Description
The report for the financial year 2011 - 2012 of GVK power & infrastructure limited.
GVK Jegurupadu CCPP
Alaknanda Hydro Project
Artistic view of New Integrated Passenger Terminal, CSIA Mumbai
Artistic view of Passenger Terminal, BIAL Bengaluru
GVK Jaipur-Kishangarh Expressway
GVK EMRI
18th Annual Report 2011 - 2012
GVK Power & Infrastructure Limited
Resources
GVK Gautami Power Project
Passenger Terminal, BIAL
Resources
GVK Goindwal Sahib Power Project
Corporate Information
Board of Directors
Dr. G V Krishna Reddy G Indira Krishna Reddy G V Sanjay Reddy Krishna Ram Bhupal Dr. Abid Hussain Dr. A Ramakrishna K N Shenoy P Abraham Ranjana Kumar Pradip Baijal Ch G Krishna Murthy S Balasubramanian A Issac George P V Rama Seshu Chairman & Managing Director Director Vice Chairman Director Director Director Director Director Director (from 10-11-2011) Director (upto 10-11-2011) Director Director Director General Manager & Company Secretary
Committees of the Board
Audit Committee
Ch G Krishna Murthy A Ramakrishna P Abraham S Balasubramanian Chairman
Remuneration Committee
A Ramakrishna K N Shenoy P Abraham Chairman
Investors’ Grievance Committee
A Ramakrishna Ch G Krishna Murthy A Issac George Chairman
GVK Power & Infrastructure Limited
Statutory Auditors
M/s. S R Batliboi & Associates The Oval O?ce, 18, ILabs Centre Hitech City, Madhapur Hyderabad - 500 081
Registrar & Share Transfer Agents
Karvy Computershare Private Limited Plot No.17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081
Registered & Corporate O?ce
“Paigah House” 156 - 159 Sardar Patel Road Secunderabad - 500 003
ISIN
INE251H01024
CIN
L74999AP2005PLC059013
Stock Code
BSE:532708 NSE: GVKPIL
Standalone Financials at a glance
2012
(Rs.Lakhs)
2011
Financial Performance
Operational Income EBIDTA Other Income Interest & Financial Charges Depreciation Pro?t A?er tax EPS (Rupees) Basic and Diluted Financial Position: Fixed Assets ( Net of depreciation) Cash and Bank balance Net current assets Total Assets Equity Reserves Networth Market Capitalisation 144 1,748 40,854 294,682 15,792 236,800 252,592 274,783 159 310 50,680 263,955 15,792 237,627 253,419 409,015 (0.05) 0.43 2,760 1,172 1,285 2,493 18 (827) 4,148 549 8,157 1,495 9 6,828
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Notice
Notice is hereby given that the 18th Annual General Meeting of the members of GVK Power & Infrastructure Limited will be held on Wednesday, the August 8, 2012 at 11.30 a.m. at Sri Satya Sai Nigamagamam, 8-3-987/2, Srinagar Colony, Hyderabad - 500 073 to transact the following business:
Ordinary business
1. 2. 3. 4. 5. To receive, consider and adopt the Balance Sheet as at March 31, 2012 and the Pro?t and Loss Account for the year ended on that date and the Report of the Directors and the Auditors thereon. To appoint a Director in place of Mrs. G Indira Krishna Reddy, who retires by rotation and, being eligible, o?ers herself for reappointment. To appoint a Director in place of Mr. G V Sanjay Reddy, who retires by rotation and, being eligible, o?ers himself for reappointment. To appoint a Director in place of Mr. Ch G Krishna Murthy, who retires by rotation and, being eligible, o?ers himself for reappointment. To appoint M/s. S R Batliboi & Associates, (Firm Registration No: 101049W) Chartered Accountants, Hyderabad, the retiring auditors, as Statutory Auditors of the Company to hold o?ce from the conclusion of this Annual General Meeting to the conclusion of next Annual General Meeting on such remuneration as may be ?xed by the Audit Committee and approved by the Board.
Special business
6. To consider and if thought ?t, to pass the following, with or without modi?cation(s) as an ordinary resolution. “RESOLVED THAT pursuant to the provisions of Section 257 and other applicable provisions, if any, of the Companies Act, 1956 read with Article 109 of the Articles of Association of the Company, Mrs. Ranjana Kumar, be and is hereby appointed as Director of the company, whose period of o?ce shall be liable to retire by rotation.”
By Order of the Board Place : Hyderabad Date : May 9, 2012 P V Rama Seshu General Manager & Company Secretary
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GVK Power & Infrastructure Limited
Notes
1. 2. 3. 4. 5. 6. Every Member entitled to attend and vote at the meeting is entitled to appoint a Proxy to attend and vote instead of himself and such Proxy need not be a member of the Company. Duly ?lled in Proxy form must be deposited at the Registered O?ce of the Company before 48 hours of the time ?xed for holding the meeting. Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 is annexed hereto and forms part of the notice. Pursuant to Clause 49 of the Listing Agreement, particulars of Directors seeking appointment / re-appointment at this meeting are annexed hereto. The Register of Members and Share Transfer Books of the Company will remain closed from 04-08-2012 to 08-08-2012 (both days inclusive). Members are requested to: i) Note that as a measure of austerity, copies of Annual Report will not be distributed at the Annual General Meeting. ii) Deliver duly completed and signed Attendance Slip at the entrance of the meeting venue, as entry to the Auditorium will be strictly on the basis of the entry slip, available at the counters at the venue to be exchanged with the attendance slip.
iii) Quote the Folio / Client ID & DP ID Nos. in all their correspondences. iv) Note that due to strict security reasons brief cases, eatables and other belongings are not allowed inside the auditorium. v) Note that no gi?s / compliments / coupons will be distributed at the Annual General Meeting. vi) A corporate member shall be deemed to be personally present only if it is represented in accordance with Section 187 of the Companies Act, 1956 i.e. only if the corporate member sends certi?ed true copy of the Board resolution / power of attorney authorizing the representative to attend and vote at the Annual General Meeting. vii) Members are requested to notify immediately changes, if any, in their addresses, in respect of the physical shares held by them, to the Company, and to their Depository Participants (DP) in respect of shares held in the dematerialized form. 7. Members desirous of getting any information on any items of business of this Meeting are requested to address their queries to Mr. P V Rama Seshu, General Manager & Company Secretary at the Registered O?ce of the Company at least ten days prior to the date of the meeting, so that the information required can be made available at the meeting. All documents referred to in the notice and annexures thereto along with other mandatory registers / documents are open for inspection at the registered o?ce of the Company on all working days (except Saturdays and Sundays) between 11.00 a.m. to 1.00 p.m. prior to the date of Annual General Meeting. The Ministry of Corporate A?airs has taken a corporate “Green initiative in the corporate governance” by allowing paperless compliance by companies. As per the MCA Circular, Service of documents through electronic mode i.e. e-mail by the company will be a valid compliance of Section 53 of the Companies Act, 1956. A recent amendment to the Listing Aggrement with the Stock Exchanges permits companies to send so? copies of the Annual Report to all those shareholders who have registered their e-mail id’s for the said purpose. As such the members who have not yet registered their e-mail id’s are requested to furnish/ register their e-mail id’s at [email protected] to enable the Company to send all notices, periodical statements etc., of the company through electronic mode.
8.
9.
10. The Securities and Exchange Board of India has noti?ed that the shareholders/transferee of shares (including joint holders) holding shares in physical form are required to furnish a certi?ed copy of their PAN Card to the company/RTA while transacting in the securities market including transfer, transmission or any other corporate action. Accordingly, all the shareholders/ transferee of shares (including joint holders) are requested to furnish a certi?ed copy of their PAN Card to the company/RTA while transacting in the securities market including transfer, transmission or any other corporate action.
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Explanatory Statement
(Pursuant to Section 173(2) of the Companies Act, 1956) Item 6 The Board of Directors of your Company at its meeting held on November 10, 2011 had appointed Mrs.Ranjana Kumar as an additional director of the company. In terms of the provisions of Section 260 of the Companies Act, 1956 read with Article 109 of the Articles of Association of the company, Mrs. Ranjana Kumar holds the o?ce up to the date of this Annual General Meeting. Your company has received a notice, in writing, under Section 257 of the Companies Act, 1956 along with a requisite deposit, signifying his intention to appoint Mrs. Ranjana Kumar as a Director of the company. Pro?le of Mrs. Ranjana Kumar Mrs. Ranjana Kumar is a Graduate in Arts and a Gold Medalist. A?er serving the Government of India for 44 years, she retired on 01-12-2009. She spent most of her carrier in the Banking sector and has held various prestigious positions viz., General Manager & CEO Bank of India US Operations based in New York, Executive Director holding Concurrent charge as Chairman & Managing Director (CMD) of Canara Bank, CMD of Indian Bank and Chairman of National Bank of Agriculture & Rural Development. As a CMD of Indian Bank (weakest Public Sector Bank then), she has the reputation of turning around the same in three years, which is now ranked amongst the top Public Sector Bank in India. Mrs. Ranjana Kumar, is a ?rst woman Chairman of a Public sector Bank in India. She was also appointed as the Vigilance Commissioner, Central Vigilance Commission, a Constitutional Post. She has given lectures at various forums in India and abroad including IITs, IIMs, Wharton School, Stanford University, World Bank, Asia Society New York. She also authored a book “A New beginning the Turn Around Story of Indian Bank” Foreword by Dr. A P J Abdul Kalam, Former President of India. None of the Directors, except the incumbent Mrs. Ranjana Kumar is interested or concerned in the above resolution.
By Order of the Board Place : Hyderabad Date : May 9, 2012 P V Rama Seshu General Manager & Company Secretary
Important Communication to Members
The Ministry of Corporate A?airs has taken a “Green Initiative in the Corporate Governance” by allowing paperless compliances by the companies and has issued circulars stating that service of notice/ documents including Annual Report can be sent by e-mail to its members. All those shareholders who have not yet registered their email Ids or holding shares in physical form are requested to immediately register their e-mail Ids with NSDL/CDSL and / or our RTA at [email protected] along with your Folio No. and No. of shares / Client Id and DP Id.
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GVK Power & Infrastructure Limited
Annexure
Brief details of Directors seeking appointment / re-appointment at this Annual General Meeting (Pursuant to Clause 49 of the Listing Agreement) Name of the Director Date of Appointment Date of Birth Quali?cations Expertise in speci?c functional areas Mrs. G Indira Krishna Reddy 20-02-2005 17-10-1944 B.Sc., OPM from Harvard Business School Mrs. G Indira Krishna Reddy is a Director of our Company. She has over 27 years of experience in the ?elds of ?nance, hospitality and management. Currently, she is the Managing Director of Taj GVK Hotels & Resorts Limited and the Vice Chairman of Novopan Industries Limited apart from being the Director on the boards of various other companies in the GVK Group. Mr. G.V. Sanjay Reddy 20-02-2005 18-11-1964 MBA (Finance), Bachelors Degree in Industrial Engineering from Purdue University, USA Mr. G.V. Sanjay Reddy is the Vice – Chairman of the Company. He is also the Managing Director of Mumbai International Airport Private Limited and Bangalore International Airport Limited apart from being the Director on the Board of various other Companies in the GVK Group. He is the Chairman of Confederation of Indian Industry, Southern Region for 2012-13 He was also nominated by World Economic Forum as a Young Global Leader for 2007. He was also the chairman of the CII Young Indians apart from being a member of the Board of Trustees of the Jagdish and Kamla Mittal Museum of Indian Art, a museum dedicated to the cause of propagating Indian Art and Culture. Bangalore International Airport Ltd GVK Industries Ltd Alaknanda Hydro Power Company Ltd GVK Oil & Gas Ltd GVK Energy Ltd GVK Power (Goindwal Sahib) Ltd Pinakini Share & Stock Brokers Ltd Taj GVK Hotels & Resorts Ltd GVK Gautami Power Ltd GVK Airport Developers (P) Ltd GVK Developmental Projects (P) Ltd GVK Perambalur SEZ (P) Ltd NA
List of other Companies in which Directorship is held as on 31.03.2012
Alaknanda Hydro Power Company Ltd GVK Energy Ltd GVK Projects & Technical Services Ltd Vertex Projects Ltd Novopan Industries Ltd Pinakini Share & Stock Brokers Ltd Taj GVK Hotels & Resorts Ltd GVK Industries Ltd GVK Gautami Power Ltd Bangalore International Airport Ltd GVK Perambalur SEZ (P) Ltd GVK Developmental Projects (P) Ltd Goriganga Hydro Power (P) Ltd NA
Chairman / Member of the *Committees of other Companies on which he/ she is a Member as on 31.03.2012
* The Committees include the Audit Committee, the Remuneration Committee and the Shareholder’s / Investor Grievance Committee.
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Name of the Director Date of Appointment Date of Birth Quali?cations
Mr. Ch G Krishna Murthy 24-07-2008 09-02-1931 MA, LLB, CA
Mrs. Ranjana Kumar 10-11-2011 10-12-1945 Graduate in Arts and a Gold Medalist Mrs. Ranjana Kumar served the Government of India for 44 years. She spent most of her carrier in the Banking sector and has held various positions viz. General Manger & CEO Bank of India US Operations based in New York, Executive Director holding Concurrent charge as Chairman & Managing Director (CMD) of Canara Bank, CMD of Indian Bank, Chairman of National Bank of Agriculture & Rural Development.
Expertise in speci?c functional Ch G Krishna Murthy, is an Independent areas Director on our Board. He is a Chartered Accountant and holds a Masters degree in Arts and a LLB Degree.
He has been a member, Law Commission India and has served on the Income Tax Appellate Tribunal in various capacities including President. He has also been a chairman of the Oil Selection Board, Ministry of Petroleum for the states of Karnataka, Andhra Pradesh and Orissa. He was also a practicing chartered As a CMD of Indian Bank (weakest Public accountant. Sector Bank then), she has the reputation of turning around the same in three years, He was a member of the Governing Council which is now ranked amongst the top of the International Centre for Alternative Public Sector Bank in India. Mrs. Ranjana Dispute Resolution (ICADR), a member of Kumar, is a ?rst woman Chairman of a the General Council of the National Academy Public sector Bank in India. of Legal Studies and Research University, a Chairman of the Chinmaya Vidyala and a She was also appointed as the Vigilance member of the Chinmaya Seva Trust. Commissioner, Central Vigilance Commission, a Constitutional Post. She has given lectures at various forums in India and abroad including IITs, IIMs, Wharton School, Stanford University, World Bank, Asia Society New York. She also authored a book “A New beginning the Turn Around Story of Indian Bank” Foreword by Dr. A P J Abdul Kalam, Former President of India.
List of other Companies in which Directorship is held as on 31.03.2012
Nil
Tata Global Beverages Ltd National Stock Exchange of India Ltd Coromandel International Ltd The Andhra Pradesh Paper Mills Ltd Tata Global Beverages Ltd International Asset Reconstruction Company Ltd National Stock Exchange of India Ltd The Andhra Pradesh Paper Mills Ltd
Chairman / Member of the *Committees of other Companies on which he/she is a Member as on 31.03.2012
NA
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GVK Power & Infrastructure Limited
Directors Report
Dear Shareholders, Your Directors have pleasure in presenting the 18th annual report together with the audited balance sheet and pro?t and loss account of your Company for the year ended March 31, 2012.
Consolidated Financial results
Being a holding company of di?erent vertical business operations, your company does not have independent operating revenues other than O&M fee, incentives and dividends, if any, from its subsidiaries, interest and other treasury income earned on surplus funds. Following is the summary of consolidated results of the company, its subsidiaries and associates. (Rs.Lakhs) Particulars Financial Performance Operational Income EBIDTA Other Income Interest & Financial Charges Depreciation Provision for taxes Profit before tax and share of profits for associate and minority interest Add: Share of income from Associates Less: Minority Interest Total Pro?t for the year Add: Balance brought forward from previous years Balance available for appropriation Appropriations Transfer to General Reserve EPS (Rupees) Weighted Average no. of Equity Shares Basic and Diluted Financial Position Fixed Assets ( Net of Depreciation) Cash and Bank balance Net Current Assets Total Assets Equity Reserves Net worth 1,670,708 172,626 (161,433) 2,289,511 15,792 332,345 348,137 686,810 32,820 (26,930) 1,071,470 15,792 322,886 338,678 1,579,210,400 0.39 1,579,210,400 0.98 249,183 69,408 8,887 46,727 24,893 6,782 (107) 10,639 4,386 6,146 59,052 65,198 191,466 51,399 2,853 26,314 18,364 2,132 7,442 11,093 3,044 15,491 43,561 59,052 2011-12 2010-11
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Our total income increased by 24.7 % to Rs.2,58,070 Lakhs from Rs.1,943,19 Lakhs in the previous year. The Power assets contributed an income of Rs.1,73,124 Lakhs compared to Rs.1,73,475 Lakhs (67.10 % of total income) in the previous year. The Transportation asset contributed an income of Rs.23,192 Lakhs (8.99% of total income) compared to Rs.19,243 Lakhs in the previous year. Airport assets contributed an income of Rs.59,700 Lakhs (23.15% of total income). The other assets contributed Rs.1,901 Lakhs compared to Rs.1,601 Lakhs in the previous year. Airport assets (Mumbai and Bangalore Airports) as the associates of the company have contributed to net pro?t of Rs.106,39 Lakhs compared to Rs.11,093 Lakhs in the previous year. The net pro?t a?er tax is Rs.6,164 Lakhs as against Rs.15,491 Lakhs in the previous year. During the current year (from October 18, 2011), Mumbai International Airport Private Limited (MIAL) has become a subsidiary (associate company in the previous year) of your Company by virtue of increase in our equity holding from 37% to 50.50%. Accordingly, these ?nancial statements re?ect every line item of the ?nancials of MIAL. However, Bangalore International Airport Limited (BIAL) continues to be an associate of your company during the current year (same as in previous year), even though our equity holding in BIAL was increased from 29% to 43% during the current year (from October 19, 2011). The net pro?t a?er tax, share of pro?t from associate and minority interest was Rs.61.48 Crores as against Rs.154.92 Crores in the previous year. The fall in net pro?t is mainly attributable to drop in generation of power due to shortage of fuel (Gas) and an increase in interest cost.
Dividend
The Board of Directors of your company has not recommended any dividend for the ?nancial year 2011-12.
Subsidiaries and Consolidated Financial Statements
Subsidiaries of your Company are predominantly spread across 3 main vertical business operations i.e., Energy, Airport and Transportation. In addition, your Company has other subsidiaries, which are engaged in Oil & Gas and Industrial Park amongst others. As on March 31, 2012 your Company has 7 direct subsidiaries, 15 step down subsidiaries and 2 associate companies. A list of these companies is provided separately as Annexure “A” to this report. There has been no material change in the nature of the business of the subsidiaries. As required under the Listing Agreement entered into with the Stock Exchanges, a consolidated ?nancial statement of the Company and all its subsidiaries is attached. The consolidated ?nancial statements have been prepared in accordance with the relevant accounting standards as prescribed under section 211(3C) of the Companies Act, 1956. These ?nancial statements disclose the assets, liabilities, income, expenses and other details of the company, its subsidiaries and associate companies. Pursuant to the provision of section 212(8) of the Companies Act, 1956, the Ministry of Corporate A?airs (MCA), Government of India, New Delhi vide its Circular No.2/2011 dated: 08-02-2011 has granted general exemption from attaching the balance sheet, statement of pro?t and loss and other documents of the subsidiary companies with the balance sheet of the Company. As required under the said Circular, the Board of directors of your Company at its meeting held on February 14, 2012 gave its speci?c consent for not attaching the balance sheets of its subsidiaries, as they would be made available to its members at the company’s website. A statement containing the brief ?nancial details of the Company’s subsidiaries for the ?nancial year ended March 31, 2012 is provided as Annexure “B” to this report. Accordingly, this annual report does not contain the reports and other statements of the subsidiary companies. Any member intends to have a certi?ed copy of the Balance Sheet and other ?nancial statements of these subsidiaries may write to the Company Secretary. These documents are available for inspection during business hours at the registered o?ce of the company and also at the registered o?ces of the respective subsidiary companies.
Developments in the existing assets
i) Energy During the FY 2010-11, your Company through its subsidiary i.e. GVK Energy Limited had entered into an Investment Agreement with M/s. 3i India Infrastructure Fund, Actis Infrastructure India PCC Limited and an a?liate of the Government of Singapore Investment Corporation (GIC) for a total Private Equity investment of Rs.1,498 Crores for an ultimate equity dilution of 24.97%. Out of this, the second & ?nal tranche of Rs.561.75 Crores was received from the said PE Investors during the current ?nancial year.
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GVK Power & Infrastructure Limited
ii) Airport During the year (on 18-10-2011), your company through its step down subsidiary GVK Airport Holdings Private Limited (GVKAHPL), acquired additional 10,80,00,000 equity shares of Rs.10 each (aggregating to 13.50% stake) of Mumbai International Airport Private Limited (MIAL) from Bid Services Division (Mauritius) Limited (BSDM) at a cost of US$ 231 Million thereby increasing the aggregate total equity holding in MIAL to 50.50% from 37%. Further, during the year (on 19-10-2011), your company through its step down subsidiary Bangalore Airport & Infrastructure Developers Private Limited, acquired additional 53,844,000 equity shares of Rs.10 each (aggregating to 14% stake) in Bangalore International Airport Limited (BIAL) from Siemens Project Ventures GmbH (Siemens) at a cost of Rs.613.82 Crores making the aggregate total e?ective stake in BIAL to 43% from 29%. iii) Transportation During the year, your Company formed a SPV in the name of Shivpuri Dewas Expressway Private Limited, a subsidiary of GVK Transportation Private Limited, a wholly owned subsidiary of the Company to implement the 332.46 Km Shivpuri Dewas Expressway project. With this, there would be three road projects under development in this vertical business.
Emerging Opportunities
Resources During the year, your company had participated as an investor for the acquisition of a major coal resource and infrastructure development project in the Galilee Basin, Queensland, Australia. Your Company currently holds 10% in the equity share capital of GVK Coal Developers (Singapore) Pte Limited (“GVKCD”) a step down subsidiary of GVK Natural Resources Private Limited (“GVKNRPL”) a GVK Group company, with an option to increase its stake upto 49%. The coal resource consists of an estimated 7.9 billion tonnes compliant with Australia’s Joint Ore Reserves Committee (JORC) resource categorisation with a 3.3 billion tones reserves in Measured + Indicated categories along with a 495 km rail line and a 60 million tonnes per annum port at Abbot Point. GVKNRPL has entered into a transaction through its subsidiaries, incorporated in Singapore, to acquire: a. 79% shareholding in Hancock Coal and Hancock Alpha West Coal Projects, located in the Galilee basin in the State of Queensland, Australia while the balance 21% has been retained by the Seller i.e. Hancock Prospecting Pty Ltd. The JORC study estimates the combined resources at Alpha and Alpha West at 3.6 billion tonnes. b. 100% shareholding in Kevin’s Corner Coal Project, located adjacent to Alpha Coal Project. The JORC study estimates the resources to be around 4.3 billion tonnes. c. 100% shareholding in the proposed rail project connecting the above coal projects to the port of Abbot Point and in the proposed port expansion project to export the coal from the aforesaid coal projects. The acquisition o?ers the following bene?ts to GVKPIL. a. good investment opportunity with signi?cant value upside. b. option to enter into long term coal purchase contracts up to 20 Million tonnes per annum (to supply around 7,500 megawatts of power generating capacity) for securing long term fuel supplies for its subsidiary GVK Energy Limited. c. option to take a lead role in the company that will own Rail and Port projects, on mutually agreed terms with GVKNRPL.
Financial Statements The audited stand alone and consolidated ?nancial statements of the company along with its subsidiary companies are attached herewith and form part of this annual report. These have been prepared in accordance with the provisions of the Companies Act, 1956, the Listing Agreement, the Accounting Standard (AS-21) on Consolidated Financial Statements and the Accounting Standard (AS-23) on Accounting for Investments in Associates.
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Awards and recognitions Following are some of the awards and recognitions that your Company/its Subsidiaries/Associates received during the current year
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GVK has been awarded the ‘Asia Deal of the year’ and the ‘Asia Outbound Investor of the year’ at the 8th annual Asia Mining Congress held in Singapore on 28-03-2012. GVK was recognized for its acquisition of the Australia based Hancock Coal and Infrastructure projects, which have paved the way for future investments from other corporate investors.
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GVKPIL is ranked among top ten companies on “Carbon Disclosure Leadership Index” in India as per the CDP India 200 Report 2011. GVK’s EPC arm GVK Projects & Technical Services has received ISO 9001-2008 accreditation from internationally renowned agency TUV NORD. GVK EMRI has bagged the following prestigious awards
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The NASSCOM 2012 Innovation Award. Marico’s Innovation for India Awards 2012 in Public Service category. Won eINDIA award for enabling IT in Saving Lives. GVKEMRI Assam received the Runner-Up in 6th National Road Safety Award
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Bangalore International Airport Limited (BIAL) has bagged the following prestigious awards
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First Company in India to be certi?ed as a Green Company as per the CII GreenCo rating system Won the ‘Most Innovative’ Environmental Best Practice Award 2012 in the CII Environmental best practice award event. Won the Water Award for outstanding work in water management and sustainability at the Bangalore World Water Summit 2012.
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Mumbai International Airport Limited won the STAT TIMES International Award for Excellence in Air Cargo in the Indian region category - Cargo Airport of the year as runners up.
Following are some of the achievements, awards and recognitions that your Promoter Directors received during the year:
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Dr. G V Krishna Reddy, Chairman & Managing Director of your company has been awarded as the ‘CONSTRUCTION WORLD-MAN OF THE YEAR’ by the Construction World magazine. Mr. G V Sanjay Reddy, Vice Chairman of your company has been elected as Chairman of Confederation of Indian Industry, Southern Region for 2012-13.
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Corporate Governance Report and Management Discussion and Analysis Your Company continues to practice the best of the Corporate Governance policies. Your Company is in compliance with the recommendations of the Narayana Murthy Committee on Corporate Governance constituted by the Securities and Exchange Board of India (SEBI). A certi?cate, from a Company Secretary in whole time practice, on compliance with the mandatory recommendations of the committee is provided as an annexure to the Directors’ Report. As required under Clause 49 of the Listing Agreement with the Stock Exchanges, a Corporate Governance Report and management Discussion and Analysis are attached to this annual report. Corporate Social Responsibility (CSR)
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The GVK Group’s social responsibility initiatives are implemented through GVK Foundation, the CSR arm of the GVK Group. The Foundation is involved mainly in the areas of education, health and hygiene; community-based programs; empowerment and entrepreneurship development, arts, music, sports and various social economical and cultural activities. It reaches out with the objective of improving the quality of life of the economically deprived people in the places where the Group has a presence.
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The Foundation has been funding GVK EMRI which was taken over the management of Emergency Management and Research Institute (EMRI), a non-pro?t organization and is providing integrated emergency response service across the country in 11 States and 2 UT in India under public private partnership mode.
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GVK Power & Infrastructure Limited
Directors
Appointments by rotation In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company Mrs. G Indira Krishna Reddy, Mr. G V Sanjay Reddy and Mr. Ch G Krishna Murthy, Directors of the company will retire by rotation at this meeting and being eligible, your Board recommends their re- appointment. The Board of Directors at their meeting held on November 10, 2011 appointed Mrs. Ranjana Kumar as an additional director subject to your approval. Your Board recommends her appointment as an independent director whose period of o?ce shall be liable to retire by rotation. Cessation During the year Mr. Pradip Baijal, Director has expressed his inability to continue as a director due to his other commitments. The board of directors at its meeting held on November 10, 2011 has accepted the same and placed on record its appreciation for the services rendered by Mr. Pradip Baijal, during his tenure as director of the company. Superannuation Mr. A Issac George, who has been with the Group for over a period of 17 years has attained superannuation on May 9, 2012 as Chief Financial O?cer of the Company. He will continue to be on the Board as a Non Independent and Non Executive Director of the Company and is liable to retire by rotation. The Board placed on record its deep appreciation of the services rendered by Mr. Issac George. In recognition of his meritorious services, he is being appointed as a Chief Executive O?cer of the Transportation vertical. Directors’ Responsibilities Statement Pursuant to the requirements speci?ed under Section 217 (2AA) of the Companies Act, 1956, with respect to the Directors’ Responsibilities Statement, it is hereby con?rmed that; i) in the preparation of the annual accounts for the ?nancial year ended March 31, 2012, the applicable Accounting Standards have been followed along with proper explanations relating to material departures; ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of a?airs of the Company as at March 31, 2012 and of the pro?t or loss of the Company for the said period; iii) that the directors had taken proper and su?cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and iv) the directors had prepared the annual accounts for the ?nancial year ended March 31, 2012 on a “going concern” basis. Auditors M/s. S R Batliboi & Associates, the Statutory Auditors of the Company will retire at the conclusion of this Annual General Meeting. They have o?ered themselves for reappointment as statutory auditors and have con?rmed that their re-appointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956. The Notes to Accounts forming part of the ?nancial statements are self explanatory and need no further explanation. Other Information The Audit Committee of the Company has reviewed the audited ?nancial statements for the year under review at its meeting held on May 8, 2012 and recommended the same for the approval of the Board of Directors. Internal Control Systems and their adequacy The Management continuously reviews the internal control systems and procedures for the e?cient conduct of the Company’s business. The Company adheres to the prescribed guidelines with respect to the transactions, ?nancial reporting and ensures that all its assets are safeguarded and protected against losses. The Internal Auditor of the Company conducts the audit on regular basis and the Audit Committee actively reviews internal audit reports and e?ectiveness of internal control systems.
12
Internal Control Systems are implemented to safeguard the Company’s assets from loss or damage, to keep constant check on the cost structure, to prevent revenue leakages, to provide adequate ?nancial and accounting controls and implement accounting standards. Public Deposits During the year under review, your company has neither invited nor accepted any ?xed deposits from the public. Particulars of Employees As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employee(s) are set out in the Annexure “C” to this report. Foreign Exchange Earnings and Outgo In accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the information relating to foreign exchange earnings and outgo is provided under Notes to the Balance Sheet and Pro?t and Loss Account. Acknowledgements The Directors of your Company thank the Government of India, various State Governments and their concerned Department / Agencies / Regulatory Authorities for their continued support and cooperation. The Directors also wish to place on record the support extended by various Banks, Financial Institutions and every stakeholder of the Company. The Directors further wish to appreciate and value the contributions made by every employee of the GVK Family.
For and on behalf of the Board of Directors
Place : Hyderabad Date : May 9, 2012
Dr. G V Krishna Reddy Chairman & Managing Director
13 13
GVK Power & Infrastructure Limited
Annexure – A
Ultimate Holding / Parent Company
1. GVK Power & Infrastructure Limited
Subsidiaries (As on March 31, 2012)
1. GVK Energy Limited 2. GVK Airport Developers Private Limited 3. GVK Transportation Private Limited 4. GVK Oil & Gas Limited 5. GVK Perambalur SEZ Private Limited 6. GVK Developmental Projects Private Limited 7. Goriganga Hydro Power Private Limited
Step Down Subsidiaries (As on March 31, 2012)
1. GVK Industries Limited 2. GVK Gautami Power Limited 3. Alaknanda Hydro Power Company Limited 4. GVK Power(Goindwal Sahib) Limited 5. GVK Coal (Tokisud) Company Private Limited 6. GVK Ratle Hydro Electric Private Limited 7. GVK Power (Khadur Sahib) Private Limited 8. GVK Airport Holdings Private Limited 9. Bangalore Airport & Infrastructure Developers Private Limited 10. GVK Deoli Kota Expressway Private Limited 11. GVK Bagodara Vasad Expressway Private Limited 12. GVK Shivpuri Dewas Expressway Private Limited 13. GVK Energy Ventures Private Limited 14. GVK Jaipur Expressway Private Limited 15. Mumbai International Airport Private Limited
Associates (As on March 31, 2012)
1. Bangalore International Airport Limited 2. Seregarha Mines Limited
14
Annexure – B
State pusuant to approval of the Central Government under section 212(8) of the Companies Act, 1956 about the ?nancial information of the Subsidiary Companies
(Rs.Lakhs)
Name of the Subsidiary
GVK Energy Ltd
GVK Airport GVK Goriganga Developers Transportation Hydro Pvt Ltd Pvt Ltd Power Pvt Ltd 25,000 3,750 1
GVK Oil GVK GVK & Gas Perumbalur Developmental Ltd SEZ Pvt Ltd Projects Pvt Ltd 5 1 1
Issued and Subscribed Share Capital Reserves Total Assets Total Liabilities Investments (except investments in Subsidiaries) Turnover Pro?t/(Loss) before taxation Provision for taxation Pro?t/(Loss) a?er taxation Proposed dividend
44,827
133,539 261,900 261,900 4,410
(25,735) 395,351 395,351 31
(780) 92,419 92,419 140
4,819 4,819
(4) 16,922 16,922
11,656 11,656
(4) 91 91
6,576 5,250
37 (16,489)
612 (669) (4)
0 0
1,711 3,539
10 (16,499)
(0) (669) -
0 (4) 0
Nil
Nil 250,000,000
Nil 37,500,000
Nil 10,000
Nil 50,000
Nil 10,000
Nil 10,000
Number of shares held by 250,000,000 GVKPIL with its nominess in the subsidiaries at the end of the ?nancial year. Extent of interest of the holding company 73.94%
100%
100%
100%
100%
100%
100%
Notes: 1. The Ministry of Corporate A?airs (MCA), Government of India, New Delhi vide its Circular No.2/2011, dated: 8-2-2011 has granted general exemption to all the Companies for not attaching the Balance sheer, Pro?t & Loss account etc. of subsidiaries with the Annual Report to the Holding Company, subject to compliance of the conditions speci?ed therein. 2. The Company will make available the annual accounts of the subsidiary companies and related detailed information sought by the members of the company or its subsidiearies. Further, the annual accounts of the subsidiary companies will also be kept for inspection by any member of the company or its subsidiary at the registered o?ce of the company and that of the subsidiary companies concerned.
15 15
GVK Power & Infrastructure Limited
Annexure – C
Annexure to the Directors’ Report
Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1988 and forming part of the Directors’ Report for the year ended March 31, 2012
% of equity shares held in company 0.50 Date of commencement of employment 14-10-2005
Name of the employee Dr. G V K Reddy
Age
Quali?cation
Designation
Experience (Years) 48
Remuneration received Rs.144 lakhs
Previous Employment Executive Chairman GVK Industries Limited
75
BA and Owner / President Management program from Harvard University, Doctorate in Philosophy, JNTU, Hyderabad B.Com, ACA
Chairman & Managing Director
A Issac George
58
Director & Chief Financial O?cer
33
Nil
1/10/2005
Rs.173 lakhs
Director (Finance) GVK Industries Ltd
a) Remuneration received includes salary and other allowances, perquisites etc. b) Mrs. G Indira Krishna Reddy, Director, Mr. G V Sanjay Reddy, Vice Chairman and Mr. Krishna Ram Bhupal, Director of the Company are relatives of Dr. G V Krishna Reddy.
For and on behalf of the Board of Directors
Place : Hyderabad Date : May 9, 2012
Dr. G V Krishna Reddy Chairman & Managing Director
Report on Corporate Governance
In compliance with Clause 49 of the Listing Agreement entered into with the stock exchanges, the Company is providing below a report on the matters as mentioned in the said clause and practices followed by the Company.
1. Philosophy of the Company on the code of governance
The Company aims at achieving transparency, accountability and equity in all facets of its operations, and in all interactions with stakeholders, including shareholders, employees, government, lenders and other constituents, while ful?lling the role of a responsible corporate representative committed to good corporate practices. The Company is committed to achieve good standards of Corporate Governance on a continuous basis by laying emphasis on ethical corporate citizenship and establishment of good corporate culture which aims at true Corporate Governance. The Company believes that all its operations and actions must result in enhancement of the overall shareholder value in terms of maximizing shareholder’s bene?ts, over a sustained period of time.
16
2. Board of Directors
a) Size and composition of the Board
The policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board, and to separate the Board functions of governance and management. The total strength of the Board as on March 31, 2012 is 12 (Twelve) Directors comprising of four Promoter Directors, seven Independent Directors and one Non-Independent Director. Among the Directors, Executive Directors and ten are Non-executive Directors as on March 31, 2012. The Board periodically evaluates the need for increasing or decreasing its size. Following is the present composition of our Board and their number of directorships in other companies. Number of memberships in Board of other Public Limited Companies 11 + Associated with other Committees of Public Limited Companies Member Chairman -
Name of the Director
Category
Director Identi?cation Number 00005212
Relationship with other directors All promoter directors are relatives All promoter directors are relatives All promoter directors are relatives All promoter directors are relatives None None None None None None None None None
Dr. G V Krishna Reddy
Chairman & Managing Director NEPD
G Indira Krishna Reddy
00005230
10
-
-
G V Sanjay Reddy
Vice Chairman NEPD NEPD
00005282
9
-
-
Krishna Ram Bhupal
00005442
11
-
-
Abid Hussain A Ramakrishna K N Shenoy P Abraham Pradip Baijal * Ranjana Kumar ** Ch G Krishna Murthy S Balasubramanian A Issac George #
NEID NEID NEID NEID NEID NEID NEID NEID NID
00612504 00027520 00021373 00280426 01417748 02930881 01667614 02849971 00005456
7 11 4 11 4 5 5
4 8 3 3 2
1 1 -
NEPD : Non-Executive Promoter Director
NEID : Non-Executive Independent Director
NID : Non-Independent Director
+ Committee memberships considered are of other companies only and those as required under the Code of Corporate Governance. * Ceased to be a Director w.e.f. 10-11-2011 ** Appointed as Director w.e.f. 10-11-2011 # Superannuated as CFO w.e.f. 09-05-2012 and will continue on Board as Non-Executive Non-Independent Director
None of the directors is i) A board member in more than ??een public limited companies ii) A member in more than ten committees; and iii) Acting as a chairman in more than ?ve committees across all companies in which he is a director.
17 17
GVK Power & Infrastructure Limited
b) Board Meetings held during the year
The Board of Directors met ?ve times during the year on May 7, 2011, June 19, 2011, August 6, 2011, November 10, 2011 and February 14, 2012. The maximum gap between the two meetings was less than four months.
c) Directors Attendance and Sitting fee paid
Given in the table below is the Board Meeting attendance record of the directors during the year 2011-2012. Name of the Director Dr. G V Krishna Reddy G Indira Krishna Reddy G V Sanjay Reddy Krishna Ram Bhupal A Ramakrishna Abid Hussain K N Shenoy P Abraham Pradip Baijal * Ch G Krishna Murthy S Balasubramanian A Issac George Ranjana Kumar** *ceased to be a Director w.e.f 10-11-2011 No. of meetings held 5 5 5 5 5 5 5 5 5 5 5 5 5 No. of meetings attended 5 5 4 3 5 3 3 1 2 5 3 5 1 Sitting Fees Paid (Rs.) 1,00,000 80,000 60,000 1,00,000 60,000 60,000 20,000 40,000 1,00,000 60,000 20,000 Presence at last AGM Yes Yes Yes Yes Yes Yes Yes No No Yes Yes Yes NA
** appointed as an Additional Director w.e.f. 10-11-2011
d) Availability of information to the members of the Board
The Board has unfettered and complete access to any information within the Company and from any of our employees. At meetings of the Board, it welcomes the presence of concerned employees who can provide additional insights into the items being discussed. The information regularly supplied to the Board includes: Annual operating plans and budgets, capital budgets and updates Periodic Financial Statements Minutes of meetings of audit, compensation and investor grievance committee of the Company along with board minutes of the subsidiary companies General notices of interest Information on recruitment and remuneration of senior o?cers just below the Board level, including appointment or removal of Chief Financial O?cer and Company Secretary Materially important litigations, show cause, demand, prosecution and penalty Fatal or serious accidents or dangerous occurrences, any material e?uent or pollution problems, if any Any materially relevant default in ?nancial obligations to and by us Details of any joint venture, acquisitions of companies or collaboration agreement Transactions that involve substantial payment towards goodwill, brand equity or intellectual property Signi?cant development on the human resources front Sale of material, nature of investments in subsidiaries and assets, which are not in the normal course of business Details of foreign exchange exposure and the steps taken by the management to limit risks of adverse exchange rate movement Non-compliance of any regulatory, statutory or listing requirements as well as shareholder services such as non-payment of dividend and delays in share transfer
? ? ?
?
? ? ? ? ? ? ? ?
?
The Board also periodically reviews compliance reports of all laws applicable to the Company, prepared by the designated employees as well as steps taken to rectify instances of non-compliance.
18
3. Committees of the Board
a) Code of Conduct
The Board of Directors of the Company has laid a code of conduct for Directors and the senior management. The code of conduct is posted on the Company’s website. All Directors and designated personnel in the senior management have a?rmed compliance with the code for the year under review. A declaration to this e?ect duly signed by Dr. G V Krishna Reddy, Chairman & Managing Director is annexed to this report. Details of Directors seeking appointment / re-appointment as required under Clause 49 of the Listing Agreement pursuant to the requirements of the Listing Agreement of Stock Exchanges on Corporate Governance, the information about the Directors proposed to be appointed / re-appointed is given as an Annexure to the notice.
b) Audit Committee
In terms of Clause 49 of the Listing Agreement, the Audit Committee constituted by the Board consists of only Non-Executive and Independent Directors. The committee had met four times on May 6, 2011, August 6, 2011, November 9, 2011 and February 13, 2012. In order to ensure the best corporate governance practices across the company, the Board of Directors, at its meeting held on 10th November, 2011, has decided that the position of Chairman of the Audit Committee would be on a rotational basis, once in every three years. Accordingly, the Board appointed Mr. Ch G Krishna Murthy as Chairman of the Audit Committee. Mr. S Balasubramanian was appointed as a member of the Committee on 10th November, 2011 in place of Mr. K N Shenoy. The attendance details for the Committee meetings are as follows: Name of the Member Ch G Krishna Murthy A Ramakrishna P Abraham S Balasubramanian* K N Shenoy ** Category Chairman Member Member Member Member No. of meetings Held 4 4 4 4 4 Attended 4 4 1 0 3
*Appointed as Member w.e.f 10-11-2011 ** Ceased to be a Member w.e.f 10-11-2011
c) The terms of reference as stipulated by the Board to the Audit Committee include:
a) Review of the Company’s ?nancial reporting process and disclosure of its ?nancial information. b) Recommending the appointment and removal of external auditors, ?xation of audit fee and recommending payment for any other services. c) Reviewing with the management the annual ?nancial statements before submission to the Board, focusing primarily on i) Changes in accounting policies and practices ii) Major accounting entries involving estimates based on the exercise of judgment by the management iii) Quali?cations in the dra? audit report iv) Signi?cant adjustments arising out of audit v) The going concern assumption vi) Compliance with accounting standards vii) Compliance with stock exchange and legal requirements concerning ?nancial statements viii) Disclosure of any related party transactions d) Reviewing with the management, the external and internal auditors the adequacy of internal control systems. e) Reviewing with the management, the quarterly ?nancial statements before submission to the Board for approval. f) Discussion with internal auditors of any signi?cant ?ndings and follow up there on. g) Reviewing the ?ndings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or failure of internal control systems of a material nature and reporting the matter to the Board. h) Discussion with statutory auditors about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. The committee is in compliance with its requirements under this charter.
19 19
GVK Power & Infrastructure Limited
d) Remuneration Committee
The Remuneration Committee comprises of following three Non-Executive Independent Directors. A Ramakrishna - Chairman K N Shenoy P Abraham - Member - Member
The committee has been constituted to recommend/review the remuneration package of the Managing/Whole-Time Directors apart from deciding other matters such as framing and implementation of stock option plans to employees, etc. The remuneration policy is directed towards rewarding performance based on review of achievements which are being reviewed periodically which is in consonance with the existing industry practices. This Committee meets as and when required.
e) Shareholders’ / Investors Grievance Committee
The Shareholders’ / Investors’ Grievance Committee comprises of following three Directors and the majority of whom are Non-Executive Independent Directors. A Ramakrishna - Chairman Ch G Krishna Murthy A Issac George Member Member
The Shareholders’/Investors’ Grievance Committee reviews and redresses all the grievances periodically and meets as and when required. Details of complaints received / resolved during the ?nancial year 2011-12 Nature of Complaint Non receipt of Refund Order For Non receipt of - Dividend Warrant - Annual Report - Share Certi?cate Total 28 34 47 109 28 34 47 109 0 0 0 0 Received 0 Resolved 0 Pending 0
f) Ethics & Compliance Committee
The Ethics & Compliance Committee was constituted pursuant to the amended regulations of SEBI (Insider Trading Regulations), 1992 and comprises of the following Non-Executive Independent Directors. Abid Hussain - Chairman A Ramakrishna K N Shenoy Member Member
The Company has a Code of Conduct for Prevention of Insider Trading as prescribed by the Securities and Exchange Board of India. The Committee monitors the implementation of the Code and takes on record the status reports detailing the dealings in securities by the Speci?ed Persons.
4. Whistle-blower policy
We have established a policy for all the employees to report concerns about unethical behavior, actual or suspected fraud, or violation of our code of conduct or ethics policy. The mechanism under the said policy also provides for adequate safeguards against victimization of employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. We further a?rm that during the ?nancial year 2011-12, no employee has been denied access to the audit committee. Mr. P V Rama Seshu, General Manager & Company Secretary has been designated as the Compliance O?cer and also acts as the Secretary to all the above Committees.
20
5. General Body Meetings
a) Annual General Meetings
Year 2008-09 2009-10 2010-11 Date 28.07.2009 31.07.2010 06.08.2011 Time 11.30 A.M. 11.30 A.M. 12.05 P.M. Venue Sri Satya Sai Nigamagamam, Sri Nagar Colony, Hyderabad - 500 074 Sri Satya Sai Nigamagamam, Sri Nagar Colony, Hyderabad - 500 074 Sri Satya Sai Nigamagamam, Sri Nagar Colony, Hyderabad - 500 074
b) Extraordinary General Meeting
During the F.Y 2011-2012 the company had not held any Extraordinary General Meeting.
c) Postal Ballot
During the F.Y 2011-12 the company has not passed any resolutions through Postal Ballot.
6. Disclosures
The Board of Directors receives the requisite disclosures, from time to time, relating to ?nancial and commercial transactions from the key managerial personnel of the Company. There are no materially signi?cant related party transactions, which have potential con?ict with the interest of the Company at large. There have not been any occasion of non-compliance by the Company and therefore, no penalties or strictures have been imposed on the Company by Stock Exchanges or SEBI or any other statutory authority on any matter related to capital markets since the company was listed on the stock exchanges.
7. Reconciliation of shares capital audit
A Company Secretary in whole time practice carried out a share capital audit to reconcile the total admitted equity share capital with NSDL / CDSL and the total issued and listed equinity share capital. The audit report con?rms that the total issued / paidup capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with NSDL / CDSL.
8. Subsidiary companies
The Audit Committee reviews the consolidated ?nancial statements of the company and the investments made in and by its ultimate subsidiary companies. The minutes of the Board meetings of the subsidiary companies along with signi?cant developments of the subsidiaries are periodically placed before the Board of Directors of the company.
9. Means of Communication
The quarterly and annual ?nancial results of the Company are generally published in National Newspapers i.e. The Economic Times, The Financial Express or Business Standard in English and Andhra Prabha or Surya a regional newspaper in vernacular language. The results are also displayed in the company’s website www.gvk.com. Press release made by the company are also displayed on the company’s website. A management discussion and Analysis statement is annexed hereto and forms part of the Annual Report.
10.SEBI Complaints redress System (SCORES)
SEBI has initiated SCORES for processing the investor complaints in a centralized web based redress system and online redressel of all the shareholders complaints. The company is in compliance with the SCORES and redressed the shareholders complaints well within the stipulated time.
21 21
GVK Power & Infrastructure Limited
11. General Shareholder Information
1. Annual General Meeting Day, date and time Venue Book Closure Dates Calendar of events (tentative and subject to change) for ?nancial reporting for the period ending - Jun 30, 2012 - Sep 30, 2012 - Dec 31, 2012 - Mar 31, 2013 - AGM for 2012-13 Listing of equity shares is at : Wednesday, the August 8, 2012 at 11.30 am : Sri Satya Sai Nigamagamam, 8-3-987/2 Srinagar Colony, Hyderabad - 500 073 : 04-08-2012 to 08-08-2012 (both days inclusive)
2. 3.
: : : : :
Aug 8, 2012 Nov 2012* Feb 2013* May 2013* Aug 2013* (*tentative)
4.
: The National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex Bandra East, Mumbai - 400 051 The Bombay Stock Exchange Limited Floor 25, P J Towers, Dalal Street Fort, Mumbai - 400001 Annual Listing Fee has been paid for the year 2012-13 to both the Exchanges
5. 6. 7.
Stock Code Corporate Identi?cation Number (CIN) allotted by the Ministry of Corporate A?airs Share Transfer System
: BSE : 532708, NSE: GVKPIL ISIN : INE251H01024 : L74999AP2005PLC059013 : Share transfer requests, which are received in physical form are processed and the share certi?cates returned within a period of 15 days in most cases, and in any case within 30 days, from the date of receipt, subject to the documents being in order and complete in all respects. : Secretarial Audit is being carried out every quarter by a practicing Company Secretary and his audit report is placed before the Board for its perusal and ?led regularly with the Stock Exchanges within the stipulated time. : Registered O?ce: ‘Paigah House’, 156-159, Sardar Patel Road, Secunderabad - 500 003 Phone: 040-27902663 / 64, Fax: 040-27902665 Email: [email protected], Website: www.gvk.com : Karvy Computershare Private Limited Unit: GVK Power & Infrastructure Limited Plot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081 Phone: 040 - 44655168, Fax : 040 - 23420814 E-mail: [email protected], website: www.karvy.com : P V Rama Seshu, General Manager & Company Secretary-Compliance O?cer GVK Power & Infrastructure Limited 156-159, ‘Paigah House’, Sardar Patel Road, Secunderabad - 500 003 Phone: 040-27902663/64, Fax: 040-27902665
8.
Secretarial Audit
9.
Location
10. Registrar & Share Transfer Agents
11. Query on the Annual Report (Shall reach 10 days before the AGM)
22
Changes in Share Capital
Date of Allotment 02/12/1994 02/12/1994 10/09/1996 18/01/1997 18/06/1997 27/08/2005 14/10/2005 Number of Shares 1 1 8 20,990 14,000 52,85,000 24,76,194 Issue Price (Rs.) 10.00 10.00 10.00 10.00 10.00 10.00 155.41 Consideration Cash Cash Cash Cash Cash Other than Cash Cash Reasons for Allotment Subscribers to the Memorandum Subscribers to the Memorandum Allotment to JOMC Mauritius Allotment to JOMC Mauritius Allotment to Triumph Investments Limited Bonus issue in the ratio 151:1 Preferential allotment to certain Promoters, Promoter Group Companies and others Preferential allotment to Transoceanic Projects Limited Initial Public O?ering Quali?ed Institutional Placement (QIP) Under the Scheme of Amalgamation Under the Scheme of Arrangement Quali?ed Institutional Placement (QIP) Cumulative Paid up Capital (Rs.) 10 20 100 210,000 350,000 53,200,000 77,961,940 Cumulative Share Premium (Rs.) Nil Nil Nil Nil Nil Nil 360,063,369.54
14/10/2005
75,72,695
155.44
Cash
153,688,890
1,461,436,130.34
21/02/2006 14/05/2007 17/10/2007 24/11/2007 09/07/2009 Total
82,75,556 375,69,230 7,03,25,000 90,46,215 173,361,500 1,579,210,400
310.00 325.00 10.00 10.00 41.25
Cash Cash Other than Cash Other than Cash Cash
236,444,450
3,944,102,930.34
612,136,750 15,778,410,380.34 1,315,386,750 15,778,410,380.34 1,405,848,900* 15,778,410,380.34 1,579,210,400 22,756,210,755.34
* E?ective from 15.02.2008 the face value of the shares have been changed from Rs.10/- per share to Re.1/- per share. Note: No changes in share capital during the F.Y 2011-12.
Rs. in Crores
NSE Market Capitalisation Chart
23 23
GVK Power & Infrastructure Limited
Monthly high, low and trading volume of equity shares of the Company during the ?nancial year 2011-12
National Stock Exchange (NSE) Month, Year High (Rs) April, 2011 May June July August September October November December January, 2012 February March 30.60 24.45 23.30 20.50 19.40 18.45 15.75 14.45 12.15 16.70 20.40 20.20 Low (Rs) 23.40 20.65 17.60 17.85 15.85 15.70 13.80 10.06 9.56 11.51 15.45 16.00 Volume (No) 214,036,166 153,386,523 166,943,257 102,089,509 173,853,640 186,600,944 144,337,663 232,899,436 213,224,469 356,919,998 508,409,172 509,115,766 High (Rs) 30.55 24.45 23.30 20.50 19.40 18.45 15.75 14.45 12.15 16.70 20.40 20.20 Low (Rs) 23.90 20.65 17.60 17.85 15.85 15.70 13.80 10.06 9.56 11.51 15.45 16.00 Volume (No) 54,671,190 30,313,390 37,279,389 24,445,718 38,362,714 39,630,139 28,691,229 58,139,321 54,278,159 80,945,170 95,019,817 95,231,056 BSE & NSE 268,707,356 183,699,913 204,222,646 126,535,227 212,216,354 226,231,083 173,028,892 291,038,757 267,502,628 437,865,168 603,428,989 604,346,822 Bombay Stock Exchange (BSE) Total Volume (No)
Price Movement in NSE
Price Movement in BSE
24
Category of Shareholders as on March 31, 2012 Category Promoter Companies Promoter Directors Promoter Individuals Directors & Relatives Foreign Institutional Investors Resident Individuals Mutual Funds Bodies Corporate Banks HUF Insurance Companies Non Resident Indians Clearing Members Trusts Government Overseas Corporate Bodies Foreign Nationals Foreign Corporate Bodies Total Distribution by category as on March 31, 2012 Category Promoters & Promoter Group Foreign Institutional Investors, FCB, OCB Banks, FIs, Mutual Funds etc Others Total Number of Shares 856,814,700 428,859,748 150,008,137 143,527,815 1,579,210,400 % of holding 54.25 18.15 11.46 16.14 100.00 Number of Shareholders 3 4 5 7 72 310,982 20 2,147 6 4,463 1 3,856 271 16 1 1 1 1 321,857 Total Shares 140,632,430 519,004,410 197,092,500 85,360 283,975,457 235,463,180 63,091,189 72,864,732 2,831,249 5,862,510 8,182,011 13,184,217 9,718,622 18,164,682 6,330,000 375,000 2,000 2,350,851 1,579,210,400 % of holding 8.91 32.86 12.48 0.01 17.98 14.91 4.00 4.61 0.18 0.37 0.52 0.83 0.62 1.15 0.40 0.02 0.00 0.15 100.00
Distribution by size as on March 31, 2012 Range of equity No. of % of shares held Shareholders Shareholders 1-5,000 5,001-10,000 10,001-20,000 20,001-30,000 30,001-40,000 40,001-50,000 50,001-1,00,000 1,00,001 & above Total 314,910 4,076 1,561 429 182 143 260 296 321,857 97.84 1.27 0.48 0.13 0.06 0.04 0.08 0.10 100.00 No. of equity shares 153,299,973 30,471,083 22,664,421 10,796,430 6,424,871 6,586,042 19,224,027 1,329,743,553 1,579,210,400
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% of equity shares 9.71 1.93 1.43 0.68 0.41 0.42 1.22 84.20 100.00
GVK Power & Infrastructure Limited
Dematerialisation of Shares as on March 31, 2012 Category NSDL CDSL Physical Total Shareholders 208,333 107,571 5,953 321,857 Number of Shares 1,491,262,995 85,584,748 2,362,657 1,579,210,400 % 94.43 5.42 0.15 100.00
As on March 31, 2012 over 99.85% of outstanding shares are held in demat form and the balance 0.15% in physical form. Trading in equity shares of the Company is permitted only in dematerialised form as per noti?cation issued by the Securities and Exchange Board of India (SEBI). Shareholders interested in dematerializing / rematerializing their shares are requested to write to the Registrar & Transfer Agent through their Depository Participants.
Compliance with Clause 49 of the Listing Agreement
The Company has been in compliance with all the requirements speci?ed under the revised Clause 49.
DECLARATION
A Code of Conduct for the Directors and Senior Management Personnel has already been approved by the Board of Directors of the Company. As stipulated under the provisions of sub-clause I(D) (ii) of Clause 49 of the Listing Agreement with stock exchanges, all the Directors and the designated personnel in the Senior Management of the Company have a?rmed compliance with the said code for the ?nancial year ended March 31, 2012.
For GVK Power & Infrastructure Limited
Place : Hyderabad Date : May 9, 2012
Dr. G V Krishna Reddy Chairman & Managing Director
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Managing Director and Chief Financial O?cer Certi?cation under clause 49 of the Listing Agreement with the Stock Exchanges
To, The Board of Directors of GVK Power & Infrastructure Limited In relation to the Audited Financial Accounts of the Company as at March 31, 2012, we hereby certify that a) We have reviewed the ?nancial statements and the cash ?ow statement for the year and that to the best of our knowledge and belief. i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; ii) These statements together present a true and fair view of the company’s a?airs and are in compliance with the existing accounting standards, applicable laws and regulations. b) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Company’s Code of Conduct. c) We accept responsibility for establishing and maintaining internal controls for ?nancial reporting and we have evaluated the e?ectiveness of the internal control systems of the company pertaining to ?nancial reporting and we have disclosed to the Auditors and the Audit Committee, de?ciencies in the design or operation of internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these de?ciencies. d) We have indicated to the Auditors and the Audit Committee i) Signi?cant changes in internal control over ?nancial reporting during the year; ii) Signi?cant changes in accounting policies during the year and that the same have been disclosed in the notes to the ?nancial statements; and iii) Instances of signi?cant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a signi?cant role in the Company’s internal control system over ?nancial reporting.
Dr. G V Krishna Reddy Chairman & Managing Director
Place : Hyderabad Date : May 9, 2012
A Issac George Director & CFO
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GVK Power & Infrastructure Limited
Certi?cate from a Company Secretary in Whole-time Practice on compliance of conditions of Corporate Governance as per Clause 49 of the Listing Agreement with Stock Exchanges
To, The Members of GVK Power & Infrastructure Limited We have reviewed the compliance of conditions of Corporate Governance by GVK Power & Infrastructure Limited, for the year ended on March 31, 2012, as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock Exchanges. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination has been limited to a review of the procedures and implementations thereof adopted by the Company for ensuring compliance with the conditions of the certi?cate of Corporate Governance as stipulated in the said Clause. It is neither an audit nor an expression of opinion on the ?nancial statements of the Company. No investor grievances are pending for a period exceeding one month against the Company as per the records maintained by the Company. In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and the management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the Company nor of the e?ciency or e?ectiveness with which the management has conducted the a?airs of the Company.
Place : Hyderabad Date : May 9, 2012
G Narender Company Secretary In Whole-time Practice FCS-4898 CP:5024
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Management Discussion and Analysis
1. About the Company
GVK Power & Infrastructure Limited (the Company) is a listed entity and an ultimate holding company of “GVK” which operates in diversi?ed assets through di?erent vertical businesses. The Company operates predominantly present in Energy, Airports, Transportation has presence in others like Oil & Gas, Industrial Park, Urban infrastructures etc. It conducts and operates its business through 7 subsidiaries, 15 step down subsidiaries and 2 associate companies (as on March 31, 2012). Revenues of the company are derived primarily from the O&M fee, incentives for operating the business of subsidiaries / associate and secondarily from the interest income earned out of managing the surplus funds through a better ?nancial planning.
2. The Economy and the Sectoral growth
Managing growth and price stability are the major challenges of macroeconomic policymaking. The Indian economy had grown by 6.9% in 2011-2012, a?er having grown at the rate of 8.4% in each of the two preceding years. This indicates a slowdown compared not just to the previous two years but 2003 to 2011 (except 2008-2009). With agriculture and services continuing to perform well, India’s slowdown can be attributed almost entirely to the weakening industrial growth. Monetary policy was tightened by the RBI during the year to control in?ation and curb in?ationary expectations. There are signs from some high frequency indicators that the weakness in economic activity has bottomed out and a gradual upswing is imminent. The Eleventh Five Year plan emphasized the need for removing infrastructure bottlenecks for sustained growth. It therefore proposed an investment of US $500 billion in infrastructure sectors through a mix of public and private sectors to reduce de?cits in identi?ed infrastructure sectors. For the ?rst time the contribution of the private sector in total investment in infrastructure was targeted to exceed 30%. Total investment in infrastructure during the Eleventh Plan is estimated to increase more than 8% of GDP, which is higher by 2.47% points as compared to the tenth plan. The private sector is expected to be contributing nearly 36% of this investment. The overall power generation in the country during the ?nancial year 2011-12 was 876.888 Billion Unit (BU) as compared to generation of 811.104 BU during the corresponding previous year, representing a growth rate of 8.11%. Thermal power plants, which contribute 81% of the total generation, reported PLF of 73.32% (down by 1.75% YoY). For the current FY 2011-12, private sector reported generation growth at 20.16%, while central and state sector reported growth of 5.2% YoY and 7.18% YoY respectively. Availability of domestic natural gas to the power sector is reduced with short supplies from KG –D6 and the gas based power projects are being operated at less than 50% PLFs. With reduced availability of domestic coal & natural gas, there is a growing dependence on coal & natural gas imports. Availability of coal & natural gas continues to be a key challenge in power sector. Coal will continue to be the main fossil fuel that will drive the power sector for long in India. The Indian power sector is reeling under tremendous pressure due to inadequate supplies by Coal India Limited. The Central Electricity Authority (CEA) has estimated a coal import of 55 Mt. for both import as well as indigenous coal based power utilities for the ?nancial year 2012-13. The gap between the demand and indigenous availability of coal is projected to be in the range of 185 Mt. in minimum to 265 Mt. in maximum by the end of 12th plan (2016-17), which is likely to be bridged by import of coal. The requirement of coal for power utilities for 12th plan period has been estimated on the basis of demand of power forecast by the 17th Electric Power Survey (PES) Report of CEA. The report predicts likely power demand of 1,392 Bn., units in 2016-17 and if coal based thermal power plants share an estimated 70% of this demand, the coal requirement will be around 682 Mt, if speci?c coal consumption remains at 0.7 Kg/unit. Though, the coal price in dollar terms have fallen by around 20% in the last one year due to sluggish demand in China, the import cost in real terms has not reduced due to the appreciation of dollar. In the short to medium term, the coal prices on FOB base will be sluggish giving some relief to the Indian power sector. Air tra?c in India continues to register signi?cantly higher rates of growth with CAGR of 11.7% in the last ten years. The total aircra? movements increased by 10.8% i.e. from 1393.76 thousand movements in FY11 to 1544.65 thousand movements during FY12. The international aircra? movements during FY12 increased by 3.0% while domestic aircra? movements showed
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GVK Power & Infrastructure Limited
an increase of 13.0% over previous year. The total passenger tra?c handled during FY12 increased to 162.30 million from 143.43 million in FY11 registering an increase of 13.2%. The international passenger tra?c during FY12 increased by 7.6% while domestic passenger tra?c grew by 15.1% over FY11. The total freight tra?c decreased to 2.28 MMT from 2.35 MMT, showing a decline of 2.9% during FY12 over FY11. The international freight tra?c during the FY12 declined by 1.9% while domestic freight tra?c reduced by 4.8% over FY11. India has an extensive road network of 4.24 million km, out of which the National Highways have a total length of 70,934 km and serve as the arterial road network of the country. However, only about 25% of national highways are presently four laned. It is estimated that more than 70 per cent of freight and 85 per cent of passenger tra?c in the country is being handled by roads. Till date, out of the total length of 54,454 kms of National Highways being developed under various phases of the National Highways Development Project (NHDP), work for 32.6% of highways is complete. For 26.2% of highways work is under progress whereas the balance projects are still to be awarded by NHAI. In FY 2011-12, Ministry of Road Transport and Highways (MoRTH) and National Highways Authority of India (NHAI) have together awarded 62 projects covering 7,957 kms, 54% higher than the preceding year 2010-11. Finance Minister had announced a target for award of 8800 km in his budget speech for FY 2012-13. Many SEZ projects announced across the country have not been progressing smoothly mainly on account of problems associated with acquisition of land, recent recessionary trends in the real estate and falling export volumes. Consequently, the prospects of SEZs crimped and companies have put their SEZ projects on the back burner during the year. As of now, GVKPIL acquired requisite land for SEZ proposal and is yet to take it forward in terms of project development considering the unsuitable economic climate.
3. Assets under Operation
i) Energy
GVK Gautami Power Limited During the year Gautami was operated at a Plant Availability Factor (PAF) and Plant Load Factor (PLF) of 73.13% and 71.69% (PY 88.64% and 83.3 9%). The company reported a pro?t a?er tax of Rs.7.86 crores for the ?nancial year 2011-2012 (PY Rs.76.57 crores). GVK Industries Limited During the year Jegurupadu Phase I was operated at a Plant Availability Factor (PAF) and Plant Load Factor (PLF) of 98.53% and 78.40% (PY 95.94 % and 76.62%). The unit reported a pro?t of Rs.11.64 crores for the ?nancial year 2011-2012 (PY Rs.23.03 crores). Increase in the supply of Gas from GAIL improved the PLF. During the year Jegurupadu Phase II was operated at a PAF and PLF of 71.53% and 70.59% (PY 89.17% and 81.75%). The unit reported a pro?t a?er tax of Rs.20.74 crores for the ?nancial year 2010-2011 (PY Rs.29.03 crores). The decline in PAF, PLF and pro?ts are mainly due to non availability of gas from Reliance.
ii) Airports
Mumbai International Airport Pvt Ltd. (MIAL) During the year MIAL handled 30.75 Mio (PY 29.04 mio) passenger tra?c, handled 251512 ATMs (PY 242,659 ATMs) and 389800 MT (PY 340,260 MT) of Cargo re?ecting a growth of 5.76%, 3.65% and 8.31% respectively. The company reported a pro?t a?er tax of Rs.183.76 crores for the ?nancial year 2011-2012 (PY Rs.197.03 crores). Bangalore International Airport Ltd. (BIAL) During the year BIAL handled 12.71 Mio (PY 11.63 mio) passenger tra?c, handled 119,033 ATMs (PY 111,787 ATMs) and 224,994 MT (PY 222,783 MT) of Cargo re?ecting a growth of 9.30%, 6.5% and 1% respectively. The company reported a pro?t a?er tax of Rs.160.76 crores for the ?nancial year 2011-2012 (PY Rs.132.10 crores).
iii) Transportation
GVK Jaipur Expressway Pvt Ltd. During the year toll collections recorded were Rs.223.94 crores (PY Rs.189.16 crores) with an increase of 18%. The company reported a pro?t a?er tax of Rs.78.63 crores for the ?nancial year 2011-2012 (PY Rs.80.02 crores).
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4. Assets Under Development
i) Energy
Alaknanda Hydro Power Company Limited The 330MW Alaknanda Hydro Electric Power Project on the river Alaknanda, Srinagar, Uttarakhand is being implemented with an estimated project cost of Rs.4,192 crores. Nearly 90% of the civil works are completed involving 10 million Cum. Of Earth Works and 1.7 million Cum of Concrete Works. The Installation of turbines and generators are in progress for all the four units. All the other works are being executed as scheduled. GVK Power (Goindwal Sahib) Limited The 540MW the thermal (coal based) power project in Tarn Taran district, Punjab is being set up at an estimated cost of Rs.3,200 crores. The Chimney shell, Mill foundations, TG deck BFP foundation and Drum Li?ing works completed. TG erection, Boilererection and major systems erection is in progress the project is expected to be commissioned by 2013. GVK Ratle Hydro Electric Project Private Limited The SPV is formed to implement 690 MW Ratle Hydro Electric Project on the river Chenab, Kishtwar District, in the State of Jammu & Kashmir and necessary Power Purchase Agreement is executed with Power Development Department (PDD), Government of Jammu & Kashmir (GOJK). Power Grid Corporation of India Limited (PGCIL) had approved the proposal for erection of 400kV double circuit line from Dulhasti HEP to Kishanpur. The project installed capacity has been increased to 850 MW as per the Hydrology approved by the Central Electricity Authority. The cost of the project is estimated around Rs.6,300 Crores and is expected to be operational by December, 2017. Goriganga Hydro Power Private Limited The 370MW run of the river Hydel Project on the river Goriganga in Uttarakhand is being implemented through two projects i.e. 146 MW Bogudiyar Sirkari Bhyol Project and 200 MW Mapang - Bogudiyar. Detailed Project Report is prepared and submitted to Central Electricity Authority (CEA ) for its approval (during the year 2010) for the 146 MW Bogudiyar – Sirkari Bhyol project. The DPR is cleared by CEA (except cost chapter which is being revised as per the changes proposed by the CEA). Hydrological studies and Geological investigations are completed for the 200 MW (likely to be increased to 240 MW) Mapang Bogudiyar project and submitted to CEA. Approach roads to project site are being formed. GVK Power (Khadur Sahib) Private Limited Incorporated on April 12, 2011 as a subsidiary of GVK Energy Limited to execute 2 x 660 MW capacity coal based thermal power project with super critical technology, proposed to be developed in the additional land at the existing Goindwal Sahib site in Tarn Taran District, Punjab. AAI clearance for 275 Mtrs high multi ?ue chimney is obtained on 22-09-2011 and it is valid for 5 years. GVK Coal (Tokisud) Company Private Limited This company is incorporated mainly to support the fuel requirements of GVK’s Goindwal Sahib Project. The tokisud block has 52 million tones of mineral reserves. MoEF has accorded Stage-II Forest Clearance. Acquired 452 acres of land, out of the requirement of 480 acres. The company has made an application for balance land with District Land Acquisition O?cer, Hazaribagh to acquire under Land Acquisition Act, 1894. Seregarha Mines Limited The company was incorporated as a SPV to support the fuel requirements of Goindwal Sahib project. Tokisud and saregarha coal mines together have an estimated coal reserves of 119 million tones and will cater the fuel requirements of Goindwal Sahib for 25 years in the ratio of 55:45. The prospecting License and Exploration Contract have been executed and the work has commissioned.
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GVK Power & Infrastructure Limited
ii) Airports
Your Company has signed two MoUs with Indonesian Government during its President’s State visit to India in January 2011 to develop green ?eld international airports in North Bali and Yogyakarta (Java), Indonesia. Bali and Java are the prime destinations for tourist tra?c from both Europe and Asia. Bali project has not progressed due to land and local issues. Yogyakarta airport is being developed jointly with Angkasa Pura Airports, the government owned airport operating company. Feasibility has been completed and a preliminary approval for proposed site has been granted by the government. Master plan development is currently underway. The signing of the MoU marks a very signi?cant milestone for GVK and your Company is con?dent that these agreements will yield signi?cant synergies.
iii) Transportation
GVK Deoli Kota Expressway Private Limited The company was incorporated as a Special Purpose Vehicle to implement and augment the existing Deoli-Kota Section of National Highway (NH) No. 12 from Km 165 to Junction of NH - 76 on Kota Bypass (approximately 83.04 Km) in the State of Rajasthan by four laning on design, build, ?nance, operate and transfer (DBFOT) basis (“Project”). The Highway works, hume pipe culvert, cleaning & grubbing works are under progress. The project would become operational within 30 months as per the Concession Agreement. GVK Bagodara Vasad Expressway Private Limited The Special Purpose Vehicle - GVK Bagodara Vasad Expressway Private Limited was incorporated to implement the Six Laning of existing three lanes of Bagodara - Wataman - Tarapur - Vasad Road Project (State Highway No.8, Km 0/0 to Km 101/9) in the State of Gujarat on BOT Basis. Requisite Concession Agreement has been executed with the Gujarat State Road Development Corporation. Roads & Structures - Cleaning & Grubbing P1 Packages for 53km - 51% completed and P2 Package for 48.9km 21% completed. The cost of the project estimated Rs.1,200 crores. The project would become operational within 30 months as per the Concession Agreement. GVK Shivpuri Dewas Expressway Private Limited The Company has signed a Concession Agreement on 12-01-2012 with National Highways Authority of India (NHAI) for Four Laning of Shivpuri Dewas section of National Highway No 3 (from Km 236.000 to Km 566.450) for a length of 332.46 kms. in the State of Madhya Pradesh to be executed as BOT (Toll) project on DBFOT Pattern under National Highways Development Programme (NHDP) phase IV. The Concession Period for the Project is for 30 years including construction period of 30 months. The main Project O?ce at Guna established.
iv) Others
GVK Perambalur SEZ Private Limited GVK has signed a MOU with TIDCO to develop 3184 acre multi product SEZ in Perambular district, Tamilnadu. The Tamilnadu Water Supply and Drainage Board (TWAD Board) has approved the water supply for 3 MLD from River Vellar and given technical approval for 44 MLD from River Kollidam. Total estimated cost of the project is Rs.750 crores. The total expenditure incurred so far is Rs.116.62 crores, expenditure incurred on land acquisition is Rs.104.10 crores. Water allocation for the SEZ is dropped by the State Government and company requested TIDCO to restore the water allocation. GVK Oil & Gas Limited Your company in consortium with BHP Billiton, the largest diversi?ed resource company, has been awarded 7 deepwater blocks under NELP VII. The 2D Over/under seismic data acquisition and processing in NELP VII blocks was completed in Calgary by WesternGeco and Edcon. Complete set of ?nal processed PSDM seismic data of MB & KK blocks was received by the Company. Future of Public Private Partnership The development of infrastructure facilities is largely dependent on the ability of the government to attract private capital under the public private partnership (PPP) model. PPPs are the cornerstone for infrastructure development. This model has enabled greater private participation in the creation and maintenance of infrastructure. The pace of PPP projects is slowly picking up and many projects are to be awarded this year. One immediate step taken by the Government is setting up of the India Infrastructure Finance Company Limited to provide long term debts to infrastructure projects. The Government is also giving a ?llip to infrastructure by delineating infrastructure as one of the key areas for focus and development in the coming years.
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5. Risks and Concerns
Energy
At present, the company has three operational gas based power plants, totalling to approximately 900 MW. Gas is being sourced from ONGC through GAIL for Jegurupadu Phase - I and to the extent that GAIL is not able to supply, the requirement for Jegurupadu Phase I and for the entire requirement of Jegurupadu phase II and Gautami, it is sourced from Reliance Industries Limited (RIL) with whom we have a contract. There has been a considerable reduction in the natural gas supply to the gas based power plant. The Plant Load Factor for all three power plants for the year ended March 31, 2012, was comparatively low against the previous year. Your company’s initiatives for development and expansion of the Jegurupadu Phase III and Gautami Phase II Projects are hardly hit by the acute shortage in the availability of Gas and your company is reconsidering the proposals for expansion. The other power plants under development/ construction are Alaknanda Hydro Power Company Limited- 330 MW Hydel Plant, GVK Power (Goinwal Sahib) Limited - 540 MW Thermal Plant, Goriganga Hydro Power Private Limited- 370 MW Hydel Plant. GVK Coal (Tokisud) Company Private Limited, GVK Ratle Hydro Electric Project Private Limited and GVK Power (Khadur Sahib) Private Limited, The coal mines linked to Goindwal sahib thermal plant are under development. Other than Goriganga Hydro Power Plant ?nancial closure has been achieved for the rest. For the hydel projects any unforeseen adverse weather conditions and un-controllable factors can delay construction and commissioning of the project.
Airports
GVK PIL through its subsidiaries/ associates, is currently operating, managing and developing the Mumbai International Airport and Bangalore International Airport. Revenues at the airports are to some extent relatable to tra?c - both passengers and aircra?. Further growth in revenues is also linked to aviation fuel prices, hike in aero charges which are within the ambit of Government. Other factors such as economic growth, weather, and unforeseen events may a?ect growth and tra?c. Likewise, aero revenues and income from real estate may also be impacted by market conditions and regulatory uncertainties.
Transportation
The company’s one operational asset GVK Jaipur Expressway Private Limited is doing well and the company has realized growth in tra?c and revenues. However, unforeseen events such as strikes and agitations, adverse weather conditions, economic down turns may impact growth and revenues. Likewise, these factors can also a?ect projects under construction’s development.
SEZ
GVKPIL is developing a multi product SEZ in Perambular, Tamil Nadu. SEZs across the country have not progressed much because of adverse global economic conditions coupled with the factors peculiar to India. Activity at our SEZ is expected to pick up with economic growth and supporting environmental factors. Developers of Special Economic Zones (SEZs) and units operating in these zones have been brought under the ambit of Minimum Alternate Tax (MAT) which could impact ?rms in these tax-free enclaves and hurt the development of SEZs.
Oil & Gas
Seven deep water blocks that were awarded under NELP VII are currently undergoing technical analysis which will continue for another year or two. Work in progress may get delayed due to factors such as exercise that may be undertaken by Indian Navy, weather conditions, availability of equipments etc.
6. GVK Power & Infrastructure Limited - Financial Performance Review
Standalone Financials
Revenue The Company’s total income, which comprises of income in the form of operating fees, incentives, fees for technical services to Rs.40.45 crores as compared to Rs.123.06 crores of the previous year.
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GVK Power & Infrastructure Limited
Expenditure The Company’s total expenditure, comprising of sta? costs, and other administrative expenses to Rs.15.88 crores for the year ended March 31, 2012 from Rs.35.99 crores when compared to the previous year ended March 31, 2011. Interest Interest expenses stood at Rs.24.93 crores (previous year ?gure was Rs.14.95 crores) Pro?t before tax (PBT) PBT is Rs.(0.54) crores for the current year as compared Rs.72.02 crores in the previous year. Pro?t a?er tax The Company’s pro?t a?er tax is Rs.(8.27) crores for the year ended March 31, 2012 as comapared to Rs.68.28 crores as compared to the previous year. EPS The earnings per share for the current year stood at Rs.(0) as compared to Rs.0.43 per equity share of Re.1/- each in the previous year.
Consolidated Financials
The current year results include the results of the companies including subsidiaries and step down subsidiaries and associates. The Consolidated Financial Statements have been drawn as per the Accounting Standards 21 and 23 issued by the Institute of Chartered Accountants of India. These companies operate broadly in a) Power b) Road c) Airport and d) Others. Revenue The Company reported gross revenue of Rs.2580.78 crores for 2011-2012 compared to Rs.1943.19 crores in the previous year. Pro?t a?er tax The Company reported pro?t a?er tax and minority interest of Rs.61.46 crores for 2011-2012 as compared to Rs.154.91 crores in the previous year. Earning Per Share (EPS) The earnings per share at consolidated level for the current year stands at Rs.0.39 as compared to Rs.0.98 per equity share of Re.1/- each in the previous year. Net Worth The net worth in the current year stands at Rs.3481.37 crores as compared to Rs.3386.78 crores in the previous year.
7. Clean Development Mechanism
GVKPIL has build inhouse capacity to develop Clean Development Mechanism (CDM) projects and obtain the registration and issuance of the same in the form of Certi?ed Emission Reductions (CERs) from the United Nations Framework Convention Climate Change (UNFCCC). The validation Report of Alaknanda Hydro Power Company Limited has been approved by UNFCCC. The company is in the process of ?ling its validation Reports with UNFCCC for two of its other power projects also.
8. Internal Control System and Adequacy
The company’s internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These systems are designed to ensure that all the assets of the Company are safeguarded and protected against any loss and that all the transactions are properly authorized, recorded and reported. The Company has an internal audit function, which is empowered to examine the adequacy and compliance with policies, plans and statutory requirements. The internal audit function team comprises of well-quali?ed, experienced professionals who conduct regular audits across the Company’s operations. The internal audit reports are placed before the Audit committee for consideration. The management duly considers and takes appropriate action on the recommendations made by the statutory auditors, internal auditors and the independent Audit Committee of the Board of Directors.
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9. Human Resources
Your company’s human capital remains its key strength. Several initiatives have been undertaken during the year to increase the depth of management expertise. Highly skilled professionals from reputed institutes as well as specialists with deep industry knowledge and experience have been recruited for various roles across the organization. The company continues to value its personnel in that it designs program and policies tailored to enhance individual and organizational welfare. Participative style of management ensures excellent relations throughout the organization. Your company aims to become to “employer of choice” in the industry and is on course to achieve the stated objective. The total number of employee talent base in corporate o?ce and project sites as on March 31, 2012, stands at 2981 approximately.
10.Future Outlook
We endeavour to contribute meaningfully to infrastructure development in India and seek to aggressively place bids for the upcoming infrastructure projects to be developed under Public Private Partnership mode. The Planning Commission, in its approach paper has projected an investment of over Rs. 45 lakh crore during the Twel?h Plan (2012-17). It is projected that atleast 50 % of this investment will come from the private sector as against the 36% anticipated in the Eleventh Plan. Financing infrastructure will therefore, be a big challenge in the coming years and will require some innovative ideas and new models of ?nancing. Your Company aspires to be the most trusted and respected name in infrastructure in India and the World. We seek to attain a transnational presence in Infrastructure that would be competitive and avant-garde. Even as we are going from strength to strength in the Energy and Transportation verticals, we keep abreast of constantly evolving technology, explore potential avenues in other areas within the infrastructure space. A?er carefully carrying out due-diligence and satisfactory evaluation of the relevant parameters, the company strives to foray into areas considered bene?cial to the interests of all stakeholders.
11.Cautionary Statement
Statements in the Management Discussion and Analysis describing the company’s objectives, projections, estimates and expectations may be ‘forward looking statements’ within the meaning applicable under the securities laws and regulations. As ‘forward looking statements’ are based on certain assumptions and expectations of future events over which the company exercises no control, the company cannot guarantee their accuracy nor can it warrant that the same will be realized by the company. Actual results could di?er materially from those expressed or implied. Signi?cant factors that could make a di?erence to the company’s operations include domestic and international economic conditions a?ecting demand, supply and price conditions in the electricity industry, changes in government regulations, tax regimes and other statutes.
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GVK Power & Infrastructure Limited
Auditors’ Report
To The Board of Directors of GVK Power & Infrastructure Limited 1. We have audited the attached consolidated balance sheet of GVK Power & Infrastructure Limited (‘the Company’), its subsidiaries and associates (collectively, ‘the Group’), as at March 31, 2012, and also the consolidated statement of pro?t and loss and the consolidated cash ?ow statement for the year ended on that date annexed thereto. These ?nancial statements are the responsibility of the Company’s management and have been prepared by Management on the basis of separate ?nancial statements and other ?nancial information regarding compo¬nents. Our responsibility is to express an opinion on these ?nancial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the ?nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and dis¬closures in the ?nancial statements. An audit also includes assessing the accounting principles used and signi?cant estimates made by management, as well as evaluating the overall ?nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We did not audit the ?nancial statements of certain subsidiaries, whose ?nancial statements re?ect total assets of Rs.2,807,325 lakhs as at March 31, 2012, the total revenue of Rs.249,157 lakhs and net cash ?ows amounting to Rs.49,461 lakhs for the year then ended. We also did not audit the ?nancial statements of associates, whose ?nancial statements re?ect share of pro?t of the Company Rs.10,639 lakhs for the year ended March 31, 2012. These ?nancial statements and other ?nancial information have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of other auditors. 4. Without qualifying our opinion, we draw attention to: i) Note 17(i)(a) of notes to the consolidated ?nancial statements, regarding pending con?rmation and approval by the Andhra Pradesh Electricity Regulatory Commission (APERC) for the increase in capital cost and consequential accruals of revenue to that extent being the ?xed charge component of the tari? for the years 1997-98 to 2000-01 aggregating to Rs.4,512 lakhs by GVK Industries Limited, a Subsidiary; ii) Note 17(i)(b) and 17 (i)(c) of notes to the consolidated ?nancial statements, regarding outstanding minimum alternate tax amounts claimed for reimbursement and other amounts aggregating to Rs.3,530 lakhs and Rs.76 lakhs respectively considered recoverable from AP Transco and consequential impact on taxes in GVK Industries Limited and GVK Gautami Power Limited’s books, Subsidiary Companies; iii) Note 39 of notes to the consolidated ?nancial statements, a subsidiary company has made certain transactions covered by the provisions of Section 297 of the Companies Act, 1956, where the prior approval of the Central Government is required, but has not been so obtained. The subsidiary Company has applied to the appropriate regulatory authorities for regularisation of this non-compliance. iv) Note 40 of notes to the consolidated ?nancial statements, regarding application being made by the Company to the Reserve Bank of India (‘RBI’) for granting time for compliance with capital requirements and leverage ratio as applicable to Systematically Important Core Investment Company. v) Note 41 of notes to the consolidated ?nancial statements, regarding application made by the Company for waiver of excess managerial remuneration amounting to Rs.207 lakhs paid to two directors in excess of limits prescribed under Schedule XIII of the Companies Act, 1956. 5. The auditor’s reports on a subsidiary and an associate, whose audited ?nancial statements we have relied on as stated in paragraph 3 above, included certain matters as follows, in respect of which those auditor’s reports were not quali?ed: i) Note 17(i)(d) and 17(i)(e) of notes to the consolidated ?nancial statements, regarding a subsidiary company having trade receivables from Air India Limited aggregating to Rs.21,266 lakhs and King?sher Airlines Limited aggregating to Rs.4,041 lakhs, which the subsidiary company considers good and recoverable for the reasons set out in the referred note. Consequently no provision towards non recoverability, if any, has been made in the ?nancial statements;
36
ii) Note 31 of notes to the consolidated ?nancial statements, regarding an associate company that was required to demolish certain assets in order to facilitate its expansion programme. Since the expansion is being carried out to create the improved infrastructure, the associate Company believes that the existing carrying values of the assets demolished, which are integral to the plan should form part of expansion cost capitalized. The associate Company has, as a matter of abundant caution also sought an opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India (“EAC”) soliciting their opinion on the appropriateness of the stated accounting treatment. Pending opinion from the EAC, the Company has currently recorded the carrying values of these demolished assets aggregating to Rs.638 lakhs under capital work in progress. iii) Note 32 of notes to the consolidated ?nancial statements, regarding recognition and carry forward of Minimum Alternate Tax (“MAT”) credit entitlement aggregating to Rs.7,352 lakhs as at March 31, 2012 by an associate company, which, the Management is con?dent of utilizing within the stipulated period available under the provision of the Income-tax Act, 1961, notwithstanding the fact, that the Company is entitled to a tax holiday period as per the provisions of Section 80-IA of the aforesaid Act. The associate Company has, as a matter of abundant caution also sought an opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India (“EAC”) soliciting their opinion on the appropriateness of the stated accounting treatment. Pending opinion from the EAC, the associate company has currently retained the MAT credit entitlement aggregating to Rs.7,352 lakhs. iv) Note 33 of notes to the consolidated ?nancial statements, regarding outstanding dues from a customer aggregating to Rs.5,532 lakhs in the books of an associate company, where there appears to be signi?cant uncertainty relating to the ability of the party to pay the debts due to the associate company, due to ?nancial di?culties which have resulted in scaling down of customer’s business. However, Management is con?dent of eventual collection of the debts due from customer and accordingly believes that the current provision of Rs.264 lakhs created in accordance with the associate Company’s provision policy is su?cient. The ultimate outcome of the matters referred to in paragraphs 4 and 5 above cannot presently be determined, pending approvals, acceptances, legal and accounting interpretations and future cash ?ows of customers as referred to in the relevant notes to the consolidated accounts and accordingly no provision for any liability and/or adjustments that may result has been made in the consolidated ?nancial statements. 6. Based on our audit and on consideration of reports of other auditors on separate ?nancial statements and on the other ?nancial information of the components, and to the best of our information and according to the explanations given to us, we are of the opinion that the attached consolidated ?nancial statements give a true and fair view in con¬formity with the accounting principles generally accepted in India: a) in the case of the consolidated balance sheet, of the state of a?airs of the Group as at March 31, 2012; b) in the case of the statement of consolidated pro?t and loss, of the pro?t for the year ended on that date; and c) in the case of the consolidated cash ?ow statement, of the cash ?ows for the year ended on that date.
For S.R. Batliboi & Associates Firm Registration No: 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No.: 93649 Place : Hyderabad Date : May 9, 2012
37 37
GVK Power & Infrastructure Limited
Consolidated Balance Sheet as at March 31, 2012
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Notes March 31, 2012 March 31, 2011
Equity and liabilities
Shareholders’ Funds Share capital Reserves and surplus 4 5 15,792 332,345 348,137 15,792 322,886 338,678
Deferred income Minority interest
Non-current liabilities Long-term borrowings Deferred tax liabilities (net) Other long-term liabilities Long-term provisions Current liabilities Short-term borrowings Trade payables Other current liabilities Short-term provisions
2(h) & 25
16,431 311,678
17,027 115,336
421,133 5,761 12,291 1,417 440,602 114,849 10,429 33,505 1,044 159,827 1,071,470
6 7 8 9
1,109,444 30,139 28,451 2,984 1,171,018 279,010 42,863 117,559 2,815 442,247 2,289,511
10 11 11 9
Assets
Non-current assets Fixed assets Tangible assets Intangible assets Capital work-in-progress Expenditure incurred during construction period Intangible assets under development Non-current investments Deferred tax assets (net) Long-term loans and advances Trade receivables Other non-current assets Current assets Current investments Inventories Trade receivables Cash and bank balances Short-term loans and advances Other current assets 12 13 14 15 7 16 17 (a) 17 (b) 494,285 213,189 751,079 194,524 17,631 189,791 64 135,907 8,118 4,109 2,008,697 23,406 7,540 37,502 172,626 21,022 18,718 280,814 2,289,511 288,986 78,202 257,573 61,719 330 173,762 62 66,747 6,810 4,382 938,573 76,409 3,168 120 32,820 3,550 16,830 132,897 1,071,470
18 19 17 (a) 20 16 17 (b)
Summary of signi?cant accounting policies
2
The accompanying notes are an inegral part of the consolidated ?nancial statements. As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No. 93649 Place : Hyderabad Date : May 9, 2012 For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited Dr. G V Krishna Reddy Chairman & Managing Director A Issac George Director & CFO 38 P. V. Rama Seshu GM & Company Secretary
Consolidated Pro?t and Loss Account for the year ended March 31, 2012
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Notes March 31, 2012 March 31, 2011
Income
Revenue from operations Other income Total revenue 21 22 249,183 8,887 258,070 191,466 2,853 194,319
Expenses
Cost of fuel Annual fee to Airport Authority of India Employee bene?t expense Finance costs Depreciation and amortization expense Other expenses Total expenses Pro?t before tax and share of pro?ts of associate and minority interest Tax expenses Current tax MAT credit Deferred tax Income tax for earlier years Total tax expenses Pro?t/(loss) a?er tax and share of pro?ts of associate and minority interest Add: Share of pro?ts of associates for the year Less: Minority interest Pro?t for the year Earnings per equity share (in Rs.) - Basic - Diluted Nominal value per equity share (in Rs.) Weighted average number of equity shares - Basic - Diluted 1,579,210,400 1,579,210,400 1,579,210,400 1,579,210,400 0.39 0.39 1 0.98 0.98 1 7,659 (2,570) 1,683 10 6,782 (107) 10,639 4,386 6,146 5,639 (3,132) (404) 29 2,132 7,442 11,093 3,044 15,491 23 24 25 26 118,483 23,150 8,068 46,727 24,893 30,074 251,395 6,675 114,171 3,349 26,314 18,364 22,547 184,745 9,574
Summary of signi?cant accounting policies
The accompanying notes are an inegral part of the ?nancial statements. As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No. 93649 Place : Hyderabad Date : May 9, 2012
2
For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited Dr. G V Krishna Reddy Chairman & Managing Director A Issac George Director & CFO P. V. Rama Seshu GM & Company Secretary
39 39
GVK Power & Infrastructure Limited
Consolidated Cash Flow Statement for the year ended March 31, 2012
(Amounts expressed in Indian Rupees Lakhs unless otherwise stated) Notes Cash ?ow from Operating Activities Pro?t before tax Adjustments for Depreciation and amortisation Loss/(Pro?t) on sale of ?xed assets (net) Insurance claims and assets written o? Unrealised foreign exchange loss Pro?t on sale of non trade current investments (net) Dividend income from non trade current investments Interest expense Interest income Excess provisions/credit balances written back Operating pro?t before working capital changes Movements in working capital Increase in inventories Increase in current liabilities and provisions Increase in trade receivables and other current and non current assets Increase in loans and advances Cash generated from operations Direct taxes paid Net cash from operating activities Cash ?ows from investing activities Purchase of ?xed assets including capital work in progress and capital advances Proceeds from sale of ?xed assets Refund of capital advances Purchase of current investments Proceeds from sale/maturity of current investments Purchase of non current investments including associates Investments in bank deposits (having original maturity of more than three months) Proceeds from deemed disposal of stake in subsidiaries Payments for net assets acquired of subsidiaries, net of cash Share application money received Interest received Net cash used in investing activities (B) 10,995 (101,157) 3,819 (516,058) 24,783 (2) 233 615 (149,255) 385 7,266 (335,048) 399,424 (62,054) (93,067) 14,446 (385,379) 349,773 (7,400) (201) (346,621) (146,123) (A) (4,055) 77,096 (5,442) 71,654 (4,512) 45,844 (4,983) 40,861 (3,866) 17,710 (2,611) (762) 855 (967) 24,893 (12) 17 222 (3,964) (97) 45,722 (3,462) (76) 69,918 18,364 1 520 (1,497) (169) 25,447 (984) (26) 51,230 6,675 9,574 March 31, 2012 March 31, 2011
40
Consolidated Cash Flow Statement for the year ended March 31, 2012
(Amounts expressed in Indian Rupees Lakhs unless otherwise stated) Notes Cash ?ows from ?nancing activities Money received from minority shareholders Money refunded to minority shareholders Proceeds from short-term borrowings (net) Proceeds from long-term borrowings Repayment of long-term borrowings Interest paid Net cash ?ow from ?nancing activities E?ect of foreign exchange di?erences Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Components of Cash and cash equivalent Cash on hand Cheques/dra?s on hand Balances with banks on: Current accounts deposit account unpaid dividend accounts* Total cash and cash equivalents Add: Fixed deposits classi?ed in investing activities Cash and bank balance as reported in consolidated balance sheet Summary of signi?cant accounting policies
*Not available for ready use by the Group The accompanying notes are an integral part of the consolidated ?nancial statements
March 31, 2012
March 31, 2011
111,213 (2,802) 163,942 342,793 (21,880) (101,212) (C) (D) A+B+C+D 492,054 8 47,658 31,794 79,452 214 5,956
71,524 10,750 151,110 (52,058) (44,947) 136,379 27,985 3,809 31,794 75 -
53,885 19,382 15 Note 20 Note 20 2 79,452 93,174 172,626
9,679 22,020 20 31,794 1,026 32,820
As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited
per Vikas Kumar Pansari Partner Membership No. 93649
Dr. G V Krishna Reddy Chairman & Managing Director
Place : Hyderabad Date : May 9, 2012
A Issac George Director & CFO
P. V. Rama Seshu GM & Company Secretary
41 41
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
1. Nature of operations
GVK Power & Infrastructure Limited (“Parent Company” or “the Company”) is primarily engaged in the business of providing operation & maintenance services, manpower & consultancy services and incidental services to owners of power plants and infrastructure companies. The Parent Company together with its subsidiaries and associates (collectively termed as “the Group”) is engaged in constructing and operating power plants, highway projects, airports, exploration of oil, natural gas and coal mines. The following is the brief description of the subsidiaries: a) GVK Industries Limited (“GVKIL” or “Subsidiary Company”) is engaged in the business of generation of power. b) GVK Jaipur Expressway Private Limited (“GJEPL” or “Subsidiary Company”) is engaged in building and developing highway project. c) Alaknanda Hydro Power Company Limited (“AHPCL” or “Subsidiary Company”) is engaged in the business of generation of power. d) GVK Power (Goindwal Sahib) Limited (“GVKPGSL” or “Subsidiary Company”) is engaged in the business of generation of power. e) GVK Coal (Tokisud) Company Private Limited (“GVKCCPL” or “Subsidiary Company”) is engaged in the business of mining of coal meant. f) GVK Airport Developers Private Limited (“GVKADPL” or “Subsidiary Company”) is engaged in the business of construction and development of airports.
g) Goriganga Hydro Power Private Limited (“GHPPL” or “Subsidiary Company”) is engaged in the business of generation of power. h) GVK Airport Holdings Private Limited (“GVKAHPL” or “Subsidiary Company”) is engaged in the business of investment as promoters and developers of the international and domestic airport projects. i) GVK Perambalur SEZ Private Limited (“GVKPSPL” or “Subsidiary Company”) is engaged in the business of development, operation and maintenance of infrastructure facility. GVK Oil & Gas Limited (“GVKOGL” or “Subsidiary Company”) is engaged in the business of exploration of Oil and Natural Gas.
j)
k) GVK Energy Limited (“GVKEL” or “Subsidiary Company”) is engaged in the business of providing operating and maintenance services to owners of power plants. l) GVK Developmental Projects Private Limited (“GVKDPPL” or “Subsidiary Company”) is engaged in the business of Infrastructure Projects.
m) GVK Gautami Power Limited (“GVKGPL” or “Subsidiary Company”) is engaged in the business of generation of power. n) Bangalore Airport & Infrastructure Developers Private Limited (“BAIDPL or “Subsidiary Company”) is engaged in construction and development of domestic and international airports. o) GVK Energy Venture Private Limited (‘’GVKEVPL’’ or ‘’Subsidiary Company’’) is engaged in the business of investment in mega power projects. p) GVK Bagodara Vasad Expressway Private Limited (‘’GVKBVEPL’’ or ‘’Subsidiary Company’’) is engaged in the business of building and developing highway project. q) GVK Deoli Kota Expressway Private Ltd (‘’GVKDKEPL’’ or ‘’Subsidiary Company’’) is engaged in the business of building and developing highway project. r) GVK Ratle Hydro Electric Project Private Limited (“GVKRHEPPL” or “Subsidiary Company”) is engaged in the business of generation of power.
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Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
s) GVK Transportation Private Limited (“GVKTPL” or “Subsidiary Company”) is engaged in building and developing highway project t) Mumbai International Airport Private Limited (“MIAL” or “Subsidiary Company”) is engaged in operations, maintenance and development of Chhatrapati Shivaji International Airport, Mumbai.
u) GVK Power (Khadur Sahib) Private Limited (“GVKPKSPL” or “Subsidiary Company”) is engaged in the business of generation of power. v) GVK Airports International Pte Ltd (“GVKAIPL” or “Subsidiary Company”) is engaged in construction and development of airports. w) GVK Shivpuri Dewas Expressway Private Limited (“GVKSDEPL” or “Subsidiary Company”) is engaged in building and developing highway project. The following is the brief description of the associates: a) Bangalore International Airport Limited (“BIAL” or “Associate Company”) is engaged in operations, maintenance and development of Bangalore International Airport, Bangalore. b) Seregarha Mines Limited (“SML” or “Associate Company”) is engaged in exploration of coal mines.
2. Statement of signi?cant accounting policies
a. Basis of preparation The consolidated ?nancial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these ?nancial statements to comply in all material respects with the accounting standards noti?ed under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The accounting policies adopted in the preparation of ?nancial statements are consistent with those of previous year, except for the change in accounting policy explained below: Change in accounting policy Presentation and disclosure of ?nancial statements During the year ended March 31, 2012, the revised Schedule VI noti?ed under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its consolidated ?nancial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of ?nancial statements. However, it has signi?cant impact on presentation and disclosures made in the consolidated ?nancial statements. The company has also reclassi?ed the previous year ?gures in accordance with the requirements applicable in the current year. b. Principles of consolidation Investments in subsidiaries and associates in consolidated ?nancial statements are accounted in accordance with accounting principles as de?ned in the AS 21 "Consolidated ?nancial statements" and AS 23 “Accounting for investments in associates in consolidated ?nancial statements” noti?ed by Companies Accounting Standards Rules, 2006 respectively. The consolidated ?nancial statements are prepared on the following basis: i) Subsidiary companies are consolidated on a line-by-line basis by adding together the book values of the like items of assets, liabilities, income and expenses a?er eliminating all signi?cant intra-group balances and intra-group transactions and also unrealized pro?ts or losses, except where cost cannot be recovered.
ii) The di?erence between the cost to the Group of investments in subsidiaries and the proportionate share in the equity of the subsidiary company as at the date of acquisition of stake is recognized in the consolidated ?nancial statements as Goodwill or Capital Reserve, as the case may be. Any gain/loss arising upon acquiring additional stake in subsidiary from parties outside the group is accounted for as goodwill/capital reserve. Similarly, any gain/loss arising upon dilution of stake in subsidiary in favour of parties outside the group is recorded in capital reserve. iii) Minorities’ interest in net pro?ts of consolidated subsidiaries for the year is identi?ed and adjusted against the income in order to arrive at the net income attributable to the shareholders of the Company. Their share of net assets is identi?ed and presented in the consolidated balance sheet separately. Where accumulated losses attributable to the minorities are in excess of their equity in the absence of the contractual obligation on the minorities, the same is accounted for by the Company.
43 43
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
iv) Investments in associates are accounted for using equity method. The excess of cost of investment over the proportionate share in equity of the associate as at the date of acquisition of stake is identi?ed as Goodwill and is disclosed in the consolidated ?nancial statements. The carrying amount of the investment is adjusted therea?er for the post-acquisition change in the share of net assets of associate. However, share of losses is accounted for only to the extent of the cost of investment. Subsequent pro?ts of such associates are not accounted for unless the accumulated losses (not accounted for by the Group) are recouped. v) As far as possible, the consolidated ?nancial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented, to the extent possible, in the same manner as the Company’s stand alone ?nancial statements. vi) The ?nancial statements of the entities used for the purpose of consolidation are drawn up to same reporting date as that of the Company i.e. year ended March 31, 2012. vii) As per Accounting Standard 21, only those notes which are material need to be disclosed. Materiality for this purpose is assessed in relation to the information contained in the consolidated ?nancial statements. Further, additional statutory information disclosed in separate ?nancial statements of the subsidiary and/or a parent having no bearing on the true and fair view of the consolidated ?nancial statements are not disclosed in the consolidated ?nancial statements. The consolidated ?nancial statements as at and for the year ended on March 31, 2012 include the ?nancial statements of the following entities: Name of the consolidated entity GVKIL GJEPL AHPCL GVKPGSL GVKCCPL GVKADPL GHPPL GVKAHPL GVKPSPL GVKEL GVKOGL GVKDPPL GVKGPL BAIDPL GVKEVPL GVKDKEPL GVKBVEPL GVKRHEPPL GVKTPL GVKPKSPL GVKSDEPL GVKAIPL MIAL** BIAL SML Country of Incorporation India India India India India India India India India India India India India India India India India India India India India Singapore India India India Nature of Interest Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Associate % of interest 2012 73.94 100.00 73.94 73.94 73.94 100.00 100.00 100.00 100.00 73.94 100.00 100.00 47.02* 100.00 100.00 100.00 100.00 100.00 100.00 73.94 100.00 100.00 50.50 43.00 32.87 2011 81.95 100.00 81.95 81.95 81.95 100.00 100.00 100.00 100.00 81.95 100.00 100.00 52.12 100.00 100.00 100.00 100.00 100.00 100.00 37.00 29.00 36.43
* GVKEL, subsidiary company holds 63.6% equity stake in GVKGPL and the Parent Company holds 73.94% in GVKEL. ** MIAL has become subsidiary w.e.f October 18, 2011 and prior to that it was an associate company.
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Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
c. Use of estimates The preparation of ?nancial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that a?ect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. d. Tangible ?xed assets and depreciation Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of ?xed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Exchange di?erences arising on reporting of the long-term foreign currency monetary items at rates di?erent from those at which they were initially recorded during the period, or reported in the previous ?nancial statements are added to or deducted from the cost of the asset and are depreciated over the balance life of the asset, if these monetary items pertain to the acquisition of a depreciable ?xed asset. Depreciation is provided on straight line method at the rates mentioned below, which are greater than or equal to the corresponding rates prescribed in Schedule XIV of the Act: Particulars Factory building Non-factory building Plant and machinery Computers and computer equipment O?ce and electrical equipment Furniture and ?xtures Vehicles Leasehold land is amortised over the period of the lease or useful life whichever is lower. The expenditure on improvement to runways and existing infrastructure of airport are amortised over their estimated useful life of 20 years and 10 years respectively. Fixed assets individually costing Rs.0.05 or less are fully depreciated in the year of purchase. Oil & gas assets The Company follows full cost method of accounting for Oil & Gas Assets. All costs incurred in prospecting, acquiring, mineral interest are accumulated in a large cost centers and are carried as capital work-in-progress. Aeronautical assets Development fee levied under the authority of Ministry of Civil Aviation, Government of India/AERA for exclusive utilization for development of aeronautical assets, is disclosed as reduction from the cost of such aeronautical assets. e. Intangible assets and amortization An intangible asset is recognised, only where it is probable that future economic bene?ts attributable to the asset will accrue to the enterprise and the cost can be measured reliably. Intangible assets are stated at cost less accumulated amortization. Toll collection rights Direct expenditure incurred on construction of highway project is shown as toll collection rights. Toll collection rights are amortized over the concession period (i.e. 18 years) proportionately in each year based on the actual tra?c revenue for the year and projected tra?c revenue for the balance concession period. Rates (SLM) 3.34% 1.63% 5.28% 16.21% 4.75% 6.33% 9.50%
45 45
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
So?ware Cost of so?ware is amortised on a straight line basis over its estimated useful life which is three to six years. Airport grant for upfront fees and other compensations The non-refundable upfront fee, other compensations paid/payable to the AAI for the airport grant is classi?ed under “Intangible Assets” and is amortized over the primary period of the grant available under Operation, Maintenance and Development Agreement (‘OMDA’). Goodwill Goodwill represents the excess of purchase consideration over the net book value of assets acquired of the subsidiary companies as on the date of investment. Goodwill is not amortised but is tested for impairment, where indicator of impairment exists and losses are recognized where applicable. f. Impairment The company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash in?ows 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 ?ows are discounted to their present value using a pre-tax discount rate that re?ects current market assessments of the time value of money and the risks speci?c to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identi?ed, an appropriate valuation model is used. g. Investments Investments that are readily realizable and intended to be held for not more than a year from the date on which such investment are made are classi?ed as current investments. All other investments are classi?ed as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of such investments. h. Government grants Grants from the government are recognized when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Government grants relating to assets are recognized in the proportion in which the amortization of such assets is charged and are netted o? against the amortization on such assets. Grants related to depreciable assets are treated and disclosed as deferred income which is recognized in the statement of pro?t and loss over the periods and in the proportions in which depreciation on related asset is charged. i. Revenue recognition Revenue is recognized to the extent that it is probable that economic bene?ts will ?ow to the Company and the revenue can be reliably measured. The following speci?c recognition criteria must also be met before revenue is recognized: i) Generation of power Revenue from sale of energy is recognized on accrual basis in accordance with the provisions of the Power Purchase Agreements (“PPA”) with Andhra Pradesh Transmission Corporation Limited (“AP Transco”). The subsidiary companies (‘GVKIL’ and ‘GVKGPL’) are also eligible to receive incentive fees for every percentage point generated in excess of Plant Load Factor as de?ned in PPA with AP Transco. Such incentives are accrued on achievement of speci?ed Plant Load Factor.
46
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
ii)
Aeronautical services, Non-Aeronautical services and Cargo services Revenue from aeronautical services (net of credit notes) includes landing and parking charges and passenger service fees at the rates prescribed under State Support Agreement, as amended from time to time by Ministry of Civil Aviation, Government of India (“MoCA”) / Airports Economic Regulatory Authority (“AERA”). Landing and parking charges are recognized, when such services are provided. Passenger service fees – facilitation component is recognized in respect of each embarking passenger at a speci?ed rate. Passenger service fees – security component (PSF-SC) collected as per the terms of State Support Agreement and MoCA orders, is not recognized as revenue of the Company since the same is collected in a ?duciary capacity. Revenue from non-aeronautical services (net of credit notes) consisting of concessions, rentals, public admission fees, hangar charges, car parking rentals, demurrage on cargo etc., is recognized as per terms of contracts. Revenue from cargo services (net of credit notes) is recognized as and when the related services are rendered.
iii) Income from toll operations The revenue is recognized as and when the tra?c passes through toll – plazas. iv) Manpower and consultancy services Revenue for manpower services are recognised as and when services are rendered based on time spent. v) Interest Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
vi) Dividends Revenue is recognised when the shareholders’/unit holders’ right to receive payment is established by the balance sheet date. vii) Guarantee commission Revenue is recognized on a time proportion basis taking into account the guarantee amount and the commission rate applicable. j. Borrowing Costs Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange di?erences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. k. Foreign currency translation Foreign currency transaction and balances i) Initial recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Conversion Foreign currency monetary items are reported using the exchange rate prevailing on the reporting date. Non-monetary items which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
ii)
iii) Exchange di?erences Exchange di?erences arising on the settlement of monetary items or on restatement of monetary items on reporting date at rates di?erent from those at which they were initially recorded during the year, or reported in previous ?nancial statements, are recognized as income or as expenses in the year in which they arise.
47 47
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Translation of integral and non-integral foreign operation The assets and liabilities of a non-integral foreign operation are translated into the reporting currency at the exchange rate prevailing at the reporting date. Their statement of pro?t and loss are translated at exchange rates prevailing at the dates of transactions or weighted average rates, where such rates approximate the exchange rate at the date of transaction. The exchange di?erences arising on translation are accumulated in the foreign currency translation reserve. On disposal of a non-integral foreign operation, the accumulated foreign currency translation reserve relating to that foreign operation is recognized in the statement of pro?t and loss. l. Operating Lease Leases where the lessor e?ectively retains substantially all the risks and bene?ts of ownership of the leased term, are classi?ed as operating leases. Operating lease payments are recognized as an expense in the statement of pro?t and loss on a straight-line basis over the lease term. m. Retirement and other employee bene?ts i) Retirement bene?t in the form of Provident Fund is a de?ned contribution scheme. The contributions are charged to the statement of pro?t and loss of the year when the contributions are due. The company has no obligation other than the contribution payable to the provident fund. ii) Gratuity liability is de?ned bene?t obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each ?nancial year. iii) Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method. iv) Actuarial gains/losses are immediately taken to the statement of pro?t and loss and are not deferred. v) The company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months a?er the reporting date. n. Inventories Spares, stores and consumables are valued at lower of cost and net realizable value. Cost is determined on a weighted average basis. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make the sale. o. Income taxes Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred income taxes re?ect the impact of current period timing di?erences between taxable income and accounting income for the period and reversal of timing di?erences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that su?cient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable pro?ts. At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that su?cient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that su?cient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that su?cient future taxable income will be available.
48
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the speci?ed period. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the pro?t and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the e?ect that Company will pay normal Income Tax during the speci?ed period. p. Earnings per share Basic earnings per share are calculated by dividing the net pro?t or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue; bonus element in a rights issue, share split; and reverse share split (consolidation of shares). For the purpose of calculating diluted earnings per share, the net pro?t or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the e?ects of all dilutive potential equity shares. q. Provisions A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an out?ow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present values and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to re?ect the current best estimates. Provision for resurfacing obligations Contractual obligations to periodically maintain, replace or restore infrastructure at the end of each ?ve years or earlier as per the terms of the concession agreement are provided for in accordance with Accounting Standard (AS) - 29 “Provision, Contingent Liabilities and Contingent Assets” i.e., at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. r. Segment Reporting Policies Identi?cation of segments The Company’s operating businesses are organized and managed separately according to the nature of services provided, with each segment representing a strategic business. Intersegment Transfers The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices. Allocation of common costs Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. Unallocated items The corporate and other segment include general corporate income and expense items which are not allocated to any business segment. s. Cash and Cash equivalents Cash and cash equivalents for the purposes of cash ?ow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less. t. Derivative instruments As per the ICAI Announcement, accounting for derivative contracts, other than those covered under AS-11, are marked to market on a portfolio basis, and the loss is charged to the income statement. Gains are ignored.
49 49
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
u. Contingent liabilities A contingent liability is a possible obligation that arises from past events whose existence will be con?rmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an out?ow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the ?nancial statements.
3. Di?erence in accounting estimates/policy
i. Depreciation Depreciation on certain ?xed assets of BIAL is provided at rates which are di?erent from the rates used by the Parent Company, Estimate of useful life and quantum of assets on which di?erent rates are followed are as follows: Asset Description Buildings Engineering structures Plant and machinery O?ce equipment Computer and computer equipments Furniture and ?xtures Vehicles So?ware Useful life 3.33% - 5% 3.33%-5% 4.75%-16.21% 10.34%25% 16.21%-25% 6.33%-10% 9.5%-20% 20%-33.33% March 31, 2012 49,333 46,058 39,923 180 3,142 4,960 1,363 460 March 31, 2011 50,760 47,440 46,745 180 4,117 5,470 1,572 582
ii. Inventory Valuation of certain inventory of MIAL is done on ?rst in ?rst out basis. The closing stock of inventory in hand was Rs.364 (March 31, 2011: Rs.452)
4. Share capital
March 31, 2012 Authorized shares 2,500,000,000 (March 31, 2011: 2,500,000,000) equity shares of Rs.1/ each Issued, subscribed and fully paid-up shares 1,579,210,400 (March 31,2011: 1,579,210,400) equity shares of Rs.1 each Add: Issued during the year 15,792 15,792 a) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period. March 31, 2012 No. Equity shares At the beginning of the year Issued during the year 1,579,210,400 1,579,210,400
50
March 31, 2011
25,000
25,000
15,792 15,792
March 31, 2011 Rs. No. Rs.
1,579 1,579
1,579,210,400 1,579,210,400
1,579 1,579
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
b)
Terms/rights attached to equity shares The Company has only one class of equity share having par value of Rs.1 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, a?er distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. Details of shareholders holding more than 5% shares in the company Name of the shareholder G Indira Krishna Reddy HSBC Global Investment Funds Vertex Infratech Private Limited March 31, 2012 No 394,994,190 115,250,000 116,896,770 % holding 25.01 7.30 7.40 March 31, 2011 No 435,944,190 113,000,000 % holding 27.61 7.16 -
c)
d)
Aggregate number of bonus shares issued, shares issued for consideration other than cash: March 31, 2012 No. Equity shares allotted as fully paid bonus shares by capitalization of general reserve Equity shares allotted as fully paid-up pursuant to scheme of amalgamation Equity shares allotted as fully paid-up pursuant to scheme of arrangement 52,850,000 703,250,000 90,462,150 March 31, 2011 No. 52,850,000 703,250,000 90,462,150
5. Reserves and surplus
March 31, 2012 Capital reserve on acquisition Balance as per the last ?nancial statements Add: additions during the year General reserve Balance as per the last ?nancial statements Add: additions during the year Securities premium account Balance as per the last ?nancial statements Less: amounts utilised for share issue expenses Surplus in the statement of pro?t and loss Balance as per the last ?nancial statements Pro?t for the year Net surplus in the statement of pro?t and loss Foreign currency translation reserve Total reserves and surplus 59,052 6,146 65,198 8 332,345 43,561 15,491 59,052 322,886 215,352 215,352 215,935 583 215,352 952 952 952 952 47,530 3,305 50,835 39,352 8,178 47,530 March 31, 2011
51 51
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
6. Long term borrowings
Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) Foreign currency loan from banks (secured) Indian rupee loan from ?nancial institutions (secured) Indian rupee loan from ?nancial institutions (unsecured) Other loans and advances Vehicle loan (secured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” (note 11) Net amount 1,101,944 7,500 1,101,944 421,133 421,133 37,289 (37,289) 18,855 (18,855) 124 1,109,444 106 421,133 110 37,289 53 18,855 816,402 41,721 243,697 7,500 266,202 40,504 114,321 22,708 4,119 10,352 10,519 2,408 5,875 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Entity wise details of the above long term borrowings are as follows: Name of the entities Parent Company GVKIL AHPCL GVKPGSL GJEPL MIAL GVKCCPL GVKBVEPL GVKADPL GVKDKEPL GVKGPL Non-current portion March 31, 2012 30 50,649 211,284 151,503 107,464 375,516 9,850 6,500 90,000 15,550 91,098 1,109,444 March 31, 2011 64 54,676 171,729 70,809 17,114 5,400 101,341 421,133 Current maturities March 31, 2012 34 8,611 10,748 6 2,992 3,030 11,868 37,289 March 31, 2011 30 7,087 2,595 6 2,843 6,294 18,855
52
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
The details of the security, repayment and other terms are as follows: A) Parent Company Non-current portion March 31, 2012 Term loans Loans from bank- vehicle loan (secured) Amount disclosed under the head “other current liabilities” Net amount 30 30 64 64 34 (34) 30 (30) March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Vehicle loan from bank carries interest @ 8.5% p.a. The loan is repayable in 36 monthly instalments of Rs.3.15, along with interest, from the date of loan, viz., January 29, 2011. The loan is secured by charge over ?xed asset i.e. vehicle, for which ?nance is provided by the lender. B) GVKIL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) Foreign currency loan from banks (secured) Indian Rupee loan from ?nancial institutions (secured) Other loans and advances Vehicle loan (secured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” Net amount a. 50,649 50,649 54,676 54,676 8,611 (8,611) 7,087 (7,087) 4 50,649 7 54,676 3 8,611 3 7,087 33,686 11,023 5,936 36,387 11,247 7,035 5,701 1,807 1,100 4,478 1,505 1,101 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks other than one loan from State Bank of India of Rs.3,000, ?nancial institutions and foreign currency loan from a bank are secured by: i) Pari passu ?rst mortgage and charge on all the immovable and movable properties (both tangible and intangible), present and future of the expansion project and assets common for both Phase I and Phase II; ii) Pari passu ?rst charge on all the immovable and movable properties (both tangible and intangible), present and future, pertaining to Phase-I; iii) Pari passu ?rst charge/assignment/security interest on all the revenues/receivables of the subsidiary company pertaining to Phase-II; iv) Pari passu ?rst charge/assignment/security interest on subsidiary company’s rights under Phase II agreements, in respect of all clearances, licenses, permits, approvals and consents in respect of the expansion project and letters of credit, guarantee or performance bond that may be provided in favour of subsidiary company; and v) Pledge of 28% of shares of the subsidiary company held by its holding company, GVKEL.
53 53
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
b. c.
Loan from State Bank of India is secured by hypothecation of ?rst charge on spares and Pari-passu ?rst charge on Fixed Assets of Phase I. Repayment and other terms of loans as follows: i) Rupee loan from State Bank of India amounting to Rs.3,000 is repayable in 12 quarterly instalments from June 2012 and currently carries interest of 13% per annum. ii) Other Indian Rupee loans from banks are repayable in 42 quarterly instalments from 2008-09, and currently carry interest of 9.50% per annum. iii) Term loans from ?nancial institution are repayable in 39 quarterly instalments from 2008-09, and carry interest of 9.88 % and 11.35% for the two tranches. iv) Foreign currency loan is repayable in 13 half yearly foreign currency instalments from 2008-2009 and 13 quarterly INR instalments from 2015-2016. Interest is payable half yearly at 6 Month Libor plus 2.50% margin and interest on INR instalments would be agreed at the time of conversion.
d.
The vehicle loan is secured by charge over ?xed asset i.e. vehicle, for which ?nance is provided by the lender. It is repayable in 31 instalments and carries interest at 9.6% p.a.
C)
AHPCL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) Foreign currency loan from banks (secured) Indian rupee loan from ?nancial institutions (secured) Indian rupee loan from ?nancial institution (unsecured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” Net amount a. 203,784 7,500 211,284 171,729 171,729 10,748 (10,748) 2,595 (2,595) 154,801 19,077 29,906 7,500 211,284 122,516 17,712 31,501 171,729 8,390 763 1,595 10,748 1,973 224 398 2,595 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks, ?nancial institutions and foreign currency loan from bank are secured by: i) First mortgage on the subsidiary company’s immovable properties present and future; ii) First charge by way of hypothecation of all the movables, including movable plant and machinery, machinery spares, tools and accessories, furniture, ?xtures, vehicles and all other movable assets, present and future; iii) First charge on all cash ?ows, book debts and receivables and any other revenues of whatsoever nature and wherever arising and all intangibles including but not limited to goodwill, uncalled capital, present and future; and iv) Assignment or creation of security interest in: ? All rights, titles, interest, bene?ts, claims and demands whatsoever of the subsidiary company in the project documents, duly acknowledged and consented to by the relevant counter parties to such project documents, all as amended, varied or supplemented from time to time;
? ?
All rights, title, interest, bene?ts, claims and demands whatsoever of the subsidiary company in the clearances; All rights, title, interest, bene?ts, claims and demands whatsoever of the subsidiary company in any letter of credit, guarantee, performance bond provided by any party to the project document;
54
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
? ?
All insurance contracts / insurance proceeds; Pledge of 51% of equity shares issued or to be issued by the subsidiary company during the currency of the term loans; and The aforesaid mortgages, hypothecation, assignment charges and pledge of shares, shall in all respects, rank pari pasu interest.
?
b.
Repayment and other terms of loans are as follows: i) All the secured rupee term loans are repayable in 60 quarterly instalments commencing from January 1, 2012. However, the subsidiary company has requested banks to reschedule the repayment date starting from December 1, 2013 to be repaid in 53 quarterly instalments which is under consideration of the lenders. Pending approval of the same the subsidiary company paid the ?rst instalment due on January 1, 2012 in accordance with the existing repayment schedule. ii) The secured foreign currency loans are repayable in 60 quarterly instalments commencing from January 1, 2012. iii) The secured rupee term loans currently carry interest at 12% per annum subject to reset. Foreign currency loan carries ?oating rate of interest at 3 month LIBOR + 248 bps (i.e.2.48%).
c.
Unsecured loan from ?nancial institution is repayable in full within 24 months from the date of disbursement i.e. July 25, 2011. Interest is currently payable at 13.5% per annum.
D) GVKPGSL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) Indian rupee loan from ?nancial institution (secured) Other loans and advances Vehicle loan (secured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” Net amount a. 151,503 151,503 70,809 70,809 6 (6) 6 (6) 3 151,503 9 70,809 6 6 6 6 126,500 25,000 58,700 12,100 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks and ?nancial institutions are secured by: i) The subsidiary company’s all movable, immovable properties and receivables present and future; ii) Assignment or creation of charge of all the right, title, interest, bene?ts, claims and demands whatsoever in the project documents; and iii) Pledge of 51% of equity shares held by GVKEL.
b.
Repayment and other terms of loans are as follows: 70% of rupee loans are repayable in 46 quarterly instalments commencing from November 1, 2013 and balance of 30% are repayable in a single/bullet repayment instalment along with 46th quarter instalment. The loans are scheduled to be repaid fully by February 1, 2025. The Rupee Term loans currently carry interest at 13.5% per annum. The vehicle loan is secured by charge over ?xed asset i.e. vehicle, for which ?nance is provided by the lender. The loan is repayable in 36 instalments and carries interest of 8.75% per annum.
55 55
c.
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
E)
GJEPL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) From ?nancial institutions (secured) Other loans and advances Vehicle loan (secured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” Net amount a. 107,464 17,114 (2,992) (2,843) 107,464 17,114 2,992 2,843 73 107,464 17,114 54 2,992 2,843 9,117 98,274 10,964 6,150 1,843 1,095 1,843 1,000 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks and ?nancial institutions to the extent of Rs.6,150 are secured by: i) The subsidiary company’s immovable properties present and future; ii) Hypothecation of all the movables, including movable plant and machinery, machinery spares, tools and accessories, furniture, ?xtures, vehicles and all other movable assets, present and future; iii) First charge on all cash ?ows, book debts and receivables and any other revenues of whatsoever nature and wherever arising, present and future; iv) First charge on all intangibles including but not limited to Goodwill, uncalled capital, present and future; v) Assignment or creation of security interest in:
?
All rights, titles, interest, bene?ts, claims and demands whatsoever of the subsidiary company in the project documents, duly acknowledged and consented to by the relevant counter parties to such project documents, all as amended, varied or supplemented from time to time; All rights, title, interest, bene?ts, claims and demands whatsoever of the subsidiary company in the clearances; and All rights, title, interest, bene?ts, claims and demands whatsoever of the subsidiary company in any letter of credit, guarantee, and performance bond provided by any party to the project document and all insurance contracts / insurance proceeds.
?
?
vi) Charge on the escrow account and other reserves, and any other bank accounts of the subsidiary company wherever maintained:
?
Pledge of shares to the extent of 51% of the equity shares of the company held by the holding Company i.e. GVK Transportation Private Limited with e?ect from 1.4.2011. Further the debt servicing is secured by way of a bank guarantee for Rs.1,250 from Indian Overseas Bank, Secunderabad.
?
b.
Repayment and other terms of loans are as follows: The aforesaid loans carry interest of 9.25% to 9.58% and the rate of interest is due for reset during August’2012. The loans have to be fully repaid by November 2017.
56
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
c)
Rupee term loans to the extent of Rs.92,124 from ?nancial institutions are secured by: i) Mortgage by way of second exclusive charge of entire immovable properties of the subsidiary company, save and except project assets, both present and future, if any; ii) Second exclusive charge by way of hypothecation of entire movable properties of the subsidiary company, save and except project assets, both present and future, including movable plant and machinery, machinery spares, tools and accessories, furniture, ?xtures, vehicles and all other movable properties of whatsoever nature; iii) Second exclusive charge on entire cash ?ows, receivables, book debts and revenues of the subsidiary company of whatsoever nature and wherever arising, subject to the terms of the Concession Agreement and the Escrow Agreement, both present and future; iv) Second exclusive charge on entire intangible assets of the subsidiary company, including but not limited to, goodwill and uncalled capital, both present and future; v) Pledge of shares held by sponsor in dematerialized form in the equity share capital of the subsidiary company representing 51% of the total paid up equity share capital of the subsidiary company. The shares to be pledged shall be free from any restrictive covenants/lien or other encumbrance under any contract/arrangement, including shareholder agreement/joint venture agreement/ ?nancing arrangement, with regard to pledge/transfer of the shares including transfer upon enforcement of the pledge except for the encumbrance created in favor of the existing senior lenders to the Project; vi) First exclusive charge on the surplus cash ?ows, surplus account and the surplus debt service reserve of the subsidiary company;
d)
Repayment and other terms of loans are as follows: i. The loans currently carry interest at 12.98% (on Rs.65,000 of original disbursement) and 12.75% (on Rs.30,000 of the original disbursement) ii. The loans were raised in October 2011 and scheduled to be repaid fully by September 15, 2021.
e)
The vehicle loan is secured by charge over ?xed asset i.e. vehicle, for which ?nance is provided by the lender and is scheduled for repayment by June 15, 2014 in 36 equal monthly installments. The loan carries interest of 9.75%.
F)
MIAL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) From ?nancial institutions (secured) Additional term loans from banks (secured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” Net amount 375,516 375,516 3,030 (3,030) 343,933 30,825 758 375,516 3,030 3,030 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Note: In the previous year, MIAL was an associate company and hence last year ?gures are not disclosed.
57 57
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
a.
Term loans from consortium of banks and ?nancial institution are secured by way of: i) First charge on all the amounts lying in certain designated bank accounts of the subsidiary company; and ii) Pledge of equity shares of the company held by the prime members (i.e. GVK Airport Holdings Private Limited., Bid Services Division (Mauritius) Limited and ACSA Global Limited) constituting not less than 74% of the total voting paidup equity share capital of the subsidiary company.
b.
Additional term loan from a bank is secured by way of second charge on all the amounts lying in certain designated bank accounts of the Company. Repayment and other term of the loan are as follows: Term loans: i) Repayable in 120 monthly instalments commencing from the 85th month a?er ?rst disbursement i.e. July 2014. 18% of total loan amount outstanding will be repaid in 36 equal instalments commencing July 2014, 30% of total loan amount will be repaid in 36 equal instalments commencing July 2017 and balance 52% of total loan amount outstanding will be repaid in subsequent 48 equal instalments commencing July 2020. ii) As per the common loan agreement dated April 27, 2007 with consortium of banks and ?nancial institutions, the applicable rate of interest shall be 3 years G-Sec (“the Benchmark Rate”) plus spread of 215 bps (“the spread”) per annum payable monthly for the disbursements received till the amendment to common loan agreement dated April 09, 2011 and 265 bps spread for further disbursements received therea?er. The interest rate would be reset facility wise on December 31 once in every three years starting from December 31, 2009. Additional term loan from banks: Repayment is in equal quarterly instalments till June 2013. Current rate of interest is 9.896%.
c.
G)
GVKCCPL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) a. 9,850 5,400 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks are secured by: i) First charge on all movable, immovable properties and receivables present and future; ii) Assignment or creation of charge of all the right, title, interest, bene?ts, claims and demands whatsoever in the project documents; and iii) Pledge of 51% of equity shares held by the holding company i.e. GVK Energy Limited.
b)
Repayment and other terms of loans are as follows: Rupee term loans are repayable in 45 equal quarterly instalments commencing from April 1, 2013 and are scheduled to be repaid fully by April 1, 2024. The loans currently carry interest at 12.5% p.a. subject to reset.
H) GVKBVEPL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) 6,500 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
58
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
a.
Indian rupee loan is secured to the extent permitted under the concession agreement by: i) First charge on all the present and future moveable assets both present and future, save and except the project assets as de?ned under the Rupee Loan agreement; ii) First charge on all the bank accounts of the subsidiary company including debt service reserve account/escrow accounts/ its sub accounts. Charge on the escrow account shall be in a manner as permitted under the Escrow agreement and supplementary escrow agreement; iii) First charge on all intangibles of the subsidiary company including goodwill, rights, undertakings and uncalled capital both present and future save and except the project assets as de?ned under the rupee loan agreement; iv) Assignment by way of security of all the project documents and guarantees to the extent provided under the substitution agreement entered into by the subsidiary company with the rupee lender and authority; and v) Pledge of 51% equity shares of the subsidiary company held by the sponsor’s until the commercial operation date. Pledge of shares will be gradually reduced to 26% over a period of 3 years from the date of COD if there is no outstanding event of default.
b)
Repayment and other terms of loans are as follows: Indian rupee loan carries interest at 11.75% p.a. up to scheduled commercial operation date and therea?er it is reset on the date falling on expiry of every 24 months from the previous interest reset date until the ?nal settlement of loan. The loan is repayable over a period of 17.25 years (including the construction period) in 54 quarterly instalments starting from December 31, 2015.
I)
GVKADPL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) a. 90,000 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks is secured by: Pledge of shares held by the Parent Company in the subsidiary company and shares held by the subsidiary company in GVK Airport Holdings Private Limited and Bangalore Airport & Infrastructure Developers Private Limited. Share pledge is ranking pari passu with loan extended by other lenders. The loan is further secured by mortgage of land located at Himayat sagar, Rajender Nagar Mandal, Ranga Reddy district, Andhra Pradesh and o?ce building including land located at 156-159, Paigah House, Sardar Patel Road, Secunderabad belonging to the promoter of Parent Company. Repayment and other terms of loans are as follows: Loan amounting to Rs.60,000 and Rs.30,000 currently carries interest of 13.25% and 13.95% respectively. The loan is repayable on September 16, 2013 in single instalment and interest has to be paid on quarterly basis.
b)
J)
GVKDKEPL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) From ?nancial institutions (secured) The above amount includes Secured borrowings Unsecured borrowings Net amount March 31, 2011 Current maturities March 31, 2012 March 31, 2011
12,766 2,784 15,550 15,550 15,550
59 59
-
-
-
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
a.
Indian rupee loans are secured to the extent permitted under the concession agreement by: i) First charge on all the present and future moveable assets and intangible assets except the project assets as de?ned under the rupee loan agreement; ii) First charge on all revenues and receivables of the borrower from the project or otherwise; iii) Pledge of 51% equity shares of the subsidiary company held by the Sponsor’s until the commercial operation date and pledge of 26% equity shares of the subsidiary company held by the Sponsor’s for a period of 2 years from commercial operation date; iv) Assignment by way of security of all the project documents to the extent provided under the substitution agreement entered into by the subsidiary company with the rupee lender and the NHAI; v) First charge on all rights, title, interests, bene?ts, demands, and claims under the contractor guarantees, liquidated damages, any guarantees, letter of credit, or performance bonds provided by any counter party under any contract of the borrower, insurance contracts, and insurance proceeds; vi) First charge on all the bank accounts of the subsidiary company.
b.
Repayment and other terms of loans are as follows: i. Loan currently carries interest at 10.50% p.a. up to the ?rst interest reset date viz. scheduled project completion date or commercial operation date whichever is earlier and therea?er each such date falling every two years from the previous interest reset date, until the ?nal settlement of the loan. The rupee lenders may change the interest rate before the interest reset date if base rate of any of the rupee lender is revised before the next interest reset date, to a rate higher than the determined interest rate. Any such change in interest rate, if made, is subject to the Reserve Bank of India’s policy with regard to the base rate, as may be applicable from time to time. ii. The loan is repayable over a period of 18 years (including the construction period) in 58 quarterly instalments starting from September 30, 2014.
K)
GVKGPL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) Foreign currency loan from banks (secured) From ?nancial institutions (secured) Other loans and advances Vehicle loan (secured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” Net amount a. 91,098 101,341 (11,868) (6,294) 91,098 101,341 11,868 6,294 14 91,098 27 101,341 13 11,868 13 6,294 28,491 11,621 50,972 32,235 11,545 57,534 3,744 1,549 6,562 2,226 679 3,376 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks, ?nancial institutions and foreign currency loans are secured by: i) Pari passu ?rst charge by deposit of title deeds of immovable properties in respect of project land;
60
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
ii) Pari passu ?rst charge in the form of Hypothecation of all movable assets of the project both present and future except speci?ed receivables on which ?rst charge was given to working capital lender; iii) Pari passu ?rst charge/assignment/security interest on/ of all the rights, titles, interest and bene?ts and all licenses, permits, approvals and consents in respect of the project; and iv) Pledge of 51% shares of paid-up capital of the subsidiary company held by GVKEL. b. Repayment terms of loans are as follows: i) Indian Term Loans from banks currently carries interest at 9.50%p.a to 11.50% p.a. The loans are repayable in 42 to 44 quarterly instalments along with monthly interest. The ?rst instalment was paid in year 2008-2009 and the ?nal instalments will fall due on March 15, 2020. ii) Foreign Currency Loan carries interest at 3 M Libor plus 2.50% margin. The loan is repayable in 43 quarterly instalments along with interest. The ?rst instalment was paid in year 2008-2009 and the ?nal instalments will fall on March 15, 2020. iii) Term Loans from ?nancial institution currently carries interest at11.35%. These loans are repayable in 40 quarterly instalments along with monthly interest. The ?rst instalment was paid in year 2010-2011 and the ?nal instalment will fall on April 15, 2020. c. The vehicle loan is secured by charge over ?xed asset i.e. vehicle, for which ?nance is provided by the lender and is scheduled for complete repayment by March 2014.
7. Deferred tax liabilities and assets
March 31, 2012 Deferred tax liability (net) Depreciation Provision for doubtful trade receivables Provision for retirement bene?ts Others Deferred tax asset (net) Provision for retirement bene?ts Depreciation Gross deferred tax asset 72 (8) 64 68 (6) 62 30,246 (182) (338) 413 30,139 5,334 427 5,761 March 31, 2011
Note: In accordance with the terms and conditions of the Power Purchase Agreement (‘PPA’) with AP Transco, GVKIL is entitled for reimbursement of tax on income. Since deferred tax liability is created based on tax laws, timing di?erence reversing a?er tax holiday period but within the period of power purchase agreement amounting to Rs.2,623 (March 31, 2011: Rs.3,496) has been accrued as unbilled revenues. Further, the Company has created deferred tax liability on such unbilled revenue to the extent not expected to be reimbursed by AP Transco.
8. Other long-term liabilities
March 31, 2012 Retention money Retirement compensation payable to AAI under OMDA Security deposits Others 10,391 11,839 5,197 1,024 28,451
61 61
March 31, 2011 12,291 12,291
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
9. Provisions
Long-term March 31, 2012 Provision for employee bene?ts Provision for gratuity (note 27) Provision for leave bene?ts Other provisions Provision for income tax (net) Provision for resurfacing obligation 2,266 2,266 2,984 1,133 1,133 1,417 1,102 1,102 2,815 808 808 1,044 718 718 284 284 99 1,614 1,713 12 224 236 March 31, 2011 Short-term March 31, 2012 March 31, 2011
10. Short term borrowings
March 31, 2012 Debentures (secured) Cash credit (secured) Overdra? from banks (secured) Overdra? from banks (unsecured) Buyers credit from banks (secured) Other loans and advances - Loan from banks (secured) - Loan from banks (unsecured) - Loan from others (secured) 110,770 97,000 8,600 279,010 The above amount includes Secured borrowings Unsecured borrowings Entity wise details of the borrowings are as follows: Name of the entities Parent Company GVKIL MIAL GVKADPL GVKTPL GVKRHEPPL GVKGPL March 31, 2012 41,595 9,973 81,045 83,847 53,900 8,600 50 March 31, 2011 10,000 25,602 75,000 4,247 168,638 110,372 93,349 21,500 10,000 21,500 114,849 1,083 45,250 13,372 2,935 March 31, 2011 75,000 1,451 4,247 2,651
62
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
The details of the loan entity wise are as follows: a) Parent Company March 31, 2012 Overdra? from banks (unsecured) Other loans and advances - Loan from banks (secured) - Loan from banks (unsecured) 21,870 15,000 41,595 10,000 10,000 4,725 March 31, 2011 -
1. Over dra? is unsecured and carries interest rate of 10.85%. 2. Term loan aggregating to Rs.20,000 is secured by ?rst charge on the current assets, present and future of the company and carries interest at base + 150 bps i.e. currently 11.50% per annum 3. Term loan aggregating to Rs.1,870 presently carries interest of 12% per annum and secured by (i) charge on loans and advances of the company to GVK Airport Developers Private Limited (“GVKADPL”) and also loans and advances provided by GVKADPL to GVK Airport Holdings Private Limited (“GVKAHPL”) and Bangalore Airport & Infrastructure Developer Private Limited (“BAIDPL”) (ii) exclusive charge on shares of GVKADPL to the extent of two times of facility amount. (iii) exclusive charge on shares of GVKAHPL and BAIDPL not exceeding 30% of the shares of the companies and the no. of shares to be pledged to be in proportion to the lenders at GVKADPL. 4. Term loans aggregating to Rs.15,000 is unsecured and carries interest rate of 11.75%. b) GVKIL March 31, 2012 Cash credit from banks (secured) Buyers credit from banks (secured) Other loans and advances - Loan from banks (secured) - Loan from banks (unsecured) 5,000 2,000 9,973 21,500 25,602 38 2,935 March 31, 2011 1,451 2,651
1. Cash Credit from banks are secured by: a. In respect of Phase-I working capital lenders, ?rst charge on receivables of Phase-I and second charge on ?xed assets of Phase-I. b. In respect of Phase-II working capital lenders, ?rst charge on ?xed assets and on current assets of Phase-II on pari passu with Phase-II term lenders. c. Cash credit carries interest at PLR+ margin which ranged from 11% to 14% per annum 2. Buyer’s Credit is secured by corporate guarantee of Parent Company and carries interest at Libor plus 2.50 margin. 3. Loan from Syndicate Bank (Rs.5,000) is secured by pari passu second charge on ?xed assets of the subsidiary company and currently carries interest of 12.25% per annum. 4. Unsecured loan from bank currently carries interest of 11.75%. per annum. c) MIAL March 31, 2012 Cash credit from banks (secured) Other loans and advances - Loan from banks (unsecured) 80,000 81,045 1,045 March 31, 2011 -
1. Loan from banks are in the process of getting securitized, loan amounting to Rs.15,000/-, Rs.35,000/- and Rs.30,000/carrying interest of 12.75%, 12% and 12.25% respectively. 2. Terms of security for Cash Credit facilities: refer note 6(f).
63 63
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
d)
GVKADPL March 31, 2012 Overdra? from banks (secured) Overdra? from banks (unsecured) Debentures (secured) Other loans and advances - Loan from banks (secured) 30,000 83,847 75,000 45,200 8,647 March 31, 2011 75,000
1. Overdra? facility amounting to Rs.45,200 currently carries interest of 11.25% p.a. The loans are 100% secured in the form of lien on ?xed deposit of the subsidiary company. 2. Overdra? amounting to Rs.4,985 currently carries interest of 11.20% p.a & Rs.3,662 carries interest of 11.33% p.a. 3. Loan amounting to Rs.30,000 currently carries interest of 14.25% p.a. The loans are secured by pledge of shares held by parent company in the subsidiary company and shares held by the subsidiary company in GVKAHPL and BAIDPL. Share pledge is ranking pari passu with loan extended by other lenders. The loan is further secured by mortgage of land located at Himayat sagar, Rajender Nagar Mandal, Ranga Reddy district, Andhra Pradesh and o?ce building including land located at 156-159, Paigah House, Sardar Patel Road, Secunderabad belonging to the promoter of parent Company. 4. Debentures outstanding during the previous year carry interest of 14% p.a. and are secured by pledge of 72% equity of GVKADPL and GVKAHPL. e) GVKRHEPPL March 31, 2012 Other loans and advances - Loan from others (secured) 8,600 Loan is secured against: i) Fixed assets, rights titles, approvals, clearances, contracts, insurance policies of the subsidiary company. ii) First charge on the currents assets of the subsidiary company. iii) Corporate guarantee of the parent company. iv) This loan currently carries interest rate of 13% p.a. i.e SREI Benchmark Rate (SBR) minus 4.50%. f) GVKTPL March 31, 2012 Other loans and advances - Loan from banks (unsecured) 53,900 Loan carries interest presently set at 12% p.a. for a period of 1 year from the date of ?rst disbursement. The loan is secured by i) Charge on loans and advances given by the Parent company to GVKADPL and also loans and advances provided by GVKADPL to GVKAHPL and BAIDPL. ii) Exclusive charge on shares of GVKADPL, however the lendor has option to create pari-passu basis of pledge of shares. iii) Exclusive charge on shares of GVKAHPL and BAIDPL however the lendor has option to create pari-passu basis of pledge of shares. iv) Corporate guarantee by the parent company. March 31, 2011 March 31, 2011
64
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
g)
GVKGPL March 31, 2012 Overdra? from banks (secured) 50 March 31, 2011 4,247
Overdra? is secured by ?rst charge on the entire current assets of the subsidiary company, including receivables and second charge on the entire ?xed assets of the company on pari-passu basis. Interest is currently payable at 12.5% p.a.
11. Trade payable and other current liabilities
March 31, 2012 Trade payables Other current liabilities Current maturities of long-term borrowings (note 6) Interest accrued but not due on borrowings Unpaid dividends Retention money Advances from customers Payable for capital goods Other liabilities 37,289 3,501 15 24,420 1,780 42,857 7,697 117,559 18,855 2,849 20 607 10,273 901 33,505 42,863 March 31, 2011 10,429
65 65
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
12. Tangible assets
Freehold Land Leasehold Land Factory building NonPlant and factory machinery building Electrical equipment Computers and O?ce computer equipment equipments Runways, Furniture Taxiways and Vehicles and ?xtures Aprons Total
GVK Power & Infrastructure Limited
Cost 26,338 5,144 20 14,759 24 42 1,701 133 168 27 101 1,253 6,798 8,349 347,035 513 537 88 435 586 216 21 391,932 7,556 14,800 31,462 2,910 596 119 265 1 14 11 6,207 2,815 508 306 76,301 35,795 4,480 4,687 1,253 6,822 8,391 333,722 646 705 (255) 115 69 536 4,005 673 1 781 31 276 10 104,175 12,177 (255) 384,433 229,474 25,952 1,006
As at April 1, 2010
Additions
Disposals
Other adjustments
- Exchange di?erences
As at March 31, 2011
Additions on account of acquisition
Additions
Disposals
Other adjustments 33,776 1,253 6,833 90,780 373,828 1,761 5,633 5,684 184 5,213 1,078 (119) 116,233 (119) 1,761 640,495
66 150 2,156 42 140 108 2,016 693 6,911 1,487 8 9,083 42 232 135 66 1,784 558 75,585 16,070 83 91,572 9,577 17,829 3 118,975 302 65 367 2,286 420 3,073 31,462 33,776 1,145 1,103 4,806 4,677 7,698 81,697 242,150 254,853 279 2,560
- Funded through Development Fee
- Exchange di?erences
As at March 31, 2012
Depreciation 139 30 169 1,218 259 4 1,642 27 6 33 10 43 188 34 222 1,201 230 1,653 224 58 15 267 4 79 7 343 7,033 2,059 9,092 78,873 16,672 98 95,447 28,230 22,555 22 146,210
As at April 1, 2010
Charge for the year
Disposals
As at March 31, 2011
On acquisitions
Charge for the year
Disposals
As at March 31, 2012
Net Block 536 4,042 82 141 314 3,560 514 735 107,141 288,986 494,285
As at March 31, 2011
As at March 31, 2012
Note: Disposals include refund of customs duty aggregating to Rs.Nil (March 31, 2011: Rs.13,241)
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
13. Intangible assets
Toll collection rights Cost As at April 1, 2010 Additions Disposals Other adjustments - Exchange di?erences - Borrowing costs As at March 31, 2011 Additions on account of acquisition Additions Disposals Other adjustments - Exchange di?erences - Borrowing costs As at March 31, 2012 Depreciation As at April 1, 2010 Charge for the year Disposals As at March 31, 2011 On acquisitions Charge for the year Disposals As at March 31, 2012 Net Block As at March 31, 2011 As at March 31, 2012 54,708 52,794 23,311 116,161 183 3,150 41,084 78,202 213,189 10,393 2,695 13,088 1,914 15,002 14 32 46 652 563 4 1,257 5,269 728 5,997 10,407 2,727 13,134 5,920 3,205 4 22,255 67,796 116,161 4,407 47,081 235,445 67,796 23,311 93,276 426 229 1,507 2,685 13 41,471 5,610 91,336 136,254 8,294 439 67,796 24,271 960 113 116 92,180 116 960 Goodwill So?ware Airport Grant Total
67 67
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
14: Expenditure incurred during construction period pending allocation
Particulars Personnel expenses: Salaries, allowances and bonus Contribution to Provident and other funds Sta? welfare Power, fuel & water charges Stores and consumables Rent Rates & Taxes Communication costs Travelling and Conveyance Legal and professional charges Survey charges Repairs & Maintenance: Building Plant & Machinery Others Insurance Land lease charges Printing & Stationery Remuneration to directors O?ce and Guest house maintenance Loss on sale of assets(net) Tender fees paid Exchange ?uctuations Miscellaneous expenses Depreciation Project Premium Financial expenses: Interest on ?xed period loans Interest on other loans Guarantee commission Exchange di?erence considered as adjustment to borrowing cost Bank charges Sub Total - (A) Less: Interest income Dividends from mutual funds Pro?t on Sale of mutual funds Provisions no longer required written back Tender fee received Sale of Scrap Gain on forward contracts Sub Total- (B) Amount capitalised (C) Balance carried to Balance Sheet - (A-B-C) As at April 01, 2011 1,891 30 94 130 308 382 1,739 153 3,061 10,081 100 431 21 215 1,494 8 106 419 48 10 10 1,143 1,291 546 3,580 34,338 1,904 48 90 63,671 120 976 45 694 5 56 58 1,954 61,717 Additions on acquisition 12,692 121 486 157 6,528 104 134 2,498 8,102 604 1,020 59,290 3,268 95,004 1,584 2,560 5 4,149 32,689 58,166 Additions during the year 4,000 97 116 210 204 620 123 92 1,688 6,139 48 112 5 86 494 38 111 156 1,044 405 271 4,895 55,040 970 35 1,385 1,183 79,567 355 618 55 53 8 141 83 1,313 3,613 74,641 As at March 31, 2012 18,583 127 331 826 669 7,530 1,966 379 7,247 24,322 148 543 26 301 2,592 8 144 530 204 10 10 2,187 2,716 817 8,475 148,668 2,874 83 1,385 4,541 238,242 2,059 4,154 100 752 13 197 141 7,416 36,302 194,524
68
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
15. Non-current investments
March 31, 2012 Trade investments (unquoted, at cost) Investment in associates A) Seregraha Mines Limited 22,225 (March 31, 2011: 22,225) equity shares of Rs.10 each fully paid up B) Bangalore International Airport Limited 165,378,000 (March 31, 2011: 111,534,000) equity shares of Rs.10 each fully paid up (includes Goodwill amounting to Rs.160,730 (March 31, 2011: Rs.107,989) Add: Opening balance of accumulated pro?t Add: Pro?t for the year C) Mumbai International Airport Private Limited* Nil (March 31, 2011: 296,000,000) equity shares of Rs.10 each fully Add: Opening balance of accumulated pro?t Add: Pro?t for the year till the date of acquiring control Less: Eliminated upon consolidation 29,600 22,786 4,283 (56,669) 189,761 Investment in equity instruments 50,000 ( March 31, 2011: Nil) equity shares of USD 1 each fully paid-up in GVK Coal Developers Singapore Pte Limited Non-trade investments (unquoted, at cost) Investment in Government or trust securities National Savings Certi?cates 5 30 189,791 Aggregate amount of unquoted investments * The entity became a subsidiary with e?ect from October 18, 2011. 189,791 1 1 173,762 173,762 25 29,600 15,496 7,290 52,386 173,761 179,340 117,311 2 2 March 31, 2011
4,062 6,357 189,759
259 3,803 121,373
69 69
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
16. Loans and advances
Non-current March 31, 2012 Loan and advances to related parties Unsecured, considered good Loan to GVK employee welfare trust Loan to EMRI Share application money to associate Others (A) Capital advances Unsecured, considered good (B) Deposits Unsecured, considered good (C) Advances recoverable in cash or kind Unsecured considered good (D) Other loans and advances (Unsecured, considered good) Advance income-tax (net of provision for taxation) Balance with statutory/government authorities Prepaid expenses MAT credit entitlement Others (E) (A+B+C+D+E) 6,163 116 6,279 135,907 3,767 3,767 66,747 10,675 895 1,783 192 13,545 21,022 480 212 651 285 7 1635 3,550 418 418 463 463 4,373 4,373 1,022 1,022 861 861 1,145 1,145 3,104 3,104 893 893 117,924 117,924 4,500 5,473 337 115 10,425 3,000 4,777 209 7,986 53,386 53,386 March 31, 2011 Current March 31, 2012 March 31, 2011
70
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
17. Trade receivables and other assets
i) Trade receivables Non-current March 31, 2012 Unsecured, considered good unless stated otherwise Outstanding for a period exceeding six months from the date they are due for payment Unsecured, considered good Doubtful (A) Provision for doubtful receivables (B) Other receivables Unsecured, considered good (C) (A+B+C) a) 1,308 1,308 8,118 483 483 6,810 16,530 16,530 37,502 120 120 120 6,810 6,810 6,810 6,327 6,327 20,972 561 21,533 (561) 20,972 March 31, 2011 Current March 31, 2012 March 31, 2011
Trade receivables include accruals towards reimbursement of ?xed charges for the ?nancial years 1997-1998 to 20002001, on increased capital cost worked out as per ratios set out in the PPA aggregating to Rs.4,512 (March 31, 2011: Rs.4,512) by GVKIL. The increased capital cost is subject to the approval of APERC. Pending approval of increased capital cost by APERC, the claim for reimbursement of ?xed charges has not been made on AP Transco. The subsidiary company contends that it is entitled to reimbursement of ?xed charges on increased capital cost under the terms of PPA and accordingly considers these amounts as good and recoverable. The subsidiary company has ?led a writ petition before the High Court of New Delhi against APERC, seeking a direction to APERC to take a decision on approval of completed capital cost in a time bound manner. The matter is pending hearing. The management of the subsidiary company based on its internal assessment and legal advice is con?dent of receiving approval of completed capital cost. Trade receivables include amounts receivable from AP Transco towards reimbursement of minimum alternate tax under the provisions of Income Tax Act, 1961, for the period commencing from the ?nancial year 2000-2001 up to the ?nancial year 2010-2011, aggregating to Rs.3,530 (March 31, 2011: Rs.3,500) are refuted by AP Transco. While the subsidiary company contends that the it is entitled to claim payments on account of minimum alternate taxes also under the provisions of PPA, AP Transco contends only taxes on the net taxable income under the regular provisions of the Income Tax Act, 1961 are reimbursable and not taxes levied on book pro?ts under the deemed provisions of Section 115 JB of the Income Tax Act, 1961. Further, provision for current taxes is being made a?er considering reimbursable amount from AP Transco. Based on its internal assessment and legal advice, the subsidiary company’s contention is that these amounts are recoverable. Trade receivables further include an amount of Rs.76 (March 31, 2011: Rs.76) being the di?erential interest recovered by AP Transco considering the actual working capital limits as against the working capital limits computed as per the terms of the PPA and interest rate charged as per rates available with AP Transco and not with the subsidiary Company. The subsidiary company has ?led a petition under Section 9 of Arbitration & Conciliation Act 1996, and the City Civil Court of Hyderabad has restrained AP Transco from considering the lower level of working capital limits by granting a stay in the matter. The appeal ?led by AP Transco before the High Court of Andhra Pradesh against the aforesaid stay, is pending disposal. The management of the subsidiary company based on its internal assessment is con?dent that the matter will be decided in its favour.
b)
c)
71 71
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
d)
The trade receivables include Rs.21,266 from Air India Limited (Air India) a company wholly owned by the Government of India (GOI) and its subsidiaries. Air India has been facing ?nancial di?culties and has not been settling its dues to MIAL in time. In the plan outlay of the Union Budget 2012-13 which is awaiting approval in the Parliament, the GOI has proposed to infuse equity into Air India which has in turn communicated to MIAL that it would start paying MIAL’s dues once the funds are made available by the Government. MIAL accordingly considers the dues from Air India as good and recoverable. In the event either the proposal is not approved or the payments are not made as communicated, the recoverability of the dues from Air India could be impacted. The trade receivables also include Rs.4,041 from King?sher Airlines Limited (King?sher) which has also been facing ?nancial di?culties and has curtailed its operations recently. MIAL has an understanding under which King?sher is paying amounts in excess of its actual service usage and the dues from King?sher have been gradually reducing. Accordingly, MIAL considers the dues from King?sher as good and recoverable. In the event payments from King?sher are not received as per the understanding, the recoverability of dues from King?sher could be impacted.
e)
ii)
Other assets Non-current March 31, 2012 Unsecured, considered good Non-current bank balances (note 20) Non-current inventory (note 19) Unamortised expenditure Unamortised portion of ancillary cost of arranging the borrowings Others Unbilled revenues Interest accrued on ?xed deposits Advance for investments Other receivables 48 4,109 1,302 4,382 12,517 1,001 1,400 1,199 18,718 16,024 495 311 16,830 1,667 1,490 2,601 1,368 1,026 449 1,141 March 31, 2011 Current March 31, 2012 March 31, 2011
18. Current investments
March 31, 2012 Current investments (valued at lower of cost and fair value) Other than trade (quoted) Investments in units of Mutual Funds Certi?cate of Deposit Aggregate market value of quoted investments 21,946 1,460 23,406 23,554 73,964 2,445 76,409 77,275 March 31, 2011
19. Inventories (valued at lower of cost and net realizable value)
Non-current March 31, 2012 Stores, spares and consumables Amount disclosed under non-current assets (note 17(ii)) 1,026 1,026 (1,026) 72
Current March 31, 2012 7,540 7,540 March 31, 2011 3,168 3,168 1,141 1,141 (1,141) 7,540 3,168
March 31, 2011
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
20. Cash and bank balances
Non-current March 31, 2012 Cash and cash equivalents Balances with banks: - On current accounts - Deposits with originally maturity of less than three months - On unpaid dividend account Cheques/dra?s on hand Cash on hand 53,885 19,382 15 5,956 214 79,452 Other bank balances - Deposits with original maturity for more than 12 months - Deposits with original maturity for more than 3 months but less than 12 months - Margin money deposit/security against borrowings Amount disclosed under non-current assets (note 17(ii)) 1,368 1,368 (1,368) 449 449 (449) 172,626 32,820 40,686 52,488 93,174 736 290 1,026 9,679 22,020 20 75 31,794 March 31, 2011 Current March 31, 2012 March 31, 2011
21. Revenue from Operations
March 31, 2012 Revenue from operations Sale of electrical energy Sale of services Income from toll operations Aeronautical Non-aeronautical Cargo operations Manpower and consultancy services 22,384 19,879 31,984 7,689 616 249,183 18,916 1,257 191,466 166,631 171,293 March 31, 2011
73 73
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
22. Other income
March 31, 2012 Interest income on Bank deposits Others Dividend income on Non trade current investments Pro?t on sale of investments Non trade current investments Pro?t on sale of ?xed assets (net) Guarantee commission Liabilities written back Miscellaneous income 3,964 12 1,062 76 214 8,887 1,497 71 26 106 2,853 97 169 3,436 26 156 828 March 31, 2011
23. Employee bene?t expense
March 31, 2012 Salaries, wages and bonus Contribution to provident and other funds Retirement and other employee bene?ts Sta? welfare expenses 7,375 333 158 202 8,068 March 31, 2011 3,103 108 38 100 3,349
24. Finance costs
March 31, 2012 Interest Bank charges Amortization of ancillary borrowing costs Exchange di?erence to the extent considered as an adjustment to borrowing costs 44,077 480 525 1,645 46,727 March 31, 2011 25,447 867 26,314
25. Depreciation and amortization expense
March 31, 2012 Depreciation of tangible assets Amortization of intangible assets Less: Transfer to Expenditure incurred during construction period Less: Amount withdrawn from deferred income 22,555 3,205 25,760 271 596 24,893 March 31, 2011 16,672 2,727 19,399 197 838 18,364
74
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
26. Other expenses
March 31, 2012 Operating and maintenance expenses NHAI share of toll fee Minimum o? take price for naphtha Rent Rates and taxes Insurance Repairs and maintenance: - Buildings - Roads - Plant and machinery - Others Vehicle hire charges Electricity and water Travel and conveyance Communication Printing and stationery Advertisement Bid and tender document charges Legal and professional charges Prompt payment rebate Auditor's remuneration (refer note below) Directors' sitting fee Donation Foreign exchange ?uctuations (net) Loss on sale of ?xed assets (net) Provision for Doubtful trade receivable Insurance claims and assets written o? Miscellaneous expenses 938 2,318 3,024 1,572 167 1,602 917 216 203 210 270 3,075 3,998 17 29 886 315 136 17 1,716 30,080 March 31, 2012 As auditor: Audit fee Limited Review In other Capacity: Other services (certi?cation fees) Reimbursement of expenses 1 17 15 12 4 11 4 53 3,082 4,801 574 58 244 624 139 125 78 235 3,061 4,223 15 25 657 399 1 502 22,547 March 31, 2011 3,820 2,728 13 354 542 991 March 31, 2011 392 1,716 10 244 499 790
75 75
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
27. Gratuity and other post-employment bene?t plans
The Group operates one de?ned plan, viz., gratuity, for its employees. Under the gratuity plan, every employee who has completed at least ?ve years of service gets a gratuity on retirement or termination at 15 days of last drawn salary for each completed year of service. The scheme is unfunded. The following tables summarize the components of net bene?t expense recognized in the statement of pro?t and loss and the funded status and amounts recognized in the balance sheet for the plan. A) Statement of pro?t and loss Net employee bene?t expense recognized in the employee cost March 31, 2012 Current service cost Interest cost on bene?t obligation Past service costs Net actuarial( gain) / loss recognized in the year Net bene?t expense B) Balance sheet March 31, 2012 Present value of de?ned bene?t obligation Past service costs Fair value of plan assets Net liability C) Changes in the present value of the de?ned bene?t obligation are as follows: March 31, 2012 Opening de?ned bene?t obligation Obligation on transfer of employees Opening de?ned bene?t obligation on acquisition of subsidiary Current service cost Interest cost Bene?ts paid Past service costs Actuarial (gains) / losses on obligation Closing de?ned bene?t obligation 296 357 81 54 (32) 61 817 68 15 (2) 79 (85) 296 March 31, 2011 184 37 794 23 817 March 31, 2011 296 296 81 54 11 61 207 March 31, 2011 68 15 79 (85) 77
D) The principal assumptions used in determining gratuity bene?t obligations for the company’s plans are shown below: March 31, 2012 Discount rate Expected rate of return on assets Employee turnover 8.6% p.a. Not applicable 5% March 31, 2011 8% p.a. Not applicable 5%
The estimates of future salary increases, considered in actuarial valuation, take account of in?ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
76
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
28. Contingent liabilities
A) 1. Parent Company Direct and indirect taxes ? Income tax demand for assessment year 2008-09 for Rs.72.98 (March 31, 2011:Rs.72.98).
?
The Company has received a notice dated February 4, 2008 from the O?ce of the District Registrar of Assurances, Hyderabad demanding payment of stamp duties of Rs.2,829 on transfer of shares to the shareholders of GVK Industries Limited vide the scheme of arrangement approved by the Andhra Pradesh High Court. The company has obtained an order from the Andhra Pradesh High Court staying the above notice on March 13, 2008 until such further orders from the said court. Management based on its internal assessment and/or legal advice is con?dent that the cases will be decided in the Company’s favour.
2.
?
Security against loans taken by others The Company has pledged 73,217,647 (March 31, 2011: Nil) and 22,495,000 (March 31, 2011: Nil) shares of GVK Energy Limited and GVK Transportation Private Limited for securing loan obtained by GVK Coal (Singapore) Pte. Limited, an entity in which Company has 10% stake. During the year ended March 31, 2012, the Parent Company has provided security by way of corporate guarantees amounting to Rs.1,441 for securing facilities obtained by an associate (March 31, 2011: Rs.1,441) for various fund and non-fund based facilities availed by them. During the year ended March 31, 2012, the Company has provided security by way of corporate guarantees amounting to Rs.9,074 (March 31, 2011: 10,048) for securing loans obtained by GVK Projects and Technical Services Limited. During the year ended March 31, 2012, the Company has provided security by way of guarantee amounting to Rs.220,587 (March 31, 2011:Nil) for securing loans obtained by GVK Coal Developers (Singapore) Pte Limited for a facility availed by it. Management is of the opinion that the aforesaid Companies will be able to meet their obligations as they arise and consequently no adjustment is required to be made to the carrying value of the security and guarantees provided.
?
?
?
B) i)
Subsidiary companies GVKIL Particulars On account of guarantees issued by banks Service Tax demand on operator of the power plant Claims not acknowledged as debts
?
March 31, 2012 128 759 150
March 31, 2011 208 570 8
AP Transco during the year 2003-2004 made a claim of Rs.2,048 against the subsidiary company stating that e?ective Return on Equity (“ROE“) claimed by the subsidiary company works out to 17.17% as pointed out by Comptroller and Auditor General of India as against 16% to be claimed as per the Power Purchase Agreement (“PPA”). Aggrieved by the said claim, the subsidiary preferred a writ petition before the High Court of Andhra Pradesh and the High Court directed that the matter be referred to arbitration as envisaged in PPA. Pending arbitration, the High Court permitted the subsidiary company to collect ROE at 16% on a monthly basis which is accounted for as income and is being paid by AP Transco. If the decision is against GVKIL, the liability on this account up to March 31, 2012 would be Rs.5,078 (March 31, 2011: Rs.4,716). The subsidiary company is con?dent that its claim for ROE on a monthly basis is strictly in accordance with PPA. AP Transco has ?led petition before APERC to consider interest on working capital charged by State Bank of India to its most credit worthy customers for the purpose of determining tari? for the year 2003-04. Based on these petitions, APERC has issued notices to the subsidiary company for hearing on these matters. The subsidiary company has ?led a writ petition before the High Court of Andhra Pradesh questioning the jurisdiction of APERC for adjudication of matters under the PPA. The High Court of Andhra Pradesh has issued interim directions against APERC not to proceed with the subject notice until further orders.
77 77
?
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Subsequently, in the year 2008, the Supreme Court held that all matters relating to tari? shall be adjudicated by Electricity Regulatory Commission. The subsidiary company accordingly, withdrew the writ petition and approached Andhra Pradesh Electricity Regulatory Commission (APERC) seeking directions of the Commission for adjudication of its claims. The subsidiary company is con?dent that the matter will be decided in its favour.
?
In the year 2007, AP Central Power Distribution Company Ltd has ?led a petition without specifying any amount before APERC against the subsidiary company stating that insurance premium relating to Business Interruption Policy is not eligible for reimbursement right from date of commencement of commercial operations. The subsidiary company is con?dent that the matter will be decided in its favour. As per the terms of contract with Bharat Petroleum Corporation Limited (BPCL) for supply of Naphtha, the subsidiary company has to pay for 80,000 MT @ Rs.38.45 as ‘Minimum o? Take charges’ in the year in which there is no procurement. The subsidiary company is negotiating with BPCL to reduce the Minimum o? Take quantity from 80,000 MT to 40,000 MT, which is under consideration by BPCL. Pending receipt of acceptance from BPCL, no provision is made in the books for the requested reductions of 40,000 MT, which worked out to Rs.13 (March 31, 2011 Rs.15) for the year and the liability on this account up to January 29, 2012 is Rs.105 (March 31, 2011 Rs.92). The subsidiary company is con?dent of receiving acceptance from BPCL. The contract with BPCL expired on January 29, 2012. AP State Load Despatch Centre (APSLDC) has ?led petitions before the Andhra Pradesh Electricity Regulatory Commission (APERC) for appointment of adjudicating o?cer for assessment of charges to be levied on the Company for non adherence to backing down instructions by GVK Power and Infrastructure Limited, operator of the power plant of the subsidiary company. APSLDC has claimed an amount of Rs.1,320 for the aforesaid non- compliance. Management based on its internal assessment/ legal advice is con?dent that the matter will be decided in the company’s favour. The subsidiary company approached AP Transco for new connection while constructing it’s new power plant upon which AP Transco raised demand of Rs.399 towards minimum monthly charges regarding electricity connection taken earlier which was surrendered on October 7, 1996. The subsidiary company ?led petition before the Andhra Pradesh Electricity Regulatory Commission (APERC) claiming levy of demand as arbitrary, which is disposed directing GVKIL to approach Consumer Grievance Redressal Cell as dispute is not connection with power purchase agreement. The GVKIL has ?led a writ petition before the High Court of Andhra Pradesh contesting the matter is within ambit of PPA. The High Court of Andhra Pradesh has issued stay on demand. Management based on its internal assessment/ legal advice is con?dent that the matter will be decided in the company’s favour.
?
?
?
ii)
GJEPL Particulars On account of guarantees issued by banks Disputed income tax demands Claims not acknowledged as debts March 31, 2012 1,250 220 8 March 31, 2011 1,250 1,749 -
iii)
AHPCL Particulars On account of guarantees issued by banks Claims not acknowledged as debts Disputed income tax demands March 31, 2012 6,085 7,650 32 March 31, 2011 7,075 5 126
iv)
GVKPGSL Particulars On account of guarantees issued by banks March 31, 2012 4,050 March 31, 2011 4,050
78
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
v)
GVKGPL Particulars Service Tax demand on operator of the power plant Claims not acknowledged as debts March 31, 2012 312 826 March 31, 2011 156 97
?
AP State Load Despatch Centre (APSLDC) has ?led petitions before the Andhra Pradesh Electricity Regulatory Commission (APERC) for appointment of adjudicating o?cer for assessment of charges to be levied for non-adherence to backing down instructions by subsidiary. APSLDC has claimed an amount of Rs.290 for the aforesaid non-compliance. Management based on its internal assessment is con?dent that the matter will be decided in the subsidiary company’s favour.
vi) GVKDPPL Particulars On account of guarantees issued by banks vii) GVKBVPL Particulars On account of guarantees issued by banks viii) GVKRHEPPL Particulars On account of guarantees issued by banks ix) GVKSDEPL Particulars On account of guarantees issued by banks x) March 31, 2012 2,815 March 31, 2011 March 31, 2012 69 March 31, 2011 March 31, 2012 4,420 March 31, 2011 March 31, 2012 2,967 March 31, 2011 18,251
?
GVKOGL The subsidiary company has given seven multiple performance bank guarantee’s amounting to Rs.1,178 (March 31, 2011: Rs.1,178) for seven oil blocks in favor of ‘Ministry of Petroleum & Natural Gas’ for a period of one year towards 35% of estimated expenditure of Minimum Work Program of the exploration phase. Management is con?dent of executing the minimum work program during the exploration phase, hence no provision has been made. The subsidiary company has received a demand notice from service tax authorities demanding service tax of Rs.82 (March 31, 2011: Rs.82) under the category “Survey and Exploration of Mineral Service” on the seismic data purchased by the subsidiary company from M/s GX Technology Corporation and M/s GGS Spectrum Limited. The subsidiary company has disputed the claim and has ?led a reply to notice demanding service tax. During the year 2008-09, GVKOGL had purchased seismic data, which is acquired in the process of bidding, from M/s GX Technology Corporation and M/s GGS Spectrum Limited. The subsidiary company remitted Rs.617 and Rs.45 to the above parties respectively without deduction of tax, on the opinion that remittance for purchase of data is not covered u/s 195 of the Income Tax Act. Subsequently, the Income Tax Department raised a demand aggregating to Rs.84 (March 31, 2011: Rs.84) stating that the payments made were in the nature of royalty and were subject to TDS. The subsidiary company has ?led an appeal against the said notice and the case is pending before the Commissioner of Income tax (Appeals). Management of the subsidiary company is of the opinion that in the light of recent judgements, there is a high likelihood that the case will be decided in its favour.
79 79
?
?
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
xi) GVKDKEPL Particulars On account of guarantee issued by banks
?
March 31, 2012 2,967
March 31, 2011 2,967
During the previous year, the subsidiary company had received a letter from NHAI stating that the subsidiary company is liable to pay penalty amounting to Rs.157 for delay in achieving the ?nance closure within the stipulated time as per the concession agreement entered into with NHAI. According to the subsidiary company, the contention of NHAI is not in accordance to provisions of the concession agreement. The subsidiary company has objected to levy said penalty and is con?dent that the matter will be decided in its favour.
xii) GHPPL ? The subsidiary company had ?led an appeal before Hon’ble High Court of Uttarakhand challenging a common judgment and order dated 8th November, 2010 passed by Single Judge on a writ petition ?led by Reliance Infrastructure Limited in awarding Hydro Electric Power Project, Mapang Bogudiyar, in favor of the consortium of GVK and L & T. The Hon’ble High Court has dismissed the petition ?led by the GVK vide its order dated April 27, 2012. The Court has however allowed recovery of the sum paid by GVK to the State of Uttarakhand and directed Reliance Infrastructure Limited to pay a sum of Rs.1,683 to the company a?er deducting Rs.1,334. The company has preferred an appeal before the Hon’ble Supreme Court of India and the subsidiary company is of the view that the matter will be decided in its favour. xiii) MIAL ? Claims against MIAL not acknowledged as debts: a) Non-Agricultural tax amounting to Rs.6,138 (March 31, 2011: Rs.2,851) to the extent levied by the appropriate authorities on the Airport Land, of which Rs.1,166 (March 31, 2011: Rs.431) was paid under protest. b) Income tax amounting to Rs.4,682 (March 31, 2011: Rs.2,743) demanded by the concerned authorities, of which Rs.200 (March 31, 2011: Rs.2,407) was adjusted / paid under protest. c) Service Tax amounting to Rs.10,174 (March 31, 2011: Rs.12) demanded by the concerned authorities under Section 73, 76, 77 and 78 of the Finance Act, 1994 on development fee considered not payable based as per the advise received by the Company. d) Other claims amounting to Rs.3,349 (March 31, 2011: Rs.Nil) not acknowledged as debts.
?
Earlier supplier of electricity to the airport has sought certain revision in rates and arrears of short recovery with Maharashtra Electricity Regulatory Commission. The impact, if any on the company is presently not ascertainable. Applicability of service tax on the rent / license fee / lease being charged by the subsidiary company has been disputed by certain airlines and concessionaries who have not paid the service tax on such services and most of them have obtained stay order from various courts. However some of these concessionaires who are members of Retailers Association of India (“RAI”) have deposited the arrears of Service tax due for the period prior to September 30,2011 with the court as per the order given by the Hon’ble Supreme Court . The matter is currently subjudice and necessary actions will be taken by the subsidiary company once the matter is decided by the courts. However, in the opinion of the subsidiary Company, this would not have any impact on the ?nancial results of the subsidiary company as the same is recoverable from the said parties if it becomes payable by the subsidiary Company.
?
C)
Associate companies (to the extent of shareholding therein) i) SML Particulars On account of guarantees issued by banks March 31, 2012 1,180 March 31, 2011 1,180
80
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
ii)
BIAL Particulars Claims against the associate company not acknowledged as debts
?
March 31, 2012 42
March 31, 2011 28
The associate company has issued undertaking to Customs authorities aggregating to Rs.Nil (March 31, 2011: Rs.23) with respect to concessional rate of duty adopted for import of certain eligible equipment. The associate company has ?led an application to get itself impleaded as one of the aggrieved party against an appeal ?led by the State of Karnataka, challenging the order of the Karnataka High Court, issued in April, 2007, quashing the levy of Special Entry Tax of Rs.92 (March 31, 2011: Rs.62). The Income Tax Department has ?led an appeal in the Karnataka High Court against the Income Tax Appellate Tribunal (ITAT) order regarding the Tax Deducted at Source (TDS) on the reimbursement of development costs to overseas promoters in 2005-2006. The associate company had earlier paid the TDS amount of Rs.255 (March 31,2011: Rs.172) under protest before getting the relief from ITAT. This was refunded to the associate company along with the interest of Rs.39 (March 31, 2011: Rs.26) as a result of favorable ITAT order. The Management of the associate company is con?dent of defending the tribunal order in the High Court and made appropriate legal representation in this regard. The associate company has received two demand orders from Commissioner of service tax for the periods 20052009 and 2009-10 for payment of service tax of Rs.101 (March 31, 2011: Rs.68) as a recipient of service towards reimbursement of salary costs to Zurich Airport. The interest and penalty as per the above demand orders amounts to Rs.53 and Rs.126 respectively. Further, a show cause notice has been issued for period 2010-2011 for a sum of Rs.12 on the same account. These payments relate to salaries of expatriates who were seconded to associate company. The associate company has preferred an appeal against demand orders before the Tribunal (CESTAT) and challenged the show cause notice which is not con?rmed by formal demand as on the balance sheet date. The associate company has challenged the demand based on the judicial precedence on the matter and is con?dent of non-applicability of service tax since the payment relates to salary costs to expatriate employees of the associate company which cannot be treated as services received by the associate company. Zurich Airport is only a remitter of the foreign currency remuneration as is evidenced by expatriate remuneration reimbursement agreement between the associate company and Zurich Airport. The associate company has accounted these payments as salaries and discharged appropriate TDS as the economic employer of the said expatriates.
?
?
?
29. Capital and other commitments
A)
?
Parent company The Company has given undertaking to infuse equity aggregating to Rs.229,590 in GVK Coal Developers (Singapore) Pte. Limited, towards shortfall, if any, of its loan repayment obligations. During the previous year, the Company, GVK Energy Limited (subsidiary company) and certain private equity investors (‘investors’) have entered into an investment agreement pursuant to which the Company has undertaken to conduct an initial public o?ering of the GVK Energy Limited’s equity shares (‘Quali?ed IPO’ or ‘QIPO’) within 60 months from the date of investment agreement (preferred listing period). If the GVK Energy Limited does not make a QIPO during the preferred listing period and no o?er for sale takes place within 12 months of the preferred listing period, then, at any time therea?er, the investors will have a put option with respect to all of the securities held by the Investor (“Put Right”) on the Company and the GVK Energy Limited at the higher of i) 20% IRR from the date of investment to the date of receipt of proceeds from the investor (“Put IRR”) and ii) the fair market value of the investor’s shares. Provided the Put IRR shall be reduced to 15% IRR, if at least 3 private sector initial public o?erings with an issue size of Rs.100,000 or more each have not taken place in India between the 36th month to the 60th month from date of investment agreement.
?
81 81
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
B)
?
Subsidiary companies Estimated amounts of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs.459,903 (March 31, 2011: Rs.410,597). The company under the Production Sharing Contract entered into with Ministry of Petroleum and Natural Gas has given commitment towards minimum work programme in seven blocks allotted during NELP VII for exploration of oil and gas being conducted by the jointly controlled entity of the company. Similar commitment was there in the previous year also.
?
C)
Associate companies (to the extent of shareholding therein) Estimated amounts of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs.24,280 (March 31, 2011: Rs.99,742).
30. The subsidiary Company (“MIAL”) has awarded a contract to Housing Development and Infrastructure Limited (“HDIL”) to undertake activities relating to rehabilitation of slum dwellers and restoration of the Airport Land, which is currently under encroachment and as consideration, the subsidiary company has granted rights to HDIL to develop and use part of the land vacated by encroachers in a phased manner without any cost to the subsidiary company and balance land will be made available to the subsidiary company for its use. Construction of tenements by HDIL for the relocation of slum dwellers from the airport land is under progress. 31. During the year ended March 31, 2012, BIAL has demolished a portion of its ?xed assets, comprising of carrying value of building aggregating Rs.152, furniture and ?xtures aggregating Rs.332 and plant and equipment aggregating Rs.154 as a part of its airport expansion plan. The Management has not derecognised the carrying values of these assets on demolition and has instead transferred the carrying values of such assets to capital work – in – progress as it believes that these costs are an integral part of the new asset being constructed and hence eligible for capitalisation. BIAL has, as a matter of abundant caution, also sought an option from the Institute of Chartered Accountants of India (“EAC”) soliciting their opinion on the appropriateness of the stated accounting treatment. Pending the opinion form EAC, BIAL currently recorded the carrying values of these demolished assets aggregating Rs.638 under Capital work – in – progress. BIAL would carry out adjustments, if any, based on the opinion from the EAC. The amounts reported in this paragraph are full amounts as reported in associate’s ?nancial statements. 32. BIAL has recognised carry forward Minimum alternate tax(“MAT”) credit entitlement aggregating to Rs.7,352 (March 31, 2011: Rs.3,752) as at March 31, 2012. This is based on the pro?table projections of the Company for aeronautical, non aeronautical and real estate businesses; which are supported by the Concession agreement, which gives BIAL the right to operate the airport for a period of atleast 30 years from the airport opening date (i.e., May23, 2008). Accordingly, the Management believes that there will be su?cient future taxable pro?ts to utilise the aforementioned MAT credit entitlement within the stipulated period available under the provisions of the Income-tax Act, 1961 of India, notwithstanding the fact, that the Company is entitled to a tax holiday period as per the provisions of Section 80-IA of the aforesaid Act. BIAL has, as a matter of abundant caution, also sought an opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India (“EAC”) soliciting their opinion on the appropriateness of the stated accounting treatment. BIAL is awaiting the opinion from the EAC, and has currently retained the MAT credit entitlement aggregating Rs 7,352 (Previous year: Rs 3,752) under Long-term loans and advances. The Company would carry out adjustments, if any, based on the opinion from the EAC. The amounts reported in this paragraph are full amounts as reported in associate’s ?nancial statements. 33. The trade receivables of BIAL as at March 31, 2012 contain outstanding dues from a customer aggregating Rs 5,532. There appears to be signi?cant uncertainty relating to the ability of the party to pay the debts due to the Company due to ?nancial di?culties which have resulted in scaling down of customer’s business. However, considering the national importance of the continued existence of the customer and based on the regular receipt of debts due during the year February 9, 2012 which resumed again e?ective April 17, 2012, the Management is con?dent of eventual collection of the debts due from the customer in due course. Accordingly, the Management believes that the current provision for the customer aggregating Rs.264 created in accordance with the Company’s provision policy is su?cient. The amounts reported in this paragraph are full amounts as reported in associate’s ?nancial statements.
82
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
34. Related Party Transactions
During the year ended March 31, 2012, the Company has entered into certain related party transactions. Details of the related party and transactions are as follows: Name of the related party MIAL * (till October 18, 2011) BIAL* SML * Dr. G V Krishna Reddy, Chairman & Managing Director Mr. G V Sanjay Reddy, Vice Chairman and Director Mr. Krishna Ram Bhupal, Director Mr. A. Issac George, Director TAJ GVK Hotels & Resorts Limited Orbit Travels & Tours Private Limited Paigah House Hotel Private Limited GVK Novopan Industries Limited Pinakini Share and Stock Broker Limited GVK Technical & Consultancy Services Private Limited Krishna Enterprises GVK Emergency Management and Research Institute (a society registered under Societies Registration Act) (EMRI) GVK Foundation GVK Airport Foundation GVK Hydel Private Limited GVK Employee Welfare Trust GVK Coal Developers (Singapore) Pte Ltd GVK Projects & Technical Services Limited * Through subsidiary companies Enterprises over which the key management personnel exercise signi?cant in?uence Key management personnel Associates Nature of relationship
83 83
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Details of related party transactions during the year
Particulars
GVK Projects & Technical Services Limited
GVK Technical & Consultancy Services Pvt Ltd
Pinakani Share and Stock Broker Limited
GVK Coal Developers (Singapore) Pte Ltd
TAJ GVK Hotels & Resorts Limited
Orbit Travels & Tours Private Limited
GVK GVK GVK GVK Novopan Foundation Airport EMRI Industries Foundation Limited
Paigah House Hotel Private Limited
Rent Services received (Including EPC services) Services rendered Donation Investment in equity Advances given Loans given
58,680 (44,250) 57,328 (918) -
4,310 (3,581) 154 88 108
27 (8) 8 8 -
1,014 25 830 1,071 220,587 178,082,500
80 (35) 4 -
1,436 (473) (11)
(1) (900) 81
252 (291) -
272 -
466 (400) 696 (1,570)
129 (103) -
Loans recovered Loans taken Share application money Corporate guarantee given Corporate guarantee released Remuneration to key managerial personnel Shares pledged (no. of shares) Shares unpledged (no. of shares) Balances outstanding Receivables/ (Payables) - March 31, 2012 Receivables/ (Payables) - March 31, 2011 Corporate Guarantee Shares pledged (no. of shares)
Note:
(298) (2,961) 46,700 (143) 974 (4,285)
(48)
5,473
-
(6)
82,369,853 517
1
2,215
(1)
-
-
6
(19)
81
(39)
-
4,777
-
9,074 (10,048) -
-
-
220,587 95,712,647*
-
-
-
-
-
-
-
Previous year ?gures are in parenthesis except for receivable/(payable) at year end *Pledge of 73,217,647 (March 31, 2011: Nil) shares of GVK Energy Limited and 22,495,000 (March 31, 2011:Nil) shares of GVK Transportation Private Limited
84
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Details of related party transactions during the year
Particulars
Krishna Seregraha Enterprises Mines Limited
Mumbai International Airport Pvt. Ltd.
Bengaluru GVK Hydel International Private Airport limited Limited
GVK Employee welfare trust
Dr. G V Krishna Reddy
Mr. G V Sanjay Reddy
Mr. Krishna Mr. A Issac Ram George Bhupal
Rent Services received (Including EPC services) Services rendered Donation Investment in equity Advances given Loans given Loans recovered Loans taken Share application money Corporate guarantee given Corporate guarantee released Remuneration to key managerial personnel Shares pledged (no. of shares) Shares unpledged (no. of shares) Balances outstanding Receivables/ (Payables) - March 31, 2012 Receivables/ (Payables) - March 31, 2011 Corporate Guarantee Shares pledged (no. of shares)
Note:
24 (24) -
8 (8) -
641 (1,387) (7,400) (6) (3) -
44 (9) 53 -
2 (2) -
1,500 (2,000) 4,500
487 (139) (32)
436 (190)
31 (31) 257 (149) (84)
208 (171) -
-
4
120
9
-
3,000
-
-
-
(7)
-
1,441 (1,441) -
-
-
-
-
-
-
-
-
Previous year ?gures are in parenthesis except for receivable/(payable) at year end *Pledge of 73,217,647 (March 31, 2011: Nil) shares of GVK Energy Limited and 22,495,000 (March 31, 2011:Nil) shares of GVK Transportation Private Limited
85 85
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
35. Segment Information
Business Segments: The Company organized its operations into three major businesses: a) Power : Generation, Operation and Maintenance services to the power plants b) Roads : Building, development and maintenance of roads c) Airport : Operation and maintenance of airport d) Others : SEZ, Manpower, and Exploration of Oil & Gas. Geographical Segments: The Company operates in a single geographical segment. Segment disclosers
Power Particulars REVENUE External revenue Inter segment revenue Total revenue RESULT Segment result Interest expense Interest income Other income (net) Pro?t Before Tax (PBT) Income taxes Pro?t/(loss) before minority interest and share of pro?t from associate Share of Pro?t from Associate Minority Interest Pro?t for the year OTHER INFORMATION Segment assets Unallocable corporate assets Total assets Segment liabilities Unallocable corporate liabilities Total liabilities Capital expenditure including capital work in progress Depreciation (included in segment expense) Capital Employed 263,123 151,684 22,736 3,996 75,198 3,058 11,887 64,399 32,034 26,014 21,102 78,766 50 33 13 899,903 679,413 142,605 62,305 743,350 28,438 27,462 - 1,814,296 475,215 769,180 302,290 17,478 24,232 12,747 9,681 13,061 (395) 235 (1,350) 142 43,663 45,722 3,462 5,272 6,675 6,782 (107) 32,168 25,447 984 1,869 9,574 2,132 7,442 166,631 171,293 22,384 18,916 59,552 166,631 171,293 22,384 18,916 59,552 616 628 1,244 1,257 1,257 (628) 249,183 249,183 191,466 191,466 Roads Airports Others Eliminations Total
March 31, 2012 March 31, 2011 March March March March March March March March March March 31, 2012 31, 2011 31, 2012 31, 2011 31, 2012 31, 2011 31, 2012 31, 2011 31, 2012 31, 2011
10,639 4,386 6,146
11,093 3,044 15,491
2,289,511 1,071,470 169,212 ,772,162 1,941,374 364,115 53,199 679,593 732,792 167,567
16,515
16,451
1,374
1,904
7,004
(50)
28,405
9 27,449
-
-
24,893 348,137
18,364 338,678
835,504 647,379 116,591
41,203 664,584
86
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
36. Operating Leases
The Group has entered into operating lease agreements for various o?ces and guest house for period up to 3 years. The future minimum lease payments payable under non-cancellable operating lease are as follows: Particulars March 31, 2012 March 31, 2011
Not later than one year 12 9 Later than one year and not later than ?ve years Nil 7 Later than ?ve years Nil Nil Note: The minimum lease payments are excluding service tax. No signi?cant restrictions have been imposed by the lessors on the leases. The leases can be renewed a?er completion of the minimum lock in period a?er mutually discussing the renewal terms with the lessor.
37. Derivative Instruments and Un hedged foreign currency exposure
Particulars of derivatives: Particulars of derivative Forward cover contracts outstanding at Balance Sheet date Particulars of unhedged foreign currency: Particulars Payables Loans Creditors Buyers credit Other payables Receivables Gaurantee commission 45,840 3,425 2,407 527 458 42,912 1,968 2,650 March 31, 2012 March 31, 2011 Purpose Hedge of foreign currency transactions March 31, 2012 Buy EURO 47 Buy CHF 9 March 31, 2011 Buy EURO 16 -
38. Provision for resurfacing obligation
The Group has a contractual obligation to periodically maintain, replace or restore infrastructure at the end of each ?ve years or earlier as per the terms of the concession agreement. Movement in provision for resurfacing obligation is as follows: Particulars Opening balance Additions during the year Amount used during the year Amounts reversed during the year March 31, 2012 1,133 1,133 2,266 March 31, 2011 1,192 1.133 (1,912) 1,133
39. During the previous year, GVKEL had made purchase of services from two companies aggregating to Rs.69 in respect of which prior approval of central government is required under the provisions of section 297 of the Companies Act 1956. The above transactions are part of normal business transactions at prevailing market prices. The company has since then applied to regulatory authorities for condonation. 40. The Reserve Bank of India (‘RBI’) had issued guidelines for Core Investment Companies (CIC) on January 5, 2011 pursuant to which Systematically Important Core Investment Companies (SI-CIC) are required to apply for registration with RBI within six months from the date of issue of the guidelines. The Company had applied to RBI for granting certi?cate of registration and is awaiting approval. As a SI- CIC, the company is required to comply with requirements of capital requirements and leverage ratios. The company is not in compliance with the aforesaid requirements and in the process of submitting an application to Reserve Bank of India for granting additional time to meet the compliance requirements. The company based on legal advice/ internal assessment believes that RBI would look favourably into the matter. Further, the Company based on legal advise/ internal assessment believes that since its income from ?nancial assets in the year ended March 31, 2012 are less than 50% of the gross income, the Company is not a Non- Banking Financial Company in the current year.
87 87
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
41. The Company has applied to Central government on April 24, 2012 for waiver of excess managerial remuneration amounting to Rs.207 paid to two directors during the year beyond the limits speci?ed in Part II of Section II (B) and Section III of Schedule XIII of the Companies Act, 1956. The Company believes that approval will be obtained in due course and would not have any material impact upon the ?nancial statements. 42. Consequent to the amendment to Schedule XIV of the Companies Act, 1956, regarding amortization of intangible assets (toll collection rights), GJEPL has changed the basis of amortization from actual tra?c for the year to projected tra?c method to actual tra?c revenue for the year to projected tra?c revenue. Had the subsidiary company continued to use earlier method of charging depreciation pro?ts before tax for the year would have been lower by Rs.690. 43. Acquisition of subsidiary During the current year, the Company has acquired additional 13.5% stake in MIAL, thereby making it subsidiary. On acquisition of the stake in the acquired entity the excess of purchase price over the net assets acquired has been recorded as Goodwill. Transactions relating to Pro?t and Loss Account of the acquired entity have been included in the Consolidated Pro?t and Loss Account from the e?ective date of acquisition. Until the date of acquisition, the Company has accounted for only share of pro?ts. i) The interest of the company in the net assets of the acquired entity and the resultant goodwill is as given below: Amount Purchase consideration Net assets as on the date of acquisition Goodwill ii) 113,952 20,676 93,276
Summary of post acquisition losses of the acquired entity included in the consolidated pro?t and loss account for the year ended March 31, 2012: Amount Revenues Expenses 59,817 53,023 6,794
iii) The assets and liabilities of the acquired entity (excluding goodwill) included in the Consolidated Balance Sheet as at March 31, 2012 Amount Liabilities Assets 563,678 763,631
44. Previous year comparatives Till the year ended March 31, 2011, the company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its ?nancial statements. During the year ended March 31, 2012, the revised Schedule VI noti?ed under the Companies Act 1956, has become applicable to the company. The company has reclassi?ed previous year ?gures to conform to this year’s classi?cation.
As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No. 93649 Place : Hyderabad Date : May 9, 2012 For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited Dr. G V Krishna Reddy Chairman & Managing Director A Issac George Director & CFO P. V. Rama Seshu GM & Company Secretary
88
Auditors’ Report
To The Members of GVK Power & Infrastructure Limited 1. We have audited the attached Balance Sheet of GVK Power & Infrastructure Limited (‘the Company’) as at March 31, 2012 and also the Statement of Pro?t and Loss and the Cash ?ow statement for the year ended on that date annexed thereto. These ?nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these ?nancial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the ?nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the ?nancial statements. An audit also includes assessing the accounting principles used and signi?cant estimates made by management, as well as evaluating the overall ?nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters speci?ed in paragraphs 4 and 5 of the said Order. 4. Without qualifying our opinion, we draw attention to: a. note 33 of notes to the ?nancial statements, regarding application being made by the Company to the Reserve Bank of India (‘RBI’) for granting time for compliance with capital requirements and leverage ratio as applicable to Systematically Important Core Investment Company more fully described therein b. note 34 of notes to the ?nancial statements, regarding application made by the Company for waiver of excess managerial remuneration amounting to Rs.207 lakhs paid to two directors in excess of limits prescribed under Schedule XIII of the Companies Act, 1956 more fully described therein. The ultimate outcome of the above matters cannot presently be determined, pending approvals as referred to in the relevant notes to the accounts referred above and accordingly no adjustments and provision for any liability that may result has been made in the ?nancial statements. 5. Further to our comments in the Annexure referred to above, we report that: i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; iii. The balance sheet, statement of pro?t and loss and cash ?ow statement dealt with by this report are in agreement with the books of account; iv. In our opinion, the balance sheet, statement of pro?t and loss and cash ?ow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; v. On the basis of the written representations received from the directors, as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disquali?ed as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: a) in the case of the balance sheet, of the state of a?airs of the Company as at March 31, 2012; b) in the case of the statement of pro?t and loss , of the loss for the year ended on that date and c) in the case of cash ?ow statement, of the cash ?ows for the year ended on that date. For S.R. Batliboi & Associates Firm Registration Number: 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No.: 93649 Place : Hyderabad Date : May 9, 2012
89 89
GVK Power & Infrastructure Limited
Annexure referred to in paragraph 3 of our report of even date
Re: GVK Power & Infrastructure Limited (‘the Company’) i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of ?xed assets. b) Fixed assets have been physically veri?ed by the management during the year and no material discrepancies were identi?ed on such veri?cation. c) There was no substantial disposal of ?xed assets during the year. ii) In view of the nature of operations carried out by the Company, it has no inventory. Accordingly, the provisions of clause (ii) (a) to (c) of the paragraph 4 of the Companies (Auditor’s Report) Order, 2003 (as amended) in respect of the inventories are not applicable to the Company and hence not commented upon.
iii) a) According to the information and explanation given to us, the Company has not granted any loans, secured or unsecured to companies, ?rms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of the clauses (iii) (a) to (d) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company and hence not commented upon. b) According to the information and explanation given to us, the Company has not taken any loans, secured or unsecured from companies, ?rms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of the clauses (iii) (e) to (g) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company and hence not commented upon. iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of ?xed assets and for the sale of services. Due to the nature of its business, the Company does not purchase any inventory or sell goods. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the company in respect of these areas. v) a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered. b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of such contract or arrangement exceeding value of Rupees ?ve lakhs have been entered into during the ?nancial year at prices which are reasonable having regard to the prevailing market prices at the relevant time, except for services provided to one party aggregating to Rs.1,372 lakhs and services availed from one party aggregating to Rs.61 lakhs because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time. vi) The Company has not accepted any deposits from the public. vii) In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business. viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for the services of the Company. ix) a) Undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities except for income tax where there has been a slight delay in a few cases. b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.
90
c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows: Name of the statute The Finance Act, 1994 Indian Stamp Act, 1899 Income Tax Act, 1961 x) xi) Nature of dues Service Tax Stamp duty Income tax liability Amount (Rs.Lakhs) Period to which Forum where dispute is pending the amount relates Commissioner of Central Excise and Customs – Visakhapatnam - II High Court of Andhra Pradesh Commissioner of Income Tax (Appeals)- Rajahmundry
548 July 1,2003 to March 31, 2011 2,829 February 4, 2008 73 Assessment year 2008-09
The Company has no accumulated losses at the end of the ?nancial year. The Company has incurred cash loss during the year. In the immediately preceding ?nancial year, the Company had not incurred cash loss. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a ?nancial institution and banks. There are no dues to debenture holders.
xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual bene?t fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company. xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company. xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by others from bank or ?nancial institutions, the terms and conditions whereof in our opinion are not prima-facie prejudicial to the interest of the Company. xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained. xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short term-basis have been used for long term investments. xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956. xix) The Company did not have any outstanding debentures during the year. xx) The Company did not raise any money through a public issue during the year. xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the ?nancial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year. For S.R. Batliboi & Associates Firm Registration Number: 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No.: 93649 Place : Hyderabad Date : May 9, 2012
91 91
GVK Power & Infrastructure Limited
Balance Sheet as at March 31, 2012
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Notes March 31, 2012 March 31, 2011
Equity and liabilities
Shareholders’ Funds Share capital Reserves and surplus Non-current liabilities Long-term borrowings Long-term provisions Current liabilities Short-term borrowings Trade payables Other current liabilities Short-term provisions Total Assets Non-current assets Fixed Assets Tangible assets Non-current investments De?erred tax assests (net) Long-term loans and advances Other non-current assets Current assets Current investments Trade receivables Cash and bank balances Short-term loans and advances Other current assets Total Summary of signi?cant accounting policies
The accompanying notes are an inegral part of the ?nancial statements. As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No. 93649 Place : Hyderabad Date : May 9, 2012 For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited Dr. G V Krishna Reddy Chairman & Managing Director A Issac George Director & CFO P. V. Rama Seshu GM & Company Secretary
3 4
15,792 236,800 252,592
15,792 237,627 253,419 64 79 143 10,000 199 111 83 10,393 263,955
5 6
30 24 54 41,595 143 68 230 42,036 294,682
7 8 8 6
9 10 11 12 13.2
144 137,106 27 40,323 32,444 210,044 117 1,748 81,961 812 84,638 294,682
159 160,733 39 32,797 8,844 202,572 888 149 310 59,828 208 61,383 263,955
14 13.1 15 12 13.2
2.1
92
Pro?t and Loss Account for the year ended March 31, 2012
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Notes March 31, 2012 March 31, 2011
Income Revenue from operations Other income Total revenue Expenses Employee bene?ts expense Other expenses Depreciation expense Financial costs Total expenses Pro?t/(loss) before tax Tax expenses Current tax MAT Credit Deferred tax Income tax of earlier year, net Total Tax Expense Pro?t/(loss) for the year Earnings per share (in Rs.) -Basic -Diluted Nominal value per share (in Rs.) Weighted average number of shares -Basic -Diluted Summary of signi?cant accounting policies
The accompanying notes are an inegral part of the ?nancial statements. As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited
16 17
2,760 1,285 4,045
4,148 8,157 12,305
18 19 20 21
655 933 18 2,493 4,099 (54) 761 12 773 (827) (0.05) (0.05) 1 1,579,210,400 1,579,210,400
1,278 2,321 9 1,495 5,103 7,202 1,718 (1,382) 13 25 374 6,828 0.43 0.43 1 1,579,210,400 1,579,210,400
2.1
per Vikas Kumar Pansari Partner Membership No. 93649
Dr. G V Krishna Reddy Chairman & Managing Director
Place : Hyderabad Date : May 9, 2012
A Issac George Director & CFO
P. V. Rama Seshu GM & Company Secretary
93 93
GVK Power & Infrastructure Limited
Cash Flow statement for the year ended March 31, 2012
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated) March 31, 2012 A.Cash ?ow from operating activities Pro?t/(loss) before tax Non-cash adjustment to reconcile pro?t before tax to net cash ?ows Depreciation expense Pro?t on sale of investments Interest income Dividend income Loss on sale of assets Provisions no longer required written back Interest expense Operating pro?t before working capital changes Movements in working capital: Increase/ (decrease) in trade payables, current liabilities, and provisions Decrease in trade receivables Decrease/(increase) in loans and advances Decrease/(increase) in other current and non-current assets Cash generated from/(used in) operations Direct taxes paid (net of refunds) Net cash generated from/(used in) operating activities B.Cash ?ows from investing activities Purchase of ?xed assets Sale of ?xed assets Investments in subsidiaries Proceeds from sale of investments in subsidiaries Advances to subsidiaries Refund of advance from subsidiaries Investments in bank deposits Purchase of current investments Proceeds from sale of current investments Interest received Net cash from/(used in) investing activities B (3) (25) (36,428) 5,776 (1,101) (4,406) 5,408 26 (30,753) (132) 1 (24,996) 45,813 (40,861) 21,889 (39,509) 41,390 3,595 A (121) 32 712 (539) 2,261 (360) 1,901 23 245 (1,812) 307 (654) (1,644) (2,298) 18 (114) (39) (23) 2,389 2,177 9 (8,012) (44) 2 (2) 1,428 583 (54) 7,202 March 31, 2011
94
Cash Flow statement for the year ended March 31, 2012
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated) March 31, 2012 C. Cash ?ows from ?nancing activities Proceeds from short term borrowings Repayment of short term borrowings Proceeds from long term borrowings Repayment of long term borrowings Interest paid Net cash from/(used in) ?nancing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Components of cash and cash equivalents as at Cash on hand Balance with scheduled banks on current accounts Balance with unpaid dividend accounts Note 15 Add: Deposit held as security against borrowings Cash and bank balance as per balance sheet
Summery of signi?cant accounting policies * Not available for ready use by the company
March 31, 2011 15,000 (15,000) 100 (4) (1,462) (1,366) (69) 379 310 306 4 310 310
46,645 (15,050) (31) (2,375) C (A+B+C) 29,189 337 310 647 643 4 647 1,101 Note 15 2.1 1,748
The accompanying notes are an integral part of the ?nancial statements
As per our report of even date
For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants
For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited
per Vikas Kumar Pansari Partner Membership No. 93649
Dr. G V Krishna Reddy Chairman & Managing Director
Place : Hyderabad Date : May 9, 2012
A Issac George Director & CFO
P. V. Rama Seshu GM & Company Secretary
95 95
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
1. Corporate information
GVK Power & Infrastructure Limited (‘the Company’ or ‘GVKPIL’) provides operating and maintenance services, manpower and consultancy services and incidental services to owners of power plants, airports etc. The Company has also acquired substantial ownership interest into power generating assets, airports, roads and companies providing infrastructure facilities.
2. Basis of preparation
The ?nancial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these ?nancial statements to comply in all material respects with the accounting standards noti?ed under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The ?nancial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of ?nancial statements are consistent with those of previous year, except for the change in accounting policy explained below. 2.1 Summary of signi?cant accounting policies a) Change in accounting policy Presentation and disclosure of ?nancial statements During the year ended March 31, 2012, the revised Schedule VI noti?ed under the Companies Act 1956 has become applicable to the Company for preparation and presentation of its ?nancial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of ?nancial statements. However, it has signi?cant impact on presentation and disclosures made in the ?nancial statements. The company has also reclassi?ed the previous year ?gures in accordance with the requirements applicable in the current year. b) Use of estimates The preparation of ?nancial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that a?ect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. Tangible ?xed assets Fixed assets are stated at cost, net of accumulated depreciation and impairment losses, if any. The cost comprises purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Depreciation on tangible ?xed assets Depreciation on ?xed assets is calculated on straight-line basis using the rates arrived at based on the useful life estimated by the Management which coincides with the rates prescribed under Schedule XIV of the Companies Act, 1956. Fixed assets individually costing Rs.0.05 or less are fully depreciated in the year of purchase. Impairment The company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, the company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash in?ows 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 ?ows are discounted to their present value using a pre-tax discount rate that re?ects current market assessments of the time value of money and the risks speci?c to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identi?ed, an appropriate valuation model is used. Impairment losses are recognized in the statement of pro?t and loss. Borrowing costs Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange di?erences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
96
c)
d)
e)
f)
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. g) Investments Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classi?ed as current investments. All other investments are classi?ed as long-term investments. Current investments are carried in the ?nancial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. h) Revenue recognition Revenue is recognized to the extent that it is probable that the economic bene?ts will ?ow to the company and the revenue can be reliably measured. The following speci?c recognition criteria must also be met before revenue is recognized: Rendering of operation and maintenance services Revenues represent amounts billed or accrued for services rendered and expenses incurred in relation to such services, in accordance with the Operation and Maintenance agreement with its customer. Per the operations and maintenance agreements, the Company’s income comprises of (a) Operating fees (b) Incentive fees and (c) Reimbursement of actual expenses. Operating fees are ?xed per annum subject to escalations. The Company is also eligible to receive incentive fees, if the Actual Annual Availability and/or if the actual generation of power are higher than the de?ned levels. Manpower and consultancy services Revenues for manpower services are recognized as and when services are rendered on time and material basis. Interest Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Dividends Dividend income is recognized when the company’s right to receive dividend is established by the reporting date. Guarantee commission Revenue is recognized on a time proportion basis taking into account the guarantee amount and the commission rate applicable. i) Foreign currency transaction and balances Initial recognition Foreign currency transactions are recorded in the reporting currency, by applying the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Conversion Foreign currency monetary items are reported using the exchange rate prevailing on the reporting date. Non-monetary items which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Exchange di?erences Exchange di?erences arising on the settlement of monetary items or on restatement of monetary items on reporting date at rates di?erent from those at which they were initially recorded during the year, or reported in previous ?nancial statements, are recognized as income or as expenses in the year in which they arise. j) Retirement and other employee bene?ts i) Retirement bene?t in the form of Provident Fund is a de?ned contribution scheme. The contributions are charged to the Statement of Pro?t and Loss of the year when the contributions are due. The company has no obligation other than the contribution payable to the provident fund.
97 97
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
ii)
Gratuity liability is de?ned bene?t obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each ?nancial year.
iii) Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method at the end of each ?nancial year. iv) Actuarial gains/losses are immediately taken to the Statement of Pro?t and Loss and are not deferred. v) k) The company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months a?er the reporting date.
Income tax Tax expense comprises current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. Deferred income taxes re?ects the impact of current year timing di?erences between taxable income and accounting income for the year and reversal of timing di?erences of earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that su?cient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain that su?cient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain that su?cient future taxable income will be available. The company recognizes MAT credit available as an asset only to the extent there is convincing evidence that the company will pay normal income tax during the speci?ed period. In the year in which the company recognizes Minimum Alternative tax (MAT) credit as an asset in accordance with the Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Pro?t and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each reporting date and writes down the carrying amount of MAT Credit Entitlement to the extent the company does not have convincing evidence that it will pay normal tax during the speci?ed period.
l)
Earnings Per Share Basic earnings per share are calculated by dividing the net pro?t or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue; bonus element in a rights issue, share split, and reverse share split (consolidation of shares). For the purpose of calculating diluted earnings per share, the net pro?t or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the e?ects of all dilutive potential equity shares.
m) Leases Leases where the lessor e?ectively retains substantially all the risks and bene?ts of ownership over the leased term, are classi?ed as operating leases. Operating lease payments are recognized as an expense in the Statement of Pro?t and Loss on a straight-line basis over the lease term. n) Provisions A provision is recognized when the company has a present obligation as a result of past event, it is probable that an out?ow of resources embodying economic bene?ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to re?ect the current best estimates.
98
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
o)
Cash and cash equivalents Cash and cash equivalents for the purposes of cash ?ow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less. Contingent liability A contingent liability is a possible obligation that arises from past events whose existence will be con?rmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an out?ow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognises contingent liability but discloses its existence in the ?nancial statement.
p)
3. Share capital
March 31, 2012 Authorised shares 2,500,000,000 (March 31, 2011: 2,500,000,000) equity shares of Rs.1/ each Issued, subscribed and fully paid-up shares 1,579,210,400 (March 31, 2011: 1,579,210,400) equity shares of Rs.1 each 15,792 15,792 a) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period Equity shares March 31, 2012 No. At the beginning of the year Issued during the year 1,579,210,400 1,579,210,400 b) Rs. 1,579 1,579 March 31, 2011 No. 1,579,210,400 1,579,210,400 Rs. 1,579 1,579 15,792 15,792 25,000 25,000 March 31, 2011
Terms/rights attached to equity shares The Company has only one class of equity share having par value of Rs.1 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, a?er distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. Details of shareholders holding more than 5% equity shares in the company Name of the shareholder G. Indira Krishna Reddy HSBC Global Investment Funds Vertex Infratech Private Limited March 31, 2012 No. 394,994,190 115,250,000 116,896,770 % holding 25.01 7.30 7.40 March 31, 2011 No. 435,944,190 113,000,000 % holding 27.61 7.10 -
c)
99 99
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
d)
Aggregate number of bonus shares issued, shares issued for consideration other than cash: March 31, 2012 No. Equity shares allotted as fully paid bonus shares by capitalization of general reserve Equity shares allotted as fully paid-up pursuant to scheme of amalgamation Equity shares allotted as fully paid-up pursuant to scheme of arrangement 52,850,000 703,250,000 90,462,150 March 31, 2011 No. 52,850,000 703,250,000 90,462,150
4. Reserves and surplus
March 31, 2012 General reserve Securities premium account Surplus in the statement of pro?t and loss Balance as per the last ?nancial statements Pro?t /(loss) for the year Net surplus in the statement of pro?t and loss Total reserves and surplus 21,565 (827) 20,738 236,800 14,737 6,828 21,565 237,627 127 215,935 March 31, 2011 127 215,935
5. Long-term borrowings
Non-current portion March 31, 2012 Term loans Loans from bank- vehicle loan (secured) The above amount includes Secured borrowings Amount disclosed under the head “other current liabilities” (note 8 ) Net amount 30 30 64 64 34 (34) 31 (31) 30 64 34 31 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Vehicle loan from bank carries interest at 8.5% p.a. The loan is repayable in 36 monthly installments of Rs.3.15 from the date of loan, viz., January 29, 2011. The loan is secured by charge over ?xed asset i.e. vehicle, for which ?nance is provided by the lender.
100
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
6. Provisions
Long-term March 31, 2012 Provision for employee bene?ts Provision for gratuity Provision for leave bene?ts Other provisions Provision for income tax (net) 24 79 145 145 230 25 25 83 24 79 42 43 85 58 58 March 31, 2011 Short-term March 31, 2012 March 31, 2011
24
79
7. Short-term borrowings
March 31, 2012 Overdra? facility from bank (unsecured) Other loans and advances- term loans from banks (secured) Other loans and advances- term loans from banks (unsecured) The above amount includes Secured borrowings Unsecured borrowings a. b. c. Overdra? facility is unsecured and carries interest rate of 10.85%. Term loan aggregating to Rs.20,000 is secured by ?rst charge on the current assets, present and future of the Company and carries interest at base + 150 bps i.e. 11.50% per annum Term loan aggregating to Rs.1,870 presently carries interest of 12% per annum and scured by (i) charge on loans and advances of the Company to GVK Airport Developers Private Limited (“GVKADPL”) and also loans and advances provided by GVKADPL to GVK Airport Holdings Private Limited (“GVKAHPL”) and Bangalore Airport & Infrastructure Developer Private Limited (“BAIDPL”) (ii) exclusive charge on shares of GVKADPL to the extent of two times of facility amount. (iii) exclusive charge on shares of GVKAHPL and BAIDPL not exceeding 30% of the shares of the Companies and the no. of shares to be pledged to be in proportion to the lenders at GVKADPL. Term loans aggregating to Rs.15,000 is unsecured and carries interest rate of 11.75%. 21,870 19,725 10,000 4,725 21,870 15,000 41,595 March 31, 2011 10,000 10,000
d.
8. Trade payable and other current liabilities
March 31, 2012 Trade payables (note 27) Other current liabilities Current maturities of long-term borrowings (note 5) Interest accrued but not due on borrowings Unpaid dividends, Investor Education and Protection Fund will be created by unpaid dividends (as and when due) Others 34 14 4 16 68
101 101
March 31, 2011 199 31 4 76 111
143
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
9. Tangible assets (at cost)
Furniture & ?ttings As at April 1, 2010 Additions Disposals As at March 31, 2011 Additions As at March 31, 2012 Depreciation Upto April 1, 2010 Charge for the year On Disposals Upto March 31, 2011 Charge for the year Upto March 31, 2012 Net Block As at March 31, 2011 As at March 31, 2012 5 4 7 7 128 115 19 18 159 144 4 1 5 1 6 1 1 1 6 5 (2) 9 13 22 1 3 4 4 8 12 9 (2) 19 18 37 7 3 10 10 O?ce equipment 5 3 8 8 Vehicles 28 114 (5) 137 137 Data processing equipment 11 12 23 3 26 Total 51 132 (5) 178 3 181
10. Non-current investments
March 31, 2012 Trade investments (at cost) Unquoted equity instruments Investment in subsidiaries Nil (March 31, 2011: 96,810,700) equity shares of Rs.10 each fully paidup in GVK Jaipur Expressway Private Limited 250,000,000 (31 March 2011: 250,000,000) equity shares of Rs.10 each fully paid-up in GVK Airport Developers Private Limited 250,000,000 ( March31, 2011: 250,000,000) equity shares of Rs.10 each fully paid-up in GVK Energy Limited 37,500,000 (31 March 2011: 10,000) equity shares of Rs.10 each fully paid-up in GVK Transportation Private Limited 10,000 ( March 31, 2011: 10,000) equity shares of Rs.10 each fully paidup in Goriganga Hydro Power Private Limited 10,000 ( March 31, 2011: 10,000) Equity shares of Rs.10 each fully paid-up in GVK Perambalur SEZ Private Limited 50,000 ( March 31, 2011: 50,000) equity shares of Rs.10 each fully paidup in GVK Oil & Gas Limited 10,000 ( March 31, 2011: 10,000) equity shares of Rs.10 each fully paidup in GVK Developmental Projects Private Limited 25,000 25,000 3750 1 1 5 1 53,758
102
March 31, 2011
27,401 25,000 25,000 1 1 1 5 1 77,410
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
March 31, 2012 Investment in equity instruments 50,000 ( March 31, 2011: Nil) equity shares of USD 1 each fully paid-up in GVK Coal Developers (Singapore) Pte Ltd 25 25 53,783 Debentures (unquoted) 83,322,610 (March 31, 2011: 83383,322,610) 0.001% Compulsory Convertible Debentures of Rs.100 each fully paid up in GVK Energy Limited Aggregate amount of unquoted investments 83,323
March 31, 2011
77,410
83,323
83,323 137,106
83,323 160,733
11. Deferred tax asset (net)
March 31, 2012 Deferred tax liability Fixed assets: Impact of di?erence between tax depreciation and depreciation charged for the ?nancial reporting Gross deferred tax liability Deferred tax asset Provision for Gratuity Provision for compensated absences Gross deferred tax asset Net deferred tax asset 21 14 35 27 26 19 45 39 8 8 6 6 March 31, 2011
12. Loans and advances
Non-current March 31, 2012 Loan and advances to related parties (note 23 & 24) Unsecured, considered good Deposits Unsecured, considered good Advances recoverable in cash or kind Unsecured, considered good Other loans and advances Unsecured, considered good Advance income-tax (net of provision for taxation) Prepaid expenses MAT credit entitlement GVK employee welfare trust March 31, 2011 Current March 31, 2012 March 31, 2011
37,394 6 -
29,694 6 -
81,477 213
58,485 513 461
923 2,000 40,323
1,097 2,000 32,797
80 16 175 81,961
77 7 285 59,828
103 103
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
13. Trade receivables and other assets
13.1 Trade receivables Non-current March 31, 2012 Unsecured, considered good Outstanding for a period not exceeding six months from the date they are due for payment Secured, considered good Unsecured, considered good Trade receivables include dues from: Non-current March 31, 2012 GVK Gautami Power Limited Mumbai International Airport Private Limited GVK Industries Limited 13.2. Other assets Non-current March 31, 2012 Unsecured, considered good Unbilled revenues Share application money to subsidiaries Receivable for sale of investment Interest accrued on ?xed deposits Other receivables Unamoritsed portion of ancillary cost of arranging the borrowings 23 5,020 27,401 32,444 75 8,769 8,844 13 507 271 812 21 114 94 208 March 31, 2011 Current March 31, 2012 March 31, 2011 March 31, 2011 Current March 31, 2012 106 11 March 31, 2011 29 120 117 117 149 149 March 31, 2011 Current March 31, 2012 March 31, 2011
104
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
14. Current investments
March 31, 2012 Current investments (valued at lower of cost and fair value) Quoted mutual funds- other than trade Nil (31 March 2011: 7,656) units of Rs.1,000 each fully paid-up of Religare Ultra Short Term Fund – Growth plan Nil (31 March 2011: 9,338) units of Rs.1000 each fully paid-up of Templeton India Treasury Management Institutional Plan Nil (31 March 2011: 13,005) units of Rs.1,000 each fully paid-up of Taurus Ultra Short Term Bond Fund - Retail Growth Nil (31 March 2011: 5,000,000) units of Rs.10 each fully paid-up of Taurus Fixed Maturity Plan 120 Days Growth Series Aggregate market value of quoted investments 100 139 149 500 888 904 March 31, 2011
15. Cash and bank balances
Non-current March 31, 2012 Cash and cash equivalents Balances with banks: – On current accounts – On unpaid dividend account Other bank balances Deposit held as security against borrowings 1,101 1,101 1,748 310 643 4 647 306 4 310 March 31, 2011 Current March 31, 2012 March 31, 2011
16. Revenue from operations
March 31, 2012 Revenue from operations Sale of services – Operation and maintenance services - Manpower and consultancy services 1,516 1,244 2,760 2,891 1,257 4,148 March 31, 2011
105 105
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
17. Other income
March 31, 2012 Dividend income on Current investments Pro?t on sale of investments Current investments Long-term investments Liabilities written back Guarantee commission Interest on Bank Deposits Others 13 26 1,285 8,157 114 70 1,062 328 7,684 23 78 44 March 31, 2011
18. Employee bene?t expense
March 31, 2012 Salaries, wages and bonus Contribution to provident fund Retirement and other employee bene?ts Sta? welfare expenses 590 44 21 655 March 31, 2011 1,099 71 74 34 1,278
19. Other expenses
March 31, 2012 Rent Communication costs Travelling and conveyance Operating and maintenance expenses Repairs and maintenance – others Legal and professional fees Rates and taxes Printing and stationery Insurance Payment to auditor (note below) Donations Directors’ sitting fees Expenses for manpower services Bid and tender document charges Miscellaneous Expenses 17 34 102 157 29 247 64 33 11 17 11 145 2 64 933
106
March 31, 2011 53 87 223 305 35 945 75 58 5 15 130 11 164 123 92 2,321
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Payment to auditor (including service tax) March 31, 2012 As auditor: Audit fee Limited Review In other Capacity: Other services(certi?cation fees) Reimbursement of expenses 0 1 17 0 15 12 4 11 4 March 31, 2011
20. Depreciation expense
March 31, 2012 Depreciation of tangible assets 18 March 31, 2011 9
21. Finance costs
March 31, 2012 Interest Amortization of ancilliary borrowing costs Bank charges 2,389 54 50 2,493 March 31, 2011 1,428 67 1,495
22. Gratuity bene?t
The company operates one de?ned bene?t plan, viz., gratuity, for its employees. Under the gratuity plan, every employee who has completed at least ?ve years of service gets a gratuity on retirement or termination at 15 days of last drawn salary for each completed year of service. The scheme is unfunded. The following tables summarize the components of net bene?t expense recognized in the statement of pro?t and loss and the funded status and amounts recognized in the balance sheet for the plan. A) Statement of pro?t and loss Net employee bene?t expense recognized in the employee cost* March 31, 2012 Current service cost Interest cost on bene?t obligation Past service costs Net actuarial( gain) / loss recognized in the year Net bene?t expense 13 6 (32) (13) March 31, 2011 18 7 24 (55) (6)
* During the previous year, the Company has transferred certain employees to its subsidiary GVK Energy Limited pursuant to which liability of Rs.30 was transferred to aforesaid subsidiary.
107 107
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
B)
Balance sheet March 31, 2012 Present value of de?ned bene?t obligation Fair value of plan assets Net liability 66 66 March 31, 2011 79 79
C)
Changes in the present value of the de?ned bene?t obligation are as follows: March 31, 2012 Opening de?ned bene?t obligation Current service cost Interest cost Past service costs Actuarial (gains) / losses on obligation Closing de?ned bene?t obligation 79 13 6 (32) 66 March 31, 2011 85 18 7 24 (55) 79
D) The principal assumptions used in determining gratuity bene?t obligations for the company’s plans are shown below: March 31, 2012 Discount rate Expected rate of return on assets Employee turnover 8.6% p.a. Not applicable 5% March 31, 2011 8% p.a. Not applicable 5%
The estimates of future salary increases, considered in actuarial valuation, take account of in?ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. E) Amounts for the current and previous four periods are as follows: March 31, 2012 Gratuity De?ned bene?t obligation 66 79 85 64 55 March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008
23. Related party disclosures
Disclosure as required by Noti?ed Accounting Standard 18 (AS -18) “Related Party Disclosures” are as follows: Names of the related parties and description of relationship: a) Related parties where control exists Subsidiaries GVK Industries Limited GVK Jaipur Expressway Private Limited Alaknanda Hydro Power Company Limited GVK Airport Developers Private Limited GVK Coal (Tokisud) Company Private Limited Goriganga Hydro Power Private Limited GVK Power (Goindwal Sahib) Limited
108
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
GVK Perambalur SEZ Private Limited GVK Oil & Gas Limited GVK Developmental Projects Private Limited GVK Energy Limited GVK Gautami Power Limited GVK Airport Holdings Private Limited GVK Transportation Private Limited GVK Ratle Hydro Electrical Projects Private Limited GVK Energy Venture Private Limited GVK Bagodara Vasad Expressway Private Limited GVK Deoli Kota Expressway Private Ltd Bangalore Airport & Infrastructure Developers Private Limited Mumbai International Airport Private Limited (e?ective October 18, 2011) GVK Power (Khadur Sahib) Private Limited GVK Airports International Pte Ltd GVK Shivpuri Dewas Expressway Private Limited (e?ective October 18, 2011)
b) Associates Mumbai International Airport Private Limited (upto October 17, 2011) Bangalore International Airport Limited Seregraha Mines Limited
c) Key management personnel Dr. G V Krishna Reddy, Chairman & Managing Director Mr. G V Sanjay Reddy, Director Mr A Issac George, Director Mr Krishna Ram Bhupal, Director d) Enterprises over which the key management personnel exercise signi?cant in?uence TAJ GVK Hotels & Resorts Limited Orbit Travels & Tours Private Limited GVK Technical & Consultancy Services Private Limited Pinakini Share and Stock Broker Limited GVK Projects and Technical Services Limited GVK Foundation GVK Employee Welfare Trust GVK Coal Developers (Singapore) Pte Ltd
109 109
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Details of related party transactions during the year
GVK Gautami Power Limited Mumbai International Airport Private Limited GVK Jaipur Expressway Private Limited Alakananda Hydro Power Company Limited Goriganga Hydro Power Private Limited GVK Power (Goindwal Sahib) Limited GVK Airport Developers Private Limited GVK Ratle Hydro Electrical Projects Private Limited GVK Transporation Private Limited GVK Airport Holdings Private Limited GVK Coal (Tokisud) Company Private Limited GVK Projects and Techncial Services Limited GVK Perambalur SEZ Private Limited
Particulars
GVK Industries Limited
Transactions during the year Fees for services rendered/ interest income (including service tax) Reimbursement of expenses (Billable expenses) Services received (734) (612) 157 (164) 5,054 (3) 5,053 (3) 175 177 (17,200,000) 32 (13,984) 10,550 (68,120,000) 810 (828) 706 (724) 156 (13,539) (219,259,805) 1,372 (1,387) 2 (4) (3) (7,692,300) (53,296,530) 4 (28) 4 (28) (2,370) 8,585 (140,250,000) 365 (4,333) (3,851) 3 2 (500) (6,800) (18,450) (122,425,500) (24,800) 27,947 (10,249) 4,995 (482) (8,765) 77,265 (178,560,000) 77 (3,574) 2 8,600 3,749 (1) 5,419 (191) 178 (3,769) 52,900 27,401 (8,800) (1,023) (442) (442) 73 (71) (143) 974 336 (1,020) -
Investment in equity
Loans taken
Loan repaid
Loans/advance given
Loans/ advance recovered
Share application money given Share application money refunded Shares Buyback (in no.)
Allotment of Debentures
Interest expense
Guarantees given
Guarantees released Investments pledged (no. of shares) Investments unpledged (no. of shares) Sale of Investments
Purchase of ?xed assets Remuneration to key managerial personnel Donations
Balances outstanding Receivables/(Payables) - March 31, 2012 Receivables/(Payables) - March 31, 2011 10 97 28 104 106 120 4,674 4,309 1 81,437 58,485 3,649 3,574 32,854 3,960 0 30 34 11,637 11,301
Corporate Guarantee Pledge of Investment (no. of shares)
3,434 (13,984) -
1,305 (1,461) -
-
-
8,585 -
-
4,050 (4,050) -
(77,265) 180,000,000 (180,000,000)
8,600 -
52,900 -
-
-
9,074 (10,048) -
-
Notes: a) Previous year ?gures are in parenthesis except for receivable/(payable) at year end b) Refer note 26 for equity commitments. c) *Pledge of 73,217,647 (March 31, 2011: Nil) shares of GVK Energy Limited and 22,495,000 (March 31, 2011; Nil) shares of GVK Transportation Private Limited
110
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Details of related party transactions during the year
GVK Developmental Projects Private Limited GVK Oil & Gas Limited Bangalore International Airport Limited GVK Technical & Consultancy Services Private Limited Pinakani Share and Stock Broker Limited TAJ GVK Hotels & Resorts Limited Orbit Travel & Tours Private Limited Seregraha Mines Limited GVK Employee Welfare Trust GVK Coal Developers (Singapore) Pte Ltd Dr. G V Krishna Reddy Mr. A. Issac George
Particulars
GVK Energy Limited
GVK Foundation
Transactions during the year Fees for services rendered/ interest income (including service tax) Reimbursement of expenses (Billable expenses) Services received 0 (96) (4) 10,084 (16,749) 1 (78) (24,995) (3,201) (3,390) (83,323) (118,051) 2,275 (13,878) 594 (3,000) (1,178) 44 (9) 53 61 (89) 14 (5) 8 8 17 (11) 219 (128) 8 (8) (1,000) 1,014 25 830 1,071 220,587 178,082,500 82,369,853 (130) 152 (139) 168 (135) -
Investment in equity
Loans taken
Loan repaid
Loans/advance given
Loans/ advance recovered
Share application money given Share application money refunded Shares Buyback (in no.)
Allotment of Debentures
Interest expense
Guarantees given
Guarantees released Investments pledged (no. of shares) Investments unpledged (no. of shares) Sale of Investments
Purchase of ?xed assets Remuneration to key managerial personnel Donations
Balances outstanding Receivables/(Payables) - March 31, 2012 Receivables/(Payables) - March 31, 2011 94 94 1 47 16,906 15,225 9 (1) (1) (2) (10) 4 2,000 2,000 517 (7)
Corporate Guarantee Pledge of Investment (no. of shares)
8,167 (18,251) -
-
1,178 (1,178) -
-
-
-
-
-
1,441 (1,441) -
-
220,587 95,712,647* -
-
-
-
Notes: a) Previous year ?gures are in parenthesis except for receivable/(payable) at year end b) Refer note 26 for equity commitments. c) *Pledge of 73,217,647 (March 31, 2011: Nil) shares of GVK Energy Limited and 22,495,000 (March 31, 2011; Nil) shares of GVK Transportation Private Limited
111 111
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
24. Details of Loan given to subsidiaries, associates, parties in which directors are interested
Subsidiaries i) GVK Oil & Gas Limited Balance as at March 31, 2012 Rs.16,906 (March 31, 2011: Rs.15,225) Maximum amount outstanding during the year was Rs.16,906 (March 31, 2011: Rs.15,225) The aforesaid loan is repayable on demand ii) GVK Perambalur SEZ Private Limited Balance as at March 31, 2012 Rs.6,638 (March 31, 2011: Rs.6,302) Maximum amount outstanding during the year was Rs.6,638 (March 31, 2011:Rs.6,302) The aforesaid loan is repayable on demand
iii) Goriganga Hydro Power Private Limited Balance as at March 31, 2012 Rs.4,674 (March 31, 2011: Rs.4,309) Maximum amount outstanding during the year was Rs.4,674 (March 31, 2011: Rs.4,309) The aforesaid loan is repayable on demand iv) GVK Airport Developers Private Limited Balance as at March 31, 2012 Rs.81,437 (March 31, 2011: Rs.58,485) Maximum amount outstanding during the year was Rs.83,894 (March 31, 2011: Rs.83,285) The aforesaid loan is repayable on demand v) GVK Developmental Projects Private Limited Balance as at March 31, 2012 Rs.92 (March 31, 2011: Rs.92) Maximum amount outstanding during the year was Rs.92 (March 31, 2011: Rs.95) The aforesaid loan is repayable on demand
vi) GVK Transportation Private Limited Balance as at March 31, 2012 Rs.32,854 (March 31, 2011: Rs.191) Maximum amount outstanding during the year was Rs.38,147 (March 31, 2011: Rs.191 ) The aforesaid loan is repayable on demand vii) GVK Ratle Hydro Electrical Projects Private Limited Balance as at March 31, 2012 Rs.3,649 (March 31, 2011: Rs.3,574) Maximum amount outstanding during the year was Rs.3,650 (March 31, 2011:Rs.3,574) The aforesaid loan is repayable on demand viii) Alakananda Hydro Power Company Limited Balance as at March 31, 2012 Rs.Nil (March 31, 2011: Rs.Nil) Maximum amount outstanding during the year was Rs.3 (March 31, 2011:Rs.28) The aforesaid loan was repayable on demand ix) GVK Power (Goindwal Sahib) Limited Balance as at March 31, 2012 Rs.Nil (March 31, 2011: Rs.Nil) Maximum amount outstanding during the year was Rs.Nil (March 31, 2011:Rs.500) The aforesaid loan was repayable on demand x) GVK Coal (Tokisud) Company Private Limited Balance as at March 31, 2012 Rs.Nil (March 31, 2011: Rs.Nil) Maximum amount outstanding during the year was Rs. Nil (March 31, 2011:Rs.1,023) The aforesaid loan was repayable on demand
xi) GVK Energy Limited Balance as at March 31, 2012 Rs.Nil (March 31, 2011: Rs.Nil) Maximum amount outstanding during the year was Rs. Nil (March 31, 2011:Rs.3,279) The aforesaid loan was repayable on demand
112
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
25. Contingent liabilities
a. Direct and indirect taxes: i) Income tax demand for assessment year 2008-09 for Rs.73 (March 31, 2011:Rs.73). ii) The Company had received a notice dated February 4, 2008 from the O?ce of the District Registrar of Assurances, Hyderabad demanding payment of stamp duties of Rs.2,829 on transfer of shares to the shareholders of GVK Industries Limited vide the scheme of arrangement approved by the Andhra Pradesh High Court. The Company has obtained an order from the Andhra Pradesh High Court staying the above notice on March 13, 2008 until such further orders from the said court. Management based on its internal assessment and/or legal advice is con?dent that the cases will be decided in the Company’s favour. b. Security against loans taken by others i) During the year ended March 31, 2012, the Company has provided security by way of pledge of 180,000,000 (March 31, 2011: 180,000,000) shares of GVK Airport Developers Private Limited for loan taken by the aforesaid subsidiary. Further, the Company has pledged 73,217,647 (March 31, 2011: Nil) and 22,495,000 (March 31, 2011: Nil) shares of GVK Energy Limited and GVK Transportation Private Limited respectively for securing loan obtained by GVK Coal (Singapore) Pte. Ltd, an entity in which Company has 10% stake. ii) During the year ended March 31, 2012, the Company has provided security by way of corporate guarantees amounting to Rs.88,220 (March 31, 2011: Rs.116,188) to subsidiaries and Rs.1,441 to an associate ( March 31, 2011: Rs.1,441) for various fund and non-fund based facility availed by them.
iii) During the year ended March 31, 2012, the Company has provided security by way of corporate guarantees amounting to Rs.9,074 (March 31, 2011: 10,048 ) for securing loans obtained by GVK Projects and Technical Services Limited. iv) During the year ended March 31, 2012, the Company has provided security by way of corporate guarantee amounting to Rs.220,587 (March 31, 2011:Nil) to GVK Coal Developers (Singapore) Pte Ltd for a facility availed by it. Management is of the opinion that the aforesaid Companies will be able to meet their obligations as they arise and consequently no adjustment is required to be made to the carrying value of the security and guarantees provided.
26. Capital and other commitments
a) b) c) The Company has outstanding equity commitments to fund subsidiaries under construction stage aggregating to Rs.29,565 (March 31, 2011: Rs.87,474). The company has given undertaking to infuse equity aggregating to Rs.229,590 in GVK Coal Developers (Singapore) Pte. Ltd, towards shortfall, if any, of its loan repayment obligations. During the previous year, the Company, GVK Energy Limited (subsidiary Company) and certain private equity investors (‘investors’) had entered into an investment agreement pursuant to which the Company has undertaken to conduct an initial public o?ering of the GVK Energy Limited’s equity shares (‘Quali?ed IPO’ or ‘QIPO’) within 60 months from the date of investment agreement (preferred listing period). If the GVK Energy Limited does not make a QIPO during the preferred listing period and no o?er for sale takes place within 12 months of the preferred listing period, then, at any time therea?er, the investors will have a put option with respect to all of the securities held by the Investor (“Put Right”) on the Company and the GVK Energy Limited at the higher of i) 20% IRR from the date of investment to the date of receipt of proceeds from the investor (“Put IRR”) and ii) the fair market value of the investor’s shares. Provided the Put IRR shall be reduced to 15% IRR, if at least 3 private sector initial public o?erings with an issue size of Rs.100,000 or more each have not taken place in India between the 36th month to the 60th month from date of investment agreement. The Company believes that the subsidiary Company would be able to successfully conduct QIPO in the preferred listing period.
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Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
27. Micro, small and medium enterprises
The identi?cation of micro, small and medium enterprise suppliers as de?ned under the provisions of “Micro, small and medium enterprises Act, 2006” is based on Management’s knowledge of their status. There are no dues to micro, small and medium enterprises as on March 31, 2012 or March 31, 2011.
28. Unhedged foreign currency exposure
Particulars Receivable Amount Rs.458 (March 31, 2011 : Nil)
29. Operating leases
The Company has entered into commercial leases which are in the nature of operating lease agreements for o?ce spaces for period up to 3 years. There are no restrictions placed upon the company by entering into these leases. Further there are no renewal or escalation clauses in the lease. Future minimum lease payments payable under non-cancellable operating lease are as follows: Particulars Not later than one year Later than one year but not later than ?ve years Later than ?ve years Note: The minimum lease payments are excluding service tax March 31, 2012 12 March 31, 2011 6 -
30. Expenditure in foreign currency (accrual basis):
March 31, 2012 Travel Legal and professional fees March 31, 2011 49 550 599
31. Earnings in foreign currency (accrual basis):
March 31, 2012 Guarantee commission 989 989 March 31, 2011 -
32. Segment information
In accordance with Accounting Standard 17 - Segment Reporting, segment information has been given in the consolidated ?nancial statements of the Company and therefore no separate disclosure on segment information is given in these ?nancial statements.
33. The Reserve Bank of India (‘RBI’) had issued guidelines for Core Investment Companies (CIC) on January 5, 2011 pursuant to
which Systematically Important Core Investment Companies (SI-CIC) are required to apply for registration with RBI within six months from the date of issue of the guidelines. The Company had applied to RBI for granting Certi?cate of Registration and is awaiting approval. As a SI-CIC, the Company is required to comply with requirements of capital requirements and leverage ratios. The Company is not in compliance with the aforesaid requirements and in the process of submitting an application to
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Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Reserve Bank of India for granting additional time to meet the compliance requirements. The Company based on legal advice/ internal assessment believes that RBI would look favourably into the matter. Further, the Company based on legal advise/ internal assessment believes that since its income from ?nancial assets in the year ended March 31, 2012 are less than 50% of the gross income, the Company is not a Non- Banking Financial Company in the current year.
34. The Company has applied to Central government on April 24, 2012 for waiver of excess managerial remuneration amounting
to Rs.207 paid to two directors during the year beyond the limits speci?ed in Part II of Section II (B) and Section III of Schedule XIII of the Companies Act, 1956. The Company believes that approval will be obtained in due course and would not have any material impact upon the ?nancial statements.
35. The ?nancial statements contain certain amounts reported as “0“which are less than Rs.1. 36. Previous year ?gures
Till the year ended March 31, 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its ?nancial statements. During the year ended March 31, 2012, the revised Schedule VI noti?ed under the Companies Act 1956, has become applicable to the company. The company has reclassi?ed previous year ?gures to conform to this year’s classi?cation.
As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited
per Vikas Kumar Pansari Partner Membership No. 93649
Dr. G V Krishna Reddy Chairman & Managing Director
Place : Hyderabad Date : May 9, 2012
A Issac George Director & CFO
P. V. Rama Seshu GM & Company Secretary
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GVK POWER & INFRASTRUCTURE LIMITED
Registered O?ce:’Paigah House’, 156-159, Sardar Patel Road, Secunderabad - 500 003.
ATTENDANCE SLIP
I/we hereby record my/our presence at the 18th Annual General Meeting held on Wednesday, the August 8, 2012 at 11.30 a.m. at Sri Satya Sai Nigamagamam, 8-3-987/2, Srinagar Colony, Hyderabad - 500073.
Name of the Shareholder/Proxy*
No. of Shares Held: ____________
FOLIO NO. SIGNATURE OF THE SHAREHOLDER/PROXY*
*Strike out whichever is not applicable
CLIENT ID:
DP ID:
Notes:
1. Shareholder/Proxy intending to attend the meeting must bring the duly signed Attendance Slip to the Meeting and handover at the entrance. 2. Shareholder/Proxy should bring his/her copy of the Annual Report. 3. No gi?s / gi? coupons will be distributed at the Annual General Meeting.
?
GVK POWER & INFRASTRUCTURE LIMITED
Registered O?ce:’Paigah House’, 156-159, Sardar Patel Road, Secunderabad - 500 003. I/We in the District of appoint
PROXY
of
being a Member(s) of the above named Company, hereby of in the district of or failing him/her of in the district of as my/our Proxy to attend and vote for me/us and on my/ our behalf at the 18th Annual General Meeting of the Company to be held on Wednesday, the August 8, 2012 at 11.30 a.m. and at any adjournment thereof. Signed this day of 2012
FOLIO NO.
No. of Shares:
CLIENT ID:
Signature:
DP ID:
Note: The Proxy in order to be e?ective must reach duly ?lled in at least 48 (forty-eight) hours before the commencement of the aforesaid meeting.
A?x Re.1/Revenue Stamp
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GVK Power & Infrastructure Limited
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Notes
Notes
Saving lives every day!
GVK EMRI, a CSR initiative of GVK...
If undelivered, please return to:
GVK Power & Infrastructure Limited
“Paigah House”, 156-159, Sardar Patel Road Secunderabad - 500 003, India. Phone: 040 - 2790 2663 / 64 Fax: 040 - 2790 2665
doc_968571044.pdf
The report for the financial year 2011 - 2012 of GVK power & infrastructure limited.
GVK Jegurupadu CCPP
Alaknanda Hydro Project
Artistic view of New Integrated Passenger Terminal, CSIA Mumbai
Artistic view of Passenger Terminal, BIAL Bengaluru
GVK Jaipur-Kishangarh Expressway
GVK EMRI
18th Annual Report 2011 - 2012
GVK Power & Infrastructure Limited
Resources
GVK Gautami Power Project
Passenger Terminal, BIAL
Resources
GVK Goindwal Sahib Power Project
Corporate Information
Board of Directors
Dr. G V Krishna Reddy G Indira Krishna Reddy G V Sanjay Reddy Krishna Ram Bhupal Dr. Abid Hussain Dr. A Ramakrishna K N Shenoy P Abraham Ranjana Kumar Pradip Baijal Ch G Krishna Murthy S Balasubramanian A Issac George P V Rama Seshu Chairman & Managing Director Director Vice Chairman Director Director Director Director Director Director (from 10-11-2011) Director (upto 10-11-2011) Director Director Director General Manager & Company Secretary
Committees of the Board
Audit Committee
Ch G Krishna Murthy A Ramakrishna P Abraham S Balasubramanian Chairman
Remuneration Committee
A Ramakrishna K N Shenoy P Abraham Chairman
Investors’ Grievance Committee
A Ramakrishna Ch G Krishna Murthy A Issac George Chairman
GVK Power & Infrastructure Limited
Statutory Auditors
M/s. S R Batliboi & Associates The Oval O?ce, 18, ILabs Centre Hitech City, Madhapur Hyderabad - 500 081
Registrar & Share Transfer Agents
Karvy Computershare Private Limited Plot No.17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081
Registered & Corporate O?ce
“Paigah House” 156 - 159 Sardar Patel Road Secunderabad - 500 003
ISIN
INE251H01024
CIN
L74999AP2005PLC059013
Stock Code
BSE:532708 NSE: GVKPIL
Standalone Financials at a glance
2012
(Rs.Lakhs)
2011
Financial Performance
Operational Income EBIDTA Other Income Interest & Financial Charges Depreciation Pro?t A?er tax EPS (Rupees) Basic and Diluted Financial Position: Fixed Assets ( Net of depreciation) Cash and Bank balance Net current assets Total Assets Equity Reserves Networth Market Capitalisation 144 1,748 40,854 294,682 15,792 236,800 252,592 274,783 159 310 50,680 263,955 15,792 237,627 253,419 409,015 (0.05) 0.43 2,760 1,172 1,285 2,493 18 (827) 4,148 549 8,157 1,495 9 6,828
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Notice
Notice is hereby given that the 18th Annual General Meeting of the members of GVK Power & Infrastructure Limited will be held on Wednesday, the August 8, 2012 at 11.30 a.m. at Sri Satya Sai Nigamagamam, 8-3-987/2, Srinagar Colony, Hyderabad - 500 073 to transact the following business:
Ordinary business
1. 2. 3. 4. 5. To receive, consider and adopt the Balance Sheet as at March 31, 2012 and the Pro?t and Loss Account for the year ended on that date and the Report of the Directors and the Auditors thereon. To appoint a Director in place of Mrs. G Indira Krishna Reddy, who retires by rotation and, being eligible, o?ers herself for reappointment. To appoint a Director in place of Mr. G V Sanjay Reddy, who retires by rotation and, being eligible, o?ers himself for reappointment. To appoint a Director in place of Mr. Ch G Krishna Murthy, who retires by rotation and, being eligible, o?ers himself for reappointment. To appoint M/s. S R Batliboi & Associates, (Firm Registration No: 101049W) Chartered Accountants, Hyderabad, the retiring auditors, as Statutory Auditors of the Company to hold o?ce from the conclusion of this Annual General Meeting to the conclusion of next Annual General Meeting on such remuneration as may be ?xed by the Audit Committee and approved by the Board.
Special business
6. To consider and if thought ?t, to pass the following, with or without modi?cation(s) as an ordinary resolution. “RESOLVED THAT pursuant to the provisions of Section 257 and other applicable provisions, if any, of the Companies Act, 1956 read with Article 109 of the Articles of Association of the Company, Mrs. Ranjana Kumar, be and is hereby appointed as Director of the company, whose period of o?ce shall be liable to retire by rotation.”
By Order of the Board Place : Hyderabad Date : May 9, 2012 P V Rama Seshu General Manager & Company Secretary
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GVK Power & Infrastructure Limited
Notes
1. 2. 3. 4. 5. 6. Every Member entitled to attend and vote at the meeting is entitled to appoint a Proxy to attend and vote instead of himself and such Proxy need not be a member of the Company. Duly ?lled in Proxy form must be deposited at the Registered O?ce of the Company before 48 hours of the time ?xed for holding the meeting. Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 is annexed hereto and forms part of the notice. Pursuant to Clause 49 of the Listing Agreement, particulars of Directors seeking appointment / re-appointment at this meeting are annexed hereto. The Register of Members and Share Transfer Books of the Company will remain closed from 04-08-2012 to 08-08-2012 (both days inclusive). Members are requested to: i) Note that as a measure of austerity, copies of Annual Report will not be distributed at the Annual General Meeting. ii) Deliver duly completed and signed Attendance Slip at the entrance of the meeting venue, as entry to the Auditorium will be strictly on the basis of the entry slip, available at the counters at the venue to be exchanged with the attendance slip.
iii) Quote the Folio / Client ID & DP ID Nos. in all their correspondences. iv) Note that due to strict security reasons brief cases, eatables and other belongings are not allowed inside the auditorium. v) Note that no gi?s / compliments / coupons will be distributed at the Annual General Meeting. vi) A corporate member shall be deemed to be personally present only if it is represented in accordance with Section 187 of the Companies Act, 1956 i.e. only if the corporate member sends certi?ed true copy of the Board resolution / power of attorney authorizing the representative to attend and vote at the Annual General Meeting. vii) Members are requested to notify immediately changes, if any, in their addresses, in respect of the physical shares held by them, to the Company, and to their Depository Participants (DP) in respect of shares held in the dematerialized form. 7. Members desirous of getting any information on any items of business of this Meeting are requested to address their queries to Mr. P V Rama Seshu, General Manager & Company Secretary at the Registered O?ce of the Company at least ten days prior to the date of the meeting, so that the information required can be made available at the meeting. All documents referred to in the notice and annexures thereto along with other mandatory registers / documents are open for inspection at the registered o?ce of the Company on all working days (except Saturdays and Sundays) between 11.00 a.m. to 1.00 p.m. prior to the date of Annual General Meeting. The Ministry of Corporate A?airs has taken a corporate “Green initiative in the corporate governance” by allowing paperless compliance by companies. As per the MCA Circular, Service of documents through electronic mode i.e. e-mail by the company will be a valid compliance of Section 53 of the Companies Act, 1956. A recent amendment to the Listing Aggrement with the Stock Exchanges permits companies to send so? copies of the Annual Report to all those shareholders who have registered their e-mail id’s for the said purpose. As such the members who have not yet registered their e-mail id’s are requested to furnish/ register their e-mail id’s at [email protected] to enable the Company to send all notices, periodical statements etc., of the company through electronic mode.
8.
9.
10. The Securities and Exchange Board of India has noti?ed that the shareholders/transferee of shares (including joint holders) holding shares in physical form are required to furnish a certi?ed copy of their PAN Card to the company/RTA while transacting in the securities market including transfer, transmission or any other corporate action. Accordingly, all the shareholders/ transferee of shares (including joint holders) are requested to furnish a certi?ed copy of their PAN Card to the company/RTA while transacting in the securities market including transfer, transmission or any other corporate action.
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Explanatory Statement
(Pursuant to Section 173(2) of the Companies Act, 1956) Item 6 The Board of Directors of your Company at its meeting held on November 10, 2011 had appointed Mrs.Ranjana Kumar as an additional director of the company. In terms of the provisions of Section 260 of the Companies Act, 1956 read with Article 109 of the Articles of Association of the company, Mrs. Ranjana Kumar holds the o?ce up to the date of this Annual General Meeting. Your company has received a notice, in writing, under Section 257 of the Companies Act, 1956 along with a requisite deposit, signifying his intention to appoint Mrs. Ranjana Kumar as a Director of the company. Pro?le of Mrs. Ranjana Kumar Mrs. Ranjana Kumar is a Graduate in Arts and a Gold Medalist. A?er serving the Government of India for 44 years, she retired on 01-12-2009. She spent most of her carrier in the Banking sector and has held various prestigious positions viz., General Manager & CEO Bank of India US Operations based in New York, Executive Director holding Concurrent charge as Chairman & Managing Director (CMD) of Canara Bank, CMD of Indian Bank and Chairman of National Bank of Agriculture & Rural Development. As a CMD of Indian Bank (weakest Public Sector Bank then), she has the reputation of turning around the same in three years, which is now ranked amongst the top Public Sector Bank in India. Mrs. Ranjana Kumar, is a ?rst woman Chairman of a Public sector Bank in India. She was also appointed as the Vigilance Commissioner, Central Vigilance Commission, a Constitutional Post. She has given lectures at various forums in India and abroad including IITs, IIMs, Wharton School, Stanford University, World Bank, Asia Society New York. She also authored a book “A New beginning the Turn Around Story of Indian Bank” Foreword by Dr. A P J Abdul Kalam, Former President of India. None of the Directors, except the incumbent Mrs. Ranjana Kumar is interested or concerned in the above resolution.
By Order of the Board Place : Hyderabad Date : May 9, 2012 P V Rama Seshu General Manager & Company Secretary
Important Communication to Members
The Ministry of Corporate A?airs has taken a “Green Initiative in the Corporate Governance” by allowing paperless compliances by the companies and has issued circulars stating that service of notice/ documents including Annual Report can be sent by e-mail to its members. All those shareholders who have not yet registered their email Ids or holding shares in physical form are requested to immediately register their e-mail Ids with NSDL/CDSL and / or our RTA at [email protected] along with your Folio No. and No. of shares / Client Id and DP Id.
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Annexure
Brief details of Directors seeking appointment / re-appointment at this Annual General Meeting (Pursuant to Clause 49 of the Listing Agreement) Name of the Director Date of Appointment Date of Birth Quali?cations Expertise in speci?c functional areas Mrs. G Indira Krishna Reddy 20-02-2005 17-10-1944 B.Sc., OPM from Harvard Business School Mrs. G Indira Krishna Reddy is a Director of our Company. She has over 27 years of experience in the ?elds of ?nance, hospitality and management. Currently, she is the Managing Director of Taj GVK Hotels & Resorts Limited and the Vice Chairman of Novopan Industries Limited apart from being the Director on the boards of various other companies in the GVK Group. Mr. G.V. Sanjay Reddy 20-02-2005 18-11-1964 MBA (Finance), Bachelors Degree in Industrial Engineering from Purdue University, USA Mr. G.V. Sanjay Reddy is the Vice – Chairman of the Company. He is also the Managing Director of Mumbai International Airport Private Limited and Bangalore International Airport Limited apart from being the Director on the Board of various other Companies in the GVK Group. He is the Chairman of Confederation of Indian Industry, Southern Region for 2012-13 He was also nominated by World Economic Forum as a Young Global Leader for 2007. He was also the chairman of the CII Young Indians apart from being a member of the Board of Trustees of the Jagdish and Kamla Mittal Museum of Indian Art, a museum dedicated to the cause of propagating Indian Art and Culture. Bangalore International Airport Ltd GVK Industries Ltd Alaknanda Hydro Power Company Ltd GVK Oil & Gas Ltd GVK Energy Ltd GVK Power (Goindwal Sahib) Ltd Pinakini Share & Stock Brokers Ltd Taj GVK Hotels & Resorts Ltd GVK Gautami Power Ltd GVK Airport Developers (P) Ltd GVK Developmental Projects (P) Ltd GVK Perambalur SEZ (P) Ltd NA
List of other Companies in which Directorship is held as on 31.03.2012
Alaknanda Hydro Power Company Ltd GVK Energy Ltd GVK Projects & Technical Services Ltd Vertex Projects Ltd Novopan Industries Ltd Pinakini Share & Stock Brokers Ltd Taj GVK Hotels & Resorts Ltd GVK Industries Ltd GVK Gautami Power Ltd Bangalore International Airport Ltd GVK Perambalur SEZ (P) Ltd GVK Developmental Projects (P) Ltd Goriganga Hydro Power (P) Ltd NA
Chairman / Member of the *Committees of other Companies on which he/ she is a Member as on 31.03.2012
* The Committees include the Audit Committee, the Remuneration Committee and the Shareholder’s / Investor Grievance Committee.
6
Name of the Director Date of Appointment Date of Birth Quali?cations
Mr. Ch G Krishna Murthy 24-07-2008 09-02-1931 MA, LLB, CA
Mrs. Ranjana Kumar 10-11-2011 10-12-1945 Graduate in Arts and a Gold Medalist Mrs. Ranjana Kumar served the Government of India for 44 years. She spent most of her carrier in the Banking sector and has held various positions viz. General Manger & CEO Bank of India US Operations based in New York, Executive Director holding Concurrent charge as Chairman & Managing Director (CMD) of Canara Bank, CMD of Indian Bank, Chairman of National Bank of Agriculture & Rural Development.
Expertise in speci?c functional Ch G Krishna Murthy, is an Independent areas Director on our Board. He is a Chartered Accountant and holds a Masters degree in Arts and a LLB Degree.
He has been a member, Law Commission India and has served on the Income Tax Appellate Tribunal in various capacities including President. He has also been a chairman of the Oil Selection Board, Ministry of Petroleum for the states of Karnataka, Andhra Pradesh and Orissa. He was also a practicing chartered As a CMD of Indian Bank (weakest Public accountant. Sector Bank then), she has the reputation of turning around the same in three years, He was a member of the Governing Council which is now ranked amongst the top of the International Centre for Alternative Public Sector Bank in India. Mrs. Ranjana Dispute Resolution (ICADR), a member of Kumar, is a ?rst woman Chairman of a the General Council of the National Academy Public sector Bank in India. of Legal Studies and Research University, a Chairman of the Chinmaya Vidyala and a She was also appointed as the Vigilance member of the Chinmaya Seva Trust. Commissioner, Central Vigilance Commission, a Constitutional Post. She has given lectures at various forums in India and abroad including IITs, IIMs, Wharton School, Stanford University, World Bank, Asia Society New York. She also authored a book “A New beginning the Turn Around Story of Indian Bank” Foreword by Dr. A P J Abdul Kalam, Former President of India.
List of other Companies in which Directorship is held as on 31.03.2012
Nil
Tata Global Beverages Ltd National Stock Exchange of India Ltd Coromandel International Ltd The Andhra Pradesh Paper Mills Ltd Tata Global Beverages Ltd International Asset Reconstruction Company Ltd National Stock Exchange of India Ltd The Andhra Pradesh Paper Mills Ltd
Chairman / Member of the *Committees of other Companies on which he/she is a Member as on 31.03.2012
NA
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GVK Power & Infrastructure Limited
Directors Report
Dear Shareholders, Your Directors have pleasure in presenting the 18th annual report together with the audited balance sheet and pro?t and loss account of your Company for the year ended March 31, 2012.
Consolidated Financial results
Being a holding company of di?erent vertical business operations, your company does not have independent operating revenues other than O&M fee, incentives and dividends, if any, from its subsidiaries, interest and other treasury income earned on surplus funds. Following is the summary of consolidated results of the company, its subsidiaries and associates. (Rs.Lakhs) Particulars Financial Performance Operational Income EBIDTA Other Income Interest & Financial Charges Depreciation Provision for taxes Profit before tax and share of profits for associate and minority interest Add: Share of income from Associates Less: Minority Interest Total Pro?t for the year Add: Balance brought forward from previous years Balance available for appropriation Appropriations Transfer to General Reserve EPS (Rupees) Weighted Average no. of Equity Shares Basic and Diluted Financial Position Fixed Assets ( Net of Depreciation) Cash and Bank balance Net Current Assets Total Assets Equity Reserves Net worth 1,670,708 172,626 (161,433) 2,289,511 15,792 332,345 348,137 686,810 32,820 (26,930) 1,071,470 15,792 322,886 338,678 1,579,210,400 0.39 1,579,210,400 0.98 249,183 69,408 8,887 46,727 24,893 6,782 (107) 10,639 4,386 6,146 59,052 65,198 191,466 51,399 2,853 26,314 18,364 2,132 7,442 11,093 3,044 15,491 43,561 59,052 2011-12 2010-11
8
Our total income increased by 24.7 % to Rs.2,58,070 Lakhs from Rs.1,943,19 Lakhs in the previous year. The Power assets contributed an income of Rs.1,73,124 Lakhs compared to Rs.1,73,475 Lakhs (67.10 % of total income) in the previous year. The Transportation asset contributed an income of Rs.23,192 Lakhs (8.99% of total income) compared to Rs.19,243 Lakhs in the previous year. Airport assets contributed an income of Rs.59,700 Lakhs (23.15% of total income). The other assets contributed Rs.1,901 Lakhs compared to Rs.1,601 Lakhs in the previous year. Airport assets (Mumbai and Bangalore Airports) as the associates of the company have contributed to net pro?t of Rs.106,39 Lakhs compared to Rs.11,093 Lakhs in the previous year. The net pro?t a?er tax is Rs.6,164 Lakhs as against Rs.15,491 Lakhs in the previous year. During the current year (from October 18, 2011), Mumbai International Airport Private Limited (MIAL) has become a subsidiary (associate company in the previous year) of your Company by virtue of increase in our equity holding from 37% to 50.50%. Accordingly, these ?nancial statements re?ect every line item of the ?nancials of MIAL. However, Bangalore International Airport Limited (BIAL) continues to be an associate of your company during the current year (same as in previous year), even though our equity holding in BIAL was increased from 29% to 43% during the current year (from October 19, 2011). The net pro?t a?er tax, share of pro?t from associate and minority interest was Rs.61.48 Crores as against Rs.154.92 Crores in the previous year. The fall in net pro?t is mainly attributable to drop in generation of power due to shortage of fuel (Gas) and an increase in interest cost.
Dividend
The Board of Directors of your company has not recommended any dividend for the ?nancial year 2011-12.
Subsidiaries and Consolidated Financial Statements
Subsidiaries of your Company are predominantly spread across 3 main vertical business operations i.e., Energy, Airport and Transportation. In addition, your Company has other subsidiaries, which are engaged in Oil & Gas and Industrial Park amongst others. As on March 31, 2012 your Company has 7 direct subsidiaries, 15 step down subsidiaries and 2 associate companies. A list of these companies is provided separately as Annexure “A” to this report. There has been no material change in the nature of the business of the subsidiaries. As required under the Listing Agreement entered into with the Stock Exchanges, a consolidated ?nancial statement of the Company and all its subsidiaries is attached. The consolidated ?nancial statements have been prepared in accordance with the relevant accounting standards as prescribed under section 211(3C) of the Companies Act, 1956. These ?nancial statements disclose the assets, liabilities, income, expenses and other details of the company, its subsidiaries and associate companies. Pursuant to the provision of section 212(8) of the Companies Act, 1956, the Ministry of Corporate A?airs (MCA), Government of India, New Delhi vide its Circular No.2/2011 dated: 08-02-2011 has granted general exemption from attaching the balance sheet, statement of pro?t and loss and other documents of the subsidiary companies with the balance sheet of the Company. As required under the said Circular, the Board of directors of your Company at its meeting held on February 14, 2012 gave its speci?c consent for not attaching the balance sheets of its subsidiaries, as they would be made available to its members at the company’s website. A statement containing the brief ?nancial details of the Company’s subsidiaries for the ?nancial year ended March 31, 2012 is provided as Annexure “B” to this report. Accordingly, this annual report does not contain the reports and other statements of the subsidiary companies. Any member intends to have a certi?ed copy of the Balance Sheet and other ?nancial statements of these subsidiaries may write to the Company Secretary. These documents are available for inspection during business hours at the registered o?ce of the company and also at the registered o?ces of the respective subsidiary companies.
Developments in the existing assets
i) Energy During the FY 2010-11, your Company through its subsidiary i.e. GVK Energy Limited had entered into an Investment Agreement with M/s. 3i India Infrastructure Fund, Actis Infrastructure India PCC Limited and an a?liate of the Government of Singapore Investment Corporation (GIC) for a total Private Equity investment of Rs.1,498 Crores for an ultimate equity dilution of 24.97%. Out of this, the second & ?nal tranche of Rs.561.75 Crores was received from the said PE Investors during the current ?nancial year.
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GVK Power & Infrastructure Limited
ii) Airport During the year (on 18-10-2011), your company through its step down subsidiary GVK Airport Holdings Private Limited (GVKAHPL), acquired additional 10,80,00,000 equity shares of Rs.10 each (aggregating to 13.50% stake) of Mumbai International Airport Private Limited (MIAL) from Bid Services Division (Mauritius) Limited (BSDM) at a cost of US$ 231 Million thereby increasing the aggregate total equity holding in MIAL to 50.50% from 37%. Further, during the year (on 19-10-2011), your company through its step down subsidiary Bangalore Airport & Infrastructure Developers Private Limited, acquired additional 53,844,000 equity shares of Rs.10 each (aggregating to 14% stake) in Bangalore International Airport Limited (BIAL) from Siemens Project Ventures GmbH (Siemens) at a cost of Rs.613.82 Crores making the aggregate total e?ective stake in BIAL to 43% from 29%. iii) Transportation During the year, your Company formed a SPV in the name of Shivpuri Dewas Expressway Private Limited, a subsidiary of GVK Transportation Private Limited, a wholly owned subsidiary of the Company to implement the 332.46 Km Shivpuri Dewas Expressway project. With this, there would be three road projects under development in this vertical business.
Emerging Opportunities
Resources During the year, your company had participated as an investor for the acquisition of a major coal resource and infrastructure development project in the Galilee Basin, Queensland, Australia. Your Company currently holds 10% in the equity share capital of GVK Coal Developers (Singapore) Pte Limited (“GVKCD”) a step down subsidiary of GVK Natural Resources Private Limited (“GVKNRPL”) a GVK Group company, with an option to increase its stake upto 49%. The coal resource consists of an estimated 7.9 billion tonnes compliant with Australia’s Joint Ore Reserves Committee (JORC) resource categorisation with a 3.3 billion tones reserves in Measured + Indicated categories along with a 495 km rail line and a 60 million tonnes per annum port at Abbot Point. GVKNRPL has entered into a transaction through its subsidiaries, incorporated in Singapore, to acquire: a. 79% shareholding in Hancock Coal and Hancock Alpha West Coal Projects, located in the Galilee basin in the State of Queensland, Australia while the balance 21% has been retained by the Seller i.e. Hancock Prospecting Pty Ltd. The JORC study estimates the combined resources at Alpha and Alpha West at 3.6 billion tonnes. b. 100% shareholding in Kevin’s Corner Coal Project, located adjacent to Alpha Coal Project. The JORC study estimates the resources to be around 4.3 billion tonnes. c. 100% shareholding in the proposed rail project connecting the above coal projects to the port of Abbot Point and in the proposed port expansion project to export the coal from the aforesaid coal projects. The acquisition o?ers the following bene?ts to GVKPIL. a. good investment opportunity with signi?cant value upside. b. option to enter into long term coal purchase contracts up to 20 Million tonnes per annum (to supply around 7,500 megawatts of power generating capacity) for securing long term fuel supplies for its subsidiary GVK Energy Limited. c. option to take a lead role in the company that will own Rail and Port projects, on mutually agreed terms with GVKNRPL.
Financial Statements The audited stand alone and consolidated ?nancial statements of the company along with its subsidiary companies are attached herewith and form part of this annual report. These have been prepared in accordance with the provisions of the Companies Act, 1956, the Listing Agreement, the Accounting Standard (AS-21) on Consolidated Financial Statements and the Accounting Standard (AS-23) on Accounting for Investments in Associates.
10
Awards and recognitions Following are some of the awards and recognitions that your Company/its Subsidiaries/Associates received during the current year
?
GVK has been awarded the ‘Asia Deal of the year’ and the ‘Asia Outbound Investor of the year’ at the 8th annual Asia Mining Congress held in Singapore on 28-03-2012. GVK was recognized for its acquisition of the Australia based Hancock Coal and Infrastructure projects, which have paved the way for future investments from other corporate investors.
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GVKPIL is ranked among top ten companies on “Carbon Disclosure Leadership Index” in India as per the CDP India 200 Report 2011. GVK’s EPC arm GVK Projects & Technical Services has received ISO 9001-2008 accreditation from internationally renowned agency TUV NORD. GVK EMRI has bagged the following prestigious awards
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The NASSCOM 2012 Innovation Award. Marico’s Innovation for India Awards 2012 in Public Service category. Won eINDIA award for enabling IT in Saving Lives. GVKEMRI Assam received the Runner-Up in 6th National Road Safety Award
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Bangalore International Airport Limited (BIAL) has bagged the following prestigious awards
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First Company in India to be certi?ed as a Green Company as per the CII GreenCo rating system Won the ‘Most Innovative’ Environmental Best Practice Award 2012 in the CII Environmental best practice award event. Won the Water Award for outstanding work in water management and sustainability at the Bangalore World Water Summit 2012.
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Mumbai International Airport Limited won the STAT TIMES International Award for Excellence in Air Cargo in the Indian region category - Cargo Airport of the year as runners up.
Following are some of the achievements, awards and recognitions that your Promoter Directors received during the year:
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Dr. G V Krishna Reddy, Chairman & Managing Director of your company has been awarded as the ‘CONSTRUCTION WORLD-MAN OF THE YEAR’ by the Construction World magazine. Mr. G V Sanjay Reddy, Vice Chairman of your company has been elected as Chairman of Confederation of Indian Industry, Southern Region for 2012-13.
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Corporate Governance Report and Management Discussion and Analysis Your Company continues to practice the best of the Corporate Governance policies. Your Company is in compliance with the recommendations of the Narayana Murthy Committee on Corporate Governance constituted by the Securities and Exchange Board of India (SEBI). A certi?cate, from a Company Secretary in whole time practice, on compliance with the mandatory recommendations of the committee is provided as an annexure to the Directors’ Report. As required under Clause 49 of the Listing Agreement with the Stock Exchanges, a Corporate Governance Report and management Discussion and Analysis are attached to this annual report. Corporate Social Responsibility (CSR)
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The GVK Group’s social responsibility initiatives are implemented through GVK Foundation, the CSR arm of the GVK Group. The Foundation is involved mainly in the areas of education, health and hygiene; community-based programs; empowerment and entrepreneurship development, arts, music, sports and various social economical and cultural activities. It reaches out with the objective of improving the quality of life of the economically deprived people in the places where the Group has a presence.
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The Foundation has been funding GVK EMRI which was taken over the management of Emergency Management and Research Institute (EMRI), a non-pro?t organization and is providing integrated emergency response service across the country in 11 States and 2 UT in India under public private partnership mode.
11 11
GVK Power & Infrastructure Limited
Directors
Appointments by rotation In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company Mrs. G Indira Krishna Reddy, Mr. G V Sanjay Reddy and Mr. Ch G Krishna Murthy, Directors of the company will retire by rotation at this meeting and being eligible, your Board recommends their re- appointment. The Board of Directors at their meeting held on November 10, 2011 appointed Mrs. Ranjana Kumar as an additional director subject to your approval. Your Board recommends her appointment as an independent director whose period of o?ce shall be liable to retire by rotation. Cessation During the year Mr. Pradip Baijal, Director has expressed his inability to continue as a director due to his other commitments. The board of directors at its meeting held on November 10, 2011 has accepted the same and placed on record its appreciation for the services rendered by Mr. Pradip Baijal, during his tenure as director of the company. Superannuation Mr. A Issac George, who has been with the Group for over a period of 17 years has attained superannuation on May 9, 2012 as Chief Financial O?cer of the Company. He will continue to be on the Board as a Non Independent and Non Executive Director of the Company and is liable to retire by rotation. The Board placed on record its deep appreciation of the services rendered by Mr. Issac George. In recognition of his meritorious services, he is being appointed as a Chief Executive O?cer of the Transportation vertical. Directors’ Responsibilities Statement Pursuant to the requirements speci?ed under Section 217 (2AA) of the Companies Act, 1956, with respect to the Directors’ Responsibilities Statement, it is hereby con?rmed that; i) in the preparation of the annual accounts for the ?nancial year ended March 31, 2012, the applicable Accounting Standards have been followed along with proper explanations relating to material departures; ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of a?airs of the Company as at March 31, 2012 and of the pro?t or loss of the Company for the said period; iii) that the directors had taken proper and su?cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and iv) the directors had prepared the annual accounts for the ?nancial year ended March 31, 2012 on a “going concern” basis. Auditors M/s. S R Batliboi & Associates, the Statutory Auditors of the Company will retire at the conclusion of this Annual General Meeting. They have o?ered themselves for reappointment as statutory auditors and have con?rmed that their re-appointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956. The Notes to Accounts forming part of the ?nancial statements are self explanatory and need no further explanation. Other Information The Audit Committee of the Company has reviewed the audited ?nancial statements for the year under review at its meeting held on May 8, 2012 and recommended the same for the approval of the Board of Directors. Internal Control Systems and their adequacy The Management continuously reviews the internal control systems and procedures for the e?cient conduct of the Company’s business. The Company adheres to the prescribed guidelines with respect to the transactions, ?nancial reporting and ensures that all its assets are safeguarded and protected against losses. The Internal Auditor of the Company conducts the audit on regular basis and the Audit Committee actively reviews internal audit reports and e?ectiveness of internal control systems.
12
Internal Control Systems are implemented to safeguard the Company’s assets from loss or damage, to keep constant check on the cost structure, to prevent revenue leakages, to provide adequate ?nancial and accounting controls and implement accounting standards. Public Deposits During the year under review, your company has neither invited nor accepted any ?xed deposits from the public. Particulars of Employees As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employee(s) are set out in the Annexure “C” to this report. Foreign Exchange Earnings and Outgo In accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the information relating to foreign exchange earnings and outgo is provided under Notes to the Balance Sheet and Pro?t and Loss Account. Acknowledgements The Directors of your Company thank the Government of India, various State Governments and their concerned Department / Agencies / Regulatory Authorities for their continued support and cooperation. The Directors also wish to place on record the support extended by various Banks, Financial Institutions and every stakeholder of the Company. The Directors further wish to appreciate and value the contributions made by every employee of the GVK Family.
For and on behalf of the Board of Directors
Place : Hyderabad Date : May 9, 2012
Dr. G V Krishna Reddy Chairman & Managing Director
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GVK Power & Infrastructure Limited
Annexure – A
Ultimate Holding / Parent Company
1. GVK Power & Infrastructure Limited
Subsidiaries (As on March 31, 2012)
1. GVK Energy Limited 2. GVK Airport Developers Private Limited 3. GVK Transportation Private Limited 4. GVK Oil & Gas Limited 5. GVK Perambalur SEZ Private Limited 6. GVK Developmental Projects Private Limited 7. Goriganga Hydro Power Private Limited
Step Down Subsidiaries (As on March 31, 2012)
1. GVK Industries Limited 2. GVK Gautami Power Limited 3. Alaknanda Hydro Power Company Limited 4. GVK Power(Goindwal Sahib) Limited 5. GVK Coal (Tokisud) Company Private Limited 6. GVK Ratle Hydro Electric Private Limited 7. GVK Power (Khadur Sahib) Private Limited 8. GVK Airport Holdings Private Limited 9. Bangalore Airport & Infrastructure Developers Private Limited 10. GVK Deoli Kota Expressway Private Limited 11. GVK Bagodara Vasad Expressway Private Limited 12. GVK Shivpuri Dewas Expressway Private Limited 13. GVK Energy Ventures Private Limited 14. GVK Jaipur Expressway Private Limited 15. Mumbai International Airport Private Limited
Associates (As on March 31, 2012)
1. Bangalore International Airport Limited 2. Seregarha Mines Limited
14
Annexure – B
State pusuant to approval of the Central Government under section 212(8) of the Companies Act, 1956 about the ?nancial information of the Subsidiary Companies
(Rs.Lakhs)
Name of the Subsidiary
GVK Energy Ltd
GVK Airport GVK Goriganga Developers Transportation Hydro Pvt Ltd Pvt Ltd Power Pvt Ltd 25,000 3,750 1
GVK Oil GVK GVK & Gas Perumbalur Developmental Ltd SEZ Pvt Ltd Projects Pvt Ltd 5 1 1
Issued and Subscribed Share Capital Reserves Total Assets Total Liabilities Investments (except investments in Subsidiaries) Turnover Pro?t/(Loss) before taxation Provision for taxation Pro?t/(Loss) a?er taxation Proposed dividend
44,827
133,539 261,900 261,900 4,410
(25,735) 395,351 395,351 31
(780) 92,419 92,419 140
4,819 4,819
(4) 16,922 16,922
11,656 11,656
(4) 91 91
6,576 5,250
37 (16,489)
612 (669) (4)
0 0
1,711 3,539
10 (16,499)
(0) (669) -
0 (4) 0
Nil
Nil 250,000,000
Nil 37,500,000
Nil 10,000
Nil 50,000
Nil 10,000
Nil 10,000
Number of shares held by 250,000,000 GVKPIL with its nominess in the subsidiaries at the end of the ?nancial year. Extent of interest of the holding company 73.94%
100%
100%
100%
100%
100%
100%
Notes: 1. The Ministry of Corporate A?airs (MCA), Government of India, New Delhi vide its Circular No.2/2011, dated: 8-2-2011 has granted general exemption to all the Companies for not attaching the Balance sheer, Pro?t & Loss account etc. of subsidiaries with the Annual Report to the Holding Company, subject to compliance of the conditions speci?ed therein. 2. The Company will make available the annual accounts of the subsidiary companies and related detailed information sought by the members of the company or its subsidiearies. Further, the annual accounts of the subsidiary companies will also be kept for inspection by any member of the company or its subsidiary at the registered o?ce of the company and that of the subsidiary companies concerned.
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GVK Power & Infrastructure Limited
Annexure – C
Annexure to the Directors’ Report
Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1988 and forming part of the Directors’ Report for the year ended March 31, 2012
% of equity shares held in company 0.50 Date of commencement of employment 14-10-2005
Name of the employee Dr. G V K Reddy
Age
Quali?cation
Designation
Experience (Years) 48
Remuneration received Rs.144 lakhs
Previous Employment Executive Chairman GVK Industries Limited
75
BA and Owner / President Management program from Harvard University, Doctorate in Philosophy, JNTU, Hyderabad B.Com, ACA
Chairman & Managing Director
A Issac George
58
Director & Chief Financial O?cer
33
Nil
1/10/2005
Rs.173 lakhs
Director (Finance) GVK Industries Ltd
a) Remuneration received includes salary and other allowances, perquisites etc. b) Mrs. G Indira Krishna Reddy, Director, Mr. G V Sanjay Reddy, Vice Chairman and Mr. Krishna Ram Bhupal, Director of the Company are relatives of Dr. G V Krishna Reddy.
For and on behalf of the Board of Directors
Place : Hyderabad Date : May 9, 2012
Dr. G V Krishna Reddy Chairman & Managing Director
Report on Corporate Governance
In compliance with Clause 49 of the Listing Agreement entered into with the stock exchanges, the Company is providing below a report on the matters as mentioned in the said clause and practices followed by the Company.
1. Philosophy of the Company on the code of governance
The Company aims at achieving transparency, accountability and equity in all facets of its operations, and in all interactions with stakeholders, including shareholders, employees, government, lenders and other constituents, while ful?lling the role of a responsible corporate representative committed to good corporate practices. The Company is committed to achieve good standards of Corporate Governance on a continuous basis by laying emphasis on ethical corporate citizenship and establishment of good corporate culture which aims at true Corporate Governance. The Company believes that all its operations and actions must result in enhancement of the overall shareholder value in terms of maximizing shareholder’s bene?ts, over a sustained period of time.
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2. Board of Directors
a) Size and composition of the Board
The policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board, and to separate the Board functions of governance and management. The total strength of the Board as on March 31, 2012 is 12 (Twelve) Directors comprising of four Promoter Directors, seven Independent Directors and one Non-Independent Director. Among the Directors, Executive Directors and ten are Non-executive Directors as on March 31, 2012. The Board periodically evaluates the need for increasing or decreasing its size. Following is the present composition of our Board and their number of directorships in other companies. Number of memberships in Board of other Public Limited Companies 11 + Associated with other Committees of Public Limited Companies Member Chairman -
Name of the Director
Category
Director Identi?cation Number 00005212
Relationship with other directors All promoter directors are relatives All promoter directors are relatives All promoter directors are relatives All promoter directors are relatives None None None None None None None None None
Dr. G V Krishna Reddy
Chairman & Managing Director NEPD
G Indira Krishna Reddy
00005230
10
-
-
G V Sanjay Reddy
Vice Chairman NEPD NEPD
00005282
9
-
-
Krishna Ram Bhupal
00005442
11
-
-
Abid Hussain A Ramakrishna K N Shenoy P Abraham Pradip Baijal * Ranjana Kumar ** Ch G Krishna Murthy S Balasubramanian A Issac George #
NEID NEID NEID NEID NEID NEID NEID NEID NID
00612504 00027520 00021373 00280426 01417748 02930881 01667614 02849971 00005456
7 11 4 11 4 5 5
4 8 3 3 2
1 1 -
NEPD : Non-Executive Promoter Director
NEID : Non-Executive Independent Director
NID : Non-Independent Director
+ Committee memberships considered are of other companies only and those as required under the Code of Corporate Governance. * Ceased to be a Director w.e.f. 10-11-2011 ** Appointed as Director w.e.f. 10-11-2011 # Superannuated as CFO w.e.f. 09-05-2012 and will continue on Board as Non-Executive Non-Independent Director
None of the directors is i) A board member in more than ??een public limited companies ii) A member in more than ten committees; and iii) Acting as a chairman in more than ?ve committees across all companies in which he is a director.
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GVK Power & Infrastructure Limited
b) Board Meetings held during the year
The Board of Directors met ?ve times during the year on May 7, 2011, June 19, 2011, August 6, 2011, November 10, 2011 and February 14, 2012. The maximum gap between the two meetings was less than four months.
c) Directors Attendance and Sitting fee paid
Given in the table below is the Board Meeting attendance record of the directors during the year 2011-2012. Name of the Director Dr. G V Krishna Reddy G Indira Krishna Reddy G V Sanjay Reddy Krishna Ram Bhupal A Ramakrishna Abid Hussain K N Shenoy P Abraham Pradip Baijal * Ch G Krishna Murthy S Balasubramanian A Issac George Ranjana Kumar** *ceased to be a Director w.e.f 10-11-2011 No. of meetings held 5 5 5 5 5 5 5 5 5 5 5 5 5 No. of meetings attended 5 5 4 3 5 3 3 1 2 5 3 5 1 Sitting Fees Paid (Rs.) 1,00,000 80,000 60,000 1,00,000 60,000 60,000 20,000 40,000 1,00,000 60,000 20,000 Presence at last AGM Yes Yes Yes Yes Yes Yes Yes No No Yes Yes Yes NA
** appointed as an Additional Director w.e.f. 10-11-2011
d) Availability of information to the members of the Board
The Board has unfettered and complete access to any information within the Company and from any of our employees. At meetings of the Board, it welcomes the presence of concerned employees who can provide additional insights into the items being discussed. The information regularly supplied to the Board includes: Annual operating plans and budgets, capital budgets and updates Periodic Financial Statements Minutes of meetings of audit, compensation and investor grievance committee of the Company along with board minutes of the subsidiary companies General notices of interest Information on recruitment and remuneration of senior o?cers just below the Board level, including appointment or removal of Chief Financial O?cer and Company Secretary Materially important litigations, show cause, demand, prosecution and penalty Fatal or serious accidents or dangerous occurrences, any material e?uent or pollution problems, if any Any materially relevant default in ?nancial obligations to and by us Details of any joint venture, acquisitions of companies or collaboration agreement Transactions that involve substantial payment towards goodwill, brand equity or intellectual property Signi?cant development on the human resources front Sale of material, nature of investments in subsidiaries and assets, which are not in the normal course of business Details of foreign exchange exposure and the steps taken by the management to limit risks of adverse exchange rate movement Non-compliance of any regulatory, statutory or listing requirements as well as shareholder services such as non-payment of dividend and delays in share transfer
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?
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The Board also periodically reviews compliance reports of all laws applicable to the Company, prepared by the designated employees as well as steps taken to rectify instances of non-compliance.
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3. Committees of the Board
a) Code of Conduct
The Board of Directors of the Company has laid a code of conduct for Directors and the senior management. The code of conduct is posted on the Company’s website. All Directors and designated personnel in the senior management have a?rmed compliance with the code for the year under review. A declaration to this e?ect duly signed by Dr. G V Krishna Reddy, Chairman & Managing Director is annexed to this report. Details of Directors seeking appointment / re-appointment as required under Clause 49 of the Listing Agreement pursuant to the requirements of the Listing Agreement of Stock Exchanges on Corporate Governance, the information about the Directors proposed to be appointed / re-appointed is given as an Annexure to the notice.
b) Audit Committee
In terms of Clause 49 of the Listing Agreement, the Audit Committee constituted by the Board consists of only Non-Executive and Independent Directors. The committee had met four times on May 6, 2011, August 6, 2011, November 9, 2011 and February 13, 2012. In order to ensure the best corporate governance practices across the company, the Board of Directors, at its meeting held on 10th November, 2011, has decided that the position of Chairman of the Audit Committee would be on a rotational basis, once in every three years. Accordingly, the Board appointed Mr. Ch G Krishna Murthy as Chairman of the Audit Committee. Mr. S Balasubramanian was appointed as a member of the Committee on 10th November, 2011 in place of Mr. K N Shenoy. The attendance details for the Committee meetings are as follows: Name of the Member Ch G Krishna Murthy A Ramakrishna P Abraham S Balasubramanian* K N Shenoy ** Category Chairman Member Member Member Member No. of meetings Held 4 4 4 4 4 Attended 4 4 1 0 3
*Appointed as Member w.e.f 10-11-2011 ** Ceased to be a Member w.e.f 10-11-2011
c) The terms of reference as stipulated by the Board to the Audit Committee include:
a) Review of the Company’s ?nancial reporting process and disclosure of its ?nancial information. b) Recommending the appointment and removal of external auditors, ?xation of audit fee and recommending payment for any other services. c) Reviewing with the management the annual ?nancial statements before submission to the Board, focusing primarily on i) Changes in accounting policies and practices ii) Major accounting entries involving estimates based on the exercise of judgment by the management iii) Quali?cations in the dra? audit report iv) Signi?cant adjustments arising out of audit v) The going concern assumption vi) Compliance with accounting standards vii) Compliance with stock exchange and legal requirements concerning ?nancial statements viii) Disclosure of any related party transactions d) Reviewing with the management, the external and internal auditors the adequacy of internal control systems. e) Reviewing with the management, the quarterly ?nancial statements before submission to the Board for approval. f) Discussion with internal auditors of any signi?cant ?ndings and follow up there on. g) Reviewing the ?ndings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or failure of internal control systems of a material nature and reporting the matter to the Board. h) Discussion with statutory auditors about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern. The committee is in compliance with its requirements under this charter.
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GVK Power & Infrastructure Limited
d) Remuneration Committee
The Remuneration Committee comprises of following three Non-Executive Independent Directors. A Ramakrishna - Chairman K N Shenoy P Abraham - Member - Member
The committee has been constituted to recommend/review the remuneration package of the Managing/Whole-Time Directors apart from deciding other matters such as framing and implementation of stock option plans to employees, etc. The remuneration policy is directed towards rewarding performance based on review of achievements which are being reviewed periodically which is in consonance with the existing industry practices. This Committee meets as and when required.
e) Shareholders’ / Investors Grievance Committee
The Shareholders’ / Investors’ Grievance Committee comprises of following three Directors and the majority of whom are Non-Executive Independent Directors. A Ramakrishna - Chairman Ch G Krishna Murthy A Issac George Member Member
The Shareholders’/Investors’ Grievance Committee reviews and redresses all the grievances periodically and meets as and when required. Details of complaints received / resolved during the ?nancial year 2011-12 Nature of Complaint Non receipt of Refund Order For Non receipt of - Dividend Warrant - Annual Report - Share Certi?cate Total 28 34 47 109 28 34 47 109 0 0 0 0 Received 0 Resolved 0 Pending 0
f) Ethics & Compliance Committee
The Ethics & Compliance Committee was constituted pursuant to the amended regulations of SEBI (Insider Trading Regulations), 1992 and comprises of the following Non-Executive Independent Directors. Abid Hussain - Chairman A Ramakrishna K N Shenoy Member Member
The Company has a Code of Conduct for Prevention of Insider Trading as prescribed by the Securities and Exchange Board of India. The Committee monitors the implementation of the Code and takes on record the status reports detailing the dealings in securities by the Speci?ed Persons.
4. Whistle-blower policy
We have established a policy for all the employees to report concerns about unethical behavior, actual or suspected fraud, or violation of our code of conduct or ethics policy. The mechanism under the said policy also provides for adequate safeguards against victimization of employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. We further a?rm that during the ?nancial year 2011-12, no employee has been denied access to the audit committee. Mr. P V Rama Seshu, General Manager & Company Secretary has been designated as the Compliance O?cer and also acts as the Secretary to all the above Committees.
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5. General Body Meetings
a) Annual General Meetings
Year 2008-09 2009-10 2010-11 Date 28.07.2009 31.07.2010 06.08.2011 Time 11.30 A.M. 11.30 A.M. 12.05 P.M. Venue Sri Satya Sai Nigamagamam, Sri Nagar Colony, Hyderabad - 500 074 Sri Satya Sai Nigamagamam, Sri Nagar Colony, Hyderabad - 500 074 Sri Satya Sai Nigamagamam, Sri Nagar Colony, Hyderabad - 500 074
b) Extraordinary General Meeting
During the F.Y 2011-2012 the company had not held any Extraordinary General Meeting.
c) Postal Ballot
During the F.Y 2011-12 the company has not passed any resolutions through Postal Ballot.
6. Disclosures
The Board of Directors receives the requisite disclosures, from time to time, relating to ?nancial and commercial transactions from the key managerial personnel of the Company. There are no materially signi?cant related party transactions, which have potential con?ict with the interest of the Company at large. There have not been any occasion of non-compliance by the Company and therefore, no penalties or strictures have been imposed on the Company by Stock Exchanges or SEBI or any other statutory authority on any matter related to capital markets since the company was listed on the stock exchanges.
7. Reconciliation of shares capital audit
A Company Secretary in whole time practice carried out a share capital audit to reconcile the total admitted equity share capital with NSDL / CDSL and the total issued and listed equinity share capital. The audit report con?rms that the total issued / paidup capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with NSDL / CDSL.
8. Subsidiary companies
The Audit Committee reviews the consolidated ?nancial statements of the company and the investments made in and by its ultimate subsidiary companies. The minutes of the Board meetings of the subsidiary companies along with signi?cant developments of the subsidiaries are periodically placed before the Board of Directors of the company.
9. Means of Communication
The quarterly and annual ?nancial results of the Company are generally published in National Newspapers i.e. The Economic Times, The Financial Express or Business Standard in English and Andhra Prabha or Surya a regional newspaper in vernacular language. The results are also displayed in the company’s website www.gvk.com. Press release made by the company are also displayed on the company’s website. A management discussion and Analysis statement is annexed hereto and forms part of the Annual Report.
10.SEBI Complaints redress System (SCORES)
SEBI has initiated SCORES for processing the investor complaints in a centralized web based redress system and online redressel of all the shareholders complaints. The company is in compliance with the SCORES and redressed the shareholders complaints well within the stipulated time.
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GVK Power & Infrastructure Limited
11. General Shareholder Information
1. Annual General Meeting Day, date and time Venue Book Closure Dates Calendar of events (tentative and subject to change) for ?nancial reporting for the period ending - Jun 30, 2012 - Sep 30, 2012 - Dec 31, 2012 - Mar 31, 2013 - AGM for 2012-13 Listing of equity shares is at : Wednesday, the August 8, 2012 at 11.30 am : Sri Satya Sai Nigamagamam, 8-3-987/2 Srinagar Colony, Hyderabad - 500 073 : 04-08-2012 to 08-08-2012 (both days inclusive)
2. 3.
: : : : :
Aug 8, 2012 Nov 2012* Feb 2013* May 2013* Aug 2013* (*tentative)
4.
: The National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex Bandra East, Mumbai - 400 051 The Bombay Stock Exchange Limited Floor 25, P J Towers, Dalal Street Fort, Mumbai - 400001 Annual Listing Fee has been paid for the year 2012-13 to both the Exchanges
5. 6. 7.
Stock Code Corporate Identi?cation Number (CIN) allotted by the Ministry of Corporate A?airs Share Transfer System
: BSE : 532708, NSE: GVKPIL ISIN : INE251H01024 : L74999AP2005PLC059013 : Share transfer requests, which are received in physical form are processed and the share certi?cates returned within a period of 15 days in most cases, and in any case within 30 days, from the date of receipt, subject to the documents being in order and complete in all respects. : Secretarial Audit is being carried out every quarter by a practicing Company Secretary and his audit report is placed before the Board for its perusal and ?led regularly with the Stock Exchanges within the stipulated time. : Registered O?ce: ‘Paigah House’, 156-159, Sardar Patel Road, Secunderabad - 500 003 Phone: 040-27902663 / 64, Fax: 040-27902665 Email: [email protected], Website: www.gvk.com : Karvy Computershare Private Limited Unit: GVK Power & Infrastructure Limited Plot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081 Phone: 040 - 44655168, Fax : 040 - 23420814 E-mail: [email protected], website: www.karvy.com : P V Rama Seshu, General Manager & Company Secretary-Compliance O?cer GVK Power & Infrastructure Limited 156-159, ‘Paigah House’, Sardar Patel Road, Secunderabad - 500 003 Phone: 040-27902663/64, Fax: 040-27902665
8.
Secretarial Audit
9.
Location
10. Registrar & Share Transfer Agents
11. Query on the Annual Report (Shall reach 10 days before the AGM)
22
Changes in Share Capital
Date of Allotment 02/12/1994 02/12/1994 10/09/1996 18/01/1997 18/06/1997 27/08/2005 14/10/2005 Number of Shares 1 1 8 20,990 14,000 52,85,000 24,76,194 Issue Price (Rs.) 10.00 10.00 10.00 10.00 10.00 10.00 155.41 Consideration Cash Cash Cash Cash Cash Other than Cash Cash Reasons for Allotment Subscribers to the Memorandum Subscribers to the Memorandum Allotment to JOMC Mauritius Allotment to JOMC Mauritius Allotment to Triumph Investments Limited Bonus issue in the ratio 151:1 Preferential allotment to certain Promoters, Promoter Group Companies and others Preferential allotment to Transoceanic Projects Limited Initial Public O?ering Quali?ed Institutional Placement (QIP) Under the Scheme of Amalgamation Under the Scheme of Arrangement Quali?ed Institutional Placement (QIP) Cumulative Paid up Capital (Rs.) 10 20 100 210,000 350,000 53,200,000 77,961,940 Cumulative Share Premium (Rs.) Nil Nil Nil Nil Nil Nil 360,063,369.54
14/10/2005
75,72,695
155.44
Cash
153,688,890
1,461,436,130.34
21/02/2006 14/05/2007 17/10/2007 24/11/2007 09/07/2009 Total
82,75,556 375,69,230 7,03,25,000 90,46,215 173,361,500 1,579,210,400
310.00 325.00 10.00 10.00 41.25
Cash Cash Other than Cash Other than Cash Cash
236,444,450
3,944,102,930.34
612,136,750 15,778,410,380.34 1,315,386,750 15,778,410,380.34 1,405,848,900* 15,778,410,380.34 1,579,210,400 22,756,210,755.34
* E?ective from 15.02.2008 the face value of the shares have been changed from Rs.10/- per share to Re.1/- per share. Note: No changes in share capital during the F.Y 2011-12.
Rs. in Crores
NSE Market Capitalisation Chart
23 23
GVK Power & Infrastructure Limited
Monthly high, low and trading volume of equity shares of the Company during the ?nancial year 2011-12
National Stock Exchange (NSE) Month, Year High (Rs) April, 2011 May June July August September October November December January, 2012 February March 30.60 24.45 23.30 20.50 19.40 18.45 15.75 14.45 12.15 16.70 20.40 20.20 Low (Rs) 23.40 20.65 17.60 17.85 15.85 15.70 13.80 10.06 9.56 11.51 15.45 16.00 Volume (No) 214,036,166 153,386,523 166,943,257 102,089,509 173,853,640 186,600,944 144,337,663 232,899,436 213,224,469 356,919,998 508,409,172 509,115,766 High (Rs) 30.55 24.45 23.30 20.50 19.40 18.45 15.75 14.45 12.15 16.70 20.40 20.20 Low (Rs) 23.90 20.65 17.60 17.85 15.85 15.70 13.80 10.06 9.56 11.51 15.45 16.00 Volume (No) 54,671,190 30,313,390 37,279,389 24,445,718 38,362,714 39,630,139 28,691,229 58,139,321 54,278,159 80,945,170 95,019,817 95,231,056 BSE & NSE 268,707,356 183,699,913 204,222,646 126,535,227 212,216,354 226,231,083 173,028,892 291,038,757 267,502,628 437,865,168 603,428,989 604,346,822 Bombay Stock Exchange (BSE) Total Volume (No)
Price Movement in NSE
Price Movement in BSE
24
Category of Shareholders as on March 31, 2012 Category Promoter Companies Promoter Directors Promoter Individuals Directors & Relatives Foreign Institutional Investors Resident Individuals Mutual Funds Bodies Corporate Banks HUF Insurance Companies Non Resident Indians Clearing Members Trusts Government Overseas Corporate Bodies Foreign Nationals Foreign Corporate Bodies Total Distribution by category as on March 31, 2012 Category Promoters & Promoter Group Foreign Institutional Investors, FCB, OCB Banks, FIs, Mutual Funds etc Others Total Number of Shares 856,814,700 428,859,748 150,008,137 143,527,815 1,579,210,400 % of holding 54.25 18.15 11.46 16.14 100.00 Number of Shareholders 3 4 5 7 72 310,982 20 2,147 6 4,463 1 3,856 271 16 1 1 1 1 321,857 Total Shares 140,632,430 519,004,410 197,092,500 85,360 283,975,457 235,463,180 63,091,189 72,864,732 2,831,249 5,862,510 8,182,011 13,184,217 9,718,622 18,164,682 6,330,000 375,000 2,000 2,350,851 1,579,210,400 % of holding 8.91 32.86 12.48 0.01 17.98 14.91 4.00 4.61 0.18 0.37 0.52 0.83 0.62 1.15 0.40 0.02 0.00 0.15 100.00
Distribution by size as on March 31, 2012 Range of equity No. of % of shares held Shareholders Shareholders 1-5,000 5,001-10,000 10,001-20,000 20,001-30,000 30,001-40,000 40,001-50,000 50,001-1,00,000 1,00,001 & above Total 314,910 4,076 1,561 429 182 143 260 296 321,857 97.84 1.27 0.48 0.13 0.06 0.04 0.08 0.10 100.00 No. of equity shares 153,299,973 30,471,083 22,664,421 10,796,430 6,424,871 6,586,042 19,224,027 1,329,743,553 1,579,210,400
25 25
% of equity shares 9.71 1.93 1.43 0.68 0.41 0.42 1.22 84.20 100.00
GVK Power & Infrastructure Limited
Dematerialisation of Shares as on March 31, 2012 Category NSDL CDSL Physical Total Shareholders 208,333 107,571 5,953 321,857 Number of Shares 1,491,262,995 85,584,748 2,362,657 1,579,210,400 % 94.43 5.42 0.15 100.00
As on March 31, 2012 over 99.85% of outstanding shares are held in demat form and the balance 0.15% in physical form. Trading in equity shares of the Company is permitted only in dematerialised form as per noti?cation issued by the Securities and Exchange Board of India (SEBI). Shareholders interested in dematerializing / rematerializing their shares are requested to write to the Registrar & Transfer Agent through their Depository Participants.
Compliance with Clause 49 of the Listing Agreement
The Company has been in compliance with all the requirements speci?ed under the revised Clause 49.
DECLARATION
A Code of Conduct for the Directors and Senior Management Personnel has already been approved by the Board of Directors of the Company. As stipulated under the provisions of sub-clause I(D) (ii) of Clause 49 of the Listing Agreement with stock exchanges, all the Directors and the designated personnel in the Senior Management of the Company have a?rmed compliance with the said code for the ?nancial year ended March 31, 2012.
For GVK Power & Infrastructure Limited
Place : Hyderabad Date : May 9, 2012
Dr. G V Krishna Reddy Chairman & Managing Director
26
Managing Director and Chief Financial O?cer Certi?cation under clause 49 of the Listing Agreement with the Stock Exchanges
To, The Board of Directors of GVK Power & Infrastructure Limited In relation to the Audited Financial Accounts of the Company as at March 31, 2012, we hereby certify that a) We have reviewed the ?nancial statements and the cash ?ow statement for the year and that to the best of our knowledge and belief. i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; ii) These statements together present a true and fair view of the company’s a?airs and are in compliance with the existing accounting standards, applicable laws and regulations. b) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Company’s Code of Conduct. c) We accept responsibility for establishing and maintaining internal controls for ?nancial reporting and we have evaluated the e?ectiveness of the internal control systems of the company pertaining to ?nancial reporting and we have disclosed to the Auditors and the Audit Committee, de?ciencies in the design or operation of internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these de?ciencies. d) We have indicated to the Auditors and the Audit Committee i) Signi?cant changes in internal control over ?nancial reporting during the year; ii) Signi?cant changes in accounting policies during the year and that the same have been disclosed in the notes to the ?nancial statements; and iii) Instances of signi?cant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a signi?cant role in the Company’s internal control system over ?nancial reporting.
Dr. G V Krishna Reddy Chairman & Managing Director
Place : Hyderabad Date : May 9, 2012
A Issac George Director & CFO
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GVK Power & Infrastructure Limited
Certi?cate from a Company Secretary in Whole-time Practice on compliance of conditions of Corporate Governance as per Clause 49 of the Listing Agreement with Stock Exchanges
To, The Members of GVK Power & Infrastructure Limited We have reviewed the compliance of conditions of Corporate Governance by GVK Power & Infrastructure Limited, for the year ended on March 31, 2012, as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock Exchanges. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination has been limited to a review of the procedures and implementations thereof adopted by the Company for ensuring compliance with the conditions of the certi?cate of Corporate Governance as stipulated in the said Clause. It is neither an audit nor an expression of opinion on the ?nancial statements of the Company. No investor grievances are pending for a period exceeding one month against the Company as per the records maintained by the Company. In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and the management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the Company nor of the e?ciency or e?ectiveness with which the management has conducted the a?airs of the Company.
Place : Hyderabad Date : May 9, 2012
G Narender Company Secretary In Whole-time Practice FCS-4898 CP:5024
28
Management Discussion and Analysis
1. About the Company
GVK Power & Infrastructure Limited (the Company) is a listed entity and an ultimate holding company of “GVK” which operates in diversi?ed assets through di?erent vertical businesses. The Company operates predominantly present in Energy, Airports, Transportation has presence in others like Oil & Gas, Industrial Park, Urban infrastructures etc. It conducts and operates its business through 7 subsidiaries, 15 step down subsidiaries and 2 associate companies (as on March 31, 2012). Revenues of the company are derived primarily from the O&M fee, incentives for operating the business of subsidiaries / associate and secondarily from the interest income earned out of managing the surplus funds through a better ?nancial planning.
2. The Economy and the Sectoral growth
Managing growth and price stability are the major challenges of macroeconomic policymaking. The Indian economy had grown by 6.9% in 2011-2012, a?er having grown at the rate of 8.4% in each of the two preceding years. This indicates a slowdown compared not just to the previous two years but 2003 to 2011 (except 2008-2009). With agriculture and services continuing to perform well, India’s slowdown can be attributed almost entirely to the weakening industrial growth. Monetary policy was tightened by the RBI during the year to control in?ation and curb in?ationary expectations. There are signs from some high frequency indicators that the weakness in economic activity has bottomed out and a gradual upswing is imminent. The Eleventh Five Year plan emphasized the need for removing infrastructure bottlenecks for sustained growth. It therefore proposed an investment of US $500 billion in infrastructure sectors through a mix of public and private sectors to reduce de?cits in identi?ed infrastructure sectors. For the ?rst time the contribution of the private sector in total investment in infrastructure was targeted to exceed 30%. Total investment in infrastructure during the Eleventh Plan is estimated to increase more than 8% of GDP, which is higher by 2.47% points as compared to the tenth plan. The private sector is expected to be contributing nearly 36% of this investment. The overall power generation in the country during the ?nancial year 2011-12 was 876.888 Billion Unit (BU) as compared to generation of 811.104 BU during the corresponding previous year, representing a growth rate of 8.11%. Thermal power plants, which contribute 81% of the total generation, reported PLF of 73.32% (down by 1.75% YoY). For the current FY 2011-12, private sector reported generation growth at 20.16%, while central and state sector reported growth of 5.2% YoY and 7.18% YoY respectively. Availability of domestic natural gas to the power sector is reduced with short supplies from KG –D6 and the gas based power projects are being operated at less than 50% PLFs. With reduced availability of domestic coal & natural gas, there is a growing dependence on coal & natural gas imports. Availability of coal & natural gas continues to be a key challenge in power sector. Coal will continue to be the main fossil fuel that will drive the power sector for long in India. The Indian power sector is reeling under tremendous pressure due to inadequate supplies by Coal India Limited. The Central Electricity Authority (CEA) has estimated a coal import of 55 Mt. for both import as well as indigenous coal based power utilities for the ?nancial year 2012-13. The gap between the demand and indigenous availability of coal is projected to be in the range of 185 Mt. in minimum to 265 Mt. in maximum by the end of 12th plan (2016-17), which is likely to be bridged by import of coal. The requirement of coal for power utilities for 12th plan period has been estimated on the basis of demand of power forecast by the 17th Electric Power Survey (PES) Report of CEA. The report predicts likely power demand of 1,392 Bn., units in 2016-17 and if coal based thermal power plants share an estimated 70% of this demand, the coal requirement will be around 682 Mt, if speci?c coal consumption remains at 0.7 Kg/unit. Though, the coal price in dollar terms have fallen by around 20% in the last one year due to sluggish demand in China, the import cost in real terms has not reduced due to the appreciation of dollar. In the short to medium term, the coal prices on FOB base will be sluggish giving some relief to the Indian power sector. Air tra?c in India continues to register signi?cantly higher rates of growth with CAGR of 11.7% in the last ten years. The total aircra? movements increased by 10.8% i.e. from 1393.76 thousand movements in FY11 to 1544.65 thousand movements during FY12. The international aircra? movements during FY12 increased by 3.0% while domestic aircra? movements showed
29 29
GVK Power & Infrastructure Limited
an increase of 13.0% over previous year. The total passenger tra?c handled during FY12 increased to 162.30 million from 143.43 million in FY11 registering an increase of 13.2%. The international passenger tra?c during FY12 increased by 7.6% while domestic passenger tra?c grew by 15.1% over FY11. The total freight tra?c decreased to 2.28 MMT from 2.35 MMT, showing a decline of 2.9% during FY12 over FY11. The international freight tra?c during the FY12 declined by 1.9% while domestic freight tra?c reduced by 4.8% over FY11. India has an extensive road network of 4.24 million km, out of which the National Highways have a total length of 70,934 km and serve as the arterial road network of the country. However, only about 25% of national highways are presently four laned. It is estimated that more than 70 per cent of freight and 85 per cent of passenger tra?c in the country is being handled by roads. Till date, out of the total length of 54,454 kms of National Highways being developed under various phases of the National Highways Development Project (NHDP), work for 32.6% of highways is complete. For 26.2% of highways work is under progress whereas the balance projects are still to be awarded by NHAI. In FY 2011-12, Ministry of Road Transport and Highways (MoRTH) and National Highways Authority of India (NHAI) have together awarded 62 projects covering 7,957 kms, 54% higher than the preceding year 2010-11. Finance Minister had announced a target for award of 8800 km in his budget speech for FY 2012-13. Many SEZ projects announced across the country have not been progressing smoothly mainly on account of problems associated with acquisition of land, recent recessionary trends in the real estate and falling export volumes. Consequently, the prospects of SEZs crimped and companies have put their SEZ projects on the back burner during the year. As of now, GVKPIL acquired requisite land for SEZ proposal and is yet to take it forward in terms of project development considering the unsuitable economic climate.
3. Assets under Operation
i) Energy
GVK Gautami Power Limited During the year Gautami was operated at a Plant Availability Factor (PAF) and Plant Load Factor (PLF) of 73.13% and 71.69% (PY 88.64% and 83.3 9%). The company reported a pro?t a?er tax of Rs.7.86 crores for the ?nancial year 2011-2012 (PY Rs.76.57 crores). GVK Industries Limited During the year Jegurupadu Phase I was operated at a Plant Availability Factor (PAF) and Plant Load Factor (PLF) of 98.53% and 78.40% (PY 95.94 % and 76.62%). The unit reported a pro?t of Rs.11.64 crores for the ?nancial year 2011-2012 (PY Rs.23.03 crores). Increase in the supply of Gas from GAIL improved the PLF. During the year Jegurupadu Phase II was operated at a PAF and PLF of 71.53% and 70.59% (PY 89.17% and 81.75%). The unit reported a pro?t a?er tax of Rs.20.74 crores for the ?nancial year 2010-2011 (PY Rs.29.03 crores). The decline in PAF, PLF and pro?ts are mainly due to non availability of gas from Reliance.
ii) Airports
Mumbai International Airport Pvt Ltd. (MIAL) During the year MIAL handled 30.75 Mio (PY 29.04 mio) passenger tra?c, handled 251512 ATMs (PY 242,659 ATMs) and 389800 MT (PY 340,260 MT) of Cargo re?ecting a growth of 5.76%, 3.65% and 8.31% respectively. The company reported a pro?t a?er tax of Rs.183.76 crores for the ?nancial year 2011-2012 (PY Rs.197.03 crores). Bangalore International Airport Ltd. (BIAL) During the year BIAL handled 12.71 Mio (PY 11.63 mio) passenger tra?c, handled 119,033 ATMs (PY 111,787 ATMs) and 224,994 MT (PY 222,783 MT) of Cargo re?ecting a growth of 9.30%, 6.5% and 1% respectively. The company reported a pro?t a?er tax of Rs.160.76 crores for the ?nancial year 2011-2012 (PY Rs.132.10 crores).
iii) Transportation
GVK Jaipur Expressway Pvt Ltd. During the year toll collections recorded were Rs.223.94 crores (PY Rs.189.16 crores) with an increase of 18%. The company reported a pro?t a?er tax of Rs.78.63 crores for the ?nancial year 2011-2012 (PY Rs.80.02 crores).
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4. Assets Under Development
i) Energy
Alaknanda Hydro Power Company Limited The 330MW Alaknanda Hydro Electric Power Project on the river Alaknanda, Srinagar, Uttarakhand is being implemented with an estimated project cost of Rs.4,192 crores. Nearly 90% of the civil works are completed involving 10 million Cum. Of Earth Works and 1.7 million Cum of Concrete Works. The Installation of turbines and generators are in progress for all the four units. All the other works are being executed as scheduled. GVK Power (Goindwal Sahib) Limited The 540MW the thermal (coal based) power project in Tarn Taran district, Punjab is being set up at an estimated cost of Rs.3,200 crores. The Chimney shell, Mill foundations, TG deck BFP foundation and Drum Li?ing works completed. TG erection, Boilererection and major systems erection is in progress the project is expected to be commissioned by 2013. GVK Ratle Hydro Electric Project Private Limited The SPV is formed to implement 690 MW Ratle Hydro Electric Project on the river Chenab, Kishtwar District, in the State of Jammu & Kashmir and necessary Power Purchase Agreement is executed with Power Development Department (PDD), Government of Jammu & Kashmir (GOJK). Power Grid Corporation of India Limited (PGCIL) had approved the proposal for erection of 400kV double circuit line from Dulhasti HEP to Kishanpur. The project installed capacity has been increased to 850 MW as per the Hydrology approved by the Central Electricity Authority. The cost of the project is estimated around Rs.6,300 Crores and is expected to be operational by December, 2017. Goriganga Hydro Power Private Limited The 370MW run of the river Hydel Project on the river Goriganga in Uttarakhand is being implemented through two projects i.e. 146 MW Bogudiyar Sirkari Bhyol Project and 200 MW Mapang - Bogudiyar. Detailed Project Report is prepared and submitted to Central Electricity Authority (CEA ) for its approval (during the year 2010) for the 146 MW Bogudiyar – Sirkari Bhyol project. The DPR is cleared by CEA (except cost chapter which is being revised as per the changes proposed by the CEA). Hydrological studies and Geological investigations are completed for the 200 MW (likely to be increased to 240 MW) Mapang Bogudiyar project and submitted to CEA. Approach roads to project site are being formed. GVK Power (Khadur Sahib) Private Limited Incorporated on April 12, 2011 as a subsidiary of GVK Energy Limited to execute 2 x 660 MW capacity coal based thermal power project with super critical technology, proposed to be developed in the additional land at the existing Goindwal Sahib site in Tarn Taran District, Punjab. AAI clearance for 275 Mtrs high multi ?ue chimney is obtained on 22-09-2011 and it is valid for 5 years. GVK Coal (Tokisud) Company Private Limited This company is incorporated mainly to support the fuel requirements of GVK’s Goindwal Sahib Project. The tokisud block has 52 million tones of mineral reserves. MoEF has accorded Stage-II Forest Clearance. Acquired 452 acres of land, out of the requirement of 480 acres. The company has made an application for balance land with District Land Acquisition O?cer, Hazaribagh to acquire under Land Acquisition Act, 1894. Seregarha Mines Limited The company was incorporated as a SPV to support the fuel requirements of Goindwal Sahib project. Tokisud and saregarha coal mines together have an estimated coal reserves of 119 million tones and will cater the fuel requirements of Goindwal Sahib for 25 years in the ratio of 55:45. The prospecting License and Exploration Contract have been executed and the work has commissioned.
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GVK Power & Infrastructure Limited
ii) Airports
Your Company has signed two MoUs with Indonesian Government during its President’s State visit to India in January 2011 to develop green ?eld international airports in North Bali and Yogyakarta (Java), Indonesia. Bali and Java are the prime destinations for tourist tra?c from both Europe and Asia. Bali project has not progressed due to land and local issues. Yogyakarta airport is being developed jointly with Angkasa Pura Airports, the government owned airport operating company. Feasibility has been completed and a preliminary approval for proposed site has been granted by the government. Master plan development is currently underway. The signing of the MoU marks a very signi?cant milestone for GVK and your Company is con?dent that these agreements will yield signi?cant synergies.
iii) Transportation
GVK Deoli Kota Expressway Private Limited The company was incorporated as a Special Purpose Vehicle to implement and augment the existing Deoli-Kota Section of National Highway (NH) No. 12 from Km 165 to Junction of NH - 76 on Kota Bypass (approximately 83.04 Km) in the State of Rajasthan by four laning on design, build, ?nance, operate and transfer (DBFOT) basis (“Project”). The Highway works, hume pipe culvert, cleaning & grubbing works are under progress. The project would become operational within 30 months as per the Concession Agreement. GVK Bagodara Vasad Expressway Private Limited The Special Purpose Vehicle - GVK Bagodara Vasad Expressway Private Limited was incorporated to implement the Six Laning of existing three lanes of Bagodara - Wataman - Tarapur - Vasad Road Project (State Highway No.8, Km 0/0 to Km 101/9) in the State of Gujarat on BOT Basis. Requisite Concession Agreement has been executed with the Gujarat State Road Development Corporation. Roads & Structures - Cleaning & Grubbing P1 Packages for 53km - 51% completed and P2 Package for 48.9km 21% completed. The cost of the project estimated Rs.1,200 crores. The project would become operational within 30 months as per the Concession Agreement. GVK Shivpuri Dewas Expressway Private Limited The Company has signed a Concession Agreement on 12-01-2012 with National Highways Authority of India (NHAI) for Four Laning of Shivpuri Dewas section of National Highway No 3 (from Km 236.000 to Km 566.450) for a length of 332.46 kms. in the State of Madhya Pradesh to be executed as BOT (Toll) project on DBFOT Pattern under National Highways Development Programme (NHDP) phase IV. The Concession Period for the Project is for 30 years including construction period of 30 months. The main Project O?ce at Guna established.
iv) Others
GVK Perambalur SEZ Private Limited GVK has signed a MOU with TIDCO to develop 3184 acre multi product SEZ in Perambular district, Tamilnadu. The Tamilnadu Water Supply and Drainage Board (TWAD Board) has approved the water supply for 3 MLD from River Vellar and given technical approval for 44 MLD from River Kollidam. Total estimated cost of the project is Rs.750 crores. The total expenditure incurred so far is Rs.116.62 crores, expenditure incurred on land acquisition is Rs.104.10 crores. Water allocation for the SEZ is dropped by the State Government and company requested TIDCO to restore the water allocation. GVK Oil & Gas Limited Your company in consortium with BHP Billiton, the largest diversi?ed resource company, has been awarded 7 deepwater blocks under NELP VII. The 2D Over/under seismic data acquisition and processing in NELP VII blocks was completed in Calgary by WesternGeco and Edcon. Complete set of ?nal processed PSDM seismic data of MB & KK blocks was received by the Company. Future of Public Private Partnership The development of infrastructure facilities is largely dependent on the ability of the government to attract private capital under the public private partnership (PPP) model. PPPs are the cornerstone for infrastructure development. This model has enabled greater private participation in the creation and maintenance of infrastructure. The pace of PPP projects is slowly picking up and many projects are to be awarded this year. One immediate step taken by the Government is setting up of the India Infrastructure Finance Company Limited to provide long term debts to infrastructure projects. The Government is also giving a ?llip to infrastructure by delineating infrastructure as one of the key areas for focus and development in the coming years.
32
5. Risks and Concerns
Energy
At present, the company has three operational gas based power plants, totalling to approximately 900 MW. Gas is being sourced from ONGC through GAIL for Jegurupadu Phase - I and to the extent that GAIL is not able to supply, the requirement for Jegurupadu Phase I and for the entire requirement of Jegurupadu phase II and Gautami, it is sourced from Reliance Industries Limited (RIL) with whom we have a contract. There has been a considerable reduction in the natural gas supply to the gas based power plant. The Plant Load Factor for all three power plants for the year ended March 31, 2012, was comparatively low against the previous year. Your company’s initiatives for development and expansion of the Jegurupadu Phase III and Gautami Phase II Projects are hardly hit by the acute shortage in the availability of Gas and your company is reconsidering the proposals for expansion. The other power plants under development/ construction are Alaknanda Hydro Power Company Limited- 330 MW Hydel Plant, GVK Power (Goinwal Sahib) Limited - 540 MW Thermal Plant, Goriganga Hydro Power Private Limited- 370 MW Hydel Plant. GVK Coal (Tokisud) Company Private Limited, GVK Ratle Hydro Electric Project Private Limited and GVK Power (Khadur Sahib) Private Limited, The coal mines linked to Goindwal sahib thermal plant are under development. Other than Goriganga Hydro Power Plant ?nancial closure has been achieved for the rest. For the hydel projects any unforeseen adverse weather conditions and un-controllable factors can delay construction and commissioning of the project.
Airports
GVK PIL through its subsidiaries/ associates, is currently operating, managing and developing the Mumbai International Airport and Bangalore International Airport. Revenues at the airports are to some extent relatable to tra?c - both passengers and aircra?. Further growth in revenues is also linked to aviation fuel prices, hike in aero charges which are within the ambit of Government. Other factors such as economic growth, weather, and unforeseen events may a?ect growth and tra?c. Likewise, aero revenues and income from real estate may also be impacted by market conditions and regulatory uncertainties.
Transportation
The company’s one operational asset GVK Jaipur Expressway Private Limited is doing well and the company has realized growth in tra?c and revenues. However, unforeseen events such as strikes and agitations, adverse weather conditions, economic down turns may impact growth and revenues. Likewise, these factors can also a?ect projects under construction’s development.
SEZ
GVKPIL is developing a multi product SEZ in Perambular, Tamil Nadu. SEZs across the country have not progressed much because of adverse global economic conditions coupled with the factors peculiar to India. Activity at our SEZ is expected to pick up with economic growth and supporting environmental factors. Developers of Special Economic Zones (SEZs) and units operating in these zones have been brought under the ambit of Minimum Alternate Tax (MAT) which could impact ?rms in these tax-free enclaves and hurt the development of SEZs.
Oil & Gas
Seven deep water blocks that were awarded under NELP VII are currently undergoing technical analysis which will continue for another year or two. Work in progress may get delayed due to factors such as exercise that may be undertaken by Indian Navy, weather conditions, availability of equipments etc.
6. GVK Power & Infrastructure Limited - Financial Performance Review
Standalone Financials
Revenue The Company’s total income, which comprises of income in the form of operating fees, incentives, fees for technical services to Rs.40.45 crores as compared to Rs.123.06 crores of the previous year.
33 33
GVK Power & Infrastructure Limited
Expenditure The Company’s total expenditure, comprising of sta? costs, and other administrative expenses to Rs.15.88 crores for the year ended March 31, 2012 from Rs.35.99 crores when compared to the previous year ended March 31, 2011. Interest Interest expenses stood at Rs.24.93 crores (previous year ?gure was Rs.14.95 crores) Pro?t before tax (PBT) PBT is Rs.(0.54) crores for the current year as compared Rs.72.02 crores in the previous year. Pro?t a?er tax The Company’s pro?t a?er tax is Rs.(8.27) crores for the year ended March 31, 2012 as comapared to Rs.68.28 crores as compared to the previous year. EPS The earnings per share for the current year stood at Rs.(0) as compared to Rs.0.43 per equity share of Re.1/- each in the previous year.
Consolidated Financials
The current year results include the results of the companies including subsidiaries and step down subsidiaries and associates. The Consolidated Financial Statements have been drawn as per the Accounting Standards 21 and 23 issued by the Institute of Chartered Accountants of India. These companies operate broadly in a) Power b) Road c) Airport and d) Others. Revenue The Company reported gross revenue of Rs.2580.78 crores for 2011-2012 compared to Rs.1943.19 crores in the previous year. Pro?t a?er tax The Company reported pro?t a?er tax and minority interest of Rs.61.46 crores for 2011-2012 as compared to Rs.154.91 crores in the previous year. Earning Per Share (EPS) The earnings per share at consolidated level for the current year stands at Rs.0.39 as compared to Rs.0.98 per equity share of Re.1/- each in the previous year. Net Worth The net worth in the current year stands at Rs.3481.37 crores as compared to Rs.3386.78 crores in the previous year.
7. Clean Development Mechanism
GVKPIL has build inhouse capacity to develop Clean Development Mechanism (CDM) projects and obtain the registration and issuance of the same in the form of Certi?ed Emission Reductions (CERs) from the United Nations Framework Convention Climate Change (UNFCCC). The validation Report of Alaknanda Hydro Power Company Limited has been approved by UNFCCC. The company is in the process of ?ling its validation Reports with UNFCCC for two of its other power projects also.
8. Internal Control System and Adequacy
The company’s internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These systems are designed to ensure that all the assets of the Company are safeguarded and protected against any loss and that all the transactions are properly authorized, recorded and reported. The Company has an internal audit function, which is empowered to examine the adequacy and compliance with policies, plans and statutory requirements. The internal audit function team comprises of well-quali?ed, experienced professionals who conduct regular audits across the Company’s operations. The internal audit reports are placed before the Audit committee for consideration. The management duly considers and takes appropriate action on the recommendations made by the statutory auditors, internal auditors and the independent Audit Committee of the Board of Directors.
34
9. Human Resources
Your company’s human capital remains its key strength. Several initiatives have been undertaken during the year to increase the depth of management expertise. Highly skilled professionals from reputed institutes as well as specialists with deep industry knowledge and experience have been recruited for various roles across the organization. The company continues to value its personnel in that it designs program and policies tailored to enhance individual and organizational welfare. Participative style of management ensures excellent relations throughout the organization. Your company aims to become to “employer of choice” in the industry and is on course to achieve the stated objective. The total number of employee talent base in corporate o?ce and project sites as on March 31, 2012, stands at 2981 approximately.
10.Future Outlook
We endeavour to contribute meaningfully to infrastructure development in India and seek to aggressively place bids for the upcoming infrastructure projects to be developed under Public Private Partnership mode. The Planning Commission, in its approach paper has projected an investment of over Rs. 45 lakh crore during the Twel?h Plan (2012-17). It is projected that atleast 50 % of this investment will come from the private sector as against the 36% anticipated in the Eleventh Plan. Financing infrastructure will therefore, be a big challenge in the coming years and will require some innovative ideas and new models of ?nancing. Your Company aspires to be the most trusted and respected name in infrastructure in India and the World. We seek to attain a transnational presence in Infrastructure that would be competitive and avant-garde. Even as we are going from strength to strength in the Energy and Transportation verticals, we keep abreast of constantly evolving technology, explore potential avenues in other areas within the infrastructure space. A?er carefully carrying out due-diligence and satisfactory evaluation of the relevant parameters, the company strives to foray into areas considered bene?cial to the interests of all stakeholders.
11.Cautionary Statement
Statements in the Management Discussion and Analysis describing the company’s objectives, projections, estimates and expectations may be ‘forward looking statements’ within the meaning applicable under the securities laws and regulations. As ‘forward looking statements’ are based on certain assumptions and expectations of future events over which the company exercises no control, the company cannot guarantee their accuracy nor can it warrant that the same will be realized by the company. Actual results could di?er materially from those expressed or implied. Signi?cant factors that could make a di?erence to the company’s operations include domestic and international economic conditions a?ecting demand, supply and price conditions in the electricity industry, changes in government regulations, tax regimes and other statutes.
35 35
GVK Power & Infrastructure Limited
Auditors’ Report
To The Board of Directors of GVK Power & Infrastructure Limited 1. We have audited the attached consolidated balance sheet of GVK Power & Infrastructure Limited (‘the Company’), its subsidiaries and associates (collectively, ‘the Group’), as at March 31, 2012, and also the consolidated statement of pro?t and loss and the consolidated cash ?ow statement for the year ended on that date annexed thereto. These ?nancial statements are the responsibility of the Company’s management and have been prepared by Management on the basis of separate ?nancial statements and other ?nancial information regarding compo¬nents. Our responsibility is to express an opinion on these ?nancial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the ?nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and dis¬closures in the ?nancial statements. An audit also includes assessing the accounting principles used and signi?cant estimates made by management, as well as evaluating the overall ?nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We did not audit the ?nancial statements of certain subsidiaries, whose ?nancial statements re?ect total assets of Rs.2,807,325 lakhs as at March 31, 2012, the total revenue of Rs.249,157 lakhs and net cash ?ows amounting to Rs.49,461 lakhs for the year then ended. We also did not audit the ?nancial statements of associates, whose ?nancial statements re?ect share of pro?t of the Company Rs.10,639 lakhs for the year ended March 31, 2012. These ?nancial statements and other ?nancial information have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of other auditors. 4. Without qualifying our opinion, we draw attention to: i) Note 17(i)(a) of notes to the consolidated ?nancial statements, regarding pending con?rmation and approval by the Andhra Pradesh Electricity Regulatory Commission (APERC) for the increase in capital cost and consequential accruals of revenue to that extent being the ?xed charge component of the tari? for the years 1997-98 to 2000-01 aggregating to Rs.4,512 lakhs by GVK Industries Limited, a Subsidiary; ii) Note 17(i)(b) and 17 (i)(c) of notes to the consolidated ?nancial statements, regarding outstanding minimum alternate tax amounts claimed for reimbursement and other amounts aggregating to Rs.3,530 lakhs and Rs.76 lakhs respectively considered recoverable from AP Transco and consequential impact on taxes in GVK Industries Limited and GVK Gautami Power Limited’s books, Subsidiary Companies; iii) Note 39 of notes to the consolidated ?nancial statements, a subsidiary company has made certain transactions covered by the provisions of Section 297 of the Companies Act, 1956, where the prior approval of the Central Government is required, but has not been so obtained. The subsidiary Company has applied to the appropriate regulatory authorities for regularisation of this non-compliance. iv) Note 40 of notes to the consolidated ?nancial statements, regarding application being made by the Company to the Reserve Bank of India (‘RBI’) for granting time for compliance with capital requirements and leverage ratio as applicable to Systematically Important Core Investment Company. v) Note 41 of notes to the consolidated ?nancial statements, regarding application made by the Company for waiver of excess managerial remuneration amounting to Rs.207 lakhs paid to two directors in excess of limits prescribed under Schedule XIII of the Companies Act, 1956. 5. The auditor’s reports on a subsidiary and an associate, whose audited ?nancial statements we have relied on as stated in paragraph 3 above, included certain matters as follows, in respect of which those auditor’s reports were not quali?ed: i) Note 17(i)(d) and 17(i)(e) of notes to the consolidated ?nancial statements, regarding a subsidiary company having trade receivables from Air India Limited aggregating to Rs.21,266 lakhs and King?sher Airlines Limited aggregating to Rs.4,041 lakhs, which the subsidiary company considers good and recoverable for the reasons set out in the referred note. Consequently no provision towards non recoverability, if any, has been made in the ?nancial statements;
36
ii) Note 31 of notes to the consolidated ?nancial statements, regarding an associate company that was required to demolish certain assets in order to facilitate its expansion programme. Since the expansion is being carried out to create the improved infrastructure, the associate Company believes that the existing carrying values of the assets demolished, which are integral to the plan should form part of expansion cost capitalized. The associate Company has, as a matter of abundant caution also sought an opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India (“EAC”) soliciting their opinion on the appropriateness of the stated accounting treatment. Pending opinion from the EAC, the Company has currently recorded the carrying values of these demolished assets aggregating to Rs.638 lakhs under capital work in progress. iii) Note 32 of notes to the consolidated ?nancial statements, regarding recognition and carry forward of Minimum Alternate Tax (“MAT”) credit entitlement aggregating to Rs.7,352 lakhs as at March 31, 2012 by an associate company, which, the Management is con?dent of utilizing within the stipulated period available under the provision of the Income-tax Act, 1961, notwithstanding the fact, that the Company is entitled to a tax holiday period as per the provisions of Section 80-IA of the aforesaid Act. The associate Company has, as a matter of abundant caution also sought an opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India (“EAC”) soliciting their opinion on the appropriateness of the stated accounting treatment. Pending opinion from the EAC, the associate company has currently retained the MAT credit entitlement aggregating to Rs.7,352 lakhs. iv) Note 33 of notes to the consolidated ?nancial statements, regarding outstanding dues from a customer aggregating to Rs.5,532 lakhs in the books of an associate company, where there appears to be signi?cant uncertainty relating to the ability of the party to pay the debts due to the associate company, due to ?nancial di?culties which have resulted in scaling down of customer’s business. However, Management is con?dent of eventual collection of the debts due from customer and accordingly believes that the current provision of Rs.264 lakhs created in accordance with the associate Company’s provision policy is su?cient. The ultimate outcome of the matters referred to in paragraphs 4 and 5 above cannot presently be determined, pending approvals, acceptances, legal and accounting interpretations and future cash ?ows of customers as referred to in the relevant notes to the consolidated accounts and accordingly no provision for any liability and/or adjustments that may result has been made in the consolidated ?nancial statements. 6. Based on our audit and on consideration of reports of other auditors on separate ?nancial statements and on the other ?nancial information of the components, and to the best of our information and according to the explanations given to us, we are of the opinion that the attached consolidated ?nancial statements give a true and fair view in con¬formity with the accounting principles generally accepted in India: a) in the case of the consolidated balance sheet, of the state of a?airs of the Group as at March 31, 2012; b) in the case of the statement of consolidated pro?t and loss, of the pro?t for the year ended on that date; and c) in the case of the consolidated cash ?ow statement, of the cash ?ows for the year ended on that date.
For S.R. Batliboi & Associates Firm Registration No: 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No.: 93649 Place : Hyderabad Date : May 9, 2012
37 37
GVK Power & Infrastructure Limited
Consolidated Balance Sheet as at March 31, 2012
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Notes March 31, 2012 March 31, 2011
Equity and liabilities
Shareholders’ Funds Share capital Reserves and surplus 4 5 15,792 332,345 348,137 15,792 322,886 338,678
Deferred income Minority interest
Non-current liabilities Long-term borrowings Deferred tax liabilities (net) Other long-term liabilities Long-term provisions Current liabilities Short-term borrowings Trade payables Other current liabilities Short-term provisions
2(h) & 25
16,431 311,678
17,027 115,336
421,133 5,761 12,291 1,417 440,602 114,849 10,429 33,505 1,044 159,827 1,071,470
6 7 8 9
1,109,444 30,139 28,451 2,984 1,171,018 279,010 42,863 117,559 2,815 442,247 2,289,511
10 11 11 9
Assets
Non-current assets Fixed assets Tangible assets Intangible assets Capital work-in-progress Expenditure incurred during construction period Intangible assets under development Non-current investments Deferred tax assets (net) Long-term loans and advances Trade receivables Other non-current assets Current assets Current investments Inventories Trade receivables Cash and bank balances Short-term loans and advances Other current assets 12 13 14 15 7 16 17 (a) 17 (b) 494,285 213,189 751,079 194,524 17,631 189,791 64 135,907 8,118 4,109 2,008,697 23,406 7,540 37,502 172,626 21,022 18,718 280,814 2,289,511 288,986 78,202 257,573 61,719 330 173,762 62 66,747 6,810 4,382 938,573 76,409 3,168 120 32,820 3,550 16,830 132,897 1,071,470
18 19 17 (a) 20 16 17 (b)
Summary of signi?cant accounting policies
2
The accompanying notes are an inegral part of the consolidated ?nancial statements. As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No. 93649 Place : Hyderabad Date : May 9, 2012 For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited Dr. G V Krishna Reddy Chairman & Managing Director A Issac George Director & CFO 38 P. V. Rama Seshu GM & Company Secretary
Consolidated Pro?t and Loss Account for the year ended March 31, 2012
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Notes March 31, 2012 March 31, 2011
Income
Revenue from operations Other income Total revenue 21 22 249,183 8,887 258,070 191,466 2,853 194,319
Expenses
Cost of fuel Annual fee to Airport Authority of India Employee bene?t expense Finance costs Depreciation and amortization expense Other expenses Total expenses Pro?t before tax and share of pro?ts of associate and minority interest Tax expenses Current tax MAT credit Deferred tax Income tax for earlier years Total tax expenses Pro?t/(loss) a?er tax and share of pro?ts of associate and minority interest Add: Share of pro?ts of associates for the year Less: Minority interest Pro?t for the year Earnings per equity share (in Rs.) - Basic - Diluted Nominal value per equity share (in Rs.) Weighted average number of equity shares - Basic - Diluted 1,579,210,400 1,579,210,400 1,579,210,400 1,579,210,400 0.39 0.39 1 0.98 0.98 1 7,659 (2,570) 1,683 10 6,782 (107) 10,639 4,386 6,146 5,639 (3,132) (404) 29 2,132 7,442 11,093 3,044 15,491 23 24 25 26 118,483 23,150 8,068 46,727 24,893 30,074 251,395 6,675 114,171 3,349 26,314 18,364 22,547 184,745 9,574
Summary of signi?cant accounting policies
The accompanying notes are an inegral part of the ?nancial statements. As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No. 93649 Place : Hyderabad Date : May 9, 2012
2
For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited Dr. G V Krishna Reddy Chairman & Managing Director A Issac George Director & CFO P. V. Rama Seshu GM & Company Secretary
39 39
GVK Power & Infrastructure Limited
Consolidated Cash Flow Statement for the year ended March 31, 2012
(Amounts expressed in Indian Rupees Lakhs unless otherwise stated) Notes Cash ?ow from Operating Activities Pro?t before tax Adjustments for Depreciation and amortisation Loss/(Pro?t) on sale of ?xed assets (net) Insurance claims and assets written o? Unrealised foreign exchange loss Pro?t on sale of non trade current investments (net) Dividend income from non trade current investments Interest expense Interest income Excess provisions/credit balances written back Operating pro?t before working capital changes Movements in working capital Increase in inventories Increase in current liabilities and provisions Increase in trade receivables and other current and non current assets Increase in loans and advances Cash generated from operations Direct taxes paid Net cash from operating activities Cash ?ows from investing activities Purchase of ?xed assets including capital work in progress and capital advances Proceeds from sale of ?xed assets Refund of capital advances Purchase of current investments Proceeds from sale/maturity of current investments Purchase of non current investments including associates Investments in bank deposits (having original maturity of more than three months) Proceeds from deemed disposal of stake in subsidiaries Payments for net assets acquired of subsidiaries, net of cash Share application money received Interest received Net cash used in investing activities (B) 10,995 (101,157) 3,819 (516,058) 24,783 (2) 233 615 (149,255) 385 7,266 (335,048) 399,424 (62,054) (93,067) 14,446 (385,379) 349,773 (7,400) (201) (346,621) (146,123) (A) (4,055) 77,096 (5,442) 71,654 (4,512) 45,844 (4,983) 40,861 (3,866) 17,710 (2,611) (762) 855 (967) 24,893 (12) 17 222 (3,964) (97) 45,722 (3,462) (76) 69,918 18,364 1 520 (1,497) (169) 25,447 (984) (26) 51,230 6,675 9,574 March 31, 2012 March 31, 2011
40
Consolidated Cash Flow Statement for the year ended March 31, 2012
(Amounts expressed in Indian Rupees Lakhs unless otherwise stated) Notes Cash ?ows from ?nancing activities Money received from minority shareholders Money refunded to minority shareholders Proceeds from short-term borrowings (net) Proceeds from long-term borrowings Repayment of long-term borrowings Interest paid Net cash ?ow from ?nancing activities E?ect of foreign exchange di?erences Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Components of Cash and cash equivalent Cash on hand Cheques/dra?s on hand Balances with banks on: Current accounts deposit account unpaid dividend accounts* Total cash and cash equivalents Add: Fixed deposits classi?ed in investing activities Cash and bank balance as reported in consolidated balance sheet Summary of signi?cant accounting policies
*Not available for ready use by the Group The accompanying notes are an integral part of the consolidated ?nancial statements
March 31, 2012
March 31, 2011
111,213 (2,802) 163,942 342,793 (21,880) (101,212) (C) (D) A+B+C+D 492,054 8 47,658 31,794 79,452 214 5,956
71,524 10,750 151,110 (52,058) (44,947) 136,379 27,985 3,809 31,794 75 -
53,885 19,382 15 Note 20 Note 20 2 79,452 93,174 172,626
9,679 22,020 20 31,794 1,026 32,820
As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited
per Vikas Kumar Pansari Partner Membership No. 93649
Dr. G V Krishna Reddy Chairman & Managing Director
Place : Hyderabad Date : May 9, 2012
A Issac George Director & CFO
P. V. Rama Seshu GM & Company Secretary
41 41
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
1. Nature of operations
GVK Power & Infrastructure Limited (“Parent Company” or “the Company”) is primarily engaged in the business of providing operation & maintenance services, manpower & consultancy services and incidental services to owners of power plants and infrastructure companies. The Parent Company together with its subsidiaries and associates (collectively termed as “the Group”) is engaged in constructing and operating power plants, highway projects, airports, exploration of oil, natural gas and coal mines. The following is the brief description of the subsidiaries: a) GVK Industries Limited (“GVKIL” or “Subsidiary Company”) is engaged in the business of generation of power. b) GVK Jaipur Expressway Private Limited (“GJEPL” or “Subsidiary Company”) is engaged in building and developing highway project. c) Alaknanda Hydro Power Company Limited (“AHPCL” or “Subsidiary Company”) is engaged in the business of generation of power. d) GVK Power (Goindwal Sahib) Limited (“GVKPGSL” or “Subsidiary Company”) is engaged in the business of generation of power. e) GVK Coal (Tokisud) Company Private Limited (“GVKCCPL” or “Subsidiary Company”) is engaged in the business of mining of coal meant. f) GVK Airport Developers Private Limited (“GVKADPL” or “Subsidiary Company”) is engaged in the business of construction and development of airports.
g) Goriganga Hydro Power Private Limited (“GHPPL” or “Subsidiary Company”) is engaged in the business of generation of power. h) GVK Airport Holdings Private Limited (“GVKAHPL” or “Subsidiary Company”) is engaged in the business of investment as promoters and developers of the international and domestic airport projects. i) GVK Perambalur SEZ Private Limited (“GVKPSPL” or “Subsidiary Company”) is engaged in the business of development, operation and maintenance of infrastructure facility. GVK Oil & Gas Limited (“GVKOGL” or “Subsidiary Company”) is engaged in the business of exploration of Oil and Natural Gas.
j)
k) GVK Energy Limited (“GVKEL” or “Subsidiary Company”) is engaged in the business of providing operating and maintenance services to owners of power plants. l) GVK Developmental Projects Private Limited (“GVKDPPL” or “Subsidiary Company”) is engaged in the business of Infrastructure Projects.
m) GVK Gautami Power Limited (“GVKGPL” or “Subsidiary Company”) is engaged in the business of generation of power. n) Bangalore Airport & Infrastructure Developers Private Limited (“BAIDPL or “Subsidiary Company”) is engaged in construction and development of domestic and international airports. o) GVK Energy Venture Private Limited (‘’GVKEVPL’’ or ‘’Subsidiary Company’’) is engaged in the business of investment in mega power projects. p) GVK Bagodara Vasad Expressway Private Limited (‘’GVKBVEPL’’ or ‘’Subsidiary Company’’) is engaged in the business of building and developing highway project. q) GVK Deoli Kota Expressway Private Ltd (‘’GVKDKEPL’’ or ‘’Subsidiary Company’’) is engaged in the business of building and developing highway project. r) GVK Ratle Hydro Electric Project Private Limited (“GVKRHEPPL” or “Subsidiary Company”) is engaged in the business of generation of power.
42
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
s) GVK Transportation Private Limited (“GVKTPL” or “Subsidiary Company”) is engaged in building and developing highway project t) Mumbai International Airport Private Limited (“MIAL” or “Subsidiary Company”) is engaged in operations, maintenance and development of Chhatrapati Shivaji International Airport, Mumbai.
u) GVK Power (Khadur Sahib) Private Limited (“GVKPKSPL” or “Subsidiary Company”) is engaged in the business of generation of power. v) GVK Airports International Pte Ltd (“GVKAIPL” or “Subsidiary Company”) is engaged in construction and development of airports. w) GVK Shivpuri Dewas Expressway Private Limited (“GVKSDEPL” or “Subsidiary Company”) is engaged in building and developing highway project. The following is the brief description of the associates: a) Bangalore International Airport Limited (“BIAL” or “Associate Company”) is engaged in operations, maintenance and development of Bangalore International Airport, Bangalore. b) Seregarha Mines Limited (“SML” or “Associate Company”) is engaged in exploration of coal mines.
2. Statement of signi?cant accounting policies
a. Basis of preparation The consolidated ?nancial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these ?nancial statements to comply in all material respects with the accounting standards noti?ed under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The accounting policies adopted in the preparation of ?nancial statements are consistent with those of previous year, except for the change in accounting policy explained below: Change in accounting policy Presentation and disclosure of ?nancial statements During the year ended March 31, 2012, the revised Schedule VI noti?ed under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its consolidated ?nancial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of ?nancial statements. However, it has signi?cant impact on presentation and disclosures made in the consolidated ?nancial statements. The company has also reclassi?ed the previous year ?gures in accordance with the requirements applicable in the current year. b. Principles of consolidation Investments in subsidiaries and associates in consolidated ?nancial statements are accounted in accordance with accounting principles as de?ned in the AS 21 "Consolidated ?nancial statements" and AS 23 “Accounting for investments in associates in consolidated ?nancial statements” noti?ed by Companies Accounting Standards Rules, 2006 respectively. The consolidated ?nancial statements are prepared on the following basis: i) Subsidiary companies are consolidated on a line-by-line basis by adding together the book values of the like items of assets, liabilities, income and expenses a?er eliminating all signi?cant intra-group balances and intra-group transactions and also unrealized pro?ts or losses, except where cost cannot be recovered.
ii) The di?erence between the cost to the Group of investments in subsidiaries and the proportionate share in the equity of the subsidiary company as at the date of acquisition of stake is recognized in the consolidated ?nancial statements as Goodwill or Capital Reserve, as the case may be. Any gain/loss arising upon acquiring additional stake in subsidiary from parties outside the group is accounted for as goodwill/capital reserve. Similarly, any gain/loss arising upon dilution of stake in subsidiary in favour of parties outside the group is recorded in capital reserve. iii) Minorities’ interest in net pro?ts of consolidated subsidiaries for the year is identi?ed and adjusted against the income in order to arrive at the net income attributable to the shareholders of the Company. Their share of net assets is identi?ed and presented in the consolidated balance sheet separately. Where accumulated losses attributable to the minorities are in excess of their equity in the absence of the contractual obligation on the minorities, the same is accounted for by the Company.
43 43
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
iv) Investments in associates are accounted for using equity method. The excess of cost of investment over the proportionate share in equity of the associate as at the date of acquisition of stake is identi?ed as Goodwill and is disclosed in the consolidated ?nancial statements. The carrying amount of the investment is adjusted therea?er for the post-acquisition change in the share of net assets of associate. However, share of losses is accounted for only to the extent of the cost of investment. Subsequent pro?ts of such associates are not accounted for unless the accumulated losses (not accounted for by the Group) are recouped. v) As far as possible, the consolidated ?nancial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented, to the extent possible, in the same manner as the Company’s stand alone ?nancial statements. vi) The ?nancial statements of the entities used for the purpose of consolidation are drawn up to same reporting date as that of the Company i.e. year ended March 31, 2012. vii) As per Accounting Standard 21, only those notes which are material need to be disclosed. Materiality for this purpose is assessed in relation to the information contained in the consolidated ?nancial statements. Further, additional statutory information disclosed in separate ?nancial statements of the subsidiary and/or a parent having no bearing on the true and fair view of the consolidated ?nancial statements are not disclosed in the consolidated ?nancial statements. The consolidated ?nancial statements as at and for the year ended on March 31, 2012 include the ?nancial statements of the following entities: Name of the consolidated entity GVKIL GJEPL AHPCL GVKPGSL GVKCCPL GVKADPL GHPPL GVKAHPL GVKPSPL GVKEL GVKOGL GVKDPPL GVKGPL BAIDPL GVKEVPL GVKDKEPL GVKBVEPL GVKRHEPPL GVKTPL GVKPKSPL GVKSDEPL GVKAIPL MIAL** BIAL SML Country of Incorporation India India India India India India India India India India India India India India India India India India India India India Singapore India India India Nature of Interest Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Associate % of interest 2012 73.94 100.00 73.94 73.94 73.94 100.00 100.00 100.00 100.00 73.94 100.00 100.00 47.02* 100.00 100.00 100.00 100.00 100.00 100.00 73.94 100.00 100.00 50.50 43.00 32.87 2011 81.95 100.00 81.95 81.95 81.95 100.00 100.00 100.00 100.00 81.95 100.00 100.00 52.12 100.00 100.00 100.00 100.00 100.00 100.00 37.00 29.00 36.43
* GVKEL, subsidiary company holds 63.6% equity stake in GVKGPL and the Parent Company holds 73.94% in GVKEL. ** MIAL has become subsidiary w.e.f October 18, 2011 and prior to that it was an associate company.
44
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
c. Use of estimates The preparation of ?nancial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that a?ect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. d. Tangible ?xed assets and depreciation Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of ?xed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Exchange di?erences arising on reporting of the long-term foreign currency monetary items at rates di?erent from those at which they were initially recorded during the period, or reported in the previous ?nancial statements are added to or deducted from the cost of the asset and are depreciated over the balance life of the asset, if these monetary items pertain to the acquisition of a depreciable ?xed asset. Depreciation is provided on straight line method at the rates mentioned below, which are greater than or equal to the corresponding rates prescribed in Schedule XIV of the Act: Particulars Factory building Non-factory building Plant and machinery Computers and computer equipment O?ce and electrical equipment Furniture and ?xtures Vehicles Leasehold land is amortised over the period of the lease or useful life whichever is lower. The expenditure on improvement to runways and existing infrastructure of airport are amortised over their estimated useful life of 20 years and 10 years respectively. Fixed assets individually costing Rs.0.05 or less are fully depreciated in the year of purchase. Oil & gas assets The Company follows full cost method of accounting for Oil & Gas Assets. All costs incurred in prospecting, acquiring, mineral interest are accumulated in a large cost centers and are carried as capital work-in-progress. Aeronautical assets Development fee levied under the authority of Ministry of Civil Aviation, Government of India/AERA for exclusive utilization for development of aeronautical assets, is disclosed as reduction from the cost of such aeronautical assets. e. Intangible assets and amortization An intangible asset is recognised, only where it is probable that future economic bene?ts attributable to the asset will accrue to the enterprise and the cost can be measured reliably. Intangible assets are stated at cost less accumulated amortization. Toll collection rights Direct expenditure incurred on construction of highway project is shown as toll collection rights. Toll collection rights are amortized over the concession period (i.e. 18 years) proportionately in each year based on the actual tra?c revenue for the year and projected tra?c revenue for the balance concession period. Rates (SLM) 3.34% 1.63% 5.28% 16.21% 4.75% 6.33% 9.50%
45 45
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
So?ware Cost of so?ware is amortised on a straight line basis over its estimated useful life which is three to six years. Airport grant for upfront fees and other compensations The non-refundable upfront fee, other compensations paid/payable to the AAI for the airport grant is classi?ed under “Intangible Assets” and is amortized over the primary period of the grant available under Operation, Maintenance and Development Agreement (‘OMDA’). Goodwill Goodwill represents the excess of purchase consideration over the net book value of assets acquired of the subsidiary companies as on the date of investment. Goodwill is not amortised but is tested for impairment, where indicator of impairment exists and losses are recognized where applicable. f. Impairment The company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash in?ows 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 ?ows are discounted to their present value using a pre-tax discount rate that re?ects current market assessments of the time value of money and the risks speci?c to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identi?ed, an appropriate valuation model is used. g. Investments Investments that are readily realizable and intended to be held for not more than a year from the date on which such investment are made are classi?ed as current investments. All other investments are classi?ed as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of such investments. h. Government grants Grants from the government are recognized when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Government grants relating to assets are recognized in the proportion in which the amortization of such assets is charged and are netted o? against the amortization on such assets. Grants related to depreciable assets are treated and disclosed as deferred income which is recognized in the statement of pro?t and loss over the periods and in the proportions in which depreciation on related asset is charged. i. Revenue recognition Revenue is recognized to the extent that it is probable that economic bene?ts will ?ow to the Company and the revenue can be reliably measured. The following speci?c recognition criteria must also be met before revenue is recognized: i) Generation of power Revenue from sale of energy is recognized on accrual basis in accordance with the provisions of the Power Purchase Agreements (“PPA”) with Andhra Pradesh Transmission Corporation Limited (“AP Transco”). The subsidiary companies (‘GVKIL’ and ‘GVKGPL’) are also eligible to receive incentive fees for every percentage point generated in excess of Plant Load Factor as de?ned in PPA with AP Transco. Such incentives are accrued on achievement of speci?ed Plant Load Factor.
46
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
ii)
Aeronautical services, Non-Aeronautical services and Cargo services Revenue from aeronautical services (net of credit notes) includes landing and parking charges and passenger service fees at the rates prescribed under State Support Agreement, as amended from time to time by Ministry of Civil Aviation, Government of India (“MoCA”) / Airports Economic Regulatory Authority (“AERA”). Landing and parking charges are recognized, when such services are provided. Passenger service fees – facilitation component is recognized in respect of each embarking passenger at a speci?ed rate. Passenger service fees – security component (PSF-SC) collected as per the terms of State Support Agreement and MoCA orders, is not recognized as revenue of the Company since the same is collected in a ?duciary capacity. Revenue from non-aeronautical services (net of credit notes) consisting of concessions, rentals, public admission fees, hangar charges, car parking rentals, demurrage on cargo etc., is recognized as per terms of contracts. Revenue from cargo services (net of credit notes) is recognized as and when the related services are rendered.
iii) Income from toll operations The revenue is recognized as and when the tra?c passes through toll – plazas. iv) Manpower and consultancy services Revenue for manpower services are recognised as and when services are rendered based on time spent. v) Interest Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
vi) Dividends Revenue is recognised when the shareholders’/unit holders’ right to receive payment is established by the balance sheet date. vii) Guarantee commission Revenue is recognized on a time proportion basis taking into account the guarantee amount and the commission rate applicable. j. Borrowing Costs Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange di?erences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. k. Foreign currency translation Foreign currency transaction and balances i) Initial recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Conversion Foreign currency monetary items are reported using the exchange rate prevailing on the reporting date. Non-monetary items which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
ii)
iii) Exchange di?erences Exchange di?erences arising on the settlement of monetary items or on restatement of monetary items on reporting date at rates di?erent from those at which they were initially recorded during the year, or reported in previous ?nancial statements, are recognized as income or as expenses in the year in which they arise.
47 47
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Translation of integral and non-integral foreign operation The assets and liabilities of a non-integral foreign operation are translated into the reporting currency at the exchange rate prevailing at the reporting date. Their statement of pro?t and loss are translated at exchange rates prevailing at the dates of transactions or weighted average rates, where such rates approximate the exchange rate at the date of transaction. The exchange di?erences arising on translation are accumulated in the foreign currency translation reserve. On disposal of a non-integral foreign operation, the accumulated foreign currency translation reserve relating to that foreign operation is recognized in the statement of pro?t and loss. l. Operating Lease Leases where the lessor e?ectively retains substantially all the risks and bene?ts of ownership of the leased term, are classi?ed as operating leases. Operating lease payments are recognized as an expense in the statement of pro?t and loss on a straight-line basis over the lease term. m. Retirement and other employee bene?ts i) Retirement bene?t in the form of Provident Fund is a de?ned contribution scheme. The contributions are charged to the statement of pro?t and loss of the year when the contributions are due. The company has no obligation other than the contribution payable to the provident fund. ii) Gratuity liability is de?ned bene?t obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each ?nancial year. iii) Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method. iv) Actuarial gains/losses are immediately taken to the statement of pro?t and loss and are not deferred. v) The company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months a?er the reporting date. n. Inventories Spares, stores and consumables are valued at lower of cost and net realizable value. Cost is determined on a weighted average basis. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make the sale. o. Income taxes Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred income taxes re?ect the impact of current period timing di?erences between taxable income and accounting income for the period and reversal of timing di?erences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that su?cient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable pro?ts. At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that su?cient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that su?cient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that su?cient future taxable income will be available.
48
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the speci?ed period. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the pro?t and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the e?ect that Company will pay normal Income Tax during the speci?ed period. p. Earnings per share Basic earnings per share are calculated by dividing the net pro?t or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue; bonus element in a rights issue, share split; and reverse share split (consolidation of shares). For the purpose of calculating diluted earnings per share, the net pro?t or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the e?ects of all dilutive potential equity shares. q. Provisions A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an out?ow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present values and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to re?ect the current best estimates. Provision for resurfacing obligations Contractual obligations to periodically maintain, replace or restore infrastructure at the end of each ?ve years or earlier as per the terms of the concession agreement are provided for in accordance with Accounting Standard (AS) - 29 “Provision, Contingent Liabilities and Contingent Assets” i.e., at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. r. Segment Reporting Policies Identi?cation of segments The Company’s operating businesses are organized and managed separately according to the nature of services provided, with each segment representing a strategic business. Intersegment Transfers The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices. Allocation of common costs Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. Unallocated items The corporate and other segment include general corporate income and expense items which are not allocated to any business segment. s. Cash and Cash equivalents Cash and cash equivalents for the purposes of cash ?ow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less. t. Derivative instruments As per the ICAI Announcement, accounting for derivative contracts, other than those covered under AS-11, are marked to market on a portfolio basis, and the loss is charged to the income statement. Gains are ignored.
49 49
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
u. Contingent liabilities A contingent liability is a possible obligation that arises from past events whose existence will be con?rmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an out?ow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the ?nancial statements.
3. Di?erence in accounting estimates/policy
i. Depreciation Depreciation on certain ?xed assets of BIAL is provided at rates which are di?erent from the rates used by the Parent Company, Estimate of useful life and quantum of assets on which di?erent rates are followed are as follows: Asset Description Buildings Engineering structures Plant and machinery O?ce equipment Computer and computer equipments Furniture and ?xtures Vehicles So?ware Useful life 3.33% - 5% 3.33%-5% 4.75%-16.21% 10.34%25% 16.21%-25% 6.33%-10% 9.5%-20% 20%-33.33% March 31, 2012 49,333 46,058 39,923 180 3,142 4,960 1,363 460 March 31, 2011 50,760 47,440 46,745 180 4,117 5,470 1,572 582
ii. Inventory Valuation of certain inventory of MIAL is done on ?rst in ?rst out basis. The closing stock of inventory in hand was Rs.364 (March 31, 2011: Rs.452)
4. Share capital
March 31, 2012 Authorized shares 2,500,000,000 (March 31, 2011: 2,500,000,000) equity shares of Rs.1/ each Issued, subscribed and fully paid-up shares 1,579,210,400 (March 31,2011: 1,579,210,400) equity shares of Rs.1 each Add: Issued during the year 15,792 15,792 a) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period. March 31, 2012 No. Equity shares At the beginning of the year Issued during the year 1,579,210,400 1,579,210,400
50
March 31, 2011
25,000
25,000
15,792 15,792
March 31, 2011 Rs. No. Rs.
1,579 1,579
1,579,210,400 1,579,210,400
1,579 1,579
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
b)
Terms/rights attached to equity shares The Company has only one class of equity share having par value of Rs.1 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, a?er distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. Details of shareholders holding more than 5% shares in the company Name of the shareholder G Indira Krishna Reddy HSBC Global Investment Funds Vertex Infratech Private Limited March 31, 2012 No 394,994,190 115,250,000 116,896,770 % holding 25.01 7.30 7.40 March 31, 2011 No 435,944,190 113,000,000 % holding 27.61 7.16 -
c)
d)
Aggregate number of bonus shares issued, shares issued for consideration other than cash: March 31, 2012 No. Equity shares allotted as fully paid bonus shares by capitalization of general reserve Equity shares allotted as fully paid-up pursuant to scheme of amalgamation Equity shares allotted as fully paid-up pursuant to scheme of arrangement 52,850,000 703,250,000 90,462,150 March 31, 2011 No. 52,850,000 703,250,000 90,462,150
5. Reserves and surplus
March 31, 2012 Capital reserve on acquisition Balance as per the last ?nancial statements Add: additions during the year General reserve Balance as per the last ?nancial statements Add: additions during the year Securities premium account Balance as per the last ?nancial statements Less: amounts utilised for share issue expenses Surplus in the statement of pro?t and loss Balance as per the last ?nancial statements Pro?t for the year Net surplus in the statement of pro?t and loss Foreign currency translation reserve Total reserves and surplus 59,052 6,146 65,198 8 332,345 43,561 15,491 59,052 322,886 215,352 215,352 215,935 583 215,352 952 952 952 952 47,530 3,305 50,835 39,352 8,178 47,530 March 31, 2011
51 51
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
6. Long term borrowings
Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) Foreign currency loan from banks (secured) Indian rupee loan from ?nancial institutions (secured) Indian rupee loan from ?nancial institutions (unsecured) Other loans and advances Vehicle loan (secured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” (note 11) Net amount 1,101,944 7,500 1,101,944 421,133 421,133 37,289 (37,289) 18,855 (18,855) 124 1,109,444 106 421,133 110 37,289 53 18,855 816,402 41,721 243,697 7,500 266,202 40,504 114,321 22,708 4,119 10,352 10,519 2,408 5,875 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Entity wise details of the above long term borrowings are as follows: Name of the entities Parent Company GVKIL AHPCL GVKPGSL GJEPL MIAL GVKCCPL GVKBVEPL GVKADPL GVKDKEPL GVKGPL Non-current portion March 31, 2012 30 50,649 211,284 151,503 107,464 375,516 9,850 6,500 90,000 15,550 91,098 1,109,444 March 31, 2011 64 54,676 171,729 70,809 17,114 5,400 101,341 421,133 Current maturities March 31, 2012 34 8,611 10,748 6 2,992 3,030 11,868 37,289 March 31, 2011 30 7,087 2,595 6 2,843 6,294 18,855
52
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
The details of the security, repayment and other terms are as follows: A) Parent Company Non-current portion March 31, 2012 Term loans Loans from bank- vehicle loan (secured) Amount disclosed under the head “other current liabilities” Net amount 30 30 64 64 34 (34) 30 (30) March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Vehicle loan from bank carries interest @ 8.5% p.a. The loan is repayable in 36 monthly instalments of Rs.3.15, along with interest, from the date of loan, viz., January 29, 2011. The loan is secured by charge over ?xed asset i.e. vehicle, for which ?nance is provided by the lender. B) GVKIL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) Foreign currency loan from banks (secured) Indian Rupee loan from ?nancial institutions (secured) Other loans and advances Vehicle loan (secured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” Net amount a. 50,649 50,649 54,676 54,676 8,611 (8,611) 7,087 (7,087) 4 50,649 7 54,676 3 8,611 3 7,087 33,686 11,023 5,936 36,387 11,247 7,035 5,701 1,807 1,100 4,478 1,505 1,101 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks other than one loan from State Bank of India of Rs.3,000, ?nancial institutions and foreign currency loan from a bank are secured by: i) Pari passu ?rst mortgage and charge on all the immovable and movable properties (both tangible and intangible), present and future of the expansion project and assets common for both Phase I and Phase II; ii) Pari passu ?rst charge on all the immovable and movable properties (both tangible and intangible), present and future, pertaining to Phase-I; iii) Pari passu ?rst charge/assignment/security interest on all the revenues/receivables of the subsidiary company pertaining to Phase-II; iv) Pari passu ?rst charge/assignment/security interest on subsidiary company’s rights under Phase II agreements, in respect of all clearances, licenses, permits, approvals and consents in respect of the expansion project and letters of credit, guarantee or performance bond that may be provided in favour of subsidiary company; and v) Pledge of 28% of shares of the subsidiary company held by its holding company, GVKEL.
53 53
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
b. c.
Loan from State Bank of India is secured by hypothecation of ?rst charge on spares and Pari-passu ?rst charge on Fixed Assets of Phase I. Repayment and other terms of loans as follows: i) Rupee loan from State Bank of India amounting to Rs.3,000 is repayable in 12 quarterly instalments from June 2012 and currently carries interest of 13% per annum. ii) Other Indian Rupee loans from banks are repayable in 42 quarterly instalments from 2008-09, and currently carry interest of 9.50% per annum. iii) Term loans from ?nancial institution are repayable in 39 quarterly instalments from 2008-09, and carry interest of 9.88 % and 11.35% for the two tranches. iv) Foreign currency loan is repayable in 13 half yearly foreign currency instalments from 2008-2009 and 13 quarterly INR instalments from 2015-2016. Interest is payable half yearly at 6 Month Libor plus 2.50% margin and interest on INR instalments would be agreed at the time of conversion.
d.
The vehicle loan is secured by charge over ?xed asset i.e. vehicle, for which ?nance is provided by the lender. It is repayable in 31 instalments and carries interest at 9.6% p.a.
C)
AHPCL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) Foreign currency loan from banks (secured) Indian rupee loan from ?nancial institutions (secured) Indian rupee loan from ?nancial institution (unsecured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” Net amount a. 203,784 7,500 211,284 171,729 171,729 10,748 (10,748) 2,595 (2,595) 154,801 19,077 29,906 7,500 211,284 122,516 17,712 31,501 171,729 8,390 763 1,595 10,748 1,973 224 398 2,595 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks, ?nancial institutions and foreign currency loan from bank are secured by: i) First mortgage on the subsidiary company’s immovable properties present and future; ii) First charge by way of hypothecation of all the movables, including movable plant and machinery, machinery spares, tools and accessories, furniture, ?xtures, vehicles and all other movable assets, present and future; iii) First charge on all cash ?ows, book debts and receivables and any other revenues of whatsoever nature and wherever arising and all intangibles including but not limited to goodwill, uncalled capital, present and future; and iv) Assignment or creation of security interest in: ? All rights, titles, interest, bene?ts, claims and demands whatsoever of the subsidiary company in the project documents, duly acknowledged and consented to by the relevant counter parties to such project documents, all as amended, varied or supplemented from time to time;
? ?
All rights, title, interest, bene?ts, claims and demands whatsoever of the subsidiary company in the clearances; All rights, title, interest, bene?ts, claims and demands whatsoever of the subsidiary company in any letter of credit, guarantee, performance bond provided by any party to the project document;
54
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
? ?
All insurance contracts / insurance proceeds; Pledge of 51% of equity shares issued or to be issued by the subsidiary company during the currency of the term loans; and The aforesaid mortgages, hypothecation, assignment charges and pledge of shares, shall in all respects, rank pari pasu interest.
?
b.
Repayment and other terms of loans are as follows: i) All the secured rupee term loans are repayable in 60 quarterly instalments commencing from January 1, 2012. However, the subsidiary company has requested banks to reschedule the repayment date starting from December 1, 2013 to be repaid in 53 quarterly instalments which is under consideration of the lenders. Pending approval of the same the subsidiary company paid the ?rst instalment due on January 1, 2012 in accordance with the existing repayment schedule. ii) The secured foreign currency loans are repayable in 60 quarterly instalments commencing from January 1, 2012. iii) The secured rupee term loans currently carry interest at 12% per annum subject to reset. Foreign currency loan carries ?oating rate of interest at 3 month LIBOR + 248 bps (i.e.2.48%).
c.
Unsecured loan from ?nancial institution is repayable in full within 24 months from the date of disbursement i.e. July 25, 2011. Interest is currently payable at 13.5% per annum.
D) GVKPGSL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) Indian rupee loan from ?nancial institution (secured) Other loans and advances Vehicle loan (secured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” Net amount a. 151,503 151,503 70,809 70,809 6 (6) 6 (6) 3 151,503 9 70,809 6 6 6 6 126,500 25,000 58,700 12,100 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks and ?nancial institutions are secured by: i) The subsidiary company’s all movable, immovable properties and receivables present and future; ii) Assignment or creation of charge of all the right, title, interest, bene?ts, claims and demands whatsoever in the project documents; and iii) Pledge of 51% of equity shares held by GVKEL.
b.
Repayment and other terms of loans are as follows: 70% of rupee loans are repayable in 46 quarterly instalments commencing from November 1, 2013 and balance of 30% are repayable in a single/bullet repayment instalment along with 46th quarter instalment. The loans are scheduled to be repaid fully by February 1, 2025. The Rupee Term loans currently carry interest at 13.5% per annum. The vehicle loan is secured by charge over ?xed asset i.e. vehicle, for which ?nance is provided by the lender. The loan is repayable in 36 instalments and carries interest of 8.75% per annum.
55 55
c.
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
E)
GJEPL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) From ?nancial institutions (secured) Other loans and advances Vehicle loan (secured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” Net amount a. 107,464 17,114 (2,992) (2,843) 107,464 17,114 2,992 2,843 73 107,464 17,114 54 2,992 2,843 9,117 98,274 10,964 6,150 1,843 1,095 1,843 1,000 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks and ?nancial institutions to the extent of Rs.6,150 are secured by: i) The subsidiary company’s immovable properties present and future; ii) Hypothecation of all the movables, including movable plant and machinery, machinery spares, tools and accessories, furniture, ?xtures, vehicles and all other movable assets, present and future; iii) First charge on all cash ?ows, book debts and receivables and any other revenues of whatsoever nature and wherever arising, present and future; iv) First charge on all intangibles including but not limited to Goodwill, uncalled capital, present and future; v) Assignment or creation of security interest in:
?
All rights, titles, interest, bene?ts, claims and demands whatsoever of the subsidiary company in the project documents, duly acknowledged and consented to by the relevant counter parties to such project documents, all as amended, varied or supplemented from time to time; All rights, title, interest, bene?ts, claims and demands whatsoever of the subsidiary company in the clearances; and All rights, title, interest, bene?ts, claims and demands whatsoever of the subsidiary company in any letter of credit, guarantee, and performance bond provided by any party to the project document and all insurance contracts / insurance proceeds.
?
?
vi) Charge on the escrow account and other reserves, and any other bank accounts of the subsidiary company wherever maintained:
?
Pledge of shares to the extent of 51% of the equity shares of the company held by the holding Company i.e. GVK Transportation Private Limited with e?ect from 1.4.2011. Further the debt servicing is secured by way of a bank guarantee for Rs.1,250 from Indian Overseas Bank, Secunderabad.
?
b.
Repayment and other terms of loans are as follows: The aforesaid loans carry interest of 9.25% to 9.58% and the rate of interest is due for reset during August’2012. The loans have to be fully repaid by November 2017.
56
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
c)
Rupee term loans to the extent of Rs.92,124 from ?nancial institutions are secured by: i) Mortgage by way of second exclusive charge of entire immovable properties of the subsidiary company, save and except project assets, both present and future, if any; ii) Second exclusive charge by way of hypothecation of entire movable properties of the subsidiary company, save and except project assets, both present and future, including movable plant and machinery, machinery spares, tools and accessories, furniture, ?xtures, vehicles and all other movable properties of whatsoever nature; iii) Second exclusive charge on entire cash ?ows, receivables, book debts and revenues of the subsidiary company of whatsoever nature and wherever arising, subject to the terms of the Concession Agreement and the Escrow Agreement, both present and future; iv) Second exclusive charge on entire intangible assets of the subsidiary company, including but not limited to, goodwill and uncalled capital, both present and future; v) Pledge of shares held by sponsor in dematerialized form in the equity share capital of the subsidiary company representing 51% of the total paid up equity share capital of the subsidiary company. The shares to be pledged shall be free from any restrictive covenants/lien or other encumbrance under any contract/arrangement, including shareholder agreement/joint venture agreement/ ?nancing arrangement, with regard to pledge/transfer of the shares including transfer upon enforcement of the pledge except for the encumbrance created in favor of the existing senior lenders to the Project; vi) First exclusive charge on the surplus cash ?ows, surplus account and the surplus debt service reserve of the subsidiary company;
d)
Repayment and other terms of loans are as follows: i. The loans currently carry interest at 12.98% (on Rs.65,000 of original disbursement) and 12.75% (on Rs.30,000 of the original disbursement) ii. The loans were raised in October 2011 and scheduled to be repaid fully by September 15, 2021.
e)
The vehicle loan is secured by charge over ?xed asset i.e. vehicle, for which ?nance is provided by the lender and is scheduled for repayment by June 15, 2014 in 36 equal monthly installments. The loan carries interest of 9.75%.
F)
MIAL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) From ?nancial institutions (secured) Additional term loans from banks (secured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” Net amount 375,516 375,516 3,030 (3,030) 343,933 30,825 758 375,516 3,030 3,030 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Note: In the previous year, MIAL was an associate company and hence last year ?gures are not disclosed.
57 57
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
a.
Term loans from consortium of banks and ?nancial institution are secured by way of: i) First charge on all the amounts lying in certain designated bank accounts of the subsidiary company; and ii) Pledge of equity shares of the company held by the prime members (i.e. GVK Airport Holdings Private Limited., Bid Services Division (Mauritius) Limited and ACSA Global Limited) constituting not less than 74% of the total voting paidup equity share capital of the subsidiary company.
b.
Additional term loan from a bank is secured by way of second charge on all the amounts lying in certain designated bank accounts of the Company. Repayment and other term of the loan are as follows: Term loans: i) Repayable in 120 monthly instalments commencing from the 85th month a?er ?rst disbursement i.e. July 2014. 18% of total loan amount outstanding will be repaid in 36 equal instalments commencing July 2014, 30% of total loan amount will be repaid in 36 equal instalments commencing July 2017 and balance 52% of total loan amount outstanding will be repaid in subsequent 48 equal instalments commencing July 2020. ii) As per the common loan agreement dated April 27, 2007 with consortium of banks and ?nancial institutions, the applicable rate of interest shall be 3 years G-Sec (“the Benchmark Rate”) plus spread of 215 bps (“the spread”) per annum payable monthly for the disbursements received till the amendment to common loan agreement dated April 09, 2011 and 265 bps spread for further disbursements received therea?er. The interest rate would be reset facility wise on December 31 once in every three years starting from December 31, 2009. Additional term loan from banks: Repayment is in equal quarterly instalments till June 2013. Current rate of interest is 9.896%.
c.
G)
GVKCCPL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) a. 9,850 5,400 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks are secured by: i) First charge on all movable, immovable properties and receivables present and future; ii) Assignment or creation of charge of all the right, title, interest, bene?ts, claims and demands whatsoever in the project documents; and iii) Pledge of 51% of equity shares held by the holding company i.e. GVK Energy Limited.
b)
Repayment and other terms of loans are as follows: Rupee term loans are repayable in 45 equal quarterly instalments commencing from April 1, 2013 and are scheduled to be repaid fully by April 1, 2024. The loans currently carry interest at 12.5% p.a. subject to reset.
H) GVKBVEPL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) 6,500 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
58
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
a.
Indian rupee loan is secured to the extent permitted under the concession agreement by: i) First charge on all the present and future moveable assets both present and future, save and except the project assets as de?ned under the Rupee Loan agreement; ii) First charge on all the bank accounts of the subsidiary company including debt service reserve account/escrow accounts/ its sub accounts. Charge on the escrow account shall be in a manner as permitted under the Escrow agreement and supplementary escrow agreement; iii) First charge on all intangibles of the subsidiary company including goodwill, rights, undertakings and uncalled capital both present and future save and except the project assets as de?ned under the rupee loan agreement; iv) Assignment by way of security of all the project documents and guarantees to the extent provided under the substitution agreement entered into by the subsidiary company with the rupee lender and authority; and v) Pledge of 51% equity shares of the subsidiary company held by the sponsor’s until the commercial operation date. Pledge of shares will be gradually reduced to 26% over a period of 3 years from the date of COD if there is no outstanding event of default.
b)
Repayment and other terms of loans are as follows: Indian rupee loan carries interest at 11.75% p.a. up to scheduled commercial operation date and therea?er it is reset on the date falling on expiry of every 24 months from the previous interest reset date until the ?nal settlement of loan. The loan is repayable over a period of 17.25 years (including the construction period) in 54 quarterly instalments starting from December 31, 2015.
I)
GVKADPL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) a. 90,000 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks is secured by: Pledge of shares held by the Parent Company in the subsidiary company and shares held by the subsidiary company in GVK Airport Holdings Private Limited and Bangalore Airport & Infrastructure Developers Private Limited. Share pledge is ranking pari passu with loan extended by other lenders. The loan is further secured by mortgage of land located at Himayat sagar, Rajender Nagar Mandal, Ranga Reddy district, Andhra Pradesh and o?ce building including land located at 156-159, Paigah House, Sardar Patel Road, Secunderabad belonging to the promoter of Parent Company. Repayment and other terms of loans are as follows: Loan amounting to Rs.60,000 and Rs.30,000 currently carries interest of 13.25% and 13.95% respectively. The loan is repayable on September 16, 2013 in single instalment and interest has to be paid on quarterly basis.
b)
J)
GVKDKEPL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) From ?nancial institutions (secured) The above amount includes Secured borrowings Unsecured borrowings Net amount March 31, 2011 Current maturities March 31, 2012 March 31, 2011
12,766 2,784 15,550 15,550 15,550
59 59
-
-
-
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
a.
Indian rupee loans are secured to the extent permitted under the concession agreement by: i) First charge on all the present and future moveable assets and intangible assets except the project assets as de?ned under the rupee loan agreement; ii) First charge on all revenues and receivables of the borrower from the project or otherwise; iii) Pledge of 51% equity shares of the subsidiary company held by the Sponsor’s until the commercial operation date and pledge of 26% equity shares of the subsidiary company held by the Sponsor’s for a period of 2 years from commercial operation date; iv) Assignment by way of security of all the project documents to the extent provided under the substitution agreement entered into by the subsidiary company with the rupee lender and the NHAI; v) First charge on all rights, title, interests, bene?ts, demands, and claims under the contractor guarantees, liquidated damages, any guarantees, letter of credit, or performance bonds provided by any counter party under any contract of the borrower, insurance contracts, and insurance proceeds; vi) First charge on all the bank accounts of the subsidiary company.
b.
Repayment and other terms of loans are as follows: i. Loan currently carries interest at 10.50% p.a. up to the ?rst interest reset date viz. scheduled project completion date or commercial operation date whichever is earlier and therea?er each such date falling every two years from the previous interest reset date, until the ?nal settlement of the loan. The rupee lenders may change the interest rate before the interest reset date if base rate of any of the rupee lender is revised before the next interest reset date, to a rate higher than the determined interest rate. Any such change in interest rate, if made, is subject to the Reserve Bank of India’s policy with regard to the base rate, as may be applicable from time to time. ii. The loan is repayable over a period of 18 years (including the construction period) in 58 quarterly instalments starting from September 30, 2014.
K)
GVKGPL Non-current portion March 31, 2012 Term loans Indian rupee loan from banks (secured) Foreign currency loan from banks (secured) From ?nancial institutions (secured) Other loans and advances Vehicle loan (secured) The above amount includes Secured borrowings Unsecured borrowings Amount disclosed under the head “other current liabilities” Net amount a. 91,098 101,341 (11,868) (6,294) 91,098 101,341 11,868 6,294 14 91,098 27 101,341 13 11,868 13 6,294 28,491 11,621 50,972 32,235 11,545 57,534 3,744 1,549 6,562 2,226 679 3,376 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Rupee term loans from banks, ?nancial institutions and foreign currency loans are secured by: i) Pari passu ?rst charge by deposit of title deeds of immovable properties in respect of project land;
60
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
ii) Pari passu ?rst charge in the form of Hypothecation of all movable assets of the project both present and future except speci?ed receivables on which ?rst charge was given to working capital lender; iii) Pari passu ?rst charge/assignment/security interest on/ of all the rights, titles, interest and bene?ts and all licenses, permits, approvals and consents in respect of the project; and iv) Pledge of 51% shares of paid-up capital of the subsidiary company held by GVKEL. b. Repayment terms of loans are as follows: i) Indian Term Loans from banks currently carries interest at 9.50%p.a to 11.50% p.a. The loans are repayable in 42 to 44 quarterly instalments along with monthly interest. The ?rst instalment was paid in year 2008-2009 and the ?nal instalments will fall due on March 15, 2020. ii) Foreign Currency Loan carries interest at 3 M Libor plus 2.50% margin. The loan is repayable in 43 quarterly instalments along with interest. The ?rst instalment was paid in year 2008-2009 and the ?nal instalments will fall on March 15, 2020. iii) Term Loans from ?nancial institution currently carries interest at11.35%. These loans are repayable in 40 quarterly instalments along with monthly interest. The ?rst instalment was paid in year 2010-2011 and the ?nal instalment will fall on April 15, 2020. c. The vehicle loan is secured by charge over ?xed asset i.e. vehicle, for which ?nance is provided by the lender and is scheduled for complete repayment by March 2014.
7. Deferred tax liabilities and assets
March 31, 2012 Deferred tax liability (net) Depreciation Provision for doubtful trade receivables Provision for retirement bene?ts Others Deferred tax asset (net) Provision for retirement bene?ts Depreciation Gross deferred tax asset 72 (8) 64 68 (6) 62 30,246 (182) (338) 413 30,139 5,334 427 5,761 March 31, 2011
Note: In accordance with the terms and conditions of the Power Purchase Agreement (‘PPA’) with AP Transco, GVKIL is entitled for reimbursement of tax on income. Since deferred tax liability is created based on tax laws, timing di?erence reversing a?er tax holiday period but within the period of power purchase agreement amounting to Rs.2,623 (March 31, 2011: Rs.3,496) has been accrued as unbilled revenues. Further, the Company has created deferred tax liability on such unbilled revenue to the extent not expected to be reimbursed by AP Transco.
8. Other long-term liabilities
March 31, 2012 Retention money Retirement compensation payable to AAI under OMDA Security deposits Others 10,391 11,839 5,197 1,024 28,451
61 61
March 31, 2011 12,291 12,291
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
9. Provisions
Long-term March 31, 2012 Provision for employee bene?ts Provision for gratuity (note 27) Provision for leave bene?ts Other provisions Provision for income tax (net) Provision for resurfacing obligation 2,266 2,266 2,984 1,133 1,133 1,417 1,102 1,102 2,815 808 808 1,044 718 718 284 284 99 1,614 1,713 12 224 236 March 31, 2011 Short-term March 31, 2012 March 31, 2011
10. Short term borrowings
March 31, 2012 Debentures (secured) Cash credit (secured) Overdra? from banks (secured) Overdra? from banks (unsecured) Buyers credit from banks (secured) Other loans and advances - Loan from banks (secured) - Loan from banks (unsecured) - Loan from others (secured) 110,770 97,000 8,600 279,010 The above amount includes Secured borrowings Unsecured borrowings Entity wise details of the borrowings are as follows: Name of the entities Parent Company GVKIL MIAL GVKADPL GVKTPL GVKRHEPPL GVKGPL March 31, 2012 41,595 9,973 81,045 83,847 53,900 8,600 50 March 31, 2011 10,000 25,602 75,000 4,247 168,638 110,372 93,349 21,500 10,000 21,500 114,849 1,083 45,250 13,372 2,935 March 31, 2011 75,000 1,451 4,247 2,651
62
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
The details of the loan entity wise are as follows: a) Parent Company March 31, 2012 Overdra? from banks (unsecured) Other loans and advances - Loan from banks (secured) - Loan from banks (unsecured) 21,870 15,000 41,595 10,000 10,000 4,725 March 31, 2011 -
1. Over dra? is unsecured and carries interest rate of 10.85%. 2. Term loan aggregating to Rs.20,000 is secured by ?rst charge on the current assets, present and future of the company and carries interest at base + 150 bps i.e. currently 11.50% per annum 3. Term loan aggregating to Rs.1,870 presently carries interest of 12% per annum and secured by (i) charge on loans and advances of the company to GVK Airport Developers Private Limited (“GVKADPL”) and also loans and advances provided by GVKADPL to GVK Airport Holdings Private Limited (“GVKAHPL”) and Bangalore Airport & Infrastructure Developer Private Limited (“BAIDPL”) (ii) exclusive charge on shares of GVKADPL to the extent of two times of facility amount. (iii) exclusive charge on shares of GVKAHPL and BAIDPL not exceeding 30% of the shares of the companies and the no. of shares to be pledged to be in proportion to the lenders at GVKADPL. 4. Term loans aggregating to Rs.15,000 is unsecured and carries interest rate of 11.75%. b) GVKIL March 31, 2012 Cash credit from banks (secured) Buyers credit from banks (secured) Other loans and advances - Loan from banks (secured) - Loan from banks (unsecured) 5,000 2,000 9,973 21,500 25,602 38 2,935 March 31, 2011 1,451 2,651
1. Cash Credit from banks are secured by: a. In respect of Phase-I working capital lenders, ?rst charge on receivables of Phase-I and second charge on ?xed assets of Phase-I. b. In respect of Phase-II working capital lenders, ?rst charge on ?xed assets and on current assets of Phase-II on pari passu with Phase-II term lenders. c. Cash credit carries interest at PLR+ margin which ranged from 11% to 14% per annum 2. Buyer’s Credit is secured by corporate guarantee of Parent Company and carries interest at Libor plus 2.50 margin. 3. Loan from Syndicate Bank (Rs.5,000) is secured by pari passu second charge on ?xed assets of the subsidiary company and currently carries interest of 12.25% per annum. 4. Unsecured loan from bank currently carries interest of 11.75%. per annum. c) MIAL March 31, 2012 Cash credit from banks (secured) Other loans and advances - Loan from banks (unsecured) 80,000 81,045 1,045 March 31, 2011 -
1. Loan from banks are in the process of getting securitized, loan amounting to Rs.15,000/-, Rs.35,000/- and Rs.30,000/carrying interest of 12.75%, 12% and 12.25% respectively. 2. Terms of security for Cash Credit facilities: refer note 6(f).
63 63
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
d)
GVKADPL March 31, 2012 Overdra? from banks (secured) Overdra? from banks (unsecured) Debentures (secured) Other loans and advances - Loan from banks (secured) 30,000 83,847 75,000 45,200 8,647 March 31, 2011 75,000
1. Overdra? facility amounting to Rs.45,200 currently carries interest of 11.25% p.a. The loans are 100% secured in the form of lien on ?xed deposit of the subsidiary company. 2. Overdra? amounting to Rs.4,985 currently carries interest of 11.20% p.a & Rs.3,662 carries interest of 11.33% p.a. 3. Loan amounting to Rs.30,000 currently carries interest of 14.25% p.a. The loans are secured by pledge of shares held by parent company in the subsidiary company and shares held by the subsidiary company in GVKAHPL and BAIDPL. Share pledge is ranking pari passu with loan extended by other lenders. The loan is further secured by mortgage of land located at Himayat sagar, Rajender Nagar Mandal, Ranga Reddy district, Andhra Pradesh and o?ce building including land located at 156-159, Paigah House, Sardar Patel Road, Secunderabad belonging to the promoter of parent Company. 4. Debentures outstanding during the previous year carry interest of 14% p.a. and are secured by pledge of 72% equity of GVKADPL and GVKAHPL. e) GVKRHEPPL March 31, 2012 Other loans and advances - Loan from others (secured) 8,600 Loan is secured against: i) Fixed assets, rights titles, approvals, clearances, contracts, insurance policies of the subsidiary company. ii) First charge on the currents assets of the subsidiary company. iii) Corporate guarantee of the parent company. iv) This loan currently carries interest rate of 13% p.a. i.e SREI Benchmark Rate (SBR) minus 4.50%. f) GVKTPL March 31, 2012 Other loans and advances - Loan from banks (unsecured) 53,900 Loan carries interest presently set at 12% p.a. for a period of 1 year from the date of ?rst disbursement. The loan is secured by i) Charge on loans and advances given by the Parent company to GVKADPL and also loans and advances provided by GVKADPL to GVKAHPL and BAIDPL. ii) Exclusive charge on shares of GVKADPL, however the lendor has option to create pari-passu basis of pledge of shares. iii) Exclusive charge on shares of GVKAHPL and BAIDPL however the lendor has option to create pari-passu basis of pledge of shares. iv) Corporate guarantee by the parent company. March 31, 2011 March 31, 2011
64
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
g)
GVKGPL March 31, 2012 Overdra? from banks (secured) 50 March 31, 2011 4,247
Overdra? is secured by ?rst charge on the entire current assets of the subsidiary company, including receivables and second charge on the entire ?xed assets of the company on pari-passu basis. Interest is currently payable at 12.5% p.a.
11. Trade payable and other current liabilities
March 31, 2012 Trade payables Other current liabilities Current maturities of long-term borrowings (note 6) Interest accrued but not due on borrowings Unpaid dividends Retention money Advances from customers Payable for capital goods Other liabilities 37,289 3,501 15 24,420 1,780 42,857 7,697 117,559 18,855 2,849 20 607 10,273 901 33,505 42,863 March 31, 2011 10,429
65 65
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
12. Tangible assets
Freehold Land Leasehold Land Factory building NonPlant and factory machinery building Electrical equipment Computers and O?ce computer equipment equipments Runways, Furniture Taxiways and Vehicles and ?xtures Aprons Total
GVK Power & Infrastructure Limited
Cost 26,338 5,144 20 14,759 24 42 1,701 133 168 27 101 1,253 6,798 8,349 347,035 513 537 88 435 586 216 21 391,932 7,556 14,800 31,462 2,910 596 119 265 1 14 11 6,207 2,815 508 306 76,301 35,795 4,480 4,687 1,253 6,822 8,391 333,722 646 705 (255) 115 69 536 4,005 673 1 781 31 276 10 104,175 12,177 (255) 384,433 229,474 25,952 1,006
As at April 1, 2010
Additions
Disposals
Other adjustments
- Exchange di?erences
As at March 31, 2011
Additions on account of acquisition
Additions
Disposals
Other adjustments 33,776 1,253 6,833 90,780 373,828 1,761 5,633 5,684 184 5,213 1,078 (119) 116,233 (119) 1,761 640,495
66 150 2,156 42 140 108 2,016 693 6,911 1,487 8 9,083 42 232 135 66 1,784 558 75,585 16,070 83 91,572 9,577 17,829 3 118,975 302 65 367 2,286 420 3,073 31,462 33,776 1,145 1,103 4,806 4,677 7,698 81,697 242,150 254,853 279 2,560
- Funded through Development Fee
- Exchange di?erences
As at March 31, 2012
Depreciation 139 30 169 1,218 259 4 1,642 27 6 33 10 43 188 34 222 1,201 230 1,653 224 58 15 267 4 79 7 343 7,033 2,059 9,092 78,873 16,672 98 95,447 28,230 22,555 22 146,210
As at April 1, 2010
Charge for the year
Disposals
As at March 31, 2011
On acquisitions
Charge for the year
Disposals
As at March 31, 2012
Net Block 536 4,042 82 141 314 3,560 514 735 107,141 288,986 494,285
As at March 31, 2011
As at March 31, 2012
Note: Disposals include refund of customs duty aggregating to Rs.Nil (March 31, 2011: Rs.13,241)
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
13. Intangible assets
Toll collection rights Cost As at April 1, 2010 Additions Disposals Other adjustments - Exchange di?erences - Borrowing costs As at March 31, 2011 Additions on account of acquisition Additions Disposals Other adjustments - Exchange di?erences - Borrowing costs As at March 31, 2012 Depreciation As at April 1, 2010 Charge for the year Disposals As at March 31, 2011 On acquisitions Charge for the year Disposals As at March 31, 2012 Net Block As at March 31, 2011 As at March 31, 2012 54,708 52,794 23,311 116,161 183 3,150 41,084 78,202 213,189 10,393 2,695 13,088 1,914 15,002 14 32 46 652 563 4 1,257 5,269 728 5,997 10,407 2,727 13,134 5,920 3,205 4 22,255 67,796 116,161 4,407 47,081 235,445 67,796 23,311 93,276 426 229 1,507 2,685 13 41,471 5,610 91,336 136,254 8,294 439 67,796 24,271 960 113 116 92,180 116 960 Goodwill So?ware Airport Grant Total
67 67
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
14: Expenditure incurred during construction period pending allocation
Particulars Personnel expenses: Salaries, allowances and bonus Contribution to Provident and other funds Sta? welfare Power, fuel & water charges Stores and consumables Rent Rates & Taxes Communication costs Travelling and Conveyance Legal and professional charges Survey charges Repairs & Maintenance: Building Plant & Machinery Others Insurance Land lease charges Printing & Stationery Remuneration to directors O?ce and Guest house maintenance Loss on sale of assets(net) Tender fees paid Exchange ?uctuations Miscellaneous expenses Depreciation Project Premium Financial expenses: Interest on ?xed period loans Interest on other loans Guarantee commission Exchange di?erence considered as adjustment to borrowing cost Bank charges Sub Total - (A) Less: Interest income Dividends from mutual funds Pro?t on Sale of mutual funds Provisions no longer required written back Tender fee received Sale of Scrap Gain on forward contracts Sub Total- (B) Amount capitalised (C) Balance carried to Balance Sheet - (A-B-C) As at April 01, 2011 1,891 30 94 130 308 382 1,739 153 3,061 10,081 100 431 21 215 1,494 8 106 419 48 10 10 1,143 1,291 546 3,580 34,338 1,904 48 90 63,671 120 976 45 694 5 56 58 1,954 61,717 Additions on acquisition 12,692 121 486 157 6,528 104 134 2,498 8,102 604 1,020 59,290 3,268 95,004 1,584 2,560 5 4,149 32,689 58,166 Additions during the year 4,000 97 116 210 204 620 123 92 1,688 6,139 48 112 5 86 494 38 111 156 1,044 405 271 4,895 55,040 970 35 1,385 1,183 79,567 355 618 55 53 8 141 83 1,313 3,613 74,641 As at March 31, 2012 18,583 127 331 826 669 7,530 1,966 379 7,247 24,322 148 543 26 301 2,592 8 144 530 204 10 10 2,187 2,716 817 8,475 148,668 2,874 83 1,385 4,541 238,242 2,059 4,154 100 752 13 197 141 7,416 36,302 194,524
68
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
15. Non-current investments
March 31, 2012 Trade investments (unquoted, at cost) Investment in associates A) Seregraha Mines Limited 22,225 (March 31, 2011: 22,225) equity shares of Rs.10 each fully paid up B) Bangalore International Airport Limited 165,378,000 (March 31, 2011: 111,534,000) equity shares of Rs.10 each fully paid up (includes Goodwill amounting to Rs.160,730 (March 31, 2011: Rs.107,989) Add: Opening balance of accumulated pro?t Add: Pro?t for the year C) Mumbai International Airport Private Limited* Nil (March 31, 2011: 296,000,000) equity shares of Rs.10 each fully Add: Opening balance of accumulated pro?t Add: Pro?t for the year till the date of acquiring control Less: Eliminated upon consolidation 29,600 22,786 4,283 (56,669) 189,761 Investment in equity instruments 50,000 ( March 31, 2011: Nil) equity shares of USD 1 each fully paid-up in GVK Coal Developers Singapore Pte Limited Non-trade investments (unquoted, at cost) Investment in Government or trust securities National Savings Certi?cates 5 30 189,791 Aggregate amount of unquoted investments * The entity became a subsidiary with e?ect from October 18, 2011. 189,791 1 1 173,762 173,762 25 29,600 15,496 7,290 52,386 173,761 179,340 117,311 2 2 March 31, 2011
4,062 6,357 189,759
259 3,803 121,373
69 69
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
16. Loans and advances
Non-current March 31, 2012 Loan and advances to related parties Unsecured, considered good Loan to GVK employee welfare trust Loan to EMRI Share application money to associate Others (A) Capital advances Unsecured, considered good (B) Deposits Unsecured, considered good (C) Advances recoverable in cash or kind Unsecured considered good (D) Other loans and advances (Unsecured, considered good) Advance income-tax (net of provision for taxation) Balance with statutory/government authorities Prepaid expenses MAT credit entitlement Others (E) (A+B+C+D+E) 6,163 116 6,279 135,907 3,767 3,767 66,747 10,675 895 1,783 192 13,545 21,022 480 212 651 285 7 1635 3,550 418 418 463 463 4,373 4,373 1,022 1,022 861 861 1,145 1,145 3,104 3,104 893 893 117,924 117,924 4,500 5,473 337 115 10,425 3,000 4,777 209 7,986 53,386 53,386 March 31, 2011 Current March 31, 2012 March 31, 2011
70
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
17. Trade receivables and other assets
i) Trade receivables Non-current March 31, 2012 Unsecured, considered good unless stated otherwise Outstanding for a period exceeding six months from the date they are due for payment Unsecured, considered good Doubtful (A) Provision for doubtful receivables (B) Other receivables Unsecured, considered good (C) (A+B+C) a) 1,308 1,308 8,118 483 483 6,810 16,530 16,530 37,502 120 120 120 6,810 6,810 6,810 6,327 6,327 20,972 561 21,533 (561) 20,972 March 31, 2011 Current March 31, 2012 March 31, 2011
Trade receivables include accruals towards reimbursement of ?xed charges for the ?nancial years 1997-1998 to 20002001, on increased capital cost worked out as per ratios set out in the PPA aggregating to Rs.4,512 (March 31, 2011: Rs.4,512) by GVKIL. The increased capital cost is subject to the approval of APERC. Pending approval of increased capital cost by APERC, the claim for reimbursement of ?xed charges has not been made on AP Transco. The subsidiary company contends that it is entitled to reimbursement of ?xed charges on increased capital cost under the terms of PPA and accordingly considers these amounts as good and recoverable. The subsidiary company has ?led a writ petition before the High Court of New Delhi against APERC, seeking a direction to APERC to take a decision on approval of completed capital cost in a time bound manner. The matter is pending hearing. The management of the subsidiary company based on its internal assessment and legal advice is con?dent of receiving approval of completed capital cost. Trade receivables include amounts receivable from AP Transco towards reimbursement of minimum alternate tax under the provisions of Income Tax Act, 1961, for the period commencing from the ?nancial year 2000-2001 up to the ?nancial year 2010-2011, aggregating to Rs.3,530 (March 31, 2011: Rs.3,500) are refuted by AP Transco. While the subsidiary company contends that the it is entitled to claim payments on account of minimum alternate taxes also under the provisions of PPA, AP Transco contends only taxes on the net taxable income under the regular provisions of the Income Tax Act, 1961 are reimbursable and not taxes levied on book pro?ts under the deemed provisions of Section 115 JB of the Income Tax Act, 1961. Further, provision for current taxes is being made a?er considering reimbursable amount from AP Transco. Based on its internal assessment and legal advice, the subsidiary company’s contention is that these amounts are recoverable. Trade receivables further include an amount of Rs.76 (March 31, 2011: Rs.76) being the di?erential interest recovered by AP Transco considering the actual working capital limits as against the working capital limits computed as per the terms of the PPA and interest rate charged as per rates available with AP Transco and not with the subsidiary Company. The subsidiary company has ?led a petition under Section 9 of Arbitration & Conciliation Act 1996, and the City Civil Court of Hyderabad has restrained AP Transco from considering the lower level of working capital limits by granting a stay in the matter. The appeal ?led by AP Transco before the High Court of Andhra Pradesh against the aforesaid stay, is pending disposal. The management of the subsidiary company based on its internal assessment is con?dent that the matter will be decided in its favour.
b)
c)
71 71
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
d)
The trade receivables include Rs.21,266 from Air India Limited (Air India) a company wholly owned by the Government of India (GOI) and its subsidiaries. Air India has been facing ?nancial di?culties and has not been settling its dues to MIAL in time. In the plan outlay of the Union Budget 2012-13 which is awaiting approval in the Parliament, the GOI has proposed to infuse equity into Air India which has in turn communicated to MIAL that it would start paying MIAL’s dues once the funds are made available by the Government. MIAL accordingly considers the dues from Air India as good and recoverable. In the event either the proposal is not approved or the payments are not made as communicated, the recoverability of the dues from Air India could be impacted. The trade receivables also include Rs.4,041 from King?sher Airlines Limited (King?sher) which has also been facing ?nancial di?culties and has curtailed its operations recently. MIAL has an understanding under which King?sher is paying amounts in excess of its actual service usage and the dues from King?sher have been gradually reducing. Accordingly, MIAL considers the dues from King?sher as good and recoverable. In the event payments from King?sher are not received as per the understanding, the recoverability of dues from King?sher could be impacted.
e)
ii)
Other assets Non-current March 31, 2012 Unsecured, considered good Non-current bank balances (note 20) Non-current inventory (note 19) Unamortised expenditure Unamortised portion of ancillary cost of arranging the borrowings Others Unbilled revenues Interest accrued on ?xed deposits Advance for investments Other receivables 48 4,109 1,302 4,382 12,517 1,001 1,400 1,199 18,718 16,024 495 311 16,830 1,667 1,490 2,601 1,368 1,026 449 1,141 March 31, 2011 Current March 31, 2012 March 31, 2011
18. Current investments
March 31, 2012 Current investments (valued at lower of cost and fair value) Other than trade (quoted) Investments in units of Mutual Funds Certi?cate of Deposit Aggregate market value of quoted investments 21,946 1,460 23,406 23,554 73,964 2,445 76,409 77,275 March 31, 2011
19. Inventories (valued at lower of cost and net realizable value)
Non-current March 31, 2012 Stores, spares and consumables Amount disclosed under non-current assets (note 17(ii)) 1,026 1,026 (1,026) 72
Current March 31, 2012 7,540 7,540 March 31, 2011 3,168 3,168 1,141 1,141 (1,141) 7,540 3,168
March 31, 2011
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
20. Cash and bank balances
Non-current March 31, 2012 Cash and cash equivalents Balances with banks: - On current accounts - Deposits with originally maturity of less than three months - On unpaid dividend account Cheques/dra?s on hand Cash on hand 53,885 19,382 15 5,956 214 79,452 Other bank balances - Deposits with original maturity for more than 12 months - Deposits with original maturity for more than 3 months but less than 12 months - Margin money deposit/security against borrowings Amount disclosed under non-current assets (note 17(ii)) 1,368 1,368 (1,368) 449 449 (449) 172,626 32,820 40,686 52,488 93,174 736 290 1,026 9,679 22,020 20 75 31,794 March 31, 2011 Current March 31, 2012 March 31, 2011
21. Revenue from Operations
March 31, 2012 Revenue from operations Sale of electrical energy Sale of services Income from toll operations Aeronautical Non-aeronautical Cargo operations Manpower and consultancy services 22,384 19,879 31,984 7,689 616 249,183 18,916 1,257 191,466 166,631 171,293 March 31, 2011
73 73
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
22. Other income
March 31, 2012 Interest income on Bank deposits Others Dividend income on Non trade current investments Pro?t on sale of investments Non trade current investments Pro?t on sale of ?xed assets (net) Guarantee commission Liabilities written back Miscellaneous income 3,964 12 1,062 76 214 8,887 1,497 71 26 106 2,853 97 169 3,436 26 156 828 March 31, 2011
23. Employee bene?t expense
March 31, 2012 Salaries, wages and bonus Contribution to provident and other funds Retirement and other employee bene?ts Sta? welfare expenses 7,375 333 158 202 8,068 March 31, 2011 3,103 108 38 100 3,349
24. Finance costs
March 31, 2012 Interest Bank charges Amortization of ancillary borrowing costs Exchange di?erence to the extent considered as an adjustment to borrowing costs 44,077 480 525 1,645 46,727 March 31, 2011 25,447 867 26,314
25. Depreciation and amortization expense
March 31, 2012 Depreciation of tangible assets Amortization of intangible assets Less: Transfer to Expenditure incurred during construction period Less: Amount withdrawn from deferred income 22,555 3,205 25,760 271 596 24,893 March 31, 2011 16,672 2,727 19,399 197 838 18,364
74
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
26. Other expenses
March 31, 2012 Operating and maintenance expenses NHAI share of toll fee Minimum o? take price for naphtha Rent Rates and taxes Insurance Repairs and maintenance: - Buildings - Roads - Plant and machinery - Others Vehicle hire charges Electricity and water Travel and conveyance Communication Printing and stationery Advertisement Bid and tender document charges Legal and professional charges Prompt payment rebate Auditor's remuneration (refer note below) Directors' sitting fee Donation Foreign exchange ?uctuations (net) Loss on sale of ?xed assets (net) Provision for Doubtful trade receivable Insurance claims and assets written o? Miscellaneous expenses 938 2,318 3,024 1,572 167 1,602 917 216 203 210 270 3,075 3,998 17 29 886 315 136 17 1,716 30,080 March 31, 2012 As auditor: Audit fee Limited Review In other Capacity: Other services (certi?cation fees) Reimbursement of expenses 1 17 15 12 4 11 4 53 3,082 4,801 574 58 244 624 139 125 78 235 3,061 4,223 15 25 657 399 1 502 22,547 March 31, 2011 3,820 2,728 13 354 542 991 March 31, 2011 392 1,716 10 244 499 790
75 75
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
27. Gratuity and other post-employment bene?t plans
The Group operates one de?ned plan, viz., gratuity, for its employees. Under the gratuity plan, every employee who has completed at least ?ve years of service gets a gratuity on retirement or termination at 15 days of last drawn salary for each completed year of service. The scheme is unfunded. The following tables summarize the components of net bene?t expense recognized in the statement of pro?t and loss and the funded status and amounts recognized in the balance sheet for the plan. A) Statement of pro?t and loss Net employee bene?t expense recognized in the employee cost March 31, 2012 Current service cost Interest cost on bene?t obligation Past service costs Net actuarial( gain) / loss recognized in the year Net bene?t expense B) Balance sheet March 31, 2012 Present value of de?ned bene?t obligation Past service costs Fair value of plan assets Net liability C) Changes in the present value of the de?ned bene?t obligation are as follows: March 31, 2012 Opening de?ned bene?t obligation Obligation on transfer of employees Opening de?ned bene?t obligation on acquisition of subsidiary Current service cost Interest cost Bene?ts paid Past service costs Actuarial (gains) / losses on obligation Closing de?ned bene?t obligation 296 357 81 54 (32) 61 817 68 15 (2) 79 (85) 296 March 31, 2011 184 37 794 23 817 March 31, 2011 296 296 81 54 11 61 207 March 31, 2011 68 15 79 (85) 77
D) The principal assumptions used in determining gratuity bene?t obligations for the company’s plans are shown below: March 31, 2012 Discount rate Expected rate of return on assets Employee turnover 8.6% p.a. Not applicable 5% March 31, 2011 8% p.a. Not applicable 5%
The estimates of future salary increases, considered in actuarial valuation, take account of in?ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
76
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
28. Contingent liabilities
A) 1. Parent Company Direct and indirect taxes ? Income tax demand for assessment year 2008-09 for Rs.72.98 (March 31, 2011:Rs.72.98).
?
The Company has received a notice dated February 4, 2008 from the O?ce of the District Registrar of Assurances, Hyderabad demanding payment of stamp duties of Rs.2,829 on transfer of shares to the shareholders of GVK Industries Limited vide the scheme of arrangement approved by the Andhra Pradesh High Court. The company has obtained an order from the Andhra Pradesh High Court staying the above notice on March 13, 2008 until such further orders from the said court. Management based on its internal assessment and/or legal advice is con?dent that the cases will be decided in the Company’s favour.
2.
?
Security against loans taken by others The Company has pledged 73,217,647 (March 31, 2011: Nil) and 22,495,000 (March 31, 2011: Nil) shares of GVK Energy Limited and GVK Transportation Private Limited for securing loan obtained by GVK Coal (Singapore) Pte. Limited, an entity in which Company has 10% stake. During the year ended March 31, 2012, the Parent Company has provided security by way of corporate guarantees amounting to Rs.1,441 for securing facilities obtained by an associate (March 31, 2011: Rs.1,441) for various fund and non-fund based facilities availed by them. During the year ended March 31, 2012, the Company has provided security by way of corporate guarantees amounting to Rs.9,074 (March 31, 2011: 10,048) for securing loans obtained by GVK Projects and Technical Services Limited. During the year ended March 31, 2012, the Company has provided security by way of guarantee amounting to Rs.220,587 (March 31, 2011:Nil) for securing loans obtained by GVK Coal Developers (Singapore) Pte Limited for a facility availed by it. Management is of the opinion that the aforesaid Companies will be able to meet their obligations as they arise and consequently no adjustment is required to be made to the carrying value of the security and guarantees provided.
?
?
?
B) i)
Subsidiary companies GVKIL Particulars On account of guarantees issued by banks Service Tax demand on operator of the power plant Claims not acknowledged as debts
?
March 31, 2012 128 759 150
March 31, 2011 208 570 8
AP Transco during the year 2003-2004 made a claim of Rs.2,048 against the subsidiary company stating that e?ective Return on Equity (“ROE“) claimed by the subsidiary company works out to 17.17% as pointed out by Comptroller and Auditor General of India as against 16% to be claimed as per the Power Purchase Agreement (“PPA”). Aggrieved by the said claim, the subsidiary preferred a writ petition before the High Court of Andhra Pradesh and the High Court directed that the matter be referred to arbitration as envisaged in PPA. Pending arbitration, the High Court permitted the subsidiary company to collect ROE at 16% on a monthly basis which is accounted for as income and is being paid by AP Transco. If the decision is against GVKIL, the liability on this account up to March 31, 2012 would be Rs.5,078 (March 31, 2011: Rs.4,716). The subsidiary company is con?dent that its claim for ROE on a monthly basis is strictly in accordance with PPA. AP Transco has ?led petition before APERC to consider interest on working capital charged by State Bank of India to its most credit worthy customers for the purpose of determining tari? for the year 2003-04. Based on these petitions, APERC has issued notices to the subsidiary company for hearing on these matters. The subsidiary company has ?led a writ petition before the High Court of Andhra Pradesh questioning the jurisdiction of APERC for adjudication of matters under the PPA. The High Court of Andhra Pradesh has issued interim directions against APERC not to proceed with the subject notice until further orders.
77 77
?
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Subsequently, in the year 2008, the Supreme Court held that all matters relating to tari? shall be adjudicated by Electricity Regulatory Commission. The subsidiary company accordingly, withdrew the writ petition and approached Andhra Pradesh Electricity Regulatory Commission (APERC) seeking directions of the Commission for adjudication of its claims. The subsidiary company is con?dent that the matter will be decided in its favour.
?
In the year 2007, AP Central Power Distribution Company Ltd has ?led a petition without specifying any amount before APERC against the subsidiary company stating that insurance premium relating to Business Interruption Policy is not eligible for reimbursement right from date of commencement of commercial operations. The subsidiary company is con?dent that the matter will be decided in its favour. As per the terms of contract with Bharat Petroleum Corporation Limited (BPCL) for supply of Naphtha, the subsidiary company has to pay for 80,000 MT @ Rs.38.45 as ‘Minimum o? Take charges’ in the year in which there is no procurement. The subsidiary company is negotiating with BPCL to reduce the Minimum o? Take quantity from 80,000 MT to 40,000 MT, which is under consideration by BPCL. Pending receipt of acceptance from BPCL, no provision is made in the books for the requested reductions of 40,000 MT, which worked out to Rs.13 (March 31, 2011 Rs.15) for the year and the liability on this account up to January 29, 2012 is Rs.105 (March 31, 2011 Rs.92). The subsidiary company is con?dent of receiving acceptance from BPCL. The contract with BPCL expired on January 29, 2012. AP State Load Despatch Centre (APSLDC) has ?led petitions before the Andhra Pradesh Electricity Regulatory Commission (APERC) for appointment of adjudicating o?cer for assessment of charges to be levied on the Company for non adherence to backing down instructions by GVK Power and Infrastructure Limited, operator of the power plant of the subsidiary company. APSLDC has claimed an amount of Rs.1,320 for the aforesaid non- compliance. Management based on its internal assessment/ legal advice is con?dent that the matter will be decided in the company’s favour. The subsidiary company approached AP Transco for new connection while constructing it’s new power plant upon which AP Transco raised demand of Rs.399 towards minimum monthly charges regarding electricity connection taken earlier which was surrendered on October 7, 1996. The subsidiary company ?led petition before the Andhra Pradesh Electricity Regulatory Commission (APERC) claiming levy of demand as arbitrary, which is disposed directing GVKIL to approach Consumer Grievance Redressal Cell as dispute is not connection with power purchase agreement. The GVKIL has ?led a writ petition before the High Court of Andhra Pradesh contesting the matter is within ambit of PPA. The High Court of Andhra Pradesh has issued stay on demand. Management based on its internal assessment/ legal advice is con?dent that the matter will be decided in the company’s favour.
?
?
?
ii)
GJEPL Particulars On account of guarantees issued by banks Disputed income tax demands Claims not acknowledged as debts March 31, 2012 1,250 220 8 March 31, 2011 1,250 1,749 -
iii)
AHPCL Particulars On account of guarantees issued by banks Claims not acknowledged as debts Disputed income tax demands March 31, 2012 6,085 7,650 32 March 31, 2011 7,075 5 126
iv)
GVKPGSL Particulars On account of guarantees issued by banks March 31, 2012 4,050 March 31, 2011 4,050
78
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
v)
GVKGPL Particulars Service Tax demand on operator of the power plant Claims not acknowledged as debts March 31, 2012 312 826 March 31, 2011 156 97
?
AP State Load Despatch Centre (APSLDC) has ?led petitions before the Andhra Pradesh Electricity Regulatory Commission (APERC) for appointment of adjudicating o?cer for assessment of charges to be levied for non-adherence to backing down instructions by subsidiary. APSLDC has claimed an amount of Rs.290 for the aforesaid non-compliance. Management based on its internal assessment is con?dent that the matter will be decided in the subsidiary company’s favour.
vi) GVKDPPL Particulars On account of guarantees issued by banks vii) GVKBVPL Particulars On account of guarantees issued by banks viii) GVKRHEPPL Particulars On account of guarantees issued by banks ix) GVKSDEPL Particulars On account of guarantees issued by banks x) March 31, 2012 2,815 March 31, 2011 March 31, 2012 69 March 31, 2011 March 31, 2012 4,420 March 31, 2011 March 31, 2012 2,967 March 31, 2011 18,251
?
GVKOGL The subsidiary company has given seven multiple performance bank guarantee’s amounting to Rs.1,178 (March 31, 2011: Rs.1,178) for seven oil blocks in favor of ‘Ministry of Petroleum & Natural Gas’ for a period of one year towards 35% of estimated expenditure of Minimum Work Program of the exploration phase. Management is con?dent of executing the minimum work program during the exploration phase, hence no provision has been made. The subsidiary company has received a demand notice from service tax authorities demanding service tax of Rs.82 (March 31, 2011: Rs.82) under the category “Survey and Exploration of Mineral Service” on the seismic data purchased by the subsidiary company from M/s GX Technology Corporation and M/s GGS Spectrum Limited. The subsidiary company has disputed the claim and has ?led a reply to notice demanding service tax. During the year 2008-09, GVKOGL had purchased seismic data, which is acquired in the process of bidding, from M/s GX Technology Corporation and M/s GGS Spectrum Limited. The subsidiary company remitted Rs.617 and Rs.45 to the above parties respectively without deduction of tax, on the opinion that remittance for purchase of data is not covered u/s 195 of the Income Tax Act. Subsequently, the Income Tax Department raised a demand aggregating to Rs.84 (March 31, 2011: Rs.84) stating that the payments made were in the nature of royalty and were subject to TDS. The subsidiary company has ?led an appeal against the said notice and the case is pending before the Commissioner of Income tax (Appeals). Management of the subsidiary company is of the opinion that in the light of recent judgements, there is a high likelihood that the case will be decided in its favour.
79 79
?
?
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
xi) GVKDKEPL Particulars On account of guarantee issued by banks
?
March 31, 2012 2,967
March 31, 2011 2,967
During the previous year, the subsidiary company had received a letter from NHAI stating that the subsidiary company is liable to pay penalty amounting to Rs.157 for delay in achieving the ?nance closure within the stipulated time as per the concession agreement entered into with NHAI. According to the subsidiary company, the contention of NHAI is not in accordance to provisions of the concession agreement. The subsidiary company has objected to levy said penalty and is con?dent that the matter will be decided in its favour.
xii) GHPPL ? The subsidiary company had ?led an appeal before Hon’ble High Court of Uttarakhand challenging a common judgment and order dated 8th November, 2010 passed by Single Judge on a writ petition ?led by Reliance Infrastructure Limited in awarding Hydro Electric Power Project, Mapang Bogudiyar, in favor of the consortium of GVK and L & T. The Hon’ble High Court has dismissed the petition ?led by the GVK vide its order dated April 27, 2012. The Court has however allowed recovery of the sum paid by GVK to the State of Uttarakhand and directed Reliance Infrastructure Limited to pay a sum of Rs.1,683 to the company a?er deducting Rs.1,334. The company has preferred an appeal before the Hon’ble Supreme Court of India and the subsidiary company is of the view that the matter will be decided in its favour. xiii) MIAL ? Claims against MIAL not acknowledged as debts: a) Non-Agricultural tax amounting to Rs.6,138 (March 31, 2011: Rs.2,851) to the extent levied by the appropriate authorities on the Airport Land, of which Rs.1,166 (March 31, 2011: Rs.431) was paid under protest. b) Income tax amounting to Rs.4,682 (March 31, 2011: Rs.2,743) demanded by the concerned authorities, of which Rs.200 (March 31, 2011: Rs.2,407) was adjusted / paid under protest. c) Service Tax amounting to Rs.10,174 (March 31, 2011: Rs.12) demanded by the concerned authorities under Section 73, 76, 77 and 78 of the Finance Act, 1994 on development fee considered not payable based as per the advise received by the Company. d) Other claims amounting to Rs.3,349 (March 31, 2011: Rs.Nil) not acknowledged as debts.
?
Earlier supplier of electricity to the airport has sought certain revision in rates and arrears of short recovery with Maharashtra Electricity Regulatory Commission. The impact, if any on the company is presently not ascertainable. Applicability of service tax on the rent / license fee / lease being charged by the subsidiary company has been disputed by certain airlines and concessionaries who have not paid the service tax on such services and most of them have obtained stay order from various courts. However some of these concessionaires who are members of Retailers Association of India (“RAI”) have deposited the arrears of Service tax due for the period prior to September 30,2011 with the court as per the order given by the Hon’ble Supreme Court . The matter is currently subjudice and necessary actions will be taken by the subsidiary company once the matter is decided by the courts. However, in the opinion of the subsidiary Company, this would not have any impact on the ?nancial results of the subsidiary company as the same is recoverable from the said parties if it becomes payable by the subsidiary Company.
?
C)
Associate companies (to the extent of shareholding therein) i) SML Particulars On account of guarantees issued by banks March 31, 2012 1,180 March 31, 2011 1,180
80
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
ii)
BIAL Particulars Claims against the associate company not acknowledged as debts
?
March 31, 2012 42
March 31, 2011 28
The associate company has issued undertaking to Customs authorities aggregating to Rs.Nil (March 31, 2011: Rs.23) with respect to concessional rate of duty adopted for import of certain eligible equipment. The associate company has ?led an application to get itself impleaded as one of the aggrieved party against an appeal ?led by the State of Karnataka, challenging the order of the Karnataka High Court, issued in April, 2007, quashing the levy of Special Entry Tax of Rs.92 (March 31, 2011: Rs.62). The Income Tax Department has ?led an appeal in the Karnataka High Court against the Income Tax Appellate Tribunal (ITAT) order regarding the Tax Deducted at Source (TDS) on the reimbursement of development costs to overseas promoters in 2005-2006. The associate company had earlier paid the TDS amount of Rs.255 (March 31,2011: Rs.172) under protest before getting the relief from ITAT. This was refunded to the associate company along with the interest of Rs.39 (March 31, 2011: Rs.26) as a result of favorable ITAT order. The Management of the associate company is con?dent of defending the tribunal order in the High Court and made appropriate legal representation in this regard. The associate company has received two demand orders from Commissioner of service tax for the periods 20052009 and 2009-10 for payment of service tax of Rs.101 (March 31, 2011: Rs.68) as a recipient of service towards reimbursement of salary costs to Zurich Airport. The interest and penalty as per the above demand orders amounts to Rs.53 and Rs.126 respectively. Further, a show cause notice has been issued for period 2010-2011 for a sum of Rs.12 on the same account. These payments relate to salaries of expatriates who were seconded to associate company. The associate company has preferred an appeal against demand orders before the Tribunal (CESTAT) and challenged the show cause notice which is not con?rmed by formal demand as on the balance sheet date. The associate company has challenged the demand based on the judicial precedence on the matter and is con?dent of non-applicability of service tax since the payment relates to salary costs to expatriate employees of the associate company which cannot be treated as services received by the associate company. Zurich Airport is only a remitter of the foreign currency remuneration as is evidenced by expatriate remuneration reimbursement agreement between the associate company and Zurich Airport. The associate company has accounted these payments as salaries and discharged appropriate TDS as the economic employer of the said expatriates.
?
?
?
29. Capital and other commitments
A)
?
Parent company The Company has given undertaking to infuse equity aggregating to Rs.229,590 in GVK Coal Developers (Singapore) Pte. Limited, towards shortfall, if any, of its loan repayment obligations. During the previous year, the Company, GVK Energy Limited (subsidiary company) and certain private equity investors (‘investors’) have entered into an investment agreement pursuant to which the Company has undertaken to conduct an initial public o?ering of the GVK Energy Limited’s equity shares (‘Quali?ed IPO’ or ‘QIPO’) within 60 months from the date of investment agreement (preferred listing period). If the GVK Energy Limited does not make a QIPO during the preferred listing period and no o?er for sale takes place within 12 months of the preferred listing period, then, at any time therea?er, the investors will have a put option with respect to all of the securities held by the Investor (“Put Right”) on the Company and the GVK Energy Limited at the higher of i) 20% IRR from the date of investment to the date of receipt of proceeds from the investor (“Put IRR”) and ii) the fair market value of the investor’s shares. Provided the Put IRR shall be reduced to 15% IRR, if at least 3 private sector initial public o?erings with an issue size of Rs.100,000 or more each have not taken place in India between the 36th month to the 60th month from date of investment agreement.
?
81 81
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
B)
?
Subsidiary companies Estimated amounts of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs.459,903 (March 31, 2011: Rs.410,597). The company under the Production Sharing Contract entered into with Ministry of Petroleum and Natural Gas has given commitment towards minimum work programme in seven blocks allotted during NELP VII for exploration of oil and gas being conducted by the jointly controlled entity of the company. Similar commitment was there in the previous year also.
?
C)
Associate companies (to the extent of shareholding therein) Estimated amounts of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs.24,280 (March 31, 2011: Rs.99,742).
30. The subsidiary Company (“MIAL”) has awarded a contract to Housing Development and Infrastructure Limited (“HDIL”) to undertake activities relating to rehabilitation of slum dwellers and restoration of the Airport Land, which is currently under encroachment and as consideration, the subsidiary company has granted rights to HDIL to develop and use part of the land vacated by encroachers in a phased manner without any cost to the subsidiary company and balance land will be made available to the subsidiary company for its use. Construction of tenements by HDIL for the relocation of slum dwellers from the airport land is under progress. 31. During the year ended March 31, 2012, BIAL has demolished a portion of its ?xed assets, comprising of carrying value of building aggregating Rs.152, furniture and ?xtures aggregating Rs.332 and plant and equipment aggregating Rs.154 as a part of its airport expansion plan. The Management has not derecognised the carrying values of these assets on demolition and has instead transferred the carrying values of such assets to capital work – in – progress as it believes that these costs are an integral part of the new asset being constructed and hence eligible for capitalisation. BIAL has, as a matter of abundant caution, also sought an option from the Institute of Chartered Accountants of India (“EAC”) soliciting their opinion on the appropriateness of the stated accounting treatment. Pending the opinion form EAC, BIAL currently recorded the carrying values of these demolished assets aggregating Rs.638 under Capital work – in – progress. BIAL would carry out adjustments, if any, based on the opinion from the EAC. The amounts reported in this paragraph are full amounts as reported in associate’s ?nancial statements. 32. BIAL has recognised carry forward Minimum alternate tax(“MAT”) credit entitlement aggregating to Rs.7,352 (March 31, 2011: Rs.3,752) as at March 31, 2012. This is based on the pro?table projections of the Company for aeronautical, non aeronautical and real estate businesses; which are supported by the Concession agreement, which gives BIAL the right to operate the airport for a period of atleast 30 years from the airport opening date (i.e., May23, 2008). Accordingly, the Management believes that there will be su?cient future taxable pro?ts to utilise the aforementioned MAT credit entitlement within the stipulated period available under the provisions of the Income-tax Act, 1961 of India, notwithstanding the fact, that the Company is entitled to a tax holiday period as per the provisions of Section 80-IA of the aforesaid Act. BIAL has, as a matter of abundant caution, also sought an opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India (“EAC”) soliciting their opinion on the appropriateness of the stated accounting treatment. BIAL is awaiting the opinion from the EAC, and has currently retained the MAT credit entitlement aggregating Rs 7,352 (Previous year: Rs 3,752) under Long-term loans and advances. The Company would carry out adjustments, if any, based on the opinion from the EAC. The amounts reported in this paragraph are full amounts as reported in associate’s ?nancial statements. 33. The trade receivables of BIAL as at March 31, 2012 contain outstanding dues from a customer aggregating Rs 5,532. There appears to be signi?cant uncertainty relating to the ability of the party to pay the debts due to the Company due to ?nancial di?culties which have resulted in scaling down of customer’s business. However, considering the national importance of the continued existence of the customer and based on the regular receipt of debts due during the year February 9, 2012 which resumed again e?ective April 17, 2012, the Management is con?dent of eventual collection of the debts due from the customer in due course. Accordingly, the Management believes that the current provision for the customer aggregating Rs.264 created in accordance with the Company’s provision policy is su?cient. The amounts reported in this paragraph are full amounts as reported in associate’s ?nancial statements.
82
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
34. Related Party Transactions
During the year ended March 31, 2012, the Company has entered into certain related party transactions. Details of the related party and transactions are as follows: Name of the related party MIAL * (till October 18, 2011) BIAL* SML * Dr. G V Krishna Reddy, Chairman & Managing Director Mr. G V Sanjay Reddy, Vice Chairman and Director Mr. Krishna Ram Bhupal, Director Mr. A. Issac George, Director TAJ GVK Hotels & Resorts Limited Orbit Travels & Tours Private Limited Paigah House Hotel Private Limited GVK Novopan Industries Limited Pinakini Share and Stock Broker Limited GVK Technical & Consultancy Services Private Limited Krishna Enterprises GVK Emergency Management and Research Institute (a society registered under Societies Registration Act) (EMRI) GVK Foundation GVK Airport Foundation GVK Hydel Private Limited GVK Employee Welfare Trust GVK Coal Developers (Singapore) Pte Ltd GVK Projects & Technical Services Limited * Through subsidiary companies Enterprises over which the key management personnel exercise signi?cant in?uence Key management personnel Associates Nature of relationship
83 83
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Details of related party transactions during the year
Particulars
GVK Projects & Technical Services Limited
GVK Technical & Consultancy Services Pvt Ltd
Pinakani Share and Stock Broker Limited
GVK Coal Developers (Singapore) Pte Ltd
TAJ GVK Hotels & Resorts Limited
Orbit Travels & Tours Private Limited
GVK GVK GVK GVK Novopan Foundation Airport EMRI Industries Foundation Limited
Paigah House Hotel Private Limited
Rent Services received (Including EPC services) Services rendered Donation Investment in equity Advances given Loans given
58,680 (44,250) 57,328 (918) -
4,310 (3,581) 154 88 108
27 (8) 8 8 -
1,014 25 830 1,071 220,587 178,082,500
80 (35) 4 -
1,436 (473) (11)
(1) (900) 81
252 (291) -
272 -
466 (400) 696 (1,570)
129 (103) -
Loans recovered Loans taken Share application money Corporate guarantee given Corporate guarantee released Remuneration to key managerial personnel Shares pledged (no. of shares) Shares unpledged (no. of shares) Balances outstanding Receivables/ (Payables) - March 31, 2012 Receivables/ (Payables) - March 31, 2011 Corporate Guarantee Shares pledged (no. of shares)
Note:
(298) (2,961) 46,700 (143) 974 (4,285)
(48)
5,473
-
(6)
82,369,853 517
1
2,215
(1)
-
-
6
(19)
81
(39)
-
4,777
-
9,074 (10,048) -
-
-
220,587 95,712,647*
-
-
-
-
-
-
-
Previous year ?gures are in parenthesis except for receivable/(payable) at year end *Pledge of 73,217,647 (March 31, 2011: Nil) shares of GVK Energy Limited and 22,495,000 (March 31, 2011:Nil) shares of GVK Transportation Private Limited
84
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Details of related party transactions during the year
Particulars
Krishna Seregraha Enterprises Mines Limited
Mumbai International Airport Pvt. Ltd.
Bengaluru GVK Hydel International Private Airport limited Limited
GVK Employee welfare trust
Dr. G V Krishna Reddy
Mr. G V Sanjay Reddy
Mr. Krishna Mr. A Issac Ram George Bhupal
Rent Services received (Including EPC services) Services rendered Donation Investment in equity Advances given Loans given Loans recovered Loans taken Share application money Corporate guarantee given Corporate guarantee released Remuneration to key managerial personnel Shares pledged (no. of shares) Shares unpledged (no. of shares) Balances outstanding Receivables/ (Payables) - March 31, 2012 Receivables/ (Payables) - March 31, 2011 Corporate Guarantee Shares pledged (no. of shares)
Note:
24 (24) -
8 (8) -
641 (1,387) (7,400) (6) (3) -
44 (9) 53 -
2 (2) -
1,500 (2,000) 4,500
487 (139) (32)
436 (190)
31 (31) 257 (149) (84)
208 (171) -
-
4
120
9
-
3,000
-
-
-
(7)
-
1,441 (1,441) -
-
-
-
-
-
-
-
-
Previous year ?gures are in parenthesis except for receivable/(payable) at year end *Pledge of 73,217,647 (March 31, 2011: Nil) shares of GVK Energy Limited and 22,495,000 (March 31, 2011:Nil) shares of GVK Transportation Private Limited
85 85
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
35. Segment Information
Business Segments: The Company organized its operations into three major businesses: a) Power : Generation, Operation and Maintenance services to the power plants b) Roads : Building, development and maintenance of roads c) Airport : Operation and maintenance of airport d) Others : SEZ, Manpower, and Exploration of Oil & Gas. Geographical Segments: The Company operates in a single geographical segment. Segment disclosers
Power Particulars REVENUE External revenue Inter segment revenue Total revenue RESULT Segment result Interest expense Interest income Other income (net) Pro?t Before Tax (PBT) Income taxes Pro?t/(loss) before minority interest and share of pro?t from associate Share of Pro?t from Associate Minority Interest Pro?t for the year OTHER INFORMATION Segment assets Unallocable corporate assets Total assets Segment liabilities Unallocable corporate liabilities Total liabilities Capital expenditure including capital work in progress Depreciation (included in segment expense) Capital Employed 263,123 151,684 22,736 3,996 75,198 3,058 11,887 64,399 32,034 26,014 21,102 78,766 50 33 13 899,903 679,413 142,605 62,305 743,350 28,438 27,462 - 1,814,296 475,215 769,180 302,290 17,478 24,232 12,747 9,681 13,061 (395) 235 (1,350) 142 43,663 45,722 3,462 5,272 6,675 6,782 (107) 32,168 25,447 984 1,869 9,574 2,132 7,442 166,631 171,293 22,384 18,916 59,552 166,631 171,293 22,384 18,916 59,552 616 628 1,244 1,257 1,257 (628) 249,183 249,183 191,466 191,466 Roads Airports Others Eliminations Total
March 31, 2012 March 31, 2011 March March March March March March March March March March 31, 2012 31, 2011 31, 2012 31, 2011 31, 2012 31, 2011 31, 2012 31, 2011 31, 2012 31, 2011
10,639 4,386 6,146
11,093 3,044 15,491
2,289,511 1,071,470 169,212 ,772,162 1,941,374 364,115 53,199 679,593 732,792 167,567
16,515
16,451
1,374
1,904
7,004
(50)
28,405
9 27,449
-
-
24,893 348,137
18,364 338,678
835,504 647,379 116,591
41,203 664,584
86
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
36. Operating Leases
The Group has entered into operating lease agreements for various o?ces and guest house for period up to 3 years. The future minimum lease payments payable under non-cancellable operating lease are as follows: Particulars March 31, 2012 March 31, 2011
Not later than one year 12 9 Later than one year and not later than ?ve years Nil 7 Later than ?ve years Nil Nil Note: The minimum lease payments are excluding service tax. No signi?cant restrictions have been imposed by the lessors on the leases. The leases can be renewed a?er completion of the minimum lock in period a?er mutually discussing the renewal terms with the lessor.
37. Derivative Instruments and Un hedged foreign currency exposure
Particulars of derivatives: Particulars of derivative Forward cover contracts outstanding at Balance Sheet date Particulars of unhedged foreign currency: Particulars Payables Loans Creditors Buyers credit Other payables Receivables Gaurantee commission 45,840 3,425 2,407 527 458 42,912 1,968 2,650 March 31, 2012 March 31, 2011 Purpose Hedge of foreign currency transactions March 31, 2012 Buy EURO 47 Buy CHF 9 March 31, 2011 Buy EURO 16 -
38. Provision for resurfacing obligation
The Group has a contractual obligation to periodically maintain, replace or restore infrastructure at the end of each ?ve years or earlier as per the terms of the concession agreement. Movement in provision for resurfacing obligation is as follows: Particulars Opening balance Additions during the year Amount used during the year Amounts reversed during the year March 31, 2012 1,133 1,133 2,266 March 31, 2011 1,192 1.133 (1,912) 1,133
39. During the previous year, GVKEL had made purchase of services from two companies aggregating to Rs.69 in respect of which prior approval of central government is required under the provisions of section 297 of the Companies Act 1956. The above transactions are part of normal business transactions at prevailing market prices. The company has since then applied to regulatory authorities for condonation. 40. The Reserve Bank of India (‘RBI’) had issued guidelines for Core Investment Companies (CIC) on January 5, 2011 pursuant to which Systematically Important Core Investment Companies (SI-CIC) are required to apply for registration with RBI within six months from the date of issue of the guidelines. The Company had applied to RBI for granting certi?cate of registration and is awaiting approval. As a SI- CIC, the company is required to comply with requirements of capital requirements and leverage ratios. The company is not in compliance with the aforesaid requirements and in the process of submitting an application to Reserve Bank of India for granting additional time to meet the compliance requirements. The company based on legal advice/ internal assessment believes that RBI would look favourably into the matter. Further, the Company based on legal advise/ internal assessment believes that since its income from ?nancial assets in the year ended March 31, 2012 are less than 50% of the gross income, the Company is not a Non- Banking Financial Company in the current year.
87 87
GVK Power & Infrastructure Limited
Notes to Consolidated Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
41. The Company has applied to Central government on April 24, 2012 for waiver of excess managerial remuneration amounting to Rs.207 paid to two directors during the year beyond the limits speci?ed in Part II of Section II (B) and Section III of Schedule XIII of the Companies Act, 1956. The Company believes that approval will be obtained in due course and would not have any material impact upon the ?nancial statements. 42. Consequent to the amendment to Schedule XIV of the Companies Act, 1956, regarding amortization of intangible assets (toll collection rights), GJEPL has changed the basis of amortization from actual tra?c for the year to projected tra?c method to actual tra?c revenue for the year to projected tra?c revenue. Had the subsidiary company continued to use earlier method of charging depreciation pro?ts before tax for the year would have been lower by Rs.690. 43. Acquisition of subsidiary During the current year, the Company has acquired additional 13.5% stake in MIAL, thereby making it subsidiary. On acquisition of the stake in the acquired entity the excess of purchase price over the net assets acquired has been recorded as Goodwill. Transactions relating to Pro?t and Loss Account of the acquired entity have been included in the Consolidated Pro?t and Loss Account from the e?ective date of acquisition. Until the date of acquisition, the Company has accounted for only share of pro?ts. i) The interest of the company in the net assets of the acquired entity and the resultant goodwill is as given below: Amount Purchase consideration Net assets as on the date of acquisition Goodwill ii) 113,952 20,676 93,276
Summary of post acquisition losses of the acquired entity included in the consolidated pro?t and loss account for the year ended March 31, 2012: Amount Revenues Expenses 59,817 53,023 6,794
iii) The assets and liabilities of the acquired entity (excluding goodwill) included in the Consolidated Balance Sheet as at March 31, 2012 Amount Liabilities Assets 563,678 763,631
44. Previous year comparatives Till the year ended March 31, 2011, the company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its ?nancial statements. During the year ended March 31, 2012, the revised Schedule VI noti?ed under the Companies Act 1956, has become applicable to the company. The company has reclassi?ed previous year ?gures to conform to this year’s classi?cation.
As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No. 93649 Place : Hyderabad Date : May 9, 2012 For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited Dr. G V Krishna Reddy Chairman & Managing Director A Issac George Director & CFO P. V. Rama Seshu GM & Company Secretary
88
Auditors’ Report
To The Members of GVK Power & Infrastructure Limited 1. We have audited the attached Balance Sheet of GVK Power & Infrastructure Limited (‘the Company’) as at March 31, 2012 and also the Statement of Pro?t and Loss and the Cash ?ow statement for the year ended on that date annexed thereto. These ?nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these ?nancial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the ?nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the ?nancial statements. An audit also includes assessing the accounting principles used and signi?cant estimates made by management, as well as evaluating the overall ?nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters speci?ed in paragraphs 4 and 5 of the said Order. 4. Without qualifying our opinion, we draw attention to: a. note 33 of notes to the ?nancial statements, regarding application being made by the Company to the Reserve Bank of India (‘RBI’) for granting time for compliance with capital requirements and leverage ratio as applicable to Systematically Important Core Investment Company more fully described therein b. note 34 of notes to the ?nancial statements, regarding application made by the Company for waiver of excess managerial remuneration amounting to Rs.207 lakhs paid to two directors in excess of limits prescribed under Schedule XIII of the Companies Act, 1956 more fully described therein. The ultimate outcome of the above matters cannot presently be determined, pending approvals as referred to in the relevant notes to the accounts referred above and accordingly no adjustments and provision for any liability that may result has been made in the ?nancial statements. 5. Further to our comments in the Annexure referred to above, we report that: i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; iii. The balance sheet, statement of pro?t and loss and cash ?ow statement dealt with by this report are in agreement with the books of account; iv. In our opinion, the balance sheet, statement of pro?t and loss and cash ?ow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; v. On the basis of the written representations received from the directors, as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disquali?ed as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: a) in the case of the balance sheet, of the state of a?airs of the Company as at March 31, 2012; b) in the case of the statement of pro?t and loss , of the loss for the year ended on that date and c) in the case of cash ?ow statement, of the cash ?ows for the year ended on that date. For S.R. Batliboi & Associates Firm Registration Number: 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No.: 93649 Place : Hyderabad Date : May 9, 2012
89 89
GVK Power & Infrastructure Limited
Annexure referred to in paragraph 3 of our report of even date
Re: GVK Power & Infrastructure Limited (‘the Company’) i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of ?xed assets. b) Fixed assets have been physically veri?ed by the management during the year and no material discrepancies were identi?ed on such veri?cation. c) There was no substantial disposal of ?xed assets during the year. ii) In view of the nature of operations carried out by the Company, it has no inventory. Accordingly, the provisions of clause (ii) (a) to (c) of the paragraph 4 of the Companies (Auditor’s Report) Order, 2003 (as amended) in respect of the inventories are not applicable to the Company and hence not commented upon.
iii) a) According to the information and explanation given to us, the Company has not granted any loans, secured or unsecured to companies, ?rms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of the clauses (iii) (a) to (d) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company and hence not commented upon. b) According to the information and explanation given to us, the Company has not taken any loans, secured or unsecured from companies, ?rms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of the clauses (iii) (e) to (g) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company and hence not commented upon. iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of ?xed assets and for the sale of services. Due to the nature of its business, the Company does not purchase any inventory or sell goods. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the company in respect of these areas. v) a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered. b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of such contract or arrangement exceeding value of Rupees ?ve lakhs have been entered into during the ?nancial year at prices which are reasonable having regard to the prevailing market prices at the relevant time, except for services provided to one party aggregating to Rs.1,372 lakhs and services availed from one party aggregating to Rs.61 lakhs because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time. vi) The Company has not accepted any deposits from the public. vii) In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business. viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for the services of the Company. ix) a) Undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities except for income tax where there has been a slight delay in a few cases. b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.
90
c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows: Name of the statute The Finance Act, 1994 Indian Stamp Act, 1899 Income Tax Act, 1961 x) xi) Nature of dues Service Tax Stamp duty Income tax liability Amount (Rs.Lakhs) Period to which Forum where dispute is pending the amount relates Commissioner of Central Excise and Customs – Visakhapatnam - II High Court of Andhra Pradesh Commissioner of Income Tax (Appeals)- Rajahmundry
548 July 1,2003 to March 31, 2011 2,829 February 4, 2008 73 Assessment year 2008-09
The Company has no accumulated losses at the end of the ?nancial year. The Company has incurred cash loss during the year. In the immediately preceding ?nancial year, the Company had not incurred cash loss. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a ?nancial institution and banks. There are no dues to debenture holders.
xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual bene?t fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company. xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company. xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by others from bank or ?nancial institutions, the terms and conditions whereof in our opinion are not prima-facie prejudicial to the interest of the Company. xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained. xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short term-basis have been used for long term investments. xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956. xix) The Company did not have any outstanding debentures during the year. xx) The Company did not raise any money through a public issue during the year. xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the ?nancial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year. For S.R. Batliboi & Associates Firm Registration Number: 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No.: 93649 Place : Hyderabad Date : May 9, 2012
91 91
GVK Power & Infrastructure Limited
Balance Sheet as at March 31, 2012
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Notes March 31, 2012 March 31, 2011
Equity and liabilities
Shareholders’ Funds Share capital Reserves and surplus Non-current liabilities Long-term borrowings Long-term provisions Current liabilities Short-term borrowings Trade payables Other current liabilities Short-term provisions Total Assets Non-current assets Fixed Assets Tangible assets Non-current investments De?erred tax assests (net) Long-term loans and advances Other non-current assets Current assets Current investments Trade receivables Cash and bank balances Short-term loans and advances Other current assets Total Summary of signi?cant accounting policies
The accompanying notes are an inegral part of the ?nancial statements. As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants per Vikas Kumar Pansari Partner Membership No. 93649 Place : Hyderabad Date : May 9, 2012 For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited Dr. G V Krishna Reddy Chairman & Managing Director A Issac George Director & CFO P. V. Rama Seshu GM & Company Secretary
3 4
15,792 236,800 252,592
15,792 237,627 253,419 64 79 143 10,000 199 111 83 10,393 263,955
5 6
30 24 54 41,595 143 68 230 42,036 294,682
7 8 8 6
9 10 11 12 13.2
144 137,106 27 40,323 32,444 210,044 117 1,748 81,961 812 84,638 294,682
159 160,733 39 32,797 8,844 202,572 888 149 310 59,828 208 61,383 263,955
14 13.1 15 12 13.2
2.1
92
Pro?t and Loss Account for the year ended March 31, 2012
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Notes March 31, 2012 March 31, 2011
Income Revenue from operations Other income Total revenue Expenses Employee bene?ts expense Other expenses Depreciation expense Financial costs Total expenses Pro?t/(loss) before tax Tax expenses Current tax MAT Credit Deferred tax Income tax of earlier year, net Total Tax Expense Pro?t/(loss) for the year Earnings per share (in Rs.) -Basic -Diluted Nominal value per share (in Rs.) Weighted average number of shares -Basic -Diluted Summary of signi?cant accounting policies
The accompanying notes are an inegral part of the ?nancial statements. As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited
16 17
2,760 1,285 4,045
4,148 8,157 12,305
18 19 20 21
655 933 18 2,493 4,099 (54) 761 12 773 (827) (0.05) (0.05) 1 1,579,210,400 1,579,210,400
1,278 2,321 9 1,495 5,103 7,202 1,718 (1,382) 13 25 374 6,828 0.43 0.43 1 1,579,210,400 1,579,210,400
2.1
per Vikas Kumar Pansari Partner Membership No. 93649
Dr. G V Krishna Reddy Chairman & Managing Director
Place : Hyderabad Date : May 9, 2012
A Issac George Director & CFO
P. V. Rama Seshu GM & Company Secretary
93 93
GVK Power & Infrastructure Limited
Cash Flow statement for the year ended March 31, 2012
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated) March 31, 2012 A.Cash ?ow from operating activities Pro?t/(loss) before tax Non-cash adjustment to reconcile pro?t before tax to net cash ?ows Depreciation expense Pro?t on sale of investments Interest income Dividend income Loss on sale of assets Provisions no longer required written back Interest expense Operating pro?t before working capital changes Movements in working capital: Increase/ (decrease) in trade payables, current liabilities, and provisions Decrease in trade receivables Decrease/(increase) in loans and advances Decrease/(increase) in other current and non-current assets Cash generated from/(used in) operations Direct taxes paid (net of refunds) Net cash generated from/(used in) operating activities B.Cash ?ows from investing activities Purchase of ?xed assets Sale of ?xed assets Investments in subsidiaries Proceeds from sale of investments in subsidiaries Advances to subsidiaries Refund of advance from subsidiaries Investments in bank deposits Purchase of current investments Proceeds from sale of current investments Interest received Net cash from/(used in) investing activities B (3) (25) (36,428) 5,776 (1,101) (4,406) 5,408 26 (30,753) (132) 1 (24,996) 45,813 (40,861) 21,889 (39,509) 41,390 3,595 A (121) 32 712 (539) 2,261 (360) 1,901 23 245 (1,812) 307 (654) (1,644) (2,298) 18 (114) (39) (23) 2,389 2,177 9 (8,012) (44) 2 (2) 1,428 583 (54) 7,202 March 31, 2011
94
Cash Flow statement for the year ended March 31, 2012
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated) March 31, 2012 C. Cash ?ows from ?nancing activities Proceeds from short term borrowings Repayment of short term borrowings Proceeds from long term borrowings Repayment of long term borrowings Interest paid Net cash from/(used in) ?nancing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Components of cash and cash equivalents as at Cash on hand Balance with scheduled banks on current accounts Balance with unpaid dividend accounts Note 15 Add: Deposit held as security against borrowings Cash and bank balance as per balance sheet
Summery of signi?cant accounting policies * Not available for ready use by the company
March 31, 2011 15,000 (15,000) 100 (4) (1,462) (1,366) (69) 379 310 306 4 310 310
46,645 (15,050) (31) (2,375) C (A+B+C) 29,189 337 310 647 643 4 647 1,101 Note 15 2.1 1,748
The accompanying notes are an integral part of the ?nancial statements
As per our report of even date
For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants
For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited
per Vikas Kumar Pansari Partner Membership No. 93649
Dr. G V Krishna Reddy Chairman & Managing Director
Place : Hyderabad Date : May 9, 2012
A Issac George Director & CFO
P. V. Rama Seshu GM & Company Secretary
95 95
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
1. Corporate information
GVK Power & Infrastructure Limited (‘the Company’ or ‘GVKPIL’) provides operating and maintenance services, manpower and consultancy services and incidental services to owners of power plants, airports etc. The Company has also acquired substantial ownership interest into power generating assets, airports, roads and companies providing infrastructure facilities.
2. Basis of preparation
The ?nancial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these ?nancial statements to comply in all material respects with the accounting standards noti?ed under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The ?nancial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of ?nancial statements are consistent with those of previous year, except for the change in accounting policy explained below. 2.1 Summary of signi?cant accounting policies a) Change in accounting policy Presentation and disclosure of ?nancial statements During the year ended March 31, 2012, the revised Schedule VI noti?ed under the Companies Act 1956 has become applicable to the Company for preparation and presentation of its ?nancial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of ?nancial statements. However, it has signi?cant impact on presentation and disclosures made in the ?nancial statements. The company has also reclassi?ed the previous year ?gures in accordance with the requirements applicable in the current year. b) Use of estimates The preparation of ?nancial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that a?ect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. Tangible ?xed assets Fixed assets are stated at cost, net of accumulated depreciation and impairment losses, if any. The cost comprises purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Depreciation on tangible ?xed assets Depreciation on ?xed assets is calculated on straight-line basis using the rates arrived at based on the useful life estimated by the Management which coincides with the rates prescribed under Schedule XIV of the Companies Act, 1956. Fixed assets individually costing Rs.0.05 or less are fully depreciated in the year of purchase. Impairment The company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, the company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash in?ows 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 ?ows are discounted to their present value using a pre-tax discount rate that re?ects current market assessments of the time value of money and the risks speci?c to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identi?ed, an appropriate valuation model is used. Impairment losses are recognized in the statement of pro?t and loss. Borrowing costs Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange di?erences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
96
c)
d)
e)
f)
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. g) Investments Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classi?ed as current investments. All other investments are classi?ed as long-term investments. Current investments are carried in the ?nancial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. h) Revenue recognition Revenue is recognized to the extent that it is probable that the economic bene?ts will ?ow to the company and the revenue can be reliably measured. The following speci?c recognition criteria must also be met before revenue is recognized: Rendering of operation and maintenance services Revenues represent amounts billed or accrued for services rendered and expenses incurred in relation to such services, in accordance with the Operation and Maintenance agreement with its customer. Per the operations and maintenance agreements, the Company’s income comprises of (a) Operating fees (b) Incentive fees and (c) Reimbursement of actual expenses. Operating fees are ?xed per annum subject to escalations. The Company is also eligible to receive incentive fees, if the Actual Annual Availability and/or if the actual generation of power are higher than the de?ned levels. Manpower and consultancy services Revenues for manpower services are recognized as and when services are rendered on time and material basis. Interest Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Dividends Dividend income is recognized when the company’s right to receive dividend is established by the reporting date. Guarantee commission Revenue is recognized on a time proportion basis taking into account the guarantee amount and the commission rate applicable. i) Foreign currency transaction and balances Initial recognition Foreign currency transactions are recorded in the reporting currency, by applying the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Conversion Foreign currency monetary items are reported using the exchange rate prevailing on the reporting date. Non-monetary items which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Exchange di?erences Exchange di?erences arising on the settlement of monetary items or on restatement of monetary items on reporting date at rates di?erent from those at which they were initially recorded during the year, or reported in previous ?nancial statements, are recognized as income or as expenses in the year in which they arise. j) Retirement and other employee bene?ts i) Retirement bene?t in the form of Provident Fund is a de?ned contribution scheme. The contributions are charged to the Statement of Pro?t and Loss of the year when the contributions are due. The company has no obligation other than the contribution payable to the provident fund.
97 97
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
ii)
Gratuity liability is de?ned bene?t obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each ?nancial year.
iii) Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method at the end of each ?nancial year. iv) Actuarial gains/losses are immediately taken to the Statement of Pro?t and Loss and are not deferred. v) k) The company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months a?er the reporting date.
Income tax Tax expense comprises current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. Deferred income taxes re?ects the impact of current year timing di?erences between taxable income and accounting income for the year and reversal of timing di?erences of earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that su?cient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain that su?cient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain that su?cient future taxable income will be available. The company recognizes MAT credit available as an asset only to the extent there is convincing evidence that the company will pay normal income tax during the speci?ed period. In the year in which the company recognizes Minimum Alternative tax (MAT) credit as an asset in accordance with the Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Pro?t and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each reporting date and writes down the carrying amount of MAT Credit Entitlement to the extent the company does not have convincing evidence that it will pay normal tax during the speci?ed period.
l)
Earnings Per Share Basic earnings per share are calculated by dividing the net pro?t or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue; bonus element in a rights issue, share split, and reverse share split (consolidation of shares). For the purpose of calculating diluted earnings per share, the net pro?t or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the e?ects of all dilutive potential equity shares.
m) Leases Leases where the lessor e?ectively retains substantially all the risks and bene?ts of ownership over the leased term, are classi?ed as operating leases. Operating lease payments are recognized as an expense in the Statement of Pro?t and Loss on a straight-line basis over the lease term. n) Provisions A provision is recognized when the company has a present obligation as a result of past event, it is probable that an out?ow of resources embodying economic bene?ts will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to re?ect the current best estimates.
98
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
o)
Cash and cash equivalents Cash and cash equivalents for the purposes of cash ?ow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less. Contingent liability A contingent liability is a possible obligation that arises from past events whose existence will be con?rmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an out?ow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognises contingent liability but discloses its existence in the ?nancial statement.
p)
3. Share capital
March 31, 2012 Authorised shares 2,500,000,000 (March 31, 2011: 2,500,000,000) equity shares of Rs.1/ each Issued, subscribed and fully paid-up shares 1,579,210,400 (March 31, 2011: 1,579,210,400) equity shares of Rs.1 each 15,792 15,792 a) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period Equity shares March 31, 2012 No. At the beginning of the year Issued during the year 1,579,210,400 1,579,210,400 b) Rs. 1,579 1,579 March 31, 2011 No. 1,579,210,400 1,579,210,400 Rs. 1,579 1,579 15,792 15,792 25,000 25,000 March 31, 2011
Terms/rights attached to equity shares The Company has only one class of equity share having par value of Rs.1 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, a?er distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. Details of shareholders holding more than 5% equity shares in the company Name of the shareholder G. Indira Krishna Reddy HSBC Global Investment Funds Vertex Infratech Private Limited March 31, 2012 No. 394,994,190 115,250,000 116,896,770 % holding 25.01 7.30 7.40 March 31, 2011 No. 435,944,190 113,000,000 % holding 27.61 7.10 -
c)
99 99
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
d)
Aggregate number of bonus shares issued, shares issued for consideration other than cash: March 31, 2012 No. Equity shares allotted as fully paid bonus shares by capitalization of general reserve Equity shares allotted as fully paid-up pursuant to scheme of amalgamation Equity shares allotted as fully paid-up pursuant to scheme of arrangement 52,850,000 703,250,000 90,462,150 March 31, 2011 No. 52,850,000 703,250,000 90,462,150
4. Reserves and surplus
March 31, 2012 General reserve Securities premium account Surplus in the statement of pro?t and loss Balance as per the last ?nancial statements Pro?t /(loss) for the year Net surplus in the statement of pro?t and loss Total reserves and surplus 21,565 (827) 20,738 236,800 14,737 6,828 21,565 237,627 127 215,935 March 31, 2011 127 215,935
5. Long-term borrowings
Non-current portion March 31, 2012 Term loans Loans from bank- vehicle loan (secured) The above amount includes Secured borrowings Amount disclosed under the head “other current liabilities” (note 8 ) Net amount 30 30 64 64 34 (34) 31 (31) 30 64 34 31 March 31, 2011 Current maturities March 31, 2012 March 31, 2011
Vehicle loan from bank carries interest at 8.5% p.a. The loan is repayable in 36 monthly installments of Rs.3.15 from the date of loan, viz., January 29, 2011. The loan is secured by charge over ?xed asset i.e. vehicle, for which ?nance is provided by the lender.
100
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
6. Provisions
Long-term March 31, 2012 Provision for employee bene?ts Provision for gratuity Provision for leave bene?ts Other provisions Provision for income tax (net) 24 79 145 145 230 25 25 83 24 79 42 43 85 58 58 March 31, 2011 Short-term March 31, 2012 March 31, 2011
24
79
7. Short-term borrowings
March 31, 2012 Overdra? facility from bank (unsecured) Other loans and advances- term loans from banks (secured) Other loans and advances- term loans from banks (unsecured) The above amount includes Secured borrowings Unsecured borrowings a. b. c. Overdra? facility is unsecured and carries interest rate of 10.85%. Term loan aggregating to Rs.20,000 is secured by ?rst charge on the current assets, present and future of the Company and carries interest at base + 150 bps i.e. 11.50% per annum Term loan aggregating to Rs.1,870 presently carries interest of 12% per annum and scured by (i) charge on loans and advances of the Company to GVK Airport Developers Private Limited (“GVKADPL”) and also loans and advances provided by GVKADPL to GVK Airport Holdings Private Limited (“GVKAHPL”) and Bangalore Airport & Infrastructure Developer Private Limited (“BAIDPL”) (ii) exclusive charge on shares of GVKADPL to the extent of two times of facility amount. (iii) exclusive charge on shares of GVKAHPL and BAIDPL not exceeding 30% of the shares of the Companies and the no. of shares to be pledged to be in proportion to the lenders at GVKADPL. Term loans aggregating to Rs.15,000 is unsecured and carries interest rate of 11.75%. 21,870 19,725 10,000 4,725 21,870 15,000 41,595 March 31, 2011 10,000 10,000
d.
8. Trade payable and other current liabilities
March 31, 2012 Trade payables (note 27) Other current liabilities Current maturities of long-term borrowings (note 5) Interest accrued but not due on borrowings Unpaid dividends, Investor Education and Protection Fund will be created by unpaid dividends (as and when due) Others 34 14 4 16 68
101 101
March 31, 2011 199 31 4 76 111
143
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
9. Tangible assets (at cost)
Furniture & ?ttings As at April 1, 2010 Additions Disposals As at March 31, 2011 Additions As at March 31, 2012 Depreciation Upto April 1, 2010 Charge for the year On Disposals Upto March 31, 2011 Charge for the year Upto March 31, 2012 Net Block As at March 31, 2011 As at March 31, 2012 5 4 7 7 128 115 19 18 159 144 4 1 5 1 6 1 1 1 6 5 (2) 9 13 22 1 3 4 4 8 12 9 (2) 19 18 37 7 3 10 10 O?ce equipment 5 3 8 8 Vehicles 28 114 (5) 137 137 Data processing equipment 11 12 23 3 26 Total 51 132 (5) 178 3 181
10. Non-current investments
March 31, 2012 Trade investments (at cost) Unquoted equity instruments Investment in subsidiaries Nil (March 31, 2011: 96,810,700) equity shares of Rs.10 each fully paidup in GVK Jaipur Expressway Private Limited 250,000,000 (31 March 2011: 250,000,000) equity shares of Rs.10 each fully paid-up in GVK Airport Developers Private Limited 250,000,000 ( March31, 2011: 250,000,000) equity shares of Rs.10 each fully paid-up in GVK Energy Limited 37,500,000 (31 March 2011: 10,000) equity shares of Rs.10 each fully paid-up in GVK Transportation Private Limited 10,000 ( March 31, 2011: 10,000) equity shares of Rs.10 each fully paidup in Goriganga Hydro Power Private Limited 10,000 ( March 31, 2011: 10,000) Equity shares of Rs.10 each fully paid-up in GVK Perambalur SEZ Private Limited 50,000 ( March 31, 2011: 50,000) equity shares of Rs.10 each fully paidup in GVK Oil & Gas Limited 10,000 ( March 31, 2011: 10,000) equity shares of Rs.10 each fully paidup in GVK Developmental Projects Private Limited 25,000 25,000 3750 1 1 5 1 53,758
102
March 31, 2011
27,401 25,000 25,000 1 1 1 5 1 77,410
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
March 31, 2012 Investment in equity instruments 50,000 ( March 31, 2011: Nil) equity shares of USD 1 each fully paid-up in GVK Coal Developers (Singapore) Pte Ltd 25 25 53,783 Debentures (unquoted) 83,322,610 (March 31, 2011: 83383,322,610) 0.001% Compulsory Convertible Debentures of Rs.100 each fully paid up in GVK Energy Limited Aggregate amount of unquoted investments 83,323
March 31, 2011
77,410
83,323
83,323 137,106
83,323 160,733
11. Deferred tax asset (net)
March 31, 2012 Deferred tax liability Fixed assets: Impact of di?erence between tax depreciation and depreciation charged for the ?nancial reporting Gross deferred tax liability Deferred tax asset Provision for Gratuity Provision for compensated absences Gross deferred tax asset Net deferred tax asset 21 14 35 27 26 19 45 39 8 8 6 6 March 31, 2011
12. Loans and advances
Non-current March 31, 2012 Loan and advances to related parties (note 23 & 24) Unsecured, considered good Deposits Unsecured, considered good Advances recoverable in cash or kind Unsecured, considered good Other loans and advances Unsecured, considered good Advance income-tax (net of provision for taxation) Prepaid expenses MAT credit entitlement GVK employee welfare trust March 31, 2011 Current March 31, 2012 March 31, 2011
37,394 6 -
29,694 6 -
81,477 213
58,485 513 461
923 2,000 40,323
1,097 2,000 32,797
80 16 175 81,961
77 7 285 59,828
103 103
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
13. Trade receivables and other assets
13.1 Trade receivables Non-current March 31, 2012 Unsecured, considered good Outstanding for a period not exceeding six months from the date they are due for payment Secured, considered good Unsecured, considered good Trade receivables include dues from: Non-current March 31, 2012 GVK Gautami Power Limited Mumbai International Airport Private Limited GVK Industries Limited 13.2. Other assets Non-current March 31, 2012 Unsecured, considered good Unbilled revenues Share application money to subsidiaries Receivable for sale of investment Interest accrued on ?xed deposits Other receivables Unamoritsed portion of ancillary cost of arranging the borrowings 23 5,020 27,401 32,444 75 8,769 8,844 13 507 271 812 21 114 94 208 March 31, 2011 Current March 31, 2012 March 31, 2011 March 31, 2011 Current March 31, 2012 106 11 March 31, 2011 29 120 117 117 149 149 March 31, 2011 Current March 31, 2012 March 31, 2011
104
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
14. Current investments
March 31, 2012 Current investments (valued at lower of cost and fair value) Quoted mutual funds- other than trade Nil (31 March 2011: 7,656) units of Rs.1,000 each fully paid-up of Religare Ultra Short Term Fund – Growth plan Nil (31 March 2011: 9,338) units of Rs.1000 each fully paid-up of Templeton India Treasury Management Institutional Plan Nil (31 March 2011: 13,005) units of Rs.1,000 each fully paid-up of Taurus Ultra Short Term Bond Fund - Retail Growth Nil (31 March 2011: 5,000,000) units of Rs.10 each fully paid-up of Taurus Fixed Maturity Plan 120 Days Growth Series Aggregate market value of quoted investments 100 139 149 500 888 904 March 31, 2011
15. Cash and bank balances
Non-current March 31, 2012 Cash and cash equivalents Balances with banks: – On current accounts – On unpaid dividend account Other bank balances Deposit held as security against borrowings 1,101 1,101 1,748 310 643 4 647 306 4 310 March 31, 2011 Current March 31, 2012 March 31, 2011
16. Revenue from operations
March 31, 2012 Revenue from operations Sale of services – Operation and maintenance services - Manpower and consultancy services 1,516 1,244 2,760 2,891 1,257 4,148 March 31, 2011
105 105
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
17. Other income
March 31, 2012 Dividend income on Current investments Pro?t on sale of investments Current investments Long-term investments Liabilities written back Guarantee commission Interest on Bank Deposits Others 13 26 1,285 8,157 114 70 1,062 328 7,684 23 78 44 March 31, 2011
18. Employee bene?t expense
March 31, 2012 Salaries, wages and bonus Contribution to provident fund Retirement and other employee bene?ts Sta? welfare expenses 590 44 21 655 March 31, 2011 1,099 71 74 34 1,278
19. Other expenses
March 31, 2012 Rent Communication costs Travelling and conveyance Operating and maintenance expenses Repairs and maintenance – others Legal and professional fees Rates and taxes Printing and stationery Insurance Payment to auditor (note below) Donations Directors’ sitting fees Expenses for manpower services Bid and tender document charges Miscellaneous Expenses 17 34 102 157 29 247 64 33 11 17 11 145 2 64 933
106
March 31, 2011 53 87 223 305 35 945 75 58 5 15 130 11 164 123 92 2,321
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Payment to auditor (including service tax) March 31, 2012 As auditor: Audit fee Limited Review In other Capacity: Other services(certi?cation fees) Reimbursement of expenses 0 1 17 0 15 12 4 11 4 March 31, 2011
20. Depreciation expense
March 31, 2012 Depreciation of tangible assets 18 March 31, 2011 9
21. Finance costs
March 31, 2012 Interest Amortization of ancilliary borrowing costs Bank charges 2,389 54 50 2,493 March 31, 2011 1,428 67 1,495
22. Gratuity bene?t
The company operates one de?ned bene?t plan, viz., gratuity, for its employees. Under the gratuity plan, every employee who has completed at least ?ve years of service gets a gratuity on retirement or termination at 15 days of last drawn salary for each completed year of service. The scheme is unfunded. The following tables summarize the components of net bene?t expense recognized in the statement of pro?t and loss and the funded status and amounts recognized in the balance sheet for the plan. A) Statement of pro?t and loss Net employee bene?t expense recognized in the employee cost* March 31, 2012 Current service cost Interest cost on bene?t obligation Past service costs Net actuarial( gain) / loss recognized in the year Net bene?t expense 13 6 (32) (13) March 31, 2011 18 7 24 (55) (6)
* During the previous year, the Company has transferred certain employees to its subsidiary GVK Energy Limited pursuant to which liability of Rs.30 was transferred to aforesaid subsidiary.
107 107
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
B)
Balance sheet March 31, 2012 Present value of de?ned bene?t obligation Fair value of plan assets Net liability 66 66 March 31, 2011 79 79
C)
Changes in the present value of the de?ned bene?t obligation are as follows: March 31, 2012 Opening de?ned bene?t obligation Current service cost Interest cost Past service costs Actuarial (gains) / losses on obligation Closing de?ned bene?t obligation 79 13 6 (32) 66 March 31, 2011 85 18 7 24 (55) 79
D) The principal assumptions used in determining gratuity bene?t obligations for the company’s plans are shown below: March 31, 2012 Discount rate Expected rate of return on assets Employee turnover 8.6% p.a. Not applicable 5% March 31, 2011 8% p.a. Not applicable 5%
The estimates of future salary increases, considered in actuarial valuation, take account of in?ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. E) Amounts for the current and previous four periods are as follows: March 31, 2012 Gratuity De?ned bene?t obligation 66 79 85 64 55 March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008
23. Related party disclosures
Disclosure as required by Noti?ed Accounting Standard 18 (AS -18) “Related Party Disclosures” are as follows: Names of the related parties and description of relationship: a) Related parties where control exists Subsidiaries GVK Industries Limited GVK Jaipur Expressway Private Limited Alaknanda Hydro Power Company Limited GVK Airport Developers Private Limited GVK Coal (Tokisud) Company Private Limited Goriganga Hydro Power Private Limited GVK Power (Goindwal Sahib) Limited
108
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
GVK Perambalur SEZ Private Limited GVK Oil & Gas Limited GVK Developmental Projects Private Limited GVK Energy Limited GVK Gautami Power Limited GVK Airport Holdings Private Limited GVK Transportation Private Limited GVK Ratle Hydro Electrical Projects Private Limited GVK Energy Venture Private Limited GVK Bagodara Vasad Expressway Private Limited GVK Deoli Kota Expressway Private Ltd Bangalore Airport & Infrastructure Developers Private Limited Mumbai International Airport Private Limited (e?ective October 18, 2011) GVK Power (Khadur Sahib) Private Limited GVK Airports International Pte Ltd GVK Shivpuri Dewas Expressway Private Limited (e?ective October 18, 2011)
b) Associates Mumbai International Airport Private Limited (upto October 17, 2011) Bangalore International Airport Limited Seregraha Mines Limited
c) Key management personnel Dr. G V Krishna Reddy, Chairman & Managing Director Mr. G V Sanjay Reddy, Director Mr A Issac George, Director Mr Krishna Ram Bhupal, Director d) Enterprises over which the key management personnel exercise signi?cant in?uence TAJ GVK Hotels & Resorts Limited Orbit Travels & Tours Private Limited GVK Technical & Consultancy Services Private Limited Pinakini Share and Stock Broker Limited GVK Projects and Technical Services Limited GVK Foundation GVK Employee Welfare Trust GVK Coal Developers (Singapore) Pte Ltd
109 109
GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Details of related party transactions during the year
GVK Gautami Power Limited Mumbai International Airport Private Limited GVK Jaipur Expressway Private Limited Alakananda Hydro Power Company Limited Goriganga Hydro Power Private Limited GVK Power (Goindwal Sahib) Limited GVK Airport Developers Private Limited GVK Ratle Hydro Electrical Projects Private Limited GVK Transporation Private Limited GVK Airport Holdings Private Limited GVK Coal (Tokisud) Company Private Limited GVK Projects and Techncial Services Limited GVK Perambalur SEZ Private Limited
Particulars
GVK Industries Limited
Transactions during the year Fees for services rendered/ interest income (including service tax) Reimbursement of expenses (Billable expenses) Services received (734) (612) 157 (164) 5,054 (3) 5,053 (3) 175 177 (17,200,000) 32 (13,984) 10,550 (68,120,000) 810 (828) 706 (724) 156 (13,539) (219,259,805) 1,372 (1,387) 2 (4) (3) (7,692,300) (53,296,530) 4 (28) 4 (28) (2,370) 8,585 (140,250,000) 365 (4,333) (3,851) 3 2 (500) (6,800) (18,450) (122,425,500) (24,800) 27,947 (10,249) 4,995 (482) (8,765) 77,265 (178,560,000) 77 (3,574) 2 8,600 3,749 (1) 5,419 (191) 178 (3,769) 52,900 27,401 (8,800) (1,023) (442) (442) 73 (71) (143) 974 336 (1,020) -
Investment in equity
Loans taken
Loan repaid
Loans/advance given
Loans/ advance recovered
Share application money given Share application money refunded Shares Buyback (in no.)
Allotment of Debentures
Interest expense
Guarantees given
Guarantees released Investments pledged (no. of shares) Investments unpledged (no. of shares) Sale of Investments
Purchase of ?xed assets Remuneration to key managerial personnel Donations
Balances outstanding Receivables/(Payables) - March 31, 2012 Receivables/(Payables) - March 31, 2011 10 97 28 104 106 120 4,674 4,309 1 81,437 58,485 3,649 3,574 32,854 3,960 0 30 34 11,637 11,301
Corporate Guarantee Pledge of Investment (no. of shares)
3,434 (13,984) -
1,305 (1,461) -
-
-
8,585 -
-
4,050 (4,050) -
(77,265) 180,000,000 (180,000,000)
8,600 -
52,900 -
-
-
9,074 (10,048) -
-
Notes: a) Previous year ?gures are in parenthesis except for receivable/(payable) at year end b) Refer note 26 for equity commitments. c) *Pledge of 73,217,647 (March 31, 2011: Nil) shares of GVK Energy Limited and 22,495,000 (March 31, 2011; Nil) shares of GVK Transportation Private Limited
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Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Details of related party transactions during the year
GVK Developmental Projects Private Limited GVK Oil & Gas Limited Bangalore International Airport Limited GVK Technical & Consultancy Services Private Limited Pinakani Share and Stock Broker Limited TAJ GVK Hotels & Resorts Limited Orbit Travel & Tours Private Limited Seregraha Mines Limited GVK Employee Welfare Trust GVK Coal Developers (Singapore) Pte Ltd Dr. G V Krishna Reddy Mr. A. Issac George
Particulars
GVK Energy Limited
GVK Foundation
Transactions during the year Fees for services rendered/ interest income (including service tax) Reimbursement of expenses (Billable expenses) Services received 0 (96) (4) 10,084 (16,749) 1 (78) (24,995) (3,201) (3,390) (83,323) (118,051) 2,275 (13,878) 594 (3,000) (1,178) 44 (9) 53 61 (89) 14 (5) 8 8 17 (11) 219 (128) 8 (8) (1,000) 1,014 25 830 1,071 220,587 178,082,500 82,369,853 (130) 152 (139) 168 (135) -
Investment in equity
Loans taken
Loan repaid
Loans/advance given
Loans/ advance recovered
Share application money given Share application money refunded Shares Buyback (in no.)
Allotment of Debentures
Interest expense
Guarantees given
Guarantees released Investments pledged (no. of shares) Investments unpledged (no. of shares) Sale of Investments
Purchase of ?xed assets Remuneration to key managerial personnel Donations
Balances outstanding Receivables/(Payables) - March 31, 2012 Receivables/(Payables) - March 31, 2011 94 94 1 47 16,906 15,225 9 (1) (1) (2) (10) 4 2,000 2,000 517 (7)
Corporate Guarantee Pledge of Investment (no. of shares)
8,167 (18,251) -
-
1,178 (1,178) -
-
-
-
-
-
1,441 (1,441) -
-
220,587 95,712,647* -
-
-
-
Notes: a) Previous year ?gures are in parenthesis except for receivable/(payable) at year end b) Refer note 26 for equity commitments. c) *Pledge of 73,217,647 (March 31, 2011: Nil) shares of GVK Energy Limited and 22,495,000 (March 31, 2011; Nil) shares of GVK Transportation Private Limited
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GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
24. Details of Loan given to subsidiaries, associates, parties in which directors are interested
Subsidiaries i) GVK Oil & Gas Limited Balance as at March 31, 2012 Rs.16,906 (March 31, 2011: Rs.15,225) Maximum amount outstanding during the year was Rs.16,906 (March 31, 2011: Rs.15,225) The aforesaid loan is repayable on demand ii) GVK Perambalur SEZ Private Limited Balance as at March 31, 2012 Rs.6,638 (March 31, 2011: Rs.6,302) Maximum amount outstanding during the year was Rs.6,638 (March 31, 2011:Rs.6,302) The aforesaid loan is repayable on demand
iii) Goriganga Hydro Power Private Limited Balance as at March 31, 2012 Rs.4,674 (March 31, 2011: Rs.4,309) Maximum amount outstanding during the year was Rs.4,674 (March 31, 2011: Rs.4,309) The aforesaid loan is repayable on demand iv) GVK Airport Developers Private Limited Balance as at March 31, 2012 Rs.81,437 (March 31, 2011: Rs.58,485) Maximum amount outstanding during the year was Rs.83,894 (March 31, 2011: Rs.83,285) The aforesaid loan is repayable on demand v) GVK Developmental Projects Private Limited Balance as at March 31, 2012 Rs.92 (March 31, 2011: Rs.92) Maximum amount outstanding during the year was Rs.92 (March 31, 2011: Rs.95) The aforesaid loan is repayable on demand
vi) GVK Transportation Private Limited Balance as at March 31, 2012 Rs.32,854 (March 31, 2011: Rs.191) Maximum amount outstanding during the year was Rs.38,147 (March 31, 2011: Rs.191 ) The aforesaid loan is repayable on demand vii) GVK Ratle Hydro Electrical Projects Private Limited Balance as at March 31, 2012 Rs.3,649 (March 31, 2011: Rs.3,574) Maximum amount outstanding during the year was Rs.3,650 (March 31, 2011:Rs.3,574) The aforesaid loan is repayable on demand viii) Alakananda Hydro Power Company Limited Balance as at March 31, 2012 Rs.Nil (March 31, 2011: Rs.Nil) Maximum amount outstanding during the year was Rs.3 (March 31, 2011:Rs.28) The aforesaid loan was repayable on demand ix) GVK Power (Goindwal Sahib) Limited Balance as at March 31, 2012 Rs.Nil (March 31, 2011: Rs.Nil) Maximum amount outstanding during the year was Rs.Nil (March 31, 2011:Rs.500) The aforesaid loan was repayable on demand x) GVK Coal (Tokisud) Company Private Limited Balance as at March 31, 2012 Rs.Nil (March 31, 2011: Rs.Nil) Maximum amount outstanding during the year was Rs. Nil (March 31, 2011:Rs.1,023) The aforesaid loan was repayable on demand
xi) GVK Energy Limited Balance as at March 31, 2012 Rs.Nil (March 31, 2011: Rs.Nil) Maximum amount outstanding during the year was Rs. Nil (March 31, 2011:Rs.3,279) The aforesaid loan was repayable on demand
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Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
25. Contingent liabilities
a. Direct and indirect taxes: i) Income tax demand for assessment year 2008-09 for Rs.73 (March 31, 2011:Rs.73). ii) The Company had received a notice dated February 4, 2008 from the O?ce of the District Registrar of Assurances, Hyderabad demanding payment of stamp duties of Rs.2,829 on transfer of shares to the shareholders of GVK Industries Limited vide the scheme of arrangement approved by the Andhra Pradesh High Court. The Company has obtained an order from the Andhra Pradesh High Court staying the above notice on March 13, 2008 until such further orders from the said court. Management based on its internal assessment and/or legal advice is con?dent that the cases will be decided in the Company’s favour. b. Security against loans taken by others i) During the year ended March 31, 2012, the Company has provided security by way of pledge of 180,000,000 (March 31, 2011: 180,000,000) shares of GVK Airport Developers Private Limited for loan taken by the aforesaid subsidiary. Further, the Company has pledged 73,217,647 (March 31, 2011: Nil) and 22,495,000 (March 31, 2011: Nil) shares of GVK Energy Limited and GVK Transportation Private Limited respectively for securing loan obtained by GVK Coal (Singapore) Pte. Ltd, an entity in which Company has 10% stake. ii) During the year ended March 31, 2012, the Company has provided security by way of corporate guarantees amounting to Rs.88,220 (March 31, 2011: Rs.116,188) to subsidiaries and Rs.1,441 to an associate ( March 31, 2011: Rs.1,441) for various fund and non-fund based facility availed by them.
iii) During the year ended March 31, 2012, the Company has provided security by way of corporate guarantees amounting to Rs.9,074 (March 31, 2011: 10,048 ) for securing loans obtained by GVK Projects and Technical Services Limited. iv) During the year ended March 31, 2012, the Company has provided security by way of corporate guarantee amounting to Rs.220,587 (March 31, 2011:Nil) to GVK Coal Developers (Singapore) Pte Ltd for a facility availed by it. Management is of the opinion that the aforesaid Companies will be able to meet their obligations as they arise and consequently no adjustment is required to be made to the carrying value of the security and guarantees provided.
26. Capital and other commitments
a) b) c) The Company has outstanding equity commitments to fund subsidiaries under construction stage aggregating to Rs.29,565 (March 31, 2011: Rs.87,474). The company has given undertaking to infuse equity aggregating to Rs.229,590 in GVK Coal Developers (Singapore) Pte. Ltd, towards shortfall, if any, of its loan repayment obligations. During the previous year, the Company, GVK Energy Limited (subsidiary Company) and certain private equity investors (‘investors’) had entered into an investment agreement pursuant to which the Company has undertaken to conduct an initial public o?ering of the GVK Energy Limited’s equity shares (‘Quali?ed IPO’ or ‘QIPO’) within 60 months from the date of investment agreement (preferred listing period). If the GVK Energy Limited does not make a QIPO during the preferred listing period and no o?er for sale takes place within 12 months of the preferred listing period, then, at any time therea?er, the investors will have a put option with respect to all of the securities held by the Investor (“Put Right”) on the Company and the GVK Energy Limited at the higher of i) 20% IRR from the date of investment to the date of receipt of proceeds from the investor (“Put IRR”) and ii) the fair market value of the investor’s shares. Provided the Put IRR shall be reduced to 15% IRR, if at least 3 private sector initial public o?erings with an issue size of Rs.100,000 or more each have not taken place in India between the 36th month to the 60th month from date of investment agreement. The Company believes that the subsidiary Company would be able to successfully conduct QIPO in the preferred listing period.
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GVK Power & Infrastructure Limited
Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
27. Micro, small and medium enterprises
The identi?cation of micro, small and medium enterprise suppliers as de?ned under the provisions of “Micro, small and medium enterprises Act, 2006” is based on Management’s knowledge of their status. There are no dues to micro, small and medium enterprises as on March 31, 2012 or March 31, 2011.
28. Unhedged foreign currency exposure
Particulars Receivable Amount Rs.458 (March 31, 2011 : Nil)
29. Operating leases
The Company has entered into commercial leases which are in the nature of operating lease agreements for o?ce spaces for period up to 3 years. There are no restrictions placed upon the company by entering into these leases. Further there are no renewal or escalation clauses in the lease. Future minimum lease payments payable under non-cancellable operating lease are as follows: Particulars Not later than one year Later than one year but not later than ?ve years Later than ?ve years Note: The minimum lease payments are excluding service tax March 31, 2012 12 March 31, 2011 6 -
30. Expenditure in foreign currency (accrual basis):
March 31, 2012 Travel Legal and professional fees March 31, 2011 49 550 599
31. Earnings in foreign currency (accrual basis):
March 31, 2012 Guarantee commission 989 989 March 31, 2011 -
32. Segment information
In accordance with Accounting Standard 17 - Segment Reporting, segment information has been given in the consolidated ?nancial statements of the Company and therefore no separate disclosure on segment information is given in these ?nancial statements.
33. The Reserve Bank of India (‘RBI’) had issued guidelines for Core Investment Companies (CIC) on January 5, 2011 pursuant to
which Systematically Important Core Investment Companies (SI-CIC) are required to apply for registration with RBI within six months from the date of issue of the guidelines. The Company had applied to RBI for granting Certi?cate of Registration and is awaiting approval. As a SI-CIC, the Company is required to comply with requirements of capital requirements and leverage ratios. The Company is not in compliance with the aforesaid requirements and in the process of submitting an application to
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Notes to Accounts
(All amounts expressed in Indian Rupees Lakhs unless otherwise stated)
Reserve Bank of India for granting additional time to meet the compliance requirements. The Company based on legal advice/ internal assessment believes that RBI would look favourably into the matter. Further, the Company based on legal advise/ internal assessment believes that since its income from ?nancial assets in the year ended March 31, 2012 are less than 50% of the gross income, the Company is not a Non- Banking Financial Company in the current year.
34. The Company has applied to Central government on April 24, 2012 for waiver of excess managerial remuneration amounting
to Rs.207 paid to two directors during the year beyond the limits speci?ed in Part II of Section II (B) and Section III of Schedule XIII of the Companies Act, 1956. The Company believes that approval will be obtained in due course and would not have any material impact upon the ?nancial statements.
35. The ?nancial statements contain certain amounts reported as “0“which are less than Rs.1. 36. Previous year ?gures
Till the year ended March 31, 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its ?nancial statements. During the year ended March 31, 2012, the revised Schedule VI noti?ed under the Companies Act 1956, has become applicable to the company. The company has reclassi?ed previous year ?gures to conform to this year’s classi?cation.
As per our report of even date For S. R. Batliboi & Associates Firm Registration No. 101049W Chartered Accountants For and on behalf of the Board of Directors of GVK Power & Infrastructure Limited
per Vikas Kumar Pansari Partner Membership No. 93649
Dr. G V Krishna Reddy Chairman & Managing Director
Place : Hyderabad Date : May 9, 2012
A Issac George Director & CFO
P. V. Rama Seshu GM & Company Secretary
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GVK Power & Infrastructure Limited
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GVK POWER & INFRASTRUCTURE LIMITED
Registered O?ce:’Paigah House’, 156-159, Sardar Patel Road, Secunderabad - 500 003.
ATTENDANCE SLIP
I/we hereby record my/our presence at the 18th Annual General Meeting held on Wednesday, the August 8, 2012 at 11.30 a.m. at Sri Satya Sai Nigamagamam, 8-3-987/2, Srinagar Colony, Hyderabad - 500073.
Name of the Shareholder/Proxy*
No. of Shares Held: ____________
FOLIO NO. SIGNATURE OF THE SHAREHOLDER/PROXY*
*Strike out whichever is not applicable
CLIENT ID:
DP ID:
Notes:
1. Shareholder/Proxy intending to attend the meeting must bring the duly signed Attendance Slip to the Meeting and handover at the entrance. 2. Shareholder/Proxy should bring his/her copy of the Annual Report. 3. No gi?s / gi? coupons will be distributed at the Annual General Meeting.
?
GVK POWER & INFRASTRUCTURE LIMITED
Registered O?ce:’Paigah House’, 156-159, Sardar Patel Road, Secunderabad - 500 003. I/We in the District of appoint
PROXY
of
being a Member(s) of the above named Company, hereby of in the district of or failing him/her of in the district of as my/our Proxy to attend and vote for me/us and on my/ our behalf at the 18th Annual General Meeting of the Company to be held on Wednesday, the August 8, 2012 at 11.30 a.m. and at any adjournment thereof. Signed this day of 2012
FOLIO NO.
No. of Shares:
CLIENT ID:
Signature:
DP ID:
Note: The Proxy in order to be e?ective must reach duly ?lled in at least 48 (forty-eight) hours before the commencement of the aforesaid meeting.
A?x Re.1/Revenue Stamp
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GVK Power & Infrastructure Limited
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Notes
Notes
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