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Power Grid Corporation of India
BSE: 532898|NSE: POWERGRID|ISIN: INE752E01010|SECTOR: Power - Generation & Distribution
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Notes to Accounts Year End : Mar '15
1.1 Cash equivalent of deemed export benefits availed of Rs. 209.99
 crore in respect of supplies effected for East South Inter Connector-
 II 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 this regard the Cumulative amount received and de-capitalized upto
 31st March 2015 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 2015 (previous year Rs. 197.87 crore) in the capital cost of
 the respective assets / projects pending receipt of the same from
 Customs and Excise Authorities.
 1.2 Out of the proceeds of Follow on Public Offer (FPO) made in
 Financial Year 2013-14, a sum of Rs. 2975 crore (Previous Year Rs.
 2346.31 crore) has been utilised during the year for part financing of
 capital expenditure on the projects and general corporate purpose as
 per objects of the issue resulting in complete utilisation of funds
 amounting to Rs. 5321.31 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 Information in respect of cost plus consultancy contracts,
 considering the same as consultancy business as required under
 Accounting Standard (AS)-7 (Revised 2002) Construction Contracts  is
 provided as under :
 1.5 The company has been entrusted with the responsibility of billing
 collection and disbursement (BCD) of the transmission charges on behalf
 of all the ISTS (Interstate transmission System) licensees through the
 mechanism of the POC (Point of Connection) charges introduced w.e.f.
 01st July 2011 which involves billing based on approved drawl/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 remain unaffected.
 Some of the beneficiaries aggrieved by the POC mechanism have preferred
 appeal before various High Courts of India. All such appeals have been
 transferred to Delhi High Court as per order of the 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 the matter. Honorable Delhi High
 Court has directed all the above beneficiaries to release payments and
 accordingly the beneficiaries have started making payments as per the
 said directions.
 1.6 CERC issued tariff order dated 29.04.2011 in respect of Barh-Balia
 Transmission line considering the date of commercial operation (DOCO)
 01.07.10 in line with their Regulation. Against this tariff order, one
 of the beneficiaries filed appeal before the Appellate Tribunal for
 Electricity (ATE) challenging the tariff approved by CERC based on
 above DOCO claimed by the company. The ATE vide its order dated
 02.07.2012 observed that the DOCO of 01.07.2010 was not appropriate as
 the appellant had reported that the transmission line was put in
 regular service from August 2011 i.e. when it was put in regular
 service when the other end in the scope of the generating company viz.
 NTPC was completed i.e. August 2011 though Company had completed its
 scope as on 01.07.2010. Accordingly, the ATE remanded CERC for
 redetermination of DOCO and tariff of the Transmission line. Upon this,
 the company filed an appeal in the Supreme Court explaining that the
 DOCO of 01.07.2010 was as per CERC Regulations. The Hon''ble Supreme
 Court on 15.03.2013 had stayed all the proceedings before the CERC for
 the said Transmission System based on the appeal filed by the Company.
 The Company had also filed another petition on 28.02.2013 before the
 Central Electricity Regulatory Commission (CERC) for determination of
 revised transmission tariff on the basis of revised cost estimate
 approved by its Board of Directors. Subsequently on 08.10.2013, in its
 interim order, the Hon''ble Supreme Court has directed the CERC to
 proceed with determination of tariff for the said Transmission System
 pending disposal of the appeal regarding determination of DOCO date.The
 decision of redetermination of DOCO is awaited from CERC.
 Since the decision of the date of DOCO is pending before the Supreme
 Court, and also considering that 01.07.2010 as the correct DOCO as per
 CERC Regulations, no adjustment has been made in respect of Revenue of
 Rs. 144.91 crore recognised for the period 01.07.2010 to 31.08.2011.
 1.7 As per CERC Grant of Connectivity, Long-term Access and
 Medium-term Open Access in inter-State Transmission and related matters
 Regulations, 2009 as amended from time to time, all transmission
 elements are constructed as per the requirement of the long term
 customers (LTA) up to 25 years and transmission charges are recoverable
 from such long term customers. For medium term open access (MTOA), no
 additional transmission element is constructed but only the existing
 surplus transmission capacities are utilised. The charges recovered
 from the MTOA customers, upon utilisation of the surplus capacity which
 is very small and temporary in nature, are used to reduce the charges
 of the LTA customers. The company is revenue neutral.
 One of the MTOA customer, signed an agreement for MTOA for a period of
 3 years from 16.06.2013 but did not utilise the capacity.  The company,
 however, billed the customer as per the agreement. But the MTOA
 customer defaulted on its dues of Rs.15.64 crore billed during the
 period from 16.06.2013 to 31.01.2014. Due to non-recovery of dues, the
 company has cancelled the MTOA w.e.f.  01.02.2014 as per order of the
 APTEL. The total transmission charges are being recovered from other
 customers since then. An application, filed by the company is pending
 before CERC for allowing recovery of the dues of such MTOA customer for
 the period from 16.06.2013 to 31.01.2014 from other customers during
 this period. The revenue of the company is not impacted
 (increase/decrease) due to grant of MTOA or cancellation thereof.
 Considering that the company is entitled to recover total transmission
 charges as per CERC sharing regulations, no provision has been made in
 the accounts for the year ended on 31.03.2015 towards the above dues of
 the MTOA charges for the period from 16.06.2013 to 31.01.2014
 1.8 (i) FERV Loss of Rs. 510.52 crore (Previous Year Rs. 2258.13crore)
 has been adjusted in the respective carrying amount of Fixed Assets/
 Capital work in Progress (CWIP)/lease receivables.
 (ii) FERV Gain of Rs. 12.46 crore (Previous Year FERV Loss Rs. 8.34
 crore) has been recognised in the Statement of Profit and Loss.
 1.9 Change in accounting policy/accounting practice
 a) During the Year, material for construction of Substations (including
 HVDC) is being transferred to Capital Work in Progress (CWIP) during
 the progress of erection work as against earlier practice of
 transferring the same on the completion of erection work. The change of
 practice has resulted in increase in CWIP amount by Rs. 234.43 Crore
 with corresponding reduction in Construction Stores.
 b) The Company has revised depreciation rates on certain fixed assets
 w.e.f. 01st April, 2014 as per useful life specified in schedule II of
 the Companies Act, 2013 as reassessed by the company. Accordingly, the
 company has accounted for additional depreciation charge of Rs.22.31
 Crore during the year ended 31st March, 2015 and Rs. 0.05 Crores (net
 of deferred tax) in reserves in terms of the transitional provisions of
 said schedule II. Thus, by charging depreciation at the revised
 depreciation rates, the depreciation charge for the year ended 31st
 March, 2015 is higher by Rs. 22.31 Crore and profit before tax for the
 year is lower by Rs. 22.31 Crore.
 1.10 Borrowing cost capitalised during the year is Rs. 2459.60 crore
 (previous year Rs. 2274.62 crore) as per AS 16- Borrowing Costs.
 1.11 Based on information available with the company, there are few
 suppliers/service providers who are registered as micro, small or
 medium enterprise under The Micro, Small and Medium Enterprises
 Development Act,2006 (MSMED Act, 2006). Information in respect of micro
 and small enterprises as required by MSMED Act, 2006 is given as under:
 1.12 Disclosures as per Accounting Standard AS 15 -Employee Benefits
 Defined employee benefit/ contribution schemes are as under:-
 A.  Provident Fund
 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 and EPS scheme for the year
 amounting to Rs. 76.48 crore(previous year Rs.74.88 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
 B.  Gratuity
 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 of Rs. 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 on
 the Balance Sheet date.
 C.  Pension
 The Company has scheme of employees defined Pension Contribution.
 Company contribution is paid to separate trust. Amount of contribution
 paid/payable for the year is Rs. 73.11 crore (previous year Rs. 60.08
 crore) has been recognised as expense and is charged to statement of
 profit & loss. In addition to above provision for additional
 contribution of Rs. 87.28 crore for the period from January 2007 to
 March 2012 has been made during the year as approved by the management.
 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.  Leave Encashment
 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. Earned leave is
 en-cashable while in service. Half-pay leaves (HPL) are en-cashable
 only on separation beyond the age of 55 years up to the maximum of 300
 days (HPL). However, total amount of leave that can be encashed on
 superannuation shall be restricted to 300 days and no commutation of
 half-pay leave shall be permissible. The liability for the same is
 recognised on the basis of actuarial valuation.
 F.  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.
 The above schemes (D,E and F) are unfunded.
 G.  The summarised position of various defined benefits recognized in
 the Statement of Profit & Loss and Balance Sheet is as under:- a)
 Expenses recognised in Statement of profit and loss:
 H.  Other Employee Benefits
 Provision for Long Service Award amounting to Rs. 1.24 crore (previous
 year Rs. 0.84 crore) has been made on the basis of actuarial valuation
 at the year end.
 J.  Actuarial Assumptions
 Principal assumptions used for actuarial valuation are:
 i) Method used - Projected unit credit ( PUC) (Previous Year (PUC))
 ii) Discount rate - 8.00 % (previous year 8.50 %)
 iii) Expected rate of return on assets (Gratuity only) - 8.00 %
 (previous year 8.50%)
 iv) Future salary increase- 6.50 % (previous year 6.50%)
 The estimate of future salary increases, considered in actuarial
 valuation, takes into account (i) inflation, (ii) Seniority (iii)
 Promotion and (iv) 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, assessed risk of asset management and
 historical return for plan assets.
 K.  The Company''s best estimate of contribution towards gratuity for
 the financial year 2015-16 is Rs. 1.51crore (previous year Rs. 4.65
 L.  The effect of the percentage point increase/decrease in the medical
 cost of PRMF will be as under:-
 1.13 Disclosure as per AS 17- Segment Reporting
 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 of
 AS-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, current assets and loan and advances. Construction
 work-in-progress, construction stores & advances and investments are
 included in unallocated assets. Segment liabilities include operating
 liabilities and provisions.
 1.14 Disclosure as per AS 18- Related Party Disclosure a) List of
 Related Parties:-
 i) Key Management Personnel
 Sh. R.N. Nayak Chairman and Managing Director
 Sh. I.S. Jha Director (Projects)
 Sh. R.T. Agarwal Director (Finance)
 Sh. Ravi P Singh Director(Personnel)
 Sh. R.P. Sasmal Director(Operations)
 Smt. Divya Tandon Company Secretary
 ii) Subsidiaries:- Wholly Owned
 i) Power System Operation Corporation Limited (POSOCO)
 ii) Powergrid NM Transmission Limited
 iii) Powergrid Vemagiri Transmission Limited
 iv) Powergrid Vizag Transmission Limited
 v) Powergrid Unchahar Transmission Limited
 vi) Powergrid Kala Amb Transmission Limited (w.e.f 12 May 2014)
 vii) Vindhyachal Jabalpur Transmission Limited (w.e.f 26 Feb 2015)
 iii) Joint Ventures:-
 i) Powerlinks Transmission Limited
 ii) Torrent Power Grid Limited
 iii) Jaypee Powergrid Limited
 iv) Parbati Koldam Transmission Company Limited
 v) Teestavalley Power Transmission Limited
 vi) North East Transmission Company Limited
 vii) National High Power Test Laboratory Private Limited
 viii) Energy Efficiency Services Limited.
 ix) Bihar Grid Company Limited
 x) Kalinga Bidyut Prasaran Nigam Private Limited
 xi) Cross Border Power Transmission Company Limited
 xii) Power Transmission Company Nepal Ltd
 1.15 Disclosure as per AS 19-Leases
 a) Finance Leases :-
 Long Term Loans and Advances and Short Term Loans and Advances include
 lease receivables representing the present value of future lease
 rentals receivable on the finance lease transactions entered into by
 the company with the constituents in respect of State Sector ULDC.
 Disclosure requirements of Accounting Standard (AS) - 19 Leases
 notified under the Companies Act, 2013 are given as under:
 (i) The reconciliation of the lease receivables (as per project cost
 data submitted to / approved by the CERC for tariff fixation) is as
 (iii) The unearned finance income as at 31st March, 2015 is Rs. 157.42
 crore (previous year Rs. 152.09 crore).  (iv) The value of contractual
 maturity of such leases as per AS-19 are as under :
 (v) There are differences in balance lease receivable as at year end as
 per accounts and tariff records on account of :
 (a) Undischarged liabilities amounting to Rs.17.33 crore (Previous Year
 Rs. 79.62 crore). Such cost become part of project cost only on
 discharge of such liabilities.
 (b) Unamortized FERV on loans included in lease receivable amounting to
 Rs. 61.14 crore (Previous Year Rs. 62.91 crore). Such FERV are allowed
 to be recovered as part of tariff on actual payment basis
 b) Operating leases:-
 The company''s significant leasing arrangements are in respect of
 operating leases of premises for residential use of employees, offices
 and guest houses/transit camps are usually renewable on mutually agreed
 terms but are not non-cancellable. Employees'' remuneration and benefits
 include Rs. 31.87 crore (previous year Rs. 33.80 crore) towards lease
 payments, net of recoveries, in respect of premises for residential use
 of employees. Lease payments of Rs. 10.52 crore (previous year Rs.
 11.23 crore) in respect of premises for offices and guest house/transit
 camps are shown under the head Rent in Note 2.30 Transmission,
 Administration and Other expenses.
 Under the Transmission Service Agreement (TSA) with Powerlinks
 Transmission Ltd, the company has an obligation to purchase the JV
 company (Powerlinks Transmission Ltd) at a buyout price determined in
 accordance with the TSA. Such an obligation may result in case JV
 company (Powerlinks Transmission Ltd) serves a termination notice
 either on POWERGRID event of default or on force majeure event
 prescribed under TSA. No contingent liability on this account has been
 considered as the same is not ascertainable.
 The company''s share in assets, liabilities, contingent liabilities and
 capital commitment as on 31st March 2015 and income and expenses for
 the year in respect of above joint venture entities based on their
 accounts are given below:-
 The figures pertaining to FY 2014-15 are compiled based on unaudited
 accounts except for Powerlinks Transmission Limited, National High
 Power Test Laboratory Private Limited and Cross Border Power
 Transmission Company Limited which are audited.
 1.16 Disclosure as per AS 28- Impairment of assets
 In accordance with Accounting Standard (AS-28) Impairment of Assets,
 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. Accordingly, no impairment loss has been provided in the books
 of accounts.
 1.17 Capital and Other Commitments
 i) Estimated amount of contracts remaining to be executed on capital
 account and not provided for is Rs. 24189.22 crore (previous year Rs.
 30175.65 crore).
 ii) As at 31st March,2015, the company has commitment of Rs. 427.61
 crore (previous year Rs. 812.82 crore) towards further investment in
 joint venture entities.
 iii) As at 31st March,2015, the company has commitment of Rs. 4261.42
 crore (previous year Rs. 730.00crore) towards further investment in
 subsidiary companies.
 1.18 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
 for Rs. 219.14 crore (previous year Rs. 211.73 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 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. 2253.11
 crore (previous year Rs. 2393.45 crore) has been estimated.
 (iii) Other claims
 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. 44.09crore
 (previous year Rs. 5.80 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. 391.22 crore (previous year Rs. 474.74 crore) are being 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 departments.
 (v) Others
 a) Other contingent liabilities amounts to Rs. 303.56 crore (previous
 year Rs. 778.54 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) companies (wholly owned subsidiaries)
 namely Powergrid NM Transmission Company Ltd (erstwhile Nagapattinam
 Madugiri Transmission Company Ltd.) , Powergrid Vemagiri Transmission
 Company Ltd. ( erstwhile Vemagiri Transmission System Limited), Vizag
 Transmission Limited Unchahar Transmission Limited Kala Amb
 Transmission Limited and Vindhyachal Jabalpur Transmission Limited has
 been taken over to carry over the business awarded under Tariff based
 bidding. Details of Bank guarantees given by the company on behalf of
 SPV companies towards performance of the work awarded are as under:
 1.19 Disclosure as required by Clause 32 of Listing Agreements:
 A.  Loans and Advances in nature of Loans:
 1.  To Subsidiary Companies
 2.  To firms/companies in which directors are interested : NIL
 3.  Where there is no repayment schedule or repayment beyond seven
 years or no interest or interest as per Section 186 of The Companies
 Act 2013 : Rs. 229.70 Crore (Repayment schedule is beyond seven years)
 B.  Investment by the loanee (as detailed above) in the shares of Power
 Grid Corporation of India Ltd : NIL
 1.20 a) Figures have been rounded off to nearest rupees in crore up to
 two decimal.
 b) Previous year figures have been regrouped / rearranged wherever
 considered necessary.
Source : Dion Global Solutions Limited
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