MANAGEMENT DISCUSSION AND ANALYSIS Economic Review Global Economy As per the International Monetary Fund (IMF), world GDP growth slowed to 3.1% in 2015 from 3.4% in 2014. Global economic activity weakened amidst increasing financial market volatility, especially in the second half of 2015. Moderation in economic growth was driven by softer economic activity in advanced economies. While softness in commodity prices lowered external trade realisations, global trade also suffered The continuing slowdown and rebalancing in China, declining investments in commodity exporters like Brazil, Russia, etc., and significant exchange rate debrciation in emerging markets resulted in weakening of global trade activity. Subdued economic activity amidst disinflationary conditions prompted many key central banks to further ease monetary policy through a combination of conventional and unconventional tools. The euro region was influenced by low investment, high unemployment and weak corporate performance, among others. In Japan, both growth and inflation continued to stay weaker than expected, revealing a sharp fall in private consumption. Indian Economy Indian Economy grew by 7.6% in FY 2015-16 and the International Monetary Fund (IMF) has projected that India will grow by 7.5% in FY 2016-17. Amidst continuing global headwinds and fall in oil prices, India remains one of the best-performing economies. The macroeconomic fundamentals of the Indian economy have made substantial improvements with reforms in selected areas, pursuit of fiscal prudence, benign price situation and comfortable level of external current account. India registered a positive economic performance during the year on the back of investment-focused strategies and fiscal management initiatives. Inflation continued to remain moderate. Average CPI inflation in FY 2015-16 decelerated to 4.9% from 6.0% in FY 2014-15. Sharp drop in crude oil prices helped moderate fuel inflation. The central bank's anti-inflationary stance and quality fiscal consolidation bode well for core inflation, which remained below 5% through the course of the year. Inflation is expected to ease further during FY 2016-17 which will provide space for further rate cut by RBI. India's external position strengthened further in 2016. As per the Economic Survey 201617, the current account deficit is expected to remain within the comfort zone at 1.0-1.5% of GDP. On the fiscal front, the government is expected to meet its 2016 fiscal deficit target of 3.9% of GDP . Exports continued to decline for more than a year on poor global demand. However, with imports falling concurrently due to lower global commodity prices, merchandise trade deficit moderated in FY 2015-16. The rupee remained strong in the recent upheavals , affirming to a strong macroeconomic outlook for the country. The government also provided a roadmap for increased investments as well as enhanced participation opportunities to private players in the development of the infrastructure sector. The certainty and prospect of high and rising growth, pooled with macroeconomic strength, promises continuous growth for India. Indian Power Sector Review Thermal Coal Review Global Perspective Growth in global coal demand is expected to slow sharply, growing by just 0.5% p.a. as compared with almost 3% p.a. over the past 20 years. This slowdown can be largely attributed to the slowing down in China's coal consumption as its economy rebalances. China is also steadfast to move from coal to cleaner sources of energy which is mainly gas and hydropower. It also plans to ban import of low grade coal and levy import duties. Coal demand is expected to fall in both the US and OECD Europe, determined by abundant supply of gas, the falling cost of renewable and stronger environmental regulation. The economic makeover in China and eco-friendly policies worldwide, including the recent climate agreement in Paris is likely to put brssure on global coal demand. The Chinese government has also initiated an ambitious campaign to sbrad its energy sources, consolidate its coal mines and cap consumption, announcing various coal quality restrictions and a ban on new developments of coal-fired plants. Factors such as lowering oil prices, continuing geopolitical instability in different parts of the world and on-going global climate negotiations are likely to impact the global energy landscape. Further, underlying forces such as India's response to the intensifying energy challenge and the prospects of development of non-conventional sources of energy in China will have lasting implications on the consistency, affordability and sustainability of energy globally. [Source: International Energy Agency (IEA) and BP Energy Outlook, 2016] Indian Perspective According to ICRA, coal production grew at 8.6% in FY 2015-16 as compared to 6.9% in FY 2014-15. This was mainly driven by increased output from Coal India Limited, which resulted in a decline in dependence on costlier imported coal. Coal India Limited achieved a record production of 536 MT during FY 2015-16, 42 MT more than the brvious year, showing a growth of 8.5%. Coal India Limited, which accounts for over 80% of the domestic production, is aiming to double the output to one billion tonnes in next four years. The record coal production and off-take lead to a unique 28-day average inventory of coal at power plants. Overall coal imports declined by 16.5% from 212.103 million metric tonnes (MMT) in FY 2014-15 to 177.843 MMT (provisional) in FY 2015-16. The enhanced domestic production levels have led to an 8.8% y-o-y increase in coal off-take in FY 2015-16. This growth was the result of synchronised efforts by the Government of India and the State Governments to ensure faster approvals as well as land acquisition for mining, besides higher rake availability. Higher domestic coal availability can be expected to help thermal projects that have entered into PPAs with State-owned distribution utilities on the basis of supply of domestic coal and have been unable to secure pass-through of additional costs arising out of use of imported coal. Capacity Review The total installed capacity during the fiscal stood at 298 GW. The private sector contributed around 40% to the total installed capacity. During FY 2015-16, a capacity addition of 23,976.60MW has been achieved which is 41.9% of the target of 16,894.10MW. The break up of the Capacity addition between the Private sector and State Sector is as under : Power Generation Power generation in India grew by 5.60% during FY 2015-16. The country generated 1,107.385 billion units in FY 2015-16 as compared to 1,048.672 billion units generated in FY 2014-15. A healthy performance by thermal power stations helped the country in reporting more than 5% growth in total power generation. Thermal power generation grew by 7.41% year-on-year (y-o-y), generating 943.407 billion units in FY 2015-16. Transmission Lines Consequent to various steps taken by the Government for expediting clearances as well as intensive monitoring of critical transmission lines, 28,114 circuit kilometers (ckm) of transmission lines have been commissioned during FY 2015-16, against 22,101 ckm commissioned during the same period last year, a growth of 27%. Despite this addition to the transmission sector capacity, power outages and shortages continue to impede the country's economic growth. The inept synergies between power-surplus and power-deficit states are the result of inadequate transmission infrastructure. This status however, is set to change with the government making substantive efforts to enhance investments in the transmission sector. Power Situation improving The power deficit position improved from - 2.1% in March 2015 to -1.5% during March 2016. The shortage during the month improved for all regions leading to reduced usage of diesel for backup power generation. Government Initiatives New scheme UDAY The Union Cabinet has given its approval to a new scheme Ujwal Discom Assurance Yojana (UDAY) moved by the Ministry of Power. UDAY provides for the financial turnaround and revival of Power Distribution Companies (DISCOMs), and importantly also ensures a sustainable permanent solution to the problem. It envisages reducing interest burden, cost of power and AT&C losses in its endeavour to make the DISCOMs viable to supply adequate and reliable power. Key Highlights • Improving efficiency through infrastructure development, smart metering and tracking of losses • Reduced losses through public participation programmes • Demand Side Management to reduce bills and save the environment • Transmission Capacity Addition for reliable power supply Benefits • 24X7 Power for all • Electrification of all villages • Enable Energy Security • Revive investments in Power sector to create jobs • Almost all DISCOMs to be profitable in 2-3 years • Substantial savings due to efficiency improvement National Smart Grid Mission The Government of India has approved the National Smart Grid Mission (NSGM). The mission is an institutional mechanism for planning, monitoring and implementation of policies and programmes related to Smart Grid activities. The main aim is to bring efficiency in power supply network and facilitate reduction in losses and outages. The total outlay for Coal production in India grew by 8.6% in FY 2015-16 vis-a-vis 6.9% in FY 2014-15*. This was primarily driven by increased output from Coal India, which resulted in a decline in dependence on costlier imported coal. NSGM activities for 12th Plan is Rs. 980 crore with a budgetary support of Rs. 338 crore. The major activities envisioned under NSGM are development of smart grid, development of micro grids, consumer engagements as well as training and capacity building. Integrated Power Development Scheme (IPDS) In a bid to facilitate State utilities to ensure quality and reliable 24X7 Power supply in urban areas, Government approved the IPDS with a total outlay of Rs. 32,612 crore including budgetary support of Rs. 25,354 crore. The main component of the scheme is establishment of sub-transmission and distribution networks in urban areas, metering of distribution transformers/ feeders of consumers in urban areas and IT enablement of distribution sector. Deendayal Upadhyaya Gram Jyoti Yojana (DUGJY) The Ministry of Power has planned to provide electricity to 18,500 villages in three years under the Deendayal Upadhyaya Gram Jyoti Yojana (DUGJY). Out of these, 3,500 villages would receive electricity through off-grid or renewable energy solutions. The earlier scheme for rural electrification, Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), has been included in the new scheme as its rural electrification component. The major components of the new scheme are feeder separation; strengthening of sub-transmission and distribution network; Metering at all levels viz: input points, feeders and distribution transformers ; Micro grid and off grid distribution network and Rural electrification- already sanctioned projects under RGGVY to be completed. Coal Mines (Special Provisions) Act, 2015 The act aims to provide for allocation of coal mines and vesting of the right, title and interest in and over the land and mine infrastructure to successful bidders and allottees with a view to safeguarding continuity in coal mining operations and production of coal. This will help tackle the issue of fuel shortage for power generation. Outlook There is a huge potential in the Indian power sector where many households still do not have access to electricity. The government has undertaken an ambitious journey to provide affordable and uninterrupted electricity supply to all households by 2019. However, there are still serious bottlenecks in the form of lack of long term PPAs, lack of clarity regarding coal mines allocation and severe congestion in the transmission corridors. This, combined with the slowdown in industrial activity, has hindered the healthy growth of energy generators in the country resulting in non-availability of continuous power supply to the consumers. Introduction of UDAY scheme to improve the financial stability of the ailing Discoms and the increasing number of states embracing the scheme bodes well for the sector in the long run. Forecast of a good monsoon also should provide the much needed boost to the economy after two consecutive years of deficient rainfall. There is a concerted push from the government to promote renewable, especially solar energy, in India. The government has set high targets for solar capacity additions and has been providing various incentives and policy support to attain a fast growth. The latest bids for solar power projects has seen startling declines raising hopes that this sector will see rapid development in the coming years as new technological breakthroughs make solar power generation more affordable and viable. Domestic coal production has improved considerably and India has moved from a coal deficit to a surplus situation. Coal imports into the country are expected to go down further in the coming years as more domestic mines come into operation. International coal prices are also expected to remain subdued due to lack of demand from China and developed nations reducing their dependence on fossil fuels for electricity generation. Company Overview JSW Energy Limited is an India-based integrated power company primarily engaged in generation and sale of power. The Company either by itself or through its subsidiaries / joint ventures / associates is engaged in power generation, power transmission, mining, power trading and equipment manufacturing. JSW Energy operates 4,531MW of power generation capacity with the vision to achieve 10,000MW in power generation capacity by 2020. In less than a decade of its operations, the company has crossed several milestones working on power solutions in the States of Karnataka, Maharashtra, Rajasthan and Himachal Pradesh. During the current financial year, the Company concluded the acquisition of Himachal Baspa Power Company Limited (HBPCL) adding 1,391MW of hydro electric capacity to its existing thermal capacity of 3,140MW. Operational Review The Company on consolidated basis has achieved a yearly net generation of 22.06 BU in FY 2015-16 as against 20.31 BU in FY 2014-15. The thermal plants have achieved an average deemed plant load factor (PLF) of 86.10% during the current year as against 85.82% during the brvious year. The hydro power plants which were acquired effective September 2015 achieved an average PLF of 26.74%, given the impact of seasonality and availability of water. Plant-wise PLF and Net Generation • The overall increase in net generation was primarily due to addition of hydro capacity during part of the year. • During the year the Company achieved merchant sales of 10,175 MU (47%) and long-term PPA sales of 11,677 MU (53%). Project Review Barmer Lignite Mining Company Limited Overburden removal at Jalipa Mines has commenced. The Company has filed a petition with the regulator for approval of the MDO contractor based on the outcome of the tendering process for Jalipa and Kapurdi mines. The project cost incurred till March 31, 2016 is Rs. 1,938 crore. 240 MW - at Kutehr, Himachal Pradesh (HP) At Kutehr, Himachal Pradesh, the Company is implementing a 240 MW (3x 80MW), run-of-the -river, hydroelectric power project. All the requisite clearances for the project have been received and the land required for construction of the project acquired. Construction of 33/11 KV substation for providing Construction Power is nearing completion and other enabling works e.g. construction of approach roads, development of dumping sites etc. are in progress. Main works of the project is proposed to be executed through a single EPC contract, for which a leading Construction Agency has been selected through International Competitive Bidding (ICB) and Letter of Intent (LoI) has been issued. Financial closure is expected to be completed in the coming fiscal, after which the EPC contract will be awarded. The project cost is estimated at Rs. 2,900 crore and cost incurred on the project up to March 31, 2016 is Rs. 262 crore. Financial Review Standalone financial performance The Company recorded a PAT of Rs. 965.85 crore during the financial year ended March 31, 2016 (FY 2014-15: Rs. 994.55 crore). Both the basic and the diluted earnings per share were at Rs. 5.89 for FY 2015-16 (FY 2014-15: Rs. 6.06). The Government's signature initiatives such as Make in India, Housing for All by 2022, Power for All by 2019, 100 Smart Cities by 2022 and Atal Mission for Rejuvenation & Urban Transformation (AMRUT) will drive power demand significantly. Revenue from sale of power has reduced on a Year-on-Year (Y-o-Y) basis primarily on account of lower realisation per unit and also due to lower saleable units as compared to the brvious year. Saleable units of the brvious year includes sale of banked energy. Revenue from sale of services is higher on Y-o-Y basis mainly on account of higher operator fees realised from O&M services. Employee Benefits Expense is higher Y-o-Y basis due to annual increase in salary and induction of new employees. Finance Costs have increased during the current year due to increase in short term loans offset by periodical repayment of long term debt. Debrciation and Amortisation Expense increased due to full year impact of debrciation in current year of fixed assets capitalized towards the end of brvious year. Other Expenses increased primarily due to increase in Repairs & Maintenance / Stores & Spares consumption on account of Plant maintenance expenditure, increase in CSR expenses, Cash discount and Legal & Professional expenditure. EBITDA and Profit after Tax (PAT) The EBITDA before exceptional items increased due to decrease in fuel cost on account of lower international coal prices partly offset by decrease in average tariff, decline in other income and increase in other expenses. Though, EBITDA increased during the current year, Profit after Tax decreased primarily on account of increase in finance costs, higher debrciation and increase in deferred tax. Consolidated Financial Review The Company recorded a PAT (after Associate loss and Minority Interest) of Rs. 1,395.51 crore during the financial year ended March 31, 2016 as compared to Rs. 1,349.51 crore for the financial year ended on March 31, 2015. Both the basic and the diluted earnings per share were at Rs. 8.51 for FY 2015-16 (FY 2014-15: Rs. 8.23). Parameters Revenue from Operations Employee Benefits Expense Other Expenses Finance Costs Debrciation and Amortisation Expense Revenue from operations increased primarily due to addition of revenue from hydro business which was acquired by the Company in September 2015, increase in volumes of power trading business partly offset by decrease in average tariff. Employee benefits expense, Other expenses, Finance Costs & Debrciation increased primarily on account of acquisition of the hydro business in September 2015 EBITDA and Profit after Tax Parameters EBITDA before exceptional items Profit After Tax Increase in EBITDA is primarily on account of acquisition of Hydro business during the year, lower fuel costs on account of declining international prices of coal, partly offset by debrciation of Indian rupee against the US Dollar and decrease in average tariffs. Profit after Tax has increased due to exceptional compensation of Rs. 150 crore received as per the terms of the Securities Purchase Agreement executed for acquisition of hydro power business of JPVL during the year partially offset by increase in finance costs and debrciation expense on account of the aforesaid acquisition. Risk Management The company has been following the globally recognised Committee of Sponsoring Organisations (COSO) framework of Risk Management to proactively manage risks and opportunities that impact organisational objectives. The relevant risks are identified, assessed and then responded to. The framework provides for: • Timely identification, communication and assessment of risks and opportunities • Risk ownership aimed at combrhensive coverage, impact assessment, proactive action and regular tracking • Training of all risk owners with a view to embedding risk intelligence in: a. Decision making - to ensure prudence b. Performance - to ensure competence and accountability • Timely escalation to the Committee of Directors' for risk oversight to ensure prioritisation Multiple policy initiatives have been unveiled to kick-start growth in the power and coal sectors. These are designed to revamp the Discoms, improve domestic coal availability, encourage renewable energy generation and enhance transmission capacity. of initiatives and allocation of resources in line with enterprise objectives • Independent review through risk based audit Power off-take With supply outpacing demand in the medium term, merchant tariffs have been under constant brssure, posing a severe challenge to the off take of merchant power. With the DISCOMS adhering to strict fiscal discipline there has been deferment of power procurement, resulting in reduced demand for power. In States like Maharashtra, the high cross subsidy surcharge has served as a big deterrent to the direct sale of power to industrial consumers. Transmission corridor related bottlenecks, especially pertaining to sales to the power deficit southern region has also served as a major dampener. Response Plan • Focus on enhancing the sale through long term PPAs and through captive route • Tracking various opportunities for sale of power to utilities in the home states as well as others • Focus on ensuring an optimum mix of medium, short and long term arrangements Fuel Company is currently using imported coal from countries like Indonesia, South Africa, Australia etc. The interruption in supply of coal due to regulatory changes, weather conditions in the sourcing country, strike by mine workers & closure of mines due to force majeure can impact the availability and/or cost of coal. Response Plan • The Company regularly broadens the sources (countries / vendors) and maintains the optimum fuel mix and stock levels Rupee-Dollar fluctuation Foreign exchange fluctuations can affect cost of coal and in turn the Company margins. Response Plan • Prudent hedging strategies to mitigate the risk of foreign exchange fluctuations Human Resources Management Managing huge network of activity in the organisation, HR has taken on increasingly strategic dimensions in the world of business more so when the employees remain to be one of the most important differentiators and source of competitive advantage in the VUCA world of today. Shaping the culture after merger and acquisitions, building capability to support operations and on-going growth, HR at JSW Energy plays critical role in creating structure & drive change. HR is at the forefront of the transformational journey and is an integral part in charting the success story of the Company. With a talent pool of 2073 employees, JSW Energy remains a dream Company to work. The key enablers for FY 2015-16 are detailed below: Chairman's Rolling Trophy: Introduced in FY 2014-15, the first assessment for the best operating Power Plant of JSW Energy took place in FY 2015-16. Assessed by three eminent members of the Industry on the basis of Plant's performance in the areas of Safety, Environment, Housekeeping, Production & Productivity as well as Employee's Satisfaction; Raj WestPower Limited, Barmer emerged as the Best Operating Power Plant for FY 2014-15. With an objective to vitalise the work place and improve the standards in the respective areas, this initiative has been very effective in creating a clean, green & safe work environment. BRIDGE: Started last year with an intent to give exposure to the employees regarding the best practices in the industry, BRIDGE initiative proved extremely useful in creating a structural platform through which our employees visited different Power Plants in the country. This helped them learn and imbibe the best practices in the industry and enhance their knowledge. UMANG: A fun at work initiative, UMANG, is event based initiative which encourages Cross Functional Team to participate in the programmes conducted at different locations. This enhances bonding amongst the member of the teams and eliminates functional barriers. LEAP: Lead, Engage, Associate & Perform (LEAP) is a programme which allows Head of all vital Departments such as Operations & Maintenance, Mechanical Maintenance as well as Electrical Maintenance, Safety, Peer Groups of our different plants to meet at br-defined frequency and discuss their best practices as well as seek solutions for different technical issues. This has emerged as a very good knowledge sharing platform and everyone participates in the trouble shooting of the other plant. This has not only created sense of belongingness but also helped the participants enrich their knowledge. WILP: Three Year's BS (Power) programme in collaboration with BITS (Pilani) has been immensely popular among Diploma holders. Work Integrated Learning Programme (WILP) launched in 2012 has been very useful in honing the skill and upgrading the knowledge of the employees. Successful completion of the programme has enabled our employees to grow faster within the organisation. Learning and Development: Achieving more than 6 man days of training on average with focus on functional and behavioural training has been a significant step towards enhancing employee's knowledge and skill. JSW Energy is engaged with IIM, Ahmedabad and NPTI, Faridabad and organised specialised Programmes viz MDP and certification programmes on regulatory matters respectively to build capability within the organisation. JSW Energy Centre of Excellence (JSWECE): The Company runs JSWECE at the O.P. Jindal Centre, Vijayanagar, where the PC-based dynamic, High-fidelity 300 MW Thermal Power Plant Simulator, is used to train the engineers to take up bigger responsibilities at the desk in the power plant. The trained and experienced staff of JSWECE helped the engineers at all the three locations - Barmer, Vijayanagar, and Ratnagiri - with tailor-made special programmes to address their real time on floor issues. The centre also conducted open programmes for other corporates, which witnessed 100% attendance and encouraging feedback. The centre has re-invented itself and is directly contributing to the growth of the company by conducting and facilitating technical programmes at a high frequency. Corporate Social Responsibility JSW Energy believes in inclusive growth to facilitate creation of a value-based and empowered society through continuous and purposeful engagement with society around. The Company is well on its course to execute programmes under the theme 'Janam Se Janani Tak - JSW Aap Ke Saath', a long term commitment extending services to meet the brssing needs towards empowering women and children living in the Direct Influence Zone of JSW Energy's plant locations and beyond. Through JSJT our efforts are directed towards enabling an ideal scenario where women and girls have access to quality education, healthcare and livelihood skills to build their own destinies while taking vital decisions in their families and society at large. Guided by the belief that every life is important and must be given fair opportunities to make the best out of it, the Company is working towards eradicating poverty & hunger, tackling malnutrition, promoting social development, addressing social inequalities by empowering the vulnerable sections of society, addressing environmental issues, brserving national heritage and promoting sports training. JSW Energy is committed to: • Continue allocating at least 2% of Profit Before Tax (PBT) towards special corpus for Corporate Social Responsibility as per the categories of the Companies Act, 2013 • Transparent and accountable system for social development and impact assessments through an external agency • Concentrate on community needs and perceptions through social processes and related infrastructure development • Provide special thrust towards empowerment of women through a process of social inclusion • Promote arts, culture and sports; and conserve cultural heritage • Sbrad the culture of volunteerism through the process of social engagement Strategy: JSW Foundation administers the planning and implementation of all our CSR interventions. A separate corpus has been created and is administered by a committee appointed by the Board. All the CSR initiatives are approved by the committee and the same are reviewed periodically at different levels. Taking a note of the importance of synergy and interdependence at various levels, JSW Energy has adopted a strategy that combines working with multi-stakeholders, as well as directly, depending on the appropriateness, and some of these are enumerated below: • Priority is given to the villages in the immediate vicinity of the plant locations defined as Direct Influence Zone (DIZ). The policy enables plants to define their own DIZ with the provision that this could be expanded as per the size of operations. However, certain programmes might be expanded beyond this geographical purview and scaled up to include a wider area defined as the Indirect Influence Zone (IIZ) • All the interventions shall be formulated based on need assessment using different quantitative and qualitative methods that lead to measurable impact • All these interventions shall be implemented either directly or in partnership with both Government and civil society organisations at various levels • All the interventions shall be adopted based on concurrent evaluation and knowledge management through process documentation and sharing • Social Mobilisation, advocacy at various levels, and /or appropriate policy changes shall form part of the interventions in each sector Key Highlights Improving Living Conditions (Vijayanagar) • Government of Karnataka announced in budget 2016 to replicate JSW's 'Mission Against Malnutrition' (MAM) model across the state • 8,500+ (children under 6 years, brgnant women, lactating mothers) covered in MAM this year, covering 269 anganwadis of gram panchayats • Up to 46% reduction in malnutrition cases in DIZ registered • JSW-ICRISAT watershed development and crop productivity enhancement program is benefiting farmers immensely. In FY 2015-16 farmers have witnessed 19% average increase in Groundnut harvest, 27% average increase in Maize harvest, 41% average increase in Pearl Millet harvest and 29% average increase in Cotton harvest (Ratnagiri) • DIZ in now open defecation free, more than 25 toilet units are connected to bio-gas units to benefit the households with cooking gas; 19 individual toilets constructed • 18,000+ people benefited from our healthcare intervention in the DIZ • To benefit brgnant women and mothers of infants in the DIZ, Phone-Sakhi (a timed and targeted voice calling) launched to remind them of approaching crucial days related to their brgnancy and infants' immunisation and general care. Phone-Shakhi is currently benefiting 45 brgnant women in 2 PHCs. They have been receiving 145 personalised voice messages of 60-90 seconds each, emphasising on safe motherhood and child care practices • Facilitated 5 vermi compost pits in DIZ • 127 farmers are benefiting from our agriculture interventions (cost & labour effective techniques and multi cropping), more than 5 hectares of land covered • 26 farmers tried second crop for the first time and reaped extra income benefit (Barmer) • 4,000+ people benefited from various health camps • Constructed 204 individual toilets (Sholtu) • Eye care - Eye camps covered 19 gram panchayats and 650+ people benefited from EYE OPDs; also facilitated 34 cataract operations (Kutehr) • Infrastructure of Garola PHC of our DIZ has been upgraded with the installation of X-Ray machine, ECG Machine and blood analyser • Eye care - 10 cataract operations facilitated Promoting Social Development (Ratnagiri) • Facilitated digital classrooms in all the 16 schools in DIZ • Supplementary meal in 15 primary schools and 14 anganwadis, benefiting 500+ children (Barmer) • In an initiative to embed nuances of theatre in school education to make learning fun, 'Theater in Education' program benefited 300+ students, including 100 + girls • 500 solar lanterns were given to rural schools in DIZ (Kutehr) • Continuing deployment of 20 para teachers in 16 government schools • 100+ students (including diploma engineers, degree engineers, ITI students, higher secondary students) are benefiting from scholarships Addressing Environment Issues (Ratnagiri) • 300+ families of 3 villages are availing potable drinking water supply through pipe line (Barmer) • Additional 7 Km pipeline laid for water supply to cover entire DIZ families Addressing Social Inequalities (Ratnagiri) • 50 girls are gainfully employed as associates at non voice Rural BPO • Betel nut plate unit, Cashew processing unit, Mango caning unit established by Self Help Groups (SHGs) • SHG program has been scaled up to include 85 women, who have been able to transform their lives and have collectively managed a turnover of Rs. 7 Lac • 13 SHGs earned Rs. 6.71 lac in current financial year through entrebrneurial ventures • Our commitment to water conservation through Maharashtra government's 'Jalyukta Shivar Abhiyaan' has so far led to construction of 18 check dams. The structures will hold more than 69000 cubic meter of water in the catchment and will benefit 10,000+ people (Barmer) • 90 women are part of 8 SHGs in DIZ and getting regular training inputs to enhance handicraft product designs • 50 bicycles were given to needy adolescent girls in DIZ (Kutehr) • Sewing teaching centres - 45 women got trained in sewing from 7 villages • 18 SHGs have been created and linked to banks benefiting 180 women • 20 women received training in knitting to make sweaters and socks to earn a livelihood Promoting Art & Culture • 90+ children of Manganiyar community were given training by Manganiyar folk music trainers to conserve the traditional folk music of Rajasthan Swachh Bharat Abhiyan (Ratnagiri) • 24 school toilets repaired • 2 school toilets constructed • 1 toilet constructed at Anganwadi (Sholtu) • In a drive through achieving 100 percent open defecation free DIZ, 16 bio digester toilets installed at 2 gram panchayats Rural Development (Ratnagiri) • 11.6 KMs of rural road constructed in the DIZ (Barmer) • 200 solar street lights installed in DIZ Promotion of Sports (Sholtu) • Boxing ring installed in a government middle school benefiting 40+ boxing players Internal Control Systems and Audit Overview A robust system of internal control, commensurate with the size and nature of its business, forms an integral part of the Company's corporate governance policies. Internal control The Company has a proper and adequate system of internal control commensurate with the size and nature of its business. Internal control systems are an integral part of JSW Energy's corporate governance structure. Some significant features of the internal control systems are: • Adequate documentation of policies, guidelines, authority and approval procedures covering all the important functions of the Company • Deployment of an ERP system which covers most of its operations and is supported by a defined on-line authorisation protocol • Ensuring complete compliance with laws, regulations, standards and internal procedures and systems • De-risking the Company's assets and resources as well as protecting them from any loss • Ensuring the integrity of the accounting systems; proper and authorised recording and reporting of all transactions • Preparation and monitoring of annual budgets for all operating and service functions • Ensuring reliability of all financial and operational information • The Audit committee of the Board of Directors, comprising of Independent Directors, regularly reviews audit plans, significant audit findings, adequacy of internal controls and compliance with Accounting Standards • A combrhensive Information Security Policy and continuous updation of IT Systems The internal control systems and procedures are designed to assist in the identification and management of risks, the procedure-led verification of all compliances as well as an enhanced control consciousness. Internal audit JSW Energy has an internal audit function that inculcates global best standards and practices of international majors into the Indian operations. The Company has a strong internal audit department reporting to the Audit Committee comprising Independent / Nominee Directors who are experts in their respective fields. The Company successfully integrated the COSO framework with its audit process to enhance the quality of its financial reporting, compatible with business ethics, effective controls and governance. The Company extensively practices delegation of authority across its team, which creates effective checks and balances within the system to arrest all possible gaps within the system. The internal audit team has access to all information in the organisation which has been largely facilitated by the ERP implementation across the organisation. Audit plan and execution The Internal Audit department brpares a risk-based Audit Plan and the frequency of audit is decided based on the risk ratings of the respective areas/functions. The Audit plan is approved by the Audit Committee and executed by the internal team. It is reviewed periodically to include areas which have assumed significance in line with the emerging industry trends and the aggressive growth of the Company. In addition, the Audit Committee also places reliance on internal customer feedback and other external events for inclusion of additional areas into the audit plan. Internal Financial Controls As per Section 134(5)(e) of the Companies Act, 2013, the Directors have an overall responsibility for ensuring that the Company has implemented robust system and framework of Internal Financial Controls. This provides the Directors with reasonable assurance regarding the adequacy and operating effectiveness of controls with regards to reporting, operational and compliance risks. The Company has devised appropriate systems and framework including proper delegation of authority, policies and procedures, effective IT systems aligned to business requirements, risk based internal audits, risk management framework and whistle blower mechanism. The Company had already developed and implemented a framework for ensuring internal controls over financial reporting. This framework includes entity level policies, processes and operating level standard operating procedures. The entity level policies includes anti-fraud policies (like code of conduct, conflict of interest, confidentiality and whistle blower policy) and other polices (like Organisation Structure, Insider Trading Policy, HR Policy, IT Security Policy, Treasury Policy and Business Continuity and Disaster Recovery Plan). The Company has also brpared Standard Operating Procedures (SOP) for each of its processes like procure to pay, order to cash, hire to retire, treasury, fixed assets, inventory, manufacturing operations etc. During the year, controls were tested and no reportable material weaknesses in design and effectiveness was observed. |