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Neyveli Lignite Corporation Ltd. Notes to Accounts, Neyveli Lignite Corporation Ltd. Company
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Notes to Accounts of Neyveli Lignite Corporation Ltd.

Mar 31, 2015

1 Neyveli Bonds 6000, 8.83% 10 Years, Secured, Redeemable, Taxable, Non-convertible Bonds in the nature as Debentures of t 10 lakh each secured by way of pari-passu charge on the present and future fixed assets of Mine-II Expansion Project, TS-II Expansion Project, Barsingsar Mine and Thermal Power Station and exclusive charge on an immovable property. Redeemable on 23-01-2019 (without Put or Call Option).

2 i. The Rupee Term Loan of t 2500 crore from Canara Bank consortium is secured by pari-passu charge on project fixed assets financed and repayable in Twenty equal bi-annual instalments commenced from 23-02-2010, ending on August 2019.

ii. The Rupee Term Loan of Rs.1250 crore from Canara Bank consortium is secured by pari-passu charge on project fixed assets financed and repayable in twenty equal bi-annual instalments commenced from 23-02-2010, ending on August 2019.

3 During the year Company availed t 500 crore (upto 31-03-2015) out of the Rupee term loan of t 3000 crore from M/s. Power Finance Corporation Ltd is secured by pari-passu charge on project fixed assets of Neyveli New Thermal Power Station (NNTPS) and repayable in 20 equal bi-annual instalments commencing after moratorium period of 6 months from the date of achievement of COD of Unit II.

4 Bi-annual equal repayment (0.44 Million euro) of Foreign Currency loan - I from KfW Germany, commenced from 30-12-2001 ending on 30-06-2036.

5 Bi-annual equal repayment (2.80 Million euro) of Foreign Currency loan -II from KfW Germany, commenced from 30-06-2002, ending on 30-06-2037.

6 Pursuant to GOI guidelines on Mine closure, Mine closure cost was approved by Ministry of Coal at a rate of t 6 lakh per hectare for all the open cast Mine. The amount is being compounded annually @ 5% and deposited in Escrow account in the name of Coal Controller Escrow account NLC Ltd. Mine..., ( renewed with interest less tax) as stipulated by Coal Controller.

7 Thermal Power Station-II Expansion consists of two units of 250 MW each based on first of its kind eco friendly CFBC technology in India with the scheduled completion in February 2009 for Unit-I and June 2009 for Unit-II which were revised to June 2012 for Unit-I and March 2013 for Unit-II.

Due to technical issues, sustained operations could not be maintained to declare Commercial Operation Date (COD).

The issue was also subjected to a technical audit in July-August 2014 to assess the nature of delays in the project. The technical audit report proposed extension of time to provide further opportunity to the contractor to complete the project, given the technological constraints.

Subsequently, Unit-II has been commissioned on 22.04.2015 and Unit-I is expected to be commissioned shortly.

The additional interest and overheads for the period of delay are being capitalized along with the cost of the project in line with industry practice and policies of the company. Based on the past experience, management is reasonably confident to recover the project cost through tariff.

8 Inventory valuation - Inventories are valued at the lower of cost and net realisable value.

i. Lignite - At absorption cost excluding share of common charges and social overhead.

ii. Stores & Spares procured - At weighted average acquisition cost.

iii. Fly ash bricks - At absorption cost.

iv. Waste products, used belts reconditioned, Stores & Spares discarded for disposal, medicines and canteen stores are taken at NIL value.

9 Stocks of stores, spares,raw materials and finished goods are under hypothecation for cash credit facilities arranged with State Bank of India.

10 Contingencies and Commitments As at As at 31.03.2015 31.03.2014 a. Contingent Liability exists in respect of:

i. Guarantees issued by Company 4.45 4.45

ii. Differential amount to beneficiaries 55.61 55.61

on account of adopting normal Corporate

Tax rate instead of Minimum Alternative Tax rate (MAT) for Return on Equity in power tariff for the year 2012-13, as the Company is of the opinion that MAT rate is not applicable. Petition with the CERC filed and awaiting orders

b. Claims against the Corporation not acknowledged as debts:

i. From Employees /Others NQ NQ

ii. Additional amount payable for the land NQ NQ acquired after 1-1-2014 towards compensation payable under the Right to Fair Compensation and Transparency in land acquisition, Rehabilitation and Resettlement of Act 2013

iii. From Suppliers / Contractors/Customers 1,816.81 1,798.43

iv. Disputed amount of Income Tax/ST/Other 1,040.79 669.57 Taxes v. Statutory Authorities 1,162.25 869.46

a. Includes tax payable under Tamilnadu Tax on Consumption or sale of Electricity Act.2003 of t 856.63 crore (previous year t 722.12 crore) and t 138.71 crore (previous year t 128.99 crore) towards sale of power to distribution Companies and Captive consumption in Mines. However the same is recoverable from the beneficiaries after getting approval from CERC.

b. Includes Rs. 147.56 crore estimated liability under the scheme of Perform, Achieve and Trade (PAT) mechanism of The Energy Conservation Act, 2001 in respect of Thermal Power Station-I for exceeding the energy efficiency targets. However application for exemption of TPS-I from PAT mechanism has been made to the appropriate authority.

c. i. Estimated value of contracts remaining 4,473.22 4,322.67 to be executed on capital accounts not provided for

ii. Commitment for the acquisition of lands 8.96 94.56

NQ - In view of the various court cases and litigations and claims disputed by the corporation financial impact as to outflow of resources is not quantifiable at this stage.

11 Advances, Sundry Debtors and Sundry Creditors have been linked with corresponding credits/ debits to the extent practicable. Balances due in respect of advances and amounts due to creditors are subject to confirmation. However, Power dues and Lignite sale dues are reconciled with Debtors periodically.

12 Pending determination of power tariff by Central Electricity Regulatory Commission (CERC), sale of power for the year is accounted by adopting provisional tariff as per CERC Regulation, 2014 and provisional lignite price in energy charges is considered as per the guidelines of Ministry of Coal (MOC) dt, 02.01.2015. Due to this, net sales from the operation is increased to the extent of Rs. 275.78 crore for which invoice will be raised on receipt of CERC Order.

13 CERC Order dt 07-05-2015 was received admitting the inclusion of cost of Mine-II Expansion for the year 2010-11 to 2014-15 in the Pooling price of lignite. While admitting the increase in the lignite price, the CERC has ordered for the refund of incentive earned for the excess generation of power over and above the contemplated PLF in TPS-II and passing of the revenue earned on lignite sales from Mine-II to the beneficiaries. This has not been quantified since the Company has not accepted this order and is in the process of filing the petition for review/appeal before the competent authority.

14 Power sales comprises, t 73.36 crore towards impact of Truing up provided from 2009-14 and t 273.33 crore towards Claim of Wage Revision arrears approved by CERC vide order dt.12.5.2015 and the same are receivable from beneficiaries.

15 Lignite sales includes t 24.20 crore towards impact of truing up from 2009-14 payable to the customers and t 25.59 crore towards increase in pooled price due to wage revision arrears paid which is receivable from the customers.

16 Based on opinion from Expert Advisory Committee (EAC) of ICAI , exchange rate difference (on account of restatement of foreign currency borrowing) recoverable from or payable to the beneficiaries in subsequent years as per CERC Tariff regulations are accounted as Deferred foreign currency fluctuation asset / liability. Accordingly necessary adjustment is made in the current year in depreciation and interest expenditure.

17 Disclosure in accordance with the Accounting Standard-24 towards discontinued operations:

a. Discontinuing operation : Thermal Power Station I

b. Business Segment : Power

c. Date and nature of initial : On 3rd June 2014, it was communicated that TPS-I disclosure of event will be retired on commissioning of Neyveli New Thermal Power Project. d. Date of discontinuation : Likely from Oct.2017 to April 2018

18 New higher capacity of Neyveli New Thermal Power Project of 1000 MW under implementation would be commissioned as replacement to TPS-I.

19 i. Salaries and wages are included in the expenses in order to arrive the operating profit before tax

ii. Total assets includes net current assets.

20 Figures of the previous year have been re-grouped wherever necessary.


Mar 31, 2014

Sl. Particulars (Rs. in crore) No.

1 Contingencies and Commitments As at 31.03.2014 As at 31.03.2013

a. Contingent Liability exists in respect of:

i. Guarantees issued by Company 4.45 4.13

ii. Differential amount to beneficiaries on account of adopting normal Corporate Tax rate instead of Minimum Alternative Tax rate(MAT) for Return on Equity in power tariff for the year 2012-13, as the Company is of the opinion that MAT rate is not applicable. The matter is to be referred for clarification from CERC. 55.61 0.00

b. Claims against the Corporation not acknowledged as debts:

i. From employees/others NQ NQ

ii. From suppliers/contractors/ customers 1798.43 1640.56

iii. Disputed amount of Income tax/ST/ Other taxes 669.57 458.45

iv. Statutory authorities 869.46 87.49 Rs. Includes Rs.722.12 crore (previous year Rs.Nil) and Rs.128.99 crore (previous year Rs.68.15 crore) tax payable under Tamilnadu Tax on Consumption or sale of Electricity Act.2003 towards sales made to Companies and Captive consumption in Mines. However the same is recoverable from the beneficiaries after getting approval from CERC.

c.i. Estimated value of contracts remaining to be executed on capital accounts not provided for 4322.67 1159.76

ii. Commitment for the acquisition of lands 94.56 59.86

NQ - Not Quantifiable

2 Advances, Sundry Debtors and Sundry Creditors have been linked with corresponding credits/ debits to the extent practicable. Balances due in respect of advances and amounts due to creditors are subject to confirmation. However, Power dues and Lignite sale dues are reconciled with Debtors periodically.

3 Based on opinion from Expert Advisory Committee (EAC) of ICAI, exchange rate difference (on account of restatement of foreign currency borrowing) recoverable from or payable to the beneficiaries in subsequent years as per CERC Tariff regulations are accounted as Deferred foreign currency fluctuation asset/liability. Accordingly necessary adjustment is made in the current year in depreciation and interest expenditure. Credit to the tune of Rs.57.60 crore, being interest for Rs.1.29 crore and depreciation for Rs.56.31 crore is accounted. Out of Rs.57.60 crore, Rs.26.19 crore accounted in current year and Rs.31.41 crore accounted as prior period transaction. This treatment is effected retrospectively from April 1, 2004. Upto 31.03.2014, the Company accounted the above FERV as sales revenue as and when recovered from the beneficiaries.

4 Disclosure of transactions with the related parties as defined in the Accounting Standard-18 are given below:

(i) List of related parties: (a) Key Management Personnel:

Shri B.Surender Mohan - Chairman-cum-Managing Director

Directors

Shri. Sarat Kumar Acharya

Shri. Rakesh Kumar

Shri. S. Rajagopal

Shri. M.S.Ravindranath

Shri. S.Boopathy

Shri. R.Kandasamy

Dr. A.K.Dubey

Shri. C.V. Sankar

Shri. N.S. Palaniappan

(ii) Transactions during the year with related parties:

Remuneration to Directors listed in (a) above: Rs.2.50.crore

5 Disclosure in respect of the interests in Joint Venture as per Accounting Standard-27 is furnished as under:

a. Company Name : M/s. MNH Shakti Limited

b. Registered Office : Anand Vihar, PO Jagruti Vihar, Sambalpur District, Odisha.

6 Figures of the previous year have been re-grouped wherever necessary.


Mar 31, 2013

1 Advances, Sundry Debtors and Sundry Creditors have been linked with corresponding credits/debits to the extent practicable. Balances due in respect of advances and amounts due to creditors are subject to confirmation.

2 Disclosure of transactions with the related parties as defined in the Accounting Standard-18 are given below:

(i) List of related parties: (a) Key Management Personnel:

Shri B.Surender Mohan - Chairman-cum-Managing Director Shri A.R. Ansari - Chairman-cum-Managing Director

Directors

Ms. Zohra Chatterji

Shri N. Sundaradevan

Shri. N.S. Palaniappan

Shri. Vikram Kapur

Shri. R. Kandasamy

Shri. Sarat Kumar Acharya

Shri. Rakesh Kumar

Shri. S. Rajagopal

Shri. J. Mahilselvan

(ii) Transactions during the year with related parties:

Remuneration to Directors listed in (a) above: Rs.1.71 crore

3 Figures of the previous year have been re-grouped wherever necessary.


Mar 31, 2012

1 Contingencies and Commitments As at 31.03.2012 As at 31.03.2011

a. Contingent Liability exists in respect of:

(i) Guarantees issued by Company 3.38 0.01

b. Claims against the Corporation not acknowledged as debts:

(i) From employees/others 0.22 0.23

(ii) From suppliers/contractors 1721.04 1545.05

(iii) Statutory authorities 19.34 16.02

(iv) Disputed amount of Income tax 280.97 82.92

c. (i) Estimated value of contracts remaining to be executed on capital accounts not provided for 523.93 600.35

(ii) Commitment for the acquisition of lands 40.89 90.51

d. Value of Securities other than cash not considered in accounts 0.75 1.22

2 Advances, Sundry Debtors and Sundry Creditors have been linked with corresponding credits/debits to the extent practicable. Balances due in respect of Sundry Debtors, Advances and amounts due to Creditors are subject to confirmation.

a. Pending determination of power tariff by Central Electricity Regulatory Commission (CERC), tariff rate has been provisionally accounted based on the Ministry of Coal Guidelines on the lignite transfer price for energy charges and other relevant parameters for capacity charges in respect of Barsingsar Thermal Power Station in accordance with the accounting policy.

b. Revision in capacity charges of power tariff and transfer price of lignite (in accordance with Ministry of Coal (MOC) Guidelines) for energy charges of power tariff on account of "truing up" (i.e., adjustments based on actuals as against projected) to the actual of the normative, wherever and whenever applicable will be considered subject to approval by Central Electricity Regulatory Commission (CERC).

c. Mine-ll Expansion expenditure in determining the transfer price of lignite for energy charges in respect of sale of power will be considered on filing of tariff petition with CERC for TPS-II Expansion.

d. Surcharges recoverable from Electricity Boards on the belated settlement of the power bill, amounting to Rs.64.66 crore (previous year Rs.9.66 crore) has not been reckoned as income since there is uncertainty in realisation. The same will be accounted on certainty of realisation.

e. Power tariff has been finalised by CERC for Thermal Power Station-1 & II for the period from 01.04.2009 during the year. Consequently there is a reduction in the power sale which had been provisionally reckoned in the earlier years.

f. Claim for the Income-Tax reimbursement for the period from 2005-06 to 2008-09 has been accepted by the beneficiaries in respect of lignite supplied to them. Hence the same has been reckoned as income during the year.

g. Consequent to receipt of finalised power tariff for Thermal Power Station-1 & II and on acceptance of Income Tax reimbursement claim, income in respect of interest for the difference between the provisional billing and finalised power tariff and on earlier year Income Tax reimbursement claim has been reckoned.

h. Additional provision has been made in respect of employee superannuation benefit for the period from 01.01.2007 to 31.03.2011.

i. During the year ended 31st March, 2011, the Ministry of Coal approved Mine Closure Plans effective from 01.04.2004. Pursuant to this, the provision created in earlier years has been reversed to the extent of Rs. 400.42 crore, power sales has been reduced by Rs.340.72 crore and lignite sales has been reduced by Rs. 6.15 crore being adjustment relating to earlier years and consequent interest payable to the beneficiaries has been reckoned at Rs.52.74 crore. Interest income on receipt of finalised powertariff forTPS-l Expansion amounting toRs.16.21 crore also considered.

3 Disclosure of transactions with the related parties as defined in the Accounting Standard-18 are given below:

(i) List of related parties: (a) Key Management Personnel:

Chairman-cum-Managing Director

Shri A.R. Ansari

Directors

Shri. Alok Perti

Smt. Zohra Chatterji

Shri. Rajeev Ranjan

Shri N.Sundaradevan

Shri.R.K.Mahajan

Shri. B.Surender Mohan

Shri. R.Kandasamy

Shri. K.Sekar

Shri. J.Mahilselvan

Shri. Sarat Kumar Acharya

(ii) Transactions during the year with related parties:

Remuneration to Functional Directors listed in (a) above: Rs.1.92 crore

4 Figures of the previous year have been re-grouped wherever necessary.


Mar 31, 2011

1. Net pre-commissioning income/expenditure are adjusted directly in the cost of related assets.

2. For the year For the year M' Subject in brief ended ended _ 31s'March 2011 31s'March 2010

1. A. Contingent liability exists in respect of:'

a. Guarantees issued by the Company 0.01 0.01

b. Additional customs duty, on final assessment of goods

released on bond N.Q N.Q

c. Labour Court cases N.Q N.Q

3. As per the accounting policy of the Corporation, surcharge recoverable from Electricity Boards on the belated settlement of the power bill, amounting to Rs.9.66 crore (previous year Rs. 116.83 crore) has not been reckoned as income since there is uncertainty in realisation. The same will be accounted on certainty of realisation.

4. Details relating to consumption of raw materials, stores and spares, licensed and installed capacities, production, etc., are furnished in the Annexure to Schedule-21.

5. i. Principal amount remaining unpaid to any supplier belonging to Micro, Small and Medium Enterprises as at the end of the year Rs. 2.74 crore (previous year Rs. 3.04 crore).

ii. Amount of Interest due and payable for the period of delay in making payment but without adding the interest specified under this Act Rs. 0.12 crore.

6. As per the accounting policy, pending determination of power tariff by Central Electricity Regulatory Commission (CERC), tariff rate has been provisionally accounted based on the Ministry of Coal Guideline on the lignite transfer price for energy charges and other relevant parameters for capacity charges. On account of this an amount of Rs. 847.32 crore (previous year Rs.805.34 crore) has been reckoned as sale of powerfor which the bill will be raised on receipt of CERC order.

7. Revision in capacity charges of power tariff and transfer price of lignite for energy charges of power tariff on account of "truing up" (i.e., adjustments based on actuals as against projected) to the actual of the normative, wherever and whenever applicable and inclusion of Mine-ll expansion expenditure will be considered on receipt of Central Electricity Regulatory Commission's (CERC) Orders in accordance with Ministry of Coal (MOC) guidelines and CERC Regulations.

8. During the year the Ministry of Coal approved Mine Closure Plans effective from 01.04.2004. Pursuant to this, the provision created in earlier years has been reversed to the extent of Rs. 382.45 crore, after netting of current year provision of Rs. 17.97 crore, power sales has been reduced by Rs. 340.72 crore (being adjustment relating to earlier years) and lignite sales has been reduced by Rs.6.15 crore (being adjustment relating to earlier years) and Interest payable to the beneficiaries has been reckoned at Rs.53.38 crore (Rs.0.64 crore pertains to current year).

9. Stocks of stores, spares, raw materials and finished goods are under hypothecation for cash credit facilities arranged with State Bank of India.

10. Advances, Sundry Debtors and Sundry Creditors have been linked with corresponding credits/debits to the extent practicable. Balances due in respect of sundry debtors, advances and amounts due to creditors are subject to confirmation.

11. Profit after tax - Rs. 1298.33 crore Number of shares - 167,77,09,600 Face value of share - Rs. 10/-

12. There is no impairment loss identified other than disposable/dismantled assets for which provision of Rs.1.95 crore has been created as per Accounting Standard-28.

13. Figures of the previous year have been re-grouped wherever necessary.


Mar 31, 2010

1. Net Pre-commissioning income/expenditure are adjusted directly in the cost of related assets.

Sl. Subject in brief 31 stMarch 2010 31st March 2009

1. i. Contingent liability exists in respect of:

a. Guarantees issued by the Company 0.01 0.01

b. Additional customs duty, on final assessment of goods released on bond N.Q N.Q

c. Labour Court cases N.Q N.Q

ii. Claims against the Corporation not acknowledged as debts:

a. From employees/others 7.23 6.43

b. From suppliers/contractors 1317.59 1207.87

c. From statutory authorities 16.03 16.03

d. Disputed amount of Income tax 0.90 16.30

2. As per the accounting policy of the Corporation, surcharge recoverable from Electricity Boards on the belated settlement of the power bill amounting to Rs.116.83 crore has not been reckoned as income since there is uncertainty in realisation. The same will be accounted on certainty of realisation.

3. The rate of depreciation has been modified to match with main equipment of Thermal Power Station - I on account of revised planned shutdown of the unit.

4. Details relating to consumption of raw materials stores and spares licensed and installed capacities, production etc., are furnished in the Annexure to Schedule-22.

5. There is no impact in profit due to change in accounting policy of providing depreciation by way of fixing ceiling limit of Rs.1 crore for prior period transaction. However depreciation to the extent of Rs.0.75 crore (debit) has been included in the current year on account of this change.

6. i. Principal amount remaining unpaid to any supplier belonging to Micro, Small and Medium Enterprises as at the end of the year Rs. 3.04 crore.

ii. Amount of Interest due and payable for the period of delay in making payment but without adding the interestspecifiedunderthisActRs. 0.03 crore.

7. Pending finalisation of pay revision to non-executives from 01.01.2007, provisional liability is being provided in the accounts towards arrears of pay revision. The liability as on 31.3.2010 is Rs. 564.24 crore.

8. As per the accounting policy, pending determination of power tariff by Central Electricity Regulatory Commission (CERC), tariff rate has been provisionally accounted based on the Ministry Guideline on the lignite transfer price for energy charges and other relevant parameters for capacity charges. On account of this an amount of Rs 805.34 crore has been reckoned as sale of power and Rs. 52.20 crore has been reckoned as sale of lignite for which the bill will be raised on receipt of CERC order.

9. Stocks of stores, spares, raw materials and finished goods are under hypothecation for cash credit facilities arranged with State Bank of India.

10. Advances, Sundry Debtors and Sundry Creditors have been linked with corresponding credits/debits to the extent practicable. Balances due in respect of sundry debtors, advances and amounts due to creditors are subject to confirmation.

11. Profit after tax-Rs.1247.46 crore. Numbers of shares -167,77,09,600. Face value of share - Rs.10/-.

12. There is no impairment loss identified other than disposable/dismantled assets for which provision of Rs. 1.95 crore has been created as per Accounting Standard-28.

13. Figures of the previous year have been re-grouped wherever necessary.

 
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