TIDMOPG
RNS Number : 8958C
OPG Power Ventures plc
22 October 2020
22 October 2020
OPG Power Ventures plc
("OPG", the "Group" or the "Company")
Final results for the year ended 31 March 2020
OPG (AIM: OPG), the developer and operator of power generation
assets in India, announces its final results for the year ended 31
March 2020 ("FY20").
FY20 Highlights
-- Revenue up 9.5% to GBP154.0 million from GBP140.6 million in FY19
-- Total generation (including deemed) of 2.72 billion units (2.71 billion units in FY19)
-- Adjusted EBITDA of GBP3 1 . 2 million ( 20.3 % margin)
compared with GBP35.3 million (25.1% margin) in FY19
-- Profit before tax from continued operations was GBP14.5
million compared with GBP16.9 million in FY19
-- Term loans principal debt repayment GBP18.0 million
-- Borrowings reduced with gross debt of GBP56.8 million*,
compared to GBP80.4 million at 31 March 2019
Summary financial information
GBP million
FY 20 FY19
Revenue 154.0 140.6
Adjusted EBITDA ** 31.2 35.3
Profit before tax from continuing operations 14.5 16.8
Loss from discontinued operations, incl.
NCI (2.1) (1.0)
Profit for the year 8.0 14.0
Earnings per share (pence) 2.1 3.8
Gross debt * 56.8 80.4
---------------------------------------------- -------------- ----------
Total generation (billion kWh) 2.72 2.71
* Gross Debt of GBP56.8 million consists of long term loans of
GBP49.9 million and working capital of GBP6.9 million
** See definition of Adjusted EBITDA on page 6
Post year end developments and highlights
-- Six months period to 30 September 2020 average Plant Load
Factor ("PLF") was 46% (H1 FY19: 79%); in September 2020 PLF
increased to 63%
-- In June 2020, approx. GBP21.0 million (Rs.2 billion) was
raised through non-convertible debentures (NCDs) with a three year
term and coupon rate of 9.85%; the NCD's proceeds were used to
repay the FY21 and FY22 (i.e. up to March 2022) principal term
loans obligations
-- Total receivables from TANGEDCO at 31st March 2020 of GBP16.4
million (Rs.1.5 billion) were fully collected; there are no overdue
monthly invoices from TANGEDCO
-- At 30 September 2020 the Company's gross debt amounted to
GBP43.8 million, comprised of GBP21.0 million of NCDs, GBP21.5
million of existing term loans, with scheduled repayments spread
from June 2022 to June 2024, and working capital loans of GBP1.3
million
Arvind Gupta, Chairman said:
"We delivered strong operational FY20 results and achieved
significant deleverage as promised to our shareholders. COVID-19
and the lockdown had a severe impact on overall industrial activity
in India and OPG's operations at the beginning of FY21, but power
demand gradually increased during the first half of FY21 and OPG
remains profitable. We have worked hard to tackle the unprecedented
challenges caused by COVID-19 and I am proud to report that we
managed to significantly strengthen OPG's balance sheet with issue
of NCDs and collecting receivables from TANGEDCO. This will enable
OPG to resume cash dividend payments to the Company's shareholders
in the medium term. I am pleased to report that our long term,
profitable and sustainable business model remains unchanged."
Presentation
Dmitri Tsvetkov, CFO will be presenting at the Proactive One2One
Virtual Forum at 6pm on Thursday 22nd October 2020. Attendees can
register for the conference here:
https://event.webinarjam.com/register/692/gwwg2hx20
The presentation will be available for download from the
Company's website: http://www.opgpower.com/
A recording of the conference call will subsequently be
available on the Proactive Investors' and the Company's
websites.
For further information, please visit www.opgpower.com or
contact:
+91 (0) 44 429
OPG Power Ventures PLC 11211
Arvind Gupta / Dmitri Tsvetkov
Cenkos Securities (Nominated Adviser +44 (0) 20 7397
& Broker) 8900
Russell Cook / Stephen Keys/Cameron
MacRitchie
+44 (0) 20 7920
Tavistock (Financial PR) 3150
Simon Hudson / Barney Hayward / Nick
Elwes
Chairman's Statement
Strong operational performance and profitability
As we have seen, the year was challenging amidst a turbulent
macro environment. The Company has emerged stronger at the end,
paving pathways for accelerated future growth. In spite of all the
challenges during the year, the Company's strong operational
performance and operating profitability in FY20 demonstrates that
focusing on the existing operations and deleveraging remains the
right strategy. The Company today is poised to be amongst the most
successful and least leveraged power companies in India with world
class assets and sustained profitability.
The Chennai plants' generation, including deemed generation,
during FY20 was 2.7 billion units which is in line with the level
achieved in FY19, with average Plant Load Factor ("PLF") at 75 per
cent (FY19: 75 per cent). During FY20 average realised tariff was
Rs5.67 (FY19: Rs5.41) 4.8 per cent higher than in FY19.
In FY20, the Group's revenue was GBP154.0 million (FY19:
GBP140.6 million) and Adjusted EBITDA was GBP31.2 million (FY19:
GBP35.3 million). Profit from continuing operations was GBP10.2
million (FY19: GBP15.0 million) and profit for the year was GBP8.0
million (GBP14.0 million).
This was the second year of operations of the Group's Karnataka
solar projects (62MW) situated north of Bengaluru. A capacity
utilisation factor of 18.5 per cent was achieved in FY20 (17 per
cent in FY19).
Continued deleveraging
In 2018, the Board took the decision to focus on our profitable,
long-life assets in Chennai, and to prioritise deleveraging as a
method to grow shareholders' equity. Total borrowings during FY20
were reduced from GBP80.4 million to GBP56.8 million, comprising
term loans of GBP49.9 million and working capital loans of GBP6.9
million.
Since the adoption of this strategy, additional shareholders'
value of 15.6p per share was accrued during last three years on
account of term loan repayments.
We will continue to use the cash generation of our existing
operations to repay our debt and based on the revised term loans'
repayments schedule we aim to be term loans free in calendar year
2024.
Indian economy
Being one of the most populous countries in the world, COVID-19
and the subsequent countrywide lockdown have caused severe
disruption to the Indian economy. The economy continued to witness
slowdown in growth due to successive lockdowns, movement
restrictions, lower consumption and slow credit growth. Amid
projections of a sharp contraction in the global economy, the
International Monetary Fund ("IMF") projects the Indian GDP to
contract by 10.3 per cent in fiscal year 2020 and projects the
Indian economy to rebound in fiscal year 2021 with GDP growth of
8.8 per cent.
The Reserve Bank of India, the country's central bank and
banking regulator, has taken several steps to reduce the negative
impact of the lockdown on the economy through various monetary
policy measures, including reduction in repo and reverse repo
rates, moratorium on loan repayment, 90 days freeze on
non-performing assets declaration, helping MSMEs through stimulus
packages and credit line for incentivizing industries. These
measures coupled with the easing of lockdown restrictions in a
phased manner, will help economic activity to resume fully.
Power sector
During the initial lockdown the total power consumption reduced
by approximately 25 per cent primarily due to a decrease in
industrial demand for electricity on account of COVID-19
restrictions. As the restrictions were eased, power consumption
gradually increased and in September 2020 country wide consumption
grew by 5.6 per cent after a six month slump. Following the gradual
recovery of the Indian economy, the power demand in the country is
expected to grow driven by rising industrial demand. Further,
demand revival will be driven by various reforms undertaken by the
Government of India, viz., the UDAY scheme, 24*7 Power for All
initiative and the Saubhagya scheme. On the energy generation
front, coal is expected to remain a significant fuel source in the
country's quest to provide power to every citizen.
Outlook
The Company delivered a robust operational performance and
continued its scheduled repayment of term loans during FY20.
After the year end, in June 2020, the Group raised approximately
GBP21.0 million (Rs.2 billion) through a non-convertible debentures
("NCDs") issue with a three years bullet repayment term and coupon
rate of 9.85 per cent. The NCDs proceeds were used to repay the
FY21 and FY22 (i.e. up to March 2022) principal term loans
obligations. Total receivables from TANGEDCO for principal payment
up to 31 March 2020 amounting to GBP16.4 million (Rs.1.5 billion)
has been fully collected and there are no overdue monthly invoices
from TANGEDCO. Collections from TANGEDCO were partly used to
further prepay the term loans and partly for working capital
requirements. Following these transactions, as at 30 September 2020
the Company's debt amounts to GBP42.5 million, comprised of GBP21.0
million of NCDs, GBP21.5 million of existing term loans, with
scheduled repayments spread from June 2022 to June 2024, and
working capital loans of GBP1.3 million . These two developments
strengthened the Group's financial position and liquidity at this
uncertain times caused by the COVID-19 pandemic.
COVID-19 has posed unprecedented and global challenges for all
countries and the Indian economy is expected to contract during
FY21, resulting in lower GDP and less demand for electricity. We
have been working tirelessly to implement plans to limit the human,
financial and commercial consequences of COVID-19. We have
initiated significant cash conservation initiatives across the
Group, whilst ensuring the health and safety of all our employees
to secure our long term sustainability. These initiatives have
improved the liquidity position of the Company which, together with
support from our lending institutions, put the Group in a stronger
position to manage the difficult market conditions.
During the six month period to 30 September 2020, Company
operated at average PLF (incl. deemed), of 46 per cent which in
September 2020 increased to 63 per cent. We expect that the
Company's FY21 generation and average realised tariff will reduce
in comparison with FY20. However, the Company is likely to benefit
from the projected lower coal prices and freight rates and remains
profitable. We expect that medium-term and long-term fundamentals
remain unchanged and post-COVID-19 recovery, the Company expects to
prosper as management seeks to deliver its long term, profitable
and sustainable business model.
I would like to thank, all of our employees, vendors, banks and
all stakeholders for the incredible support we have received during
these unprecedented and extraordinary times.
Arvind Gupta
Chairman
22 October 2020
FINANCIAL REVIEW
The following is a commentary on the Group's nancial performance
for the year.
Income statement
========================================== ======= ========= ------------------------
2020 % of 2019 % of
revenue revenue
========= ===============
Year ended 31 March GBPm GBPm
========================================== ======= ========= ======= ===============
Revenue 154.0 140.6
Cost of revenue (excluding
depreciation) (90.0) (91.7)
========================================== ======= ========= ======= ===============
Gross profit 64.0 41.5 48.9 34.8
Other income 0.7 2.6
Distribution, general and administrative
Expenses, expected credit loss
(excluding depreciation and
share-based compensation) (33.5) (16.2)
Adjusted EBITDA (see definition
on page 6) 31.2 20.3 35.3 25.1
Share-based compensation (0.8)
Depreciation and amortisation (6.3) (6.1)
Net finance costs (9.5) (12.4)
========================================== ======= ========= ======= ===============
Profit before tax from continuing
operations 14.5 9.4 16.8 11.9
Taxation (4.3) (1.8)
========================================== ======= ========= ======= ===============
Profit after tax from continuing
operations 10.2 6.6 15.0 10.7
========================================== ======= ========= ======= ===============
Loss from discontinued operations,
incl. Non-Controlling Interest (2.1) (1.0)
Profit for the year 8.0 14.0
========================================== ======= ========= ======= ===============
Note: Due to rounding, numbers presented throughout this
document may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
Revenue
The Group's revenue has increased by GBP13.4 million, re ecting
a 9.5% growth year on year as a result of full year impact of
increase in tariff during FY19. Average tariff realised during FY20
increased to Rs5.86 per kWh, as a result of full year impact of
tariff increases during October 2018 for captive users and
additional contractual claims to TANGEDCO. Generation exported to
customers and billed for revenue, including deemed generation, was
in the same range of 2.72 billion units during FY20 in comparison
with FY19 generation.
Production and output levels from the Group's operating power
plant in Chennai compared to the prior year were as follows:
Particulars FY20 FY19
============================================ ===== =====
Total generation, incl. "deemed" generation
(million units) 2,716 2,705
============================================ ===== =====
Plant Load Factor (PLF) (%)(1) 75 75
============================================ ===== =====
Average tariff (INR/unit) (2) 5.86 5.56
============================================ ===== =====
1 Chennai Unit 3: "Deemed" PLF (%) has been included
2 Average tariff includes effect of deemed offtake tariff for
Chennai Unit 3. Average FY20 tariff excluding effect of deemed
offtake was Rs5.67 (FY19: Rs5.41).
Gross pro t and Adjusted EBITDA
Gross pro t ('GP') in FY20 was 41.5% of revenue (FY19: 34.8%).
The increase in GP is primarily on account of the full year impact
of the increase in tariff during FY19, additional contractual
claims to TANGEDCO and reduction of cost of coal.
Adjusted earnings before interest, taxation, depreciation and
amortisation ('Adjusted EBITDA') is a measure of a business' cash
generation from operations before depreciation, interest and
exceptional and non-standard or non-operational charges, e.g. share
based compensation, etc. Adjusted EBITDA is useful to analyse and
compare profitability among periods and companies, as it eliminates
the effects of financing and capital expenditures.
Adjusted EBITDA was GBP31.2 million in FY20 a decrease from
GBP35.3 million in FY19. The Adjusted EBITDA margin was lower at
20.3% in FY20 against 25.1% in FY19 primarily on account of
increase in expected credit loss on trade receivables with respect
to contractual claim made on a customer towards change in law as
per the Power Purchase Agreement of GBP6.4 million, tariff discount
dispute of GBP7.5 million and change in credit risk of customers of
GBP3.1 million.
Profit from continuing operations before tax was GBP14.5 million
compared with a profit from continuing operations before tax of
GBP16.8 million in FY19.
Profit before tax reconciliation ('PBT') (GBPm) FY 20
PBT 2019-20 14.5
PBT 2018-19 16.8
Decrease in PBT (2.3)
========================================================= =======
Increase in GP 15.1
Decrease in Other Income (2.0)
Increase in Expected Credit Loss, Distribution, General
& Administrative Expenses (18.0)
Decrease in Net Finance Costs 2.8
Increase in Depreciation and Amortisation (0.2)
Decrease in PBT (2.3)
========================================================= =======
Taxation
The Company's operating subsidiaries are under a tax holiday
period, but are subject to Minimum Alternate Tax ('MAT') on their
accounting profits. Any tax paid under MAT can be offset against
future tax liabilities arising after the tax holiday period.
The tax expense during the year was GBP4.3 million comprised of
current tax expense of GBP0.8 million and deferred tax expense of
GBP3.5 million.
Profits after tax from continuing operations
Profits after tax from continuing operations have decreased by
32.0% in FY20 to GBP10.2 million due to increased provision for
expected credit loss.
Assets Held for Sale and Loss from discontinued operations
62MW Karnataka solar projects
In FY18 four Karnataka solar projects (62MW) were commissioned.
The Group has a 31% equity interest in these projects. During FY19,
the Company obtained a right to buy an additional 30% equity
interest in the solar projects following the achievement of the
conditions precedent under the terms of the agreement. This right,
in combination with other rights, provided substantive potential
voting rights and investments in the underlying solar projects and
were re-classified from associates to subsidiaries. Given the long
term returns from solar projects and the level of capital
investment required, the Board has decided to focus on the core
thermal power plants business and announced its intention to
dispose of the Karnataka solar projects. The Company initiated the
process of disposal of the solar projects in the previous year
which met all conditions of IFRS 5 for classification of the solar
business as Assets held for sale at 31 March 2020. Accordingly,
assets of GBP46.4 million and liabilities of GBP32.9 million were
classified as assets and liabilities held for sale in the
Consolidated Statement of Financial Position as at 31 March 2020
and their loss from operations of GBP0.3 million was also included
in loss from discontinued operations in the Consolidated Statement
of Comprehensive Income.
Impairment provision of investments in joint venture Padma
Shipping
In 2014 the Company entered into a Joint Venture agreement with
Noble Chartering Ltd ("Noble"), to secure competitive long term
rates for international freight for its imported coal requirements.
Under the arrangement, the company and Noble agreed to jointly
purchase and operate two 64,000 MT cargo vessels through a Joint
venture company Padma Shipping Ltd, Hong Kong ('Padma').
During FY18, the Joint Venture partner, due to a change in their
group strategy, requested for the Joint Venture to be terminated
and as the vessels were still under construction and OPG agreed
with this proposal. During FY19 one of the vessels was sold by the
shipping yard and during FY20 the second vessel has been sold. The
Padma joint venture will be terminated and dissolved in due
course.
OPG has invested approximately GBP3.5 million in equity and
GBP1.7 million to date as advance to Padma and the joint venture
has been reported using equity method as per the requirements of
IFRS 11. The Company recognised an impairment provision in FY20
financial statements of GBP0.9 million (FY19: GBP1.0 million)
against its investment to date, including its advance to Padma
Shipping, resulting in impairment of the entire investment of
GBP5.2 million on account of the impending dissolution of the joint
venture.
Earnings per Share (EPS)
The Company's total reported EPS decreased to 2.11 pence from
3.81 pence primarily due to higher provision for expected credit
loss on trade receivables and loss from discontinued operations in
FY20.
Dividend
The Company has issued 12,823,311 (2019: 31,601,503) shares
during FY19 with respect to a scrip dividend at par value of
GBP0.000147 (2018: GBP0.000147) per share amounting to GBP1,885
(2019: GBP4,646). The difference between fair value of shares
issued above par value of GBP2,325,567 (2019: GBP3,558,442) with
respect to the scrip dividend was credited to share premium.
Foreign exchange loss on translation
The British Pound-to-Indian Rupee exchange rate has moved higher
to a closing rate on 31 March 2020 of GBP1= INR 93.07 as against
GBP1= INR 90.28 on 31 March 2019 thereby resulting in exchange loss
of GBP4.6 million on translating foreign operations.
Property, plant and equipment
The decrease in net book value of our property, plant and
equipment of GBP11.6 million principally relates to depreciation
and foreign exchange impact on account of translation during the
year offset by additions.
Other non--current assets
Other non-current assets (excluding Property, plant and
equipment & Intangible assets) have decreased by GBP0.5 million
primarily due to decrease in non-current portion of restricted
cash.
Current assets
Current assets have decreased by GBP36.4 million from GBP139.7
million to GBP103.3 million year on year primarily as a result of
the following:
-- Increase in inventory holdings by GBP4.3 million.
-- Decrease in Assets held for sale by GBP4.1 million.
-- Decrease in trade and other receivables by GBP22.3 million.
-- Decrease in cash and bank balances (including restricted cash) by GBP14.3 million.
Liabilities
Current liabilities have decreased by GBP10.8 million from
GBP109.7 million to GBP98.9 million year on year primarily due to
trade payable and assets held of sales.
Non-current liabilities have decreased by GBP41.7 million from
GBP80.7 million to GBP39.0 million year on year primarily on
account of repayment of borrowings and reduction in provision for
pledged deposit, offset with restricted cash.
Gross debt, gearing and nance costs
As of 31 March 2020, total borrowings were GBP56.8 million (31
March 2019: GBP80.4 million). The gearing ratio, net borrowings
(i.e. total borrowings minus cash)/(equity plus borrowings), was
25% (31 March 2019: 34%). Gearing ratio is a useful measure of
financial risk of the Company.
Total borrowings (current and non-current portions) decreased by
GBP23.6 million due to the repayment of term loans of GBP18.0
million, the decrease in working capital loans of GBP3.5 million
and foreign exchange impact of depreciation of INR against GBP.
The Company achieved a major milestone with respect to Unit 1 of
Chennai plant (77 MW out of 414 MW) as the term loans were fully
repaid in December 2018. Based on the revised term loans repayments
schedule the Chennai plant is expected to be debt free in calendar
2024.
Finance costs have decreased by GBP3.1 million from GBP14.6
million in FY19 to GBP11.5 million in FY20 primarily due to the
impact of the decrease in foreign exchange losses and reduction in
interest expense following scheduled repayments of term loans.
Finance income decreased from GBP2.2 million in FY19 to GBP2.0
million in FY20 and therefore net finance costs in FY20 amounted to
GBP9.5 million (FY19: GBP12.4 million).
The restricted cash balances totaling GBP7.5 million at 31 March
2020 (31 March 2019: GBP23.5 million) is comprised of financial
deposits that have been pledged as security for Letters of Credit.
Reduction in restricted cash is primarily due to an offset of
financial deposits, pledged as a security for BVP's borrowings,
against an impairment provision made in previous years.
Cash ow
Cash flow from continuing operations before and after changes in
working capital were GBP48.2 million (FY19: GBP35.7 million) and
GBP30.6 million (FY19: GBP28.1million) respectively. Net cash flow
from operating activities has increased from GBP28.1 million in
FY19 to GBP30.6 million in FY20, an increase of GBP2.5 million,
primarily due to increase in gross profit.
Movements (GBPm) FY20 FY19
================================================== ======= =======
Operating cash flows from continuing operations
before changes in working capital 48.2 35.7
Tax paid (0.8) (0.6)
Change in working capital assets and liabilities (16.8) (7.0)
Net cash generated by operating activities
from continuing operations 30.6 28.1
Purchase of property, plant and equipment
(net of disposals) (0.6) (1.5)
Investments sold/(purchased), incl. in
solar projects, market securities, movement
in restricted cash and interest received 3.5 1.2
Net cash from/(used in) continuing investing
activities 2.9 (0.3)
Finance costs paid (9.9) (14.8)
-------------------------------------------------- ------- -------
Total cash change from continuing operations
before net borrowings 23.6 13.0
-------------------------------------------------- ------- -------
Post - reporting date events
The Group raised approximately GBP21.0 million (Rs2 billion)
during June 2020 through non-convertible debentures (NCDs) issue
with a three years term and coupon rate of 9.85%. The NCDs proceeds
was used to repay the FY21 and FY22 (i.e. to March 2022) principal
term loans obligations.
Post year end operations update and COVID-19 impact
Since the start of FY21, there has been a reduction in
generation due to COVID-19 induced country wide lockdown which
resulted in disruption in the economic activities and subsequent
decrease in power demand from captive users. For the six months to
30 September 2020:
-- Average Plant Load Factor ("PLF") was 46% (H1 FY19: 79%); in
September 2020 PLF increased to 63%
-- Average tariff was Rs5.60 (FY20: Rs5.67)
-- At 30 September 2020 the Company's gross debt amounted to
GBP43.8 million, comprised of GBP21.0 million of NCDs, GBP21.5
million of existing term loans, with scheduled repayments spread
from June 2022 to June 2024, and working capital loans of GBP1.3
million
-- Various cost reduction, efficiency improvement and liquidity
improvement measures have been implemented to ensure sustainable
operations
The Government of India with Reserve Bank of India (RBI) have
announced various regulatory measures to help the industry.
Subsequent to the year end, the RBI announced various regulatory
measures (RBI COVID-19 Regulatory package which, inter alia,
provides for rescheduling of payments towards term loans and
working capital facilities for principal and interest) to mitigate
the burden of debt servicing brought by disruptions on account of
the COVID-19 pandemic and to ensure the continuity of viable
businesses. The Group has opted for such measures for the deferment
of payment of principal and interest on term loans and also
interest on working capital loans.
In June 2020, the Group repaid the principal term loan
obligation for FY 21 and FY 22 from NCDs proceeds and during the
first few months of FY21 it collected total receivables outstanding
at 31 March 2020 of approximately GBP16.4 million from its
principle customer TANGEDCO and there are no overdue monthly
invoices from TANGEDCO. These two developments strengthened the
Group's financial position at this time of economic slowdown.
Dmitri Tsvetkov
Chief Financial Officer
22 October 2020
Consolidated statement of financial
position
As at 31 March 2020
(All amount in GBP, unless
otherwise stated)
As at As at
Notes 31 March 2020 31 March 2019
-------------------------------- ------ -------------- --------------
Assets
Non-current assets
Intangible assets 14 9,045 23,603
Property, plant and equipment 15 192,469,395 204,102,891
Other long-term assets 17 509,628 518,553
Restricted cash 20 26,645 517,271
193,014,713 205,162,318
-------------- --------------
Current assets
Inventories 19 11,480,099 7,151,366
Trade and other receivables 18 26,901,986 49,198,105
Other short-term assets 17 6,316,735 6,329,354
Current tax assets (net) 1,330,684 1,337,316
Restricted cash 20(b) 7,497,967 23,030,599
Cash and cash equivalents 20(a) 3,438,830 2,118,960
7(a),
Assets held for sale 7(b) 46,356,680 50,497,664
103, 322,981 139,663,364
-------------- --------------
Total assets 296, 337,694 344,825,682
============== ==============
Equity and liabilities
Equity
Share capital 21 58,909 57,024
Share premium 21 131,451,482 129,125,915
Other components of equity (1,322,987) 2,401,287
Retained earnings 27,818,474 21,916,422
Equity attributable to owners
of the Company 158,005,878 153,500,648
Non-controlling interests 497,955 882,759
Total equity 158,503,833 154,383,407
-------------- --------------
Liabilities
Non-current liabilities
Borrowings 23 33,081,456 51,495,208
Trade and other payables 24 169,373 14,235,485
Provision for pledged deposits 20(b) - 12,627,381
Deferred tax liabilities (net) 13 5,723,791 2,380,115
38,974,620 80,738,189
-------------- --------------
Current liabilities
Borrowings 23 23,746,229 28,869,722
Trade and other payables 24 41,663,989 45,474,814
Other liabilities 582,241 91,764
Liabilities classified as held
for sale 7(b) 32,866,783 35,267,786
98,859,241 109,704,086
-------------- --------------
Total liabilities 137,833,861 190,442,275
-------------- --------------
Total equity and liabilities 296, 337,694 344,825,682
============== ==============
The notes are an integral part of these consolidated financial
statements
The financial statements were authorised for issue by the board
of directors on 22 October 2020 and were signed on its behalf
by
Arvind Gupta, Chairman Dmitri Tsvetkov, Chief Financial
Officer
Consolidated statement of Comprehensive
Income
For the Year ended 31 March 2020
(All amount in GBP, unless otherwise
stated)
Year ended Year ended
31 March 31 March
2020 2019
Notes
-------------------------------------------------- ----------- ------------- -------------
Revenue 8 154,040,283 140,632,328
Cost of revenue 9 (90,060,252) (91,753,763)
Gross profit 63,980,031 48,878,565
------------- -------------
Other income 10 668,037 2,645,332
Distribution cost (9,209,987) (8,476,933)
General and administrative expenses (8,061,622) (6,955,960)
Expected credit loss on trade receivables 29 (17,046,480) (790,437)
Depreciation and amortisation (6,293,034) (6,064,374)
Operating profit 24,036,945 29,236,193
------------- -------------
Finance costs 11 (11,495,136) (14,586,917)
Finance income 12 1,962,692 2,207,480
------------- -------------
Profit before tax 14,504,501 16,856,756
Tax expense 13 (4,321,124) (1,819,387)
-------------
Profit for the year from continued
operations 10,183,377 15,037,369
------------- -------------
Loss from discontinued operations,
including Non-Controlling Interest 7(a)(b)(c) (2,146,275) (989,493)
Profit for the year 8,037,102 14,047,876
============= =============
Profit for the year attributable to:
Owners of the Company 8,229,504 14,020,364
Non - controlling interests (192,402) 27,512
8,037,102 14,047,876
============= =============
Earnings per share from continued operations
Basic earnings per share (in pence) 26 2.60 4.09
Diluted earnings per share (in pence) 2.59 4.09
Loss per share from discontinued operations
Basic earnings per share (in pence) 26 (0.50) (0.23)
Diluted earnings per share (in pence) (0.50) (0.23)
Earnings per share
-Basic (in pence) 26 2.11 3.81
-Diluted (in pence) 2.09 3.81
Other comprehensive income / (loss)
Items that will be reclassified subsequently
to profit or loss
Exchange differences on translating
foreign operations (4,560,097) 1,207,292
Items that will be not reclassified
subsequently to profit or loss
Exchange differences on translating
foreign operations, relating to non-controlling
interests (192,401) 961
Total other comprehensive income /
(loss) (4,752,498) 1,208,253
------------- ---------------
Total comprehensive income 3,284,604 15,256,129
============= ===============
Total comprehensive income / (loss)
attributable to:
Owners of the Company 3,669,407 15,227,656
Non-controlling interest (384,803) 28,473
3,284,604 15,256,129
============= ===============
The notes are an integral part of these consolidated financial
statements
Consolidated statement of changes in equity
For the Year ended 31 March 2020
(All amount in GBP, unless otherwise stated)
Issued Foreign Total
capital currency attributable
(No. of Ordinary Share Other translation Retained to owners Non-controlling Total
shares) shares premium reserves reserve earnings of parent interests equity
At 1 April
2018 356,308,697 52,378 125,567,473 6,650,305 (5,456,310) 11,461,826 138,275,672 854,752 139,130,424
--------------- ------------ --------- ------------ ---------- ------------ ------------ ------------- ---------------- ------------
Additions on
consolidation
of new
subsidiary (2,680) (2,680) (466) (3,146)
Dividends
(Note
21) 31,601,503 4,646 3,558,442 - - (3,563,088) - - -
Transaction
with owners 31,601,503 4,646 3,558,442 - - (3,565,768) (2,680) (466) (3,146)
--------------- ------------ --------- ------------ ---------- ------------ ------------ ------------- ---------------- ------------
Profit for
the year - - - - - 14,020,364 14,020,364 27,512 14,047,876
Other
comprehensive
income - - - - 1,207,292 - 1,207,292 961 1,208,253
Total
comprehensive
income - - - - 1,207,292 14,020,364 15,227,656 28,473 15,256,129
--------------- ------------ --------- ------------ ---------- ------------ ------------ ------------- ---------------- ------------
At 31 March
2019 387,910,200 57,024 129,125,915 6,650,305 (4,249,018) 21,916,422 153,500,648 882,759 154,383,407
--------------- ------------ --------- ------------ ---------- ------------ ------------ ------------- ---------------- ------------
At 1 April
2019 387,910,200 57,024 129,125,915 6,650,305 (4,249,018) 21,916,422 153,500,648 882,759 154,383,407
Employee Share
based payment
LTIP (Note
22) 835,822 - 835,822 - 835,822
Dividends
(Note
21) 12,823,311 1,885 2,325,567 - - (2,327,452) - - -
Transaction
with owners 12,823,311 1,885 2,325,567 835,822 - (2,327,452) 835,822 - 835,822
--------------- ------------ --------- ------------ ---------- ------------ ------------ ------------- ---------------- ------------
Profit for
the year - - - - - 8,229,504 8,229,504 (192,402) 8,037,101
Other
comprehensive
income - - - - (4,560,096) - (4,560,096) (192,402) (4,752,497)
Total
comprehensive
income - - - - (4,560,096) 8,229,503 3,669,408 (384,804) 3,284,604
--------------- ------------ --------- ------------ ---------- ------------ ------------ ------------- ---------------- ------------
At 31 March
2020 400,733,511 58,909 131,451,482 7,486,127 (8,809,114) 27,818,474 158,005,878 497,955 158,503,833
--------------- ------------ --------- ------------ ---------- ------------ ------------ ------------- ---------------- ------------
During the year, the Company paid a scrip dividend of 12,823,311
shares (2019:31,601,503 shares)
The notes are an integral part of these consolidated financial
statements.
Consolidated statement of cash flows
For the Year ended 31 March 2020
(All amount in GBP, unless otherwise stated)
Year ended Year ended
Notes 31 March 31 March
2020 2019
--------------------------------------------------- ------ ------------- -------------
Cash flows from operating activities
Profit before income tax including discontinued
operations 11,365,000 15,867,263
Adjustments for:
Loss from discontinued operations, net 7 3,139,501 989,493
Unrealised foreign exchange loss / (gain) 9(d) 1,568,333 (416,338)
Financial costs 11 9,926,804 14,586,917
Financial income 12 (1,962,692) (2,207,480)
Share based compensation costs 22 835,822 -
Depreciation and amortisation 6,293,034 6,064,374
Expected credit loss on Trade receivables 29 17,046,480 790,437
Changes in working capital
Trade and other receivables 4,406,823 (16,021,881)
Inventories (4,699,650) 2,564,914
Other assets 1,945,750 4,752,087
Trade and other payables (18,245,141) 2,384,828
Other liabilities (217,194) (669,762)
Cash generated from continuing operations 31,402,869 28,684,851
Taxes paid (767,865) (584,390)
------------- -------------
Cash provided by operating activities
of continuing operations 30,635,004 28,100,461
Cash provided by (used for) operating
activities of discontinued operations (2,062,318) (8,256,479)
-------------
Net cash provided by operating activities 28,572,687 19,843,983
------------- -------------
Cash flows from investing activities
Purchase of property, plant and equipment
(including capital advances) (573,668) (1,515,742)
Interest received 1,962,692 2,207,480
Movement in restricted cash 2,240,335 (1,737,255)
Sale/(purchase) of investments (725,418) 785,222
Cash from / (used in) investing activities
of continuing operations 2,903,941 (260,295)
Cash from / (used in) investing activities
of discontinued operations 426,425 (4,346,681)
-------------
Net cash from / (used in) investing activities 3,330,366 (4,606,976)
------------- -------------
Cash flows from financing activities
Proceeds from borrowings (net of costs) - 7,535,858
Repayment of borrowings (21,620,516) (20,636,875)
Finance costs paid (9,927,750) (14,835,536)
------------- -------------
Cash used in financing activities of continuing
operations (31,548,266) (27,936,553)
Cash used in financing activities of discontinued
operations 689,255 12,717,446
Net cash used in financing activities (30,859,011) (15,219,107)
------------- -------------
Net Increase / (decrease) in cash and
cash equivalents from continuing operations 1,990,679 (96,387)
Net Increase / (decrease) in cash and
cash equivalents from discontinued operations (946,638) 114,286
------------- -------------
Net increase in cash and cash equivalents 1,044,042 17,899
Cash and cash equivalents at the beginning
of the year 2,118,960 2,185,570
Cash and cash equivalents - solar business 24,545 231,953
Exchange differences on cash and cash
equivalents 19,330 29,769
Cash and cash equivalents of the discontinued
operations 231,953 (346,231)
Cash and cash equivalents at the end of
the year 3,438,830 2,118,960
------------- -------------
Consolidated statement of cash flows
For the Year ended 31 March 2020 (continued)
(All amount in GBP, unless otherwise stated)
Disclosure of Changes in financing
liabilities:
Analysis of changes in Net 1 April Cash flows Forex rate 31 March
debt 2019 impact 2020
Working Capital loan 10,433,893 (3,317,490) (202,281) 6,914,122
Secured loan due within one
year 18,435,829 (1,087,278) (516,444) 16,832,107
Borrowings grouped under Current
liabilities 28,869,722 (4,404,768) (718,725) 23,746,229
Secured loan due after one
year 51,495,208 (17,215,748) (1,198,004) 33,081,456
Borrowings grouped under Non-current
liabilities 51,495,208 (17,215,748) (1,198,004) 33,081,456
----------- --------------- ---------------- -----------
Analysis of changes in Net 1 April Cash flows Other Changes 31 March
debt 2018 2019
Working Capital loan 3,426,622 7,535,858 (528,587) 10,433,893
Secured loan due within one
year 20,402,793 (1,966,964) - 18,435,829
Borrowings grouped under Current
liabilities 23,829,415 5,568,894 (528,587) 28,869,722
Secured loan due after one
year 69,636,532 (18,669,911) 528,587 51,495,208
Borrowings grouped under Non-current
liabilities 69,636,532 (18,669,911) 528,587 51,495,208
----------- --------------- ---------------- -----------
Notes to the Consolidated Financial Statements
(All amounts are in GBP, unless otherwise stated)
1. Nature of operations
OPG Power Ventures Plc ('the Company' or 'OPGPV'), and its
subsidiaries (collectively referred to as 'the Group') are
primarily engaged in the development, owning, operation and
maintenance of private sector power projects in India. The
electricity generated from the Group's plants is sold principally
to public sector undertakings and heavy industrial companies in
India or in the short term market. The business objective of the
group is to focus on the power generation business within India and
thereby provide reliable, cost effective power to the industrial
consumers and other users under the 'open access' provisions
mandated by the Government of India.
2. Statement of compliance
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards (IFRS) and their interpretations as adopted by the
European Union (EU) and the provisions of the Isle of Man,
Companies Act 2006 applicable to companies reporting under
IFRS.
3. General information
OPG Power Ventures Plc, a limited liability corporation, is the
Group's ultimate parent Company and is incorporated and domiciled
in the Isle of Man. The address of the Company's registered Office,
which is also the principal place of business, is 55 Athol street,
Douglas, Isle of Man IM1 1LA. The Company's equity shares are
listed on the Alternative Investment Market (AIM) of the London
Stock Exchange.
The Consolidated Financial statements for the year ended 31
March 2020 were approved and authorised for issue by the Board of
Directors on 22 October 2020.
4. Recent accounting pronouncements
a. Standards, amendments and interpretations to existing
standards that are not yet effective and have not been adopted
early by the Group
At the date of authorisation of these financial statements,
certain new standards, and amendments to existing standards have
been published by the IASB that are not yet effective, and have not
been adopted early by the Group. Information on those expected to
be relevant to the Group's financial statements is provided
below.
Management anticipates that all relevant pronouncements will be
adopted in the Group's accounting policies for the first period
beginning after the effective date of the pronouncement. New
standards, interpretations and amendments not either adopted or
listed below are not expected to have a material impact on the
Group's financial statements.
Amendments to IAS 1 and IAS 8, "Definition of Material,"
published in October 2018. An entity shall apply those amendments
prospectively for annual periods beginning on or after 1 January
2020.
Amendments to IFRS 3, "Definition of a business," published in
October 2018. Acquisitions that occur on or after first annual
reporting period beginning on or after 1 January 2020. Early
application is permitted.
Amendments to IFRS 9, IAS 39 and IFRS 7, "Interest rate
benchmark reform," published in September 2019. An entity shall
apply those amendments prospectively for annual periods beginning
on or after 1 January 2020.
Currently, these adjustments are not expected to have a material
impact on the consolidated financial statements of Group.
b. Changes in accounting Standards
i) IFRS 16 'Leases'
Effective April 1, 2019, the Group applied the accounting
standard IFRS 16 "Leases" for the first time. IFRS 16 "Leases"
replaces IAS 17 "Leases" and the corresponding interpretations.
IFRS 16 introduces a uniform lessee accounting model that requires
lessees to recognize all leases in the consolidated balance sheet.
This model mandates that right-of-use assets be recognized for
identified assets and lease liabilities recognized for entered
payment obligations. In accordance with IFRS 16, lease liabilities
to be recognized for leases with the Group as a lessee are to be
measured at the present value of the future lease payments. In
accordance with IFRS 16, right-of-use assets are recognized within
property, plant and equipment under the same line item that would
have been used if the underlying asset had been purchased. In
contrast to the previous approach of fully recognizing expenses
from operating leases in the respective functional costs, interest
expenses from the unwinding of the discount on lease liabilities
will in future be recognized in the financial result. Currently
there are no material leases and rentals are charged to the income
statement. The new lease accounting regulations have no material
impact on the consolidated financial statement of the Group.
5. Summary of significant accounting policies
a) Basis of preparation
The consolidated financial statements of the Group have been
prepared on a historical cost basis, except for financial assets
and liabilities at fair value through profit or loss and financial
assets measured at FVPL.
The consolidated financial statements are presented in
accordance with IAS 1 Presentation of Financial Statements and have
been presented in Great Britain Pounds ('LIR'), the functional and
presentation currency of the Company.
During FY2019, the Company obtained a right to exercise an
option to buy additional 30% equity interest in solar companies.
This right, in combination with other rights, provided substantive
potential voting rights and investments in solar companies were
re-classified from associates to subsidiaries. During FY2019,
results of operations of associates Avanti Solar Energy Private
Limited, Mayfair Renewable Energy Private Limited, Avanti Renewable
Energy Private Limited and Brics Renewable Energy Private Limited
were reclassified to discontinued operations. After evaluation of
all options, the Company decided that the most efficient way to
maximise shareholders' value from solar operations is to dispose
solar companies and it initiated process of disposition of solar
companies which met all conditions of IFRS 5 for classification of
solar business as Assets held for sale at 31 March 2020 (Note
7(b)).
Going concern
As at 31 March 2020 the Group had GBP3.4m in cash and net
current assets of GBP4.4m. The directors and management have
prepared a cash flow forecast to October 2021, 12 months from the
date this report has been approved.
The Group experiences sensitivity in its cash flow forecasts due
to the exposure to potential increase in USD denominated coal
prices and a decrease in the value of the Indian Rupee. The
Directors and management are confident that the Group will be
trading in line with its forecast and that any exposure to a
fluctuation in coal prices or the exchange rate INR/USD has been
taken into consideration and therefore prepared the financial
statements on a going concern basis.
COVID-19 virus, a global pandemic has affected the world economy
leading to significant decline and volatility in financial markets
and decline in economic activities. The Group has considered the
possible effects that may result from the pandemic on the carrying
amounts of receivables and other financial assets and carried out a
Reverse Stress Test (RST). In developing the assumptions relating
to the possible future uncertainties in the global economic
conditions because of this pandemic, the Group, as at the date of
approval of these financial statements has used internal and
external sources of information. The Group has performed
sensitivity analysis on the assumptions used for business
projections and based on current estimates expects the carrying
amount of these assets will be recovered and no material impact on
the financial results inter-alia including the carrying value of
various current and non-current assets are expected to arise for
the year ended 31 March 2020. The Group will continue to closely
monitor any variation due to the changes in situation and these
changes will be taken into consideration, if necessary, as and when
they crystalise. However, electricity being an essential commodity
the impact on industry has been comparatively lower. The operating
assets of the
Group primarily are located in India. The Government of India
with Reserve Bank of India (RBI) have announced various regulatory
measures to help the industry. Subsequent to year end, RBI
announced various regulatory measures (RBI COVID-19 Regulatory
package which, inter alia, provides for rescheduling of payments
towards Term Loans and Working Capital facilities for principal and
interest) to mitigate the burden of debt servicing brought by
disruptions on account of COVID-19 pandemic and to ensure the
continuity of viable businesses. The Group has opted for such
measures for deferment of payment of principal and interest on term
loans and also interest on working capital loans. Please refer to
events after year end detailed below that have substantially eased
the cash flow burden on account of the Group having repaid the
principal term loan obligation for FY 21 and FY 22 and major
recoveries of overdues towards power supply from our principle
customer TANGEDCO. Based on the RST analysis, we can conclude that
the Group is in strong position to go through the current situation
caused by COVID-19 pandemic and going concern is not an issue.
Developments after the year end
Group raised approximately GBP 21.0 million (Rs.2000 million)
during June 2020 through non-convertible debentures (NCDs) issue
with a three years term and coupon rate of 9.85%. NCD's proceeds
was used to repay the FY21 and FY22 (i.e. to March 2022) principal
term loans obligations. This will substantially release the cash
flow burden for the next two financial years on account of loan
repayment obligations.
Subsequent to 31 March 2020, the Group collected the full amount
of receivables from its principle customer TANGEDCO of
approximately GBP16.4 m.
These two developments strengthened the Group's financial
position at this time of economic slowdown.
b) Basis of consolidation
The consolidated financial statements include the assets,
liabilities and results of the operation of the Company and all of
its subsidiaries as of 31 March 2020. All subsidiaries have a
reporting date of 31 March.
A subsidiary is defined as an entity controlled by the Company.
The parent controls a subsidiary if it is exposed, or has rights,
to variable returns from its involvement with the subsidiary and
has the ability to affect those returns through its power over the
subsidiary. Subsidiaries are fully consolidated from the date of
acquisition, being the date on which effective control is acquired
by the Group, and continue to be consolidated until the date that
such control ceases.
All transactions and balances between Group companies are
eliminated on consolidation, including unrealised gains and losses
on transactions between Group companies. Where unrealised losses on
intra-group asset sales are reversed on consolidation, the
underlying asset is also tested for impairment from a group
perspective. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Non-controlling interest represents the portion of profit or
loss and net assets that is not held by the Group and is presented
separately in the consolidated statement of comprehensive income
and within equity in the consolidated statement of financial
position, separately from parent shareholders' equity. Acquisitions
of additional stake or dilution of stake from/ to non-controlling
interests/ other venturer in the Group where there is no loss of
control are accounted for as an equity transaction, whereby, the
difference between the consideration paid to or received from and
the book value of the share of the net assets is recognised in
'other reserve' within statement of changes in equity.
c) Investments in associates and joint ventures
Investments in associates and joint ventures are accounted for
using the equity method. The carrying amount of the investment in
associates and joint ventures is increased or decreased to
recognise the Group's share of the profit or loss and other
comprehensive income of the associate and joint venture, adjusted
where necessary to ensure consistency with the accounting policies
of the Group.
Unrealised gains and losses on transactions between the Group
and its associates and joint ventures are eliminated to the extent
of the Group's interest in those entities. Where unrealised losses
are eliminated, the underlying asset is also tested for
impairment.
d) List of subsidiaries, joint ventures, and associates
Details of the Group's subsidiaries and joint ventures, which
are consolidated into the Group's consolidated financial
statements, are as follows:
i) Subsidiaries
% Voting Right % Economic interest
------ --- ----
Immediate Country March
Subsidiaries parent of incorporation March 2020 March 2019 2020 March 2019
---------------------- -------------- --------------------- ------------- ------------- -------- ------------
Caromia Holdings
limited ('CHL') OPGPV Cyprus 100 100 100 100
Gita Power and
Infrastructure
Private Limited,
('GPIPL') CHL India 100 100 100 100
OPG Power Generation
Private Limited
('OPGPG') GPIPL India 73.16 73.49 99.91 99.91
Samriddhi Solar
Power LLP(*) OPGPG India 73.16 73.49 99.91 99.90
Samriddhi Surya
Vidyut Private
Limited OPGPG India 73.16 73.49 99.91 99.90
OPG Surya Vidyut
LLP(*) OPGPG India 73.16 73.49 99.91 99.90
Powergen Resources
Pte Ltd OPGPV Singapore 98.66 98.67 100.00 100.00
Avanti Solar Energy
Private Limited(**) OPGPG India 31 31% 31 31%
Mayfair Renewable
Energy Private
Limited(**) OPGPG India 31 31% 31 31%
Avanti Renewable
Energy Private
Limited(**) OPGPG India 31 31% 31 31%
Brics Renewable
Energy Private
Limited(**) OPGPG India 31 31% 31 31%
(*)During FY20 the companies were converted into LLP.
(**)During FY19, the Group obtained a right 'to exercise an
option to buy additional equity interest in solar companies. This
right, in combination with other rights, provided substantive
potential voting rights and investments in solar companies were
re-classified from associates to subsidiaries.
ii) Financial assets measured at FVPL (Assets
Held for sale) - Joint ventures (Note 7(a))
Joint ventures Venturer Country of incorporation % Voting right % Economic interest
-------------------- ---------- --------------------------
March 2019 March March March
2018 2019 2018
------------------ ---------- -------------------------- ----------- ------ ---------- ----------
Padma Shipping OPGPV /
Limited ("PSL") OPGPG Hong Kong 50 50 50 50
e) Foreign currency translation
The functional currency of the Company is the Great Britain
Pound Sterling (GBP). The Cyprus entity is an extension of the
parent and pass through investment entity. Accordingly, the
functional currency of the subsidiary in Cyprus is the Great
Britain Pound Sterling. The functional currency of the Company's
subsidiaries operating in India, determined based on evaluation of
the individual and collective economic factors is Indian Rupees ('
' or 'INR'). The presentation currency of the Group is the Great
Britain Pound (GBP) as submitted to the AIM counter of the London
Stock Exchange where the shares of the Company are listed.
At the reporting date the assets and liabilities of the Group
are translated into the presentation currency at the rate of
exchange prevailing at the reporting date and the income and
expense for each statement of profit or loss are translated at the
average exchange rate (unless this average rate is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expense are
translated at the rate on the date of the transactions). Exchange
differences are charged/ credited to other comprehensive income and
recognized in the currency translation reserve in equity.
Transactions in foreign currencies are translated at the foreign
exchange rate prevailing at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
Statement of financial position date are translated into functional
currency at the foreign exchange rate ruling at that date.
Aggregate gains and losses resulting from foreign currencies are
included in finance income or costs within the profit or loss.
INR exchange rates used to translate the INR financial
information into the presentation currency of Great Britain Pound
(GBP) are the closing rate as at 31 March 2020: 93.07 (2019: 90.28)
and the average rate for the year ended 31 March 2020: 89.97 (2019:
91.60).
f) Revenue recognition
In accordance with IFRS 15 - Revenue from contracts with
customers, the group recognises revenue to the extent that it
reflects the expected consideration for goods or services provided
to the customer under contract, over the performance obligations
they are being provided. For each separable performance obligation
identified, the Group determines whether it is satisfied at a
"point in time" or "over time" based upon an evaluation of the
receipt and consumption of benefits, control of assets and
enforceable payment rights associated with that obligation. If the
criteria required for "over time" recognition are not met, the
performance obligation is deemed to be satisfied at a "point in
time". Revenue principally arises as a result of the Group's
activities in electricity generation and distribution. Supply of
power and billing satisfies performance obligations. The supply of
power is invoiced in arrears on a monthly basis and generally the
payment terms within the Group are 30 days.
Sale of electricity
Revenue from the sale of electricity is recognised on the basis
of billing cycle under the contractual arrangement with the
customers and reflects the value of units of power supplied and the
applicable customer tariff after deductions or discounts. Revenue
is earned at a point in time of joint meter reading by both buyer
and seller for each billing month.
Interest and dividend
Revenue from interest is recognised as interest accrued (using
the effective interest rate method). Revenue from dividends is
recognised when the right to receive the payment is
established.
g) Operating expenses
Operating expenses are recognised in the statement of profit or
loss upon utilisation of the service or as incurred.
h) Taxes
Tax expense recognised in profit or loss comprises the sum of
deferred tax and current tax not recognised in other comprehensive
income or directly in equity.
Current income tax assets and/or liabilities comprise those
obligations to, or claims from, taxation authorities relating to
the current or prior reporting periods, that are unpaid at the
reporting date. Current tax is payable on taxable profit, which
differs from profit or loss in the financial statements.
Calculation of current tax is based on tax rates and tax laws
that have been enacted or substantively enacted by the end of the
reporting period.
Deferred income taxes are calculated using the liability method
on temporary differences between the carrying amounts of assets and
liabilities and their tax bases. However, deferred tax is not
provided on the initial recognition of goodwill, nor on the initial
recognition of an asset or liability unless the related transaction
is a business combination or affects tax or accounting profit.
Deferred tax on temporary differences associated with investments
in subsidiaries is not provided if reversal of these temporary
differences can be controlled by the Group and it is probable that
reversal will not occur in the foreseeable future.
Deferred tax assets and liabilities are calculated, without
discounting, at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or
substantively enacted by the end of the reporting period. Deferred
tax liabilities are always provided for in full.
Deferred tax assets are recognised to the extent that it is
probable that they will be able to be utilised against future
taxable income. Deferred tax assets and liabilities are offset only
when the Group has a right and the intention to set off current tax
assets and liabilities from the same taxation authority. Changes in
deferred tax assets or liabilities are recognised as a component of
tax income or expense in profit or loss, except where they relate
to items that are recognised in other comprehensive income or
directly in equity, in which case the related deferred tax is also
recognised in other comprehensive income or equity,
respectively.
i) Financial assets
IFRS 9 Financial Instruments contains regulations on measurement
categories for financial assets and financial liabilities. It also
contains regulations on impairments, which are based on expected
losses.
Financial assets are classified as financial assets measured at
amortized cost, financial assets measured at fair value through
other comprehensive income (FVOCI) and financial assets measured at
fair value through profit and loss (FVPL) based on the business
model and the characteristics of the cash flows. If a financial
asset is held for the purpose of collecting contractual cash flows
and the cash flows of the financial asset represent exclusively
interest and principal payments, then the financial asset is
measured at amortized cost. A financial asset is measured at fair
value through other comprehensive income (FVOCI) if it is used both
to collect contractual cash flows and for sales purposes and the
cash flows of the financial asset consist exclusively of interest
and principal payments. Unrealized gains and losses from financial
assets measured at fair value through other comprehensive income
(FVOCI), net of related deferred taxes, are reported as a component
of equity (other comprehensive income) until realized. Realized
gains and losses are determined by analyzing each transaction
individually. Debt instruments that do not exclusively serve to
collect contractual cash flows or to both generate contractual cash
flows and sales revenue, or whose cash flows do not exclusively
consist of interest and principal payments are measured at fair
value through profit and loss (FVPL). For equity instruments that
are not held for trading purposes the group has uniformly exercised
the option of recognizing changes in fair value through profit or
loss (FVPL). Refer to note 30 "Summary of financial assets and
liabilities by category and their fair values".
Impairments of financial assets are both recognized for losses
already incurred and for expected future credit defaults. The
amount of the impairment loss calculated in the determination of
expected credit losses is recognized on the income statement.
Impairment provisions for current and non-current trade receivables
are recognised based on the simplified approach within IFRS 9 using
a provision matrix in the determination of the lifetime expected
credit losses. During this process the probability of the
non-payment of the trade receivables is assessed. This probability
is then multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the
trade receivables. On confirmation that the trade receivable will
not be collectable, the gross carrying value of the asset is
written off against the associated provision.
j) Financial liabilities
The Group's financial liabilities include borrowings and trade
and other payables. Financial liabilities are measured subsequently
at amortised cost using the effective interest method. All
interest-related charges and, if applicable, changes in an
instrument's fair value that are reported in profit or loss are
included within 'finance costs' or 'finance income'.
k) Fair value of financial instruments
The fair value of financial instruments that are actively traded
in organised financial markets is determined by reference to quoted
market prices at the close of business on the Statement of
financial position date. For financial instruments where there is
no active market, fair value is determined using valuation
techniques. Such techniques may include using recent arm's length
market transactions; reference to the current fair value of another
instrument that is substantially the same; discounted cash flow
analysis or other valuation models.
l) Property, plant and equipment
Property, plant and equipment are stated at historical cost,
less accumulated depreciation and any impairment in value.
Historical cost includes expenditure that is directly attributable
to property plant & equipment such as employee cost, borrowing
costs for long-term construction projects etc., if recognition
criteria are met. Likewise, when a major inspection is performed,
its costs are recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria are
satisfied. All other repairs and maintenance costs are recognised
in the profit or loss as incurred.
Land is not depreciated. Depreciation on all other assets is
computed on straight-line basis over the useful life of the asset
based on management's estimate as follows:
Nature of asset Useful life (years)
----------------- --------------------
Buildings 40
Power stations 40
Other plant and
equipment 3-10
Vehicles 5-11
----------------- --------------------
Assets in the course of construction are stated at cost and not
depreciated until commissioned.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the
profit or loss in the year the asset is derecognised.
The assets residual values, useful lives and methods of
depreciation of the assets are reviewed at each financial year end,
and adjusted prospectively if appropriate.
m) Intangible assets
Acquired software
Acquired computer software licences are capitalised on the basis
of the costs incurred to acquire and install the specific
software.
Subsequent measurement
All intangible assets, including software are accounted for
using the cost model whereby capitalised costs are amortised on a
straight-line basis over their estimated useful lives, as these
assets are considered finite. Residual values and useful lives are
reviewed at each reporting date. The useful life of software is
estimated as 4 years.
n) Leases
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
Leases of low value assets; and
-- Leases with a duration of 12 months or less.
IFRS 16 was adopted effective from 1 April 2019 without
restatement of comparative figures.
The following policies apply subsequent to the date of initial
application, 1 April 2019.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease unless (as is typically the case) this is not readily
determinable, in which case the group's incremental borrowing rate
on commencement of the lease is used. Variable lease payments are
only included in the measurement of the lease liability if they
depend on an index or rate. In such cases, the initial measurement
of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments
are expensed in the period to which they relate. On initial
recognition, the carrying value of the lease liability also
includes:
-- amounts expected to be payable under any residual value
guarantee;
-- the exercise price of any purchase option granted in favour
of the group if it is reasonable certain to assess that option;
-- any penalties payable for terminating the lease, if the term
of the lease has been estimated in the basis of termination option
being exercised.
Right of use assets are initially measured at the amount of the
lease liability, reduced for any lease
incentives received, and increased for:
-- lease payments made at or before commencement of the
lease;
-- initial direct costs incurred; and
-- the amount of any provision recognised where the group is
contractually required to dismantle, remove or restore the leased
asset (typically leasehold dilapidations)
o) Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, that necessarily
take a substantial period of time to get ready for their intended
use or sale, are added to the cost of those assets. Interest income
earned on the temporary investment of specific borrowing pending
its expenditure on qualifying assets is deducted from the costs of
these assets.
Gains and losses on extinguishment of liability, including those
arising from substantial modification from terms of loans are not
treated as borrowing costs and are charged to profit or loss.
All other borrowing costs including transaction costs are
recognized in the statement of profit or loss in the period in
which they are incurred, the amount being determined using the
effective interest rate method.
p) Impairment of non-financial assets
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required,
the Group estimates the asset's recoverable amount. An asset's
recoverable amount is the higher of an asset's or cash-generating
unit's (CGU) fair value less costs to sell and its value in use and
is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from
other assets or Groups of assets. Where the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. In determining fair value less
costs to sell, an appropriate valuation model is used. These
calculations are corroborated by valuation multiples, quoted share
prices for publicly traded subsidiaries or other available fair
value indicators.
For assets excluding goodwill, an assessment is made at each
reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may
have decreased. If such indication exists, the Group estimates the
asset's or cash-generating unit's recoverable amount. A previously
recognised impairment loss is reversed only if there has been a
change in the assumptions used to determine the asset's recoverable
amount since the last impairment loss was recognised. The reversal
is limited so that the carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying amount that would
have been determined, net of depreciation, had no impairment loss
been recognised for the asset in prior years. Such reversal is
recognised in the profit or loss.
q) Non-current assets Held for Sale and Discontinued Operations
Non-current assets and any corresponding liabilities held for
sale and any directly attributable liabilities are recognized
separately from other assets and liabilities in the balance sheet
in the line items "Assets held for sale" and "Liabilities
associated with assets held for sale" if they can be disposed of in
their current condition and if there is sufficient probability of
their disposal actually taking place. Discontinued operations are
components of an entity that are either held for sale or have
already been sold and can be clearly distinguished from other
corporate operations, both operationally and for financial
reporting purposes. Additionally, the component classified as a
discontinued operation must represent a major business line or a
specific geographic business segment of the Group. Non-current
assets that are held for sale either individually or collectively
as part of a disposal group, or that belong to a discontinued
operation, are no longer depreciated. They are instead accounted
for at the lower of the carrying amount and the fair value less any
remaining costs to sell. If this value is less than the carrying
amount, an impairment loss is recognized. The income and losses
resulting from the measurement of components held for sale as well
as the gains and losses arising from the disposal of discontinued
operations, are reported separately on the face of the income
statement under income/loss from discontinued operations, net, as
is the income from the ordinary operating activities of these
divisions. Prior-year income statement figures are adjusted
accordingly. However, there is no reclassification of prior-year
balance sheet line items attributable to discontinued
operations.
r) Cash and cash equivalents
Cash and cash equivalents in the Statement of financial position
includes cash in hand and at bank and short-term deposits with
original maturity period of 3 months or less.
For the purpose of the consolidated cash flow statement, cash
and cash equivalents consist of cash in hand and at bank and
short-term deposits. Restricted cash represents deposits which are
subject to a fixed charge and held as security for specific
borrowings and are not included in cash and cash equivalents.
s) Inventories
Inventories are stated at the lower of cost and net realisable
value. Costs incurred in bringing each product to its present
location and condition is accounted based on weighted average
price. Net realisable value is the estimated selling price in the
ordinary course of business, less estimated selling expenses.
t) Earnings per share
The earnings considered in ascertaining the Group's earnings per
share (EPS) comprise the net profit for the year attributable to
ordinary equity holders of the parent. The number of shares used
for computing the basic EPS is the weighted average number of
shares outstanding during the year. For the purpose of calculating
diluted earnings per share the net profit or loss for the period
attributable to equity shareholders and the weighted average number
of shares outstanding during the period are adjusted for the
effects of all dilutive potential equity share.
u) Other provisions and contingent liabilities
Provisions are recognised when present obligations as a result
of a past event will probably lead to an outflow of economic
resources from the Group and amounts can be estimated reliably.
Timing or amount of the outflow may still be uncertain. A present
obligation arises from the presence of a legal or constructive
obligation that has resulted from past events. Restructuring
provisions are recognised only if a detailed formal plan for the
restructuring has been developed and implemented, or management has
at least announced the plan's main features to those affected by
it. Provisions are not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to
settle the present obligation, based on the most reliable evidence
available at the reporting date, including the risks and
uncertainties associated with the present obligation. Where there
are a number of similar obligations, the likelihood that an outflow
will be required in settlement is determined by considering the
class of obligations as a whole. Provisions are discounted to their
present values, where the time value of money is material.
Any reimbursement that the Group can be virtually certain to
collect from a third party with respect to the obligation is
recognised as a separate asset. However, this asset may not exceed
the amount of the related provision. All provisions are reviewed at
each reporting date and adjusted to reflect the current best
estimate.
In those cases where the possible outflow of economic resources
as a result of present obligations is considered improbable or
remote, no liability is recognised, unless it was assumed in the
course of a business combination. In a business combination,
contingent liabilities are recognised on the acquisition date when
there is a present obligation that arises from past events and the
fair value can be measured reliably, even if the outflow of
economic resources is not probable. They are subsequently measured
at the higher amount of a comparable provision as described above
and the amount recognised on the acquisition date, less any
amortisation.
v) Share based payments
The Group operates equity-settled share-based remuneration plans
for its employees. None of the Group's plans feature any options
for a cash settlement.
All goods and services received in exchange for the grant of any
share-based payment are measured at their fair values. Where
employees are rewarded using share-based payments, the fair values
of employees' services is determined indirectly by reference to the
fair value of the equity instruments granted. This fair value is
appraised at the grant date and excludes the impact of non-market
vesting conditions (for example profitability and sales growth
targets and performance conditions).
All share-based remuneration is ultimately recognised as an
expense in profit or loss with a corresponding credit to 'Other
Reserves'.
If vesting periods or other vesting conditions apply, the
expense is allocated over the vesting period, based on the best
available estimate of the number of share options expected to vest.
Non-market vesting conditions are included in assumptions about the
number of options that are expected to become exercisable.
Estimates are subsequently revised if there is any indication that
the number of share options expected to vest differs from previous
estimates. Any cumulative adjustment prior to vesting is recognised
in the current period. No adjustment is made to any expense
recognised in prior periods if share options ultimately exercised
are different to that estimated on vesting.
Upon exercise of share options, the proceeds received net of any
directly attributable transaction costs up to the nominal value of
the shares issued are allocated to share capital with any excess
being recorded as share premium.
w) Employee benefits
Gratuity
In accordance with applicable Indian laws, the Group provides
for gratuity, a defined benefit retirement plan ("the Gratuity
Plan") covering eligible employees. The Gratuity Plan provides a
lump-sum payment to vested employees at retirement, death,
incapacitation or termination of employment, of an amount based on
the respective employee's salary and the tenure of employment.
Liabilities with regard to the gratuity plan are determined by
actuarial valuation, performed by an independent actuary, at each
Statement of financial position date using the projected unit
credit method.
The Group recognises the net obligation of a defined benefit
plan in its statement of financial position as an asset or
liability, respectively in accordance with IAS 19, Employee
benefits. The discount rate is based on the Government securities
yield. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or
credited to profit or loss in the statement of comprehensive income
in the period in which they arise.
x) Business combinations
Business combinations arising from transfers of interests in
entities that are under the control of the shareholder that
controls the Group are accounted for as if the acquisition had
occurred at the beginning of the earliest comparative period
presented or, if later, at the date that common control was
established using pooling of interest method. The assets and
liabilities acquired are recognised at the carrying amounts
recognised previously in the Group controlling shareholder's
consolidated financial statements. The components of equity of the
acquired entities are added to the same components within Group
equity. Any excess consideration paid is directly recognised in
equity.
y) Segment Reporting
The Group is primarily involved in business of power generation.
Considering the nature of Group's business, as well as based on
reviews by the chief operating decision maker to make decisions
about resource allocation and performance measurement, there are
only two reportable segments in accordance with the requirements of
IFRS 8.
6. Significant accounting judgements, estimates and assumptions
The preparation of financial statements in conformity with IFRS
requires management to make certain critical accounting estimates
and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.
The principal accounting policies adopted by the Group in the
consolidated financial statements are as set out above. The
application of a number of these policies requires the Group to use
a variety of estimation techniques and apply judgment to best
reflect the substance of underlying transactions.
The Group has determined that a number of its accounting
policies can be considered significant, in terms of the management
judgment that has been required to determine the various
assumptions underpinning their application in the consolidated
financial statements presented which, under different conditions,
could lead to material differences in these statements. The actual
results may differ from the judgments, estimates and assumptions
made by the management and will seldom equal the estimated
results.
a. Judgements
The following are significant management judgments in applying
the accounting policies of the Group that have the most significant
effect on the financial statements.
Assessing control of subsidiaries, associates, joint
ventures
During FY19, the Company obtained a right to exercise an option
to buy additional 30% equity interest in the solar companies. This
right, in combination with other rights, provided substantive
potential voting rights and the investments in the solar companies
were re-classified from associates to subsidiaries. Subsequently,
the results of operations of Avanti Solar Energy Private Limited,
Mayfair Renewable Energy Private Limited, Avanti Renewable Energy
Private Limited and Brics Renewable Energy Private Limited were
reclassified to discontinued operations.
Non-current assets held for sale and discontinued operations
The Group exercises judgement in whether assets are held for
sale. After evaluation of all options, the Company decided that the
most efficient way to maximise shareholders' value from solar
operations is to dispose of the solar companies and it initiated
the process of disposition of the solar companies. Under IFRS 5,
such a transaction meets the 'Asset held for sale' when the
transaction is considered sufficiently probable and other relevant
criteria are met. Management consider that all the conditions under
IFRS 5 for classification of the solar business as held for sale
have been met as at 31 March 2020 and expects the interest in the
solar companies to be sold within the next 12 months.
The investment in the joint venture Padma Shipping Limited and
associated advance has been presented as asset held for sale
following the process of sale of the second vessel as mentioned in
note 7(a).
Recoverability of deferred tax assets:
The recognition of deferred tax assets requires assessment of
future taxable profit (see note 5(h)).
b. Estimates and uncertainties
The key assumptions concerning the future and other key sources
of estimation uncertainty at the Statement of financial position
date, that have a significant risk of causing material adjustments
to the carrying amounts of assets and liabilities within the next
financial year are discussed below:
i. Estimation of fair value of financial assets and financial
liabilities: While preparing the financial statements the Group
makes estimates and assumptions that affect the reported amount of
financial assets and financial liabilities.
Trade Receivables
The Group ascertains the expected credit losses (ECL) for all
receivables and adequate impairment provision are made. At the end
of each reporting period a review of the allowance for impairment
of trade receivables is performed. Trade receivables do not contain
a significant financing element, and therefore expected credit
losses are measured using the simplified approach permitted by IFRS
9, which requires lifetime expected credit losses to be recognised
on initial recognition. A provision matrix is utilised to estimate
the lifetime expected credit losses based on the age, status and
risk of each class of receivable, which is periodically updated to
include changes to both forward-looking and historical inputs.
Assets held for sale - Financial assets measured at FVPL
Valuation of Investment in joint venture Padma Shipping is based
on estimates and subject to uncertainties (Note 7(a)).
Financial assets measured at FVPL
Management applies valuation techniques to determine the fair
value of financial assets measured at FVPL where active market
quotes are not available. This requires management to develop
estimates and assumptions based on market inputs, using observable
data that market participants would use in pricing the asset. Where
such data is not observable, management uses its best estimate.
Estimated fair values of the asset may vary from the actual prices
that would be achieved in an arm's length transaction at the
reporting date.
Other financial liabilities
Borrowings held by the Group are measured at amortised cost
(Note 5(j) and note 29).
ii. Impairment tests: In assessing impairment, management
estimates the recoverable amount of each asset or cash-generating
units based on expected future cash flows and use an interest rate
for discounting them. Estimation uncertainty relates to assumptions
about future operating results including fuel prices, foreign
currency exchange rates etc. and the determination of a suitable
discount rate;
iii. Useful life of depreciable assets: Management reviews its
estimate of the useful lives of depreciable assets at each
reporting date, based on the expected utility of the assets.
7. Non-current assets held for sale and discontinued operation
Non-current assets held for sale and discontinued operations consists
of:
Assets held for Liabilities classified Loss from discontinued
sale as held for sale operations
--------------------------
At 31 At 31 At 31
March March At 31 March March For For FY
2020 2019 2020 2019 FY 20 19
----------- ------------ ----------- ------------ ------------
Impairment of investments
i in joint venture - 918,432 - - (918,432) (1,010,200)
--------------------------- ----------- ----------- ------------ ----------- ------------ ------------
Solar subsidiaries
ii (7(b)) 46,356,680 49,579,232 32,866,783 35,267,786 (293,942) 20,708
--------------------------- ----------- ----------- ------------ ----------- ------------ ------------
iii Impairment of deposits
pledged for lenders
of BVP Note7(c ) - - - - (933,901) -
--------------------------- ----------- ------------ ----------- ------------ ------------
Total 46,356,680 50,497,664 32,866,783 35,267,786 (2,146,275) (989,493)
--------------------------------- ----------- ------------ ----------- ------------ ------------
a) Investment in joint venture Padma Shipping Limited - classified as held for sale
In 2014 the Company entered into a Joint Venture agreement with
Noble Chartering Ltd ("Noble"), to secure competitive long term
rates for international freight for its imported coal requirements.
Under the Arrangement, the company and Noble agreed to jointly
purchase and operate two 64,000 MT cargo vessels through a Joint
venture company Padma Shipping Ltd, Hong Kong ('Padma').
During FY18, the Joint Venture partner due to a change in their
group strategy requested for the Joint Venture to be terminated and
as the vessels were still under construction, OPG agreed with this
proposal. During FY19 one of the vessels was sold by the shipping
yard and the second vessel was sold during FY20. The Padma joint
venture will be terminated and dissolved. As at 31 March 2020, the
investment was therefore reclassified to assets held for sale.
OPG has invested approximately GBP3,484,178 in equity and
GBP1,727,418 to date as advance and accordingly the joint venture
has been reported using equity method as per the requirements of
IFRS 11. During the year the Company recognised an impairment
provision of GBP918,432 (2019 GBP1,000,000) resulting in impairment
of entire investment of GBP5,211,596 in joint venture (note 16) on
account of the impending dissolution of the JV.
b) Assets held for sale and discontinued operations of solar subsidiaries
During FY19, the results of the operations of solar subsidiaries
Avanti Solar Energy Private Limited, Mayfair Renewable Energy
Private Limited, Avanti Renewable Energy Private Limited and Brics
Renewable Energy Private Limited were classified as Assets held for
sale. After evaluation of all the options, the Company decided that
the most efficient way to maximise shareholders' value from the
solar operations is to dispose of the solar companies and the
process of disposition of the solar companies was initiated. The
process of sale could not be implemented during FY20 due to
pandemic COVID-19 and expectation of comparatively better valuation
for sale. However the Management expects the interest in the solar
companies to be sold within the next 12 months and continues to
locate a buyer.
Non-current Assets held-for-sale and discontinued
operations
(a) Assets of disposal group classified As at 31 March As at 31 March
as held-for-sale 2020 2019
Property, plant and equipment 42,098,498 46,442,294
Trade and other receivables 3,489,633 578,721
Other short-term assets 256,209 499,527
Restricted cash 487,795 1,712,450
Cash and cash equivalents 24,545 346,240
Investment in Joint venture classified as
held for sale - 918,432
--------------- ---------------
Total 46,356,680 50,497,664
--------------------------------------------------- --------------- ---------------
(b) Liabilities of disposal group classified As at 31 March As at 31 March
as held-for-sale 2020 2019
Non Current liabilities
Borrowings 28,262,288 17,194,745
Trade and other payables - 7,710,956
Deferrred tax liability 1,014,031 1,666,495
Current liabilities
Trade and other payables 901,474 3,958,192
Other liabilities 2,688,990 4,737,398
---------------------------------------------- ---------------------- ----------------------
Total 32,866,783 35,267,786
---------------------------------------------- ---------------------- ----------------------
(c) Analysis of the results of discontinued For FY 20 For FY 19
operations is as follows:
Revenue 5,884,401 5,007,509
Operating profit before impairments 2,160,974 4,009,485
Finance income 92,096 311,744
Finance cost (3,540,239) (2,294,669)
Current Tax - (363,372)
Deferred tax 993,226 (1,642,480)
--------------------------------------------- ------------ ------------
Profit/(Loss) from Solar operations (293,942) 20,708
--------------------------------------------- ------------ ------------
c) Loss from discontinued operations of BVP
As reported in the FY18 financial statements, the Group had
pledged deposits with lenders of BVP for overdraft facility availed
by BVP. During the year the lenders of BVP have appropriated the
entire deposits towards the overdraft loan availed by BVP. The
Group has already impaired GBP12,627,381 during FY18 and the
balance deposits of GBP933,901 has been impaired during the
year.
8 Segment Reporting
The Group has adopted the "management approach" in identifying
the operating segments as outlined in IFRS 8 - Operating segments.
Segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The Board
of Directors being the chief operating decision maker evaluate the
Group's performance and allocates resources based on an analysis of
various performance indicators at operating segment level.
Accordingly, there are two operating segments, thermal power and
solar power following the reclassification of the interest in the
solar companies as subsidiaries as detailed in note 7(b). The solar
power business was classified as held for sale subsequently. There
are no geographical segments as all revenues arise from India. All
the non-current assets are located in India.
Revenue on account of sale of power to one customer exceeding
10% of total sales revenue amounts to GBP27,152,241 (2019:
GBP24,117,088).
Segmental information disclosure
Continuing operations Discontinued operations
Thermal Solar
Segment Revenue FY20 FY19 FY20 FY19
Sales 154,040,283 140,632,328 5,884,401 5,007,509
------------- ------------- ------------ ------------
Total 154,040,283 140,632,328 5,884,401 5,007,509
------------- ------------- ------------ ------------
Depreciation, impairment (6,293,034) (6,064,374) (3,516,527) -
Profit / (loss) from operation
Finance Cost 24,036,945 29,236,193 2,160,974 4,009,485
Tax expenses 1,962,692 2,207,480 92,096 311,744
------------- ------------- ------------ ------------
Profit / (loss) for the
year (11,495,136) (14,586,917) (3,540,239) (2,294,669)
------------- ------------- ------------ ------------
Loss from discontinued operations relating to shipping JV and past
subsidiary BVP aggregating to GBP1,887,629 not included above.
Assets 294,328,018 304,743,440 49,579,232 -
Liabilities 155,174,489 165,613,016 35,267,786 -
9 Costs of inventories and employee benefit expenses included in
the consolidated statements of comprehensive income
a) Cost of fuel
31 March 2020 31 March 2019
---------------------------------------- --------------- ---------------
Included in cost of revenue:
Cost of fuel consumed 83,133,530 88,754,095
Other direct costs 6,926,722 2,999,668
---------------
Total 90,060,252 91,753,763
--------------------------------------------- --------------- ---------------
b) Employee benefit expenses forming part of general and administrative
expenses are as follows:
31 March 2020 31 March 2019
---------------------------------------- --------------- ---------------
Salaries and wages 2,756,438 3,302,162
Employee benefit costs * 760,914 251,520
Long Term Incentive Plan (Note 22) 835,822 -
---------------
Total 4,353,174 3,553,682
--------------------------------------------- --------------- ---------------
* includes GBP21,860 (2019: NIL) being expenses towards gratuity
which is a defined benefit plan (Note 5(w))
c) Auditor's remuneration for audit services amounting to GBP65,000
(2019: GBP80,000) is included in general and administrative expenses.
d) Foreign exchange movements (realised and unrealised) included
in the Finance costs is as follows:
31 March 2020 31 March 2019
------------------------------------------- --------------- --------------
Foreign exchange realised - (gain)/loss (420,842) 3,543,163
Foreign exchange unrealised- (gain)
/ loss 1,568,333 (416,338)
--------------- --------------
Total 1,147,491 3,126,825
------------------------------------------------ --------------- --------------
10 Other income and expenses
Other income
31 March 20209 31 March 2019
--------------------------------------------- --------------- --------------
Sale of coal 462,718 887,815
Sale of fly ash 26,611 48,910
Power trading commission and other services 161,053 1,217,369
Others 17,655 491,238
--------------
Total 668,037 2,645,332
--------------------------------------------- --------------- --------------
11 Finance costs
Finance costs are comprised of:
---------------------------------------- --------------- ------------
31 March
31 March 2020 2019
---------------------------------------- --------------- ------------
Interest expenses on borrowings 9,289,625 10,210,464
Net foreign exchange loss (Note 9) 1,147,491 3,126,825
Other finance costs 1,058,020 1,249,628
--------------- ------------
Total 11,495,136 14,586,917
---------------------------------------- --------------- ------------
Other finance costs include charges and cost related to LC's for
import of coal and other charges levied by banks on transactions
12 Finance income
Finance income is comprised of:
----------------------------------------------- -------------- --------------
31 March 2020 31 March 2019
----------------------------------------------- -------------- --------------
Interest income on bank deposits and advances 1,943,132 2,192,555
Profit on disposal of financial instruments* 19,560 14,925
-------------- --------------
Total 1,962,692 2,207,480
----------------------------------------------- -------------- --------------
*Financial instruments represent the mutual
funds held during the year.
13 Tax expense
Tax Reconciliation
Reconciliation between tax expense and the product of accounting
profit multiplied by India's domestic tax rate for the years ended
31 March 2019 and 2018 is as follows:
31 March 2020 31 March 2019
----------------------------------------------- -------------- --------------
Accounting profit / (loss) before taxes 14,504,501 16,856,756
Enacted tax rates 34.94% 34.94%
Tax expense / (benefit) on profit / (loss)
at enacted tax rate 5,068,453 5,890,425
Exempt Income due to tax holiday (22,896) (685,895)
Foreign tax rate differential (327,343) 303,096
Unused tax losses brought forward and carried
forward (993,226) (1,216,052)
Non-taxable items - (275,769)
MAT credit entitlement (397,088) (190,567)
Actual tax for the period 3,327,899 3,825,239
----------------------------------------------- -------------- --------------
31 March 2020 31 March 2019
------------------------------------------------ ----------------- --------------
Current tax 788,430 1,281,584
Deferred tax 3,532,694 537,803
Total tax expenses on income from continued
operations 4,321,124 1,819,387
Add: tax on income from discontinuing operations (993,226) 2,005,852
----------- --------------
Tax reported in the statement of comprehensive
income 3,327,899 3,825,239
------------------------------------------------------ ----------- --------------
The Company is subject to Isle of Man corporate tax at the
standard rate of zero percent. As such, the Company's tax liability
is zero. Additionally, Isle of Man does not levy tax on capital
gains. However, considering that the group's operations are
primarily based in India, the effective tax rate of the Group has
been computed based on the current tax rates prevailing in India.
Further, a substantial portion of the profits of the Group's India
operations are exempt from Indian income taxes being profits
attributable to generation of power in India. Under the tax holiday
the taxpayer can utilize an exemption from income taxes for a
period of any ten consecutive years out of a total of fifteen
consecutive years from the date of commencement of the operations.
However, the entities in India are still liable for Minimum
Alternate Tax (MAT) which is calculated on the book profits of the
respective entities currently at a rate of 17.47% (31 March 2019:
21.55%).
The Group has carried forward credit in respect of MAT tax
liability paid to the extent it is probable that future taxable
profit will be available against which such tax credit can be
utilised.
Deferred income tax for the Group at 31 March 2020 and 2019
relates to the following:
31 March 2020 31 March 2019
----------------------------------------------- -------------- --------------
Deferred income tax assets
Unused tax losses brought forward and carried
forward 1,216,052 1,216,052
MAT credit entitlement 11,962,515 11,565,427
-------------- --------------
13,178,567 12,781,479
Deferred income tax liabilities
Property, plant and equipment 18,902,358 15,161,594
-------------- --------------
18,902,358 15,161,594
-------------- --------------
Deferred income tax liabilities, net 5,723,791 2,380,115
----------------------------------------------- -------------- --------------
Movement in temporary differences during the year
Particulars Classified
as (Asset)
Deferred / Liability As at
As at 01 tax Asset/(Liability) held for Translation 31 Mar
April 2019 for the year sale adjustment 2020
---------------------------------- ------------- ----------------------- ------------- ------------ -------------
Property, plant and equipment (15,161,594) (2,936,557) (993,226) 189,018 (18,902,358)
Unused tax losses brought
forward and carried forward 1,216,052 - 1,216,052
MAT credit entitlement 11,565,427 397,088 - - 11,962,515
-------------
Deferred income tax (liabilities)
/ assets, net (2,380,115) (2,539,468) (993,226) 189,018 (5,723,791)
---------------------------------- ------------- ----------------------- ------------- ------------ -------------
Particulars Classified
as (Asset)
As at Deferred / (Liability) As at
01 April tax Asset/(Liability) held for Translation 31 Mar
2018 for the year sale adjustment 2019
------------- ----------------------- --------------- ------------ -------------
Property, plant and equipment (12,853,799) (4,754,829) 2,447,034 - (15,161,594)
Unused tax losses brought
forward and carried forward - 2,020,606 (804,554) - 1,216,052
MAT credit entitlement 11,396,590 190,567 - (21,730) 11,565,427
--------------------------------
Deferred income tax
(liabilities)
/ assets, net (1,457,209) (2,543,656) 1,642,480 (21,730) (2,380,115)
-------------------------------- ------------- ----------------------- --------------- ------------ -------------
In assessing the recoverability of deferred income tax assets,
management considers whether it is more likely than not that some
portion or all of the deferred income tax assets will be realized.
The ultimate realization of deferred income tax assets is dependent
upon the generation of future taxable income during the periods in
which the temporary differences become deductible. The amount of
the deferred income tax assets considered realizable, however,
could be reduced in the near term if estimates of future taxable
income during the carry forward period are reduced.
There are no unrecognised deferred tax assets and liabilities.
As at 31 March 2020 and 2019, there was no recognised deferred tax
liability for taxes that would be payable on the unremitted
earnings of certain of the Group's subsidiaries, as the Group has
determined that undistributed profits of its subsidiaries will not
be distributed in the foreseeable future.
14 Intangible assets Acquired software
licences
Cost
At 31 March 2018 847,648
Additions -
Exchange adjustments 4,976
At 31 March 2019 852,624
At 31 March 2019 852,624
Additions -
Exchange adjustments (25,559)
At 31 March 2020 827,065
--------------------
Accumulated depreciation and impairment
At 31 March 2018 783,478
Charge for the year 40,354
Exchange adjustments 5,190
At 31 March 2019 829,021
At 31 March 2019 829,021
Charge for the year 14,327
Exchange adjustments (25,329)
At 31 March 2020 818,020
--------------------
Net book value
At 31 March 2020 9,045
At 31 March 2019 23,603
15 Property, plant and equipment
The property, plant and equipment comprises of:
Other Asset
Land Power plant under
& Buildings stations & equipment Vehicles Solar assets construction Total
------------- ------------- ------------- ---------- ------------- ------------- -------------
Cost
At 1 April 2018 4,744,093 221,066,874 614,925 2,394,639 - 4,530,760 233,351,291
Additions 236,830 316,648 1,154,749 8,751 - 18,803 1,735,781
Additions -
Solar
assets (note
7(b)) 46,635,849 - 46,635,849
Deletions - (11,054) - - - - (11,054)
Solar assets
classified as
Asset Held for
Sale (note
7(b)) - - - - (46,635,849) - (46,635,849)
Transfer on
capitalisation - 290,658 - - - (290,658) -
Exchange
adjustments 26,978 1,297,928 3,595 14,023 - 26,959 1,369,483
------------- ------------- ------------- ---------- ------------- ------------- -------------
At 31 March
2019 5,007,901 222,961,054 1,773,269 2,417,413 - 4,285,864 236,445,501
------------- ------------- ------------- ---------- ------------- ------------- -------------
At 1st April
2019 5,007,901 222,961,054 1,773,269 2,417,413 - 4,285,864 236,445,501
Additions - 294,954 165,831 10,958 - 82,815 554,559
Transfers on
capitalisation 3,903,256 56,168 - - - (3,959,424) -
Exchange adjustments (145,667) (6,689,809) (52,848) (72,290) - (128,479) (7,089,093)
At 31 March 2020 8,765,490 216,622,367 1,886,252 2,356,081 - 280,776 229,910,967
---------- ------------ ---------- ---------- ------------ ------------
Accumulated depreciation and
impairment
At 1 April 2018 32,174 24,456,188 526,100 1,065,694 - - 26,080,156
Charge for the
year * 12,363 5,494,384 103,316 413,957 - - 6,024,020
Additions - Solar
assets (note
7(b)) - - - - 4,417 - 4,417
Exchange adjustments 493 221,076 4,595 12,270 - - 238,434
Solar assets
classified as
Asset Held for
Sale (note 7(b)) - - - - (4,417) - (4,417)
At 31 March 2019 45,030 30,171,648 634,011 1,491,921 - - 32,342,610
At 1 April 2019 45,030 30,171,648 634,011 1,491,921 - - 32,342,610
Charge for the
year * 12,981 5,603,791 272,110 389,825 - 6,278,707
Exchange adjustments (2,410) (1,091,777) (28,050) (57,509) - - (1,179,746)
At 31 March 2020 55,601 34,683,662 878,072 1,824,237 - - 37,441,572
-------- ------------ --------- ---------- ------------
Net book value
At 31 March 2020 8,709,889 181,938,705 1,008,180 531,845 - 280,776 192,469,395
At 31 March 2019 4,962,871 192,789,406 1,139,258 925,492 - 4,285,864 204,102,891
---------- ------------ ---------- -------- ---------- ------------
The net book value of land and buildings
block comprises of:
31 March 2020 31 March 2019
--------------------------------------------------- -------------- --------------
Freehold land 8,134,867 4,514,642
Buildings 405,387 448,229
--------------
8,540,254 4,962,871
------------------------------------------------ -------------- --------------
Property, plant and equipment with a carrying amount of
GBP187,757,094 (2019: GBP197,184,156) is subject to security
restrictions (refer note 23).
16 Investments accounted for using the equity method
The carrying amount of investments accounted for using the
equity method is as follows:
31 March
2020 31 March 2019
----------------------------------------------- ------------ --------------
Investments in joint venture 3,448,882 3,448,882
Impairment provision for investments in joint
venture (Note 7(a)) (3,448,882) (3,247,668)
Balance value of Investments in joint venture
classified as Assets held for sale - (201,214)
Investments accounted for using the equity - -
method
----------------------------------------------- ------------ --------------
The Group's share of loss from equity accounted investments is
as follows:
31 March 2020 31 March 2019
--------------------------- --------------- --------------
Investment in joint
venture - (34,638)
Investments in associates - (658)
--------------
- (35,296)
------------------------------------------- --------------
a) Investment in joint venture (Note 5(d) and Note 7(a))
The investment in Padma Shipping Limited ("PSL") is accounted
for using the equity method in accordance with IAS 28. The
financial statements of PSL are as of 31 December 2019 which is the
financial year followed by PSL. As no additional information was
available as such the 31st December 2019 balances have been used
below. At the end of the year the investment in PSL net of
impairment provision is classified as Asset held for sale.
Summarised financial information for Padma Shipping Limited ("PSL")
is set out below:
31 March
2020 31 March 2019
------------------------- ----------- --------------
Non-current assets 11,652,330 11,652,330
Current assets (a) 29,970 29,970
Total assets 11,682,300 11,682,300
-------------------------- ----------- --------------
Current liabilities (b) 11,682,300 4,784,535
Total liabilities 11,682,300 4,784,535
-------------------------- ----------- --------------
Net assets - 6,897,765
-------------------------- ----------- --------------
a) Includes cash and cash equivalents
b) Includes financial liabilities
31 March 2020 31 March 2019
------------------------------------------ -------------- --------------
Total net assets
of PSL - 6,897,765
Proportion of ownership interests held
by the Group 50% 50%
Group's share of the investment
in PSL - 3,448,882
----------------------------------------- -------------- --------------
17 Other Assets
31 March 31 March 2019
2020
---------------------------------------------------------- ---------- --------------
A. Short-term
Capital advances 114,084 280,494
Equity instruments measured at fair value
through P&L 741,425 40,453
Advances and other receivables 6,587,261 6,008,407
Total 7,442,440 6,329,354
---------- --------------
B. Long-term
Lease deposits 492,973 502,869
Other advances 16,655 15,684
-----------
Total 509,628 518,553
----------------------------------------------- ----------- -----------
Financial instruments measured at fair value through P&L are
comprised of:
Fair value of retained investment in former subsidiary BVP
GBP40,453 (Note 7(c)). Fair Valuation of retained investments in
BVP is on the basis of the last transaction.
The fair value of the mutual fund instruments of GBP700,972 are
determined by reference to published data.
18 Trade and other receivables
31 March 2020 31 March 2019
--------------------- -------------- --------------
Current
Trade receivables 26,901,986 49,079,582
Other receivables - 118,523
--------------
26,901,986 49,198,105
-------------------- -------------- --------------
The Group's trade receivables are classified at amortised cost
unless stated otherwise and are measured after allowances for
future expected credit losses, see "Credit risk analysis" in note
29 "Financial risk management objectives and policies" for more
information on credit risk. The carrying amounts of trade and other
receivables, which are measured at amortised cost, approximate
their fair value and are predominantly non-interest bearing.
19 Inventories
31 March 2020 31 March 2019
----------------------------- --------------------------- --------------
Coal and fuel 10,505,138 6,038,267
Stores and spares 974,961 1,113,099
--------------
Total 11,480,099 7,151,366
----------------------------- --------------------------- --------------
The entire amount of above inventories has been pledged as
security for borrowings (refer note 23)
20 Cash and cash equivalents and Restricted cash
a. Cash and short term deposits comprise of the following:
31 March 2020 31 March 2019
------------------------------- --------------------------- --------------
Cash at banks and on hand 3,438,830 2,118,960
--------------
Total 3,438,830 2,118,960
------------------------------- --------------------------- --------------
Short-term deposits are placed for varying periods, depending on
the immediate cash requirements of the Group. They are recoverable
on demand.
b. Restricted cash
Restricted cash represents deposits maturing between three to
twelve months amounting to GBP7,497,967 (2019: GBP23,030,599) and
maturing after twelve months amounting to GBP26,645 (2019:
GBP517,271) which have been pledged by the Group in order to secure
borrowing limits with banks. In FY19, restricted cash of
GBP23,030,599 includes GBP12,627,381 pledged during the previous
year in favour of lenders of BVP (Note 7(c)). In FY20, the Group
has made impairment provision of GBP933,901 of securities provided
to lenders of BVP.
21 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 Group
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 Group.
The Company has issued 12,823,311 (2019: 31,601,503) shares
during the year with respect to scrip dividend at par value of
GBP0.000147 (2019: GBP0.000147) per share amounting to GBP1,885
(2019: GBP4,646). The difference between fair value of shares
issued above par value of GBP2,325,567 (2019: GBP3,558,442) with
respect to scrip dividend was credited to share premium.
As at 31 March 2020, the Company has an authorised and issued
share capital of 400,733,511 (2019: 387,910,200) equity shares at
par value of GBP 0.000147 (2019: GBP 0.000147) per share amounting
to GBP58,909 (2019: GBP57,024) in total.
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 benefits.
Foreign currency translation reserve is used to record the
exchange differences arising from the translation of the financial
statements of the foreign subsidiaries.
Other reserve represents the difference between the
consideration paid and the adjustment to net assets on change of
controlling interest, without change in control, other reserves
also includes any costs related with share options granted and
gain/losses on re-measurement of financial assets measured at fair
value through other comprehensive income.
Retained earnings include all current and prior period results
as disclosed in the consolidated statement of comprehensive income
less dividend distribution.
22 Share based payments
The board has granted share options to directors and nominees of
directors which are limited to 10 percent of the Group's share
capital. Once granted, the shares must be exercised within ten
years of the date of grant otherwise the options would lapse.
The vesting conditions are as follows:
-- The 300 MW power plant of Kutch in the state of Gujarat must
have been in commercial operation for three months.
-- The Closing share price being at least GBP1.00 for three
consecutive business days.
The related expense has been amortised over the remaining
estimated vesting period and an expense amounting to GBP Nil (2019:
GBP Nil) was recognised in the profit or loss with a corresponding
credit to other reserves.
Movement in the number of share options outstanding are as
follows:
31 March 2020 31 March 2019
---------------------------------- ------------------------ --------------
At 1 April 21,774,234 23,274,234
Expired ( 21,774,234 ) (250,000)
At 31 March - 21,774,234
---------------------------------- ------------------------ --------------
Long Term Incentive Plan
In April 2019, the Board of Directors has approved the
introduction of Long Term Incentive Plan ("LTIP"). The key terms of
the LTIP are:
The number of performance-related awards is 14 million ordinary
shares (the "LTIP Shares") (representing approximately 3.6 per cent
of the Company's issued share capital). In addition to three
executive directors, additional members of the senior management
team will be included within the LTIP. The grant date is 24 April
2019.
The LTIP Shares were awarded to certain members of the senior
management team as Nominal Cost Shares and will vest in three
tranches subject to continued service with Group until vesting and
meeting the following share price performance targets, plant load
factor ("PLF") and term loan repayments of the Chennai thermal
plant.
- 20% of the LTIP Shares shall vest upon meeting the target
share price of 25.16p before the first anniversary for the first
tranche, i.e. 24 April 2020, achievement of PLF during the period
April 2019 to March 2020 of at least 70% at the Chennai thermal
plant and repayment of all scheduled term loans;
- 40% of the LTIP Shares shall vest upon meeting the target
share price of 30.07p before the second anniversary for the second
tranche, i.e. 24 April 2021, achievement of PLF during the period
April 2020 to March 2021 of at least 70% at the Chennai thermal
plant and repayment of all scheduled term loans;
- 40% of the LTIP Shares shall vest upon meeting the target
share price of 35.00p before the third anniversary for the third
tranche, i.e. 24 April 2022, achievement of PLF of at least 70% at
the Chennai thermal plant during the period April 2021 to March
2022 and repayment of all scheduled term loans.
The nominal cost of performance share, i.e. upon the exercise of
awards, individuals will be required to pay up 0.0147p per share to
exercise their awards
The share price performance metric will be deemed achieved if
the average share price over a fifteen day period exceeds the
applicable target price. In the event that the share price or other
performance targets do not meet the applicable target, the number
of vesting shares would be reduced pro-rata, for that particular
year. However, no LTIP Shares will vest if actual performance is
less than 80 per cent of any of the performance targets in any
particular year. The terms of the LTIP provide that the Company may
elect to pay a cash award of an equivalent value of the vesting
LTIP Shares.
None of the LTIP Shares, once vested, can be sold until the
third anniversary of the award, unless required to meet personal
taxation obligations in relation to the LTIP award.
For LTIP Shares awards, GBP835,822 (FY19: nil) has been
recognised in General and administrative expenses.
Grant date 24-Apr-19 24-Apr-19 24-Apr-19
Vesting date 24-Apr-20 24-Apr-21 24-Apr-22
Method of Settlement Equity/ Cash Equity/ Equity/ Cash
Cash
Vesting of shares (%) 20% 40% 40%
Number of LTIP Shares granted 2,800,000 5,600,000 5,600,000
Exercise Price (pence per share) 0.0147 0.0147 0.0147
Fair Value of LTIP Shares granted
(pence per share) 0.107493 0.121739 0.104486
Expected Volatility (%) 68.00% 64.18% 55.97%
23 Borrowings
The borrowings comprise of the
following:
Interest rate Final maturity 31 March 31 March
(range %) 2020 2019
------------------------- ------------------ ----------------- ----------- -------------
Borrowings at amortised
cost 10.35-11.40 June 2024 56,827,685 80,364,930
-------------
Total 56,827,685 80,364,930
---------------------------------------------------------------- ----------- -------------
The term loans of GBP49.9m and working capital loans of GBP6.9m
taken by the Group are fully secured by the property, plant, assets
under construction and other current assets of subsidiaries which
have availed such loans. All Loans are personally guaranteed by a
director.
Term loans contain certain covenants stipulated by the facility
providers and primarily require the Group to maintain specified
levels of certain financial metrics and operating results. As of 31
March 2020, the Group has met all the relevant covenants. Further,
the Group raised approximately GBP 21.0 million (Rs.2000 million)
during June 2020 through non-convertible debentures (NCDs) issue
with a three years term and coupon rate of 9.85%. NCD's proceeds
was used to repay the FY21 and FY22 (i.e. to March 2022) principal
term loans obligations. This will substantially release the cash
flow burden for next two financial years on account of loan
repayment obligations note 5(a).
The fair value of borrowings at 31 March 2020 was GBP56,827,685
(2019: GBP80,364,930). The fair values have been calculated by
discounting cash flows at prevailing interest rates.
The borrowings are reconciled to the statement of financial
position as follows:
31 March 31 March 2019
2020
--------------------------------------------------------- ----------- --------------
Current liabilities
Amounts falling due within
one year 23,746,229 28,869,722
Non-current liabilities
Amounts falling due after 1 year but not
more than 5 years 33,081,456 51,495,208
Total 56,827,685 80,364,930
--------------------------------------------------------- ----------- --------------
24 Trade and other payables
31 March 31 March 2019
2020
--------------------------- ----------- --------------
Current
Trade payables 45,300,370 45,300,370
Creditors for
capital goods 174,444 174,444
Total 45,474,814 45,474,814
Non-current
Security deposit from
customers - 14,085,854
Other payables 169,373 180,746
--------------
Total 169,373 14,235,485
--------------------------- ----------- --------------
Trade payables include credit availed from banks under letters
of credit for payments in USD to suppliers for coal purchased by
the Group. Other trade payables are normally settled on 45 days
terms credit. The arrangements are interest bearing and are payable
within one year. With the exception of certain other trade
payables, all amounts are short term. Creditors for capital goods
are non-interest bearing and are usually settled within a year.
Other payables include accruals for gratuity and other accruals for
expenses.
25 Related party transactions
Key Management Personnel:
Name of the party Nature of relationship
-------------------------------- ---------------------------------------------
Arvind Gupta Chairman
Avantika Gupta (from November Chief Operating Officer & Director
2018)
Dmitri Tsvetkov Chief Financial Officer & Director
Jeremy Warner Allen Deputy Chairman
Mike Grasby (resigned in Director
November 2019)
Ravi Gupta (resigned in Director
May 2018)
Jeremy Beeton (resigned Director
in March 2020)
N Kumar (from November Director
2019)
Related parties with whom the Group had transactions during the
period
Name of the party Nature of relationship
------------------------------
Padma Shipping Limited The company has joint control of the entity
Avanti Solar Energy Private Entity in which Key Management personnel
Limited has Control/Significant Influence (subsdiary
from FY 19 note 7(b))
Mayfair Renewable Energy Entity in which Key Management personnel
Private Limited has Control/Significant Influence (subsdiary
from FY 19 note 7(b))
Avanti Renewable Energy Entity in which Key Management personnel
Private Limited has Control/Significant Influence (subsdiary
from FY 19 note 7(b))
Brics Renewable Energy Entity in which Key Management personnel
Private Limited has Control/Significant Influence (subsdiary
from FY 19 note 7(b))
Avantika Gupta Relative of Key Management Personnel (became
Ravi Gupta Director on 27 November 2018)
Relative of Key Management Personnel
Summary of transactions with related parties
Name of the party 31 March 2020 31 March 2019
Avantika Gupta
a) Remuneration (up to 27 November
2018) 120,000 79,084
Summary of balance with
related parties
Name of the Nature of balance 31 March 2020 31 March 2019
party
Padma Shipping
Limited Investment 3,438,682 3,485,837
Padma Shipping
Limited Advances 1,727,418 1,727,418
Padma Shipping
Limited Impairment provision (5,176,300) (4,257,868)
Ravi Gupta Land Lease Deposit 492,973 502,869
Outstanding balances at the year-end are unsecured. Related
party transaction are on arms length basis. There have been no
guarantees provided or received for any related party receivables
or payables except for corporate guarantees issued to lenders of
its subsidiaries classified as Asset Held for Sale of GBP28,261,524
(2019: GBP32,132,255). For the year ended 31 March 2020, the Group
has not recorded any impairment of receivables relating to amounts
owed by related parties GBPNil (2019: GBPNil). However, the Group
has made impairment provision for investments in joint venture
GBP918,432 (2019: GBP1,000,000) (Note 7(a)). This assessment is
undertaken each financial year through examining the financial
position of the related party and the market in which the related
party operates.
A director personally guaranteed loans of a solar subsidiary
(loan outstanding GBP9,372,074 (2019: GBP10,360,066)) which is
classified as Asset Held for Sale. All Loans are personally
guaranteed by a director.
26 Earnings per share
Both the basic and diluted earnings per share have been
calculated using the profit attributable to shareholders of the
parent company as the numerator (no adjustments to profit were
necessary for the year ended March 2020 or 2019).
The Company has issued options and LTIP over ordinary shares
which could potentially dilute basic loss per share in the future.
There is no difference between basic loss per share and diluted
loss per share as the potential ordinary shares are
anti-dilutive.
The weighted average number of shares for the purposes of
diluted earnings per share can be reconciled to the weighted
average number of ordinary shares used in the calculation of basic
earnings per share (for the Group and the Company) as follows:
Particulars 31 March 31 March 2019
2020
Weighted average number of shares
used in basic earnings per share 390,923,328 367,650,606
Shares deemed to be issued for no consideration
in respect of share based payments 2,190,519 -
Weighted average number of shares
used in diluted earnings per share 393,113,847 367,650,606
31 March
27 Directors remuneration 2020 31 March 2019
Arvind Gupta 500,000 500,000
Avantika Gupta (became Director on 27 November
2018) 120,000 64,691
Dmitri Tsvetkov 240,000 288,000
Jeremy Warner Allen 50,000 50,000
N Kumar (from November 2019) 15,000 -
Mike Grasby (resigned in November 2019) 33,750 45,000
Jeremy Beeton (resigned in March 2020) 43,270 45,000
Total 1,002,020 992,691
The above remuneration is in the nature of short-term employee
benefits. As the future liability for gratuity and compensated
absences is provided on actuarial basis for the companies in the
group, the amount pertaining to the directors is not individually
ascertainable and therefore not included above.
28 Commitments and contingencies
Operating lease commitments
The Group leases office premises under operating leases. The
leases typically run for a period up to 5 years, with an option to
renew the lease after that date. None of the leases includes
contingent rentals.
Non-cancellable operating lease rentals are payable as
follows:
31 March 2019
Not later than
one year 46,095
Later than one year and not later than
five years 64,254
Total 110,349
Recognition of a right of use asset and a lease liability is not
material and instead charge of GBP55,292 (2019: GBP41,301) has been
recognised as an expense for leases.
Contingent liabilities
Disputed income tax demand GBP1,021,210 (2019:
GBP1,056,154).
Future cash flows in respect of the above matters are
determinable only on receipt of judgements / decisions pending at
various forums / authorities.
Guarantees and Letter of credit
The Group has provided bank guarantees and letter of credits
(LC) to customers and vendors in the normal course of business. The
LC provided as at 31 March 2020: GBP30,912,751(2019: GBP32,373,664)
and Bank Guarantee (BG) as at 31 March 2020: GBP3,167,066 (2019:
GBP6,457,430). LC are supporting accounts payables already
recognised in statement of financial position. There have been no
guarantees provided or received for any related party receivables
or payables except for corporate guarantees issued to lenders of
its subsidiaries classified as Asset Held for Sale of GBP28,261,524
(2019: GBP32,132,255). BG are treated as contingent liabilities
until such time it becomes probable that the Company will be
required to make a payment under the guarantee.
29 Financial risk management objectives and policies
The Group's principal financial liabilities, comprises of loans
and borrowings, trade and other payables, and other current
liabilities. The main purpose of these financial liabilities is to
raise finance for the Group's operations. The Group has loans and
receivables, trade and other receivables, and cash and short-term
deposits that arise directly from its operations. The Group also
hold investments designated financial assets measured at FVPL
categories.
The Group is exposed to market risk, credit risk and liquidity
risk.
The Group's senior management oversees the management of these
risks. The Group's senior management advises on financial risks and
the appropriate financial risk governance framework for the
Group.
The Board of Directors reviews and agrees policies for managing
each of these risks which are summarised below:
Market risk
Market risk is the risk that the fair values of future cash
flows of a financial instrument will fluctuate because of changes
in market prices. Market prices comprise three types of risk:
interest rate risk, currency risk and other price risk, such as
equity risk. Financial instruments affected by market risk include
loans and borrowings, deposits, financial assets measured at
FVPL.
The sensitivity analyses in the following sections relate to the
position as at 31 March 2020 and 31 March 2019
The following assumptions have been made in calculating the
sensitivity analyses:
(i) The sensitivity of the statement of comprehensive income is
the effect of the assumed changes in interest rates on the net
interest income for one year, based on the average rate of
borrowings held during the year ended 31 March 2020, all other
variables being held constant. These changes are considered to be
reasonably possible based on observation of current market
conditions.
Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group's exposure to the risk
of changes in market interest rates relates primarily to the
Group's long-term debt obligations with average interest rates.
At 31 March 2020 and 31 March 2019, the Group had no interest
rate derivatives.
The calculations are based on a change in the average market
interest rate for each period, and the financial instruments held
at each reporting date that are sensitive to changes in interest
rates. All other variables are held constant. If interest rates
increase or decrease by 100 basis points with all other variables
being constant, the Group's profit after tax for the year ended 31
March 2020 would decrease or increase by GBP568,277 (2019:
GBP803,649).
Foreign currency risk
Foreign currency risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rate. The Group's presentation currency
is the Great Britain GBP. A majority of our assets are located in
India where the Indian rupee is the functional currency for our
subsidiaries. Currency exposures also exist in the nature of
capital expenditure and services denominated in currencies other
than the Indian rupee.
The Group's exposure to foreign currency arises where a Group
company holds monetary assets and liabilities denominated in a
currency different to the functional currency of that entity:
As at 31 March 2020 As at 31 March 2019
Currency Financial Financial liabilities Financial Financial liabilities
assets assets
United States Dollar
(USD) 4,275,436 30,575,559 8,242,631 39,040,874
--------------------- ----------
Set out below is the impact of a 10% change in the US dollar on
profit arising as a result of the revaluation of the Group's
foreign currency financial instruments:
As at 31 March 2020 As at 31 March 2019
Currency Closing Rate Effect of 10% Closing Rate Effect of 10%
(INR/USD) strengthening (INR/USD) strengthening
in USD against in USD
INR - Translated against INR
to GBP - Translated
to GBP
United States
Dollar (USD) 75.10 2,122,208 69.32 2,681,169
The impact on total equity is the same as the impact on net
earnings as disclosed above.
Credit risk analysis
Credit risk is the risk that counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risk
from its operating activities (primarily for trade and other
receivables) and from its financing activities, including
short-term deposits with banks and financial institutions, and
other financial assets. Further, the global economy has been
severely impacted by the global pandemic COVID-19 (Note 5(a)).
The maximum exposure for credit risk at the reporting date is
the carrying value of each class of financial assets amounting to
GBP33,986,093 (2019: GBP49,388,558) and corporate guarantees issued
to lenders of its subsidiaries classified as Asset Held for Sale of
GBP28,261,524 (2019: GBP32,132,255).
The Group has exposure to credit risk from accounts receivable
balances on sale of electricity. The operating entities of the
group has entered into power purchase agreements with distribution
companies incorporated by the Indian state government (TANGEDCO) to
sell the electricity generated therefore the group is committed to
sell power to these customers and the potential risk of default is
considered low. For other customers, the Group ensures
concentration of credit does not significantly impair the financial
assets since the customers to whom the exposure of credit is taken
are well established and reputed industries engaged in their
respective field of business. It is Group policy to assess the
credit risk of new customers before entering contracts and to
obtain credit information during the power purchase agreement to
highlight potential credit risks. The Group have established a
credit policy under which customers are analysed for credit
worthiness before power purchase agreement is signed. The Group's
review includes external ratings, when available, and in some cases
bank references. The credit worthiness of customers to which the
Group grants credit in the normal course of the business is
monitored regularly and incorporates forward looking information
and data available. The receivables outstanding at the year end are
reviewed till the date of signing the financial statements in terms
of recoveries made and ascertain if any credit risk has increased
for balance dues. Further, the macro economic factors and specific
customer industry status are also reviewed and if required the
search and credit worthiness reports, financial statements are
evaluated. The credit risk for liquid funds is considered
negligible, since the counterparties are reputable banks with high
quality external credit ratings.
To measure expected credit losses, trade and other receivables
have been grouped together based on shared credit risk
characteristics and the days past due. The Group determined that
some trade receivables were credit impaired as these were long past
their due date and there was an uncertainty about the recovery of
such receivables. The expected loss rates are based on an ageing
analysis performed on the receivables as well as historical loss
rates. The historical loss rates are adjusted to reflect current
and forward looking information that would impact the ability of
the customer to pay.
Trade and other receivables are written off when there is no
reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the
failure of the debtor to engage in a repayment plan, the debtor is
not operating anymore and a failure to make contractual payments
for a period of greater than 180 days.
31 March 2020 Within Credit Days past due
period
More than More than More than Total
30 days 60 days 180 days
Expected loss rate 0% 0% 0% 17.23%
Gross carrying
amount - Trade
Receivables -TANGEDCO 2,378,240 3,953,961 5,310,071 18,734,652 30,376,924
Gross carrying
amount - Trade
Receivables -Others 7,824,720 608,495 889,434 5,286,795 14,609,444
General loss allowance(1) 4,138,025 4,138,025
Specific loss allowance(1) 13,970,007 13,970,007
Total loss allowance - - - 18,108,033 18,108,033
(1) There has been significant increase in loss allowance in
FY20 GBP17 million (FY19 GBP0.8 million) primarily on account of
contractual claim made on customer towards change in law as per
Power Purchase Agreement of GBP6.4 million, tariff discount dispute
of GBP7.5 million and change in credit risk of customer
constituting general loss allowance of GBP3.1 million.
31 March 2019 Within Credit Days past due
period
More than More than More than Total
30 days 60 days 180 days
Expected loss rate 0% 0% 0% 19.07%
Gross carrying
amount - Trade
Receivables -TANGEDCO 4,616,792 2,120,998 6,657,543 2,633,639 16,028,972
Gross carrying
amount - Trade
Receivables -Others 22,093,386 2,169,134 7,034,955 2,933,211 34,230,686
Loss allowance - - - 1,061,553 1,061,553
The closing loss allowances for trade receivables as at 31 March
2020 reconcile to the opening loss allowances as follows:
31 March 2020 31 March 2019
Opening loss allowance as
at 1 April (1,061,553) (271,116)
Increase in loss allowance
recognised in profit or (loss)
during the year for new receivables
recognised (17,046,480) (790,437)
Total (18,108,033) (1,061,553)
The Group's management believes that all the financial assets,
except as mentioned above are not impaired for each of the
reporting dates under review and are of good credit quality.
Liquidity risk analysis
The Group's main source of liquidity is its operating
businesses. The treasury department uses regular forecasts of
operational cash flow, investment and trading collateral
requirements to ensure that sufficient liquid cash balances are
available to service on-going business requirements. The Group
manages its liquidity needs by carefully monitoring scheduled debt
servicing payments for long-term financial liabilities as well as
cash outflows due in day-to-day business. Liquidity needs are
monitored in various time bands, on a day-to-day and week-to-week
basis, as well as on the basis of a rolling 90 day projection.
Long-term liquidity needs for a 90 day and a 30 day lookout period
are identified monthly.
The Group maintains cash and marketable securities to meet its
liquidity requirements for up to 60 day periods. Funding for
long-term liquidity needs is additionally secured by an adequate
amount of committed credit facilities and the ability to sell
long-term financial assets.
The following is an analysis of the group contractual
undiscounted cash flows payable under financial liabilities at 31
March 2020 and 31 March 2019:
As at 31 March
2020
Current Non-Current Total
Within 12 1-5 years Later than
months 5 years
Borrowings 23,746,229 33,081,456 - 56,827,685
Interest on borrowings 6,595,187 10,464,236 - 17,059,422
Trade and other
payables 42,790,023 169,373 - 42,959,396
Liabilities held
for sale 32,866,783 - 32,866,783
Other current liabilities 582,241 - 582,241
Total 106,580,463 43,715,065 - 150,295,527
As at 31 March
2019
Current Non-Current Total
Within 12 1-5 years Later than
months 5 years
Borrowings 28,869,722 51,495,208 - 80,364,930
Interest on borrowings 8,507,484 17,059,422 - 25,566,906
Trade and other
payables 45,474,814 14,235,485 - 59,710,299
Provision for pledged
deposits - 12,627,381 12,627,381
Liabilities held
for sale 33,601,291 - - 33,601,291
Other current liabilities 91,764 - - 91,764
Total 116,545,075 95,417,496 - 211,962,571
Capital management
Capital includes equity attributable to the equity holders of
the parent and debt less cash and cash equivalents.
The Group's capital management objectives include, among
others:
-- Ensure that it maintains a strong credit rating and healthy
capital ratios in order to support its business and maximise
shareholder value
-- Ensure Group's ability to meet both its long-term and
short-term capital needs as a going concern;
-- To provide an adequate return to shareholders by pricing
products and services commensurately with the level of risk.
The Group manages its capital structure and makes adjustments to
it, in light of changes in economic conditions. To maintain or
adjust the capital structure, the Group may adjust the dividend
payment to shareholders, return capital to shareholders or issue
new shares.
No changes were made in the objectives, policies or processes
during the years end 31 March 2020 and 31 March 2019.
The Group maintains a mixture of cash and cash equivalents,
long-term debt and short-term committed facilities that are
designed to ensure the Group has sufficient available funds for
business requirements. There are no imposed capital requirements on
Group or entities, whether statutory or otherwise.
The Capital for the reporting periods under review is summarised
as follows:
31 March 31 March 2019
2020
Total equity 158,503,833 154,383,407
Less: Cash and cash equivalents (3,438,830) (2,185,570)
Capital 155,065,003 152,264,447
Total equity 154,383,407
Add: Borrowings (including buyer's credit) 158,503,833 80,364,930
Overall financing 215,331,518 234,748,337
Capital to overall financing ratio 0.72 0.65
30 Summary of financial assets and liabilities by category and
their fair values
Carrying amount Fair value
March 2020 March 2019 March 2020 March 2019
--------------
Financial assets
Debt instruments measured
at amortised cost
-- Cash and cash equivalents
(1) 3,438,830 2,118,960 3,438,830 2,118,960
-- Restricted cash (1) 7,524,612 23,547,870 7,524,612 23,547,870
-- Current trade receivables
(1) 26,901,986 49,198,105 26,901,986 49,198,105
-- Other long-term assets 509,628 518,553 509,628 518,553
-- Other short-term assets 6,701,345 6,288,901 6,701,345 6,288,901
Financial instruments measured
at fair value through profit
or loss
-- Other short term assets
- (Note (7)(c)) 741,425 40,453 741,425 40,453
45,817,826 81,712,842 45,817,826 81,712,842
--------------
Financial liabilities
Term loans 56,827,685 80,364,930 56,827,685 80,364,930
Current trade and other
payables (1) 42,790,023 45,474,814 42,790,023 45,474,814
Provision for pledged
deposits - 12,627,381 - 12,627,381
Non-current trade and
other payables (2) 169,373 14,235,485 169,373 14,235,485
99,787,081 152,702,610 99,787,081 152,702,610
The fair value of the financial assets and liabilities are
included at the price that would be received to sell an asset or
paid to transfer a liability (i.e. a exit price) in an ordinary
transaction between market participants at the measurement date.
The following methods and assumptions were used to estimate the
fair values:
1. Cash and short-term deposits, trade receivables, trade
payables, and other borrowings like short-term loans, current
liabilities approximate their carrying amounts largely due to the
short-term maturities of these instruments.
2. The fair value of loans from banks and other financial
indebtedness, obligations under finance leases, financial
liabilities at fair value through profit or loss as well as other
non-current financial liabilities is estimated by discounting
future cash flows using rates currently available for debt or
similar terms and remaining maturities.
3. Fair value of financial assets measured at FVPL held for
trading purposes are derived from quoted market prices in active
markets. Fair value of financial assets measured at FVPL of
unquoted equity instruments are derived from valuation performed at
the year end. Fair Valuation of retained investments in PS and BVP
is on basis of the last transaction.
Fair value measurements recognised in the statement of financial
position
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which
the fair value is observable.
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Financial instruments measured at fair Level Level Level
value through profit or loss 1 2 3 Total
---------------------------------------- -------- ------
2020
Unquoted securities - 700,972 40,453
Total - 700,972 40,453
---------------------------------------- -------- ------
2019
Unquoted securities - - 40,453
Total - - 40,453
---------------------------------------- -------- ------
There were no transfers between Level 1 and 2 in the period.
Investments in mutual funds are valued at closing net asset value
(NAV).
The Group's finance team performs valuations of financial items
for financial reporting purposes, including Level 3 fair values.
Valuation techniques are selected based on the characteristics of
each instrument, with the overall objective of maximising the use
of market-based information. The finance team reports directly to
the chief financial officer (CFO).
Valuation processes and fair value changes are discussed by the
Board of Directors at least every year, in line with the Group's
reporting dates.
31 Post - reporting date events
The Group raised approximately GBP21.0 million INR 2000 million)
during June 2020 through non-convertible debentures (NCDs) issue
with a three years term and coupon rate of 9.85%. The proceeds from
the NCDs were used to repay the FY21 and FY22 (i.e. to March 2023)
principal term loans obligations.
-ends-
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