As reported previously, the Gujarat State Distribution Companies (the “Discoms”) have been delaying payment to OPG Gujarat of monies collected by them from captive customers of OPG Gujarat who are located in the state. Currently, OPG Gujarat makes its direct sales to industrial users (“Captive Users”) under Group Captive Regulations, which stipulate that those Captive Users should own at least 26% of OPG Gujarat's equity share capital with voting rights. OPG Gujarat issues different classes of shares to Captive Users and to OPG with equal voting but varying economic rights. Following constructive dialogue with the Discoms, management has determined that an amendment to the share capital rights of Captive Users – such that their economic and voting rights are aligned – will help in accelerating the recovery from the Discoms of delayed payments.
This amendment of share capital rights at OPG Gujarat, which will result in an increase in Captives Users' non-controlling interest in OPG Gujarat, is not expected to have an impact on the consolidated results after tax or the consolidated cashflows of OPG and its subsidiaries and is expected to lead to a marginal increase in the Company's reported earnings per share in the near term, whilst OPG Gujarat continues to ramp up. Thereafter, management expect the impact upon the Company's reported earnings per share to be neutral. The Company's operational and management control and its majority shareholder status at OPG Gujarat will remain unaffected. In addition, the Company's dividend policy, which is based on a pay-out ratio of its post-tax result and its cash flows, is not expected to change as a result of this amendment to share capital rights at OPG Gujarat.
OPG Gujarat is implementing the necessary corporate resolutions and court approvals to align the economic and voting rights of its shareholders as described above to be effective from when group captive sales commenced in April 2015.