OPG POWER VENTURES PLC

Earnings Release • Jul 8, 2013

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RNS Number : 8172I

KSK Power Ventur PLC

08 July 2013

KSK Power Ventur plc

("KSKPV" or the "Company")

Audited Results for the year ended 31st March 2013

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, is pleased to announce the consolidated audited results for the year ended 31st March 2013.

Financial Highlights

·     Group Revenue increased 3% to $ 392.8 m (2012: $ 383.2 m)

·     Gross Profit increased 20% to $ 156.1 m (2012: $ 130.0 m)

·     Operating Profit decreased marginally to $ 119.2 m (2012: $ 122.4 m)

·     Profit before tax increased to $ 36.5 m (2012: $ 1.2m )

·     Investments in Property Plant and Equipment increased 22% to $ 3,273 m (2012: $ 2,686 m)

The underlying Revenue growth of 15%, Gross Profit growth of 35% compared to the previous year at the rupee level, has been strong given the current trading environment and increased generation levels over the year ended 31 March 2012. However, the currency depreciation of the Indian Rupee against the US Dollar of c.12%, since March 2012, has led to reporting of more moderate Revenue growth of 3% in US Dollar terms together with associated performance.  The comparative Rupee and US Dollar performance is illustrated in the table below.

Comparison of results

				Mar 13 translated at Mar 12 Rupee/USD exchange rate
Particulars	31 Mar 2013  (In USD m)	31 Mar 2012 (In USD m)	% change	31 Mar 2013  (In USD m)	31 Mar 2012 (In USD m)	% change
Revenue	392.82	383.23	3	441.54	383.23	15
Gross profit	156.08	130.01	20	175.44	130.01	35
Operating profit	119.15	122.40	(3)	133.93	122.40	9
Profit before tax	36.46	1.15	3071	40.98	1.15	3464
Average exchange rate Rupee/USD	Rs 54.55/$	Rs 48.53/$	12%	Rs 48.53/$	Rs 48.53/$	-

Operating Highlights

·     During the year operating assets recorded an aggregate generation of 5,546 million units ("MU") as against 4,862 MU for the previous year, with the following individual Plant Load Factors ("PLF")

Wardha Warora (540 MW)	3,403 MU	(72%)
VS Lignite (135 MW)	889 MU	(75%)
Sai Regency (58 MW)	429 MU	(84%)
Arasmeta & Arasmeta Expansion (86 MW)	445 MU	(59%)
Sitapuram Power (43 MW)	337 MU	(89%)
Wind Project (19 MW)	41 MU	(25%)
Solar Project (10 MW)	2 MU	(22%)

·     The 3,600 MW KSK Mahanadi power project is under construction with good progress being made that includes

o  Synchronisation of first 600 MW already announced and second 600 MW also progressing

o  Commissioning of some of the ancillary common infrastructure facilities such as water, rail linkage, as well as the commencement of fuel supplies under the Linkage expected shortly

Commenting on the results, T.L.Sankar, Chairman of KSK said:

"The year witnessed the Group power plants' gross generation crossing 5 billion units and we anticipate crossing 9 billion units in the current year. At the operational level, these results are satisfactory given the circumstances across the Indian power sector and the overall challenging times and economic environment in India. The year continued to be a difficult time for the entire power sector in India and the Group has continued its efforts to address the various challenges in the operating projects and continues to make good progress in the KSK Mahanadi project. Whilst we have been successful in receiving sufficient quantities of coal, the profitability of Wardha, and consequently, the Group as a whole, has been impacted by the high price charged for the coal supplies made under the Cost plus Linkage and reimbursement from the coal company is currently being pursued. When this is successfully addressed, profitability is expected to revert to earlier anticipated levels.

The Forest Clearance accorded during May 2013 to Gujarat Mineral Development Corporation ("GMDC") for the Morga-II Coal Block, is a very significant development. The Group anticipates a combination of fuel supplies from Tapering Linkage from South Eastern Collieries Limited ("SECL"), by Goa Industries Development Corporation ("GIDC") from Gare Pelma as well as interim coal imports from overseas through appropriate collaborative arrangements to help facilitate the planned power generation from KSK Mahanadi. In line with the evolving government policy of pooling of coal prices and associated pass through, the Group anticipates that power supply arrangements of KSK Mahanadi will be in line with these fuel cost structures, both in the interim and long term. They are expected to be addressed during the current year and provide a robust support for the entire power generation portfolio of the Group.

The management focus continues  moving the various supply chain solutions forward with respect to operational assets and addressing the on-ground situations to synchronise planned generation with fuel supplies for assets under construction. With our underlying assets, associated performance and opportunities, KSK is well positioned to be one of the more stable, valuable and sustainable players in the Indian power generation landscape.

KSK's bold growth initiative, from start-up to being a leading independent power producer targeted to account for c.3% of the total Indian power generation by 2015 (upon completion of all six units of KSK Mahanadi), demonstrates the growth and profitability potential  in this area of the Indian economy for the Group.

This Group performance was possible only with the valuable and appreciated support of the various investors in the Company who have enabled us to pursue appropriate business opportunities in these challenging times."

For further information, please contact:

KSK Power Ventur plc Mr. S. Kishore, Executive Director Mr. K. A. Sastry, Executive Director	+91 40 2355 9922
Arden Partners plc                                                Richard Day / Adrian Trimmings	+44 (0)20 7614 5900

Key Business Updates

OPERATING POWER PLANTS

·     540 MW WARDHA POWER COMPANY LIMITED (WPCL):

The total gross power generated in the plant during the review period stood at 3,403 MU with an average Plant Load Factor (PLF) of 72%.

While the Company has focused and been successful in firming up the necessary quantity of coal supplies required for the efficient operation of the power plant, the guaranteed calorific value from the coal supplied by Western Coalfields Limited ("WCL") has not been met. Additionally, WCL has been charging for coal supplies at higher prices than prescribed under the Cost plus Linkage arrangements. Coal supplies during 2011-12 were made available under an MOU and carried an ad-hoc premium. Post execution of the Fuel Supply Agreement in April 2012, coal costs per ton for supplies made by WCL during the year were further increased compared to the already higher levels in the previous year. These unjustified higher prices have adversely affected KSK's profitability and appropriate recompense from Western Coalfields Limited is being pursued to address this.

The Company has lodged claims with WCL under the cost plus arrangements, both for the shortfall in calorific value vis-à-vis the guarantees under Fuel Supply Agreement ("FSA") as well pursuing recompense for charging on coal supplies at much higher prices than those prescribed under the Cost plus Linkage arrangements. The claim on calorific value shortfall only has been recognized as receivable in the financial statements. The amount corresponding to reversal or compensation for the higher price of coal charged by WCL than those prescribed under Cost Plus arrangement has not been finalised for the reporting of this year's numbers and is expected to be recognized directly with WCL or through suitable regulatory direction on the matter being obtained.

On the agreed terms, the Coal plus Linkage arrangements for this project would enable fuel at competitive prices for KSK and good financial performance which is being sought to be strongly protected. The Plant Load Factor (PLF) achieved has been 72% as against earlier anticipated 75%+ levels. The Company continues to pursue with every effort the grant of the necessary open access permission and associated benefits from enhanced power plant utilisation.

Subsequent to the year end during May 2013, the Company has successfully completed the planned debt refinancing - availing an External Commercial Borrowing ("ECB") under permission of the Reserve Bank of India up to USD 250 million, replacing high cost rupee debt with USD loan facilities from a consortium of two banks, namely Standard Chartered Bank and IDBI Bank, which is expected to generate significant cost savings on debt interest repayments.

·     CONSTRUCTION OF 3600 MW KSK MAHANADI POWER PROJECT:

The construction activity of KSK Mahanadi, a large, single location, Greenfield private power plant, continues with significant achievements during the year under review and the period up to this date:

o  First 600 MW unit achieved Oil Synchronisation in May 2013, as announced, and it is anticipated that power generation and supplies under PPA's  will commence very shortly;

o  The next synchronisation of power generation, from the second 600 MW unit is expected prior to December 2013;

o  Continued pursuit on the balance of the four units of 600 MW each for commissioning through 2014 and 2015;

o  Construction and completion of significant part of the Civil works at site and common operation infrastructure;

o  Water Pipeline infrastructure for meeting water requirements of the entire power plant commissioned;

o  Switch Yard and Transformer Yard commissioned, with back charging of 400kV Switchyard and transmission system with LILO connectivity for evacuation of power generated into the national grid; and

o  Rail connectivity to the power plant for coal transportation achieved. 

It is anticipated that upon stabilised generation from the first unit and the progress being made with the second unit, the Group will focus its efforts to expedite the construction progress on the balance of four units.

·     135 MW VS LIGNITE POWER PRIVATE LIMITED (VSLP):

The total gross power generated in the plant during the year stood at 889 MU, with an average PLF of 75%. The marginal shortfall from an anticipated 78% PLF is primarily on account of the outage during September 2012. The Company is continuing its efforts to secure appropriate legal reliefs with respect to tariffs from industrial customers. The Company anticipates that industrial customers, who have been experiencing extremely high alternative tariffs, will find our power plant supplies and tariff proposition attractive..

·     86 MW ARASMETA CAPTIVE POWER COMPANY PRIVATE LIMITED (ACPCPL):

The total gross power generated in the plant during the year stood at 445 MU, with an average PLF of 59% primarily on account of the limited off take by Lafarge India.  The year under review witnessed decreased utilisation by Lafarge India for its cement plants and an associated setback on profitability. While continuing to press for its claim against Lafarge India for agreed minimum usage levels, the Company also initiated efforts for  alternative power supply arrangements for enhanced asset utilisation. With the coal supplies under the coal supply agreement for an additional 43 MW having commenced from Coal India's subsidiary South Eastern Coalfields Limited (SECL), the Company anticipates increased generation, revenue and profitability at the plant.

·     58 MW SAI REGENCY POWER CORPORATION PRIVATE LIMITED (SRPCPL):

The total gross power generated in the plant during the year stood at 429 MU, with an average PLF of 84% in the combined cycle gas based power plant. The marginal shortfall as compared to the previous year is primarily due to a major inspection and associated planned outage undertaken in March 2013. With the continuous supply of gas and the efficient operation, the plant has provided an exceptional operational and financial performance and the Company expects this to continue in the future.

The wind assets (nine Wind Turbine machines of 2.1 MW each) generated 41 MU with an average annualised PLF of 25%. The Group is exploring various options on optimising value from the assets including revenue from Renewable Energy Certificate ("REC") mechanism.

·     43 MW SITAPURAM POWER LIMITED (SPL):

The total gross power generated in the plant during the year stood at 337 MU, with an average PLF of 89%. Although the fuel cost for the period under review has increased due to 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 sold to other customers under Open Access.  

·     COMMISSIONING OF 10 MW SAI MAITHILI SOLAR POWER PROJECT:

During the year, the Group achieved completion of 10 MW PV solar power generation plant in the state of Rajasthan under the Jawaharlal Nehru National Solar Mission, linked with a power purchase agreement for 25 years with the prescribed government agency. Part of the debt financing of this project is tied up through a 16 year tenor USD denominated financing facility from Export Import Bank of the United States ("US EXIM") at very favourable terms.

·     CONSTRUCTION OF NEW 40 MW SOLAR POWER GENERATION INITIATIVES:

The Group is pursuing an additional 40 MW Solar power generation initiative in the state of Tamil Nadu with PPA with the local state utility. We expect to achieve completion of this generation facility in the current year. Necessary discussions are already underway for the debt tie-up, EPC, land acquisition and site preparation works.

·     ANCILLARY INFRASTRUCTURE INITIATIVE AT KSK MAHANADI  

The Group's pursuit of this infrastructure to support the KSK Mahanadi power project has witnessed tremendous progress with commissioning of the entire water pipeline infrastructure. The on-going progress on KSK Mineral and Raigarh Champa is satisfactory given the overall development environment.  The Group now anticipates, the ensuing year to witness further progress on these and enable a competitive power generation at KSK Mahanadi.   

·     WIND POWER GENRATION AND HYDRO POWER GENRATION INITIATIVE  

The Group continues to pursue specific wind power generation initiatives as well as continues to work on the hydro project portfolio for appropriate collaboration opportunities.

FINANCIAL PERFORMANCE

The underlying financial performance at the rupee level has been strong. However, with significant currency depreciation of Indian Rupees against the US dollar during the period, the performance reported in US Dollars compared to the previous year reflects marginal increase.

With total operating capacity of 891MW, the consolidated operating revenue achieved was USD 393 million with operating profits at USD 119.15 and profit before tax of USD 36.5 million.

The increase in profit before taxation from $1.2m to $36.5m in the current year which arisen in part due the non-recurrence in 2013 of a $48.5m exchange loss that arose in 2012 and was accounted for in finance costs.

OUTLOOK

With unfulfilled demand for power generation expected to continue and grow through the coming decade, KSK is well positioned and we expect significant unit commissioning in the coming years, as increased asset utilisation and lower cost fuel supply arrangements are implemented.

With an exciting portfolio of power assets and appropriate fuel arrangements being secured the Group has a strong and sustainable power generation portfolio. As a result, the Board views the future for KSKPV very positively in the medium and long term as the Company is now positioned to be one of the leading suppliers of power within India.

An extract of the Audited Consolidated and Company Financial Statements for the year ended 31st March 2013 is shown below.

A full set of accounts is available from the Company website: www.kskplc.co.uk

PRINCIPAL RISKS AND UNCERTAINITIES

The business of the Group is subject to a variety of risks and uncertainties which, if they occur may have a materially adverse effect on the Group's business or financial condition, results or future operations. The risks & uncertainties set out in this document 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 Group's business. The risks & uncertainties faced by the Group and the industry as a whole are provided in detail earlier in the Annual Report of the Company for the year 2011-12 and the Interim statements as well. The majority of the risks previously identified have not changed. While the Company attempts to address the same, the key risks & uncertainties continued to be faced by the Group are as follows:

·      Delays in government decisions or implementation of earlier government decisions along with continual inconsistencies in government policies across any departments and any retrospective amendments to the existing policies or introduction of new policies;

·      Deviation from approved government policies and abuse of market dominance position by certain contractual counter parties;

·      Shortage of fuel and dependence on market based / imported fuel which are subject to the market vagaries and other uncertainties;

·      Economic slowdown and negative sectoral outlook with resultant impact on the banking sector delays in agreed project disbursements and timely availability of credit;

·      Delays in enforcement of contractual rights or legal remedies with government counter parties undertaking fuel supplies, power off take, transmission and open access amongst others;

·      PPA Counter parties 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 effects project imports cost of project implementation and repayment obligations;

·      Logistics bottlenecks and other infrastructure constraints of various agencies;

·      Challenges in development of support infrastructure for the power projects including physical hindrances and delay in issue of permits and clearances associated with land acquisitions; and

·      Political and economic instability and global financial turmoil and resultant fiscal & monetary policies as well as currency depreciation resulting in increasing cost structures.

Extract of Consolidated and Company financial statements for the year ended 31 March 2013  

CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
as at 31 March 2013
(All amount in thousands of US $, unless otherwise stated)
			Consolidated				Company
	Notes		2013		2012		2013		2012
ASSETS
Non-current
Property, plant and equipment			3,273,033		2,685,771		1		1
Intangible assets and goodwill			22,326		23,589		-		-
Investments and other financial assets	4		98,045		109,356		295,191		309,853
Other non-current assets			67,406		58,722		-		-
Trade and other receivables			6,272		5,995		-		-
Deferred tax asset			15,649		14,273		-		-
			3,482,731		2,897,706		295,192		309,854
Current
Investments and other financial assets			81,464		85,461		9,557		332
Other current assets			42,490		39,648		883		75
Trade and other receivables			116,252		97,805		-		-
Inventories			26,246		21,960		-		-
Cash and short-term deposits	5		305,264		417,585		287		1,598
			571,716		662,459		10,727		2,005
Total assets			4,054,447		3,560,165		305,919		311,859
EQUITY AND LIABILITIES
Issued capital			263		263		263		263
Share premium			253,890		253,890		253,890		253,890
Foreign currency translation reserve			(78,380)		(58,783)		6,420		12,217
Revaluation reserve			2,752		2,859		-		-
Other reserves			141,674		140,189		-		-
Retained earnings / (Accumulated deficit)			119,337		98,407		(10,049)		(8,455)
Equity attributable to owners of the Company			439,536		436,825		250,524		257,915
Non-controlling interests			199,290		188,192		-		-
Total equity			638,826		625,017		250,524		257,915
Non-current liabilities
Interest-bearing loans and borrowings	6		1,834,526		1,409,050		-		-
Trade and other payables			59,782		48,981		-		-
Provisions			2,541		2,480		-		-
Deferred revenue			8,403		9,150		-		-
Employee benefit liability			1,050		947		-		-
Deferred tax liability			35,063		37,699		-		-
			1,941,365		1,508,307		-		-
Current liabilities
Interest-bearing loans and borrowings	6		1,021,122		1,128,911		54,119		52,475
Trade and other payables			441,518		287,701		1,276		1,469
Deferred revenue			928		984		-		-
Other current liabilities			9,259		6,417		-		-
Taxes payable			1,429		2,828		-		-
			1,474,256		1,426,841		55,395		53,944
Total liabilities			3,415,621		2,935,148		55,395		53,944
Total equity and liabilities			4,054,447		3,560,165		305,919		311,859
(See accompanying notes to the Consolidated and Company financial statements)
CONSOLIDATED AND COMPANY INCOME STATEMENT
for the year ended 31 March 2013
(All amount in thousands of US $, unless otherwise stated)
				Consolidated				Company
		Notes		2013		2012		2013		2012
Revenue				392,821		383,226		-		-
Cost of revenue				(236,741)		(253,214)		-		-
Gross profit				156,080		130,012		-		-
Other operating income				1,648		23,604		42		-
Distribution costs				(7,037)		(1,789)		-		-
General and administrative expenses				(31,541)		(29,425)		(784)		(839)
Operating profit / (loss)				119,150		122,402		(742)		(839)
Finance costs		7		(120,984)		(160,508)		(2,342)		(3,170)
Finance income		8		38,296		39,256		1,490		131
Profit / (loss) before tax				36,462		1,150		(1,594)		(3,878)
Tax income / (expense)				1,788		(11,068)		-		-
Profit / (loss) for the year				38,250		(9,918)		(1,594)		(3,878)
Attributable to:
Owners of the Company				23,843		(932)		(1,594)		(3,878)
Non-controlling interests				14,407		(8,986)		-		-
				38,250		(9,918)		(1,594)		(3,878)
Earnings / (loss) per share
Weighted average number of ordinary shares for basic and diluted earnings per share				159,378,600		152,203,869
Basic and diluted (US $)				0.15		(0.01)
(See accompanying notes to the  Consolidated and Company financial statements)

CONSOLIDATED AND COMPANY STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2013
(All amount in thousands of US $, unless otherwise stated)
			Consolidated			Company
		Notes	2013		2012	2013		2012
Profit / (loss) for the year			38,250		(9,918)	(1,594)		(3,878)
Other comprehensive income
Foreign currency translation differences			(28,501)		(97,792)	(5,797)		4,706
Available-for-sale financial assets
- current period losses			(3,051)		(1,239)	-		-
- reclassification to income statement			4,258		514	-		-
Reclassification of reserve on deemed disposal of interest in joint venture			-		(2,485)	-		-
Income tax relating to available for sale financial asset			35		173	-		-
Other comprehensive (loss) / income, net of tax			(27,259)		(100,829)	(5,797)		4,706
Total comprehensive income / (loss) for the year			10,991		(110,747)	(7,391)		828
Attributable to:
Owners of the Company			5,451		(62,562)	(7,391)		828
Non-controlling interests			5,540		(48,185)	-		-
			10,991		(110,747)	(7,391)		828
(See accompanying notes to the Consolidated and Company financial statements)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2012
(All amount in thousands of US $, unless otherwise stated)
	Attributable to owners of the Company								Non-controlling interests	Total equity
	Issued capital  (No. of shares)	Issued capital (Amount)	Share premium	Foreign currency translation reserve	Revaluation reserve	Other reserves	Retained  earnings	Total
As at 1 April 2011	151,789,145	251	194,435	(260)	6,219	217,112	97,336	515,093	335,595	850,688
Issue of shares	7,589,455	12	59,455	-	-	-	-	59,467	-	59,467
Tax consequence on share issue expenses	-	-	-	-	-	(1,736)	-	(1,736)	-	(1,736)
Non-controlling interests arising on business combination	-	-	-	-	-	-	-	-	14,841	14,841
Issuance of equity shares by subsidiary	-	-	-	-	-	-	-	-	306	306
Acquisition of non-controlling interests without change in control	-	-	-	-	-	(72,080)	-	(72,080)	(115,722)	(187,802)
Transfer of economic interest to non-controlling interests	-	-	-	-	-	-	(1,357)	(1,357)	1,357	-
Net depreciation transfer for property, plant and equipment	-	-	-	-	(121)	-	121	-	-	-
Transaction with owners	-	-	-	-	(121)	(73,816)	(1,236)	(15,706)	(99,218)	(114,924)
Loss for the year	-	-	-	-	-	-	(932)	(932)	(8,986)	(9,918)
Other comprehensive income
Foreign currency translation differences	-	-	-	(58,523)	-	-	-	(58,523)	(39,269)	(97,792)
Available-for-sale financial assets
- current year losses	-	-	-	-	-	(1,160)	-	(1,160)	(79)	(1,239)
- reclassification to income statement	-	-	-	-	-	365	-	365	149	514
Reclassification of reserves on deemed disposal of interest in joint venture	-	-	-	-	(3,239)	(2,485)	3,239	(2,485)	-	(2,485)
Income tax relating to available-for-sale financial asset	-	-	-	-	-	173	-	173	-	173
Total comprehensive income for the year	-	-	-	(58,523)	(3,239)	(3,107)	2,307	(62,562)	(48,185)	(110,747)
Balance as at 31 March 2012	159,378,600	263	253,890	(58,783)	2,859	140,189	98,407	436,825	188,192	625,017

(See accompanying notes to the Consolidated and Company financial statements)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2013
(All amount in thousands of US $, unless otherwise stated)
	Attributable to owners of the Company								Non-controlling interests	Total equity
	Issued capital  (No. of shares)	Issued capital (Amount)	Share premium	Foreign currency translation reserve	Revaluation reserve	Other reserves	Retained  earnings	Total
As at 1 April 2012	159,378,600	263	253,890	(58,783)	2,859	140,189	98,407	436,825	188,192	625,017
Non-controlling interests arising on acquisition of subsidiary	-	-	-	-	-	-	-	-	2	2
Issuance of equity shares by subsidiaries       (see note 3)	-	-	-	-	-	27	-	27	2,813	2,840
Acquisition of non-controlling interests without change in control (see note 2)	-	-	-	-	-	253	-	253	(277)	(24)
Transfer of economic interest to non-controlling interests1	-	-	-	-	-	-	(3,020)	(3,020)	3,020	-
Net depreciation transfer for property, plant and equipment	-	-	-	-	(107)	-	107	-	-	-
Transaction with owners	-	-	-	-	(107)	280	(2,913)	(2,740)	5,558	2,818
Profit for the year	-	-	-	-	-	-	23,843	23,843	14,407	38,250
Other comprehensive income
Foreign currency translation differences	-	-	-	(19,597)	-	-	-	(19,597)	(8,904)	(28,501)
Available-for-sale financial assets
- current period (losses) / gains	-	-	-	-	-	(3,079)	-	(3,079)	28	(3,051)
- reclassification to profit or loss	-	-	-	-	-	4,258	-	4,258	-	4,258
Income tax relating to available-for-sale financial asset	-	-	-	-	-	26	-	26	9	35
Total comprehensive income / (loss) for the year	-	-	-	(19,597)	-	1,205	23,843	5,451	5,540	10,991
Balance as at 31 March 2013	159,378,600	263	253,890	(78,380)	2,752	141,674	119,337	439,536	199,290	638,826
(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 Consolidated income statement.  However, the non-controlling interest disclosed in 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 2013

(All amount in thousands of US $, unless otherwise stated)

	Issued capital  (No. of shares)	Issued capital  (Amount)	Share premium	Foreign currency translation reserve	Accumulated deficit	Total equity
As at 1 April 2011	151,789,145	251	194,435	7,511	(4,577)	197,620
Issue of equity shares	7,589,455	12	59,455	-	-	59,467
Transaction with owners	7,589,455	12	59,455	-	-	59,467
Loss for the year	-	-	-	-	(3,878)	(3,878)
Other comprehensive income
Foreign currency translation differences	-	-	-	4,706	-	4,706
Total comprehensive income / (loss) for the year	-	-	-	4,706	(3,878)	828
Balance as at 31 March 2012	159,378,600	263	253,890	12,217	(8,455)	257,915
As at 1 April 2012	159,378,600	263	253,890	12,217	(8,455)	257,915
Transaction with owners	-	-	-	-	-	-
Loss for the year	-	-	-	-	(1,594)	(1,594)
Other comprehensive income
Foreign currency translation differences	-	-	-	(5,797)	-	(5,797)
Total comprehensive loss for the year	-	-	-	(5,797)	(1,594)	(7,391)
Balance as at 31 March 2013	159,378,600	263	253,890	6,420	(10,049)	250,524

(See accompanying notes to Consolidated and Company financial statements)

CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 March 2013
(All amount in thousands of US $, unless otherwise stated)
	Consolidated		Company
	2013	2012	2013	2012
Cash inflow / (outflow) from operating activities
Profit / (loss) before tax	36,462	1,150	(1,594)	(3,878)
Adjustment
Depreciation and amortization	39,492	42,829	-	-
Finance cost	120,984	137,291	2,341	3,218
Finance income	(28,008)	(39,256)	(1,586)	(131)
Provision for doubtful capital advances and trade receivable	8,958	3,070	-	-
Gain on re-measurement of equity interest	-	(536)	-	-
Loss / (profit) on sale of fixed assets, net	458	(5,292)	-	-
others	(120)	(214)	-	-
Change in working capital
Trade receivables and unbilled revenue	(28,347)	(25,018)	-	-
Inventories	(4,286)	(6,603)	-	-
Other assets	(12,305)	(5,177)	(845)	(77)
Trade payables and other liabilities	2,712	2,208	(126)	1,046
Provisions and employee benefit liability	103	362	-	-
Cash generated from /(used in) operating activities	136,103	104,814	(1,810)	178
Taxes paid, net	(10,440)	(6,460)	-	-
Net cash provided by / (used in) operating activities	125,663	98,354	(1,810)	178
Cash inflow / (outflow) from investing activities
Movement in restricted cash, net	35,969	(20,421)	-	13,039
Purchase of property, plant and equipment & other non current assets 1	(394,515)	(746,862)	-	(1)
Proceed from sale of wind mill undertaking	11,069	30,061	-	-
Proceeds from sale of property, plant and equipment	4,815	-	-	-
Net cash flow on business combination	-	4,015	-	-
Purchase of financial instruments	(103,168)	(136,419)	-	(118,067)
Proceeds from sale of  financial instruments	121,337	134,854	1,184	12,200
Dividend income	482	491	-	-
Finance income	37,460	30,358	-	297
Net cash flow (used in)/provided by investing activities	(286,551)	(703,923)	1,184	(92,532)
Cash inflow / (outflow) from financing activities
Proceeds from borrowings	1,202,714	1,657,188	1,515	53,239
Repayment of borrowings	(786,440)	(593,454)	(240)	(9,300)
Interest paid	(314,275)	(228,495)	(1,997)	(3,934)
Payment for acquisition of non controlling interest	(24)	(187,802)	-	-
Net proceeds from issue of shares and share application money in subsidiary to non-controlling interest	4,478	1,748	-	-
Net proceeds from issue of shares	-	59,467	-	59,467
Net cash flow provided by / (used in) financing activities	106,453	708,652	(722)	99,472
Effect of exchange rate changes	(21,917)	(44,112)	37	(7,032)
Net (decrease) / increase in cash and cash equivalent	(76,352)	58,971	(1,311)	86
Cash and cash equivalent at the beginning of the year	120,186	61,215	1,598	1,512
Cash and cash equivalent at the end of the year (note 5)	43,834	120,186	287	1,598
1Includes upfront premium paid to the government or others towards long term land leases.
(See accompanying notes to the Consolidated and Company financial statements)

EXTRACT OF NOTES TO CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS

for the year ended 31 March 2013           

(All amounts 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 ventures (collectively referred to as 'the Group') are primarily engaged in the development, operation and maintenance of private sector power projects, predominantly through subsidiaries and jointly controlled entities with multiple industrial consumers in India with next level of growth coming through large base load power plant subsidiaries.

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.

1.3.   Statement of compliance /responsibility statement

The Consolidated and Company financial statements contained in this document has been prepared in accordance with International Financial Reporting Standard and its interpretations as adopted by the European Union (EU) ('IFRS') and the provisions of the Isle of Man, Companies Act 1931-2004 applicable to companies reporting under IFRS.

The financial statements were authorised for issue by the Board of Directors on 06 July 2013.

1.4.   Financial period

The Consolidated and Company financial statements cover the period from 1 April 2012 to 31 March 2013, with comparative figures from 1 April 2011 to 31 March 2012.

1.5.   Basis of preparation

These financial statements have been prepared under IFRS.

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

·     employee defined benefit assets are recognised as the net total of the fair value of plan assets, plus unrecognised past service cost and unrecognised actuarial losses, less unrecognised actuarial gains and the present value of the defined benefit obligation.

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 financial statements have been prepared on going concern basis which assumes the Group and the Company will have sufficient funds to continue its operational existence for the foreseeable future covering atleast twelve months. The Group requires funds both for short-term operational needs as well as for long-term investment programmes mainly in construction projects for its power plants. The Group currently has net current liabilities of US $ 902,540, with short term facilities expiring in March 2014 totalling US $ 921,359 and a committed capital spend of US $ 1,475,717. The Group continue to generate cash flows from the current operations which together with the available cash and short term deposits provides liquidity both in short-term as well as in long-term. Anticipated future cash flows and undrawn long term committed facilities of US $ 1,323,911 together with cash and short term deposits of US $ 305,264 as at 31st March 2013 on a consolidated basis, are expected to be utilised to meet the on-going capital investment programme and liquidity requirement of the Group in the near future. In addition, a number of the facilities that are due to expire at 31st March 2014 are in the process of being extended and have rollover clause in a number of cases.

2.   Acquisition of non-controlling interest

·      During the year ended 31 March 2013, the Group has issued additional 107,514,330 shares in KSK Mahanadi Power Company Limited ("KMPCL") to KSK Energy Limited ("KEL") at a face value of Rs 10 (US $ 0.18) at par. Also during the year the Group has transferred 250,000,000 equity shares in KMCPL from KSK Energy Ventures Limited ("KEVL") to KSK Energy Company Private Limited ("KECPL"). The above transactions resulted in acquisition of 3.68 % of non-controlling interest.

The acquisition of interest in subsidiary from non-controlling interest is accounted as an equity transaction, and accordingly no gain or loss is recognised in the Consolidated income statement. The difference of US $ 867 between the fair value of the net consideration paid (US $ Nil) and the amount by which the non-controlling interest (US $ (867)) is adjusted are credited to 'other reserve' within consolidated statement of changes in equity and attributed to the owners of the Company.

·      During the year ended 31 March 2013, KSK Energy Ventures Limited ('KEVL') acquired 130,000 equity shares of KSK Wind Energy Private Limited ('KWEPL')of face value of Rs. 10 (US $ 0.18) each at par from Chemplast Sanmar Limited.

Pursuant to the acquisition of the additional equity shares, the ownership interest of the Group in KWEPL increased from 74 percent to 100 percent resulting in a 26 percent additional interest in subsidiary.

The acquisition of interest in subsidiary from non-controlling interest is accounted as an equity transaction, and accordingly no gain or loss is recognised in the Consolidated income statement. The difference of US $ 614 between the fair value of the net consideration paid (US $ 24) and the amount by which the non-controlling interest (US $ 590) is adjusted are debited to 'other reserve' within consolidated statement of changes in equity and attributed to the owners of the company.

3.   Dilution on Issuance of Equity Shares by Subsidiaries

·      During the month of November 2012, the VS Lignite Power Private Limited ("VSLPPL") has made right issue of equity shares to all the existing shareholders. KSK Electricity Financing India Private Limited and captive customers have subscribed to 37,000,000 shares and 13,000,009 shares of face value of Rs 10 (US $ 0.18) each at par and have contributed US $ 6,770 and US $ 2,383 respectively. The amount contributed by captive customers has been disclosed as Non-controlling interest in the statement of changes in equity.

·      During the month of September 2012, the Group has issued additional 2,500,000 shares in KSK Surya Photovoltaic Venture Limited ("KSPVL") to Medha Servo Drives Private Limited at face value of Rs 10 (US $ 0.18) each.

Pursuant to the issuance of the additional equity share's the ownership interest of the Group in KSPVL decreased from 100 percent to 93.25 percent resulting in a 6.75 percent deemed partial disposal of the Group's controlling interest in a subsidiary without loss of control.

The partial disposal of the interest in a subsidiary without loss of control is accounted as an equity transaction, and no gain or loss is recognised in the Consolidated income statement.  The difference of US $ 27 between the fair value of the net consideration received (US $ 457) and the amount by which the non-controlling interest are adjusted (US $ 430), is credited to 'other reserve' within statement of changes in equity and attributed to the owners of the company.

4.   Investments and other financial assets

	Consolidated		Company
	2013	2012	2013	2012
Current
Financial assets at fair value through profit or loss
-  held-for-trading	3,293	4,384	-	-
Loans and receivables	66,429	58,950	9,557	332
Loans to and receivables from  JV partners	11,742	22,127	-	-
	81,464	85,461	9,557	332
Non-current
Available-for-sale investments	26,354	30,774	-	-
Deposit with banks	31,208	47,929	-	-
Loans and receivables	24 264	25,476	-	9,225
Loans to and receivables from JV partners	16,219	5,177	-	-
Loans to and receivable from subsidiaries	-	-	151,877	157,213
Investment in subsidiaries	-	-	143,314	143,415
	98,045	109,356	295,191	309,853
Total	179,509	194,817	304,748	310,185

Financial assets at fair value through profit or loss

The Group has invested into short-term mutual fund units and equity securities in various companies being quoted on Indian stock market. 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 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.

Deposit with banks

This represents the deposits with the bank with the maturity term of more than twelve months from the reporting date.

Loans and receivables

This primarily includes interest-bearing inter-corporate deposits of US $ 13,538 (2012: US $ 17,375), deferred loan origination costs US $ 9,783 (2012: US $ 5,981), security deposit to suppliers US $ 20,721 (2012: US $ 15,236), advance for investments US $ 3,469 (2012: US $ 11,716) and other financial assets US $ 43,182 (2012: US $ 34,118).

The claim on calorific value shortfall of US $ 11,575 only has been recognized as receivable in other financial assets and the amount corresponding to reversal or compensation for higher price of coal charged by WCL in WPCL, than those prescribed under cost plus arrangement, has not been recognized

Loans to and receivables from JV partners

This primarily includes the share application money in the joint venture entities, interest bearing inter corporate deposit to joint   venture partners and redeemable preference share capital held in the joint venture entities redeemable between 5 to 20 years.

Loans to and receivable from subsidiary

Loans to and receivable from subsidiary represents inter-corporate deposits given by the Company to its wholly owned subsidiaries.

Investment in subsidiaries

Investment primarily includes unquoted investments in subsidiaries in the Company financial statements. The Company has invested in 139,244,601 equity shares (2012: 139,244,601) in KEL, 12,000 equity shares (2012: 12,000) in KASL, 100,000,000 equity shares (2012: 100,000,000) in KGPP and 1 equity share (2012: 1) in KSVP totalling to US $ 143,314 (2012: US $ 143,415).

Investment and other financial assets amounting of US $ 153,621 (2012: US $ 173,289) for the Group is subject to security restrictions.

Impairment of financial assets

During the year ended 31 March 2013, available-for-sale financial asset of US $ 4,363 (2012: US $ 572) and loans and receivable of US $ 2,466 (2012: US $ 1,669) were collectively impaired.

5.   Cash and short-term deposits

Cash and short-term deposits comprise of the following:

	Consolidated		Company
	2013	2012	2013	2012
Cash at banks and on hand	39,875	113,900	287	1,598
Short-term deposits	265,389	303,685	-	-
Total	305,264	417,585	287	1,598

Short-term deposits are made for varying periods, depending on the immediate cash requirements of the Group.

The Group has pledged a part of its short-term deposits amounting US $ 252,053 (2011: US $ 294,416) in order to fulfil collateral requirements.

For the purpose of cash flow statement, cash and cash equivalent comprise:

	Consolidated		Company
	2013	2012	2013	2012
Cash at banks and on hand	39,875	113,900	287	1,598
Short-term deposits	265,389	303,685	-	-
Total	305,264	417,585	287	1,598
Less: Restricted cash1	(261,430)	(297,399)	-	-
Cash and cash equivalent	43,834	120,186	287	1,598

1Include deposits pledged for availing credit facilities from banks and deposits with maturity term of three months to twelve months.

6.   Interest-bearing loans and borrowings

The interest-bearing loans and borrowings comprise of the following:

	Interest rate (range %)	Final Maturity		Consolidated		Company
	2013	2012	2013	2012
Long-term "project finance" loans	3.75 to 16.50	April-26	1,908,435		1,471,250	-	-
Short-term loans	9.50 to 14.00	March-14	245,113		312,172	4,514	3,239
Buyers' credit facility	1.09 to 2.58	March-14	562,951		595,487	49,605	49,236
Cash credit and other working capital facilities	10.00 to 14.50	March-14	113,295		132,563	-	-
Redeemable preference shares	0.01 to 15.00	February-28	25,854		26,489	-	-
Total			2,855,648		2,537,961	54,119	52,475

Total debt of US $ 2,855,648 (2012: US $ 2,537,961) comprised:

·      Long-term "project finance" loans of the Group amounting US $ 1,908,435 (2012: US $ 1,471,250) is fully secured on the property, plant and equipment and other assets of joint venture and subsidiaries that operate power stations, allied services and by a pledge over the promoter's shareholding in equity and preference capital of some of the joint ventures and subsidiaries.

·      The short term loan taken by the Group is secured by the corporate guarantee provided by the Company, 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. These loans bear interest at LIBOR plus 100 to 250 basis points. Further the Group has the possibility of roll over of these facilities for further short term periods.

·      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 in 1-15 year.

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 2013, the Group has complied with the relevant covenants.

As at 31 March 2013, the Group has available US $ 1,323,911 of undrawn long term committed borrowing facilities.

The fair value of borrowings at 31 March 2013 was US $ 2,853,565 (2012: US $ 2,537,553). The fair values have been calculated by discounting cash flows at prevailing interest rates.

7.   Finance costs

Finance costs comprise:

	Consolidated		Company
	2013	2012	2013	2012
Interest expenses on loans and borrowings 1	109,830	104,227	1,423	826
Other finance costs	5,209	4,089	919	2,014
Provision for impairment of financial assets2	4,363	2,241	-	-
Net loss on financial liability at fair value through profit or loss3	-	438	-	-
Foreign exchange loss, net	-	48,475	-	330
Net loss on held-for-trading financial assets
on re-measurement	-	13	-	-
Unwinding of discounts	1,582	1,025	-	-
Total	120,984	160,508	2,342	3,170

1Borrowing cost capitalised during the year amounting to US $ 217,834 (2012: US $ 175,849) to property, plant and equipment at an effective interest rate of 14.25% (2012: 14.14%).

2Provision for impairment of financial assets relates to available-for-sale financial asset of US $ 4,363 (2012: US $ 572) and loans and receivable of US $ Nil (2012: US $ 1,669).

3 Net loss on financial liability at fair value through profit or loss above relates to foreign exchange forward contracts that did not qualify for hedge accounting.

8.   Finance income

The finance income comprises:

	Consolidated		Company
	2013	2012	2013	2012
Interest income
bank deposits	27,443	29,837	-	34
loans and receivables	6,635	7,813	-	97
Dividend income	520	649	-	-
Net gain on held-for-trading financial assets
on disposal	67	60	-	-
on re-measurement	12	-	-	-
Unwinding of discount on security deposits	1,404	839	-	-
Net gain on financial liability at fair value through profit or loss1	1,529	-	-	-
Foreign exchange gain, net	672	-	1,490	-
Reclassification adjustment in respect of available-for- sale financial assets disposed	14	58	-	-
Total	38,296	39,256	1,490	131

1Net gain on financial liability at fair value through profit or loss above relates to foreign exchange forward contracts that did not qualify for hedge accounting.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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