RattanIndia Power Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2020

1. The above standalone financial results of RattanIndia Power Limited ("RPL" or "the Company") for the quarter and year ended 31 March 2020 have been reviewed by the Audit Committee and approved at the meeting of the Board of Directors ("the Board") held on 26 June 2020. These results have been prepared in accordance with the requirement of Regulation 33 of the SEBI Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended).



2. The Company has non-current investment of Rs.1,513.13 crore in and loans under current financial assets of Rs. 25 crore (net of provision for impairment) recoverable from, Sinnar Thermal Power Limited (‘STPL’), a wholly-owned subsidiary of the Company.

STPL has incurred losses since its inception and is yet to commence operations. Subsequent to defaults in debt repayments, STPL initiated discussion with consortium of lenders for restructuring of debt under Strategic Debt Restructuring Scheme (‘SDR’) as per the Reserve Bank of India (RBI) guidelines. However, RBI’s notification dated 12 February 2018 repealed all debt restructuring schemes (including SDR) which resultantly impacted progress made by STPL under SDR. STPL is in active discussion with lenders for successful resolution of debt. In the meanwhile, PFC (Lead lender) filed an application under IBC before NCLT Delhi on 10 September 2018 which was subsequently withdrawn on 14 May 2019.

On 30 April 2019, MSEDCL has issued letter of intent to STPL for execution of PPA of 507 MW (net capacity). STPL was required to furnish Contract Performance Guarantee (CPG) in 3 months. Lenders of STPL have also shown interest in starting operations and in granting required working capital and non-fund base facilities so as to implement aforementioned PPA with MSEDCL.Considering the effect of COVID 19, the Company was not able to furnish the requested CPG, and have requested additional time till 30 September 2020 to furnish CPG with MSEDCL. Also, refer note 7 for possible effect of COVID 19.

Conditions explained above, indicate existence of uncertainties that may cast significant doubt on STPL’s ability to continue as a going concern due to which STPL may not be able to realise its assets and discharge its liabilities in the normal course of business. However, on expectation of resolution of debt with lenders within the available time frame and implementation of PPA soon, management is of the view that STPL’s going concern basis of accounting is appropriate and believes no additional provision for impairment is required to be created against the amount in investment and loans (net of provision for impairment)

The statutory auditors have expressed qualification in respect of this matter.



3.Pursuant to the enactment of the Taxation Law (Amendment) Act 2019 (“Act”) which is effective from 01 April 2019 domestic company have the option to pay the income tax at 22% plus surcharges and cess (“new tax regime”) subject to certain condition. Company has decided to opt for new tax regime and file its return under section 115BAA. Accordingly, the tax liabilities for FY 2019-20 are computed based on provision of section 115BAA.



4. Exceptional Items include:

a) During the year, Binding Settlement Proposal was approved by the competent authorities of all the lenders in relation of debt availed by the Company for Phase I of the Company’s Amravati power project. Pursuant to the binding settlement through a resolution plan under the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions 2019, the Company has paid Rs. 50 crore upfront towards repayment of existing facilities and issued certain securities, including equity shares (805,724,169 equity shares of face value Rs. 10 each), redeemable preference shares (25 crore redeemable preference shares of face value Rs. 10 each) and optionally convertible cumulative preference shares (37,69,20,000 shares of face value Rs. 10 each) amounting to Rs. 746.17 crore to existing lenders towards reduction of part of the total debt of Rs. 8,649.48 crore and remaining debt of Rs. 7,853.31 crore was assigned in favor of Aditya Birla ARC Limited (ABARC), an incoming investor by existing lenders. Subsequently, all existing lenders of Company’s Phase I Amravati power project have issued ‘No Dues Letter’. Gain of Rs. 55.93 crore on account of modification in terms of new securities issued is recorded as exceptional item in these standalone financial results.

Further, the Company issued 805,724,169 equity shares of Rs. 10 each amounting to Rs. 805.72 crore to Aditya Birla ARC Limited (ABARC) and balance remaining debt has been reconstituted as (i) Rs. 4,114.96 crore as facilities having terms and conditions set out under agreement with ABARC (ii) Rs. 1,278.15 crore as assignment of debt to RR Infralands Private Limited (“Sponsor”) (iii) ABARC has waived off balance unsustainable debt portion of Rs. 1,654.48 crore which is recorded as exceptional item in these standalone financial results. Also, gain of Rs. 1,126.17 crore on account of modification in terms of new facilities and equity shares issued is recorded as exceptional item in these standalone financial results.

The terms of total dues on account of debt of Sponsor amounting to Rs. 2,255.72 crore has been reconstituted as (i) issued of 805,724,169 Compulsory Convertible Debentures (CCDs) of Rs. 805.72 crore convertible into equivalent numbers of equity shares, and (ii) Rs. 1,450.00 crore of Inter-corporate deposits having terms and conditions set out in the agreement. The gain amounting to Rs. 272.62 crores on account of modification in terms of debt assigned by ABARC is recognised as exceptional item in these standalone financial results.

b) During the year, the Company has settled dues with IDBI Bank and ICICI Bank under one-time settlement and resultant gain of Rs.104.76 crore is recorded as exceptional item in these standalone financial results.

c) The Company has incurred Rs. 546.57 crores for development of Phase II of Amaravati Project. Post restructuring of Lending facility, the Company has considered not to construct the Phase II and accordingly, after considering the realizable value net of expected cost for dismantling the phase II, the Company had recognized impairment loss amounting to Rs 546.57 crore against Capital work-in-progress. This has been recorded as exceptional item in these standalone financial results.



5. The SARS-CoV-2 virus (COVID-19 pandemic) continues to spread across the globe and India, which has contributed to a significant decline and volatility in global and Indian Financial Markets and a significant decrease in the economic activities. On 11 March 2020, the COVID-19 outbreaks declared as a global pandemic by the World Health Organization subsequent to which, on 24 March 2020 the Indian Government had announced a strict 21 days lockdown which was further extended by 19 days up till 3 May 2020. Subsequently, the Government has announced extension of lockdown by two weeks till 17 May 2020 and further by two weeks till 31 May 2020 and has provided guidelines for restrictions and relaxations in different zones across India subsequent to this period.

Due to outbreak of COVID-19 globally and in India, the Company made initial assessment of likely adverse impact on economic environment in general and financial risks on account of COVID-19. The Company is in the business of generation of electricity which is an essential service as emphasized by the Ministry of Power, Government of India. The availability of power plant to generate electricity as per the demand of the customers is important. Hence. the Company has ensured the availability of its power plant to generate power. However, for the short-term period the demand of power is expected to be lower and accordingly, the Company may have lower demand than earlier periods and has to operate power plants at lower load factor. The Power Ministry has also clarified on 6 April 2020 that State Distribution Entities (Discoms) will have to comply with the obligation to pay fixed capacity charges as per PPA. This will largely mitigate the stress on cash flows, if any, during the period of COVID-19. The Company is also having sufficient stock of coal and has also tied up further supply of coal so as to maintain supply of electricity. On long term basis also, the Company does not anticipate any major challenge in meeting its financial obligations. Basis above, the management has estimated its future cash flows for the Company which indicates no major change in the financial performance as estimated prior to COVID-19 impact and hence, the Company believes that there is no impact on its ability to meeting its liabilities as and when they fall due. However, the impact assessment of COVID-19 is a continuing process given its nature and duration. The Company will continue to monitor any material changes to future economic conditions.



6. In the light of the direction of the Hon’ble Supreme Court in case of Energy Watchdog dated 11 April 2017, Maharashtra Electricity Regulatory Commission (MERC) vide its order dated 3 April 2018 principally held that the Company is entitled to compensation for procurement of additional coal for fulfilling its obligations under the PPA signed with MSEDCL. MERC also provided mechanism for computation of the compensation. The Company has filed an appeal against the MERC order since the methodology passed by MERC is not fully on the principle of “restoration of the affected party to the same economic position as if the change in law event did not occur”. Company is confident that, the Hon’ble Tribunal is likely to set out a mechanism for compensation restoring the Company to the same economic position as if such Change in Law has not occurred. Hence, it would not be unreasonable to expect the ultimate collection of an equivalent amount of compensation including related late payment surcharge recorded in books of account on account of aforesaid matter.



7. Revenue from operations on account of Change in Law events in terms of Power Purchase Agreements (PPA) with MSEDCL is accounted for by the Company based on the best management estimates including orders of Regulatory Authorities in some cases, which may be subject to adjustments on account of final orders of Respective Authorities.



8. During the quarter, an aggregate of 37,54,00,000 (Thirty seven crore fifty four lakh) 0.001% compulsorily convertible debentures (CCDs) of INR 10/- per CCD, out of a total of 80,57,24,169 (Eighty crore fifty seven lakh twenty four thousand one hundred and sixty nine) CCDs, held by RR Infralands Private Limited (RRIPL) a Promoter entity, in the Company, were converted into the corresponding number of underlying fully paid up equity shares of face value INR 10/- per share, consequent to the exercise by RRIPL, of its right of conversion.

In consequence of the same the paid up equity share capital of the Company increased from Rs. 4,564.38 crore divided into 456,43,81,691 (Four hundred fifty six crore forty three lakh eighty one thousand six hundred and ninety one) fully paid up equity shares of face value Rs. 10/- each, to Rs. 4,939.78 crore divided into 493,97,81,691 (Four hundred ninety three crore ninety seven lakh eighty one thousand six hundred and ninety one) fully paid up equity shares of face value Rs. 10/- each.



9. The Company has applied Ind AS 116 ‘Leases’ from 1 April 2019. On adoption of Ind AS 116, the Company has recognized ‘Right-of-use’ assets amounting to Rs.152.44 crore (including reclassification of lease assets from Property, Plant and Equipment amounting to Rs.150.43 crore) and ‘Lease liabilities’ amounting to Rs. 2.01 crore as at 1 April 2019. The impact on account of Ind AS 116 on the current quarter/ financial year is not material.



10. The Chief Operating Decision Maker (“CODM”) reviews the operations at the Company level. The operations of the Company fall under “power generation and allied activities” business only, which is considered to be the only reportable segment in accordance with the provisions of Ind AS 108 – Operating Segments.



11. The figures for the quarters ended 31 March 2020 and 31 March 2019 represents the balancing figures between audited figures in respect of the full financial year and published reviewed year to date figures upto the third quarter of the respective financial year.