1. The loans from IBRD, IFCW and ANZ have been granted jointly to the
Company, Tata Hydro and Tata Power. These loans have been secured or
agreed to be secured by mortgages/charges on the assets and licences
held by the said three Companies jointly as well as severally.
(ii) The debentures mentioned in (a) are secured by mortgage/charge on
the Company's assets in Gujarat and have been further secured by
mortgage/charge on its other assets as mentioned above.
(iii) In the above table of priorities of the mortgages/charges, where
the priorities are the same, the mortgages/charges rank on pari passu
basis. In cases where priority of security is shown as 'Nil', such
assets/licences do not constitute security for that loan.
(i) The debentures mentioned in (a) are redeemable at par on 22nd June,
2002, the Company having the option to redeem the same at any time
after 21st June, 1999, which have been redeemed during the year.
(ii) The debentures mentioned in (b) and (c) are redeemable at par on
26th November, 2005 and 26th November, 2008 respectively. The Company
has the call option to redeem the same at the end of 5 years from 26th
November, 1998, being the date of allotment, at a premium of 0.25% per
annum for the balance period of debentures giving 90 days prior period
(iii) The debentures mentioned in (a) are redeemable at par on 5th
July, 2009. The Company has the call option to redeem the same at the
end of 5 years from 5th July, 1999.
(iv) The debentures mentioned in (e) are redeemable at par in forty
equated quarterly instalments commencing from 15th October, 1999. The
Company has the call option to redeem the same at the end of 5 years
from 24th November, 1999, by giving 30 days prior period notice.
(v) The debentures mentioned in (f) and (g) are redeemable at par in
three annual instalments at the end of the ninth, tenth and eleventh
years from the date of allotment i.e. 22/24 November, 2008, 22/24
November, 2009 and 22/24 November, 2010. The Company has the call
option to redeem the same at the end of 5 years from 22nd November,
1999, by giving 30 days prior period notice.
3. (a) The assets and liabilities shown in the Balance Sheet include
such amounts as relate to this Company of the assets and liabilities
jointly held with The Tata Hydro-Electric Power Supply Company Limited
(Tata Hydro) and The Tata Power Company Limited (Tata Power).
(b) All expenses (other than depreciation) and income of the hydro
generating stations solely owned by the Company, Tata Hydro and Tata
Power respectively, as also expenses and income of generating stations
and divisions owned by the Company jointly with Tata Hydro and Tata
Power are considered as joint expenses and income and allocated between
the Companies in the proportion of 3:2:5.
4. (a) Accounting Standard 10 (AS-10) issued by The Institute of
Chartered Accountants of India requires financing costs relating to
borrowings attributable to the acquisition and construction of fixed
assets to be capitalised upto the date the assets are ready for use.
However, in accordance with past practice and consistent with the
treatment adopted for determination of Capital Base and Clear
Profit under the Electricity (Supply) Act, 1948, the Company has
charged financing costs to the Profit and Loss Account. The effect on
profit for the year and reserves as at the end of the year, if
financing costs had been capitalised, has not been determined.
(b) Accounting Standard 11 (AS-11) issued by The Institute of Chartered
Accountants of India requires exchange differences arising on
repayment/realignment of liabilities incurred for the purpose of
acquiring fixed assets,which are carried in terms of historical cost,
to be adjusted in the carrying amount of the respective fixed assets.
However, in accordance with past practice and consistent with the
treatment adopted for determination of Capital Base and Clear
Profit under the Electricity (Supply) Act, 1948, the Company has dealt
with such differences in accordance with the accounting policy
enunciated in Note 1 (a)(ii) above. The effect on profit for the year
and reserves as at the end of the year, if exchange differences had
been adjusted in the carrying amount of fixed assets, has not been
5. Pursuant to a change in the rate of depreciation on computers
acquired on or after 1st April, 1998 as stated in Note 1 (b)(i) above,
the depreciation charge for the year is higher by Rs.9.33 lakhs.
6. The expenses (net of applicable income) and depreciation shown in
the Profit and Loss Account include Rs.22.25 lakhs (31st March, 1999 -
Rs. 26.84 lakhs) and Rs.2.55 lakhs (31st March, 1999 - Rs. 1.98 lakhs)
respectively in respect of Research and Development activities
undertaken during the year.
7. The Special Appropriation towards Project Cost made during the year
includes Rs.353.21 lakhs, which is subject to the approval of the State
Government for which an application is being made.
8. Reasonable Return for the purposes of the Sixth Schedule to the
Electricity (Supply) Act, 1948 has been computed in accordance with
legal advice obtained by the Company regarding the correct
interpretation of the Government of India notification dated 5th May,
1999. Any adjustment necessary in this account will be made by
adjusting an equivalent amount against the Special Appropriations
towards Project Cost after obtaining the approval of the Government of
9. (a) Contingencies Reserve No.1 represents the transfer to such
reserves in terms of para IV of the Sixth Schedule to the Electricity
(Supply) Act, 1948.
(b) Contingencies Reserve No.2 represents the transfer to such reserves
in respect of the Net surplus on cancellation of foreign exchange
forward cover contracts in accordance with the approval of the State
10. The Company has been legally advised that the Company is considered
to be established with the object of providing infrastructural
facilities and accordingly, Section 372A inserted by the Companies
(Amendment) Act, 1999 effective 31st October, 1998 is not applicable to
11. The Company jointly with Tata Hydro and-Tata Power has, in
consideration of loan facilities and deferred payment guarantee
facilities aggregating to Rs.950 crores and Rs.520 crores respectively
extended by the Financial Institutions and Banks to Haldia
Petrochemicals Limited (HPL), given an undertaking to such Financial
Institutions and Banks not to dispose of its investments in HPL without
their prior consent so long as any part of the loan/guarantee limits
sanctioned by them to HPL remains outstanding as also to meet
shortfall, if any, which may arise in respect of project completion or
working capital requirements. Through a separate inter se agreement
among the promoters of HPL, the Companies' liability in relation to the
shortfall, if any, will be borne by the promoters in the ratio of their
shareholding in HPL the Company's share being 2.14%.
12. The Company has investments of Rs. 2264.64 lakhs in the preference
shares of Tata Ceramics Limited. (TCL). During the year loans due from
TCL aggregating to Rs. 537.44 lakhs and interest accrued thereon
aggregating to Rs. 103.65 lakhs have been converted into Preference
Shares and the balance aggregating to Rs. 115.17 lakhs has been treated
as advances towards investment in Preference Shares. Further, the
Company has issued guarantees on behalf of TCL to third parties jointly
with Tata Hydro and Tata Power aggregating to Rs. 949.42 lakhs. TCL
has incurred substantial losses but having regard to the long term
involvement of the Company, Tata Hydro and Tata Power with TCL and the
programme for the rehabilitation of TCL, no provision has been made on
this account. However, the Company's equity investment in TCL has been
fully written down.
13. Capital commitments not provided for are estimated at Rs. 5921.38
lakhs, as certified by a Whole-time Director (31st March, 1999 -
14. Certificate of Deposit in foreign currency with State Bank of
India, London Rs.21 580.03 lakhs (31st March, 1999- Rs. 19899.88 lakhs)
and with State Bank of India, New York Rs. 15082.68 lakhs (31st March,
1999 - Rs. 13133.30 lakhs), amount in Current Account with Chase
Manhattan Bank, New York Rs.Nil (31st March, 1999 - Rs. 119.19 lakhs)
and Call Deposits with banks in foreign currency Rs.Nil (31st March,
1999 - Rs.7288.02 lakhs) are out of the proceeds of the Euro Notes
issued and interest earned thereon.
15. The Company jointly with Tata Hydro and Tata Power has entered into
financial lease agreements for assets taken on lease, of which the
Company's share of cost of assets aggregates Rs.2424.48 lakhs (31st
March, 1999-Rs.2424.48 lakhs). The Company's share of future lease
rental obligations on these assets aggregates Rs.324.95 lakhs (31st
March, 1999-Rs. 531.96 lakhs). Lease rentals of Rs. 206.77 lakhs
(1998-99 - Rs. 274.16 lakhs) payable for the year have been charged to
the Profit and Loss Account.
16. The Wage Agreement entered into by the Company with the employees
had expired on 31st December, 1997 and provision on an estimated basis
of additional liability for the period from 1St January, 1998 to 31st
March, 1999 had been made under item 1(a) of Schedule2. The fresh
agreement which was under negotiation was finalised during the year.
Accordingly, the provision in respect of arrears paid, made in earlier
years, was reversed in item 1(a) of Schedule 2 and the arrears
payable under the agreement are charged in the respective heads under
'Payments to and Provisions for Employees' in Schedule 2.
17. 14% Eleventh Debentures of the face value of Rs. 1479.82 lakhs
redeemed by the Company have been kept alive for reissue.
18. The Company has cancelled the forfeiture of 590 shares on which
dividend for previous year aggregating to Rs. 2,183 has become payable.
19. Other Advances include Rs.2110.17 lakhs (31st March, 1999-Rs.Nil)
being application money/advances towards proposed investment in shares
20. Under agreements for an aggregate value of U.S.Dollars 55 million
made between the Company jointly with Tata Hydro, Tata Power and (a)
Diamond Lease Company Limited and (b) Mitsui Leasing and Development
Limited and other Companies, all of Japan, the Companies have sold for
cash and simultaneously repurchased on deferred payment basis part of
the equipment acquired for the Trombay 2nd 500MW (Unit 6) Project with
a view to obtaining from the said parties loans for financing part of
the cost of the Project. The deferred payment obligations [item (c) -
Schedule D under the above arrangements have been guaranteed by State
Bank of India against :-
(a) a first charge created over the entire moveable/immoveable assets
of the Company, both present and future, but subject to charges
created/to be created in favour of bankers on the current assets. The
above charges will rank on a pari passu basis with charges in favour of
existing lenders for their loans for the 1st 500MW Unit and 2nd 500MW
Unit and in favour of some of the debenture trustees and
(b) a counter guarantee furnished by the Company jointly with Tata
Hydro and Tata Power.
21. Under an agreement for an aggregate value of Japanese Yen 1440
million made between the Company jointly with Tata Hydro, Tata Power
and Kanematsu Corporation, Japan, the Companies have obtained
supplier's credit for part financing the import of equipment for 245 kV
Gas Insulated Switchgear for Borivli Receiving Station. The deferred
payment obligations [item (a) - Schedule D) under the above
arrangements have been guaranteed by State Bank of India.
22. (a) Sundry Creditors [item (b) under 'Current
Liabilities'-ScheduleH] include Rs. 2.47 lakhs (31st March, 1999-Rs.
8.51 lakhs) due to small scale and ancillary undertakings. This amount
has been determined to the extent such parties have been identified
from available information.
(b) The small scale and ancillary undertaking to whom amounts
outstanding for more than 30 days together with Tata Hydro and Tata
Power, exceeded Rs. 1 lakh is as under :
Pioneer Plastic Industries.
23. Contingent Liabilities :-
(a) Claims against the Company not acknowledged as debts Rs. 3451.28
lakhs (31st March, 1999 - Rs.3339.99 lakhs).
(b) Other employee matters - amount not ascertainable.
(c) Taxation matters for which liability, is disputed by the Company
and provision is not made (computed on the basis of assessments which
have been re-opened and assessments remaining to be completed) :
Rs in lakhs
31st, March, 1999
(i) matters on which there are decisions of the
appellate authorities in the Company's favour, not
accepted by the tax authorities 1148.21 257.75
(ii) other matters in respect of which the Company
is in appeal 263.88 125.55
(iii) interest and penalty demanded 914.02 147.00
(d) In respect of guarantees issued jointly with
Tata Hydro and Tata Power on behalf of other
Companies (including guarantee of Rs.949.42 lakhs
referred to in Note 11) 1149.42 2822.04
(e) Uncalled liability on partly paid shares Nil 541.07
Note : If any liability materialises in respect of items (a) to (c)
above, the same would have to be considered for the purposes of the
computations and appropriations under the Electricity (Supply) Act,
1948, to the extent it pertains to the electricity business.
24. (a) (i) Provision has been made in the accounts for supply of gas
upto 29th January, 1987 by Oil and Natural Gas Commission (ONGC) on the
basis of their bills. The Company has been advised that the price at
which the gas is billed is to be treated as provisional. The Company
has not accepted this position.
(ii) In respect of gas supplied by ONGC from 30th January, 1987 to 15th
May, 1992, transportation charges have been billed on a provisional
basis. The Company has also been advised that the excise duty and
octroi, if levied, on the price of gas, together with the sales tax on
the excise duty, transportation charges and octroi would be recovered
from the Company, Tata Hydro and Tata Power.
(iii) Supply of gas by Gas Authority of India Ltd. (GAIL) with effect
from 1St January, 1996 to 30th September, 1997 and from 1st October,
1997 to 15th April, 1998 has been booked in the accounts on the basis
of provisional billings by GAIL. The provisional billing rates charged
by GAIL are in pursuance of pricing notification dated 31St December,
1991 and 18th September, 1997 respectively issued by Ministry of
Petroleum and Natural Gas, Government of India.
(iv) In respect of gas purchased from ONGC and later from GAIL, claims
aggregating to Rs.4009.02 lakhs (31st March, 1999 - Rs. 3071.71 lakhs)
has been made on the Company, jointly with Tata Hydro and Tata Power
towards shortfall in the off take of minimum guaranteed quantities of
gas during the years from 1992-93 to 1999-2000 which claim has been
contested by the Companies.
(v) The cost of supply of fuel by Bharat Petroleum Corporation Limited
and Hindustan Petroleum Corporation Limited during the year has been
booked in the accounts on the basis of the Company's meter readings and
not as per the bills raised by the suppliers based on their meter
readings. The difference of Rs.404.81 lakhs is being contested by the
(b) If any amount is payable by the Company jointly with Tata Hydro and
Tata Power in respect of the items referred to in (a) above, the same
would be recoverable as part of fuel surcharge from the consumers. No
provision has, therefore, been made in the accounts in respect of these
25. Other Operation Expenses [item 2(h) - Schedule 2) include Rs.
241.40 lakhs (Previous Year - Rs. Nil) towards Y2K compliance expenses.
26. Miscellaneous Expenses [item 4(k) of Schedule 2] include :
(a) Rs. 10.62 lakhs towards Y2K compliance expenses.
(b) Rs. 1.35 lakhs (Previous Year - Rs. 1.80 lakhs) being the fees of
directors as consultants/technical advisers for professional services
rendered by them. Where a car has been provided to them for
professional work in terms of their appointment, recoveries are being
made for personal use which the Company considers as sufficient.
(c) Rs. Nil (Previous Year- Rs. 15.98 lakhs) being charge paid on
prepayment of loans and debentures.
(d) Rs. 6.00 lakhs (Previous Year - Rs. Nil) being contribution to the
Electoral Trust whose objects inter alia include distribution funds
to be held by the Trustees for distribution to political parties.
27. The Company has paid during the year lumpsum amounts aggregating to
Rs.638 lakhs and monthly payments aggregating to Rs.0.90 lakh under
post retirement scheme to former Managing Directors.