jaiprakash power ventures ltd Management discussions

(Forming part of Directors Report for the year ended 31st March, 2023)

1.0 ECONOMIC REVIEW

1.1 Global Economy

With subsiding of multiple waves of COVID this year, the world economy received another kind of shock in the form of Russia – Ukraine war which had its irreversible economic and political impact apart from humanitarian casualties. Supply bottlenecks, rise in commodity prices, disrupted trade relations and high energy prices resulted into severe energy crunch disturbing the otherwise recovering world economy post COVID. Sudden spurt in Inflation in many developed countries touched all time high of more than 8%. The situation was worst in Europe where inflation crossed double digit. Central Banks across world stumbled to douse the fire of inflation set up interest hikes multiple times. The rapid rise in interest rates and resultant slowing of economic activity to put inflation under bearable state contributed to stresses in parts of the financial system,raising financial stability concerns. The unexpected failures of two specialized regional banks in the United States in mid-March 2023 and the collapse of confidence in Credit Suisse - a globally significant bank have roiled financial markets.

The prolonged Russia – Ukraine war not only disrupted the energy demand – supply equation but also resulted into a never before energy crisis in Europe forcing civilian black outs and factories being shut down. On the other hand, the energy crisis made people think of shifting their energy intensive manufacturing to other regions having uninterrupted and cheaper supply, to ensure energy security, pursue aggressively the path of renewable and green energy in this respect. European countries, who once shunned coal based plants suddenly resorted to reigniting the coal.

More than a year after Russias invasion of Ukraine and the outbreak of more contagious COVID-19 variants, many economies are still absorbing the shocks. The recent tightening in global financial conditions is also hampering the recovery. As a result, many economies experienced slower growth in incomes in 2023, amid rising joblessness. Moreover, even with central banks having driven up interest rates to reduce inflation, the road back to price stability could be long. Over the medium term, the prospects for growth now seem dimmer than in decades. As per World Economic Outlook 2023, the global output growth,estimated at 3.4 percent in 2022, fell to 2.8 percent in 2023, but can rise to 3.0 percent in 2024. The latest Global Economic Prospects report (Jan 2023) highlights over the next two years, per-capita income growth in Emerging Markets and Developing Economies (EMDE) is expected to average only 2.8 percent—a full percentage point less than the 2010-2019 average. Between 2020 and 2024,per-capita income growth in EMDEs other than China is projected to be roughly the same as per-capita income growth in advanced economies,meaning income convergence is now effectively stalled. On the other hand,

Advanced Economy growth slowed from 5.3 percent in 2021 to an estimated 2.5 percent in 2022 - the fourth fastest deceleration of the past five decades. Economic conditions deteriorated substantially in the second half of 2022 as high inflation eroded household purchasing power and dented confidence, while rapid monetary policy tightening weighed on demand.[Global Economic Prospect Jan 2023].

During the year, due to unprecedented energy crisis, countries tried hard to ensure energy security by not only falling back to coal but also to accelerate use of renewable sources. In the COP27 summit of 2022, governments and private parties pledged to focus on climate technology to keep the global warming under check. Remarkable progress is witnessed in Green Hydrogen (H2) application and Germany launched its first fleet of H2 cell trains. Nuclear power generation remained subdued due to Fukushima accident.

1.2 Indian Economy

In continuation of the vision of the Honble Prime Minister to make India a US$ 5 trillion economy by 2024-25,because - of various initiatives taken by national leadership like promoting "Make In India", " Local to be Vocal", digitization at every level of functioning, labour reforms, betterment of infrastructure, augmenting logistic facilities, introducing more ease of doing business and frequent policy reforms that were aimed to remove bottlenecks, India is poised to become hub of all manufacturing activities.

Although significant challenges remain in the global environment due to monetary policy tightening, deteriorating financial conditions and ongoing inflationary pressures, India was one of the fastest growing economies in the world with real GDP growing 7.7 percent year-on-year during Q1-Q3 fiscal year 2022/23. Growth was underpinned by robust domestic demand – strong investment activity bolstered by the governments capex push and buoyant private consumption, particularly among higher income earners. The overall growth momentum remains robust and real GDP growth for FY22/23 is estimated to be 6.9 percent.

Headline inflation averaged around 6.6 percent in FY22/23. Average inflation in H2 FY22/23 was almost 1.0 percentage point lower than the first half as inflationary pressures began to taper and the combination of supply side measures (such as export restrictions) and monetary policy tightening began to take effect. Notwithstanding the moderation, headline inflation remains above the Reserve Bank of Indias (RBI) target range of 2.0-6.0 percent. The gradual moderation in price pressures was led by a decline in food inflation (the single largest component of headline inflation) and easing fuel prices on the back of softening in global oil prices. However, the core inflation remained elevated in FY22/23, averaging around 6.1 percent over the fiscal year. Elevated inflationary pressures continued to drive monetary policy decision making despite growing headwinds against growth prospects. Since May 2022 the RBIs Monetary Policy Committee (MPC) has hiked the repo rate (its main policy rate) by 250 basis points to reduce liquidity in the system. The benchmark yield on 10-year sovereign bonds has been increasing since May 2022 and peaked at around 7.60 percent in June but largely remained stable around 7.40 percent throughout the year.

Since September 2022, stock markets bounced back, driven by better-than-expected corporate earnings in the first half of FY22/23, moderation in domestic inflation easing global commodity prices, and a reversal in foreign portfolio flowing back into India. As a result, markets hit new all-time high in January 2023.

Robust nominal GDP growth bolstered revenue collection during FY22/23. The highlight continued to be the performance of the Goods and Services Tax (GST) with average growth of over 20.00 percent year-on-year. According to the governments revised estimates, tax revenues were about 8.00 percent higher than budgeted and 15.60 percent higher than the previous year. On the expenditure side, the announcement of several support measures to offset the impact of inflationary pressure caused current spending to exceed budget estimates by 8.00 percent, largely due to increased allocation for income support measures like the food subsidy, fertilizer subsidies and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Although Indias economy has been relatively resilient to challenging external conditions, recent financial sector turmoil in the US and Europe reduced appetite for emerging market assets, trigger another bout of capital flight and put pressure on the Indian rupee. Tighter global financial conditions also weigh on the risk appetite private investment in India. Notwithstanding external pressures, Indian banks are well capitalized, and the impact of policy tightening on bank balance sheets has been less severe in India due to the relatively modest pace of tightening.

2.0 INDIAN POWER SECTOR

Posting a GDP growth of 6.8% (Source IMF World Economic Outlook Projections, April 2023) the power demand also surged by approx. 10.00% during FY 2022-23 to 132 BUs in FY 2023. Apart from the Government of Indias focus on attaining ‘Power for all, the growing population, faster urbanization, faster industrialization, growing demand of air conditioning and sustained economic growth continues to drive electricity demand in India. There was a phase in Q4 of FY 2022 when energy prices shot to Rs. 20/- per unit as demand peaked due to intense heat wave and shortage of power supply on account of short supply of coal and non-availability of rakes. With intervention of CERC, the prices of energy were capped at Rs. 12/- per unit in Q1 of FY 2023 and then Rs. 10/- per unit in Q1 of FY 2024 to check consumer interest. At the same time immediate steps were also taken to avert the crisis and power generators were asked to blend 10.00% imported coal of their requirements to avoid coal shortage. Section 11 of the Electricity Act 2003 was invoked and all thermal power plants were asked to run the plants at full capacity.

The All India Installed Capacity (GW) as on 31st March, 2023, as released by CEA was 416 GW with capacity addition of 17 GW in FY 2023 as follows:

Sector	Thermal	Nuclear	Hydro	Renewable Energy Source	Grand Total
State	75.98	0	27.25	2.49	105.73
Private	85.31	0	3.93	121.04	210.28
Central	75.98	6.78	15.66	1.63	100.05
All India	237.27	6.78	46.85	125.16	416.06

The Government of India is making serious efforts to boost the renewable energy segment due to its sustainability and countrys climate change obligations. India currently has a total renewable energy capacity of 168.96 GW (as on 28th February 2023). This includes 64.38 GW Solar Power, 51.79 GW Hydro Power, 42.02 GW Wind Power and 10.77 GW Bio Power and balance as residual sources.

The Government has decided to invite bids for 50 GW of renewable energy capacity annually for the next five years i.e., from Financial Year 2023-24 till Financial Year 2027-28. These annual bids of ISTS (Inter-State Transmission) connected renewable energy capacity will also include setting up of wind power capacity of at least 10 GW per annum. The plan finalized by Ministry of New & Renewable

Energy (MNRE) at a meeting chaired by Union Minister for Power & NRE Shri R. K. Singh, is in accordance with Prime Ministers announcement at COP26, of achieving 500 GW of installed electricity capacity from non-fossil fuel (Renewable Energy + Nuclear) sources by FY 2030.

Considering the fact that Renewable Energy (RE) projects take around 18-24 months for commissioning, the bid plan will add 250 GW of renewable energy and ensure 500 GW of installed capacity by FY 2030. The Ministry of Power is already working on upgrading and adding the transmission system capacity for evacuating 500 GW of electricity from non-fossil fuel. [Source Press Release of PIB 5.4.2023].

2.1 Generation

The Electricity generation during the FY 2022-23 was 1,624.158 BU against 1490.277 BU in FY 2021-22 [source CEA], higher by 8.87%. Share of coal-based capacities in Indias total installed capacity was at around 57.02% while that of renewables has risen to 30.07%. The PLF of thermal based plants was 56.63% against 53.62% in FY 2021-22.

As per Report published by CEA for FY 2022-23, the data for power generation was as follows:-

Type	Apr. 2022 to Mar. 2023	Apr. 2021 to Mar. 2022	% Change
Thermal	1206.15	1114.71	8.20
Nuclear	45.83	47.11	-2.72
Hydro	162.05	151.63	6.87
Bhutan Import	6.76	7.49	-9.78
All India*	1420.79	1320.95	7.56

*Excluding power generated through renewable (except Hydro) and other sources.

Indias power sector is most diversified with respect to power generation mix, ranging from conventional sources like coal, lignite, gas, oil and hydro to non-conventional sources like wind, solar and waste based generation. India stands 4th globally in Renewable Energy Installed Capacity (including Large Hydro), 4th in Wind Power capacity & 4th in Solar Power capacity (as per REN21 Renewables 2022 Global Status Report).

As on March 2023, India had total solar installed generation capacity of 67 GW, (previous year 54 GW) which is up by 33% from previous year because of addition of installed capacity of 13 GW. Among states, Rajasthan (17 GW) tops the list of solar energy producers followed by Gujrat (9 GW), Karnataka (8 GW) and Tamil Nadu (7 GW). Solar power has seen fluctuations in monthly power generation which can be linked to seasonal factors as well as the disruptions in the input (imported) supply chains. India is committed to bring down the carbon footprint to fight climate change, hence, is promoting solar energy generation in a big way. The Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan (PM-KUSUM) scheme is aimed to promote solar energy generation to reduce dependence on diesel. Government is also promoting the Roof Top Solar Programme by providing financial assistance to residential sector. Government has also rolled out Development of Solar Parks and Ultra Mega Solar Parks scheme to facilitate the solar project developers to set up projects expeditiously.

Wind power generation capacity in India has significantly increased in recent years. As of 31 March 2023, the total installed wind power capacity was 42.633 GW, the fourth largest installed wind power capacity in the world. Wind power capacity is mainly spread across the southern, western, and northwestern states. India is expected to become a hub for wind energy due to geological situation and move towards clean energy.

2.2 Transmission

India has a robust National Grid which facilitates seamless power transfer from the resource rich areas to major load centers of the country with reliability & security. Power can be transferred from surplus regions/states to deficit region/states. The capacity of national grid is being expanded on a continuous basis to commensurate with the growth in electricity generation and electricity demand. As on February 28, 2023, Indian Transmission network includes 4.71 Lakhs km of transmission lines (220kV and above voltage level) and 11.80 Lakhs MVA of the transformation capacity in substations (220kV and above voltage level). The inter-regional capacity of the National Grid is 1.12 Lakhs MW. The newly launched PM Gati Shakti initiative is expected to streamline project development and reduce time and cost overruns for all infrastructure projects including transmission, which will help address Right of Way (RoW) issues. Meanwhile, for mobilising investments through the asset monetisation route, the MoP has recently issued guidelines under theacquire, operate, maintain and transfer PPP model.

Further, the notification of the General Network Access (GNA) regulations in the past year is expected to improve network planning and new transmission corridors.

2.3 Distribution

Power distribution is the crucial link in the electricity supply chain. It assumes great significance as this segment has a direct impact on the sectors commercial viability, and ultimately on the consumers who pay for power services. The sector had been plagued by high distribution losses, obsolete distribution system, operational inefficiencies, unstable and uneconomical tariff policies and lack of modernization.

The sector has started receiving greater attention of governments with heavy investment. Several new initiatives have been introduced to reduce aggregate technical and commercial (AT&C) losses along with a definitive regulatory framework. As a result, the AT & C losses started showing a decline for the first time last year.

National Level Figures	FY 2017-18	FY 2018-19	FY 2019-20	FY 2020-21	FY 2021-22	FY 2022-23
AT&C Losses (%)	21.53	21.64	20.73	22.32	17.00	13.50

Government of India has been helping the States through its various schemes including Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS) to achieve the objective of providing uninterrupted power supply to all households. Under the recently launched Revamped Distribution Sector Scheme (RDSS), the State Power Distribution Utilities are financially supported to strengthen Distribution infrastructure and the fund releases under the scheme are linked to initiation of reforms and achievement of results that also includes trajectories for improving electricity supply hours to urban and rural consumers. Implementation of Late Payment Surcharge and Related Matters Rules 2022 has strengthened the Gencos in regulating power supply in case of default.I ntegrated Power Development Scheme (IPDS) Schemehas strengthened sub-transmission and distribution networks in the urban areas, improved Metering of distribution transformers / feeders / consumers in the urban area and has ensured IT enablement of distribution sector and strengthening of distribution network.

Further, efforts by government to replace traditional meters with smart meters will also reduce AT & C losses and will improve their billing efficiency.

The draft electricity (Amendment) Bill 2022 has introduced concept of multiple distribution licensee operating in a given area of supply without each owning a separate network which presupposes non-discriminatory open access to the distribution network and sharing of existing power purchase agreements (PPAs) between discoms. This way, the Bill seeks to promote consumer choice and bring efficiency through competition.

2.4 Power Trading

With heightened thrust on digitization, Government of India is promoting power trading on Energy Exchanges, which is gaining popularity, indicating a significant shift in the Indian power market that has been largely dominated by bilateral deals. Presently there are three Power exchanges operating in India - Indian Energy Exchange (IEX), Power Exchange of India Ltd. (PXIL), and Hindustan Power Exchange (HPX). Indian Energy Exchange (IEX), which controls 99% of the total exchange based power trading has clocked a 5% de-growth in trade volume at 96.8 BUs in financial year 2022-23 despite a highly constrained sell-side liquidity, which led to the price increase by approx. 35% on YoY basis.

2.6 Power Supply Trend

The power supply position in the country during last six years 2017-18 to 2022-23 was as under:

	Energy				Peak
Year	Requirement	Availability	Surplus(+)/ Deficits(-)		Peak Demand	Peak Met	Surplus(+)/ Deficits(-)
	(MU)	(MU)	(MU)	(%)	(MW)	(MW)	(MW)	(%)
2017-18	12,13,134	12,04,697	-8,629	-0.7	1,64,066	1,60,752	-3,314	-2.0
2018-19	12,74,595	12,67,526	-7,070	-0.6	1,77,022	1,75,528	-1,494	-0.8
2019-20	12,91,010	12,84,444	-6566	-0.5	1,83,804	1,82,533	-1,271	-0.7
2020-21	12,75,534	12,70,663	-4871	-0.4	1,90,198	1,89,395	-802	-0.4
2021-22	13,75,663	13,69,818	-5,845	-0.4	2,03,014	2,00,539	-2,475	-1.2
2022-23	15,11,847	15,04,264	-7,583	-0.5	2,15,888	2,07,231	-8,657	-4.0

[Source: https://powermin.nic.in/en/content/power-sector-glance-all-india

GOVERNMENT INITIATIVE:

During the year, the government has taken several steps/ initiatives to trouble shoot the issues in power sector as well as to foster growth therein, some of them are mentioned below:

1. Sensing an emergency situation of power crisis wherein the demand of power rose by almost 20% in energy terms, the Mo Phad to invoke provisions of Section 11 of the Electricity Act 2003 twice in the year (May 2022 and February 2023) directing all imported coal-based power plants to operate and generate power to their full capacity. Where the imported coal-based plant was under NCLT, the resolution professional was required to take steps to make it functional. These plants were asked to supply power in the first instance to the PPA holders. Any surplus power left thereafter or any power for which there is no PPA would be sold at the power exchanges.

2. The Central Electricity Regulatory Commission vide its orders dated 1st April, 2022 and 6th May, 2022 capped the prices on power exchanges across all the market segments – DAM, RTM, Intra-day, Day Ahead Contingency and Term-Ahead contracts at Rs 12/- per unit, which further reduced to Rs. 10/- in the month of April, 2023.

3. The Ministry of Power (MoP) issued the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022. As per these rules, total dues owed by distribution companies (discoms) to generation and transmission companies can be paid in equated monthly installments (EMIs). Further, total dues including late payment surcharge (LPS) up to the date of notification of these rules were to be rescheduled and the due dates were to be redetermined for payment by a discom in EMIs. Furthermore, discoms with over Rs 100 billion of dues were allowed to n clear them in a maximum of 48 EMIs while the ones in the range of Rs 40-100 billion could clear at a maximum of 40 months. The discoms with dues of Rs 20-40 billion, Rs 10-20 billion and discoms owing up to Rs 5.01-10 billion were given a maximum of 34 months, 28 months and 20 months respectively. Meanwhile, discoms with less than Rs 5 billion were allowed to have a maximum of 12 months to settle their dues.

4. The central government notified in June 2022 the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022. These rules were notified for promoting generation, purchase, and consumption of green energy including the energy from waste-to-energy plants. The rules enabled simplified procedure for open access (OA) to green power. It enabled faster approval of green OA, uniform banking, voluntary purchase of renewable power by commercial and industrial consumers, and applicability of OA charges, among others.

5. In June 2022, the Central Electricity Regulatory Commission (CERC) has issued the Connectivity and General Network Access (GNA) to the Inter-State Transmission System (ISTS) Regulations, 2022. The rules specify the application for grant of connectivity and GNA, eligibility for connectivity to ISTS, application for grant of connectivity, among others.

6. The Central Electricity Authority (CEA) notified the draft Central Electricity Authority (Flexible operation of thermal power plants) Regulations, 2022. The regulations will apply to all coal and lignite based thermal power plants (TPPs) and load despatch centers (LDCs). As per the draft, all TPPs will be capable of providing the required output as per the schedule for generation finalised appropriate LDCs.

7. The Central Electricity Regulatory Commission (CERC) has issued a suo-moto order pertaining to blending of imported coal with domestic coal to mitigate the domestic coal shortage which allowed that prior permission from beneficiaries shall not be a precondition for blending upto 20 per cent from alternate sources of fuel supply including imported coal, subject to technical feasibility,

8. The Ministry of Power (MoP) issued the draft Electricity (Amendment) Rules, 2022. The MoP suggested creating a central pool of renewable energy sources from which an intermediary company will procure power to be supplied to an entity that will undertake distribution and retail supply to more than one state. The ministry has also proposed that standalone energy storage system (ESS) will be a delicensed activity. It was proposed the authority shall decide the cases for grant of concurrence to hydroelectric generation scheme within 150 days from the date of submission of the scheme. Further, the authority shall decide the cases for grant of concurrence to off-the river pumped storage plant scheme within 90 days from the date of submission of the scheme.

9. The Ministry of Environment, Forest and Climate Change (MoEFCC) has issued the Environment (Protection) Second Amendment Rules, 2022. Under this, MoEFCC has extended the deadlines for thermal power plants (TPPs) to install equipment to cut sulphur emissions by two years. The deadline for TPPs within a 10-km radius of Delhi-NCR and cities with a population of more than 1 million has been extended from December 31, 2022 to December 31, 2024. For TPPs in a 10-km radius of critically-polluted areas or non-attainment cities, the deadline has been extended from December 31, 2023 to December 31, 2025. For all other TPPs across the country, the deadline has been extended from December 31, 2024 to December 31, 2026. 10. Central Electricity Authority (CEA) has amended the CEA (Cyber Security in Power Sector) Guidelines, 2021.

The amendment has been notified to address the issue of frequency of operational technology (OT) audit for compliance by all entities in clause 2.3 of the guidelines. Now onwards, the responsible entity shall through a CERT-In (the Indian Computer Emergency Response Team) empanelled cyber security OT auditor shall get their information technology (IT) system audited at least once in every six months and OT system audited at least once in a year. 11. The Ministry of Power (MoP) has amended the Electricity Rules, 2005, related to captive generating plant by providing that the consumption by a subsidiary company of a company which is an existing captive user shall also be admissible as captive consumption by the captive user.

12. The Ministry of New and Renewable Energy (MNRE) has notified the National Bioenergy Program for the period from FY 2021-22 to FY 2025-26 comprising of three sub-schemes including- waste to energy programme (programme on energy from urban, industrial and agricultural wastes /residues) to support setting up of large biogas, bio compressed natural gas (bioCNG) and power plants (excluding municipal solid waste to power projects); biomass programme (scheme to support manufacturing of briquettes and pellets and promotion of biomass (non-bagasse) based cogeneration in industries) to support setting up of pellets and briquettes for use in power generation and non-bagasse based power generation projects; and biogas programme to support setting up of family and medium size biogas in rural areas.

13. The Ministry of Power (MoP) is considering notification of renewable generation obligation in accordance with Tariff Policy 2016, to enhance the generation and utilisation of renewable energy in the country. Accordingly, in order to promote renewable energy/ sources, any generating company proposing to establish a coal/lignite based thermal generation station after April 1, 2024 will be required to establish minimum 25 per cent renewable energy generating capacity or procure and supply renewable energy/ equivalent to such capacity.

14. The Ministry of Power (MoP) has notified the Energy Conservation (Amendment) Act, 2022 empowering the central government to specify a carbon credit trading scheme. Designated consumers may be required to meet a proportion of their energy needs from non-fossil sources.

15. The Ministry of Power (MoP) has notified the Electricity (Amendment) Rules, 2022. The MoP has inserted rules for surcharge payable by consumers seeking open access, timely recovery of power purchase costs by distribution licensee, subsidy accounting, resource adequacy, development of hydro power, energy storage system, and implementation of uniform renewable energy tariff for central pool. The MoP has also substituted rules for resolution of disputes wherein the appropriate commission, will pass a final order, for resolution of dispute within 120 days from the date of receipt of the petition in the commission, which may be extended by 30 days for reasons to be recorded in writing.

16. Union Budget 2023 Highlights:

i. Green Growth identified is one of the nodes in the SAPTARISHI (7 priorities).

ii. $2.4 Bn National Hydrogen Mission for production of 5 MMT by 2030. $36 Mn additional in Budget.

iii. 4 GWh Battery Energy Storage Systems supported through Viability Gap Funding.

iv. Pumped Storage Projects has received a push with a detailed framework to be formulated.

OUTLOOK

The current decade (2020-2029) is going to witness a major transformation in the Indian electricity sector demand growth, energy mix and market operations, innovations and expansion of power reach to all. As per governments plan of "Power to All", there has to be reliable access to sufficient electricity at all times to all, while also accelerating the clean energy transition by lowering its reliance on fossil fuels and moving toward more environmentally friendly, renewable sources of energy. Future investments will benefit from strong demand fundamentals, policy support and increasing government focus on infrastructure.

The Government of India is preparing a rent a roof policy for supporting its target of generating 40 GW of power through solar rooftop projects. It also plans to set up 21 new nuclear power reactors with a total installed capacity of 15,700 MW by 2031. The Central Electricity Authority (CEA) estimates Indias power requirement to grow to reach 817 GW by 2030. Also, by 2029-30, CEA estimates that the share of renewable energy generation would increase from 18% to 44%, while that of thermal energy generation is expected to be reduced from 78% to 52%.

The government plans to establish renewable energy capacity of 500 GW by 2030.

RISKS/THREATS:

Because this is an industry spanning global markets across international economies and different geo-political environments, the power industry is not immune to risks. To quote a few, following risks are always looming large in the industry:

1. The power demand is co-extensive with the growth of economy. Any contraction in economy adversely affects the industry.

2. Tackling Carbon Emission emanated from fossil fuel based power plants is the biggest risk to Industry

3. The Industry is on the verge of fast changing technology and hence needs equal pace of investments as well as implementation of the technology to meet requirement of the advanced/updated technology.

4. Erratic fuel supply to TPPs due to insufficient railway infrastructure and high volatility in fuel prices. Lack of fuel safety poses risk of its becoming economical unviable.

5. Quality variations in available fossil fuel.

6. Hydro projects are always subject to hydrological risks

7. Since all power projects are capital intensive projects with higher gestation period and long pay back period, lack of banks/financial institutions enthusiasm in financing projects is a deterrent.

8. Not all power projects are having long term PPA which causes uncertainty of operations.

9. Frequent changes in regulatory regime.

10. Availability of fuel coal at market price are market driven but quantity is controlled and market rates are controlled by regulators.

3.0 SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company is primarily engaged in generation of power and thus has only one segment. The Company has Amelia (North) Coal Mine which is for captive consumption. Recently, the Company has received "Right of Exploration" in respect Banda (North) Coal Block. The turnover from Cement Grinding Unit is very small compared to the total turnover.

4.0 INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate internal control system which is commensurate with the nature and size of its operations and is manned by qualified and experienced personnel.

The system involves adopted policies and procedures regarding financial and operating functions for ensuring the orderly and efficient conduct of its business including adherence to Companys assets, prevention & detection of frauds and errors and timely preparation of reliable financial information.

The internal control systems are further supplemented by internal audit carried out by an independent firm of

Chartered Accountants and periodical review by the management and Statutory Auditors. The Internal Audit reports are reviewed by the Audit Committee.

The internal control systems are implemented:-

• To safeguard the Companys assets from loss or damage.

• To keep constant check on cost structure.

To provide adequate financial and accounting controls and implement accounting standards.

The senior management regularly reviews the findings and recommendations of the Internal Auditors so as to continuously monitor and improve internal controls to match the organizations pace of growth and increasing complexity of operations as well as to meet the changes in statutory and accounting requirements.

5.0 FINANCIAL DISCUSSION & ANALYSIS

After adoption of Indian Accounting Standards (Ind AS) from 1st April, 2016, the financial statements for the Financial Year 2022-23 have been prepared in accordance with Ind AS.

6.1 Standalone Financial Performance

The revenue from operations for the year ended 31st March, 2023 aggregated to Rs. 5,786.67 crore as compared to Rs. 4,624.55 crore in the previous year i.e. higher by Rs. 1,162.12 crore.

The operations resulted in profit before exceptional items, tax and regulatory deferral account balances for the year under review of Rs 226.70 crore as compared to profit of

Rs 310.61 crore in the previous year due to: i. Higher generation and Higher incentive for plant availability in Vishnuprayag HEP. ii. Higher generation and higher rate of Merchant Power. Average rate of merchant power in the current year is Rs.5.25 per Unit Vs average rate of Rs. 3.71 per Unit in the previous year in Bina TPP. iii. Despite of lower generation, increase in sale is mainly due to higher rate of Merchant Power. The average rate of merchant power in the current year is Rs. 5.94 per Unit Vs average rate of Rs. 4.41 per Unit in the previous year in Nigrie STPP.

Further, Other Income has decreased to Rs.135.26 crore as compared to income of Rs. 234.87 crore in the previous year.

The Tax expenses during the year under review are Rs. 167.68 crore (including Deferred Tax of Rs. 97.83 crore) during the year under review against Tax expenses of Rs. 202.12 crore in the previous year. The Net profit during the year under review is Rs. 59.02 crore against Net profit of Rs. 108.29 crore during the previous year.

6.2 Finance Cost

Finance cost has increased from Rs. 556.09 crore in the Financial Year 20221-22 to Rs. 559.70 crore in FY 2022-23 mainly due to excess provision/liabilities no longer required written back.

6.3 Operational Performance

The Operational Performance of the company was as under:

	Name of Project
Parameter	Vishnuprayag HEP		Bina TPP		Nigrie STPP
	FY 21-22	FY 22-23	FY 21-22	FY 22-23	FY 21-22	FY 22-23
Plant Availability	96.65	99.51	74.20	83.59	87.56	87.19
PLF	51.40	54.53	57.28	68.03	72.49	69.50

The saleable energy generation for the year has been 11,832.45 MUs as compared to 11,675.33 MUs during previous year i.e. higher by 157.12 MUs as detailed below:-Energy in MUs

S.No	Name of Plant	FY 2021-22	FY 2022-23	Variation
1	Vishnuprayag HEP	1,565.56	1,661.33	95.77
2	Bina TPP	2,314.87	2,729.63	414.76
3	Nigrie STPP	7,794.90	7,441.49	-353.41
	Total	11,675.33	11,832.45	157.12

The energy generation during the period ended 31st March, 2023 was 1910.83 MUs as compared to 1801.23 MUs during the corresponding previous year and the net saleable energy of 1661.33 MUs as against 1565.56 MUs during the previous year. Energy generation of Vishnuprayag HEP is marginally higher during the current year due to hydrology. Energy generation of Bina TPP is higher in the current year by 471.05 MUs. PLF of Bina TPP during the current year has been at 68.03% as compared to 57.28% in the corresponding period. Energy generation at JNSTPP is higher in the current year by 345.53 MUs. PLF of JNSTPP during the current year has been at 69.50 as compared to 72.49% in the corresponding previous year. The energy generation of the JNSTPP was 8,036.35 MUs during the year.

6.4 Discussion on financial performance with respect to operational performance

The companys financial performance has improved due to operational efficiency and lower finance cost post implementation of the Debt Resolution Plan.

6.5 Consolidated Financial Review

The total income on consolidated basis for the year ended 31st March, 2023 aggregated to Rs. 5922.15 crore as compared to Rs. 4859.63 crore in the previous year.

However, Net profit after tax and exceptional items on consolidated basis during the year under review stood at Rs.55.42 crore as compared to net loss on consolidated basis of Rs. 107.48 crore during the previous year.

6.6 Key Financial Ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018 (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector-specific financial ratios, along with detailed explanation there for. The details of Key Financial Ratios for FY 2021-22 and FY 2020-21 are given below:

			Standalone
SL	Particulars	Indicators	2022-23	2021-22	Variations
1	Current Ratio	Times	1.19	1.16	3%
2	Debt Equity Ratio	Times	0.44	0.47	-7%
3	Debt Service Coverage Ratio	Times	.46	1.68	-13%
4	Return of Equity Ratio	%	0.99	3.48	-72%
	Reason of variations more than 25%
	Due to decrease in Net profit majorly on account of fair valuation loss of JPVL trust shares.
5	Inventory Turnover Ration	50.49	39.04	29%	-25%
	Reason of variations more than 25%
	Due to increase in closing inventory.
6	Trade Receivable Turnover Ratio	Times	87.24	82.05	6%
7	Trade Payable Turnover Ratio	Times	34.98	36.59	-4%
8	Net Capital Turnover Ratio	Times	11.79	13.71	-14%
9	Net Profit Ratio	%	1.02%	2.35%	-57%
	Reason of variations more than 25%
	Due to decrease in Net profit majorly on account of fair valuation loss
	of JPVL trust shares.
10	Return on Capital employed	%	5.12%	5.55%	-8.0%
11	Return on net worth	Times	0.07	0.08	-10.0%

7.0 MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS

Human Resources are considered as one of the most critical resources in the business, which need to be continuously nurtured to maximize the effectiveness of the Organisation. The Company recognizes its human resources as the most valuable assets. The Company has appointed specialized professionals in the fields of engineering, finance, administration and technical and non-technical staff to take care of its operations and allied activities.

Total manpower of the Company at the end of the financial year was 1765 which includes professionals like engineers, chartered accountants, managers and other skilled and unskilled employees. These Teams of professionals are put in place both at Corporate Office and in all the project locations. Various initiatives have been taken up for developing employees at all levels and to make them future ready for higher roles and responsibility. Necessary training was imparted to the staff for operations and maintenance of power stations by specialist from related fields including the equipment suppliers from time to time.

Industrial relations remained cordial throughout the year.

	For and on behalf of the Board
Place : New Delhi	(Manoj Gaur)
Date : 28th July, 2023	Chairman
	(DIN: 00008480)