ksk energy ventures ltd Management discussions

Indian Economy Overview

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers of the world over the next 10-15 years, backed by its strong democracy and partnerships.

Despite a moderation in real GDP growth by 40 basis points in 2018-19 over 2017-18, Indian economy remained the fastest growing major economy along with macroeconomic stability. There was a pickup in fixed investment rate in 2018-19. Fiscal situation remained comfortable and the consolidation process continues to bring down the elevated level of public debt. Consumer price inflation was within the targeted limits set by the monetary policy committee of RBI. Current Account De cit increased from 1.9 percent of GDP in 2017-18 to 2.4 percent in April-December 2018-19. Global confidence on the Indian economy has improved as seen from indicators like improvement in ease of doing business and gross FDI in flows. According to World Banks Ease of Doing Business 2019 Report, Indias ranking improved by 23 positions to 77 rank in 2018.

Industry

The performance of the industrial sectors based on the Index of Industrial Production (IIP) comprising mining, manufacturing and electricity registered a growth of 3.6 percent in 2018- 19, as compared to 4.4 percent in 2017-18. As per the sectorial classification, mining, manufacturing and electricity sectors registered 2.9 percent, 3.6 percent and 5.2 percent growth during 2018-19 respectively. Among the use-based categories, primary goods, capital goods, intermediate goods, infrastructure/construction goods, consumer durables goods and consumer non durables goods have attained 3.5 percent, 2.8 percent, (-)0.5 percent, 7.5 percent, 5.5 percent and 3.9 percent growth respectively in 2018-19.

The eight core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity that have a total weight of nearly 40 percent in the Index of Industrial Production (IIP) grew by 4.3 percent in 2018-19 at the same level of growth at 4.3 percent in 2017-18. The production of coal, natural gas, refinery products, fertilizers, steel, cement and electricity increased by 7.4 percent, 0.8 percent, 3.1 percent, 0.3 percent, 4.7 percent, 13.3 percent and 5.2 percent respectively during 2018-19, while the production of crude oil fell during the same period.

Government Initiatives

The interim Union Budget for 2019-20 was announced by Mr Piyush Goyal, Union Minister for Finance, Corporate Affairs, Railways and Coal, Government of India, in Parliament on February 01, 2019. It focuses on supporting the needy farmers, economically less privileged, workers in the unorganised sector and salaried employees, while continuing the Government of Indias push towards better physical and social infrastructure.

Total expenditure for 2019-20 is budgeted at Rs 2,784,200 crore (US$ 391.53 billion), an increase of 13.30 per cent from 2018-19 (revised estimates).

Numerous foreign companies are setting up their facilities in India on account of various government initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister of India, has launched the Make in India initiative with an aim to boost the manufacturing sector of Indian economy, to increase the purchasing power of an average Indian consumer, which would further boost demand, and hence spur development, in addition to benefitting investors. The Government of India, under the Make in India initiative, is trying to give boost to the contribution made by the manufacturing sector and aims to take it up to 25 per cent of the GDP from the current 17 per cent. Besides, the Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy.

Some of the recent initiatives and developments undertaken by the government are listed below:

In February 2019, the Government of India approved the National Policy on Software Products - 2019, to develop the country as a software hub.

The National Mineral Policy 2019, National Electronics Policy 2019 and Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME II) have also been approved by the Government of India in 2019.

Village electrification in India was completed in April 2018.

The Government of India released the maiden Agriculture Export Policy, 2018 which seeks to double agricultural exports from the country to US$ 60 billion by 2022.

Around 1.29 million houses have been constructed up to December 24, 2018, under Government of Indias housing scheme named Pradhan Mantri Awas Yojana (Urban).

Prime Ministers Employment Generation Programme (PMEGP) will be continued with an outlay of Rs 5,500 crore (US$ 755.36 million) for three years from 2017-18 to 2019-20, according to the Cabinet Committee on Economic Affairs (CCEA).

Road Ahead

Indias gross domestic product (GDP) is expected to reach US$ 6 trillion by FY27 and achieve upper-middle income status on the back of digitisation, globalisation, favourable demographics and reforms. Indias revenue receipts are estimated to touch Rs 28-30 trillion (US$ 385-412 billion) by 2019, owing to Government of Indias measures to strengthen infrastructure and reforms like demonetisation and Goods and Services Tax (GST).

India is also focusing on renewable sources to generate energy. It is planning to achieve 40 per cent of its energy from non-fossil sources by 2030 which is currently 30 per cent and also have plans to increase its renewable energy capacity from to 175 GW by 2022.

India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behaviour and expenditure pattern, according to a Boston Consulting Group (BCG) report; and is estimated to surpass USA to become the second largest economy in terms of purchasing power parity (PPP) by the year 2040, according to a report by Price waterhouse Coopers.

Power Sector:

Power Sector in India has witnessed a paradigm shift over the years due to the constant the orts of Government to foster investment in the sector. As a result, India improved its ranking in the Energy Transition Index published by World Economic Forum (WEF) (76th position). Along with universal electrification, commendable progress has been made in generation and transmission of electricity.

Performance Highlights:

Power plays a crucial role in the economic growth and welfare of India. The countrys power sector is one of the most diversified in the world with thermal power contributing 63.5% of installed capacity, while hydro, nuclear, RES accounting for 12.8%, 1.9%, 21.8%, respectively. Coal continues to be the mainstay for the power sector, primarily due to its abundant domestic availability and the predominance of coal-based plants in the power generation base. India is the fifth largest in the world by power generation capacity and is the third largest producer of electricity. The total Installed Capacity of power stations in India stood at 356.10 Gigawatt (GW) as on 31st March 2019.

The overall Generation in the country has increased from 1308.146 BU during 2017-18 to 1376.095 BU during 2018-19, with growth rate of 5.19%.

The Power Supply position in the country has marginally got better, since during the FY 2018-19, the supply gap in terms of energy has decreased to 7355 MUs as against shortfall of energy of 8567 MUs in FY 2017-18. The shortfall in peak demand has also decreased to 1,494 MW in FY 2018-19 from 3,314 MW in FY 2017-18.

Generation:

The aggregate Plant Load Factor for the FY 2018-19 stood at 61.07% compared to 60.67% during the previous year.

Year	PLF		Sector-wise PLF (%)
	%	Central	State	Private
2010-11	75.1	85.1	66.7	80.7
2011-12	73.3	82.1	68	69.5
2012-13	69.9	79.2	65.6	64.1
2013-14	65.6	76.1	59.1	62.1
2014-15	64.46	73.96	59.83	60.58
2015-16	62.29	72.52	55.41	60.49
2016-17	59.88	71.98	54.35	55.73
2017-18	60.67	72.35	56.83	55.32
2018-19	61.07	72.64	57.81	55.24

The Plant Load Factor of Thermal Power Stations is an index of utilization of the installed capacity. Therefore, even though there was increase in generation compared to the previous year, lot of thermal power plants were left stranded due to various reasons like lack of demand, availability of fuel etc.

The fall in Plant Load Factors of Independent Power Producers (IPPs) from 83.9% to 55.24% between 2010 to 2019 also re ects the inherent challenges and contrasts in the policy paradigms of new power generation capacities that have resulted in prolonged period of challenges and uncertainty across the Indian power sector. Overall capacity utilisation of coal-based plants stood at 61.1%, as of March 2019, up from 60.7% in the year-earlier period, due to improved domestic coal availability and higher imports. Gas-based power plants continued to witness a PLF of 22.2% due to paucity of domestic natural gas.

Transmission

Recognizing the need for development of the national grid, thrust was given to enhance the capacity of inter-regional links in a phased manner. Working in this direction, all the five regional grids are now interconnected through synchronous links. An extensive network of Transmission lines has been developed over the years for evacuating power produced by different electricity generating stations and distributing the same to the consumers. Depending upon the quantum of power and the distance involved, lines of appropriate voltages are laid. The nominal Extra High Voltage lines in vogue are 800 kV HVDC & 765kV, 400 kV, 230/220 kV, 110 kV and 66kV AC lines. These have been installed by all the SEBs and by Generation, Transmission & Distribution utilities including those in Central Sector.

Development of High Capacity Power Transmission Corridors (HCPTCs)

Being the nodal agency for grant of Long Term Access (LTA), POWERGRID has undertaken development of high capacity power transmission corridors for evacuation of large quantum of power from various Independent Power Producers (IPPs) mainly coming up in resource rich states/coastal locations, i.e Odisha, Jharkhand, Sikkim, Madhya Pradesh, Chhattisgarh, Tamil Nadu, Andhra Pradesh, etc. Accordingly, to transmit this power to various load centres located across the states and regions, implementation of 11 nos of HCPTCs has been planned by POWERGRID in consultation with CEA, IPPs & beneficiaries. Central Electricity Regulatory Commission (CERC) has already granted regulatory approval for 11 nos. of HCPTCs at an estimated cost of Rs. 750,000 million. Implementation of HCPTCs is progressing as per schedule with completion in a phased manner matching with generation projects. In fact some of the elements under HCPTCs of Chhattisgarh and Odisha have already been commissioned and balance elements of HCPTCs are expected to be completed progressively as per requirement.

Distribution

The various reforms like Deen Dayal Upadhaya Gram Jyoti Yojana (DDUGJY), Ujwal Discom Assurance Yojana (UDAY), National Smart Grid Mission (NSGM), Revised Tari Policy, 2016 were launched for development of the Distribution sector.

Ujwal Discoms Assurance Yojana (UDAY) was launched by the Government of India to encourage operational and financial turnaround of state-owned power distribution companies (Discoms), with an aim to reduce Aggregate Technical & Commercial (AT&C) losses to 15% by FY19. However, AT&C losses stood at 19.8% in March 2019, which remains a concern. A few major Subhagya beneficiary states - Jammu & Kashmir, Uttar Pradesh, Madhya Pradesh, Bihar and Rajasthan recorded AT&C losses above 25%. Rajasthan has recently raised tariffs to cover additional power cost of Discoms, owing to regulatory claims arising from power generating companies.

Under the UDAY scheme, as of 31st March, 2019, A total of 27 states and 5 UTs have adopted UDAY scheme for financial and operational improvement and UDAY states have reduced book losses to Rs. 15,049 Cr. in FY18 from Rs. 51,480 Cr in FY16.

In order to bring uniformity in power procurement by the DISCOMs and also to promote competition in electricity sector, DEEP (Discovery of E cient Electricity Price) e-bidding portal was launched. In the first stage, portal was launched for procurement of short term power (i.e. up to One year). The scope of the portal has been extended for procurement of power for medium term also.

Introduction of SHAKTI - (Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India)

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has approved the signing of Fuel Supply Agreement (FSA) with the Letter of Assurance (LoA) holders. Allocation of linkages for power sector shall be based on auction of linkages or through Power Purchase Agreement (PPA) based on competitive bidding of tariffs except for the State and the central power generating companies and the exceptions provided in Tari Policy, 2016. Coal drawl will be permitted against valid long term PPAs and to be concluded medium term PPAs. The intended benefits of the policy include :

Coal available to all Power Plants in transparent and objective manner.

Auction to be made on the basis of linkage allocations to IPPs; cheaper and a ordable POWER FOR ALL.

The stress on account of non-availability of linkages to power sector projects shall be overcome. Good for the infrastructure and banking sector.

PPA holders to reduce tariff for linkage; direct benefit of reduced tariff to Discom/consumers.

The first round of SHAKTI was successfully conducted by Coal India Limited, resulting in 10 companies participating in the auction representing a cumulative capacity of approx.9044 MW and booked from 8 available sources a cumulative quantity of approx. 27.18 million tonnes per annum (MTPA). This is expected to result in an annual generation of over 47 billion units per annum from the linkage coal and a savings in tariff of approximately Rs. 125 crores / annum for period up to 25 years.

OPPORTUNITIES AND OUTLOOK

The Indian power sector itself has an investment potential of US $ 250 billion in the next 4-5 years, providing immense opportunities in power generation, distribution, transmission and equipment, according to Union Minister of Coal, Power and Renewable Energy. The Government of India has identified the power sector as a key sector of focus for sustained industrial growth. In September 2018, a draft amendment to the Electricity Act, 2003 was introduced which calls for separation of content and carriage, direct benefit transfer of subsidy, 24X7 Power supply as an obligation, penal action on PPA violations, Smart Meters and Prepaid Meters. This means doubling the current production capacity to provide 24x7electricity for residential, industrial, commercial and agriculture use. Capital intensive nature of the industry and strenuous process of regulatory approval and land acquisition makes it di cult for new entrants there by existing players reaching their highest potential.

The Government of India approved a pilot scheme for procurement of power of 2.5 GW aggregate power for three years on competitive basis under medium term with commissioned projects but without Power Purchase Agreement. It aims to revive commissioned power plant which were unable to sell electricity in the absence of valid PPAs, in the month of April 2018 & March 2019.

Therefore, the current metamorphosis at the Indian power sector carries both an opportunity and threat. If handled appropriately, through reconsidered business approach and collaborations, long term economic value could be preserved as well as realised and if not properly handled, the same could lead to challenges to private power generation, distressed projects adding to the growing bad loan portfolios of project lenders.

RISKS AND CONCERNS

While the company attempts to address various risks, the key risks and uncertainties continued to be faced by the group are as follows:

The actions of lending banks and other financial institutions at subsidiaries level under RBIs revised framework for resolution of stressed assets have resulted in a significant number of the wider groups power plants and subsidiaries ceasing to be subsidiaries of the Group with material impact on the Groups business going forward.

Uncertainty on Companys investment and receivables in some of the subsidiaries whose lenders have invoked the pledge of majority shares of subsidiaries and in subsidiaries in which Corporate Insolvency Resolution processes have been initiated.

Liquidity risk, project financing and sustainable debt levels against invested equity at projects

Delay in Government decisions or implementation of earlier Government decisions along with continual inconsistencies in Government policies across departments and retrospective amendments to the existing policies or introduction of new policies

Delay in providing necessary regulatory support and / or dispensation as may be required for timely implementation of the financing plans or regulatory constraints on financing arrangements resulting in alternate financing arrangements, which may take more time than anticipated to fructify

Deviation from approved Government policies and abuse of market dominance position by certain contractual counterparties

Shortage of fuel and dependence on market based or imported fuel which is subject to market vagaries and other uncertainties

Economic slowdown and negative sectoral outlook with resultant impact on banking sector delays in agreed project disbursements and timely availability of credit

Delays in enforcement of contractual rights or legal remedies with Government counter parties undertaking fuel supplies, power o take, transmission and open access amongst others

PPA Counter parties going contrary to pre agreed understanding and seeking benefits from the power generators that are often in conflict with shareholder obligations to further the business

Unusual currency depreciation that adversely affects the cost of project imports, project implementation and repayment obligations

Logistics bottlenecks and other infrastructure constraints of various agencies

Challenges in the development of support infrastructure for the power projects including physical hindrances and delay in the issue of permits and clearances associated with land acquisitions

Political and economic instability, global financial turmoil and the resultant fiscal and monetary policies as well as currency depreciation resulting in increasing cost structures

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an internal control system, which provides protection to all its assets against loss from unauthorised use and for correct reporting of transactions. 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. The Audit Committee of the Board addresses issues raised by both the Internal and Statutory Auditors.

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

OPERATIONAL PERFORMANCE

During the year, operating assets generated 443GWh with an average portfolio plant load factor of 34%.

The Plant wise details are tabulated below:

	31 March 2019		31 March 2018
	GWh	(%)	GWh	(%)
Sai Regency (58 MW)	426	84%	420	83%
Sai Lilagar (86 MW)	0	0%	96	13%
Sai Maithili (10 MW)	17	19%	18	21%
TOTAL	443	34%	534	39%

Note:

1. Lenders Consortium of KSK Mahanadi Power Company Limited on 27th March, 2018 have decided to consider the change in management and accordingly invoked the shares pledged with them as security for the financial facilities. Consequent to this, it ceased to be Subsidiary of the Company and accordingly it is not considered in the operational performance of the Company.

2. Lenders Consortium of Sai Wardha Power Generation Limited on 28th April, 2017 have decided to implement change in Management and has invoked shares pledged with them. Further, Corporate Insolvency resolution Process has also been initiated in Sai Wardha Power Generation Limited vide National Company Law Tribunal, Hyderabad order dated 9 November, 2018 and accordingly it is not considered in the operational performance of the Company.

3. Pursuant to decision of lenders of VS Lignite Power Private Limited on 29thAugust, 2017 to implement change in Management, the Company has lost control and it ceased to be a Subsidiary of the Company and accordingly it is not considered in the operational performance of the Company.

86 MW Sai Lilagar Power Generation Limited:

The plant was not in operation during the year due to non-availability of coal.

Corporate Insolvency resolution Process has been initiated in Sai Lilagar Power Generation Limited vide National Company Law Tribunal, Hyderabad order dated 11th July, 2019.

58 MW Sai Regency Power Corporation Private Limited:

The total gross power generated in the combined cycle gas red power plant during the year was 426GWh as against 420 GWh during FY 2018.

Corporate Insolvency resolution Process has been initiated in Sai Regency Power Corporation Private Limited vide National Company Law Tribunal, Chennai order dated 27th March, 2019.

10 MW Sai Maithili Solar Power Project:

The total gross power generated during the year was 17GWh as against 18 GWh during the previous year. The 10 MW PV solar power generation plant of Sai Maithili is located in the state of Rajasthan, operating under the Jawaharlal Nehru National Solar Mission with a long term PPA.

FINANCIAL REVIEW

All gures given in the review are in Indian Rupee million unless otherwise stated.

Financial Highlights:

Rs in million

Particulars	31 March 2019	31 March 208	% variance
Revenue from operations	2,074	31,490	-93%
Gross profit	934	10,373	-91%
EBITDA	715	6,243	-89%
Loss after tax	(3,603)	(17,014)	-79%

These movements are on account of deconsolidation of Sai Wardha, VSLP and KSK Mahanadi pursuant to lenders decision of change in management and disposal of Joint venture Sitapuram Power to coventurer in the previous years.

Further, Financial creditors of SRPCPL have led the petition for a Corporate Insolvency Resolution process ("CIRP") under the Insolvency and Bankruptcy Code, 2016 at National Company Law Tribunal, Chennai ("NCLT") and same has been admitted by NCLT on 27 March 2019. Consequent to this, the Group has lost control over the subsidiary and has derecognised the related carrying values of assets and liabilities of SRPCPL with effect from 27th March 2019.

Principal activity and overview

KSK Group is primarily engaged in the development; ownership, operation and maintenance of power generation assets in India. KSK focused its strategy on the private sector power development market, undertaking entire gamut of development, investment, construction, operation and maintenance of power plant with supplies to industrial consumers operating in India and to state utilities and others in the wider Indian power sector.

Operating Results:

Rs in million

Particulars	March 2019	March 2018	Variance	% variance
Revenue	2,074	31,490	(29,416)	-93%
Cost of revenue	(997)	(19,014)	18,017	-95%
Manufacturing expenses	(143)	(2,103)	1,960	-93%
Gross Profit	934	10,373	(9,439)	-91%

Generation, revenues and cost of revenue

The total revenue from operation of the Group have decreased by Rs. 29,416 million reflecting a year on year decrease of 93% as a result of deconsolidation of Sai Wardha, VSLP and KSK Mahanadi during the end of previous year.

Cost of revenue also decreased by Rs. 18,017 million reflecting a year on year decrease of 95%. The decrease is mainly due to deconsolidation of Sai Wardha, VSLP and KSK Mahanadi. Manufacturing expenses also decreased in same proportion on account of above mentioned reasons.

Gross Profit

Gross profit of the Group decreased from Rs. 10,373 million to Rs. 934 million, reflecting a year on year decrease of 91%. Decrease as explained above is mainly on account of deconsolidation effect.

Earnings before Interest, depreciation and tax (EBITDA)

Rs in million

Particulars	March 2019	March 2018	Variance	% variance
Gross Profit	934	10,373	(9,439)	-91%
Employee benefit expenses	(69)	(836)	767	-92%
Other general & administrative expenses	(150)	(3,294)	3,144	-95%
EBITDA	715	6,243	(5,528)	-89%

EBITDA of the Group have also decreased by 89% from Rs. 6,243 million in FY 2018 to Rs. 715 million in FY 2019 in line with decrease in revenue and gross profit.

Profit / (loss) for the year

Particulars	March 2019	March 2018	Variance	% variance
EBITDA	715	6,243	(5,528)	-89%
Finance costs	(1,176)	(21,843)	20,667	-95%
Depreciation and amortisation	(346)	(5,998)	5,651	-94%
Other income and exceptional items	(2,751)	2,981	(5,731)	-192%
Loss before tax	(3,559)	(18,617)	15,058	-81%
Tax income	(44)	1,604	(1,648)	-103%
Loss for the year	(3,603)	(17,013)	13,410	-79%

Movement in loss for the year from Rs. 17,013 million to Rs. 3,603 million is mainly because of the following:

Decrease in finance costs by Rs. 20,667 million from Rs. 21,843 million to Rs. 1,176 million reflecting year on year decrease of 95%. The decrease is on account of deconsolidation of Sai Wardha, VSLP and KSK Mahanadi. Further Company along with its subsidiaries Sai Lilagar Power Generation Limited and KSK Electricity Financing (India) Private Limited has not accrued interest on various credit facilities from Banks and Financial Institution subsequent to account becoming NPA.

Decrease in depreciation and amortization expenses from Rs. 5,998 million in FY 2018 to Rs. 346 million in FY 2019 is mainly on account of deconsolidation of Sai Wardha, VSLP and KSK Mahanadi.

Decrease in other income (including exceptional) from Rs. 2,981 million to Rs (2,751) million is mainly on account of recognition of gain on deconsolidation of above mentioned company amounting to Rs. 8,406 million in the previous year. Further group has also impaired its investment in various Hydro, Solar, Thermal under constructed projects amounting to Rs 6,206 million in the previous year. During current year Group has recognised a loss of Rs. 2,840 million on account of impairment of receivables and deconsolidation of SRPCPL.

Decrease in tax income from Rs. 1,604 million to Rs. (44) million.

Financial position and cash flows

The capital employed of the Group was Rs. 25,425 million as at March 31, 2019 and decreased by Rs. 7,406 million as compared to March 31, 2018. The Group incurred Rs. 131 million mainly towards capital expenditure relating to continuous development activities at KSK Dibbin project during FY 2019.

The loan portfolio of the Group comprises only Indian currency loans. The aggregate outstanding indebtedness as at March 31, 2019 stood at Rs. 20,766 million and decreased by Rs. 2,928 million compared to FY 2018. The decrease is mainly on account of repayment and deconsolidation of SRPCPL.

Net customer receivables as at March 31, 2018 stood at Rs. 56 million as compared to Rs. 313 million as at previous year. Lower trade receivables are mainly due to deconsolidation of SRPCPL and impairment made pursuant to Sai Wardha admitted to NCLT.

Cash accruals from operations before working capital changes are lower in FY 2019 by Rs. 7,986 million as compared to FY 2018 mainly due to deconsolidation of Sai Wardha, VSLP and KSK Mahanadi. Apart from deployment of cash for capital expenditure, the Group repaid some of its long term loans amounting to Rs. 842 million and availed fresh disbursement of borrowings amounting to Rs. 398 million. Consequently, there is net cash out flow of Rs. 193 million for the FY 2019.

Consolidation Financial Ratios

Particulars	Mar-19	Mar-18
Debtors Turnover Ratio (Days)	90.45	175.48
Inventory Turnover Ratio (Days)	77.83	21.43
Current Ratio	1.14	1.40
Net Debt Equity Ratio	4.42	2.54

Notes:

1. Operating Profit Margin, Net Profit Margin and Return on Networth has not been given since Group is incurring losses

2. Reason for >25% variances in key ratios:

(i) Debtors and Inventory Turnover Ratio: Significant change is on account of deconsolidation of key subsidiaries during previous year (ii) Net Debt Equity Ratio: Significant change is on account of losses of the year

Going Concern

The Group has incurred net loss during the current year as well in the previous years with resultant defaults in payment of interest and instalments dues to banks and financial institutions. Further as discussed at note 43 to the financial statements, the Group has residual investments and receivables pursuant to invocation of shares. However, the Group has been making appropriate representation and is in discussion with the respective lenders to find an appropriate resolution plan at each of the assets. The Group continues to prepare the financial statements as going-concern.

HUMAN RESOURCES

The Focus of Human Resources function this year continued from the last year focus of effective utilization of manpower & cost optimization along with integrated roles to the extent possible at supervisor and above levels. The other critical focus was on maintaining Positive Industrial Relations by engaging the Project E ected People in skill development and effective deployment on work given the environment of continued business challenges in the sector as well as our Group companies

Total manpower of the Group at the end of financial year is 35.

SUSTAINABILITY INITIATIVES

KSK actively contribute to the social and economic development of the communities to build a better and environmentally sustainable way of life for all stake-holders. The groups sustainability initiatives towards community are essentially focused on five thrust areas; Education, Health, Socio- economic empowerment, infrastructure development and cultural and social contribution.

KSKs holistic approach to the issues in education sector in India focuses on addressing the critical issues of quality, access, equity, infrastructure and bridging the urban-rural disparity. KSK is committed to ensure that healthcare is more easily available to all. The group believes that socio-economic empowerment of our communities alone can help us ensure sustainability of the development that we undertake. KSK is committed to develop /renewing Common property Resources that are critical for rural economy. The Group proactively seeks to deepen its relationship with local communities. Building relationship for us is sharing and being part of the joys and sorrows of our communities.

KSK Group is currently engaged through its CSR programme by building Sustainable Communities covering project affected families and the villlages they reside in.

KSK Group supported infrastructure projects in the state of Chhattisgarh through Sanjeevani Hospital project. The hospital has taken forward the initiative of exclusive paediatric cardiac services totally free of cost to all irrespective of caste, creed, colour, religion and nation.

CAUTIONARY STATEMENT

Certain statements in this Management Discussion and Analysis describing the Companys business plans estimates and expectations, numerical or otherwise, may be Forward looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include economic conditions, government permissions, significant changes in political and regulatory environment in India, tax laws, litigation, labour relations and interest costs amongst others.