TIDMKSK
RNS Number : 2203M
KSK Power Ventur PLC
27 July 2017
KSK Power Ventur plc
("KSK" or the "Group" or the "Company")
Audited Results for the year ended 31 March 2017
KSK Power Ventur plc (KSK.L), the power project company listed
on the London Stock Exchange, with interests in multiple power
plants and businesses across India, announces its consolidated
audited results for the year ended 31 March 2017.
Financial Highlights
-- Gross Revenue decreased by 12% to $ 591 m (2016: $ 675 m)
-- Gross Profit decreased by 37% to $ 145 m (2016: $ 231 m)
-- Operating Profit increased by 12% to $ 179 m (2016: $ 160 m)
-- Loss before tax at $ 174 m (2016: loss of $ 110 m)
These movements reflect a moderate increase in the plant load
factor (PLF) at KSK Mahanadi being offset by lower PLF and
operating performance at Sai Wardha, VS Lignite and other smaller
generating assets in common with the wider structural and economic
challenges being experienced by the Indian Power sector as a whole.
The main factors holding back the Company's operational performance
relate to achieving suitable fuel supply availability and
acceptable costs, state agencies continuing failure to meet their
commitments and non-receipt of payments in favour of the Group
pursuant to specific rulings.
The increase in Operating Profit was due to $93m recognized as
other income in respect of COMPAT ruling, the process to execute
proceedings for the recovery of the claim under the law are
currently underway, however this was offset by the higher finance
cost at KSK Mahanadi wherein a debt refinancing has become
necessary to complete the third and fourth 600 MW units to increase
capacity to 2,400 MW. The Company is in discussions for equity
collaboration and stake divestment at the project level which would
enable the debt funding for the project being refinanced on the
strength of collaboration with a new potential investor group. Upon
the conclusion of such a new collaboration, the expected benefit of
lower finance costs at KSK Mahanadi should be substantially
recognised from FY 2019 onwards.
Comparison of results
During the year, there has been further depreciation of the
Indian Rupee against the US Dollar from Rs 65.5 to Rs 67.15 and a
comparison of results on constant currency basis has been tabulated
below:
March 2017 translated
at March 2016 Rupee/$
exchange rate
Particulars 31 March 31 March % Change 31 March 31 March % Change
2017 2016 ($m) 2017 ($m) 2016 ($m)
($m)
Revenue* 591 675 (12%) 606 675 (10%)
Gross profit 145 231 (37%) 149 231 (35%)
Operating profit 179 160 12% 183 160 14%
(Loss) / profit
before tax (174) (110) 58% (178) (110) 62%
Average exchange
rate Rs/$ 67.1508 65.5051 65.5051 65.5051
*Includes revenue of $ 75 million (2016: $ 110 million) at KSK
Mahanadi arising from change in law provision under the Power
Purchase Agreements with State Utilities as well as Government of
India directive on coal shortfalls but requiring determination by
the Electricity Regulatory Commission before receipt of
payment.
While recently we have enjoyed greater certainty towards an
improvement in operating and financial performance, especially at
KSK Mahanadi, as a result of the announcement of the new coal
linkage policy "SHAKTI" (Scheme for Harnessing and Allocating
Koyala (Coal) Transparently in India) by the Government of India in
May 2017, the path to recovery and timing will continue to be
uncertain until these new government policies on fuel linkages and
the proposed coal supply auction mechanisms are finally
implemented.
Operating Highlights
During the twelve month period, operating assets generated 9,402
GWh with an average portfolio plant load factor of 53%, (FY16:
9,987 GWh with a 55% load factor, FY 2015: 6,158 GWh with a 34%
load factor, FY 2014: 5,757 GWh with 32% load factor), marginally
less than the 10,000 GWh mark that was expected to be crossed
during the year primarily on account of decreased generation at Sai
Wardha and VS Lignite.
31-Mar-17 31-Mar-16 31-Mar-15 31-Mar-14
GWH (%) GWH (%) GWH (%) GWH (%)
KSK Mahanadi
(1200 MW) 6,731 (64%) 6,368 (61%)* 3,203 (30%)* 1,088 (10%)*
Sai Wardha (540
MW) 1395 (29%) 1856 (39%) 1,174 (25%) 2,586 (55%)
VS Lignite (135
MW) 474 (40%) 792 (67%) 851 (72%) 902 (76%)
Sai Regency (58
MW) 379 (75%) 459 (90%) 423 (83%) 445 (88%)
Sai Lilagar (86
MW) 124 (16%) 172 (23%) 148 (20%) 341 (45%)
Sitapuram Power
(43 MW) 281 (75%) 324 (86%) 343 (91%) 342 (91%)
Solar Project
(10 MW) 18 (21%) 17 (19%) 16 (18%) 19 (22%)
Wind Project - - - - - - 33 (20%)
TOTAL 9,402 (52%) 9,988 (55%) 6,158 (34%) 5,756 (32%)
*KSK Mahanadi's PLF is calculated across the periods on the
installed capacity base of 1200 MW although actual operations of
this capacity only commenced substantially during the second half
of FY 2016 (upon grant of the necessary transmission corridor
access for supplying through the National Grid).
Notwithstanding the challenges across the sector, together with
exchange rate volatility which is expected to continue during the
current year, the combination of the Company's underlying assets,
the risk mitigation strategies and certain recent positive
developments within the power sector should, in the long term,
assist in moving the Company back towards meeting market
expectations.
EQUITY AND FINANCING ARRANGEMENTS
The Group's interest in underlying business has been supported
by the equity raised and leverage at the holding companies. A
secondary sale of project interests and refinancing opportunities
on more favourable terms to provide the necessary liquidity to
retire part of the existing high cost debt is being considered for
ongoing business operations. Once its financial performance
improves, the Group would be in a position to consolidate its
equity interest and further increase equity stakes both at KSKEV
and underlying power plants in the future. Consequently, the
Company is holding discussions and evaluating proposals for further
strategic funding and equity collaboration at the asset level with
various potential participants.
Commenting on the results, T. L. Sankar, Chairman of KSK
said:
"The financial year to 31 March 2017 witnessed the continuation
of the prolonged period of challenges and uncertainty across the
Indian power sector as a whole and the various operating power
plants of the group in particular. While 2017-18 holds promise for
enhanced performance, actual achievement is contingent upon a
number of government initiatives being implemented, as well as the
potential equity collaboration at KSK Mahanadi and debt refinancing
negotiation being concluded during FY 2018. On this basis the
Company is confident that, with support of its lenders, progress on
KSK Mahanadi can be achieved and the third 600 MW units
commissioned during the year. Steps towards a transparent auction
process for coal linkages under the new SHAKTI Policy is a positive
development which will help enable the coal requirements of our
initial 2400 MW to be satisfied over the longer term before the
coal requirements of the last 1200 MW are addressed.
However, the current constraints being faced in enforcing our
rights against government counterparties in Sai Wardha and VS
Lignite highlights the requirement of the Company to reconsider its
business approach and explore alternative solutions and equity
collaborations at each of the company' assets to preserve long term
value. Such collaborations are being pursued with a spectrum of
project stakeholders, including project lenders, operations and
maintenance (O&M) contractors, fuel suppliers and others. The
focus of the Company has also been to reduce the debt leverage
within the various asset holding companies of the group, and the
Company is currently in discussions with a number of potential
strategic and financial investors to achieve the same
The operating performance during the year would not have been
possible without the continued support of our shareholders, who
have enabled us to pursue business opportunities against a
background of challenging market conditions"
For further information, please contact:
KSK Power Ventur plc
Mr. S. Kishore, Executive Director
+91 40 23559922
Arden Partners plc
Steve Douglas
William Vandyk
+44 (0)20 7614 5900
Key Business Updates
3,600 MW KSK MAHANADI POWER PROJECT:
Construction of KSK Mahanadi, a large single location green
field private power plant, has continued. There have been notable
achievements during the year:
-- The initial 1200 MW under operation generated 6,731 GWh
during the year with a third 600 MW due to be commissioned over the
next few months, followed by the fourth 600 MW unit thereafter.
-- Mitigating arrangements were put in place to ensure power
requirement of the various State Distribution Companies (Discoms)
continue to be fulfilled by alternate sources pending the third 600
MW unit being fully commissioned and made operational.
-- A scheme of arrangement was agreed with the lenders allowing
the Raigarh Champa Rail Infrastructure SPV and the KSK Water
Infrastructure SPV to be merged into KSK Mahanadi.
-- Progress on the remaining 1200 MW (2x 600 MW units) is
contingent upon project equity funding, as well as addressing fuel
supply and Power Purchase Agreement (PPA) issues.
540 MW SAI WARDHA POWER GENERATION LIMITED (SWPGL):
The total gross power generated during the review period was
1,395 GWh as against the 1,856 GWh during FY 2016. This reflected
the continued challenging local operating environment, the fuel and
the offtake constraints experienced by SWPGL, and resultant
pressure on working capital.
A significant achievement during the period at Sai Wardha was
the final ruling by the Competition Appellate Tribunal ("COMPAT")
in December 2016 awarding an amount of US$ 93m to be immediately
recoverable from Western Coal Fields Limited (WCL) of the total
claim of US$ 240m, and the process to execute proceedings for the
recovery of the claim under the law are currently underway.
As regards, the final legal appeal of WCL and Coal India Limited
(CIL), the Hon Supreme Court has not stayed the COMPAT order and
final hearing on the appeal is expected to commence shortly. A
favourable final ruling would not only enable a price reduction but
also allow substantial claims of damages for the prior period be
determined by the COMPAT. As regards long term power sale
arrangements to commence delivery for half of the capacity of the
Sai Wardha project to the local utility, the appeal against the
Appellate Tribunal for Electricity ("APTEL") is also expected to be
adjudicated by the Supreme Court shortly.
The Company continues to make every effort to pursue the coal
price reduction and implementation of the APTEL direction, which we
believe will ultimately lead to the enhanced utilisation and
profitability of the SWPGL plant. However, proposals are under
consideration for conversion of the project debt into equity and
/or collaboration with a new investor consortium to address the
project requirements before long term solutions on fuel and PPA are
achieved.
135 MW VS LIGNITE POWER PRIVATE LIMITED (VSLP):
Total gross power generated during the year was 474 GWh as
against the 792 GWh during FY 2016, reflecting the challenges
experienced in the transition from Captive Power Plant (CPP) to
Independent Power Plant (IPP) imposed under a local mandate by the
Government. While efforts to secure necessary long term PPAs from
the local grid continue, conversion of the project debt into equity
and/or collaboration with a new investor consortium to address the
project's requirements are being explored.
86 MW SAI LILAGAR POWER GENERATION LIMITED (SLPGL):
Total gross power generated during the year was 124 GWh as
against 172 GWh during the previous year reflecting the transition
from Captive Power Plant to Independent Power Producer. The Company
anticipates increased generation, revenue and profitability from
the SLPGL plant upon resolution of the various challenges it
faces.
58 MW SAI REGENCY POWER CORPORATION PRIVATE LIMITED
(SRPCPL):
Total gross power generated in the combined cycle gas fired
power plant during the year was 379 GWh as against 459 GWh during
the previous year, primarily on account of movement of gas supply
arrangement from direct to auction basis. The PLF has recently
improved and is operating at 81% PLF in the April to June 2017
quarter.
43 MW SITAPURAM POWER LIMITED (SPL):
Total gross power generated during the year was 281 GWh as
against 324 GWh during the previous year. The fuel cost for the
period under review continued to be high due to an increase in coal
prices from the Singareni Collieries Company Limited, as well as
from open market purchases. The energy generated in the period has
been supplied to the captive consumers in accordance with the
provisions of the PPA, and the balance of power generated has been
sold to local utility companies.
10 MW SAI MAITHILI SOLAR POWER PROJECT (SMSPP):
Total gross power generated during the year was 18 GWh as
against 17 GWh during the previous year. The 10 MW PV solar power
generation plant of SMSPP is located in the state of Rajasthan,
operating under the Jawaharlal Nehru National Solar Mission with a
long term PPA
FINANCIAL PERFORMANCE
With a total operable capacity of 2,072 MW, albeit at a lower
portfolio PLF compared to the previous year, the consolidated
operating revenue achieved was $ 591 m, with a gross profit of $
145 m, operating profits of $ 179 m, a loss before tax of $ 174 m,
and a loss after tax of $ 159 m.
Net revenue decrease is largely as a result of decreased output
levels at Sai Wardha and VS Lignite, which have been offset by
improved power generation at KSK Mahanadi. Revenues also include $
75 m due to changes in law pursuant to the Power Purchase
Agreements with State Utilities and Government of India directive.
However, receipt of this amount is subject to obtaining a ruling by
the Electricity Regulatory Commission which was strengthened post
the Supreme Court Ruling in May 2017. Similarly, at Sai Wardha $ 93
m of receivables from WCF have been recognised pursuant to the
COMPAT ruling on the excess coal change for coal supplied.
Gross profit decreased to $ 145 m but operating profit increased
to $ 179 m. There was a significant increase in finance costs from
$ 296 m to $ 360 m due to increased borrowing levels with respect
to operational power plants, especially at KSK Mahanadi.
Business Strategy
The Company's business strategy is to focus on consolidation of
the operations of the power generation capacity while evaluating
and concluding proposals for further strategic funding and equity
collaboration at the asset level. Work continues on a number of
major initiatives in this regard and with appropriate equity
collaboration at KSK Mahanadi. The same coupled with potential cash
accruals (post debt servicing) could provide the path for movement
forward.
Obtaining the right fuel at the right price within the Indian
power sector and supplying power to customers at sensible PPAs
continues to be the main challenge facing the Company, but the
majority of these are external issues and not directly within the
Company's control to resolve. Against the current difficult Indian
policy environment the Company continues to work tirelessly with
the Government and the authorities at all levels seeking their
support to address these Industry wide issues which, once they are
resolved, will significantly improve the Company's financial
performance over time.
OUTLOOK
The Company estimates that demand for power generation in India
is expected to grow over the next decade, albeit with sporadic
surprises and uncertainties with Government counterparties. The
high quality of the Company's asset base means that KSK is well
positioned to address the challenges as well as take advantage of
these opportunities.
Once the remaining units of KSK Mahanadi power projects are
added to the Company's existing portfolio, the Board believes KSK
will be one of India's leading suppliers of power. However, in the
short term the Board expects revenues and underlying profit to
remain below the Board's initial expectations, but gradually
improving over the longer term.
An extract of the Audited Consolidated and Company Financial
Statements for the year ended 31 March 2017 is shown below.
A full set of accounts will be available from the Company
website:
PRINCIPAL RISKS AND UNCERTAINITIES
The business of the Company is subject to a variety of risks and
uncertainties which, if they occur may have a materially adverse
effect on the Company's business or financial condition, results or
future operations. The risks and uncertainties set out in this
announcement are not exhaustive and there may be risks of which the
Board is not aware or believes to be immaterial, which may, in the
future, adversely affect the Company's business. The risks and
uncertainties faced by the Company and the industry as a whole have
been previously provided in detail in the Annual Reports of the
Company and the Interim Statements. The majority of the risks
previously identified have not significantly changed. While the
Company attempts to address the same, the key risks and
uncertainties continued to be faced by the Company are as
follows:
-- Delays in government decisions or implementation of earlier
government decisions along with continual inconsistencies in
government policies across departments and retrospective amendments
to the existing policies or introduction of new policies;
-- Liquidity risk, project financing and sustainable debt levels
against invested equity in the projects.
-- Delays in providing necessary regulatory support and / or
dispensation as may be required for timely implementation of the
financing plans or regulatory constraints on financing arrangements
resulting in alternate financing arrangements, which make take more
time than anticipated to fructify
-- Deviation from approved government policies and abuse of
market dominance position by certain contractual counter
parties;
-- Shortage of fuel and dependence on market based or imported
fuel which is subject to market vagaries and other
uncertainties;
-- Economic slowdown and negative sectoral outlook with
resultant impact on banking sector delays in agreed project
disbursements and timely availability of credit;
-- Delays in enforcement of contractual rights or legal remedies
with government counterparties undertaking fuel supplies, power off
take, transmission and open access amongst others;
-- PPA Counterparties going contrary to pre agreed understanding
and seeking benefits from the power generators that are often in
conflict with shareholder obligations to further the business;
-- Unusual currency depreciation that adversely affects the cost
of project imports, project implementation, and repayment
obligations;
-- Logistic bottlenecks and other infrastructure constraints of various agencies;
-- Challenges in the development of support infrastructure for
the power projects including physical hindrances and delay in the
issue of permits and clearances associated with land acquisitions;
and
-- Political and economic instability, global financial turmoil
and the resultant fiscal and monetary policies as well as currency
depreciation resulting in increasing cost structures.
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
as at 31 March
(All amounts in thousands of US $, unless otherwise stated)
Consolidated Company
----------------------- ---------------------
Notes 2017 2016 2017 2016
----------- ---------- ---------- ---------
ASSETS
Non-current
Property, plant and equipment,
net 3,736,864 3,370,932 - -
Intangible assets and goodwill 11,495 11,382 - -
Investments and other financial
assets 4 103,261 100,828 373,890 382,820
Other non-current assets 60,390 52,620 - -
Trade and other receivables 2,717 2,593 - -
Deferred tax asset 167,951 141,327 - -
4,082,678 3,679,682 373,890 382,820
----------- ---------- ---------- ---------
Current
Investments and other financial
assets 4 158,256 49,623 87 -
Other current assets 103,008 85,870 111 108
Trade and other receivables 457,018 367,139 - -
Inventories 29,258 38,891 - -
Cash and short-term deposits 5 105,079 122,800 969 1,194
----------- ---------- ---------- ---------
852,619 664,323 1,167 1,302
----------- ---------- ---------- ---------
Total assets 4,935,297 4,344,005 375,057 384,122
----------- ---------- ---------- ---------
EQUITY AND LIABILITIES
Issued capital 6 289 289 289 289
Share premium 6 287,191 287,191 287,191 287,191
Foreign currency translation
reserve 6 (143,123) (147,152) (477) 4,761
Revaluation reserve 6 1,352 1,385 - -
Capital redemption reserve 6 16,045 16,045 - -
Other reserves 6 102,578 146,234 185 169
Retained earnings 6 (175,303) (56,670) (32,255) (25,589)
----------- ---------- ---------- ---------
Equity attributable to owners
of the Company 89,029 247,322 254,933 266,821
Non-controlling interests 185,227 168,418 - -
----------- ---------- ---------- ---------
Total equity 274,256 415,740 254,933 266,821
----------- ---------- ---------- ---------
Non-current liabilities
Loans and borrowings 7 3,267,005 2,700,202 - -
Other non-current financial
liabilities 8 13,815 23,239 - -
Trade and other payables 64,961 30,496 - -
Provisions 9,376 8,868 - -
Deferred revenue 2,205 2,556 - -
Employee benefit liability 1,177 1,057 - -
Deferred tax liabilities 45,429 37,596 - -
3,403,968 2,804,014 - -
----------- ---------- ---------- ---------
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
as at 31 March
(All amounts in thousands of US $, unless otherwise stated)
Consolidated Company
---------------------- -------------------
Notes 2017 2016 2017 2016
---------- ---------- --------- --------
Current liabilities
Loans and borrowings 7 598,827 623,600 118,921 115,798
Other current financial liabilities 8 7,636 6,098 - -
Trade and other payables 648,733 493,099 1,203 1,503
Deferred revenue 219 211 - -
Taxes payable 1,658 1,243 - -
1,257,073 1,124,251 120,124 117,301
---------- ---------- --------- --------
Total liabilities 4,661,041 3,928,265 120,124 117,301
---------- ---------- --------- --------
Total equity and liabilities 4,935,297 4,344,005 375,057 384,122
---------- ---------- --------- --------
CONSOLIDATED AND COMPANY INCOME STATEMENT
for the year ended 31 March
(All amounts in thousands of US $, unless otherwise stated)
Consolidated Company
-------------------------- -------------------
Notes 2017 2016 2017 2016
------------ ------------ --------- --------
Revenue 9 591,258 674,547 - -
Cost of revenue (446,415) (443,211) - -
------------ ------------ --------- --------
Gross profit 144,843 231,336 - -
Other operating income 10 95,667 1,675 - -
Distribution costs (3,719) (8,640) - -
General and administrative expenses (58,240) (63,905) (735) (1,688)
------------ ------------ --------- --------
Operating profit / (loss) 178,551 160,466 (735) (1,688)
Finance costs 11 (360,244) (296,470) (5,931) (4,974)
Finance income 12 7,694 26,336 - -
------------ ------------ --------- --------
Loss before tax (173,999) (109,668) (6,666) (6,662)
Income tax 13 15,103 14,064 - -
--------- --------
Loss for the year (158,896) (95,604) (6,666) (6,662)
------------ ------------ --------- --------
Attributable to:
Owners of the Company (120,600) (72,922) (6,666) (6,662)
Non-controlling interests (38,296) (22,682) - -
--------- --------
(158,896) (95,604) (6,666) (6,662)
------------ ------------ --------- --------
(Loss) / earnings per share
Weighted average number of ordinary
shares for basic and diluted
earnings per share 175,308,600 175,308,600
Basic and diluted (loss) / earnings
per share (US $) (0.69) (0.42)
CONSOLIDATED AND COMPANY STATEMENT OF OTHER COMPREHENSIVE
INCOME
for the year ended 31 March
(All amounts in thousands of US $, unless otherwise stated)
Consolidated Company
----------------------- --------------------
2017 2016 2017 2016
----------- ---------- ---------- --------
Loss for the year (158,896) (95,604) (6,666) (6,662)
Items that will never be reclassified
to income statement
Re-measurement of defined benefit
liability 76 (114) - -
Income tax relating to re-measurement
of defined benefit liability (22) 19 - -
54 (95) - -
----------- ---------- ---------- --------
Items that are or may be reclassified
subsequently to income statement
Foreign currency translation differences 8,046 (28,412) (5,238) 237
Available-for-sale financial assets
- current year gain / (loss) (241) (116) - -
- reclassification to income statement (11) 163 - -
Income tax relating to available - (456) - -
for sale financial asset
7,794 (28,821) (5,238) 237
----------- ---------- ---------- --------
Other comprehensive income / (expense),
net of tax 7,848 (28,916) (5,238) 237
----------- ---------- ---------- --------
Total comprehensive expense for
the year (151,048) (124,520) (11,904) (6,425)
----------- ---------- ---------- --------
Attributable to:
Owners of the Company (116,664) (91,017) (11,904) (6,425)
Non-controlling interests (34,384) (33,503) - -
(151,048) (124,520) (11,904) (6,425)
----------- ---------- ---------- --------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2016
(All amount in thousands of US $, unless otherwise stated)
Non - Total
controlling equity
Attributable to owners of Company interests
------------------------------------------------------------------------------------------------------------- ------------ ------------
Issued Share Share Foreign Revaluation Capital Other Retained Total
capital premium application currency reserve redemption reserves earnings
money translation reserve
reserve
-------------------- -------- -------- ------------ ------------ ------------ ------------ --------- ---------- ---------- ------------ ----------
As at 1 April 2015 289 287,191 16,498 (129,431) 1,418 10,855 147,317 15,590 349,727 203,374 553,101
Refund of share
application
money - - (16,498) - - - - - (16,498) - (16,498)
Change in
non-controlling
interests without
change in
control - - - - - - (756) - (756) 4,366 3,610
Transfer of
economic interest
to non-controlling
interests(1) - - - - - - 5,819 5,819 (5,819) -
Equity-settled
share based
payment - - - - - - 47 - 47 - 47
Transfer of profit
to capital
redemption reserve - - - - - 5,190 (5,190) - - -
Net depreciation
transfer
for property,
plant and
equipment - - - - (33) - - 33 - - -
Transaction with
owners - - (16,498) - (33) 5,190 (709) 662 (11,388) (1,453) (12,841)
Loss for the year - - - - - - - (72,922) (72,922) (22,682) (95,604)
Other comprehensive
income
Items that will
never be
reclassified
to income statement
Re-measurement of
defined
benefit liability - - - - - - (114) - (114) - (114)
Income tax relating
to re-measurement
of defined benefit
liability - - - - - - 19 - 19 - 19
Items that are or
may be reclassified
subsequently to
income statement
Foreign currency
translation
differences - - - (17,721) - - - - (17,721) (10,691) (28,412)
Available-for-sale
financial
assets
- current year
(loss) / gain - - - - - - (131) - (131) 15 (116)
- reclassification
to profit
or loss - - - - - - 163 - 163 - 163
Income tax relating
to
available-for-sale
financial asset - - - - - - (311) - (311) (145) (456)
Total comprehensive
expenses
for the year - - - (17,721) - - (374) (72,922) (91,017) (33,503) (124,520)
-------- -------- ------------ ------------ ------------ ------------ --------- ---------- ---------- ------------ ------------
Balance as at 31
March 2016 289 287,191 - (147,152) 1,385 16,045 146,234 (56,670) 247,322 168,418 415,740
-------------------- -------- -------- ------------ ------------ ------------ ------------ --------- ---------- ---------- ------------ ------------
(See accompanying notes to the Consolidated and Company financial statements)
(1) The group entities have arrangements of sharing of profits with its non-controlling shareholders,
through which the non-controlling shareholders are entitled to a dividend of 0.01% of the face value of
the equity share capital held and the same is also reflected in the Consolidated income statement. However,
the non controlling interest disclosed in the Consolidated statement of changes in equity is calculated
in the proportion of the actual shareholding as at the reporting date.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2017
(All amount in thousands of US $, unless otherwise stated)
Non - Total
controlling equity
Attributable to owners of Company interests
--------------------------------------------------------------------------------------------------- ------------ ----------
Issued Share Foreign Revaluation Capital Other Retained Total
capital premium currency reserve redemption reserves earnings
translation reserve
reserve
------------------------------ -------- ------------ ------------ ------------ ------------ --------- ---------- ---------- ------------ ----------
As at 1 April 2016 289 287,191 (147,152) 1,385 16,045 146,234 (56,670) 247,322 168,418 415,740
Change in non-controlling
interests
without change in control
(refer
note 3) - - - - - (43,579) - (43,579) 53,127 9,548
Transfer of economic interest
to
non-controlling interests(1) - - - - - - 1,934 1,934 (1,934) -
Equity-settled share based
payment - - - - - 16 - 16 - 16
Net depreciation transfer for
property,
plant and equipment - - - (33) - - 33 - - -
Transaction with owners - - - (33) - (43,563) 1,967 (41,629) 51,193 9,564
Loss for the year - - - - - - (120,600) (120,600) (38,296) (158,896)
Other comprehensive income
Items that will never be
reclassified
to income statement
Re-measurement of defined
benefit
liability - - - - - 73 - 73 3 76
Income tax relating to
re-measurement
of defined benefit liability - - - - - (22) - (22) - (22)
Items that are or may be
reclassified
subsequently to income
statement
Foreign currency translation
differences - - 4,029 - - - - 4,029 4,017 8,046
Available-for-sale financial
assets
- current year (loss) / gain - - - - - (133) - (133) (108) (241)
- reclassification to profit
or
loss - - - - - (11) - (11) - (11)
Total comprehensive income /
(expenses)
for the year - - 4,029 - - (93) (120,600) (116,664) (34,384) (151,048)
-------- ------------ ------------ ------------ ------------ --------- ---------- ---------- ------------ ----------
Balance as at 31 March 2017 289 287,191 (143,123) 1,352 16,045 102,578 (175,303) 89,029 185,227 274,256
------------------------------ -------- ------------ ------------ ------------ ------------ --------- ---------- ---------- ------------ ----------
(See accompanying notes to the Consolidated and Company financial statements)
(1) The group entities have arrangements of sharing of profits with its non-controlling shareholders, through
which the non controlling shareholders are entitled to a dividend of 0.01% of the face value of the equity
share capital held and the same is also reflected in the Consolidated income statement. However, the non
controlling interest disclosed in the Consolidated Statement of changes in equity is calculated in the
proportion of the actual shareholding as at the reporting date.
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2017
(All amount in thousands of US $, unless otherwise stated)
Issued Share premium Share Foreign Other reserve Retained Total
capital application currency earnings Equity
money translation
reserve
------------------------------ -------- -------------------------- ------------ ------------ --------------------- ---------- ------------
As at 1 April 2015 289 287,191 16,498 4,524 122 (18,927) 289,697
Refund of share application
money - - (16,498) - - - (16,498)
Equity-settled share based
payment - - - - 47 47
-------- -------------------------- ------------ ------------ --------------------- ---------- ------------
Transaction with owners - - (16,498) - 47 - (16,451)
Loss for the year - - - - - (6,662) (6,662)
Other comprehensive income
Foreign currency translation
differences - - - 237 - - 237
-------- -------------------------- ------------ ------------ --------------------- ---------- ------------
Total comprehensive income /
(expense)
for the year - - - 237 - (6,662) (6,425)
-------- -------------------------- ------------ ------------ --------------------- ---------- ------------
Balance as at 31 March 2016 289 287,191 - 4,761 169 (25,589) 266,821
-------- -------------------------- ------------ ------------ --------------------- ---------- ------------
As at 1 April 2016 289 287,191 - 4,761 169 (25,589) 266,821
Equity-settled share based
payment - - - - 16 - 16
-------- -------------------------- ------------ ------------ --------------------- ---------- ------------
Transaction with owners - - - - 16 - 16
Loss for the year - - - - - (6,666) (6,666)
Other comprehensive income
Foreign currency translation
differences - - - (5,238) - - (5,238)
-------- -------------------------- ------------ ------------ --------------------- ---------- ------------
Total comprehensive expense
for
the year - - - (5,238) - (6,666) (11,904)
-------- -------------------------- ------------ ------------ --------------------- ---------- ------------
Balance as at 31 March 2017 289 287,191 - (477) 185 (32,255) 254,933
------------------------------ -------- -------------------------- ------------ ------------ --------------------- ---------- ------------
(See accompanying notes to Consolidated and Company financial
statements)
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 March
(All amount in thousands of US $, unless otherwise stated)
Consolidated Company
---------------------- -------------------
2017 2016 2017 2016
---------- ---------- -------- ---------
Cash inflow / (outflow) from operating
activities
Loss before tax (173,999) (109,668) (6,666) (6,662)
Adjustment
Depreciation and amortization 100,478 91,068 - -
Finance cost 361,252 317,817 6,112 8,212
Finance income (7,694) (15,773) - -
Provision and impairment of trade receivable,
PPE and other receivable 15,062 29,353 - 912
(Profit) / loss on sale of fixed assets,
net (230) 5 - -
Others (28) (182) 9 (65)
Change in
Trade receivables and unbilled revenue (107,925) (222,093) - -
Inventories 9,633 (6,438) - -
Other assets (130,042) (12,111) (17) 214
Trade payables and other liabilities 72,278 71,699 48 260
Provisions and employee benefit liability (188) 346 - -
Cash generated from / (used in) operating
activities 138,597 144,023 (514) 2,871
Taxes refund, net 5,836 80 - -
---------- ---------- -------- ---------
Net cash provided by / (used in) operating
activities 144,433 144,103 (514) 2,871
Cash inflow / (outflow) from investing
activities
Movement in restricted cash, net 23,281 50,487 - -
Purchase of property, plant and equipment
and other non-current assets (188,637) (58,518) - -
Proceeds from sale of property, plant and
equipment 4,110 2,605 - -
Purchase of financial assets (20,039) (4,910) - -
Proceeds from sale of financial assets 65 8,541 296 17,826
Dividend received 107 417 - -
Interest income received 11,893 14,099 - -
---------- ---------- -------- ---------
Net cash (used in) / provided by investing
activities (169,220) 12,721 296 17,826
Cash inflow / (outflow) from financing
activities
Proceeds from borrowings 713,642 501,317 2,958 52,843
Repayment of borrowings (219,914) (276,115) - (51,609)
Finance costs paid (483,091) (377,058) (2,785) (2,286)
Payment of derivative liabilities (9,523) (9,333) - -
Advance received for sale of investment 25,239 4,024 - -
Net proceeds from issue of shares and share
application money in subsidiary to non-controlling
interest 1,818 2,984 - -
Net refund of share application money - (16,498) - (16,498)
---------- ---------- -------- ---------
Net cash flow (used in) / provided by financing (17,
activities 28,171 (170,679) 173 550)
Effect of exchange rate changes 2,176 (10,854) (180) (3,018)
---------- ---------- -------- ---------
Net increase / (decrease) in cash and cash
equivalent 5,560 (24,709) (225) 129
Cash and cash equivalents at the beginning
of the year 16,024 40,733 1,194 1,065
---------- ---------- -------- ---------
Cash and cash equivalents at the end of
the year (refer note 5) 21,584 16,024 969 1,194
---------- ---------- -------- ---------
(See accompanying notes to the Consolidated and Company
financial statements)
NOTES TO CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS
for the year ended 31 March 2017
(All amount in thousands of US $, unless otherwise stated)
1. Corporate information
1.1. General information
KSK Power Ventur plc ('the Company' or 'KPVP' or 'KSK' or
'Parent'), a limited liability corporation, is the Group's parent
Company and is incorporated and domiciled in the Isle of Man. The
address of the Company's Registered Office, which is also principal
place of business, is Fort Anne, Douglas, Isle of Man, IM1 5PD. The
Company's equity shares are listed on the Standard List on the
official list of the London Stock Exchange.
1.2. Nature of operations
KSK Power Ventur plc, its subsidiaries and joint operations
(collectively referred to as 'the Group') are primarily engaged in
the development, ownership, operation and maintenance of private
sector power projects with multiple industrial consumers and
utilities in India.
KSK focused its strategy on the private sector power development
market, undertaking entire gamut of development, investment,
construction (for its own use), operation and maintenance of power
plant with supplies initially to heavy industrials operating in
India and now branching out to cater to the needs of utilities and
others in the wider Indian power sector.
The principal activities of the Group are described in note
9.
1.3. Statement of compliance /responsibility statement
a. The Consolidated and Company financial statements contained
in this document have been prepared in accordance with
International Financial Accounting Standard and its interpretations
as adopted by European Union ('EU') and the provisions of the Isle
of Man, Companies Act 1931-2004 applicable to companies reporting
under IFRS and gives a true and fair view of the assets,
liabilities, financial position and the profit or loss of the group
as required by Disclosure and Transparency Rules ("DTR")
4.2.4R;
b. the management report contained in this document includes a
fair review of the information required by the Financial Conduct
Authority's DTR 4.2.7R (being an indication of important events
that have occurred during the financial year and their impact on
the financial statements; and a description of the principal risks
and uncertainties);
c. this document includes a fair review of the information
required by DTR 4.2.8R (disclosure of related party transactions
and changes therein);
The financial statements were authorised for issue by the Board
of Directors on 26 July 2017.
1.4. Financial period
The Consolidated and Company financial statements cover the
period from 1 April 2016 to 31 March 2017, with comparative figures
from 1 April 2015 to 31 March 2016.
1.5. Basis of preparation
These Consolidated financial statements have been prepared on
the historical cost convention and on an accrual basis, except for
the following:
-- Derivative financial instruments that are measured at fair value;
-- Financial instruments that are designated as being at fair
value through profit or loss account upon initial recognition are
measured at fair value;
-- Available-for-sale financial assets that are measured at fair value; and
-- Liabilities for cash-settled shared-based payment arrangements
-- Net employee defined benefit (asset) / liability that is
measured based on actuarial valuation.
The financial statements of the Group and the Company have been
presented in United States Dollars ('US $'), which is the
presentation currency of the Company. All amounts have been
presented in thousands, unless specified otherwise.
Balances represent consolidated amounts for the Group, unless
otherwise stated. The Company's financial statement represents
separate financial statement of KPVP.
Going Concern:
These financial statements have been prepared on the going
concern basis which assumes the Group and the Company will have
sufficient funds to continue its operational existence for the
foreseeable future, covering at least twelve months from the date
of signing these financial statements. This is based on the Group's
assessment of the business, sectoral developments, underlying
economic environment as well as approach towards addressing the
business challenges faced by operating assets to achieve optimistic
solutions thereto. The Group is making cautious efforts to preserve
and maximize the economic value of the underlying power generation
assets and recognizes that dilution of equity interest at some of
these power plants could be the potential outcome and with support
from the project stakeholders at each of such assets it would be
able to address the requirements of Going Concern at each of the
same. However, the Group is exposed to a number of operational,
legal, financial, economic and political risks, including:
Capital structure
The Group is seeking additional equity financing and/or debt
restructuring in respect of the KSK Mahanadi and other key power
plant projects in order to stabilise the projects development and
the Groups financing and operating obligations. The Group is
currently pursuing a number of avenues in this regard and expects
positive outcomes during late 2017. It is anticipated by management
that a number of the financing facilities will be restructured
during the next 12 months and that the Group's proportion of equity
holdings in significant projects may be diluted as a result of
these initiatives. However there can be no certainty as to the
outcome of these negotiations or the impact on the finances of the
Group.
Financial
The Group requires funds for both short term operational needs
as well as for long term investment programs, mainly in
construction projects for its power plants. As at 31 March 2017,
the Group has net current liabilities of US $ 404,454 and is
dependent on a continuation of both short term and long term debt
financing facilities. A number of the facilities that are due to
expire at or before 31 March 2018 are in the process of being
extended and have a rollover clause in a number of cases, and the
Group may refinance and/or restructure certain short term
borrowings into long term borrowings and will also consider
alternative sources of financing, where applicable. The Directors
consider that facilities will remain available to the Group based
on current trading, current covenant compliance and ongoing
discussions with the Group's primary lending consortium regarding
future facilities and arrangements in respect of current
borrowings. During the year the Group breached certain debt service
covenant requirements in respect of loan facilities - the Group
remains in active discussions with its lenders with regard to the
provision of facilities.
Operational
The Group continues to generate cash flows from current
operations which are further expected to increase with improved PLF
in the existing 1200 MW KSK Mahanadi and Sai Wardha operations, and
incremental cash flows upon expected commissioning of another two
units of 600 MW each and also on account of reduction in coal
procurement costs with the new coal policy called 'SHAKTI'. Also in
Sai Wardha, with recent COMPAT order, the Group is confident of
reduction in overall coal price and thereby increases in operating
cash flow. These factors are key assumptions with regard to
management's forecasts and expectations.
Legal and claims
The Group is also involved in a number of on-going legal and
claim matters. These may impact on the timing of receipt and value
of receivables recognised in the financial statements. For example,
the Group has experienced delays and legal challenge to the
settlement of significant receivables, including c$220m recognized
in respect of change in law claim under PPA due to fuel input
considerations, which the Group has recognized in accordance with
the PPA, has obtained legal advice in respect of and considered the
recent ruling of Central Electrical Regulatory Commission and
Honorable Supreme Court of India in similarly placed power
projects, as such management consider the entire claim as fully
recoverable, and c$93m recognized in the period due to fuel supply
issues from Western Coalfields Limited and Coal India Limited,
wherein the Competition Appellate Tribunal and Honorable
Competition Commission of India have ruled in favour of the
Company. Notwithstanding these rulings the Group has not forecast
receipt of these amounts in the going concern cash flow analysis
prepared by management due to the uncertainty regarding timing of
receipt. In addition the Group is subject to a number of claims,
whilst the Group considers that it has a strong position of defense
in respect, these proceedings may result in outflows that are not
currently recognized. For further details refer to note 15 (b).
Political environment
Given the country and sector of operations the Group is exposed
to political uncertainties that may result in changes in government
policy which may materially affect the business plans, of the Group
and amounts recognised in the financial statements.
Commitments
The Group also has significant capital commitments at the
period-end of which a portion is due to be met during the next 12
months, primarily in respect of on-going plant construction
projects at KSK Mahanadi. However, the Group currently has also
significant committed undrawn borrowing facilities, subject to
certain conditions, amounting to approximately US $ 479,852 to meet
its long term investment programmes. The Group has already entered
in to Common Loan Agreement with the Lenders at KSK Mahanadi with
respect to cost overrun debt sanctioned of US $ 892,252 and the
remaining draw down of these funds of US $ 393,958 is not impacted
by the current restructure negotiations or breaches on financing
facilities. This will facilitate drawing the balance of the debt
depending upon the investment required for construction of project
and resultant surpluses of operational cash flows available to meet
Group obligations.
Conclusion
Nonetheless Group monitors the situation on an on-going basis
and plans alternative arrangements where possible. The outcome of
the above factors is subject to material uncertainty and may impact
on the timing of the strategic development of power plants, the
Groups proportional equity holdings in significant projects and the
going concern of the Group. However, the Directors continue to have
a reasonable expectation that the Company and Group are well placed
to manage their business risks and continue in operational
existence for the foreseeable future. Accordingly, the Directors
continue to adopt the going concern basis of accounting when
preparing these financial statements.
2. Changes in accounting policy and disclosure
The accounting policies adopted are consistent with those of the
previous financial year except for the adoption of new standards as
of 1 April 2016, noted below.
The Group has adopted the following new standards and amendments
to standards, including any consequential amendments to other
standards, with a date of initial application of 1 April 2016.
- IFRS 14 - Regulatory Deferral Accounts: IFRS 14 is an optional
standard that allows an entity, whose activities are subject to
rate-regulation, to continue applying most of its existing
accounting policies for regulatory deferral account balances upon
its first-time adoption of IFRS. Entities that adopt IFRS 14 must
present the regulatory deferral accounts as separate line items on
the statement of financial position and present movements in these
account balances as separate line items in the statement of profit
or loss and Other Comprehensive Income ('OCI'). The standard
requires disclosure of the nature of, and risks associated with,
the entity's rate-regulation and the effects of that
rate-regulation on its financial statements. IFRS 14 is effective
for annual periods beginning on or after 1 January 2016. Since the
Group is not subject to any rate regulation and is an existing IFRS
preparer, this standard would not apply.
- IFRS 11 - Accounting for acquisition of interest in Joint
Operations (Amendments): The amendments to IFRS 11 require that a
joint operator accounting for the acquisition of an interest in a
joint operation, in which the activity of the joint operation
constitutes a business, must apply the relevant IFRS 3 principles
for business combinations accounting. The amendments also clarify
that a previously held interest in a joint operation is not
re-measured on the acquisition of an additional interest in the
same joint operation while joint control is retained. In addition,
scope exclusion has been added to IFRS 11 to specify that the
amendments do not apply when the parties sharing joint control,
including the reporting entity, are under common control of the
same ultimate controlling party.
The amendments apply to both the acquisition of the initial
interest in a joint operation and the acquisition of any additional
interests in the same joint operation and are prospectively
effective for annual periods beginning on or after 1 January 2016,
with early adoption permitted. These amendments are not expected to
have any impact on the Group.
- IAS 16 & IAS 38 - Clarification of Acceptable Methods of
Depreciations and Amortisation (Amendments): The amendments clarify
the principle in IAS 16 and IAS 38 that revenue reflects a pattern
of economic benefits that are generated from operating a business
(of which the asset is part) rather than the economic benefits that
are consumed through use of the asset. As a result, a revenue-based
method cannot be used to depreciate property, plant and equipment
and may only be used in very limited circumstances to amortise
intangible assets. The amendments are effective prospectively for
annual periods beginning on or after 1 January 2016, with early
adoption permitted. These amendments do not have any impact to the
Group given that the Group has not used a revenue-based method to
depreciate its non-current assets.
- IAS 16 & IAS 41 - Agriculture: Bearer Plant (Amendments):
The amendments change the accounting requirements for biological
assets that meet the definition of bearer plants. Under the
amendments, biological assets that meet the definition of bearer
plants will no longer be within the scope of IAS 41. Instead, IAS
16 will apply. After initial recognition, bearer plants will be
measured under IAS 16 at accumulated cost (before maturity) and
using either the cost model or revaluation model (after maturity).
The amendments also require that produce that grows on bearer
plants will remain in the scope of IAS 41 measured at fair value
less costs to sell. For government grants related to bearer plants,
IAS 20 Accounting for Government Grants and Disclosure of
Government Assistance will apply. The amendments are
retrospectively effective for annual periods beginning on or after
1 January 2016, with early adoption permitted. These amendments do
not have any impact to the Group as the Group does not have any
bearer plants.
- IAS 27 - Equity method in Separate Financial Statements
(Amendments): The amendments will allow entities to use the equity
method to account for investments in subsidiaries, joint ventures
and associates in their separate financial statements. Entities
already applying IFRS and electing to change to the equity method
in its separate financial statements will have to apply that change
retrospectively. For first-time adopters of IFRS electing to use
the equity method in its separate financial statements, they will
be required to apply this method from the date of transition to
IFRS. The amendments are effective for annual periods beginning on
or after 1 January 2016, with early adoption permitted. These
amendments will not have any impact on the Group's consolidated
financial statements.
- IFRS 10, IFRS 12 and IAS 28 - Investment Entities: Applying
the Consolidation Exception (Amendments): The amendments address
issues that have arisen in applying the investment entities
exception under IFRS 10. The amendments to IFRS 10 clarify that the
exemption from presenting consolidated financial statements applies
to a parent entity that is a subsidiary of an investment entity,
when the investment entity measures all of its subsidiaries at fair
value.
Furthermore, the amendments to IFRS 10 clarify that only a
subsidiary of an investment entity that is not an investment entity
itself and that provides support services to the investment entity
is consolidated. All other subsidiaries of an investment entity are
measured at fair value. The amendments to IAS 28 allow the
investor, when applying the equity method, to retain the fair value
measurement applied by the investment entity associate or joint
venture to its interests in subsidiaries.
These amendments must be applied retrospectively and are
effective for annual periods beginning on or after 1 January 2016,
with early adoption permitted. These amendments are not expected to
have any impact on the Group.
- IAS 1 - Disclosure Initiative (Amendments): The amendments to
IAS 1 Presentation of Financial Statements clarify, rather than
significantly change, existing IAS 1 requirements. The amendments
clarify:
- The materiality requirements in IAS 1
- That specific line items in the statement(s) of profit or loss
and OCI and the statement of financial position may be
disaggregated
- That entities have flexibility as to the order in which they
present the notes to financial statements
- That the share of OCI of associates and joint ventures
accounted for using the equity method must be presented in
aggregate as a single line item, and classified between those items
that will or will not be subsequently reclassified to profit or
loss
Furthermore, the amendments clarify the requirements that apply
when additional subtotals are presented in the statement of
financial position and the statement(s) of profit or loss and OCI.
These amendments are effective for annual periods beginning on or
after 1 January 2016, with early adoption permitted. These
amendments are not expected to have any impact on the Group.
- Annual Improvements 2012-2014 Cycle: These improvements are
effective for annual periods beginning on or after 1 January 2016.
They include:
- IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations: Assets (or disposal groups) are generally disposed of
either through sale or distribution to owners. The amendment
clarifies that changing from one of these disposal methods to the
other would not be considered a new plan of disposal, rather it is
a continuation of the original plan. There is, therefore, no
interruption of the application of the requirements in IFRS 5. This
amendment must be applied prospectively.
- IFRS 7 Financial Instruments: Disclosures
Servicing contracts: The amendment clarifies that a servicing
contract that includes a fee can constitute continuing involvement
in a financial asset. An entity must assess the nature of the fee
and the arrangement against the guidance for continuing involvement
in IFRS 7 in order to assess whether the disclosures are required.
The assessment of which servicing contracts constitute continuing
involvement must be done retrospectively. However, the required
disclosures would not need to be provided for any period beginning
before the annual period in which the entity first applies the
amendments.
Applicability of the amendments to IFRS 7 to condensed interim
financial statements: The amendment clarifies that the offsetting
disclosure requirements do not apply to condensed interim financial
statements, unless such disclosures provide a significant update to
the information reported in the most recent annual report. This
amendment must be applied retrospectively.
- IAS 19 Employee Benefits: The amendment clarifies that market
depth of high quality corporate bonds is assessed based on the
currency in which the obligation is denominated, rather than the
country where the obligation is located. When there is no deep
market for high quality corporate bonds in that currency,
government bond rates must be used. This amendment must be applied
prospectively.
- IAS 34 Interim Financial Reporting: The amendment clarifies
that the required interim disclosures must either be in the interim
financial statements or incorporated by cross-reference between the
interim financial statements and wherever they are included within
the interim financial report (e.g., in the management commentary or
risk report). The other information within the interim financial
report must be available to users on the same terms as the interim
financial statements and at the same time. This amendment must be
applied retrospectively.
These amendments are not expected to have any impact on the
Group.
3. Acquisition and Dilution - change in non-controlling interest without change in control
Dilution in KSK Energy Ventures Limited
During the year ended 31 March 2017, 43,840,496 equity shares in
KSK Energy Ventures Limited ("KEVL") were sold to non - controlling
interest. Pursuant to this the economic interest of the Group in
KEVL has decreased from 68.17 percent to 57.83 percent resulting in
a 10.34 percent decrease in Group's controlling interest in
subsidiary without loss of control. The aforesaid transaction is
accounted as an equity transaction, and accordingly no gain or loss
is recognised in the consolidated income statement. The difference
of US $ 34,514, between the fair value of the net consideration
received US $ 7,702 and the amount by which the non-controlling
interest are adjusted US $ 42,216, is debited to 'Other reserve'
within consolidated statement of changes in equity and attributed
to the owners of the Company.
Forfeiture of share warrant
During the year ended 31 March 2015, the Group has issued
80,808,080 warrants of face value of Rs 10 (US $ 0.16) each in KSK
Energy Ventures Limited ('KEVL'), an Indian Listed subsidiary to
KSK Power Holdings Limited ("KPHL") with an option to apply for and
be allotted equivalent number of equity shares of the face value of
Rs 10 (US $ 0.16) each at a premium of Rs 89 (US $ 1.45) each on a
preferential basis.
During the year ended 31 March 2017, KPHL has not exercised the
right of conversion of balance 69,856,800 warrants resulting in
forfeiture of the same. The aforesaid transaction is accounted as
an equity transaction, and accordingly no gain or loss is
recognised in the consolidated income statement. An amount of US $
8,195 by which the non-controlling interest is adjusted and debited
to 'other reserve' within Consolidated statement of changes in
equity and attributed to the owners of the Company.
Acquisition in KSK Mahanadi Power Company Limited
During the year ended 31 March 2017, the Group has issued
additional 62,000,000 equity shares in KSK Mahanadi Power Company
Limited ("KMPCL") to KSK Energy Ventures Limited ("KEVL") and
97,360,000 equity shares to KSK Energy Company Private Limited
("KECPL") at a face value of Rs 10 (US $ 0.16) at par.
Pursuant to above, the economic interest of the Group in KMPCL
increased by 2.69 percent in a subsidiary without loss of control.
The aforesaid transaction is accounted as an equity transaction,
and no gain or loss is recognised in the consolidated income
statement. Pursuant to this an amount of US $ 454 by which the non
controlling interest is adjusted, is debited to 'other reserve'
within Consolidated statement of changes in equity and attributed
to the owners of the company.
Dilution of KSK Water Infrastructure Private Limited
During the period ended 31 March 2017, the Group has transferred
30,000,000 equity shares of Rs 10 (US $ 0.16) at par in KSK Water
Infrastructure Private Limited ("KWIPL") held by KSK Energy Company
Private Limited ("KECPL") to KSK Mahanadi Power Company Limited
("KMPCL")
Pursuant to above, the economic interest of the Group in KWIPL
decreased by 4.62 percent in subsidiary without loss of control.
The aforesaid transaction is accounted as an equity transaction,
and no gain or loss is recognised in the consolidated income
statement. Pursuant to this an amount of US $ 452 by which the
non-controlling interest is adjusted, is credited to 'other
reserve' within consolidated statement of changes in equity and
attributed to the owners of the company.
Dilution of KSK Wind Energy Halagali Benchi Private Limited
('KWEHBPL'), KSK Wind Power Sankonahatti Athni Private Limited
('KWPSAPL') and KSK Wind Energy Mothalli Haveri Private Limited
('KWEMHPL')
During the period ended 31 March 2017, the Group has transferred
2,563,254 equity shares of Rs 10 (US $ 0.16) at par in KWEHBPL,
2,544,485 equity shares of Rs 10 (US $ 0.16) at par in KWEMHPL,
2,544,481 equity shares of Rs 10 (US $ 0.16) at par in KWPSAPL held
by KSK Green Energy Pte Limited to KSK Electricity Financing India
Private Limited.
Pursuant to above, the economic interest of the Group in
KWEHBPL, KWEMHPL, KWPSAPL decreased by 31.83 percent each in
subsidiaries without loss of control. The aforesaid transaction is
accounted as an equity transaction, and no gain or loss is
recognised in the consolidated income statement. Pursuant to this
an amount of US $ 755 by which the non-controlling interest is
adjusted, is debited to 'other reserve' within consolidated
statement of changes in equity and attributed to the owners of the
company.
Dilution of KSK Wind Power Aminabhavi Chikodi Private Limited
('KWPACPL')
During the period ended 31 March 2017, the Group has transferred
773,254 equity shares of Rs 10 (US $ 0.16) at par in KWPACPL held
by KSK Green Energy Pte Limited to KSK Electricity Financing India
Private Limited
Pursuant to above, the economic interest of the Group in KWPACPL
decreased by 9.56 percent without loss of control. The aforesaid
transaction is accounted as an equity transaction, and no gain or
loss is recognised in the consolidated income statement. Pursuant
to this an amount of US $ 111 by which the non-controlling interest
is adjusted, is debited to 'other reserve' within consolidated
statement of changes in equity and attributed to the owners of the
company.
4. Investments and other financial assets
Consolidated Company
---------------- -----------------
2017 2016 2017 2016
------- ------- -------- -------
Current
Financial assets at fair value through
profit or loss
- held for trading 5,410 5,177 - -
Loans and receivables 152,846 44,446 87 -
158,256 49,623 87 -
------- ------- -------- -------
Non-current
Financial assets at fair value through
profit or loss
- Derivative assets 40,297 45,872 - -
Available-for-sale investments 17,970 17,938 - -
Deposit with banks 9,079 4,994 - -
Loans and receivables 34,382 30,523 - -
Loans to and receivables to Joint
Venture partner 1,533 1,501 - -
Loans to and receivable to subsidiaries - - 147,002 155,978
Investment in subsidiaries - - 226,888 226,842
------- ------- -------- -------
103,261 100,828 373,890 382,820
------- ------- -------- -------
Total 261,517 150,451 373,977 382,820
---------------------------------------- ------- ------- -------- -------
Financial assets at fair value through profit or loss (held for
trading)
The Group has invested into short-term mutual fund units and
equity securities in various companies being quoted on Indian stock
market which are designated as held for trading. The fair value of
the mutual fund units and equity securities are determined by
reference to published data.
Available-for-sale investment
The Group has investments in listed equity securities of various
companies being quoted on the Indian and London stock markets
respectively. The fair value of the quoted equity shares are
determined by reference to published data. The Group also holds
non-controlling interest (1%-25%) in unlisted entities which are in
the business of power generation and allied projects. The Group
designated these quoted and unquoted equity shares as
available-for-sale investment in accordance with the documented
investment strategy of the Group to manage and evaluate performance
of the equity shares on fair value basis. The fair value of
unquoted ordinary shares has been estimated using a relative
valuation using price earnings ratio / book value method. The
valuation requires management to make certain assumptions about the
inputs including size and liquidity.
Derivative assets
Derivative assets include currency option contracts and currency
forward contracts carried at fair value. Fair value of currency
options is determined by an independent valuer, which is the
counterparty in the contracts. Fair value of currency forwards is
determined by mark to market value of the forward on the date of
the financial position.
Loans and receivables
This primarily includes inter-corporate deposits of US $ 21,391
(2016: US $ 9,313), deferred loan origination costs US $ Nil (2016:
US $ 2,496), security deposit US $ 60,610 (2016: US $ 54,925),
advance for investments US $ 1,637 (2016: US $ 1,603) and other
financial assets US $ 103,590 (2016: US $ 6,632).
Investment in subsidiaries
Investment primarily includes unquoted investments in
subsidiaries in the Company financial statements. The Company has
invested in 139,244,601 (2016: 139,244,601) equity shares in KEL,
12,000 (2016: 12,000) equity shares in KASL, 84,146,843 (2016:
84,146,843) equity shares in KGEPL and 1 (2016: 1) equity share in
KSVP totalling to US $ 226,888 (2016: US $ 226,842).
The Company is carrying investment and advances to subsidiaries
amounting to US $ 291,270 (net of US $ 82,620 of borrowings from
subsidiaries) in the separate financial statement at cost. Even
though the consolidated equity of the Group is US $ 89,029 and the
market capitalisation is c US $120,000, Management believes there
are no permanent diminutions in the investment value because the
underlying power generating assets have significant inbuilt
intrinsic value and long term economic value. Also as against the
net carrying value of US $ 291,270 investment by the Company, the
aggregate equity investment made across the various power project
SPVs is significantly in excess of the carrying value. Therefore,
management believes that the lower consolidated equity vis a vis
investment value is only a temporary event, and reflects the
commissioning and current operational challenges at the project
SPVs as a result of the power sector in India as a whole. This in
no way interferes with the long term value held in the strategic
assets via the investment in subsidiaries, which are held for a
long term purpose to generate yield returns over the economic life
of the asset. Therefore management has concluded that no impairment
in the carrying value of the investment in subsidiaries at cost in
the separate financial statement is necessary at the current
time.
Investment and other financial assets amounting to US $ 204,706
(2016: US $ 99,593) for the Group are subject to security
restrictions (refer note 7).
Impairment of financial assets
During the year ended 31 March 2017, the Group's
available-for-sale financial asset of US $ Nil (2016: US $ 170) and
loans and receivable of US $ 308 (2016: US $ 16,481) were
collectively impaired.
During the year ended 31 March 2017, the Company's loans and
receivable of US $Nil (2016: US $ 912) were collectively impaired
and written off.
5. Cash and short-term deposits
Cash and short-term deposits comprise of the following:
Consolidated Company
---------------- -----------
2017 2016 2017 2016
------- ------- ---- -----
Cash at banks and on hand 21,565 16,022 969 1,194
Short-term deposits 83,514 106,778 - -
------- ------- ---- -----
Total 105,079 122,800 969 1,194
-------------------------- ------- ------- ---- -----
Short-term deposits are made for varying periods, depending on
the immediate cash requirements of the Group.
The Group has pledged its short-term deposits amounting US $
83,457 (2016: US $ 106,739) in order to fulfil collateral
requirements (refer note 7).
For the purpose of cash flow statement, cash and cash equivalent
comprise:
Consolidated Company
--------------------- -------------
2017 2016 2017 2016
--------- ---------- ----- ------
Cash at banks and on hand 21,565 16,022 969 1,194
Short-term deposits 83,514 106,778 - -
--------- ---------- ----- ------
Total 105,079 122,800 969 1,194
Less: Restricted cash(1) (83,495) (106,776) - -
--------- ---------- ----- ------
Cash and cash equivalent 21,584 16,024 969 1,194
--------------------------- --------- ---------- ----- ------
(1) Include deposits pledged for prevailing credit facilities
from banks and deposits with maturity term of three months to
twelve months (refer note 7).
6. Issued share capital
Share capital
The Company presently has only one class of ordinary shares. For
all matters submitted to vote in the shareholders' meeting, every
holder of ordinary shares, as reflected in the records of the
Company on the date of the shareholders' meeting, has one vote in
respect of each share held. All shares are equally eligible to
receive dividends and the repayment of capital in the event of
liquidation of the Company.
The Company has an authorised share capital of 500,000,000
equity shares (2016: 500,000,000) at par value of GBP 0.001 (US $
0.0013) per equity share amounting to US $ 650. The issued and
fully paid up number of shares of the Company is 175,308,600 (2016:
175,308,600). During the year Company has not issued/ bought back
any ordinary share.
Share application money represents amount received from
investors/parents pending allotment of ordinary shares.
Reserves
Share premium represents the amount received by the Group over
and above the par value of shares issued. Any transaction costs
associated with the issuing of shares are deducted from share
premium, net of any related income tax consequences. Revaluation
reserve comprises gains and losses due to the revaluation of
previously held interest of the assets acquired in a business
combination.
Foreign currency translation reserve is used to record the
exchange difference arising from the translation of the financial
statements of the Group entities and the same is not
distributable.
Capital redemption reserve represents statutory reserve required
to be maintained under local law of India on account of redemption
of capital. The reserve is credited equivalent to amount of capital
redeemed by debiting retained earnings and the same is not
distributable.
Other reserve represents the difference between the
consideration paid and the adjustment to net assets on change of
controlling interest, without change in control and the excess of
the fair value of share issued in business combination over the par
value of such shares. Any transaction costs associated with the
issuing of shares by the subsidiaries are deducted from other
reserves, net of any related income tax consequences. Further, it
also includes the loss/gain on fair valuation of available-for-sale
financial instruments and re-measurement of defined benefit
liability net of taxes and the same is not distributable.
Retained earnings mainly represent all current and prior year
results as disclosed in the consolidated income statement and
consolidated other comprehensive income less dividend
distribution.
7. Loans and borrowings
The loans and borrowings comprise of the following:
Interest rate Final Consolidated Company
(range %) maturity
------------- ----------- ----------------------- --------------------
2017 2016 2017 2016
------------- ----------- ----------- ---------- -------- --------
Long-term "project finance" 3.51 to
loans 19.75 April-38 3,342,527 2,793,569 - -
0.00 to
Short-term loans 26.00 March-20 142,953 158,762 83,921 80,798
1.53 to
Buyers' credit facility 4.17 March-18 81,238 138,614 35,000 35,000
Cash credit and other 10.90 to
working capital facilities 17.50 March-18 241,918 194,255 - -
Redeemable preference
shares 0.01 January-29 5,940 5,817 - -
0.01 to
Debentures 21.00 March-25 51,256 32,785 - -
----------- ---------- -------- --------
Total 3,865,832 3,323,802 118,921 115,798
------------------------------ ------------- ----------- ----------- ---------- -------- --------
The interest-bearing loans and borrowings mature as follows:
Consolidated Company
--------------------- ----------------
2017 2016 2017 2016
--------- ---------- ------- -------
Current liabilities
Amounts falling due within one year 598,827 623,600 118,921 115,798
Non-current liabilities
Amounts falling due after more than one
year but not more than five years 1,208,631 925,489 - -
Amounts falling due in more than five years 2,058,374 1,774,713 - -
--------- ---------- ------- -------
Total 3,865,832 3,323,802 118,921 115,798
-------------------------------------------- --------- ---------- ------- -------
Total debt of US $ 3,865,832 (2016: US $ 3,323,802)
comprised:
-- Long-term "project finance" loans of the Group amounting US
$3,342,527 (2016: US $ 2,793,569) is fully secured on the property,
plant and equipment and other assets of subsidiaries and joint
operations that operate power stations, allied services and by a
pledge over the promoter's shareholding in equity and preference
capital of some of the subsidiaries and joint operations and
corporate guarantee provided by the Company.
-- The short term loans taken by the Group are secured by the
corporate guarantee provided by the Company, pledge of fixed
deposits of the Group and by pledge of shares held in the
respective entities.
-- Buyer's credit facility is secured against property, plant
and equipment and other assets on pari-passu basis, pledge of fixed
deposits and corporate guarantee of KEVL.
-- A number of the facilities that are due to expire at 31 March
2018 are in the process of being extended and have a rollover
clause in a number of cases.
-- Cash credit and other working capital facilities are fully
secured against property, plant and equipment and other assets on
pari-passu basis with other lenders of the respective entities
availing the loan facilities.
-- Redeemable preference shares are due for repayment within
next 12 years.
-- Debentures are secured on the property, plant and equipment
and other assets of subsidiaries that operate power stations,
allied services and by a pledge over the promoter's shareholding in
equity capital of some of the subsidiaries.
Long-term "project finance" loan contains certain restrictive
covenants for the benefit of the facility providers and primarily
requires the Group to maintain specified levels of certain
financial ratios and operating results. The terms of the other
borrowings arrangements also contain certain restrictive covenants
primarily requiring the Group to maintain certain financial ratios.
As of 31 March 2017, the Group has complied with the relevant
significant covenants, while there are few financial ratios which
are not met and management is in discussion with the lenders for
addressing the same. However, these do not have any significant
impact on the Group.
The lenders are evaluating the strategic debt restructuring
('SDR') option; this will involve debt / equity swap or new equity
investment in respect of SWPGL and VSLPPL.
As at 31 March 2017, the Group has available US $ 479,852 of
undrawn long term committed borrowing facilities.
The fair value of borrowings at 31 March 2017 was US $ 3,865,832
(2016: US $ 3,323,802). The fair values have been calculated by
discounting cash flows at prevailing interest rates.
8. Other financial liabilities
2017 2016
----------------------------------- ------ ------
Current
Option premium payable 7,248 5,469
Foreign exchange forward contracts 388 629
------ ------
7,636 6,098
------ ------
Non-Current
Option premium payable 12,040 17,065
Interest rate swaps 1,775 6,174
------ ------
13,815 23,239
------ ------
Total 21,451 29,337
------------------------------------- ------ ------
9. Segment information
The Group has adopted the "management approach" in identifying
the operating segments as outlined in IFRS 8. Management has
analysed the information that the chief operating decision maker
reviews and concluded on the segment disclosure.
For management purposes, the Group is organised into business
units based on their services and has two reportable operating
segments as follows:
-- Power generating activities and
-- Project development activities
Management monitors the operating results of its business units
separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
evaluated based on operating profit or loss which in certain
respects, as explained in the table below, is measured differently
from operating profit or loss in the Consolidated financial
statements. Group financing (including finance costs and finance
income) and income taxes are managed on a Group basis and are not
allocated to operating segments. There is only one geographical
segment as all the operations and business is carried out in
India.
2017 Project Power generating Reconciling Consolidated
development activities / Elimination
activities activities
--------------------------------- ------------- ----------------- --------------- -------------
Revenue
External customers 281 590,977 - 591,258
Inter-segment 2,674 - (2,674) -
Total revenue 2,955 590,977 (2,674) 591,258
------------- ----------------- --------------- -------------
Segment operating results 1,469 178,500 - 179,969
Unallocated operating expenses,
net . (1,418)
Finance costs (360,244)
Finance income 7,694
-------------
Loss before tax (173,999)
Tax income 15,103
-------------
Loss after tax (158,896)
Segment assets 5,084 4,634,084 (4,616) 4,634,552
Unallocated assets 300,745
Total assets 4,935,297
-------------
Segment liabilities 655 513,180 (4,616) 509,219
Unallocated liabilities 4,151,822
Total liabilities 4,661,041
-------------
Other segment information
Depreciation and amortisation 38 100,398 42 100,478
Capital expenditure 1 407,575 - 407,576
--------------------------------- ------------- ----------------- --------------- -------------
2016 Project Power generating Reconciling Consolidated
development activities / Elimination
activities activities
--------------------------------- ------------- ----------------- --------------- -------------
Revenue
External customers 33 674,514 - 674,547
Inter-segment 3,293 - (3,293) -
Total revenue 3,326 674,514 (3,293) 674,547
------------- ----------------- --------------- -------------
Segment operating results 738 161,362 880 162,980
Unallocated operating expenses,
net (2,514)
Finance costs (296,470)
Finance income 26,336
-------------
Loss before tax (109,668)
Tax income 14,064
-------------
Loss after tax (95,604)
Segment assets 18,396 4,057,522 (14,031) 4,061,887
Unallocated assets 282,118
-------------
Total assets 4,344,005
-------------
Segment liabilities 2,786 394,420 (14,031) 383,175
Unallocated liabilities 3,545,090
-------------
Total liabilities 3,928,265
-------------
Other segment information
Depreciation and amortisation 77 90,913 78 91,068
Capital expenditure 4 193,275 31 193,310
--------------------------------- ------------- ----------------- --------------- -------------
Notes to segment reporting:
(a) Inter-segment revenues are eliminated on consolidation.
(b) Profit / (loss) for each operating segment does not include
finance income and finance costs of US $ 7,694
and US $ 360,244 respectively (2016: US $ 26,336 and US $ 296,470 respectively).
(c) Segment assets do not include deferred tax asset of US $
167,951 (2016: US $ 141,327), financial assets and other
investments US $ 103,144 (2016: US $ 99,923), short-term deposits
with bank and cash US $ 7,163 (2016: US $ 8,551), and corporate
assets US $ 22,487 (2016: US $ 32,317).
(d) Segment liabilities do not include deferred tax US $ 45,429
(2016: US $ 37,596), current tax payable US $ 1,658 (2016: US $
1,243), interest-bearing current and non-current borrowings US $
3,865,832 (2016: US $ 3,323,802), derivative liabilities US $
21,451(2016: US $ 29,337) and corporate liabilities US $ 217,452
(2016: US $ 153,112).
(e) The Company operates in one business and geographic segment.
Consequently no segment disclosures of the Company are
presented.
(f) Three customers in the power generating segment contributing
revenues of US $ 461,763 accounted for 77.75% (2016: Three
customers in the power generating segment contributing revenues of
US $ 473,844 accounted for 70.02% ) of the total segment
revenue.
10. Other operating income
Other operating income comprises:
Consolidated
2017 2016
Income from management fees 94 226
Claims received / receivable(1) 94,805 893
Deferred revenue amortisation 117 115
Gain on disposal of property, plant and equipment,
net 225 -
Other operating income 426 441
------- -----
Total 95,667 1,675
---------------------------------------------------- ------- -----
(1) Claims received includes an amount of US $ 90,173 (2016: US
$ Nil) relating to quality and price claim receivable from a Coal
supplier (refer note 15 (b) (x)).
11. Finance costs
Finance costs comprise:
Consolidated Company
---------------- -------------------------
2017 2016 2017 2016
------- ------- ----- ------------------
Interest expenses on loans and borrowings
(1) 327,516 268,611 1,080 1,065
Other finance costs 21,376 16,577 1,737 1,576
Impairment of financial assets (2) - 170 - -
Net loss on financial instrument
at fair value through profit or
loss (3) 7,308 8,822 - -
Foreign exchange loss, net 2,105 - 3,114 2,333
Net loss on held for trading financial
assets
on disposal - 2 - -
on re-measurement - 6 - -
Unwinding of discounts 1,939 2,282 - -
Total 360,244 296,470 5,931 4,974
------------------------------------------ ------- ------- ----- ------------------
(1) Borrowing cost amounting to US $ 157,720 (2016: US $
154,737) is capitalised during the year to property, plant and
equipment at an effective interest rate of 14.80% (2016:
15.25%).
(2) Impairment of financial assets relates to available-for-sale
financial asset of US $ Nil (2016: US $ 170).
(3) Net loss on financial instrument at fair value through
profit or loss above relates to foreign exchange forward contracts,
currency options and interest rate swap that did not qualify for
hedge accounting.
12. Finance income
The finance income comprises:
2017 2016
----------------------------------- ----- -------------------
Interest income
bank deposits 4,511 11,508
loans and receivables and trade
receivable 1,584 2,044
Dividend income 203 510
Net gain on held for trading
financial assets
on disposal 30 -
on re-measurement 23 -
Unwinding of discount on security
deposits 1,332 1,704
Foreign exchange gain, net - 10,563
Reclassification adjustment in
respect of available-for- sale
instrument disposed 11 7
------------------------------------- ----- -------------------
Total 7,694 26,336
------------------------------------- ----- -------------------
13. Tax income / (expense)
The major components of income tax for the year ended 31 March
2017 and 31 March 2016 are:
2017 2016
------ --------
Current tax (932) (1,392)
Deferred tax 16,035 15,456
------ --------
Tax income reported in the income statement 15,103 14,064
-------------------------------------------- ------ --------
14. Related party transactions
Name of the related party Nature of relationship
------------------------------------- -----------------------
K&S Consulting Group Private Limited Group ultimate parent
(GUP)
Sayi Power Energy Limited Step-up holding
Sayi Energy Ventur Limited Parent
------------------------------------- -----------------------
Key management personnel and their relatives (KMP):
Name of the KMP Nature of relationship
------------------ -----------------------
T L Sankar Chairman
S Kishore Executive Director
K A Sastry Executive Director
S R Iyer Director
S R Iyer
Vladimir Dlouhy Director
Abhay M Nalawade Director
Keith N Henry Director
K V Krishnamurthy Director of parent
------------------ -----------------------
The table below set out transactions with related parties that
occurred in the normal course of trading.
Particulars Consolidated Company
------------------- ------------------------------------------------------ ----------------------------------------------------------
2017 2016 2017 2016
------------------- -------------------------- ---------------------------- ----------------------------
Joint Parent KMP Joint Parent KMP Subsidiaries Parent KMP Subsidiaries Parent KMP
operations / GUP operations / GUP / GUP / GUP
------------------- ----------- ------- ---- ----------- ------- ---- ------------- ------- ---- ------------- ------- ----
Transactions(1,2)
Corporate support
services fees 33 - - 33 - - - - - - - -
Interest income 523 - - 515 - - - - - - - -
Inter-corporate
deposits and
loans given - - - 901 19 - 108 - - 4,258 9 -
Inter-corporate
deposits and
loans refunded - - - 447 164 - 489 - - 17,633 35 -
Loans taken 458 12 - 272 430 - 1,926 12 - 17,152 27 -
Repayment of
loan taken 114 10 - - 10 - 86 10 - 993 10 -
Refund of share
application
money - - - - 16,498 - - - - - 16,498 -
Equity-settled
share based
payment - - 16 - - 47 - - 16 - - 47
Managerial
remuneration(3) - - 665 - - 702 - - 343 - - 371
Balances(1,2)
Interest
receivable 4,780 - - 4,153 - - - - - - - -
Loans and inter
corporate
deposits
receivable 1,533 802 - 1,501 784 - 147,002 - - 155,978 - -
Loans payable 377 583 - 269 412 - 82,620 176 - 80,785 13 -
Other receivable - - - 9 - - - - - - - -
Other payable 2,785 - - 2,408 165 - - - - - 165 -
Guarantees given - - - 135 - - 416,031 - - 465,202 - -
Managerial
remuneration
payable(3) - - 98 - - 108 - - 74 - - 87
------------------- ----------- ------- ---- ----------- ------- ---- ------------- ------- ---- ------------- ------- ----
(1) The transactions with related parties are made at terms
equivalent to those that prevail in arm's length transactions.
Outstanding balances at the period end are unsecured,
interest-bearing in case of loans and inter-corporate deposits and
non-interest bearing in case of other loans and advances and
settlement occurs in cash. For the year ended 31 March 2017, the
Group has recorded US $ 28 as impairment of receivables relating to
amounts owed by related parties (2016: US $ 14,096). This
assessment is undertaken each financial period through examining
the financial position of the related party and the market in which
the related party operates.
(2) The difference in the movement between the opening
outstanding balances, transactions during the year and closing
outstanding balances is on account of exchange adjustments, impact
of business combination, provision / write off and conversion into
equity.
(3) Remuneration is net of share based payments and accrual
towards Gratuity, a defined benefit plan, which is managed for the
Group as a whole. However, the annual accrual of this liability
towards key management personnel is not expected to be significant.
There are no other long term benefits and termination benefits
which are payable to the key management personnel.
15. Commitments and contingencies
a. Capital commitments
As at 31 March 2017, the Group is committed to purchase
property, plant and equipment for US $ 1,247,291 (2016: US $
1,467,098).
b. Legal and other claim
As a part of the environment and activities of the Group, the
Group is exposed to a number of litigation and claim matters which
may significantly impact receivables or payables. No significant
developments have occurred in respect of these matters during the
year except disclosed below.
i. SWPGL had filed a claim against Maharashtra State Electricity
Distribution Company Limited (MSEDCL) towards recovery of the
amount withheld against supply of energy under Power Purchase
Agreement (including penalty on such amount) amounting to US $
11,008 (2016: US $ 11,008). The facility required for generation of
an agreed quantum of power was not ready as per an agreed schedule
on account of unexpected factors beyond the control of the Group,
the Group proposed to MSEDCL an arrangement to secure the energy
from alternate supplies for the short quantity required to meet the
obligation under the power purchase agreement. MSEDCL accepted the
proposal and also confirmed that the energy supplied from alternate
sources will also be subject to the tariff agreed under the power
purchase agreement. However, after initial payments for the period
April to June 2010, starting July 2010 to October 2010, MSEDCL did
not settle the entire dues billed and the certain amounts were
withheld without any explanation. The Group contended before
Maharashtra Electricity Regulatory Commission (MERC) that since the
energy supplied and billed was as per the terms agreed and the
similar bills of earlier months were paid by MSEDCL, there is no
cause to withhold the payments. However, MERC has dismissed the
petition. The Group has filed an appeal before Appellate Tribunal
for Electricity (APTEL) against the order of MERC and APTEL also
rejected the appeal. The Group has filed an appeal before
Honourable Supreme Court of India. During the year ended 31 March
2017 the group received an unfavorable ruling on a claim against a
state body MSEDCL as it was concluded the claims if allowed were
against public interest and accordingly group has impaired and
written off the entire claim amount.
ii. VSLPPL has receivables of US $ 7,952 (2016: US $ 7,787) from
its consumers representing taxes including royalty, cess on clean
energy, taxes on input fuel as well as double adjustments for the
security deposit, transmission and SLDC charges and take or pay
obligation which are disputed by the consumers. In addition, the
customers have also raised demand towards supply or pay obligation
which are disputed by the Group. The Group has an amount of US $
6,508 access from such customers as redeemable preference and
equity capital available for necessary setoffs. Further, the Group
contends that not only it has fulfilled the contractually
guaranteed supplies but also the amounts claimed are as per the
terms of the power purchase agreements. Aggrieved by the order of
Arbitrator, civil and high court, the Group has preferred an appeal
in Honourable Supreme Court. Pending outcome of the same, the Group
based on the opinion of legal counsel believes that the final
determination of the above dispute would be in favour of the Group
and there would be no material impact on the financial
statements.
iii. The captive customers of the SWPGL has deducted from the
sales invoices and paid an amount of US$ 9,300 towards Cross
Subsidy Surcharge ('CSS') levied by MSEDCL for the financial year
2012-13 before ascertaining the captive status of the plant at the
end of financial year which was against the express provisions of
the Electricity Act 2003 read with the Electricity Rules, 2005.
MERC asked SWPGL to pay CSS on ground of non-fulfilment of criteria
of 51% supply to captive users as per Rule 3 of the Electricity
Rules 2005. Aggrieved by the said order of the MERC, SWPGL has
filed an appeal before the APTEL on the ground that the
non-fulfilment of captive criteria by the SWPGL was attributed to
the delay caused by MSEDCL in granting open access to captive
customers. APTEL also rejected the appeal, aggrieved by this the
Group has filed petition with Honourable Supreme Court of India.
Pending adjudication of the same, the Group believes that there is
a good chance of succeeding and hence no adjustment has been made
in the consolidated financial statements. Pending final
adjudication of the matter the Group has accrued necessary
provision on a prudent basis.
iv. KSK Mahanadi, the Group's largest thermal power generation
plant with two units fully operational and balance units in various
stages of construction and commissioning is engaged in the
generation and supply of power to four state utilities of Andhra
Pradesh, Telangana, Tamil Nadu and Uttar Pradesh under Case 1
competitive bid Power Purchase Agreement (PPA). The respective PPAs
in addition to the agreed tariff payable for the power supplied
contains specific provisions providing for tariff adjustment
payment to the generator on account of Change in law. The Change in
law provision essentially provides reimbursement mechanism for all
additional recurring or non-recurring expenditure incurred by the
Generator towards new costs levied / incurred post the bidding
point. These claims under the PPA cover both (a) Claim on account
of various statutory duties, levies and cess levied by Central or
State Governments or its instrumentalities; and (b) linkage coal
shortfall compensation with respective to Presidential Directive
and Ministry of Power Notification to all Electricity Regulators in
India. KSK Mahanadi has made claims pursuant to the above PPA
provisions in excess of US $ 290,750, wherein claim pertaining to
taxes amounts to US $ 81,287 and claim on account of short supply
of coal pursuant to the Presidential Directive amounts to US $
209,463. However, notwithstanding its eligibility for the full
claim as per the PPA, keeping in view the regulatory commitments by
the Government instrumentalities, the necessary legal and
administrative process that KSK Mahanadi has to pursue, on its
internal evaluation of the facts and circumstances of the case on a
prudent basis, KSK Mahanadi has recognised a portion of the claim
aggregating to US $ 220,934 in the books of accounts until date,
wherein US $ 77,472 pertains to the current year. KSK Mahanadi has
in its notices to the utilities submitted that it qualifies for the
composite scheme guidelines and hence Central Electrical Regulatory
Commission (CERC) will be the relevant appropriate authority to
adjudicate the matter. While in the earlier year, the claims were
to be determined by the State Regulators, pursuant to a recent
ruling by the Appellate Tribunal of Electricity (APTEL) with
respect to multiple power producers, the jurisdiction of CERC has
been reaffirmed. Based on the bid guidelines, the PPA provisions
and the legal advice that KSK Mahanadi has obtained, Group has made
necessary amendments in its claim petitions and filed before CERC.
Based on the legal advice and recent ruling of Honourable Supreme
Court of India in similarly placed power project, KSK Mahanadi is
confident that the entire claim amount is receivable.
v. KSK Mahanadi has levied capacity charges and transmission
charges to AP Discoms for the period from 16 June 2013 to 13 August
2013 amounting to US $ 13,463 (2016: US $ 13,183), on account of
delayed fulfilment of obligation under the PPA. AP Discoms have
rejected those claims and made the counter claim of US $ 3,637
(2016: US $ 3,562) for failure to furnish advance final written
notice of commencement of supply of power as per the provision of
PPA. The Group has preferred an appeal before APERC & TSERC for
refund of amount collected by Discoms by encashment of bank
guarantee. The Group's contention is that since the Discoms have
failed to fulfil the obligation as per PPA, there is default on
part of Discoms and the counter claim by Discoms is merely to
negate the effect of KSK Mahanadi claim of capacity charges.
Pending adjudication of the case, the Group believes that there is
a good chance of succeeding before the regulatory commissions and
hence no adjustment has been made in the consolidated financial
statements.
vi. The Company had made investment of US $ 16,184 (2016: US $
15,848) in Athena Projects Private Limited ('APPL') for acquisition
of 25% stake. APPL in turn holds substantial investment in Teesta
III hydro project. On 16.07.2009, the parties entered into a MOU
providing for transfer of interest in 68,400,000 shares of Teesta
III in favour of KSK Energy Company Private Limited ('KECPL'). The
arrangement envisaged APPL to complete certain corporate actions.
Thereafter, as a final arrangement a share sale and purchase
agreement dated 5 April 2010 was executed between KECPL and APPL
promoters that provided for acquisition of entire shares of US $
16,184 (2016: US $ 15,848) in one year's time. Upon same being not
honoured KECPL filed the petition with National Company Law
Tribunal ('NCLT'), Principal Bench, New Delhi which is currently
pending. The aforesaid is the significant matter of minority
protection and management believe that they have the good grounds
for the favourable disposal of the case. Hence the Group continue
to carry the investment in APPL at cost.
vii. The Group had entered into coal supply agreement with Goa
Industrial Development Corporation (GIDC) for sourcing coal from
the identified coal block i.e., Garepelma-III coal block. However,
pursuant to the Honourable Supreme Court Orders during August and
September 2014, Garepelma-III was de-allocated from GIDC. GIDC has
kept the group notified that is still pursuing with the Government
for allocation of this mine under the new coal statute and also has
filed a legal case before Honourable High Court of Delhi wherein
interim relief is granted in favor of GIDC. At the same time the
initial development of the Garepelma-III block was entrusted to
Group by GIDC, wherein the Group has incurred all the cost relating
to the development of mine. Government of India has promulgated the
Coal Mines (Special Provisions) Ordinance, which provides for
reimbursement of cost incurred towards land and mine infrastructure
by new allottee. Accordingly GIDC has made the claim for US $
40,844 for settlement before Nominated Authority appointed under
the Ordinance by Ministry of Coal. During the year end, Government
of India, Ministry of Coal has directed to pay towards cost of
compensation for geological report to all the prior allottee and
accordingly the Group has received US $ 4,624. Pending final
adjudication of the case by Honourable High Court of Delhi or
pending final settlement of the claim by the Nominated Authority,
the management believes that the entire amount incurred by the
Group is recoverable and accordingly the balance claim of US $
36,220 has been reclassified under other receivable.
viii. Other non-current assets include an amount of US $ 8,934
(2016: US $ 8,749) relating to Central Excise receivable from the
excise departments by SWPGL. SWPGL is registered as SEZ unit. A
unit in SEZ is allowed to import goods (purchase from local market
is also treated as import) without payment of Duty for the purpose
of its authorised operations. The exemption from the payment of
duties is provided under Section 26 of the SEZ Act, 2005. The
excise duty refund claims were rejected by the department stating
that there are no provisions of refund under the SEZ Act. The
Company has filed an appeal with the CESTAT where in the CESTAT and
the Large bench has mentioned that in respect of rebate on goods
supplied from DTA to SEZ within India, the appeal would not lie to
Appellate Tribunal under clause (b) of provision of Section 35(1)
of Central Excise Act, however the Group has liberty to file
revision application before Revisionary Authority, Government of
India. Accordingly, the Company has filed a revisionary petition
with Ministry of Finance, Department of Revenue. The Group is
confident to receive the refund.
ix. The Group has received claims for US $ 9,580 (2016: US $
9,807) from Joint Director General of Foreign Trade (DGFT) towards
the recovery of the duty drawbacks, earlier refunded. The Group had
earlier made claims for the refund of the duties paid on the
machinery and other items purchased for the construction of the
power projects under the scheme of deemed export benefit, which
were accepted and refunds were granted. The communications from the
DGFT regarding the recovery of the duties paid are based on the
interpretations by the Policy Interpretation Committee held on 15
March 2011. The Group contends that the above change in
interpretation requires an amendment to the foreign trade policy to
be legally enforceable in law. Since, no such amendment can be made
with retrospective effect, the Group believes that outcome of the
above dispute would be in favour of the Group and there would be no
material impact on the financial statements and as such no
provision for claim has been made.
x. SWPGL has lodged a claim relating to quality and price on
Western Coalfields Limited (WCL), the coal supplier for abuse of
dominant position by WCL and Coal India Limited (CIL). Honourable
Competition Commission of India ('Commission') has passed an order
on 27 October 2014 in favour of the Group as far as price claim is
concerned whereas for the quality claim, the Commission has
referred to its earlier order dated 13 January 2014, of similar
case which is presently pending at Competition Appellate Tribunal
(COMPAT). WCL has preferred an appeal against the order of the
Commission before the COMPAT wherein during the year ended 31 March
2017, COMPAT has upheld the order given by Commission against which
WCL has preferred an appeal before the Honourable Supreme Court of
India. The Group has filed a total claim of US $ 239,950 with
COMPAT under provision 53N of The Competition Act, 2002. Further
SWPGL has received a demand of US $ 11,737 from WCL towards short
lifting of minimum quantity of coal which is also contested by the
SWPGL on various grounds including of inferior quality & high
price and as such has not been provided for. Consequent to
reiterating and upholding, in entirety, the earlier favourable
order of Hon'ble Competition Commission of India by COMPAT the
Group has recognised a claim of US $ 90,173 during the year ended
31 March 2017. The Group believes that the final outcome of the
above matters would be in favour of the group and company is
confident that the entire amount is fully recoverable.
In addition, the Group is also subject to various other legal
proceedings and claims which have arisen in the ordinary course of
business including claims before various tax authorities. The
Management does not reasonably expect that these legal proceedings,
when ultimately concluded and determined, will have a material or
adverse effect on the Group's results of operations or financial
conditions. The Group has accrued appropriate provision wherever
required.
16. Financial Instruments
Carrying amounts versus fair values
The fair values of financial assets and financial liabilities,
together with the carrying amounts in the Consolidated statement of
financial position are as follows:
Carrying amount Fair value Carrying amount Fair value
---------------------------------------- ---------------- ----------- ---------------- -----------
2017 2017 2016 2016
---------------------------------------- ---------------- ----------- ---------------- -----------
Non-current financial assets
Trade and other receivables 2,717 2,717 2,593 2,593
Equity securities - available-for-sale 17,970 17,970 17,938 17,938
Loans and receivables 35,915 35,915 32,024 32,024
Derivative assets 40,297 40,297 45,872 45,872
Non-current bank deposits 9,079 9,079 4,994 4,994
---------------- ----------- ---------------- -----------
Total non-current 105,978 105,978 103,421 103,421
---------------- ----------- ---------------- -----------
Current financial assets
Trade and other receivables 457,018 457,018 367,139 367,139
Equity securities - held for trading 141 141 115 115
Debt securities-held for trading 5,269 5,269 5,062 5,062
Loans and receivables 152,846 152,846 44,446 44,446
Cash and short-term deposits 105,079 105,079 122,800 122,800
---------------- ----------- ---------------- -----------
Total current 720,353 720,353 539,562 539,562
Total 826,331 826,331 642,983 642,983
---------------- ----------- ---------------- -----------
Non-current financial liabilities
Trade and other payables 64,961 64,961 30,496 30,496
Loans and borrowings 3,267,005 3,267,005 2,700,202 2,700,202
Interest rate swaps 1,775 1,775 6,174 6,174
Option premium payable 12,040 12,040 17,065 17,065
---------------- ----------- ---------------- -----------
Total non-current 3,345,781 3,345,781 2,753,937 2,753,937
---------------- ----------- ---------------- -----------
Current financial liabilities
Trade and other payables 648,733 648,733 493,099 493,099
Loans and borrowings 598,827 598,827 623,600 623,600
Foreign exchange forward contract 388 388 629 629
Option premium payable 7,248 7,248 5,469 5,469
---------------- ----------- ---------------- -----------
Total current 1,255,196 1,255,196 1,122,797 1,122,797
Total 4,600,977 4,600,977 3,876,734 3,876,734
---------------------------------------- ---------------- ----------- ---------------- -----------
The fair values of financial assets and financial liabilities,
together with the carrying amounts in the Company statement of
financial position are as follows:
Carrying amount Fair value Carrying amount Fair value
--------------------------------------- ---------------- ----------- ---------------- -----------
2017 2017 2016 2016
--------------------------------------- ---------------- ----------- ---------------- -----------
Non-current financial assets
Loans and receivables to subsidiaries 147,002 147,002 155,978 155,978
Total non-current 147,002 147,002 155,978 155,978
Current financial assets
Loans and receivables 87 87 - -
Cash and short-term deposits 969 969 1,194 1,194
Total current 1,056 1,056 1,194 1,194
Total 148,058 148,058 157,172 157,172
---------------- ----------- ---------------- -----------
Current financial liabilities
Trade and other payables 1,203 1,203 1,503 1,503
Loans and borrowings 118,921 118,921 115,798 115,798
Total current 120,124 120,124 117,301 117,301
Fair value hierarchy
The table below analyses recurring fair value measurements for
financial assets and financial liabilities. These fair value
measurements are categorised in to different levels in the fair
value hierarchy based on the inputs to valuation techniques used.
The different levels are defined as follows.
-- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
-- Level 2: inputs other than quoted prices that is observable
for the asset or liability, either directly or indirectly.
-- Level 3: valuation techniques that include inputs for the
asset or liability that are not based on observable market data
(unobservable inputs).
2017 Level Level Level Total
1 2 3
Financial assets measured at fair value
Equity securities - available-for-sale 496 - 17,474 17,970
Equity securities - held for trading 141 - - 141
Debt securities-held for trading 5,269 - - 5,269
Derivative assets - 40,297 - 40,297
Total 5,906 40,297 17,474 63,677
Financial liabilities measured at fair
value
Interest rate swaps - 1,775 - 1,775
Option premium payable - 19,288 - 19,288
Foreign exchange forward contract - 388 - 388
Total - 21,451 - 21,451
The Group recognises transfers between levels of the fair value
hierarchy as of the end of the reporting year during which the
transfer has occurred. During the year ended 31 March 2017, there
were no transfers between Level 1 and Level 2 fair value
measurements.
Reconciliation of Level 3 fair value measurements of financial
assets:
2017 Available-for-sale Total
Unquoted equities
Opening balance 17,429 17,429
Total gains or losses:
- in income statement - -
- in other comprehensive income
change in fair value of available for sale financial
asset (314) (314)
foreign currency translation difference 359 359
Settlements - -
Transfers into level 3 - -
Closing balance 17,474 17,474
Total gains or losses for the year shown above, relates to
available for sale securities held at the end of the reporting
year
2016 Level Level Level Total
1 2 3
Financial assets measured at fair value
Equity securities - available-for-sale 509 - 17,429 17,938
Equity securities - held for trading 115 - - 115
Debt securities-held for trading 5,062 - - 5,062
Derivative assets - 45,872 - 45,872
Total 5,686 45,872 17,429 68,987
Financial liabilities measured at fair
value
Interest rate swaps - 6,174 - 6,174
Option premium payable - 22,534 - 22,534
Foreign exchange forward contract - 629 - 629
Total - 29,337 - 29,337
During the year ended 31 March 2016, there were no transfers
between Level 1 and Level 2 fair value measurements.
Reconciliation of Level 3 fair value measurements of financial
assets:
31 March 2016 Available-for-sale Total
Unquoted equities
Opening balance 18,644 18,644
Total gains or losses:
- in income statement 2 2
- in other comprehensive income
change in fair value of available for sale financial
asset (159) (159)
foreign currency translation difference (1,004) (1,004)
Settlements (54) (54)
Transfers into level 3 - -
Closing balance 17,429 17,429
Valuation techniques
Level 2 fair values for simple over-the-counter derivative
financial instruments are based on broker quotes. Those quotes are
tested for reasonableness by discounting expected future cash flows
using market interest rate for a similar instrument at the
measurement date. Fair values reflect the credit risk of the
instrument and include adjustments to take account of the credit
risk of the Group entity and counterparty when appropriate.
Level 3 fair values for equity securities-available for sale has
been determined by using Comparable Company Analyses. This is a
relative valuation technique which involves comparing that
company's valuation multiples to those of its peers. The multiples
consider for the valuation is price to book value which is then
adjusted for differences that are directly related to the
characteristics of equity instruments being valued such as
discounting factor for size and liquidity etc.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGUGPMUPMGBQ
(END) Dow Jones Newswires
July 27, 2017 02:01 ET (06:01 GMT)
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