Final Results

RNS Number : 8231O

OPG Power Ventures plc

05 July 2010

 



5^th July 2010

OPG Power Ventures PLC

("the Group", "the Company" or "OPG")

Final Results for the Year to 31 March 2010

OPG, the developer and operator of Group Captive power plants in India, is pleased to announce its final results for the year ended 31^st March 2010.

Operational Highlights

·      Successful commissioning of the 77 MW power station near Chennai shortly after the year end, in April 2010;

·      Operating capacity of OPG's plants now stands at 107 MW, an increase of over 250 % from the previous level of approximately 30 MW

·      Environmental clearance in respect of the 2 x 150 MW Kutch project now received, with site work to commence in August 2010;

·      All-India peak power deficit widens to 13.3 % as at March 2010, compared to 11.1 % at the same date in 2009, as a result of continuing economic growth and strong performance from the manufacturing sector;

Financial Highlights

·      Group revenue of GBP 12.87 Million (2009: GBP 7.31 Million), an increase of 76%;

·      Income from continuing operations before tax, expenses relating to projects under construction and non-recurring items up by 15% to GBP 6.62 Million (2009: GBP 5.75 Million);

·      Cash and cash equivalents as at 31^st March 2010 stood at GBP 14.17 million;

·      Increase in average tariffs realized in short term markets to Rs. 5.54 per Kwh (2009: Rs 4.11), an increase of 35%.

Commenting on the progress made to date and the outlook for OPG, Mr M. C. Gupta, Chairman, said, "With the increased throughput of power available from the 77 MW facility and, given buoyant conditions in the power market, the current year promises increased growth and scale of operations for the Group.  OPG looks to the year ahead with confidence and enthusiasm."

For further information, please visit www.opgpower.org/ or contact:

OPG Power Ventures PLC
Arvind Gupta (Managing Director)	[phone] [phone] [phone]
V. Narayan Swami (Finance Director)	[phone] [phone] [phone]
Martin Gatto (Senior Non Executive Director)	[phone]
Cenkos Securities (Nominated Adviser & Broker)	[phone]
Stephen Keys/ Camilla Hume
Tavistock Communications	[phone]
Simon Hudson / James Midmer	[phone]

Chairman's Statement

I have pleasure in presenting the results for the financial year ended 31^st March 2010 which is the second set of full year results since the listing of the Company on AIM in May 2008.

Financial Results

Group revenue of GBP 12.87 Million (2009: GBP 7.31 Million) includes a full year contribution from the 10 MW waste heat plant commissioned in September 2008. The revenue for the year includes sale of power in the short term market at attractive prices.

Income from continuing operations before tax, period expenses relating to projects under construction and non-recurring items was GBP 6.62 Million (2009: GBP 5.75 Million).

Progress

The principal milestone attained by your Company since the previous year's report has been the commissioning, in April 2010, of the 77 MW coal fired power plant near Chennai.  The Company has thus delivered the first of the two major projects for which resources were raised in the AIM listing.

Following this development, the operating capacity of your Company's plants now stands at 107 MW, an increase of over 250 % from the previous level of about 30 MW.  The commissioning of the 77 MW plant represents the first step in the transformation of your company to a power producer, whose stated aim is to achieve a critical mass of 400 MW and beyond over the next few years.

The Environmental Clearance for the Gujarat project has now been obtained and construction on site will commence shortly.

The Indian Economy & the Power Sector

In my previous report to shareholders, I referred to a growth rate of 6.7 % attained by the Indian Economy in 2008 - 09, a significant result given the overall global economic conditions prevailing during that period.  Early indications are that the growth rate is likely to be 7.5 % if not higher for the year 2009 - 10, a  significant level of performance in the context of the slow growth in major world economies and second only to that of China among the BRIC countries.

The growth rate announced for the most recent quarter (January - March 2010) is still higher at 8.6 % and, within this overall growth rate, growth in the manufacturing sector has been higher at 10.3 %, indicating strong consumer spending on cars and other manufactured goods.  The corollary to this rate of industrial growth is, of course, increased demand for power with a multiplier effect, usually thought to be about 1.2 times the growth in other sectors.

Per capita electricity consumption has risen from 566 Kwh in 2003 to 704 Kwh in 2008.  However, the creation of new generating capacity of some 27 GW (2007 - 10) suggests the 5 year target of 78 GW (2007 -12) will not be met.  This is underscored by an all-India peak power deficit of 13.3 % as at March 2010 (2009: 11.1 %).  As a result, investment in power generation continues to be a highly promising proposition.

The Current Year 

With the increased throughput of power available from the 77 MW facility and, given buoyant conditions in the power market, the current year promises increased growth and scale of operations for the Group.  OPG looks to the year ahead with confidence and enthusiasm.

M. C. Gupta

Chairman

4^th July 2010

Chief Executive's Review of Operations

The commissioning of the 77 MW power plant in April 2010, immediately following the financial year end, rounded off another year of progress for your Company.  With an operating capacity today of 107 MW, we look ahead to the completion of the 2 x 150 MW development under way in Kutch, Gujarat.

Significant Developments during the Period

The newly commissioned 77 MW facility is undergoing a period of stabilization.  We expect to stabilize the output at high levels.

As previously announced, the Environmental clearance in respect of the 2 x 150 Mw Kutch project has now been received.  Site work will commence in August 2010.  Tata Power Ltd are taking steps to expedite the implementation of the project.  An assured supply of coal from the public sector coal mines for the life of the plant has been obtained from the Government of India for 70 % of the fuel requirements of the Kutch plant.  This linkage spells enhanced fuel security and diversity for this unit when it goes on stream.

Following the Carbon Credit registration in respect of the 19.4 MW gas fired plant at Mayavaram received last year, a process of validation and verification is expected to be completed in about three months.  Certified Emission Reductions will become available for trading thereafter.  For the 10 MW waste heat fired facility near Chennai, a similar process of validation of the emission levels is also under way on completion of which, Verified Emission Reductions will become available.

Financial Review

The Group's revenue during the year ended March 31, 2010 was GBP 12.87 Million (2009: GBP 7.3 Million).  Profit from Continuing Operations before Tax, period expenses relating to projects under construction and extraordinary items at GBP 6.62 Million (2009: GBP 5.75 Million) was after provision of GBP 1.20 Million towards amortization for the period of fair value cost of stock options awarded, a non cash item (2009: Nil).  The Net Income after Taxes amounted to GBP 4.02 Million (2009: GBP 5.33 Million inclusive of a one time release of negative goodwill of GBP 1.49 Million) with EBITDA for the period (prior to deduction of pre-operative expenses on new projects in the course of construction) being GBP 5.43 Million.  Cash as at 31 March 2010 was GBP 14.17 Million.

Operational Review

The 19.4 MW gas-cum-waste heat fired plant at Mayavaram operated satisfactorily for the seventh year running.  On account of a reduction in gas flow from the on shore fields, the plant output levels for the year were 71 % as against 83 % in the previous year.  During the year ahead the gas flow position has improved and a higher output level for the plant is forecast.

The 10 MW waste heat fired facility operated satisfactorily during its second year of continuous operation.  Output levels averaged a stable 78 % of capacity.

A sizeable proportion of the total generation from these two plants was sold on the short term markets at higher realizations.  The average price earned during the year was Rs. 5.54 per Kwh (2009: Rs 4.11).

Projects in the Pipeline

We reported last year that further expansion of the facilities at the Chennai 77 MW plant and at the Kutch 2 x 150 MW development was under active consideration.

In Chennai, it will be possible to add three further units of 77 / 80 MW at the existing site.  Aside from the availability of land, we hold final Environmental clearance in respect of an additional unit.  Firm offers of debt have been obtained in respect of all three additional units as well as coal linkages from the Government of India. 

Outlook

With the enhanced generation capacity and the buoyant power markets, we anticipate an increase in operating and financial performance in 2010 - 11.  The key next step for us is to commence ground works on our site at Kutch in August.  Our focus will continue to remain the development and operation of power generation assets and the achievement of higher sale realizations.

Arvind Gupta

Chief Executive

4^th July 2010

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2010

	Notes	Year ended 31 March 2010		Period ended 31 March 2009 (As restated*)
		Group	Company	Group	Company
		£	£	£	£
REVENUES
Operating Revenue	3.2	12,872,597	-	7,310,559	-
Cost of power generation		(5,358,089)	-	(2,534,696)	-
Gross Profit		7,514,508	-	4,775,863	-
EXPENSES
Other gains and losses	3.3	1,028,559	(102,531)	1,298,249	694,240
Employee costs	3.2	(1,373,055)	(1,329,683)	(113,792)	(86,701)
Distribution Cost		(501,021)	-	(172,582)	-
Other expenses		(495,104)	(259,443)	(496,602)	(326,127)
Depreciation	3.8	(195,461)	-	(54,951)	-
Financial income	3.5	1,297,504	145,399	2,718,568	989,110
Financial Expenses	3.6	(654,461)	(1,230)	(2,206,738)	-
Release of negative goodwill	3.4	-	-	1,493,760	-
Pre Operative Expenses (Relating to projects under construction)		(1,171,626)	-	(911,559)	-
Pre-tax Income / (Loss)		5,449,843	(1,547,488)	6,330,216	1,270,522
Income  Tax Expense	3.7	(1,432,338)	-	(997,407)	-
Net Income / (Loss) after taxes		4,017,505	(1,547,488)	5,332,809	1,270,522
Other Comprehensive Income
Exchange differences on translating foreign operations		6,497,808	(2,594,435)	3,010,783	(3,192,552)
Net value gain on available for sale financial assets, net of taxes		56,041	-	(231,685)	-
Other comprehensive income / (loss) for the year / period, net of tax		6,553,849	(2,594,435)	2,779,098	(3,192,552)
Total comprehensive income / (loss) for the year / period		10,571,354	(4,141,923)	8,111,907	(1,922,030)
Profit / (loss) attributable to
Equity holders of parent		926,473	(1,54,7488)	3,309,434	1,270,522
Non controlling interest		3,091,032	-	2,023,375	-
		4,017,505	(1,547,488)	5,332,809	1,270,522
Total comprehensive income / (loss) attributable to
Equity holders of parent		6,750,867	(4,141,923)	5,825,573	(1,922,030)
Non controlling interest		3,820,487	-	2,286,334	-
		10,571,354	(4,141,923)	8,111,907	(1,922,030)
Basic and diluted earnings per share for profit attributable to the equity holders of the company during the year (expressed as Pence per share)
Basic earnings per share	3.17	0.32	(0.54)	1.24	0.47
Diluted earnings per share	3.17	0.32	(0.54)	1.24	0.47

* Certain items in the previous year (2009) financial statements have been restated as detailed in Note 3.24

STATEMENT OF FINANCIAL POSITION

As at 31 March 2010

	Notes	As at 31 March 2010		As at 31 March 2009 (As restated*)
		Group £	Company £	Group £	Company £
ASSETS
Non current assets
Property, plant and equipment	3.8	15,169,634	-	13,556,906	-
Capital Work in Progress	3.9	49,847,157	-	29,174,655	-
Capital advances	3.1	21,160,152	-	6,705,770	-
Other Assets	3.11	5,470,257	7,887	4,316,518	5,000
Deferred Tax Asset	3.7.1	51,505		60,909
Investment in subsidiaries		-	2,410	-	2,410
Total non current assets		91,698,705	10,297	53,814,758	7,410
Current Assets
Inventories	3.13	1,867,915	-	41,711	-
Trade and other receivables	3.12	3,089,084	274,265	1,400,329	13,213
Current tax assets		2,003,214	-	751,309	-
Financial Assets	3.14	12,977,604	-	8,478,766	-
Other Assets	3.12	7,113,514	61,145,096	5,230,748	67,386,189
Cash and Cash Equivalents	3.15	14,168,453	7,072,048	32,319,842	4,039,991
Restricted Cash		1,481,894	-	1,403,126	-
Total current assets		42,701,678	68,491,409	49,625,831	71,439,393
Total assets		134,400,383	68,501,706	103,440,588	71,446,803
EQUITY AND LIABILITIES
Capital and Reserves
Issued Capital	3.16	42,187	42,187	42,187	42,187
Reserves		76,490,815	68,691,738	69,459,462	70,079,213
Retained earnings		4,235,907	(276,966)	3,309,434	1,270,522
Equity attributable to owners of the Company		80,768,909	68,456,959	72,811,083	71,391,922
Non-Controlling Interest		7,816,771	-	3,996,285	-
Total Equity		88,585,680	68,456,959	76,807,368	71,391,922
Non current liabilities
Interest-bearing loans and borrowings	3.18	30,800,245	-	19,967,353	-
Other Liabilities		2,261,141	-	1,935,743	-
Deferred tax liabilities	3.7.1	514,235	-	446,451	-
Total non current liabilities		33,575,621	-	22,349,547	-
Current liabilities
Trade and other payables		6,567,099	44,747	799,498	54,881
Interest-bearing loans and borrowings	3.18	3,882,815	-	2,481,114	-
Provision for Taxation		1,599,168	-	942,826	-
Other liabilities		190,000	-	60,235	-
Total current liabilities		12,239,082	44,747	4,283,673	54,881
Total liabilities		45,814,703	44,747	26,633,220	54,881
Total equity and liabilities		134,400,383	68,501,706	103,440,588	71,446,803

* Certain items in the previous year (2009) financial statements have been restated as detailed in Note 3.24

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year to 31 March 2010

GROUP	Share Capital	Share capital	Share Premium	MTM gain / (loss) on AVS	Foreign Currency Translation reserve	Equity settled employee benefits reserve	Retained earnings	Total of Parent equity	Non-Controlling Interest	Total Equity
	No.	£	£	£	£		£	£	£	£
Opening Balance	170,068,027	-	-	-	-	-	-	-	1,538,852	1,538,852
Proceeds from issue of ordinary shares	116,921,768	42,187	70,135,875	-	-	-	-	70,178,062	171,099	70,349,161
Share issue expenses adjusted	-	-	(3,192,552)	-	-	-	-	(3,192,552)	-	(3,192,552)
As Restated
Profit for the period	-	-	-	-	-	-	3,309,434	3,309,434	2,023,375	5,332,810
Other comprehensive income for the period	-	-	-	(151,716)	2,667,855	-	-	2,516,139	262,959	2,779,098
Total comprehensive income for the period	-	-	-	(151,716)	2,667,855	-	3,309,434	5,825,573	2,286,334	8,111,907
Balance at 31 March, 2009	286,989,795	42,187	66,943,323	(151,716)	2,667,855	-	3,309,434	72,811,083	3,996,285	76,807,368
Opening Balance	286,989,795	42,187	66,943,323	(151,716)	2,667,855	-	3,309,434	72,811,083	3,996,285	76,807,368
Profit for the year	-	-	-	-	-	-	926,473	926,473	3,091,032	4,017,504
Other comprehensive income for the year	-	-	-	48,529	5,775,866	-	-	5,824,395	729,454	6,553,849
Total comprehensive income for the year	-	-	-	48,529	5,775,866	-	926,473	6,750,867	3,820,486	10,571,353
Share based compensation costs (Refer Note 3.17.1)	-	-	-	-	-	1,206,959	-	1,206,959	-	1,206,959
Balance at 31 March, 2010	286,989,795	42,187	66,943,323	(103,188)	8,443,721	1,206,959	4,235,907	80,768,909	7,816,771	88,585,680

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year to 31 March 2010

COMPANY	Share Capital	Share Capital	Share Premium	MTM gain / (loss) on AVS	Forign Currency Translation reserve	Equity settled employee benefits reserve	Retained Earnings	Excess of share of assets  acquired over acquisition cost	Total shareholders equity
	No.	£	£	£	£	£	£	£	£
Opening Balance	170,068,027	-	-	-	-	-	-	-	0
Proceeds from issue of ordinary shares	116,921,768	42,187	70,135,875	-	-	-	-	-	70,178,062
Share Issue Expenses Adjusted	-	-	(3,192,552)	-	-	-	-	-	(3,192,552)
Other comprehensive income for the year	-	-	-	-	3,135,891	-	-	-	3,135,891
Profit for the period	-	-	-	-	-	-	1,270,522	-	1,270,522
Balance as at 31 March 2009	286,989,795	42,187	66,943,323	0	3,135,891	0	1,270,522	-	71,391,922
Balance as at 1 April 2009	286,989,795	42,187	66,943,323	-	3,135,891	-	1,270,522	-	71,391,922
Other comprehensive income for the year	-	-	-	-	(2,594,435)	-	-	-	(2,594,435)
Profit for the year	-	-	-	-	-	-	(1,547,488)	-	(1,547,488)
Share based compesnation costs (Refer Note 3.17.1)	-	-	-	-	-	1,206,959	-	-	1,206,959
Balance as at 31 March 2010	286,989,795	42,187	66,943,323	0	541,456	1,206,959	(276,966)		68,456,959

STATEMENT OF CASH FLOWS

For the year ended 31 March 2010

		Year to 31 March 2010		Period to 31 March 2009 (As restated*)
	Notes	Group	Company	Group	Company
		£	£	£	£
Cash flows from operating activities
Profit / Loss for the year / period		4,017,505	(1,547,488)	4,638,569	1,270,522
Income tax expense		1,432,338	-	997,407	-
Financial Expenses		373,359	-	2,206,738	-
Financial Income		(1,251,252)	(145,399)	(2,718,568)	(989,110)
Other gains and losses		(730,329)	-	(604,009)	-
Release of negative goodwill		-	-	(1,493,760)	-
Share based compensation costs		1,206,959	1,206,959	-	-
Depreciation		625,324	-	398,830	-
		5,673,904	(485,928)	3,425,207	281,412
Movements in Working Capital
(Increase) / Decrease in trade and other receivables		(1,418,191)	(261,052)	(805,564)	(13,212)
(Increase) / Decrease in inventories		(1,636,191)	-	18,319	-
(Increase) / Decrease in other current assets		988,313	(4,346)	(2,070,063)	(5,000)
Increase / (Decrease) in trade and other payables		5,139,417	(10,135)	23,741	54,881
Increase / (Decrease) in Other liabilities		(10,087,192)	-	(620,314)	-
Cash (used in) / generated from operations		(1,339,941)	(761,461)	(28,674)	318,081
Interest paid		(372,025)	-	(2,206,738)	-
Income Taxes paid, net of refunds		(1,913,470)	-	(418,584)	-
Net Cash Generated by / (used in) Operating activities		(3,625,435)	761,461)	(2,653,996)	318,081
Cash flow from investing activities
Acquisition of property, plant and equipment		(29,017,680)	-	(32,452,626)	-
Sale of property, plant and equipment		2,493	-	-	-
Advances Net		17,759,978	6,242,553	(6,225,204)	(67,386,189)
Finance Income		1,165,040	145,399	2,614,831	986,700
Dividend income		944,839	-	604,009	-
Movement in restricted cash		385,765	-	(970,388)	-
Net cash outflow on acquisition of subsidiaries		(10,582,408)	-	(8,052,207)	-
Purchase of Investments (Net of sales)		(3,222,067)	-	-	-
Increase / Decrease in land lease Deposits		1,260	-	(2,866,112)	-
Net cash (used) / generated by investing activities		(22,562,779)	6,387,952	(47,347,697)	(66,399,489)
Cash flows from financing activities
Proceeds from issue of Ordinary Shares		-	-	70,348,035	70,178,060
Proceeds from borrowings		14,249,387	-	14,330,099	-
Repayment of borrowings		5,205,136	-	(3,290,759)	-
Payment for share issue costs		-	-	(3,192,552)	(3,192,552)
Net cash provided by financing activities		9,044,250	-	78,194,823	66,985,508
Net increase / (decrease) in cash and cash equivalents		(17,143,964)	5,626,491	28,193,130	904,100
Cash and cash equivalents at the beginning of the year / period		32,319,842	4,039,991	1,358,882	-
Effect of Exchange rate changes on the balance of cash held in foreign currencies		(1,007,425)	(2,594,434)	2,767,830	3,135,891
Cash and cash equivalents at the end of the year / period	3.15	14,168,453	7,072,048	32,319,842	4,039,991

* Certain items in the previous year (2009) financial statements have been restated as detailed in Note 3.24

Notes to the Accounts

Note 1 : Basis of Preparation

1.1  General Information

OPG Power Ventures Plc.  (the "Company" or "OPGPV") is a company domiciled  and incorporated in the Isle of Man on 17 January 2008 and was admitted to the Alternative Investment Market (AIM) of London Stock Exchange on 30 May 2008. The Company had raised approximately £ 65.10 Million (before admission costs) through a public offering in the previous period.

The Consolidated financial statements for OPG Power Ventures Plc (the "Group") and financial statements for the Company have been prepared for the year ended 31 March 2010

As on 31 March 2010 the following entities forms part of the Group:

Company *	Immediate Parent	Country of Incorporation	Voting Rights (%)	Economic Interest (%)
Gita Energy Private Limited ("GE Cyprus")	OPG Power Ventures Plc	Cyprus	100	100
Gita Holdings  Private Limited ("GH Cyprus")	OPG Power Ventures Plc	Cyprus	100	100
OPG Power Generation Private Limited ("OPGPG")	Gita Energy Private Limited and Gita Holdings Private Limited	India	35.86 35.90	49.5 49.5
OPG Power Gujarat Private Limited ("OPGG")	Gita Energy Private Limited and Gita Holdings Private Limited	India	29.19 36.71	43.85 55.15
*OPG Renewable Energy Private Limited ("OPGRE")	Gita Energy Private Limited and Gita Holdings Private Limited	India	11 11	16.5 16.5
*OPG Energy  Private Limited ("OPGE")	OPG Power Generation Private Limited	India	29.78	43.78
Gita Power & Infrastructure Private Limited ("GPIL")	Gita Holdings Private Limited	India	100	100

Note:

*The ownership structure results in a "Non Controlling" voting and economic stake in OPGE and OPGRE, with captive customers holding the majority of shares.  However, voting agreements have been entered into with key shareholders - Tamil Nadu Property Developers and Salem Food Products by which there is a commitment that these shareholders will exercise all voting rights in accordance with the directions of OPGPG (in the case of OPGE) and G E Cyprus (in the case of OPGRE).  This gives the Group effective voting control about 66% of OPGRE shares and 67% of OPGE shares. As such, the results of OPGE and OPGRE will be consolidated in producing group accounts for OPGPV.

The activities of the various entities listed above are as detailed below:

Company	Activity
OPGPV	"The Company". Invests in and controls the development and operation of power generation businesses in India.
GE Cyprus	Subsidiary Of The Company
GH Cyprus	Subsidiary Of The Company
OPGE	19.4 MW Power Plant
OPGRE	10MW Power Plant
OPGPG	77MW Power Plant(in construction)
OPGG	2*150 MW Power Plant(in construction)
GPIL	80MW Power Plant( in construction)

Investments into one of the entities GPIL, was made during the year. The consideration paid was £ 3.13 million, being the net worth of the Company as on the date of acquisition and there was no goodwill arising on this investment.

The Company's registered office is at IOMA House, Hope Street, Douglas, Isle of Man.

The Group is primarily engaged in the business of development, construction and operation of Power generation plants for the supply of power directly to the State Electricity Boards, Public Sector Undertakings and Industrial consumers. The business objective of the Group is to focus on the power generation business within India and thereby to provide reliable, cost effective power to industrial consumers and other users under the 'Open Access' provisions mandated by the Government of India and applicable to all producers of power.

Note 2 : Significant accounting policies

2.1  Adoption of New and Revised Standards

2.1.1 Standards and Interpretations effective in the Reporting Period

The following new and revised Standards and interpretations have been adopted in these consolidated financial statements. Their adoption has not had any significant impact on the amounts reported in these consolidated financial statements but may affect the accounting for future transactions or arrangements.

IFRS 8: Operating Results	IFRS 8 is a disclosure Standard that requires re-   designation of the Group's reportable segments   based on the segments. The Managing Director of the Group is the Chief Operating Decision Maker (CODM) to allocate resources and assess   performance.
Amendments to IFRS 2: Share-based Payment -  the Vesting Conditions and Cancellations	The amendments clarify the definition of vesting conditions for the purposes of IFRS 2, introduce concept of 'non- vesting' conditions, and clarify the accounting treatment for cancellations.
IAS 23 (as revised in 2007) - Borrowing Costs	The principal change to the Standard was to eliminate the option to expense all borrowing costs when incurred. This change has had no impact on these consolidated financial statements because it has always been the Group's accounting policy to capitalize borrowing costs incurred on qualifying assets
Amendments to IAS 32: Financial Instruments: Presentation and IAS 1 Presentation of Financial  Statements - Puttable Financial instruments and Obligations Arising on Liquidation	The revisions to IAS 32 amend the criteria for debt/equity classification by permitting certain puttable financial instruments and instruments (or components of instruments) that impose on an  entity an obligation to deliver to another party a pro-rata share of the net assets of the entity only on liquidation, to be classified as equity, subject to specified criteria being met.
IFRIC 13: Customer Loyalty Programmes	The Interpretation provides guidance on how entities should account for customer loyalty programmes by allocating revenue on sale to possible future award attached to the sale.
IFRIC 16: Hedges of Net Investment in a Foreign operation.	The Interpretation provides guidance on the detailed          requirements for net investment hedging for certain                hedge accounting designations
IFRIC 9	Amendment to IFRIC 9 (revised): Reassessment of Embedded Derivatives relating to assessment of embedded derivatives in case of reclassification of financial assets out of the FVTPL category;
IFRS 1	(Revised) First time Adoption of IFRS - Amendment relating to cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate;

2.1.2 Standards and Interpretations in issue but not yet effective

At the date of authorization of these consolidated financial statements, the following Standards and Interpretations were in issue but not yet effective:

IFRS 1	(Revised) First time Adoption of IFRS - Amendment on additional exemptions for first-time adopter (effective for annual periods beginning on or after January 1,2010);
IFRS 1	(Revised) Limited exemption from comparatives IFRS 7 disclosure for first time adopters - effective for annual periods beginning on or after July 1, 2010
IFRS 2	(Revised) Share-based Payment- Amendment relating to Group cash- settled share based payment (effective for annual periods beginning on or after January 1, 2010);
IFRS 9	Financial Instruments: Classification and Measurement (intended as complete replacement for IAS 39 and IFRS 7) (effective for annual periods beginning on or after January 1, 2013);
IAS 24	(Revised) Related Party Disclosures - Amendment on disclosure     requirements for entities that are controlled, jointly controlled or significantly influenced by a Government (effective for annual periods beginning on or after January 1,2011)
IAS 27	(Revised) Consolidated and Separate Financial Statements - Amendment relating to Cost of an Investment in a Subsidiary (effective for annual periods beginning on or after July 1, 2009);
IAS 32	(Revised) Financial Instruments: Presentation - Amendments relating to classification of Rights Issue (effective for annual periods beginning on or after February 1,2010);
IAS 39	(Revised) Financial Instruments: Recognition and Measurement - Amendments relating to Eligible Hedged Items (such as hedging inflation risk and Hedging with options) (effective for annual periods beginning on or after July 1, 2009);
Others	Amendments to IFRS 2, IFRS 5, IFRS 8, IAS I, IAS 7, IAS 17, IAS 36, IAS 38 and IAS 39 resulting from April 2009 Annual Improvements to IFRSs (Majority effective for annual periods beginning on or after January 1,2010);
IFRIC 14	Amendment to IFRIC 14: IAS 19 The limit on a defined Benefit Asset - Minimum Funding Requirement and their interaction (effective for annual periods beginning on or after January 1, 2011);
IFRIC 17	Distributions of Non-cash Assets to Owners (effective for annual periods beginning on or after July 1, 2009); and
IFRIC 19	Extinguishing Financial Liabilities with Equity Instruments (effective for annual periods beginning on or after July 1, 2010).

The management anticipates that the adoption of these Standards and Interpretations will have no material financial impact on the consolidated financial statements of the Group.

2.2  Basis of Preparation and Statement of Compliance with International Financial Reporting standards

The consolidated and separate financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations issued by the International Accounting Standard Board.

The Group and Company financial statements cover the financial year from 1 April 2009 to 31 March 2010.The comparatives represents the period 17 January 2008, being the date of incorporation of OPG Power Ventures Plc., to 31 March 2009 and incorporate the financial year from 1 April 2008 to 31 March 2009 in respect of the Indian subsidiaries.

2.3  The Basis of Presentation and Accounting Policies used in preparing the historical financial information

These accounting policies have been consistently applied to the results, gains and losses, assets, liabilities and cash flows of all entities included in the consolidated financial statements for all the periods presented unless otherwise stated. The financial statements are presented in Great Britain Pounds (GBP/£)

The financial information has been prepared on an historical cost basis. In the process of applying the Group's accounting policies, management is required to make judgments, estimates and assumptions that may affect the financial statements. Management believes that the judgments made in the preparation of the historical financial information are reasonable. Actual results could materially differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Judgments made by management in the application of IFRS that have significant effect on the historical financial information and estimates with a significant risk of material adjustment in the next year are discussed in note 3.20. Also refer Policy 2.2.

2.4  Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the Company made up to 31^st March each year.

Intra-group balances and transactions and any resulting unrealised gains arising from intra-group transactions are eliminated on consolidation. Unrealised losses resulting from intra-group transactions are also eliminated unless cost cannot be recovered. Amounts reported in the financial statements of the subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Controlled entities are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The excess of cost of acquisition over the group's interest in the net value of the identifiable assets, liabilities and contingent liabilities of the subsidiaries on the date of acquisition is accounted as Goodwill arising on consolidation. If, after reassessment, the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit. Goodwill is initially recognized as an asset at Cost and subsequently measured at cost less any accumulated impairment losses.

Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. The interests of non controlling shareholders may be initially measured either at fair value or at the non-controlling interests' proportionate share of the fair value of the acquiree's identifiable net assets. The choice of measurement basis is made on an acquisition by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.

2.5  Foreign Currency

2.5.1       Translation to Presentation Currency

The functional currency of the Indian subsidiaries in Indian Rupee (INR) and Cyprus and IOM Company is Great British Pound (GBP).

Functional and presentation currency: Items included in the financial statements in each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in Great Britain Pound (£), which is the Company's functional and presentation currency.

At the reporting date the assets and liabilities of the Indian entities are translated into the presentation currency, which is the Great Britain Pound (£) at the rate of exchange ruling at the balance sheet date and the income statement is translated at the average exchange rate for that year. Exchange differences arising, if any, are classified as equity and recognised in the Group's foreign currency translation reserve. Such exchange differences are recognized in profit or loss in the period in which the foreign operation is disposed of.

2.5.2       Foreign currency transactions

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognized in the Income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Goodwill and fair value adjustments, arising on consolidation of financial statements and presentation of financial instruments acquired other than by subscription of subsidiaries, are treated as assets of the purchasing entity.

Goodwill is measured at cost less any accumulated impairment losses. Impairment review is performed at least annually. Any impairment is recognized immediately in the income statement and is not subsequently reversed.

On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation),all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss. Any exchange differences that have previously been attributed to non-controlling interests are derecognised, but they are not reclassified to profit or loss.

In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. of associates or jointly controlled entities not involving a change of accounting basis), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

2.6  Property, Plant and Equipment

2.6.1       Owned assets    

Property, Plant and Equipment are stated at cost of acquisition less accumulated depreciation. Direct cost is capitalized until the asset is ready for use and includes inward freight, duties and expenses incidental to acquisition and installation.

The cost of self constructed assets includes the cost of material and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing any items on and restoring the site on which they are located.

Parts of some items of property, plant and equipment require replacement at regular intervals. OPG recognizes in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred and correspondingly, any carrying amount of those parts that are replaced is derecognized.

Certain items of plant and equipment require the performance of regular major inspections for faults regardless of whether parts of the item are replaced. When each major inspection is performed, its cost is recognized in the carrying amount of the item of property, plant and equipment as a replacement and any remaining carrying amount of the previous inspection is derecognized. This occurs regardless of whether the cost of previous inspection was identified in the transaction in which the item was acquired or constructed. Where necessary, the estimated cost of a future similar inspection is be used as an indication of what the cost of the existing inspection component was when the item was acquired or constructed.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized within "other gains and losses" for gains and "other operating expenses" for losses in the statement of income.

2.6.2       Depreciation

Depreciation on property, plant and equipment is provided based on the straight line method over the economic useful life of assets as estimated by the management, on a pro-rata basis. The economic useful lives estimated by the management for depreciation of the assets are as under:

Asset	Estimated useful life (years)
Building	30
Plant and Machinery	4-30
Furniture and Fixtures	5-15
Office Equipments	3-10
Vehicles	5-11
Computers	3

The useful life of property, plant and equipment is reviewed annually and, wherever a change is made to the estimates of useful life of an asset, the depreciation charge is adjusted.

Leasehold improvements are depreciated over the primary period of the lease or estimated useful lives of the assets whichever is less. Assets under construction are not depreciated, as they are not ready for use.

2.6.3       Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Transaction cost incurred on raising long term borrowings are deferred in the year of payment and are capitalized as part of costs of the qualifying asset and depreciated over the useful life on straight line method. 

Borrowing cost, including amortization of transaction cost directly attributable to the acquisition or construction of qualifying property, plant and equipment are capitalized as part of the cost of asset when it is probable they will result in future economic benefit and the cost can be measured reliably.

2.6.4       Impairment of Property, Plant and Equipment

The Group's property, plant and equipment are subject to impairment testing.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.

All individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognized for the amount by which the assets or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell and value in use, based on an internal discounted cash flow evaluation. The impairment loss is charged pro rata to the assets in the cash-generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist.

Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimate used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

2.7  Financial Assets

Investments are recognized and derecognized on the date of trade where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL), 'held-to-maturity' investments, 'available-for-sale' (AFS) financial assets and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

2.7.1       Held to Maturity Investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity. Investments are classified as held-to-maturity if it is the intention of Group's management to hold them until maturity. Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method. In addition, if there is objective evidence that the investment has been impaired, the financial asset is measured at the present value of estimated cash flows. Any changes to the carrying amount of the investment are recognized in income statement.

2.7.2       Available for Sale Financial Assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Regular purchases and sales of financial assets are recognized on the trade-date - the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through income statement. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available for sale financial assets are subsequently carried at fair value. Loans and receivables are carried at amortized cost using the effective interest method.

Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognized in equity. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognized in equity are included in the income statement as 'financial expenses (gains and losses from investment securities)'.

Dividends on available-for-sale mutual fund units are recognized in the income statement as part of other income.

2.7.3       Impairment of Financial Assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. In case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for sale financial asset is calculated by reference to its fair value.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in Groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available for-sale financial asset recognised previously in equity is transferred to profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity.

2.8  Trade and other Receivables

Trade receivables are initially measured at fair value and subsequently measured at amortized cost using the effective interest rate method. They are as reduced by appropriate allowances for estimated irrecoverable amounts. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original term of the receivable. The amount of the provision is the difference between the carrying amount and the recoverable amount and this difference is recognized in the income statement. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

2.9  Inventories

Inventories are stated at lower of cost and net realizable value. The cost is based on the first-in-first-out principle and includes duties and taxes (other than those subsequently recoverable from taxing authorities), freight inward, handling and other costs directly attributable to the acquisition.

2.10        Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

2.11        Share Capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Equity instruments, convertible into fixed number of ordinary shares at a fixed pre-determined price, and which are exercisable after a specific period, are accounted for as and when such instruments are exercised. The transaction costs pertaining to such instruments are adjusted against equity.

2.12        Employee Benefits

Short term employee benefits obligations, including salary, are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short term cash bonus or profit sharing plans if the company has a present legal or constructive obligation to pay this amount as a result of the past service of the employee and the obligation can be estimated reliably.

The Group's net obligation in respect of gratuity includes amounts payable to employees on termination, resignation or retirement on completion of a minimum service period with the Group. The discount rate is the yield at the balance sheet date on government bonds that have maturity dates approximating to the terms of the Group's obligations. The calculation is performed by a qualified actuary using the projected unit credit method. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the income statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the income statement.

2.12.1     Share based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note ___. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that  the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.

.

2.13        Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

2.14        Trade Payables

Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

2.15        Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow to the Group, and revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable in accordance with the relevant agreements, net of discounts, rebates and other applicable taxes and duties.

Sale of power

Revenue from the sale of electricity is recognised when earned on the basis of contractual arrangement with the customers and reflects the value of units supplied including an estimated value of units supplied to the customers between the date of their last meter reading and period end.

Financial Income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable. Dividend income from investments is recognized when the shareholders' / units holders' rights to receive payment have been established. Foreign currency gains and losses are reported on a net basis

2.16        Operating lease payments

Payments made under non-cancellable operating leases are recognized in the income statement on a straight-line basis over the term of the lease. Payments made under cancellable operating leases are recognized as expense in the period in which they are incurred. 

.

2.17        Pre Operative Expenses

Adminsitration expenses, salaries, travels rents, rates, taxes and other professional fees incurred in respect in the plants under construction and not directly attributable to cost of assets constructed are expensed in the period in which they were incurred and has been included as Pre Operative expenses in the income statement.

2.18        Income Tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognized in the income statement except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities and tax base for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

2.19        Earnings per Share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. Refer Note 3.17 for the calculation of EPS.

2.20          Significant Estimates in the financial statements

The preparation of financial statements in conformity with IFRS requires management to make certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The principal accounting policies adopted by the Group in the consolidated financial statements are as set out above. The application of a number of these policies required the Group to use a variety of estimation techniques and apply judgement to best reflect the substance of underlying transactions.

The Group has determined that a number of its accounting policies can be considered significant, in terms of the management judgement that has been required to determine the various assumptions underpinning their application in the consolidated financial statements presented which, under different conditions, could lead to material differences in these statements.

The policies where significant estimates have been made are as follows:

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustments to the carrying amounts of assets and liabilities within the next financial year are discussed below:

• Recoverability of deferred tax assets: The recognition of deferred tax assets requires assessment of sufficient future taxable profit and consequent tax payments to realize the values stated

¤ Other financial liabilities: Interest-bearing loans and borrowings held by the Group are measured at amortised cost except where designated at fair value through profit and loss account.

¤ Uncollectability of trade receivables:  Analysis of historical payment patterns, customer concentrations, customer credit-worthiness and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required.

• Impairment tests: The determination of recoverable amounts of the CGUs assessed in the annual impairment test requires the Group to estimate of their fair value net of disposal costs as well as their value in use. The assessment of value in use requires assumptions to be made with respect to the operating cash flows of the CGUs as well as the discount rates.

Share based payments - In determining the fair value of the share based payments and the related charge to the statement of comprehensive income, certain assumptions have to be made about future events and market conditions. In particular, judgments were made about the likely number of options that would vest, and the fair value of the option granted, which si again dependent on other assumptions like market volatility, dividend policy, prevailing interest rates etc.

Note 3: Notes on Accounts forming part of the consolidated financial statements

3.1 Segment Reporting

The Group has adopted IFRS 8 Operating Segments with effect from 1 April 2009. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard (IAS 14 Segment Reporting) required an entity to identify two sets of segments (business and geographical), using a risks and returns approach, with the entity's 'system of internal financial reporting to key management personnel' serving only as the starting point for the identification of such segments.

Based upon the risks and returns of the Group and reviews done regularly by the chief operating decision maker, the Group has concluded that there is only one business segment, this being the generation and sale of electricity to customers. There are no segments classified based on other risks and rewards and the power plants are all only in India.

3.2 Revenue

	Year ended 31 March 2010		Period ended 31 March 2009
	Group   £	Company £	Group   £	Company £
Sale of Power	11,279,182	-	7,072,984	-
Sale of Service	236,226	-	237,575	-
Trading and Other Sales	1,357,189	-	-	-
Total	12,872,597	-	7,310,559	-

The revenue is derived from sales to government undertakings (65.61%) (Previous year 14.37%) and private sector customers (34.39%) (Previous year 85.63%). There is no individual customer who accounts for 10% or more of the total revenue except for two government undertakings which are considered sovereign risk free from default.

3.3 Other Gains and Losses

	Year ended 31 March 2010		Period ended 31 March 2009
	Group £	Company £	Group   £	Company £
Dividend Income	944,524	-	208,723	-
Provision for Tax no longer required, written back	-	-	394,492	-
Unclaimed amount written back	99,668	-	-	-
Unrealised Forex (loss) / Gain (Net)	(114,430)	(200,657)	694,240	694,240
Others	98,797	98,126	794	-
	1,028,559	(102,531)	1,298,249	694,240

3.4 Release of negative goodwill

During 2009, the Group acquired controlling interests in the Indian subsidiaries. On consolidation of the financial statements of the said subsidiaries with the parent company, the amounts of the identifiable net assets of the latter attributable to the group exceeded the consideration transferred by the way of equity and resulted in a surplus which was been recognized as release of negative goodwill in the Income statement.

3.5 Financial Income

	Year ended 31 March 2010		Period ended 31 March 2009
	Group  £	Company        £	Group                     £	Company        £
Bank Interest	3,361	1,840	1,031,518	989,110
Interest on Bank Deposits	1,017,756	-	1,593,356	-
Interest on loan	8,820	8,820	83,688	-
Interest on Lease Deposits	86,576	-	10,006	-
Profit on sale of Mutual Funds	46,252	-	-	-
Other income	134,739	134,739	-	-
Financial Income	1,297,504	145,399	2,718,568	989,110

3.6 Financial Expenses

	Year ended 31 March 2010		Period ended 31 March 2009
	Group £	Company £	Group £	Company £
Interest on short term  borrowings and Other financing costs	(186,753)	(1,230)	(1,355,020)	-
Interest on bank borrowings	(362,302)	-	(851,718)	-
Loss on sale of Mutual Funds	(105,406)	-	-	-
Financial Expenses	(654,461)	(1,230)	(2,206,738)	-

3.7 Income Tax Expense 

	Year ended 31 March 2010		Period ended 31 March 2009
	Group £	Company £	Group                 £	Company £
Current tax expense
Current tax	(1,416,412)	-	(870,849)	-
Deferred tax expense
Origination and reversal of temporary differences	(15,926)	-	(126,558)	-
Total income tax expense of the year / period	(1,432,338)	-	(997,407)	-

Reconciliation of Tax rates:

	Year ended 31 March 2010	Period  ended 31 March 2009
	Group                 £	Group £
Profit before tax	5,449,843	6,330,216
Indian corporate income tax rate	33.99%	33.99%
Income tax at standard rate	(1,852,402)	(2,151,640)
Differences on account of items taxed at zero/lower rates	420,064	1,154,233
Tax charge	1,432,338	997,407

The item "Differences on account of items taxed at zero/lower rates" in the above table represents the difference between notional Indian income tax at standard rate (not applicable to the Company and the Cyprus subsidiaries) on the consolidated profits before tax and the actual tax liability of the Indian subsidiaries.

The Company is subject to Isle of Man corporate tax at the standard rate of zero percent. As such, the Company's tax liability is zero. Additionally, Isle of Man does not levy tax on capital gains. However, considering that the Company's operations are entirely based in India, the effective tax rate of the Group has been computed based on the current tax rates prevailing in India. Further, a substantial portion of the profits of the Group's India operations are exempt from Indian income taxes being profits attributable to generation of power in India. Under the tax holiday the taxpayer can utilize an exemption from income taxes for a period of any ten consecutive years out of the fifteen years of commencement of the operations. The Group is subject to the provisions of Minimum Alternate Tax ('MAT') under the Indian Income taxes for the year ended 31 March 2010 and 2009. Accordingly, the Group calculated the tax liability for current taxes in India after considering MAT. The MAT Credit as at March 31, 2010 is £ 1.67 million and a 100% valuation allowance has been considered on a prudent basis. However, the Indian entities can avail credit of the MAT paid against future tax liabilities and can carry forward and set off within ten years from the end of the financial year in which MAT is paid.

3.7.1 Deferred Tax Assets and Liabilities

Recognized deferred tax assets and liabilities of the Group

Deferred tax assets and liabilities of the Group are attributable to the following:

	Assets		Liabilities
	As at 31 March 2010 (£)	As at 31 March 2009 (£)	As at 31 March 2010 (£)	As at 31 March 2009 (£)
Property, plant and equipment	-	-	(514,235)	(446,451)
Fair valuation of AVS securities	51,505	60,909	-	-
Net tax assets/(liabilities)	51,505	60,909	(514,235)	(446,451)

Movement in temporary differences during the year

	As at 1 April 2009	Recognised in income statement	Recognised in equity	Translation adjustment	As at 31 March 2010
Property, plant and equipment	(446,451)	(15,927)	-	(51,857)	(514,235)
MTM gain / (loss) on AVS	60,909	-	(7,482)	(1,922)	51,505
Deferred tax assets/(liabilities)	(385,542)	(15,927)	(7,482)	(53,779)	(462,730)

	As at 1 April 2008	Recognised in income statement	Recognised in equity	Translation adjustment	As at 31 March 2009
Property, plant and equipment	(290,095)	(126,558)	-	(29,798)	(446,451)
MTM gain / (loss) on AVS	-	-	(5,702)	66,611	60,909
Deferred tax assets/(liabilities)	(290,095)	(126,558)	(5,702)	36,813	(385,542)

3.8 Property, Plant and Equipment

	Land	Building	Plant and machinery	Furniture and fixtures	Office Equipments	Vehicles	Computer	Total
Gross Block
As of 1 April 2009	6,758,646	985,993	7,675,718	13,130	26,342	124,063	7,810	15,591,702
Additions during the year	974,219	-	30,664	10,656	16,643	25,414	15,932	1,073,528
Disposals during the year	-	-	(145,870)	-	-	(17,983)	-	(163,853)
Exchange Adjustment	626,327	83,550	710,692	1,217	1,192	11,497	1,972	1,436,447
As at 31 March 2010	8,359,192	1,069,543	8,271,204	25,003	44,177	142,991	25,714	17,937,824
Accumulated depreciation
As of 1 April 2009	-	159,867	1,833,000	3,436	12,567	22,391	3,534	2,034,795
Depreciation / impairment during the year	-	24,948	555,440	3,328	10,748	26,200	4,660	625,324*
Disposals during the year	-	-	(5,600)	-	-	(13,187)	-	(18,787)
Exchange Adjustment	-	22,988	96,086	727	2,313	3,674	1,070	126,858
As at 31 March 2010	-	207,803	2,478,926	7,491	25,628	39,078	9,264	2,768,190
Net book value
As of 31 March 2010	8,359,192	861,740	5,792,278	17,512	18,549	103,913	16,450	15,169,634

* Depreciation of £ 429,863 for the year on Plant & Machinery relating to OPG Energy Private Limited has been included within Cost of power Generation.

	Land	Building	Plant and machinery	Furniture and fixtures	Office Equipments	Vehicles	Computer	Total
Gross Block
As of 1 April 2008	215,628	961,777	6,683,629	4,347	23,640	15,332	-	7,904,353
Additions during the year	6,666,028	-	501,252	8,521	1,433	107,605	7,810	7,298,032
Disposals during the year	(84,489)	-	-	-	-	-	-	(89,872)
Exchange Adjustment	(38,521 )	24,216	490,837	262	1,269	1,126	-	479,189
As at 31 March 2009	6,758,646	985,993	7,675,718	13,130	26,342	124,063	7,810	15,591,702
Accumulated depreciation
As of 1 April 2008	-	122,801	1,364,112	907	4,918	5,833	-	1,498,571
Depreciation during the year	-	25,989	344,071	2,414	6,899	15,923	3,534	398,830#
Exchange Adjustment	-	11,077	124,817	115	750	635	-	137,394
As at 31 March 2009	-	159,867	1,833,000	3,436	12,567	22,391	3,534	2,034,795
Net book value
As of 31 March 2009	6,758,646	826,126	5,842,718	9,694	13,775	101,672	4,276	13,556,907

# Depreciation of £ 343,879 for the year on Plant & Machinery relating to OPG Energy Private Limited has been included within Cost of power Generation.

3.8.2 Assets pledged as Security

At 31 March 2010, properties with a carrying amount of £ 15.16 Million are secured against the Group's immoveable assets, present and future, including the property, plant and equipment. These loans are further secured by a floating charge on the movable assets and by the personal guarantee of a Director.

In addition OPG Energy has availed a bank facility against its receivables which is secured by a first floating charge on its receivables and current assets and by a second charge on the immovable assets of the Company. In addition, this facility is guaranteed by two Directors of OPG Energy and by Mr. Ravi Gupta, relative of a Key Managerial Person.

3.9 Capital Work In Progress

	As at 31 March 2010		As at 31 March 2009
	Group £	Company £	Group £	Company £
Plant & Machinery	31,045,394	-	17,111,103	-
Civil & Foundation	10,078,070	-	7,519,000	-
Interest Paid on bank borrowings	4,189,400	-	1,016,905	-
Electrical Installation	4,059,549	-	2,967,444	-
Others	474,744	-	560,203	-
TOTAL	49,847,157	-	29,174,655	-

3.10 Capital Advances

Capital advances of £21,160,152 (£6,705,770) include advance for capital goods amounting to £20,486,837 (£6,632,416) and other advances.

3.11 Other Non-Current Assets

	As at 31 March 2010		As at 31 March 2009
	Group £	Company £	Group £	Company £
Prepaid Expenses	3,618,405	7,887	3,525,784	5,000
Lease Deposit	961,213	-	790,734	-
Others	890,639	-	-	-
TOTAL	5,470,257	7,887	4,316,518	5,000

3.12 Trade and Other Receivables / Other Current Assets

Other Current Assets includes prepaid expenses, staff advances, advance to suppliers etc. The carrying amounts detailed above are the maximum potential credit exposure in relation to these assets.

	As at 31 March 2010		As at 31 March 2009
	Group £	Company £	Group £	Company £
Trade receivables	3,089,084	274,265	1,400,329	13,213
Other Current Assets
Short term loans	3,452,529	61,143,636	882,938	67,386,189
Mutual Funds redemption receivable	3,002,282	-	-	-
Dividend & Interest receivable	151,052	-	835,151	-
Other receivables	209,237	-	2,551,888	-
Other Current Assets	298,414	1,459	960,771	-
TOTAL	7,113,514	61,145,095	5,230,748	67,386,189

3.13 Inventories

	As at 31 March 2010		As at 31 March 2009
	Group £	Company £	Group £	Company £
Stock of Coal	1,726,409	-	-	-
Stock of Stores and Spares	414,506	-	41,711	-
TOTAL	1,867,915	-	41,711	-

3.14 Financial Assets

	As at 31 March 2010		As at 31 March 2009
	Group £	Company £	Group £	Company £
Available for Sale Financial Assets	12,977,604	-	8,478,766	-
TOTAL	12,977,604	-	8,478,766	-

Available for Sale Financial Assets

Available for Sale financial assets, represents investments that present the Group with the opportunity for return through dividend income and gains.

Funds raised in the Initial Public Offer and contributed as equity in three of the subsidiaries - OPG Power Generation Pvt Ltd and OPG Power Gujarat Pvt Ltd and Gita Power and Infrastructure Pvt Ltd were, to the extent not immediately required for the project,  deployed in deposits with banks and (in) units of (Regulated, supervised) mutual funds.

3.15 Cash and Cash Equivalents

	As at 31 March 2010		As at 31 March 2009
	Group   £	Company  £	Group   £	Company  £
Cash	3,786	-	44,669	-
Cash at Bank	7,355,871	7,072,048	10,290,078	4,039,991
Cheques on hand	-	-	157,891	-
Fixed Deposits	6,808,796	-	21,827,204	-
Cash and cash equivalents	14,168,453	7,072,048	32,319,842	4,039,991
Restricted Cash	1,481,894	-	1,403,126	-

Restricted cash of £ 1,481,894 (£1,403,126) represents bank deposits, including accrued interest, of varying maturities extending beyond two years, all of which are under lien to the Group's bankers.

3.16        Share Capital

The Company is incorporated under the Isle of Man Companies Act 2006 (CA 2006) which does not prescribe that a company shall have an authorized share capital. Rather, subject to CA 2006 and to the Memorandum and Articles of Association, shares in a company may be issued at such times and to such persons, for such consideration and on such terms as its directors may determine.

Certain companies had invested in the Company prior to Admission at the Placing Price (the "Pre IPO Monies").

The issue price at listing was Pence 60 per Ordinary share for the issue of 108,418,367 new Ordinary Shares raising £ 65.10 Million before issue expenses.

286,989,795 shares are outstanding as at March 31, 2010 and 2009 which includes 170,068,027 shares to Promoters, 8,503,401 for cash pre IPO and 108,418,367 shares for cash as initial public offering.

Issued capital as at March 31, 2010 and 2009 amounts to £42,187.

3.17 Earnings per share

Profit attributable to ordinary shareholders	Year ended 31 March 2010	Year ended 31 March 2010	Period ended 31 March 2009	Period ended 31 March 2009
	Group £	Company £	Group £	Company £
Profit for the year	4,017,505	(1,547,488)	5,332,809	1,270,522
Profit attributable to ordinary shareholders	926,473	(1,547,488)	3,309,434	1,270,522

	Year ended 31 March 2010	Year ended 31 March 2010	Period ended 31 March 2009	Period ended 31 March 2009
Weighted average number of ordinary shares (Basic)	286,989,795	286,989,795	267,502,834	267,502,834
Profit attributable to ordinary shareholders(diluted)
	Year ended 31 March 2010	Year ended 31 March 2010	Period ended 31 March 2009	Period ended 31 March 2009
	£	£	£	£
Profit attributable to ordinary shareholders	926,473	(1,547,488)	3,309,434	1,270,522
Profit attributable to ordinary shareholders(diluted)	926,473	(1,547,488)	3,309,434	1,270,522
Weighted average number of ordinary shares (diluted)
	Year ended 31 March 2010	Year ended 31 March 2010	Period ended 31 March 2009	Period ended 31 March 2009
Weighted average number of ordinary shares	286,989,795	286,989,795	267,502,834	267,502,834
Shares deemed to be issued for no consideration in respect of stock options	4,383,911	4,383,911	-	-
Weighted average number of ordinary shares(diluted)	291,373,706	291,373,706	267,502,834	267,502,834
Basic EPS ( In Pence)	0.323	(0.539)	1.237	0.475
Diluted EPS ( In Pence)	0.318	(0.539)*	1.237	0.475

* Anti dilutive

3.17.1 Employee Stock Option Issued to Directors -On 16 July 2009, Board has granted share options  which are limited to 10% of the Group's Share Capital(Presently 28,698,979 shares). Once granted, options must be exercised within ten years of the date of grant otherwise the options lapse.

The Vesting of these options is based on following conditions:

1) The power plant at Kutch (2x150MW) in the State of Gujarat must have been in commercial operation for three months.

2) The closing share price being at least £1.00 for 3 consecutive business days.

Under IFRS 2 - Share Based Payments, these outstanding options being in the nature of share based payment, are amortized over the estimated vesting period of 3.71 years (expected completion of Kutch Plant - Gujarat by April 2013).

Accordingly, the attributable period expense was GBP 1,206,959.

3.17.2 Fair value of share options granted in the year

The weighted average fair value of the share options granted during the financial year is                                        £0.28. Options were priced using a Black Scholes Model - European Option. Where relevant, the expected life used in the model has been adjusted based on management's best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioral considerations. Expected volatility is based on the historical share price volatility.

Assumptions

Grant date share price	£0.66
Exercise price	£0.60
Expected volatility	31.34%
Option life	6.86years
Dividend yield	0%
Risk-free interest rate	3.04%
Option Fair Value	£0.28

3.17.3 Movements in shares options during the year

The following reconciles the share options outstanding at the beginning and end of the year

	Number of Options
Balance at beginning of year	-
Granted during the year(at an exercise price of £0.60)	22,524,234
Forfeited during the year	-
Exercised during the year	-
Expired during the year	-
Balance at end of year	22,524,234

3.18 Interest Bearing Loans and Bank Borrowings

	As at 31 March 2010	As at 31 March 2010	As at March 2009	As at March 2009
	Group £	Company £	Group £	Company £
Non -Current liabilities
Bank borrowings	30,800,245	-	19,967,353	-
	30,800,245	-	19,967,353	-
Current liabilities
Current portion of bank borrowings	3,882,815	-	2,481,114	-
	3,882,815	-	2,481,114	-
Total Borrowings	34,683,060	-	22,448,467	-
	As at 31 March 2010	As at 31 March 2010	As at March 2009	As at March 2009
	Group £	Company £	Group £	Company £
The borrowings are repayable as follows:
On demand or within one year	3,882,815	-	2,481,114	-
In the second year	10,677,786	-	5,798,783	-
In the third to fifth years inclusive	19,058,181	-	14,168,570	-
After five years	1,064,278	-	-	-
	34,683,060	-	22,448,467	-

3.19 Financial Instruments

3.19.1 Financial risk factors

(a)   The Group's activities expose it to a variety of financial risks; market risk (for example, currency risk) interest rate risk and liquidity risk. The Group's overall risk management programme places stress on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. The financial instruments of the Group, other than derivatives, comprise loans from banks and financial institutions, nonconvertible bonds, demand deposits and short-term bank deposits.

(b)   Financial risk management objectives

The Finance Director and Managing Director of the Group, co-ordinate access to domestic and international financial markets, monitor and manage the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include fair value interest rate risk component of market risk, credit risk, liquidity risk and cash flow interest rate risk.

The Company does not seek to manage fair value interest rate risk and cash flow interest rate risk on its fixed and floating borrowings, as these risks are managed at the Group level. The company does not enter into any financial derivative contracts. The Company follows Group's policies approved by the board of directors, which provide written principles on, interest rate risk, credit risk, the use of non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

3.19.2 Market risk

(a)   Foreign Exchange Risk

The Group prepares consolidated financial statements in UK Pounds and conducts substantially all its business in Indian rupees ('INR'). As a result, it is subject to foreign currency exchange risk arising from exchange rate movements which will affect the Group's translation of the results and underlying net assets of its foreign Subsidiaries.

(b)   Cash flow and fair value interest rate risk

As the Group has no significant interest-bearing assets other than investment in bank deposits, the Group's income and operating cash flows are substantially independent of changes in market interest rates. The Company considers that the impact of fair value interest rate risk on investment in bank deposits is not material. The Group's interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. During the period, the Group's borrowings at variable or fixed rates were entirely denominated in the functional currency of its Indian entities, being INR.

	As at 31 March 2010 (£)
	On demand Less than 1 year	1 -5 years	More than 5 years	Effective interest rate	Total
Financial assets
Cash and bank balances	14,168,453	-	-	-	14,168,453
Trade and other receivables	10,202,598	-	-	-	10,202,598
	24,371,051	-	-	-	24,371,051
Financial Liabilities
Rupee floating rate loan	3,882,815	29,735,967	1,064, 278	12.00%	34,683,060
Trade and other payables	6,757,099	-	-		6,757,099
	10,639,914	29,735,967	1,064, 278		41,440,159

	As at 31 March 2009 (£)
	On demand Less than 1 year	1 -5 years	More than 5 years	Effective interest rate	Total
Financial assets
Cash and bank balances	33,722,968	-	-	-	33,722,968
Trade and other receivables	6,631,077	-	-	-	6,631,077
	40,354,045	-	-	-	40,354,045
Financial Liabilities
Bank Borrowings:
Rupee floating rate loan	2,481,114	19,967,353	-	12.04%	22,448,467
Trade and other payables	859,733	-	-		859,733
	3,340,847	19,967,353	-		23,308,200

The carrying amount reflected above represents the Company's maximum exposure to credit risk for such loans and receivables.

(c)   Credit risk

The Group's credit risk arises from accounts receivable balances on sale of electricity. The Indian entities have entered into exclusive Power Purchase Agreements (PPA's) with industrial buyers to export the entire electricity generated. The Group is therefore committed to sell power to these customers and regards any potential risk of default as being a commercial one. The Group is paid monthly by the buyers for the electricity it supplies.

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. For cash and cash equivalents the Company only transacts with entities that are rated the equivalent to investment grade and above. Other financial assets consist of amounts receivable from related parties.  The company's exposure to significant concentration of credit risk on receivables from related parties is detailed in note 3.24.

The group has not entered into any derivative financial instruments during the year and hence there is no credit risk exposure on derivatives

The table below shows the credit limit set by the group for and outstanding deposits there against in respect of 2 major bank counterparties at the balance sheet date using the Standard and Poor's credit rating symbols.

			As at 31 March 2010		As at 31 March 2009
Counterparty	Location	Rating	Maximum amount that can be deposited	Deposits as at year end	Maximum amount that can be deposited	Deposits as at year end
			£	£	£	£
Punjab National Bank	India	Not Available	6,000,000	5,334,814	4,500,000	2,836,435
Indian Overseas Bank	India	Not Available	-	-	3,500,000	2,148,289
Indian Bank	India	Not Available	3,500,000	1,473,982	-	-

(d)   Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and maintaining adequate credit facilities. In respect of its existing operations the Group funds itself primarily through bank borrowings secured against each power plant. The Group's objective in relation to its existing operating business is to maintain sufficient funding to allow the plants to operate at an optimal level and in particular purchase the necessary raw materials required.

In respect of each plant under development, the Group prepares a model to evaluate the necessary funding required. The Group's strategy is to primarily fund such acquisitions by assuming debt in the development companies secured on the power plant to be built. In relation to the payment towards equity component of companies to be developed, the Group ordinarily seeks to fund this by the injection of external funds by debt or equity.

The Group has identified a large range of development opportunities which it is continually evaluating and which are subject to constant change. In respect of its overall business the Group therefore does not, at the current time, maintain any overall liquidity forecasts. The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date.

(e)   Capital risk management

The Group's objective when managing capital is to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for stakeholders. The Group also proposes to maintain an optimal capital structure to reduce the cost of capital. Hence, the Group may adjust any dividend payments, return capital to shareholders or issue new shares. Total capital is the equity as shown in the consolidated balance sheet. Currently, the Group primarily monitors its capital structure in terms of evaluating the funding of potential developments. It plans to strike a balance between risks and returns. Management is continuously evolving strategies to optimize the returns and reduce the risks. It includes plans to optimize the financial leverage of the Group.

The Group's debt of £ 19,032,713 (net of Cash & Cash Equivalents of £ 14,168,453 and restricted cash of £ 1,481,894) represents a gearing of 23.56% on a net debt basis.

(f)    Interest rate risk management

The Company is exposed to interest rate risk as it borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.

The Company's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at balance sheet date was outstanding for the whole year. A 0.5 per cent increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.

	Year ended 31 March 2010			Period ended 31 March 2009
	As Reported	+0.5%	-0.5%	As Reported	+0.50%	-0.50%
Net result for the year	4,017,505	3,874,141	4,160,870	5,332,809	5,302,525	5,363,095
Shareholder's Equity	80,768,909	80,625,545	80,912,273	72,811,083	72,798,479	72,825,129

(g)   Fair value of financial instruments

Details of the methods of the determination of the fair values of the Company's financial assets and financial liabilities are discussed in the note 2.7. The carrying amount of financial assets and financial liabilities are recorded in these financial statements at amortised cost which approximate their fair values.

3.20 Employee Benefits

3.20.1 In accordance with applicable Indian laws, the Group provides for gratuity, a defined benefit retirement plan ("the Gratuity Plan") covering eligible employees. The Gratuity Plan provides for a lump sum payment to vested employees on retirement (subject to completion of five years of continuous employment), death, incapacitation or termination of employment of amounts that are based on salary and tenure of employment Liabilities with regard to the Gratuity Plan are determined by actuarial valuation on the reporting date. The following tables summarises the components of net benefit expense recognised in the income statement and the funded status and amounts recognised in the balance sheet for the plan:

	As at 31 March 2010	As at 31 March 2009
	Group £	Group £
Present value of unfunded obligations	15,338	1,443
Recognised liability for defined benefit obligations	15,338	1,443
Total employee benefit liability	15,338	1,443

3.20.2 Movements in the net liability for defined benefit obligations recognised in the balance sheet

	As at 31 March 2010	As at 31 March 2009
	Group £	Group £
Net liability for defined benefit obligations at 1 April	1,443	1,570
Expense recognised in the income statement (see below)	16,142	746
Actuarial gains	(3,885)	(973)
Translation adjustment	1,638	100
Net liability for defined benefit obligations	15,338	1,443

3.20.3 Employee benefits recognised in the balance sheet are as follows:

	As at 31 March 2010	As at 31 March 2009
	Group £	Group £
Non-current employee benefits	15,338	1,443
	15,338	1,443

3.20.4 Employee benefits  recognised in the income statement

	Year ended 31 March 2010	Period ended 31 March 2009
	Group £	Group £
Current service costs	15,643	645
Interest on obligation	499	101
Actuarial gains	(3,885)	(973)
	12,257	(227)

 3.20.5 The above expense is recognised in the following line items in the income statement:

	Year ended 31 March 2010	Period ended 31 March 2009
	Group £	Group £
Employee Cost	486	(227)
Pre-operative expenses(Relating to projects under construction)	11,771	-
	12,257	(227)

3.20.6 Liability for defined benefit obligations

Principal actuarial assumptions at the balance sheet date:

	As at 31 March 2010	As at 31 March 2009
	Group £	Group £
Discount rate at 31 March	8%	8%
Future salary increases	15%	15%
Withdrawal rate	10%	10%

3.20.7 Personnel costs

	Year ended 31 March 2010	Year ended 31 March 2010	Period ended 31 March 2009	Period ended 31 March 2009
	Group £	Company £	Group £	Company £
Wages and salaries	165,610	122,724	114,019	86,701
Increase in liability for defined  benefit plans	486	-	(227)	-
Share based compensation Costs	1,206,959	1,206,959	-	-
	1,373,055	1,329,683	113,792	86,701

3.21 Leases and Licences

One of the subsidiaries has taken land on lease for 30 years from 4 September 2006.

Plant and equipment of the 10 MW waste heat plant operated by OPG Renewable Energy has been taken on a license agreement dated 26 April 2008, with effect from 23 September 2008, for fifteen years (with an option to renew it for 15 more years), from Kanishk Steels, a related party. As a compensation for this arrangement, the entity has committed to supply 9 Million units of power per annum to Kanishk and only the power generated in excess of this commitment is available for sale to external customers. The quantum of rental has been reduced to 4.5 Million units per annum from 1 April 2009. An interest free refundable lease deposit of INR 200 Million (equivalent to £ 2.7 Million) has been paid at the end of March 2009 by the entity to Kanishk as security deposit to compensate for this reduction in rental. An amount of £ 236,537 has been charged to the Income statement being the rent for the period. For further details, please refer to Note 2.17.

The total of future minimum lease payments under these non cancelable operating leases for each of the following periods:

	As at 31 March 2010 (Group)	As at 31 March 2009 (Group)
	Amount (£)	Amount (£)
Not later than one year	236,537	79,053
One to five years	946,149	818,105
Greater than five years	2,427,833	2,729,168

3.22 Capital Commitments and Contingent liabilities

3.22.1     Bank Guarantees and Letters of credit

PARTICULARS	As at 31 March 2010	As at 31 March 2009
	Group	Group
	£	£
Towards outstanding Letter of Credit	5,674,858	190,134
Towards Counter guarantees furnished to the bank outstanding  Bank Guarantees	7,814,483	812,891

Company - Nil for both years

3.22.2     Estimated amount of contracts remaining to be executed on capital contracts : (net of advances)

PARTICULARS	As at 31 March 2010	As at 31 March 2009
	Group	Group
	£	£
Estimated amount of contracts remaining to be executed on capital contracts	142,629,414	127,332,911

Company - Nil for both years

3.22.3     Claims against the group not acknowledged as debts

a.     Towards additional demand of income tax for the assessment year 2007-08 £ 428,514 against which appeal has been filed before appellate authorities. No provision is considered necessary for these disputed demands, as the Company has been legally advised of success in the appeal. Costs expected to be incurred is also not material.

3.23        Related Parties

3.23.1     Key Management Personnel (KMP)

Arvind Gupta - Managing Director

V. Narayan Swami -Finance Director

3.23.2     List of Related Parties

Name of the Related Party	Nature of Relationship
Gita Investments Limited	Holding Company of the entity
Arvind Gupta	Key Management Personnel of the entity
V. Narayan Swami	Key Management Personnel of the entity
Gita Energy Pvt Ltd	Controlled entity
Gita Holdings Pvt Ltd	Controlled entity
OPG Energy private Limited	Step down Controlled entity
OPG Power Generation Private Limited	Step down Controlled entity
OPG Renewable Energy Private Limited	Step down Controlled entity
OPG Power Gujarat Private Limited	Step down Controlled entity
Gita Power and Infrastructure Private Limited	Step down Controlled entity

Other Related Parties with whom there were transactions during the period:

Sri Hari Vallabhaa Enterprises & Investments (P) Limited	Entity in which Key management personnel has Control / Significant Influence
Dhanvarsha Enterprises & Investments Private Limited	Entity in which Key management personnel has Control / Significant Influence
Goodfaith Vinimay (P) Ltd	Entity over which KMP exercises Control / Significant Influence through relatives
Salem Food Products Limited	Entity in which Key management personnel has Control / Significant Influence
Kanishk Steel Industries Limited	Entity in which Key management personnel has Control / Significant Influence
Gita Energy and Generation Private Limited	Entity in which Key management personnel has Control / Significant Influence
Gita Devi	Relative of Key Management Personnel
Rajesh Gupta	Relative of Key Management Personnel
Ravi Gupta	Relative of Key Management Personnel

3.23.3     Transactions with related parties

		2010	2009
Transactions / Names of Party	Relationship	Amount (£)	Amount (£)
Sharing of Power
Kanishk Steel Industries Limited	Entity over which relative of KMP exercises Control / Significant Influence	790,753	381,128
Salem Food Products Limited	Entity over which KMP exercises Control / Significant Influence through relatives	-	16,400
		790,753	397,528
Cost of Power Generated
Kanishk Steel Industries Limited	Entity over which relative of KMP exercises Control / Significant Influence	8,946	283,515
Loan Outstanding
Salem Food Products Limited	Entity over which KMP exercises Control / Significant Influence through relatives	890,639	844,669
Interest Received
Salem Food Products Limited	Entity over which KMP exercises Control / Significant Influence through relatives	89,660	89,300
Loans Repaid
Salem Food Products Limited	Entity over which KMP exercises Control / Significant Influence through relatives	-	67,422
Receivables
Salem Food Products Limited	Entity over which KMP exercises Control / Significant Influence through relatives	970	887
Kanishk Steel Industries Limited	Entity over which relative of KMP exercises Control / Significant Influence	632,955	13,409
		633,925	14,296
Investments in share capital
Gita Investments Limited	Holding Company	-	22,500
Sri Hari Vallabhaa Enterprises & Investments (P) Ltd	Entity in which KMP is a Director	-	2,040,817
Dhanvarsha Enterprises & Investments (P) Ltd	Entity in which KMP is a Director	-	1,530,612
Goodfaith Vinimay (P) Ltd	Entity over which KMP exercises Control / Significant Influence through relatives	-	1,530,612
			5,124,541
Rent paid
Gita Devi	Close relative of KMP	2,100	3,033
Remuneration Paid
Rajesh Gupta	Close relative of KMP Remuneration as director of OPG Energy Pvt Ltd	-	5,308
Ravi Gupta	Close relative of KMP Remuneration as director of the company	25,000	22517
Further lease deposit made
Kanishk Steel Industries Limited	Entity over which relative of KMP exercises Control / Significant Influence	-	3,233,145
Lease Rent paid
Kanishk Steel Industries Limited	Entity over which relative of KMP exercises Control / Significant Influence	236,226	237,584
Lease Deposit outstanding
Kanishk Steel Industries Limited (difference is only due to change in exchange rates)	Entity over which relative of KMP exercises Control / Significant Influence	3,532,783	3,233,144
Reimbursement of Expenses
Kanishk Steel Industries Limited	Entity over which relative of KMP exercises Control / Significant Influence	16,015	23,948
Advance Paid
Gita Energy and Generation Private Limited	Entity over which relative of KMP exercises Control / Significant Influence	1,719,051	-
Gita Power and Infrastructure Private Limited	Entity over which relative of KMP exercises Control / Significant Influence	3,394,260	-

3.23.4     Director's Remuneration

The remuneration of Directors for the period was as follows:

	2010	2009
	Amount(£)	Amount(£)
Salaries, Allowances and Perquisites	304,729	313,189
Share based payments	1,206,959	-
TOTAL	1,511,688	313,189

3.24   Restatement relating to 2008-09

Foreign currency translation movements (a net gain of GBP 694,240) on US Dollar bank deposits outstanding as at March 31 2009 were carried in reserves instead of being recognised in income for the period ended March 31, 2009 as required by IAS 21. Consequently profits of the previous period was understated to this extent. This item has been restated by release to the Income Statement for the relative reporting period under Other gains & losses (Note 3.3). The basic and diluted Earnings per Share for the relative period have also been correspondingly restated. (Refer Note 3.17)

3.25   Reclassification of the consolidated financial statements for the prior years

Prior year's figures in the consolidated financial statements have been regrouped and reclassified wherever necessary to conform to the current year's figures. The Group has reclassified following items which does not have any impact upon the income statement, cash flows, equity and financial position and performance of the Group.

Depreciation relating to plant and machinery (GBP 343,879) which was included as part of Depreciation costs has now been reclassified to Cost of power Generation.

Current Tax Assets (GBP 751,309) and Provision for Taxation (GBP 942,826) which were shown on a net basis have been restated in their respective carrying amounts.

Deferred Tax Asset (GBP 60,909) and Deferred Tax Liability (GBP 446,451) which were shown on a net basis have been restated in their respective carrying amounts (Note 3.7.1).

The above reclassifications have no impact on the separate financial statements. These reclassifications also have no impact on the profits and earnings per share of the periods presented.

3.26   Events After Balance Sheet Date

The 80 MW power plant (OPG Power Generation Private Limited) has been commissioned on 14th April' 2010 near Chennai (India). There are no other material events after the reporting period, which have a bearing on the understanding of the financial statements. 

 

END

 

 

FR UVOURRRABRAR