TIDMOPG
RNS Number : 8231O
OPG Power Ventures plc
05 July 2010
5th July 2010
OPG Power Ventures PLC
("the Group", "the Company" or "OPG")
Final Results for the Year to 31 March 2010
OPG, the developer and operator of Group Captive power plants in India, is
pleased to announce its final results for the year ended 31st March 2010.
Operational Highlights
· Successful commissioning of the 77 MW power station near Chennai shortly
after the year end, in April 2010;
· Operating capacity of OPG's plants now stands at 107 MW, an increase of
over 250 % from the previous level of approximately 30 MW
· Environmental clearance in respect of the 2 x 150 MW Kutch project now
received, with site work to commence in August 2010;
· All-India peak power deficit widens to 13.3 % as at March 2010, compared
to 11.1 % at the same date in 2009, as a result of continuing economic growth
and strong performance from the manufacturing sector;
Financial Highlights
· Group revenue of GBP 12.87 Million (2009: GBP 7.31 Million), an increase
of 76%;
· Income from continuing operations before tax, expenses relating to
projects under construction and non-recurring items up by 15% to GBP 6.62
Million (2009: GBP 5.75 Million);
· Cash and cash equivalents as at 31st March 2010 stood at GBP 14.17
million;
· Increase in average tariffs realized in short term markets to Rs. 5.54
per Kwh (2009: Rs 4.11), an increase of 35%.
Commenting on the progress made to date and the outlook for OPG, Mr M. C. Gupta,
Chairman, said, "With the increased throughput of power available from the 77 MW
facility and, given buoyant conditions in the power market, the current year
promises increased growth and scale of operations for the Group. OPG looks to
the year ahead with confidence and enthusiasm."
For further information, please visit www.opgpower.org/ or contact:
+-----------------------------------------+----------------------+
| OPG Power Ventures PLC | |
+-----------------------------------------+----------------------+
| Arvind Gupta (Managing Director) | +44 (0) 7814 830 893 |
| | +91 (0) 98400 96299 |
| | +91 (0) 44 429 11 |
| | 222 |
+-----------------------------------------+----------------------+
| V. Narayan Swami (Finance Director) | +44 (0) 7843 595 394 |
| | +91 (0) 99400 17927 |
| | +91 (0) 44 42911214 |
+-----------------------------------------+----------------------+
| Martin Gatto (Senior Non Executive | +44 (0) 7778 749 223 |
| Director) | |
+-----------------------------------------+----------------------+
| | |
+-----------------------------------------+----------------------+
| Cenkos Securities (Nominated Adviser & | +44 (0) 20 7397 8900 |
| Broker) | |
+-----------------------------------------+----------------------+
| Stephen Keys/ Camilla Hume | |
+-----------------------------------------+----------------------+
| | |
+-----------------------------------------+----------------------+
| Tavistock Communications | +44 (0) 20 7920 3150 |
+-----------------------------------------+----------------------+
| Simon Hudson / James Midmer | +44 (0) 7966 477256 |
+-----------------------------------------+----------------------+
Chairman's Statement
I have pleasure in presenting the results for the financial year ended 31st
March 2010 which is the second set of full year results since the listing of the
Company on AIM in May 2008.
Financial Results
Group revenue of GBP 12.87 Million (2009: GBP 7.31 Million) includes a full year
contribution from the 10 MW waste heat plant commissioned in September 2008. The
revenue for the year includes sale of power in the short term market at
attractive prices.
Income from continuing operations before tax, period expenses relating to
projects under construction and non-recurring items was GBP 6.62 Million (2009:
GBP 5.75 Million).
Progress
The principal milestone attained by your Company since the previous year's
report has been the commissioning, in April 2010, of the 77 MW coal fired power
plant near Chennai. The Company has thus delivered the first of the two major
projects for which resources were raised in the AIM listing.
Following this development, the operating capacity of your Company's plants now
stands at 107 MW, an increase of over 250 % from the previous level of about 30
MW. The commissioning of the 77 MW plant represents the first step in the
transformation of your company to a power producer, whose stated aim is to
achieve a critical mass of 400 MW and beyond over the next few years.
The Environmental Clearance for the Gujarat project has now been obtained and
construction on site will commence shortly.
The Indian Economy & the Power Sector
In my previous report to shareholders, I referred to a growth rate of 6.7 %
attained by the Indian Economy in 2008 - 09, a significant result given the
overall global economic conditions prevailing during that period. Early
indications are that the growth rate is likely to be 7.5 % if not higher for the
year 2009 - 10, a significant level of performance in the context of the slow
growth in major world economies and second only to that of China among the BRIC
countries.
The growth rate announced for the most recent quarter (January - March 2010) is
still higher at 8.6 % and, within this overall growth rate, growth in the
manufacturing sector has been higher at 10.3 %, indicating strong consumer
spending on cars and other manufactured goods. The corollary to this rate of
industrial growth is, of course, increased demand for power with a multiplier
effect, usually thought to be about 1.2 times the growth in other sectors.
Per capita electricity consumption has risen from 566 Kwh in 2003 to 704 Kwh in
2008. However, the creation of new generating capacity of some 27 GW (2007 -
10) suggests the 5 year target of 78 GW (2007 -12) will not be met. This is
underscored by an all-India peak power deficit of 13.3 % as at March 2010 (2009:
11.1 %). As a result, investment in power generation continues to be a highly
promising proposition.
The Current Year
With the increased throughput of power available from the 77 MW facility and,
given buoyant conditions in the power market, the current year promises
increased growth and scale of operations for the Group. OPG looks to the year
ahead with confidence and enthusiasm.
M. C. Gupta
Chairman
4th July 2010
Chief Executive's Review of Operations
The commissioning of the 77 MW power plant in April 2010, immediately following
the financial year end, rounded off another year of progress for your Company.
With an operating capacity today of 107 MW, we look ahead to the completion of
the 2 x 150 MW development under way in Kutch, Gujarat.
Significant Developments during the Period
The newly commissioned 77 MW facility is undergoing a period of stabilization.
We expect to stabilize the output at high levels.
As previously announced, the Environmental clearance in respect of the 2 x 150
Mw Kutch project has now been received. Site work will commence in August 2010.
Tata Power Ltd are taking steps to expedite the implementation of the project.
An assured supply of coal from the public sector coal mines for the life of the
plant has been obtained from the Government of India for 70 % of the fuel
requirements of the Kutch plant. This linkage spells enhanced fuel security and
diversity for this unit when it goes on stream.
Following the Carbon Credit registration in respect of the 19.4 MW gas fired
plant at Mayavaram received last year, a process of validation and verification
is expected to be completed in about three months. Certified Emission
Reductions will become available for trading thereafter. For the 10 MW waste
heat fired facility near Chennai, a similar process of validation of the
emission levels is also under way on completion of which, Verified Emission
Reductions will become available.
Financial Review
The Group's revenue during the year ended March 31, 2010 was GBP 12.87 Million
(2009: GBP 7.3 Million). Profit from Continuing Operations before Tax, period
expenses relating to projects under construction and extraordinary items at GBP
6.62 Million (2009: GBP 5.75 Million) was after provision of GBP 1.20 Million
towards amortization for the period of fair value cost of stock options awarded,
a non cash item (2009: Nil). The Net Income after Taxes amounted to GBP 4.02
Million (2009: GBP 5.33 Million inclusive of a one time release of negative
goodwill of GBP 1.49 Million) with EBITDA for the period (prior to deduction of
pre-operative expenses on new projects in the course of construction) being GBP
5.43 Million. Cash as at 31 March 2010 was GBP 14.17 Million.
Operational Review
The 19.4 MW gas-cum-waste heat fired plant at Mayavaram operated satisfactorily
for the seventh year running. On account of a reduction in gas flow from the on
shore fields, the plant output levels for the year were 71 % as against 83 % in
the previous year. During the year ahead the gas flow position has improved and
a higher output level for the plant is forecast.
The 10 MW waste heat fired facility operated satisfactorily during its second
year of continuous operation. Output levels averaged a stable 78 % of capacity.
A sizeable proportion of the total generation from these two plants was sold on
the short term markets at higher realizations. The average price earned during
the year was Rs. 5.54 per Kwh (2009: Rs 4.11).
Projects in the Pipeline
We reported last year that further expansion of the facilities at the Chennai 77
MW plant and at the Kutch 2 x 150 MW development was under active consideration.
In Chennai, it will be possible to add three further units of 77 / 80 MW at the
existing site. Aside from the availability of land, we hold final Environmental
clearance in respect of an additional unit. Firm offers of debt have been
obtained in respect of all three additional units as well as coal linkages from
the Government of India.
Outlook
With the enhanced generation capacity and the buoyant power markets, we
anticipate an increase in operating and financial performance in 2010 - 11. The
key next step for us is to commence ground works on our site at Kutch in August.
Our focus will continue to remain the development and operation of power
generation assets and the achievement of higher sale realizations.
Arvind Gupta
Chief Executive
4th July 2010
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2010
+---------------------+-------+-------------+-------------+-------------+-------------+
| |Notes | Year ended 31 | Period ended 31 |
| | | March | March 2009 (As |
| | | 2010 | restated*) |
+---------------------+-------+---------------------------+---------------------------+
| | | Group | Company | Group | Company |
+---------------------+-------+-------------+-------------+-------------+-------------+
| | | GBP | GBP | GBP | GBP |
+---------------------+-------+-------------+-------------+-------------+-------------+
| REVENUES | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Operating Revenue | 3.2 | 12,872,597 | - | 7,310,559 | - |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Cost of power | | (5,358,089) | - | (2,534,696) | - |
| generation | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Gross Profit | | 7,514,508 | - | 4,775,863 | - |
+---------------------+-------+-------------+-------------+-------------+-------------+
| EXPENSES | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Other gains and | 3.3 | 1,028,559 | (102,531) | 1,298,249 | 694,240 |
| losses | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Employee costs | 3.2 | (1,373,055) | (1,329,683) | (113,792) | (86,701) |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Distribution Cost | | (501,021) | - | (172,582) | - |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Other expenses | | (495,104) | (259,443) | (496,602) | (326,127) |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Depreciation | 3.8 | (195,461) | - | (54,951) | - |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Financial income | 3.5 | 1,297,504 | 145,399 | 2,718,568 | 989,110 |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Financial Expenses | 3.6 | (654,461) | (1,230) | (2,206,738) | - |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Release of negative | 3.4 | - | - | 1,493,760 | - |
| goodwill | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Pre Operative | | (1,171,626) | - | (911,559) | - |
| Expenses (Relating | | | | | |
| to projects under | | | | | |
| construction) | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Pre-tax Income / | | 5,449,843 | (1,547,488) | 6,330,216 | 1,270,522 |
| (Loss) | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Income Tax Expense | 3.7 | (1,432,338) | - | (997,407) | - |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Net Income / (Loss) | | 4,017,505 | (1,547,488) | 5,332,809 | 1,270,522 |
| after taxes | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Other Comprehensive | | | | | |
| Income | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Exchange | | 6,497,808 | (2,594,435) | 3,010,783 | (3,192,552) |
| differences on | | | | | |
| translating foreign | | | | | |
| operations | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Net value gain on | | 56,041 | - | (231,685) | - |
| available for sale | | | | | |
| financial assets, | | | | | |
| net of taxes | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Other comprehensive | | 6,553,849 | (2,594,435) | 2,779,098 | (3,192,552) |
| income / (loss) for | | | | | |
| the year / period, | | | | | |
| net of tax | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Total comprehensive | | 10,571,354 | (4,141,923) | 8,111,907 | (1,922,030) |
| income / (loss) for | | | | | |
| the year / period | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Profit / (loss) | | | | | |
| attributable to | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Equity holders of | | 926,473 | (1,54,7488) | 3,309,434 | 1,270,522 |
| parent | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Non controlling | | 3,091,032 | - | 2,023,375 | - |
| interest | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| | | 4,017,505 | (1,547,488) | 5,332,809 | 1,270,522 |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Total comprehensive | | | | | |
| income / (loss) | | | | | |
| attributable to | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Equity holders of | | 6,750,867 | (4,141,923) | 5,825,573 | (1,922,030) |
| parent | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Non controlling | | 3,820,487 | - | 2,286,334 | - |
| interest | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| | | 10,571,354 | (4,141,923) | 8,111,907 | (1,922,030) |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Basic and diluted earnings per share for profit attributable |
| to the equity holders of the company during the year |
| (expressed as Pence per share) |
+-------------------------------------------------------------------------------------+
| Basic earnings per | 3.17 | 0.32 | (0.54) | 1.24 | 0.47 |
| share | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
| Diluted earnings | 3.17 | 0.32 | (0.54) | 1.24 | 0.47 |
| per share | | | | | |
+---------------------+-------+-------------+-------------+-------------+-------------+
* Certain items in the previous year (2009) financial statements have been
restated as detailed in Note 3.24
STATEMENT OF FINANCIAL POSITION
As at 31 March 2010
+--------------------+-------+-------------+------------+-------------+------------+
| |Notes | As at 31 March | As at 31 March |
| | | 2010 | 2009 |
| | | | (As restated*) |
+--------------------+-------+--------------------------+--------------------------+
| | | Group | Company | Group | Company |
| | | GBP | GBP | GBP | GBP |
+--------------------+-------+-------------+------------+-------------+------------+
| ASSETS | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Non current assets | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Property, plant | 3.8 | 15,169,634 | - | 13,556,906 | - |
| and equipment | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Capital Work in | 3.9 | 49,847,157 | - | 29,174,655 | - |
| Progress | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Capital advances | 3.1 | 21,160,152 | - | 6,705,770 | - |
+--------------------+-------+-------------+------------+-------------+------------+
| Other Assets | 3.11 | 5,470,257 | 7,887 | 4,316,518 | 5,000 |
+--------------------+-------+-------------+------------+-------------+------------+
| Deferred Tax Asset |3.7.1 | 51,505 | | 60,909 | |
+--------------------+-------+-------------+------------+-------------+------------+
| Investment in | | - | 2,410 | - | 2,410 |
| subsidiaries | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Total non current | | 91,698,705 | 10,297 | 53,814,758 | 7,410 |
| assets | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Current Assets | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Inventories | 3.13 | 1,867,915 | - | 41,711 | - |
+--------------------+-------+-------------+------------+-------------+------------+
| Trade and other | 3.12 | 3,089,084 | 274,265 | 1,400,329 | 13,213 |
| receivables | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Current tax assets | | 2,003,214 | - | 751,309 | - |
| | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Financial Assets | 3.14 | 12,977,604 | - | 8,478,766 | - |
+--------------------+-------+-------------+------------+-------------+------------+
| Other Assets | 3.12 | 7,113,514 | 61,145,096 | 5,230,748 | 67,386,189 |
+--------------------+-------+-------------+------------+-------------+------------+
| Cash and Cash | 3.15 | 14,168,453 | 7,072,048 | 32,319,842 | 4,039,991 |
| Equivalents | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Restricted Cash | | 1,481,894 | - | 1,403,126 | - |
+--------------------+-------+-------------+------------+-------------+------------+
| Total current | | 42,701,678 | 68,491,409 | 49,625,831 | 71,439,393 |
| assets | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Total assets | | 134,400,383 | 68,501,706 | 103,440,588 | 71,446,803 |
+--------------------+-------+-------------+------------+-------------+------------+
| EQUITY AND | | | | | |
| LIABILITIES | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Capital and | | | | | |
| Reserves | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Issued Capital | 3.16 | 42,187 | 42,187 | 42,187 | 42,187 |
+--------------------+-------+-------------+------------+-------------+------------+
| Reserves | | 76,490,815 | 68,691,738 | 69,459,462 | 70,079,213 |
+--------------------+-------+-------------+------------+-------------+------------+
| Retained earnings | | 4,235,907 | (276,966) | 3,309,434 | 1,270,522 |
+--------------------+-------+-------------+------------+-------------+------------+
| Equity | | 80,768,909 | 68,456,959 | 72,811,083 | 71,391,922 |
| attributable to | | | | | |
| owners of the | | | | | |
| Company | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Non-Controlling | | 7,816,771 | - | 3,996,285 | - |
| Interest | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Total Equity | | 88,585,680 | 68,456,959 | 76,807,368 | 71,391,922 |
+--------------------+-------+-------------+------------+-------------+------------+
| Non current | | | | | |
| liabilities | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Interest-bearing | 3.18 | 30,800,245 | - | 19,967,353 | - |
| loans and | | | | | |
| borrowings | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Other Liabilities | | 2,261,141 | - | 1,935,743 | - |
+--------------------+-------+-------------+------------+-------------+------------+
| Deferred tax |3.7.1 | 514,235 | - | 446,451 | - |
| liabilities | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Total non current | | 33,575,621 | - | 22,349,547 | - |
| liabilities | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Current | | | | | |
| liabilities | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Trade and other | | 6,567,099 | 44,747 | 799,498 | 54,881 |
| payables | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Interest-bearing | 3.18 | 3,882,815 | - | 2,481,114 | - |
| loans and | | | | | |
| borrowings | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Provision for | | 1,599,168 | - | 942,826 | - |
| Taxation | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Other liabilities | | 190,000 | - | 60,235 | - |
+--------------------+-------+-------------+------------+-------------+------------+
| Total current | | 12,239,082 | 44,747 | 4,283,673 | 54,881 |
| liabilities | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
| Total liabilities | | 45,814,703 | 44,747 | 26,633,220 | 54,881 |
+--------------------+-------+-------------+------------+-------------+------------+
| Total equity and | | 134,400,383 | 68,501,706 | 103,440,588 | 71,446,803 |
| liabilities | | | | | |
+--------------------+-------+-------------+------------+-------------+------------+
* Certain items in the previous year (2009) financial statements have been
restated as detailed in Note 3.24
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year to 31 March 2010
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| GROUP | Share | Share | Share | MTM | Foreign | Equity | Retained | Total | Non-Controlling | Total |
| | Capital | capital | Premium | gain | Currency | settled | earnings | of | Interest | Equity |
| | | | | / | Translation | employee | | Parent | | |
| | | | | (loss) | reserve | benefits | | equity | | |
| | | | | on AVS | | reserve | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| | No. | GBP | GBP | GBP | GBP | | GBP | GBP | GBP | GBP |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Opening Balance | 170,068,027 | - | - | - | - | - | - | - | 1,538,852 | 1,538,852 |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Proceeds from | 116,921,768 | 42,187 | 70,135,875 | - | - | - | - | 70,178,062 | 171,099 | 70,349,161 |
| issue of | | | | | | | | | | |
| ordinary shares | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Share issue | - | - | (3,192,552) | - | - | - | - | (3,192,552) | - | (3,192,552) |
| expenses | | | | | | | | | | |
| adjusted | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| As Restated | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Profit for the | - | - | - | - | - | - | 3,309,434 | 3,309,434 | 2,023,375 | 5,332,810 |
| period | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Other | - | - | - | (151,716) | 2,667,855 | - | - | 2,516,139 | 262,959 | 2,779,098 |
| comprehensive | | | | | | | | | | |
| income for the | | | | | | | | | | |
| period | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Total | - | - | - | (151,716) | 2,667,855 | - | 3,309,434 | 5,825,573 | 2,286,334 | 8,111,907 |
| comprehensive | | | | | | | | | | |
| income for the | | | | | | | | | | |
| period | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Balance at 31 | 286,989,795 | 42,187 | 66,943,323 | (151,716) | 2,667,855 | - | 3,309,434 | 72,811,083 | 3,996,285 | 76,807,368 |
| March, 2009 | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Opening Balance | 286,989,795 | 42,187 | 66,943,323 | (151,716) | 2,667,855 | - | 3,309,434 | 72,811,083 | 3,996,285 | 76,807,368 |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Profit for the | - | - | - | - | - | - | 926,473 | 926,473 | 3,091,032 | 4,017,504 |
| year | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Other | - | - | - | 48,529 | 5,775,866 | - | - | 5,824,395 | 729,454 | 6,553,849 |
| comprehensive | | | | | | | | | | |
| income for the | | | | | | | | | | |
| year | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Total | - | - | - | 48,529 | 5,775,866 | - | 926,473 | 6,750,867 | 3,820,486 | 10,571,353 |
| comprehensive | | | | | | | | | | |
| income for the | | | | | | | | | | |
| year | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Share based | - | - | - | - | - | 1,206,959 | - | 1,206,959 | - | 1,206,959 |
| compensation | | | | | | | | | | |
| costs (Refer | | | | | | | | | | |
| Note 3.17.1) | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
| Balance at 31 | 286,989,795 | 42,187 | 66,943,323 | (103,188) | 8,443,721 | 1,206,959 | 4,235,907 | 80,768,909 | 7,816,771 | 88,585,680 |
| March, 2010 | | | | | | | | | | |
+------------------+-------------+---------+-------------+-----------+-------------+-----------+-----------+-------------+-----------------+-------------+
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year to 31 March 2010
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| COMPANY | Share | Share | Share | MTM | Forign | Equity | Retained | Excess | Total |
| | Capital | Capital | Premium | gain | Currency | settled | Earnings | of | shareholders |
| | | | | / | Translation | employee | | share | equity |
| | | | | (loss) | reserve | benefits | | of | |
| | | | | on AVS | | reserve | | assets | |
| | | | | | | | | acquired | |
| | | | | | | | | over | |
| | | | | | | | | acquisition | |
| | | | | | | | | cost | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| | No. | GBP | GBP | GBP | GBP | GBP | GBP | GBP | GBP |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| Opening Balance | 170,068,027 | - | - | - | - | - | - | - | 0 |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| Proceeds from | 116,921,768 | 42,187 | 70,135,875 | - | - | - | - | - | 70,178,062 |
| issue of | | | | | | | | | |
| ordinary shares | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| Share Issue | - | - | (3,192,552) | - | - | - | - | - | (3,192,552) |
| Expenses | | | | | | | | | |
| Adjusted | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| Other | - | - | - | - | 3,135,891 | - | - | - | 3,135,891 |
| comprehensive | | | | | | | | | |
| income for the | | | | | | | | | |
| year | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| Profit for the | - | - | - | - | - | - | 1,270,522 | - | 1,270,522 |
| period | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| Balance as at 31 | 286,989,795 | 42,187 | 66,943,323 | 0 | 3,135,891 | 0 | 1,270,522 | - | 71,391,922 |
| March 2009 | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| Balance as at 1 | 286,989,795 | 42,187 | 66,943,323 | - | 3,135,891 | - | 1,270,522 | - | 71,391,922 |
| April 2009 | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| Other | - | - | - | - | (2,594,435) | - | - | - | (2,594,435) |
| comprehensive | | | | | | | | | |
| income for the | | | | | | | | | |
| year | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| Profit for the | - | - | - | - | - | - | (1,547,488) | - | (1,547,488) |
| year | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| Share based | - | - | - | - | - | 1,206,959 | - | - | 1,206,959 |
| compesnation | | | | | | | | | |
| costs (Refer | | | | | | | | | |
| Note 3.17.1) | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
| Balance as at 31 | 286,989,795 | 42,187 | 66,943,323 | 0 | 541,456 | 1,206,959 | (276,966) | | 68,456,959 |
| March 2010 | | | | | | | | | |
+------------------+-------------+---------+-------------+--------+-------------+-----------+-------------+-------------+--------------+
STATEMENT OF CASH FLOWS
For the year ended 31 March 2010
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| | | Year to 31 | Period to 31 |
| | | March 2010 | March 2009 |
| | | | (As |
| | | | restated*) |
+-----------------------------------+-------+----------------------------+-----------------------------+
| |Notes | Group | Company | Group | Company |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| | | GBP | GBP | GBP | GBP |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Cash flows from operating | | | | | |
| activities | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Profit / Loss for the year / | | 4,017,505 | (1,547,488) | 4,638,569 | 1,270,522 |
| period | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Income tax expense | | 1,432,338 | - | 997,407 | - |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Financial Expenses | | 373,359 | - | 2,206,738 | - |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Financial Income | | (1,251,252) | (145,399) | (2,718,568) | (989,110) |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Other gains and losses | | (730,329) | - | (604,009) | - |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Release of negative goodwill | | - | - | (1,493,760) | - |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Share based compensation costs | | 1,206,959 | 1,206,959 | - | - |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Depreciation | | 625,324 | - | 398,830 | - |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| | | 5,673,904 | (485,928) | 3,425,207 | 281,412 |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Movements in Working Capital | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| (Increase) / Decrease in trade | | (1,418,191) | (261,052) | (805,564) | (13,212) |
| and other receivables | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| (Increase) / Decrease in | | (1,636,191) | - | 18,319 | - |
| inventories | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| (Increase) / Decrease in other | | 988,313 | (4,346) | (2,070,063) | (5,000) |
| current assets | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Increase / (Decrease) in trade | | 5,139,417 | (10,135) | 23,741 | 54,881 |
| and other payables | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Increase / (Decrease) in Other | | (10,087,192) | - | (620,314) | - |
| liabilities | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Cash (used in) / generated from | | (1,339,941) | (761,461) | (28,674) | 318,081 |
| operations | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Interest paid | | (372,025) | - | (2,206,738) | - |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Income Taxes paid, net of refunds | | (1,913,470) | - | (418,584) | - |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Net Cash Generated by / (used in) | | (3,625,435) | 761,461) | (2,653,996) | 318,081 |
| Operating activities | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Cash flow from investing | | | | | |
| activities | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Acquisition of property, plant | | (29,017,680) | - | (32,452,626) | - |
| and equipment | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Sale of property, plant and | | 2,493 | - | - | - |
| equipment | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Advances Net | | 17,759,978 | 6,242,553 | (6,225,204) | (67,386,189) |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Finance Income | | 1,165,040 | 145,399 | 2,614,831 | 986,700 |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Dividend income | | 944,839 | - | 604,009 | - |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Movement in restricted cash | | 385,765 | - | (970,388) | - |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Net cash outflow on acquisition | | (10,582,408) | - | (8,052,207) | - |
| of subsidiaries | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Purchase of Investments (Net of | | (3,222,067) | - | - | - |
| sales) | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Increase / Decrease in land lease | | 1,260 | - | (2,866,112) | - |
| Deposits | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Net cash (used) / generated by | | (22,562,779) | 6,387,952 | (47,347,697) | (66,399,489) |
| investing activities | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Cash flows from financing | | | | | |
| activities | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Proceeds from issue of Ordinary | | - | - | 70,348,035 | 70,178,060 |
| Shares | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Proceeds from borrowings | | 14,249,387 | - | 14,330,099 | - |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Repayment of borrowings | | 5,205,136 | - | (3,290,759) | - |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Payment for share issue costs | | - | - | (3,192,552) | (3,192,552) |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Net cash provided by financing | | 9,044,250 | - | 78,194,823 | 66,985,508 |
| activities | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Net increase / (decrease) in cash | | (17,143,964) | 5,626,491 | 28,193,130 | 904,100 |
| and cash equivalents | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Cash and cash equivalents at the | | 32,319,842 | 4,039,991 | 1,358,882 | - |
| beginning of the year / period | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Effect of Exchange rate changes | | (1,007,425) | (2,594,434) | 2,767,830 | 3,135,891 |
| on the balance of cash held in | | | | | |
| foreign currencies | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
| Cash and cash equivalents at the | 3.15 | 14,168,453 | 7,072,048 | 32,319,842 | 4,039,991 |
| end of the year / period | | | | | |
+-----------------------------------+-------+--------------+-------------+--------------+--------------+
* Certain items in the previous year (2009) financial statements have been
restated as detailed in Note 3.24
Notes to the Accounts
Note 1 : Basis of Preparation
1.1 General Information
OPG Power Ventures Plc. (the "Company" or "OPGPV") is a company domiciled and
incorporated in the Isle of Man on 17 January 2008 and was admitted to the
Alternative Investment Market (AIM) of London Stock Exchange on 30 May 2008. The
Company had raised approximately GBP 65.10 Million (before admission costs)
through a public offering in the previous period.
The Consolidated financial statements for OPG Power Ventures Plc (the "Group")
and financial statements for the Company have been prepared for the year ended
31 March 2010
As on 31 March 2010 the following entities forms part of the Group:
+----------------+------------+---------------+--------+----------+
| Company | Immediate | Country |Voting |Economic |
| * | Parent | of |Rights |Interest |
| | |Incorporation | (%) | (%) |
+----------------+------------+---------------+--------+----------+
| Gita | OPG | Cyprus | 100 | 100 |
| Energy | Power | | | |
| Private | Ventures | | | |
| Limited | Plc | | | |
| ("GE | | | | |
| Cyprus") | | | | |
+----------------+------------+---------------+--------+----------+
| Gita | OPG | Cyprus | 100 | 100 |
| Holdings | Power | | | |
| Private | Ventures | | | |
| Limited | Plc | | | |
| ("GH | | | | |
| Cyprus") | | | | |
+----------------+------------+---------------+--------+----------+
| OPG | Gita | India | 35.86 | 49.5 |
| Power | Energy | | 35.90 | 49.5 |
| Generation | Private | | | |
| Private | Limited | | | |
| Limited | and | | | |
| ("OPGPG") | Gita | | | |
| | Holdings | | | |
| | Private | | | |
| | Limited | | | |
+----------------+------------+---------------+--------+----------+
| OPG | Gita | India | 29.19 | 43.85 |
| Power | Energy | | 36.71 | 55.15 |
| Gujarat | Private | | | |
| Private | Limited | | | |
| Limited | and | | | |
| ("OPGG") | Gita | | | |
| | Holdings | | | |
| | Private | | | |
| | Limited | | | |
+----------------+------------+---------------+--------+----------+
| *OPG | Gita | India | 11 | 16.5 |
| Renewable | Energy | | 11 | 16.5 |
| Energy | Private | | | |
| Private | Limited | | | |
| Limited | and | | | |
| ("OPGRE") | Gita | | | |
| | Holdings | | | |
| | Private | | | |
| | Limited | | | |
+----------------+------------+---------------+--------+----------+
| *OPG | OPG | India | 29.78 | 43.78 |
| Energy | Power | | | |
| Private |Generation | | | |
| Limited | Private | | | |
| ("OPGE") | Limited | | | |
+----------------+------------+---------------+--------+----------+
| Gita | Gita | India | 100 | 100 |
| Power | Holdings | | | |
| & | Private | | | |
|Infrastructure | Limited | | | |
| Private | | | | |
| Limited | | | | |
| ("GPIL") | | | | |
+----------------+------------+---------------+--------+----------+
Note:
*The ownership structure results in a "Non Controlling" voting and economic
stake in OPGE and OPGRE, with captive customers holding the majority of shares.
However, voting agreements have been entered into with key shareholders - Tamil
Nadu Property Developers and Salem Food Products by which there is a commitment
that these shareholders will exercise all voting rights in accordance with the
directions of OPGPG (in the case of OPGE) and G E Cyprus (in the case of OPGRE).
This gives the Group effective voting control about 66% of OPGRE shares and 67%
of OPGE shares. As such, the results of OPGE and OPGRE will be consolidated in
producing group accounts for OPGPV.
The activities of the various entities listed above are as detailed below:
+---------+---------------+
| Company | |
| | Activity |
+---------+---------------+
| | |
| OPGPV | "The |
| | Company". |
| | Invests |
| | in and |
| | controls |
| | the |
| | development |
| | and |
| | operation |
| | of power |
| | generation |
| | businesses |
| | in India. |
+---------+---------------+
| | |
| GE | Subsidiary |
| Cyprus | Of The |
| | Company |
| | |
+---------+---------------+
| | |
| GH | Subsidiary |
| Cyprus | Of The |
| | Company |
| | |
+---------+---------------+
| | |
| OPGE | 19.4 |
| | MW |
| | Power |
| | Plant |
+---------+---------------+
| | |
| OPGRE | 10MW |
| | Power |
| | Plant |
+---------+---------------+
| | |
| OPGPG | 77MW |
| | Power |
| | Plant(in |
| | construction) |
+---------+---------------+
| | |
| OPGG | 2*150 |
| | MW |
| | Power |
| | Plant(in |
| | construction) |
+---------+---------------+
| | |
| GPIL | 80MW |
| | Power |
| | Plant( |
| | in |
| | construction) |
+---------+---------------+
Investments into one of the entities GPIL, was made during the year. The
consideration paid was GBP 3.13 million, being the net worth of the Company as
on the date of acquisition and there was no goodwill arising on this investment.
The Company's registered office is at IOMA House, Hope Street, Douglas, Isle of
Man.
The Group is primarily engaged in the business of development, construction and
operation of Power generation plants for the supply of power directly to the
State Electricity Boards, Public Sector Undertakings and Industrial consumers.
The business objective of the Group is to focus on the power generation business
within India and thereby to provide reliable, cost effective power to industrial
consumers and other users under the 'Open Access' provisions mandated by the
Government of India and applicable to all producers of power.
Note 2 : Significant accounting policies
2.1 Adoption of New and Revised Standards
2.1.1 Standards and Interpretations effective in the Reporting Period
The following new and revised Standards and interpretations have been adopted in
these consolidated financial statements. Their adoption has not had any
significant impact on the amounts reported in these consolidated financial
statements but may affect the accounting for future transactions or
arrangements.
+------------------------+-------------------------------------+
| IFRS 8: Operating | IFRS 8 is a disclosure Standard |
| Results | that requires re- designation of |
| | the Group's reportable segments |
| | based on the segments. The Managing |
| | Director of the Group is the Chief |
| | Operating Decision Maker (CODM) to |
| | allocate resources and assess |
| | performance. |
+------------------------+-------------------------------------+
| Amendments to IFRS 2: | The amendments clarify the |
| Share-based Payment - | definition of vesting conditions |
| the Vesting Conditions | for the purposes of IFRS 2, |
| and Cancellations | introduce concept of 'non- vesting' |
| | conditions, and clarify the |
| | accounting treatment for |
| | cancellations. |
+------------------------+-------------------------------------+
| IAS 23 (as revised in | The principal change to the |
| 2007) - Borrowing | Standard was to eliminate the |
| Costs | option to expense all borrowing |
| | costs when incurred. This change |
| | has had no impact on these |
| | consolidated financial statements |
| | because it has always been the |
| | Group's accounting policy to |
| | capitalize borrowing costs incurred |
| | on qualifying assets |
+------------------------+-------------------------------------+
| Amendments to IAS 32: | The revisions to IAS 32 amend the |
| Financial Instruments: | criteria for debt/equity |
| Presentation and IAS 1 | classification by permitting |
| Presentation of | certain puttable financial |
| Financial Statements | instruments and instruments (or |
| - Puttable Financial | components of instruments) that |
| instruments and | impose on an entity an obligation |
| Obligations Arising on | to deliver to another party a |
| Liquidation | pro-rata share of the net assets of |
| | the entity only on liquidation, to |
| | be classified as equity, subject to |
| | specified criteria being met. |
+------------------------+-------------------------------------+
| IFRIC 13: Customer | The Interpretation provides |
| Loyalty Programmes | guidance on how entities should |
| | account for customer loyalty |
| | programmes by allocating revenue on |
| | sale to possible future award |
| | attached to the sale. |
+------------------------+-------------------------------------+
| IFRIC 16: Hedges of | The Interpretation provides |
| Net Investment in a | guidance on the detailed |
| Foreign operation. | requirements for net investment |
| | hedging for certain |
| | hedge accounting designations |
+------------------------+-------------------------------------+
| IFRIC 9 | Amendment to IFRIC 9 (revised): |
| | Reassessment of Embedded |
| | Derivatives relating to assessment |
| | of embedded derivatives in case of |
| | reclassification of financial |
| | assets out of the FVTPL category; |
+------------------------+-------------------------------------+
| IFRS 1 | (Revised) First time Adoption of |
| | IFRS - Amendment relating to cost |
| | of an Investment in a Subsidiary, |
| | Jointly Controlled Entity or |
| | Associate; |
+------------------------+-------------------------------------+
2.1.2 Standards and Interpretations in issue but not yet effective
At the date of authorization of these consolidated financial statements, the
following Standards and Interpretations were in issue but not yet effective:
+--------+-------------------------------------------------------+
| IFRS | (Revised) First time Adoption of IFRS - Amendment on |
| 1 | additional exemptions for first-time adopter |
| | (effective for annual periods beginning on or after |
| | January 1,2010); |
+--------+-------------------------------------------------------+
| IFRS | (Revised) Limited exemption from comparatives IFRS 7 |
| 1 | disclosure for first time adopters - effective for |
| | annual periods beginning on or after July 1, 2010 |
+--------+-------------------------------------------------------+
| IFRS | (Revised) Share-based Payment- Amendment relating to |
| 2 | Group cash- settled share based payment (effective |
| | for annual periods beginning on or after January 1, |
| | 2010); |
+--------+-------------------------------------------------------+
| IFRS | Financial Instruments: Classification and Measurement |
| 9 | (intended as complete replacement for IAS 39 and IFRS |
| | 7) (effective for annual periods beginning on or |
| | after January 1, 2013); |
+--------+-------------------------------------------------------+
| IAS | (Revised) Related Party Disclosures - Amendment on |
| 24 | disclosure requirements for entities that are |
| | controlled, jointly controlled or significantly |
| | influenced by a Government (effective for annual |
| | periods beginning on or after January 1,2011) |
+--------+-------------------------------------------------------+
| IAS | (Revised) Consolidated and Separate Financial |
| 27 | Statements - Amendment relating to Cost of an |
| | Investment in a Subsidiary (effective for annual |
| | periods beginning on or after July 1, 2009); |
+--------+-------------------------------------------------------+
| IAS | (Revised) Financial Instruments: Presentation - |
| 32 | Amendments relating to classification of Rights Issue |
| | (effective for annual periods beginning on or after |
| | February 1,2010); |
+--------+-------------------------------------------------------+
| IAS | (Revised) Financial Instruments: Recognition and |
| 39 | Measurement - Amendments relating to Eligible Hedged |
| | Items (such as hedging inflation risk and Hedging |
| | with options) (effective for annual periods beginning |
| | on or after July 1, 2009); |
+--------+-------------------------------------------------------+
| Others | Amendments to IFRS 2, IFRS 5, IFRS 8, IAS I, IAS 7, |
| | IAS 17, IAS 36, IAS 38 and IAS 39 resulting from |
| | April 2009 Annual Improvements to IFRSs (Majority |
| | effective for annual periods beginning on or after |
| | January 1,2010); |
+--------+-------------------------------------------------------+
| IFRIC | Amendment to IFRIC 14: IAS 19 The limit on a defined |
| 14 | Benefit Asset - Minimum Funding Requirement and their |
| | interaction (effective for annual periods beginning |
| | on or after January 1, 2011); |
+--------+-------------------------------------------------------+
| IFRIC | Distributions of Non-cash Assets to Owners (effective |
| 17 | for annual periods beginning on or after July 1, |
| | 2009); and |
+--------+-------------------------------------------------------+
| IFRIC | Extinguishing Financial Liabilities with Equity |
| 19 | Instruments (effective for annual periods beginning |
| | on or after July 1, 2010). |
+--------+-------------------------------------------------------+
The management anticipates that the adoption of these Standards and
Interpretations will have no material financial impact on the consolidated
financial statements of the Group.
2.2 Basis of Preparation and Statement of Compliance with International
Financial Reporting standards
The consolidated and separate financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) and its
interpretations issued by the International Accounting Standard Board.
The Group and Company financial statements cover the financial year from 1 April
2009 to 31 March 2010.The comparatives represents the period 17 January 2008,
being the date of incorporation of OPG Power Ventures Plc., to 31 March 2009 and
incorporate the financial year from 1 April 2008 to 31 March 2009 in respect of
the Indian subsidiaries.
2.3 The Basis of Presentation and Accounting Policies used in preparing the
historical financial information
These accounting policies have been consistently applied to the results, gains
and losses, assets, liabilities and cash flows of all entities included in the
consolidated financial statements for all the periods presented unless otherwise
stated. The financial statements are presented in Great Britain Pounds (GBP/GBP)
The financial information has been prepared on an historical cost basis. In the
process of applying the Group's accounting policies, management is required to
make judgments, estimates and assumptions that may affect the financial
statements. Management believes that the judgments made in the preparation of
the historical financial information are reasonable. Actual results could
materially differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period or in the period of
the revision and future periods if the revision affects both current and future
periods. Judgments made by management in the application of IFRS that have
significant effect on the historical financial information and estimates with a
significant risk of material adjustment in the next year are discussed in note
3.20. Also refer Policy 2.2.
2.4 Basis of Consolidation
The consolidated financial statements incorporate the financial statements of
the company and entities controlled by the Company made up to 31st March each
year.
Intra-group balances and transactions and any resulting unrealised gains arising
from intra-group transactions are eliminated on consolidation. Unrealised losses
resulting from intra-group transactions are also eliminated unless cost cannot
be recovered. Amounts reported in the financial statements of the subsidiaries
have been adjusted where necessary to ensure consistency with the accounting
policies adopted by the Group.
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up to
31 March each year. Control is achieved where the Company has the power to
govern the financial and operating policies of an investee entity so as to
obtain benefits from its activities. The existence and effect of potential
voting rights that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. Controlled entities are
fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases.
The excess of cost of acquisition over the group's interest in the net value of
the identifiable assets, liabilities and contingent liabilities of the
subsidiaries on the date of acquisition is accounted as Goodwill arising on
consolidation. If, after reassessment, the Group's interest in the net fair
value of the acquiree's identifiable assets, liabilities and contingent
liabilities exceeds the cost of the business combination, the excess is
recognised immediately in profit. Goodwill is initially recognized as an asset
at Cost and subsequently measured at cost less any accumulated impairment
losses.
Non-controlling interests in subsidiaries are identified separately from the
Group's equity therein. The interests of non controlling shareholders may be
initially measured either at fair value or at the non-controlling interests'
proportionate share of the fair value of the acquiree's identifiable net assets.
The choice of measurement basis is made on an acquisition by-acquisition basis.
Subsequent to acquisition, the carrying amount of non-controlling interests is
the amount of those interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity. Total comprehensive income is
attributed to non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
Changes in the Group's interests in subsidiaries that do not result in a loss of
control are accounted for as equity transactions. The carrying amounts of the
Group's interests and the non-controlling interests are adjusted to reflect the
changes in their relative interests in the subsidiaries. Any difference between
the amount by which the non-controlling interests are adjusted and the fair
value of the consideration paid or received is recognised directly in equity and
attributed to owners of the Company.
When the Group loses control of a subsidiary, the profit or loss on disposal is
calculated as the difference between (i) the aggregate of the fair value of the
consideration received and the fair value of any retained interest and (ii) the
previous carrying amount of the assets (including goodwill), and liabilities of
the subsidiary and any non-controlling interests. Amounts previously recognised
in other comprehensive income in relation to the subsidiary are accounted for
(i.e. reclassified to profit or loss or transferred directly to retained
earnings) in the same manner as would be required if the relevant assets or
liabilities were disposed of. The fair value of any investment retained in the
former subsidiary at the date when control is lost is regarded as the fair value
on initial recognition for subsequent accounting under IAS 39 Financial
Instruments: Recognition and Measurement or, when applicable, the cost on
initial recognition of an investment in an associate or jointly controlled
entity.
2.5 Foreign Currency
2.5.1 Translation to Presentation Currency
The functional currency of the Indian subsidiaries in Indian Rupee (INR) and
Cyprus and IOM Company is Great British Pound (GBP).
Functional and presentation currency: Items included in the financial statements
in each of the Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional currency').
The consolidated financial statements are presented in Great Britain Pound
(GBP), which is the Company's functional and presentation currency.
At the reporting date the assets and liabilities of the Indian entities are
translated into the presentation currency, which is the Great Britain Pound
(GBP) at the rate of exchange ruling at the balance sheet date and the income
statement is translated at the average exchange rate for that year. Exchange
differences arising, if any, are classified as equity and recognised in the
Group's foreign currency translation reserve. Such exchange differences are
recognized in profit or loss in the period in which the foreign operation is
disposed of.
2.5.2 Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated into
functional currency at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognized in the Income
statement. Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the exchange rate at
the date of the transaction.
Goodwill and fair value adjustments, arising on consolidation of financial
statements and presentation of financial instruments acquired other than by
subscription of subsidiaries, are treated as assets of the purchasing entity.
Goodwill is measured at cost less any accumulated impairment losses. Impairment
review is performed at least annually. Any impairment is recognized immediately
in the income statement and is not subsequently reversed.
On the disposal of a foreign operation (i.e. a disposal of the Group's entire
interest in a foreign operation, or a disposal involving loss of control over a
subsidiary that includes a foreign operation, loss of joint control over a
jointly controlled entity that includes a foreign operation, or loss of
significant influence over an associate that includes a foreign operation),all
of the accumulated exchange differences in respect of that operation
attributable to the Group are reclassified to profit or loss. Any exchange
differences that have previously been attributed to non-controlling interests
are derecognised, but they are not reclassified to profit or loss.
In the case of a partial disposal (i.e. no loss of control) of a subsidiary that
includes a foreign operation, the proportionate share of accumulated exchange
differences are re-attributed to non-controlling interests and are not
recognised in profit or loss. For all other partial disposals (i.e. of
associates or jointly controlled entities not involving a change of accounting
basis), the proportionate share of the accumulated exchange differences is
reclassified to profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign
operation are treated as assets and liabilities of the foreign operation and
translated at the closing rate.
2.6 Property, Plant and Equipment
2.6.1 Owned assets
Property, Plant and Equipment are stated at cost of acquisition less accumulated
depreciation. Direct cost is capitalized until the asset is ready for use and
includes inward freight, duties and expenses incidental to acquisition and
installation.
The cost of self constructed assets includes the cost of material and direct
labour, any other costs directly attributable to bringing the asset to a working
condition for its intended use, and the cost of dismantling and removing any
items on and restoring the site on which they are located.
Parts of some items of property, plant and equipment require replacement at
regular intervals. OPG recognizes in the carrying amount of an item of property,
plant and equipment the cost of replacing part of such an item when that cost is
incurred and correspondingly, any carrying amount of those parts that are
replaced is derecognized.
Certain items of plant and equipment require the performance of regular major
inspections for faults regardless of whether parts of the item are replaced.
When each major inspection is performed, its cost is recognized in the carrying
amount of the item of property, plant and equipment as a replacement and any
remaining carrying amount of the previous inspection is derecognized. This
occurs regardless of whether the cost of previous inspection was identified in
the transaction in which the item was acquired or constructed. Where necessary,
the estimated cost of a future similar inspection is be used as an indication of
what the cost of the existing inspection component was when the item was
acquired or constructed.
Gains and losses on disposal of an item of property, plant and equipment are
determined by comparing the proceeds from disposal with the carrying amount of
property, plant and equipment and are recognized within "other gains and losses"
for gains and "other operating expenses" for losses in the statement of income.
2.6.2 Depreciation
Depreciation on property, plant and equipment is provided based on the straight
line method over the economic useful life of assets as estimated by the
management, on a pro-rata basis. The economic useful lives estimated by the
management for depreciation of the assets are as under:
+--------------------------+-----------+
| Asset |Estimated |
| | useful |
| | life |
| | (years) |
+--------------------------+-----------+
| Building | 30 |
+--------------------------+-----------+
| Plant and Machinery | 4-30 |
+--------------------------+-----------+
| Furniture and Fixtures | 5-15 |
+--------------------------+-----------+
| Office Equipments | 3-10 |
+--------------------------+-----------+
| Vehicles | 5-11 |
+--------------------------+-----------+
| Computers | 3 |
+--------------------------+-----------+
The useful life of property, plant and equipment is reviewed annually and,
wherever a change is made to the estimates of useful life of an asset, the
depreciation charge is adjusted.
Leasehold improvements are depreciated over the primary period of the lease or
estimated useful lives of the assets whichever is less. Assets under
construction are not depreciated, as they are not ready for use.
2.6.3 Borrowing cost
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are 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, until such time as the assets are
substantially ready for their intended use or sale.
Transaction cost incurred on raising long term borrowings are deferred in the
year of payment and are capitalized as part of costs of the qualifying asset and
depreciated over the useful life on straight line method.
Borrowing cost, including amortization of transaction cost directly attributable
to the acquisition or construction of qualifying property, plant and equipment
are capitalized as part of the cost of asset when it is probable they will
result in future economic benefit and the cost can be measured reliably.
2.6.4 Impairment of Property, Plant and Equipment
The Group's property, plant and equipment are subject to impairment testing.
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating
units). As a result, some assets are tested individually for impairment and some
are tested at cash-generating unit level.
All individual assets or cash-generating units are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable.
An impairment loss is recognized for the amount by which the assets or
cash-generating unit's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of fair value, reflecting market conditions
less costs to sell and value in use, based on an internal discounted cash flow
evaluation. The impairment loss is charged pro rata to the assets in the
cash-generating unit. All assets are subsequently reassessed for indications
that an impairment loss previously recognized may no longer exist.
Impairment losses recognized in prior periods are assessed at each reporting
date for any indications that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the estimate used to
determine the recoverable amount. An impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortization, if no
impairment loss had been recognized.
2.7 Financial Assets
Investments are recognized and derecognized on the date of trade where the
purchase or sale of an investment is under a contract whose terms require
delivery of the investment within the timeframe established by the market
concerned, and are initially measured at fair value, plus transaction costs,
except for those financial assets classified as at fair value through profit or
loss, which are initially measured at fair value.
Financial assets are classified into the following specified categories:
financial assets 'at fair value through profit or loss' (FVTPL),
'held-to-maturity' investments, 'available-for-sale' (AFS) financial assets and
'loans and receivables'. The classification depends on the nature and purpose of
the financial assets and is determined at the time of initial recognition.
2.7.1 Held to Maturity Investments
Held-to-maturity investments are non-derivative financial assets with fixed or
determinable payments and fixed maturity. Investments are classified as
held-to-maturity if it is the intention of Group's management to hold them until
maturity. Held-to-maturity investments are subsequently measured at amortized
cost using the effective interest method. In addition, if there is objective
evidence that the investment has been impaired, the financial asset is measured
at the present value of estimated cash flows. Any changes to the carrying amount
of the investment are recognized in income statement.
2.7.2 Available for Sale Financial Assets
Available-for-sale financial assets are non-derivatives that are either
designated in this category or not classified in any of the other categories.
They are included in non-current assets unless management intends to dispose of
the investment within 12 months of the balance sheet date.
Regular purchases and sales of financial assets are recognized on the trade-date
- the date on which the Group commits to purchase or sell the asset. Investments
are initially recognized at fair value plus transaction costs for all financial
assets not carried at fair value through income statement. Financial assets are
derecognized when the rights to receive cash flows from the investments have
expired or have been transferred and the Group has transferred substantially all
risks and rewards of ownership. Available for sale financial assets are
subsequently carried at fair value. Loans and receivables are carried at
amortized cost using the effective interest method.
Changes in the fair value of monetary and non-monetary securities classified as
available-for-sale are recognized in equity. When securities classified as
available for sale are sold or impaired, the accumulated fair value adjustments
recognized in equity are included in the income statement as 'financial expenses
(gains and losses from investment securities)'.
Dividends on available-for-sale mutual fund units are recognized in the income
statement as part of other income.
2.7.3 Impairment of Financial Assets
A financial asset is assessed at each reporting date to determine whether there
is any objective evidence that it is impaired. A financial asset is considered
to be impaired if objective evidence indicates that one or more events have had
a negative effect on the estimated future cash flows of that asset. In case of
equity investments classified as available-for-sale, objective evidence would
include a significant or prolonged decline in the fair value of the investment
below its cost.
An impairment loss in respect of a financial asset measured at amortised cost is
calculated as the difference between its carrying amount, and the present value
of the estimated future cash flows discounted at the original effective interest
rate. An impairment loss in respect of an available-for sale financial asset is
calculated by reference to its fair value.
Individually significant financial assets are tested for impairment on an
individual basis. The remaining financial assets are assessed collectively in
Groups that share similar credit risk characteristics.
All impairment losses are recognised in profit or loss. Any cumulative loss in
respect of an available for-sale financial asset recognised previously in equity
is transferred to profit or loss.
An impairment loss is reversed if the reversal can be related objectively to an
event occurring after the impairment loss was recognised. For available-for-sale
financial assets that are equity securities, the reversal is recognised directly
in equity.
2.8 Trade and other Receivables
Trade receivables are initially measured at fair value and subsequently measured
at amortized cost using the effective interest rate method. They are as reduced
by appropriate allowances for estimated irrecoverable amounts. A provision for
impairment of trade receivables is established when there is objective evidence
that the Group will not be able to collect all amounts due according to the
original term of the receivable. The amount of the provision is the difference
between the carrying amount and the recoverable amount and this difference is
recognized in the income statement. Interest income is recognized by applying
the effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
2.9 Inventories
Inventories are stated at lower of cost and net realizable value. The cost is
based on the first-in-first-out principle and includes duties and taxes (other
than those subsequently recoverable from taxing authorities), freight inward,
handling and other costs directly attributable to the acquisition.
2.10 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
2.11 Share Capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds. Equity instruments, convertible into
fixed number of ordinary shares at a fixed pre-determined price, and which are
exercisable after a specific period, are accounted for as and when such
instruments are exercised. The transaction costs pertaining to such instruments
are adjusted against equity.
2.12 Employee Benefits
Short term employee benefits obligations, including salary, are measured on an
undiscounted basis and are expensed as the related service is provided. A
liability is recognized for the amount expected to be paid under short term cash
bonus or profit sharing plans if the company has a present legal or constructive
obligation to pay this amount as a result of the past service of the employee
and the obligation can be estimated reliably.
The Group's net obligation in respect of gratuity includes amounts payable to
employees on termination, resignation or retirement on completion of a minimum
service period with the Group. The discount rate is the yield at the balance
sheet date on government bonds that have maturity dates approximating to the
terms of the Group's obligations. The calculation is performed by a qualified
actuary using the projected unit credit method. When the benefits of a plan are
improved, the portion of the increased benefit relating to past service by
employees is recognised as an expense in the income statement on a straight-line
basis over the average period until the benefits become vested. To the extent
that the benefits vest immediately, the expense is recognised immediately in the
income statement.
2.12.1 Share based payments
Equity-settled share-based payments to employees and others providing similar
services are measured at the fair value of the equity instruments at the grant
date. Details regarding the determination of the fair value of equity-settled
share-based transactions are set out in note ___. The fair value determined at
the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's estimate of
equity instruments that will eventually vest. At the end of each reporting
period, the Group revises its estimate of the number of equity instruments
expected to vest. The impact of the revision of the original estimates, if any,
is recognised in profit or loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to the equity-settled employee
benefits reserve.
.
2.13 Provisions
Provisions are recognized when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will be
required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration
required to settle the present obligation at the balance sheet date, taking into
account the risks and uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, the receivable is recognized as an
asset if it is virtually certain that reimbursement will be received and the
amount of the receivable can be measured reliably.
2.14 Trade Payables
Trade payables are recognized initially at fair value and subsequently measured
at amortized cost using the effective interest method.
2.15 Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic
benefits associated with the transaction will flow to the Group, and revenue can
be reliably measured. Revenue is measured at the fair value of the consideration
received or receivable in accordance with the relevant agreements, net of
discounts, rebates and other applicable taxes and duties.
Sale of power
Revenue from the sale of electricity is recognised when earned on the basis of
contractual arrangement with the customers and reflects the value of units
supplied including an estimated value of units supplied to the customers between
the date of their last meter reading and period end.
Financial Income
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the interest rate applicable. Dividend income from
investments is recognized when the shareholders' / units holders' rights to
receive payment have been established. Foreign currency gains and losses are
reported on a net basis
2.16 Operating lease payments
Payments made under non-cancellable operating leases are recognized in the
income statement on a straight-line basis over the term of the lease. Payments
made under cancellable operating leases are recognized as expense in the period
in which they are incurred.
.
2.17 Pre Operative Expenses
Adminsitration expenses, salaries, travels rents, rates, taxes and other
professional fees incurred in respect in the plants under construction and not
directly attributable to cost of assets constructed are expensed in the period
in which they were incurred and has been included as Pre Operative expenses in
the income statement.
2.18 Income Tax
Income tax on the profit or loss for the year comprises current and deferred
tax. Income tax is recognized in the income statement except to the extent that
it relates to items recognized directly in equity, in which case it is
recognized in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantially enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities and
tax base for financial reporting purposes and the amounts used for taxation
purposes. The amount of deferred tax provided is based on the expected manner of
realization or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the balance sheet date.
Deferred tax is measured at the tax rates that are expected to be applied to the
temporary differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date. Deferred tax assets and
liabilities are offset if there is a legally enforceable right to offset current
tax liabilities and assets, and they relate to income taxes levied by the same
tax authority on the same taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on a net basis or their tax
assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilized. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realized.
2.19 Earnings per Share
The Group presents basic and diluted earnings per share (EPS) data for its
ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Group by the weighted average
number of ordinary shares outstanding during the period. Diluted EPS is
determined by adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding for the effects
of all dilutive potential ordinary shares. Refer Note 3.17 for the calculation
of EPS.
2.20 Significant Estimates in the financial statements
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 required the Group to use a variety of estimation techniques and apply
judgement 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 judgement 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 policies where significant estimates have been made are as follows:
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation
uncertainty at the balance sheet date, that have a significant risk of causing a
material adjustments to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
- Recoverability of deferred tax assets: The recognition of deferred tax assets
requires assessment of sufficient future taxable profit and consequent tax
payments to realize the values stated
¤ Other financial liabilities: Interest-bearing loans and borrowings held by the
Group are measured at amortised cost except where designated at fair value
through profit and loss account.
¤ Uncollectability of trade receivables: Analysis of historical payment
patterns, customer concentrations, customer credit-worthiness and current
economic trends. If the financial condition of a customer deteriorates,
additional allowances may be required.
- Impairment tests: The determination of recoverable amounts of the CGUs
assessed in the annual impairment test requires the Group to estimate of their
fair value net of disposal costs as well as their value in use. The assessment
of value in use requires assumptions to be made with respect to the operating
cash flows of the CGUs as well as the discount rates.
Share based payments - In determining the fair value of the share based payments
and the related charge to the statement of comprehensive income, certain
assumptions have to be made about future events and market conditions. In
particular, judgments were made about the likely number of options that would
vest, and the fair value of the option granted, which si again dependent on
other assumptions like market volatility, dividend policy, prevailing interest
rates etc.
Note 3: Notes on Accounts forming part of the consolidated financial statements
3.1 Segment Reporting
The Group has adopted IFRS 8 Operating Segments with effect from 1 April 2009.
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision maker in order to allocate resources to the segments and to
assess their performance. In contrast, the predecessor Standard (IAS 14 Segment
Reporting) required an entity to identify two sets of segments (business and
geographical), using a risks and returns approach, with the entity's 'system of
internal financial reporting to key management personnel' serving only as the
starting point for the identification of such segments.
Based upon the risks and returns of the Group and reviews done regularly by the
chief operating decision maker, the Group has concluded that there is only one
business segment, this being the generation and sale of electricity to
customers. There are no segments classified based on other risks and rewards and
the power plants are all only in India.
3.2 Revenue
+---------+------------+---------+------------+---------+
| | Year ended 31 | Period ended 31 |
| | March 2010 | March 2009 |
+---------+----------------------+----------------------+
| | |Company | Group |Company |
| | Group | GBP | | GBP |
| | | | GBP | |
| | GBP | | | |
+---------+------------+---------+------------+---------+
| Sale | | - | 7,072,984 | - |
| of | 11,279,182 | | | |
| Power | | | | |
+---------+------------+---------+------------+---------+
| Sale | 236,226 | - | 237,575 | - |
| of | | | | |
| Service | | | | |
+---------+------------+---------+------------+---------+
| Trading | 1,357,189 | - | - | - |
| and | | | | |
| Other | | | | |
| Sales | | | | |
+---------+------------+---------+------------+---------+
| Total | | - | 7,310,559 | - |
| | 12,872,597 | | | |
+---------+------------+---------+------------+---------+
The revenue is derived from sales to government undertakings (65.61%) (Previous
year 14.37%) and private sector customers (34.39%) (Previous year 85.63%). There
is no individual customer who accounts for 10% or more of the total revenue
except for two government undertakings which are considered sovereign risk free
from default.
3.3 Other Gains and Losses
+------------+-----------+-----------+-----------+---------+
| | Year ended | Period ended |
| | 31 March 2010 | 31 March 2009 |
+------------+-----------------------+---------------------+
| | Group | Company | Group |Company |
| | GBP | GBP | | GBP |
| | | | GBP | |
+------------+-----------+-----------+-----------+---------+
| Dividend | | | 208,723 | - |
| Income | 944,524 | - | | |
+------------+-----------+-----------+-----------+---------+
| Provision | - | - | 394,492 | - |
| for Tax | | | | |
| no longer | | | | |
| required, | | | | |
| written | | | | |
| back | | | | |
+------------+-----------+-----------+-----------+---------+
| Unclaimed | 99,668 | - | - | - |
| amount | | | | |
| written | | | | |
| back | | | | |
+------------+-----------+-----------+-----------+---------+
| Unrealised | (114,430) | (200,657) | 694,240 | 694,240 |
| Forex | | | | |
| (loss) / | | | | |
| Gain (Net) | | | | |
+------------+-----------+-----------+-----------+---------+
| Others | 98,797 | 98,126 | 794 | - |
+------------+-----------+-----------+-----------+---------+
| | 1,028,559 | (102,531) | 1,298,249 | 694,240 |
+------------+-----------+-----------+-----------+---------+
3.4 Release of negative goodwill
During 2009, the Group acquired controlling interests in the Indian
subsidiaries. On consolidation of the financial statements of the said
subsidiaries with the parent company, the amounts of the identifiable net assets
of the latter attributable to the group exceeded the consideration transferred
by the way of equity and resulted in a surplus which was been recognized as
release of negative goodwill in the Income statement.
3.5 Financial Income
+-----------+-----------+---------+------------+----------+
| | Year ended 31 | Period ended 31 |
| | March 2010 | March 2009 |
+-----------+---------------------+-----------------------+
| | Group | Company | Group | Company |
| | | | | |
| | GBP | | | |
| | | GBP | GBP | GBP |
+-----------+-----------+---------+------------+----------+
| Bank | 3,361 | 1,840 | 1,031,518 | 989,110 |
| Interest | | | | |
+-----------+-----------+---------+------------+----------+
| Interest | 1,017,756 | | 1,593,356 | - |
| on Bank | | - | | |
| Deposits | | | | |
+-----------+-----------+---------+------------+----------+
| Interest | 8,820 | 8,820 | 83,688 | - |
| on loan | | | | |
+-----------+-----------+---------+------------+----------+
| Interest | 86,576 | - | 10,006 | - |
| on Lease | | | | |
| Deposits | | | | |
+-----------+-----------+---------+------------+----------+
| Profit | 46,252 | - | - | - |
| on | | | | |
| sale | | | | |
| of | | | | |
| Mutual | | | | |
| Funds | | | | |
+-----------+-----------+---------+------------+----------+
| Other | 134,739 | 134,739 | - | - |
| income | | | | |
+-----------+-----------+---------+------------+----------+
| Financial | 1,297,504 | 145,399 | 2,718,568 | 989,110 |
| Income | | | | |
+-----------+-----------+---------+------------+----------+
3.6 Financial Expenses
+------------+-----------+---------+-------------+---------+
| | Year ended 31 | Period ended 31 |
| | March 2010 | March 2009 |
+------------+---------------------+-----------------------+
| | Group |Company | Group |Company |
| | GBP | GBP | GBP | GBP |
+------------+-----------+---------+-------------+---------+
| Interest | | | (1,355,020) | - |
| on short | | | | |
| term | (186,753) | (1,230) | | |
| borrowings | | | | |
| and Other | | | | |
| financing | | | | |
| costs | | | | |
+------------+-----------+---------+-------------+---------+
| Interest | (362,302) | - | (851,718) | - |
| on bank | | | | |
| borrowings | | | | |
+------------+-----------+---------+-------------+---------+
| Loss | (105,406) | - | - | - |
| on | | | | |
| sale | | | | |
| of | | | | |
| Mutual | | | | |
| Funds | | | | |
+------------+-----------+---------+-------------+---------+
| Financial | (654,461) | (1,230) | (2,206,738) | - |
| Expenses | | | | |
+------------+-----------+---------+-------------+---------+
3.7 Income Tax Expense
+-------------+-------------+---------+-----------+---------+
| | Year ended 31 | Period ended 31 |
| | March 2010 | March 2009 |
| | | |
+-------------+-----------------------+---------------------+
| | Group |Company | Group |Company |
| | GBP | GBP | | GBP |
| | | | GBP | |
+-------------+-------------+---------+-----------+---------+
| Current | | | | |
| tax | | | | |
| expense | | | | |
+-------------+-------------+---------+-----------+---------+
| Current | (1,416,412) | - | (870,849) | - |
| tax | | | | |
+-------------+-------------+---------+-----------+---------+
| Deferred | | | | |
| tax | | | | |
| expense | | | | |
+-------------+-------------+---------+-----------+---------+
| Origination | (15,926) | - | (126,558) | - |
| and | | | | |
| reversal of | | | | |
| temporary | | | | |
| differences | | | | |
+-------------+-------------+---------+-----------+---------+
| Total | (1,432,338) | - | (997,407) | - |
| income | | | | |
| tax | | | | |
| expense | | | | |
| of the | | | | |
| year / | | | | |
| period | | | | |
+-------------+-------------+---------+-----------+---------+
Reconciliation of Tax rates:
+-------------+-------------+-------------+
| | Year | Period |
| | ended | ended |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+-------------+-------------+-------------+
| | Group | Group |
| | | GBP |
| | GBP | |
+-------------+-------------+-------------+
| Profit | 5,449,843 | 6,330,216 |
| before | | |
| tax | | |
+-------------+-------------+-------------+
| Indian | 33.99% | 33.99% |
| corporate | | |
| income | | |
| tax rate | | |
+-------------+-------------+-------------+
| Income | (1,852,402) | (2,151,640) |
| tax at | | |
| standard | | |
| rate | | |
+-------------+-------------+-------------+
| Differences | 420,064 | 1,154,233 |
| on account | | |
| of items | | |
| taxed at | | |
| zero/lower | | |
| rates | | |
+-------------+-------------+-------------+
| Tax | 1,432,338 | 997,407 |
| charge | | |
+-------------+-------------+-------------+
The item "Differences on account of items taxed at zero/lower rates" in the
above table represents the difference between notional Indian income tax at
standard rate (not applicable to the Company and the Cyprus subsidiaries) on the
consolidated profits before tax and the actual tax liability of the Indian
subsidiaries.
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 Company's
operations are entirely based in India, the effective tax rate of the Group has
been computed based on the current tax rates prevailing in India. Further, a
substantial portion of the profits of the Group's India operations are exempt
from Indian income taxes being profits attributable to generation of power in
India. Under the tax holiday the taxpayer can utilize an exemption from income
taxes for a period of any ten consecutive years out of the fifteen years of
commencement of the operations. The Group is subject to the provisions of
Minimum Alternate Tax ('MAT') under the Indian Income taxes for the year ended
31 March 2010 and 2009. Accordingly, the Group calculated the tax liability for
current taxes in India after considering MAT. The MAT Credit as at March 31,
2010 is GBP 1.67 million and a 100% valuation allowance has been considered on a
prudent basis. However, the Indian entities can avail credit of the MAT paid
against future tax liabilities and can carry forward and set off within ten
years from the end of the financial year in which MAT is paid.
3.7.1 Deferred Tax Assets and Liabilities
Recognized deferred tax assets and liabilities of the Group
Deferred tax assets and liabilities of the Group are attributable to the
following:
+----------------------+--------+--------+-----------+-----------+
| | Assets | Liabilities |
| | | |
+ +-----------------+-----------------------+
| | As at | As at | As at | As at |
| | 31 | 31 | 31 | 31 |
| | March | March | March | March |
| | 2010 | 2009 | 2010 | 2009 |
| | (GBP) | (GBP) | (GBP) | (GBP) |
+----------------------+--------+--------+-----------+-----------+
| | | | | |
+----------------------+--------+--------+-----------+-----------+
| Property, | - | - | (514,235) | (446,451) |
| plant and | | | | |
| equipment | | | | |
+----------------------+--------+--------+-----------+-----------+
| Fair | 51,505 | 60,909 | - | - |
| valuation | | | | |
| of AVS | | | | |
| securities | | | | |
+----------------------+--------+--------+-----------+-----------+
| Net | 51,505 | 60,909 | (514,235) | (446,451) |
| tax | | | | |
| assets/(liabilities) | | | | |
+----------------------+--------+--------+-----------+-----------+
Movement in temporary differences during the year
+----------------------+-----------+------------+------------+-------------+-----------+
| | As at |Recognised |Recognised |Translation | As at |
| | 1 | in income | in equity | adjustment | 31 |
| | April | statement | | | March |
| | 2009 | | | | 2010 |
+----------------------+-----------+------------+------------+-------------+-----------+
| | | | | | |
+----------------------+-----------+------------+------------+-------------+-----------+
| Property, | (446,451) | (15,927) | - | (51,857) | (514,235) |
| plant and | | | | | |
| equipment | | | | | |
+----------------------+-----------+------------+------------+-------------+-----------+
| MTM | 60,909 | - | (7,482) | (1,922) | 51,505 |
| gain / | | | | | |
| (loss) | | | | | |
| on AVS | | | | | |
+----------------------+-----------+------------+------------+-------------+-----------+
| | | | | | |
+----------------------+-----------+------------+------------+-------------+-----------+
| Deferred | (385,542) | (15,927) | (7,482) | (53,779) | (462,730) |
| tax | | | | | |
| assets/(liabilities) | | | | | |
+----------------------+-----------+------------+------------+-------------+-----------+
+----------------------+-----------+------------+------------+-------------+-----------+
| | As at |Recognised |Recognised |Translation | As at |
| | 1 | in income | in equity | adjustment | 31 |
| | April | statement | | | March |
| | 2008 | | | | 2009 |
+----------------------+-----------+------------+------------+-------------+-----------+
| | | | | | |
+----------------------+-----------+------------+------------+-------------+-----------+
| Property, | (290,095) | (126,558) | - | (29,798) | (446,451) |
| plant and | | | | | |
| equipment | | | | | |
+----------------------+-----------+------------+------------+-------------+-----------+
| MTM | - | - | (5,702) | 66,611 | 60,909 |
| gain / | | | | | |
| (loss) | | | | | |
| on AVS | | | | | |
+----------------------+-----------+------------+------------+-------------+-----------+
| | | | | | |
+----------------------+-----------+------------+------------+-------------+-----------+
| Deferred | (290,095) | (126,558) | (5,702) | 36,813 | (385,542) |
| tax | | | | | |
| assets/(liabilities) | | | | | |
+----------------------+-----------+------------+------------+-------------+-----------+
3.8 Property, Plant and Equipment
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+--------+----------+
| | Land | Building | Plant | Furniture | Office | Vehicles | Computer | Total | |
| | | | and | and | Equipments | | | | |
| | | | machinery | fixtures | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+--------+----------+
| Gross Block | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| As of 1 April | 6,758,646 | 985,993 | 7,675,718 | 13,130 | 26,342 | 124,063 | 7,810 | 15,591,702 |
| 2009 | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| Additions | 974,219 | - | 30,664 | 10,656 | 16,643 | 25,414 | 15,932 | 1,073,528 |
| during the | | | | | | | | |
| year | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| Disposals | - | - | (145,870) | - | - | (17,983) | - | (163,853) |
| during the | | | | | | | | |
| year | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| Exchange | 626,327 | 83,550 | 710,692 | 1,217 | 1,192 | 11,497 | 1,972 | 1,436,447 |
| Adjustment | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| As at 31 March | 8,359,192 | 1,069,543 | 8,271,204 | 25,003 | 44,177 | 142,991 | 25,714 | 17,937,824 |
| 2010 | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| Accumulated | | | | | | | | |
| depreciation | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| As of 1 April | - | 159,867 | 1,833,000 | 3,436 | 12,567 | 22,391 | 3,534 | 2,034,795 |
| 2009 | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| Depreciation / | - | 24,948 | 555,440 | 3,328 | 10,748 | 26,200 | 4,660 | 625,324* |
| impairment | | | | | | | | |
| during the | | | | | | | | |
| year | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| Disposals | - | - | (5,600) | - | - | (13,187) | - | (18,787) |
| during the | | | | | | | | |
| year | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| Exchange | - | 22,988 | 96,086 | 727 | 2,313 | 3,674 | 1,070 | 126,858 |
| Adjustment | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| As at 31 March | - | 207,803 | 2,478,926 | 7,491 | 25,628 | 39,078 | 9,264 | 2,768,190 |
| 2010 | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| Net book value | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+-------------------+
| As of 31 March | 8,359,192 | 861,740 | 5,792,278 | 17,512 | 18,549 | 103,913 | 16,450 | 15,169,634 |
| 2010 | | | | | | | | |
+----------------+-----------------+---------------+-------------------+-------------------+----------------------+-------------------+----------------------+--------+----------+
* Depreciation of GBP 429,863 for the year on Plant & Machinery relating to OPG
Energy Private Limited has been included within Cost of power Generation.
+----------------+------------+----------+------------+-----------+------------+-----------+----------+-------+----------+
| | Land |Building | Plant |Furniture | Office | Vehicles |Computer |Total | |
| | | | and | and |Equipments | | | | |
| | | | machinery | fixtures | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+-------+----------+
| Gross Block | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| As of 1 April | 215,628 | 961,777 | 6,683,629 | 4,347 | 23,640 | 15,332 | - | 7,904,353 |
| 2008 | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| Additions | 6,666,028 | - | 501,252 | 8,521 | 1,433 | 107,605 | 7,810 | 7,298,032 |
| during the | | | | | | | | |
| year | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| Disposals | (84,489) | - | - | - | - | - | - | (89,872) |
| during the | | | | | | | | |
| year | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| Exchange | (38,521 ) | 24,216 | 490,837 | 262 | 1,269 | 1,126 | - | 479,189 |
| Adjustment | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| As at 31 March | 6,758,646 | 985,993 | 7,675,718 | 13,130 | 26,342 | 124,063 | 7,810 | 15,591,702 |
| 2009 | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| Accumulated | | | | | | | | |
| depreciation | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| As of 1 April | - | 122,801 | 1,364,112 | 907 | 4,918 | 5,833 | - | 1,498,571 |
| 2008 | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| Depreciation | - | 25,989 | 344,071 | 2,414 | 6,899 | 15,923 | 3,534 | 398,830# |
| during the | | | | | | | | |
| year | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| Exchange | - | 11,077 | 124,817 | 115 | 750 | 635 | - | 137,394 |
| Adjustment | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| As at 31 March | - | 159,867 | 1,833,000 | 3,436 | 12,567 | 22,391 | 3,534 | 2,034,795 |
| 2009 | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| Net book value | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+------------------+
| As of 31 March | 6,758,646 | 826,126 | 5,842,718 | 9,694 | 13,775 | 101,672 | 4,276 | 13,556,907 |
| 2009 | | | | | | | | |
+----------------+------------+----------+------------+-----------+------------+-----------+----------+-------+----------+
# Depreciation of GBP 343,879 for the year on Plant & Machinery relating to OPG
Energy Private Limited has been included within Cost of power Generation.
3.8.2 Assets pledged as Security
At 31 March 2010, properties with a carrying amount of GBP 15.16 Million are
secured against the Group's immoveable assets, present and future, including the
property, plant and equipment. These loans are further secured by a floating
charge on the movable assets and by the personal guarantee of a Director.
In addition OPG Energy has availed a bank facility against its receivables which
is secured by a first floating charge on its receivables and current assets and
by a second charge on the immovable assets of the Company. In addition, this
facility is guaranteed by two Directors of OPG Energy and by Mr. Ravi Gupta,
relative of a Key Managerial Person.
3.9 Capital Work In Progress
+--------------+------------+---------+------------+---------+
| | As at 31 March | As at 31 March |
| | 2010 | 2009 |
+--------------+----------------------+----------------------+
| | Group |Company | Group |Company |
| | GBP | GBP | GBP | GBP |
+--------------+------------+---------+------------+---------+
| Plant | 31,045,394 | - | 17,111,103 | - |
| & | | | | |
| Machinery | | | | |
+--------------+------------+---------+------------+---------+
| Civil | 10,078,070 | - | 7,519,000 | - |
| & | | | | |
| Foundation | | | | |
+--------------+------------+---------+------------+---------+
| Interest | 4,189,400 | - | 1,016,905 | - |
| Paid on | | | | |
| bank | | | | |
| borrowings | | | | |
+--------------+------------+---------+------------+---------+
| Electrical | 4,059,549 | - | 2,967,444 | - |
| Installation | | | | |
+--------------+------------+---------+------------+---------+
| Others | 474,744 | - | 560,203 | - |
+--------------+------------+---------+------------+---------+
| TOTAL | 49,847,157 | - | 29,174,655 | - |
+--------------+------------+---------+------------+---------+
3.10 Capital Advances
Capital advances of GBP21,160,152 (GBP6,705,770) include advance for capital
goods amounting to GBP20,486,837 (GBP6,632,416) and other advances.
3.11 Other Non-Current Assets
+----------+-----------+---------+-----------+---------+
| | As at 31 March | As at 31 March |
| | 2010 | 2009 |
+----------+---------------------+---------------------+
| | Group |Company | Group |Company |
| | GBP | GBP | GBP | GBP |
+----------+-----------+---------+-----------+---------+
| Prepaid | 3,618,405 | 7,887 | 3,525,784 | 5,000 |
| Expenses | | | | |
+----------+-----------+---------+-----------+---------+
| Lease | 961,213 | - | 790,734 | - |
| Deposit | | | | |
+----------+-----------+---------+-----------+---------+
| Others | 890,639 | - | - | - |
+----------+-----------+---------+-----------+---------+
| TOTAL | 5,470,257 | 7,887 | 4,316,518 | 5,000 |
+----------+-----------+---------+-----------+---------+
3.12 Trade and Other Receivables / Other Current Assets
Other Current Assets includes prepaid expenses, staff advances, advance to
suppliers etc. The carrying amounts detailed above are the maximum potential
credit exposure in relation to these assets.
+-------------+-----------+------------+------------+-------------+
| | As at 31 March | As at 31 March |
| | 2010 | 2009 |
+-------------+------------------------+--------------------------+
| | Group | Company | Group | Company |
| | GBP | GBP | GBP | GBP |
+-------------+-----------+------------+------------+-------------+
| Trade | 3,089,084 | 274,265 | 1,400,329 | 13,213 |
| receivables | | | | |
+-------------+-----------+------------+------------+-------------+
| Other | | | | |
| Current | | | | |
| Assets | | | | |
+-------------+-----------+------------+------------+-------------+
| Short | 3,452,529 | 61,143,636 | 882,938 | 67,386,189 |
| term | | | | |
| loans | | | | |
+-------------+-----------+------------+------------+-------------+
| Mutual | 3,002,282 | - | - | - |
| Funds | | | | |
| redemption | | | | |
| receivable | | | | |
+-------------+-----------+------------+------------+-------------+
| Dividend | 151,052 | - | 835,151 | - |
| & | | | | |
| Interest | | | | |
| receivable | | | | |
+-------------+-----------+------------+------------+-------------+
| Other | 209,237 | - | 2,551,888 | - |
| receivables | | | | |
+-------------+-----------+------------+------------+-------------+
| Other | 298,414 | 1,459 | 960,771 | - |
| Current | | | | |
| Assets | | | | |
+-------------+-----------+------------+------------+-------------+
| TOTAL | 7,113,514 | 61,145,095 | 5,230,748 | 67,386,189 |
+-------------+-----------+------------+------------+-------------+
3.13 Inventories
+--------+-----------+---------+---------+---------+
| | As at 31 March | As at 31 March |
| | 2010 | 2009 |
+--------+---------------------+-------------------+
| | Group |Company | Group |Company |
| | GBP | GBP | GBP | GBP |
+--------+-----------+---------+---------+---------+
| Stock | 1,726,409 | - | - | - |
| of | | | | |
| Coal | | | | |
+--------+-----------+---------+---------+---------+
| Stock | 414,506 | - | 41,711 | - |
| of | | | | |
| Stores | | | | |
| and | | | | |
| Spares | | | | |
+--------+-----------+---------+---------+---------+
| | | | | |
+--------+-----------+---------+---------+---------+
| TOTAL | 1,867,915 | - | 41,711 | - |
+--------+-----------+---------+---------+---------+
3.14 Financial Assets
+-----------+------------+---------+------------+---------+
| | As at 31 March | As at 31 March |
| | 2010 | 2009 |
+-----------+----------------------+----------------------+
| | Group |Company | Group |Company |
| | GBP | GBP | GBP | GBP |
+-----------+------------+---------+------------+---------+
| Available | | - | 8,478,766 | - |
| for Sale | 12,977,604 | | | |
| Financial | | | | |
| Assets | | | | |
+-----------+------------+---------+------------+---------+
| | | | | |
+-----------+------------+---------+------------+---------+
| TOTAL | 12,977,604 | - | 8,478,766 | - |
+-----------+------------+---------+------------+---------+
Available for Sale Financial Assets
Available for Sale financial assets, represents investments that present the
Group with the opportunity for return through dividend income and gains.
Funds raised in the Initial Public Offer and contributed as equity in three of
the subsidiaries - OPG Power Generation Pvt Ltd and OPG Power Gujarat Pvt Ltd
and Gita Power and Infrastructure Pvt Ltd were, to the extent not immediately
required for the project, deployed in deposits with banks and (in) units of
(Regulated, supervised) mutual funds.
3.15 Cash and Cash Equivalents
+-------------+--------------------------+-----------+--------------------------+-----------+
| | As at 31 March | As at 31 March |
| | 2010 | 2009 |
+-------------+--------------------------------------+--------------------------------------+
| | Group | Company | Group | Company |
| | | GBP | | GBP |
| | GBP | | GBP | |
+-------------+--------------------------+-----------+--------------------------+-----------+
| Cash | 3,786 | - | 44,669 | - |
+-------------+--------------------------+-----------+--------------------------+-----------+
| Cash | 7,355,871 | 7,072,048 | 10,290,078 | 4,039,991 |
| at | | | | |
| Bank | | | | |
+-------------+--------------------------+-----------+--------------------------+-----------+
| Cheques | - | - | 157,891 | - |
| on hand | | | | |
+-------------+--------------------------+-----------+--------------------------+-----------+
| Fixed | 6,808,796 | - | 21,827,204 | - |
| Deposits | | | | |
+-------------+--------------------------+-----------+--------------------------+-----------+
| Cash | 14,168,453 | 7,072,048 | 32,319,842 | 4,039,991 |
| and | | | | |
| cash | | | | |
| equivalents | | | | |
+-------------+--------------------------+-----------+--------------------------+-----------+
| Restricted | 1,481,894 | - | 1,403,126 | - |
| Cash | | | | |
+-------------+--------------------------+-----------+--------------------------+-----------+
Restricted cash of GBP 1,481,894 (GBP1,403,126) represents bank deposits,
including accrued interest, of varying maturities extending beyond two years,
all of which are under lien to the Group's bankers.
3.16 Share Capital
The Company is incorporated under the Isle of Man Companies Act 2006 (CA 2006)
which does not prescribe that a company shall have an authorized share capital.
Rather, subject to CA 2006 and to the Memorandum and Articles of Association,
shares in a company may be issued at such times and to such persons, for such
consideration and on such terms as its directors may determine.
Certain companies had invested in the Company prior to Admission at the Placing
Price (the "Pre IPO Monies").
The issue price at listing was Pence 60 per Ordinary share for the issue of
108,418,367 new Ordinary Shares raising GBP 65.10 Million before issue expenses.
286,989,795 shares are outstanding as at March 31, 2010 and 2009 which includes
170,068,027 shares to Promoters, 8,503,401 for cash pre IPO and 108,418,367
shares for cash as initial public offering.
Issued capital as at March 31, 2010 and 2009 amounts to GBP42,187.
3.17 Earnings per share
+--------------+-----------+-------------+------------+-----------+
| Profit | Year | Year | Period | Period |
| attributable | ended | ended | ended | ended |
| to ordinary | 31 | 31 | 31 | 31 |
| shareholders | March | March | March | March |
| | 2010 | 2010 | 2009 | 2009 |
+--------------+-----------+-------------+------------+-----------+
| | Group | Company | Group | Company |
| | GBP | GBP | GBP | GBP |
+--------------+-----------+-------------+------------+-----------+
| Profit | 4,017,505 | (1,547,488) | 5,332,809 | 1,270,522 |
| for | | | | |
| the | | | | |
| year | | | | |
+--------------+-----------+-------------+------------+-----------+
| Profit | 926,473 | (1,547,488) | 3,309,434 | 1,270,522 |
| attributable | | | | |
| to ordinary | | | | |
| shareholders | | | | |
+--------------+-----------+-------------+------------+-----------+
| | | | | |
+--------------+-----------+-------------+------------+-----------+
+-----------------------+-------------+-------------+--------------+--------------+
| | Year | Year | Period | Period |
| | ended | ended | ended | ended |
| | 31 | 31 | 31 | 31 |
| | March | March | March | March |
| | 2010 | 2010 | 2009 | 2009 |
+-----------------------+-------------+-------------+--------------+--------------+
| Weighted | 286,989,795 | 286,989,795 | 267,502,834 | 267,502,834 |
| average | | | | |
| number | | | | |
| of | | | | |
| ordinary | | | | |
| shares | | | | |
| (Basic) | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| Profit | | | | |
| attributable | | | | |
| to ordinary | | | | |
| shareholders(diluted) | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| | Year | Year | Period | Period |
| | ended | ended | ended | ended |
| | 31 | 31 | 31 | 31 |
| | March | March | March | March |
| | 2010 | 2010 | 2009 | 2009 |
+-----------------------+-------------+-------------+--------------+--------------+
| | GBP | GBP | GBP | GBP |
+-----------------------+-------------+-------------+--------------+--------------+
| Profit | 926,473 | (1,547,488) | 3,309,434 | 1,270,522 |
| attributable | | | | |
| to ordinary | | | | |
| shareholders | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| Profit | 926,473 | (1,547,488) | 3,309,434 | 1,270,522 |
| attributable | | | | |
| to ordinary | | | | |
| shareholders(diluted) | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| Weighted | | | | |
| average | | | | |
| number | | | | |
| of | | | | |
| ordinary | | | | |
| shares | | | | |
| (diluted) | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| | Year | Year | Period | Period |
| | ended | ended | ended | ended |
| | 31 | 31 | 31 | 31 |
| | March | March | March | March |
| | 2010 | 2010 | 2009 | 2009 |
+-----------------------+-------------+-------------+--------------+--------------+
| Weighted | 286,989,795 | 286,989,795 | 267,502,834 | 267,502,834 |
| average | | | | |
| number | | | | |
| of | | | | |
| ordinary | | | | |
| shares | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| Shares | 4,383,911 | 4,383,911 | - | - |
| deemed | | | | |
| to be | | | | |
| issued | | | | |
| for no | | | | |
| consideration | | | | |
| in respect of | | | | |
| stock options | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| Weighted | 291,373,706 | 291,373,706 | 267,502,834 | 267,502,834 |
| average | | | | |
| number | | | | |
| of | | | | |
| ordinary | | | | |
| shares(diluted) | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| Basic | 0.323 | (0.539) | 1.237 | 0.475 |
| EPS ( | | | | |
| In | | | | |
| Pence) | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
| Diluted | 0.318 | (0.539)* | 1.237 | 0.475 |
| EPS ( | | | | |
| In | | | | |
| Pence) | | | | |
+-----------------------+-------------+-------------+--------------+--------------+
* Anti dilutive
3.17.1 Employee Stock Option Issued to Directors -On 16 July 2009, Board has
granted share options which are limited to 10% of the Group's Share
Capital(Presently 28,698,979 shares). Once granted, options must be exercised
within ten years of the date of grant otherwise the options lapse.
The Vesting of these options is based on following conditions:
1) The power plant at Kutch (2x150MW) in the State of Gujarat must have been in
commercial operation for three months.
2) The closing share price being at least GBP1.00 for 3 consecutive business
days.
Under IFRS 2 - Share Based Payments, these outstanding options being in the
nature of share based payment, are amortized over the estimated vesting period
of 3.71 years (expected completion of Kutch Plant - Gujarat by April 2013).
Accordingly, the attributable period expense was GBP 1,206,959.
3.17.2 Fair value of share options granted in the year
The weighted average fair value of the share options granted during the
financial year is GBP0.28. Options were
priced using a Black Scholes Model - European Option. Where relevant, the
expected life used in the model has been adjusted based on management's best
estimate for the effects of non-transferability, exercise restrictions
(including the probability of meeting market conditions attached to the option),
and behavioral considerations. Expected volatility is based on the historical
share price volatility.
Assumptions
+--------------------------------+-----------+
| Grant date share price | GBP0.66 |
+--------------------------------+-----------+
| Exercise price | GBP0.60 |
+--------------------------------+-----------+
| Expected volatility | 31.34% |
+--------------------------------+-----------+
| Option life |6.86years |
+--------------------------------+-----------+
| Dividend yield | 0% |
+--------------------------------+-----------+
| Risk-free interest rate | 3.04% |
+--------------------------------+-----------+
| Option Fair Value | GBP0.28 |
+--------------------------------+-----------+
3.17.3 Movements in shares options during the year
The following reconciles the share options outstanding at the beginning and end
of the year
+--------------------------------+------------+
| | Number |
| | of |
| | Options |
+--------------------------------+------------+
| Balance at beginning of year | - |
+--------------------------------+------------+
| Granted during the year(at an |22,524,234 |
| exercise price of GBP0.60) | |
+--------------------------------+------------+
| Forfeited during the year | - |
+--------------------------------+------------+
| Exercised during the year | - |
+--------------------------------+------------+
| Expired during the year | - |
+--------------------------------+------------+
| Balance at end of year |22,524,234 |
+--------------------------------+------------+
3.18 Interest Bearing Loans and Bank Borrowings
+-------------+------------+---------+-------------+---------+
| | As at | As at | As at | As at |
| | 31 | 31 | March | March |
| | March | March | 2009 | 2009 |
| | 2010 | 2010 | | |
+-------------+------------+---------+-------------+---------+
| | Group |Company | Group |Company |
| | GBP | GBP | GBP | GBP |
+-------------+------------+---------+-------------+---------+
| Non | | | | |
| -Current | | | | |
| liabilities | | | | |
+-------------+------------+---------+-------------+---------+
| Bank | 30,800,245 | - | 19,967,353 | - |
| borrowings | | | | |
+-------------+------------+---------+-------------+---------+
| | 30,800,245 | - | 19,967,353 | - |
+-------------+------------+---------+-------------+---------+
| Current | | | | |
| liabilities | | | | |
+-------------+------------+---------+-------------+---------+
| Current | 3,882,815 | - | 2,481,114 | - |
| portion | | | | |
| of bank | | | | |
| borrowings | | | | |
+-------------+------------+---------+-------------+---------+
| | 3,882,815 | - | 2,481,114 | - |
+-------------+------------+---------+-------------+---------+
| Total | 34,683,060 | - | 22,448,467 | - |
| Borrowings | | | | |
+-------------+------------+---------+-------------+---------+
| | As at | As at | As at | As at |
| | 31 | 31 | March | March |
| | March | March | 2009 | 2009 |
| | 2010 | 2010 | | |
+-------------+------------+---------+-------------+---------+
| | Group |Company | Group |Company |
| | GBP | GBP | GBP | GBP |
+-------------+------------+---------+-------------+---------+
| The | | | | |
| borrowings | | | | |
| are | | | | |
| repayable | | | | |
| as | | | | |
| follows: | | | | |
+-------------+------------+---------+-------------+---------+
| On | 3,882,815 | - | 2,481,114 | - |
| demand | | | | |
| or | | | | |
| within | | | | |
| one | | | | |
| year | | | | |
+-------------+------------+---------+-------------+---------+
| In the | 10,677,786 | - | 5,798,783 | - |
| second | | | | |
| year | | | | |
+-------------+------------+---------+-------------+---------+
| In the | 19,058,181 | - | 14,168,570 | - |
| third | | | | |
| to | | | | |
| fifth | | | | |
| years | | | | |
| inclusive | | | | |
+-------------+------------+---------+-------------+---------+
| After | 1,064,278 | - | - | - |
| five | | | | |
| years | | | | |
+-------------+------------+---------+-------------+---------+
| | 34,683,060 | - | 22,448,467 | - |
+-------------+------------+---------+-------------+---------+
3.19 Financial Instruments
3.19.1 Financial risk factors
(a) The Group's activities expose it to a variety of financial risks; market
risk (for example, currency risk) interest rate risk and liquidity risk. The
Group's overall risk management programme places stress on the unpredictability
of financial markets and seeks to minimize potential adverse effects on the
Group's financial performance. The financial instruments of the Group, other
than derivatives, comprise loans from banks and financial institutions,
nonconvertible bonds, demand deposits and short-term bank deposits.
(b) Financial risk management objectives
The Finance Director and Managing Director of the Group, co-ordinate access to
domestic and international financial markets, monitor and manage the financial
risks relating to the operations of the Company through internal risk reports
which analyse exposures by degree and magnitude of risks. These risks include
fair value interest rate risk component of market risk, credit risk, liquidity
risk and cash flow interest rate risk.
The Company does not seek to manage fair value interest rate risk and cash flow
interest rate risk on its fixed and floating borrowings, as these risks are
managed at the Group level. The company does not enter into any financial
derivative contracts. The Company follows Group's policies approved by the board
of directors, which provide written principles on, interest rate risk, credit
risk, the use of non-derivative financial instruments, and the investment of
excess liquidity. Compliance with policies and exposure limits is reviewed by
the internal auditors on a continuous basis. The Company does not enter into or
trade financial instruments, including derivative financial instruments, for
speculative purposes.
3.19.2 Market risk
(a) Foreign Exchange Risk
The Group prepares consolidated financial statements in UK Pounds and conducts
substantially all its business in Indian rupees ('INR'). As a result, it is
subject to foreign currency exchange risk arising from exchange rate movements
which will affect the Group's translation of the results and underlying net
assets of its foreign Subsidiaries.
(b) Cash flow and fair value interest rate risk
As the Group has no significant interest-bearing assets other than investment in
bank deposits, the Group's income and operating cash flows are substantially
independent of changes in market interest rates. The Company considers that the
impact of fair value interest rate risk on investment in bank deposits is not
material. The Group's interest rate risk arises from long-term borrowings.
Borrowings issued at variable rates expose the Group to cash flow interest rate
risk. Borrowings issued at fixed rates expose the Group to fair value interest
rate risk. During the period, the Group's borrowings at variable or fixed rates
were entirely denominated in the functional currency of its Indian entities,
being INR.
+-------------+------------+------------+------------+-----------+------------+
| | As at 31 March 2010 (GBP) |
+-------------+---------------------------------------------------------------+
| | On | 1 -5 | More | Effective | Total |
| | demand | years | than 5 | interest | |
| | Less | | years | rate | |
| | than 1 | | | | |
| | year | | | | |
+-------------+------------+------------+------------+-----------+------------+
| | | | | | |
+-------------+------------+------------+------------+-----------+------------+
| Financial | | | | | |
| assets | | | | | |
+-------------+------------+------------+------------+-----------+------------+
| Cash | 14,168,453 | - | - | - | 14,168,453 |
| and | | | | | |
| bank | | | | | |
| balances | | | | | |
+-------------+------------+------------+------------+-----------+------------+
| Trade | 10,202,598 | - | - | - | 10,202,598 |
| and | | | | | |
| other | | | | | |
| receivables | | | | | |
+-------------+------------+------------+------------+-----------+------------+
| | 24,371,051 | - | - | - | 24,371,051 |
+-------------+------------+------------+------------+-----------+------------+
| | | | | | |
+-------------+------------+------------+------------+-----------+------------+
| Financial | | | | | |
| Liabilities | | | | | |
+-------------+------------+------------+------------+-----------+------------+
| Rupee | 3,882,815 | 29,735,967 | 1,064, 278 | 12.00% | 34,683,060 |
| floating | | | | | |
| rate | | | | | |
| loan | | | | | |
+-------------+------------+------------+------------+-----------+------------+
| Trade | 6,757,099 | - | - | | 6,757,099 |
| and | | | | | |
| other | | | | | |
| payables | | | | | |
+-------------+------------+------------+------------+-----------+------------+
| | 10,639,914 | 29,735,967 | 1,064, 278 | | 41,440,159 |
+-------------+------------+------------+------------+-----------+------------+
+-------------+-------------+-------------+--------+-----------+-------------+
| | As at 31 March 2009 (GBP) |
+-------------+--------------------------------------------------------------+
| | On | 1 -5 | More | Effective | Total |
| | demand | years | than 5 | interest | |
| | Less | | years | rate | |
| | than 1 | | | | |
| | year | | | | |
+-------------+-------------+-------------+--------+-----------+-------------+
| | | | | | |
+-------------+-------------+-------------+--------+-----------+-------------+
| Financial | | | | | |
| assets | | | | | |
+-------------+-------------+-------------+--------+-----------+-------------+
| Cash | 33,722,968 | - | - | - | 33,722,968 |
| and | | | | | |
| bank | | | | | |
| balances | | | | | |
+-------------+-------------+-------------+--------+-----------+-------------+
| Trade | 6,631,077 | - | - | - | 6,631,077 |
| and | | | | | |
| other | | | | | |
| receivables | | | | | |
+-------------+-------------+-------------+--------+-----------+-------------+
| | 40,354,045 | - | - | - | 40,354,045 |
+-------------+-------------+-------------+--------+-----------+-------------+
| | | | | | |
+-------------+-------------+-------------+--------+-----------+-------------+
| Financial | | | | | |
| Liabilities | | | | | |
+-------------+-------------+-------------+--------+-----------+-------------+
| Bank | | | | | |
| Borrowings: | | | | | |
+-------------+-------------+-------------+--------+-----------+-------------+
| Rupee | 2,481,114 | 19,967,353 | - | 12.04% | 22,448,467 |
| floating | | | | | |
| rate | | | | | |
| loan | | | | | |
+-------------+-------------+-------------+--------+-----------+-------------+
| Trade | 859,733 | - | - | | 859,733 |
| and | | | | | |
| other | | | | | |
| payables | | | | | |
+-------------+-------------+-------------+--------+-----------+-------------+
| | 3,340,847 | 19,967,353 | - | | 23,308,200 |
+-------------+-------------+-------------+--------+-----------+-------------+
The carrying amount reflected above represents the Company's maximum exposure to
credit risk for such loans and receivables.
(c) Credit risk
The Group's credit risk arises from accounts receivable balances on sale of
electricity. The Indian entities have entered into exclusive Power Purchase
Agreements (PPA's) with industrial buyers to export the entire electricity
generated. The Group is therefore committed to sell power to these customers and
regards any potential risk of default as being a commercial one. The Group is
paid monthly by the buyers for the electricity it supplies.
Credit risk refers to the risk that counterparty will default on its contractual
obligations resulting in financial loss to the Company. For cash and cash
equivalents the Company only transacts with entities that are rated the
equivalent to investment grade and above. Other financial assets consist of
amounts receivable from related parties. The company's exposure to significant
concentration of credit risk on receivables from related parties is detailed in
note 3.24.
The group has not entered into any derivative financial instruments during the
year and hence there is no credit risk exposure on derivatives
The table below shows the credit limit set by the group for and outstanding
deposits there against in respect of 2 major bank counterparties at the balance
sheet date using the Standard and Poor's credit rating symbols.
+-------------------+----------+-----------+-----------+-----------+-----------+-----------+
| | | |
| | As at 31 March | As at 31 March |
| | 2010 | 2009 |
| | | |
| | | |
+------------------------------------------+-----------------------+-----------------------+
| Counterparty | Location | Rating | Maximum | Deposits | Maximum | Deposits |
| | | | amount | as at | amount | as at |
| | | | that | year end | that | year end |
| | | | can be | | can be | |
| | | | deposited | | deposited | |
+-------------------+----------+-----------+-----------+-----------+-----------+-----------+
| | | | GBP | GBP | GBP | GBP |
+-------------------+----------+-----------+-----------+-----------+-----------+-----------+
| Punjab | India | Not | 6,000,000 | 5,334,814 | 4,500,000 | 2,836,435 |
| National | | Available | | | | |
| Bank | | | | | | |
+-------------------+----------+-----------+-----------+-----------+-----------+-----------+
| Indian | India | Not | - | - | 3,500,000 | 2,148,289 |
| Overseas | | Available | | | | |
| Bank | | | | | | |
+-------------------+----------+-----------+-----------+-----------+-----------+-----------+
| Indian | | Not | | 1,473,982 | - | - |
| Bank | India | Available | 3,500,000 | | | |
| | | | | | | |
+-------------------+----------+-----------+-----------+-----------+-----------+-----------+
(d) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash
equivalents and maintaining adequate credit facilities. In respect of its
existing operations the Group funds itself primarily through bank borrowings
secured against each power plant. The Group's objective in relation to its
existing operating business is to maintain sufficient funding to allow the
plants to operate at an optimal level and in particular purchase the necessary
raw materials required.
In respect of each plant under development, the Group prepares a model to
evaluate the necessary funding required. The Group's strategy is to primarily
fund such acquisitions by assuming debt in the development companies secured on
the power plant to be built. In relation to the payment towards equity component
of companies to be developed, the Group ordinarily seeks to fund this by the
injection of external funds by debt or equity.
The Group has identified a large range of development opportunities which it is
continually evaluating and which are subject to constant change. In respect of
its overall business the Group therefore does not, at the current time, maintain
any overall liquidity forecasts. The table below analyses the Group's financial
liabilities into relevant maturity groupings based on the remaining period at
the balance sheet to the contractual maturity date.
(e) Capital risk management
The Group's objective when managing capital is to safeguard the Group's ability
to continue as a going concern in order to provide returns for shareholders and
benefits for stakeholders. The Group also proposes to maintain an optimal
capital structure to reduce the cost of capital. Hence, the Group may adjust any
dividend payments, return capital to shareholders or issue new shares. Total
capital is the equity as shown in the consolidated balance sheet. Currently, the
Group primarily monitors its capital structure in terms of evaluating the
funding of potential developments. It plans to strike a balance between risks
and returns. Management is continuously evolving strategies to optimize the
returns and reduce the risks. It includes plans to optimize the financial
leverage of the Group.
The Group's debt of GBP 19,032,713 (net of Cash & Cash Equivalents of GBP
14,168,453 and restricted cash of GBP 1,481,894) represents a gearing of 23.56%
on a net debt basis.
(f) Interest rate risk management
The Company is exposed to interest rate risk as it borrows funds at both fixed
and floating interest rates. The risk is managed by the Company by maintaining
an appropriate mix between fixed and floating rate borrowings.
The Company's exposures to interest rates on financial assets and financial
liabilities are detailed in the liquidity risk management section of this note.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to
interest rates for non-derivative instruments at the balance sheet date. For
floating rate liabilities, the analysis is prepared assuming the amount of
liability outstanding at balance sheet date was outstanding for the whole year.
A 0.5 per cent increase or decrease is used when reporting interest rate risk
internally to key management personnel and represents management's assessment of
the reasonably possible change in interest rates.
+---------------+------------+------------+------------+------------+------------+------------+
| | Year ended 31 March 2010 | Period ended 31 March |
| | | 2009 |
+---------------+--------------------------------------+--------------------------------------+
| | As | +0.5% | -0.5% | As | +0.50% | -0.50% |
| | Reported | | | Reported | | |
+---------------+------------+------------+------------+------------+------------+------------+
| Net | 4,017,505 | 3,874,141 | 4,160,870 | 5,332,809 | 5,302,525 | 5,363,095 |
| result | | | | | | |
| for | | | | | | |
| the | | | | | | |
| year | | | | | | |
+---------------+------------+------------+------------+------------+------------+------------+
| Shareholder's | 80,768,909 | 80,625,545 | 80,912,273 | 72,811,083 | 72,798,479 | 72,825,129 |
| Equity | | | | | | |
+---------------+------------+------------+------------+------------+------------+------------+
(g) Fair value of financial instruments
Details of the methods of the determination of the fair values of the Company's
financial assets and financial liabilities are discussed in the note 2.7. The
carrying amount of financial assets and financial liabilities are recorded in
these financial statements at amortised cost which approximate their fair
values.
3.20 Employee Benefits
3.20.1 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 for a lump sum payment to vested
employees on retirement (subject to completion of five years of continuous
employment), death, incapacitation or termination of employment of amounts that
are based on salary and tenure of employment Liabilities with regard to the
Gratuity Plan are determined by actuarial valuation on the reporting date. The
following tables summarises the components of net benefit expense recognised in
the income statement and the funded status and amounts recognised in the balance
sheet for the plan:
+-------------+--------+--------+
| | As at | As at |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+-------------+--------+--------+
| | Group | Group |
| | GBP | GBP |
+-------------+--------+--------+
| | | |
+-------------+--------+--------+
| Present | 15,338 | 1,443 |
| value | | |
| of | | |
| unfunded | | |
| obligations | | |
+-------------+--------+--------+
| Recognised | 15,338 | 1,443 |
| liability | | |
| for | | |
| defined | | |
| benefit | | |
| obligations | | |
+-------------+--------+--------+
| Total | 15,338 | 1,443 |
| employee | | |
| benefit | | |
| liability | | |
+-------------+--------+--------+
3.20.2 Movements in the net liability for defined benefit obligations recognised
in the balance sheet
+-------------+---------+--------+
| | As at | As at |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+-------------+---------+--------+
| | Group | Group |
| | GBP | GBP |
+-------------+---------+--------+
| | | |
+-------------+---------+--------+
| Net | 1,443 | 1,570 |
| liability | | |
| for | | |
| defined | | |
| benefit | | |
| obligations | | |
| at 1 April | | |
+-------------+---------+--------+
| Expense | 16,142 | 746 |
| recognised | | |
| in the | | |
| income | | |
| statement | | |
| (see | | |
| below) | | |
+-------------+---------+--------+
| Actuarial | (3,885) | (973) |
| gains | | |
+-------------+---------+--------+
| Translation | 1,638 | 100 |
| adjustment | | |
+-------------+---------+--------+
| Net | 15,338 | 1,443 |
| liability | | |
| for | | |
| defined | | |
| benefit | | |
| obligations | | |
+-------------+---------+--------+
3.20.3 Employee benefits recognised in the balance sheet are as follows:
+-------------+--------+--------+
| | As at | As at |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+-------------+--------+--------+
| | Group | Group |
| | GBP | GBP |
+-------------+--------+--------+
| Non-current | 15,338 | 1,443 |
| employee | | |
| benefits | | |
+-------------+--------+--------+
| | 15,338 | 1,443 |
+-------------+--------+--------+
3.20.4 Employee benefits recognised in the income statement
+------------+---------+--------+
| | Year |Period |
| | ended | ended |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+------------+---------+--------+
| | Group | Group |
| | GBP | GBP |
+------------+---------+--------+
| | | |
+------------+---------+--------+
| Current | 15,643 | 645 |
| service | | |
| costs | | |
+------------+---------+--------+
| Interest | 499 | 101 |
| on | | |
| obligation | | |
+------------+---------+--------+
| Actuarial | (3,885) | (973) |
| gains | | |
+------------+---------+--------+
| | 12,257 | (227) |
+------------+---------+--------+
3.20.5 The above expense is recognised in the following line items in the
income statement:
+-------------------+---------+---------+
| | Year | Period |
| | ended | ended |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+-------------------+---------+---------+
| | Group | Group |
| | GBP | GBP |
+-------------------+---------+---------+
| | | |
+-------------------+---------+---------+
| Employee | 486 | (227) |
| Cost | | |
+-------------------+---------+---------+
| Pre-operative | 11,771 | - |
| expenses(Relating | | |
| to projects under | | |
| construction) | | |
+-------------------+---------+---------+
| | 12,257 | (227) |
+-------------------+---------+---------+
3.20.6 Liability for defined benefit obligations
Principal actuarial assumptions at the balance sheet date:
+------------+--------+--------+
| | As at | As at |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+------------+--------+--------+
| | Group | Group |
| | GBP | GBP |
+------------+--------+--------+
| | | |
+------------+--------+--------+
| Discount | 8% | 8% |
| rate at | | |
| 31 March | | |
+------------+--------+--------+
| Future | 15% | 15% |
| salary | | |
| increases | | |
+------------+--------+--------+
| Withdrawal | 10% | 10% |
| rate | | |
+------------+--------+--------+
3.20.7 Personnel costs
+--------------+-----------+-----------+-------------+---------+
| | Year | Year | Period | Period |
| | ended | ended | ended | ended |
| | 31 | 31 | 31 | 31 |
| | March | March | March | March |
| | 2010 | 2010 | 2009 | 2009 |
+--------------+-----------+-----------+-------------+---------+
| | Group | Company | Group |Company |
| | GBP | GBP | GBP | GBP |
+--------------+-----------+-----------+-------------+---------+
| | | | | |
+--------------+-----------+-----------+-------------+---------+
| Wages | 165,610 | 122,724 | 114,019 | 86,701 |
| and | | | | |
| salaries | | | | |
+--------------+-----------+-----------+-------------+---------+
| Increase | 486 | - | (227) | - |
| in | | | | |
| liability | | | | |
| for | | | | |
| defined | | | | |
| benefit | | | | |
| plans | | | | |
+--------------+-----------+-----------+-------------+---------+
| Share | 1,206,959 | 1,206,959 | - | - |
| based | | | | |
| compensation | | | | |
| Costs | | | | |
+--------------+-----------+-----------+-------------+---------+
| | 1,373,055 | 1,329,683 | 113,792 | 86,701 |
+--------------+-----------+-----------+-------------+---------+
3.21 Leases and Licences
One of the subsidiaries has taken land on lease for 30 years from 4 September
2006.
Plant and equipment of the 10 MW waste heat plant operated by OPG Renewable
Energy has been taken on a license agreement dated 26 April 2008, with effect
from 23 September 2008, for fifteen years (with an option to renew it for 15
more years), from Kanishk Steels, a related party. As a compensation for this
arrangement, the entity has committed to supply 9 Million units of power per
annum to Kanishk and only the power generated in excess of this commitment is
available for sale to external customers. The quantum of rental has been reduced
to 4.5 Million units per annum from 1 April 2009. An interest free refundable
lease deposit of INR 200 Million (equivalent to GBP 2.7 Million) has been paid
at the end of March 2009 by the entity to Kanishk as security deposit to
compensate for this reduction in rental. An amount of GBP 236,537 has been
charged to the Income statement being the rent for the period. For further
details, please refer to Note 2.17.
The total of future minimum lease payments under these non cancelable operating
leases for each of the following periods:
+---------+-----------+-----------+
| | As at | As at |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
| | (Group) | (Group) |
+---------+-----------+-----------+
| | Amount | Amount |
| | (GBP) | (GBP) |
+---------+-----------+-----------+
| Not | 236,537 | 79,053 |
| later | | |
| than | | |
| one | | |
| year | | |
+---------+-----------+-----------+
| One to | 946,149 | 818,105 |
| five | | |
| years | | |
+---------+-----------+-----------+
| Greater | 2,427,833 | 2,729,168 |
| than | | |
| five | | |
| years | | |
+---------+-----------+-----------+
3.22 Capital Commitments and Contingent liabilities
3.22.1 Bank Guarantees and Letters of credit
+-------------+-----------+---------+
|PARTICULARS | As at | As at |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+ +-----------+---------+
| | Group | Group |
+ +-----------+---------+
| | GBP | GBP |
+-------------+-----------+---------+
| Towards | 5,674,858 | 190,134 |
| outstanding | | |
| Letter of | | |
| Credit | | |
+-------------+-----------+---------+
| Towards | 7,814,483 | 812,891 |
| Counter | | |
| guarantees | | |
| furnished | | |
| to the | | |
| bank | | |
| outstanding | | |
| Bank | | |
| Guarantees | | |
+-------------+-----------+---------+
Company - Nil for both years
3.22.2 Estimated amount of contracts remaining to be executed on capital
contracts : (net of advances)
+-------------+--------------+-------------+
|PARTICULARS | As at | As at |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+ +--------------+-------------+
| | Group | Group |
+ +--------------+-------------+
| | GBP | GBP |
+-------------+--------------+-------------+
| Estimated | 142,629,414 | 127,332,911 |
| amount of | | |
| contracts | | |
| remaining | | |
| to be | | |
| executed | | |
| on | | |
| capital | | |
| contracts | | |
+-------------+--------------+-------------+
Company - Nil for both years
3.22.3 Claims against the group not acknowledged as debts
a. Towards additional demand of income tax for the assessment year 2007-08
GBP 428,514 against which appeal has been filed before appellate authorities. No
provision is considered necessary for these disputed demands, as the Company has
been legally advised of success in the appeal. Costs expected to be incurred is
also not material.
3.23 Related Parties
3.23.1 Key Management Personnel (KMP)
Arvind Gupta - Managing Director
V. Narayan Swami -Finance Director
3.23.2 List of Related Parties
+----------------+--------------+
| Name | Nature |
| of the | of |
| Related |Relationship |
| Party | |
+----------------+--------------+
| Gita | Holding |
| Investments | Company |
| Limited | of the |
| | entity |
+----------------+--------------+
| Arvind | Key |
| Gupta | Management |
| | Personnel |
| | of the |
| | entity |
+----------------+--------------+
| V. | Key |
| Narayan | Management |
| Swami | Personnel |
| | of the |
| | entity |
+----------------+--------------+
| Gita | Controlled |
| Energy | entity |
| Pvt | |
| Ltd | |
+----------------+--------------+
| Gita | Controlled |
| Holdings | entity |
| Pvt Ltd | |
+----------------+--------------+
| OPG | Step |
| Energy | down |
| private | Controlled |
| Limited | entity |
+----------------+--------------+
| OPG | Step |
| Power | down |
| Generation | Controlled |
| Private | entity |
| Limited | |
+----------------+--------------+
| OPG | Step |
| Renewable | down |
| Energy | Controlled |
| Private | entity |
| Limited | |
+----------------+--------------+
| OPG | Step |
| Power | down |
| Gujarat | Controlled |
| Private | entity |
| Limited | |
+----------------+--------------+
| Gita | Step |
| Power | down |
| and | Controlled |
| Infrastructure | entity |
| Private | |
| Limited | |
+----------------+--------------+
Other Related Parties with whom there were transactions during the period:
+-------------+-------------+
| Sri | Entity |
| Hari | in |
| Vallabhaa | which |
| Enterprises | Key |
| & | management |
| Investments | personnel |
| (P) Limited | has |
| | Control / |
| | Significant |
| | Influence |
+-------------+-------------+
| Dhanvarsha | Entity |
| Enterprises | in |
| & | which |
| Investments | Key |
| Private | management |
| Limited | personnel |
| | has |
| | Control / |
| | Significant |
| | Influence |
+-------------+-------------+
| Goodfaith | Entity |
| Vinimay | over |
| (P) Ltd | which |
| | KMP |
| | exercises |
| | Control / |
| | Significant |
| | Influence |
| | through |
| | relatives |
+-------------+-------------+
| Salem | Entity |
| Food | in |
| Products | which |
| Limited | Key |
| | management |
| | personnel |
| | has |
| | Control / |
| | Significant |
| | Influence |
+-------------+-------------+
| Kanishk | Entity |
| Steel | in |
| Industries | which |
| Limited | Key |
| | management |
| | personnel |
| | has |
| | Control / |
| | Significant |
| | Influence |
+-------------+-------------+
| Gita | Entity |
| Energy | in |
| and | which |
| Generation | Key |
| Private | management |
| Limited | personnel |
| | has |
| | Control / |
| | Significant |
| | Influence |
+-------------+-------------+
| Gita | Relative |
| Devi | of Key |
| | Management |
| | Personnel |
+-------------+-------------+
| Rajesh | Relative |
| Gupta | of Key |
| | Management |
| | Personnel |
+-------------+-------------+
| Ravi | Relative |
| Gupta | of Key |
| | Management |
| | Personnel |
+-------------+-------------+
3.23.3 Transactions with related parties
+----------------+--------------+-----------+------------+
| | | 2010 | 2009 |
+----------------+--------------+-----------+------------+
| Transactions | Relationship | Amount | Amount |
| / Names of | | (GBP) | (GBP) |
| Party | | | |
+----------------+--------------+-----------+------------+
| Sharing | | | |
| of | | | |
| Power | | | |
+----------------+--------------+-----------+------------+
| Kanishk | Entity | 790,753 | 381,128 |
| Steel | over | | |
| Industries | which | | |
| Limited | relative | | |
| | of KMP | | |
| | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
+----------------+--------------+-----------+------------+
| Salem | Entity | | 16,400 |
| Food | over | - | |
| Products | which | | |
| Limited | KMP | | |
| | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
| | through | | |
| | relatives | | |
+----------------+--------------+-----------+------------+
| | | 790,753 | 397,528 |
+----------------+--------------+-----------+------------+
| | | | |
+----------------+--------------+-----------+------------+
| Cost | | | |
| of | | | |
| Power | | | |
| Generated | | | |
+----------------+--------------+-----------+------------+
| Kanishk | Entity | 8,946 | 283,515 |
| Steel | over | | |
| Industries | which | | |
| Limited | relative | | |
| | of KMP | | |
| | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
+----------------+--------------+-----------+------------+
| | | | |
+----------------+--------------+-----------+------------+
| Loan | | | |
| Outstanding | | | |
+----------------+--------------+-----------+------------+
| Salem | Entity | 890,639 | 844,669 |
| Food | over | | |
| Products | which | | |
| Limited | KMP | | |
| | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
| | through | | |
| | relatives | | |
+----------------+--------------+-----------+------------+
| Interest | | | |
| Received | | | |
+----------------+--------------+-----------+------------+
| Salem | Entity | 89,660 | 89,300 |
| Food | over | | |
| Products | which | | |
| Limited | KMP | | |
| | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
| | through | | |
| | relatives | | |
+----------------+--------------+-----------+------------+
| | | | |
+----------------+--------------+-----------+------------+
| Loans | | | |
| Repaid | | | |
+----------------+--------------+-----------+------------+
| Salem | Entity | - | 67,422 |
| Food | over | | |
| Products | which | | |
| Limited | KMP | | |
| | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
| | through | | |
| | relatives | | |
+----------------+--------------+-----------+------------+
| | | | |
+----------------+--------------+-----------+------------+
| Receivables | | | |
+----------------+--------------+-----------+------------+
| Salem | Entity | 970 | 887 |
| Food | over | | |
| Products | which | | |
| Limited | KMP | | |
| | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
| | through | | |
| | relatives | | |
+----------------+--------------+-----------+------------+
| Kanishk | Entity | 632,955 | 13,409 |
| Steel | over | | |
| Industries | which | | |
| Limited | relative | | |
| | of KMP | | |
| | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
+----------------+--------------+-----------+------------+
| | | | |
+----------------+--------------+-----------+------------+
| | | 633,925 | 14,296 |
+----------------+--------------+-----------+------------+
| Investments | | | |
| in share | | | |
| capital | | | |
+----------------+--------------+-----------+------------+
| Gita | Holding | - | 22,500 |
| Investments | Company | | |
| Limited | | | |
+----------------+--------------+-----------+------------+
| Sri | Entity | - | 2,040,817 |
| Hari | in | | |
| Vallabhaa | which | | |
| Enterprises | KMP is | | |
| & | a | | |
| Investments | Director | | |
| (P) Ltd | | | |
+----------------+--------------+-----------+------------+
| Dhanvarsha | Entity | - | 1,530,612 |
| Enterprises | in | | |
| & | which | | |
| Investments | KMP is | | |
| (P) Ltd | a | | |
| | Director | | |
+----------------+--------------+-----------+------------+
| Goodfaith | Entity | - | 1,530,612 |
| Vinimay | over | | |
| (P) Ltd | which | | |
| | KMP | | |
| | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
| | through | | |
| | relatives | | |
+----------------+--------------+-----------+------------+
| | | | 5,124,541 |
+----------------+--------------+-----------+------------+
| Rent | | | |
| paid | | | |
+----------------+--------------+-----------+------------+
| Gita | Close | 2,100 | 3,033 |
| Devi | relative | | |
| | of KMP | | |
+----------------+--------------+-----------+------------+
| Remuneration | | | |
| Paid | | | |
+----------------+--------------+-----------+------------+
| Rajesh | Close | - | 5,308 |
| Gupta | relative | | |
| | of KMP | | |
| | Remuneration | | |
| | as director | | |
| | of OPG | | |
| | Energy Pvt | | |
| | Ltd | | |
+----------------+--------------+-----------+------------+
| Ravi | Close | 25,000 | 22517 |
| Gupta | relative | | |
| | of KMP | | |
| | Remuneration | | |
| | as director | | |
| | of the | | |
| | company | | |
+----------------+--------------+-----------+------------+
| Further | | | |
| lease | | | |
| deposit | | | |
| made | | | |
+----------------+--------------+-----------+------------+
| Kanishk | Entity | - | 3,233,145 |
| Steel | over | | |
| Industries | which | | |
| Limited | relative | | |
| | of KMP | | |
| | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
+----------------+--------------+-----------+------------+
| Lease | | | |
| Rent | | | |
| paid | | | |
+----------------+--------------+-----------+------------+
| Kanishk | Entity | 236,226 | 237,584 |
| Steel | over | | |
| Industries | which | | |
| Limited | relative | | |
| | of KMP | | |
| | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
+----------------+--------------+-----------+------------+
| Lease | | | |
| Deposit | | | |
| outstanding | | | |
+----------------+--------------+-----------+------------+
| Kanishk | Entity | 3,532,783 | 3,233,144 |
| Steel | over | | |
| Industries | which | | |
| Limited | relative | | |
| (difference | of KMP | | |
| is only due | exercises | | |
| to change | Control / | | |
| in exchange | Significant | | |
| rates) | Influence | | |
+----------------+--------------+-----------+------------+
| Reimbursement | | | |
| of Expenses | | | |
+----------------+--------------+-----------+------------+
| Kanishk | Entity | 16,015 | 23,948 |
| Steel | over | | |
| Industries | which | | |
| Limited | relative | | |
| | of KMP | | |
| | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
+----------------+--------------+-----------+------------+
| | | | |
+----------------+--------------+-----------+------------+
| Advance | | | |
| Paid | | | |
+----------------+--------------+-----------+------------+
| Gita | Entity | 1,719,051 | - |
| Energy | over | | |
| and | which | | |
| Generation | relative | | |
| Private | of KMP | | |
| Limited | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
+----------------+--------------+-----------+------------+
| Gita | Entity | 3,394,260 | - |
| Power | over | | |
| and | which | | |
| Infrastructure | relative | | |
| Private | of KMP | | |
| Limited | exercises | | |
| | Control / | | |
| | Significant | | |
| | Influence | | |
+----------------+--------------+-----------+------------+
3.23.4 Director's Remuneration
The remuneration of Directors for the period was as follows:
+-------------+-------------+-------------+
| | 2010 | 2009 |
+-------------+-------------+-------------+
| | Amount(GBP) | Amount(GBP) |
+-------------+-------------+-------------+
| Salaries, | 304,729 | 313,189 |
| Allowances | | |
| and | | |
| Perquisites | | |
+-------------+-------------+-------------+
| Share | 1,206,959 | - |
| based | | |
| payments | | |
+-------------+-------------+-------------+
| TOTAL | 1,511,688 | 313,189 |
+-------------+-------------+-------------+
3.24 Restatement relating to 2008-09
Foreign currency translation movements (a net gain of GBP 694,240) on US Dollar
bank deposits outstanding as at March 31 2009 were carried in reserves instead
of being recognised in income for the period ended March 31, 2009 as required by
IAS 21. Consequently profits of the previous period was understated to this
extent. This item has been restated by release to the Income Statement for the
relative reporting period under Other gains & losses (Note 3.3). The basic and
diluted Earnings per Share for the relative period have also been
correspondingly restated. (Refer Note 3.17)
3.25 Reclassification of the consolidated financial statements for the prior
years
Prior year's figures in the consolidated financial statements have been
regrouped and reclassified wherever necessary to conform to the current year's
figures. The Group has reclassified following items which does not have any
impact upon the income statement, cash flows, equity and financial position and
performance of the Group.
Depreciation relating to plant and machinery (GBP 343,879) which was included as
part of Depreciation costs has now been reclassified to Cost of power
Generation.
Current Tax Assets (GBP 751,309) and Provision for Taxation (GBP 942,826) which
were shown on a net basis have been restated in their respective carrying
amounts.
Deferred Tax Asset (GBP 60,909) and Deferred Tax Liability (GBP 446,451) which
were shown on a net basis have been restated in their respective carrying
amounts (Note 3.7.1).
The above reclassifications have no impact on the separate financial statements.
These reclassifications also have no impact on the profits and earnings per
share of the periods presented.
3.26 Events After Balance Sheet Date
The 80 MW power plant (OPG Power Generation Private Limited) has been
commissioned on 14th April' 2010 near Chennai (India). There are no other
material events after the reporting period, which have a bearing on the
understanding of the financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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