REG - OPG Power Ventures - Final results for the year ended 31 March 2022
30/09/2022 07:00
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RNS Number : 3122B OPG Power Ventures plc 30 September 2022
30 September 2022
OPG Power Ventures plc
("OPG", the "Group" or the "Company")
Final results for the year ended 31 March 2022
OPG (AIM: OPG), the developer and operator of power generation assets in
India, announces its final results for the year ended 31 March 2022 ("FY22").
FY22 Summary:
· FY22 revenue decreased by 14.66 per cent to £80.1 million from
£93.8 million in FY21 primarily due to Covid-19 related disruptions and
increased coal prices in second half of FY22 due to ongoing global conflict.
· Total generation (including deemed) in FY22 was nearly 1.9
billion kWh, 11.0 per cent lower than last year's generation of nearly 2.1
billion kWh.
· Adjusted EBITDA of £21.6 million (27.0 per cent margin) as
compared with £33.7 million (36.0 per cent margin) in FY21.
· Profit before tax from continued operations was £13.0 million as
compared to £21.6 million in FY21.
· Basic earnings per share 1.5 pence in FY22 as compared to 3.5
pence in FY21.
· Net debt reduced from £16.24 million in FY21 to £6.9 million in
FY22.
Unless specified, all figures in £ million FY22 FY21
Revenue 80.1 93.8
Other Operating Income - 9.4
Adjusted EBITDA 21.6 33.7
Profit before tax from continuing operations 13.0 21.6
Profit/(Loss) from discontinued operations, incl. NCI (2.9) 1
Profit for the year 6.0 14.1
Earnings per share (pence) 1.5 3.5
Net debt 6.9 16.2
Net debt to Adjusted EBITDA (ratio) 0.3 0.5
Total generation (including deemed) (billion kWh) 1.9 2.1
Current developments and highlights
· Plant Load Factor ("PLF") including 'deemed' for the five-month
period to 31 August 2022 was low at 28.6 per cent as OPG continues to focus on
profitability and an optimising Plant Load Factor (PLF) with a mix of long
term and short term Power Purchase Agreements (PPA) with the State Utility,
supply to captive shareholders and supply through Exchange and coal sales.
· Due to prevalent high coal prices, State Utility has approved the
pass through of the fuel prices until December 2022, under long term PPA.
· Average tariff for the five months period to 31 August 2022 was
Rs. 9.15, up 69 per cent (FY21: Rs. 5.42) due to pass through of high coal
prices by the State Utility and short-term supply contract awarded by State
Utility.
· International coal prices continue to be high due to the ongoing
global conflict coupled with demand from China and Europe.
Indian Economy update
· According to the World Economic Report, the Indian Economy is
expected to grow by 8.2 per cent in FY23.
· The power demand in the country is expected to grow at 6.5 per
cent between FY22 and FY24 according to the Central Electricity Authority
· The deadline for meeting emission norms for the majority of
coal-based power plants in India, has been extended from December 2024 to
December 2026.
Mr. Kumar, Non-Executive Chairman said:
"We are proud to report that, despite the challenges of Covid 19 and the
global supply disruption due to Russia Ukraine conflict, OPG has demonstrated
an excellent performance which was comfortably in line with FY22 market
expectations and has also delivered a significant reduction in net debt during
the year."
The Company's annual report and accounts for the year ended 31 March 2022 is
available on the Company's website at www.opgpower.com/and will be sent to
shareholders shortly.
For further information, please visit www.opgpower.com or contact:
Via Tavistock below
OPG Power Ventures PLC
Ajit Pratap Singh
Cenkos Securities plc (Nominated Adviser & Broker) +44 (0) 20 7397 8900
Stephen Keys / Katy Birkin
Tavistock (Financial PR) +44 (0) 20 7920 3150
Simon Hudson / Nick Elwes
Chairman's Statement
Resilience, robust profitability and strong cash generation
FY22 has been a challenging year. As the world and the global economy was
recovering from Covid-19, the war in Ukraine dented sentiment with a sharp
increase in global energy prices. Despite a challenging year, OPG has
continued to deliver strong cash generation, robust profitability and achieve
a significant reduction in net debt.
The unprecedented health crisis, caused by Covid-19, took an immense human and
economic toll globally. At OPG, we responded immediately with a comprehensive
Covid-19 response plan - putting in place health and safety measures to
protect our employees, continuing to run our plant operations smoothly to
ensure supply of electricity to our consumers, and providing essential support
and assistance to our local communities in need. Yet, even in such critical
circumstances, our Group has emerged strong, reporting solid set of financial
results and paving pathways for accelerated and sustainable future growth.
The plants' generation, including deemed generation, during FY22 was 1.9
billion units which is an 11.0 per cent reduction in generation in comparison
with FY21 primarily due to the increase in coal prices. The average Plant Load
Factor ("PLF") in FY22 (including deemed) was at 52 per cent (FY21: 58 per
cent) and the average realised tariff was Rs. 5.82 (FY21: Rs.5.72) per
kilowatt hour.
In FY22, the Group's revenue was £80.1 million (FY21: £93.8 million) and
Adjusted EBITDA was £21.6 million (FY21: £33.7 million) and profit for the
year was £6.0 million (FY21: £14.1 million).
We are glad to report that OPG was comfortably in line with FY22 market
expectations despite the difficult market conditions.
Creating shareholder value through 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. This strategy, we believe, will deliver value to
shareholders with free cash flows providing significant returns to our
shareholders and further opportunities to grow the business.
During the period FY20 - FY22 net debt reduced significantly from £53.4
million to £16.2 million and then to £6.9 million. Net debt to Adjusted
EBITDA ratio reduced from 1.7x to 0.5x and further to 0.3x demonstrating the
robustness of OPG's financial position. The Group remains amongst the least
leveraged power companies in India.
The Board remains convinced, especially in light of the Covid-19 challenges,
that our strategy of maintaining operational excellence and paying down
expensive borrowings is the right one to pursue for all our stakeholders.
Maximising stakeholders' long-term value
One of OPG's paramount objective is to maximise stakeholders' long-term value.
In light of disruptions and uncertainty caused by Covid-19 and extraordinary
volatility in coal prices and freight over the past year and a half, the Board
believes that it is in the best interest of the Group and its stakeholders to
conserve cash. The cash thus conserved will be utilized for repaying debt,
growing ESG focused projects and maintaining a strong and resilient balance
sheet to withstand the turbulent times.
Building a sustainable future
Rapid growth in urbanisation, universal electrification, and a renewable
energy transition driven by climate change, mean that India's incremental
power needs is targeted to largely be met by renewable energy. Our business
strategy is aligned with this, offering us an opportunity to unlock value for
all our stakeholders in the years to come. OPG has developed its ESG strategy,
which, among other matters, includes objectives to reduce its carbon
footprint. As part of this strategy, the Group is evaluating various options
to increase its renewable energy asset base and to establish joint ventures to
roll out various energy transition technologies. These initiatives will ensure
that OPG delivers year-on-year improvements to reach the Group's emissions
reduction targets in the medium and longer-term.
We are pleased to present our second standalone ESG report which pertains to
FY22 and summarises the objectives, activities, and the performance of the
Group from an ESG perspective. This report includes examples of how we have
demonstrated our commitments and applied our management approach on a range of
ESG topics, including environmental stewardship, health & safety,
relationship with local community, and governance.
Indian Economy and Power Sector Update
India is the third largest producer and third largest consumer of electricity
in the world with installed power capacity reaching 400 GW as at March 2022.
In FY22, even amidst a relatively weaker macroeconomic scenario, peak power
demand hit an all-time high of 200.5 GW. On account of a record-breaking heat
wave in North India, the peak power demand has already touched 210.8 GW in the
current financial year.
In June 2022, the World Bank's Global Economic Outlook projected India's FY23
(CY22) economic growth forecast at 7.5 per cent, supported by plans for higher
spending on infrastructure, rural development and health services as well as
stronger-than-expected recovery in services. FY24 (CY23) is forecasted at 7.1
per cent, amongst the highest growth rates.
During FY22, power consumption increased by 9.5 per cent to 1,392.1 BU from
1,271.5 BU. ICRA, which is a leading ratings agency in India estimates that
India's electricity demand is expected to grow up to 6.5 per cent in FY23 on a
year-on-year basis.
Over the last several months the prices of thermal coal and freight have
surged sharply primarily due to increased imports of coal and other goods by
China and other Asian countries on the back of post Covid-19 economic
recovery. Whilst OPG is partially covered from increases in prices with fixed
price agreements for coal and freight, the Group remains exposed to market
fluctuations for the unhedged portion of coal consumption and
freight. The Group continues to explore various options including sourcing the
coal from other geographies (including domestic sources) to reduce the per
unit cost of electricity.
Outlook
Since April 2022, the prices of thermal coal and freight have increased
significantly due to geo-political tensions. Coal prices may not reduce
significantly in the short term.
While challenges to the economy will continue in FY23, the Group has strong
foundations, allowing us both to manage the ongoing Covid-19 situation and to
pursue growth sustainably. The Group's medium and long-term fundamentals
remain unchanged. We have strong cash flows which will enable OPG to continue
to reduce and deliver our long-term profitable business model of responsible
growth and sustainable returns to shareholders. We will also continue to focus
on advancing our ESG agenda.
I would like to extend my gratitude to all our employees who overcame
challenges posed by the pandemic, as well as vendors, banks and all
stakeholders, especially our shareholders, for the incredible support we have
received during these unprecedented and extraordinary times.
N. Kumar
Chairman
28 September 2022
Financial Review
The following is a commentary on the Group's financial performance for the year.
Income statement
Year ended 31 March 2022 % of revenue 2021 % of revenue
£m £m
Revenue £80.1 £93.8
Cost of revenue (excluding depreciation) (£56.5) (£56.9)
Gross profit £23.6 29.4 £36.9 39.4
Other operating income £0.0 £9.4
Other income £8.1 £1.9
Distribution, General and Administrative expenses, ECL (excluding
depreciation, employee stock option charge)
(£10.0) (£14.5)
Adjusted EBITDA £21.6 27.0 £33.7 36.0
Share based compensation (£0.2) (£0.5)
Depreciation (£5.3) (£5.7)
Net finance costs (£3.1) (£5.9)
Profit before tax from continuing operations £13.0 16.2 £21.6 23.0
Taxation (£4.1) (£8.4)
Profit after tax from continuing operations £8.9 11.1 £13.1 14.0
(Loss)/Profit from discontinued operations, including Non-Controlling Interest
(£2.9) £1.0
Profit for the year £6.0 7.5 £14.1 15.0
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
FY22 has been a tough year for OPG. The Group's revenues decreased by £13.8
million (a 14.7 per cent decline) in FY22 primarily driven by the impact of
Covid-19 in the first half and high coal prices in the second half of FY22.
The Group decreased generation and consequently sales to captive power users
because of the unprecedented increase in costs. Adjusted EBITDA in FY22 at
£21.6 million was 27.0 per cent of revenues as compared to 36 per cent last
year.
The average tariff realized in FY22 was Rs. 5.60/kWh, marginally higher than
previous year's Rs. 5.52/kWh. Total generation including deemed was 1.87 Bn
units, a decline of 11.3 per cent over last year's 2.1 Bn units. This
reduction was primarily because of the second Covid-19 wave that affected
India and the high coal prices in the second half. The increase in coal prices
was due to higher demand for coal from China, Europe, excessive rains in the
Q3FY22 and later on, the export ban on coal in Q4FY22 in Indonesia.
The production and output levels from the Group's operating power plants
compared to the prior years were as follows:
FY22 FY21
Total generation, incl. "deemed" generation (million units) 1,868 2,107
Plant Load Factor (PLF) (%)* 52 58
Average tariff (INR/unit) 5.60 5.52
* Unit 3: "Deemed" PLF (%) has been included.
Gross Profit
The Gross Profit (GP) for the year was £23.6 million (29.4 per cent of
revenue). On y-o-y basis (FY21 - £36.9 million (39.4 per cent of revenue)),
the gross profit declined by 36 per cent reflecting the impact of high
Indonesian coal prices.
The cost of revenue represents fuel costs. The table below shows average price
of coal consumed in FY22 and FY21.
Average price of coal consumed FY22 FY21
Average price of coal consumed (₹/mt) ₹ 5,460 ₹ 4,127
Average price of coal consumed (₹ / mKCal) ₹1,328 ₹991
Per cent change in average price of coal consumed (₹/mt) 32.3 (4.1)
Per cent change in the average price of coal consumed (₹ / mKCal) 34.0 (3.6)
Adjusted EBITDA
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 for FY22 was £21.6 million, a decrease of 36 per cent from
£33.7 million in FY21 primarily because of increase in international coal
prices.
Profit from continuing operations before tax was £13.0 million (16.2 per cent
of revenue) as compared to £21.6 million (23.0 per cent of revenue) in FY21
primarily because of increase in international coal prices.
Profit before Tax (PBT) reconciliation for FY22 (£m)
PBT FY22 £13.0
PBT FY21 £21.6
Increase (Decrease) in PBT (£8.6)
Decrease in GP (£13.4)
Decrease in Other Operating Income (£9.4)
Increase in Other Income £6.1
Decrease in Distribution, General & Administrative Expenses, Expected £4.9
Credit Loss
Decrease in Net Finance Costs £2.9
Decrease in Depreciation and Amortisation £0.4
Increase (Decrease) in PBT (£8.6)
Taxation
The Company's operating subsidiaries are under a tax holiday period but are
subject to Minimum Alternate Tax ('MAT') on their accounting profits. Taxes
paid under MAT can be offset against future tax liabilities arising after the
tax holiday period. The tax expense during the year was £4.1 million.
Profits after tax from continuing operations
Profits after tax from continuing operations has decreased by 32.1 per cent or
£4.2 million from £13.1 million to £8.9 million. The decrease was in line
with H1FY22 forecasts.
Assets held for sale and loss from discontinued operations - 62 MW Karnataka
solar projects
In FY18, four Karnataka solar projects (62 MW) were commissioned. OPG has a 31
per cent equity interest in these projects.
During FY19, the Group obtained a right to exercise an option to buy an
additional 30 per cent equity interest in solar companies. Effective from FY20
this right was assigned to a third party and from FY21 the remaining related
obligations and the results of the operations of the solar companies are not
consolidated in the Group's consolidated financial statements due to loss of
control. As previously reported, after evaluation of all options, the Group
decided that the most efficient way to maximise shareholders' value from the
solar operations was to divest its' stake in the solar companies. The process
of disposing the assets satisfy all conditions of IFRS 5. Therefore, the solar
assets have been classified as "Assets held for sale" as on 31 March 2022. The
completion of the disposal process was impacted by Covid-19.
OPG in its endeavour to sell the solar assets continues to identify
potential buyers. Based on the term sheet received from potential buyer, the
Group's investment in the solar companies was valued at £13.5 million as
compared to OPG's initial investment of £16.4 million. This loss of £2.9
million is recognized as loss from discontinued operations on account of the
diminution in the value of investment. The management is evaluating and
actively considering the offer received from the potential buyer.
Earnings per Share (EPS)
The group's total reported EPS decreased from 3.5 pence in FY21 to 1.5 pence
in FY22.
Dividend policy
One of OPG's paramount objectives is to maximise stakeholders' long-term
value. Keeping in mind, the disruptions and uncertainty caused by Covid-19 and
extraordinary volatility in coal prices and freight, the Board believes that
it is in the best interests of the Group and its stakeholders to conserve
cash. The cash thus accumulated will be used to repay debt, to fund growth in
relation to ESG focused projects and to maintain a strong and resilient
balance sheet to withstand turbulent times. Therefore, the Board decided not
to declare a dividend for FY22. The Board will revisit the Group's dividend
policy in due course.
Foreign exchange gain/loss on translation
The British Pound to Indian Rupee exchange rate appreciated to a closing rate
of £1= Rs. 99.37 on 31 March 2022 from a rate of £1= Rs. 100.81 on 31 March
2021 thereby resulting in a gain of £2.3 million. The same has been
recognized under "Exchange differences on translating foreign operations".
Property, plant and equipment
The increase in net book value of our property, plant and equipment to £173.4
million principally relates to additions during the year offset by
depreciation and foreign exchange impact during the year.
Other non-current assets
Other non-current assets (excluding property, plant and equipment &
intangible assets) have increased by £4.3 million. The major components of
this increase was in the non-current portion of restricted cash (up £2.2
million) represented by investments in mutual funds and fixed deposits
maturing after twelve months of £10.4 million (2021: £8.2 million) allocated
to debenture redemption fund and OPG's strategic investment in Atsuya
Technologies Private Limited totalling to £2.1 million (Rs. 210.0 million).
The debenture redemption fund was created to repay the non-convertible
debentures of £20.1 million (Rs. 2.0 billion) which are repayable in FY24.
Current assets
Current assets have decreased by £4.4 million from £74.5 million to £70.1
million year on year primarily as a result of the following:
• decrease in Assets held for sale by £2.9 million due to
diminution in the value of investments in the solar companies.
• decrease in trade receivables by £6.2 million as a result of
strong collections from the Group's captive power users and customers,
including old receivable balances.
• decrease in inventories by £1.7 million on account of consumption
and sale of coal.
• increase in other short-term assets by £8.4 million primarily due
to increase in investments in mutual funds to £18.2 million (2021: £13.3
million) and advances to vendors of £6.2 million (2021: £2.4 million).
• decrease in cash balances (including restricted cash) by £2.1
million.
Liabilities
Current liabilities have marginally increased by £0.2 million from £38.2
million to £38.4 million year on year. Bank borrowings increased by £8.9
million from £4.5 million to £13.4 million. Trade payables decreased by
£8.1 million from £32.5 to £24.4 million.
Non-current liabilities have decreased by £8.1 million primarily due to
decrease in the non-current portion of borrowings by £12.5 million from
£22.3 million to £9.8 million. Deferred Tax liabilities have increased from
£13.0 million to £17.0 million.
Financial position, debt, gearing and finance costs
As at 31 March 2022, total borrowings were £43.3 million (31 March 2021:
£46.6 million). The gearing ratio, net debt (i.e. total borrowings minus cash
and current and non-current investments in mutual funds)/(equity plus net
debt), was 3.9 per cent (31 March 2021: 9.1 per cent). The gearing ratio is a
useful measure to identify the financial risk of a company.
OPG's NCDs are repayable in June 2023 and have an interest coupon of 9.85
per cent. The issue of the NCDs had a material positive impact upon the
Group's cash flow during the uncertain Covid-19 impacted period, through a
significant deferment of principal payments and the NCDs' interest coupon
being lower by c.1 per cent in comparison with the existing term loans
interest rate.
During FY22 net debt (total borrowings minus cash and current and non-current
investments in mutual funds) reduced from £16.3 million to £6.9 million and
net debt to Adjusted EBITDA ratio reduced from 0.5x to 0.3x as a result of the
repayment of term loans and working capital loans as well as strong cash
collections achieved during the year. This demonstrates the robustness of
OPG's financial position. The Group remains amongst the least leveraged power
companies in India.
Based on the present term loans repayment schedule, the Group is expected to
be term loan free during June 2024.
Finance costs have decreased by £1.4 million from £6.8 million in FY21 to
£5.4 million in FY22. This was primarily due to the impact of decrease in
foreign exchange losses and reduction in interest expenses following scheduled
repayments of the term loans and the issuance of the NCDs.
Finance income increased from £0.9 million in FY21 to £2.3 million in FY22.
This has resulted in a decrease of £2.8 million in Net Finance Costs from
£5.9 million in FY21 to £3.1 million in FY22.
Current restricted cash representing deposits maturing between three to twelve
months amounted to £2.4 million (FY21: £3.2 million) which have been pledged
as security for Letters of Credit.
Non-current restricted cash represents investments in mutual funds of £8.8
million (31 March 2021: £8.2 million) and fixed deposits of £1.6 million (31
March 2021: £0.01 million). These non-current investments have a maturity
period in excess of twelve months and are allocated to the debenture
redemption fund which is earmarked towards the redemption of non-convertible
debentures scheduled during FY24 of £20.1 million (`2.0 billion).
Cash flow
Cash flow from continuing operations before and after changes in working
capital were £21.6 million (FY21: £36.8 million) and £16.3 million (FY21:
£40.2 million) respectively. Net cash flow from operating activities
decreased from
£40.2 million in FY21 to £16.3 million in FY22, a decrease of £23.8
million, primarily due to decrease in trade payables and other liabilities.
Movements (£m) FY22 FY21
Operating cash flows from continuing operations before changes in
working capital £21.6 £36.8
Tax paid (£0.0) (£0.7)
Change in working capital assets and liabilities (£5.2) £4.1
Net cash generated by operating activities from continuing operations £16.3 £40.2
Purchase of property, plant and equipment (net of disposals) (£3.5) (£0.5)
Investments (purchased)/sold, incl. in solar projects, shipping JV, market
securities, movement in restricted cash and interest received(#)
(£5.7) (£29.0)
Net cash (used in)/from continuing investing activities (£9.2) (£29.5)
Finance costs paid, incl. foreign exchange losses (£4.5) (£5.8)
Dividend paid - -
Total cash change from continuing operations before net borrowings £2.6 £4.9
(#) Includes purchase of investments in mutual funds and other market
securities of £10 million included in restricted cash and other short term
assets in the statement of financial position.
Ajit Pratap Singh
Chief Financial Officer,
28 September 2022
Consolidated statement of financial position As at 31 March 2022
(All amount in £, unless otherwise stated)
As at As at
Notes 31 March 2022 31 March 2021
Assets
Non-current assets
Intangible assets 14 11,810 2,394
Property, plant and equipment 15 173,369,128 172,716,040
Right-of-use assets 15 36,548 -
Investments 2,113,307 -
Other long-term assets 16 12,140 69,853
Restricted cash 19 10,427,847 8,194,412
185,970,780 180,982,699
Current assets
Inventories 18 10,465,820 12,186,644
Trade and other receivables 17 8,607,935 14,829,989
Other short-term assets 16 26,182,923 17,805,554
Current tax assets (net) 1,250,086 1,131,342
Restricted cash 19(b) 2,392,104 3,219,356
Cash and cash equivalents 19(a) 7,691,392 8,920,952
Assets held for sale 7(a), 7(b) 13,497,027 16,425,368
70,087,287 74,519,205
Total assets 256,058,067 255,501,904
Equity and liabilities
Equity
Share capital 20 58,909 58,909
Share premium 20 131,451,482 131,451,482
Other components of equity (10,221,248) (12,735,470)
Retained earnings 47,904,448 41,910,280
Equity attributable to owners of the Company 169,193,591 160,685,201
Non-controlling interests 872,663 881,869
Total equity 170,066,254 161,567,070
Liabilities
Non-current liabilities
Borrowings 22 9,759,610 22,260,206
Non-Convertible Debentures 22 20,126,738 19,840,089
Trade and other payables 23 630,358 607,702
Other liabilities 36,228 -
Deferred tax liabilities (net) 13 17,029,927 12,994,371
47,582,861 55,702,368
Current liabilities
Borrowings 22 13,399,429 4,510,358
Trade and other payables 23 24,440,324 32,495,799
Other liabilities 569,199 1,226,309
Liabilities classified as held for
sale
7(b)
-
-
38,408,952 38,232,466
Total liabilities 85,991,813 93,934,834
Total equity and liabilities 256,058,067 255,501,904
The notes are an integral part of these consolidated financial statements.
The financial statements were authorised for issue by the board of directors
on 28 September 2022 and were signed on its behalf by:
N Kumar Arvind Gupta Dmitri Tsvetkov Ajit Pratap Singh
Non-Executive Chairman1 Chairman1 Chief Financial Officer2 Chief Financial Officer2
1 Effective 4 April 2022. Mr Arvind Gupta step down from the Board and Mr N.
Kumar appointed as Non-executive Chairman
2 Effective 31 May 2022. Mr Dmitri Tsvetkov step down from the Board and Mr
Ajit Pratap Singh appointed as Chief Financial Officer
Consolidated statement of Comprehensive Income for the Year ended 31 March
2022
(All amount in £, unless otherwise stated)
Year ended 31 March 2022 Year ended 31 March 2021
Notes
Revenue 8 80,067,032 93,823,933
Cost of revenue 9 (56,500,964) (56,893,065)
Gross profit 23,566,068 36,930,868
Other Operating income 10(a) - 9,420,712
Other income 10(b) 8,054,865 1,921,546
Distribution cost (3,894,563) (4,791,056)
General and administrative expenses (6,316,484) (7,256,153)
Expected credit loss on trade receivables 28 - (3,025,055)
Depreciation and amortization (5,333,531) (5,705,538)
Operating profit 16,076,355 27,495,324
Finance costs 11 (5,356,089) (6,803,137)
Finance income 12 2,285,364 868,439
Profit before tax 13,005,630 21,560,626
Tax expense 13 (4,097,184) (8,447,699)
Profit for the year from continued operations 8,908,446 13,112,927
(Loss)/Gain from discontinued operations, including Non-Controlling Interest 7 (2,928,341) 999,398
Profit for the year 5,980,105 14,112,325
Profit for the year attributable to:
Owners of the Company 5,994,168 14,091,807
Non - controlling interests (14,063) 20,518
5,980,105 14,112,325
Earnings per share from continued operations
Basic earnings per share (in pence) 25 2.23 3.27
Diluted earnings per share (in pence) 2.23 3.25
Earnings/(Loss) per share from discontinued operations
Basic (Loss)/Earnings per share (in pence) 25 (0.73) 0.25
Diluted (Loss)/Earnings per share (in pence) (0.73) 0.25
Earnings per share
-Basic (in pence) 25 1.50 3.52
-Diluted (in pence) 1.50 3.50
Other comprehensive income / (loss)
Items that will be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 2,319,444 (12,860,261)
Consolidated statement of changes in equity
For the Year ended 31 March 2022
(All amount in £, unless otherwise stated)
Issued capital (No. of shares) Ordinary shares Share premium Other reserves Foreign currency translation reserve Retained earnings Total attributable to owners of parent Non-controlling interests Total equity
At 1 April 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
Employee Share based payment LTIP (Note 21)
- - - 535,247 - - 535,247 - 535,247
Transaction with owners - - - 535,247 - - 535,247 - 535,247
Profit for the year - - - - - 14,091,806 14,091,806 20,518 14,112,324
Deconsolidation (note 7b) - - - - 912,531 - 912,531 376,718 1,289,249
Other comprehensive loss - - - - (12,860,261) - (12,860,261) (13,322) (12,873,583)
Total comprehensive income - - - - (11,947,730) 14,091,806 2,144,076 383,914 2,527,990
At 31 March 2021 400,733,511 58,909 131,451,482 8,021,374 (20,756,844) 41,910,280 160,685,201 881,869 161,567,070
At 1 April 2021 400,733,511 58,909 131,451,482 8,021,374 (20,756,844) 41,910,280 160,685,201 881,869 161,567,070
Employee Share based payment LTIP (Note 21)
- - - 194,778 - - 194,778 - 194,778
Transaction with owners - - - 194,778 - - 194,778 - 194,778
Profit for the year - - - - - 5,994,168 5,994,168 (14,063) 5,980,105
Other comprehensive income - - - - 2,319,444 - 2,319,444 4,857 2,324,301
Total comprehensive income - - - - 2,319,444 5,994,168 8,313,612 (9,206) 8,304,406
At 31 March 2022 400,733,511 58,909 131,451,482 8,216,152 (18,437,400) 47,904,448 169,193,591 872,663 170,066,254
The notes are an integral part of these consolidated financial statements
Consolidated statement of cash flows For the Year ended 31 March 2022
(All amount in £, unless otherwise stated)
Year ended 31 March 2022 Year ended 31 March 2021
Notes
Cash flows from operating activities
Profit before income tax including discontinued operations 10,077,289 22,560,024
Adjustments for:
(Profit) / Loss from discontinued operations, net 7 2,928,341 (999,398)
Unrealised foreign exchange loss 9(d) 184,880 46,931
Financial costs 11 5,171,209 6,756,206
Financial income 12 (2,285,364) (864,156)
Share based compensation costs 21 194,778 535,247
Depreciation and amortisation 5,333,531 5,705,538
Expected credit loss on Trade receivables 28 - 3,025,055
Changes in working capital
Trade and other receivables 6,294,982 7,404,759
Inventories 1,854,857 (1,654,539)
Other assets (3,283,261) 4,976,235
Trade and other payables (9,121,460) (7,106,516)
Other liabilities (969,676) 490,713
Cash generated from continuing operations 16,380,106 40,876,099
Taxes paid (48,554) (709,277)
Cash provided by operating activities of continuing operations Cash used for 16,331,552 40,166,822
operating activities of discontinued operations
- -
Net cash provided by operating activities 16,331,552 40,166,822
Cash flows from investing activities
Purchase of property, plant and equipment (including capital advances) (3,534,707) (506,222)
Interest received 2,285,364 864,156
Movement in restricted cash (1,213,769) (4,655,096)
Purchase of investments (6,760,520) (25,250,994)
Cash used in investing activities of continuing operations (9,223,632) (29,548,156)
Net cash used in investing activities (9,223,632) (29,548,156)
Cash flows from financing activities
Proceeds from borrowings (net of costs) - 21,981,043
Repayment of borrowings (3,909,695) (27,938,844)
Finance costs paid (4,528,565) (5,812,498)
Cash used in financing activities of continuing operations (8,438,260) (11,770,299)
Cash used in financing activities of discontinued
operations
-
-
Net cash used in financing activities (8,438,260) (11,770,299)
Net decrease in cash and cash equivalents from continuing operations (1,330,340) (1,151,633)
Net decrease in cash and cash equivalents from discontinued
operations
-
-
Net decrease in cash and cash equivalents (1,330,340) (1,151,633)
Cash and cash equivalents at the beginning of the year 8,920,954 3,438,830
Cash and cash equivalents on deconsolidation - (28,560)
Exchange differences on cash and cash equivalents 100,781 6,662,317
Cash and cash equivalents at the end of the year 7,691,395 8,920,954
Consolidated statement of cash flows
For the Year ended 31 March 2022 (continued)
(All amount in £, unless otherwise stated)
Disclosure of Changes in financing liabilities:
Analysing of changes in Net debt 1 April 2021 Cash flows Other Changes 31 March 2022
Working Capital loan 3,788,314 (2,152,472) 5,949 1,641,791
Secured loan due within one year 722,044 10,780,822 254,772 11,757,638
Borrowings grouped under Current liabilities 4,510,358 8,628,350 260,721 13,399,429
Secured loan due after one year 42,100,295 (12,538,045) 324,098 29,886,348
Borrowings grouped under Non-current liabilities 42,100,295 (12,538,045) 324,098 29,886,348
Analysing of changes in Net debt 1 April 2020 Cash flows Other Changes 31 March 2021
Working Capital loan 6,914,122 (2,704,726) (421,082) 3,788,314
Secured loan due within one year 16,832,107 (15,443,674) (666,390) 722,044
Borrowings grouped under Current liabilities 23,746,229 (18,148,399) (1,087,471) 4,510,358
Secured loan due after one year 33,081,456 12,190,599 (3,171,760) 42,100,295
Borrowings grouped under Non-current liabilities 33,081,456 12,190,599 (3,171,760) 42,100,295
Notes to the consolidated financial statements
(All amount in £, 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) - as issued
by the International Accounting Standards Board 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 2022 were
approved and authorised for issue by the Board of Directors on 28 September
2022.
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.
b) Changes in accounting Standards
The following standards and amendments to IFRSs became effective for the
period beginning on 1 January 2021 and did not have a material impact on the
consolidated financial statements:
i Amendments to IFRS 16, Covid 19 "related rent concessions"
"The amendments permit lessees, as a practical expedient, not to assess
whether particular rent concessions occurring as a direct consequence of the
Covid-19 pandemic are lease modifications and instead, to account for those
rent concessions as they were not lease modifications. Initially, these
amendments were to apply until June 30, 2021."
ii Amendments to IFRS 16, Covid 19 "related rent concessions beyond
30 June 2021"
"In light of the fact that the Covid-19 pandemic is continuing, the IASB
extended the application period of the practical expenditure with respect to
accounting for Covid-19-related rent concessions through June 30, 2022"
iii Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16
"Interest rate benchmark reform (phase 2)"
"IFRS9. IAS 39, BRS 7, The amendments provide temporary relief to adopters
regarding the financial reporting impact that will result from replacing
Interbank Offered Rates (IBOR) with alternative risk-free rates (RFRS). The
amendments provide for the following practical expedients: Treatment of
contract modifications or changes in contractual cash flows due directly to
the Reform-such as fluctuations in a market interest rate-as changes in a
floating rate, allow changes to the designation and documentation of a hedging
relationship required by IBOR reform without discontinuing hedge accounting.
Temporary relief from having to meet the separately identifiable requirement
when an RFR instrument is designated as a hedge of a risk comes in connection
with the IBOR Reform."
iv Amendments to IFRS 9, IAS 39 and IFRS 7, "Interest Rate Benchmark
Reform"
In September 2019, the IASB published amendments to IFRS 9, IAS 39 and IFRS 7,
"Interest Rate Benchmark Reform." The Phase 1 amendments of the IASB's
Interest Rate Benchmark Reform project (IBOR reform) provide for temporary
exemption from applying specific hedge accounting requirements to hedging
relationships that are directly affected by IBOR reform. The exemptions have
the effect that IBOR reform should not generally cause hedge relationships to
be terminated due to uncertainty about when and how reference interest rates
will be replaced. However, any hedge ineffectiveness should continue to be
recorded in the income statement under both IAS 39 and IFRS 9. Furthermore,
the amendments set out triggers for when the exemptions will end, which
include the uncertainty arising from IBOR reform. The amendments have no
impact on Group's Consolidated Financial Statements.
v Amendments to IFRS 4, "Extension of the temporary exemption from
IFRS 9" "Deferral of initial application of IFRS 9 for insurers"
c) Standards and Interpretations Not Yet Applicable
The IASB and the IFRS IC have issued the following additional standards and
interpretations. Group does not apply these rules because their application is
not yet mandatory. Currently, however, these adjustments are not expected to
have a material impact on the consolidated financial statements of the Group:
i Amendments to IAS 16-proceeds before intended use
The amendments prohibit a company from deducting from the cost of property,
plant and equipment amounts received from selling items produced while the
Company is preparing the asset for its intended use. Instead, a company will
recognize such sales proceeds and related cost in profit or loss.
ii Amendments to IAS 37-Onerous contracts-cost of Fulfilling a
contract
"Clarification that all costs directly attributable to a contract must be
considered when determining the cost of fulfilling the contract."
iii Amendments to IFRS 3-Reference to the Conceptual Framework
Reference to the revised 2018 IFRS Conceptual Framework. Priority application
of LAS 37 or IFRIC 21 by the acquirer to identify acquired liabilities. No
recognition of contingent assets acquired allowed.
iv Annual Improvements Project-Annual Improvements to IFRSs 2018-2020
Cycle Minor amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41.
v IFRS 17 "Insurance contracts including Amendments to IFRS 17"
The new IFRS 17 standard governs the accounting for insurance contracts and
supersedes IFRS 4. vi Amendment to IFRS 17-Initial Application
of IFRS 17 and IFRS 9-Comparative Information
The amendment concerns the transitional provisions for the initial joint
application of IFRS 17 and IFRS 9.
vii Amendments to IAS 1-Classification of Liabilities as Current or
Non-current Amendments to IAS 1-Classification of Liabilities as Current or
Non-current-Deferral of Effective Date
Clarification that the classification of liabilities as current or non-current
is based on the rights the entity has at the end of the reporting period.
viii Amendments to IAS 1 and IFRS Practice Statement 2-Disclosure of
Accounting Policies
"Clarification that an entity must disclose all material (formerly
""significant"") accounting policies. The main characteristic of these items
is that, together with other information included in the financial statements,
they can influence the decisions of primary users of the financial statements"
ix Amendments to IAS 8-Definition of Accounting Estimates
Clarification with regard to the distinction between changes in accounting
policies (retrospective application) and changes in accounting estimates
(prospective application).
x Amendments to IAS 12-Deferred Tax related to Assets and
Liabilities arising from a Single transaction.
Clarification that the initial recognition exemption of IAS 12 does not apply
to leases and decommissioning obligations. Deferred tax is recognized on the
initial recognition of assets and liabilities arising from such transactions.
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 ('£'), the functional and presentation currency of the Company.
During the current year, the results of the operations of solar entities
Avanti Solar Energy Private Limited, Mayfair Renewable Energy Private Limited,
Avanti Renewable Energy Private Limited and Brics Renewable Energy Private
Limited continued to be classified as Assets held for sale as the process of
disposition of the solar entities could not be implemented during FY22 due to
pandemic Covid-19 and expectation of comparatively better valuation for sale.
However the Management expects the interest in the solar entities to be sold
within the next 12 months and continues to locate a buyer. The Group continues
owning a 31% equity interest in the solar entities.
Going Concern
"As at 31 March 2022 the Group had £7.7m in cash and net current assets of
£31.7m. 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 2022. TheGroup 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. The directors and management have
prepared a cash flow forecast to September 2023, 12 months from the date this
report has been approved. 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.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."
"The consequences of the Covid-19 pandemic continued to impact the Group
businesses. However, the economic consequences of the Covid-19 pandemic, which
had a marginally negative effect on the Group activities in the FY21, have to
a large extent dissipated in FY22, although the economic impediments that
still persist vary from region to region and from segment to segment.The Group
received no materially significant public support measures such as tax relief
or compensatory mechanisms except for certain debt drawn as part of COVID-19
related credit measures extended by the Reserve Bank of India. In addition,
there were no material effects on the employment situation in the Group.
Overall, the Covid-19 pandemic did not have very significant impact for the
Group during the year."
Sharp rise in global coal price during second half of the year deterred import
of coal, putting further pressure on demand for domestic (Indian) coal. The
war between Russia and Ukraine from February 2022 has further aggravated the
situation, with a sharp upward movement in global coal prices. As power demand
in India continues to be met mainly through thermal generation, a surge in
power demand during second half of the year put pressure on fuel supply. The
unanticipated rise in demand for electricity with pickup in economic
activities was not met by proportional growth in coal supplies (also in part
due to sharp jump in global coal price), resulting in severe coal shortages.
If global coal prices do not correct to normal levels there can be a material
adverse effect on the group's results of operations and financial condition.
The Group has taken certain commercial and technical measures to reduce the
impact of this adverse development including blending comparatively cheaper
coal, modifications to boilers to facilitate different quality coal firing and
also renegotiation of the tariff and commercial terms of the power sale
arrangement with the power consumers.
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 2022. 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
Subsidiaries % Voting Right % Economic interest
Immediate Country of March 2022 March 2021 March 2022 March 2021
parent incorporation
Caromia Holdings limited ('CHL') OPGPV Cyprus 100.00 100.00 100.00 100.00
Gita Power and Infrastructure
Private Limited, ('GPIPL') CHL India 100.00 100.00 100.00 100.00
OPG Power Generation
Private Limited ('OPGPG') GPIPL India 75.38 71.25 99.92 99.90
Samriddhi Surya Vidyut Private Limited OPGPG India 75.38 71.25 100.00 100.00
Powergen Resources Pte Ltd OPGPV Singapore 100.00 100.00 100.00 100.00
ii) Joint ventures - Assets Held for sale
Joint ventures % Voting Right % Economic interest
Venture Country of March 2022 March 2021 March 2022 March 2021
incorporation
Padma Shipping Limited ("PSL") OPGPV / OPGPG Hong Kong 50 50 50 50
iii) Associates- Assets Held for sale
Associates % Voting Right % Economic interest
Country of March 2022 March 2021 March 2022 March 2021
incorporation
Avanti Solar Energy Private Limited India 31 31 31 31
Mayfair Renewable Energy (I) Private Limited India 31 31 31 31
Avanti Renewable Energy Private Limited India 31 31 31 31
Brics Renewable Energy Private Limited India 31 31 31 31
a) Foreign currency translation
The functional currency of the Company is the Great Britain Pound Sterling
(£). 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 (£)
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.
₹ exchange rates used to translate the Indian Rupee financial information
into the presentation currency of Great Britain Pound (£) are the closing
rate as at 31 March 2022: 99.37 (2021: 100.81) and the average rate for the
year ended 31 March 2022: 101.62
(2021: 96.72).
b) 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 10 to 45 days.
Revenue
Revenue from providing electricity to captive power users and sales to other
customers is recognised on the basis of billing cycle under the contractual
arrangement with the captive power users & customers respectively and
reflects the value of units of power supplied and the applicable 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.
c) Operating expenses
Operating expenses are recognised in the statement of profit or loss upon
utilisation of the service or as incurred.
d) 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
comprehensiveincome or equity, respectively.
e) 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 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 29""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.
f) 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'.
g) 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.
h) 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.
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.
e) 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.
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 and
• 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)"
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining economic life
of the asset if, rarely, this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination
option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted
using a revised discount rate. The carrying value of lease liabilities is
similarly revised when the variable element of future lease payments dependent
on a rate or index is revised, except the discount rate remains unchanged. In
both cases an equivalent adjustment is made to the carrying value of the
right-of-use asset, with the revised carrying amount being amortised over the
remaining (revised) lease term. If the carrying amount of the right-of-use
asset is adjusted to zero, any further reduction is recognised in profit or
loss.
f) 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.
g) 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.
h) 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.
i) 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.
j) 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.
k) 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 share holders and the weighted average number of
shares outstanding during the period are adjusted for the effects of all
dilutive potential equity share.
l) 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.
m) 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.
n) 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.
o) 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.
p) 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.
During the year 2021 the Group has deconsolidated solar entities and are
classified as associates (note 7(b)). Accordingly, during FY22 there is only
only one operating segment thermal power. The solar power business is
classified as held for sale. There are no geographical segments as all
revenues arise from India. All the non current assets are located in India.
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.
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 2022 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 net of impairments 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 Limited 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.
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. The management considers impairment upon there being
evidence that there might be an impairment, such as a lower market
capitalization of the group or a downturn in results.
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 (Loss)/Profit from discontinued operations
Non-current assets held for sale and (Loss)/Profit from discontinued
operations consists of:
Assets Held for Sale Liabilities classified as held for sale (Loss)/Profit from discontinued operations
At 31 March 2022 At 31 March 2021 At 31 March 2022 At 31 March 2021 For FY 22 For FY 21
i Interest in Solar entities Note 7(b) 13,497,027 16,425,368 - - - -
ii Share of (Loss)/Profit on fair
value of investments, in Solar
entities Note 7(b) - - - - (2,928,341) 117,710
iii Gain on deconsolidation of
Solar entities - - - - - 881,688
Total 13,497,027 16,425,368 - - (2,928,341) 999,398
(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').
The Group has invested approximately £3,484,178 in equity and £1,727,418 to
date as advance. The Group impaired entire investment in earlier years of
£5,211,596 in joint venture on account of the impending dissolution of the
JV.
(b) Assets held for sale and discontinued operations of solar entities
During the year, the results of the operations of solar entities Avanti Solar
Energy Private Limited, Mayfair Renewable Energy Private Limited, Avanti
Renewable Energy Private Limited and Brics Renewable Energy Private Limited
continued to be classified as Assets held for sale as the process of
disposition of the solar entities could not be implemented during FY22 due to
pandemic Covid-19 and expectation of comparatively better valuation for sale.
However the management expects the interest in the solar entities to be sold
within the next 12 months and continues to locate a buyer. The Group continues
owning a 31% equity interest in the solar companies. Based on the term sheet
available the Group's investment in the solar companies was valued at £13.5
million as compared to OPG's initial investment of £16.4 million. This loss
of £2.9 million is recognized as loss from discontinued operations on account
of the diminution in the value of investment.
Non-current Assets held-for-sale and discontinued operations
(a) Assets of disposal group classified as held-for-sale As at 31 March 2022 As at 31 March 2021
Property, plant and equipment - -
Trade and other receivables - -
Other short-term assets - -
Restricted cash - -
Cash and cash equivalents - -
Investment in associates classsified as held for sale 13,497,027 16,425,368
Total 13,497,027 16,425,368
(b) Analysis of the results of discontinued operations is as follows For FY 22 For FY 21
Revenue - -
Operating profit before impairments - -
Finance income - -
Finance cost - -
Current Tax - -
Deferred tax - -
Share of (Loss)/Profit on fair value of investments, in Solar entities (2,928,341) 117,710
Gain on deconsolidation of Solar entities - 881,688
(Loss)/Profit from Solar operations (2,928,341) 999,398
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 C534performance and allocates resources
based on an analysis of various performance indicators at operating segment
level. During the year 2021 the Group has deconsolidated solar entities and
are classified as associates (note 7(b)). Accordingly, during FY22 there is
only only one operating segment thermal power. The solar power business is
classified as held for sale. 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 £16,282,629 (2021: £28,720,575 ).
Segmental information disclosure
Continuing operations Thermal Discontinued operations Solar
Segment Revenue FY22 FY21 FY22 FY21
Sales 80,067,032 93,823,933 - -
Total 80,067,032 93,823,933 - -
Other Operating income - 9,420,712 - -
Depreciation, impairment (5,333,531) (5,705,538) - -
Profit from operation 16,076,355 27,495,324 - -
Finance Income 2,285,364 868,439 - -
Finance Cost (5,356,089) (6,803,137) - -
Tax expenses (4,097,184) (8,447,699) - -
Gain on deconsolidation of Solar entities - - - 881,688
Share of Profit, (Loss) on fair value of investments, in Solar entities - - (2,928,341) 117,710
Profit / (loss) for the year 8,908,446 13,112,927 (2,928,341) 999,398
Assets 242,561,040 239,076,536 13,497,027 16,425,368
Liabilities 85,991,813 93,934,834 - -
9 Costs of inventories and employee benefit expenses included in
the consolidated statements of comprehensive income
a) Cost of fuel 31 March 2022 31 March 2021
Included in cost of revenue:
Cost of fuel consumed Other direct costs 53,886,250 54,095,390
2,614,714 2,797,675
Total 56,500,964 56,893,065
b) Employee benefit expenses forming part of general and administrative
expenses are as follows:
31 March 2022 31 March 2021
Salaries and wages Employee benefit costs *
Long Tern Incentive Plan (Note 21)
2,247,996 2,139,303
217,715 228,112
194,778 535,247
Total 2,660,589 2,902,662
* includes £22,925 (2021 £31,885) being expenses towards gratuity which is a
defined benefit plan (Note 5(v))
c) Auditor's remuneration for audit services amounting to £59,000
(2021: £60,000) is included in general and administrative expenses.
d) Foreign exchange movements (realised and unrealised) included in the
Finance costs is as follows:
31 March 2022 31 March 2021
Foreign exchange realised - loss Foreign exchange unrealised- loss
214,048 213,524
184,880 46,931
Total 398,928 260,455
10 Other operating income and expenses
a) Other operating income 31 March 2022 31 March 2021
Contractual claims payments - 9,420,712
Total - 9,420,712
Other operating income represents contractual claims payments from company's
customers under the power purchase agreements which were accumulated over
several periods.
b) Other income 31 March 2022 31 March 2021
Sale of coal 7,338,941 616,708
Sale of fly ash 77,586 16,271
Power trading commission and other services 169,183 147,166
Others 469,155 1,141,401
Total 8,054,865 1,921,546
11 Finance costs
Finance costs are comprised of: 31 March 2022 31 March 2021
Interest expenses on borrowings 4,277,158 5,848,895
Net foreign exchange loss (Note 9) 398,928 260,455
Other finance costs 680,003 693,787
Total 5,356,089 6,803,137
Other finance costs include charges and cost related to LC's for import of
coal and other charges levied by bank on transactions
12 Finance income
Finance income is comprised of: 31 March 2022 31 March 2021
Interest income on bank deposits and advances 891,467 401,194
Profit on disposal of financial instruments* 1,393,897 467,245
Total 2,285,364 868,439
*Financial instruments represent the mutual funds held during the year and
profits include £465,297 unrealised gain on mark to market rate as on
reporting date.
13 Tax expenses
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 2022 and
2021 is as follows:
31 March 2022 31 March 2021
Accounting profit before taxes 13,005,630 21,560,626
Enacted tax rates 34.94% 34.94%
Tax expense on profit at enacted tax rate 4,544,687 7,534,145
Exempt Income due to tax holiday - (161,808)
Foreign tax rate differential (13,847) 487,920
Unused tax losses brought forward and carried forward - 1,216,052
Non-taxable items (916,046) (216,590)
MAT credit (entitlement) / reversed 482,390 (412,019)
Actual tax for the period 4,097,184 8,447,699
31 March 2022 31 March 2021
Current tax 334,646 412,513
Deferred tax 3,762,538 8,035,186
Tax reported in the statement of comprehensive income 4,097,184 8,447,699
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 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 2021: 17.47%).
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 utilized.
Deferred income tax for the Group at 31 March 2022 and 2021 relates to the
following:
31 March 2022 31 March 2021
Deferred income tax assets
Unused tax losses brought forward and carried forward - -
MAT credit entitlement 11,985,655 12,374,534
11,985,655 12,374,534
Deferred income tax liabilities
Property, plant and equipment 29,015,582 25,368,905
29,015,582 25,368,905
Deferred income tax liabilities, net 17,029,927 12,994,371
Movement in temporary differences during the year
Particulars As at Deferred tax liability for the year Classified as Liability held for sale Translation adjustment As at
01 April 2021 31 March 22
Property, plant and equipment (25,368,905) (3,280,148) - (366,529) (29,015,582)
Unused tax losses brought forward and carried forward
- - - - -
MAT credit entitlement 12,374,534 (482,390) - 93,511 11,985,655
Deferred income tax liabilities net (12,994,371) (3,762,538) - (273,018) (17,029,927)
Particulars As at Deferred tax asset Classified as Liability held for sale Translation adjustment As at
01 April 2020 for the year 31 March 21
Property, plant and equipment (18,902,358) - (6,466,547) - (25,368,905)
Unused tax losses brought forward and carried forward
1,216,052 - (1,216,052) - -
MAT credit entitlement 11,962,515 412,019 - - 12,374,534
Deferred income tax (liabilities) / assets, net (5,723,791) 412,019 (7,682,599) - (12,994,371)
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.
Shareholders resident outside the Isle of Man will not suffer any income tax
in the Isle of Man on any income distributions to them. However, dividends are
taxable in India in the hands of the recipient.
There is no unrecognised deferred tax assets and liabilities. As at 31 March
2022 and 2021, 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 2020 827,065
Additions
Exchange adjustments (63,470)
At 31 March 2021 763,595
At 31 March 2021 763,595
Additions 11,875
Exchange adjustments 11,032
At 31 March 2022 786,502
Accumulated depreciation and impairment
At 31 March 2020 818,020
Charge for the year 6,209
Exchange adjustments (63,028)
At 31 March 2021 761,201
At 31 March 2021 761,201
Charge for the year 2,438
Exchange adjustments 11,054
At 31 March 2022 774,692
Net book value
At 31 March 2022 11,810
At 31 March 2021 2,394
15 Property, plant and equipment
The property, plant and equipment comprises of:
Land & Power Other plant & equipment Vehicles Right- of-use Asset under Total
Building Station construction
Cost
At 1st April 2020 8,765,490 216,622,367 1,886,252 2,356,081 - 280,776 229,910,967
Additions 271,158 318,038 24,375 134,659 - 36,206 784,436
Transfers on capitalisation 13,598 159,120 - - - (172,718) -
Sale / Disposals - - - (1,561,762) - - (1,561,762)
Exchange adjustments (661,265) (16,639,299) (143,908) (180,354) - (21,547) (17,646,373)
At 31 March 2021 8,388,982 200,460,226 1,766,719 748,624 - 122,717 211,487,267
At 1st April 2021 8,388,982 200,460,226 1,766,719 748,624 - 122,717 211,487,267
Additions 13,919 267,007 25,229 23,745 43,843 3,265,722 3,639,464
Transfers on capitalisation - 1,584,477 38,134 - - (1,622,611) -
Sale / Disposals - - - (52,794) - - (52,794)
Exchange adjustments 119,437 2,905,807 25,366 10,730 - 1,392 3,062,732
At 31 March 2022 8,522,337 205,217,516 1,855,448 730,306 43,843 1,767,219 218,136,670
Accumulated depreciation and impairment
At 1 April 2020 55,601 34,683,662 878,072 1,824,237 - - 37,441,572
Charge for the year 12,081 5,230,238 262,333 194,677 - - 5,699,329
Sale / Disposals - - - (1,263,537) - - (1,263,537)
Exchange adjustments (6,363) (2,874,452) (77,955) (147,367) - - (3,106,137)
At 31 March 2021 61,319 37,039,448 1,062,450 608,010 - - 38,771,227
At 1 April 2021 61,319 37,039,448 1,062,450 608,010 - - 38,771,227
Charge for the year 10,801 5,033,811 257,197 22,135 7,149 - 5,331,093
Sale / Disposals - - - (52,794) - - (52,794)
Exchange adjustments 1,433 649,528 21,170 9,190 146 - 681,467
At 31 March 2022 73,553 42,722,787 1,340,816 586,542 7,295 - 44,730,994
Net book value
At 31 March 2022 8,448,784 162,494,730 514,631 143,764 36,548 1,767,219 173,405,676
At 31 March 2021 8,327,663 163,420,778 704,269 140,614 - 122,717 172,716,040
The net book value of land and buildings block comprises of:
31 March 2022 31 March 2021
Freehold land 8,029,665 7,917,345
Buildings 419,119 410,318
8,448,784 8,327,663
Property, plant and equipment with a carrying amount of £167,788,550 (2021:
£169,111,804) is subject to security restrictions (refer note 22).
16 Other Assets
31 March 2022 31 March 2021
A. Short-term
Capital advances
- 124,601
Financial instruments measured at fair value through P&L 18,265,352 13,253,663
Advances and other receivables 7,917,571 4,427,290
Total 26,182,923 17,805,554
B. Long-term
Bank deposits
12,140 57,713
Other advances - 12,140
Total 12,140 69,853
The financial instruments of £18,265,352 (FY2021: £13,253,663) represent
investments in mutual funds and their fair value is determined by reference to
published data.
17 Trade and other receivables
31 March 2022 31 March 2021
Current
Trade Receivables 8,607,935 14,829,989
Total 8,607,935 14,829,989
18 Inventories
31 March 2022 31 March 2021
Coal and fuel 9,499,510 11,228,377
Stores and spares 966,310 958,267
Total 10,465,820 12,186,644
The entire amount of above inventories has been pledged as security for
borrowings (refer note 22)
Cash and cash equivalents and Restricted cash
19
a Cash and short term deposits comprise of the following:
31 March 2022 31 March 2021
Investment in Mutual funds 5,193,275 1,815,629
Cash at banks and on hand 2,498,117 7,105,324
Total 7,691,392 8,920,952
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
Current restricted cash represents deposits maturing between three to twelve
months amounting to £2,392,104 (2021: £3,219,356) which have been pledged by
the Group in order to secure borrowing limits with the banks. Non-current
restricted represents investments in mutual funds maturing after twelve months
amounting to £10,427,847 (2021: £8,194,412). Investments of £8,300,665
(2021: £8,182,445) are allocated to debenture redemption fund earmarked
towards redemption of non-convertible debentures of £20,126,738 scheduled
during FY 2024.
20 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.
As at 31 March 2022, the Company has an authorised and issued share capital of
400,733,511 (2021: 400,733,511) equity shares at par value of £ 0.000147
(2021: £ 0.000147) per share amounting to £58,909 (2020: £58,909) 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.
21 Share based payments
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). 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.
In April 2020, and upon meeting relevant performance targets, 2,190,519 LTIP
shares vested (80% of the 1st tranche). These shares will be issued later this
year.
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.
Second and third tranches of LTIP grant didn't meet relevant performance
targets and expired in April 2022.
For LTIP Shares awards, £194,778 (FY2021: 535,247) has been recognised in
General and administrative expenses.
Grant date Vesting date 24-Apr-19 24-Apr-19 24-Apr-19
Method of Settlement 24-Apr-20 24-Apr-21 24-Apr-22
Vesting of shares (%) Equity/ Cash Equity/ Cash Equity/ Cash
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) 0.1075 0.1217 0.1045
Expected Volatility (%) 68.00% 64.18% 55.97%
22 Borrowings
The borrowings comprise of the following:
Interest rate (range %) Final maturity
31 March 2022 31 March 2021
Borrowings at amortised cost 9.9-10.851 June 2024 23,159,039 26,770,564
Non-Convertible Debentures at amortised cost 9.85 June 2023 20,126,738 19,840,089
Total 43,285,777 46,610,653
1 Interest rate range for Project term loans and Working Capital
The term loans of £21.6m, working capital loans of £1.6m and non-convertible
debentures of £20.1m are 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 term loans and working capital
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 2022, the Group has met all the
relevant covenants.
The fair value of borrowings at 31 March 2022 was £43,285,777 (2021:
£46,610,653). 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 2022 31 March 2021
Current liabilities
Amounts falling due within one year 13,399,429 4,510,358
Non-current liabilities
Amounts falling due after 1 year but not more than 5 years 29,886,348 42,100,295
Total 43,285,777 46,610,653
23 Trade and other payables
31 March 2022 31 March 2021
Current
Trade payables 24,402,850 32,368,058
Creditors for capital goods 37,474 128,777
Total 24,440,324 32,496,835
Non-current
Other payables 630,358 607,702
Total 630,358 607,702
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.
24 Related party transactions Key Management Personnel:
Name of the
party
Nature of relationship
N
Kumar
Non-executive Chairman (from 4 April 2022)
Arvind
Gupta
Chairman (till 4 April 2022)
Avantika
Gupta
Chief Executive Officer (from 4 April 2022)
Dmitri
Tsvetkov
Chief Financial Officer & Director (till 31 May 2022)
Ajit Pratap
Singh
Chief Financial Officer (from 31 May 2022)
Jeremy Warner
Allen
Deputy Chairman
Mike
Grasby
Director (from February 2021)
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 Limited Associates
Mayfair Renewable Energy (I) Private Limited Associates
Avanti Renewable Energy Private Limited Associates
Brics Renewable Energy Private Limited Associates
Samriddhi Bubna Relative of Key Management Personnel
Summary of transactions with related parties
Name of the party 31 March 2022 31 March 2021
Remuneration to Samriddhi Bubna 24,601 25,847
Sale of solar modules:
a) Avanti Solar Energy Private Limited 188,741 198,299
b) Mayfair Renewable Energy (I) Private Limited 75,664 79,496
Summary of balance with related parties
Name of the party Nature of balance 31 March 2022 31 March 2021
Padma Shipping Limited Investment 3,448,882 3,448,882
Padma Shipping Limited Advances 1,727,418 1,727,418
Padma Shipping Limited Impairment provision (5,176,300) (5,176,300)
Avanti Solar Energy Private Limited Investment 4,863,575 4,766,864
Avanti Solar Energy Private Limited Trade payable - (67,391)
Avanti Solar Energy Private Limited Advance 538,038 6,022
Mayfair Renewable Energy Private Limited Investment 5,277,364 5,352,890
Mayfair Renewable Energy Private Limited Trade payable (52,035) (51,294)
Mayfair Renewable Energy Private Limited Advance - 7,242
Avanti Renewable Energy Private Limited Investment 5,804,055 5,895,541
Avanti Renewable Energy Private Limited Trade payable - (147,583)
Avanti Renewable Energy Private Limited Advance 298,745 9,047
Brics Renewable Energy Private Limited Investment 362,664 410,073
Impairment provisions - Investments in Solar (Associates) Investment (2,810,631) -
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 solar entities classified as Assets held for sale
(loans outstanding £21,760,989 (2021: £23,300,131)) and corporate guarantee
to a director for his personal guarantees with respect to the Group. The
assessment of impairment 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 an associate solar entity Nil (2021:
£7,412,554)) which is classified as Asset Held for Sale. Group's loans of
£23,044,653 (2021: £25,368,634) are personally guaranteed by a director.
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 solar entities classified as Assets held for sale
(loans outstanding £21,760,989 (2021: £23,300,131)) and corporate guarantee
to a director for his personal guarantees with respect to the Group. The
assessment of impairment 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 an associate solar entity Nil (2021:
£7,412,554)) which is classified as Asset Held for Sale. Group's loans of
£23,044,653 (2021: £25,368,634) are personally guaranteed by a director.
25 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 2022 or 2021).
The company has issued LTIP over ordinary shares which could potentially
dilute basic earnings per share in the future.
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 2022 31 March 2021
Weighted average number of shares used in basic earnings per share 402,924,030 400,733,511
Shares deemed to be issued for no consideration in respect of share based - 2,190,519
payments
Weighted average number of shares used in diluted earnings per share 402,924,030 402,924,030
26 Directors remuneration
Name of directors 31 March 2022 31 March 2021
Arvind Gupta - -
Avantika Gupta 59,043 60,000
Dmitri Tsvetkov 1,50,000 1,50,000
Jeremy Warner Allen 25,000 25,000
N Kumar 22,500 22,500
Mike Grasby (from February 2021) 22,500 2,562
Total 2,79,043 2,60,062
As part of COVID-19 response, the Company has implemented various cost
reduction and efficiency improvement measures to conserve cash and improve
liquidity, including voluntary 100 per cent salary reduction for Chairman and
voluntary reductions up to 50 per cent in compensation for Executive and
Non-Executive Directors for FY22 and FY21.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.
27 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 2022 31 March 2021
Not later than one year 15,337 -
Later than one year and not later than five years 23,005 -
Later than five years - -
Total 38,342 -
Recognition of a right of use asset £36,548 (2021: NIL) and a lease liability
£36,228 (2021: NIL).
Contingent liabilities
Disputed income tax demands £3,715,194 (2021: £816,358).
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
2022: £13,964,728 (2021: £20,167,583) and Bank Guarantee (BG) as at 31 March
2022: £4,039,969 (2021:
£2,575,878). 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 associate solar entities of £21,760,986
(2021: £23,300,131). Working capital facilities limits, LCs and BGs are
personally guaranteed by a director. 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. The Company provided a corporate guarantee to a
director for his personal guarantees with respect to the Group.
28 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 2022 and 31 March 2021 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
2022, 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 2022 and 31 March 2021, 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 2022 would decrease or increase by £432,858 (2021: £466,107).
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 £. 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 2022 As at 31 March 2021
Currency Financial assets Financial liabilities Financial assets Financial liabilities
United States Dollar (USD) 133,577 16,067,891 60,158 27,733,983
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 2022 As at 31 March 2021
Currency Closing Rate Effect of 10% Closing Rate Effect of 10%
(INR/USD) strengthening (INR/USD) strengthening in
in USD against INR USD against INR
- Translated to GBP - Translated to GBP
United States Dollar (USD) 75.66 1,223,320 73.37 2,012,662
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 £34,802,998 (2021:
£33,269,104) and corporate guarantees issued to lenders of its associates
solar entities of £21,760,986 (2021: £23,300,131).
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 2022 Within Credit Days past due
Period More than 30 days More than 60 days More than 180 days Total
Expected general loss allowance rate 0% 0% 0% 73.19% 54.68%
Gross carrying amount - Trade Receivables
-TANGEDCO 727,191 656,818 2,158,116 7,199,394 10,741,520
Gross carrying amount
- Trade Receivables -Others 1,760,732 939,318 86,005 5,466,037 8,252,092
General loss allowance - - - 10,385,677 10,385,677
Total Loss allowance - - - 10,385,677 10,385,677
31 March 2022 Within Credit Days past due
Period More than 30 days More than 60 days More than 180 days Total
Expected loss rate 0% 0% 0% 33.02% 58.76%
Gross carrying amount
- Trade Receivables -TANGEDCO 1,651,140 1,686,225 2,218,844 15,097,765 20,653,974
Gross carrying amount
- Trade Receivables -Others 7,862,837 1,154,009 460,326 5,831,930 15,309,103
General loss allowance - - 252,404 6,910,677 7,163,081
Specific loss allowance 13,970,007 13,970,007
Total Loss allowance - - 252,404 20,880,684 21,133,088
The closing loss allowances for trade receivables as at 31 March 2022
reconciles to the opening loss allowances as follows:
31 March 2022 31 March 2021
Opening loss allowance as at 1 April 21,133,088 18,108,033
(Reversal)/Increase in loss allowance (10,747,411)* 3,025,055
Total 10,385,677 21,133,088
*Out of this amount, (3,228,971) was adjusted in revenue and the balance
(7,518,440) was adjusted in individual accounts of the receivables.
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 2022 and 31 March 2021.
As at 31 March 2021 Total
Current Non Current
1 - 5 Years Later than 5 Years
Borrowings 13,399,429 9,759,610 - 23,159,039
Non-Convertible Debentures - 20,126,738 - 20,126,738
Trade and other payables 24,440,324 630,358 - 25,070,682
Other liabilities - 36,228 - 36,228
Other current liabilities 569,199 - - 569,199
Total 38,408,952 30,552,934 - 68,961,886
As at 31 March 2021 Total
Current Non Current
1 - 5 Years Later than 5 Years
Borrowings 4,510,358 22,260,206 - 26,770,564
Non-Convertible Debentures - 19,840,089 - 19,840,089
Interest on Borrowings 6,803,137 7,816,034 - 14,619,171
Trade and other payables 32,495,799 607,702 - 33,103,501
Other current liabilities 1,226,309 - - 1,226,309
Total 45,035,603 50,524,031 - 95,559,634
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 2022.
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-Mar-22 31-Mar-21
Total equity 17,00,66,254 16,15,67,070
Less: Cash and cash equivalent -76,91,392 -89,20,952
Capital 16,23,74,862 15,26,46,118
Total equity 17,00,66,254 16,15,67,070
Add: Borrowings 4,32,85,777 4,66,10,653
Overall financing 21,33,52,031 20,81,77,723
Capital to overall financing ratio 0.76 0.73
29 Summary of financial assets and liabilities by category and their
fair values
Carrying Amount Fair Value
31 March 2022 31 March 2022 31 March 2022 31 March 2022
Financial assets measured at amortised cost
Cash and cash equivalents 1 7,691,392 8,920,952 7,691,392 8,920,952
Restricted cash1 12,819,951 11,413,768 12,819,951 11,413,768
Current trade receivables1 8,607,935 14,829,989 8,607,935 14,829,989
Other long-term assets 12,140 69,853 12,140 69,853
Other short-term assets 2,724,296 2,736,262 2,724,296 2,736,262
Financial instruments measured at fair value through profit or loss
Other short term assets - (Note 16 & 19)
Investments in Mutual funds 23,458,627 15,069,292 23,458,627 15,069,292
55,314,341 53,040,116 55,314,341 53,040,116
Financial liabilities measured at amortised cost
Term loans(2) 23,159,039 26,770,564 23,159,039 26,770,564
Non-Convertible Debentures(2) 20,126,738 19,840,089 20,126,738 19,840,089
Current trade and other payables (1) 24,440,324 32,495,799 24,440,324 32,495,799
Provision for pledged deposits 36,228 - 36,228 -
Non-current trade and other payables (2) 630,358 607,702 630,358 607,702
68,392,687 79,714,154 68,392,687 79,714,154
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. an 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 BV 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).
Level 1 Level 2 Level 3 Total
Financial instruments measured at fair value through profit or loss
2022
Quoted securities 23,458,627 - - 23,458,627
Total 23,458,627 - - 23,458,627
2021
Quoted securities 15,069,292 - - 15,069,292
Total 15,069,292 - - 15,069,292
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.
30 Ultimate controlling party
As disclosed in the Directors' Report the ultimate controlling party is
considered to be the Gupta family by virtue of their majority shareholding in
the Group.
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