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Jaiprakash Power Ventures Ltd.

BSE: 532627 Sector: Infrastructure
NSE: JPPOWER ISIN Code: INE351F01018
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VOLUME 9106425
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Sell Price 7.42
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Jaiprakash Power Ventures Ltd. (JPPOWER) - Director Report

Company director report

To

The Members

The Directors of your Company are pleased to present the Twenty First Annual Reporttogether with the Audited Standalone and Consolidated Financial Statements of the Companyfor the Financial Year ended 31st March 2016.

FINANCIAL HIGHLIGHTS

The Financial Performance of the Company for the year ended 31st March 2016 issummarized below :

(Rs. in Crore)

Particulars Current Year 31.03.2016 Previous Year 31.03.2015
Net Revenue 3871.81 3935.53
Add: Other operating income 11.87 8.60
Add: Other Income 86.99 117.79
Total Income 3970.67 4061.92
Profit before Interest Depreciation Extra-ordinary Items & Taxation 2542.84 2712.88
Less : Finance Cost 2398.18 2117.55
Less : Depreciation 564.05 465.28
Less: Extra-Ordinary items (Net) 150.00 -
Profit/(Loss) before Tax (569.39) 130.05
Add: Deferred Tax reversal 274.89 7.16
Profit/(Loss) after Tax (294.50) 137.21

1. COMPANY’S PLANTS AND OPERATIONS

Your Company has power generation capacity of 2220 MW comprising of one Hydro PowerPlant and two Thermal Power Plants namely:

i) 400 MW Jaypee Vishnuprayag Hydro Power Plant in Uttarakhand;

ii) 500 MW - Phase I (of 1200 MW) Jaypee Bina Thermal Power Plant in Madhya Pradesh;and

iii) 1320 MW Jaypee Nigrie Supercritical Thermal Power Plant in Nigrie Distt.Singrauli Madhya Pradesh.

Besides the above mentioned power projects your Company has a cement grinding facility‘Jaypee Nigrie Cement Grinding Unit' at Nigrie (M.P) with a capacity of 2 MTPA whichcommenced its operations w.e.f. 3rd June 2015.

Your Company was the successful allottee in the e-auction of Amelia (North) Coal Minein Distt. Singrauli Madhya Pradesh. Entire coal produced by the said coal mine is beingutilized for power generation at 1320 MW Jaypee Nigrie Supercritical Thermal Power Plant.

The Plant availability Plant load factor (PLF) and net saleable energy generation ofthe Hydro Power Plant & Thermal Power Plants for the Financial Year 2015-16 were asunder:

Plant Plant Availability (%) Plant Load Factor (%) Net Saleable Energy Generation (M U)
Jaypee Vishnuprayag Hydro Power Plant (400 MW) 99.89 34.46 1048.29
Jaypee Bina Thermal Power Plant [500 MW - Phase I (of 1200 MW)] 99.79 30.03 1208.78
Jaypee Nigrie Supercritical Thermal Power Plant (1320 MW) 83.08 46.08 4995.16
Jaypee Baspa-II Hydro Power Plant (300 MW) upto 31st August 2015 99.82 82.37 795.19
Jaypee Karcham Wangtoo Hydro Power Plant (1091 MW) upto 31st August 2015 99.92 91.29 2931.56

*As mentioned hereinafter these plants have been transferred to Himachal Baspa PowerCompany Limited (HBPCL) through a Scheme of Arrangement sanctioned by High Court andsubsequently entire securities of HBPCL alongwith rights interest liabilities etc. ofthese plants have been sold to M/s. JSW Energy Limited (JSW).

400 MW Jaypee Vishnuprayag Hydro Power Plant

The average tariff during the year under report for 400 MW Vishnuprayag Hydro PowerPlant works out to Rs.2.28 per unit. The total generation of energy during the year was1210.63 MUs. The net saleable energy during the year was 1048.29 MUs. Generation of 400 MWJaypee Vishnuprayag H.E.P was suspended between 25th June 2015 and 10th September 2015(18:00 Hrs.) due to Force Majeure Event.

500 MW Phase I (of 1200 MW) Jaypee Bina Thermal Power Plant

Jaypee Bina Thermal Power Plant supplies 70% of the installed capacity on long-termbasis to Govt. of Madhya Pradesh/Madhya Pradesh Power Management Company Ltd. in terms ofthe Power Purchase Agreements executed with them and balance of installed capacity to besold as merchant power.

The total generation of energy during the year was 1318.86 MUs. The net saleable energyduring the year was 1208.78 MUs. The annual fixed cost for the current year was Rs.527.85crore (subject to true up) and per unit fixed cost was Rs.2.377 at normative level and thecost of coal is pass through.

Lower PLF during the year is on account of frequent back-down instructions by MPPMCLduring most part of the year besides MPPMCL had restricted offtake to the extent of70%/60% of the contracted capacity. Further merchant sales could not be achieved due tovery low pricing in short term market/power exchanges.

1320 MW Jaypee Nigrie Supercritical Thermal Power Plant (JNSTPP)

Unit 1 and Unit 2 of 660 MW each achieved commercial operations on 3rd September 2014and 21st February 2015 respectively. Further as mentioned above your Company hasacquired coal mine at Amelia (North) through e-auction conducted by Government of Indiafor meeting part of the coal requirement of JNSTPP Madhya Pradesh Electricity RegulatoryCommission has approved the provisional blended tariff of JNSTPP JNSTPP supplies 37.5% ofthe installed capacity on long term basis to Government of Madhya Pradesh (7.5% onvariable cost basis) and Madhya Pradesh Power Management Company Limited (30% on regulatedtariff basis) in terms of Power Purchase Agreement executed with them and the balancecapacity to be sold on merchant basis/short term basis.

Lower PLF is resultant of shut down of both units from 10th May 2015 to 29th May 2015due to (i) non-availability of coal from Amelia (North) Coal Mine on account of delay inapproval for transfer of Amelia (North) Coal Mine to the Company and (ii) restrictedoperations in view of the pending Long Term PPAs tie-ups.

Amelia (North) Coal Mine produced 2799975 MT of coal against the capacity of2800000 MT out of which 2796007 MT was dispatched to JNSTPP

Jaypee Nigrie Cement Grinding Unit at Nigrie

2 MTPA Jaypee Nigrie Cement Grinding Unit at Nigrie Distt. Singrauli in MadhyaPradesh started commercial operations w.e.f. 3rd June 2015. An expenditure of Rs.305crore (approx.) had been incurred till 31st March 2016. The plant recorded cementproduction of 312577 MT with a total revenue of Rs.90.70 crore.

OPERATIONS

The financials of current year are not comparable with that of previous year. Currentyear performance include operations of 400 MW Vishnuprayag H.E.P 500 MW Jaypee BinaThermal Power Plant 1320 MW Jaypee Nigrie Supercritical Thermal Power Plant JaypeeNigrie Cement Grinding Unit Amelia (North) Coal Mine and also performance for 300 MWBaspa II H.E.P! 1091 MW Karcham Wangtoo H.E.P upto 31st August 2015 as the Companyconcluded the sale of these plants to M/s. JSW Energy Limited w.e.f. 1st September 2015.

The net loss after tax for the current year i.e. Rs.294.50 crore as compared to netprofit of Rs.137.21 crore in the previous year was mainly on account of the following:-

• High financing cost.

• Profit of Jaypee Bina Thermal Power Plant in the previous year was higher due toreceipt of arrears of Rs.126.38 crore consequent upon approval offinal tariff.

• Generation at Jaypee Bina Thermal Power Plant was adversely affected due tobackdown instructions by MPPMCL during most part of the year on account of lower powerrequirement by M.P Government.

• Operations of Baspa II H.E.P. and Karcham Wangtoo H.E.P were reckoned only upto31st August 2015 consequent upon sale of these Plants to M/s. JSW Energy Limited w.e.f.1st September 2015.

• An amount of Rs.150 crore paid to Himachal Baspa Power Company Limited ascompensation arising out of Security Purchase Agreement executed between the Company JSWEnergy Limited and Himachal Baspa Power Company Limited.

• Operations of Jaypee Nigrie Supercritical Thermal Power Plant suffered mainlydue to (i) restricted generation on account of non-availability of long term PPAs; (ii)current Revenue being based on Provisional Tariff (pending determination of final tariff);and (iii) non-availability of coal (a) from 10th May 2015 to 29th May 2015 on account ofdelay in getting approval for transfer of Amelia (North) Coal Mine from the authorities(b) again in March 2016 as the entire capacity for the financial year 2015-16 fromAmelia (North) Coal Mine was utilized by February 2016.

• Lower Revenue of 400 MW Vishnuprayag H.E.P due to stoppage of generation from25th June 2015 to 10th September 2015 due to excess silt and boulders in river Alaknandadue to flood and shutdown of Plant from 20th February 2016 to 11th March 2016 due toshutdown instructions received from UPPCL for maintenance of transmission tower/lines.

2. SHARE CAPITAL

The paid up Equity Share capital as at 31st March 2016 is Rs. 29380030840. Duringthe year under review your Company has not issued any :

• shares with differential rights

• sweat equity shares

• equity shares under Employees Stock Option Scheme

3. DIVIDEND

Due to loss suffered by the Company in the current year no dividend was recommended bythe Board.

4. TRANSFER TO RESERVES

No amount is proposed to be transferred to reserves.

5.1 DIVESTMENT OF HYDRO POWER PROJECTS

As the members are aware the assets liabilities rights interest privileges etc.of 300 MW Jaypee Baspa-II Hydro - electric Plant and 1091 MW Jaypee Karcham Wangtoo Hydro- electric Plant were transferred and vested with the then Company's subsidiary HimachalBaspa Power Company Limited (HBPCL) upon the Scheme of Arrangement sanctioned by theHon'ble High Court of Himachal Pradesh under Section 391 /394 of the Companies Act 1956in terms of its Order dated 25th June 2015 becoming effective w.e.f. 1st September2015. Thereafter the entire securities (Equity Shares & NonConvertible Debentures)issued by HBPCL to the Company in terms of Scheme of Arrangement were transferred &sold to JSW Energy Limited as per Security Purchase Agreement dated 16th November 2014 atan enterprise value of Rs. 9700 crore subject to mutually agreed adjustments. After theconsummation of the said transaction it resulted in reduction of debt & interestoutgo for the Company.

5.2 Shifting of Registered Office of the Company

Conseq uent upon d ivestment of300 MW Baspa II H.E.P. &1091MW Karcham Wangtoo H.E.Pboth located in State of Himachal Pradesh the members approved shifting of RegisteredOffice of the Company from the State of Himachal Pradesh to the State of Madhya Pradeshand such shifting of Registered Office has been confirmed on a petition filed by theCompany by an Order of Regional Director (Northern Region Bench) dated 2nd December2015 which has since been filed with Ministry of Corporate Affairs on 30th December2015.

6. SUBSIDIARIES

As on 31st March 2016 the Company has six subsidiaries:

i) Jaypee Powergrid Limited;

ii) Prayagraj Power Generation Company Limited;

iii) Jaypee Arunachal Power Limited;

iv) Sangam Power Generation Company Limited;

v) Jaypee Meghalaya Power Limited; and

vi) Bina Power Supply Limited (Formerly known as Himachal Karcham Power CompanyLimited).

As mentioned hereinabove Himachal Baspa Power Company Limited ceased to be asubsidiary of the Company w.e.f. 31st August 2015 consequent upon sale of its entiresecurities to JSW.

The status of the projects implemented / being implemented through aforesaidsubsidiaries is summarised below:

i) Jaypee Powergrid Limited (JPL)

The transmission system comprising of 400 kV Quad Bundle Conductor Double Circuit Linefrom Karcham Wangtoo HEP Pothead yard at Wangtoo to Abdullapur and LILO ofBaspa-Nathpa-Jhakri Transmission Line set up by Jaypee Powergrid Limited (JPL) (a jointventure of Jaiprakash Power Ventures Limited and Power Grid Corporation of India Limited)for evacuation of Power is operating satisfactorily with cumulative availability oftransmission system for F.Y. 2015-16 at 99.95%. Revenue of Rs.174.86 crore was earned fromthe system during F.Y. 2015-16. An interim dividend @ 6% was declared & paid duringF.Y. 2015-16 and final dividend @ 6.5% has been recommended to the shareholders of theCompany.

ii) Prayagraj Power Generation Company Limited (PPGCL)

Prayagraj Power Generation Company Limited acquired from Uttar Pradesh PowerCorporation Limited through competitive bidding process is implementing 1980 MW (3x660MW) Thermal Power Project (with permission to add two additional generation units of 660MW each) in Tehsil Bara of District Allahabad Uttar Pradesh.

Power Purchase Agreement executed with U.P Power Corporation Limited (UPPCL) for saleof 90% of installed capacity for 25 years (the balance to be sold through merchant power)and Fuel Supply Agreement between PPGCL & NCL for Coal linkages for Phase-I of 1980MW are in place.

All Statutory/ Regulatory approvals required for the project are in place. Majorsupplies from BHEL for Boiler Turbine and Generator for Phase-I of the Project and fromother vendors have been received and the balance are being supplied/installed.

The Project Cost was further revised to Rs. 14596 crore. Such revised Project Costwould be financed through Rs. 4202.50 crore as equity and the balance of Rs.10393.50crore through Debt. Unit-I had been commissioned on 29th February 2016. Boiler Light Upof Unit-II had been achieved on 3rd March 2016. PPGCL is in the process of tying-up ofrequirement(s) of debt & equity to ensure completion of remaining two units within thecurrent Financial Year 2016-17.

An expenditure of approx. Rs. 13120 crore has been incurred on the implementation ofthe project upto March 2016.

iii) Jaypee Arunachal Power Limited (JAPL)

Jaypee Arunachal Power Limited (JAPL) incorporated by your Company as a wholly ownedsubsidiary of the Company to set up 2700 MW Lower Siang and 500 MW Hirong H.E. Projectsin the State of Arunachal Pradesh. Your Company alongwith its associates will ultimatelyhold 89% of the Equity of JAPL and the balance 11% will be held by the Government ofArunachal Pradesh.

For the 2700 MW Lower Siang Hydro Electric Project techno-economic clearance has beengranted by CEA.

Land acquisition is in progress. In-principle Approval has been granted and PowerPurchase Agreement (PPA) is to be submitted for final approval with respect to the grantof Mega Power status of the project. Draft Rehabilitation & Resettlement Plan has beensubmitted to the State Government. The State Government has recommended the forestclearance case to Ministry of Environment and Forest (MoEF) and the same is underexamination by Regional unit of MoEF since February 2015.

For 500 MW Hirong Hydro Electric Project technoeconomic clearance has been granted byCEA. For the Environmental/Forest Clearance of the Project the EIA & EMP reports havebeen submitted to MoEF. The State Government has recommended the forest clearance case toMinistry of Environment and Forest (MoEF) and the same is under examination by RegionalUnit of MoEF since February 2015.

An amount of Rs.228.29 crore has been incurred in respect of the aforesaid projectsupto 31st March 2016.

iv) Sangam Power Generation Company Limited (SPGCL)

Sangam Power Generation Company Limited was acquired by the Company from Uttar PradeshPower Corporation Limited (UPPCL) through competitive bidding process for theimplementation of 1320 MW (2 x 660 MW) Thermal Power Project (with permission to add oneadditional unit at 660 MW) in Tehsil Karchana of District Allahabad Uttar Pradesh.

SPGCL executed conveyance deed with Uttar Pradesh Power Corporation Limited (UPPCL) butthe District Administration could not hand over physical possession of land to SPGCL dueto local villagers agitation. As such no physical activity could be started on theground. SPGCL has written to UPPCL and all procurers that the Power Purchase Agreement isrendered void and cannot be enforced. As such it was inter-alia requested that SPGCL'sclaims be settled amicably for closing the agreement(s). As already reported UPPCL hadrequested the SPGCL to submit all supporting documents regarding the claim. All requisitedocuments in support of the company's claim have been furnished to UPPCL and the same isunder their review.

A committee has been constituted under the chairmanship of Managing Director UttarPradesh Rajya Vidyut Utpadan Nigam Limited for amicably closing the PPA.

An amount of Rs.549.81 crore has been spent on the Project upto 31st March 2016.

v) Jaypee Meghalaya Power Limited (JMPL)

Jaypee Meghalaya Power Limited was incorporated by your Company as its wholly ownedsubsidiary to implement 270 MW Umngot H.E.P in the Umngot River Basin of Meghalaya and 450MW Kynshi-II H.E.P! in the Kynshi River Basin on BOOT (Build Own Operate and Transfer)basis. Your Company alongwith its associates will ultimately hold 74% of the equity ofJMPL and the balance 26% will be held by the Government of Meghalaya.

For Kynshi-II HER the field work of survey & investigation and EIA studies havealready been completed. Drilling and drifting in Power house area have been completed. Therevised proposal for Kynshi-II HEP with involvement of lesser forest area has beensubmitted to State Government and Ministry of Environment and Forest (MoEF). Based on theobservation of the MoEF Uranium Corporation of India issued No Objection Certificate withrespect to uranium deposit in the vicinity of the Project. Accordingly a revised proposalfor issuance of term of reference for EIA studies was submitted. The control levels i.e.Full Reservoir Level & Tail Water Level for Kynshi-II Project have been approved byState Government. Approval of Central Electricity Authority has been accorded to the wateravailability series for power potential studies.

With respect to the 270 MW Umngot H.E.P the State Government has advised that theproject will not be operationalized as per MoA till further orders. The matter is beingpursued with the State Government for permission to resume the works.

An aggregate amount of approx. Rs. 8.50 crore has been spent on the above said twoprojects upto March 2016.

vi) Bina Power Supply Limited (Formerly known as Himachal Karcham Power CompanyLimited)

The Company was incorporated as Himachal Karcham Power Company Limited on 14th March2014 and it received Certificate of Commencement of Business on 24th March 2014. The nameof the Company was changed from Himachal Karcham Power Company Limited to Bina PowerSupply Limited w.e.f. 28th September 2015 and Registered Office of the Company has beenshifted from the State of Himachal Pradesh to the State of Madhya Pradesh w.e.f. 23rdNovember 2015. The Company is a wholly owned subsidiary of Jaiprakash Power VenturesLimited and presently it is not carrying on any operations.

7. REPORT ON PERFORMANCE OF SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES

As mentioned hereinabove Himachal Baspa Power Company Limited has ceased to besubsidiary w.e.f. 31st August 2015.

The performance and financial position of each of the subsidiaries of the Company forthe year ended 31st March 2016 is attached in the prescribed format AOC-1 as set out in "Annexure-A"and forms part of this Report.

In accordance with Section 136 of the Companies Act 2013 the Audited FinancialStatements including the Consolidated Financial Statements and related information of theCompany and Audited Accounts of each of its subsidiaries are available on the website www.jppowerventures.com.These documents will also be available for inspection during business hours at theRegistered Office of the Company.

The Policy on material subsidiaries as approved by the Board of Directors may beaccessed on the Company's website at the link:http://jppowerventures.com/wp-content/uploads/2015/05/Policy-on-Material-Subsidiaries-.pdf.

8. DIRECTORATE AND KEY MANAGERIAL PERSONNEL

8.1 The appointment of Shri K.P Rau as an Independent Director for a period of threeyears w.e.f. 30th May 2015 was approved by the members at the 20th Annual GeneralMeeting held on 12th September 2015.

Lt. Gen. (Retd.) Shri Ravindra Mohan Chadha Shri Sunil Kumar Sharma and Shri D.P Goyalwould retire as Directors by rotation at the ensuing Annual General Meeting and beingeligible they offer themselves for re-appointment.

8.2 As already reported pursuant to the provisions of Section 203 of the CompaniesAct 2013 read with Rule 8 and 8A of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 the following were designated as Key ManagerialPersonnel of the Company by the Board:

• Shri Sunil Kumar Sharma Vice-Chairman & CEO

• Shri Suren Jain Managing Director & CFO

• Shri Praveen Kumar Singh Whole-time Director

• Shri M. M. Sibbal Vice President and Company Secretary

8.3 Nomination & Remuneration Policy:

As already reported the Board has on the recommendations of the Nomination &Remuneration Committee adopted a policy for selection and appointment of DirectorsSenior Management and their remuneration. Brief features of the said Policy are:

a) Nomination and Remuneration Committee shall formulate the criteria for determiningqualifications positive attributes and independence of a Director;

b) Nomination and Remuneration Committee shall identify persons who are qualified tobecome Director and persons who may be appointed in Key Managerial and Senior Managementpositions;

c) While selecting Independent Directors the Nomination and Remuneration Committeeshall identify persons of integrity who possess relevant expertise and experience requiredfor the position;

d) Non-Executive/Independent Director may receive remuneration by way of sitting feesfor attending meetings of Board or Committee thereof an amount as may be approved by theBoard of Directors within the limits prescribed under the Companies Act 2013 and theRules made thereunder provided that the amount of such fees shall not exceed Rupees onelac per meeting of the Board or Committee or such amount as may be prescribed by theCentral Government from time to time. The sitting fees for Independent Directors and WomanDirector shall not be less than the sitting fee payable to other Directors;

e) An Independent Director shall not be entitled to any stock option of the Company;

f) Other employees of the Company shall be paid remuneration as per the Company's HRpolicies. The break up of the pay scale and quantum of perquisites including employer'scontribution to PF pension scheme medical expenses etc. shall be as per the Company'sHR policy.

The Company shall reimburse actual expenditure incurred by the Directors in theperformance of their duties as per the rules and policies of the Company.

Remuneration of other employees shall be reviewed/ decided on an annual basis orearlier if deemed necessary based on performance appraisal of individual employees takinginto account several factors such as job profile qualifications seniority experiencecommitment including time commitment performance and their roles and duties in theorganisation.

g) The age term of appointment and retirement of Managing Director/Whole-time Directorshall be determined in accordance with the provisions of Companies Act 2013 read withRules made thereunder;

h) Managing Director/Whole-time Director and Key Managerial Personnel shall be paid theremuneration within the overall limit prescribed under the Companies Act 2013 and theRules made thereunder as recommended by the Nomination and Remuneration Committee subjectto the approval of the Board; and

i) The Company shall provide suitable training to Independent Directors to familiarizethem with the Company their roles rights responsibilities in the Company nature of theindustry in which the Company operates business model of the Company etc.

9. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the year under review the Board met four times. The details are given in Reporton Corporate Governance. The meetings of Board of Directors were held on 30th May 20156th August 2015 2nd November 2015 and 11th February 2016.

10. A STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as stipulated under Section 149(6) of theCompanies Act 2013 and Regulation 16(1)(b) and 25(1) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.

11. ANNUAL EVALUATION OF BOARD’S PERFORMANCE

Pursuant to the provisions of Section 134(3)(p) of the Companies Act 2013 read withRule 8(4) of the Companies (Account) Rules 2014 and Regulation 17(10) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout an annual performance evaluation of its own performance the Directors individually aswell as the evaluation of the Committees constituted by it. The manner in which the formalannual evaluation has been carried out has been explained in the Report on CorporateGovernance.

12. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All Related Party Transactions that were entered into during the financial year weredone on an arm’s length basis and in the ordinary course of business. During theyear the Company has not entered into any contract/ arrangement/ transaction with relatedparties which could be considered material in accordance with the policy of the Company onmateriality of related party transaction.

The policy on Related Party Transactions as approved by the Board may be accessed onthe Company's website at the link: http://jppowerventures.com/wp-content/uploads/2015/05/Policy-on-Related-Party-Transactions.pdf.

The details of Related Party Transactions as required under Accounting Standard-18(AS-18) are provided in the accompanying Financial Statements forming part of this AnnualReport. Form AOC-2 pursuant to Section 134(3)(h) of the Companies Act 2013 read with Rule8(2) of the Companies (Accounts) Rules 2014 is set out as "Annexure-B" to thisReport.

13. US$ 200 MILLION FCCBs

The Company issued Foreign Currency Convertible Bonds during the Financial Year 2009-10for US $ 200 Million. As already reported the Company has partially redeemed FCCBsalongwith premium due thereon upto 13th February 2015 and also paid interest upto 13thFebruary 2016. As on date the principal amount of outstanding FCCBs is US$ 101.42million. The Company entered into a standstill agreement dated 11th February 2016 withcertain holders of the Bonds that collectively hold in excess of 90 per cent of theaggregate principal amount of the Bonds outstanding. Pursuant to the Standstill Agreementthe standstill period extends until 31st March 2016 subject to certain conditions. TheCompany is in discussion with the bondholders for redemption of part of FCCBs by availingfinancial assistance from an Indian Bank and/or issuance of fresh FCCBs/ extension ofredemption provided on mutually agreed terms and conditions.

14. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the year under review no significant and material orders impacting the goingconcern status and Company's operations in future have been passed by the Regulators orCourts or Tribunals.

15. AUDITORS

15.1 Statutory Auditors

As the members are aware in accordance with the provisions of Section 139 of theCompanies Act 2013 and the Rules made thereunder M/s. R. Nagpal Associates CharteredAccountants (Firm Registration No. 002626N) were appointed as Statutory Auditors of theCompany at the Nineteenth Annual General Meeting (AGM) for a period of three consecutiveyears till the conclusion of Twenty Second AGM of the Company to be held in the year 2017.The appointment of Statutory Auditors has to be ratified at every AGM. The StatutoryAuditors being eligible offer themselves for re-appointment. The Company has obtained awritten consent and a certificate from the Statutory Auditors under Section 139(1) of theCompanies Act 2013 to the effect that their re-appointment if made would be inaccordance with the conditions as may be prescribed and they fulfill the criteria laiddown in Section 141 of the Companies Act 2013.

Based on the recommendations of the Audit Committee the Board has recommended theratification of appointment of M/s. R. Nagpal Associates Chartered Accountants asStatutory Auditors of the Company to hold office till the conclusion of the Twenty SecondAnnual General Meeting to be held in the year 2017 subjectto ratification oftheirappointment in the AGM.

15.2 Cost Auditors

For the Financial Year 2015-16 the Board of Directors of the Company had re-appointedon the recommendations of the Audit Committee M/s. Kabra & Associates CostAccountants (Firm Registration No. 000075) as Cost Auditors for auditing the Cost Accountsin respect of "Power Generation" of various Plants of the Company. The CostAudit Report relating to the Power Plants of the Company for the Financial Year ended31st March 2015 has been filed in prescribed Form CRA-4 with the Cost Audit Branch ofthe Ministry of Corporate Affairs. The Cost Audit Report for the Financial Year 2015-16will be filed upon its approval bythe Board.

Pursuant to the provisions of Section 148 of the Companies Act 2013 read with theRules made thereunder and the notifications/circulars issued by the Ministry of CorporateAffairs from time to time the Board of Directors of the Company have on therecommendations of Audit Committee re-appointed M/s. Kabra & Associates CostAccountants as Cost Auditors of the Company for auditing the Cost Records relating to"Power Generation" of various plants of the Company and also for Cement GrindingUnit for the Financial Year 2016-17 and a Resolution for ratification of theirremuneration has been included in the Notice for ensuing Annual General Meeting.

15.3 Secretarial Audit

In pursuance of Section 204 of the Companies Act 2013 read with Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Boardon the recommendations of the Audit Committee has appointed M/s. SGS Associates a firmof Company Secretaries in Practice to undertake the Secretarial Audit of the Company forthe Financial Year ended 31st March 2017.

Secretarial Audit Report for the Financial Year ended on 31st March 2016 issued byM/s. SGS Associates Company Secretaries in Form MR-3 forms part of this report andmarked as "Annexure-C".

The said report does not contain any qualification or observation requiring explanationor comments from Board under Section 134(3)(f)(ii) of the Companies Act 2013.

16. AUDITORS’ REPORT

The observations of Auditors' and Notes to the Financial Statements areself-explanatory:

The Directors wish to state that the qualification of Statutory Auditors in Para (1) oftheir Report on the Standalone Financial Statements pertain to outstanding dues for aperiod exceeding 6 (six) months as on the Balance Sheet date and pertains to non-depositof Statutory Dues i.e. VAT Development Cess/ Electricity Duty in respect of Company's1320 MW Jaypee Nigrie Super Thermal Power Plant & Jaypee Nigrie Cement Grinding Unitand Para (2) pertains to non-repayment of principal amount of loan and interest on loansto banks and financial institutions as referred in the Report.

The Directors wish to state that the delays in payment of outstanding dues of theappropriate authorities banks and financial institutions are primarily because offollowing reasons:-

• Current Revenue of 1320 MW Jaypee Nigrie Super Thermal Power Plant is based onprovisional tariff (pending final tariff determination) restricted operation as long termPPA is yet to be tied up and non-availability of coal in March 2016 as the entirecapacity i.e. 2.80 MTPA coal from Amelia Coal Mine for the year 2015-16 was alreadyutilized upto February 2016.

• Generation of 500 MW Jaypee Bina Thermal Power Plant was adversely affected dueto backdown instructions received from SLDC from time to time because of lower demand ofpower.

• The general depressed economic conditions affecting the power plants in thecountry.

The Company is generally depositing undisputed statutory dues applicable to it like PFESI Income-tax Service Tax Sales- tax VAT Wealth tax Custom Duty etc. The aboveoutstanding dues would also be cleared shortly.

As regards outstanding overdues of banks and financial institutions overdue principalrepayment borrowings except FCCBs have been fully cleared and interest dues stand reducedto Rs.1532.17 Lacs.

It is stated that the Company has already redeemed part of outstanding FCCBs includingpremium on principal outstanding and the outstanding as on 31st March 2016 was

US$ 101.42 million. The Company is in discussion with the bondholders for redemption ofoutstanding FCCBs either from fresh FCCBs/ extending redemption period on mutually agreedterms and conditions or from financial assistance through Indian Banks.

The Directors further wish to state that the qualification of Statutory Auditors inPara (1) of their Report on the Consolidated Financial Statements pertain to outstandingdues for a period exceeding 6 (six) months as on the Balance Sheet date and pertains tonon-deposit of Statutory Dues i.e. VAT Development Cess/ Electricity Duty in respect ofCompany's 1320 MW Jaypee Nigrie Super Thermal Power Plant & Jaypee Nigrie CementGrinding Unit and Para (2) pertains to non-repayment of principal amount of loan andinterest on loans to banks and financial institutions as per the details given in theReport.

It is further stated that the delays in payment of outstanding dues of the appropriateauthorities banks and financial institutions are primarily because of following reasons:-

• Current Revenue of 1320 MW Jaypee Nigrie Super Thermal Power Plant is based onprovisional tariff (pending final tariff determination) restricted operation as long termPPA is yet to be tied up and non-availability of coal in March 2016 as the entirecapacity i.e. 2.80 MTPA coal from Amelia Coal Mine for the year 2015-16 was alreadyutilized upto February 2016.

• The operation(s) of 500 MW Jaypee Bina Thermal Power Plant were adverselyaffected due to backdown instructions received from Madhya Pradesh State Load DespatchCentre from time to time because of lower demand of power.

• Prayagraj Power Generation Company Limited (PPGCL) has suffered both time andcost overrun mainly due to delay in allotment of land by UPPCL exchange fluctuationincrease in duties/taxes civil works and also delay in tie-up of financial assistance forcost overrun. We are in the process of tying up the balance financial assistance for costoverrun which is expected shortly. It may be mentioned that Unit-I was commissioned on29th February 2016 and the Project COD is envisaged within current Financial Year2016-17.

• The general depressed economic conditions affecting the power plants in thecountry.

The Company is generally depositing undisputed statutory dues applicable to it like PFESI Income-tax Service Tax Sales- tax VAT Wealth tax Custom Duty etc. The aboveoutstanding dues would also be cleared shortly.

As regards outstanding overdues of banks and financial institutions overdue principalrepayment borrowings except FCCBs have been fully cleared and interest dues stand reducedto Rs. 17155 lacs as on date.

It is stated that the Company has already redeemed part of outstanding FCCBs includingpremium on principal outstanding and the outstanding as on 31st March 2016 was US$ 101.42million. The Company is in discussion with the bondholders for redemption of outstandingFCCBs either from fresh FCCBs/ extending redemption period on mutually agreed terms andconditions or from financial assistance through Indian Banks.

The Directors further wish to state that the "Opinion" of the IndependentAuditors' in Para (3) of their Report on the Consolidated Financial Statements pertain towholly owned subsidiary of the Company i.e. Sangam Power Generation Company Limited(SPGCL) incorporated for implementation of Thermal Power project at Karchana Distt.Allahabad (U.P) with 2 x 660 MW capacity in phase-I and 1 x 660 MW capacity in phase-II.SPGCL had executed conveyance deeds in respect of the land for the project but physicalpossession of the land could not be handed over by the District Administration due tocontinuous agitation by the local villagers. Despite various steps having been taken bySPGCL for implementation of the project no physical activity could be started on theground because of non-availability of the land for the reasons beyond the control of theSPGCL.

SPGCL is in correspondence with U.P! Power Corporation Limited and State Government toclose Power Purchase Agreement/ other agreements and refund of amounts incurred by it andthe matter is under examination of the authorities. However the management of SPGCL doesnot expect any material adjustment in carrying value assets including Capital Work inProgress. The Auditors were unable to comment on whether any adjustment in carrying valueof assets and liabilities were to be made and its possible effects on SPGCL. However themanagement of SPGCL expects that the claims filed by SPGCL would be amicably settled soon.

In reply to para relating to Emphasis of matter of their Report on consolidatedfinancial statements it is stated that since SPGCL is lying dormant without any source ofincome it could not appoint any Key Managerial Personnel except Company Secretary to meetthe requirements of Companies Act 2013.

17. EXTRACT OF ANNUAL RETURN

Pursuant to Section 134(3)(a) of the Companies Act 2013 Extract of the Annual Returnfor the Financial Year ended 31st March 2016 made under the provisions of Section 92(3)of the Companies Act 2013 read with Rule 12(1) of the Companies (Management andAdministration) Rules 2014 is attached as "Annexure-D" which forms partof this Report.

18. PARTICULARS OF LOANS INVESTMENTS GUARANTEES AND SECURITIES

The provisions of Section 186 of the Companies Act 2013 with respect to providingloan guarantee or security to any person or body corporate except for making investmentsis not applicable to the Company since the Company is engaged in providing infrastructuralfacilities. Particulars of investments are given in Note No. 15 to the FinancialStatements. However particulars of loans given guarantees given and securities providedto other bodies corporate under the provisions of Section 186 of the Companies Act 2013are given in the Notes to the Financial Statements.

19. RISK MANAGEMENT

As already reported the Company has developed and implemented a Risk Management Policywhich inter-alia:

a) establishes a framework for identification assessment monitoring mitigation andreporting of risks;

b) ensures that all the current and future material risk exposures are identifiedassessed quantified appropriately mitigated minimized managed and critical risks whichimpact the achievement of Company's objective or threatens its existence are periodicallyreviewed;

c) ensures systematic and uniform assessment of risks related with construction andoperations of power projects; and

d) assures business growth with financial stability.

20. MATERIAL CHANGES AND COMMITMENTS

In terms of Section 134(3)(l) of the Companies Act 2013 except as disclosed elsewherein this report no material changes and commitments which could affect the Company’sfinancial position have occurred between the end of the financial year of the Company towhich the financial statements relate and date of the report and there has been no changein the nature of business.

21. CORPORATE SOCIAL RESPONSIBILITY

As a part of its initiatives under "Corporate Social Responsibility (CSR)"the Company has spent towards fields like promoting education employment orientedvocational training healthcare rural area development environment sustainability etc.These activities are in consonance with Schedule VII to the Companies Act 2013.

The Company has constituted Corporate Social Responsibility (CSR) Committee and hasframed a CSR Policy. The brief details of CSR Committee are provided in the Report onCorporate Governance.

The Annual Report on CSR activities as required to be given under Section 135 of theCompanies Act 2013 and Rule 8 of the Companies (Corporate Social Responsibility Policy)Rules 2014 is annexed herewith as "Annexure-E".

22. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A report on Corporate Governance as stipulated by Regulation 34(3) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of this AnnualReport along with the required Certificate from the Auditors confirming compliance withthe conditions of Corporate Governance.

As required under Regulation 34(2)(e) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management Discussion and Analysis Report on theoperations and financial position of the Company has been provided in a separate sectionwhich forms part of this Annual Report.

23. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act 2013 the Directors to the best oftheir knowledge and ability confirm in respect of the Audited Annual Accounts for theyear ended 31st March 2016 that:

a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed and that there were no material departures;

b) the Directors had in consultation with the Statutory Auditors selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company for the year ended 31st March 2016 and the profit/loss of the Company forthat period;

c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid down proper internal financial controls to be followed andthat such internal financial controls were adequate and were operating effectively; and

f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

24. WHISTLE BLOWER POLICY AND VIGIL MECHANISM

As already reported the Board has pursuant to the provisions of Section 177(9) &(10) of the Companies Act 2013 read with Rule 7 of the Companies (Meetings of Board andits Powers) Rules 2014 and Regulation 22 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 formulated "Whistle Blower Policy and VigilMechanism for Directors and employees" under which protected disclosures can be madeby a whistle blower and provide for adequate safeguards against victimization ofDirector(s) or employees(s) or any other person who avail the mechanism.

The Company believes in the conduct of the affairs of its constituents in a fair andtransparent manner by adopting highest standards of professionalism integrity and ethicalbehaviour.

The Vigil Mechanism-cum-Whistle Blower Policy may be accessed on the Company's websiteat the link: http:// jppowerventures.com/wp-content/uploads/2016/03/Vigil-Mechanism-cum-Whistle-Blower-Policy.pdf.

25. INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to financial statements as designedand implemented by the Company are adequate. During the year under review no material orserious observation has been received from the Internal Auditors of the Company forinsufficiency or inadequacy of such controls.

The details pertaining to internal financial controls and their adequacy have beendisclosed in the Management Discussion & Analysis Report forming part of this Report.

26. DEPOSITS

During the year under review the Company has not accepted any fixed deposits withinthe meaning of Section 73 of the Companies Act 2013 ("the Act") read with theCompanies (Acceptance of Deposit) Rules 2014.

27. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

a) Statement showing details of employees as required under Section 197(12) of theCompanies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 has been provided in Annexure - F(I) whichforms part of this Report.

b) Information pertaining to remuneration to be disclosed by listed companies in termsof Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 have been provided in Annexure- F(II) which forms part of this Report.

28. PARTICULARS OF ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Second Amendment Rules 2015 (as per notification dated4th September 2015) is annexed to this Report as "Annexure-G".

29. ACKNOWLEDGEMENTS

The Board places on record its sincere appreciation and gratitude to variousDepartments and Undertakings of the Central Government various State Governments HPSEBUPPCL MPPMCL APTEL CERC HPERC UPERC MPERC Financial Institutions Banks RatingAgencies for their continued co-operation and support to the Company. The Board sincerelyacknowledges the hard work dedication and commitment of the employees and the faith &confidence reposed by the Shareholders in the Company.

For and on behalf of the Board
For JAIPRAKASH POWER VENTURES LTD
MANOJGAUR
Place : Noida Chairman
Date : 27th May 2016 [DIN: 00008480]

Annexures to Directors’ Report

Annexure ‘A’

FORM AOC-1

(Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of theCompanies (Accounts) Rules 2014) Statement containing salient features of the financialstatement of subsidiaries/associate companies/joint ventures

Part "A": Subsidiaries

(Rs. in Lacs)

S. No. Name of Subsidiary Company Sangam Power Generation Company Limited Prayagraj Power Generation Company Limited Jaypee Arunachal Power Limited Jaypee Powergrid Limited Jaypee Meghalaya Power Limited Bina Power Supply Limited
[A] [B] [C] [D] [E] [F]
1. Reporting period ended on 31.03.2016 31.03.2016 31.03.2016 31.03.2016 31.03.2016 31.03.2016
2. Reporting currency of the Subsidiary Concerned INR INR INR INR INR INR
3. Share Capital 55198 319319 22829 30000 838 5
4. Reserve & Surplus (7) (2046) (225) 5091 (2) (1)
5. Total Assets 55195 1451511 22780 88096 910 4
6. Total Liabilities 5 1134238 176 53005 74 -
7. Investments - - - - - -
8. Turnover - 5871 - 17486 - -
9. Profit before taxation - (2039) - 5037 - -
10. Provision for taxation - - - - - -
11. Profit after taxation - (2039) - 5037 - -
12. Proposed Dividend - - - 1950 - -
13 % of shareholding 100% 88.04% 100% 74% 100% 100%
Notes : 1. Names of subsidiaries which are yet to commence operations Sangam Power Generation Company Limited Prayagraj Power Generation Company Limited* Jaypee Arunachal Power Limited Jaypee Meghalaya Power Limited Bina Power Supply Limited
2. Names of subsidiaries which have been liquidated or sold during the year

Himachal Baspa Power Company Limited

*Unit I of the Bara Thermal Power Project of Prayagraj Power Generation Company Limitedhas been commissioned.

Part "B": Associates and Joint Ventures

Statement pursuant to Section 129(3) of the Companies Act 2013 related to AssociateCompanies and Joint Ventures

Name of Associates/Joint Ventures Not Applicable

 

For and on behalf of the Board
For R. NAGPAL ASSOCIATES Manoj Gaur
Chartered Accountants Chairman
Firm Registration No. 002626N [DIN 00008480]
R. NAGPAL Suren Jain Sunil Kumar Sharma
Partner Managing Director & CFO Vice Chairman & CEO
M.No. 081594 DIN 00011026 DIN 00008125
Place: Noida R.K. Porwal Y.K. Sharma M.M. Sibbal
Dated: 27th May 2016 Vice President (F & A) Sr. Vice President (F & A) Vice President & Company Secretary

ANNEXURE ‘B’

FORM NO. AOC -2

[Pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014]

Form for disclosure of particulars of contracts/arrangements entered into by theCompany with related parties referred to in sub-section (1) of Section 188 of theCompanies Act 2013 including certain arm's length transactions under third provisothereto.

1. Details of contracts or arrangements or transactions not at Arm’s length basis.

There were no contracts or arrangements or transactions entered in to by the Companyduring the Financial Year 2015-16 which were not at Arm's length basis.

2. Details of material contracts or arrangements or transactions at Arm’s lengthbasis.

Sl. No. Particulars Details
a) Name (s) of the related party & nature of relationship N.A
b) Nature of contracts/arrangements/transactions N.A
c) Duration of the contracts / arrangements / transactions N.A
d) Salient terms of the contracts or arrangements or transactions including the values if any N.A
e) Dates of approval by the Board N.A
f) Amount paid as advances if any N.A

 

For and on behalf of the Board
MANOJ GAUR
Place : Noida Chairman
Date : 27th May 2016 [DIN: 00008480]