1.1 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. 211.73 crore (previous year Rs. 172.60 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. 2393.45
crore (previous year Rs. 2522.64 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. 5.80 crore
(previous year Rs.2.73 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. 474.74 crore (previous year Rs. 294.86 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. 778.54 crore (previous
year Rs. 89.78 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 namely POWERGRID NM
Transmission Company Ltd. (wholly owned subsidiary) (erstwhile
Nagapattinam Madugiri Transmission Company Ltd.) , POWERGRID Vemagiri
Transmission Company Ltd. (wholly owned subsidiary) (erstwhile Vemagiri
Transmission System Limited), Vizag Transmission Limited and Unchahar
Transmission Limited has been taken over to carry over the business
awarded under Tariff based bidding. Bank guarantee of Rs. 45.00 crore
(previous year Rs. 45.00 crore ), Rs. Nil (previous year Rs. 36.00 crore), Rs.
45.00 crore and Rs. 5.40 crore respectively has been given by the company
on behalf of SPV companies towards performance of the work awarded.
2.50 Vemagiri Transmission Limited was acquired for execution of
Vemagiri Transmission system based on Tariff Based Competitive Bidding
(TBCB).CERC vide order dated 09.05.2013 and 27.09.2013 interalia stated
that Vemagiri Transmission system cannot be executed in its present
form and directed CTU to return the bank guarantees of identified long
term transmission customers and also directed the customer to return
the contract performance guarantee given by POWERGRID. Based on the
CERC order, action for winding up Special Purpose Vehicle and recovery
of cost incurred by POWERGRID will be taken. Pending any decision for
recovery of cost incurred, provision of Rs. 19.40 crore has been made in
respect of Investment and advances made by POWERGRID.
1.2 a) Figures have been rounded off to nearest rupees in crore up to
b) Previous year figures have been regrouped / rearranged wherever