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 2016 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 2016 (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 a) Balances of Trade Receivables and recoverable shown under
Assets and Trade and Other Payables shown under Liabilities include
balances subject to confirmation/reconciliation and consequential
adjustments if any. However reconciliations are carried out on ongoing
basis. 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.
1.3 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
1.4 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 CERC has vide its order dated 30.06.2015 has re-determined the DOCO
w.e.f 01.09.2011 and revised the tariff as per decision of the Honb''le
The Honb''le Supreme Court, has vide its order dated 03.03.2016 has
upheld the judgement of the Hon''ble ATE. Review application filed by
the company against the order dt. 03.03.2016 has also been dismissed by
Honb''le Supreme Court vide order dt. 12.05.2016. in accordance with the
above order of the Hon''ble Supreme Court, revenue for this TL has been
recognised w.e.f. 01.09.2011 in place of earlier DOCO of 01.07.2010 and
transmission income for the period from 01.07.2010 to 31.08.2011
amounting to Rs.112.57 crore (net of Rs.18.63 crore recovered from NTPC
as per order of CERC) has been reversed during the year.
1.5 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
ATE. The total transmission charges are being recovered from other
customers since then. An application, iled 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
Due to default made by the same customer in their agreement with the
company for LTA, the company has encashed during the year construction
bank guarantees worth Rs.48.00 crore, and adjusted the proceeds of the
same against its dues of Rs. 15.64 crore and outstanding surcharge of
Rs..6.80 crore up to 31.03.2016.
1.6 Pursuant to communication of ministry of Power vide office
memorandum 18/2/2015-PG dated 25th March 2015 and 29th Dec 2015, Board
of Directors in its meeting held on 9th march 2016 has approved to sell
& transfer 30640000 equity shares (100% share holding) held by the
company in Power System Operation Corporation Limited (POSOCO) to Govt.
Of India. Cabinet has approved for transfer of shares of POSOCO to the
Government of India. Board has further approved that purchase
consideration be calculated based on the balance sheet of POSOCO as on
date preceding the date of transfer. Shares are yet to be transferred.
1.7 (i) FERV Loss of Rs. 1841.03 crore (Previous Year Rs. 510.52
crore) has been adjusted in the respective carrying amount of Fixed
Assets/ Capital work in Progress (CWIP)/lease receivables. (ii) FERV
Loss of Rs. 4.56 crore (Previous Year FERV Gain Rs. 12.46 crore) has
been recognised in the Statement of Profit and Loss.
1.8 Change in accounting policy/accounting practice
a) Cost of Mobile Phones which were hitherto capitalised and being
depreciated over the useful life of the asset is now being charged to
statement of profit and loss. The change has resulted in decrease in
profit by Rs. 1.89 crore with corresponding decrease in Gross Block and
Accumulated Depreciation by Rs. 7.13 crore and Rs. 5.24 crore
b) In Telecom and Consultancy Segment Residual Value in respect of
Computer & Peripherals and Server & Network Components is considered as
Nil instead of as specified in Schedule II of Companies Act 2013. The
change has resulted in decrease in profit by Rs. 0.30 crore with
corresponding increase in depreciation.
c) Cost of Server which were hitherto depreciated over the useful life
of 3 years is now being depreciated over the useful life of 5 years.
The change has resulted in increase in profit by Rs. 1.10 crore with
corresponding decrease in depreciation.
1.9 Borrowing cost capitalised during the year is Rs. 2238.91 crore
(previous year Rs. 2459.60 crore) as per AS 16- Borrowing Costs.
1.10 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:
1.11 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. 84.57 crore(previous year Rs. 76.48 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
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.
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. 102.19 crore (previous year Rs. 73.11
crore) has been recognised as expense and is charged to statement of
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. 0.95 crore (previous
year Rs. 1.24 crore) has been made on the basis of actuarial valuation
at the year end.
I. Plan Asset (Gratuity)
The details of the plan assets at cost are as follows:-
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 8.00 %)
iii) Expected rate of return on assets (Gratuity only) – 8.00 %
(previous year 8.00%)
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
K. The Company''s best estimate of contribution towards gratuity for the
financial year 2015-16 is Nil (previous year Rs. 1.51 crore) L. The
effect of the percentage point increase/decrease in the medical cost of
PRMF will be as under:-
1.12 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.
1.13 Disclosure as per AS 18- Related Party Disclosure
a) List of Related Parties:-
i) Key Management Personnel
Sh. I.S. Jha Chairman and Managing Director (w.e.f 10th November 2015)
Sh. R.N. Nayak Chairman and Managing Director (superannuated on 30th
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) PowergridNM Transmission Limited
iii) Powergrid Vemagiri Transmission Limited
iv) Powergrid Vizag Transmission Limited
v) Powergrid Unchahar Transmission Limited
vi) Powergrid Kala Amb Transmission Limited
vii) Powergrid Jabalpur Transmission Limited (erstwhile Vindhyachal
Jabalpur Transmission Limited)
viii) Powergrid Warora Transmission Limited (erstwhile Gadarwada (A)
ix) Powergrid Parli Transmission Limited (erstwhile Gadarwada (B)
x) Powergrid Southern Interconnector Transmission System Limited.
(erstwhile Vemagiri II Transmission Limited)
xi) Grid Conductors Limited*
*Share Capital of Rs. 0.05 crs in Grid Conductors Limited has been paid
in April 2016. However based on control of composition of board of
directors by Power Grid Corporation of India Limited, the company has
been considered as wholly owned subsidiary company.
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
xiii) RINL Powergrid TLT Pvt. Ltd
1.14 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
1.15 Capital and Other Commitments
i) Estimated amount of contracts remaining to be executed on capital
account and not provided for is Rs. 23502.87 crore (previous year Rs.
ii) As at 31st March,2016, the company has commitment of Rs. 336.24
crore (previous year Rs. 427.61 crore) towards further investment in
joint venture entities.
iii) As at 31st March,2016, the company has commitment of Rs. 12260.25
crore (previous year Rs. 4261.42 crore) towards further investment in
1.16 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. 1666.86 crore (previous year Rs. 219.14 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.
4041.30 crore (previous year Rs. 2253.11 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 ofRs. 28.66 crore
(previous year Rs. 44.09 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. 359.03 crore (previous year Rs. 391.22 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.
a) Other contingent liabilities amounts to Rs. 342.33 crore (previous
year Rs. 303.56 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.
c) 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.
1.17 Guidance Note (GN) on Rate Regulated Activities issued by ICAI is
applicable from the financial year 2015-16.
The company is mainly engaged in Transmission of power. The price to be
charged by the company for transmission of power to its customer is
determined by the CERC through tariff regulations. The tariff is based
on cost like depreciation, interest, return on equity, operation and
maintenance Expenses etc. This form of regulation is known as cost of
service regulations which provides the company to recover its cost of
providing the services plus stipulated return. The company has adopted
GN in preparation of financial statements for the year, considering the
provisions of tariff regulations issued by CERC.
The CERC tariff regulations provide that exchange differences arising
from settlement/ translation of monetary items denominated in foreign
currency (other than long term) are recoverable from or payable to the
beneficiaries in subsequent periods. Such exchange differences are
recognized as ''Regulatory Asset/Liability by credit/debit to
''Regulatory income/Expense'' during construction period and adjusted
from the year in which the same becomes recoverable from or payable to
1.18 a) Figures have been rounded off to nearest rupees in crore up to
b) Previous year figures have been regrouped / rearranged wherever