Balancing Value – Governance Framework

Framework for
Sustainable value

Value Creation


Message from CFO

At Greenko we are very much focused and invested in advanced analytics and real-time monitoring systems. We believe the combination of our existing hydro, solar, and wind projects along with our 24/7 Renewable Power Strategy to strengthen the electricity system in India is the right step in our growth trajectory.

Dear Stakeholders,

I am happy to reach out to you with our third Integrated Report, informing our financial and nonfinancial performance and outlook. We found the intertwining of performance across capitals very enlightening, and am sure you too will. I will mainly take you through our performance on financial capital.

Greenko has set out on the ambitious mission of ‘Decarbonization, Digitalization and Decentralization of energy’ in India. Achieving this mission and the journey towards it will not only deliver sustainable returns on invested capital but positively contribute to the achievement of UN Sustainable Development Goals 7, 12 and 13. Most of our investors are excited about the social and environmental outcomes that our business delivers besides sustainable financial returns.

Financial Instruments issued by Greenko continued to be rated A+ and Greenko continued to be the top destination for overseas funds in the sector with USD 2,294 million investment flows, more than double of its closest competitor in India. Further, Greenko accesses diverse sources of capital to meet its growth targets.

Most of these investments are deployed for the execution of reliable, schedulable, and flexible renewable energy projects to harness multiple value pools in the electricity system of India. Of course, we are sensitive to the need for change in the regulatory environment to harness some additional value pools. Our colleagues are continuously making much effort to contribute to public policy and align it in the interests of an effective electricity system, which in turn will deliver additional returns on our investments

To augment our strategic initiative of being a generator of firm renewable power across India, Greenko has acquired, during the reporting period, a stake in Teesta Urja Limited, which has an underlying asset of 1,200 MW of Hydropower project in North Sikkim. The inorganic growth in hydropower continued with the acquisition of assets of 100 MW in Himachal Pradesh.

Further, Greenko has secured a total equity commitment of USD 824 million from its existing shareholders. The new capital will be used to fund its business plan, which includes the CAPEX of IRESP projects and also other opportunistic and valuable acquisitions.

We fund our operations and capital requirements primarily through cash flows from operations and borrowings under credit facilities from banks and other financial institutions as well as from equity. We evaluate our funding requirements periodically in light of our net cash flow from operating activities, the progress of our various under-construction and under-active development projects, acquisition opportunities, and market conditions. We expect to incur significant capital expenditures for the year 20-21 as we develop and construct new projects and expand our operations. In alignment with regenerative thinking, we ensure money, men, machine, information, and the material do not stagnate. Accordingly, we ensure that the money flows for its assigned purposes and this is a salient part of our financial prudence.

During the reporting period, Greenko has performed well to reach 6.2 GWdc installed capacity and is getting closer to the ambitious goal of 10GW of installed generation capacity. Accordingly, our revenue increased by 36.2%, to USD 660.9 million in FY 2020 from USD 485.1 million in FY 2019. Greenko has a well-diversified source of revenue from the sale of power through different structures of power purchase agreements and green/efficiency incentives. Our revenues against a generated unit have slightly decreased. Our revenues against RECs and other such incentives have increased over the previous year. Generation units located across India under the jurisdiction of different states and diversified PPA structures mitigate cash-flow risk and ensure balanced cash flow.

During this financial year, there have been challenges of curtailment, non and late payments, withholding of GBI, etc with regard to renewable assets in the state of Andhra Pradesh. However, the same is being resolved and the Ministry of New and Renewable Energy (MNRE) has issued directives to all State DISCOMs to adhere to the terms and conditions of PPAs and also to ensure the status of ‘must run’ with respect to renewable energy generating companies.

We have succeeded in reducing our costs by better asset management practices across the business. Some value maximization interventions have reduced downtime, some other losses, and some affected operational improvements. We have also improved revenues by harnessing electricity market/open access opportunities. Keeping with the circular economic principles, we have undertaken a modernization and up-gradation program of 500 wind turbines. This is also aimed at improving our revenue. Similarly, our WINSOM program where we have undertaken O&M by ourselves, has also reduced costs and has a significant future costsaving potential. In addition, it also mitigates operational risk. Further, the procurement of equipment and services for new and challenging Integrated Renewable Energy Projects has followed International Competitive Bidding procedures and the Project Management has included numerous built-in checks and balances. The risks in these complex projects are diligently identified and mitigated to a large extent and provisions are made for residual issues.

Thus, we earned profit before tax of USD 64.8 million in FY 2020 compared to a profit of USD 85.4 million in FY 2019.

The business environment after the COVID-19 outbreak globally and in India has not negatively impacted the generation and sale of energy. We find reinforcing evidence from IEA reports that suggest renewable generation has increased during the pandemic and it is also creating additional jobs. Global markets are accelerating the spread of new technologies, with a selfreinforcing cycle of falling costs through further deployment. Digital technology is an enabler of key elements of the energy transition: decarbonization and decentralization. At Greenko we are very much focused and invested in advanced analytics and real-time monitoring systems. We believe the combination of our existing hydro, solar, and wind projects along with our 24/7 Renewable Power Strategy to strengthen the electricity system in India is the right step in our growth trajectory.

With our steadfast approach, we will continue to pursue our transformational journey to effect decarbonization, digitalization, and decentralization. We will be keen to listen to you and engage with you throughout this journey.

Mr. Vasudeva Rao Kaipa

Chief Financial Officer