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Karnataka Renewable Energy Development Limited

ªÁ¶ðPÀ ªÀgÀ¢ 2011-12

Annual Report 2011-12

Registered Office

No.39, “Shanthi Gruha”, Bharath Scouts & Guides Building,

Opp.to Chief Post Master General Office,

Palace Road, Bangalore – 560 001.

Karnataka Renewable Energy Development Limited Bangalore

Contents

Sl.No. Particulars Page No.

1 Board of Directors 01

2 Annual General Meeting Notice 02-03

3 Activities of KREDL 2011-12 04-05

4 Directors Report 06-08

5 Secretarial Compliance Certificate 09-12

6 Audit Certificate / Comments of C & AG 13-14

7 Auditor’s Report to the Members 15-20

8 Balance Sheet 21-22

9 Statement of Profit and Loss 23-24

10 Cash Flow Statement 25-26

11 Notes to the Accounts 27-61

1

BOARD OF DIRECTORS OF KARNATAKA RENEWABLE ENERGY DEVELOPMENT LIMITED

Sl.No.

Name Designation

1 Sri. C.M Nimbannavar , Chairman Karnataka Renewable Energy Development Ltd., No.39, “Shanthi Gruha” Bharath Scouts & Guides, Palace Road Bangalore – 1.

Chairman

2 Sri. Kapil Mohan, IAS, Managing Director, Karnataka Renewable Energy Development Ltd., No.39, “Shanthi Gruha” Bharath Scouts & Guides, Palace Road Bangalore – 1.

Managing Director

3 Sri. D.N Narasimha Raju, IAS. Principal Secretary, Government of Karnataka, Energy Department, Vikasa soudha, Bangalore.

Director

4 Sri. S Selva Kumar, IAS, Managing Director, Karnataka Power Transmission Corporation Ltd., Cauvery Bhavan, Bangalore.

Director

5 Sri. M.R Kamable IAS. Managing Director, KPCL, No. 82, Shakthi Bhavan, Race Course Road, Bangalore.

Director

6 Sri. P. Manivannan, IAS, Managing Director, BESCOM, K.R.Circle, Bangalore.

Director

7 Sri. S Sumanth Kumar, Managing Director. PCKL,5th floor Cauvery Bhavan, Bangalore.

Director

8 Dr. Aditi Raja, IA & AS, Director (Finance), KPTCL, Cauvery Bhavan, Bangalore.

Director

9 Sri. B.G Gurupada Swamy, Secretary to Government, Water Resources Department, Vikasasoudha, Bangalore.

Director

10 Sri. M.S Goudar, IFS, Secretary to Govt. of Karnataka, Ecology Environment & Forest Department, M.S. Building, Bangalore – 01.

Director

11 Sri H.R Nagendra, Deputy Secretary to GOK, Energy Dept, Vikasa Soudha, Bangalore.

Director

2

NOTICE

NOTICE is hereby given that the 16th Annual General Meeting of the Members of the Company will be held on Wednesday, the 26th day of September, 2012 at 11.30 AM at the Registered Office of the Company at #39, "Shanthi Gruha" Bharath Scouts & Guides, Palace Road, Bangalore – 560 001, to transact the following business:

ORDINARY BUSINESS

01 To receive, consider, and adopt the audited accounts of the Company for the year ended

31st March 2012 and the Reports of the Auditors and Directors together with the comments

received from the Comptroller and Auditor General of India under Section 619(4) of the

Companies Act, 1956.

02 To authorize the Board of Directors to fix the remuneration to the Auditors who are yet to be

appointed by Comptroller and Auditor General of India for the financial year 2012-13.

By order of the Board

Sd- COMPANY SECRETARY IN

PRACTICE

Dated the 25th September, 2012

NOTE:

01 A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of himself / herself and the proxy need not be a member of the Company. Proxy in order to be effective must be received at the Company‟s Registered Office not later than 48 hours before the commencement of the Meeting.

02 The Corporation being a Government Corporation, the Auditors will be appointed by the

Government as per the provision Section 619(2) of the Companies Act, 1956.

3

Karnataka Renewable Energy Development Limited

No.39, “Shanthi Gruha”, Bharath Scouts & Guides Building, Opp.to Chief Post Master General Office,

Palace Road, Bangalore – 560 001.

FORM OF PROXY

I/We_________________________________________________ being a member / members of

the above mentioned Company hereby appoint ____________________________________ as

my/our proxy to vote for me / us on my / our behalf at the 16th Annual General Meeting to be held

on the ______________________________ and at any adjournment there of.

Signed this ________________day of September, 2012

Signature

Note: 1. This instrument of Proxy shall be deposited at the Regd.

Office of the Company not less than 48 (Forty Eight) hours

before the time of holding the aforesaid meeting.

2. A Proxy need not be a member of the Company.

4

Karnataka Renewable Energy Development Limited,

Bangalore

Activities of 2011-12

Annual Report and Performance Budget 2011-12

The Karnataka Renewable Energy Development Limited (KREDL) is a Nodal Agency of Energy

Department, Government of Karnataka. The objectives of the KREDL are as follows:

1) To promote renewable energy based off-grid and grid connected projects.

2) To initiate all necessary action for energy conservation.

3) To liaison between Government of India and State Government for implementation of

various off grid renewable energy projects in the State.

4) The KREDL will also co-ordinate various activities sponsored by the Bureau of Energy

Efficiency (BEE) and other renewable energy agencies and organizations.

5) Propagation of usage of renewable energy devices by public through participating in exhibitions, conducting seminars, awareness programs and displaying all types of renewable energy devices in Mobile Exhibition Vans.

6) Monitoring of all RE projects through review and site inspections during and after

construction and giving feedback to the Government.

During the Financial Year 2011-12 up to end of Feb 441.22 MW has been Commissioned as

detailed below:

SL No. Renewable Energy Sources Capacity in M.W

1 Wind Power 265.35

2 Small/Mini Hydro 37.87

3 Co-generation in Sugar Industries 138.00

Total 441.22

Many programs have been taken in Energy Conservation programs like:

Conducted Painting and Essay competition for 4th, 5th & 6th standard students and 6th, 7th & 8th standard students respectively all over the Karnataka in association with Public Education Department.

Workshops held on 16-11-2011 and 17-11-2011 with a view to identify the Road Map for ECBC implementation in the state and help to build up the capacities of the officers of Public Works, Architecture and Energy Department of the State Government.

KREDL celebrated National Energy Conservation Day on December 14th 2011. As part of the awareness campaign KREDL is distributing State Energy Conservation Awards for excellent works in energy conservation. On 14-12-2011 State Energy Conservation Awards for the year 2009-10 and 2010-11 distributed by Honorable Minister for Energy at State

5

Function organized in Bangalore. During the celebrations of Energy Conservation Day a Renewable Energy exhibition for 3 Days was also organized for General Public.

On the Occasion of Republic day celebrations, a four day “Solar Mela” was organized in Tumkur to create awareness of RE products to the Students, Industries and General Public in association with District Administration and Zilla Panchayath, Tumkur. This Program was inaugurated by Hon‟ble Minister, Energy.

“Renewable Asia 2012”, an exhibition on renewable energy was organized in association with Triune exhibitors Pvt Ltd., from 16th to 19th February 2012 at Palace Grounds, Bangalore.

Energy Conservation oath commenced in selected 6 Engineering Colleges, I st programme commenced in Dayananda Sagar College of Engineering, Bangalore on 24th September 2011

Under LED Village Campaign KREDL replaced 1000 numbers of Incandescent Bulbs to LED Bulbs and 80 numbers of HPSVL Street Lights in to LED Fixtures in Matur Village, Shimoga District.

Conducted seminar/exhibitions to propagate Renewable Energy and Energy Conservation awareness among the students in the following places:-

Presidency School Bangalore, on 27/08/2011 Carmel Pre-University College Basaveshwaranagar, Bangalore on 30/08/2011 Smt.V.H.D. Central Institute of Home Science, Bangalore on 09/09/2011 Government School programme under SPOORTI-2011 held at National College

ground on 13/09/2011 Seshadripuram First Grade College, Yelahanka Bangalore on 14th to 16th Sep

2011.

6

DIRECTORS’ REPORT TO ALL THE MEMBERS,

The Board of Directors of M/s Karnataka Renewable Energy Development Limited has great

pleasure in presenting their 16th Annual Report along with the Audited Financial Statements for the

year ended 31st March 2012.

FINANCIAL PERFORMANCE

The financial performance of the Company for the financial year ended 31st March, 2012 is as

under:

(Rupees in Lakhs)

Particulars 2011-12 2010-11

Revenue from Operations 2,726.97 2,136.90

Other Income 796.89 501.58

Total Revenue (A) 3523.86 2,638.49

Employee Benefit Expenses 280.51 228.73

Financial Cost 17.98 33.78

Depreciation and amortization Expenses 163.99 155.33

Other Expenses 421.24 298.80

Total Expenses (B) 883.75 716.66

Profit Before Exceptional and extraordinary items

and tax (C) = (A-B)

2640.11 1921.83

Add : Exceptional Items (D) 188.53 338.55

Profit Before Extraordinary items and tax

E= (C +D)

2828.64 2260.38

Less : Prior year Income / Expenses 13.65 25.70

Less : Tax Expenses 999.18 365.20

Profit carried to Balance Sheet 1815.80 1869.48

WORKING RESULTS

During the year under review the Company has earned total Income amounted to Rs. 3523.86

Lakhs as against Rs. 2,638.49 Lakhs in the previous year, showing a increase of 33.55% as

against the previous year. The working of your Company resulted in a net profit of Rs. 1815.80

Lakhs during the financial year ended 31st March, 2012 as against Rs. 1869.48 Lakhs in the

corresponding previous year.

DIVIDEND

Your Directors have decided to not to recommend for declaration of dividend for the financial year 2011-12, since the amount will be utilized for investments in infrastructure/assets of the Company.

7

FUTURE PROSPECTS

To harness Green and clean Renewable Energy Sources in the state for environment benefits and

energy security, to initiate energy efficiency measures in all sectors for sustainable growth

Government of Karnataka is pleased to notify in the Official Gazette w.e.f.9.2.2010 a New

Renewable Energy Policy 2009-14. This policy is directed towards a greater thrust on overall

development and promotion of Renewable Energy Technologies and Applications. This will

facilitate excellent opportunities for increased investment in this sector, technology up gradation,

induction of new technology market development and export promotion. It is proposed to increase

the generation of energy from wind, small- hydel units, solar photo voltaic, agro waste/biomass,

municipal waste, industrial waste, sewage and other sources like tidal, wave, geothermal etc.

These technologies are environment friendly and offer CDM benefits. The use of Municipal Solid

Waste for power generation, besides generating power, will eliminate the problem of pollution and

disposal of urban waste. Private investment will be attracted in all these sectors.

ENERGY CONSERVATION & POLLUTION CONTROL Particulars as prescribed under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are not applicable to your Company, as your company is acting as a facilitator in the Renewable Energy Sector.

FOREIGN EXCHANGE EARNINGS AND OUT GO

During the year under report, the Company has not incurred foreign exchange and also not earned Foreign Exchange.

PARTICULARS OF EMPLOYEES

There were no employees whose particulars required to be furnished under Section 217(2A) of the Companies Act, 1956.

STATUTORY AUDITORS

M/s. V R Murali & Co., Chartered Accountants, Bangalore, were appointed to audit the accounts for the year 2011-12 by the Comptroller and Auditor General of India. With regard to the observations of the Statutory Auditors in their Report, the relevant notes forming part of accounts are self-explanatory and your Directors have nothing more to add.

EMPLOYEES

Relationship with employees were cordial and your Directors wish to place on record their appreciation of the dedication, hard work and contribution by the employees of your Company at all levels during the year.

STATUTORY COMPLIANCE

Your Company has complied with the various statutory requirements prescribed under the Companies Act, 1956, Labour Laws and other Corporate Laws where applicable.

8

DIRECTORS’ RESPONSIBILITY STATEMENT

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

a) that in the preparation of the annual accounts, the applicable accounting standards, have been

followed along with proper explanation relating to material departures; b) that the directors have selected such accounting policies and applied them consistently and

made judgments and estimates that are reasonable and prudent so as to give a true and a 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;

c) that the directors have taken proper and sufficient care for the maintenance of adequate

accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the directors have prepared the annual accounts on a going concern basis.

COMPLIANCE REPORT UNDER SECTION 383A OF THE COMPANIES ACT, 1956

Pursuant to provisions to Section 383A of the Companies Act, 1956, the Company has obtained compliance certificate for the financial year 2011-12 as prescribed in the Companies (Compliance Certificate) Rules, 2001 from M/s Shashidhara G S & Co., Company Secretaries, Bangalore and the same is appended to this Report.

ACKNOWLEDGEMENT

Your Board of Directors wishes to place on record their appreciation of the valuable services, support, co-operation and guidance received from the Bankers, Auditors, Company Secretaries, IREDA, MNES, Developers and from various Government authorities and look forward for receiving similar support in the future.

FOR AND ON BEHALF OF THE BOARD

Sd- CHAIRMAN

Date : 25.09.2012

9

CIN: U75112KA1996PLC020020 NOMINAL CAPITAL: Rs.100.00 Lakhs The Members, M/s. Karnataka Renewable Energy Development Ltd, No.39, Shanthi Gruha, Bharat Scouts & Guides, Palace Road, BANGALORE - 560 001.

COMPLIANCE CERTIFICATE I have examined the registers, records, books and papers of M/s. Karnataka Renewable Energy Development Limited, (the Company) required to be maintained under the Companies Act, 1956, (the Act) and the rules made thereunder and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended 31st March, 2012. In my opinion and to the best of my information and according to the examinations carried out by me and explanations furnished to me by the Company, its officers, I certify that in respect of the aforesaid financial year: 1. The Company has kept and maintained all registers as stated in Annexure „A‟ to this

Certificate, as per the provisions of the Act and the rules made thereunder and all entries therein have been duly recorded.

2. The Company has duly filed the forms and returns as stated in Annexure „B‟ to this Certificate, with the Registrar of Companies, Karnataka at Bangalore by way of paying additional fees for those documents which were not filed within the prescribed time as prescribed under the Act and the rules made thereunder.

3. The Company being a Government Company has the minimum prescribed paid-up capital. 4. The Board of Directors duly met four times on 29th June, 2011, 30th September, 2011, 09th

January, 2012, & 29th March, 2012 in respect of which meetings proper notices were given and the proceedings were properly recorded and signed including the circular resolutions passed in the Minutes Book maintained for the purpose.

5. The Company was not required to close its Register of Members during the financial year. 6. The Annual General Meetings for the financial year ended on 31st March, 2011 was held on

30.09.2011 after giving due notices to the Members of the Company and other concerned and the resolutions passed thereat were duly recorded in the Minutes Book maintained for the purpose.

7. No Extra-Ordinary General Meeting was held during the financial year. 8. The Company being a Government Company, Section 295 of the Act is not applicable. 9. The Company being a Government Company, Section 297 of the Act is not applicable. 10. The Company was not required to make any entries in the register maintained under Section

301 of the Act.

Shashidhara G. S. & Co., Company Secretaries No.725, 1st Floor, 10th Main, 4th Block, Jayanagar, Bangalore – 560 011. E.mail : gss_comsecy@rediffmail.com Tel : 22455141, 26534024, Mobile : 98804 – 61710

10

11. As there were no instances falling within the purview of Section 314 of the Act, the Company has not obtained any approvals from the Board of Directors, Members or Central Government.

12. The Company has not issued any duplicate share certificates during the financial year. 13. The Company has:

(i) not allotted / transferred / transmitted any Securities during the financial year.

(ii) not deposited any amount in separate Bank Account as no dividend was declared during the financial year.

(iii) not posted warrants to any Member of the Company as no dividend was declared

during the financial year.

(iv) duly complied with the requirements of Section 217 of the Act. 14. The Board of Directors of the Company is duly constituted and the appointments of Directors

of a Government Company have been duly made. 15. The Company being a Government Company, provisions of section 269 of the Act, with

regard to appointment of Managing Director/Whole-time Director/Manager are not applicable. 16. The Company has not appointed any sole selling agents during the financial year. 17. The Company was not required to obtain any approvals of the Central Government,

Company Law Board, Regional Director, Registrar of Companies &/or such authorities prescribed under various provisions of the Act during the financial year.

18. The Directors were not required to disclose their interest in other firms/Companies to the

Board of Directors pursuant to the provisions of the Act and the rules made thereunder. 19. The Company has not issued any shares, debentures or other securities during the financial

year. 20. The Company has not bought back any shares during the financial year. 21. There was no redemption of preference shares or debentures during the financial year. 22. There were no transactions necessitating the Company to keep in abeyance the rights to

dividend, rights shares and bonus shares pending registration of transfer of shares. 23. The Company has not invited/accepted any deposits including any unsecured loans falling

within the purview of section 58A during the financial year. 24. The Company has not made any borrowings during the financial year ended 31.03.2012. 25. The Company has not made any loans or advances or given guarantees or provided

securities to other bodies corporate and consequently no entries have been made in the register kept for the purpose.

26. The Company has not altered the provisions of the Memorandum with respect to situation of

the Company‟s registered office from one state to another during the year under scrutiny. 27. The Company has not altered the provisions of the Memorandum with respect to the Objects

of the Company during the year under scrutiny.

11

28. The Company has not altered the provisions of the Memorandum with respect to name of the

Company during the year under scrutiny. 29. The Company has not altered the provisions of the Memorandum with respect to Share

Capital of the Company during the year under scrutiny. 30. The Company has not altered its Articles of Association during the financial year. 31. There was no prosecution initiated against or show cause notices received by the Company

and no fines or penalties or any other punishment was imposed on the Company during the financial year, for offences under the Act.

32. The Company has not received any money as security from its employees during the

financial year. 33. The Company has deposited both employee‟s and employer‟s contribution to Provident Fund

with prescribed authorities pursuant to section 418 of the Act.

PLACE: BANGALORE

DATED: 12.07.2012

Sd- SHASHIDHARA G. S.

COMPANY SECRETARY

12

ANNEXURE - A

REGISTERS AS MAINTAINED BY THE COMPANY

1. Register of Members u/s 150 of the Act 2. Register of Directors, etc u/s 303 3. Register of Directors shareholding u/s 307 4. Register of Charges u/s 143 5. Share Transfer Register u/s 108 6. Minutes of all meetings of Board of Directors u/s 193 7. Minutes of General Meetings u/s193 8. Board Meeting Attendance Register 9. General Meeting Attendance Register

ANNEXURE-B

FORMS AND RETURNS AS FILED BY THE COMPANY WITH REGISTRAR OF COMPANIES, DURING THE PERIOD 01ST APRIL, 2011 TO 31ST MARCH, 2012

Sl. No.

01

Form No. / Return

02

Filed under which

03

For

04

Date of Filing

05

Whether filed within prescribed

time

06

If delay in filing whether requisite

additional fee paid

07

01 Form-32 u/s 303(2)

Appointment of Directors on 21.04.2011

07.07.11 No Yes

02 Form-32 u/s 303(2)

Appointment / resignation of Directors on 02.05.2011

07.07.11 No Yes

03 Form-32 u/s 303(2)

Appointment / resignation of Directors on 25.06.2011

07.07.11 Yes N.A.

04 Form 18 u/s 146 Change in situation of registered office dated

04.03.2011

13.08.11 No Yes

05 Form 23AC & 23ACA

u/s 220 For the financial year ended 31.03.2011

(Balance Sheet and Profit & Loss a/c)

11.10.11 Yes N.A.

06 Form-20B u/s 159 For the Annual General Meeting held on

30.09.2011 (Annual Return)

11.10.11 Yes N.A.

07 Form 66 u/s 383 A (1)

For the financial year ended 31.03.2011

(Compliance Certificate)

11.10.11 Yes N.A.

PLACE: BANGALORE

DATED: 12.07.2012

Sd- SHASHIDHARA G. S.

COMPANY SECRETARY

Shashidhara G. S. & Co., Company Secretaries

13

COMMENTS FROM C & AG

BY REGISTERED POST CONFIDENTIAL

No. Pr. AG(E&RSA)/CAW/Ca-II/J-241(35)/2012-13/ Dated: 25th September 2012 To, The Managing Director, Karnataka Renewable Energy Development Limited, #39, Shanthi Gruha, Bhaath Scouts & Guides building, Opp. To chief Post Master General Office, Palace Road, Bangalore-560 001. Sir,

Sub: Comments of the Comptroller & Auditor General of India under Section 619(4) of the Companies Act, 1956 on the accounts of Karnataka Renewable Energy development Limited, Bangalore, for the year ended 31 March 2012.

I forward herewith Non-Review certificate under section 619(4) of the Companies Act,

1956 on the accounts of Karnataka Renewable Energy Development Limited, Bangalore, for

the year ended 31 March 2012.

2. A copy of the proceedings of the Annual General Meeting adopting the certified accounts,

Auditors Report thereon and the Comments of the Comptroller and Auditor General of India may

be forwarded to this office immediately after the conclusion of the Annual General Meeting. Six

copies of the printer Annual Reports may also be sent to this office.

3. Receipt of the letter and the enclosures may please be acknowledged.

Yours faithfully,

Sd/- (D.J.BHADRA)

PR. ACCOUNTANT GENERAL

(ECONOMIC & REVENUE SECTOR AUDIT)

KARNATAKA, BANGALORE

14

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION

619(4) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS OF KARNATAKA RENEWABLE

ENERGY DEVELOPMENT LIMITED, BANGALORE, FOR THE YEAR ENDED 31 MARCH 2012

The preparation of financial statement of Karnataka Renewable Energy Development Limited,

Bangalore, for the year ended 31 March 2012 in accordance with the financial reporting

framework prescribed under the Companies Act, 1956 is the responsibility of the management of

the Company. The statutory auditors appointed by the Comptroller and Auditor General of India

under Section 619(2) of the Companies Act, 1956 are responsible for expressing opinion on these

financial statements under section 227of the companies Act, 1956 based on independent audit in

accordance with the auditing and assurance standards prescribed by their professional body the

Institute of Chartered Accountants of India. This is stated to have been done by them vide their

Audit Report dated 12 September 2012.

I, on behalf of the Comptroller and Auditor General of India, have decided not to review the report

of the Statutory Auditors‟ on the accounts of “Karnataka Renewable Energy Development

Limited, Bangalore” for the year ended 31 March 2012 and as such have no comments to make

under section 619(4) of the Companies Act, 1956.

For and on behalf of the Comptroller & Auditor General of India

Sd/- (D.J.BHADRA)

PR. ACCOUNTANT GENERAL

(ECONOMIC & REVENUE SECTOR AUDIT)

KARNATAKA, BANGALORE BANGALORE DATED:25 SEPTEMBER 2012

15

AUDITOR’S REPORT To the Members of KARNATAKA RENEWAL ENERGY DEVELOPMENT LIMITED 1. We have audited the attached Balance Sheet of KARNATAKA RENEWAL ENERGY

DEVELOPMENT LIMITED (The Company), as at 31st March, 2012, Statement of Profit and Loss and the Cash Flow Statement of the Company, for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company‟s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor‟s Report) Order, 2003. issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Without qualifying our report, we draw your attention to :-

a. Note 27 and 31 of the financial statements regarding the demand of ` 4,94,43,049 towards “Service Tax” by the department and the Company has not made any provisions in the books of accounts. Had such provision is made in the annual accounts of the year, the Company‟s net profit would have lowered by ` 4,94,43,049.

b. Note 1.B. VII. Operating Lease (AS-19), wherein the company has leased 1665 Acre

and 34 Guntas of land to developers / entrepreneurs until 31.03.2011. The land is leased by the Government of Karnataka to the Company and in turn the Company as a Lessor has leased the land to the developers, under this circumstances the transaction of payment of lease to the Government are not routed through the company‟s books, hence, the impact on the revenue, if any, is not ascertainable.

5. Further to our comments in the Annexure referred to above, we report that:

i. We have obtained all the information and explanations, which to the best of our

knowledge and belief were necessary for the purposes of our audit; ii. In our opinion, proper books of account as required by law have been kept by the

company so far as appears from our examination of those books (and proper returns adequate for the purposes of our audit have been received from the branches not visited by us.

iii. The Balance Sheet and Statement of Profit and Loss dealt with by this report are in agreement with the books of account.

16

iv. In our opinion, the Balance Sheet and Statement of Profit and Loss dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

v. As per the information furnished to us, the provisions of clause (g) of sub-section (1) of Section 274 of the Companies Act 1956 are not applicable to a Government Company.

6. In our opinion and to the best of our information and according to the explanations given to

us, the said accounts, read together with notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. In the case of the Balance Sheet, of the state of affairs of the company as at 31st

March, 2012;

b. In the case of Statement of Profit and Loss of the Profit for the year ended on that date and

c. In the case of the Cash Flow Statement, of the Cash Flow of the Company for the year ended on that date.

For M/s V.R.MURALI & CO.,

Chartered Accountants Firm Registration Number

002178S

Sd/- V.RANGANATHA MURALI

PROPRIETOR Membership Number:

027051 Place : BANGALORE Date : SEPT 12, 2012

17

ANNEXURE TO THE AUDITORS’ REPORT

Annexure referred to in paragraph 3 of our report to the members of KARNATAKA RENEWAL

ENERGY DEVELOPMENT LIMITED for the year ended March 31, 2012 (i) In respect of fixed assets:

(a) The company has maintained proper records showing full particulars, including

quantitative details and situation of fixed assets;

(b) These fixed assets have been physically verified by the management at reasonable

intervals; and according to the information and explanation given to us, no material

discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a

substantial part of fixed assets of the company and such disposal, in our opinion has

not affected the going concern status of the Company;

(ii) In respect of its Inventory:

According to the information and explanation given to us, the Company does not have any

inventory and hence clause (a), (b) and (c) of the Companies (Auditors‟ Report) Order,

2003 are not applicable;

(iii) In respect of loans, secured or unsecured granted by the Company;

According to the information and explanation given to us, the Company has neither granted

nor taken any loans, secured or unsecured to or from companies, firms or other parties

covered in the register maintained under section 301 of the Act. Hence, provisions of the

clauses (iii) a to (g) of the Companies (Auditors‟ Report) Order, 2003 are not applicable;

(iv) In respect of adequacy of internal Control;

In our opinion and according to the information and explanations given to us, there are

adequate internal control procedures commensurate with the size of the Company and

nature of its business with regard to purchase of inventories and fixed assets and for sale of

goods and services. In our opinion, internal control systems of Contract Administration,

Monitoring and Project Management need to be strengthened. During the course of our

audit, except for a few weaknesses in internal control of contract administration, Monitoring

and project management, we have not observed any continuing failure to correct major

weaknesses in internal controls.

18

(v) To the best of our knowledge and belief and according to the information and explanations

given to us, there are no contracts or arrangements during the period that need to be

entered in the register maintained under Section 301 of the Companies Act, 1956.

Therefore, the provisions of the clauses (v) (a) and (b) of the Companies (Auditors‟ Report)

Order, 2003 are not applicable;

(vi) In our opinion and according to the information and explanations given to us, the Company

has not accepted or renewed any deposits from the public. Hence, the directives issued by

the Reserve Bank of India and the provisions of Sections 58A and 58AA or any other

relevant provisions of the Companies Act, 1956 are not applicable. We were informed by

the management that no order has been passed by Company Law Board or National

Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal for its

compliance.

(vii) In our opinion, the Company has an adequate internal audit system commensurate with the

size and nature of its business.

(viii) The Central Government has not prescribed maintenance of cost records under section

209 (1) (d) of the Companies Act, 1956 in respect of any of the activities of the Company.

(ix) (a) According to the information and explanations given to us, the Company has generally

been regular in depositing undisputed statutory dues including Provident Fund, Employees‟

State Insurance, Income-tax, Sales Tax, Wealth-tax, Custom Duty, Excise Duty, Cess and

any other material statutory dues with the appropriate authorities during the year under

review and no undisputed amounts payable in respect of the aforesaid dues were

outstanding as on 31st March 2012 for a period of more than six months from the date they

became payable, with an exception of Service Tax demand of Rs.4,94,43,049 raised by the

Service Tax department for the period 2006-07 to 2010-11, has not been paid. However,

the Company initiated Correspondence with Government seeking exemption from payment

of service Tax.

(b) According to the information and explanations given to us, there are no dues of Sales

tax / Wealth-tax/ Custom duty/ Excise duty/ cess that have not been deposited on

account of any dispute with the exception of following.

The taxes that have not been deposited with appropriate authorities as on 31st March,

2012 on account of dispute are given below:

19

SL No.

Name of the Statute Nature of Dues

Amount in Rs.

Period for which the

amount relates (financial year)

Forum where dispute is pending

1 Income Tax Act, 1961 Income tax 2,84,20,053 2008-09 Commissioner Appeals (Income Tax)

2 Employees Provident fund Miscellaneous Provisions Act, 1952

Interest / Damage Charges

20,70,547 2001-02 to 2006-07

Appellate Tribunal – High Court

3 Finance Act, 1994 Service Tax 4,94,43,049 2006-07 to 2010-11

Company initiated Correspondence with Government seeking exemption and the Company has not made any provision in the books of accounts.

(x) The Company does not have accumulated losses. The Company has not incurred cash

losses during the financial year covered by our audit and in the immediately preceding

financial year.

(xi) As per the information and explanations given to us, and the books of accounts, documents

examined by us, the Company has not defaulted in repayment of dues to any financial

institution or bank. The Company does not have any dues to debenture holders.

(xii) In our opinion and according to the information and explanations given to us, no loans and

advances have been granted by the Company on the basis of securities by way of pledge

of shares, debentures and other securities;

(xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society. Accordingly, clause 4

(xiii) of the Companies (Auditor‟s Report) Order, 2003 is not applicable to the Company

during the year under audit;

(xiv) The Company during the year under review has not dealt or traded in shares, securities,

debentures and other investments;

(xv) In our opinion and according to the information and explanations given to us, the company

has not given any guarantee for loans taken by others from bank or financial institutions;

20

(xvi) According to the information and explanations given to us, the company has not availed

any term loans during the year under review;

(xvii) According to the information and explanations given to us, and on an overall examination

of the Balance Sheet of the Company, we are of the opinion that Company has not raised

any funds on short term basis or on long term basis. Therefore, the provisions of the clause

(xvii) of the Companies (Auditors‟ Report) Order, 2003 are not applicable;

(xviii) During the year, the Company has not made preferential allotment of shares;

(xix) The company does not have any outstanding debentures during the period;

(xx) The Company has not raised any monies by way of public issue during the year;

(xxi) To the best of our knowledge and belief and according to the information and explanations

given to us, no material fraud on or by the Company has been noticed or reported during

the year, with the exception of Grant received from MNRE under National SPV Programme

(Subsidy) 2005-06 and 2006-07, where in an investigation has been initiated by the

management. Awaiting the investigation report and reconciliation, payment to suppliers for

supplies (trade payables) and EMD payables has been kept under abeyance.

For M/s V.R.MURALI & CO.,

Chartered Accountants Firm Registration Number

002178S

Sd/- V.RANGANATHA MURALI

PROPRIETOR Membership Number:

027051 Place : BANGALORE Date : SEPT 12, 2012

21

KARNATAKA RENEWABLE ENERGY DEVELOPMENT LIMITED

BALANCE SHEET

Balance Sheet as at 31st March, 2012

Amount in Rs.

Particulars Note No

AS AT AS AT

31-03-2012 31-03-2011

I. EQUITY AND LIABILITIES

(1) Shareholder's Funds

(a) Share Capital 2 50,00,300 50,00,300 (b) Reserves and Surplus 3 59,18,36,588 41,02,55,753 (c) Money received against share warrants

(2) Share application money pending allotment

(3) Non-Current Liabilities

(a) Long-term borrowings 4 - 2,72,21,853 (b) Deferred tax liabilities (Net) 5 1,15,87,216 1,30,39,768 (c) Other Long term liabilities 6 29,45,49,901 34,41,16,840 (d) Long term provisions 7 70,86,535 61,16,065

(4) Current Liabilities

(a) Short-term borrowings

(b) Trade payables 8 60,94,484 64,54,775 (c) Other current liabilities 9 2,25,381,805 15,90,97,555 (d) Short-term provisions 10 10,07,39,020 4,81,94,680

Total

124,22,75,849 101,94,97,589

II. Assets

(1) Non-current assets

(a) Fixed assets

(i) Tangible assets 11 5,65,16,327 6,50,18,306 (ii) Intangible assets

(iii) Capital work-in-progress 12 47,50,820 46,57,064 (iv) Intangible assets under development

(b) Non-current investments

(c) Deferred tax assets (net)

(d) Long term loans and advances

(e) Other non-current assets 13 1,56,70,364

1,15,00,000

22

(2) Current assets

(a) Current investments

(b) Inventories

(c) Trade receivables 14 16,32,676 37,70,172 (d) Cash and cash equivalents 15 96,81,75,639 85,32,53,061 (e) Short-term loans and advances 16 9,19,75,776 3,20,05,864 (f) Other current assets 17 10,35,54,247 4,92,93,122

Total

124,22,75,849 101,94,97,589

Notes to Accounts & Significant Accounting Policies

The Notes No. 1 to 34 are integral part of these Financial Statements

For KARNATAKA RENEWABLE ENERGY V. R. MURALI & CO.,

DEVELOPMENT LIMITED CHARTERED ACCOUNTANTS

Firm Registration Number: 002178S

Sd/- Sd/- Sd/-

(KAPIL MOHAN) (C M NIMBANNAVAR) (V.RANGANATHA MURALI)

MANAGING DIRECTOR CHAIRMAN Proprietor

Membership Number: 027051

PLACE : BANGALORE DATE : 12-Sept-2012

23

KARNATAKA RENEWABLE ENERGY DEVELOPMENT LIMITED

STATEMENT OF PROFIT AND LOSS

Profit and Loss statement for the year ended 31st March, 2012 Amount in Rs.

Particulars Note No

For the year ended

31-03-2012

For the year ended

31-03-2011

I. Revenue from operations 18 27,26,96,600 21,36,90,430

II. Other Income 19 7,96,89,957 5,01,58,819

III. Total Revenue (I +II)

35,23,86,557 26,38,49,249

IV. Expenses:

Cost of materials consumed

Purchase of Stock-in-Trade

Changes in inventories of finished goods, work-in-progress and Stock-in-Trade

Employee benefit expense 20 2,80,51,681 2,28,73,655

Financial costs 21 17,98,548 33,78,408

Depreciation and amortization expense 22 1,63,99,955 1,55,33,345

Other expenses 23 4,21,24,967 2,98,80,817

Total Expenses

8,83,75,151 7,16,66,225

V. Profit before exceptional and extraordinary items and tax

(III - IV) 26,40,11,406 19,21,83,024

VI. Exceptional Items 24 (1,88,53,500) (3,38,55,250)

VII. Profit before extraordinary items and tax (V - VI)

28,28,64,906 22,60,38,274

VIII. Extraordinary Items

IX. Profit before tax (VII - VIII)

28,28,64,906 22,60,38,274

Prior Year Income / Expenses (Net) 25 (13,65,630) (25,70,122)

28,14,99,276 22,34,68,152

X. Tax expense:

(1) Current tax

9,50,00,000 4,57,00,000

(2) Deferred tax

(14,52,552) (91,79,918)

(3) Previous year tax FY 2007-08

63,70,993

XI. Profit(Loss) from the period from continuing operations

(VII-VIII) 18,15,80,835 18,69,48,070

24

XII. Profit/(Loss) from discontinuing operations

XIII. Tax expense of discounting operations

XIV. Profit/(Loss) from Discontinuing operations (XII - XIII)

- -

XV. Profit/(Loss) for the period (XI + XIV)

18,15,80,835 18,69,48,070

XVI. Earning per equity share:

(1) Basic

363.14 373.87

(2) Diluted

363.14 373.87

Notes to Accounts & Significant Accounting policies The Notes No. 1 to 34 are integral part of these Financial Statements

For KARNATAKA RENEWABLE ENERGY V. R. MURALI & CO.,

DEVELOPMENT LIMITED CHARTERED ACCOUNTANTS

Firm Registration Number: 002178S

Sd/- Sd/- Sd/-

(KAPIL MOHAN) (C M NIMBANNAVAR) (V.RANGANATHA MURALI)

MANAGING DIRECTOR CHAIRMAN Proprietor

Membership Number: 027051

PLACE : BANGALORE DATE : 12-Sept-2012

25

KARNATAKA RENEWABLE ENERGY DEVELOPMENT LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED AS ON 31-3-2012

Amount in Rs.

As at

31-03-2012 As at

31-03-2011

Cash flows from operating activities

Net Profit before taxation, and extraordinary items

26,40,11,406 18,19,48,070

Adjustments for :

Depreciation 1,63,99,955 1,55,33,025

Foreign exchange loss

Interest income (7,82,34,425) (4,64,69,729)

Dividend income

Interest expense 17,98,548 33,74,705

Prior Period expense (13,65,630) -

Operating Profit before working capital changes 20,26,09,854 15,43,86,071

(Increase) / Decrease in trade receivables 21,37,496 (9,55,401)

(Increase) / Decrease in inventories

(Increase) / Decrease in loans and advances (5,99,69,912) (1,72,03,999)

(Increase) / Decrease in other current assets (5,42,61,125) (2,47,98,438)

(Increase) / Decrease in other non- current assets (41,70,364) (65,00,000)

Increase / (Decrease) in trade payable (3,60,291) -

Increase / (Decrease) in provisions 5,35,14,810

Increase / (Decrease) in other current liabilities 6,62,84,250 5,89,54,402

Increase / (Decrease) in other long term liabilities (4,95,66,939) -

Cash generated from operations 15,62,17,779 16,38,82,635

Income taxes paid

(10,13,70,993)

2,40,20,082

Cash flow before extraordinary item 5,48,46,786 18,79,02,717

Exceptional items 1,88,53,500 -

Net cash from operating activities (A) 7,37,00,286 18,79,02,717

Cash flow from investing activities

Purchase of tangible fixed assets (79,01,346) (18,01,466)

Capital Work in Progress (93,756)

Purchase of long term investments - -

Sale of tangible fixed assets 3,370 -

Sale of long term investments - -

Interest received 7,82,34,425 4,64,69,729

Dividends received

Net cash from investing activities (B) 7,02,42,693 4,46,68,263

26

Cash flows from financing activities

Proceeds from issuance of share capital - -

Proceeds from long-term borrowings - -

Repayment of long-term borrowings (2,72,21,853) (1,27,16,428)

Interest Paid (17,98,548) (33,74,705)

Dividends paid - -

Dividends distribution tax - -

Proceeds from ESOPs - -

Net cash used in financing activities (C) (2,90,20,401) (1,60,91,133)

Net increase in cash and cash equivalents (A)+(B)+(C) 11,49,22,578 21,64,79,847

Cash and cash equivalents at beginning of period (See Note 1)

85,32,53,061 63,67,73,214

Cash and cash equivalents at end of period (See Note 1) 96,81,75,639 85,32,53,061

For KARNATAKA RENEWABLE ENERGY V. R. MURALI & CO.,

DEVELOPMENT LIMITED CHARTERED ACCOUNTANTS

Firm Registration Number: 002178S

Sd/- Sd/- Sd/-

(KAPIL MOHAN) (C M NIMBANNAVAR) (V.RANGANATHA MURALI)

MANAGING DIRECTOR CHAIRMAN Proprietor

Membership Number: 027051

PLACE : BANGALORE DATE : 12-Sept-2012

27

KARNATAKA RENEWABLE ENERGY DEVELOPMENT LIMITED NOTES TO THE ACCOUNTS 1. SIGNIFICANT ACCOUNTING POLICIES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2012:- 1.A. BACKGROUND:- Karnataka Renewable Energy Development Limited (KREDL) was established in 1996 as a nodal agency of the Government of Karnataka to facilitate the development of non-conventional energy sources in the state. It is registered under Companies Act 1956. The primary objective of the company is to develop both on grid and off grid power projects as a supplement to conventional energy power projects. It also acts as liaison office between the independent power producers and Government in the state and centre. At present KREDL is concentrating on the development of renewable energy sources such as small hydro, wind, biomass, cogeneration in sugar factories and solar and also helping the private entrepreneurs in development of these sources. Government of Karnataka in its Notification No.DE 22 PSR 2002 dt. 13.5.2004 designated Karnataka Renewable Energy Development Limited (KREDL) as „The Designated Agency” to co-ordinate, regulate and enforce the provisions contained in the Energy Conservation Act within the State of Karnataka. The Government authorized KREDL to establish a separate department within the organization for implementing the provisions of the energy conversation Act and to take necessary steps for capacity building programs in KREDL with the assistance of Bureau of Energy Efficiency (BEE) established by the Government of India. 1.B. SIGNIFICANT ACCOUNTING POLICIES:- 1.B. I. Basis of preparation of financial statements:- The financial statements are prepared on accrual basis under the historical cost convention, in accordance with the generally accepted accounting principles in India and to comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 and the rules framed there under. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. The Company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual except Interest on Motor Cycle Advance. (a) Basis of preparation of financial statements: The financial statements are prepared on an accrual basis of accounting and in accordance with the generally accepted accounting principles in India (Indian GAAP), the relevant provisions of the Companies Act, 1956 (the Act) and comply in material aspects with the Accounting Standards notified under Section 211 (3C) of the Act, read with Companies (Accounting Standards) Rules, 2006 (as amended). The accounting policies adopted in the preparation of financial statements are consistent with those of previous year. (b) Financial Statements: Presentation and Disclosures: During the year ended March 31, 2012, the Revised Schedule VI notified under the Companies Act, 1956 has become applicable to the Company, for preparation and presentation of its financial statements. The adoption of Revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. Financial Statements contain the information and disclosures mandated by Revised Schedule VI, applicable Accounting Standards, other applicable pronouncements and regulations.

28

1.B. II. Tangible Fixed Assets and depreciation: -

(a) Tangible Fixed Assets are stated at cost and includes directly attributable cost of bringing the asset to their working conditions.

(b) Grants if any relating to Tangible Fixed Assets are shown as deduction from the gross value of the Tangible Fixed Assets and no depreciation charged on those Tangible Fixed Assets.

(c) Depreciation is provided as per the Written down Value Method at the rates specified in schedule XIV of the Companies Act, 1956 unless otherwise stated.

(d) Plant and Machinery at Mavinahunda Wind Demonstration Project has been considered as a Continuous Process Plant and depreciation calculated accordingly.

(e) Depreciation for assets at Sogi Wind Demonstration Project is written off over a period of 9 years being the balance of lease period for the land from the date of commissioning of the project. Lease hold land cost for Sogi Wind Demonstration Project is amortized over the lease period of ten years.

1.B. III. Accounting of Central Financial Assistance (CFA):- The Company has been receiving financial assistance in the form of CFA from Ministry of New and Renewable Energy, Government of India. CFAs are accounted for where it is reasonably certain that the ultimate collection will be made. CFA received and receivable from Ministry of New and Renewable Energy, Government of India is intended for utilization under various schemes and programmes. The expenditures incurred by the Company on such schemes and programmes are charged to the respective CFA and the unutilized amounts are classified as “Current Liabilities” and receivable amounts are classified as “Current Assets”. 1.B. IV. Employees’ Retirement Benefits:- Retirement benefit to employees comprises contributions to provident fund, contributions to Gratuity Scheme and Leave encashment. Provision for Gratuity is not based on actuarial valuation and not funded. Accrued liability for the period has been arrived at based on 15 days wage (i.e. Basic Pay and Dearness Allowance) for each completed year of service. In respect of leave encashment, the Company calculates the amount of leave salary payable by taking into account the actual leave credits of all the employees. 1.B. V. Borrowing Cost:- Interest and other charges on qualifying assets are capitalized up to the date the qualifying asset is commissioned or put to use. Other interest and charges are charged to the Statement of Profit and Loss. 1.B. VI. Accounting of Outstanding Liabilities:- Provisions are recognized for liability that can be measured only by using a substantial degree of estimation where company has present obligation as a result of past event having probable outflow of resource is expected to settle the obligation and the amount of the obligation is reliably estimated. 1.B. VII. Operating Lease (AS-19):- (a) Where the Company is a Lessee :- The Company‟s significant leasing arrangements are in respect of operating leases for office premises. The leasing arrangement, which is non-cancelable, is for three years and is usually

29

renewable by mutual consent on agreed terms. Lease payments under an operating lease shall be recognized as an expense in the statement of profit and loss. Accordingly, lease rent payable for the financial year, has been charged as Rent and presented in the Statement of profit and Loss. (b) Where the Company is a Lessor:- KREDL is State‟s nodal agency for investigation, development and promotion of renewable energy sources. The Government of Karnataka leased the land to private entrepreneurs for 30 years through the Company to facilitate the setting up of renewable energy projects. Some of the entrepreneurs pay the lease rent in lump sum to the Government of Karnataka and others are paying on annual basis to Government of Karnataka at rates fixed by Government i.e. Rs.1000/- per acre. The lease rent is either revenue or expenditure to the Company, hence it is not recognized in the Statement of Profit and Loss. From the FY 2011-12 the Government is directly leasing required lands to the developers of Renewable Energy projects. However, the total land leased out through the company so far is given below:

i. For Wind Energy Projects :

Years Extent of Area

Acres Guntas

1997-98 135 27

1998-99 177 20

2000-01 90 08

2001-02 59 8

2002-03 317 04

2003-04 25 37

2004-05 44 24

2005-06 293 12

2006-07 144 00

2007-08 175 36

2008-09 21 12

2009-10 157 13

2010-11 23 33

2011-12 NA NA

Total 1665 34

ii. For Small Hydro Energy Projects :

Years Extent of Area Annual Lease

Amount Rs.

Extent of Area Lump sum Lease Amount

Rs.

Acres Guntas Acres Guntas

2002-03 49 31 49,310 NIL NIL NIL

2003-04 4 24 4,240 13 NIL 3,90,000

2004-05 57 25 57,250 47 38 9,07,225

2005-06 38 10 38,100 2 13 46,500

2006-07 NIL NIL NIL 6 7 2,01,000

2007-08 18 27 18,270 NIL NIL NIL

2008-09 NIL NIL NIL NIL NIL NIL

2009-10 15 5 15,500 NIL NIL NIL

2010-11 NIL NIL NIL 28 17 1,40,850

2011-12 NA NA NA NA NA NA

Total 184 02 1,82,670 97 35 16,85,575

30

iii. The details of minimum lease payments of non-cancelable lease are as under: Amount in Rs.

Sl No.

Description

Not later than one year

Later than one year and not later than five years

Later than five years

1 Future minimum lease payments under non cancelable lease Mavinahunda (25.37 acres) AS – 19, Charged to P&L Statement

25,370

1,01,480

4,54,090

2 Sub lease amount payable to Government by the Lessee‟s directly.

18,45,130

73,80,520

3,21,89,740

The leased lands above have to be used for the purpose for which the same has been sanctioned by the Government of Karnataka. The lease can be revoked by the Government of Karnataka on infringement of terms and conditions of the lease agreement. 1.B. VIII. Use of estimates:- The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management‟s best knowledge of current events and actions which the Company may undertake in future, actual results may ultimately differ from these statements. Any revision to accounting estimates is recognized prospectively in the current and future years. 1.B. IX. Revenue recognition:- Revenue from sale of wind power energy is accounted for on the basis of billing to consumers (I.e KPTCL/ESCOM‟s in Karnataka) on monthly basis considering the actual power transmitted to Grid in line with principles laid down by the Karnataka Electricity Regulation Commission, Government of Karnataka. Revenue from interest on bank deposits is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Revenue from application fee, transfer fee and other fee except DPR Processing fee are recognized as and when received. Revenue from DPR processing fee are recognized on commissioning for projects allotted prior to 01.10.2009 as per the accounting policies generally followed by the Company. In respect of projects allotted after 01.10.2009, revenue from DPR processing fee are recognized as and when the agreements are entered into with the developers of renewable energy. 1.B. X. Taxation: The Company is eligible for tax holiday under section 80IA of the Income Tax Act, 1961 for ten years out of fifteen year after the commencement of business. Hence the provision for current tax on the income for the year is made at the prevailing tax rate under section 115 JB of the Income Tax Act 1961. Deferred tax liability is calculated and provided in terms of the relevant accounting standard. The details of deferred tax liability as on 31st March 2012 are as under:

31

Amount in Rs.

31.03.2012 31.03.2011

A. Deferred tax liability on account of difference in written down value of fixed assets.

1,30,39,768 1,35,17,320

B. Less : Deferred tax Assets on account of expenses allowable for tax purposes on payment basis

14,52,552 4,77,552

C. (A-B) Net Deferred Tax Liability Rs. 1,15,87,216 1,30,39,768

1.B. XI-Earning per share:- Reconciliation of denomination for the purpose of calculating earning per share:

Amount in Rs.

31.03.2012 31.03.2011

Weighted average No.s of Equity Shares 5,00,030 5,00,030

Effect of dilutive potential Equity Shares - -

Total weighted No.s of shares including dilutive Equity Shares 5,00,030 5,00,030

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares 1.B. XII - Impairment of assets: - The Company on an annual basis makes an assessment of any indicator that may lead to impairment of assets. If any such indication exists, the Company estimates the recoverable amount of the assets. If such recoverable amount is less than the carrying amount, then the carrying amount is reduced to its recoverable amount by treating the difference between them as impairment loss and is charged to the Statement of Profit and loss. However, no impairment loss is recognized during the year as no such indicator exists. 1.B. XIII-Contingent liabilities and provisions:- Depending on facts of each case and after due evaluation of relevant legal aspects, the Company makes a provision when there is a present obligation as a result of a past event where outflow of economic resources is probable and a reliable estimate of the amount of obligation can be made. The disclosure is made for all possible or present obligations that may but probably will not require outflow of resources as contingent liability in the financial statements. 1.B. XIV- Accounting for credit available in respect of MAT under Income Tax Act:- As per the Guidance note, issued by the Institute of Chartered Accountants of India, on accounting for credit available in respect of Minimum Alternative Tax (MAT) under the Income Tax Act 1961, MAT credit is a resource controlled by the Company as a result of past event,(viz., payment of MAT). MAT credit has expected future economic benefits in the form of its adjustments against the discharge of the normal tax liability if the same arises during the specified period and accordingly MAT credit is an asset. And it should be recognized as asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. The Company has not recognized MAT credit asset as there is no convincing evidence to the effect that the Company will pay normal income tax during the specified period.

32

NOTES TO THE ACCOUNTS 2. SHARE CAPITAL

PARTICULARS AS AT AS AT

31-03-2012 Rs.

31-03-2011 Rs.

AUTHORISED CAPITAL

1,00,00,000

1,00,00,000

(1000000 EQUITY SHARES OF Rs. 10/- EACH)

(a) ISSUED, SUBSCRIBED AND PAID UP CAPITAL

50,00,300

50,00,300 (500030 EQUITY SHARES OF Rs. 10/- EACH FULLY PAID UP)

Total

50,00,300

50,00,300

Issued, Subscribed and Paid up Capital:

1. 5,00,010 shares of Rs.10/- each have been issued in The name of Hon‟ble Governor Rs. 50,00,100/-

2. 10 shares of Rs.10/- each have been issued in the Name of Principal Secretary, GOK, Rs. 100/-

3. 10 shares of Rs.10/- each have been issued in the name of Managing Director, KREDL Rs. 100/-

_____________ Total Rs. Rs. 50,00,300/- NOTES TO THE ACCOUNTS 3. RESERVES AND SURPLUS

Amount in Rs.

PARTICULARS AS AT AS AT

31-03-2012 31-03-2011

Opening Balance

41,02,55,753

1,23,32,082

Total

41,02,55,753

1,23,32,082

Profit and Loss account

Net surplus in Profit and Loss Account

18,15,80,835

39,79,23,671

Balance transferred to Balance Sheet

59,18,36,588

41,02,55,753

These Reserves and Surplus includes accumulated Profit of Organization since inception of the Company.

33

NOTES TO THE ACCOUNTS NON-CURRENT LIABILITIES 4. LONG-TERM BORROWINGS SECURED LOANS

Amount in Rs.

PARTICULARS AS AT AS AT

31-03-2012 31-03-2011

Vijaya Bank Loan for Wind Demo Project - Mavinhunda -

1,88,64,707

(Secured by hypothecation of movable assets like machinery, plant, accessories and tools and in particular turbine sets electrical equipments, 40 M mast with instruments etc.)

Vijaya Bank Loan for Wind Demo Project - Sogi -

83,57,146

(Secured by hypothecation of movable assets like machinery, plant, accessories and tools and in particular turbine sets electrical equipments, 40 M mast with instruments etc.)

-

2,72,21,853

Loan availed Rs.5,10,00,000/- from Vijaya Bank, Indiranagar to set up 2 MW Wind Demonstration project at Mavinahunda during 2003. The Loan period is 10 years with 2 year moratorium. The entire loan outstanding as at 19.11.2011 amounting to Rs.1,53,82,717/- was repaid and the loan account is closed during the FY 2011-12. Loan availed Rs.3,90,00,000/- from Vijaya Bank, Indiranagar to set up 2.5 MW Wind Demonstration project at Sogi during 2004. The Loan period is 10 years with 2 year moratorium. The Loan period is 10 years with 2 year moratorium. The entire loan outstanding as at 19.11.2011 amounting to Rs.56,04,404/- was repaid and the loan account is closed during the FY 2011-12. NOTES TO THE ACCOUNTS 5. DEFERRED TAX LIABILITY

Amount in Rs.

PARTICULARS AS AT AS AT

31-03-2012 31-03-2011

Deferred Tax Liabilities 1,30,39,768 1,35,17,320

Deferred Tax Assets 14,52,552 4,77,552

Deferred Tax Liabilities (Net) 1,15,87,216 1,30,39,768

NOTES TO THE ACCOUNTS 6 OTHER LONG TERM LIABILITIES 6.1. REFUNDABLE ADVANCE FEE FROM RE DEVELOPERS RECEIVED PRIOR TO GOVERNMENT ORDER NO. EN 392 NCE 2008 DTD. 13.10.2009 Since inception the Company has collected fees from the Renewable Energy Developers in the form of “Application Fee, DPR Processing Fee and Transfer Fee”. As per the accounting procedure in vogue, amount collected from application fee and transfer fee are recognized as revenue as and

34

when received. Fee‟s collected for Detailed Project Processing were classified as revenue only after the projects are commissioned as the DPR processing fees were refundable in nature. The Board in its 59th Meeting decided that the accumulated DPR Processing Fees of each un-implemented project completing seven years from the date of allotment of capacity are to be considered as non-refundable and transferred to revenue accounts of the Company. The Company has balance refundable fees as detailed below:

Amount in Rs.

PARTICULARS AS AT

31-03-2012 AS AT

31-03-2011

Deposits for Wind Energy Projects 17,21,62,021 21,25,78,771

Deposits for Small Hydro Projects 6,09,67,526 8,44,16,526

Deposits for Co-generation Projects 45,41,125 67,17,125

Deposits for Industrial waste Projects 3,13,750 3,13,750

Deposits for Biomass Projects 37,31,750 79,70,500

Deposits for Solar Power Projects 13,75,000 26,00,000

Total Rs. 24,30,91,172 31,45,96,672

6.2. STATE ENERGY CONSERVATION FUND (SECF): In order to overcome the financial barriers in the implementation of Energy Efficiency activities by energy consumers in Karnataka an Energy Conservation Fund (Energy Conservation Fund) is established. The Karnataka Energy Conservation Fund Rules 2007 Dtd.1.9.2007 have been issued under section 16 of the Energy Conservation Act, providing for the Energy Conservation Fund. Under the policy it is proposed to augment the fund with a contribution of Rs 5 crores annually from Akshaya Shakthi Nidhi for 5 years till 2014.The Fund will facilitate the development and growth of an Energy Efficiency infrastructure that includes energy service providers such as ESCOMs to help consumers develop and implement cost-effective Energy Efficiency projects. Karnataka Renewable Energy Development Limited will develop the rationale for use of the funds and eligibility for receiving funding for Energy Efficiency projects etc. The Energy Conservation Fund may also be utilized for Energy Conservation Awards and Publicity Awareness Campaigns capacity building and Trainings etc. The Energy Conservation Fund will be managed and administered by a committee with Managing Director Karnataka Renewable Energy Development Limited as Chairman and members being Chief Electrical Inspectorate to the Government, Government of Karnataka, Managing Director BESCOM, one representative of Bureau of Energy Efficiency, Government of India, one representative of Central Power Research Institute Bangalore and Secretary Federation of Karnataka Chamber of Commerce & Industry. The initial amount of Rs. 2 Crores has been received from Bureau of Energy Efficiency, Government of India and a matching grant of Rs.2 Crores is received from Government of Karnataka. The amount including interest earned on the said contributions are as below:

Amount in Rs.

PARTICULARS AS AT

31-03-2012 AS AT

31-03-2011

Bureau of Energy Efficiency -SECF 4,18,23,412 2,00,00,000

6.3. CONTRIBUTIONS

Contributions for Projects

Contributions received pending implementation of various projects are as below: Amount in Rs.

PARTICULARS AS AT

31-03-2012 AS AT

31-03-2011

State Level Energy Park - Contributions 16,00,000 16,00,000

Installation of Hybrid Systems - Contributions 4,64,750 18,18,900

District Level Energy Park - Contributions 9,85,384 9,85,384

Total Rs. 30,50,134 44,04,284

35

6.4. INCOME RECEIVED IN ADVANCE Sogi Wind Project - Approach road Rs. 12,00,000/- KREDL‟s approach road at Sogi Wind Project was utilized by M/s. Suzlon Energy Ltd., for this a sum of Rs.19,00,000/- has been collected in 2006. The life of project is of 19 years. Hence, this amount is treated as pre-receipt of Income and Rs. 1 lakh is accounted as revenue every year for 18 years. Balance Rs. 12 lakhs remained as pre receipt of income as on 31.3.2012 as detailed below.

Amount in Rs.

PARTICULARS AS AT

31-03-2012 AS AT

31-03-2011

Sogi Approach Road Utilization received in advance 12,00,000 13,00,000

6.5. Akshya Shakthi Nidhi Government of Karnataka (GoK) has set up Akshya Shakthi Nidhi to facilitate Renewable Energy Project financing and Energy Conservation and Energy Efficiency measure, which is administered by KREDL as per the guidelines issued by Government from time to time. Funds available including interest earned on the accumulated amount is Rs.34,93,642/- as on 31.3.2012.

Amount in Rs.

PARTICULARS AS AT

31-03-2012 AS AT

31-03-2011

Akshya Shakthi Nidhi 34,93,642 25,00,000

6.6. Earnest Money Deposit KREDL has obtained EMD from suppliers for Supply, Installation and Commissioning of SPV Home Lighting Systems and for Establishment of Wind Monitoring Stations. The outstanding EMD repayable after 12 months are given below :

Amount in Rs.

PARTICULARS AS AT

31-03-2012 AS AT

31-03-2011

Earnest Money Deposit 1,30,200 10,200

6.7. Retention Monies / Security Deposit

Amount in Rs.

PARTICULARS AS AT

31-03-2012 AS AT

31-03-2011

Retention Monies / Security Deposit 17,61,341 13,05,684

The Retention Monies / Security Deposits received for the following works which are to be released after 12 months from the end of the reporting period is given below:

Particulars Date Amount in Rs.

Remarks Condition for

release SD

Agreed Date of Release

Security Deposit-Central Electronics Ltd-2 Vill.30h

14.10.2009 2,48,853 Security deposit for installation of solar lighting at 2 village and 30 un-electrified hamlets RVE programme 2007-08

Date of commission to 5 years period (DOC 23-11-2010)

23.11.2015

36

Security Deposit-Deepa Solar Lighting Sy-2 Vill.30h

10.9.2009 1,81,168 Security deposit for installation of solar lighting at 2 village and 30 un-electrified hamlets RVE programme 2007-08

Date of commission to 5 years period (DOC 24-11-2009)

24.11.2014

Security Deposit-Haigreen Infratech Project Ltd

12.10.2009 10,00,000 Recd. from Haigreen Infratech Project ltd towards cost bid security for setting up of 2 MW MHS at Hullahalli village, Nanjanagudu Tq. Mysore District. Vide R No. 1192 dt 12-10-2009.

Project commission within three years from Date of Agreement (DOA 20-12-2010)

20.12.2013

Security Deposit-MIC Electrics Ltd- SPV Home Lighting

30.8.2009 18,620 Security deposit for installation of (SPV)-LED home lighting systems

Date of commission to 5 years period (DOC 20-03-2010)

20.03.2015

Security Deposit-Shah Energy Inc-10 Station 80M

30.03.2012 3,12,700 Security deposit for installation of 10 Mo's 80M wind monitoring station in Karnataka

Date of commission to 2 years period (DOC 30-3-2012)

30.03.2014

Total Rs. 17,61,341

NOTES TO THE ACCOUNTS 7. LONG TERM PROVISIONS

Amount in Rs.

PARTICULARS AS AT

31-03-2012 AS AT

31-03-2011

Leave Salary 36,84,718 35,38,682

Gratuity 34,01,817 25,77,383

Total Rs. 70,86,535 61,16,065

Amount Payable after 12 months from the reporting period towards Leave Salary and Gratuity are charged to Statement of Profit and Loss. The Company also provides for retirement benefits in the form of gratuity and leave encashment. Such defined benefits are charged to Statement of Profit and Loss based on actual valuations, as at the balance sheet date. NOTES TO THE ACCOUNTS 8. TRADE PAYABLES TRADE PAYABLE-OTHERS

Amount in Rs.

PARTICULARS AS AT

31-03-2012 AS AT

31-03-2011

Trade Payables for Village Lighting / Electrification 38,74,776 47,17,667

Trade Payables for Purchase Solar 1,23,812 1,23,812

Trade Payables for Hybrid Systems 4,82,600 -

Trade Payables for Energy Parks 16,13,296 16,13,296

Total Rs. 60,94,484 64,54,775

37

The Balance outstanding as trade payables includes payments subject to reconciliation after settlement of disputed disbursement of SPV Subsidy 2005-06 and 2006-07. NOTES TO THE ACCOUNTS CURRENT LIABILITIES 9. OTHER CURRENT LIABILITIES Trade Deposits & Advances 9.1. MNRE FUNDS PAYABLE TO BENEFICIARIES MNES CFA Received Pending Implementation

Amount in Rs.

PARTICULARS AS AT

31-03-2012 AS AT

31-03-2011

MNES CFA for Dist. L E Park-CBIT, Gubbi 1,56,000 1,56,000

MNES CFA for Dist. L E Park -Maland College of Eng. Hassan

1,000 1,000

MNES CFA for Dist. L E Park -PES, Bangalore 1,000 1,000

MNES CFA for 2 Remote Village & 30 hamlets 07-08 - 2,14,927

MNES CFA for Inst of 250 No's0.55kw Hybrid Systems 1,03,75,394 1,28,92,894

MNES CFA for Solar Steam Cooker at Sainik Scl.& BOSCH

- 1,15,000

MNES CFA for Solar Steam Cooking at Ved Vigyna Mah. - 13,86,000

MNES CFA for Training Prog. At Punajaru & Puradalu Gr. 9,700 42,000

MNES CFA - Others Payables 99,000 2,50,000

MNES CFA- 250 No.s of Pico Hydro Water Mills - 20,40,000

MNES CFA- 47 No.s of Pico Hydro Water Mills 26,954 26,954

MNES CFA- Dev. Of Solar Cities at Mysore & Hubli - 3,12,500

MNES CFA- Global Solar Water Heating Project - 3,75,000

MNES CFA- Reva Car 1,15,500 1,54,000

RGAUD to All DC -2006 - 1,74,167

RGAUD to All DC -2005 - 30,091

MNRE CFA - 13 Remote village Electrification 2008-09 - 9,35,846

MNRE CFA - RGAUD to All DC -2009 - 2,00,000

MNRE CFA - Publicity and Awareness Programme (SWH) 2,00,000 -

MNRE CFA - Information & Publicity on RE-2011-12 8,064 -

MNRE CFA - Model Solar City -Mysore 79,35,000 -

MNRE CFA - Solar Water Heating Systems-JNNSM 2011-12

2,71,57,285 -

Total Rs. 4,60,84,897 1,93,07,379

9.2. MNRE Unutilized funds Refundable:

Amount in Rs.

PARTICULARS AS AT

31-03-2012 AS AT

31-03-2011

SPV Subsidy 2002-2003 Payable 5,77,500 5,77,500

MNRE CFA- Biomass Gasifier at MVIT - 2,00,000

Total Rs. 5,77,500 7,77,500

38

9.3. Income Received in Advance Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Sogi Approach Road Utilization received in advance 1,00,000 1,00,000

9.4. ADVANCE FROM RE DEVELOPERS AS PER NEW GO

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Deposits for Wind Energy Projects 11,75,66,500 6,35,66,500

Deposits for Small Hydro Projects 4,59,75,733 5,05,30,733

Deposits for Co-generation Projects - -

Deposits for Industrial waste Projects 1,89,750 1,89,750

Deposits for Biomass Projects 33,83,833 21,50,000

Deposits for Solar Power Projects 17,40,000 14,30,000

Wind-Multi Story Media Pvt Ltd-Transfer Fee 4,00,000 -

Total Rs. 16,92,55,816 11,78,66,983

9.5. BEE FUNDS RECEIVED FOR EC & EE ACTIVITIES

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Bureau of Energy Efficiency - Energy Audit 2008-09 13,91,313 14,35,433

BEE - Energy Efficient Lights at Richmond Rd, J P Park, H Nagar Park

50,31,159

54,78,039

BEE-LED Village Campaign 6,47,924 14,84,924

Bureau of Energy Efficiency -2009-10 6,65,499 6,65,499

Bureau of Energy Efficiency -2011-12 29,912 -

BEE-2010-11 A & Publicity - 3,55,499

Total Rs. 77,65,807 94,19,394

Bureau of Energy Efficiency Energy Audit – 2008-09 – Rs. 13,91,313/- Bureau of Energy Efficiency has released Rs.21,00,000/- towards energy Audit programme to be conducted in Karnataka. Unspent balance of funds as on 31st March Balance amount to be utilized is Rs. 13,91,313/-. Bureau of Energy Efficiency Energy Efficient Lighting of Richmond Road, J P Park and Hanumanthnagar Park – Rs. 50,31,159 /- Bureau of Energy Efficiency has released Rs.85,93,000/- for Energy Efficient Lighting of Richmond Road, J P Park and Hanumanthnagar Park during F Y 2008-09. Balance amount to be utilized is Rs. 50,31,159 /-. Bureau of Energy Efficiency LED Village Campaign: – Rs. 6,47,924 /- Under LED Village Campaign programme BBE has sanctioned a sum of Rs. 15 lakhs vide sanction order No. 02/42/SDA/09-99454 dtd 17.12.2009. Balance amount to be utilized is Rs.6,47,924/- Bureau of Energy Efficiency - 2009-10: – Rs.6,65,499/- For various energy conservation activities for the FY 2009-10 a sum of Rs. 20.00 lakhs sanctioned vide DO No. 02/42/SDA/09-75679 dtd 11.8.2009. During FY 2009-10 advance amount of Rs. 14.00 lakhs has been released. For this programme a sum of Rs.7,34,501/- is utilized during FY 2009-10. Unspent balance of funds as on 31st March 2012 is Rs.6,65,499/-. Bureau of Energy Efficiency - 2011-12 Rs. 29,912 /-

39

For various energy conservation activities for the FY 2011-12 a sum of Rs. 20.00 lakhs sanctioned and advance amount of Rs. 17.00 lakhs has been released during 2011-12. For this programme a sum of Rs.16,70,088/- is utilized during FY 2011-12. Unspent balance of funds as on 31st March 2012 is Rs.29,912/-.

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

GOK-SFA for RVE 2 Village & 30 Hamlets MNRE Programme

-

1,84,750

Co-Generation Subsidy from Govt. pending disbursement -

52,00,000

C-WET Wind Monitoring Stations - 08-09 - 30,00,000

C-WET Wind Monitoring Stations - 10-11 - 20,00,000

Total Rs. 1,03,84,750

9.6. Retention Monies / Security Deposit

Amount in Rs.

PARTICULARS AS AT

31-03-2012 AS AT

31-03-2011

Retention Monies / Security Deposit 5,91,945 1,66,729

The Security Deposits received for the following works these current liabilities are payable within 12 months from the end of reporting date.

Particulars Date Amount

in Rs.

Remarks Condition for release

SD

Agreed Date of Release

Security Deposit-Energy Efficient Lights-JP Park

26.05.2011 33,516

Security deposit for installation of LED Garden light at JP Park, Mathikere, Bangalore

Date of commission to 2 years period (DOC 03-08-2010)

03.08.2012

Security Deposit-Karnataka Security

20.01.2009 16,510

DD.No.514323 dt 23-08-2008 of Rs.10000/- and DD No.515835 dt 11-11-2008 of Rs.6510/- towards security deposit for contract of cleaning and house keeping service at KREDL. Vide R No.0518 dt 11-11-2008 and vide R No.578 dt 20-01-2009.

Contract Agreement completed in previous year

Security Deposit-M/s.Sumedha - LED Light at Ricm.Rd

06.01.2010 1,32,594

Security deposit for installation of 110 No's 79V LED Street light Systems at Richmond Road Flyover at Bangalore

Date of commission to 2 years period (DOC 07-11-2009)

07.11.2011

Security Deposit-Onleo Global Sol.P.L-LED,Mattur

18.06.2010 17,625

DD.No.100859 dt 14-06-2010 recd from Onleo Global Solution Pvt Ltd towards security deposit for installation of LED

Date of commission to 2 years period (DOC 19-08-2010)

19.08.2012

40

street lighting systems at Mattur village, Shimog district vide R No.1762 dt 18-06-2010.

Security Deposit-Shah Energy Inc-10 Station 80M

30.03.2012 3,12,700

Security deposit for installation of 10 Mo's 80M wind monitoring station in Karnataka

11.06.2012 Released

Security Deposit-Transpace Furnitech-Hubli RO Inter

22.12.2011 79,000

Security deposit for work of work station/cubicles facilitating -LAN telephone services to each work place and related wirings at Hubli Regional Office.

31.07.2012 Released

Total Rs.

5,91,945

9.7. Earnest Money Deposit KREDL has obtained EMD from suppliers for Supply, Installation and Commissioning of SPV Home Lighting Systems and for Establishment of Wind Monitoring Stations. The outstanding EMD repayable are given below :

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Earnest Money Deposit 10,05,840 10,74,820

The Balance outstanding for release of EMD includes payments subject to reconciliation after settlement of disputed disbursement of SPV Subsidy 2005-06 and 2006-07. NOTES TO THE ACCOUNTS

10. SHORT-TERM PROVISIONS

10.1. PROVISION FOR EMPLOYEE RETIREMENT BENEFITS Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Leave Salary 2,56,937 -

Bonus - 6,79,035

Pension 9,07,218 4,72,543

Gratuity 55,131 -

Total Rs. 12,19,286 11,51,578

Amount Payable during 2012-13 towards Contributions to defined contribution schemes such as provident fund, etc. are charged to Statement of Profit and Loss / Capital Work-in-Progress, as applicable. The Company also provides for retirement benefits in the form of gratuity and leave encashment. Such defined benefits are charged to Statement of Profit and Loss / Capital Work-in-Progress, as applicable, based on actual valuations, as at the balance sheet date.

41

10.2. PROVISIONS FOR EXPENSES Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Salaries & Wages Payable 3,15,387 1,82,862

Travelling & Conveyance Allowances Payable 28,890 8,400

Publicity & Advertisement Payable - 86,294

House Keeping Expenses Payable 11,400 6,050

Manpower Service Expenses Payable 3,96,279 1,90,148

Communications expenses Payable 37,876 38,196

Water Charges Payable 9,520 2,912

Staff Welfare Expenses Payable 19,080 12,669

Stationery & Printing Payable 7,025 46,929

Honorarium Payable - 32,000

Contributory PF Payable - 10,120

Supervision Charges Sogi Wind Project Payable - 1,18,359

Medical Expenses Payable 15,319 1,15,610

Project Expenses Mavinhunda & Sogi Project Payable 31,86,745 32,523

Legal Advice Payable - 33320

Vehicle Repairs & Maintenance Exps. Payable 7,450 8,000

Meeting Expenditure Payable - 24,721

Tax Deducted at Source Payable - 25,407

Retainership to Company Secretary Payable - 14,890

Auditors Fees Payable 1,52,211 1,56,873

Books and Periodicals Payable 1,030 -

Electricity Charges Payable 25,442 -

Participation in Exhibitions Payable 6,080 -

Rent Payable 3,00,000 -

Total Rs. 45,19,734 11,46,283

10.3. PROVISION FOR INCOME TAX

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Provision for taxation 9,50,00,000 4,57,00,000

10.4. PROVISIONS FOR DOUBTFUL ADVANCES Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Provision for Doubtful advances - 1,96,819

42

NOTE TO THE ACCOUNTS

II. Assets Non-Current Assets

11. FIXED ASSETS – TANGIBLE

PARTICULARS

GROSS BLOCK GOVT. GRANTS UTILISED Depreciation Cost of Amortisation of Leasehold Land

NET BLOCK Lease hold Land

AS ON 01.04.2011

ADDITIONS

DELETIONS

TOTAL

UP TO 31-03-2011

FOR THE

YEAR

TOTAL

UP TO 31-03-2011

FOR THE YEAR

DELETIONS

TOTAL

UP TO 31-03-2011

FOR THE YEAR

TOTAL

AS ON 31-03-2012

AS ON 31-03-2011

AS ON 31.03.2012

Rs. Rs.

Rs.

Rs.

Rs. Rs. FURNITURE &

FIXTURE

51,40,215 54,52,362 99 1,05,92,478 48,93,685 -

48,93,685

16,043

9,56,654

9,72,697 -

47,26,096 2,30,487 -

OFFICE EQUIPMENT

52,06,624 17,93,452 842 69,99,234 49,46,352 -

49,46,352

28,957

1,56,853

1,85,810 -

18,67,072 2,31,315 - COMMUNICATION EQUIPMENTS

4,06,889 74,792 - 4,81,681 3,13,448 -

3,13,448

7,318

17,504 -

24,822 -

1,43,411 86,123 -

MACHINERY

3,93,000 3,93,000 3,92,607 -

3,92,607 -

- - -

393 393 -

MOTOR VEHICLES

97,89,284 - 97,89,284 85,08,023 -

85,08,023

12,659

3,26,770

3,39,429 -

9,41,832 12,68,602 - COMPUTER & SOFTWARE

50,81,870 5,80,740 2,429 56,60,181 48,03,547 -

48,03,547

1,01,533

1,92,266

2,93,799 -

5,62,835 1,76,790 -

SOLAR POWER PLANT AT KREDL

29,01,600 29,01,600 28,98,698 -

28,98,698 -

- - -

2,902 2,902 -

Establishment of New Wind Monitoring Stations -10 Equipments -Wind Monitoring Stations

42,56,410 42,56,410 42,52,153 -

42,52,153 -

- -

4,257 4,257 -

Civil Works- Wind Monitoring Stations

5,66,372 5,66,372 5,65,805 -

5,65,805 -

- -

567 567 -

WIND DEMO PROJECT - MAVINAHUNDA, BELGAUM

Plant and Equipments

11,52,96,019 11,52,96,019 3,70,24,649 -

3,70,24,649

5,58,83,376

34,32,079

5,93,15,455 -

1,89,55,915 2,23,87,994 -

Buildings*

1,59,81,285 1,59,81,285 49,75,351 -

49,75,351

59,89,541

5,01,639

64,91,180 -

45,14,754 50,16,393 -

Land at Mavinahunda

62,74,184 62,74,184

62,74,184 62,74,184 - WIND DEMO PROJECT -

43

SOGI, BELLARY

Plant and Equipments

11,32,16,128 11,32,16,128 3,75,63,509 -

3,75,63,509

5,28,86,781

84,05,846

6,12,92,627 -

1,43,59,992 2,27,65,838 -

Buildings*

1,33,71,549 1,33,71,549 44,36,491 -

44,36,491

62,01,822

9,92,784

71,94,606 -

17,40,452 27,33,236 -

Lease hold land

1,27,58,040 - 1,27,58,040 - -

- -

- - 89,18,815

14,17,560

1,03,36,375 - -

24,21,665

TOTAL

31,06,39,469 79,01,346 3,370 31,85,37,445 11,55,74,318 -

11,55,74,318

12,11,28,030

1,49,82,395 -

13,61,10,425 89,18,815

14,17,560

1,03,36,375

5,40,94,662 6,11,79,081

24,21,665

Previous Year

30,88,38,003 18,06,861 5,395 31,06,39,469 11,55,74,318 -

11,55,74,318

10,70,12,565

1,41,15,785 320

12,11,28,030 75,01,255

14,17,560

89,18,815

6,11,79,081 7,34,93,080

38,39,225

* Building includes approach road and retaining wall in respect of which depreciation has been provided @ 10% based on the useful life of the asset.

44

NOTES TO THE ACCOUNTS NON - CURRENT ASSETS TANGIBLE FIXED ASSETS 12. CAPITAL WORK-IN-PROGRESS

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Preliminary Works - Hullahalli Small Hydro Demo Project

14,24,942 14,24,942

Preliminary Works - 6 + 6 MW Mavinahunda and Sogi Wind Projects

11,35,878 10,42,122

Preliminary Works - 10 No's Areo Generator 21,90,000 21,90,000

Total Rs. 47,50,820 46,57,064

The details of Capital Work in Progress are as below: a. During 2004-05, Company intended to establish a 2 MW small hydro demonstration project at Hullahalli, in Mysore District. From 2004 to 2006, Expenditures incurred for :

1. Preparation of Detailed Project Report Rs. 9,66,330/- 2. Advertisements in News Papers Calling Tender for Turnkey contractor Rs. 2,08,493/- 3. Preparation of PFR Rs. 54,000/- 4. Catchments Study Rs. 1,00,000/- 5. Clearances from KSPCB, Evacuation from KPTCL and Survey Works Rs. 96,119/-

Total. Rs.14,24,942/-

The tender process is already completed and this project is expected to be commissioned during 2012-13. On commissioning of the project the above expenses will be capitalized. b. During 2005-06, Company was intended to establish additional 6 MWs capacity each at Mavinhunda Wind demonstration project in Belgaum District and at Sogi, Wind demonstration project in Bellary District. In 2005-06, 2006-07 and 2011-12 Expenditures incurred for :

1. Preparation of Detailed Project Report Rs. 5,17,372/- 2. Advertisements in News Papers Calling Tender for Turnkey contractors Rs. 4,02,506/- 3. Clearances from KPTCL for Evacuation and Survey Works Rs. 2,16,000/-

________________

Total. Rs.11,35,878/- The above projects are expected to be commissioned during 2012-13. Bids are invited through e-portal for procurement. On commissioning of these projects the above expenses will be capitalized. c. Areo Generators in Mavinhunda-10 No’s of 10KW To establish 10 No‟s of 10KW Areo Generators in Mavinhunda project in Belgaum District, a work order issued to M/s. Vinanyaka Energy Tech. The Total cost of the project is Rs. 25,00,000/-. In accordance with the terms and conditions of the agreement a sum of Rs.20,90,000/- has been paid as advance on delivery and successful completion of the erection works. The project is yet to be commissioned.

45

NOTES TO THE ACCOUNTS 13. OTHER NON - CURRENT ASSETS 13.1 RENT DEPOSIT

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Rent Deposit-Head Office at BSGK 60,00,000 50,00,000

13.2 CAUTION RENT DEPOSIT

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Caution Rent Deposit -Head Office -BSGK 19,00,000 -

13.3 BALANCE WITH BANKS (FIXED DEPOSIT ABOVE 1 YRS)

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Vijaya Bank, Cunningham Road Branch 77,70,364 65,00,000

NOTES TO THE ACCOUNTS CURRENT ASSETS 14. TRADE RECEIVABLES SECURED

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

(Income from Power Generation Receivable from BESCOM)

a. Trade Receivables Outstanding for period exceeding 6 months-Good

- -

b. Other Trade Receivables - Good

16,32,676 37,70,172

Total Rs. 16,32,676 37,70,172

NOTES TO THE ACCOUNTS 15. CASH & CASH EQUIVALENTS 15.1. CASH ON HAND

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Cash on hand 12,974 11,715

Postal Loading Charges 7,505 5,277

Total Rs. 20,479 16,992

46

15.2. BALANCE WITH BANKS Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Indian Bank, RMV Ext. Branch 3,05,26,277 1,62,927

Syndicate Bank, Rajajinagar Branch - 2,03,199

Vijaya Bank, Indiranagar Branch 68,04,705 3,35,52,922

Vijaya Bank, Cunnigham Road Branch 16,84,342 98,92,961

Vijaya Bank, Gulbarga Branch 32,114 -

State Bank of Mysore, M S Bld. Branch-Gen. 1,00,000 -

State Bank of Mysore, M S Bld. Branch-SECF 7,56,733 -

State Bank of Mysore, Hubli Branch 12,29,173 -

Total Rs. 4,11,33,344 4,38,12,009

15.3. BALANCE WITH BANKS (FIXED DEPOSIT BELOW 1 YR)

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Vijaya Bank, Indiranagar Branch 30,97,15,822 33,44,48,518

Vijaya Bank, Cunnigham Road Branch 36,42,08,533 30,67,64,117

Indian Bank, RMV Extension Branch 10,30,97,461 10,82,11,425

Syndicate Bank, Rajajinagar Branch 7,00,00,000 2,00,00,000

Canara Bank, GKVK Branch 4,00,00,000 4,00,00,000

Canara Bank, Nelamangala Branch 1,00,00,000 -

State Bank of Mysore, M S Bld. Branch 2,00,00,000 -

KSCO Apex Bank, Rajajinagar Branch 1,00,00,000 -

Total Rs. 92,70,21,816 80,94,24,060

NOTES TO THE ACCOUNTS 16. SHORT TERM LOANS AND ADVANCES 16.1. ADVANCE PAYMENT OF INCOME TAX

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Advance Income Tax - 2008-09 1,73,00,000 -

Advance Income Tax - 2010-11 - 2,60,00,000

Advance Income Tax - 2011-12 7,45,00,000 -

Total Rs. 9,18,00,000 2,60,00,000

16.2. EMPLOYEES

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Vehicle Advance - 3,000

Travel Advance 3,640 1,36,787

Festival Advance 80,200 95,400

Staff Advance - 24,379

Total Rs. 83,840 2,59,566

47

16.2. OTHER ADVANCES Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Fuel Loan Amount - India Garage Service Station 12,582 6,519

Leave Salary Receivable - KPCL - 3,53,275

Leave Salary Receivable - KPTCL - SKP 79,354

Total Rs. 91,936 3,59,794

16.3. ADVANCE PAYMENTS – PROJECTS

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Shri Kalachari.C - 31,504

Shri Eshwar Prasad - 42,500

M/s. UD Energy Systems Pvt. Ltd., -250 No's Hybrid System

- 13,12,500

Advance Paid to MD,KRIDL-New KREDL Building ID - 40,00,000

Total Rs.

53,86,504

NOTES TO THE ACCOUNTS 17. OTHER CURRENT ASSETS 17.1. INTEREST ACCRUED ON FIXED DEPOSITS

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Interest accrued on Fixed Deposits 7,30,48,096 3,88,99,230

17.2. PRE-PAID EXPENSES - INSURANCE

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Pre-paid Expenses - Insurance 98,744 89,318

RECEIVABLES 17.3. MNRE - NATIONAL SPV PROG. RECEIVABLES

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

SPV Programme 2005-06 6,71,400 8,95,200

SPV Programme 2006-07 5,32,981 13,24,950

Total Rs. 12,04,381 22,20,150

17.4. MNRE - FUNDS RECEIVABLES

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

MNRE Support Receivable for Remote Village Electrifications

-

12,85,978

MNRE CFA - 5 Kw Wind Solar and Diesel Systems SB Rural

4,61,937

1,52,687

MNRE CFA - RGAUD -2007 - 5,82,275

MNRE CFA - RGAUD -2009 - 1,50,000

48

MNRE CFA - RGAUD -2011 SNA 1,20,000

Total Rs. 5,81,937 21,70,940

MNRE CFA – 5 Kw Wind Solar and Diesel System at S B Rural Institute: MNRE Vide its Order No. 22/01/2005-SWES dt. 6.12.2007 sanctioned Rs. 18,47,750/- CFA for installation and commissioning of 5 KW Capacity Wind Solar Battery and Diesel Optimized Hybrid System at S B Rural Development Society. Out of sanctioned amount Rs. 13,85,813/- CFA released by MNRE. Balance amount Rs. 4,61,937/- is receivable from MNRE. MNRE support for Celebration of RGAUD - Rs. 1,20,000/- To celebrate Rajiv Gandhi Akshaya Urja Diwas on 20th Aug. 2011, MNRE sanctioned Rs. 4,00,000/- to KREDL. Out of Rs.4 lakhs MNRE has released only Rs.2.8 lakhs as advance. Balance Rs. 1.2 lakhs was receivable as on 31.3.2012, the same is received during FY 2012-13. 17.5. MNRE CFA District Level Energy Parks Receivables MNRE is encouraging setting of District Level Energy Parks in Engineering Colleges by sanctioning financial support to establish state level energy parks. As per this scheme for 1st Park in District, MNRE financial assistance is available at 75% of project cost. For 2nd Park in the District 50% of project cost will be financial assistance from MNRE. Balance will be met by Beneficiaries (Eng. colleges). In Karnataka Energy Parks have been established at various places. Amount receivable from MNRE is accounted under this head as below:

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Adichunchangiri IOT, Chikamagalure 69,927 69,927

Basaveshwar Eng. College, Bagalkote 2,35,894 2,35,894

Govt. PU College for Boys, Gurmitkal, Gulbarga 34,280 34,280

Karuna Trust, Gubvalli Village, Chamraj Nagar 2,36,250 2,36,250

Mahadevi Girls High School, Sharananagar, Gulbarga 57,947 57,947

PES College of Engineering, Mandya 48,015 48,015

PU College, Arkera, Devadurga, Raichur 62,350 62,350

Sainika School, Bijapur 2,35,894 2,35,894

SIT, Tumkur 50,022 50,022

VIT DC, Muddenahalli, Chickballapur 1,01,715 1,01,715

Total Rs. 11,32,294 11,32,294

17.6. MNRE amount Receivables

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

MNRE CFA- Seminar on RE Application in Hotels Bagalkot

- 75,000

MNRE CFA- Seminar on RE Application in Hotels Bangalore

1,00,000

1,00,000

MNRE CFA- Inst. Small Solar Generation at Nemmadi Kendra

12,15,000 -

MNRE CFA- Stand Alone SPV Power Plant-CM,SPK,NRH 8,55,540 -

MNRE CFA- 2 RVE & 30 Hamlets 07-08 Programme Receivable

15,06,416 -

Total Rs. 36,76,956 1,75,000

49

17.7. Bureau of Energy Efficiency Funds Receivable

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

BEE-PAT Programme 1,86,010

Bureau of Energy Efficiency -2008-09 7,27,113 7,27,113

Bureau of Energy Efficiency -2010-11 3,70,488 6,949

BEE-2010-11 A & Publicity 9,17,799

Total Rs. 22,01,410 7,34,062

17.8. A district level energy park is established by M/s. Adichunchangiri Institute of Tech, Chikkamagalore with financial support from MNRE. 50% of beneficiary share is receivable from the AIT, Chikkamagalore.

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

M/s. Adichunchanagiri Institute of Tech-Chikkamangalore 1,15,605 1,15,605

17.9. PF Recoverable From Employees

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

PF Recoverable From Employees 2,362 53,355

17.10. Ernest Money Deposit - 15,000/- KREDL participated in tender process called for village lighting in Shimoga district by Deputy Commissioner, Shimoga. Ernest Money Deposit of Rs.15,000/- paid to participate in this process.

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Earnest Money Deposit 15,000 15,000

17.11. C-WET Wind Monitoring Stations – 2010-11

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

C-WET Wind Monitoring Stations – 2010-11 27,43,200 -

Karnataka is bestowed with wind potential to harness energy from wind. C-WET and KREDL have installed and commissioned 10 No.s, of 80M Wind Monitoring Stations at various places in Karnataka by contributing 80% and 20% respectively at the total cost of Rs. 59,29,000/-. Out of C-Wet Contribution of Rs.47,43,200/- C-WET has released Rs.20,00,000/- as advance. Balance Rs.27,43,200/- is receivable from C-WET. After completion of the works KREDL has released 100% of the project cost on 30.3.2012.

Particulars C-WET KREDL Total

Rs. Rs. Rs.

Project Cost 47,43,200 11,85,800 59,29,000

Contributions Received 20,00,000 11,85,800 31,85,800

Expenditure until 31.03.2012 47,43,200 11,85,800 59,29,000

Balance Receivable 27,43,200 NIL 27,43,200

50

17.12. Contribution for Hybrid Systems-250 Receivable Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Contribution for Hybrid Systems- Receivable 4,31,850

In order to popularize, create awareness and utilize locally available resources (Wind and Solar) effective for domestic and community lighting purpose, the company has installed 42 No.s of Hybrid Systems with financial support of MNRE. The scheme envisaged generation of 550 Watt energy (from Wind 400 Watt and from Solar 150 Watt). The Central Financial Assistance at the rate of 50% to domestic / individuals and 75% for Government and community use was sanctioned by MNRE. Rs.

Total cost for 42 No's Wind Solar Hybrid System

41,49,600

MNRE CFA for 42 No's 25,17,500

Beneficiaries contribution Received 12,00,250

Contribution receivable from Beneficiaries 4,31,850 Total Beneficiaries contribution 16,32,100

17.13. Advance amount at Regional Office: The Company has established 2 Regional Offices one at Gulbarga and another at Hubli. The advance amount paid to incur day to day expenditure are as detailed below :

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Gulbarga Regional Office 13,200 -

Hubli Regional Office 21,303 -

Total Rs. 34,503 -

17.14. Income Tax Refund: Income Tax Refund-FY 2010-11

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Income Tax Refund-FY 2010-11 18,72,800 -

The details of Income Tax for the FY 2010-11 are as below :

Rs.

Income Tax liability for the Year as per IT returns 4,56,15,368 Advance Tax Paid 2,60,00,000/-

Self Assessment Tax Paid 1,78,00,000/- Tax Deducted at Source 36,88,168/- 4,74,88,168

Refund Due 18,72,800

51

17.15. Income Tax Refund-FY 2007-08 The Income Tax authorities issued notice demanding a sum of Rs.2,53,20,605/-. The Company filed appeal by paying a sum of Rs. 1,26,60,310/-. The appeal of the Company is accepted by the Income Tax authorities and an order passed to refund a sum of 62,89,317/-.

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Income Tax Refund-FY 2007-08 62,89,317 -

17.16. Tax Deducted at Source The Company‟s clients deducted tax at sources of the following amount.

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Tax Deducted at Source 65,05,792 36,88,168

17.17. Caution Rent Deposit -Head Office -BSGK The Company entered an agreement with M/s. Bharth Scouts and Guides, Karnataka on 28.12.2010. As per clause No. 6, the Company has paid Rs. 1,00,00,000/- as caution deposit. The caution deposit is deductable at the rate of 50%. Amount deductable during the FY 2012-13 is Rs.36,00,000/-.

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Caution Rent Deposit -Head Office -BSGK 36,00,000

NOTES TO THE ACCOUNTS 18. REVENUE FROM OPERATIONS 18. a) Infrastructure Development Facilitation Fees During FY 2011-12, as per the standard accounting procedure in vogue, the revenue collected as application fee, transfer fee, facilitation fee except DPR Processing fee are recognized as revenue as and when received. The fee‟s collected for DPR processing were classified as revenue only after the projects are commissioned for the allotments made till 30.9.2009. The Government of Karnataka in its Order No.EN 392 NCE 2008 dated 13.10.2009 revised and authorized KREDL to collect the Fee‟s from Renewable Energy Developers. The natures of fee‟s are as below:

1. Application Fee 2. DPR Processing Fee 3. Transfer Fee 4. Change of name of the Company not involving the change in the Company Identification

No. issued by the Registrar of Companies. 5. Change of name the Company involving the change in the Company Identification No.

Issued by the Registrar of Companies. 6. The Company Seeking amalgamation / splitting up of the Companies with no change in CIN

issued by the ROC. 7. The Company Seeking amalgamation / splitting up of the Companies with change in CIN

issued by the ROC. 8. The Company seeking any facilitation letters. 9. Change of proprietary-ship to partnership to Company with CIN issued by ROC.

52

Fees collected and accounted as income accounted under this head as detailed below: Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Application fees for capacity allocation 3,94,75,999 1,87,11,222

DPR Processing fees- Wind 12,03,13,250 5,75,34,250

DPR Processing fees- Small hydro 1,00,41,250 2,24,81,501

DPR Processing fees- Co-generation 10,50,000 27,02,500

DPR Processing fees- Biomass 3,50,000 0

Transfer Fees - Wind 4,55,66,000 3,64,80,000

Transfer Fees - Small Hydro 11,25,000 80,67,500

Transfer Fees - Biomass 2,00,000 80,000

Change of Company Name 10,18,000 27,38,400

Time Extension fee 1,23,20,000 2,94,05,000

Facilitation Letter fee NIL 1,10,000

Total Rs. 23,14,59,499 17,83,10,373

18. b) Income from Power Generation KREDL has setup 2 wind demonstration projects in Karnataka. Power generated is supplied to ESCOMs. Income from Power Generation from these two projects is accounted under this head as below:

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Income from Power Generation-Mavinahunda 1,74,92,502 1,54,60,314

Income from Power Generation-Sogi 2,37,44,599 1,99,19,743

Total Rs. 4,12,37,101 3,53,80,057

The power generated from project at Mavinahunda Belgaum Dist and Sogi, Bellary Dist the corresponding number of units generated and sold during the year and previous year is as under:

The Corresponding generations of units from previous year are more because of higher wind speed during the year. The rate per unit is escalated at the rate of 2% every year in case of 2 MW out of 2.5 Mw for Sogi Wind Project as per PPA entered between KPTCL and KREDL. NOTES TO THE ACCOUNTS 19. OTHER INCOME

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Interest Received on Fixed Deposits 7,82,34,425 4,64,69,729

Application Fee-Hybrid Systems - 16,000

Application Fee-Pico Hydel 2,08,000 98,000

Sl No

Project 2011-12 2010-11

Units Generated Amount Rs.

Units Generated Amount Rs.

1 Mavinahunda Wind Demo Project

47,86,812 1,74,92,502 42,53,738 1,54,60,314

2 Sogi Wind Demo Project

68,32,752 2,37,44,599 58,14,429 1,99,19,743

Total 1,16,19,564 4,12,37,101 1,00,68,167 3,53,80,057

53

Miscellaneous Income 53,416 11,718

Right Information Act - Fee 13,486 9,812

Short Term Capital Gain-Sale of Fixed Assets 2,76,630 320

Sale of Application fees 2,38,000 29,500

Sogi Approach Road Utilization Fees 1,00,000 1,00,000

Wind Data Collection-Fees 1,50,000 10,00,000

Service Charges -250No's Pico Hydro (Water Mills) 3,50,000 15,30,000

Service Charges - Instal. of 6MW Rice Husk at Falcon - 5,00,000

Service Charges - Instal. of Steam Generation Systems 15,000 40,240

Service Charges -Stand Alone SPV Power Plants 50,000

Service Charges - Reva Car (BOV) 1,000

Service Charges - Instal. of Solar Water Heater Systems 2006-07

- 12,800

Service Charges- Instal. of Solar Steam Cooking - 27,000

Service Charges - Instal. of Solar Water Heater Systems 2007-08

- 24,800

Service Charges - Instal. of Solar Water Heater Systems 2009-10

- 1,80,200

Service Charges - Instal. of Solar Water Heater Systems 2008-09

- 14,000

Service Charges - Instal. of Solar Water Heater Systems 2010-11

- 94,700

Total Rs. 7,96,89,957 5,01,58,819

NOTES TO THE ACCOUNTS 20. EMPLOYEE BENEFITS EXPENSES

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Salary and Allowances 2,07,22,549 1,64,92,047

Contributory Provident Fund 14,38,440 12,51,916

Leave Salary Contribution 14,15,051 16,14,205

Employee's Group Insurance 1,71,000 1,72,350

Pension 12,80,292 9,79,674

Gratuity 8,96,537 6,98,928

Medical Expenses 3,35,700 4,07,327

Staff Welfare 5,96,725 4,87,354

Bonus to Employee's 15,382 1,57,500

Chairman Remuneration 1,08,000 38,700

Managing Director's Remuneration 5,94,890 4,66,555

Medical Expenses-Managing Director 2,90,825 34,201

Books and Periodicals-MD/CCF/CAO/others 6,290 8,398

Reimbursement of rent -Chairman 1,80,000 64,500

Total Rs. 2,80,51,681 2,28,73,655

NOTES TO THE ACCOUNTS 21. FINANCIAL COST

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Interest paid - Mavinahunda Wind Demo Project 12,74,339 22,55,678

Interest paid - Sogi Wind Demo Project 515331 11,19,027

Bank Charges 8,878 3,703

Total Rs. 17,98,548 33,78,408

54

Interest Paid Mavinhunda Project - Rs. 12,74,339 /- Loan availed Rs.5,10,00,000/- from Vijaya Bank, Indiranagar to set up 2 MW Wind Demonstration project at Mavinahunda during 2003. Loan period was 10 years with 2 year moratorium. This loan is pre-closed during the FY 2011-12 and Interest paid until closure of loan is Rs. 12,74,339 /-. Interest Paid Sogi Project - Rs. 5,15,331 /- Loan availed Rs.3,90,00,000/- from Vijaya Bank, Indiranagar to set up 2.5 MW Wind Demonstration project at Sogi during 2004. Loan period was 10 years with 2 year moratorium. This loan is pre-closed during the FY 2011-12 and Interest paid until closure of loan is Rs. 5,15,331/-. NOTES TO THE ACCOUNTS 22. DEPRECIATION AND AMORTIZATION EXPENSE

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Depreciation 1,49,82,395 1,41,15,785

Amortization expense 1417560 14,17,560

Total Rs. 1,63,99,955 1,55,33,345

Depreciation – Rs. 1,49,82,395/- As per accounting policies of KREDL, depreciation is provided on the Written down value method at the rates specified in Schedule XIV of the Companies Act, 1956 rate based on useful life of the asset whichever is higher. Plant and Machinery at Mavinahunda Wind Demonstration Project has been considered as a continuous process plant relying on internal technical opinion. Depreciation for assets for Sogi Wind Demonstration Project is Written off over a period of 9 years being the balance of lease period for the land form the date of commissioning of the project. Amortizations of lease hold land – Rs. 14,17,560/- Leasehold land cost for Sogi Wind Demonstration Project is amortized over the lease period of 10 years. NOTES TO THE ACCOUNTS 23. OTHER EXPENSES 23.1. ADMINISTRATION EXPENSES

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Lease Rent 78,65,796 40,04,822

Local Conveyance 1,61,797 2,94,065

Travelling 13,71,506 7,89,421

Printing & Stationary 10,19,952 6,53,736

Communications 8,08,547 5,36,481

Postage 54,895 82,349

Office Consumables 1,00,785 1,76,811

Festival Celebration Expenses 20,436 71,528

Repairs and Maintenance - Vehicles 23,92,969 13,16,553

- Others 3,98,787 1,26,144

55

Rates & Taxes 47,806 3,800

Fees paid to ROC 14,000 33,640

Service Tax paid on Professional services 17,770 20,343

Publicity and Advertisement 6,08,196 7,60,035

Seminar on Renewable Energy Application in Hotels and Tech. Inst.

- 1,86,150

Membership & Subscription 1,200 -

Directors Sitting Fees 19,500 17,500

Audit Fees - Statutory Audit 75,000 75,000

Audit Fees - Internal Audit 57,908 80,000

Audit Fees - Tax Audit 19,303 17,500

Retainership to Company Secretary 2,25,409 1,80,000

Professional - Legal Advice 3,17,251 2,06,122

Professional - Others 3,96,309 41,950

Books and Periodicals 13,821 26,660

Electricity Charges 2,46,069 1,58,743

Insurance Charges 1,44,705 99,559

House Keeping Charges 1,47,393 1,64,311

Facilitation Letter Fee 30,000 -

Transportation/Shifting Office Accommodation 2,74,139 84,240

Hospitality 12,110 1,73,345

Man Power Service Expenses 35,71,209 18,52,103

CM Relief Fund of Karnataka - 1,00,00,000

Provision for Doubtful advances - 1,19,015

PROMOTIONAL ACTIVITIES OF RE EXPENSES

Meetings 3,23,422 2,92,221

Participation in Exhibition Programmes 4,58,590 4,10,685

Solar Energy - 26,065

Work shop and Seminars-Others - 41,472

Global Investors Meet-2010 - 2,92,655

State Level Energy Park 14,79,519 -

Solar Exhibition at Tumkur 3,14,602 -

Gulbarga Utsav-2011 - 30,00,000

Vishwa Kannada Sammelana - 25,00,000

Rajiv Gandhi Akshay Urja Divas-Exhibition 5,79,936 -

Mobile Exhibition Van - Expenses 3,66,506 35,117

Capacity Building & Business Plan-KREDL-WISE 3,63,750 -

Preparation of PFR SHP 2,50,000 -

Solar and Other Renewable Devices 5,27,728 -

Solar - DPR-Vishrutha Power Pvt Ltd-RF 5,00,000 -

Small Hydro Projects Expenses-Pico Hydro 9,25,597 -

Implementation of EC & EE Programme 6,93,110 -

Village Electrification Third Party Inspection 42,150 -

Village Lighting-13 Un-electrified Hamlets-RVE 57,725 -

SPV White LED Based Home Lighting Systems 1,80,019 -

Rural Electrification Programme - DPR 35,462 1,10,994

Total Rs. 2,75,32,684 2,90,61,135

56

23.2. O & M and Other Exp.-Mavinhunda & Sogi Wind Demo Project Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

O & M and Other Exp.-Mavinhunda & Sogi Wind Demo Project

85,13,561 1,37,847

23.3. National Wind Resource Monitoring Programme C-WET and KREDL have installed and commissioned 10 No.s, of 80M Wind Monitoring Stations at various places in Karnataka by contributing 80% and 20% respectively at the total cost of Rs. 59,29,000/-. Out of this KREDL has incurred expenditure of Rs.11,85,800/-. For wind monitoring stations honorarium paid and other incidental expenditure incurred during the year.

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

National Wind Resource Monitoring Programme 20,16,211 6,81,835

23.4. Solar Demo Projects

Amount in Rs.

PARTICULARS

AS AT 31-03-2012

AS AT 31-03-2012

The Company installed through PWD, 5 KW Solar Power Plant each at the Official Residences of the Hon‟ble Chief Minister and Hon‟ble Speakers. KREDL has also installed 3 KW Solar Power Plant at Narasimharaja Hospital at the total cost of Rs. 35,10,000/-. MNRE financial assistance of Rs. 8,55,540/- received for implementation of these programmes.

26,54,460 -

Zilla Panchayat, Tumkur has installed small solar power plants at 16 Nemmadi Kendras of Gubbi Taluk at the cost of Rs.17,15,000/-. MNRE financial assistance for this Programme is of Rs.12,15,000/-. Balance Rs.5,00,000/- paid by KREDL under demonstration program.

5,00,000 -

Solar Road Map is prepared through World Institute of Sustainable Energy.

2,47,500 -

Solar Draft Policy publication cost 47,525 -

Expenditures incurred for 80MW Solar Power Projects including consultation and publication.

6,13,026 -

Total Rs. 40,62,511 -

NOTES TO THE ACCOUNTS 24. EXCEPTIONAL ITEMS 24.1. The Board in its 59th Meeting decided that the accumulated DPR Processing Fees of each un-implemented project completing seven years from the date of allotment of capacity are to be considered as non-refundable and transferred to revenue accounts of the Company. The project capacities allotted prior to 2005 but not shown the significant development are transferred to revenue account as detailed below :

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

DPR Fee From Projects Allotment Before 2005 1,88,53,500 -

DPR Fee From Projects Allotment Before 2004 - 3,13,55,250

Total Rs. 1,88,53,500 3,13,55,250

57

24.2. In pursuant to Government Order No. EN 422 NCE 2008 dated 9.2.2009 fine of Rs. 25 lakhs imposed on M/s. RRB Energy Limited for unauthorized installation of 6 Wind energy converters in the land not sub-leased to them and generating power without any sanction is transferred to Akshaya Shakthi Nidhi. Details are as below:

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Akshya Shakthi Nidhi - 25,00,000

NOTES TO THE ACCOUNTS 25. PRIOR PERIOD ITEMS

Amount in Rs.

PARTICULARS AS AT 31-03-2012

AS AT 31-03-2011

Prior Year Income

Prior Period Income - Bonus 6,68,538 -

Prior Period Income - IT Provision for F Y 2010-11

84,632 -

Total (A) 7,53,170 -

Less : Prior Year Expenditure

Prior Period Income Tax - 19,74,095

Prior Period Expenses-Fee Accounted As Revenue - 4,56,505

Prior Period Expenses-SPV 2005-06 Service Charges 3,18,800 -

Prior Period Expenses- Rent 18,00,000 -

Pension-2007-08 KPCL - 1,39,522

Total (B) 21,18,800 25,70,122

Net Total (A - B) (13,65,630) (25,70,122)

NOTES TO THE ACCOUNTS 26. Estimated amount of contracts remaining to be executed on capital account not provided for Rs. NIL (Previous year – Rs. 55.00 lakhs.) 27. Contingent Liabilities: Contingent liabilities in respect of disputed tax/liability not provided in the books. The details are as under:

SL No.

Name of the Statute Nature of Dues

Amount in Rs.

Period for which the amount relates (financial year)

Forum where dispute is pending

1 Income Tax Act, 1961 Income tax 2,84,20,053 2008-09 Commissioner Appeals (Income Tax)

2 Employees Provident fund Miscellaneous Provisions Act, 1952

Interest / Damage Charges

20,70,547 2001-02 to 2006-07

Appellate Tribunal – High Court

3 Finance Act, 1994 Service Tax 4,94,43,049 2006-07 to 2010-11

Company initiated Correspondence with Government seeking exemption

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28. The Company has made provision for Income-tax for the current year. The Company feels that the provision for taxation in the books is adequate to cover the liability of the earlier years. Any difference in the provision will be accounted for as and when the assessment is completed or appeal is disposed off.

29. Details of Salaries and Allowance paid to Managing Director/Chairman during the year 2011-

2012. Managing Director

Sl No.

Particulars

2011-12 Rs.

2010-11 Rs.

1 Salary 5,94,890 4,66,555

2 Re-imbursement of Medical Expenses

2,90,825

34,201

Total Rs. 8,85,715 5,00,756

Chairman

Sl No.

Particulars

2011-12 2010-11

Rs. Rs.

1 Salary 1,08,000 38,700

2 Re-imbursement of Rent 1,80,000 64,500

Total Rs. 2,88,000 1,03,200

30. Dues to Small Scale Industries: - The amount due to entities covered under Micro, Small and

Medium Enterprises Act, 2006 have not been identified as the necessary information regarding the supplier, whether they are registered or not registered with the authority specified under the Micro, Small and Medium Enterprises Development Act, 2006 are not furnished by the participants.

31. The Company received a demand notice from the Service tax department for registration and

payment of tax of Rs. 4,94,43,049/- under Service tax Act as provider of service under the category “Business Auxiliary Services” and “Renting of immovable property services”. However, the Company is of the opinion that the services provided by it are outside the purview of Service Tax Act and the Company has initiated correspondence with Government seeking exemption for levy of Service Tax.

32. Segment Reporting:

Basis of Preparation: The Company operates in three Business Segments: Infrastructure Development Activities, Propagation of Renewable Energy and Electrical Energy Generation, Business segments have been identified as reportable primary segments in accordance with Accounting Standard-17 Segment Reporting, as prescribed under Companies (Accounting Standards), Rules, 2006, taking into account the Organization and internal reporting structure as well as evaluation of risks and returns from these segments. The inter segment pricing is effected at cost. Segment accounting policies are in line with the accounting policies of the Company

59

Geographical Segments: The Company‟s operations are mainly confined within India. The Company does not have material earnings from business segments outside India. As such, there are no reportable geographical segments. Segment Information for the year ended 31st March 2012

A. Industry Segments

Infrastructure

Development

Activity Rs.

Power

Generation Rs.

Propagation

of

Renewable

Energy Rs.

Un-Allocated

Rs.

Consolidated

Rs.

REVENUE :

Infrastructure Development Facilitation Fees 23,14,59,499 - - - 23,14,59,499

Income from Power Generation - 4,12,37,101 - - 4,12,37,101

Sale of Solar Devices - - - - -

Other Income 1,88,53,500 - - 7,96,89,957 9,85,43,457

Total Revenue : 25,03,12,999 4,12,37,101 - 7,96,89,957 37,12,40,057

Direct Segment Expenditure 2,04,34,568 1,31,76,838 13,65,630 3,49,77,036

Employee benefit expense 2,80,51,681 - - - 2,80,51,681

Direct Finance Charges - 17,98,548 - - 17,98,548

Operation and Maintenance Sogi and

Manvinhunda Wind Projects

- 8513561 - - 85,13,561

Depreciation and Amortization of Lease hold Land - 1,63,99,955 - - 1,63,99,955

- - - -

Total Expenditure : 4,84,86,249 2,67,12,064 1,31,76,838 13,65,630 8,97,40,781

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Profit Before Tax 20,18,26,750 1,45,25,037 (1,31,76,838) 7,83,24,327 28,14,99,276

Taxation for the year 9,99,18,441 - - - 9,99,18,441

Net Profit : 10,19,08,309 1,45,25,037 (1,31,76,838) 7,83,24,327 18,15,80,835

OTHER INFORMATION

Segment Assets - 6,15,99,310 20,01,436 6,36,00,746

Segment Liabilities - - - - -

Capital Expenditure - - -

Depreciation - 1,33,32,348 - 16,50,047 1,49,82,395

Amortization of Lease hold Land - 14,17,560 - - 14,17,560

B. Revenue by Geographical Market Carrying

amount of Segment Assets

Additions to Fixed Assets

India 6,36,00,746 -

KREDL 2011-12

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33. Company has Power Purchase agreement with KPTCL entered in December 2004 for the

supply of Power. Based on the agreement, Company has been supplying Power to KPTCL/ESCOM. The Board of Directors of the Company are also the Board members of the Power Purchasing Companies KPTCL/BESCOM, these organizations are power purchasing authorities as per the Statute of Government of Karnataka. As per AS-18, Para 9 “No disclosure is required in the financial statements of State Controlled Enterprises as regards related party relationship with other state controlled enterprises and transaction with such enterprises”. Hence separate disclosure under Related Party Transactions (AS-18) not provided.

Previous years figures have recast / restated wherever necessary to confirm to the presentation of the current year.

For KARNATAKA RENEWABLE ENERGY V. R. MURALI & CO.,

DEVELOPMENT LIMITED CHARTERED ACCOUNTANTS

Firm Registration Number: 002178S

Sd/- Sd/- Sd/-

(KAPIL MOHAN) (C M NIMBANNAVAR) (V.RANGANATHA MURALI)

MANAGING DIRECTOR CHAIRMAN Proprietor

Membership Number: 027051

PLACE : BANGALORE DATE : 12-Sept-2012