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
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
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. 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
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
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.
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
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.
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
b) Previous year figures have been regrouped / rearranged wherever