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Power Grid Corporation of India
BSE: 532898|NSE: POWERGRID|ISIN: INE752E01010|SECTOR: Power - Generation/Distribution
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Mar 12
Notes to Accounts Year End : Mar '13
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
 remain unaffected.
 
 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
 the matter.
 
 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:-
 
 A.  ProvidentFund
 
 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.
 
 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 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
 ontheBalanceSheetdate.
 
 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 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
 expenses.
 
 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.I.S.Jha Director(Projects)
 
 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
 
 ii) Subsidiaries:-WhollyOwned
 
 i) Power System Operation Corporation Limited (POSOCO)
 
 ii) Powergrid NM Transmission Limited
 
 iii) Powergrid Vemagiri Transmission Limited
 
 iii)JointVentures:-
 
 i) PowerlinksTransmissionLimited
 
 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
 accounts.
 
 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
 yearRs.41800.14 crore).
 
 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.
 
 (iii) Otherclaims
 
 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
 departments.
 
 (v) Others
 
 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
 two decimal.
 
 b) Previous year figures have been regrouped / rearranged wherever
 considered necessary.
Source : Dion Global Solutions Limited
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