1. The financial statements for the year ended 31st March 2011 were
prepared as per then applicable, Schedule VI to the Companies Act,
1956. Consequent to the Notification of Revised Schedule VI under the
Companies Act, 1956, the financial statements for the year ended 31st
March 2012 are prepared as per Revised Schedule VI. Accordingly, the
previous year figures have also been reclassified to conform to this
years classifi cation. The adoption of revised Schedule VI for
previous year figures does not impact recognition and measurement
principles followed for preparation of financial statements.
2. Amount in the financial statements are presented in Rs. crore (upto
two decimals) except for per share data and as other-wise stated.
Certain amounts, which do not appear due to rounding off, are
3. a) Certain loans & advances and creditors in so far as these have
since not been realised/discharged or adjusted are subject to confi
rmation/ reconciliation and consequential adjustment, which in the
opinion of the management is not material.
b) In the opinion of the management, the value of assets, other than fi
xed assets and non-current investments, on realisation in the ordinary
course of business, will not be less than the value at which these are
stated in the Balance Sheet.
4. The coal price Notification No 222021 /1/ 2008-CRC-UU dated
31.12.2011 issued by Ministry of Coal (MoC) proposed migration from
Useful Heat Value (UHV) to Gross Calorifi c Value (GCV) based pricing
of coal, and also increased the coal prices. This was superseded by
Notification dated 31.01.2012, partially rolling back the increase in
coal prices. Various stakeholders including power utilities and MOP
have expressed concern on the switchover from existing UHV to GCV based
pricing of coal, without having put in place the prerequisite technical
and legal framework. The issue is under deliberation at MOP and Central
Electricity Authority with MoC for an early resolution.
Pending resolution of the issues, stations are continuing to make
payment and accounting of coal as per the pre-migrated system of UHV
based pricing of coal and the difference between the amounts billed by
the coal companies and the payments made/accounted for has been shown
as contingent liability. Since fuel cost is a pass through component of
tariff, the revision of price will not have any adverse impact on the
profits of the Company.
5. The levy of transit fee/entry tax/VAT on supplies of fuel to some
of the power stations has been paid under protest as the matters are
subjudice at various courts. Probable demand for the period upto
January 2012 has been included under contingent liabilities. In case
the Company gets refund / demand from fuel suppliers/tax authorities on
settlement of these cases, the same will be passed on to respective
6. Disclosure as per Accounting Standard - 9 on Revenue Recognition
Due to uncertainty of realisation in the absence of sanction by the
GOI, the Companys share of net annual profits of one of the stations
taken over by the Company in June 2006 for the period 1st April 1986 to
31st May 2006 amounting to Rs. 115.58 crore (previous year Rs. 115.58
crore) being balance receivable in terms of the management contract
with the GOI has not been recognised.
7. Disclosure as per Accounting Standard - 11 on Effects of Changes
in Foreign Exchange Rates The effect of foreign exchange fl uctuation
during the year is as under:
i) The amount of exchange differences (net) debited to the statement of
profit & loss is Rs. 19.66 crore (previous year Rs. 6.50 crore).
ii) The amount of exchange differences (net) debited to the carrying
amount of fixed assets is Rs. 1,661.21 crore (previous year Rs. 168.29
8. Disclosure as per Accounting Standard - 12 on Accounting for
Government Grants Revenue grants recognised during the year is Rs. 0.24
crore (previous year Rs. 0.43 crore).
9. Disclosure as per Accounting Standard - 15 on Employee Benefits
General description of various defi ned employee benefit schemes are
A. Provident Fund
Company pays fixed contribution to provident fund at predetermined
rates to a separate trust, which invests the funds in permitted
securities. Contribution to family pension scheme is paid to the
appropriate authorities. The contribution of Rs. 173.46 crore (previous
year Rs. 191.19 crore) to the funds for the year is recognised as expense
and is charged to the statement of profit and loss. The obligation of
the Company is to make such fixed contribution and to ensure a minimum
rate of return to the members as specifi ed by GOI. As per report of
the actuary, overall interest earnings and cumulative surplus is more
than the statutory interest payment requirement. Hence no further
provision is considered necessary.
B. Gratuity & Pension
The Company has a defi ned benefit gratuity plan. Every employee who
has rendered continuous service of five years or more is entitled to
get gratuity at 15 days salary (15/26 X last drawn basic salary plus
dearness allowance) for each completed year of service subject to a
maximum of Rs. 0.10 crore on superannuation, resignation, termination,
disablement or on death.
The Company has a scheme of pension at one of the stations in respect
of employees taken over from erstwhile state government power utility.
In respect of other employees of the Company, pension scheme is yet to
be implemented as stated in Note 11 b) above.
The existing schemes are funded by the Company and are managed by
separate trusts. The liability for the same is recognised on the basis
of actuarial valuation.
C. Post-Retirement Medical Facility (PRMF)
The Company has Post-Retirement Medical Facility (PRMF), under which
retired employee and the spouse are provided medical facilities in the
Company hospitals/empanelled hospitals. They can also avail treatment
as out-patient subject to a ceiling fixed by the Company. The
liability for the same is recognised on the basis of actuarial
D. Terminal Benefits
Terminal benefits include settlement at home town for employees &
dependents and farewell gift to the superannuating employees. Further,
the Company also provides for pension in respect of employees taken
over from erstwhile State Government Power Utility at another station.
The liability for the same is recognised on the basis of actuarial
The Company provides for earned leave benefit (including compensated
absences) and half-pay leave to the employees of the Company which
accrue annually at 30 days and 20 days respectively. 73.33 % of the
earned leave is en-cashable while in service, and upto a maximum of 300
days on separation. Half-pay leave is en-cashable only on separation
beyond the age of 50 years up to the maximum of 240 days (HPL) as per
the rules of the Company. The liability for the same is recognised on
the basis of actuarial valuation.
The above mentioned schemes (C, D and E) are unfunded and are
recognised on the basis of actuarial valuation.
The summarised position of various defi ned benefits recognised in the
statement of profit and loss, balance sheet are as under:
G. Actual return on plan assets Rs. 94.63 crore (previous year Rs. 83.89
H. Other Employee Benefits
Provision for long service award and family economic rehabilitation
scheme amounting to Rs. 4.85 crore (previous year Rs. 2.76 crore) for the
year have been made on the basis of actuarial valuation at the year end
and debited to the statement of profit & loss.
The estimates of future salary increases considered in actuarial
valuation, take account of infl ation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
Further, the expected return on plan assets is determined considering
several applicable factors mainly the composition of plan assets held,
assessed risk of asset management and historical returns from plan
J. The Companys best estimate of the contribution towards
gratuity/pension for the financial year 2012-13 is Rs. 68.59 crore.
10. Disclosure as per Accounting Standard - 16 on Borrowing Costs
Borrowing costs capitalised during the year are Rs. 2,342.21 crore
(previous year Rs. 1,743.61 crore).
11. Disclosure as per Accounting Standard - 17 on Segment Reporting
a) Business segments
The Companys principal business is generation and sale of bulk power
to State Power Utilities. Other business includes providing
consultancy, project management and supervision, oil and gas
exploration and coal mining.
b) Segment revenue and expense
Revenue directly attributable to the segments is considered as Segment
Revenue. Expenses directly attributable to the segments and common
expenses allocated on a reasonable basis are considered as Segment
c) Segment assets and liabilities
Segment assets include all operating assets in respective segments
comprising of net fixed assets and current assets, loans and advances.
Construction work-in-progress, construction stores and advances are
included in unallocated corporate and other assets. Segment liabilities
include operating liabilities and provisions.
12. Disclosure as per Accounting Standard - 26 on Intangible Assets
Research expenditure charged to revenue during the year is Rs. 29.89
crore (previous year Rs. 28.30 crore).
b) Joint venture operations:
i) The Company along-with some public sector undertakings has entered
into Production Sharing Contracts (PSCs) with GOI for three exploration
blocks namely KG- OSN-2009/1, KG-OSN-2009/4 and AN-DWN-2009/13 under
VIII round of New Exploration Licensing Policy (NELP VIII) with 10%
participating interest (PI) in each of the blocks.
Based on the un-audited statement of the accounts for the above blocks
forwarded by M/s Oil & Natural Gas Corporation Ltd., the operator, the
Companys share in respect of assets and liabilities as at 31st March
2012 and expenditure for the year are given below:
ii) Exploration activities in the block AA-ONN-2003/2 were abandoned
due to unforeseen geological conditions & withdrawal of the operator.
Attempts to reconstitute the consortium to accomplish the residual
exploratory activities did not yield result. In the meanwhile, MoP&NG
demanded from the Company the cost of unfi nished minimum work
programme of US$ 7.516 million. During the year, provision of Rs. 41.19
crore along-with interest has been made. The Company has sought waiver
of the claim citing force majeure conditions at site leading to
discontinuation of exploratory activities.
13. Disclosure as per Accounting Standard - 28 on Impairment of
As required by Accounting Standard (AS) 28 Impairment of Assets
notified under the Companies (Accounting Standards) Rules, 2006, the
Company has carried out the assessment of impairment of assets. Based
on such assessment, there has been no impairment loss during the year.
14. Contingent Liabilities:
a) Claims against the company not acknowledged as debts in respect of:
(i) Capital Works
Some of the contractors for supply and installation of equipments and
execution of works at our projects have lodged claims on the Company
for Rs. 4,417.04 crore (previous year Rs. 3,485.85 crore) seeking
enhancement of the contract price, revision of work schedule with price
escalation, compensation for the extended period of work, idle charges
etc. These claims are being contested by the Company as being not
admissible in terms of the provisions of the respective contracts.
The Company is pursuing various options under the dispute resolution
mechanism available in the contracts for settlement of these claims. It
is not practicable to make a realistic estimate of the outfl ow of
resources if any, for settlement of such claims pending resolution.
(ii) Land compensation cases
In respect of land acquired for the projects, the land losers have
claimed higher compensation before various authorities/courts which are
yet to be settled. In such cases, contingent liability of Rs. 1,173.58
crore (previous year Rs. 1,851.08 crore) has been estimated.
(iii) Fuel Suppliers
Pending resolution of the issues disclosed in Note 32, payments and
accounting of coal are being made as per the pre-migrated system of UHV
based pricing of coal. The difference between the billing by the coal
companies on the revised GCV based price and payment released on
pre-revised UHV based price amounts to Rs. 399.39 crore (previous year Rs.
Further, an amount of Rs. 399.42 crore (previous year Rs. 182.22 crore)
towards surface transportation charges, customs duty on service margin
on imported coal etc. has been disputed by the Company.
In respect of claims made by various State/Central Government
departments/Authorities towards building permission fees, penalty on
diversion of agricultural land to non-agricultural use, nala tax, water
royalty etc. and by others, contingent liability of Rs. 877.47 crore
(previous year Rs. 1,064.40 crore) has been estimated.
(v) Possible Reimbursement
The contingent liabilities referred to in (i) above, include an amount
of Rs. 1,769.70 crore (previous year Rs. 1,495.35 crore) relating to the
hydro power project stated in Note 21 b) - Other current assets, for
which Company envisages possible reimbursement from GOI in full. In
respect of balance claims included in (i) and in respect of the claims
mentioned at (ii) above, payments, if any, by the company on settlement
of the claims would be eligible for inclusion in the capital cost for
the purpose of determination of tariff as per CERC Regulations subject
to prudence check by the CERC. In case of (iii) & (iv), the estimated
possible reimbursement is by way of recovery through tariff as per
Regulations, 2009 and others is Rs. 676.32 crore (previous year Rs. 146.97
b) Disputed Income Tax/Sales Tax/Excise Matters
Disputed Income Tax/Sales Tax/Excise matters pending before various
Appellate Authorities amount to Rs. 3,038.63 crore (previous year Rs.
2,465.26 crore). Many of these matters were disposed off in favour of
the Company but are disputed before higher authorities by the concerned
departments. In such cases, the company estimate possible reimbursement
of Rs. 2,111.54 crore (previous year Rs. 1,793.36 crore).
Other contingent liabilities amount to Rs. 327.20 crore (previous year Rs.
Some of the benefi ciaries have filed appeals against the tariff
orders of the CERC. The amount of contingent liability in this regard
is not ascertainable.
15. Capital and other commitments
a) Estimated amount of contracts remaining to be executed on capital
account and not provided for as at 31st March 2012 is Rs. 29,563.89 crore
(previous year Rs. 23,779.74 crore).
b) In respect of investments of Rs. 2,895.97 crore (previous year Rs.
2,440.72 crore) in the joint venture entities, the Company has
restrictions for their disposal ranging from two years to twelve years
from the date of incorporation/allottment of shares/commercial
operation of the projects as the case may be.
c) In respect of investments of Rs. 866.61 crore (previous year Rs. 731.34
crore) in the subsidiary Companies, the Company has restrictions for
their disposal for five years from the date of commercial operation of
the respective project.
d) As at 31st March 2012, the Company has commitments of Rs. 3,236.96
crore (previous year Rs. 2,340.91 crore) towards further investment in
the joint venture entities.
e) As at 31st March 2012, the Company has commitments of Rs. 1,419.32
crore (previous year Rs. 1,561.68 crore) towards further investment in
the subsidiary companies.
f) Companys comittment towards the minimum work programme in respect
oil exploration activities of joint venture operations has been
disclosed in Note 44 b).
g) Companys commitment in respect of further commitments relating to
lease agreements has been disclosed in Note 41.