1.1 Cash equivalent of deemed export benefits availed of Rs. 209.99
crore in respect of supplies affected for East South Inter Connector-ll
Transmission Project (ESI) and Sasaram Transmission Project (STP), were
paid to the Customs and Central Excise Authorities in accordance with
direction from Ministry of Power (Govt, of India) during 2002-03 due to
non availability of World Bank loan for the entire supplies in respect
of ESI project and for the supplies prior to March 2000 in respect of
STP project and the same was capitalised in the books of accounts.
Thereafter, World Bank had financed both the ESI project and STP
project as originally envisaged and they became eligible for deemed
export benefits. Consequently, the company has lodged claims with the
Customs and Excise Authorities.
In the regard the Cumulative amount received and de-capitalized upto
31st March 2013 is Rs. 12.12 crore (Previous year Rs. 12.12 crore). The
company continued to show the balance of Rs. 197.87 crore as at 31st
March 2013 (Previous year Rs. 197.87 crore) in the capital cost ofthe
respective assets / projects pending receipt ofthe same from Customs
and Excise Authorities.
1.2 Out of the proceeds of Follow on Public Offer (FPO) made in
Financial Year 2010-11, a sum of Rs. 750 crore (Previous Year
Rs.1371.17 crore) has been utilised during the year for part financing
of capital expenditure on the projects specified for utilization
resulting in complete utilisation of funds amounting to Rs. 3721.17
crore raised through FPO.
1.3 a) Certain balances in Loans and Advances & Trade Payables are
subject to confirmation and consequential adjustments, if any.
b) In the opinion of the management, the value of any of the assets
other than fixed assets and non current investments on realization in
the ordinary course of business will not be less than value at which
they are stated in the Balance Sheet.
1.4 The company has been entrusted with the responsibility of billing
collection and disbursement (BCD) ofthe transmission charges on behalf
of all the ISTS (Interstate transmission System) licensees through the
mechanism ofthe POC (Point of Connection) charges introduced w.e.f.
01-07-2011 which involves billing based on approved drawal/injection of
power in place of old mechanism based on Mega Watt allocation of power
by Ministry of Power. By this mechanism, revenue of the company will
Some of the beneficiaries aggrieved by the POC mechanism have preferred
appeal before various High Courts of India and continue to make payment
as per old system of billing. Due to this, an unrealized amount of Rs.
273.27 crore (previous yearRs. 141.56 crore) is included in Trade
Receivables. All such appeals have been transferred to Delhi High Court
as per order ofthe Supreme Court on the appeal preferred by the company
and company has also requested for directing agitating states to pay
full transmission charges as per new methodology pending settlement of
1.5 (i) FERV Loss ofRs. 1660.02 crore includingRs. 671.89 crore for
Previous Year (previous year FERV loss Rs.882.14 crore) has been
adjusted in the respective carrying amount of Fixed Assets/Capital work
in Progress (CWIP)/lease receivables.
(ii) FERV Gain of Rs.1.16 crore (Previous Year FERV Loss Rs.2.23 crore)
has been recognised in the Statement of Profit and Loss.
1.6 Effect due to change in accounting policies during the year -
i) Ministry of Corporate Affairs, Government of India through circular
no.25/2012 dated 9th August 2012 has clarified that Para 6 of
Accounting Standard (AS)-ll and para 4(e) of AS 16 shall not apply to
company which is applying para 46A of AS 11. Consequently, exchange
differences arising on settlement/translation of foreign currency loans
to the extent regarded as an adjustment to interest cost as per para
4(e) of AS 16 and charged to the statement of profit and loss have now
been adjusted in the cost of related capital assets. This change in
accounting policy is made effective from 01 April 2011.This change has
resulted in increase in Profit before tax for the year byRs. 122.95
crore (includingRs. 66.12 crore for FY 11-12).
ii) In view of opinion ofthe Expert Advisory Committee ofthe Institute
of Chartered Accountants of India, unspent expenditure, out ofthe
budget for the year towards Corporate Social Responsibility(CSR), which
was hitherto being provided for in the statement of Profit & Loss is
now being transferred to CSR reserve by appropriating profit. The
change has resulted in increase in profit before tax for the year by
Rs. 26.06 crore (including Rs.15.26 crore write back of provision for
earlier years ).
1.7 Borrowing cost capitalised during the year is Rs. 1824.93 crore
(previous Year Rs. 1667.14 crore) as per AS 16- Borrowing Cost.
1.8 Pending approval ofthe Performance Related Pay ( PRP ) scheme for
workmen, provision of Rs.41.48 crore (includingRs. 21.87 crore for
earlier years) has been made net of payments made as per old
Performance Linked Incentive Scheme.
1.9 Disclosures as per Accounting Standard (AS) 15
Defined employee benefit/ contribution schemes are as under:-
Company pays fixed contribution to Provident Fund at predetermined rate
to a separate trust, which invests the funds in permitted securities.
Contribution to family pension scheme is paid to the appropriate
authorities. The contribution to the fund for the year amounting to Rs.
66.57 crore(previous yearRs.60.69 crore) has been recognized as expense
and is charged to Statement of Profit and Loss. The obligation of the
company is limited to such fixed contribution and to ensure a minimum
rate of interest on contributions to the members as specified by GOI.
As per the report of actuary over all interest earning and cumulative
surplus ''is more'' than statutory interest payment requirement. Hence,
no further provision is considered necessary.
The company has a defined 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 on
superannuation, resignation, termination, disablement or on death
subject to a maximum ofRs. 10 lacs. The scheme is funded by the company
and is managed by a separate trust. The liability for the same is
recognised on the basis of actuarial valuation on annual basis
The Company has scheme of employees defined Pension Contribution.
Company contribution is paid to separate trust. Amount of contribution
paid/payable for the year isRs. 52.24 crore (Previous Year Rs. 30.36
crore) has been recognised as expense and is charged to statement of
profit & loss.
D. Post-Retirement Medical Facility (PRMF)
The company has Post-Retirement Medical Facility (PRMF), under which
retired employees and the spouse are provided medical facilities in the
empanelled hospitals. They can also avail treatment as Out-Patient
subject to a ceiling fixed by the company. The scheme is unfunded and
liability for the same is recognised on the basis of actuarial
valuation on annual basis on the Balance Sheet date.
E. Other Defined Retirement Benefits (ODRB)
The Company has a scheme for settlement at the time of superannuation
at home town for employees and dependents to superannuated employees.
The scheme is unfunded and liability for the same is recognised on the
basis of actuarial valuation on annual basis on the Balance Sheet date.
1.10 Segment information (AS 17):
a) Business Segments
The company''s principal business is transmission of bulk power across
different States of India. However, telecom and consultancy business
are also treated as a reportable segment in accordance with para 28
ofAS-17 Segment Reporting.
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 comprising of net fixed
assets, construction work-in-progress, construction stores,
investments, loans and advances and current assets. Segment liabilities
include long term and short term borrowings, current and non current
liabilities and provisions
d) The operation of the company mainly carried out within the country
and therefore there is no reportable geographical segment.
1.11 Related Party Disclosures:-
a) List of Related Parties:-
i) Key Management Personnel
Sh. R.N. Nayak Chairman and Managing Director
Sh. R.T. Agarwal Director (Finance)
Sh. Ravi P Singh Director(Personnel) w.e.f. 01.04.2012
Sh. R.P. Sasmal Director(Operations) w.e.f. 01.08.2012
i) Power System Operation Corporation Limited (POSOCO)
ii) Powergrid NM Transmission Limited
iii) Powergrid Vemagiri Transmission Limited
ii) Torrent Power Grid Limited
iii) Jaypee Powergrid Limited
iv) Parbati Koldam Transmission Company Limited
v) TeestavalleyPowerTransmission Limited
vi) North East Transmission Company Limited
vii) National High Power Test Laboratory Private Limited
viii) Energy Efficiency Services Limited.
ix) BiharGridCompany Limitedw.e.f . 04.01.2013
x) Kalinga Bidyut Prasaran Nigam Private Limited w.e.f. 31.12.2012
xi) Cross Border Power Transmission Company Limited w.e.f. 11.08.2012
1.12 In accordance with Accounting Standard (AS-28) Impairment of
Assets, impairment analysis of assets of transmission activity &
telecom activity of the company by evaluation of its cash generating
units, was carried out by an outside agency in the year 2004-05 &
2006-07 respectively and since recoverable amount was more than the
carrying amount thereof, no impairment loss was recognised. The company
has assessed as on the balance sheet date whether there are any
indications with regard to impairment of any of the assets. Based on
such assessment it has been ascertained that no potential loss is
present and therefore no formal estimate of recoverable amount has been
made. Accordingly, no impairment loss has been provided in the
1.13 Capital and Other Commitments
i) Estimated amount of contracts remaining to be executed on capital
account and not provided for is Rs. 43190.76 crore (previous
ii) As at 31st March,2013, the company has commitment ofRs.1005.31
crore (previous yearRs.149.36 crore) towards further investment in
joint venture entities.
iii) As at 31st March,2013, the company has commitment of Rs. 183.33
crore towards further investment in subsidiary companies.
1.14 Contingent Liabilities
1. 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
forRs. 172.60 crore (previous yearRs. 73.15 crore) seeking enhancement
of the contract price, revision of work schedule with price escalation,
compensation forthe extended period of work, idle charges etc. These
claims are being contested bythe Company as being not admissible in
terms ofthe provisions ofthe respective contracts.
The company is pursuing various options under the dispute resolution
mechanism available in the contract for settlement of these claims. It
is not practicable to make a realistic estimate of the outflow 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. 2522.64
crore (previous year Rs.1765.09 crore) has been estimated.
In respect of claims made by various State/Central Government
Departments/Authorities towards building permission fees, penalty on
diversion of agriculture land to non-agriculture use, Nala tax, water
royalty etc. and by others, contingent liability of Rs.2.73 crore
(previous year Rs.11.72 crore ) has been estimated.
(iv) Disputed Income Tax/Sales Tax/Excise/Municipal Tax Matters
Disputed Income Tax/Sales Tax/Excise/Municipal Tax Matters amounting to
Rs. 294.86 crore (previous year Rs. 257.86 crore) are pending before
various Appellate Authorities and contested before various Appellate
Authorities. Many of these matters are disposed off in favour of the
company but are disputed before higher authorities by the concerned
a) Other contingent liabilities amounts to Rs. 89.78 crore (previous
yearRs. 80.16 crore)
b)Some of the beneficiaries have filed appeals against the tariff
orders of the CERC. The amount of contingent liability in this regard
is not ascertainable.
2. Special purpose vehicle(SPV) company namely Powergrid NM
Transmission Company Ltd. (wholly owned subsidiary) (erstwhile
Nagapaffinam Madugiri Transmission Company Ltd.) and Powergrid Vemagiri
Transmission Company Ltd. (wholly owned subsidiary) (erstwhile Vemagiri
Transmission System Limited) has been taken over to carry over the
business awarded under Tariff based bidding. Bank guarantee ofRs.
45.00 crore (previous yearRs. 45.00 crore) and Rs. 36.00 crore
(previous year Nil) respectively has been given by the company on
behalf of SPV towards performance of the work awarded.
1.15 a) Figures have been rounded off to nearest rupees in crore up to
b) Previous year figures have been regrouped / rearranged wherever