Dear Shareholders,
 
 The year 2011 -12 is an extraordinary year of contrasts lor the Indian
 power generation sector. While the year witnessed the highest ever
 capacity addition for the country In a single year of c.20 GW the
 average Plant Load Factor (PLF) of thermal power plants across the
 country has come down below 75% reflecting the policy asymmetries and
 paralysis In addressing various Issues.  Similarly, while attempting to
 address utility financials through distribution tariff reforms coupled
 with competitive procurement, parallel attempts to restructure and
 rewrite existing power purchase agreements of a lew developers to
 accommodate high cost imported fuel pass-through has brought in new
 challenge on responding to the worsening utility financials.
 
 While an ambitious capacity addition target of 75 GW over the next 5
 years has been set, the limited effort is on to enhance production of
 low cost domestic coal and gas exploitation and supplies resulting in
 power lenders being driven to restructuring of their loan portfolios.
 The developer challenges, while acute, the solutions look very simple -
 addressing the fuel security with flexible approach on asset build on
 ground for strong and power generation assets.
 
 I am pleased to report that the financial year under review has been
 successful for the business given that the year has been one of the
 most turbulent times of the power sector In India and Indian economy as
 a whole in the recent past. The significant drop in economic growth
 rate accompanied by currency depreciation of over c. 15%, with further
 depreciation of c.11% during the first 3 months of the current year,
 has led to large scale earnings'' volatilities despite strong underlying
 operational performance.
 
 Further, with government delays In granting environmental permits and
 sluggish coal and natural gas production across the country, large
 sized generation units have been affected, with major efforts now
 needed by developers to synchronize planned generation capacities with
 fuel supplies.
 
 Thermal Energy
 
 The company is currently operating 881 MW of generation capacity with
 an additional 3600 MW KSK Mahanadl power project with 6 units of 600 MW
 each under advanced construction and the first two units expected to be
 commissioned during the calendar year of 2013. It Is my firm belief
 that with commencement of power generation and with completion of all
 the six units In 2014, the company will be one of the largest single
 location green field projects In India and would join the league of the
 largest private power project developers In India albeit with a
 difference that a large part of the operational capacity would be based
 on dedicated access to domestic coal resources, with only marginal
 deficits and incremental gaps being bridged by imported coal.
 
 While resolution of the Morga-ll or supplies from alternate block has
 been slower than anticipated, recent development indicate that these
 would be addressed during the course of the current year. However, on
 the Immediate term requirements, the Company is working on a
 combination of (1) coal supplies from Gare-Pelma coal block that has
 been allotted to GIDC (2) tapering coal linkage supplies from South
 Eastern Collieries and (3) Imported / market coal to bridge any
 temporary deficits.
 
 Also, the Company has been successful in leveraging the technical and
 financial strength of other group companies especially with respect to
 setup of various ancillary infrastructure that support the power
 generation assets being developed by the Group, more specifically, the
 KSK Mahanadi Power project. Notable progress has been achieved in the
 water infrastructure, rail infrastructure, supporting coal
 transportation needs and the mine development initiatives related to
 the KSK Mahanadi project and each of such projects are being pursued by
 associate / fellow subsidiary companies of the larger KSK group.
 
 Insofar as operational capacities, significant achievements during the
 period include execution of fuel supply agreement and commencement of
 coal supplies from Western Coal Fields under cost plus coal arrangement
 as well as obtaining open access for power supplies. With these
 developments, we anticipate the PLF of 60% during 2011-12 would
 substantially improve during the ensuing year and enable us to operate
 on sound financial basis to enable continuing cash flows being
 generated in Wardha Warora.
 
 Sai Regency, the gas based power plant of the group has continued to
 provide exceptional performance on PLF and financial parameters during
 the current year. VS Lignite, the lignite power plant of the group has
 also recorded good PLF performance although with moderate financial
 performance. Arasmeta, the captive power plant with two units of 43 MWs
 has recorded low performance both on PLF and financial parameters
 primarily on account of the captive consumer not consuming contracted
 power from the expansion unit. In addition to taking up appropriate
 remedies, we anticipate that industrial customers, who have been
 experiencing extremely high alternate tariffs from local utilities,
 would find our power plant tariffs from the plants attractive and
 perform their obligations under their respective PPAs providing the
 much required sustainability to the underlying project companies.
 
 Renewable Energy
 
 The Company''s foray into hydro power generation is marked more by
 completion of the necessary detailed project reports and geo technical
 studies for the larger hydro opportunities in the State of Arunachal
 Pradesh. The Group continues its efforts for collaboration with large
 reputed hydro power plant developers to move forward to the next stage
 of development and capital commitment of these large hydro initiatives.
 
 The solar energy generation initiative of the Group has acquired a new
 thrust with recent securing of a project award for setup of c.10 MW of
 solar power generation plant in the State of Rajasthan under the
 Jawaharlal Nehru National Solar Mission with power purchase agreement
 with the prescribed nodal agency. We anticipate construction of this
 plant in the current financial year and that would strengthen the
 renewable initiatives of the Group.
 
 As regards wind power generation initiatives, the Group had 52 MW of
 earlier technology small size wind energy generators along with 18.9 MW
 of new generation individual turbines of 2.1 MW each in the Sai
 Regency. The group has divested the 52 MW and intends to focus on
 greenfield projects with higher PLF potential. While efforts have been
 initiated to procure wind energy generators at competitive prices,
 including from China, the Group continues to acquire concessions
 directly and setup the wind farms in collaboration.
 
 Sustainability Initiatives
 
 It is important to highlight that none of the above progress is either
 meaningful or sustainable unless the same is coupled with larger
 perspective of being an exemplary organization effectively contributing
 to the communities where we construct and operate our asset with a
 longer term outlook for our various stakeholder at large.
 
 While the Group continues to promote Community Leadership that
 primarily focuses on the thrust areas of Education, Socio-Economic
 Empowerment, Infrastructure Development and Cultural & Social
 Contribution, the Group during the year has initiated large scale
 collaboration that would build healthy and sustainable communities
 wherever the business activities are pursued in the longer term but
 also provide immediate term interventions that seek to change the
 conventional approaches to infrastructure provision for the poor on a
 low cost and sustainable basis.
 
 In addition to immediate term interventions, the requirement for
 premier medical facilities with comprehensive diagnostic, in-patient
 and surgical facilities to provide tertiary treatments while
 simultaneously supporting the primary healthcare centres that support
 Immediate project neighborhood has been reinforced In the context of
 increasing incidences of such ailments in the country generally as well
 as lack of any such appropriate facilities currently within the
 surroundings of the project locations. With extensive foot print of
 pro|ects (both power generation and support infrastructure) in terms of
 size across the State of Chhattisgarh, the Group has drawn a blue print
 and master plan for focused sustainability initiatives in the area of
 health care - both primary health care support centers at each of our
 pro|ect locations In Chhattisgarh and a master Tertiary Healthcare
 facility at Raipur, the capital of Chhatdsgarh.
 
 It is our belief that upon successful completion of these initiatives,
 the Group would have demonstrated truly unique models of sustainability
 and community support Initiatives that would truly bring ''dignity to
 human IHe1.
 
 Outlook
 
 Despite continual business progress and sustained business operations
 as well as an open offer process under SEBI Substantial Acquisition and
 Takeover Regulations (SAST Regulations) has been completed by the
 promoter group by acquiring additional 20% of the Company and promoter
 holding aggregating to 74.94% In the Company during the year under
 review, the price performance of the Company''s stock on the stock
 exchanges has not been highly encouraging.
 
 The coming years are crucial for the power sector in the country as
 there are new challenges, of course, coupled with new opportunities. It
 Is a fact that any organization will be able to prosper or survive only
 if it is able to survive emerging trends and is capable of transforming
 itself continuously on the ground to meet the new challenges and
 address them decisively.
 
 While the economic outlook in the short and medium term Is challenging
 and fraught with uncertainties, the Indian economic growth potential
 and unfulfilled demand for power generation in India is expected to
 continue through the coming decade. With increasing shortages of
 supplies from Coal India, we expect only Indian power generators who
 have been successful In securing their fuel supplies would passthrough
 this phase successfully and in fact, will have an opportunity to
 outlive these tumultuous times.
 
 It is anticipated that with all these initiatives, KSK is well
 positioned in this regard. The reasonably sized effective operation
 asset base coupled with the 3.6 GW project under execution, the Company
 would have demonstrated its ability to respond effectively. In the
 coming year, the Company will continue to look for the most efficient
 forms ofdebtfinancingfbrthe Company and its operations.
 
 I thank you for your continued encouragement, trust, tremendous support
 and faith shown in your Company, which allowed us to create value for
 your Company. It would be our endeavor to ensure that the Company
 evolves into one of the India''s largest diversified power developers.
 
 I also express my gratitude to all my colleagues on the Board for their
 continued support. I also convey my sincere gratitude to different
 Governmental Agencies and Authorities at the Centre and States and to
 Regulatory Authorities, Lending Institutions and the Shareholders for
 their consistent support. I also thank every employee of the Company
 for their contribution to the growth of the Company.
 
 The great thing In the world Is not so much where we stand, as In what
 direction we are moving said, Oliver Wendell Holmes the renowned
 American physician and poet. We have to look to the future with
 optimistic attitude and we are aware that we are currently operating In
 a highly challenging environment.
 
 
 T.L. Sankar 
 
 Chairman