Half Yearly Report

KSK Power Ventur PLC

26 November 2015

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

Interim Results for the half year ended 30 Sep 2015

KSK Power Ventur plc (KSK.L), the power project company listed on the London Stock Exchange, with interests in multiple power plants and businesses across India, announces its interim results for the half year ended 30 Sep 2015.

Financial Highlights 

· Gross Revenue increased by 40% to $ 245.47 m (H1 2015: $ 175.86 m)

· Gross Profit increased by 40% to $ 52.64 m (H1 2015: $ 37.66 m)

· Operating Profit remains constant at $ 28.68 m (H1 2015: $ 28.62 m)

· Loss before tax* moved to a loss of $ 146.49 m (H1 2015: loss of $ 69.03 m)

· Investments in Property Plant and Equipment** decreased 4% to $ 3,313 m (March 2015: $ 3,457 m)

\* This includes an unrealised exchange loss of $ 27.93 million due to restatement of the foreign currency component of certain bank financing facilities and trade payables.

** Underlying increase of 1 % on a constant currency basis, but headline decrease on account of translation difference from base currency of INR 66.2958 per $ at closing as against INR 62.6788 per $ at March 2015.

While underlying revenue and gross profit have both grown compared to the same period last year, operating profit has remained constant and loss before tax has increased, due to higher finance costs. During the period, the pending PPA finalisation at Sai Wardha, coupled with continuing transmission corridor constraints of the national grid at KSK Mahanadi restricted actual generation, resulting in lower than expected PLF at Sai Wardha and KSK Mahanadi, causing mismatches in meeting overall financing costs.

However, we are pleased to report that, starting early October 2015, the two 600 MW units at KSK Mahanadi became fully operational. Compared to the gross generation of 2,134 GWh during the first half, generation rose to 1,156 GWh during the first 45 days of the second half, and improvements both in revenue and gross profit are expected in the second half of the current financial year, with full benefits on a full year basis during FY2017.

Comparison of results

Operating Highlights 

· Operating assets generated 4,026 GWh in the first half, compared to 2,950 GWh for the similar period in the previous year, an increase of 36%, with the following plant load factors ("PLF"):

· With the recent commissioning of the first two 600 MW units at the 3.6 GW KSK Mahanadi power project, phased construction in line with available incremental capital expenditure is underway to commission the next two 600 MW units during the second half of FY 2017 with the remaining 1,200 MWs scheduled to be completed during the second half of FY 2018.

· High coal costs continue to constrain operations at Sai Wardha in addition to PPA issues on the IPP phase of the output. Regarding coal cost reduction, following a decision made by the Competition Commission of India; Western Coal Fields approached the Competition Appellate Tribunal and ruling on the appeal is awaited shortly and therefore it is anticipated that the issue could be resolved in the second half of the year.

· Favourable additional offtake agreements have been received on the captive phase with two PPAs from Lupin Limited and Hindustan Petroleum Corporation Limited totalling 33 MW. A Letter of Intent for 10 MW was also received from RCF Limited. In addition to the long term PPA with MSEDCL (a local state utility company), interim short term power sale arrangements are being explored to improve asset utilisation levels, enabling revenues and profitability to continue to experience marginal improvements in the short term, ahead of the full improvements being realised.

· Notwithstanding the challenges across the sector and exchange rate volatility that distorts the Company's performance, the combination of our underlying assets, our risk mitigation strategies and certain recent positive developments should, in the long term, assist in moving the Company back towards meeting market expectations. However, in the short term, owing to capacity utilisation rates remaining below the Board's initial plans, these changes will be gradual.

Commenting on the results, T. L. Sankar, Chairman of KSK said:

 "The first half of the current year witnessed the Company's power plants' aggregate gross generation increasing to 4.02 TWhs, helped by the commencement of supplies from the second 600 MW unit at KSK Mahanadi. With the challenges at Sai Wardha and KSK Mahanadi being addressed, it is anticipated that gross generation could achieve 9 TWhs during 2015-16.

With regards to fuel supplies, it is understood the Ministry of Power and Ministry of Coal are currently considering a comprehensive new plan and structure wherein the coal linkages could be formulated to address needs of those power plants that have long term PPA commitments to state owned DISCOMS in place, and have made physical progress on the ground. We believe that KSK Mahanadi, with multiple DISCOMS supply PPAs in place, is well positioned to address our coal requirements.

The Company continues to be in discussions with the project stakeholders regarding the terms of existing drawn and undrawn financial facilities and additional financing plans to enable KSK Mahanadi to continue with the project execution. Discussions with all stakeholders regarding such arrangements have been positive to date and the Company's lenders are supportive of the proposed arrangements, subject to them obtaining necessary consents.

KSK's performance during the period would not have been possible without the valuable and appreciated support of its shareholders who have enabled us to pursue appropriate business opportunities in these challenging times."

For further information, please contact:

Key Business Updates

· 3,600 MW KSK MAHANADI POWER PROJECT:

The construction activity at KSK Mahanadi (a large, single location, greenfield private power plant) continues, with significant achievements during the period under review and post period. To date, progress has been as follows:

o the first two units of 600 MW each are in operation;

o completion of the construction of the major part of the civil works and common operation infrastructure at the site;

o water pipeline infrastructure to meet the water requirements of the entire power plants is operational;

o rail connectivity to the power plant for coal transportation has been put in place; and

o switch yard and transformer yard commissioned, with the back charging of 400kV switchyard and transmission system, enabling connectivity for evacuation of power generated into the national grid.

Following stabilised generation from the current 1,200 MW, the Company's management is focusing its efforts on expediting the construction of the next 1,200 MW, while the last 1,200 MW unit is also planned to be taken up for completion. Further, it has been proposed by the project lenders that the ancillary infrastructure of KSK Water and Raigarh Champa Rail is to be merged into KSK Mahanadi with the assets and associated debt facilities taken over by KSK Mahanadi.

· 540 MW SAI WARDHA POWER LIMITED (SWPL):

The total gross power generated during the review period was 986 GWh with an average PLF of 42%. This reflects the initial positive movement achieved against the challenging local operating environment and the fuel and open access grid constraints experienced by Sai Wardha Power.

The Company continues to use every effort to pursue the coal price reduction and the PPA achievement of the IPP phase, which will ultimately lead to the enhanced utilisation and profitability of the Sai Wardha plant.

· 135 MW VS LIGNITE POWER PRIVATE LIMITED (VSLP):

The total gross power generated during the period was 418 GWh, with an average PLF of 70 %. The Company has been mandated by the local state for power supplies under a long term PPA with a local grid company and is currently operating under a short term PPA until March 2016. Efforts are continuing to secure necessary long term PPAs from the local grid as mandated by the Government which should be achieved during the current year.

· 86 MW SAI LILAGAR POWER LIMITED (SLPL):

The total gross power generated during the period was 93 GWh, with an average PLF of 25%, which continues to reflect the transition from Captive Power Plant to the Independent Power Producer as well as power supplies which are aligned with the second unit operations of KSK Mahanadi.

With the new PPA arrangements in place, the Company still expects asset utilisation to reach low to mid 80 % PLF levels over the next few quarters. As a result, the Company anticipates increased generation, revenue and profitability from the SLPL plant.

· 58 MW SAI REGENCY POWER CORPORATION PRIVATE LIMITED (SRPCPL):

The total gross power generated in the combined cycle gas fired power plant during the period was 228 GWh, with an average PLF of 90%. The plant continues to produce an exceptional operational and financial performance, which the Company expects to continue in the future.

· 43 MW SITAPURAM POWER LIMITED (SPL):

The total gross power generated during the period was 159 GWh, with an average PLF of 84%. Fuel costs for the period under review continue to increase due to an increase in coal prices from the Singareni Collieries Company Limited, as well as from open market purchases, but the energy generated in the period has been supplied to the captive consumers in accordance with the provisions of the PPA, and the balance of power sold to local utilities.

· 10 MW SAI MAITHILI SOLAR POWER PROJECT:

The total gross power generated during the period was 8.4 GWh, with an average PLF of 19%. The 10 MW PV solar power generation plant is located in the state of Rajasthan, operating under the Jawaharlal Nehru National Solar Mission.

· CONSTRUCTION OF ADDITIONAL SOLAR POWER GENERATION PLANTS:

In response to the continuing initiative of the Indian Government, the Company continues to seek to develop an additional 250 MW of solar power generation projects in the medium term wherein the first 50 MW is expected to be commissioned over the next few months and an additional 50 MW subsequently.

As mentioned in the Audited Results announced on 21 July 2015, a number of early initiatives for the procurement of the necessary panels and associated plant equipment have been finalised with selected vendors, with active support of the banks who are ready to provide the requisite long term financing required.

WIND POWER GENERATIONAND HYDRO POWER GENERATION INITIATIVE  

The Company continues to pursue specific wind power generation initiatives as well as work on the hydro project portfolio and suitable collaboration opportunities.

FINANCING ARRANGEMENTS  

The Company's main power plant initiative of KSK Mahanadi requires incremental debt and equity for full completion of the 3.6 GW during FY 2018. Post a recent regulatory clarification, the Project lenders are currently deliberating an appropriate implementation structure and funding plan to address both the debt and equity requirements of the project.

The Company continues to evaluate proposals for further strategic funding through potential participation by the EPC Contractor, directly or indirectly, as well as strategic equity collaboration by other potential participants.

FINANCIAL PERFORMANCE

During the period total operational capacity was 2,072 MW, which still only reflected partial operation during the period. The consolidated operating revenue was $ 245.47 m, gross profit was $ 52.64 m, operating profit was $ 28.68 m, loss before tax was $ 146.49 m, and the loss after tax was $ 97.66 m.

The increase in revenue and gross profit was due to an increase in power generation from KSK Mahanadi and Sai Wardha. Despite an increase in operating performance, operating profit remains at the same level caused by an increase in provision for doubtful receivables of $ 3.48 m, and due to the previous year including income from an insurance claim and liquidated damages of $ 8.08 m.

The significant increase of finance costs from $ 106.70 m to $ 184.72 m was due to increase in period-on-period finance cost of $ 60.91 m relating to Mahanadi mainly due to second unit finance cost being charged to income statement during the current period. As a result, the Company the losses before taxes has increased.

BUSINESS STRATEGY

The Company's business strategy has been to focus on consolidating the operations of the installed capacity of 2,072 MW during FY 2015-16. The combined portfolio PLF of 44% in the first half is expected to be enhanced to a portfolio PLF of 55%+ during the second half, enabling a gross generation of 9 TWh. High operation performance of KSK Mahanadi would be central to this level of generation.

The Indian power sector remains challenging due to fuel price pressures and and difficulty in achieving open access supply of power to customers at competitive PPA tariffs. However, with significant long term PPAs signed at attractive tariff rates, the Company continues to expect to secure the necessary debt funding required for its major capital projects, resulting in an improved financial performance over time.

OUTLOOK

It is well acknowledged that India's unfulfilled demand for power generation is expected to continue to grow through the coming decade. As such KSK is well positioned to address these power generation opportunities through its high quality and expanding asset base and proven execution capability as shown by the two 600 MW units at KSK Mahanadi becoming fully operational.

The Board continue to believe KSK will be one of India's leading suppliers of power and the successful phased completion of the 3.6 GW KSK Mahanadi power projects being added to the Company's existing portfolio reinforces such a view. That said, the Board expects revenues and underlying profit in the short term to remain below the Board's initial expectations, but in the long term maintain that these expectations should be met.

An extract of the Interim Consolidated and Company Financial Statements for the period ended 30 September 2015 is shown below.

A full set of accounts will be available from the Company websites: www.kskplc.co.uk

PRINCIPAL RISKS AND UNCERTAINITIES

The business of the Group is subject to a variety of risks and uncertainties which, if they occur may have a materially adverse effect on the Group's business or financial condition, results or future operations. The risks & uncertainties set out in this document are not exhaustive and there may be risks of which the Board is not aware or believes to be immaterial, which may, in the future, adversely affect the Group's business. The risks and uncertainties faced by the Group and the industry as a whole have been previously provided in detail in the Annual Reports of the Company and the Interim Statements. The majority of the risks previously identified have not significantly changed. While the Company attempts to address the same, the key risks and uncertainties continued to be faced by the Group are as follows:

· Delays in government decisions or implementation of earlier government decisions along with continual inconsistencies in government policies across departments and retrospective amendments to the existing policies or introduction of new policies;

· Delays in providing necessary regulatory support and / or dispensation as may be required for timely implementation of the financing plans

· Deviation from approved government policies and abuse of market dominance position by certain contractual counter parties;

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

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

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

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

· Unusual currency depreciation that adversely effects the cost of project imports, project implementation, and repayment obligations;

· Logistics bottlenecks and other infrastructure constraints of various agencies;

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

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

· Liquidity risk and project financing

INTERIM CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION

as at 30 September 2015

(All amounts in thousands of US $, unless otherwise stated)

INTERIM CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION

as at 30 September 2015

(All amounts in thousands of US $, unless otherwise stated)

(See accompanying notes to the interim condensed Consolidated and Company financial statements)

INTERIM CONSOLIDATED AND COMPANY INCOME STATEMENT

for the six months ended 30 September 2015

(All amounts in thousands of US $, unless otherwise stated)

(See accompanying notes to the interim condensed Consolidated and Company financial statements)

INTERIM CONSOLIDATED AND COMPANY STATEMENT OF OTHER COMPREHENSIVE INCOME

for the six months ended 30 September 2015

(All amounts in thousands of US $, unless otherwise stated)

(See accompanying notes to the interim condensed Consolidated and Company financial statements)

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the six months ended 30 September 2014

(All amount in thousands of US $, unless otherwise stated)

INTERIM COMPANY STATEMENT OF CHANGES IN EQUITYfor the six months ended 30 September 2015

 (All amount in thousands of US $, unless otherwise stated)

(See accompanying notes to interim condensed Consolidated and Company financial statements)

(See accompanying notes to the interim condensed Consolidated and Company financial statements)

NOTES TO INTERIM CONDENSED CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS

for the six months ended 30 September 2015

1. Corporate information

1.1. General information

KSK Power Ventur plc ('the Company' or 'KPVP' or 'KSK' or 'Parent'), a limited liability corporation, is the Group's parent Company and is incorporated and domiciled in the Isle of Man. The address of the Company's Registered Office, which is also principal place of business, is Fort Anne, Douglas, Isle of Man, IM1 5PD. The Company's equity shares are listed on the Standard List on the official list of the London Stock Exchange.

The financial statements were authorised for issue by the Board of Directors on 26 November 2015.

1.2. Statement of compliance /responsibility statement

a. the condensed set of financial statements contained in this document has been prepared in accordance with International Accounting Standard 34 ("IAS 34"), "Interim Financial Reporting" as adopted by European Union ('EU') and gives a true and fair view of the assets, liabilities, financial position and the profit or loss of the group as required by Disclosure and Transparency Rules ("DTR") 4.2.4R;

b. the Interim management report contained in this document includes a fair review of the information required by the Financial Conduct Authority's DTR 4.2.7R (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year);

c. this document includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein);

d. the interim condensed Consolidated and Company financial statements should be read in conjunction with the annual financial statements for the year ended 31 March 2015, which have been prepared in accordance with IFRSs.

e. The financial information set out in these financial statements does not constitute statutory accounts. The financial statement is unaudited but has been reviewed by KPMG Audit LLC and their report is set out at the end of this document.

1.3. Financial period

The interim condensed Consolidated and Company financial statements are for the six months period ended 30 September 2015. The comparative information required by IAS 1 were determined using IAS 34 and include comparative information as follows:

1.4. Basis of preparation

These interim condensed Consolidated and Company financial statements have been prepared under International Accounting Standards-34- "Interim Financial Reporting" as adopted by the European Union.

These interim condensed Consolidated and Company financial statements have been prepared on the historical cost convention and on an accrual basis, except for the following:

· derivative financial instruments that are measured at fair value;

· financial instruments that are designated as being at fair value through profit or loss account upon initial recognition are measured at fair value;

· available-for-sale financial assets that are measured at fair value; and

· Net employee defined benefit (asset) / liability that are measured based on actuarial valuation

The financial statements of the Group and the Company have been presented in United States Dollars ('US $'), which is the presentation currency of the Company. All amounts have been presented in thousands, unless specified otherwise.

Balances represent consolidated amounts for the Group, unless otherwise stated. The Company's financial statement represents separate financial statement of KPVP.

Going Concern: The financial statements have been prepared on the going concern basis which assumes the Group and the Company will have sufficient funds to continue its operational existence for the foreseeable future, covering at least twelve months from the date of signing these financial statements. The Group requires funds for both short term operational needs as well as for long term investment programmes, mainly in construction projects for its power plants.

As at 30 September 2015, the Group and Company have net current liabilities of US $ 532,790 and US $ 114,540 and is depending on a continuation of both short term and long term debt financing facilities. Such financing is subject to covenant and amortisation conditions. The Group also has significant capital commitments at the year-end of which a portion is due to be met during the year to 30 September 2016 (refer note 25), primarily in respect of on-going plant construction projects at KSK Mahanadi. The Group is also involved in a number of on-going legal and claim matters.

The Group continues to generate cash flows from current operations which are further expected to increase with higher plant load factor (PLF) both at KSK Mahanadi plant and Sai Wardha plant. These factors are key assumptions with regard to management's forecasts and expectations. While the transmission corridor constraint on KSK Mahanadi for the operation and sale of power from unit 2 has been resolved resulting in full load operation of two units of 600 MW each from the month of October 2015, long term PPA arrangement as well as interim arrangements for Sai Wardha are anticipated to be put in place shortly. 

In addition, a number of the facilities that are due to expire at 30 September 2016 are in the process of being extended and have a rollover clause in a number of cases, and the Group may refinance and/or restructure certain short term borrowings into long borrowings and will also consider alternative sources of financing, where applicable. The Directors are confident that facilities will remain available to the Group based on current trading, covenant compliance and ongoing discussions with the Group's primary lending consortium regarding future facilities and arrangements in respect of current borrowings. 

The Group currently had significant undrawn borrowing facilities, subject to certain conditions, amounting to approximately US $ 469,799 to meet its long term investment programmes. However, the Group is currently in discussions with stakeholders regarding the terms of such existing drawn and undrawn financial commitments in order to match facilities to the current development and financing plans for KSK Mahanadi. Discussions with all stakeholders regarding such arrangements have been positive to date and the Groups lenders are supportive of proposed arrangements and necessary clarification in this regard has also been received by the financiers from the relevant authority. Nonetheless the Group monitors the situation on an on-going basis and plans alternative arrangements where necessary. The outcome of these discussions may impact on the timing of the strategic development of this plant.

As a consequence, the Directors have a reasonable expectation that the Company and Group are well placed to manage their business risks and continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis of accounting when preparing these financial statements.

2. Changes in accounting policy and disclosure

The accounting policies adopted are consistent with those of the previous financial year.

3. Significant accounting judgements, estimates and assumptions

There have been no significant changes in the significant accounting judgments, estimates and assumptions applied for the purposes of the preparation of these interim condensed Consolidated and Company financial statements.

4. Acquisition and Dilution - change in non-controlling interest without change in control

a. Warrant issue by KSK Energy Ventures Limited

During the previous year ended 31 March 2015, the group has issued 80,808,080 warrants of face value of Rs. 10 (US $ 0.16) each in KSK Energy Ventures Limited ('KEVL'), an Indian Listed subsidiary to KSK Power Holdings Limited ("KPHL") with an option to apply for and be allotted equivalent number of equity shares of the face value of Rs 10 (US $ 0.16) each at a premium of Rs. 89 (US $ 1.45) each on a preferential basis.

Pursuant to above, during the period ended 30 September 2015, KPHL acquired 1,736,580 shares of KSK Energy Ventures Limited ('KEVL') resulting in increase of the ownership interest of the Group in KEVL from 68.30 % to 68.37 % resulting in a 0.07 % additional interest in subsidiary. The aforesaid transaction is accounted as an equity transaction, and accordingly no gain or loss is recognised in the interim condensed consolidated income statement. An amount of US $ 347 by which the non-controlling interest is adjusted and debited to 'other reserve' within interim condensed consolidated statement of changes in equity and attributed to the owners of the Company

b. Dilution in KSK Mahanadi Power Company Limited

During the year ended 30 September 2015, the Group has issued additional 112,000,000 equity shares in KSK Mahanadi Power Company Limited ("KMPCL") to KSK Energy Ventures Limited ("KEVL") at a face value of Rs 10 (US $ 0.16) at par and 30,000,000 equity shares in KMPCL held by KSK Energy Limited ("KEL") has been transferred to KEVL

Pursuant to above, the ownership interest of the Group in KMPCL decreased by 0.35 % in a subsidiary without loss of control. The aforesaid transaction is accounted as an equity transaction, and no gain or loss is recognised in the Consolidated income statement. Pursuant to this an amount of US $ 1,454 is debited to 'other reserve' within consolidated statement of changes in equity and attributed to the owners of the company.

c. Dilution in KSK Dibbin Hydro Power Private Limited

During the period ended 30 September 2015, the Group has issued additional 12,650,000 equity shares in KSK Dibbin Hydro Power Private Limited ("KDHPPL") to North Eastern Electric Power Corporation Limited (NEEPCO) at face value of Rs 10 (US $ 0.16) each.

Pursuant to above, the ownership interest of the Group in KDHPPL decreased from 81.01 % to 70.00 % resulting in a 11.01 % decrease in Group's controlling interest in a subsidiary without loss of control. The aforesaid transaction is accounted as an equity transaction, and no gain or loss is recognised in the interim condensed consolidated income statement. The difference of US $ 140 between the fair value of the net consideration received (US $ 1,969) and the amount by which the non-controlling interest are adjusted (US $ 1,829), is credited to 'Other reserve' within interim condensed Consolidated statement of changes in equity and attributed to the owners of the company.

5. Property, plant and equipment, net

The property, plant and equipment of the Group comprise:

Property, plant and equipment with a carrying amount of US $ 3,152,102 (31 March 2015: US $ 3,292,520) is subject to security restrictions (refer note 13).

6. Intangible assets and goodwill

The goodwill acquired through business combinations have been allocated to the following cash generating units of the Group, for impairment testing as follows:

Goodwill is tested for impairment annually and was performed last at 31 March 2015. There were no further circumstances which indicated that the carrying value may be impaired as at 30 September 2015. Hence no impairment testing was carried out in the interim period ended 30 September 2015.

7. Investments and other financial assets

Impairment of financial assets

During the period ended 30 September 2015, the Group's available-for-sale financial asset of US $ 26 (31 March 2015: US $ 693) and loans and receivable of US $ 1,210 (31 March 2015: US $ 25,095) were collectively impaired and written off.

During the period ended 30 September 2015, the Company's loans and receivable of US $ Nil (31 March 2015: US $ Nil) were collectively impaired.

8. Other assets

9. Trade and other receivables

The movement in the allowances for impairment in respect of trade and other receivable during the period/ year was as follows:

10. Inventories

11. Cash and short-term deposits

Cash and short-term deposits comprise of the following:

For the purpose of cash flow statement, cash and cash equivalent comprise:

1Include deposits pledged for availing credit facilities from banks and deposits with maturity term of three months to twelve months.

12. Issued share capital

 Share capital

The Company presently has only one class of ordinary shares. For all matters submitted to vote in the shareholders meeting, every holder of ordinary shares, as reflected in the records of the Company on the date of the shareholders' meeting, has one vote in respect of each share held. All shares are equally eligible to receive dividends and the repayment of capital in the event of liquidation of the Company.

The Company has an authorised share capital of 500,000,000 equity shares (31 March 2015: 500,000,000) at par value of US $ 0.002 (£ 0.001) per share amounting to US $ 998.The issued and fully paid up number of shares of the company is 175,308,600 (31 March 2015: 175,308,600). During the period company has not issued/ bought back any ordinary share. 

Share application money represents amount received from investors / parents pending allotment of ordinary shares.

Reserves

Share premium represents the amount received by the Group over and above the par value of shares issued. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax consequences.

Revaluation reserve comprises gains and losses due to the revaluation of previously held interest of the assets acquired in a business combination.

Foreign currency translation reserve is used to record the exchange difference arising from the translation of the financial statements of the Group entities and the same is not distributable.

Capital redemption reserve represents statutory reserve required to be maintained under local law of India on account of redemption of capital. The reserve is credited equivalent to amount of capital redeemed by debiting retained earnings and the same is not distributable.

Other reserve represents the difference between the consideration paid and the adjustment to net assets on change of controlling interest, without change in control and the excess of the fair value of share issued in business combination over the par value of such shares. Any transaction costs associated with the issuing of shares by the subsidiaries are deducted from other reserves, net of any related income tax consequences. Further, it also includes the loss / gain on fair valuation of available-for-sale financial instruments and re-measurement of defined benefit liability net of taxes and the same is not distributable.

Retained earnings mainly represent all current and prior year results as disclosed in the interim condensed consolidated income statement and interim condensed consolidated other comprehensive income less dividend distribution.

13. Loans and borrowings

The loans and borrowings comprise of the following: