance of Distribution Open Access Regulations, 2014 the company was deprived of sale of power to third parties in Maharashtra and had to sell the wind power to the state utility at the low preferential tariff determined by State Electricity Regulatory Commission.

23. DETAILS IN RESEPCT OF ADEQUACY OF INTERNAL CONTROLS WITH RESPECT TO THE FINANCIAL STATEMENTS

The company has an internal control system commensurate with the size, scale and nature of its operation. The internal controls ensure that all its assets are properly safeguarded and protected against loss from unauthorized use or disposal, all transactions are authorized, recorded and reported correctly. The company has also an internal audit system for periodical audit of the internal control systems of the company.

24. ISSUE OF NEW EQUITY SHARES DURING THE YEAR

The company has not issued any new equity shares during the year.

25. AUDITORS

In the Seventh Annual General Meeting (AGM) of the company held on September 11, 2014 Messrs. U.B. Sura & Co. Chartered Accountants and Messrs. Shyam C. Agrawal & Co., Chartered Accountants were appointed as Joint Statutory Auditors of the Company for a period of three years to hold office from the conclusion of the Seventh AGM until the conclusion of the Tenth AGM of the company. In terms of the provisions of the Companies Act, 2013, appointment of Auditors are required to be ratified by the shareholders in every AGM until the expiry of the period of original appointment.

In view of the above, the Board of Directors recommend ratification of appointment of Messrs. U.B. Sura & Co. Chartered Accountants and Messrs. Shyam C. Agrawal & Co., Chartered Accountants as Joint Statutory Auditors of the Company by the members for the period from the conclusion of the ensuing Ninth AGM till conclusion of the Tenth Annual General Meeting.

26. SECRETARIAL AUDIT

Pursuant to requirement of section 204 of the Companies Act, 2013, the company had appointed Shri Martinho Ferraro -Practicing Company Secretary (COP 5676) as Secretarial Auditor for financial year 2015-16 and whose report of 11th May, 2016 is attached as Annexure - IV. There are no adverse observations made by the Auditor.

27. AUDITORS’ REPORT

The observations of the Auditors in their report, read with notes annexed to the accounts, are self-explanatory.

28. CORPORATE GOVERNANCE

Your Company has complied with Corporate Governance requirement as per SEBI (Listing Obligations & Disclosure Requirement) Regulations, 2015. A report on Corporate Governance forms part of this report as Annexure - II. A certificate from the Statutory Auditors of the Company confirming compliance of the Corporate Governance is appended to the Report on Corporate Governance.

29. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the Listing Agreement with the Stock Exchanges is attached to this Report as Annexure - III.

30. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) Act, 2013.

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year no complaints have been received.

31. ACKNOWLEDGEMENT

Your Directors express their grateful appreciation for the assistance and co-operation received from Government Authorities, Bankers, Lending Institutions, Suppliers and Customers during the year under review.

Your Directors place on record their appreciation for the committed services of the executives and staff of the Company.

For and on behalf of the Board

Place : Mumbai Dharmendra G. Siraj

Date : 25^th May, 2016 Chairman

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Mar 31, 2015

Dear Members,

The Directors are pleased to present this Eight Annual Report and the Audited Statement of Accounts for the year ended March 31,2015.

1. FINANCIAL RESULTS

(Rs. in lakh)

Particulars 2014-2015 2013-2014

Total Income including 1665.21 3136.36 exceptional items

Profit / (Loss) Before 67.30 1023.15 Depreciation

Less : Depreciation 490.00 774.48

Profit /(Loss) Before Tax (422.70) 248.68

Less : Income Tax 8.94 340.45

Less : Deferred Tax (118.61) (244.54)

Profit / (Loss) After Tax (313.03) 152.77

Add : Balance brought 375.30 290.21 forward from previous year

Balance Available for 62.27 442.98 appropriation

Director's Recommendation for Appropriation :

Transfer to General Reserve - Depreciation

Adjustment as per Schedule - - II of Co's Act

Proposed Dividend on Equity Shares NIL (2013- 2014: 5%) - 57.85

Dividend Tax - 9.83

Surplus Carried to 62.27 375.30 Balance Sheet

The consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with the Accounting Standard 21 prescribed under Companies (Accounting Standards) Rules form part of the Annual Report and Accounts.

2. DIVIDEND AND RESERVES

Your Directors have not recommended any dividend (previous year Re.0.50 per share) for financial year 2014-15 on account of loss for the year. Pursuant to loss for the year the company has also not transferred any amount to Reserves.

3. PERFORMANCE

During the year the Total Income of the Company was Rs.1665.21 Lakh as compared to Rs.3136.36 Lakh in the previous year. The Profit before depreciation achieved was Rs.67.30 Lakh (Previous year Rs.1023.15 Lakh). The Profit / (Loss) after Tax registered was (Rs.313.03 Lakh) (Previous year Rs.152.77 Lakh). The company has not transferred any amount to Reserves during the year.

There has been no change in the business of the company during the year as compared to the previous year.

Generation from all its wind power plants in different states have been marginally lower than the previous year except in Theni District and Tirunelveli District in Tamil Nadu wherein the State Utility have not been shutting off the grid to the extent they were resorting to in the previous year on account of state wide imbalance in the grid which has been compounded by Southern grid yet to be integrated in the National grid.

The steep drop in value of realization of power generation has been on account of non granting of open access for sale to third parties by the State Utility in Maharashtra as per their Revised Procedure for Wind Open Access announced effective from 01.04.2014 which was squarely struck down by Hon'ble Maharashtra Electricity Regulatory commission (MERC) vide their order of 20.08.2014 and despite such order the State utility did not issue the open access approval necessitating the Association of Wind Power Generators filing a Contempt Petition which has been finally heard on 23.03.2015 and judgement reserved. Since the order of MERC has not yet been issued so far, the company as a conservative measure has recorded the income from its 18 MW wind farm project at the lower tariff rate applicable for sale to the state utility as the entire gross generation of 308.20 lakh units has been fed into the grid of the state utility. Since the issues involved in the litigation is squarely covered by a direct decision of Hon'ble Appellate Tribunal for Electricity, it is expected that MERC order would be in favour and on receipt of the said order only income can be accounted at a tariff agreed to for sale of power under open access to third parties.

In Andhra Pradesh where the company has a 7.5 MW, wherein on a tariff revision petition filed by State Distribution Licensee APCPDCL the Hon'ble State Electricity Regulatory Commission APERC had issued an interim order fixing that tariff at Rs.1.69 per unit against the normal tariff of Rs.3.37 per unit.

Thereafter APERC had issued their final order on 06.09.2014 retaining the tariff at Rs.3.37 per unit. Consequently the difference in tariff has been accrued and accounted under exceptional items at Rs.380.20 lakh.

However the bifurcation of state of United Andhra Pradesh into AP and Telangana with effect from 02.06.2014 has also created issues on the matter of release of payment of arrears from January 2011 to May 2014 consequent to the tariff rate being sustained by Hon'ble APERC. Though the company has accounted for arrears of income from generation proceeds as exceptional items in F.Y. 2014-15, the payment thereto is still pending.

The company in respect of its 18 MW wind farm in Maharashtra, since sale is to third parties, is availing the renewable Energy Certificates issued as per Central and State Electricity Regulatory Commissions and the said certificates can be sold in the Electricity Exchange at a base price of Rs.1500/- per REC and maximum being Rs.3300/- per REC. However, the off take of REC in the market by the obligated entities predominantly the Distribution Licensees have been negligible during 2014-15 resulting in accumulation of REC which are only accounted on sale. The unsold REC as at 31.03.2015 is about 24398 which at the minimum price of Rs.1500/- per REC would fetch about Rs.365.97 lakh.

Even though the Central Government has been enthusiastic in pronouncing measures and aiming to achieve quantum jump in installation and generation of power from renewable energy projects, unfortunately at State level as well as the utilities and at times the State Electricity Regulatory Commissions have not been keeping pace with the same. On the contrary in some states where the company has its wind farm the pronouncements whether in the form of Regulations or Orders have been adverse to the sustenance of renewable energy projects especially those which have been in operation for many years. In Maharashtra apart from the imbroglio created by the utility for F.Y. 2014-15, MERC had added to the woes by replacing old open Access Regulations with new Open Access Regulations squarely curtailing the non discriminatory open access for sale of power to third parties and thus stifling the existence and growth of renewable energy projects especially wind power. The Association of wind power generators have filed a writ petition in the Hon'ble High Court of Bombay against the new regulations of MERC and it is expected as in the case of any litigation in India, the matter before High Court could be a long drawn out affair.

4. SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES

Your company has 8 subsidiary companies namely Almi Hydro- Electric Projects Ltd, Baledh Energy Projects Ltd, Batot Hydro Power Ltd, Brahmanvel Energy Ltd, Greenweiz Projects Ltd, Joiner Hydro Power Projects Ltd, Khandesh Energy Projects Ltd and Vajharpada Energy Ltd. All subsidiary companies are SPV's executing power projects which are in different stages of development except Greenweiz Projects Limited is in the business of carrying out operation & maintenance of wind farms. Batot's 3.5 MW Project was re-commissioned in mid June 2013 after extensive repairs over a period of one year pursuant to unprecedented floods in 2012 has been recording good generation and payments thereto are also being received promptly but heavy repair cost on account of flood and high finance costs have been affecting its performance.

In accordance with Section 136 of the Companies Act, 2013 read with Rule 10 of The Companies (Accounts) Rules, 2014, a company may forward statement of accounts containing the salient features in the prescribed form and simultaneously ensure that copies of the financial statements including consolidated financial statements along with Auditors Report, Directors Report and other documents that is required to be attached are annexed with the financial statements and made available for inspection at the registered office of the company, during working hours for a minimum period of 21 days prior to the meeting of the shareholders. Accordingly Accounts in the Form as per prescribed Form AOC-3 of the subject rules are being forwarded to all the members of the company with complete set of financial statements available at the registered office of the company for inspection as above. Also salient features in the financial statement of subsidiaries, associate companies, joint ventures compiled in Form AOC-1 of the subject Rules are attached to the financial statements.

No subsidiary company has ceased to be a subsidiary during the year.

Weizmann Corporate Services Ltd. became an Associate company during the year.

Weizmann Energy Limited and Parmatma Power Projects Private Limited ceased to be the joint venture entities of the company during the year.

5. DIRECTORS AND KEY MANAGEMENT PERSONNEL

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company the Directors Shri D G Siraj and Shri N V Siraj retires by rotation and, being eligible have offered themselves for re-appointment.

The Managing Director of the company Mr. G N Kamath was re- appointed for a period of one year with effect from 1st December 2014 subject to approval of shareholders by special resolution at the ensuing Annual General Meeting. The confirmation of re- appointment of Mr. G N Kamath as Managing Director for a period of one year and above would be included in Notice to the ensuing AGM.

The company had appointed Ms. Smita V Davda as Additional Director at the Board Meeting of the company held on 13.02.2015.

Ms. Smita V Davda being spouse of Mr. Vinesh V Davda, as per section 149(6) of the Companies Act, 2013 both of them would be considered as Non Independent. Since the tenure of Additional Director as per section 161 of Companies Act, 2013 is up to the ensuing Annual General Meeting, the appointment of Ms. Smita V Davda as Director is being proposed in the ensuing AGM Notice and accordingly a Resolution has been included in the Notice to the AGM.

The Company had pursuant to Section 149(10) read with Section 152 of the Companies Act, 2013 appointed four independent directors viz. Shri V P Kamath, Shri K M Vussonji, Shri Upkar Singh Kohli and Shri Vinesh N Davda for a term of five consecutive years at the Annual General Meeting held on 11.09.2014. Subsequently pursuant to appointment of Smt. Smita V Davda, spouse of Shri Vinesh N Davda, Shri Vinesh N Davda ceased to be an independent director.

During the year no directors have resigned from the Board.

The Board of Directors had four meetings during financial year 2014-15.

Mr. T V Subramanian was appointed as Chief Financial Officer by the Board of Directors during the year.

6. STATEMENT INDICATING THE MANNER IN WHICH FORMAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

The Nomination and Remuneration Committee of the Board continuously evaluate the performance of the Board and provide feedback to the Chairman of the Board. The independent directors had a separate meeting without the presence of any non independent directors and management and considered and evaluated the Board's performance, performance of the Chairman and other non independent directors and shared their views with the Chairman. The Board had also separately evaluated the performance of the Board, the Committees and independent directors without participation of the relevant director.

7. FAMILIARISATION PROGRAMME ARRANGED FOR INDEPENDENT DIRECTORS

The company as required under Schedule IV of the Companies Act, 2013 and Clause 49 Guidelines on Corporate Governance issued by SEBI has made arrangement to provide suitable training to independent directors, to familiarize them with the company, their roles, rights, responsibilities in the company considering the nature of the industry in which the company operates, business model of the company, etc. During F.Y. 2014-15 no new independent directors have been appointed by the company.

8. EXTRACT OF ANNUAL RETURN AS PER SECTION 92(3) OF COMPANIES ACT, 2013

An extract of Annual Return as at 31.03.2015 pursuant to section 92(3) of the Companies Act, 2013 and forming part of this Report is attached as Annexure I to this Report.

9. DIRECTORS' RESPONSIBILITY STATEMENT

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

i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii) that the Directors had 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 loss of the Company for that period ;

iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities; and

iv) that the Directors had prepared the annual accounts on a going concern basis.

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

vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively ;

10. STATEMENT OF DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION 149(6) OF THE COMPANIES ACT, 2013

The Board confirms the receipt of statement of declaration from independent directors as called for u/s.149(6) of the Companies Act, 2013.

11. COMPANY'S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

The company has constituted a Nomination and Remuneration Committee with the responsibilities of formulating the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy relating to the remuneration for the directors, Key Managerial Personnel and other employees ; Formulating criteria for evaluation of independent directors and the Board ; Devising policy on Board diversity ; Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board their appointment and removal.

Appointment and Remuneration to Managing Director is subject to approval by members in General Meeting and shall be in accordance with Schedule V of Companies Act, 2013 and ceiling as per Section 197 of the Act. Appointment of Independent Directors to satisfy conditions u/s.149(6) of the Companies Act, 2013. The Independent Directors shall be governed by Code of Conduct detailed in Schedule IV of the Companies Act, 2013.

The personnel selected as Board Member or Key Management Personnel or other senior personnel of the company is based on their requisite qualifications, skills, experience and knowledge in the relevant fields.

Remuneration policy of the Company includes fixation of remuneration and annual increments based on performance, knowledge, position, target achievement, company's business plans, market environment and the remuneration is segregated into monthly fixed payments, annual payments, contribution to social and retirement benefits, reimbursement of expenses incurred for discharge of official duties, annual bonus, welfare schemes like insurance on health for self and family, accident benefits, tying up with agencies for managing retirement benefits like gratuity, pension schemes, etc.

The remuneration policy as above is also available on the website of the company - www.karmaenergy.co

12. PARTICULARS OF THE EMPLOYEES AND INFORMATION CALLED FOR UNDER SECTION 197 OF THE COMPANIES ACT, 2013 AND THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

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 and other particulars of the employees drawing remuneration in excess of the limits and other Disclosures pertaining to remuneration as set out in the said rules are complied with.

Having regard to the provisions of the first 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 information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

13. DISCLOSURE OF PARTICULARS

Pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 the Report on the matters of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are as follows :

As the Company is in the field of Wind Farm development and not manufacturing, the relevant provisions relating to conservation of energy, technology absorption are not applicable. However as the Company is in the field of wind farm development and promoting green energy, it is directly contributing to reducing dependency on fossil fuel and thus conserving the fossil fuel.

The earnings and outgo in foreign exchange was NIL during the year.

14. FIXED DEPOSITS

Your Company has not accepted any Fixed Deposits within the meaning of Section 73 of the Companies Act, 2013.

15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS U/S.186 OF THE COMPANIES ACT, 2013

As the Company is in the business of Wind Power Generation an infrastructure activity as per Schedule VI of the Companies Act, 2013, provisions of Section 186 is not applicable.

16. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT, 2013

The transactions with the Related Parties are at arm's length basis and these transactions are not material in nature as per Section 188 of the Companies Act, 2013 read with Rule 15 of the Companies (Meeting of Board and its Powers) Rules, 2014.

17. POLICY ON RELATED PARTY TRANSACTIONS

The Company has framed a policy on related party transactions and the same has been hosted on its website www.karmaenergy.co The policy includes the specific category of policies requiring prior approval of the Audit Committee, the Board of Directors, Special Resolution by members at General Meeting, determining the materiality of the related party contract both under Companies Act and Clause 49 of the Listing Agreement, and also the procedures to be followed in complying with the statutory provisions in respect of related party transaction, if any.

18. STATEMENT INDICATING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY FOR THE COMPANY

The Company has framed its Risk Management Policy detailing the identification of elements of risks, monitoring and mitigation of the risks. The company has also constituted a Risk Management Committee for the above purpose. The company has laid down detailed process in planning, decision making, organizing and controlling.

The Risk Management Policy has been hosted on the company's website www.karmaenergy.co

19. CORPORATE SOCIAL RESPONSIBILITY OF THE COMPANY

The statutory requirement of complying with Corporate Social Responsibility of the Companies Act, 2013 is not applicable to the company during F.Y. 2014-15.

20. ESTABLISHMENT OF VIGIL MECHANISM

The company has in place a vigil mechanism pursuant to which a Whistle Blower Policy is also in vogue. The whistle blower policy covering all employees and directors of the company is hosted on the company's website www.karmaenergy.co

21. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF REPORT

There are no material changes and commitments affecting the financial position of the company except in respect of its 18 MW wind farm in Maharashtra wherein the company has been hitherto availing open access from state utility for sale of wind power to Blue Chip Companies, the State Electricity Regulatory Commission has introduced a new Distribution Open Access Regulations, 2014 repealing their earlier Distribution Open Access Regulations, 2005 and consequently has restricted availability of non discriminatory open access to wind power generators to sell power to any of their consumers and the Association of Wind Power Generators has filed a writ petition before March 2015 itself in the Hon'ble High Court of Bombay and the same is pending disposal. Therefore till the Hon'ble High Court disposes off the writ petition, revenue from the 18 MW wind farm from April 2015 onwards would be an uncertainty despite the fact that on account of infirm nature of wind power, the wind power is generated in the normal way and fed into the grid of the state utility.

22. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE

No significant or material orders have been passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future except a new Distribution Open Access Regulations, 2014 issued by State Electricity Regulatory Commission has substantially curtailed the availability of open access for sale of power to third parties in the state of Maharashtra and the same is presently before the Hon'ble High Court of Bombay in the form of writ petition by an association of wind power generators. Till an order is issued by the Hon'ble High Court of Bombay there could be an uncertainty in accounting of revenue from its 18 MW wind farm in the state of Maharashtra. Alternatively company can sell its power to the state utility at a much lower preferential tariff approved by the State Electricity Regulatory Commission.

23. DETAILS IN RESEPCT OF ADEQUACY OF INTERNAL CONTROLS WITH RESPECT TO THE FINANCIAL STATEMENTS

The company has an internal control system commensurate with the size, scale and nature of its operation. The internal controls ensure that all its assets are properly safeguarded and protected against loss from unauthorized use or disposal, all transactions are authorized, recorded and reported correctly. The company has also an internal audit system for periodical audit of the internal control systems of the company.

24. ISSUE OF NEW EQUITY SHARES DURING THE YEAR

The company has not issued any new equity shares during the year.

25. AUDITORS

In the 7th Annual General Meeting (AGM) of the Company held on September, 11, 2014 Messrs. U. B. Sura & Co. Chartered Accountants and Messrs. Shyam C. Agrawal & Co., Chartered Accountants, had been appointed as the Joint Statutory Auditors of the Company for a period of 3 years to hold office from conclusion of the 7th (AGM) until the conclusion of the 10th (AGM) of the company. In terms of provisions of the Companies Act, 2013, It is necessary to get the appointment ratified by the shareholders in every Annual General Meeting until the expiry of the period of original appointment.

In view of the above, the Board of the Director recommends your ratification of the appointment Messrs. U. B. Sura & Co. Chartered Accountants and Messrs. Shyam C. Agrawal & Co., Chartered Accountants, as the joint Statutory Auditors as mention at Item No. 4 of the Notice.

26. SECRETARIAL AUDIT

Pursuant to requirement of section 204 of the Companies Act, 2013, the company had appointed Shri Martinho Ferraro - Practicing Company Secretary (COP 5676) as Secretarial Auditor for financial year 2014-15 and whose report of 25th May 2015 is attached as Annexure-IV. There are no adverse observations made by the Auditor.

27. AUDITORS' REPORT

The observations of the Auditors in their report, read with notes annexed to the accounts, are self-explanatory.

28. CORPORATE GOVERNANCE

Your Company has complied with Corporate Governance requirement as per the Clause 49 of the Listing Agreement. A report on Corporate Governance forms part of this report as Annexure-II. A certificate from the Statutory Auditors of the Company confirming compliance of the Corporate Governance is appended to the Report on Corporate Governance.

29. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the Listing Agreement with the Stock Exchanges is attached to this Report as Annexure-III.

30. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) Act, 2013.

"The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year no complaints have been received.

31. ACKNOWLEDGEMENT

Your Directors express their grateful appreciation for the assistance and co-operation received from Government Authorities, Bankers, Lending Institutions, Suppliers and Customers during the year under review.

Your Directors place on record their appreciation for the committed services of the executives and staff of the Company.

For and on behalf of the Board

Place : Mumbai D G Siraj Date : 30th May,2015 Chairman

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Mar 31, 2014

TO THE MEMBERS OF KARMA ENERGY LIMITED

The Directors are pleased to present this Seventh Annual Report and the Audited Statement of Accounts for the year ended March 31,2014.

1. FINANCIAL RESULTS

(Rs.in lakh)

Particulars 2013-2014 2012-2013

Total Income including exceptional items 3136.36 3182.95

Profit Before Depreciation 1023.15 1157.53

Less : Depreciation 774.47 781.93

Profit Before Tax 248.68 375.60

Less : Income Tax 340.45 311.00

Less : Deferred Tax (244.54) (181.27)

Profit After Tax 152.77 245.87

Add : Balance brought forward from previous year 290.21 111.53

Balance Available for appropriation 442.98 357.40

Director''s Recommendation for Appropriation :

Transfer to General Reserve -- --

Proposed Dividend on Equity Shares@5% 57.85 57.82

(2012- 2013: 5%)

Dividend Tax 9.83 9.38

Surplus Carried to Balance Sheet 375.30 290.21

The consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with Accounting Standard 21 prescribed under Companies (Accounting Standards) Rules form part of the Annual Report and Accounts.

2. DIVIDEND

Your Directors have recommended a dividend at 5% (Re.0.50 per share) on equity shares (Previous year : 5 % ). The dividend, together with the tax on distributed profit, will absorb a sum of Rs.67.68 Lakh and will be paid to those shareholders whose names stand registered in the Register of members of the Company as on the book closure date.

3. PERFORMANCE

During the year the Total Income of the Company was Rs.3136.36 Lakh as compared to Rs.3182.95 Lakh in the previous year. The Profit before depreciation achieved was Rs.1023.15 Lakh (Previous year - Rs. 1157.53 Lakh). The Profit after Tax registered was Rs.152.77 Lakh (Previous year Rs. 245.87 Lakh).

Generation from all its wind power plants in different states have been higher than the previous year except in Theni District and Tirunelveli District in Tamil Nadu wherein the State Utility have been shutting off the grid on account of state wide imbalance in the grid which has been compounded by Southern grid yet to be integrated in to the National grid.

The value of realization of power generation has also been good except in Andhra Pradesh where the company has a 7.5 MW, wherein on a tariff revision petition filed by State Distribution Licensee APCPDCL, the Hon''ble State Regulatory Commission APERC had issued an interim order fixing that tariff at Rs.1.69 per unit against the normal tariff of Rs.3.37 per unit. The company has made their submissions before APERC and the order has been reserved.

The removal of accelerated depreciation for wind mills coupled with suspension of generation based incentives had a dampening

effect in new investments in wind energy sector. The Central Government in Budget 2013-14 has reintroduced "generation based incentive" for wind energy projects and has since notified the procedural guidelines. It has also been clarified that General Based Incentives (GBI) can be claimed irrespective of the rate of depreciation applied on the wind mills. However entities choosing GBI will have reduced tariff rate.

4. SUBSIDIARY COMPANIES

Your company has 8 subsidiary companies namely Almi Hydro- Electric Projects Ltd, Baledh Energy Projects Ltd, Batot Hydro Power Ltd, Brahmanvel Energy Ltd, Greenweiz Projects Ltd, Joiner Hydro Power Projects Ltd, Khandesh Energy Projects Ltd and Vajharpada Energy Ltd. All subsidiary companies are SPV''s executing power projects which are in different stages of development except Greenweiz Projects Limited which is in the business of carrying out operation & maintenance of wind farms. Batot''s 3.5 MW Project was re-commissioned in mid June 2013 after extensive repairs over a period of one year pursuant to unprecedented floods in August 2012 immediately after the Small Hydro Power Project was commissioned in mid June 2012.

The company recorded a Net Loss after tax of Rs.410.28 lakh against Rs.241.68 lakh loss in the previous year.

In accordance with the Circular No. 5/12/2007-CL-MI dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India has granted general exemption from attaching the Balance Sheet, Statement of Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company. However the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular. The company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered office of the Company and that of the respective subsidiary companies. The Consolidated Financial statements presented by the company include the financial results of its subsidiary companies.

The statement pursuant to Section 212 of the Companies Act, 1956 containing the details of the Company''s subsidiaries as at 31st March, 2014, is attached to the Annual Accounts.

5. DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company Shri Chetan D Mehra retires by rotation as director and, being eligible has offered himself for re-appointment.

The Managing Director of the company Mr. G N Kamath was re- appointed for a period of one year with effect from 1st December 2013 subject to approval of shareholders by special resolution and the ensuing Annual General Meeting. The confirmation of re- appointment of Mr. G N Kamath as Managing Director for a period of one year and above would be included in Notice to the ensuing AGM.

Further in terms of the Section 149 of the Companies Act, 2013 the Independent Directors can hold office for a consecutive term of five years and can be reappointed for another consecutive term of five years on passing a special resolution by the Company. The Independent Directors of the Company viz. Shri V P Kamath, Shri

Kishore M Vussonji, Shri Vinesh N Davda and Shri Upkar Singh Kohli were appointed by the members in earlier Annual General Meetings without specifically stipulating the tenure of such appointments as per the Companies Act, 1956. As per the Companies Act, 2013 the Independent Directors are not liable to retire by rotation. Therefore the Independent Directors of the Company viz. Shri Vishnu P Kamath, Shri Kishore M Vussonji, Shri Vinesh N Davda and Shri Upkar Singh Kohli are proposed to be appointed as Independent Directors for a tenure of five years in the ensuing Annual General Meeting.

6. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors confirm:

I) that in the preparation of the annual accounts for the year ended 31st March, 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgements 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 31st March, 2014 and of the profit of the Company for the year ended on that date ;

iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities; and

iv) that the Directors have prepared the annual accounts on a going concern basis.

7. PARTICULARS OF THE EMPLOYEES

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the Annexure to the Directors'' Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

8. DISCLOSURE OF PARTICULARS

Pursuant to Section 217(1) (e) of the Companies Act, 1956 read with Companies Disclosure of particulars in the report of the Board of Directors) Rules, 1988 has to Report on the matters covered by this section.

As the Company is in the field of Wind Farm development and not manufacturing, the relevant provisions relating to conservation of technology absorption are not applicable. However as the Company is in the field of wind farm development and promoting green energy, it is directly contributing to reducing dependency on fossil fuel and thus conserving the fossil fuel.

The earnings and outgo in foreign exchange was Rs.127.84 lakh and NIL respectively during the year.

9. FIXED DEPOSITS

Your Company has not accepted any Fixed Deposits within the meaning of Section 58A of the Companies Act, 1956.

10. AUDITORS

Messrs. U.B. Sura & Co. Chartered Accountants and Messrs. Shyam C. Agrawal & Co., Chartered Accountants, Statutory Auditors of the Company retire as Auditors at the forthcoming Annual General Meeting and have given their consent for re- appointment. The members will be required to appoint Auditors for the current year and fix their remuneration.

As required under the provisions of Section 224 of the Companies Act, 1956, the Company has obtained a written confirmation from the above Auditors proposed to be re-appointed to the effect that their re-appointment, if made at the ensuing Annual General Meeting will be within the limits specified in Section 224(1B) of the Companies Act, 1956.

11. COST AUDIT

As per Order of the Ministry of Corporate Affairs, dated 2nd May 2011, and pursuant to Section 233 B of the Companies Act, 1956, Company is required to get Cost records audited by a practicing Cost Accountant under Cost Accounting records (Electricity Industry) Rules, 2011. For Financial Year 2013-14 the company had appointed Mr. S C Mawalankar, a Practicing Cost Accountant as Cost Auditor. For Financial year 2014-15, Rules under Companies Act, 2013 is awaited in the matter of Companies required to get their Cost Accounting Records audited.

12. AUDITORS'' REPORT

The observations of the Auditors in their report, read with notes annexed to the accounts, are self-explanatory.

13. CORPORATE GOVERNANCE

Your Company has complied with Corporate Governance requirement as per the Clause 49 of the Listing Agreement. A report on Corporate Governance forms part of this report. A certificate from the Statutory Auditors of the Company confirming compliance of the Corporate Governance is appended to the Report on Corporate Governance.

14. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the Listing Agreement with the Stock Exchanges is annexed forming part of this report.

15. ACKNOWLEDGEMENT

Your Directors express their grateful appreciation for the assistance and co-operation received from Government Authorities, Bankers, Lending Institutions, Suppliers and Customers during the year under review. Your Directors place on record their appreciation for the committed services of the executives and staff of the Company.

For and on behalf of the Board Place : Mumbai Dharmendra G. Siraj Date : 27th May, 2014 Chairman

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Mar 31, 2013

TO ThE MEMBERS OF KARMA ENERGY LIMITED

The Directors are pleased to present this Sixth Annual Report and the Audited Statement of Accounts for the year ended March 31, 2013.

1. FINANCIAL RESULTS

(Rs. in lakh)

Particulars 2012-2013 2011-2012

Total Income including exceptional items 3182.95 2982.78

Profit Before Depreciation 1157.53 1188.86

Less : Depreciation 781.93 793.44

Profit Before Tax 375.60 395.42

Less : Income Tax 311.00 160.91

Less : Deferred Tax (181.27) (0.38)

Profit After Tax 245.87 234.89

Add : Balance brought forward from previous year 111.53 11.81

Additions on amalgamation (67.98)

Balance Available for appropriation 357.40 178.72

Director''s Recommendation for Appropriation :

Transfer to General Reserve

Proposed Dividend on Equity Shares @ 5% 57.82 57.82

(2011- 2012: 5%)

Dividend Tax 9.38 9.38

Surplus Carried to Balance Sheet 290.21 111.52

The consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with Accounting Standard 21 prescribed under Companies (Accounting Standards) Rules form part of the Annual Report and Accounts.

2. DIVIDEND

You r Directors have recommended a dividend at 5% (Re.0.50 per share) on equity shares (Previous year : 5 % ). The dividend, together with the tax on distributed profit, will absorb a sum of Rs.67.20 Lakh and will be paid to those shareholders whose names stand registered in the Register of members of the Company as on the book closure date.

3. PERFORMANCE

Duri ng the year the Total Income of the Company was Rs.3182.95 Lakh as compared to Rs.2982.78 Lakh in the previous year. The Profit before depreciation achieved was Rs.1157.53 Lakh (Previous year - Rs.1188.86 Lakh). The Profit after Tax registered was Rs.245.87 Lakh (Previous year Rs.234.89 Lakh).

Generation from all its wind power plants from different states have been higher than the previous year by about 15.8% principally contributed by the benefit of full year generation of 3.6 MW wind power plant in Aranmanaikadu, Theni District, wherein in 2011-12 apart from frequent grid problem of the Tamil Nadu utility, a new transmission line to the substation could be completed by July 2011 i.e. well into the high wind season and of course this year the availability of wind was also on a higher side. Wind pattern is generally cyclic with high and low wind seasons alternating. The value of realization of power generation has also been good except in Andhra Pradesh where the company has a 7.5 MW, wherein on an tariff revision petition filed by State Distribution Licensee APCPDCL the Hon''ble State Regulatory Commission APERC has issued an interim order fixing that tariff at Rs.1.69 per unit against the normal tariff of Rs.3.37 per unit. As some more renewable energy generators have been affected, Appellate Tribunal of Electricity has been approached by few developers praying for setting aside the interim order, directing the Utility to make payment at Rs.3.37 per unit, directing APERC to expedite disposal of the long pending appeal. The company has provided for the difference in tariff for the period for which APCPDCL has paid the value for generation at Rs.1.69 only and the same is reflected as Exceptional Items.

The removal of accelerated depreciation for wind mills coupled with suspension of generation based incentives had a dampening effect in new investments in wind energy sector. The Central Government in Budget 2013- 14 has reintroduced "generation based incentive” for wind energy projects and has allocated Rs.800 crore to the Ministry of Non Renewable Energy for this purpose. However detailed operational guidelines are awaited.

4. SUBSIDIARY COMPANIES

Your company has 8 subsidiary companies namely Almi Hydro-Electric Projects Ltd, Baledh Energy Projects Ltd, Batot Hydro Power Ltd, Brahmanvel Energy Ltd, Greenweiz Projects Ltd, Joiner Hydro Power Projects Ltd, Khandesh Energy Projects Ltd and Vajharpada Energy Ltd. All subsidiary companies are SPV''s executing power projects which are in different stages of development except Greenweiz Projects Limited is in the business of carrying out operation

& maintenance of wind farms. Batot Hydro Power Ltd commissioned its 3.5 MW small hydro power project in June, 2012. However, specifically with respect to Batot Hydro Power, post commissioning in June 2012 there was an unprecedented floods not occurred in 100 years, in August 2012 damaging many a civil work and machineries. The restoration work is in progress and is expected the plant would restart in July 2013. Consequent to such adverse effect there could not be any income generation from August 2012. However since the expenses like depreciation, finance cost, admin expenses are fixed cost, the net operation of the said subsidiary resulted in a net loss post tax of Rs.411.59 lakh. Consequently the loss as per consolidated accounts post tax is Rs.241.68 lakh against profit of Rs.42.72 lakh in the previous year.

In accordance with the Circular No. 5/12/2007-CL-III dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India has granted general exemption from attaching the Balance Sheet, Statement of Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company. However the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular. The company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered office of the Company and that of the respective subsidiary companies. The Consolidated Financial statements presented by the company include the financial results of its subsidiary companies.

The statement pursuant to Section 212 of the Companies Act, 1956 containing the details of the Company''s subsidiaries as at 31st March, 2013, is attached to the Annual Accounts.

5. DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company Shri. V P Kamath, Shri. Vinesh Davda and Shri. Kishore Vussonji retire by rotation and, being eligible have offered themselves for re-appointment.

6. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors confirm:

i) that in the preparation of the annual accounts for the year ended 31st March, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgement 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 31st March, 2013 and of the profit of the Company for the year ended on that date ;

iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities; and

iv) that the Directors have prepared the annual accounts on a going concern basis.

7. PARTICULARS OF ThE EMPLOYEES

In terms of the the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the Annexure to the Directors'' Report. Having regard to the provisions of Section 219(1)(b) (iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

8. DISCLOSURE OF PARTICULARS

Pursuant to Section 217(1) (e) of the Companies Act, 1956 read with Companies Disclosure of particulars in the report of the Board of Directors) Rules, 1988 has to Report on the matters covered by this section.

As the Company is in the field of Wind Farm development and not manufacturing, the relevant provisions relating to conservation of technology absorption are not applicable. However as the Company is in the field of wind farm development and promoting green energy, it is directly contributing to reducing dependency on fossil fuel and thus conserving the fossil fuel.

The earnings and outgo in foreign exchange was Rs.90.78 lakh and NIL respectively during the year.

9. FIXED DEPOSITS

You r Company has not accepted any Fixed Deposits within the meaning of Section 58A of the Companies Act, 1956.

10. AUDITORS

Messrs. U.B. Sura & Co. Chartered Accountants and Messrs. Shyam C. Agrawal & Co., Chartered Accountants, Statutory Auditors of the Company retire as Auditors at the forthcoming Annual General Meeting and have given their consent for re-appointment. The members will be required to appoint Auditors for the current year and fix their remuneration.

As required under the provisions of Section 224 of the Companies Act, 1956, the Company has obtained a written confirmation from the above Auditors proposed to be re-appointed to the effect that their re-appointment, if made at the ensuing Annual General Meeting will be within the limits specified in Section 224(1B) of the Companies Act, 1956.

11. COST AUDIT

As per Order of the Ministry of Corporate Affairs, dated 2nd May 2011, and pursuant to Section 233 B of the Companies Act, 1956, Company is required to get Cost records audited by a practicing Cost Accountant under Cost Accounting records (Electricity Industry) Rules, 2011. The company is required to appoint Cost Auditor within 90 days of the beginning of the Financial Year. Accordingly the Board for Financial Year 2013-14 has appointed Mr. S C Mawalankar & Associates, a Practicing Cost Accountant firm as Cost Auditor subject to the approval of the Central Government. For Financial Year 2012-13 the company had appointed Mr. K N Satyanarayan, a Practicing Cost Accountant as Cost Auditor.

12. AUDITORS'' REPORT

The observations of the Auditors in their report, read with notes annexed to the accounts, are self-explanatory.

13. CORPORATE GOVERNANCE

You r Company has complied with Corporate Governance requirement as per the Clause 49 of the Listing Agreement. A report on Corporate Governance forms part of this report. A certificate from the Statutory Auditors of the Company confirming compliance of the Corporate Governance is appended to the Report on Corporate Governance.

14. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the Listing Agreement with the Stock Exchanges is annexed forming part of this report.

15. ACKNOWLEDGEMENT

You r Directors express their grateful appreciation for the assistance and co- operation received from Government Authorities, Bankers, Lending Institutions, Suppliers and Customers during the year under review. Your Directors place on record their appreciation for the committed services of the executives and staff of the Company.

For and on behalf of the Board Place : Mumbai D G Siraj

Date : 30th May, 2013 Chairman

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Mar 31, 2012

TO THE MEMBERS OF KARMA ENERGY LIMITED

The Directors are pleased to present this fifth Annual Report and the Audited Statement of Accounts for the year ended March 31, 2012.

1. FINANCIAL RESULTS

(Rs. in lakh)

Particulars 2011-2012 2010-2011

Total Income including exceptional items 2982.78 1761.37

Profit Before Depreciation 1188.86 833.16

Less : Depreciation 793.44 760.77

Profit Before Tax 395.42 72.39

Less : Income Tax 160.91 27.00

Less : Deferred Tax (0.38) (34.16)

Profit After Tax 234.89 79.55 Add : Balance brought forward from

previous year 11.81 (0.53)

Additions on amalgamation (67.98) --

Balance Available for appropriation 178.72 79.02

Director's Recommendation for Appropriation :

Transfer to General Reserve -- -- Proposed Dividend on Equity Shares @5%

(2010 - 2011: 5 %) 57.82 57.82

Dividend Tax 9.38 9.38

Surplus Carried to Balance Sheet 111.52 11.81

The consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with Accounting Standard 21 prescribed under Companies (Accounting Standards) Rules form part of the Annual Report and Accounts.

2. DIVIDEND

Your Directors have recommended a dividend at 5 % (Re.0.50 per share) on equity shares (Previous year : 5 % ). The dividend, together with the tax on distributed profit, will absorb a sum of Rs.67.20 Lakh and will be paid to those shareholders whose names stand registered in the Register of members of the Company as on the book closure date.

3 PERFORMANCE

During the year the Total Income of the Company was Rs.2982.78 Lakh as compared to Rs.1761.37 Lakh in the previous year. The Profit before depreciation achieved was Rs.1188.86 Lakh (Previous year - Rs.833.16 Lakh). The Profit after Tax registered was Rs.234.89 Lakh (Previous year Rs.79.55 Lakh).

4. SUBSIDIARY COMPANIES

Your company has 8 subsidiary companies namely Almi Hydro- Electric Projects Ltd, Baledh Energy Projects Ltd, Batot Hydro Power Ltd, Brahmanvel Energy Ltd, Greenweiz Projects Ltd, Joiner Hydro Power Projects Ltd, Khandesh Energy Projects Ltd and Vajharpada Energy Ltd. All subsidiary companies are SPV's executing power projects which are in different stages of development except Greenweiz Projects Limited is in the business of carrying out operation & maintenance of wind farms. Batot Hydro Power Ltd commissioned its 3.5 MW small hydro power project in June, 2012.

In accordance with the Circular No. 5/12/2007-CL-III dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India has granted general exemption from attaching the Balance Sheet, Statement of Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company. However the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular. The company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered office of the Company and that of the respective subsidiary companies. The Consolidated Financial statements presented by the company include the financial results of its subsidiary companies.

The statement pursuant to Section 212 of the Companies Act, 1956 containing the details of the Company's subsidiaries as at 31st March, 2012, is attached to the Annual Accounts.

5. MERGER OF AVIRODH FINANCIAL SERVICES LTD WITH THE COMPANY :

Avirodh Financial Services Ltd amalgamated with the Company with effect from appointed date 1st April 2011 pursuant to the sanction of Scheme of Amalgamation by the Hon'ble High Court of Bombay vide their order dated 13th April, 2012. Consequently the Financials of said Avirodh Financial Services Limited have been incorporated in the financials of the company for 2011-12.

6. DIRECTORS

Shri Upkarsingh Kohli was appointed as a Additional Director on 9th November, 2011 in accordance with Section 260 of the Companies Act, 1956 and Article 46 of the company's Articles of Association and will cease to hold office at this Annual General Meeting and is eligible for appointment. During the year under review M/s. IREDA withdrew the nomination of their nominee Director Shri. Sumant Chadha with effect from 24th October, 2011 in view of repayment of entire term loan facility availed by the Company. Your Board places on record their appreciation of the valuable contribution made by Shri. Sumant Chadha during his tenure as Nominee Director on the Board of the Company.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Shri. Neelkamal V. Siraj and Shri. Dharmendra G. Siraj retire by rotation and, being eligible have offered themselves for re-appointment.

Attention of the Members is invited to the relevant items in the notice of the Annual General Meeting and the explanatory statement thereto.

7. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors confirm:

i) that in the preparation of the annual accounts for the year ended 31st March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgement 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 31st March, 2012 and of the profit of the Company for the year ended on that date ;

iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities; and

iv) that the Directors have prepared the annual accounts on a going concern basis.

8. PARTICULARS OF THE EMPLOYEES

The Company does not have any employee whose particulars are required to be given under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended up to date.

9. DISCLOSURE OF PARTICULARS

Pursuant to Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 has to Report on the matters covered by this section.

As the Company is in the field of Wind Farm development and not manufacturing, the relevant provisions relating to conservation of technology absorption are not applicable. However as the Company is in the field of wind farm development and promoting green energy, it is directly contributing to reducing dependency on fossil fuel and thus conserving the fossil fuel.

The earnings and outgo in foreign exchange was Nil during the year.

10. FIXED DEPOSITS

Your Company has not accepted any Fixed Deposits within the meaning of Section 58A of the Companies Act, 1956.

11. AUDITORS

Messrs. U.B. Sura & Co. Chartered Accountants and Messrs. Shyam C. Agarwal & Co., Chartered Accountants, Statutory Auditors of the Company retire as Auditors at the forthcoming Annual General Meeting and have given their consent for re- appointment. The members will be required to appoint Auditors for the current year and fix their remuneration.

As required under the provisions of Section 224 of the Companies Act, 1956, the Company has obtained a written confirmation from

the above Auditors proposed to be re-appointed to the effect that their re-appointment, if made at the ensuing Annual General Meeting will be within the limits specified in Section 224(1B) of the Companies Act, 1956.

12. COST AUDITORS

The Central Government had approved the appointment of M/s. K N Satyanarayan for conducting Cost Audit for the financial year 2011-12 As per the requirement of the central Government and pursuant to Section 233B of the Act, the audit of the cost accounts of Electricity companies are required to be audited from financial year beginning April 2011 Therefore pursuant to the approval of Ministry of Corporate Affairs, M/s. K. N. Satyanarayan having registration no. 7004 has been appointed as Cost Auditor for auditing the company's cost accounting records maintained as per Cost Accounting Records (Electricity Industry) Rules, 2011, relating to power generated for the financial year ended March 31, 2012.

Pursuant to the recommendation of the Audit committee, the Board of Directors have appointed M/s. K. N. Satyanarayan as the cost Auditors of the Company for conducting the Cost Audit Records of the Company for the financial year 2012-13 which has been approved by the Central Government.

13. AUDITORS' REPORT

The observations of the Auditors in their report, read with notes annexed to the accounts, are self-explanatory.

14. CORPORATE GOVERNANCE

Your Company has complied with Corporate Governance requirement as per the Clause 49 of the Listing Agreement. A report on Corporate Governance forms part of this report. A certificate from the Statutory Auditors of the Company confirming compliance of the Corporate Governance is appended to the Report on Corporate Governance.

15. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Management Discussion and Analysis Report as required under the Listing Agreement with the Stock Exchanges is annexed forming part of this report.

16. ACKNOWLEDGEMENT

Your Directors express their grateful appreciation for the assistance and co-operation received from Government Authorities, Bankers, Lending Institutions, Suppliers and Customers during the year under review. Your Directors place on record their appreciation for the committed services of the executives and staff of the Company.

For and on behalf of the Board

Place : Mumbai

Date : 13th August, 2012 Dharmendra G. Siraj

Chairman