Girish,

Even without "-v" option the sftp works. But "-v" option gives the details of sftp connection and what exactly it is doing.
When you changed the code, you have grep'ed the 1st file (sftp1.log) instead of 2nd file (sftp2.log).

sftp1.log gives you the details of the command that is executed from the batch file but sftp2.log gives you the details of the connection such as servername, port, authentication of key, bytes per second and transfer status.