CESC

1.  The operations of the Company are governed by the Electricity Act,
 2003 and various Regulations and/or Policies framed thereunder by the
 appropriate authorities.  Accordingly, in preparing the financial
 statements the relevant provisions of the said Act, Regulations etc.
 have been duly considered.
 
 2.  Earnings from sale of electricity are determined in accordance with
 the relevant orders of the Commission, where appropriate, giving due
 effect of the required adjustments including those relating to recovery
 of arrears in respect of earlier years which resulted in a net credit
 adjustment of Rs. 74.56 crore in the current year.  Such earnings are
 net of discount for prompt payment of bills and advance against
 depreciation amounting to Rs.56.91 crore (previous year : Rs.53.93
 crore) and Rs.139.68 crore (previous year : Rs.97.47 crore)
 respectively.
 
 3.  Fixed assets other than furniture, vehicles and intangible assets
 as on 31 March 2005 have been revalued which resulted in an increase in
 the value of such assets by an amount of Rs.1900.77 crore with
 corresponding credit to Revaluation Reserve.
 
 4.  Estimated amount of contracts remaining to be executed on capital
 account and not provided for is Rs. 279.74 crore (31 March, 2008:
 Rs.835.48 crore).
 
 5.  Claims against the Company not acknowledged as debts:- (a) The West
 Bengal Taxation Tribunal had held meter rentals received by the Company
 from consumers to be deemed sales under the provisions of the Bengal
 Finance (Sales Tax) Act, 1941 and that sales tax was payable on such
 rentals. Based on such findings the Commercial Taxes Directorate
 assessed Rs.0.69 crore as sales tax on meter rentals received during
 the year ended 31st March, 1993 and raised a demand of Rs.0.36 crore on
 account of interest. Against the above demand, the Company had
 deposited a sum of Rs.0.75 crore with the sales tax authorities and
 obtained a stay against the balance demand from the Deputy Commissioner
 of Commercial Taxes. The sales tax authorities also indicated their
 intention to levy such sales tax on meter rentals for the subsequent
 years as well, against which, the Company filed a writ petition in the
 Calcutta High Court and prayed for an interim order, inter alia,
 restraining the sales tax authorities from proceeding with the
 assessment for the subsequent years till disposal of the appeal. An
 interim order has been issued by the High Court permitting the sales
 tax authorities to carry out assessments but restraining them from
 serving any assessment order on the Company. The disposal of the case
 is still pending.
 
 (b) Other matters :
 
 i.  Municipal Tax : Rs.1.11 crore (31 March, 2008: Rs.0.78 crore) in
 respect of certain properties, the rates of which are disputed by the
 Company.
 
 ii.  Income Tax : Rs.0.61 crore (31 March, 2008: Rs.0.61 crore) towards
 advance tax not admitted by authorities.
 
 iii.  Water Cess : Rs. 8.13 crore (31 March, 2008 : Rs. Nil) in respect
 of interest on water cess disputed by the Company.
 
 6.  Capital works-in-progress include a sum of Rs. 1017.07 crore (31
 March, 2008 : Rs. 407.59 crore) towards expenditure incurred in respect
 of the 250 MW thermal power project at Budge Budge, before netting off
 a sum of Rs. 68.08 crore (31 March, 2008 : Rs. 51.34 crore) relating to
 income attributable to the Company’s contribution to the project and an
 amount of Rs.18.37 crore (31 March, 2008 : Rs 70.68 crore) on account
 of advances made for capital expenditure.
 
 7.  (a) The net issue proceeds of Global Depository Receipts made in
 2005-06, have been utilised for the 250 MW thermal power project at
 Budge Budge.
 
 Out of the net proceeds of 95,60,000 equity shares allotted in 2007-08
 to Qualified Institutional Buyers in accordance with Chapter XIII A of
 SEBI (DIP) Guidelines 2000, as amended, a sum of Rs. 232.76 crore
 stands placed as deposits with scheduled banks/investments with Mutual
 Funds included under Cash and Bank balances and Investments
 respectively after utilisation of the balance proceeds for
 strengthening the Company’s distribution network and for making an
 equity contribution in Haldia Energy Limited, a wholly owned subsidiary
 of the Company for the purpose of setting up a 600 MW generating
 facility in Haldia, aggregating to Rs.340.79 crore.
 
 (b) Amount lying in deposit accounts with scheduled banks as at 31st
 March 2009 includes Rs. 27.19 crore (31st March, 2008 : Rs. 12.25
 crore) appropriated upto the previous year towards Reserve for
 unforeseen exigencies and interest attributable thereto.
 
 8.  The Company has accounted for in the current year a net sum of Rs.
 269.83 crore (previous year : Rs. 257.96 crore) shown as cost
 adjustments in schedule 11 to the Profit & Loss account, based on the
 Company’s understanding of the applicable regulatory provisions in
 respect thereof, towards an estimated adjustable sum on account of cost
 of electrical energy purchased and fuel and related cost and adjustment
 relating to revenue account after giving the effect arising from the
 applicable orders for earlier years in this regard. The accurate
 quantification and disposal of the matter are being given effect to
 from time to time on receipt of necessary directions from the
 appropriate authorities.
 
 9.  Interest expenses and discounting charges in Schedule 12 and cost
 of fuel in Schedule 11 include loss of Rs. 0.02 crore, Rs. NIL and Rs.
 9.76 crore respectively (previous year: gain of Rs. 0.15 crore, Rs.
 3.57 crore and Rs. Nil respectively) due to exchange fluctuations.
 Miscellaneous Expenses in Schedule 11 include Borrowing Cost other than
 interest, amounting to Rs.3.62 crore (31 March, 2008 : Rs. 6.90 crore),
 which has been allocated to capital account.
 
 10.  Generation at the Company’s plant at Mulajore was discontinued in
 the year 2003-04 in view of its unviable cost of generation, pollution
 related issues and the observations of the Supreme Court of India.
 Necessary permissions from the appropriate authorities had been
 obtained for permanent closure of the establishment and disposal of the
 discarded assets. Such disposal had taken place during the previous
 year, which gave rise to an income of Rs. 25.89 crores in the said
 year, included in Other Income in Schedule 10.
 
 11.  Based on a review of the projected business prospects of the
 Company’s subsidiaries, inspite of present losses therein, the
 management does not foresee any permanent diminution in the value of
 the Company’s long term investments (including advance against equity)
 therein.
 
 12.  Future rentals payable in respect of non-cancellable leases for
 assets comprising various equipment and vehicles acquired after April
 1, 2001 under operating leases work out to Rs. 12.44 crore and Rs.
 32.77 crore during next one year and thereafter till five years
 respectively. There are no restrictions in respect of such leases.
 
 13.  There are no amount due to Micro and Small Enterprises, as defined
 in the Micro, Small, Medium Enterprises Development Act, 2006, based on
 information available with the Company.
 
 14.  Employee Benefits
 
 Defined Contribution Plan
 
 The Company makes contributions for provident fund and pension
 (including for superannuation) towards defined contribution retirement
 benefit plans for eligible employees. Under the said plans, the Company
 is required to contribute a specified percentage of the employees’
 salaries to fund the benefits. During the year, based on applicable
 rates, the Company has recognised Rs. 24.76 crore (previous year : Rs.
 20.75 crore) on this count in the Profit and Loss Account.
 
 Defined Benefit Plans
 
 The company makes annual contribution to the Employees Group Gratuity
 Scheme of eligible agencies for qualifying employees. Liabilities at
 the year-end for gratuity, leave encashment and medical benefits have
 been determined on the basis of actuarial valuation carried out by an
 independent actuary, based on the method prescribed in Accounting
 Standard 15
 
 15.  The Company is engaged in generation and distribution of
 electricity and does not operate in any other reportable segment.
 
 16.  The derated installed capacity of the Generating Stations of the
 Company (as per certification of technical expert) as on 31 March, 2009
 was 975000 kW (31 March, 2008 : 975000kW) .
 
 17.  Previous year’s figures have been regrouped / rearranged, wherever
 necessary.