Jaiprakash Power Ventures Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2021
Auditor and Management Disclosures and Notes for the annual results dated 31 Mar 2021
Notes:-
1. In respect of Vishnuprayag Hydro Electric Plant (VHEP), the water availability in the first half of the financial year is normally higher as compared to the second half of the financial year. As such, the power generation in the first two quarters (based on past experience/ data) lies between 70-75% of the annual power generation, while balance 25-30% is generated in the last two quarters.
2. (a) The operations of Thermal Power Projects have been impacted on account of (i) Jaypee Bina Thermal Power Plant (JBTPP) has been affected due to non- scheduling of power during the current year/quarter ended 31st March, 2021 (ii) non availability of long term PPAs and unremunerative merchant rates for Jaypee Nigrie Super Thermal Power Plant (JNSTPP) and Jaypee Bina Thermal Power Plant (JBTPP), and (iii) Lockdown, partial lockdown, frequent restrictions in different parts of country, due to Outbreak of Covid-19 in early part of financial year 2020-21. Also subsequent to year end i.e. in the months of April to June, 2021, there was/is lockdown/partial lockdown in different parts of the Country.
(b) Company has accounted for revenue for the year/quarter ended 31st March, 2021 on the basis of Multi Year Tariff (MYT) for the period 2016-19 for JBTPP and JNSTPP which are subject to true up / final assessment.
(c) Revenue in respect of Vishnuprayag HEP for the year/quarter ended 31st March. 2021 has been accounted for based on provisional tariff which is subject to true up/final tariff order.
3. (i) During the previous year, the Company had accounted for impact of the Framework Agreement (“the Agreement”) dated 18th April, 2019 signed with banks and Financial Institutions in respect of the outstanding loans (including write back of interest to the extent not payable, conversion part of loan amount of the banks into equity/preference share capital to the extent agreed/confirmation received And into equity capital of the Company of outstanding FCCBs).Balances of certain lenders, banks, loans and advances and other liabilities [read with note no. (ii) below] are subject to confirmation/ reconciliations. In the opinion of the management, there will not be any material impact on confirmation/reconciliations.
(ii) Accordingly, in the view of the para (i) above and as per resolution passed on the 13th December, 2019 by the FCCB holders, during the quarter ended 31st December, 2020, in term of resolution dated 13th December 2019,13,007,735 nos. fully paid up equity shares of Rs. 10 each at Rs. 12 per share (including share premium of Rs. 2 per share) have been allotted to the two bond holders. Balance bond holders of Rs. 11,250 lakhs (US $ 158.62 lakhs) who had right of conversion into equity share up to 12 months period from the completion date i.e., 11th February, 2020 did not apply for the conversion. In terms of the Resolution passed by the FCCB holders the company has forfeited the outstanding FCCBs of Rs. 11,250 lakhs, of those Bond Holders who did not submit application for conversion during the extended Claim period which has expired on 11th February, 2021. The above write back has been done, in terms of the resolution of the bondholders and execution and delivery of Second Supplemental Trust Deed by the Company (issuer), receipt of the approval of the RBI for amending the terms and in opinion of the management, (amount shown as part of exceptional items in the Statement of Profit and Loss account).
4. The Company had given the corporate guarantee to State Bank of India (SBI) of USD 1,500 lakhs (Previous year USD 1,500 Lakhs), for loans outstanding to the extent of Rs 70,333 lakhs (previous year Rs.70,333 lakhs), granted to Jaiprakash Associates Limited (JAL) (the party to whom the company is an associate) for which fair valuation has not been done as per the applicable Ind-AS as of 31st March, 2021. Post impact of the “Agreement" as stated in note 3(i) above, the Company has initiated process for the release of the guarantee provided to SBI. In the opinion of the Management there will be no material impact on these financial results of the fair valuation of the above-mentioned guarantee hence not been considered necessary by the management to be provided for. On this Auditors have drawn attention in their report on consolidated financial results.
5. During the current quarter/year ended, based on the Management assessment, fair valuation of long-term investment in Trust has been carried out. Accordingly, a reversal of provision of amounting to Rs. 9,118 lakhs has been made and included in the other income.
6. No provision for diminution in the value of investments (certain long-term investments made in subsidiaries amounting to Rs. 78,785 Lakhs) (previous year Rs.78,915 lakhs), has been made by the management, as in the opinion of the management such diminution is temporary in nature considering the intrinsic value of assets, future prospects and the Company is confident for settlement of claims in its favour. Therefore, Management has concluded that no provision against diminution is necessary at this stage. On this Auditors have drawn attention in their report on standalone financial results.
7. Sangam Power Generation Company Limited (SPGCL, a Subsidiary Company) was acquired by JPVL (the Company) from Uttar Pradesh Power Corporation Ltd (UPPCL) in earlier years for implementation of 1320 MW Power Project (Karchana STPP) at Tahsil Karchana, Distt. Allahabad, Uttar Pradesh. The Company has made investment of Rs.55,207 lakhs (5,520 lakhs equity shares of Rs. 10/- each fully paid). In the books of SPGCL out of above, amount aggregating to Rs. 16,055 lakhs (excluding value of land) is shown as expenditure incurred during the construction and incidental to setting up of the project, capital advances and other financial assets and same been carried over since long and the Net Worth of SPGCL have been eroded significantly as on 31st March, 2021. In view of abnormal delay in handing over the physical possession of land by UPPCL, SPGCL has written to UPPCL and all procurers that the Power Purchase Agreement (PPA) is rendered void and cannot be enforced. As advised, draft of Share Purchase Agreement (SPA) was sent to UPPCL / UPRVUNL for their approval but there was abnormal delay in resolving the matter by UPPCL, therefore SPGCL has withdrawn all its undertakings given to UPPCL and filed a petition before Hon'ble UPERC for release of performance bank guarantee and also for payment amount against claim lodged of Rs 1,15,722 lakhs. UPERC vide its Order dated 28.06.2019 has allowed claim (of SPGCL) for Rs.25,137 Lakhs along with interest @ 9% p.a. on Rs.14,925 lakhs for the period from 11.04.2014 to 31.03.2019 and also directed UPPCL to immediately release Performance Bank Guarantee (Rs. 99 crore) to SPGCL and SPGCL to transfer the entire land parcel to UPPCL, UPPCL has appealed against the said order in APTEL and SPGCL has also filed counter appeal. Hearing in the case is completed and Order is reserved by APTEL. Pending these, no provision has been considered necessary by the management at this stage. On this auditors have drawn attention in their report on the consolidated financial results.
(a) Due to the outbreak of Coronavirus (Covid-19) and consequential lock down across the country for a significant period of first half of financial year 2020-21 there were disruption in business activities (and also subsequent to 31st March, 2021 in the month of April to June, 2021) however, the Company has continued to generate and supply electricity to its customers, which has been declared as an essential service by the Government of India. The Company has also received notices of invoking force majeure clause provided in the power purchase agreement (PPA) from M.P. Power Management Company Limited (MPPMCL) and UPPCL in respect of units JNSTPP & JBTPP and VHEP respectively and PTC with whom Company has short term PPA which have been suitably replied by the Company / clarified that the said situation is not covered under force majeure clause, considering generation and distribution of electricity falls under essential services vide notification dated March 25, 2020 issued by Ministry of Home Affairs, Government of India. The Power Ministry has also clarified on April 6, 2020 that the parties to the contract to comply with the obligation to pay fixed capacity charges as per PPA to the Power Producers.
The management believes that there is not much of an impact likely due to this pandemic on the business of the Company in long term except some lower demand and its consequential impact on supply and collection from customers which are believed to be temporary in nature. The impact of the Covid-19 pandemic in future may be different from that estimated as at the date of approval of these financial results and the Company will continue to closely monitoring developments, its operations, liquidity and capital resources and is actively working to minimize the impact of this unprecedented situation.
(b) Revenue has been accounted for based on invoices raised on MPPMCL for capacity charges for the months of April’20 to 319t March'21 amounting to Rs. 46,869 lakhs (till 31.12.2020 Rs. 35,152 lakhs) (out of which Rs. 27,870 lakhs is pending for payment). Also above including Rs 19,535 lakhs related to invoices raised for the month of April, May and August to October’20 which has been disputed by MPPMCL as notices of invoking force majeure clause as stated in note 8(a) above had been served and/or non-scheduling of power by MPPMCL. This resulted in one/both units of JBTPP being off bar for part/full months during the period June’20 to December’20. In the Opinion of the Management considering the prevailing Madhya Pradesh Electricity Grid Code (revision -ii), 2019 (MPEGC, 2019) and legal opinion taken by the Association of Private Electricity Generating Stations of MP, the MPPMCL is liable to make payment of capacity charges for declared availability of Contracted Capacity under PPA and invoices had been raised as per the terms of PPA signed between company and MPPMCL. Accordingly, amount as stated above which is overdue for payment, has been considered good and fully recoverable.
9. In the earlier years, Uttar Pradesh Power Corporation Ltd. (UPPCL) had sent notice/recovery plan in respect of unit VHEP for recovery of Rs. 37,054 lakhs (including carrying cost of Rs 8,193 lakhs for the financial year 2018-19 to 2020-21) being amount paid in excess with carrying cost (excess payment made to the Company towards income tax and secondary energy charges) for financial years 2007-OS to 2019-20 and 2014-15 to 2019-20 respectively and hold back Rs. 9,140 Lakhs till March 2021 including recovery for carrying cost of Rs 8,193 lakhs as stated above. Based on the legal opinion obtained by the Company, the action of UPPCL is not as per the terms of the power purchase agreement (PPA), and the Company had filed a petition with Uttar Pradesh Electricity Regulatory Commission (UPERC) against UPPCL for the aforesaid recovery. UPERC vide its order dated 12th June,2020 has disallowed the claims of the Company and upheld the recovery/proposed recovery of excess payment made. To avoid negative impact on cash flow and without prejudice to its rights & remedies in relation to the above 12th June 2020 Order of UPERC, the Company has requested UPPCL that no recovery towards the principal amount to be made in FY 2020-21, however carrying cost for FY 2020-21 can be recovered from monthly invoices for which UPPCL had agreed. Further, UPPCL and Company have also agreed that recovery of amount paid in excess (subject to ongoing reconciliations and final outcome of appeal filed with APTEL for revision in design energy) will be made from monthly power sale invoices which will be raised by the Company for next 7 years from FY 2021-22. In addition to that as per recovery plan, UPPCL will charge carrying cost on outstanding amount @SBI MCLR plus 350 basis points from financial year 2021-22 to financial year 2027-28 (amount unascertainable). In view of the above and considering prudence, during the current quarter/year ended 31st March, 2021, revenue from UPPCL has been accounted for net of the component of income tax and excess secondary energy charges. The Company has also filed an Appeal with Appellate Tribunal for Electricity (APTEL) against the above stated Order of UPERC and no provision in these financial statements considered necessary against the disallowances of income tax and secondary energy charges of Rs. 37,054 lakhs and carrying cost (amount unascertainable), as mentioned above by the management, as Company believes that it has credible case in its favour.
10. As per Ind-AS 108 Operating segment, segment information has been provided on consolidated financial results basis.
11. During the quarter/year ended, the Company has redeemed 25 nos. CRPS of Rs. 10,00,000 each (year ended 31st March, 2020, 25 nos. CRPS of Rs. 10,00,000 each) issued in earlier years to the Bank.
(a) The Company has signed definitive agreement (Share Purchase Agreement) dated March 19, 2021 with the Power Grid Corporation of India Limited (The JV Partner) for sale of its 74% equity stake (22,20,00,000 nos. fully paid-up equity shares) in a JV subsidiary Company Jaypee Powergrid Limited (JPL), for total consideration of Rs 35,450 lakhs (including recoverable of Rs 285 lakhs on account of accretion in the book value of JPL between March 01, 2021 and Closing Date i.e. March 25, 2021).
(b) JPL is having long power transmission line to evacuate power and being considered a separate line of business having independent risk and reward, therefore sale of equity stake in JPL (JV subsidiary company) as mentioned above has considered as discontinued operation.
(c) On receipt of cash consideration amounting to Rs 35,165 lakhs (excluding of Rs. 285 Lakhs pending to be received) and receipt of necessary approvals, impact of above equity stake sale has been given in these financial statements. The results of discontinued operations (including discontinued operations of earlier periods) are disclosed in the table below: For Table, kindly refer Corporate Announcements on www.bseindia.com.
(d) Details of net assets disposed off and profit/(loss) on disposal is as below: For Table, kindly refer Corporate Announcements on www.bseindia.com.
(e) Details of net cash flow arising on disposal is as below: For Table, kindly refer Corporate Announcements on www.bseindia.com.
13. Exceptional items in the standalone results for the current quarter/ year includes: (i) Profit on sale of investment in JPL (JV Subsidiary Company) amounting to Rs. 13,250 Lakhs (in consolidated financial statements loss of Rs. 76 Lakhs) (ii) Provision for diminution in value of investment in Jaypee Meghalaya Power Limited (Subsidiary Company) amounting to Rs. 135 Lakhs (iii) Write back of FCCBs of amounting to Rs. 11,250 lakhs (in consolidated Rs. 11,250 lakhs).
14. On Company's bid being declared as successful, Director mines & Geology (DMG), Government of Andhra Pradesh has awarded contract for mining of sand in the state of Andhra Pradesh for a period of two years (from 3rd May,2021) to the Company. The Company has entered into back to back agreement for above mining contract with a company who has submitted the bank guarantee to the DMG. In total an amount of Rs. 1528.80 crore is to be paid to DMG over a period of two years as fortnightly upfront payment/installments. The Agreement with DMG was executed on 3rd May, 2021.
15. (a) Previous period figures have been re-grouped/re-classified wherever necessary, to confirm to current quarter's classification.
(b) The figures of the last quarter in each of the years is the balancing figures between audited figures in respect of full financial year ended 31st March and the unaudited published year to date figures up to the third quarter of the respective financial year.
16. The above audited financial results for the period /quarter ended 31stMarch 2021 have been reviewed by Audit Committee and approved by the Board of Directors at their respective meetings held on the 14th June 2021.