Interim Management Statement

RNS Number : 2414B

KSK Power Ventur PLC

15 February 2011

 



15 February 2011

KSK Power Ventur plc
("KSKPV" or the "Company")

Interim Management Statement

KSK Power Ventur plc (KSK.L), the power project company listed on the London Stock Exchange, with interests in multiple power plants and businesses across India, today issues its Interim Management Statement for the period from 1 October 2010 to the date of this announcement.

The robust performance that was seen in the first half of the year has slowed down in the quarter ending December 2010, with the sales and profits for the Group below expectations on account of the various developments in the wider energy market in India and their effect on specific procurers of power from the Wardha power plant. However, we have subsequently started witnessing a pickup in the activity and the fourth quarter should witness the necessary correction in power off-take and associated revenue and profitability.

Some of the broader operational developments in the power plants include:

·    The plants at Arasmeta, Sai Regency, Sitapuram and VS Lignite have been operating at consistent loads and are expected to contribute significantly to the revenue and profitability of the full year.

·    With surplus monsoon showers and reduced demand from agriculture, coupled with more than normal hydro generation in the overall power pool contributing to a temporary supply surplus; the two 135 MW units were backed down during November 2010. However, the units were gradually back into production starting December 2010 and the generation from Wardha Warora plant during January 2011 stood at 183 MU. With the commencement of generation from the third unit, this is expected to increase further during the balance part of the current quarter.

·    In relation to the fuel economics of the Warora Project; with the expected stabilization of linkage supplies during the current quarter, the Company's dependence on short term e-auction coal / contracts is expected to significantly reduce, helping to enhance margins to expected levels.

·    The Group is currently targeting to complete construction of both the 43 MW Arasmeta expansion as well as the last unit of 135 MW of the Wardha Warora project before end March 2011 and commence generation resulting in operational capacity of the Group crossing the 900 MW threshold.

Progress on Construction projects:

·     Initial Construction progress on 3.6 GW KSK Mahanadi power project is as below:

o  More than 4000 construction personnel are on-site and are expected to significantly increase with the execution scale-up in the coming months.

o  Completion of associated civil works and commencement of boiler erection works for two units out of the total six units. The boiler drum lifting activity for these is expected to commence shortly, when supplies reach the site.

o  Completion of foundation work for Chimney 1 and the construction of other power plant support systems is in progress.

o  Works on ancillary infrastructure of water transportation, railway line contract and contractor works awarded and commenced.

o  While mine clearances and progress on Gare Pelma mine by GIDC is continuing, the Morga-II block had no further progress on account of  the new  principle of "Go" / "No-Go" by the Environment Ministry. This is currently under consideration at the highest level of the federal government and recently a group of ministers ("GoM") were constituted to consider clearances for the mine development. Pending the decision on the block / alternatives, in the interim, the Company anticipates sourcing alternate supplies from Coal India as a basis for the initial operations of the project.

Progress on development projects:

·     Construction to begin at the 120 MW KSK Dibbin power project as below:

o  Competitive bids invited for selection of construction contractors.

o  Efforts being made for the necessary debt tie-up.

o  Environmental clearance expected during first quarter of 2011-12.

o  Construction to commence thereafter.

·     Progress at JR powergen

o  The Company reached a critical milestone with the land acquisition process and the next few months should witness sustained progress on the same in collaboration with the local government.

o  The Company also intends to work on the environmental clearance process before progressing the same for financing.

·     Renewable business through a new subsidiary

o  The Company has incorporated a subsidiary KSK Green Energy Pte Limited in Singapore to make direct investment in new renewable power generation opportunities.

o  Collaborative arrangements have been put in place with various wind turbine suppliers of Chinese origin, for potential supplies to various new generation sites.

Progress on Financing:

·     The Company placed 12,254,902 new ordinary shares of 0.1p each in the capital of the Company which was well supported by institutional investors. Following the placing, the direct holding of Sayi Power Energy Limited (in which Directors Mr. S. Kishore and Mr. K.A. Sastry are interested) in the Company stood at 63.76%.

·     KSK Energy Ventures Limited ("KSKEV"), the Indian listed subsidiary has raised INR 1 billion from L&T Infrastructure Finance Company Limited.

·     IFCI, a leading financial institution has subscribed to INR 2.5 billion in the equity of KSK Mahanadi Power Company Limited.

·     The tie-up of the entire sub ordinate debt of INR 8.1 bn to part fund the KSK Mahanadi Power Company has been achieved, with documentation expected to be completed shortly.

Progress on consolidation of stake in Indian subsidiary:

·      The Company through its unlisted Indian Subsidiary KSK Energy Company has further consolidated its holdings in its Indian listed subsidiary KSKEV from the existing 52.78% to 54.94% through the further acquisition of 8,000,000 equity shares.

Outlook

We have faced short term volatility across our operations but the current outlook is positive, with the Company now continuously progressing across all areas on the various goals set for itself.

The Group with its implementation of more than 900 MW by March 2011 would achieve a critical mass of project execution capabilities in India and hope to leverage the same in the execution of the 3.6 GW power project. The Group recognizes that with various government policy changes and enhanced local activism, it has to continuously evolve its approaches for successful completion of its projects under construction. This shall be the core focus of the Company until the first quarter of 2012-13, when the first 600 MW of the Mahanadi power project is expected to synchronise with the Grid.

For further information, please contact:

KSK Power Ventur plc Mr. S. Kishore, Executive Director Mr. K. A. Sastry, Executive Director	[phone]
Arden Partners plc                                                  Richard Day / Adrian Trimmings	[phone]
Financial Dynamics                                                       Jonathan Brill / Ed Westropp	[phone]

 

END

 

 

IMSGGUACPUPGUQA