Opg Power Regulatory News (OPG)

2nd June 2015

OPG Power Ventures plc

("OPG" or the "Company" or the "Group")

Preliminary results for the year ended 31st March 2015

Scale, Robustness and Growth

OPG Power Ventures PLC, the developer and operator of power generation plants in India, announces its preliminary results for the year ended 31st March 2015.

Highlights

Financial

• Revenue of £99.97m up 1.2 % (FY14: £98.81m); underlying rupee revenue up 4.0%

• EBITDA of £33.39m up 7.8% (FY14: £30.97m); EBITDA margin of 33.4% up from 31.3%

• Pre-tax profits of £21.65m up 20.6% (FY14: £17.95m)

• EPS of 4.91 pence up 18.6% (FY14: 4.14 pence)

• Gearing at 59%

Operational (including post year end events)

• 750 MW construction completed; 600 MW now operational

• 180 MW Chennai IV synchronised, operational and to start commercial sales by 15th June

• 300 MW Gujarat plant commenced commercial sales in April 2015

• Gujarat: remaining 150 MW available and still expected to be in operation next quarter following completion of transmission system by Gujarat state

• Long term freight arrangement for imported coal entered into with Noble Chartering

Strategic

• Focus to secure continued profitable growth

• Proposed long term management incentive scheme that is aligned with value to shareholders

Summary financial information

Commenting on the results, Mr M C Gupta, Chairman stated: "The team at OPG have achieved much over the last five years and have delivered compound earnings growth of over 40% per annum over the last three years. OPG is now set to achieve a new dimension as we start to generate cash flows from a significantly expanded, multi-locational asset base. I'm confident that we will set out on the dividend path following the successful and sustainable operation of this new capacity and am also excited by management's pursuit of continued profitable growth. This Company now represents scale, robustness and growth." 

For further information, please visit www.OPGpower.com or contact:

Disclaimer

This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this announcement does not constitute a recommendation regarding any securities. Certain statements, beliefs and opinions contained in this announcement, particularly those regarding the possible or assumed future financial or other performance of OPG, industry growth or other trend projections are or may be forward looking statements. Forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond OPG's ability to control or predict. Forward-looking statements are not guarantees of future performance. No representation is made that any of these statements or forecasts will come to pass or that any forecast result will be achieved. Neither OPG, nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur. You are cautioned not to place reliance on these forward-looking statements. Other than in accordance with its legal or regulatory obligations, OPG is not under any obligation and OPG expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per OPG share for the current or future financial years would necessarily match or exceed the historical published earnings per OPG share.

Chief Executive's Review

This has been a period of tremendous progress for the Company. We have run our operations at over 90% load factor and nearly trebled our available capacity from 270 MW to 750 MW. In so doing, we have also established a multi-location business, widened our core skills in areas such as transmission line construction, delivered an increase of over 20% in profitability and continued to actively manage our gearing and operational risk profile. Over the last three years, as we increased from 110 MW to 270 MW operating capacity, our local currency earnings have grown by over 350%. With a full 750 MW constructed and further low risk projects being evaluated, we intend to create further value for shareholders.

A quantum leap forward to 750 MW constructed assets 

In the last few weeks, the Group has completed the construction of its biggest projects - the 180 MW Chennai IV and the 2x150 MW Gujarat, bringing our total constructed assets to 750 MW. With one of the 150 MW units in Gujarat awaiting transmission lines from the state, we currently have 600 MW of operational assets across two states.

The 180 MW Chennai unit, constructed on time and within budget, was built using key equipment from Europe, a first for the Group, and increases the Chennai plant's capacity to 414 MW. 

The new units at Chennai and Gujarat boast the same flexible fuel design features as our existing Chennai plant.

At the 300 MW Gujarat site, our development work has been completed. We continue to work with the State transmission company on constructing the multi-circuit evacuation line which is now approximately two thirds complete. In the meantime, one 150 MW unit has already been operating at an average load factor of approximately 47% since commissioning in April, ahead of our expectations. This unit uses the newly constructed interim transmission line and we continue to expect both units of the plant to achieve normal commercial operations in around September 2015. 

I am extremely proud of the team's achievement in building two sizeable projects concurrently in different locations to such a high standard.

Operations continue to endorse our business model

In addition to the substantial growth in capacity, we achieved continued strong operational performance that saw load factors averaging 91% across our portfolio of three units that were commercially active for the full financial year at Chennai. This is well ahead of the national average and is reflective of our flexible procurement policy that once again helped to ensure we experienced no lack of fuel (coal). We continued to perform consistently well against regulated tariff levels for industrial users - our average tariff for the year rising slightly to Rs5.71 per kWh. These factors combined to deliver rupee revenues that were higher than last year in spite of a major planned maintenance shutdown of our flagship unit, Chennai I. Our robust top line thus continued to benefit from the successful implementation of our business model. 

Rupee costs have held steady

As much of our coal purchases are imported, unit costs of generation are affected by currency fluctuation between the US dollar and the Indian Rupee. Whilst we have continued to enter into a mix of fixed and variable price coal contracts of varying durations, the rupee has been far less volatile against the dollar than in previous years. Any savings generated as a result of coal prices were largely offset by a rise in logistics costs and coal cess. Around 68% of our coal purchases were imported. 

Opportunities taken to manage risk

One of the advantages of our model is that we retain the flexibility to take opportunities that benefit our risk-reward profile. For instance, in October 2014 the Group secured power sales contracts until September 2015 with TANGEDCO for around two thirds of the output from the Chennai plant at attractive fixed rates. Similarly, the Long Term Variable Tariff arrangement entered into in January 2014 for 74 MW continues until 2029 and delivered an average tariff this year of Rs.5.79 per Kwh. This is in addition to the 55 MW reserved by us at Chennai for sales direct to group captive customers at an average tariff of over Rs.6 per kWh since December 2014.

Our joint venture with Noble, entered into in August 2014 for a Long Term Freight Arrangement, is expected to provide security over our cost and availability of international freight for around half of our existing operations from 2017, deploying the right management skills to deliver those savings. Under the arrangement, the Company has joint ownership of two new 64,000t cargo vessels and gives OPG the ability to use 1.5mt of freight capacity per annum.

I believe our being able to take such opportunities as they arise helps us to establish a continually more robust business.

Maintaining our focus on balance sheet management

During the year we invested £102 million on completing our capital projects and our borrowings were £261 million at 31st March 2015. This represents gearing of 59% which remains in line with expectations. Our repayments remain on schedule and our borrowing facilities have an average outstanding duration of approximately nine years versus our enlarged asset portfolio that is being depreciated over 35-40 years. During the year, our domestic credit rating was raised to "A-"and in the last few weeks it has been raised again to "A". In addition, as a result of base rate reductions, we have already seen 0.5% cut from our local borrowing cost which equate to annualised pre-tax savings of over £1 million.

India's economic revival continues and we will continue to build a robust business for the long term

Some developments are being prioritised by the new Government in pushing ahead with business-focused legislation, such as that relating to land acquisition for infrastructure projects, mining and minerals and to the transparency of administrative processes. The Government is starting to lead the way on investment in certain crucial sectors including the power sector. Delivering "Power to All by 2020" and anticipated amendments to the Electricity Act 2003 should assist in making investment more attractive but I believe that the sheer enormity of the task to balance electricity supply and demand makes it one of the country's greatest challenges. We expect to play our part by continuing to build and grow a profitable and robust business that meets the demands of our customers.

Meeting demand, maintaining momentum

With customers seeking to source their energy needs through a mixture of thermal and renewable power, the Board will endeavour to ensure that OPG's growth in the future reflects that dynamic. We have kept an active watch on the renewable power space and are being measured about the timing of our entry into renewables as the aforementioned demand trend in India coupled with improving wind and solar technologies and falling equipment prices make it increasingly attractive to us. 

We are evaluating in detail new projects, including modular wind and solar projects across four states in India. I believe that the development of renewables capacity will make our business even more robust with a yet wider combination of technologies, locations and potential customers. The evaluation of these future projects will include analysis of the optimum funding structure, given the forecast internal cash generation of the Company alongside the Board's intention to initiate a dividend which remains unchanged and is to be embedded within our proposed long term management incentive scheme. Our current view is that projects to be pursued are those that can be funded from internally generated capital and debt.

At this time of positioning the Company for the next stage of its development, the Board recognises that the Group currently has no long term incentive plan in place. As such, the Group's Remuneration Committee believes that the introduction of an incentive scheme is appropriate as the Board targets future growth. The scheme's currently proposed metrics, described in more detail after the financial review below, are to be designed to sit alongside the Group's strategy with vesting occurring upon value creation for shareholders.

To achieve our targets we need to maintain leadership in Health and Safety and responsible corporate citizenship

We are a growing team of around 400 and I'm pleased to report that at both Chennai and Gujarat, continuous training programmes in safety management are established for both OPG and contractor staff. Targets have been introduced to enable year-on-year improvements and these are monitored by the Company's Health Safety and Environment Committee. To drive the improvement programmes, the Company has adopted a Policy of Zero Harm at both sites. We continue to invest in our community initiatives in both Gujarat and Tamil Nadu building sanitation facilities and providing medical outreach and educational assistance to over 2,500 friends of OPG.

Summary

First and foremost, a big thank you to our team, whose unrelenting efforts have created our business. Similarly my gratitude goes to all of our partners and stakeholders over the last several years and of course to the Board for their support and guidance. 

I'm delighted by our exceptional progress. As our story starts to reveal itself more fully in the form of significant cashflows from our new plants, I'm more confident than ever of the Group's ability to deliver further and increasing long term value. Our Company continues to progress towards a new level of robustness defined by its increasing scale, diversity and ability to secure profitable growth.

Arvind Gupta

Chief Executive Officer

2nd June 2015

Financial Review

The following is a commentary on the Group's financial performance in the year.

Income Statement (£m)

Revenue

Whilst translated revenues were similar to last year, the Company's underlying Rupee revenues increased by 3.8%. This was due to a 1% increase in output as a net result of a full year of operation at the 80 MW Chennai III which was brought into commercial service in June 2013 and offset by a planned long maintenance shutdown taken at 77MW Chennai I. The group's average tariff was up by 2.9% following a 10% increase in December 2014 in the tariff charged to industrial customers served directly (currently around 55 MW) plus an average realization of Rs. 5.79 on the Long Term Variable Tariff ("LTVT") arrangement that relates to 74 MW of the output of the Chennai plant.

There were no revenues from the new 180 MW Chennai IV or 300 MW Gujarat plants during the period under review.

Production and output levels from the Group's three operating power units in Chennai compared to the prior year were as follows:

*Planned maintenance shutdown - 25 days for the Chennai I unit and 15 days for the Chennai II unit during the year

# Commissioned on 5th June 2013

Cost of revenue

About 90% of cost of revenue is represented by fuel costs. The average factory gate costs for Indian coal increased by 4.5% and for Indonesian coal by 3.2% due to increase in inland transportation and duties. Cost of generation per unit increased by 3.2% to Rs 3.27 from Rs 3.17. Cost of revenue in pound sterling terms was 58.5% of revenue in FY 15, lower than the 60.2% recorded in FY14 due to the effect of foreign currency translation.

The table below shows the average factory gate price per ton and per unit of energy, and blend of Indian and Indonesian coal consumed in FY 15 and FY14.

Coal blend and cost per energy unit in FY 2015

Gross profit

Gross profit ("GP"), excluding depreciation in 2015 was £41.51m (£39.29m in 2014), an increase of 5.6% principally as a result of the increase in average tariffs described above and lower costs of revenue on translation. Underlying Gross profit margins remained steady at 38%.

EBITDA

Earnings Before Interest, Taxation, Depreciation & Amortisation (EBITDA) is a measure of a business's cash generation from operations before interest, taxation, depreciation and exceptional and non-standard or non-operational changes which are non-cash item or expenses relating to projects under construction.

EBITDA was £ 33.39m in FY15 up from £30.97m in FY14 and the EBITDA margins were higher at 33.4 % in 2015 against 31.3% in 2014 reflecting the higher GP in FY15.

Profit before tax (PBT) (£m)

*this excludes charge on deconsolidated investments

Distribution, General & Administrative

Distribution costs include transmission costs to Group Captive customers and discount for early payment by customers. Distribution costs were higher by £0.6m due to increased sales to Group Captive customers.

General and Administrative costs (excluding charge on deconsolidated investments) were lower by £0.99m principally due to lower foreign exchange losses during the year as the Rupee and US dollar exchange rates were relatively steady. Management remuneration costs increased during the year which included provisions of £0.5m for bonuses.

Finance costs

Net Finance costs were lower by £0.56m due to decrease in finance costs relating to operations by £0.7m and higher finance income of £0.45m which was generated by profit on sale of short term financial investments. Finance costs on borrowings increased £0.6m due to increase in borrowings.

Expenditure on Projects

This relates to expenses incidental to projects under construction charged to period expense not being of a capital nature and therefore not capitalized to project costs. These expenses in FY15 were £0.38m in FY15 as compared to £0.34m in FY14.

Employee Stock Option ("ESOP) charge

This relates to the amortisation of the value of stock options granted to certain Directors and is non cash in nature. £0.23m reflected the balance ESOP costs relating to 22m options which were amortised during the year.

Taxation

The Company's operating subsidiaries are under a tax holiday period but are subject to Minimum Alternate Tax ("MAT") on its accounting profits. Any tax paid under MAT can be offset against future taxable profits once the tax holiday period is over. The tax charged during the year was £4.36m (FY14: £3.39m) which includes current tax of £2.85m (FY14: £2.68m) and deferred tax of £1.51m (FY14: £0.71m). As a result effective tax rate for the year was 20.14% up from 18.86% in FY14.

Consolidated Income Statement in Indian Rupees

Summary Financial Position (£m)

Property, Plant and Equipment

The net book value of our Property, plant and equipment has increased by £135m, almost all of which relates to investments made during the year in the construction of our new plants at Chennai and Gujarat.

Other Non-Current Assets

Other Non-Current assets increased by £4.61m year on year primarily as a result of investments made in a shipping joint venture with Noble Chartering Limited and increase in the restricted cash (deposits) holding for more than 12 months.

Trade Receivables (£m)

The age analysis of trade receivables is as follows:

Subsequent to the reporting date, the Company has received £9.4m from Tamil Nadu Generation and Distribution Corporation (TANGEDCO) towards the sale made during the period October 2014 and November 2014 under short term sale agreement and for February 2015 and March 2015 under 15 year variable tariff LTOA contract. Net amounts written off trade receivables during the year total £nil (FY14: £0.5 million).

Current assets

Current assets decreased by £39.18m to £73.11m year on year primarily as a result of the following movements:

- an increase in trade receivables of £7.63m.

- a reduction in Investments & Other Assets of £40.2m of which £27m was on account of capital advances to suppliers on new projects being capitalised to assets under construction in property, plant & equipment. A further £14.9m represented sales of holdings in financial assets for deployment in projects as scheduled.

- a reduction in Inventory holding of £5.01m as shipments were received just after year end for existing operations and coal for newly commissioned projects is accounted under project costs until commissioning.

Gearing

Net borrowings (borrowings net of cash and cash equivalents and available for sale investments) were £250.66m as at 31March 2015. The gearing ratio was 59%.

Restricted cash balances totaling £8.1m (FY14:£7.6m) comprise deposits that have been pledged as security against the Company's borrowings.

Other Non-Current liabilities

The reduction in other non-current liabilities of £6.5m is on account of £15m reduction in other payables comprising capital goods payables relating to Chennai IV and Gujarat plant offset by increases of £1.6m in deferred tax provisions and £7.2m increase in project retention monies as projects approach their completion.

Current liabilities

Current liabilities comprising borrowings due within 12 months, trade and other payables have increased by £27.7m on account of

- £14.7m the increase in the current portion of long term debt which is due within 12 months

- £4m increase in trade payables related to coal purchases for projects under commissioning

- £5m increase in general trade payables and salaries accruals and

- £4m increase in creditors for capital goods

Cash Flows

Operating cash flow has increased from £30.22m in FY14 to £32.88m in FY15, an increase of £2.66m, or 9%. The increase is primarily due to the increased gross profit.

Proposed Long Term Incentive Plan (LTIP)

The Group's Remuneration Committee (the "Remuneration Committee") are seeking to introduce a new incentive scheme for senior management to run from FY 2015-16 to FY 2017 - 18 with the following shareholder value based performance targets:

a. the achievement of a share price of 130p;

b. the achievement of a further 250 MW growth in installed capacity from a base of 750 MW; and

c. a cumulative total of 3p in ordinary dividends made, paid or declared between now and the end of /publication of the Report and Accounts in respect of FY18.

Under the proposed 2015 LTIP, up to 16 million new ordinary shares in the company are expected to be awarded at their nominal value of 0.0147p to certain members of the senior management team, the majority of which would be to Gita Investments Limited, a company linked to the CEO. The awards, which would be made in due course, would vest over a three year period equally upon achieving the three targets. The Remuneration Committee has discretion to declare vesting of awards on a linear scale of performance but cannot raise maximum award levels.  Vested shares cannot be sold for a period of 1 year following the end of the performance period, the exception to this rule being sales to meet tax liabilities, if any. All vested shares will be entitled to accrued dividends paid over the 3 year performance period, such that the interests of the Management are aligned with those of the Shareholders. Further announcements will be made upon any awards of options to directors of the Company.

Consolidated statement of profit or loss and consolidated statement of comprehensive income

For the year ended 31 March 2015

The notes are an integral part of these consolidated financial statements

The financial statements were authorised for issue by the board of directors on 1 June 2015 and were signed on its behalf by:

Consolidated statement of financial position

As at 31 March 2015

The notes are an integral part of these consolidated financial statements

.

Consolidated statement of changes in Equity

For the year ended 31 March 2015

The notes are an integral part of these consolidated financial statements.

Consolidated statement of cash flow

For the year ended 31 March 2015

Investments maturing during the year have been reinvested upon maturity in similar instruments of short tenor. The figures reported under "(Purchase) of investments" and "Sale of Investments" in the above consolidated cash flow statement are aggregate of such maturities and reinvestments made during the period reported.

NOTES TO THE CONSOLIDATED AND FINANCIAL STATEMENTS

For the year ended 31 March 2015

1. Corporate information

1.1. Nature of operations

OPG Power Ventures plc ('the Company' or 'OPGPV'), and its subsidiaries (collectively referred to as 'the Group') are primarily engaged in the development, owning, operation and maintenance of private sector power projects in India. The electricity generated from the Group's plants is sold principally to public sector undertakings and heavy industrial companies in India or in the short term market. The business objective of the group is to focus on the power generation business within India and thereby provide reliable, cost effective power to the industrial consumers and other users under the 'open access' provisions mandated by the Government of India.

1.2. Statement of compliance

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and their interpretations as adopted by the European Union (EU) and the provisions of the Isle of Man, Companies Act 2006 applicable to companies reporting under IFRS.

1.3. General information

OPG Power Ventures plc, a limited liability corporation, is the Group's ultimate parent Company and is incorporated and domiciled in the Isle of Man. The address of the Company's registered Office, which is also the principal place of business, is IOMA House, Hope Street, Douglas, Isle of Man 1M1 1JA. The Company's equity shares are listed on the Alternative Investment Market (AIM) of the London Stock Exchange.

The Consolidated Financial statements for the year ended 31 March 2015 were approved and authorised for issue by the Board of Directors on 1 June 2015.

2. New and revised standards that are effective for annual periods beginning on or after 1 January 2014

IFRS 10 'Consolidated Financial Statements' (IFRS 10)

IFRS 10 supersedes IAS 27 'Consolidated and Separate Financial Statements' (IAS 27) and SIC 12 'Consolidation-Special Purpose Entities'. IFRS 10 revises the definition of control and provide extensive new guidance on its application. These new requirements have the potential to affect which of the Group's investees are considered to be subsidiaries and therefore to change the scope of consolidation. The requirements on consolidation procedures, accounting for changes in non-controlling interests and accounting for loss of control of a subsidiary are unchanged.

Management has reviewed its control assessments in accordance with IFRS 10 and has concluded that there is no effect on the classification (as subsidiaries or otherwise) of any of the Group's investees held during the period or comparative periods covered by these financial statements.

IFRS 11 'Joint Arrangements' (IFRS 11)

IFRS 11 supersedes IAS 31 'Interests in Joint Ventures' (IAS 31) and SIC 13 'Jointly Controlled Entities- Non-Monetary-Contributions by Venturers'. IFRS 11 revises the categories of joint arrangement, and the criteria for classification into the categories, with the objective of more closely aligning the accounting with the investor's rights and obligations relating to the arrangement. In addition, IAS 31's option of using proportionate consolidation for arrangements classified as jointly controlled entities under that Standard has been eliminated. IFRS 11 now requires the use of the equity method for arrangements classified as joint ventures.

Management has reviewed its control assessments in accordance with IFRS 11 and has concluded that there is no effect on the classification of any of the Group's investees held during the period or comparative periods covered by these financial statements. The new joint venture arrangement entered into in the year has been classified as a joint venture under IFRS 11 and accounted for accordingly.

IFRS 12 'Disclosure of Interests in Other Entities' (IFRS 12)

IFRS 12 integrates and makes consistent the disclosure requirements for various types of investments, including unconsolidated structured entities. It introduces new disclosure requirements about the risks to which an entity is exposed from its involvement with structured entities.

Management has reviewed the impact of IFRS 12 and has concluded that there is no effect on any of the Group's investees held during the period or comparative periods covered by these financial statements.

IFRS 13 'Fair Value Measurement' (IFRS 13)

IFRS 13 clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It does not affect which items are required to be fair-valued. The scope of IFRS 13 is broad and it applies for both financial and non-financial items for which other IFRSs require or permit fair value measurements or disclosures about fair value measurements except in certain circumstances. IFRS 13 applies prospectively for annual periods beginning on or after 1 January 2013. Its disclosure requirements need not be applied to comparative information in the first year of application. The Group has however included as comparative information the IFRS 13 disclosures that were required previously by IFRS 7 'Financial Instruments: Disclosures'. The Group has applied IFRS 13 for the first time in the current year, see note 27.

IFRIC 21 'Levies'

The Group has applied IFRIC 21 Levies for the first time in the current period. IFRIC 21 addresses the issue as to when to recognise a liability to pay a levy imposed by a government. The interpretation defines a levy, and specifies that the obligating event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. The interpretation provides guidance on how different levy arrangements should be accounted for in particular, it clarifies that neither economic compulsion nor the going concern basis of financials statements preparations implies that an entity has present obligation to pay a levy that will be triggered by operating in a future period.

IFRIC 21 has been applied retrospectively. The application of this interpretation has had no material impact on disclosures or on the amounts recognised in the groups consolidated financial statements.

2.1 Standards, amendments and Interpretations to existing standards that are not effective and have not been early adopted by the group.

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group.

Management anticipates that all of the relevant pronouncements will be adopted in the Group's accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group's financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group's financial statements.

The management does not expect to implement IFRS 9 until all of its chapters have been published and it can comprehensively assess the impact of all changes.

The management does not expect the application of the other standards to have any material impact on its financial statements when those Standards become effective. The Group does not intend to apply any of these pronouncements early.

3. Summary of significant accounting policies

3.1 Basis of preparation

The consolidated financial statements of the Group have been prepared on a historical cost basis, except for financial assets and liabilities at fair value through profit or loss and available-for-sale financial assets measured at fair value.

The financial statements have been prepared on going concern basis which assumes the Group will have sufficient funds to continue its operational existence for the foreseeable future covering at least 12 months. As the Group has forecast it will be able to meet its debt facility interest and repayment obligations, and that sufficient funds will be available to continue with the projects development, the assumption that these financial statements are prepared on a going concern basis is appropriate.

The consolidated financial statements are presented in accordance with IAS 1 Presentation of Financial Statements and have been presented in Great Britain Pounds ('₤'), the functional and presentation currency of the Company.

3.2. Basis of consolidation

The consolidated financial statements include the assets liabilities and results of the operation of the Company, subsidiaries and joint venture for the year ended 31 March 2015

A subsidiary is defined as an entity controlled by the Company. The parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. Subsidiaries are fully consolidated from the date of acquisition, being the date on which effective control is acquired by the Group, and continue to be consolidated until the date that such control ceases. All subsidiaries have a reporting date of 31st March and use consistent accounting policies adopted by the group.

All intra-group balances pertaining to subsidiaries, income and expenses and any resulting unrealized gains arising from intra-group transactions are eliminated in full on consolidation.

Non-Controlling interest represents the portion of profit or loss and net assets that is not held by the Group and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from parent shareholders' equity. Acquisitions of additional stake or dilution of stake from/ to non-controlling interests/ other venturer in the Group where there is no loss of control are accounted for as an equity transaction, whereby, the difference between the consideration paid or received and the book value of the share of the net assets is recognised in 'other reserve' within statement of changes in equity.

3.3. List of subsidiaries

Details of the Group's subsidiaries and joint ventures, which are consolidated into the Group's consolidated financial statements, are as follows:

a. Subsidiaries

b. Joint ventures

1. The Company has entered into a Joint Venture agreement with Noble Chartering Ltd ("Noble"), to secure competitive long term rates for international freight for its imported coal requirements. Under the Long Term Freight Arrangement (LTFA), the company and Noble are to purchase and own, jointly and equally, two 64,000 MT cargo vessels through a Joint venture company Padma Shipping Ltd, Hong Kong ('Padma'). The company will commit to provide 1.5 million tonnes of coal per annum for carriage by the two vessels for a minimum period of 10 years at competitive long term rates. Pursuant to this agreement, Padma Shipping Ltd has been incorporated in order to execute the joint arrangement for procuring two cargo ships of 64,000 MT capacity from Cosco Shipyard, Hong Kong which are expected to be delivered by 2017. The company and Noble are to invest approximately USD 9 million in over the period of delivery of the vessels as their equity contribution thereby and during the current period, the company has paid an advance of USD 2,801,700 Accordingly the joint venture has been reported using equity method as per the requirements of IFRS 11.

3.4. Foreign currency translation

The functional currency of the Company is the Great Britain Pound Sterling (£). The Cyprus entity is an extension of the parent and pass through investment entity. Accordingly the functional currency of the subsidiary in Cyprus is the Great Britain Pound Sterling. The functional currency of the Company's subsidiaries operating in India, determined based on evaluation of the individual and collective economic factors is Indian Rupees ('₹'). The presentation currency of the Group is the Great Britain Pound (£) as submitted to the AIM counter of the London Stock Exchange where the shares of the Company are listed.

At the reporting date the assets and liabilities of the Group are translated into the presentation currency at the rate of exchange prevailing at the reporting date and the income and expense for each statement of profit or loss are translated at the average exchange rate (unless this average rate is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expense are translated at the rate on the date of the transactions). Exchange differences are charged/ credited to other comprehensive income and recognized in the currency translation reserve in equity.

Transactions in foreign currencies are translated at the foreign exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the Statement of financial position date are translated into functional currency at the foreign exchange rate ruling at that date. Aggregate gains and losses resulting from foreign currencies are included in finance income or costs within the profit or loss.

Indian Rupee ('INR') exchange rates used to translate the INR financial information into the presentation currency of Great Britain Pound (£) are the closing rate as at 31 March 2015: 92.76 (2014: 99.42) and the average rate for the year ended 31 March 2015: 98.41 (2014: 95.89).

3.5. 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 electricity

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 the reporting date.

Interest and dividend

Revenue from interest is recognised as interest accrued (using the effective interest rate method). Revenue from dividends is recognised when the right to receive the payment is established.

3.6. Operating Expenses

Operating expenses are recognised in the statement of profit or loss upon utilisation of the service or as incurred. Expenditure for warranties is recognised when the Group incurs an obligation in that regard.

3.7. Taxes

3.8. Financial assets

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of any financial instrument and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss which are measured initially at fair value.

Financial assets are de-recognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is de-recognised when it is extinguished, discharged, cancelled or expires.

3.9. Financial liabilities

The Group's financial liabilities include borrowings and trade and other payables. Financial liabilities are measured subsequently at amortised cost using the effective interest method.

All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within 'finance costs' or 'finance income'.

3.10. Fair value of financial instruments

The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market prices at the close of business on the Statement of financial position date. For financial instruments where there is no active market, fair value is determined using valuation techniques. Such techniques may include using recent arm's length market transactions; reference to the current fair value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models.

3.11. Property, plant and equipment

Property, plant and equipment are stated at historical cost, less accumulated depreciation and any impairment in value. Historical cost includes expenditure that is directly attributable to property plant & equipment such as employee cost, borrowing costs for long-term construction projects etc, if recognition criteria are met. Likewise, when a major inspection is performed, its costs are recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repairs and maintenance costs are recognised in the profit or loss as incurred.

Land is not depreciated. Depreciation on all other assets is computed on straight-line basis over the useful life of the asset based on management's estimate as follows:

Assets in the course of construction are stated at cost and not depreciated until commissioned.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss in the year the asset is derecognised.

The assets residual values, useful lives and methods of depreciation of the assets are reviewed at each financial year end, and adjusted prospectively if appropriate.

3.12. Intangible assets

Acquired software

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and install the specific software.

Subsequent measurement

All intangible assets, including software are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives, as these assets are considered finite. Residual values and useful lives are reviewed at each reporting date. The useful life of software is estimated as 4 years.

3.13. Leases 

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date and whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset.

Group as a lessee

Contracts to lease assets are classified as finance leases if they transfer substantially all the risks and rewards of ownership of the asset to the group. Leases where the Group does not acquire substantially all the risks and benefits of ownership of the asset are classified as operating leases.

Operating lease payments are recognised as an expense in the profit or loss on a straight line basis over the lease term. Lease of land is classified separately and is amortised over the period of the lease.

3.14. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying 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. Interest income earned on the temporary investment of specific borrowing pending its expenditure on qualifying assets is deducted from the costs of these assets.

Gains and losses on extinguishment of liability, including those arising from substantial modification from terms of loans are not treated as borrowing costs and are charged to profit or loss.

All other borrowing costs including transaction costs are recognized in the statement of profit or loss in the period in which they are incurred, the amount being determined using the effective interest rate method.

3.15. Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset's or cash-generating unit's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the profit or loss.

3.16. Cash and cash equivalents

Cash and cash equivalents in the Statement of financial position includes cash in hand and at bank and short-term deposits with original maturity period of 3 months or less.

For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and short-term deposits. Restricted cash represents deposits which is subject to a fixed charge and held as security for specific borrowings and are not included in cash and cash equivalents.

3.17. Inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition is accounted based on weighted average price. Net realisable value is the estimated selling price in the ordinary course of business, less estimated selling expenses.

3.18. Earnings per share

The earnings considered in ascertaining the Group's earnings per share (EPS) comprise the net profit for the year attributable to ordinary equity holders of the parent. The number of shares used for computing the basic EPS is the weighted average number of shares outstanding during the year. For the purpose of calculating diluted earnings per share the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity share.

3.19. Other provisions and contingent liabilities

Provisions are recognised when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive obligation that has resulted from past events. Restructuring provisions are recognised only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan's main features to those affected by it. Provisions are not recognised for future operating losses.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.

In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognised, unless it was assumed in the course of a business combination. In a business combination, contingent liabilities are recognised on the acquisition date when there is a present obligation that arises from past events and the fair value can be measured reliably, even if the outflow of economic resources is not probable. They are subsequently measured at the higher amount of a comparable provision as described above and the amount recognised on the acquisition date, less any amortisation.

3.20. Share based payments

The Group operates equity-settled share-based remuneration plans for its employees. None of the Group's plans feature any options for a cash settlement.

All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based payments, the fair values of employees' services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth targets and performance conditions).

All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to 'Other Reserves'.

If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting.

Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium.

3.21. Employee benefits

Gratuity

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 a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment.

Liabilities with regard to the gratuity plan are determined by actuarial valuation, performed by an independent actuary, at each Statement of financial position date using the projected unit credit method.

The Group recognises the net obligation of a defined benefit plan in its statement of financial position as an asset or liability, respectively in accordance with IAS 19, Employee benefits. The discount rate is based on the Government securities yield. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to profit or loss in the statement of comprehensive income in the period in which they arise.

Employees Benefit Trust

Effective during the previous year, the Group has established an Employees Benefit Trust (hereinafter 'the EBT') for investments in the Company's shares for employee benefit schemes. IOMA Fiduciary in the Isle of Man have been appointed as Trustees of the EBT with full discretion invested in the Trustee, independent of the company, in the matter of share purchases. As at present, no investments have been made by the Trustee nor any funds advanced by the Company to the EBT. The Company is yet to formulate any employee benefit schemes or to make awards thereunder.

3.22. Business Combinations

Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established using pooling of interest method. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group controlling shareholder's consolidated financial statements. The components of equity of the acquired entities are added to the same components within Group equity. Any excess consideration paid is directly recognised in equity.

4. Significant accounting judgements, estimates and assumptions

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 requires the Group to use a variety of estimation techniques and apply judgment 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 judgment 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 actual results may differ from the judgments, estimates and assumptions made by the management and will seldom equal the estimated results.

The following are significant management judgments in applying the accounting policies of the Group that have the most significant effect on the financial statements.

· Deferred tax assets:

The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on the Group's latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in India in which the Group operates are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances. (refer note 10)

· Application of lease accounting

Significant judgment is required to apply lease accounting rules under IFRIC 4 Determining whether an arrangement contains a Lease and IAS 17 Leases. In assessing the applicability to arrangements entered into by the Group, management has exercised judgment to evaluate customer's right to use the underlying assets, substance of the transaction including legally enforced arrangements and other significant terms and conditions of the arrangement to conclude whether the arrangements meet the criteria under IFRIC 4.

Estimates and uncertainties:

The key assumptions concerning the future and other key sources of estimation uncertainty at the Statement of financial position date, that have a significant risk of causing 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 future taxable profit. (see note 3.7).

§ Estimation of fair value of financial assets and financial liabilities: While preparing the financial statements the Group makes estimates and assumptions that affect the reported amount of financial assets and financial liabilities.

o Available for sale financial assets: Management apply valuation techniques to determine the fair value of available for sale financial assets where active market quotes are not available. This requires management to develop estimates and assumptions based on market inputs, using observable data that market participants would use in pricing the asset. Where such data is not observable, management uses its best estimate. Estimated fair values of the asset may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date

o Other financial liabilities: Borrowings held by the Group are measured at amortised cost. Further, liabilities associated with financial guarantee contracts in the Company financial statements are initially measured at fair value and re-measured at each Statement of financial position date. (see note 3.9 and note 26); and

o Impairment tests: In assessing impairment, management estimates the recoverable amount of each asset or cash-generating units based on expected future cash flows and use an interest rate for discounting them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate;

§ Useful life of depreciable assets: Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets.

5. Segment reporting

The Group has adopted the "management approach" in identifying the operating segments as outlined in IFRS 8 - Operating segments. Segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker evaluates the Group's performance and allocates resources based on an analysis of various performance indicators at operating segment level. Accordingly, there is only a single operating segment "generation and sale of electricity". The accounting policies used by the Group for segment reporting are the same as those used for consolidated financial statements. There are no geographical segments as all revenues arise from India.

Revenue on account of sale of power to one party amounts to £ 82,182,445   (2014: £ 94,016,799)

6. Depreciation, costs of inventories and employee benefit expenses included in the consolidated statements of comprehensive income

a) Depreciation and costs of fuel

Depreciation included in general and administrative expenses amount to £ 372,590 (2014: £ 263,885)

b) Employee benefit expenses forming part of general and administrative expenses are as follows:

c) Auditor's remuneration for audit services amounting to £ 45,000 (2014: £ 40,000) is included in general and administrative expenses.

d) Foreign exchange movements (realised and unrealised) included in the general and administrative expenses is as follows:

7. Other income

Other income is comprised of:

8. Finance costs

Finance costs are comprised of:

9. Finance income

Finance income is comprised of:

*Financial instruments represent the Mutual funds held during the year.

10. Tax expense

Tax reconciliation

Reconciliation between tax expense and the product of accounting profit multiplied by India's domestic tax rate for the years ended 31 March 2015 and 2014 is as follows:

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 group'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 a total of fifteen consecutive years from the date 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 2015 and 2014. Accordingly, the Group calculated the tax liability for current taxes in India after considering MAT.

The Group has carried forward credit in respect of MAT tax liability paid to the extent it is probable that future taxable profit will be available against which such tax credit can be utilized.

Deferred income tax for the group at 31 March 2015 and 2014 relates to the following:

Movement in temporary differences during the year

In assessing the recoverability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

Shareholders resident outside the Isle of Man will not suffer any income tax in the Isle of Man on any income distributions to them. Further, dividends are not taxable in India in the hands of the recipient. However, the group will be subject to a "dividend distribution tax" currently at the rate of 15% (plus applicable surcharge and education cess) on the total amount distributed as dividend.

As at 31 March 2015 and 31 March 2014, there was no recognised deferred tax liability for taxes that would be payable on the unremitted earnings of certain of the Group's subsidiaries, as the Group has determined that undistributed profits of its subsidiaries will not be distributed in the foreseeable future.

11. Intangible assets

12. Property, plant and equipment

The property, plant and equipment comprises of:

The net book value of land and buildings block comprises of:

Property, plant and equipment with a carrying amount of £ 413,947,500(2014: £ 278,819,692) is subject to security restrictions (refer note 19).

An amount of £ 19,129,734 (previous year £ 8,169,522) pertaining to interest on borrowings made specifically for the qualifying assets was capitalised as the funds were deployed for the construction of qualifying assets.

13. Investments and other assets

* Represents investment made in Padma Shipping Limited. The venturers are entitled for a share int the net assets of Padma Shipping Limited which is a separate legal entity. Accordingly the Company has used equity method of accounting for the same.

Available-for-sale investments are comprised of

Quoted short-term mutual fund units

The fair value of the mutual fund instruments are determined by reference to published data. These mutual fund investments are redeemable on demand.

Investments in other assets

The investments in OPG E and OPG RE, (fair value of retained non-controlling Investments) have been fairly valued and the share of the group has been determined and disclosed as available for sale classified as non-current. . There is no change in the valuation technique to those adopted in the previous year. The fair value of OPGE and OPG RE is determined using discounted cash flow approach. Significant inputs into the model are based on management's assumption of the expected cash flows up to 31 March 2024 and a discount rate of 17%. These investments are fully impaired as at 31 March 2015.

The carrying amount of investments, its fair value and the resultant impact on the statement of comprehensive income is as follows:

Loans and receivables (Current)

Advances to Suppliers include the amounts paid as advance for supply of fuel. Capital advances comprise of payments made to contractors for construction of assets and advances paid for purchase of capital equipment. The management expects to realise these in the next one year.

14. Trade and other receivables

Trade receivables are generally due within 30 days terms and are therefore short term and the carrying values are considered a reasonable approximation of fair value. An amount of £28,628,701 (2014: £21,008,401) has been pledged as security for borrowings. As at 31 March 2015, trade receivables of £563,827 (2014 £527,883) were collectively impaired and provided for. Trade receivables that are neither past due nor impaired represents billings for the month of March.

The age analysis of the (overdue) trade receivables is as follows:

Subsequent to the reporting date, the Company has received £9,409,114 from Tamil Nadu Generation and Distribution Corporation (TANGEDCO) towards the sale made during the period October 2014 and November 2014 under short term sale agreement and for February 2015 and March 2015 under 15 year variable tariff LTOA contract.

The movement in the provision for trade receivables is as follows:

The creation of provision for impaired receivables has been included in general and administrative expenses in the consolidated statement of comprehensive income. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The group does not hold any collateral as security.

15. Inventories

The entire amount of £ 7,889,661 (2014: £12,899,204) has been pledged as security for borrowings (refer note 19)

16. Cash and cash equivalents

Cash and short term deposits comprise of the following:

 Short-term deposits are placed for varying periods, depending on the immediate cash requirements of the Group. They are recoverable on demand. Restricted cash represents deposits maturing between three to twelve months amounting to £5,303,217 (previous year £7,456,090) and maturing after twelve months amounting to £2,784,990 (previous year £190,860) which have been pledged by the group in order to secure borrowing limits with banks. (Refer note 19)

17. Issued share capital

Share Capital

The Company presently has only one class of ordinary shares. For all matters submitted to vote in the shareholders meeting, every holder of ordinary shares, as reflected in the records of the Group on the date of the shareholders' meeting, has one vote in respect of each share held. All shares are equally eligible to receive dividends and the repayment of capital in the event of liquidation of the Group.

The Company has an authorized and issued share capital of 351,504,795 equity shares (2014: 351,504,795) at par value of £ 0.000147 (2014: £ 0.000147) per share amounting to £ 51,671 (2014: £ 51,671) in total.

The Company has issued share capital at par value of £ 51,671 (£0.000147 per share).

Reserves

Share premium represents the amount received by the Group over and above the par value of shares issued and the excess of the fair value of share issued in business combination over the par value of such shares. Any transaction costs associated with the issuing of shares are deducted from securities premium, net of any related income tax benefits.

Foreign currency translation reserve is used to record the exchange differences arising from the translation of the financial statements of the foreign subsidiaries.

Other reserve represents the difference between the consideration paid and the adjustment to net assets on change of controlling interest, without change in control, other reserves also includes any costs related with share options granted and gain/losses on re-measurement of Available for sale financial assets.

Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income less dividend distribution.

18. Share based payments

The board has granted share options to directors and nominees of directors which are limited to 10 percent of the group's share capital. Once granted, the share must be exercised within ten years of the date of grant otherwise the options would lapse.

The vesting conditions are as follows:

· The 300 MW power plant of Kutch in the state of Gujarat must have been in commercial operation for three months.

· The Closing share price being at least £ 1.00 for consecutive three business days.

The related expense has been amortised over the estimated vesting period of 4.96 years (expected completion of the Kutch plant) and an expense amounting to £ 242,888 (2014: £ 974,222) was recognised in the profit or loss with a corresponding credit to other reserves.

Movement in the number of share options outstanding and their related weighted average exercise price are relating to an Executive Director and a Non-executive Director are as follows:

The weighted average price fair value of options granted in 2010-11 was determined using the Black-Scholes valuation model was £ 0.28 per option. The significant inputs into the model were weighted average share price of £ 0.66 (2011) at the grant date, exercise price of £ 0.60, volatility of 31.34% dividend yield of Nil, an expected option life of 4.96 years and annual risk free rate of 3% .The volatility measured at the standard deviation of continuously compounded share returns is based on daily share prices of the last three years.

During the reporting period the board has agreed to grant 1,000,000 share options to the remaining three Non-executive Directors and one Executive Director. Option contracts in respect of these were executed following the close of the reporting period.

19. Borrowings

The borrowings comprise of the following:

Total debt of £260,788,187 (2014: £ 194,769,946) is secured as follows:

§ The term loans taken by the Group are fully secured by the property, plant, assets under construction and other current assets of subsidiaries which have availed such loans. All the loans are personally guaranteed by a director.

§ The cash credits and working capital arrangements availed by the Group are secured against hypothecation of current assets and in certain cases by deposits and margin money is provided as collateral.

§ Other borrowings are fully secured by hypothecation of current assets and in certain cases by margin money deposits and other fixed deposits of the respective entities availing the facility.

Term loans contain certain covenants stipulated by the facility providers and primarily require the Group to maintain specified levels of certain financial metrics and operating results. The terms of the other borrowings arrangements also contain certain covenants primarily requiring the Group to maintain certain financial metrics. As of 31 March 2015, the Group has met all the relevant covenants.

During the year instalment of loan £1,543,830 relating to Unit I and Unit II was prepaid upto June 2015

The fair value of borrowings at 31 March 2015 was £260,788,187 (2014: £194,769,946). The fair values have been calculated by discounting cash flows at prevailing interest rates.