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Bharat Heavy Electricals

BSE: 500103|NSE: BHEL|ISIN: INE257A01026|SECTOR: Infrastructure - General
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« Mar 15
Notes to Accounts Year End : Mar '16
1 a) Cash credit limit from banks aggregating to Rs. 5000 crore
 (previous year Rs. 5000 crore) and Company''s counter guarantee /
 indemnity obligations in regard to bank guarantee / letters of credit
 limit aggregating to Rs. 55000 Crore (previous year Rs. 55000 Crore)
 sanctioned by the consortium banks are secured by first charge by way
 of hypothecation of raw materials, components, work in progress,
 finished goods, stores, trade receivables and other current assets both
 present and future. The outstanding bank guarantees as at 31.03.2016 is
 Rs. 45834 Crore (previous year Rs. 44915 Crore).
 
 b) Corporate Guarantees outstanding as on 31.03.2016 is Rs. 3028.33
 Crore (Previous year Rs. 2752.27 Crore).
 
 2 Other payable/ liabilities include a sum of Rs. 100.51 Crore
 (previous year Rs. 100.51 Crore) towards guarantee fee demanded by the
 Government of India in respect of foreign currency loans taken by the
 Company at the instance of the Government upto 1990-91. The matter for
 its waiver has been taken up with the Government since there was no
 stipulation for payment of such guarantee fee at the time the loans
 (guaranteed by Government) were taken by the company. The Company vide
 letter dated 09.02.2015 has again requested Department of Heavy
 Industries (DHI) for waiver of the guarantee fee.
 
 3 Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon was taken on
 April 1, 1999 from Ministry of New and Renewable Energy (MNRE) on lease
 for a period of 30 years The formal lease agreement with the Ministry
 of New and Renewable Energy (MNRE) is yet to be finalised.
 
 4 Balances shown under Trade Receivables, Long term Trade receivable,
 Trade payables, contractors advances, deposits and stock/ materials
 lying with sub-contractors/ fabricators are subject to confirmation,
 reconciliation & consequential adjustment, if any. As the Company is in
 the business of long term construction contracts, bills are raised on
 the customers as per contract by the units located at various places as
 per the approved billing schedule by the customer and the
 reconciliation is carried out on ongoing basis & provisions made,
 wherever considered necessary. Final reconciliation with customer is
 being done on completion of project (Trial Operation and/ or PG Test
 completed). The total receivables (including long term) are Rs. 42886
 crs (including deferred debts & other debts of Rs. 20750 crs presently
 not due for payment and Rs. 6002 crs outstanding in respect of
 completed projects), out of which, the projects reconciled with
 customers have outstanding debts of Rs. 3998 crs in respect of
 completed projects.
 
 5 The details of Research & Development Expenditure incurred during
 the year which is eligible (other than land or building) of deduction
 under section 35 (2AB) of the Income Tax Act. 1961.
 
 6 The disclosure relating to derivative instruments:
 
 a) The derivative instruments that are hedged and outstanding as on
 31.03.2016 is Nil (previous year Nil).
 
 b) The foreign currency exposures that are not hedged by a derivative
 instrument or otherwise are as under :
 
 7 The disclosure relating to AS-15 (R) – Employee Benefits
 
 a) Gratuity Plan
 
 The gratuity liability arises on account of future payments, which are
 required to be made in the event of retirement, death in service or
 withdrawal. The liability has been assessed using projected unit credit
 actuarial method.
 
 Assumptions- Discounting rate 8.00% (prev. year 8.00%), Future salary
 increase 8.25% for 1st four years & then 6% p.a. (prev. year 6.00%).,
 Expected rate of return on plan assets 8.50% (prev. year 8.50%).
 
 c) Long Term Leave Liability (EL/HPL)
 
 The company provides for earned leave benefit and half pay leave to the
 employees of the company which accrue half yearly at 15 days (maximum)
 and 10 days respectively. The earned leave is encashable while in
 service and upto a maximum of 300 days on retirement. Half pay leave is
 encashable within 3 months prior to superannuation or on separation
 beyond the age of 50 years subject to the overall ceiling of 480
 days.The leave liability has been treated as other long term benefits
 and has been assessed using projected unit credit actuarial method.
 
 8 Related Party Transactions:
 
 i) Related Parties where control exists (Joint Ventures):
 
 Powerplant Performance Improvement Ltd.  BHEL-GE Gas Turbine Services
 Pvt. Ltd.  NTPC-BHEL Power Projects Pvt. Ltd.  Latur Power company Ltd.
 Raichur Power Corporation Ltd.  Dada Dhuniwale Khandwa Power Ltd.
 
 ii) Other related parties (Key Management Personnel- Functional
 Directors: existing & retired and Company Secretary):
 
 CMD : Shri Atul Sobti (w.e.f. 01.01.2016) , Shri B.P.Rao (upto
 31.12.2015) Functional Directors : S/Shri P. K. Bajpai (upto
 31.05.2015) , R Krishnan (upto 31.07.2015) , W V K krishnashankar (upto
 31.08.2015), T.N.Veeraraghavan (upto 30.06.2015), D. Bandyopadhyay
 (w.e.f. 01.08.2015), Amitabh Mathur (w.e.f. 01.09.2015), S. Biswas
 (w.e.f. 24.09.2015), T. Chockalingam (w.e.f. 11.02.2016) & Company
 Secretary : Shri IP Singh
 
 9 Joint Ventures
 
 Pursuant to compliance of Accounting Standard-27 issued by the
 Institute of Chartered Accountants of India, relevant disclosures
 relating to Joint ventures are as follows:
 
 10 Assets and Liabilities are classified between Current and
 Non-current considering 12 months period as operating Cycle.
 
 11 Item of expense and income less than Rs. one Lakh are not considered
 for booking under Prior Period Items.
 
 12 There are net outstanding debts of Rs. 2139 crs (after adjustment of
 advances) pertaining to 31 projects on hold due to various reasons like
 environment clearance, fuel linkage, land acquisition, fund
 constraints, force majeure, hold imposed by BHEL due to strategic
 reasons etc. FG/ WIP of Rs. 967 crs is also lying in these projects.
 Provision of Rs. 1069 crs for outstanding debts and Rs. 120 crs for
 inventory has been made during the year for these projects in line with
 the guidelines formulated in this regard.
 
 13 Previous year''s figures have been regrouped/ rearranged wherever
 considered necessary.
Source : Dion Global Solutions Limited
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