1. The Subsidiaries and Joint Venture companies considered in the financial statements are as follows: ----------------------------------------------------------------------------------------------------------------------Name of the Company ---------------------------------------------------------------------------------------------------------------------- Ownership (%) ----------------------------------------------------------------------------------------------------------------------a)Subsidiary Companies1. NTPC Electric Supply Company Ltd (incl. its Joint Venture Kinesco 100Power and Utilities Pvt Ltd with 50% holding) 2. NTPC Vidyut Vyapar Nigam Ltd. 1003. Pipavav Power Development Company Ltd 1004. NTPC Hydro Ltd 1005. Kanti Bijlee Utpadan Nigam Ltd 516. Bhartiya Rail Bijlee Company Ltd 74---------------------------------------------------------------------------------------------------------------------- b) Joint Venture Companies 1. Utility Powertech Ltd. 502. NTPC Alstom Power Services Pvt Ltd 503. NTPC SAIL Power Company Pvt Ltd 504. NTPC - Tamilnadu Energy Company Ltd 50 5. Aravali Power Company Pvt Ltd 508. Ratnagiri Gas and Power Pvt Ltd* 28.339. Meja Urja Nigam Pvt Ltd 5010. NTPC-BHEL Power Projects Pvt Ltd 5011. BF-NTPC Energy Systems Ltd 4912. Nabinagar Power Generating Company Pvt Ltd 5013. National Power Exchange Ltd* 16.6712. NTPC-SCCL Global Ventures Pvt Ltd 50------------------------------------------------------------------------------------------------------------------------- * The financials statements are un-audited All the above companies are incorporated in India The financial statements are un-audited. 2. a) The Central Electricity Regulatory Commission (CERC) has notified by Regulations in March 2004, the terms and conditions for determination of tariff applicable with effect from 1st April 2004 for a period of five years. The CERC has issued final tariff orders for all the stations/units except for two stations (four units), where sales of Rs.131723 lakhs, for the current year (previous year Rs.150275 lakhs) have been recognised based on provisional tariff orders issued by CERC. b) In respect of stations/units where the CERC had issued final tariff orders applicable from 1st April 2004, the Company aggrieved over many of the issues as considered by the CERC in the tariff orders, filed an appeal with the Appellate Tribunal for Electricity (ATE). The ATE has disposed off the appeal favourably directing the CERC to revise the tariff orders as per the directions and methodology given. The CERC has filed an appeal with the Hon’ble Supreme Court of India on some of the issues decided by the ATE which is pending and is yet to issue the revised tariff orders for the balance issues in respect of some of the stations as per the directions of the ATE. Sales for the year in respect of these stations amounting to Rs.3706611 lakhs (previous year Rs.3070132 lakhs) have been accounted for based on provisional tariff worked out by the Company as per the methodology and directions as decided by the ATE. c) Sales in respect of one of the stations has been provisionally recognised at Rs.144017 lakhs (previous year Rs.130744 lakhs) on the basis of principles enunciated under CERC Regulations, 2004, as against the billing of Rs.145694 lakhs (previous year Rs.132579 lakhs) as per tariff order issued by CERC, prior to the takeover of the station by the company. d) Sales of Rs.102004 lakhs (previous year Rs.113357 lakhs) pertaining to previous years has been recognised based on the orders issued by CERC/ATE. 3. Sales includes Rs.75828 lakhs for the year ending 31st March 2009 (previous year Rs.227609 lakhs) on accountof income tax recoverable from beneficiaries as per CERC Regulations. 4. During the year 2008-09, two units at Kahalgaon and two units at Sipat of the Company of 500 MW each have been declared commercial w.e.f 01.08.2008, 30.12.2008, 20.06.2008 and 01.01.2009 respectively. 5. The pay revision of the employees of the Company is due w.e.f 1st January 2007. Pending implementation of pay revision, provision for the year Rs.53423 lakhs (previous year Rs.40942 lakh) and up to the year Rs.104151 lakhs (upto previous year 31st March 2008 Rs.50728 lakhs) has been made towards wage revision on an estimated basis having regard to the guidelines issued by Department of Public Enterprises, GOI. 6. Effect of changes in Accounting Policies: a) I) Based on the opinions of the EAC of the ICAI, pronounced during the year, with regard to accounting of exchange differences arising from restatement/settlement of foreign currency monetary items, the following adjustments have been carried out: (i) Exchange differences (gain) of Rs.75357 lakhs in respect of foreign currency loans contracted before 1st April 2004, which were hitherto treated as borrowing cost and recognised in the Profit and Loss Account have been adjusted in the cost of related assets by debit to ‘Prior Period Interest’. Due to the above adjustment, depreciation of Rs.24782 lakhs pertaining to previous years has been written back through ‘Prior Period Depreciation’ and depreciation for the year is lower by Rs.4082 lakhs. (ii) Exchange differences (gain) of Rs.988 lakhs for the financial years 2004-05 to 2006-07 arising from restatement/settlement of foreign currency monetary items in respect of transactions entered into on or after 1st April 2004, which were hitherto treated as Incidental Expenditure During Construction (IEDC) at units under construction have been recognized in the Profit & Loss Account through ‘Prior Period Interest/Exchange differences’. Due to the above adjustment, depreciation amounting to Rs.24 lakhs pertaining to previous years has been charged to ‘Prior Period Depreciation’ and depreciation for the year is higher by Rs. 51 lakhs. II) In line with the Central Government Gazette Notification No.193 dated 31st March 2009 amending Accounting Standard (AS) – 11 on ‘The Effects of Changes in Foreign Exchange Rates’, the Company has exercised the option to adjust with effect from the financial year 2007-08, the exchange differences arising from restatement/settlement of long term foreign currency monetary items relating to acquisition of depreciable capital assets in the cost of related assets and depreciate the same over the balance life of the asset. Accordingly, the Company adjusted exchange differences arising for the financial year 2007-08 and 2008-09 amounting to Rs.1519 lakhs included in the cost of related assets, of this a sum of Rs.23 lakhs relating to the year 2007-08 has been credited to the General Reserve as per the transitional provisions in the aforesaid Notification. Consequently, depreciation for the year is higher by Rs.299 lakhs.. III) Consequent to the change in the accounting policies as detailed in (I) and (II) above, the balance of Rs.25537 lakhs as on 31st March 2008 in the ‘Deferred Foreign Currency Fluctuation Liability’ has been written back through ‘Prior Period Sales’. In respect of operating stations, an amount of Rs.20805 lakhs recoverable from the beneficiaries in future years as per CERC Regulations corresponding to exchange differences recognised in the Profit & Loss Account for the periods up to 31st March 2008 has been recognised as ‘Deferred Foreign Currency Fluctuation Asset’ through ‘Prior Period Sales’. Similarly, Rs.41443 lakhs to be passed on to the beneficiaries in future years corresponding to exchange differences adjusted in the cost of related assets up to 31st March 2008 has been recognised as ‘Deferred Foreign Currency Fluctuation Liability’ by debit to ‘Deferred Expenditure from Foreign Currency Fluctuation’. Due to accounting of such exchange differences, corresponding decrease in depreciation amounting to Rs.7360 lakhs has been credited to ‘Deferred Expenditure from Foreign Currency Fluctuation’ by debit to ‘Prior Period Depreciation out of Deferred Expenses/Income from Foreign Currency Fluctuation’. In case of projects under construction, ‘Deferred Foreign Currency Fluctuation Asset/Liability’ has been created corresponding to exchange differences recognised in the statement of Profit & Loss Account which are admissible for inclusion in capital cost for tariff determination as per CERC Regulations, relating to prior years Rs.2505 lakhs and current year Rs.2683 lakhs. As a result, net profit for the year is lower by Rs.6389 lakhs. b) Expenses common to operation and construction activities were hitherto allocated to Profit & Loss Account and Incidental Expenditure during Construction in proportion of sales to annual capital outlay in the case of Corporate Office and sales to accretion to capital work-in-progress in the case of projects. Consequent upon the withdrawal of Guidance Note on ‘Treatment of Expenditure during Construction Period’ by the ICAI, the Company has identified and allocated on a systematic basis the administration and general overhead expenses attributable to construction of fixed assets at the corporate office and construction projects and included the same in capital work-in-progress/fixed assets. Due to this, profit for the year and fixed assets/capital work-in-progress are lower by Rs.7333 lakhs. 7. Interest and finance charges includes exchange difference regarded as adjustment to interest costs amounting to Rs.18771 lakhs for year ended 31st March 2009 (Corresponding previous year Rs.11224 lakhs). 8. The Company has progressively implemented SAP-ERP System at different units w.e.f. 1st June 2007. As a result, the valuation of inventory items has undergone a change from monthly weighted average to moving weighted average at the units where ERP system has been implemented during the year. Due to the above change, impact on profit for the year if any, is not ascertainable. 9. During the quarter, the Company has paid an interim dividend of Rs.2.80 per share (face value Rs.10/-each) for the year 2008-09. The Board of Directors has recommended final dividend of Rs.0.80 per share (face value Rs.10/-each). The total dividend (including interim dividend) for the financial year 2008-09 is Rs.3.60 per share (face value Rs.10/-each). 10. The audited accounts are subject to review by Comptroller and Auditor General of India under section 619(4) of the Companies Act, 1956. 11. Formula used for computation of coverage ratios DSCR = Earning before Interest, Depreciation and Tax/(Interest net off transferred to expenditure during construction + Principal repayment) and ISCR = Earning before Interest, Depreciation and Tax/(Interest net off transferred to expenditure during construction). 12. The above results have been reviewed by the Audit Committee of the Board of Directors in their meeting held on 21st May 2009 and approved by the Board of Directors in the meeting held on 22nd May 2009. 13. Figures for the previous year have been regrouped/ rearranged wherever necessary. A K Singhal Director (Finance)