ANNUAL REPORT 2017-18 2 KSK Energy Ventures Limited Annual Report 2017-18 1 CONTENTS 03 Corporate Information Statutory 04 14 28 Management Report on Directors’ Reports Discussion Corporate Report and Analysis Governance 42 50 52 Financial Statements Independent Balance Statement of Auditors’ Sheet Profit and Report Loss STANDALONE 53 55 57 Statement of Cash Flow Notes to Changes in Statement Financial Equity Statements 94 100 102 Independent Consolidated Consolidated Auditors’ Report Balance Statement of on Consolidated Sheet Profit and Loss Financial CONSOLIDATED Statements Notice of the 104 108 110 Annual General Consolidated Consolidated Notes to Meeting 174 Statement of Cash Flow Consolidated Changes in Equity Statement Financial Statements 2 KSK Energy Ventures Limited Annual Report 2017-18 3 CONTENTS 03 Corporate Information Statutory 04 14 28 Management Report on Directors’ Reports Discussion Corporate Report and Analysis Governance 42 50 52 Financial Statements Independent Balance Statement of Auditors’ Sheet Profit and Report Loss STANDALONE 53 55 57 Statement of Cash Flow Notes to Changes in Statement Financial Equity Statements 94 100 102 Independent Consolidated Consolidated Auditors’ Report Balance Statement of on Consolidated Sheet Profit and Loss Financial CONSOLIDATED Statements Notice of the 104 108 110 Annual General Consolidated Consolidated Notes to Meeting 174 Statement of Cash Flow Consolidated Changes in Equity Statement Financial Statements 2 KSK Energy Ventures Limited Annual Report 2017-18 3 Corporate Information Statutory Reports Board of Directors Mr. T.L. Sankar Mr. Abhay M Nalawade Ms. Alankrita Soni Mr. S. Kishore Mr. K. Bapi Raju Company Secretary Mr. Ranjith Kumara Shetty Registered Office 8-2-293/82/A/431/A, Road No.22, Jubilee Hills Hyderabad - 500 033, Telangana, India Ph: 040-23559922-25 Fax: 040-23559930 E-mail: [email protected] CIN:L45204TG2001PLC057199 Statutory Auditors M/s. Jawahar and Associates., Chartered Accountants C-5, Skylark Apartments, 3-6-309, Basheer Bagh, Hyderabad - 500029 Bankers Andhra Bank Bank of India Indian Bank UCO Bank Axis Bank Registrar & Share Transfer Agent Karvy Computershare Private Limited Karvy Selenium Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad - 500 032. Ph: 040-67162222 Fax: 040-23001153 E-mail: [email protected] Shares Listed at National Stock Exchange of India Limited BSE Limited Website www.ksk.co.in 4 KSK Energy Ventures Limited Annual Report 2017-18 5 Corporate Information Statutory Reports Board of Directors Mr. T.L. Sankar Mr. Abhay M Nalawade Ms. Alankrita Soni Mr. S. Kishore Mr. K. Bapi Raju Company Secretary Mr. Ranjith Kumara Shetty Registered Office 8-2-293/82/A/431/A, Road No.22, Jubilee Hills Hyderabad - 500 033, Telangana, India Ph: 040-23559922-25 Fax: 040-23559930 E-mail: [email protected] CIN:L45204TG2001PLC057199 Statutory Auditors M/s. Jawahar and Associates., Chartered Accountants C-5, Skylark Apartments, 3-6-309, Basheer Bagh, Hyderabad - 500029 Bankers Andhra Bank Bank of India Indian Bank UCO Bank Axis Bank Registrar & Share Transfer Agent Karvy Computershare Private Limited Karvy Selenium Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad - 500 032. Ph: 040-67162222 Fax: 040-23001153 E-mail: [email protected] Shares Listed at National Stock Exchange of India Limited BSE Limited Website www.ksk.co.in 4 KSK Energy Ventures Limited Annual Report 2017-18 5 Management Discussion and Analysis Statutory Reports Indian Economy Outlook Generation India has emerged as the fastest growing major economy in the world as per the Central Statistics Organisation (CSO) and The total electricity generation for the FY 2017 - 18 was 1201.543 BU as compared to 1155.085 BU for the previous year. The International Monetary Fund (IMF) and it is expected to be one of the top three economic powers of the world over the next 10- aggregate Plant Load Factor for the FY 2017-18 stood at 60.67% compared to 59.88% during the previous year. 15 years, backed by its strong democracy and partnerships. India's GDP is estimated to have increased 6.6 per cent in 2017-18 and is expected to grow 7.3 per cent in 2018-19. Year PLF Sector-wise PLF (%) The year 2017-18 has been remarkable for India's global image as a promising investment destination. In recognition of the % Central State Private reforms carried out by the Government, Moody's Investor Service upgraded India's sovereign credit rating to Baa2 from the 2009-10 77.5 85.5 70.9 83.9 lowest investment grade of Baa3 after a period of 13 years. India ranked 100 among 190 countries assessed by the Doing 2010-11 75.1 85.1 66.7 80.7 Business Team in the Ease of Doing Business Report, 2018 with an improvement of 30 ranks over its previous rank of 130 in the 2011-12 73.3 82.1 68 69.5 Ease of Doing Business Report 2017. 2012-13 69.9 79.2 65.6 64.1 Against the backdrop, there have been various investments in various sectors of the economy. The M&A activity in India increased 53.3 per cent to US $ 77.6 billion in 2017 while private equity (PE) deals reached US $ 24.4 billion. 2013-14 65.6 76.1 59.1 62.1 2014-15 64.46 73.96 59.83 60.58 The Indian government's favourable policy regime and robust business environment have ensured that foreign capital keeps flowing into the country. The government has taken many initiatives in recent years such as relaxing FDI norms across sectors 2015-16 62.29 72.52 55.41 60.49 such as defence, PSU oil refineries, telecom, power exchanges and stock exchanges among others. According to Department of 2016-17 59.88 71.98 54.35 55.73 Industrial Policy and Promotion (DIPP), the total FDI investments in India during 2017-18 stood at US $ 44.86 billion, indicating 2017-18 60.67 72.35 56.83 55.32 the government's effort to improve ease of doing business and relaxation in FDI norms is yielding results. Data for 2017-18 indicates that the services sector attracted the highest FDI equity inflow of US $ 6.71 billion, followed by telecommunication - The Plant Load Factor of Thermal Power Stations is an index of utilization of the installed capacity. Therefore, even though US $ 6.21 billion and computer software and hardware - US $ 6.15 billion. Most recently, the total FDI inflows for the month of there was increase in generation compared to the previous year, lot of thermal power plants were left stranded due to various March 2018 touched US $ 3.31 billion. India emerged as the top recipient of greenfield FDI Inflows from the Commonwealth, as reasons like lack of demand, availability of fuel etc. per trade review released by the Commonwealth in 2018. The fall in Plant Load Factors of Independent Power Producers (IPPs) from 83.9% to 55.32% between 2010 to 2018 also reflects As per the Economic Survey of India 2017-18, after registering Gross Domestic Product (GDP) growth of over 7 per cent for the the inherent challenges and contrasts in the policy paradigms of new power generation capacities that have resulted in third year in succession in 2016-17, the Indian economy registered a slower growth, estimated to be 6.5 per cent in 2017-18, as prolonged period of challenges and uncertainty across the Indian power sector. per the first Advance Estimates released by CSO. This is slightly lower than the range of 6.5 per cent to 6.75 per cent being Transmission projected based on recent developments. However even with lower growth for 2017-18, GDP growth has averaged 7.3 per cent for Recognizing the need for development of the national grid, thrust was given to enhance the capacity of inter-regional links in a the period from 2014-15 to 2017-18, which is the highest among the major economies of the world. Given that this growth has phased manner. Working in this direction, all the five regional grids are now interconnected through synchronous links. An been achieved in a milieu of lower inflation, improved current account balance and notable reduction in fiscal deficit to GDP extensive network of Transmission lines has been developed over the years for evacuating power produced by different ratio makes it all more creditable. In addition to the introduction of GST, the year also witnessed significant steps being electricity generating stations and distributing the same to the consumers. Depending upon the quantum of power and the undertaken towards resolution of problems associated with non-performing assets of the banks, further liberalization of FDI distance involved, lines of appropriate voltages are laid. The nominal Extra High Voltage lines in vogue are ± 800 kV HVDC & etc., thus strengthening the momentum of reforms. After remaining in negative territory for a couple of years, growth of exports 765kV, 400 kV, 230/220 kV, 110 kV and 66kV AC lines. These have been installed by all the SEBs and by Generation, Transmission & rebounded into positive one during 2016-17 and strengthened further in 2017-18. Distribution utilities including those in Central Sector. Concerns have been expressed about growing protectionist tendencies in some countries and it remains to be seen as to how the situation unfolds. Additionally, average crude oil (Indian basket) prices have risen in 2017-18 and going by the recent trends, Development of High Capacity Power Transmission Corridors (HCPTCs) the average crude oil prices could rise further by another 10- 15 per cent in 2018-19. Some of these factors could have Being the nodal agency for grant of Long Term Access (LTA), POWERGRID has undertaken development of high capacity power dampening effect on GDP growth in the coming year.