Nava Bharat Ventures Ltd Management Discussions.

Industry Structure and Developments The Global Economy

The trajectory of growth during Calendar Years 2018 and 2019 at 3.6% and 2.9% respectively, was brought to a grinding halt by the COVID-19 pandemic. As per World Economic Outlook April 2021, the worlds output contracted by 3.3% in 2020. Economic recoveries are diverging across countries and sectors, reflecting variation in pandemic-induced disruptions and the extent of policy support from the Governments. The outlook presents a daunting overall picture. The UN Annual Report on the World Economic Situation and Prospects 2020 showed that growth slid in virtually all the major economies and in almost all geographies. Owing to rising tariffs and rapid shifts in trade policies, business confidence has deteriorated, dampening investment growth across most regions. A strong recovery was observed in the second half of 2020 thanks to the prompt policy implementation by major countries, additional fiscal support, and vaccination drive.

Adaptation to the ‘new normal has enabled the global economy to do well despite subdued overall mobility, leading to a stronger-than-anticipated rebound. Much will depend on how effectively economic policies deployed under high uncertainty can limit lasting damage from this unprecedented setback to the worlds economy. The UN recently raised its projection of global economic growth to 5.4% for 2021 (from the January level of 4.7%), based on some signs of revival as well as a quick rollout of vaccines in the Advanced Economies. The recovery in Advanced Economies is anticipated to be faster than that in Emerging & Developing Economies. They are projected to record 5.1% and 3.6% growth in 2021 and 2022 respectively. The Emerging & Developing Economies on the other hand, are estimated to grow at 6.7% and 5.0% in 2021 and 2022 respectively. China is forecasted to continue its rapid growth in 2021. The economic activity is expected to begin to normalize from this years third quarter, helped along by vigorous policy initiatives and lifting of pandemic-control measures. This should, in turn, bolster consumer-cum-investor confidence, improve financial conditions and push up demand by end-2021.

The Indian Economy

In FY20, the economic growth rate in India stuttered to 4.0% after recording higher growth for a larger part of the decade. Due to the unprecedented COVID-19 pandemic and the imposed lockdowns, this crashed down to a contraction of 7.3% in FY21. While the Nominal GDP was recorded at 203.5 trillion in FY21, it contracted by 3.0% in FY21 to 197.5 trillion. Indias per capita income is estimated at 85,929 in FY21 as compared to 94,566 in FY20.

India adopted a four-pillar strategy of containment, fiscal, financial and long-term structural reforms to overcome the COVID-19 led economic setback. This resulted in the governments ‘Atma Nirbhar Bharat Abhiyaan, a stimulus package of 29.8 trillion, equivalent to 15% of Indias GDP.

After significant unlocking of the economy and many businesses resuming operations, Q3 of FY 2020-21 witnessed a slight growth. Economic activity gathered some momentum, with people stepping out and spendingconfidently. Despite some operational hiccups, the vaccination drive made good progress too, with a sizable portion of the vulnerable segment of the countrys population getting inoculated within just a few months. The sentiment was dampened by the ‘second wave, which led to a re-imposition of restrictions on mobility and trade operations across the country. The UN has raised Indias growth forecast to 7.5% for Calendar Year 2021 (up 0.2% from its estimate in January), and also projected the GDP growth rate at 10.1% in 2022. The UN expects Indias economic outlook for the years ahead to be good, but also warns that it still remains highly fragile, with the scars of the pandemic likely to last very long. Despite the high rate of infections, economists are optimistic about growth, based on the strong rebound in manufacturing and several services sectors. Capital investments are seeing a good revival after a long lull.

This momentum will also see held-up or postponed investment decisions being implemented soon. Despite this quick rebound, output levels will be far below the potential GDP (had there been no COVID-19). It will take a while for the trajectory to reach full potential. The Government provisionally suspended the Fiscal Responsibility and Budget Management Acts fiscal deficit goals, to chart a new path to support the nascent recovery and launch the economy on a sustainable growth path. High spending coupled with a disinvestment strategy will boost the economy. Assuming the impact of this ‘second wave to be transient, the Reserve Bank of India has forecast a GDP growth of 9.5% for Fiscal 2021-22.

Opportunities and Threats The Ferro Alloys Sector

Demand from the steel making industry drives the global bulk ferro alloys market. Bulk ferro alloys are produced in large quantities in electric arc furnaces; they are also used exclusively in iron foundries. The Indian ferro alloys market is around 5 million MT, with silico-manganese gaining currency over ferro-manganese.

Domestic demand growth of chrome alloys is estimated to have grown at 5% between 2015-16 and 2019-20. This was led by strong growth in stainless steel production, approximately 6% CAGR during the same period. Domestic ferro-chrome demand is expected to pick up in Fiscal 2022 with 8% to 10% growth with improved demand from stainless steel industry and castings segment. Ferro-manganese demand has witnessed a muted growth by approximately 0.1% in Fiscal 2020 due to weak domestic steel demand. Going forward, the demand to pick up by 7% to 9% in Fiscal 2022 as the crude steel production to improve on the back of healthy steel demand.

Potential Challenges for the Industry

State-specific lockdowns and the diversion of oxygen for medical usage during the ‘second wave have deepened the sectors problems, with production stagnating due to a slowdown in overall economic activity. The Indian Governments recent decision to allow the ferro alloy industry to use oxygen for plant operations is likely to boost production capacity and ease the supply crunch of bulk alloys in the domestic market in FY 2021-22.

According to Indian Bureau of Mines, India has manganese ore resources of 430 million MT (including reserves of 142 million MT). Odisha alone contains 40% of these; it also has 93% of Indias 203 million MT of chromite (including reserves of 54 million MT), resulting in the hub of Indias ferro alloys industry being in Odisha. Leases for the chromite deposits are held by the State-owned Odisha Mining

Corporation Limited (OMC). Private ferro alloys units without mine linkages depend on OMC for their chrome ore; they are unhappy with the OMCs chromite distribution and pricing policies. If India is to raise capacity utilization and achieve higher exports, the Government must provide access to chromite and manganese ore deposits to the producers via auctions. Exploration also needs a major push. China forms 45% of Indias export of chrome alloys. Weak demand amid the COVID pandemic till Nov 2020 and limited production in India due to non-availability of ore, resulted in 9%-11% drop in exports. For ferro-manganese, in Fiscal 2020, Indias exports declined by a sharp 9% primarily owing to the subdued global crude steel demand. Global crude steel production registered a muted growth of 3% resulting in fall in demand for ferro-manganese alloy.

The Steel Sector

Disruption in both demand and supply resulted in global steel demand in 2020 to fall by 0.2% against a growth of 3.7% in 2019. The total demand in 2020 was 1,772 million MT against 1,775 million MT in 2019. The impact of COVID-19 has been much more benign for the steel industry due to resurgent demand in China and better-than-expected post-lockdown recovery globally in the second half of 2020. China and Turkey were two key countries that saw an increase in finished steel demand of 9% 13% respectively in 2020. North America and the European Union (EU) have experienced strong decline in steel demand owing to the COVID-19 pandemic. Both regions experienced demand decline of around 11%-16%. India also contributed to global decline as steel consumption in India declined in 2020. The Indian steel industry has grown at a CAGR of 14% over two decades and 4% in the last decade to ~101 MT in FY20. According to Indian Steel Association (ISA), consumption of finishedsteel was 102.6 million MT in 2019 and declined to 81.9 million MT in 2020. There was a good rebound in 2021, with steel demand going up to 100 million MT, the contributing sectors being capital goods, construction machinery, mining equipment and electrical machinery. Indias FY21 finished steel production declined by 8% YoY to 94.7 million MT. Production for Mar21 registered a growth of 26% YoY (+4% MoM) to steel 9.0 million MT. Mar21 domestic finished consumption registered a growth of 41% YoY (down 6% MoM) to 8.7 million MT on a lower base (lockdown in last week of Mar20) along with healthy automotive/ construction demand. Indias per capita consumption andof steel is 69 kg, against the global average of 214 kg. In 2019, India was the worlds second-largest crude steel producer with 111.2 million MT. By comparison China, the largest producer with 996.3 million MT, has a per capita consumption of 590 kg.

The pandemic has only aggravated three chronic challenges faced by the steel industry:

Dependence on imported coking coal

High logistics costs with rise in petroleum products

Import of high-grade steel (used in power,

Defense and automobiles)

The Indian Government has rolled out a set of reforms to bring about economic revival; these reforms should hopefully bear fruit soon. Some more support is also required for the Micro, Small and Medium Enterprises (MSMEs), which constitute 40% of the stainless steel industry. Another priority is to boost market growth by increasing infrastructure spending. Political and geopolitical developments, such as a reduction in government stimulus programs, policies to cut emissions and trade wars, could increase pressure on the steel sector.

Opportunities for Growth

The Governments National Steel Policy seeks to make our steel industry globally competitive by promoting technological advancements. There is also a focus on domestically manufactured iron and steel products, in order to boost consumption. The policy envisages a steel capacity of 300 mtpa and finished steel output of 200 mtpa by FY2031, including 24 mtpa of net exports, with per capita consumption of 160kgs. To help the sector cope with the pandemic, the Government has brought ‘specialty steel under the Production Linked Incentive (PLI) scheme, which provides financial incentives and support. The sector is also attracting private players, investments and modernization. Modern units are coming up now, encouraged by a) removal from compulsory licensing and b) changes in the Intermediate Bulk Container (IBC) process. Chinas renewed focus on de-carbonization leading to steel capacity cuts, strong domestic demand and muted global coking coal costs are likely to sustain high steel margins globally over FY 22-23. Lower Chinese export rebate as suggested can discourage Chinese steel exports further. This provides a capitalize and expand their sales as well as enjoy better margins.

The key opportunities boosting the steel demand are as follows:

Governments focus on strengthening the domestic manufacturing base under the flagship "Atma Nirbhar Bharat Abhiyaan" program.

• The PLI scheme introduced to boost the manufacturing sector in industries like consumer durables, automobile & auto components, solar equipment, telecom, etc. These are expected to boost steel consumption.

Governments new thrust on investment in infrastructure.

Emergence of new trends after Covid-19 such as personal mobility, preference to physical distancing would create additional demand for furniture, bigger houses, etc.

The Power Sector

Indias power sector is one of the most diversified in the world. Sources of power generation include:

Conventional sources (coal, lignite, natural gas, oil, hydro and nuclear power).

• Viable non-conventional sources (wind, solar, agricultural and domestic waste).

With an installed capacity of 375.32 GW (as of March 2021), India is the third-largest producer and the second-largest consumer of electricity in the world. With a total production of 1,252.61 Billion Units (BU) in FY 2019-20, India was ranked 5th in wind power,

5th in solar power and 4th in renewable power installed capacity. On the World Banks ‘Ease of Doing Business (Getting Electricity) Global Ranking, India rose from the 137th rank in 2014 to the 22nd rank in 2019. The total generation for FY 2020-21 was 1381.8 BUs compared to 1,389.1 BUs for FY 2019-20 witnessing a de-growth by 2.49% mainly on account of Covid-19 induced lockdowns and reduced economic activity. The Plant Load Factor (PLF) % of coal and lignite-based power plants has come down to 53.4% from the previous year figure of 56.0% (the lowest in a decade).

Indias current total installed capacity is 382.15 GW (with the private sectors share being 47%). But the peak demand in FY 2020-21 was only 190.2 GW (barely 50% of the total installed capacity). The unutilized ~50% reserve capacity is leading to reduced use of base-load capacities (especially in the thermal power segment). For FY 2021-22, the peak demand is projected to decline further to 182.9 GW.

Nearly 262 thermal power plants (with a total capacity of 65.1 GW) in India are currently shutdown, for want of demand. The thermal power plants could look for a steady supply of coal at a reasonable cost in the short to medium-term. The tariffs under short-term markets and Power Exchanges remained subdued throughout FY 2020-21 except for the later part of the Jan-Mar 2021 quarter. The Governments plans to significantly boost the share of renewable energy (especially solar) from the current 24% of the total energy mix, could impact the business of thermal power plants.

Measures needed for the Power Sector

Indias per capita consumption of power is approximately 1,181 units. There is significant room to grow the consumption over the next few years. The need of the hour is for a sound plan to boost retail consumption and power-intensive manufacturing. Tariff rationalization requirement, as industrial consumption has reduced and domestic / agricultural (low-paying customers) demand has shot up in recent months, especially in the pandemic. Tariff rationalization will mitigate the cash flow problems of power generators, who deserve the right price for their produce. Sections of society that get preferential rates should be covered under the Governments Direct Benefit Transfer. The Indian Government has drawn up a roadmap to achieve 227 GW capacity in renewable energy (including 114 GW of solar power and 67 GW of wind power) by FY 2021-22. It is preparing a ‘rent a roof policy to generate 40 GW through solar rooftop projects. Coal-based power-generation capacity, which stands at 199.5 GW now, will get an addition of 47.86 GW by 2022. By 2030, the Government plans to double renewable energys share of installed capacity, to 40%. Renewable energy is fast emerging as a major power source in India. In February 2021, India had an installed renewable energy capacity of 92.97 GW. Aiming to increase it to 227 GW by FY 2021-22, the Government has launched several large-scale tenders in phases.

Company Overview Ferro Alloys

Nava Bharat Ventures Limited (NBVL) is a leading manufacturer and exporter of manganese and chromium Alloys. NBVL makes bulk ferro alloys (both chromium and manganese) for consumption by steel producers. The Company has operating capacities to produce 125,000 TPA of Manganese Alloys and 75,000 TPA of Chromium Alloys. The current capacity utilization of more than of 80% (excluding the production loss during lockdown of March-

May 2020) is considered above par as per industry standard.

The Companys ferro alloys capacities are supported by captive power giving them certain inherent advantages in terms of availability of power and control on costs. Advance procurement of manganese ore, committed orders with reputed steel companies including the 5-year extension of the conversion arrangement with Tata Steel Mining Ltd augurswellfor flow for the company steadycash .

The quantitative performance of the ferro alloy business in 2020-21 is comparable to that in 2019-20 after considering the lockdown affect in March 2020.

Ferro Alloy Volumes:

Year Production MT Sales MT
2019-20 1,69,460 1,66,655
2020-21 1,53,145 1,52,820


The power business of the Company is driven by its captive power plants located at Paloncha

(Telangana) and Kharagprasad (Odisha) aggregating to 204 MW capacity. These cater to the entire power requirement of the ferro alloy production besides merchant sale of surplus power.

On a consolidated basis the Company has capacity aggregating to 434 MW in India. The 60 MW IPP plant in Odisha has been operationalized during May 2021 after reaching an agreement on the long-pending metering issue with the utility. Overall PLFs registered by the operational Power Plants were lower during the year due to lower demand for power, very weak realizations in spot markets through power exchanges and non-availability of bilateral short-term contracts.

The 150 MW independent power plant of Nava

Bharat Energy India Ltd (NBEIL) in Telangana was under shutdown throughout the year except for a few days for lack of PPA and unremunerative realizations in spot markets through power exchanges. The conversion of this plant into a captive power plant is getting delayed with the reluctance by Transco to grant open access permission, filed a writ petition in Telangana High Court against Transco.

Power Business – India

Nava Bharat Ventures Limited (Standalone) NBEIL (Subsidiary)
Location Paloncha, Telangana Kharagprasad, Odisha Dharmavaram, Andhra Pradesh Paloncha, Telangana
Capacity 114 MW 150 MW 20 MW 150 MW
(1 x 50 MW, 2 X 32 MW) (1 x 30 MW, 2 X 60 MW) (1 x 20 MW) (1 x 150 MW)
Plant Type CPP CPP - 90 MW IPP IPP
IPP - 60 MW
Fuel Coal Coal Coal & Bagasse Coal
Source Mix Linkage Linkage E-Auction E-Auction

Overview of the Power and Coal business of Mamba Collieries Limited (MCL) – Zambia

MCL operates Zambias only integrated coal fired power plant with installed capacity of 300 MW representing about 10% of Zambias total installed power generation capacity. MCL has a long-term 20-year PPA for net capacity of 267 MW with the state utility (ZESCO), backed by Sovereign Guarantee. The PPA is based on Declared Availability under a ‘Take or Pay arrangement.

Receivables against power sales to ZESCO continue to remain outstanding. MCL has chalked out a multi-pronged action plan to set right the cash flow concerns due to payment shortfalls by ZESCO. This involved:

• Arbitration for the delayed payments and non-compliance of conditions by ZESCO as set out in PPA.

Prospective tariffand adjustment of power matching the monthly receipts for the revised tariff.

Restructuring of the remaining long-term debt of 3,03,501 Lakhs (US$ 412.9 Mn) based on the revised tariff.

MCL is at various stages of the processes involved in the above set-out action plan and accordingly engaging with all the stakeholders. Covid-19 travel restrictions, Presidential elections in Zambia are delaying some of the activities involved under the above plans. MCLs debt is secured by Project

Assets of the Company and has no recourse to its shareholder Nava Bharat (Singapore) Pte. Limited or the ultimate parent company NBVL. The government of Zambia is currently in negotiations with the International Monetary Fund (IMF) to secure further funding to service its sovereign debt. The progress and eventual bail-out (if any) could augur well and may further expedite the receivables.

Healthcare Enabled Services

Our foray into international healthcare reflects our assessment of the long-term potential of the healthcare sector which, spurred by rapid advancements in diagnostic services and treatment, is one of the fastest-growing sectors globally.

The Companys investments in this business are routed through a Singapore Joint Venture Company Tiash Pte. Ltd. with a 65% stake. Overcoming the Covid-19 lockdowns imposed by Singapore and

Malaysia Governments, the revenue of healthcare division grew by 80% compared to the previous year. With the strengthening of the sales team and increased awareness of iron deficiency, the sales are estimated to increase by leaps and bounds in the coming years.

Operations & Maintenance Services

The Companys foray into ‘Operations & Maintenance (O&M) services for power plants took genesis with the service offering to MCL. These services have been delivered in accordance with the O&M Contract which underwent thorough scrutiny of the lenders as well as the other shareholder in Zambia. Nava Bharat Group Companies have pursued a risk matrix based on onsite and offsite deliverables under the Contract and have helped MCL maintain an optimum performance of its 300 MW power plant subject to local grid and other limitations.

The Company plans to leverage upon its experience of running medium-sized industrial and independent power plants in India, ideally supplemented by its O&M experience in Zambia, to pursue other business opportunities in this space.

Outlook Ferro Alloys

The Company expects to have the present demand momentum for ferro alloys continue till Q2 and then see a slight softening in the demand and the price realizations. The demand for steel from China will have an impact on the demand and the prices of ferro alloys in the later part of the year. Overall, the Company expects to surpass the previous years highest sale quantity and increase in The manganese alloy production could keep up its pace for the full year, although there might be some risks to the demand with the Covid-19 disruptions. The working capital involved in the manganese alloys division is projected to be lower with faster realizations. The Conversion arrangement for chrome alloys with

Tata Steel is renewed with its subsidiary, Tata Steel

Mining Limited (TSML) w.e.f. December 1, 2020 till March 31, 2025 for mutual advantage. The Company projects to receive additional margin for a few months on conversion in line with the spurt in ferro chrome sufficient chrome ore for prices.TSMLissupplying conversion and the Company projects to produce highest quantity with no planned major maintenance scheduled during the year. Steel demand is expected to be strong due to recovery in manufacturing businesses around the world and global fiscal stimulus supporting infrastructure projects. While it is expected that steel prices will consolidate closer to historical levels, prices are likely to remain high supported by

(i) strong iron ore prices,

(ii) rebound in coking coal prices,

(iii) positive impact from stimulus plans, and

(iv) improved business confidence from the roll-out of vaccines. Strong rebound of demand in 2021, in addition to supply-side reforms in China could lead to higher steel prices globally.

Power Sector

Indian Power Operations

The Company expects captive consumption to remain the significant driver of business in 2021-22 with merchant sale of power in the spot market through Power exchanges improving some extent compared to the last financial year.

For FY 2021-22 the (PLF of independent power plants is projected to improve with the slight increase in the tariffs over the power exchanges, although there is no expectation of bilateral short-term contracts. The

60 MW IPP at Odisha, made operational in May 2021, is expected to operate throughout the year with the coal linkage under Shakti B (III) scheme. For the 150 MW Nava Bharat Energy India Ltd plant and 60 MW IPP, the Company is working on a ‘Group Captive Scheme within the regulatory framework which shall guarantee the off-take by industrial consumers.

The 20 MW multi fuel-based process power plant and the huge tract of industrial land appurtenant thereto are planned to be monetized and the Company is exploring various options.

Zambia Coal & Power Operations

MCL envisages coal mining at its optimum scale with a new mining block operationalized in 2020-21 for supplying high-grade coal to industrial customers and so expects to deliver strong financial performance under this segment. Year-on-year, MCL . is adding new customers and increasing the coal sales to outside customers. The major overhaul of one unit of the power plant which started in Jan 2021 is taking longer with a deformation observed in turbines diaphragms and carrier, repairs to which was not possible. MCL had to get a new set of diaphragms manufactured, as these are not off-the-shelf items. Post operational of this unit, the major overhaul of another unit will be taken up during FY 2021-22. With the prolonged major overhaul, the plant availability will be significantly lower for FY 2021-22 impacting the revenues and profitability.

Discontinued operations

The sugar manufacturing operations were discontinued in March 2020 and accordingly classified the revenues and expenses to Profitor Loss pertaining to discontinued operations. The available sugar stocks are expected to be sold off by August 2021 and the plant and machinery of the sugar, distillery and ethanol plant are being sold on a piecemeal basis. The Company is evaluating the available business options for monetizing the land bank.

Risks and Concerns

The Companys business verticals are primarily engaged in commodities. The associated risks and concerns can be attributed to the stage of trade cycles, volatility in input costs leading to pressure on margins. Since most of our products and services involve exports and revenue generated abroad, foreign currency fluctuations may make our export products less competitive or negatively affect the margins.

1) Ferro alloys

Demand for ferro alloys has a high correlation with the prospects of the steel industry. Moreover,the ernational fortunes of the steel industry mirror the economic climate prevalent across the globe. The alloy manufacturing industry is highly fragmented with the presence of many unorganized players. This is because the entry barriers to the ferro alloy industry are low on account of low technology intensity. The Company expects that there will not be greater risk for steel and ferro alloys in 2021-22 with the demand and prices still near all-time high. Steel prices globally have risen to record highs in FY21, much more so in the US and Europe. This has largely been driven by a supply-demand mismatch; while the advent of the pandemic led to mills rationalizing supply, demand, however, bounced back faster than expected across regions with mills struggling to catch up with demand. Political and geopolitical developments, such as a reduction in government stimulus programs, policies to cut emissions and trade wars, could increase pressure on the steel sector and, in turn, the ferro alloys industry.

The Company has pursued procurement of a third of annual manganese ore requirement on a firm long-term contract, which, along with certain process innovations, shall help it obtain reasonable control on the costs in this year. This facilitates the Company to guard against volatile market developments and ensure that its quantitative parameters are duly kept up at an optimum level. The Conversion arrangement with Tata Steel, though not devoid of margin changes, largely insulates the Company from the volatility in high-carbon ferro chrome prices.

2) Power generation

The thermal power generation sector, although accounting for more than 55% of the power generation in India, continues to be plagued with multifarious issues, principal issues being the dependence on monopolistic State-owned coal suppliers, spiralling coal costs and drastic fall of industrial power consumption in the country. A certain overweight on renewable energy through solar power bids, made thermal power generation a costlier proposition. The cumulative effect of all these factors are seen in power dispatches through exchanges at marginal costs which are highly unviable in the long term for the sector. The cash-strapped power distribution companies have been relying more on spot markets at these low prices of exchange giving merchant power market a short shrift. Thanks to Covid-19, Distribution Companies have stopped pursuing bilateral tenders in both short and medium terms.

45% of the Companys installed capacity (210 MW) in India is untied and subject to short-term market risks without stable domestic fuel supply. The conversion of this capacity into a ‘Group Captive Scheme shall help in overcoming the operational hardships being faced.

Riskprofile Investments of

The Company has investment exposure for the integrated Coal and 300 MW power project of MCL in Zambia, development cost of the commercial agriculture and processing in Zambia, seed capital for healthcare enabled services in the Asia Pacific (APAC) region.

The investment in MCL through Nava Bharat (Singapore) Pte. Ltd. (NBS) comprises equity share capital (65%), Shareholder Loans and interest accrued thereon. The Company considers that the Enterprise Value (EV) of MCL adequately covers this exposure and that the suite of internationally enforceable financing and project including Sovereign Guarantee provide the requisite safeguards to the investment exposure. With the expected resolution under the arbitration proceedings in favour of MCL and restructuring of the project loans for a longer tenure, non-recourse of the project debt to the Parent Company, the Company expects due returns on this investment to commence in about two years, spurring up the EV further. The development cost of commercial agriculture and processing project is at a nascent stage and is confined to base infrastructure development at the project site of 25,000 acres. There will be marginal expenditure towards care and maintenance of the project site infrastructure till such time as the obligations Government fulfils of proper approach road and power connectivity to the project site which is expected by end of the year 2021. The Company, in the interim, has been evaluating the technical and economic feasibility of various project options and will launch an appropriate scheme thereafter.

The seed capital investment in the Healthcare Enabled Services in APAC region has obtained reasonable traction year-on-year. While the outbreak of Covid-19 pandemic is affecting the sales calls, the envisaged business objectives of this service offering will receive a boost following Bluebook listing (Government hospitals) in Malaysia. The business spurs up attendant opportunities to distribute other lifestyle medical devices, diagnostic services so as to deliver an EV commensurate with the investment. Typical of multi-geographical investments, the consolidated financials are subjected to market changes of reported currencies resulting in wide changes in Other Comprehensive Income. As all the investments are without recourse to the Parent Company, the Company does not consider the long-term debt of MCL as risk, other than to the extent of changes in reported financial positions.

Internal Control Systems and their Adequacy

Adopting stringent Internal Control Mechanisms are vitally important in a dynamic and competitive environment that witnesses frequently shifting paradigms. Our Internal Control Mechanisms seek to safeguard the organizations assets as well as authorize, record and report all transactions correctly and in a timely manner. They ensure that we not only conform to local statutory requirements, but meet the highest global standards and practices as well. Our carefully structured Internal Control Framework constantly monitors and assesses all aspects of risks associated with current activities and corporate profile, including scientific and development risks, partner interest risks, commercial and financial risks. Our Control Processes

1) safeguard the organizations assets,

2) prevent / detect frauds and errors,

3) ensure accurate and complete accounting, and

4) facilitate timely preparation of reliable financial information.

They see to it that manual and automated processes for transaction approval and recording are adequately and effectively reviewed. They also ensure compliance with various policies, practices and statutes in keeping with the organizations growth and business complexity.

Our Internal Control Systems are reinforced by regular Management Reviews and verification by Internal Auditors. Further, all internal control functions and its entire gamut of activities are covered by independent audit whosefindingsare reviewed regularly by the Audit Committee and Management of the Company. A Board-appointed Audit Committee is entrusted with the task of 1) reviewing the Internal Audit Plan, 2) verifying the adequacy of the Internal Control System, 3) marking its Audit Observations and 4) monitoring the sustainability of the remedial measures.

Discussion on financial performance with respect to operational performance Indian Operations Ferro Alloys

Ferro chrome conversion business has a consistent track record of providing steady, predictable cash flow to the company. The Conversion arrangement with Tata Steel, which expired in December 2020, has been extended for a duration of 5 years until March 2025. In FY 2021, the conversion volumes at 57,109 MT were lower by 16.8% year-on-year. This was mainly attributable to the Covid-19 induced national lockdown during March-May 2020 and shutdown of one furnace for lining works during the interim period between deal expiry and extension. Conversion revenues for the year at 18,119 lakhs were lower by 14.1%.

Post lockdown in May 2020, silico-manganese business started the year on an uncertain note due to the pandemic. Demand for steel was sluggish over the last two years and continued till November

2020. However, as the year progressed, the segment saw an impressive turnaround and demand boosted significantly led by exports and the increased demand for steel products. The revenues from this business were 65,973 lakhs with an EBITDA margin of 10.7%.

Ferro Alloys Division Performance


NBVL has four power plants in India with a total capacity of 434 MW. Standalone Power Operations have an installed capacity of 284 MW, of which 204 MW are primarily used for captive consumption in ferro alloys. Additionally, the captive power plants remain opportunistic and export surplus power whenever the merchant rates are remunerative bringing in incremental revenue. Aside from this, the companys subsidiary ‘Nava Bharat Energy India Limited (NBEIL) operates a 150 MW merchant power unit at Telangana.

As the year started with a nationwide lockdown, the demand for electricity plummeted across the nation. As the months passed, with gradual easing of lockdowns and opening of the economy, the demand recovered well.

The companys captive power operations continued to deliver consistent performance through the year along with healthy profitability. In Q4, NBEILs 150 MW unit at Telangana resumed operations towards the end of the year and the long-pending metering issue of 60 MW unit at Odisha was resolved. Indian Power operations reported a Revenue of 44,434 Lakhs with an EBITDA of 10,009 Lakhs (EBITDA Margin 22.53%).

Standalone Power Operations: The parent companys operational power plants at Telangana and Odisha having a combined capacity of 204 MW continued to operate profitably and achieved an average PLF of 53% during the year. Standalone power operations generated a Revenue of 41,430 Lakhs, and EBITDA of 9,298 Lakhs (before inter-segment eliminations).

Power Business Performance – India

Telangana: The 114 MW power plant at Paloncha had challenges to achieve merchant sales due to lower demand in the initial quarters of the year.

Captive consumption of power continued to ensure stable operations.

Odisha: The power plant at Odisha, continues to deliver stable performance, backed by the captive consumption of power. The second 60 MW IPP Unit remained available for use through the year and the metering issue was cleared in March 2021 and merchant sales commenced in May 2021 post the reporting date.

The 150 MW unit of the subsidiary ‘NBEIL reported a Revenue of 4,604 Lakhs and EBITDA of 1,836 Lakhs.

International Operations Mamba Collieries Ltd

NBVLs step-down subsidiary ‘Maamba Collieries

Limited (MCL) is engaged in ‘power and ‘coal mining operations in Zambia. NBVL has a 65% equity stake in MCL through its wholly owned subsidiary based in Singapore. Maamba Collieries reported revenue of 1,60,065 Lakhs (US$ 215.5 Million), and EBITDA of 99,759 Lakhs (US$ 134.3 Million) in this financial year. Net profit for the year was 36,578 Lakhs (US$ 49.3 Million). Overall debt of MCL stands at 3,03,501 Lakhs (US$ 412.9 Million). MCL has cash and cash equivalents of 22,772 Lakhs (US$ 31.0 Million) as of March 31, 2021.

Power Operations

The integrated 300 MW coal-fired power plant at MCL operated with 77.7% availability and 72.1% PLF in the financial year 2020-21. Through these operations, it generated a revenue of 1,44,893 Lakhs (US$ 195.1 Million) and EBITDA of 70,733 Lakhs (US$ 95.2 Million). While the revenue was flat on a year-on-year basis, EBITDA was lower from 96,070 Lakhs (US$ 135.5 Million) recorded in the previous year. This was largely due to the major maintenance shutdown of one unit during Q4 and higher expected credit loss provision of 33,427 Lakhs (US$ 45.0 Million). Due to deformation observed in turbines diaphragms and carrier, repairs to which was not possible, major maintenance got extended beyond the initial schedule. This unit is expected to be operational in July 2021. Notwithstanding the extended shutdown, the power division continued to deliver a strong operational performance. Since MCL commenced billing for power in July 2016 onwards, it has cumulatively realized ~58% of the amounts billed, as of March 31, 2021.

MCL has serviced interest on loans in full till March 25, 2021 and has to pay the principal instalments totaling to 65,052 Lakhs (US$ 88.5 Million) which fell due on March 25, 2020, September 25, 2020 and

March 25, 2021. Owing to receivables outstanding from ZESCO, MCL made a request to the project lenders for restructuring the outstanding loan amount keeping in mind the revised prospective tariffwhich is under negotiation. MCL expects the lenders to take up restructuring positively post the settlement of revised prospective power tariff with ZESCO and the increased payment plan against each month bill. In FY21, MCL has initiated the international arbitration proceedings against ZESCO for recovery of dues arising out of power purchase agreements executed with it for sale of power. An Arbitration tribunal has been appointed and proceedings are underway.

Coal Mining Operations

Mining operations received a boost from growing volumes and new client additions. Over the last financial year, coal sales to outsiders grew by 55.8% to 3,75,412 MT. Consequently, the division registered an impressive 16.2% growth in Revenue, which grew from 29,018 Lakhs (US$ 41.1 Million) last year to 35,444 Lakhs (US$ 47.7 Million). EBITDA grew by 33% year-on-year to 24,260 Lakhs (US$ 32.7 Million).

Particulars 2019-20 2020-21 Growth (%)
Rs. in Lakhs Rs. in Lakhs
1,51,539 1,60,065
Turnover 5.62
(US$ 213.8 Mn) (US$ 215.5 Mn)
92,781 99,759
(US$ 130.9 Mn) (US$ 134.3 Mn)
38,913 36,578
PAT -6.00
(US$ 54.9 Mn) (US$ 49.3 Mn)
External Coal Sales (MT) 2,41,016 3,75,412 55.76
Power Production (Mn kWh) 2,010 1,896 -5.67
Average Availability (%) 77% 77% -
Average PLF (%) 76% 72% -5.26

Asia Pacific

NBVL forayed into the healthcare sector by acquiring 65% stake in TIASH Pte. Ltd. (a holding company based in Singapore). TIASH has operations in Malaysia and Singapore via two of its subsidiaries ‘The Iron Suites-Medical Center (Singapore) and ‘Compai Pharma (Singapore).

The Iron Suites-Medical Center is a medical clinic in Singapore specializing in the treatment of iron deficiency predominantly with IV iron.

Compai Pharma is a medical distribution company with the operations in Malaysia and Singapore. It has exclusive distribution rights for Monofer in Malaysia and Singapore. Despite the pandemic and lockdown, thanks to good marketing strides made, the healthcare divisions revenue increased by 80% and loss contained by 40% compared to the previous year. The division is aiming to break-even in the next 1-2 years and looking to other products of reputed manufacturers for marketing in the APAC region.

Financial Performance (Based on Consolidated Financial Statements)

Although the year started with a full-blown global pandemic raising uncertainty across industries, NBVL reported an encouraging performance for the year, aided by gradually improving industry dynamics and perseverance of the entire team.

Statement of Profit& Loss and change in Return on Net Worth as compared to the immediately previous financial year

Despite the domestic and global economies being in lockdown for several months, Revenue from operations for the year was relatively flat and lower by 8% at 2,54,850 lakhs compared to 2,75,872 lakhs in 2019-20. Our prudent efforts to manage costs, improved domestic performance, increased exports and higher realization for ferro alloys led to Adjusted EBITDA growth of 7%, from 1,34,489 lakhs in 2019-20 to 1,43,825 lakhs in 2020-21. The Adjusted EBITDA margin improved from 48.8% to 56.4%. Net Profit improved slightly during the year, Profit After Tax for the year stood at 55,068 lakhs, higher by 4% as against 53,075 lakhs in 2019-20.

Balance Sheet

Shareholders Fund increased from 4,18,515 lakhs as on March 31, 2020 to 4,41,146 lakhs as on March 31, 2021 led by ploughing of operational surplus into the business. Net debt stood lower at 2,91,633 lakhs as on March 31, 2021, a testimony to the companys deleveraging efforts. Net debt-to-equity ratio improved to 0.62x in 2020-21 (0.74x in 2019-20).

Key Ratios (based on Standalone & Consolidated Financial Statements)

Standalone Consolidated
Particulars 2020-21 2019-20 2020-21 2019-20
EBITDA Margin 26.88% 22.20% 47.12% 41.66%
PAT Margin 14.49% 11.39% 19.68% 18.42%
Return on Average Capital Employed 7.96% 6.77% 12.21% 11.80%
Return on Average Equity 5.21% 4.39% 11.23% 12.50%
Debt to Equity Ratio 0.06x 0.10x 0.77x 0.90x
Debtors Turnover Ratio 5.87x 5.63x 1.02x 1.54x
Inventory Turnover Ratio 2.06x 1.85x 1.56x 2.60x
Current Ratio 3.84x 2.57x 1.13x 1.93x
Interest Coverage Ratio 21.73x 11.89x 2.96x 2.84x

Details of significant of 25% or more as compared to the previous financial year) in key financial ratios, along with detailed explanations:


Net profit for the year came in higher at 15,460 lakhs (+20.3% YoY) as the ferro alloys segments profitability was boosted by the performance of the silico-manganese business driven by higher exports and realizations per unit.

Debt-equity ratio as on 31.03.2021 is at 0.06x; improvement aided by the repayment of the corporate loans availed for the investment made in MCL and increase in shareholders equity value.

Current ratio improved to 3.84x as on 31.03.2021, with the reduction in current portion of the long-term debt and the increased investments made in mutual funds, bonds, etc.


Debt-equity ratio as on 31.03.2021 is at 0.77x with the repayment of the corporate loans availed by the Company and increase in shareholders equity value.

Debtors turnover ratio got deteriorated to 1.02x as on 31.03.2021 with the steep increase in receivables by MCL from ZESCO.

Decrease in current ratio to 1.13x is mainly due to reclassification of the receivables of MCL, expected to be realized beyond 12 months to non-current portion.

Material developments in Human Resources / Industrial Relations front, including number of people employed

Nava Bharat, with its continued and firm belief in its human resources, has been creating a conducive and challenging atmosphere for its employees, leading to sustainable performance growth. The Companys reliability on its proven pillars of Human Resources, viz., culture of high performance and cross-functional learnings, employee engagement, organization capability development clubbed with and maintaining cordial industrial relations has provided the platform for the above belief and led to further embrace the contemporary practices of HR.

Orientation of High-Performance Culture

The employee performance has remained the fulcrum in driving the culture of learning and high performance. The endeavor to identify and reward exceptional performers towards enabling the high-performance culture did not stop with performance management and variable-pay programs, but through various cross-functional and locational employee engagement initiatives.

Employee Engagement

Talent engagement, a bridge between the performance and the employees aspirations, has been a pivot for the Companys growth. The Company has been constantly focusing on building the systems and processes for developing a committed, engaged and efficient employee base. For the financial year gone by, various new engagement initiatives had been initiated for the employees to fully engage and connect with the Companys values, goals and principles. One of them being ‘Unlock Your Potential aimed at providing multiple platforms to employees to focus on Sharing & Learning, Contribution & Strengths and Realizing the best of oneself. An engaging culture pervades at all our Offices and Units, which is reiterated by conducting regular activities as part of Annual Day celebrations and on occasions like New Year, Republic Day, Safety Week, World Environment Day, International Womens Day, etc. The employees are also recognized through rewards and prizes for meritorious performance in various sports activities, competitions conducted and for their long service. Continuous improvement of the existing facilities and creation of new facilities being taken up regularly at the workplace and in residential colonies for creating conducive work environment and improving work-life balance.

Capability Development

The Company believes in skilling and re-skilling its employees through various programs, spanning technical and behavioral competencies. The competencies are built through on-the-job, internal trainings / workshops, guest lectures, etc., by engaging internal and external expert faculty. The Company believes in the process of review of its HR processes and systems on an ongoing basis to optimize costs, time and labour. Further, to bring prudence, to the outcome of the review and to remain contemporary, the Company has initiated more measures viz., digitization of HR administrative transactions, Anubhuti (online induction), etc.

Concern and Care

A new initiative ‘Helping Hands Task Force driven by cross-functional team members, has been established to engage with employees and their families members to extend support in the event of challenges due to COVID-19 situation.

Industrial Relations

The Company has an impeccable record in terms of maintaining harmonious industrial relations. The year gone by too did not lose a single man day on account of any industrial strife / disturbance.

The number of permanent employees on the rolls of the Company stood at 608 (990 across all the Companies of the Group globally) as on March 31, 2021.

Cautionary Statement: This document contains statements about expected events and financial and operational results of Nava Bharat Ventures Limited which are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is a significant chance that the assumptions, predictions and other forward-looking statements may not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, and actual results and events to differ materially from those expressed here.