EMPOWERING HUMANITY Sterlite Power Transmission Limited Annual Report 2017-18 Contents Corporate Overview Financial Report Introduction 01 Standalone Sterlite Power advantage 02 Auditor’s Report 74 Technology Leadership 03 Balance Sheet 80 Key Milestones 04 Statement of Profit & Loss 81 Sterlite Power : Global operations Cash Flow Statement 82 at a glance 06 Notes to Financial Statements 85 Sustainability 08 Chairman’s Message 10 Consolidated Group CEO’s Message 12 Auditor’s Report 141 Board of Directors 14 Balance Sheet 146 Management Team 16 Statement of Profit & Loss 147 Global Infrastructure Business 18 Cash Flow Statement 148 Solutions Business 26 Notes to Financial Statements 151 Convergence Business 30 Management Report Management Discussion and Analysis 34 Directors’ Report 38 Annexures to Directors’ Report 44 Corporate Governance Report 65 Forward Looking Statements: Certain statements in this Annual Report relating to the Company’s future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. 2 Annual Report 2017-18 Corporate Overview Management Reports Financial Statements Empowering Humanity by Addressing the Toughest Challenges of Energy Delivery. The UN Sustainable Development Goals aim to ensure access to affordable, reliable, sustainable and modern energy for all by 2030 (SDG7), a target that will help the last 1 billion people experience the power of electricity. The world is witnessing an abundance of power generation, thanks to the Renewables revolution. Transmission of power holds the key to successfully meeting this goal. Renewable power generation comes online at a record pace, at a fraction of the time taken by thermal generation. Transmission infrastructure will need to keep pace with this “new normal” to be relevant. In addition, finding space to build Greenfield transmission projects will be increasingly difficult in a rapidly urbanizing world. Finally, given the intermittency of renewables, need for transmission capacity is much higher compared to the thermal-only world. The scale of capital required to finance this transmission capacity is daunting. In short, these are the three primary challenges of time, space and capital faced by the transmission sector globally. Sterlite Power is a leading global power transmission developer and solutions provider that is solving problems at the intersection of time, space and capital. We believe that access to reliable electricity transforms lives and should be a fundamental right for all individuals globally. With focus on leveraging technology and nurturing right partnerships & talent, innovation is part of your company’s DNA. Our businesses are uniquely positioned to tackle problems at the intersection of time, space and capital. Our Global Infrastructure Business solves challenges of time and capital by building, owning and operating power transmission assets across the world. Our Solutions Business solves challenges of time and space for power utilities by specializing in upgrading, uprating and strengthening of power delivery networks. Our Convergence Business solves the challenge of capital by optimizing the existing transmission to roll out reliable communication networks. Our asset manager, SIML (Sterlite Investment Managers Limited) manages the IndiGrid portfolio, which solves the challenge of SPACE capital by enabling monetization of operating assets. Our mission is to Empower Humanity by Addressing the Toughest Challenges of Energy Delivery. In this quest, we will continue to innovate and challenge the status-quo in an industry that has not been disrupted enough in the last 100 years. Capital TIME Annual Report 2017-18 1 Sterlite Power Advantage Our Core Values of Respect, Social Impact, Innovation and Fun guide us in our approach. Technology and Talent We leverage new technology in project selection, planning and execution to deliver projects ahead of schedule. We pride ourselves for our global team of exceptionally talented professionals from diverse sectors and experiences leading our operations. Innovation as a Mindset We are committed to solving the toughest challenges through an innovative approach in all aspects of our operations. We are pioneers in deploying cutting-edge technologies across planning, surveying, executing and financing. Strategic Partnerships We are excited to be working with the best and most innovative partners in the industry, forging long term symbiotic relationships. We value all partners equally, be it the smallest vendors or our execution contractors. Project Management Expertise We are firm believers and practice the ‘first time right approach’. This reflects our strength of project management Practices. Safety Safety comes before all else. We have instituted world- class processes and practices to ensure safety for all our workers, contractors, employees and community at large. 2 Annual Report 2017-18 Corporate Overview Management Reports Financial Statements Technology Leadership An evolving world needs revolutionary solutions Sterlite Power has led the way in adopting the state-of-the-art global best practices in a legacy driven power transmission sector. Aerial Technology for Project Execution • First use of helicopter stringing in India. • Heli-crane based tower erections in tough terrains. Asset Planning/Monitoring using UAVs • Aerial Technology for automated inspection & data analytics. • Planning services by unmanned aerial vehicles. Design Engineering & Digital Platforms • In-house tower & foundation designs using digital platform. • Route planning, elevation models and resource optimization using digital platform. • In-house power system study capability and simulation tools. Technology Intensive Products • Largest manufacturer of high performance conductors in India. • Low loss high ampacity cable, fiber integrated power cable. • Largest Optical Ground Wire (OPGW) player in India. Smart Line Projects • Re-conductoring solutions to enhance power transfer. • Voltage upgradation solutions. • Sub-station along with enabling communication channel. Annual Report 2017-18 3 Key Milestones TODAY, STERLITE POWER IS A LEADING DEVELOPER OF POWER TRANSMISSION INFRASTRUCTURE IN INDIA AND BRAZIL 2014 2013 Attracted private equity 2011 Awarded two investment of projects of INR ` 5 billion 2010 Awarded length 403 from Standard India’s first and 545 ckms Chartered 2009 Sterlite Power 765 kV power covering Private Equity (as a division of transmission Sterlite Madhya 2006 STL) awarded project under Commissioned Technologies Pradesh and India’s first TBCB regime its first inter- Acquisition of Ltd. (STL) Rajasthan; and Independent state project Power Business enters the Jharkhand, Power Awarded its located in the from Sterlite power West Bengal Transmission third project North Eastern Industries Ltd transmission respectively Project under of 944 ckms region business Tariff Based spanning Competitive the states Awarded Expanded Bidding (TBCB) of Madhya project in power regime Pradesh, challenging conductor Maharashtra terrain of manufacturing and Gujarat Jammu and capacity Kashmir with Set up Optical route length of Ground Wire 887 ckms (OPGW) manufacturing facility 4 Annual Report 2017-18 Corporate Overview Management Reports Financial Statements 2018 Acquired 28.4% stake 2017 in its transmission infrastructure business Commissioned its fifth from Standard Chartered project 2016 Private Equity for INR Won two projects ` 1,010 Cr 2015 Became first developer to in Brazil, making Won a ` 1500 crore Goa commission a TBCB project us the first Indian power transmission Commissioned its ahead of schedule transmission system strengthening second project infrastructure Commissioned a key section of project developer to enter Awarded project in transmission corridor in Northern the global market state of Telangana, Region 12 months ahead of OPGW facility received 17025:2005 accreditation taking its total schedule IndiGrid listed by National Accreditation project count to on Indian stock Raised India’s first AAA (SO) Board for Testing and seven exchanges; Sterlite rated infrastructure bonds without Calibration Laboratories Power transferred two Became government guarantee for (NABL) projects to IndiGrid first private transmission projects Received largest transmission Solutions business Invested in Finland-based Sharper global order of US$ developer was awarded a Shape for UAV based technology 47 Billion from GS S to win MoP landmark project in for automated inspection and data Korea for supply of High award for early Kerala commissioning of analytics Performance Conductor 765/400 kV Dhule Won the largest (ACCC) Deployed helicranes to set up a substation project in Brazil power transmission line in the Won 6 new transmission Transmission Auction, mountainous terrain of J&K in projects in Brazil to taking total Latam partnership with Erickson Inc take the total capacity transmission portfolio commitment to US$ 2 Awarded three projects of route to US$ 1 Billion Billion lengths 624, 271, and 715 ckms. Total project count reaches ten Demerged from Sterlite Technologies Ltd. (STL) IndiGrid was formed as a registered trust, filed DRHP with SEBI Annual Report 2017-18 5 Sterlite Power : Global operations at a glance 6 Annual Report 2017-18 Corporate Overview