Tata Power Company

1. As per the requirement of Accounting Standard (AS-15) (Revised 2005)
 - Employee Benefits the compensation paid under Voluntary Retirement
 Schemes (VRS) is charged to the Profit and Loss Account in the year of
 exercise of option, which hitherto was amortised over a period of
 thirty six months commencing from the month following the month of
 separation. This change in the accounting policy, however, does not
 have any material impact on the financial statements for the year.  
 
 2.  The Company had on 18th June, 2007 issued and allotted 1,03,89,000
 Convertible Warrants on preferential basis to Tata Sons Limited which
 were convertible into shares within a period of 18 months from the date
 of allotment.Tata Sons Limited did not exercise its right to convert
 these warrant. Accordingly an amount of Rs.60.99 crores, representing
 the initial amount paid on the allotment of such warrants has been
 forfeited and credited to Capital Reserve.  
 
 3.  (a) In an earlier year, the Company issued 200,000 1% Foreign
 Currency Convertible Bonds (FCCB) with face value of $ 1,000 each
 aggregating to U.S. $ 200 million (Rs.878.80 crores at issue).The bond
 holders have an option to convert these Bonds into shares, at an
 initial conversion price of Rs. 590.85 per share at a fixed rate of
 exchange on conversion of Rs. 43.38 = U.S.  $ 1.00, at any time on or
 after 6th April, 2005, upto 15th February, 2010.The conversion price is
 subject to adjustment in certain circumstances.The FCCB may be
 redeemed, in whole but not in part, at the option of the Company at any
 time on or after 24th February, 2008 and prior to 15th February, 2010
 subject to satisfaction of certain conditions. Unless previously
 converted, redeemed or repurchased and cancelled, the FCCB fall due for
 redemption on 25th February, 2010 at 115.734 per cent of their
 principal amount.
 
 (b) During the year bond holders holding 9,865 bonds (31 st March, 2008
 - 1,75,816 bonds) have opted for conversion of the same into equity
 shares and accordingly 7,24,281 shares (includes 6,87,572 shares on
 which divdend of Rs. 0.72 crore has been paid during the year) (31st
 March, 2008 - 1,29,08,207 shares) of Rs. 10 each have been issued at a
 premium as per terms of issue. Consequently there is an increase in the
 Subscribed Share Capital by Rs. 0.72 crore (31st March, 2008 - Rs.
 12.91 crores) and Securities Premium by Rs.41.39 crores (31
 stMarch,2008- Rs.683.37crores). Further, provision made for premium on
 redemption of FCCB by debiting Securities Premium in an earlier year
 has been reversed to the extent it pertains to the converted FCCB. As a
 result, balance in Securities Premium Account has increased by Rs. 6.83
 crores (31st March, 2008-Rs. 121.66 crores J.Hence, the total increase
 in Securities Premium Account amounted to Rs. 48.22 crores (31st March,
 2008 - Rs. 805.03 crores).
 
 4. Contingency Reserve Investments and Deferred Taxation Liability Fund
 Investments hitherto included the cost of 6.75% Unit Trust of India
 -Tax-free US Bonds 2008 received on conversion of units in Scheme
 US-64, which bonds were redeemed during the year. In the terms of
 Appellate Tribunal for Electricity (ATE) Order dated 25th February,
 2009 the appropriations made to Contingency Reserve and Deferred
 Taxation Liability Fund (DTLF) have been utilised to meet the loss of
 Rs. 155.47 crores realised on redemption of the above statutory
 investments.
 
 5.  In an earlier year, the Company had commissioned its new 120 MW
 thermal power unit at Jojobera, Jharkhand. Revenue is recognised on the
 basis of draft Power Purchase Agreement prepared jointly by the Company
 and its customer, pending finalisation of the agreement.
 
 6. The Company has been legally advised that the Company is considered
 to be established with the object of providing infrastructural
 facilities and accordingly. Section 372A of the Companies Act, 1956 is
 not applicable to the Company.
 
 7.  (a) The Company has an investment in Tata Teleservices Limited
 (TTSL) of Rs. 735.48 crores (31st March, 2008 - Rs. 796.58 crores) and
 NELCO Limited (NELCO)Rs.l 1.07 crores (31st March, 2008 -Rs.11.07
 crores); 
 
 (b) TTSL and NELCO, based on the accounts as certified by their
 Managements for the year/period ended 31 st March, 2009, have
 accumulated losses which have significantly eroded their net worth. In
 the opinion of the Management, having regard to the long term nature of
 their business, there is no diminution other than temporary, in the
 value of the investments.
 
 8.  Capital commitments not provided for are estimated at Rs. 722.90
 crores (31st March, 2008 - Rs. 987.65 crores).
 
 9.  Contingent Liabilities and Other Commitments:
 
 (a) Claims against the Company not acknowledged as debts Rs. 188.56
 crores (31 st March, 2008-Rs. 177.17 crores) consists mainly of the
 following:
 
 (i) Octroi claims disputed by the Company aggregating to Rs. 5.03
 crores (31st March,2008 - Rs. 5.03 crores), consisting of octroi
 exemption claimed by the Company.
 
 (ii) A Suit filed against the Company claiming compensation of Rs.
 20.51 crores (31st March, 2008 - Rs. 20.51 crores) by way of damages
 for alleged wrongful disconnection of power supply and interest accrued
 thereon Rs. 94.76 crores (31st March, 2008 - Rs. 90.45 crores).
 
 (iii) Rates, Duty & Cess claims disputed
 bytheCompanyaggregatingtoRs.51.71 crores (31st March, 2008-Rs. 47.01
 crores), consisting mainly for levy of cess and way leave fees by
 Maharashtra Pollution Control Board at higher rates and interest
 thereon which is challenged by the Company and for levy of excise duty
 on fuel consumed in generation of electricity that was not sold but
 consumed by the Company.
 
 (iv) Other claims against the Company not acknowledged as debts Rs.
 16.55 crores (31st March, 2008 -Rs. 14.17 crores).
 
 (b) Under the Share Purchase Agreement entered into with Tata
 Industries Limited (TIL) in January 2001, the Company had agreed
 payment of production upside in the event the total gas production is
 more than 1.2 Trillion Cubic Feet (TCF) to Tata Industries Limited for
 net incremental production over and above 1.2 TCF. The said production
 is based upside for the Tata Petrodyne Limiteds (TPL) participating
 interest of 10% at the rate of US $ 0.23 per Thousand Cubic Feet (MCF).
 The obligation on the Company to pay TIL in case of upside in
 production continues even after the sale of shares of TPL.
 
 (c) In respect of the Standby Charges dispute with Reliance
 Infrastructure Ltd. (R-lnfra - formerly Reliance Energy Ltd.) for the
 periods from 1st April, 1999 to 31st March, 2004, the ATE, set aside
 the MERC Order dated 31st May, 2004 and directed the Company to refund
 to R-lnfra as on 31 st March, 2004, Rs. 354.00 crores (including
 interest of Rs. 15.14 crores) and pay interest at 10% per annum
 thereafter. As at 31 st March, 2009 the accumulated interest was Rs.
 139.96 crores (31st March, 2008 - Rs. 128.76 crores) (Rs. 11.20 crores
 for the year ended 31 st March, 2009).On appeal, the Honble Supreme
 Court vide its interim order dated 7th February,2007, has stayed the
 ATE Order and in accordance with its directives, the Company has
 furnished a bank guarantee of the sum of Rs. 227.00 crores and also
 deposited Rs. 227.00 crores with the Registrar General of the Court
 (the Court) which has been withdrawn by R-lnfra on furnishing the
 required undertaking to the Court. The said deposit has been accounted
 as Other Deposits
 
 Further, no adjustment has been made for the reversal in terms of the
 ATE Order dated 20th December, 2006 of Standby Charges credited in
 previous years estimated at Rs. 519.00 crores.The aggregate of Standby
 Charges credited in previous years, net of tax is estimated at
 Rs.342.60 crores, which will be adjusted, wholly by a withdrawal/set
 off from certain Statutory Reserves as allowed by MERC. No provision
 has been made in the accounts towards interest that may be finally
 determined provisions of the Accounting Standard, the Company had decided
 to charge the transitional liability as an expense over a period of 5
 years and accordingly Rs. 12.34 crores (31st March, 2008 - Rs. 12.34
 crores) has been recognised as an expense for the year under item 1 of
 Schedule 2 and balance amount of Rs. 37.02 crores (31st March, 2008 -
 Rs. 49.36 crores) is the unrecognised transitional liability as at 31
 st March, 2009.
 
 (b) The Company makes contribution towards provident fund and
 superannuation fund to a defined contribution retirement benefit plan
 for qualifying employees. The provident fund is administered by the
 Trustees of Tata Power Consolidated Provident Fund and the
 Superannuation Fund is administered by the Trustees of Tata Power
 Superannuation Fund. Under the Schemes, the Company is required to
 contribute a specified percentage of salary to the retirement benefit
 schemes to fund the benefit.
 
 The Rules of the Companys Provident Fund administered by a Trust
 require that if the Board of Trustees are unable to pay interest at the
 rate declared by the Central Government under para 60 of the
 EmployeesProvident Fund Scheme, 1952, then the shortfall shall be made
 good by the Company. Having regard to the assets of the Fund and the
 return on the investments, the Company does not expect any shortfall in
 the foreseeable future.
 
 On account of Defined Contribution Plans, a sum of Rs.20.34 crores
 (Previous YearRs. 19.34 crores) has been charged to the Profit and Loss
 Account.
 
 (c) The Company operates the following unfunded defined benefit plans:
 
 (i) Post Retirement Gratuity
 (ii) Ex-Gratia Death Benefits
 (iii) Retirement Gifts
 (iv) Post Retirement Medical Benefits and
 (v) Pension
 
 10.  The Company has paid during the year monthly payments aggregating
 to Rs.0.75 crore (31stMarch,2008-Rs. 0.74 crore) under the post
 retirement scheme to former Managing/Executive Directors.
 
 11.  (a) Total number of electricity units sold during the year -14,703
 MUs (31st March, 2008- 14,982 Mils).  (b) Total number of electricity
 units purchased during the year - 540 MUs (31st March, 2008- 1,001
 MUs).
 
 12.  In respect of the contracts pertaining to the Transmission
 EPCStrategic Electronics Business and Project Management Services,
 disclosures required as per AS 7 (Revised) are as follows:
 
 (a) Contract revenue recognised as revenue during the year - Rs. 122.30
 crores (31st March, 2008 - Rs. 73.84 crores).
 
 (b) In respect of contracts in progress-
 
 (i) The aggregate amount of costs incurred and recognised profits upto
 31 st March, 2009 - Rs. 370.78 crores (31st March, 2008-Rs. 279.76
 crores).
 
 (ii) Advances and progress payments received as at 31st March, 2009 -
 Rs. 36.47 crores (31st March, 2008 - Rs. 42.40 crores).
 
 (iii) Retention money included as at 31st March, 2009 in Sundry Debtors
 - Rs. 22.08 crores (31st March, 2008 - Rs. 26.82 crores).
 
 (c) Gross amount due to customers for contract work as a liability as
 at 31 st March, 2009 - Rs. Nil (31st March, 2008 - Rs. Nil).
 
 13.  Disclosures as required by Accounting Standard 19 (AS-19) are as
 follows:
 
 (a) Operating Leases:
 
 (i) The Companys significant leasing arrangements are in respect of
 residential flats, office premises, plant and machinery and equipments
 taken on lease.The arrangements range between 11 months and 10 years
 generally and are usually renewable by mutual consent or mutually
 agreeable terms.Undetthesearrangements,generally refundable interest-
 free deposits have been given.
 
 (ii) Commercial/residential premises have been given on operating lease
 having original cost of Rs. 34.98 crores (31st March, 2008 - Rs. 34.98
 crores) and accumulated depreciation of Rs. 7.90 crores (31st March,
 2008 - Rs. 6.83 crores) as at 31 st March, 2009. Depreciation on the
 above assets for the current year is Rs. 1.07 crores (31st March, 2008
 - Rs. 1.07 crores). Under these arrangements,generally refundable
 interest-free deposits have been taken.The future minimum lease
 payments under non-cancellable operating leases aggregating to Rs.
 13.67 crores (31stMarch, 2008 - Rs. 18.73 crores), in each of the
 following periods are as under:
 
                                                Rs. crores
                                                2007-08
 (a) not later than one year            5.52       5.31
 (b) later than one year and
     not later than five years          8.15      13.42
 (c) later than five years                -          -
 
 (b) Finance Leases:
 
 The Company has not entered into any material financial lease.
 
 14. (a) In respect of the Licensed Business, in terms of the Government
 of Maharashtra approvals, on the difference between the written down
 value of fixed assets (including foreign exchange fluctuations on
 approved borrowings) as per the books of accounts and the Income-Tax
 Act, 1961, deferred tax liability was being set up by a special
 appropriation to the Deferred Tax Liability Fund. In terms of the
 approvals, the amounts credited to the Fund are invested and permitted
 to be utilised, only subject to certain conditions. During the year
 ended 31st March, 2009 in terms of Appellate Tribunal for Electricity
 (ATE) Order dated 25th February, 2009 loss realised on redemption of
 6.75% Unit Trust of India -Tax-free US Bonds 2008 amounting to Rs.
 116.09 crores has been adjusted against the balance lying in Deferred
 Tax Liability Fund.
 
 The resultant shortfall in the Deferred Tax Liability Fund and the
 deferred tax liability recognized, then at Rs. 37.84 crores (31st
 March, 2008 - Rs. 78.25 crores excess after prior year adjustment) has
 been accounted for during the year.
 
 15.  Disclosure as required by Accounting Standard 18 (AS-18) -Related
 Party Disclosuresare as follows: Names of the related parties and
 description of relationship:
 
 (a) Related parties where control exists:
 Subsidiaries 
 
 Af-Taab Investment Co. Ltd. (AIL)
 Chemical TerminaJ Trombay Ltd. (CTTL)
 Tata Power Trading Co. Ltd. (TPTCL)
 Powerlinks Transmission Ltd.(PTL)
 NELCO Ltd.(NELCO)
 Maithon Power Ltd. (MPL)
 Industrial Energy Ltd. (IEL)
 North Delhi Power Ltd. (NDPL)
 Coastaf Gujarat Power Ltd. (CGPL)
 Veltina Holdings Ltd. (VHL)
 Bhira Investments Ltd. (BHIL) [erstwhileTata Power (Mauritius) Ltd.]
 Bhivpuri Investments Ltd. (BIL) [erstwhileTata Power (Cyprus) Ltd.]
 Khopoli Investments Ltd. (KIL) (erstwhileTata Power International
 Holdings Ltd.)
 Trust Energy Resources Pte. Ltd. (TERL)
 Energy Eastern Pte. Ltd.  (EEL)
 Industrial Power Utility Ltd. (IPUL)
 Tatanet Services Ltd. (TSL)
 Industrial Power Infrastructure Ltd. (IPIL)
 
 (b) Other related parties (where transactions have taken place during
 the year):
 
 (i) Associates   :  Panatone Finvest Ltd.(PFL)
                     Tata Ceramics Ltd. (TCL) 
                     Tata Projects Ltd. (TPL) 
                     Yashmun Engineers Ltd. (YEL) 
                     Rujuvalika Investments Ltd. (RUIL)
 
 (ii) Joint Ventures :  Indocoal Resources (Cayman) Ltd. (IRCL)
                        Tubed Coal Mines Ltd. (TCML)
                        Mandakini Coal Company Ltd. (from 18th July,
                        2008) (MCCL) 
                        Tata BP Solar India Ltd. (from 1 st April, 2008)
                        (TBSIL) 
                        Dagachhu Hydro Power Corporation Ltd. 
                        (from 19th January, 2009) (DHPCL)
 
 (iii) Promoters holding together with
       its Subsidiary is more than 20%  :   Tata Sons Ltd.
 
 (c) Key Management Personnel      Prasad R. Menon
                                   S.Ramakrishnan 
                                   S.Padmanabhan 
                                   Banmali Agrawala
 
 16.  Previous years figures have been regrouped, wherever necessary,
 to conform to this years classification. Figures are rounded off to
 nearest lakh. Figures below Rs. 50,000 are denoted by.