sjvn ltd share price Management discussions

MANAGEMENT DISCUSSSION AND ANALYSIS REPORT

1. INDUSTRY OVERVIEW / INDUSTRY STRUCTURE AND DEVELOPMENTS

All India installed power generation capacity as on 31.03.2023 was 4,16,058.89 MW. A capacity addition of 8830 MW was targeted during the year 2022-23 comprising 6350 MW of thermal, 1080 MW of hydro power and 1400 MW nuclear power. Capacity addition of 1580 MW comprising 1460 MW of thermal and 120 MW of hydro power was achieved up to 31.03.2023.

Industry scenario indicates that there is ample opportunity for consistent growth of business in hydro, renewable and thermal energy sectors in the times to come with growth in demand. Company is developing 1320 MW super-critical thermal power project at Chausa, District Buxar in Bihar, 900 MW Arun-3 HEP in Nepal, 60 MW Naitwar Mori HEP in Uttarakhand, 210 MW Luhri Stage-I HEP, 66 MW Dhaulasidh HEP, 382 MW Sunni Dam HEP and 15 MW Nangal Dam Floating SPP in Himachal Pradesh, 70 MW Bagodara SPP and 100 MW Raghanesda SPP in Gujarat, 1000 MW IREDA Solar Power Project in Rajasthan, 75 MW Gurhah SPP and 50 MW Gujrai SPP in Uttar Pradesh, 90 MW Omkareshwar Floating SPP in Madhya Pradesh and 100 MW PSPCL SPP in Punjab.

As regards hydro potential, India has an estimated hydro power potential of about 1,50,000 MW out of which only about 46850.17 MW (as on 31.03.2023) has been commissioned. The bulk of the unharnessed potential is located in the hill states/UTs of Arunachal Pradesh, Uttarakhand, Himachal Pradesh, Sikkim and Jammu & Kashmir. With fast increase in installed capacity of solar power, which is diurnal in nature, hydropower with its peaking power has huge potential to contribute towards grid stability. The above industry scenario signifies that there is ample opportunity for consistent growth of business in hydro sector.

2. SWOT ANALYSIS

A. STRENGTHS:

• SJVN has gained wide experience and expertise in development of large hydro power projects from concept to commissioning including operation & maintenance and management of silt during project operation. SJVN has inhouse State of art hard coating facility installed at one of the power stations.

• SJVN has in-house capability for complete design of mega hydro power projects, large value contract award, contract & project management.

• SJVN has efficient plant operation expertise with minimal down time of machines and maximizing the Plant Availability Factor.

• SJVN has stable revenue stream through long term power purchase agreements with distribution licensees. The allocation of power from its power stations is made as per PPAs and by the Ministry of Power, Government of India.

• Historical financial performance and steady cash flows over the years make SJVN capable of funding the pipeline of projects.

• SJVN is lean and thin organization - high manpower productivity in terms of profit per employee.

• SJVN has competent and committed workforce. SJVN fully recognize that the contribution of its employees is integral to the achievement of its ambitious plans and has thus adopted an organizational philosophy which acknowledges and rewards their contributions.

• SJVN has effective implementation of National R&R policies and excellence in CSR activities.

• SJVN has dynamic leadership and effective Corporate Governance.

B. WEAKNESSES:

• NJHPS and RHPS are cascade schemes and operating in tandem. Any difficulties faced in the operation of NJHPS will have direct consequences on power generation of RHPS.

• Inadequate powers to incur expenditure on pre-construction activities and business developments/investment before establishing project viability of hydro projects.

• Initial high tariff of hydro projects- New hydro projects have higher tariff in the initial few years. It is difficult to compete with cheaper renewables and thermal power.

• Reluctance of state governments to allot hydro/PSP projects.

C. OPPORTUNITIES:

• The unharnessed hydro potential of 1,03,150 MW (as on 31.03.2023) primarily located in the hill states/UTs of Arunachal Pradesh, Uttarakhand, Himachal Pradesh, Sikkim and Jammu & Kashmir.

• SJVN is diversifying into alternate energy sources such as Wind & Solar Energy and Power Transmission. SJVN is constantly striving to expand its base both in National and international arena.

• Push for Pump Storage Plant to complement the intermittency of renewable power.

• Honble Prime Minister announcement during COP26 Glasgow that India will reach its non-fossil energy capacity to 500 GW by 2030 is creating ample opportunities in renewable energy sector.

D. THREATS:

• Most of the hydro-electric projects are located in remote locations and are prone to natural calamities such as cloud burst, land slide, road block etc. These natural calamities also contribute to delays, unforeseen events.

• Stringent norms and cumbersome procedures for getting environment clearance, forest clearance and clearance from National Board for Wild Life (where ever applicable) delay the commencement of construction of projects.

• Inspite of extensive survey and investigations, the probability of geological surprises in various components of hydroelectric projects in young Himalayan ranges pose great technical challenge involving extremely cost intensive and timeconsuming measures.

• With the tariffs of solar and wind power projects going down, development of hydro power projects, which is the core strength of SJVN, is becoming increasingly less viable.

• Any Technological breakthrough which makes battery storage systems for storing renewables energy economical may make hydro power generation unviable.

• Non signing of Power Purchase Agreements (PPAs) by beneficiaries for new hydro projects and disowning signed PPAs where tariff of the project is high.

3. OUTLOOK

Outlook of Indias power generation looks promising with expected increase in industrial production and Government of Indias mission to provide 24x7 electricity to all. SJVN has prominent role to supply affordable power to provide 24x7 electricity to all. SJVN has already developed 7 power stations with installed capacity of 2091.5 MW a (including two hydro, two wind and three solar project) across the country. SJVN is diversifying its portfolio by taking different renewable energy projects, details of which are mentioned elsewhere in this report. Subsequent to the announcement of Green Hydrogen Policy by Govt. of India, SJVN has also started taking up preliminary actions to set up Pilot Green Hydrogen as R&D Project in Himachal Pradesh. With fourteen projects under construction, SJVN is poised to add 3765 MW during FY 2024 and 1598 MW during FY 2025. Commissioning of these projects will aid the company achieve strong financials and cash flows to emerge a stronger and bigger company.

4. RISKS AND CONCERNS

SJVN Limited has established a comprehensive and effective risk management system. National Productivity council, after audit of Risk Management System of SJVN Limited has certified that SJVN Limited has successfully implemented Risk Management System as per the guidelines of ISO 31000:2018. SJVN Limited is the first CPSU to achieve this distinction.

In SJVN, all departments and project sites have identified and documented potential risks. Risk management objectives and policy have been developed to mitigate the identified risks and prioritize them based on their likelihood and potential impact. Risk have been categorised as High, Medium and Low.

5. RISK MANAGEMENT FRAMEWORK

SJVN has implemented Risk Management Framework as per ISO 31000:2018 consisting of the following: -

1. Risk Identification and Assessment: SJVN conducts thorough risk identification and assessment processes across its projects, and departments. This includes evaluating both internal factors (such as operational risks, financial risks, and compliance risks) and external factors (such as market risks, regulatory risks, and environmental risks).

2. Risk Mitigation Plan: Once risks are identified, SJVN develops risk mitigation plan for each risk. These plans involve implementing preventive measures, establishing control mechanisms, and implementing best practices to minimize the likelihood and impact of risks. For opportunities, SJVN devises action plans to maximize their potential benefits and value.

3. Regular Risk Review and Reporting: SJVN conducts periodic reviews of risks and opportunities to ensure their relevance and effectiveness. Frequency of Project level Risk steering committee meeting is quarterly basis and for corporate level Risk steering committee meeting is half yearly basis. The Risk

Management committee of SJVN board convenes on biannual basis.

4. Preventive Actions and Continuous Improvement: SJVN emphasizes the implementation of preventive actions to address potential risks proactively. This involves conducting risk assessments, identifying control gaps, and implementing measures to strengthen controls and reduce the likelihood of risks occurring. The organization also fosters a culture of continuous improvement, regularly evaluating and enhancing risk management practices.

5. Training and Awareness: SJVN provides training and awareness programs to its employees to enhance risk management capabilities. This ensures that employees across the organization understand their roles and responsibilities in managing risks and capitalizing on opportunities.

6. FINANCIAL DISCUSSION AND ANALYSIS

A detailed financial discussion and analysis is furnished below on the Audited Financial Statements of the company for the financial year 2022- 23 vis-a-vis financial year 2021-22.

Notes referred in below paragraphs are part of the Standalone financial statements for the financial year 2022-23 placed elsewhere in this report.

Figures of previous years have been regrouped/ rearranged wherever necessary.

A. RESULTS OF OPERATIONS

1. INCOME:

	F.Y. 2022-23	F.Y. 2021-22
Units of Electricity Generated (Million Units)	9282.96	9207.07
INCOME		in Crore
1.Revenue from Operations
a) Energy Sales	2807.97	2408.68
b) Consultancy Income	9.59	2.64
c) Other Operating Revenues	117.85	10.64
Total Revenue from Operations	2935.41	2421.96
2. Other Income
a) Interest
- On deposits, advances to employees, contractors and Others etc.	188.88	113.98
b) Late Payment Surcharge from Beneficiaries	34.06	61.41
c) Gain on transfer of Shares in Joint Venture	114.28
d) Others	26.21	28.19
Total Other Income	363.43	203.58
Total Income	3298.84	2625.54

The income of the Company comprises of income from sale of electricity, interest & late payment surcharge received from beneficiaries, consultancy, interest earned on investment of surplus

funds, gain on transfer of shares in joint venture and dividend from Joint Venture Company etc. The gross income for financial year 2022- 23 is Rs.3298.84 crore as compared to Rs.2625.54 crore in the previous year registering an increase of 25.64 %. The increase in gross income is mainly due to arrears of energy sales & interest thereon pertaining to earlier years on receipt of tariff orders of hydro power plants for the period 2014-19 and 2019-24 and gain on transfer of shares in joint venture.

Tariff for computation of sale of energy

The sale of Hydro Power by the Company is governed by the tariff fixed by the Central Electricity Regulatory Commission (CERC) pursuant to the tariff policy issued by the Govt. of India. The Central Electricity Regulatory Commission (CERC) has notified the Tariff Regulations, 2019 containing inter-alia the terms & conditions for determination of tariff, applicable for a period of five years with effect from 01.04.2019. CERC has approved the tariff of hydro power stations as per above regulations. Tariff is determined with reference to Annual Fixed Charges (AFC) (which comprises of Return on Equity (ROE), Depreciation, Interest on Loan, Interest on Working Capital and Operation & Maintenance Expenses. ROE is grossed up with effective income tax rate of the respective financial year so as to recover the income tax incidence). For the purpose of recovery, AFC is bifurcated into two equal parts i.e., Energy Charges and Capacity Charges. Recovery of Energy Charges is dependent upon energy generated and full recovery is ensured when schedule design energy level is achieved. Generation over and above design energy entitles for additional revenue in the form of secondary energy charges as well as incentive by way of deviation charges where the Power Station of the Company contribute towards maintaining grid stability. Recovery of capacity charges is dependent on the actual availability of plant for generating power with reference to Normative Annual Plant Availability Factor (NAPAF). Company is entitled to receive incentives for achieving higher Plant Availability Factor against NAPAF. The sales also include reimbursement on account of Foreign Exchange Rate Variation (FERV) and Man Power Cost on pay revision.

Revenue from operations also includes sale of power from Wind and Solar Power projects situated in the States of Maharashtra and Gujarat. The rates of sale of energy is regulated as per Power Purchase Agreement (PPA) signed with the respective state government utilities.

Revenue from Operations (Note 2.32)

Energy Sales

Company sells electricity to bulk customers comprising mainly, Electricity Utilities owned by State Governments and private distribution companies. Sale of electricity is generally based on long term Power Purchase Agreements (PPAs) entered with such Utilities. Sales for the financial year 2022-23 have been recognized at Rs.2807.97 crore as compared to Rs.2408.68 crore during the financial year 2021- 22.

Energy sales include an amount of Rs.270.33 crore (previous year Rs.(68.46) crore) pertaining to earlier years.

Sales includes an amount of Rs.210.29 crore (previous year 208.36 crore) on account of capacity incentive in respect of hydro power stations mainly due to achievement of higher plant availability factor as compared to Normative Plant Availability Factor.

The company has a rebate policy for providing graded discount for early payment. The rebate is netted off from energy sales.

The details of Generation & Plant Availability Factor (PAF) in respect

of Hydro Power Stations are given below:

Particulars	NJHPS		RHPS
	2022-23	2021-22	2022-23	2021-22
Design Energy (MUs)	6612	6612	1878	1878
Gross Generation (MUs)	7133.00	7067.37	1997.45	1981.20
Normative PAF (%)	90	90	85	85
Actual PAF (%)	106.65	106.60	106.22	106.36

Sales also includes Unscheduled Interchange (UI) Charges amounting to Rs.43.63 crore (previous year Rs.44.21 crore) for the positive deviation in generation with respect to schedule, at rates notified by CERC from time to time.

Revenue from Wind/Solar Power Projects:

The revenue from sale of power from Renewal Projects (Wind and Solar Power) has decreased by Rs.2.25 crore due to slight decrease in generation of Wind and Solar Power by 5.99 MUs (current year 152.51 MUs) (Previous year: 158.50 MUs).

Consultancy

Revenue from operations also includes an amount of Rs.9.59 crore (Previous Year Rs.2.64 crore) towards consultancy charges. Consultancy for the year was provided to subsidiary company SJVN Arun-3 Power Development Company Pvt. Ltd. (SAPDC), Nepal.

Other Operating Revenue:

Other Operating Revenue mainly includes Interest from beneficiaries. CERC regulations provide that if the tariff already recovered is less than the tariff approved by the CERC, the company shall recover the balance amount along with interest from the beneficiaries.

Accordingly the interest from the beneficiaries amounting to Rs.116.94 crore (previous year: Rs.7.98 crore) has been recognised on account of revision of tariff by CERC in respect of hydro plants for the period 2014-19 and 2019-24.

During the year company has commenced the business of Power Trading and power amounting to Rs.0.17 crore was sold.

Revenue from operations for F.Y. 2022-23 constitutes 88.98% of total income as compared to 92.25% for F.Y. 2021-22.

Other Income (Note 2.33)

Other income mainly comprises of interest income on short term deposits with banks, late payment surcharge, interest from employees, contractors and gain on transfer of shares in joint venture etc., other income for the year has increased by Rs.159.85 crore to Rs.363.43 crore as compared to Rs.203.58 crore during previous year registering an increase of 78.52%. This is mainly on account of gain on transfer of shares in joint venture by Rs.114.28 crore (current year Rs.114.28 crore) (previous year Rs.Nil).

Major components of other income is as under:

		( Rs.In Crore]
Other Income	Financial Year 2022-23	Financial Year 2021-22
Interest from Banks	139.20	96.12
Late Payment Surcharge from Beneficiaries	34.06	61.41
Gain on Transfer of Shares in Joint Venture	114.28	—
Other Miscellaneous Income (Including Liquidated Damages, excess provision/sundry credit balances written back, receipt of maintenance of ICF, Interest from Subsidiary Companies, Employees, Contractors, Others, foreign currency fluctuation adjustment and dividend from Joint Venture Company)	75.89	46.05
Total Income	363.43	203.58

2. EXPENDITURE

		(Rs. in Crore)
Expenditure	Financial Year 2022-23	Financial Year 2021-22
Purchase of Electricity for Trading	0.17	---
Employee Benefits Expense (Note 2.34)	294.85	289.41
Finance Costs (Note 2.35)	432.23	161.34
Depreciation and Amortisation (Note 2.36)	390.59	404.29
Other Expenses (Note 2.37)	419.24	403.80
Total Expenditure	1537.08	1258.84

The total expenditure of the Company has increased by 22.10 % to Rs.1537.08 crore in the financial year 2022-23 from Rs.1258.84 crore in financial year 2021-22 mainly on account of increase in finance cost by Rs.270.89 crore. Total expenditure as percentage of total income during the F.Y. 2022-23 was 46.59% as compared to 47.95% during the F.Y. 2021-22.

Purchase of Electricity for Trading

During the year company has commenced the business of Power Trading and power amounting to Rs.0.17 crore was purchased. Employee Benefits Expense

The Employee Benefits Expense includes Salaries and Wages, Allowances, Incentives, Contribution to Provident & Other Funds and Welfare Expenses. These Expenses accounted for 19.18 % of total expenditure in F.Y.2022-23 as compared to 22.99 % in F.Y. 2021-22.

The Employee Benefits Expense during the year was Rs.294.85 crore (previous year Rs.289.41 crore) i.e., an increase of Rs.5.44 crore in comparison to the previous year. The Increase mainly on account of annual increment & increase in DA etc.,

Finance Costs

The Finance Cost mainly consists of interest on Rupee Term Loans, Foreign Currency Loans, Guarantee Fees, interest on bonds etc. The borrowings are denominated in rupees, including those in foreign currencies, for accounting purposes. During the current financial year, finance costs increased by Rs.270.89 crore (current year Rs.432.23 crore, previous year Rs.161.34 crore). The increase during the year as compared to previous year was due to increase in long term and short-term borrowings and increase of exchange rate as on 31.03.2023 on foreign currency loans.

The increase in finance cost during the year is due to the reasons enumerated as below:

i) Increase of FERV on restatement of foreign currency loans as on 31.03.2023 by Rs.130.41 crore (current year Rs.203.94 crore (Previous Year Rs.73.53 crore) on account of increase in foreign currency rate from Rs.76.17 (31.03.2022) to Rs. 82.57 (31.03.2023). However, an amount of Rs.119.70 crore in respect of RHPS is recoverable from beneficiaries and have no impact on the profitability as the same has been accounted for as regulatory deferral account.

ii) Increase in interest on foreign currency borrowings by Rs.96.60 crore (current year Rs.119.20 crore) (previous year Rs.22.60 crore) mainly due to increase in rates of Secured overnight Financing Rate (SOFR) from 0.56 % to 4.92% including variable spread.

iii) Increase in interest on domestic borrowings by Rs.41.13 crore (current year Rs.86.47 crore) (previous year Rs.45.34 crore) due to additional borrowing raised during the year.

Depreciation and Amortisation Expenses

As per the Accounting Policy of the Company, depreciation is charged on assets of operating units on straight line method following the rates & methodology notified by Central Electricity Regulatory Commission (CERC) for the purpose of fixation of tariff in accordance with Schedule-II of the companies act 2013. Depreciation on assets other than operating units of the company is charged to the extent 90% of the cost of the asset following the rates notified by CERC for fixation of tariff except for some items for which depreciation is charged at the rates assessed by the company.

The depreciation and amortisation cost during the year has decreased by Rs.13.70 crore, Current year Rs.390.59 crore (Previous year Rs.404.29 crore). Depreciation and amortisation represent 25.41 % of our total expenditure during F.Y.2022- 23 in comparison to 32.12 % during F.Y. 2021-22. This is mainly due to change in accounting policy of charging depreciation on renewal power projects by estimating the life of these projects as 25 years in line with the CERC regulations.

Other Expenses

Other Expenses comprises mainly of Repair & Maintenance of Buildings, Roads, Electromechanical works and Plant & Machinery, Insurance, Security, CSR Expenses, interest of arbitration awards, and other administrative expenses.

Other Expenses represents 27.28 % of total expenditure during F.Y 2022-23 in comparison to 32.08 % during F.Y.2021-22. In absolute terms the expenses were Rs.419.24 crore in F.Y. 2022-23 as compared to Rs.403.80 crore during previous year. This is higher by 15.44 crore as compared to previous year. The increase is mainly due to increase in expenses of repair and maintenance of plant & machinery, insurance, security, training, CSR and Interest on arbitration awards etc.

Exceptional Items (Note 2.38)

During the year, company has received arbitration awards in respect of Hydro Power Stations. A provision has been made as per the policy of the company. Interest on these arbitration awards amounting to Rs.29.63 crore up to 31.03.2022 has been charged to profit & loss as exceptional item. This amount has also been included in movement in regulatory deferral account balance as the same is recoverable from beneficiaries through tariff in future.

Net Movement in Regulatory Deferral Account Balance (Note 2.39)

The company is mainly engaged in generation and sale of electricity. The price to be charged by the company for electricity sold from hydro power projects to its customers is determined by the CERC which provides guidance on the principles and methodologies for determination of the tariff. The tariff is based on allowable costs like interest, depreciation, operation & maintenance expenses, etc. with a stipulated return on equity.

As per the CERC Tariff regulations any gain or loss on account of exchange rate variation during the construction period shall form part of the capital cost. Exchange differences arising from settlement/translation of monetary item denominated in foreign currency to the extent recoverable from or payable to beneficiaries in subsequent periods as per CERC Tariff Regulations are recognized on an undiscounted basis as regulatory deferral account debit/credit balance and adjusted from the year in which the same becomes recoverable from or payable to the beneficiaries. The same is accounted for as per Ind AS 114- ‘Regulatory Deferral Accounts. Accordingly, an amount of Rs.71.95 crore (Previous year 15.42crore) has been debited to Regulatory Deferral Account Debit Balance. During the year, company has received arbitration awards in respect of Hydro Power Stations. The interest on arbitration award charged to profit & loss amounting to Rs.63.84 crore (Previous year Rs.25.59 crore) has been included in movement in regulatory deferral account balance as the same is recoverable from beneficiaries through tariff in future.

O&M expenses excluding security expenses are fixed by CERC in tariff regulations 2019-24. Considering the methodology followed by CERC for allowing impact of the previous pay revision, tariff orders issued by CERC under Regulations,2014 and the provisions related to change in law of CERC Tariff Regulations,2014, a regulatory asset has been created (Regulatory deferral account debit balance) towards the O&M expenditure. During the year tariff orders of Hydro Power Stations have been received in respect of employee benefit expense (pay revision) and accordingly an amount of Rs.(148.27) crore (Previous year Rs.nil) has been adjusted from movement in regulatory deferral account balance.

Accordingly, for the financial year 2022-23 the regulatory income (net off tax) recognized in the statement of Profit and Loss on account of FERV, O&M/Security expenses and interest on arbitration awards together amount to Rs.(10.30) crore (Previous year Rs.(43.82) crore). Profit before net movement in regulatory deferral account balances and Tax

Profit before net movement in regulatory deferral account balances and tax increased by 28.93 % to Rs.1732.13 crore during F.Y. 202223 as against Rs.1343.44 crore during previous year due to the reasons explained above.

Tax Expenses:

Current Tax Expense

The Company recognises tax on income in accordance with provisions of Income Tax Act. During the year, the Company is liable to pay tax equivalent to Minimum Alternate Tax (MAT). The Current Tax including adjustment relating to earlier years is Rs.312.59 crore as compared to Rs.229.09 crore during previous year. The increase in tax incidence is due to increase in Profit before tax.

Deferred Tax (Note 2.8)

Deferred tax for the year is on account of temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. An amount of Rs.45.79 crore has been recognised as deferred tax during F.Y. 2022-23 as against Rs.93.01 crore during the F.Y. 2021-22. The decrease in deferred tax liability debited to statement of profit and loss during the year was mainly due to decrease in temporary difference in carrying amount of PPE and MAT credit utilisation. Other Comprehensive Income

The Other Comprehensive Income (OCI) is on account of re measurement of net defined benefit liability/asset in respect of employees. OCI net of tax for the financial year 2022-23 is Rs.(2.02) crore in comparison to Rs.(1.63) crore during financial year 2021-22.

Cash Flows

Cash & cash equivalents and cash flows on various activities are given below:

		(Rs. in Crore)
Particulars	F.Y. 2022-23	F.Y. 2021-22
Opening cash & cash equivalent	(291.04)	(11.58)
Net cash from operating activities	1576.12	1650.43
Net cash used in investing activities	(1805.41)	(4259.10)
Net cash flow from financing activities	352.30	2329.21
Net increase/(decrease) in cash and cash equivalent	123.01	(279.46)
Closing cash and cash equivalents	(168.03)	(291.04)

Statement of cash flows include cash flows from operating, investing and financing activities.

Net cash generated from Operating Activities was 1576.12 crore during the year 2022-23 (Previous year 1650.43 crore). The decrease is mainly due to unbilled revenue on account FERV and employee benefit expense (pay revision) recoverable from beneficiaries.

Net cash from cash outflow on investing activities was Rs.(1805.41) crore as compared to Rs.(4259.10) crore in the previous year. Cash outflow on investing activities is mainly on Property, Plant & Equipment, Capital Work in progress and investment in subsidiary companies etc. Decrease in investing activities is mainly due to decrease of investment in term deposits with bank by Rs.1943.31 crore [(current year Rs.(100.15) crore) (previous year Rs.(2043.46) crore)]. There is also a decrease in investment in Property, Plant & Equipment and Capital Work in progress etc by Rs.382.06 crore (current year Rs.900.71 crore) (previous year Rs.1282.77crore). There is an increase in investment in subsidiary companies by Rs.306.76 crore (current year 1300.00 crore) (previous year Rs.993.24 crore) During the year the net cash inflow of Rs.352.30 crore from financing activities (Previous year Rs.2329.21 crore as detailed below: Borrowings amounting to 1864.69 crore was raised during the year as compared to Rs.3338.41crore during the previous year and borrowings amounting to Rs.564.67 crore was repaid in the year 2023 (Previous year 315.78 Crore). In the year 2023, cash outflow on account of payment of dividend including interim dividend thereon was 667.99 crore (Previous year 610.54 crore). Interest & Finance charges paid during the year was 290.57 crore (Previous year 77.05 crore).

B. FINANCIAL POSITION

The items of the Balance Sheet are as under:

ASSETS:

1. Non-Current Assets

			(Rs. in Crore)
Particulars	As at March 31,
	2023		2022
Property, Plant and Equipment (Note 2.1)	7093.99		7290.62
Capital Work-in-progress (Note 2.2)	3028.69		2226.15
Intangible Assets (Note 2.3)	8.44		21.28
Intangible Assets Under Development (Note 2.4)		---	0.41
Financial Assets
- Investments (Note 2.5)		5931.45	4921.88
- Loans (Note 2.6)		93.64	96.84
- Others (Note 2.7)		198.47	186.48
Deferred Tax Assets (Net) (Note 2.8)		483.92	529.71
Other Non-Current Assets (Note 2.9)		666.57	561.73
Total		17505.17	15835.10

Non-Current Assets has increased by 10.55 % to Rs.17505.17 crore (Previous year 15835.10 crore).

Property, Plant and Equipment (PPE)

PPE includes Net Block after depreciation in respect of Land, Buildings, Roads & Bridges, Plant & Machinery, Generating Plant & Machinery, Electrical Works, Hydraulic Works (Dams, Tunnels etc.), Right of Use, Vehicles, Electrical/Office Equipments, Furniture/ Fixtures, Data Processing Equipments etc. Gross Block of PPE during the year increased by Rs.146.74 crore to Rs.10700.86 crore (Previous year Rs.10554.12 crore). The increase is mainly due to purchase of Land at Luhri hydroelectric project (Stage-I), Sunni Dam, Dhaulasidh Project and Capital Spares of generating hydropower stations etc during the year. However, Net Block of PPE decreased by 196.63 crore to 7093.99 crore at the end of current year (Previous year 7290.62 crore) due to charging of depreciation on PPE during the year.

Capital Work-in-progress

Capital Work-in-progress during Current year registered an increase of 36.05% to Rs.3028.69 crore (Previous year 2226.15 crore) mainly due to increase in activities of under construction projects of Naitwar Mori, Luhri hydroelectric project (Stage-I), Dhaulasidh Project and Sunni Dam etc.

Intangible Assets and Intangible Assets under Development

Intangible Assets & Intangible Assets under Development is on account of SAP/ERP Software. Net block of both Intangible Assets & Intangible Assets under Development at the end of Current year is 8.44 crore (previous year 21.69 crore).

Non-current Financial Assets Investments

Investments are intended for long term and carried at cost which consists of investments in Subsidiaries and Joint Venture Companies. Total Investments at the year-end is Rs.5931.45 crore (Previous year 4921.88 crore). The increase in investments is due to infusion of equity in Subsidiaries amounting to Rs.1250.00 crore. During the year SJVN had transferred its entire shareholding amounting to Rs.240.43 crore in Kholongchhu Hydro Energy Limited (KHEL), a Joint Venture Company, to Druk Green Power Corporation (DGPC), Bhutan.

Loans

Non-Current Loans are those loans which are expected to be realised after 12 months from the balance sheets date. These loans mainly include, loans and advances given to employees at concessional rates and have been fair valued at reporting date. Loans at the end of current year is Rs.93.64 crore (Previous year Rs.96.84 crore). The decrease is mainly due to decrease in loans of employees.

Other Financial Assets

Other Non-current Financial Assets includes Bank Deposits with more than twelve months maturity and interest accrued thereon. Other Non-current Financial Assets at the end of current year is Rs.198.47 crore (Previous year Rs.186.48 crore). The increase is mainly due to interest accrued on bank deposits having maturity of more than twelve months.

Deferred Tax Assets (Net)

The net deferred tax assets decreased by Rs.45.79 crore (current year 483.92 crore, previous year Rs.529.71 crore). The decrease is mainly due to materialisation/use of deferred tax assets on account of MAT credit entitlement and decrease in temporary difference in carrying amount of PPE during the year. Net decrease in deferred tax assets amounting to 45.79 crore during the year has been debited to statement of profit and loss (previous year 93.01 crore). Other Non-current Assets

Other non-current assets mainly consist of advance tax & tax deducted at source net off by provision for tax, Capital Advances given to Contractors and govt deptt / organisations for capital works and deferred employee benefits expense etc. Other non- current assets at the end of Current Year is 665.57 crore (Previous year Rs.561.73 crore).

2. Current Assets

	(Rs. in Crore)
Particulars	As at March 31,
	2023	2022
Inventories (Note 2.10)	72.80	62.66
Financial Assets
-Trade Receivables (Note 2.11)	270.64	575.03
-Cash and Cash Equivalents (Note 2.12)	128.12	17.24
-Bank Balances Other than cash and cash equivalents (Note 2.13)	2902.13	2805.40
-Loans (Note 2.14)	114.04	47.13
-Others (Note 2.15)	1188.34	482.36
Other Current Assets (Note 2.16)	136.69	130.90
Total	4812.76	4120.72

Current Assets as on March 31,2023 has increased by 16.79 % to Rs.4812.76 crore (Previous year 4120.72 crore).

Inventories

Inventories mainly comprise stores & spares which are maintained for operating plants. Inventories are valued at lower of cost arrived at on weighted average basis and net realisable value. Inventories were valued at 72.80 crore as on 31st March, 2023 (Previous year Rs.62.66 crore).

Financial Assets Trade Receivables

Trade Receivables mainly consists of receivables on account of Sale of Energy. Trade receivable does not include unbilled revenue which has been shown separately under other current financial assets (Note 2.15). Trade Receivables during the Current year has decreased by Rs.304.39 crore to 270.64 crore (Previous year 575.03 crore) due to realisation of outstanding debts. Trade receivable mainly includes an amount of 202.14 crore receivable from Jammu & Kashmir Power Corporation Limited (JKPCL). As per

the arrangements between the company, banks and beneficiaries, the bills of beneficiaries amounting to Rs.258.92 crore (previous year: 248.07 crore) have been discounted during the year. Accordingly, Trade receivables have been disclosed net off bills discounted.

Cash and Cash Equivalents & Bank Balances other than cash and cash equivalents

Cash and Cash Equivalents & Bank Balances other than cash and cash equivalents include mainly balances in Term Deposits and current account.

Cash and Cash Equivalents & Bank Balances other than cash and cash equivalents during the current year increased by 207.61 crore to 3030.25 crore (Previous year 2822.64 crore). This is mainly due to increase in investment in Term Deposits from borrowed funds pending utilisation.

Cash and Cash Equivalents & Bank Balances other than cash and cash equivalents are 62.96 % of current assets.

Loans

Current loans during the year has increased by Rs.66.91 crore to 114.04 crore as on 31.03.2023 (Previous year 47.13 crore) mainly on account of providing interest bearing loans to subsidiary company.

Other Financial Assets

Other financial assets include interest accrued but not due on deposits with Banks, amount recoverable from Contractors & Suppliers, Unbilled Revenue and amount receivable from subsidiaries and joint ventures etc. Other financial assets increased by 705.98 crore to 1188.34 crore during current year (Previous year Rs.482.36 crore). The increase is mainly due to amount receivable from subsidiary companies, mainly from SJVN Green Energy Limited (SGEL) on transfer of assets of five renewal energy projects for which Business Transfer Agreements (BTAs) have been signed.

Other Current Assets

Other Current Assets mainly include advances to Govt Departments other than capital advances and prepaid expenses etc. Other Current Assets increased by 5.79 crore to 136.69 crore during current year (Previous year 130.90 crore).

Assets Held for Sale

Land and buildings which are unutilized and not yielded the appropriate returns have been classified as assets held for sale. This includes mainly Land and Building at Dehradun. The process of sale of these assets is under process and likely to be completed within next twelve months. The amount of assets held for sale as on 31st March, 2023 was Rs.16.25 crore (Previous year Rs.16.07 crore).

Regulatory Deferral Account Debit Balance

Expense/Income recognised in the Statement of Profit & Loss to the extent recoverable from or payable to the beneficiaries in subsequent periods as per CERC tariff regulations are recognised as "Regulatory deferral account balances" as per the provisions of Ind AS 114-Regulatory Deferral Accounts. Regulatory deferral account balances are adjusted from the year in which the same become recoverable from or payable to the beneficiaries. Regulatory deferral account balances include foreign exchange rate variation on foreign currency loans, employee benefit expense on account of pay revision w.e.f. 01.01.2017, interest on arbitration awards etc. Regulatory deferral account debit balance at the year- end is 796.12 crore (Previous year Rs.808.60 crore). The decrease is mainly due to receipt of tariff orders for employee benefit expense (pay revision) pertaining to hydro power stations for the period

2014-19 and accordingly an amount of 148.27 crore has been adjusted from movement in regulatory deferral account balance, which is offset by foreign exchange recoverable by Rs.71.95 crore and interest on arbitration awards by Rs.63.84 core during the year.

3. Equity and Liabilities

Total Equity

Total Equity of the Company at the end of the financial year 202223 has increased to Rs.13821.97 crore from Rs.13128.61 crore in the previous year registering an increase of 5.28% as per details given below:

Particulars	Total Equity (Rs. Crore)
Opening Balance as on 01.04.2022	13128.61
Add: Profit for the year	1363.45
Less: Other Comprehensive Income	2.02
Less: Dividend	668.07
Balance as on 31.03.2023	13821.97

The increase in total equity resulted in increase in the book value per share to 35.17 as at 31st March,2023 (Previous year Rs.33.41 per share).

LIABILITIES

Non-Current Liabilities

Financial Liabilities

Particulars	As at March 31,
	2023	2022
Borrowings (Note 2.21)	6395.12	4796.95
Lease Liabilities (Note 2.22)	6.40	5.83
Other Financial Liabilities (Note 2.23)	0.01	0.01
Provisions (Note 2.24)	118.02	106.34
Other Non-current Liabilities (Note 2.25)	706.83	729.39
Total	7226.38	5638.52

Borrowings

Total borrowings as on March 31, 2023 inclusive of current maturities of long-term borrowings were Rs.6755.33 crore as against Rs.5062.36 crore as on March 31,2022. Current maturities of longterm borrowings have been shown under current financial liabilities (Borrowings). Details of total borrowings are as under:

		(Rs. in Crore)
Particulars	As at March 31, 2023	As at March 31,2022
Non-current Borrowings (Note No 2.21)	6395.12	4796.95
Current maturities of non-current borrowings included in current financial liabilities(borrowings) Note No.2.26	360.21	265.41
Total Borrowings	6755.33	5062.36

Borrowings excluding current maturities of long-term debts have registered an increase of 33.32 % amounting to Rs.1598.17 crore. Total non- current borrowings as on 31.03.2023 are Rs.6395.12 crore (previous year 4796.95 crore). Details of non-current borrowings are as under:

Rupee Term Loans:

Total outstanding rupee term loans drawn from domestic banks including current maturities as on 31.03.2023 were Rs.1899.77 crore (previous year Rs.297.68 crore). These term loans are secured by equitable mortgage/hypothecation of all present and future fixed and book debts & future cash flows of three beneficiaries of NJHPS.

Foreign currency borrowings:

Foreign currency borrowings are from PNB, Dubai and World Bank. Total outstanding as on 31.03.2023 was Rs.3855.56 crore (previous year: Rs.3764.68 crore).

The debt-to-equity ratio (inclusive of Short-Term Borrowings and accrued interest) at the end of financial year 2022-23 of the company is 0.52 (previous year 0.42).

Lease and Other Financial Liabilities

The lease liabilities are on account of present value of leased rentals payable over the period of lease of assets taken on lease by the company. The lease liabilities have been measured at the present value of the remaining lease payments. Lease liabilities during the current year is Rs.6.40 crore (Previous year: Rs.5.83 crore).

Other Financial liabilities include Retention Money from Contractors and others. Other financial liabilities during the current year is Rs.0.01 crore (Previous year Rs.0.01 crore).

Non-current Provisions

Non- current provisions are on account of long-term employee benefits provided on the basis of Actuarial Valuation and includes leave encashment and Other Retirement Benefits which are expected to be settled beyond a period of twelve months from the balance sheet date. Non-current provisions increased by 11.68 crore to 118.02 crore during current year (Previous year 106.34 crore).

Other Non-current Liabilities

Other non-current liabilities include income received in advance (Advance against Depreciation (AAD)), Government Grant and Deferred Foreign Currency Fluctuation Liability etc.

Other non-current liabilities have registered a decrease of Rs.22.56 crore to Rs.706.83 crore (Previous year 729.39 crore) mainly on account of amount of AAD transferred to other current liabilities as the same is adjustable in sales during next financial year.

4. Current Liabilities

Financial Liabilities		(Rs. in Crore)
Particular	As at March 31,
	2023	2022
Borrowings (Note No.2.26)	745.01	723.59
Lease Liabilities (Note 2.27)	5.53	6.31
Trade Payables (Note 2.28)	46.70	37.16
Other Financial Liabilities (Note 2.29)	649.10	699.35
Other Current Liabilities (Note 2.30)	49.28	50.13
Provisions (Note 2.31)	586.33	496.82
Total	2081.95	2013.36

The Current Liabilities as at March 31, 2023 and 2022 were Rs.2081.95 crore and Rs.2013.36 crore respectively. The Current Liabilities have increased by 3.40 % mainly due to increase in Borrowings and Provisions.

Borrowings

During the year company has availed the bank overdraft and shortterm loan from banks to finance the short-term fund requirements. Outstanding amount of short-term loan from banks/overdraft as on 31.03.2023 was Rs.384.80 crore (previous year 458.18 crore). Borrowings also include an amount of Rs.360.21 crore (previous year 265.41 crore) being current maturities of long-term debts payable within twelve months from the balance sheet date. Total outstanding balance of borrowings at the end of the year is 745.01 crore (previous year: 723.59 crore).

Lease Liabilities

Lease liabilities are on account of present value of leased rental assets rental payable with in next twelve months for assets taken on lease. Lease liabilities at the end of year is Rs.5.53 crore (Previous year: Rs.6.31 crore).

Trade Payables

Trade payables include liabilities in respect of amount due on account of goods purchased or services received in normal course of business operations other than liability for Purchase/ Construction of Fixed Assets. Trade Payables at the end of current year is Rs.46.70 crore (Previous year Rs.37.16 crore).

Other Financial Liabilities

Other Financial Liabilities mainly include Interest accrued but not due on loans, Liabilities for Employees Remuneration and Benefits, Liabilities for Purchase/Construction of Fixed Assets and Deposits, Retention Money from Contractors and Others. Other Current Liabilities have decreased by Rs.50.25 crore to 649.10 crore (Previous year 699.35 crore). This is mainly due to decrease in amount payable to subsidiary company for subscribed capital.

Other Current Liabilities

Other Current Liabilities mainly include current liability of Advance against Depreciation and Advance from customers etc. Other Current Liabilities at the year-end was Rs.49.28 crore (Previous year Rs.50.13 crore).

Provisions

Short Term Provisions include Unfunded Employees Benefits payable within Twelve Months as per Actuarial Valuation, Interest on Arbitration Awards and Performance Related Pay etc. Provisions have increased by 89.51 crore in the F.Y. 2022- 23 to 586.33crore (Previous year Rs.496.82 crore). This is mainly due to increase of provision for interest on arbitration awards and Performance related pay etc.

C. CONTINGENT LIABILITIES (NOTE NO 2.50)

The following are the components of claims against the company not acknowledged as debt:

		(Rs. in Crore)
Particulars	As at 31.03.2023	As at 31.03.2022
Capital Works	565.50	670.76
Land Compensation	25.06	25.06
Disputed Income Tax Demand	25.45	10.48
Guarantees	1416.39	195.00
Others	259.89	249.04
Total	2292.29	1150.34

Contingent Liabilities increased by 1141.95 crore to 2292.29 crore as of March 31,2023 (Previous year Rs.1150.34 crore) mainly on account of increase in contingent liabilities relating to corporate guarantee for a loan drawn by a subsidiary company.

D. BUSINESS AND FINANCIAL REVIEW OF SUBSIDIARY & JOINT VENTURE COMPANIES

1. SUBSIDIARY COMPANIES

Company has three wholly owned subsidiary companies as at 31.03.2023. The Subsidiary companies are under Construction except for SJVN Green Energy Limited (SGEL), one project of which is in operation. The performance of the subsidiaries is as under:

SJVN Thermal Pvt. Ltd.

SJVN Thermal Pvt. Ltd is 100% subsidiary company of SJVN Ltd. The authorized share capital of SJVN Thermal Pvt. Ltd. is 3000 crore. The Company has taken up the development of 1320 MW Coal based Thermal Power Project located near Chausa village in District Buxar of Bihar, which is in construction stage. Total paid up equity share capital as on 31^st March, 2023 is Rs.2511.68 crore (Previous year Rs.2511.68 crore). Total Assets as on 31^st March, 2023 is Rs.7486.03 crore (Previous Year: Rs.4376.54 crore).

SJVN Arun 3 Power Development Company Pvt. Ltd.

SJVN Arun 3 Power Development Company Pvt. Ltd. was incorporated in Nepal as a wholly owned subsidiary company of SJVN Ltd on 25.04.2013. The authorized share capital of the company is INR 2714.35 crore (NPR 4342.96 crore). Presently the company is executing the 900MW Arun-3 Hydroelectric Project in Nepal which is under construction. This project is to be installed in the Sankhuwasabha District of Nepal. Total paid up equity capital as on 31^st March, 2023 is INR 2105.41 crore (Previous Year INR 2105.41 crore). Total Assets as on 31^st March, 2023 is INR 4220.53 crore (Previous Year INR 2850.42 Crore).

SJVN Green Energy Ltd.

SJVN Green Energy Limited (SGEL) was incorporated in India on 30.03.2022 with authorised share capital of Rs.50 crore. The purpose of formation of SGEL is to have a focussed approach for expanding/ managing the renewal energy portfolio of SJVN group.

Assets of five renewal energy projects have been transferred to SJVN Green Energy Limited (SGEL) by SJVN for which Business Transfer Agreements (BTAs) have been signed.

One of the projects of SGEL of 75 MW started commercial generation in the month of November, 2022 and revenue of Rs.12.53 crore has been earned. Total paid up equity share capital as on 31^st March, 2023 is 1300.00 crore (Previous year Rs.50.00 crore). Total Assets as on 31^st March, 2023 is Rs.4113.41 crore (Previous Year: Rs.50.00 crore).

2. JOINT VENTURE COMPANIES

As at 31.03.2023, the company has interest in Cross Border Power Transmission Company Ltd (CPTC) having 26% holding. The performance of the Joint Venture is as under:

Cross Border Power Transmission Company Limited

Cross Border Power Transmission Company Limited (CPTC) is a joint venture of SJVN Ltd with IL&FS Energy Development Company Ltd.(IEDCL), Power Grid Corporation of India Ltd. (PGCIL) & Nepal Electricity Authority(NEA). The Company is principally engaged in establishment, operation & maintenance and transfer of Indian Portion of Indo-Nepal Cross Border Transmission Line from

SJVN has invested 12.61 crore (Previous Year Rs.12.61 crore) in the joint venture. The total income and PAT during the year 2022-23 are Rs.32.95 crore (previous year Rs.34.48 crore) and 16.33 Crore (previous year 17.26 crore) respectively.

Kholongchhu Hydro Energy Limited

Kholongchhu Hydro Energy Limited (KHEL), a joint Venture Company of SJVN and Druk Green Power Corporation (DGPC), Bhutan incorporated Under the Companies Act of Kingdom of Bhutan having 50% shareholding each for construction of 600MW Kholongchhu Hydro Electric Power Project. Investment of 240.43 crore was made by SJVN in KHEL as equity contribution.

During the year, KHEL Board and Shareholders had decided that SJVN shall transfer its entire shareholding in KHEL to DGPC against payment of equity contribution of SJVN in KHEL. Consequently, SJVN had transferred its entire shareholding in KHEL to DGPC and amount of equity invested along with interest has been received.

E. CONSOLIDATED FINANCIAL STATEMENTS OF SJVN LTD.

The consolidated financial statements have been prepared in accordance with Indian Accounting Standard (Ind AS-110)- ‘Consolidated financial Statements Ind AS-28 -Investments in Associates & Joint Ventures, Ind AS112- ‘Disclosure of Interests in other entities and are included in the Annual Report.

The Financial Statements of the company and its subsidiaries are combined on line byline basis by adding together of the like items of assets, liabilities, income and expenses after eliminating intra-group balances, intra-group transactions, unrealized profit or losses. The Joint Venture Company has been consolidated by using the Equity Method of Accounting.

A brief summary of the results on a consolidated basis is given below:

		(Rs. in Crore)
Particulars	FY 2022-23	FY 2021-22
Total Revenue	3282.50	2634.78
Profit before Tax	1737.66	1359.82
Profit after Tax	1359.30	989.80
Other Comprehensive Income (net of tax)	(2.03)	(163)
Total Comprehensive Income	1357.27	988.17

 

	For and on behalf of Board of Directors
Date: 9th August, 2023	(Nand Lal Sharma)
Place: New Delhi	Chairman and Managing Director
	DIN:03495554