1.  Basis of Preparation of financial statements
 
 The financial statements are prepared on accrual basis of accounting
 under the historical cost convention and in accordance with generally
 accepted accounting principles and applicable Accounting Standards in
 India.
 
 2.  Reserves And Surplus
 
 2.1 Self insurance reserve is created @ 0.1% p.a. on gross Block of
 Fixed Assets (except valve halls of HvDC Bi-pole, HvDC equipments, SvC
 substations and series compensators) as at the end of the year by
 appropriating current year profit towards future losses which may arise
 from un-insured risks. The same is shown as Self insurance reserve
 under ''Reserves & Surplus''.
 
 2.2 LDC Development fund shall be created in respect of charges
 collected on account of return on equity, interest on loan,
 depreciation and other income of the Regional Load Despatch Centre and
 National Load Despatch Centre such as registration fee, application
 fee, short-term open access charges etc. The fund shall be utilized for
 loan repayment, servicing the capital raised in the form of interest
 and dividend payment, meeting stipulated equity portion in asset
 creation and margin money for raising loan from the financial
 institutions and funding R&D projects.
 
 2.3 In accordance with the scheme of earmarking 1% of net profits of
 the preceding financial year towards Corporate Social Responsibility
 (CSR), unutilized money during an year shall be credited to CSR
 reserves. Any expenditure above 1% of the preceding year shall be
 adjusted against such reserve.
 
 3.  Grants-in-aid
 
 3.1 grants-in-aid received from Central government or other authorities
 towards capital expenditure for projects, betterment of transmission
 systems and specific depreciable assets are shown as grants-in-aid
 till the utilization of grant.
 
 3.2 on capitalization of related assets, grants received for specific
 depreciable assets are treated as deferred income and recognized in the
 profit and loss account over the useful period of life and in
 proportion to which depreciation on these assets is provided.
 
 4.  Fixed assets
 
 4.1 Fixed assets are shown at historical cost comprising of purchase
 price and any attributable cost of bringing the assets to its working
 condition for its intended use.
 
 4.2 In the case of commissioned assets, deposit works/cost-plus
 contracts where final settlement of bills with contractors is yet to be
 affected, capitalisation is done on provisional basis subject to
 necessary adjustments in the year of final settlement.
 
 4.3 Assets and systems common to more than one transmission system are
 capitalised on the basis of technical estimates/ assessments.
 
 4.4 Transmission system assets are considered ''Ready for intended use'',
 for the purpose of capitalization, after test charging/successful
 commissioning of the systems/assets and on completion of stablization
 period wherever technically required.
 
 4.5 The cost of land includes provisional deposits,
 payments/liabilities towards compensation, rehabilitation and other
 expenses wherever possession of land is taken.
 
 4.6 Expenditure on levelling, clearing and grading of land is
 capitalised as part of cost of the related buildings.
 
 4.7 Insurance spares, other than mentioned in 4.9 below, which can be
 used only in connection with an item of fixed asset and whose use is
 expected to be irregular are capitalized and depreciated over the
 residual useful life of the related plant & machinery.
 
 4.8 Mandatory spares, other than mentioned in 4.9 below, in the nature
 of sub-station equipments /capital spares i.e.
 stand-by/service/rotational equipment and unit assemblies either
 procured along with the equipments or subsequently, are capitalized and
 depreciation is charged in accordance with the relevant accounting
 standard.
 
 4.9 Items of Insurance / Mandatory spares, covered under 4.7 & 4.8
 above, are charged to revenue, if the year of purchase and consumption
 is same.
 
 5.  Capital Work in Progress (CWiP)
 
 5.1 Cost of material consumed, erection charges thereon along with
 other related expenses incurred for the projects are shown as CwIP till
 capitalization.
 
 5.2 Expenditure of Corporate office, Regional offices and Projects,
 attributable to construction of fixed assets are identified and
 allocated on a systematic basis to the cost of the related assets.
 
 5.3 Interest during construction and expenditure (net) allocated to
 construction as per policy No. 5.2 above (allocated to the projects on
 prorata basis to their capital expenditure), are apportioned to capital
 work in progress (CwIP) on the closing balance of Specific asset or
 part of asset being capitalized. Balance, if any, left after such
 capitalization is kept as a separate item under the CwIP Schedule .
 
 5.4 Deposit works/cost-plus contracts are accounted for on the basis of
 statement received from the contractors or technical assessment of work
 completed.
 
 5.5 Unsettled liability for price variation/ exchange rate variation in
 case of contracts are accounted for on estimated basis as per terms of
 the contracts.
 
 6.  Intangible assets
 
 6.1 The cost of software (which is not an integral part of the related
 hardware) acquired for internal use and resulting in significant future
 economic benefits, is recognized as an intangible assets in the books
 of accounts when the same is ready for use.
 
 6.2 Afforestation charges paid for acquiring right-of-way of laying
 transmission lines are accounted for as intangible assets and same are
 amortized over the useful life of related assets.
 
 7.  Construction stores
 
 7.1 Construction stores are valued at cost.
 
 8.  Borrowing Cost
 
 8.1 All the borrowed funds ( except short term funds for working
 capital) are earmarked to specific projects. The borrowing costs
 (including bond issue expenses, interest, front end fee, guarantee fee,
 management fee etc.) are allocated to the projects in proportion to the
 funds so earmarked.
 
 8.2 The borrowing costs so allocated are capitalised or charged to
 revenue, based on whether the project is under construction or in
 operation.
 
 8.3 Foreign exchange rate variation (FERv) (Unfavorable) on foreign
 currency borrowings, to the extent it does not exceed the difference
 between the local currency borrowing cost and foreign currency
 borrowing cost, is treated as borrowing cost.
 
 9.  Transactions in foreign Currency
 
 9.1 Transactions in foreign currencies are initially recorded at the
 exchange rate prevailing on the date of transaction.  Foreign currency
 loans, deposits and liabilities are translated or converted with
 reference to the rates of exchange ruling on the date of the Balance
 Sheet.
 
 9.2 FERv (except the amount considered as ''borrowing cost'' under para
 8.3 above) arising on transactions contracted prior to April 1, 2004 is
 adjusted to carrying cost of capital work-in-progress/fixed assets in
 case of capital assets. For the transactions contracted on or after
 April 1, 2004, the same is charged to profit & loss account
 irrespective of whether the project is under construction or operation.
 
 9.3 FERv (excluding FERV during construction period for the transaction
 contracted on or after Ist April, 2004), accounted for as per policy no
 8.3 & 9.2 is recoverable/payable from the beneficiaries on actual
 payment basis as per Central Electricity Regulatory Commission (CERC)
 norms w.e.f 1st April, 2004 or Date of Commercial operation (DoCo)
 which ever is later.
 
 The above FERv to the extent recoverable or payable as per CERC norms
 is accounted for as follows:
 
 a) FERv recoverable or payable is apportioned into (i) amount adjusted
 to carrying cost of fixed assets and (ii) amount recognized as
 income/expense in profit and loss account in the same proportion in
 which FERv is apportioned between carrying cost of fixed assets and
 profit and loss account.
 
 b) FERv recoverable/payable adjusted to carrying cost of fixed assets,
 as referred in (a) above is accounted for as ''Deferred foreign currency
 fluctuation asset/liability a/c'' with a corresponding credit/debit to
 ''Deferred income/ expenditure from foreign currency fluctuation a/c''
 
 c) FERv recoverable/payable adjusted in profit and loss referred in (a)
 above is accounted for as ''Deferred foreign currency fluctuation
 asset/liability a/c'' with a corresponding credit/debit to ''Profit &
 loss account''
 
 d) ''Deferred income/expenditure from foreign currency fluctuation a/c''
 is amortized in the proportion in which depreciation is charged on such
 FERv.
 
 e) The amount recoverable/payable as per CERC norms on year to year
 basis is adjusted to the ''Deferred foreign currency fluctuation
 asset/liability a/c'' with corresponding credit/debit to the debtors.
 
 9.4 FERv upto the date of commercial operation in respect of
 transactions contracted on or after Ist April,2004, is included in the
 capital cost for the purpose of tariff. Such FERv and transmission
 charges received thereon are accounted for as under:
 
 a) Such FERv is accounted for as ''Deferred foreign currency fluctuation
 asset/liability a/c'' with a corresponding credit/debit to ''Profit &
 loss account''.
 
 b) Depreciation component of transmission charges (being 90% of such
 FERv) is adjusted against Deferred foreign currency fluctuation
 asset/liability a/c''.
 
 c) Balance 10% is adjusted against the transmission charges over the
 tenure of respective loan.
 
 9.5 FERv in respect of current assets is taken to Profit & Loss a/c.
 
 10.  Investments
 
 10.1 Current investments are valued at lower of cost and fair value
 determined on an individual investment basis.
 
 10.2 Long term investments are carried at cost less provisions, if any,
 for permanent diminution in the value of such investments.
 
 11.  Inventories
 
 11.1.  Inventories are valued at lower of the cost, determined on
 weighted average basis, and net realizable value.
 
 11.2 Steel scrap and conductor scrap are valued at estimated realizable
 value or book value, whichever is less.
 
 11.3 Mandatory spares of consumable nature and transmission line items
 are treated as inventory after commissioning of the system.
 
 11.4 Surplus materials, as determined by the management, are held for
 intended use and are included in the inventory.
 
 12.  Deferred revenue expenditure
 
 12.1 Deferred revenue expenditure created up to March 31, 2003 (prior
 to the date AS-26 became mandatory) are amortized over a period of 5
 years from the year of commercial operation/earning of revenue.
 
 12.2 Expenditure, except the cost of equipment capitalized, incurred
 for activating the last mile connectivity of major telecom links are
 amortized over the period of agreement with the customer.
 
 13.  Revenue recognition
 
 13.1.1 Transmission Income is accounted for based on tariff orders
 notified by CERC. In case of transmission projects where tariff orders
 are yet to be notified, transmission income is accounted for as per
 tariff norms and other amendments notified by CERC in similar cases. In
 such cases, the shortage/excess, if any, is adjusted based on issuance
 of final notification of tariff orders by CERC. Transmission Income in
 respect of additional capital expenditure after the date of commercial
 operation is accounted based on actual expenditure incurred on year to
 year basis.
 
 13.1.2.  Income from short term open access is accounted for on the
 basis of regulations notified by CERC.
 
 13.1.3.  The Transmission system Incentive / disincentive is accounted
 for based on certification of availability by the respective Regional
 power committees and in accordance with the norms notified / approved
 by CERC.
 
 13.1.4.  Advance against Depreciation
 
 13.1.4.1 Advance against depreciation (AAD), forming part of tariff
 pertaining upto the block period 2004-09, to facilitate repayment of
 loans, is reduced from transmission income and considered as deferred
 income to be included in transmission income in subsequent years.
 
 13.1.4.2 The outstanding deferred income in respect of AAD is
 recognized as transmission income, after 12 years from the end of the
 financial year in which the asset was commissioned, to the extent of
 difference between charge of depreciation and recovery of depreciation
 as tariff component.
 
 13.1.5 Surcharge recoverable from debtors and liquidated damages /
 warranty claims / interest on advances to suppliers are recognized when
 no significant uncertainty as to measurability and collectability
 exists.
 
 13.1.6 Telecom income is accounted for on the basis of terms of
 agreements/ purchase orders from the customers.
 
 13.1.7 Income from sole consultancy contracts are accounted for on
 technical assessment of progress of services rendered.
 
 13.1.8 In respect of ''Cost-plus-consultancy contracts'', involving
 execution on behalf of the client, income is accounted for (wherever
 initial advances received) in phased manner as under:
 
 a.  10% on issue of Notice Inviting Tender for execution
 
 b.  5% on Award of Contracts for execution
 
 c.  Balance 85% on the basis of actual progress of work including
 supplies
 
 13.1.9 Application Fees received on account of LToA Charges is
 accounted for as and when received in accordance with CERC guidelines.
 
 13.2.1 Scrap other than steel scrap & conductor scrap are accounted for
 as and when sold.
 
 13.2.2 Dividend income including interim dividend is recognized in the
 year of declaration.
 
 14.  Leased assets – Unified Load Despatch Centre (ULDC)
 
 14.1 State sector unified load dispatch centre (ULDC) assets leased to
 the SEBs are considered as Finance Lease. Net investment in such leased
 assets along with accretion in subsequent years is accounted for as
 Lease Receivables under Loans & Advances. wherever grant in-aid is
 received for construction of State Sector ULDC, lease receivable is
 accounted for net of such grant.
 
 14.2 Finance income on leased assets are recognised based on a pattern
 reflecting a constant periodic rate of return on the net investment as
 per the levellised tariff notified/to be notified by CERC.
 
 14.3 FERv on foreign currency loans relating to leased assets is
 adjusted to the amount of lease receivables and is amortised over the
 remaining tenor of lease. FERv recovery (as per CERC norms) from the
 constituents is recognised net of such amortised amount.
 
 15.  Depreciation
 
 15.1.1 Depreciation is provided on straight line method at the rates
 specified in the norms notified by CERC for the purpose of recovery of
 tariff except for the following assets in respect of which depreciation
 is charged at the rates mentioned below:
 
 a) Computers & Peripherals 30%
 
 b) Mobile Phones 33.33%
 
 c) Software 33.33%
 
 15.1.2 ULDC assets other than assets transferred to Power System
 operation Corporation Limited are depreciated @ 6.67% per annum as
 determined by CERC for levellized tariff.
 
 15.1.3 Depreciation on assets transferred to Power System operation
 Corporation Limited is provided on straight line method at the rates
 specified in the norms notified by CERC for the purpose of recovery of
 RLDC Fee and Charges.
 
 15.1.4 Depreciation on assets of telecom and consultancy business, is
 provided for on straight line method as per rates specified in Schedule
 XIv of the Companies Act, 1956.
 
 15.1.5 Depreciation on additions to/deductions from fixed assets during
 the year is charged on pro-rata basis from/up to the month in which the
 asset is available for use/disposal.
 
 15.1.6 where the cost of depreciable asset has undergone a change due
 to increase/decrease in long term liabilities on account of exchange
 rate fluctuation, price adjustment, change in duties or similar
 factors, the unamortized balance of such asset is depreciated
 prospectively over the residual life determined on the basis of the
 rate of depreciation as specified by the CERC, except for telecom
 assets where residual life is determined on the basis of rates of
 depreciation as specified in Schedule XIv of the Companies Act, 1956.
 
 15.1.7 Plant and machinery, loose tools and items of scientific
 appliances, included under different heads of assets, costing Rs.5000/-
 or less, or where the written down value is Rs.5000/- or less as at the
 beginning of the year, are charged off to revenue.
 
 15.1.8 Assets costing upto Rs.5,000/- are fully depreciated in the year
 of acquisition.
 
 15.2.1 Leasehold Land, other than acquired on perpetual lease, is
 depreciated over the tenure of the lease or 25 years whichever is lower
 in accordance with the rates and methodology specified in the Central
 Electricity Regulatory Commission (Terms and Conditions of Tariff)
 Regulations, 2009.
 
 15.2.2 In the case of assets of National Thermal Power Corporation
 Limited (NTPC), National Hydro-Electric Power Corporation Limited
 (NHPC), North-eastern electric power corporation limited (NEEPCo),
 Neyveli lignite corporation limited (NLC) transferred w.e.f. April 1,
 1992, Jammu and Kashmir Lines w.e.f. April 1, 1993, and Tehri hydro
 development corporation limited (THDC) w.e.f. August 1, 1993,
 depreciation is charged based on gross block as indicated in
 transferor''s books with necessary adjustments so that the life of the
 assets as laid down in the CERC notification for tariff is maintained.
 
 16.  Expenditure
 
 16.1 Pre-paid/prior-period items up to Rs.1,00,000/- are accounted for to
 natural heads of account.
 
 16.2 Expenditure of research and development, other than Capital
 Expenditure , are charged to revenue in the year of incurrence.
 
 16.3 Capital expenditure on assets not owned by the company is charged
 off to revenue as and when incurred.
 
 17.  Impairment of assets
 
 Cash generating units as defined in AS-28 on ''Impairment of Assets'' are
 identified at the balance sheet date with respect to carrying amount
 vis-à-vis recoverable amount thereof and impairment loss, if any, is
 recognised in the profit & loss account. Impairment loss, if need to be
 reversed subsequently, is accounted for in the year of reversal.
 
 18.  Employee Benefits
 
 18.1 The liability for retirement benefits of employees in respect of
 gratuity, which is ascertained annually on actuarial valuation at the
 year end, is provided and funded separately.
 
 18.2 The liabilities for compensated absence (both for Earned & Half
 Pay Leave), leave encashment, post retirement medical benefits &
 Settlement Allowance to employees are ascertained annually on actuarial
 valuation at the year end and provided for.
 
 19.  Provisions and Contingent Liabilities
 
 A provision is recognized when the company has a present obligation as
 a result of past event and it is probable that an outflow of resources
 will be required to settle the obligation, in respect of which a
 reliable estimate can be made based on technical valuation and past
 experience. Provisions are not discounted to its present value and are
 determined based on management estimate required to settle the
 obligation at the balance sheet date. No provision is recognized for
 liabilities whose future outcome cannot be ascertained with reasonable
 certainties. Such contingent liabilities are not recognized but are
 disclosed in the schedule of contingent liability on the basis of
 judgment of the management /independent expert. These are reviewed at
 each balance sheet date and adjusted to reflect the current management
 estimate.