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Notes to Accounts of NTPC Ltd.

Mar 31, 2019

Note 1. Company Information and Significant Accounting Policies

A.    Reporting entity

NTPC Limited (the “Company”) is a Company domiciled in India and limited by shares (CIN: L40101DL1975GOI007966). The shares of the Company are publicly traded on the National Stock Exchange of India Limited and BSE Limited. The address of the Company’s registered office is NTPC Bhawan, SCOPE Complex, 7 Institutional Area, Lodi Road, New Delhi - 110003. The Company is primarily involved in the generation and sale of bulk power to State Power Utilities. Other business includes providing consultancy, project management & supervision, energy trading, oil & gas exploration and coal mining.

B.    Basis of preparation

1.    Statement of Compliance

These standalone financial statements are prepared on going concern basis following accrual system of accounting and comply with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto, the Companies Act, 2013 (to the extent notified and applicable), applicable provisions of the Companies Act, 1956, and the provisions of the Electricity Act, 2003 to the extent applicable.

These financial statements were authorised for issue by the Board of Directors on 25 May 2019.

2.    Basis of measurement

The financial statements have been prepared on the historical cost basis except for:

-    Certain financial assets and liabilities (including derivative instruments) that are measured at fair value (refer accounting policy regarding financial instruments); and

-    Plan assets in the case of employees defined benefit plans that are measured at fair value.

The methods used to measure fair values are discussed in notes to the financial statements.

Historical cost is the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire assets at the time of their acquisition or the amount of proceeds received in exchange for the obligation, or at the amounts of cash or cash equivalents expected to be paid to satisfy the liability in the normal course of business. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

3.    Functional and presentation currency

These financial statements are presented in Indian Rupees (INR), which is the Company’s functional currency. All financial information presented in INR has been rounded to the nearest crore (upto two decimals), except as stated otherwise.

4.    Current and non-current classification

The Company presents assets and liabilities in the balance sheet based on current/non-current classification.

An asset is current when it is:

-    Expected to be realised or intended to be sold or consumed in normal operating cycle;

-    Held primarily for the purpose of trading;

-    Expected to be realised within twelve months after the reporting period; or

-    Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

-    It is expected to be settled in normal operating cycle;

-    It is held primarily for the purpose of trading;

-    It is due to be settled within twelve months after the reporting period; or

-    There is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets/liabilities are classified as non-current.

C. use of estimates and management judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that may impact the application of accounting policies and the reported value of assets, liabilities, income, expenses and related disclosures concerning the items involved as well as contingent assets and liabilities at the balance sheet date. The estimates and management’s judgments are based on previous experience & other factors considered reasonable and prudent in the circumstances. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

In order to enhance understanding of the financial statements, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is as under:

1.    Formulation of accounting policies

The accounting policies are formulated in a manner that results in financial statements containing relevant and reliable information about the transactions, other events and conditions to which they apply. Those policies need not be applied when the effect of applying them is immaterial.

2.    Useful life of property, plant and equipment and intangible assets

The estimated useful life of property, plant and equipment and intangible assets is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.

Useful life of the assets of the generation of electricity business is determined by the CERC Tariff Regulations in accordance with Schedule II of the Companies Act, 2013.

3.    Recoverable amount of property, plant and equipment and intangible assets

The recoverable amount of property, plant and equipment and intangible assets is based on estimates and assumptions regarding in particular the expected market outlook and future cash flows associated with the power plants. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairment.

4.    Post-employment benefit plans

Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, the rate of salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate and documented. However, any changes in these assumptions may have a material impact on the resulting calculations.

5.    revenues

The Company records revenue from sale of energy based on tariff rates approved by the CERC as modified by the orders of Appellate Tribunal for Electricity, as per principles enunciated under Ind AS 115. However, in cases where tariff rates are yet to be approved, provisional rates are adopted considering the applicable CERC Tariff Regulations.

6.    Leases not in legal form of lease

Significant judgment is required to apply lease accounting rules under Appendix C to Ind AS 17 ‘Determining whether an arrangement contains a lease’. In assessing the applicability to arrangements entered into by the Company, management has exercised judgment to evaluate the right to use the underlying asset, substance of the transactions including legally enforceable agreements and other significant terms and conditions of the arrangements to conclude whether the arrangement needs the criteria under Appendix C to Ind AS 17.

7.    Assets held for sale

Significant judgment is required to apply the accounting of non-current assets held for sale under Ind AS 105, ‘Non-current assets held for sale and discontinued operations’. In assessing the applicability, management has exercised judgment to evaluate the availability of the asset for immediate sale, management’s commitment for the sale and probability of sale within one year to conclude if their carrying amount will be recovered principally through a sale transaction rather than through continuing use.

8.    Regulatory deferral account balances

Recognition of regulatory deferral account balances involves significant judgements including about future tariff regulations since these are based on estimation of the amounts expected to be recoverable/payable through tariff in future.

9.    Provisions and contingencies

The assessments undertaken in recognising provisions and contingencies have been made in accordance with Ind AS 37, ‘Provisions, contingent liabilities and contingent assets’. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss. Should circumstances change following unforeseeable developments, this likelihood could alter.

10.    Impairment test of non-financial assets

The recoverable amount of investment in joint venture companies is based on estimates and assumptions regarding in particular the future cash flows associated with the operations of the investee Company. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairment.

11. Income taxes

Significant estimates are involved in determining the provision for income taxes, including amount expected to be paid/ recovered for uncertain tax positions.

a)    The conveyancing of the title to 10,124 acres of freehold land of value Rs.1,478.01 crore (31 March 2018: 10,126 acres of value Rs. 1,900.82 crore), buildings and structures of value Rs. 4.55 crore (31 March 2018: Rs. 4.97 crore) and also execution of lease agreements for 10,592 acres of land of value Rs. 1,543.62 crore (31 March 2018: 10,824 acres of value Rs. 1,804.49 crore) in favour of the Company are awaiting completion of legal formalities.

b)    Land includes 284.35 acres of freehold land of value Rs. 0.52 crore (31 March 2018: 284.35 acres of value Rs. 0.52 crore), and 1939.55 acres of leasehold land of value Rs. 3.81 crore (31 March 2018: 1939.55 acres of value Rs. 3.81 crore), the value thereof including periodical lease rent accruing thereon is subject to revision on final settlement with the State Government Authorities with demand of late payment charges, if any.

c)    Land does not include value of 33 acre (31 March 2018: 34 acres) of land in possession of the Company. This will be accounted for on settlement of the price thereof by the State Government Authorities.

d)    Land includes 1,337 acres of value Rs. 133.77 crore (31 March 2018: 1,298 acres of value Rs.133.93 crore) not in possession of the Company. The Company is taking appropriate steps for repossession of the same.

e)    Land includes an amount of Rs. 282.92 crore (31 March 2018: Rs. 262.91 crore) deposited with various authorities in respect of land in possession which is subject to adjustment on final determination of price.

f)    Gross block of land under submergence represents Rs. 597.94 crore (31 March 2018: Rs. 576.64 crore) of freehold land and Rs.178.83 crore (31 March 2018: Rs.178.83 crore) of leasehold land. The land has been amortised considering the rate of depreciation provided by the CERC in the tariff regulations and the fact that it will not have any economic value due to deposit of silt and other foreign materials.

g)    Possession of land measuring 98 acres (31 March 2018: 98 acres) consisting of 79 acres of freehold land (31 March 2018: 79 acres) and 19 acres of lease hold land (31 March 2018: 19 acres) of value Rs. 0.21 crore (31 March 2018: Rs. 0.21 crore) was transferred to Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd. (erstwhile UPSEB) for a consideration of Rs. 0.21 crore. Pending approval for transfer of the said land, the area and value of this land has been included in the total land of the Company. The consideration received from erstwhile UPSEB is disclosed under Note 28 - Current liabilities - Other financial liabilities.

h)    Refer Note 49 (b) regarding property, plant and equipment under finance lease.

i)    Based on impairment assessment, the Company has reversed an impairment loss of Rs. Nil (31 March 2018: Rs. 3.75 crore) in respect of plant and equipment of a Solar PV Station of the Company.

j) Spare parts of Rs. 5 lakh and above, stand-by equipment and servicing equipment which meet the definition of property, plant and equipment are capitalised.

k) Property, plant and equipment costing Rs.5,000/- or less , are depreciated fully in the year of acquisition.

l) Refer Note 21 for information on property, plant and equipment pledged as security by the Company.

m) Refer Note 69 (C) (a) for disclosure of contractual commitments for the acquisition of property, plant and equipment.

n) Deduction/adjustments from gross block and depreciation, amortisation and impairment for the year includes:

o) Exchange differences capitalised are disclosed in the ‘Addition’ column of Capital work-in-progress (CWIP) and allocated to various heads of CWIP in the year of capitalisation through ‘Deductions/Adjustments’ column of CWIP. Exchange differences in respect of assets already capitalised are disclosed in the ‘Deductions/Adjustments’ column of Property, plant and equipment.

p) Gross carrying amount of the fully depreciated property, plant and equipment that are still in use:

q) Business Combinations

Additions column in gross block includes items of property, plant and equipment acquired under business combinations

(Refer Note 59), details of which are as below:

a)    Construction stores are net of provision for shortages pending investigation amounting to Rs. 25.39 crore (31 March 2018: Rs. 26.26 crore).

b)    Pre-commissioning expenses for the year amount to Rs. 622.41 crore (31 March 2018: Rs. 544.39 crore) and after adjustment of pre-commissioning sales of Rs. 71.82 crore (31 March 2018: Rs. 77.40 crore) resulted in net pre-commissioning expenditure of Rs. 550.59 crore (31 March 2018: Rs. 466.99 crore).

c)    Additions to the development of coal mines include expenditure during construction period (net) of Rs. 1,269.79 crore (31 March 2018: Rs. 668.37 crore) - [Ref. Note 39] and are after netting off the receipts from coal extracted during the development phase amounting to Rs. 1,214.99 crore (31 March 2018: Rs. 464.03 crore). Also refer Note 47 (B) relating to change in accounting policy relating to development of coal mines.

d)    Details of exchange differences and borrowing costs capitalised are disclosed in Note 2 (o).

a)    Investments have been valued as per accounting policy no. C.27.1 (Note 1).

b)    The company entered into a Memorandum of Understanding (MoU) with State Government of Bihar and its affiliate companies on 15 May 2018 for buy-out of equity of Bihar State Power Generation Company Limited (BSPGCL) in Kanti Bijlee Utpadan Nigam Limited (KBUNL) and Nabinagar Power Generating Company Private Limited (NPGCL). Consequently, the Company bought the equity shares of BSPGCL in KBUNL and NPGCL for an amount of Rs. 392.78 crore and Rs. 1,737.19 crore respectively. As a result, KBUNL and NPGCL became wholly-owned subsidiaries of the Company with effect from 29 June 2018.

c)    The Board of Directors of the Company in its meeting held on 28 April 2016 accorded in principle approval for withdrawal from NTPC BHEL Power Projects Private Ltd. (NTPC-BHEL), a joint venture of the Company. As NTPC-BHEL was formed by a directive from the GOI, approval of exit from GOI is awaited. Pending withdrawl, provision for impairment loss on the entire investment in NTPC-BHEL of Rs. 50.00 crore (upto 31 March 2018: Rs. 45.59 crore) has been made based on the un-audited accounts of NTPC-BHEL as at 31 March 2019.

d)    The Board of Directors of the Company in its meeting held on 28 April 2016 accorded in principle approval for withdrawal from Transformers and Electricals Kerala Ltd. (TELK), a joint venture of the Company. GOI has accorded its approval for exit of NTPC from the joint venture. The decison of the Board of Directors of NTPC Limited and approval of GOI has been conveyed to the Government of Kerala (JV Partner) & TELK. The government of Kerala has requested NTPC to review the decision. The matter is under examination. Pending decision in this regard, no provision for impairment in the value of investment in TELK is required to be recognised.

e)    The Company has an investment of Rs. 834.55 crore as at 31 March 2019 (31 March 2018: Rs. 834.55 crore) in the equity shares of Ratnagiri Gas and Power Private Ltd. (RGPPL), a joint venture of the Company. During the year, as required by Ind AS 36, an assessment of impairment of the investment in RGPPL was carried out by an independent expert and the provision for impairment loss on the investment in RGPPL has been increased to Rs. 775.02 crore (31 March 2018: Rs. 617.05 crore).

f)    The Company has an investment of Rs. 139.75 crore as at 31 March 2019 (31 March 2018: Rs. 139.75 crore) in the equity shares of Konkan LNG Private Ltd. (KLPL), a joint venture of the Company. Provision for impairment loss on the entire investment in KLPL made in earlier years of Rs. 139.75 crore has been continued.

g)    Restrictions for the disposal of investments held by the Company and commitments towards certain subsidiary & joint venture companies are disclosed in Note 69 (C) (b) and (c).

# Equity shares of Rs. 30,200/- (31 March 2018: Rs. 30,200/-) held in various employee co-operative societies.

a)    Investments have been valued as per accounting policy no. C.27.1 (Note 1).

b)    The Board of Directors of NTPC Limited in its meeting held on 28 April 2016 accorded in principle approval for withdrawal from PTC India Ltd. (PTC). As the Company was formed by a directive from the GOI, approval of the GOI is awaited for exit by NTPC Limited.

c)    The Board of Directors of NTPC Limited in its meeting held on 27 January 2012 accorded in principle approval for withdrawal from International Coal Ventures Private Ltd. (ICVPL). As the Company was formed by a directive from the GOI, approval of the Ministry of Steel, GOI is awaited for exit by NTPC Limited. Pending withdrawal, the Company had lost the joint control over the entity and accordingly, has classified the investment in ICVPL as ‘Investment in unquoted equity instruments’. Pending withdrawl, no provision for impairment in the value of investment in ICVPL is required to be made.

d)    The Board of Directors of NTPC Limited in its meeting held on 19 June 2014 accorded in principle approval for withdrawal from BF-NTPC Energy Systems Ltd. (BF-NTPC), a joint venture of the Company. As BF-NTPC was formed by a directive from the GOI, approval of the GOI was sought for exit by the Company. Ministry of Power, GoI conveyed its approval for winding up of BF-NTPC on 8 January 2018. Consequently, liquidator has been appointed in the extra-ordinary general meeting of BF-NTPC held on 9 October 2018. The winding up is under process. Pursuant to winding up proceedings, the Company had lost the joint control over the entity and accordingly, has classified the investment in BF NTPC as ‘Investment in unquoted equity instruments’.

e)    The Company is of the view that provisions of Ind AS 24 ‘Related Party Disclosures’ and Ind AS 111 ‘Joint Arrangements’ are not applicable to the investments made in PTC India Ltd., International Coal Ventures Private Ltd. and BF-NTPC Energy systems Ltd., and the same has been accounted for as per the provisions of Ind AS 109 ‘Financial Instruments’.

f)    No strategic investments in equity instruments measured at FVTOCI were disposed during the financial year 2018-19, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

c)    Other loans represent loan of Rs. 24.18 crore (31 March 2018: Rs. 25.07 crore) given to Andhra Pradesh Industrial Infrastructure Corporation Ltd. (APIIC).

d)    Details of collateral held as security:

-    Loans to the employees are secured against the mortgage of the house properties and hypothecation of vehicles for which such loans have been given in line with the policies of the Company.

-    Loan to APIIC is secured by a guarantee given by the Government of Andhra Pradesh vide GO dated 3 April 2003.

a)    The shares are expected to be alloted within 60 days from the date of payment of the share application money.

b)    Claims recoverable includes Rs. 719.71 crore (31 March 2018: Rs. 680.11 crore) towards the cost incurred upto 31 March 2019 in respect of one of the hydro power projects, the construction of which has been discontinued on the advice of the Ministry of Power (MoP), GOI which includes Rs. 413.40 crore (31 March 2018: Rs. 390.59 crore) in respect of arbitration awards challenged by the Company before Hon’ble High Court of Delhi. In the event the Hon’ble High Court grants relief to the Company, the amount would be adjusted against Current liabilities - Provisions - Provision for others (Note 30). Management expects that the total cost incurred, anticipated expenditure on the safety and stabilisation measures, other recurring site expenses and interest costs as well as claims of contractors/vendors for various packages for this project will be compensated in full by the GOI. Hence, no provision is considered necessary.

c)    Keeping in view the provisions of Appendix C to Ind AS 17, ‘Leases’ w.r.t. determining whether an arrangement contains a lease, the Company had ascertained that the Power Purchase Agreement (PPA) entered into for Stage I of a power station with the beneficiary falls under the definition of finance lease. Accordingly, the written down value of the specified assets had been derecognised from PPE and accounted for as Finance lease receivable (FLR) as at the transition date to Ind AS. Recovery of capacity charges towards depreciation (including AAD), interest on loan capital and return on equity (pre-tax) components from the beneficiary are adjusted against the FLR. The interest component of the FLR and amount received on account of revision of tariff of previous periods in respect of the above three elements are recognised as ‘Interest income on assets under finance lease’ under ‘Revenue from operations’ (Note 32).

a)    In line with accounting policy no. 15 (Note 1), deferred foreign currency fluctuation asset has been accounted and (-) Rs. 120.25 crore (31 March 2018: (-) Rs. 128.39 crore) being the exchange fluctuations on account of foreign currency loans have been recognised in ‘Energy sales’ under ‘Revenue from operations’ (Note 32).

b)    Capital advances include amounts given as advance against works to the following private companies (related parties) in which one or more directors of the Company are directors:

c)    Capital advances include Rs. 224.29 crore (31 March 2018: Rs. 224.29 crore), paid to a contractor pending settlement of certain claims which are under arbitration. The amount will be adjusted with the cost of related work or recovered from the party, depending upon the outcome of the arbitration proceedings.

d)    Advances to contractors and suppliers include payments to Railways amounting to Rs. 2,097.65 crore (31 March 2018: Rs. 2,226.22 crore) under customer funding model as per policy on ‘Participative model for rail-connectivity and capacity augmentation projects’ issued by the Ministry of Railways, GOI. As per this policy, an agreement has been signed between the Company and the Ministry of Railways, GOI on 6 June 2016. As per the agreement, railway projects agreed between the Company and Railways will be constructed, maintained and operated by Railways and ownership of the line and its operations and maintenance will always remain with them. Railways will pay upto 7% of the amount invested through freight rebate on freight volumes every year till the funds provided by the Company are fully recovered along-with interest (equal to the prevailing rate of dividend payable by Railways at the time of signing of respective agreements), subject to the rebate not exceeding the freight amount in the accounting year, after commercial operation date (COD) of the railway projects. The said railway projects as per the agreement are yet to achieve the COD.

e)    Capital advances are secured against the hypothecation of the construction equipment/material supplied by the contractors/suppliers.

f)    Loans given to employees are measured at amortised cost. The deferred payroll expenditure represents the benefits accruing to employees. The same is amortised on a straight-line basis over the remaining period of the loan.

a)    Inventory items have been valued as per accounting policy no. C.9 (Note 1).

b)    Inventories - Others includes steel, cement, ash bricks etc.

c)    Refer Note 21 and 46 (b) for information on inventories pledged as security by the Company.

d)    Paragraph 32 of Ind AS 2, ‘Inventories’ provides that materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. The Company is operating in the regulatory environment and as per CERC Tariff Regulations, cost of fuel and other inventory items are recovered as per extant tariff regulations. Accordingly, the realisable value of the inventories is not lower than the cost.

*Refer Note 20 (d) regarding fly ash utilisation reserve fund.

**Out of advance for DDUGJY Scheme of the GOI. Refer Note 28 (c) and 29 (a).

a)    In the previous year, deposits with original maturity of more than three months and maturing within one year included Rs. 1,743.89 crore which was kept in corporate liquid term deposits with a bank. These deposits represented unutilised balance of Medium Term Notes (MTNs) as per MTN programme to partly finance the capital expenditure of ongoing and/ or new power projects, coal mining projects, and/or renovation and modernisation of power stations and has since been utilised for the stated purposes.

b)    In line with the guidelines issued by Ministry of New and Renewable Energy (MNRE), GOI under National Solar Mission-II, a Payment Security Fund/Working Capital Fund will be set up/created by the MNRE. Upon creation of the said fund, amounts accrued from encashment of bank guarantee, penalties/liquidated damages on developers deducted by the Company from the Solar Power Developers (SPDs) as per the guidelines of MNRE shall be transferred to this fund. The said fund is yet to be created by MNRE. Pending creation of the fund, amount deducted by the Company on account of liquidated damages/penalties from the SPDs is earmarked for the said fund and is not available for use by the Company. Further, presentation of previous years figures have also been stated.

a)    Security deposits (unsecured) include Rs. 23.48 crore (31 March 2018: Rs. 27.73 crore) towards sales tax deposited with sales/commercial tax authorities, Rs. 299.79 crore (31 March 2018: Rs. 272.76 crore) deposited with Courts, Rs. 188.44 crore (31 March 2018: Rs. 177.47 crore) deposited with LIC for making annuity payments to the land oustees, Rs. 275.05 crore (31 March 2018: Rs. 275.05 crore) deposited with the Water Resource Department, Govt. of Chhattisgarh for drawl of water and Rs. 356.31 crore (31 March 2018: Rs. 158.50 crore) deposited against bank guarantee with one of the party as per the direction of the Hon’ble Supreme Court of India, refer Note 57(iii)(b).

b)    Advances - Contractors and suppliers - unsecured includes an amount of Rs. 5,769.00 crore (31 March 2018: Rs. 5,000.00 crore) paid to Indian Railways to be adjusted against freight payable on coal transportation, pursuant to the agreement entered into with Indian Railways, Ministry of Railways, GOI.

c)    Advances - Others include prepaid expenses amounting to Rs. 104.06 crore (31 March 2018: Rs. 87.39 crore) and unamortised discount on commercial paper amounting to Rs. 126.81 crore (31 March 2018: Rs. 88.40 crore).

d)    Advances - Related parties include amounts due from the following private companies in which one or more directors of the Company are directors:

e)    Loans given to employees are measured at amortised cost. The deferred payroll expenditure represents the benefits accruing to employees. The same is amortised on a straight-line basis over the remaining period of the loan.

f)    Asset held for disposal includes an amount of Rs. 98.90 crore in respect of one of the power stations which has since been shut down. (Refer Note 44).

a)    Regulatory deferral account balances have been accounted in line with Accounting policy no. C.4 (Note 1). Refer Note 65 for detailed disclosures.

b)    CERC Tariff Regulations, 2014 provide for recovery of deferred tax liability (DTL) as at 31 March 2009 from the beneficiaries. Accordingly, DTL as at 31 March 2009 is recoverable on materialisation from the beneficiaries. Regulations, 2014 provide for grossing-up the rate of return on equity based on effective tax rate for the financial year based on the actual tax paid during the year on the generation income. Accordingly, deferred tax liability for the period from 1 April 2014 will be reversed in future years when the related DTL forms part of current tax.

Hitherto the Company was disclosing tax expense recoverable from the beneficiaries as a deduction from the related tax expense. Further, ‘Deferred asset for deferred tax liability’ was hitherto disclosed as a deduction from the DTL (net). During the year, the EAC of the ICAI has issued an opinion with regard to presentation of ‘Deferred asset for the deferred tax liability’, wherein it has opined that ‘Deferred asset for DTL’ is in the nature of a ‘Regulatory Deferral Account Balance’ and should be shown as ‘Regulatory deferral account balance’. Considering the EAC opinion, ‘Deferred asset for the deferred tax liability’ which was hitherto presented as a deduction from ‘deferred tax liabilities (net) has been transferred to ‘Regulatory deferral account debit balance’. [Refer Note 47A].

c)    During the year, the Company recognised MAT Credit entitlement for the period commencing from 1 April 2014 amounting to Rs. 8,257.38 crore (31 March 2018 Rs. Nil). Utilisation of MAT Credit will result in lower effective tax rate in future years. Accordingly, ‘Regulatory deferral account balance’ of Rs. 7,615.10 crore (31 March 2018 Rs. Nil) corresponding to the said MAT Credit entitlement has also been recognised pertaining to the beneficiaries.

b) Terms and rights attached to equity shares:

The Company has only one class of equity shares having a par value Rs.10/- per share. The holders of the equity shares are entitled to receive dividends as declared from time to time and are entitled to voting rights proportionate to their share holding at the meetings of shareholders.

In accordance with applicable provisions of the Companies Act, 2013 read with Rules and as per decision of Board of Directors, the Company has created Debenture Redemption Reserve out of profits of the Company @ 50% of the value of debentures on a prudent basis, every year in equal installments till the year prior to the year of redemption of debentures/bonds for the purpose of redemption of debentures/bonds.

Pursuant to Gazette Notification dated 3 November 2009, issued by the Ministry of Environment and Forest (MOEF), Government of India (GOI), the amount collected from sale of fly ash and fly ash based products should be kept in a separate account head and shall be utilised only for the development of infrastructure or facility, promotion & facilitation activities for use of fly ash until 100 percent fly ash utilisation level is achieved.

During the year, proceeds of Rs.172.02 crore (31 March 2018: Rs. 131.02 crore) from sale of ash/ash products, Rs. 40.65 crore (31 March 2018: Rs. 26.74 crore) towards income on investment have been transferred to fly ash utilisation reserve fund. An amount of Rs. 207.25 crore (31 March 2018: Rs. 83.23 crore) has been utilised from the fly ash utilisation reserve fund on expenses incurred for activities as specified in the aforesaid notification of MOEF.

The fund balance of Rs. 636.63 crore (31 March 2018: Rs. 631.21 crore) has been kept in ‘Bank balances other than cash & cash equivalents’ (Note 14). Refer Note 18 & 65 for ash transportation cost.

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. The Company has issued 1,64,90,92,880 equity shares of Rs. 10/- each as fully paid bonus shares during the year ended 31 March 2019 (31 March 2018: Nil) in the ratio of one equity share of Rs. 10/- each for every five equity shares held.

The Company has elected to recognise changes in the fair value of certain investments in equity instruments in other comprehensive income. These changes are accumulated in reserve for equity instruments through OCI within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity instruments are derecognised.

a)    Details of terms of repayment and rate of interest

i)    Unsecured foreign currency loans (guaranteed by GOI) - Others carry fixed rate of interest ranging from 1.80% p.a. to 2.30% p.a. and are repayable in 15 to 24 semi annual installments as of 31 March 2019.

ii)    Unsecured foreign currency loans - Banks include loans of Rs. 243.97 crore (31 March 2018: Rs. 352.80 crore) which carry fixed rate of interest of 1.88% p.a. to 4.31% p.a. and loans of Rs. 10,001.63 crore (31 March 2018: Rs. 8,146.27 crore) which carry floating rate of interest linked to 6M USD LIBOR/6M JPY LIBOR. These loans are repayable in 2 to 19 semi-annual/annual installments as of 31 March 2019, commencing after moratorium period if any, as per the terms of the respective loan agreements.

iii)    Unsecured foreign currency loans - Others include loans of Rs. 2,906.14 crore (31 March 2018: Rs. 3,342.55 crore) which carry fixed rate of interest ranging from 1.88% p.a. to 4.31% p.a and loans of Rs. 60.11 crore (31 March 2018: Rs. 123.58 crore) which carry floating rate of interest linked to 6M EURIBOR. These loans are repayable in 2 to 20 semi annual installments as of 31 March 2019, commencing after moratorium period if any, as per the terms of the respective loan agreements.

iv)    Unsecured rupee term loans carry interest rate ranging from 6.571% p.a. to 8.50% p.a. with monthly/half-yearly rests. These loans are repayable in quarterly/half-yearly/yearly installments as per the terms of the respective loan agreements. The repayment period extends from a period of 7 to 15 years after a moratorium period of 3 to 6 years.

b)    The finance lease obligations are repayable in installments as per the terms of the respective lease agreements generally over a period of 4 to 99 years.

c)    There has been no default in repayment of any of the loans or interest thereon as at the end of the year.

Details of securities

I    Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of title deeds of the immovable properties pertaining to National Capital Power Station.

II    Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Hypothecation of all the present and future movable assets (excluding receivables) of Singrauli Super Thermal Power Station, Anta Gas Power Station, Auraiya Gas Power Station, Barh Super Thermal Power Project, Farakka Super Thermal Power Station, Kahalgaon Super Thermal Power Station, Koldam Hydel Power Project, Simhadri Super Thermal Power Project, Sipat Super Thermal Power Project, Talcher Thermal Power Station, Talcher Super Thermal Power Project, Tanda Thermal Power Station, Vindhyachal Super Thermal Power Station, National Capital Power Station, Dadri Gas Power Station, Feroze Gandhi Unchahar Power Station and Tapovan-Vishnugad Hydro Power Project as first charge, ranking pari-passu with charge, if any, already created in favour of the Company’s Bankers on such movable assets hypothecated to them for working capital requirement.

III    Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage of the immovable properties, on first pari-passu charge basis, pertaining to Sipat Super Thermal Power Project by extension of charge already created.

IV    Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of the title deeds of the immovable properties pertaining to Sipat Super Thermal Power Project.

V    Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai, (II) Hypothecation of all the present and future movable assets (excluding receivables) of Barh Super Thermal Power Project on first pari-passu charge basis, ranking pari passu with charge already created in favour of Trustee for other Series of Bonds and (III) Equitable mortgage of the immovable properties, on first pari-passu charge basis, pertaining to Ramagundam Super Thermal Power Station by extension of charge already created.

VI    Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of title deeds of the immovable properties pertaining to Ramagundam Super Thermal Power Station.

VII    Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage of the immovable properties, on first pari-passu charge basis, pertaining to National Capital Power Station by extension of charge already created.

VIII    Secured by English mortgage of the immovable properties pertaining to Solapur Super Thermal Power Project on first charge basis.

IX    Secured by Equitable mortgage of the immovable properties pertaining to Barh Super Thermal Power Project on first charge basis.

X    Secured by English mortgage, on pari-passu charge basis, of the immovable properties pertaining to Solapur Super Thermal Power Project.

XI    Secured by Equitable mortgage, on pari-passu charge basis, of the immovable properties pertaining to Barh Super Thermal Power Project.

XII    Secured by Equitable mortgage of the immovable properties pertaining to Vindhyachal Super Thermal Power Station on first charge basis.

XIII    Secured by Equitable mortgage, on pari-passu charge basis, of the immovable properties pertaining to Vindhyachal Super Thermal Power Station.

XIV    Security cover mentioned at Sl. No. I to XIII is above 100% of the debt securities outstanding.

a)    Disclosures as required under Companies Act, 2013 / MSMED Act, 2006 are provided in Note 67.

b)    Others mainly include amount payable to the Department of Water Resource, Government of Odisha pursuant to the Resolution No. 11011 dated 18 May 2015.

c)    Amounts payable to related parties are disclosed in Note 53.

a)    Deferred tax assets and deferred tax liabilities have been offset as they relate to the same governing laws.

b)    During the year, the Company has recognised MAT credit available to the Company in future amounting to Rs. 8,257.38 crore (31 March 2018: Rs. Nil) as the same is likely to give future economic benefits in the form of availability of set off against future income tax liability. Out of the above, an amount of Rs.7,615.10 crore (31 March 2018: Rs. Nil) has been recognised as payable to beneficiaries through regulatory deferral account balances.(Also refer Note 18 (c))

c)    Refer Note 18(b) and 47(A) for reclassification of deferred asset for deferred tax liability as per Ind AS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’ and Ind AS 1, ‘Presentation of financial statements’.

d)    Disclosures as per Ind AS 12, ‘Income Taxes’ are provided in Note 48.

a)    Details in respect of rate of interest and terms of repayment of current maturities of secured and unsecured non-current borrowings indicated above are disclosed in Note 21.

b)    Unpaid dividends, matured deposits, bonds and interest include the amounts which have either not been claimed by the investors/holders of the equity shares/bonds/fixed deposits or are on hold pending legal formalities etc. Out of the above, the amount required to be transferred to Investor Education and Protection Fund has been transferred.

c)    ’Other payables - Others’ mainly includes Rs. 472.27 crore (31 March 2018: Rs. 263.10 crore) towards the implementation of Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) Scheme of the GOI being carried out by the Company. The funds for the implementation of these schemes are provided by the agencies nominated by the GOI in this regard. Further, ‘Other payables - Others’ also include Rs. 319.74 crore (31 March 2018: Rs. 211.49 crore) payable to the Department of Water Resource, Government of Odisha and amount payable to hospitals, parties for stale cheques etc.

d)    The Company had obtained exemption from the Ministry of Corporate Affairs (MCA), GOI in respect of applicability of Section 58A from the erstwhile Companies Act, 1956 in respect of deposits held from the dependants of employees who die or suffer permanent total disability under the ‘Employees Rehabilitation Scheme’ (said amount is included in “Other payables - Others”). Consequent upon enactment of the Companies Act, 2013, the Company has written to the MCA for clarification on continuation of above exemption granted earlier, which is still awaited. Based on an expert opinion, the amount accepted under the Scheme is not considered as a deposit under the Companies Act, 2013.

e)    Disclosures as required under the Companies Act, 2013 / MSMED Act, 2006 are provided in Note 67.

f)    Amounts payable to related parties are disclosed in Note 53.

(a) Advance received for the DDUGJY (including interest thereon) of Rs. 58.28 crore (31 March 2018: Rs. 313.97 crore) is included in ‘Advance from customers and others’. Refer Note 28 (c). Tax deducted at source on the interest is included in ‘Advance tax and tax deducted at source’ - Note 10.

a)    Disclosures required by Ind AS 19, ‘Employee Benefits’ are provided in Note 50.

b)    Disclosures required by Ind AS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’ are provided in Note 57.

c)    Provision for employee benefits as of 31 March 2018 included an amount of Rs. 1203.28 crore towards revision of payscales of employees which has been used during the year.

d)    Provision for others mainly comprise Rs. 85.14 crore (31 March 2018: Rs. 73.15 crore) towards cost of unfinished minimum work programme demanded by the Ministry of Petroleum and Natural Gas (MoP&NG) including interest thereon in relation to Block AA-ONN-2003/2 (Refer Note 60), Rs. 1,908.43 crore (31 March 2018: Rs. 1,279.31 crore) towards provision for cases under litigation and Rs. 3.36 crore (31 March 2018: Rs. 4.62 crore) towards provision for shortage in property, plant and equipment on physical verification pending investigation.

a)    Advance against depreciation (AAD) was an element of tariff provided under the Tariff Regulations for 2001-04 and 2004-09 to facilitate debt servicing by the generators since it was considered that depreciation recovered in the tariff considering a useful life of 25 years is not adequate for debt servicing. Though this amount is not repayable to the beneficiaries, keeping in view the matching principle, and in line with the opinion of the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI), this was treated as deferred revenue to the extent depreciation chargeable in the accounts is considered to be higher than the depreciation recoverable in tariff in future years. Since AAD is in the nature of deferred revenue and does not constitute a liability, it has been disclosed in this note separately from equity and liabilities.

b)    In line with significant accounting policy no. C.15 (Note 1), an amount of Rs. 74.35 crore (31 March 2018: Rs. 297.91 crore) has been recognised during the year from the AAD and included in energy sales (Note 32). The AAD recognised during the previous year includes Rs. 125.24 crore for the tariff period 2004-09 in respect of one of the stations as per CERC order dated 18 July 2017 which was recognised as energy sales during that year.

c)    Foreign exchange rate variation (FERV) on foreign currency loans and interest thereon is recoverable from/payable to the customers in line with the Tariff Regulations. Keeping in view the opinion of the EAC of ICAI, the Company is recognising deferred foreign currency fluctuation asset by corresponding credit to deferred income from foreign currency fluctuation in respect of the FERV on foreign currency loans adjusted in the cost of property, plant and equipment, which is recoverable from the customers in future years as provided in accounting policy no. C.15 (Note 1). This amount will be recognised as revenue corresponding to the depreciation charge in future years. The amount does not constitute a liability to be discharged in future periods and hence, it has been disclosed separately from equity and liabilities.

d)    Government grants include Rs. 535.38 crore (31 March 2018: Rs. 575.93 crore) received from Solar Energy Corporation of India under MNRE Scheme for setting up Solar PV power projects.

a) (i) The CERC notified the Tariff Regulations, 2014 in February 2014 (Regulations, 2014). The CERC has issued tariff orders for all the stations except five stations for the period 2014-19, under Regulations, 2014, and beneficiaries are billed based on such tariff orders issued by the CERC. For other stations, beneficiaries are billed in accordance with the principles given in the Regulations, 2014. The energy charges in respect of the coal based stations are provisionally billed based on the GCV of coal ‘As received’, measured at wagon top samples in respect of most of the stations barring a few on the grounds of safety issues, for the quantity supplied through conveyors/road and other difficulties. The amount provisionally billed is Rs. 88,278.09 crore (31 March 2018: Rs. 79,231.07 crore).

(ii)    The Company filed a writ petition before the Hon’ble High Court of Delhi contesting certain provisions of the Regulations, 2014 including issue relating to the measurement of GCV. As per directions from the Hon’ble High Court on the issue of point of sampling for measurement of GCV of coal on ‘As received’ basis, CERC issued an order dated 25 January 2016 that samples for measurement of coal on ‘As received’ basis should be collected from wagon top at the generating stations. Consequent to this order, wagon top Sampling for measurement of ‘As received’ GCV was implemented at NTPC Stations w.e.f 1 October 2016. Thereafter the company approached the CERC with the difficulties being faced in implementation of said order through Petition No. 244/MP/2016 seeking inter-alia a margin in the GCV measured at wagon Top. This petition is pending in CERC.

Pending disposal of the petition by the CERC for the tariff period 2014-19, measurement of GCV of coal is being done from wagon top samples in respect of most of the stations barring a few on the grounds of safety issues, for the quantity supplied through conveyors/ road and other difficulties.

The Writ Petition filed in Hon’ble High Court of Delhi was withdrawn without prejudice to the rights and contentions of the Company in the above petition pending before the CERC for adjustments of loss of GCV relating to the period 2014-19. Subsequently, in the Tariff Regulation for the tariff period 2019-24, CERC has allowed a compensation of 85 kcal/kg on the Weighted Average GCV of coal ‘as received’ on account of compensation during storage at the generating stations.

(iii)    Sales have been provisionally recognised at Rs. 89,007.64 crore (31 March 2018: Rs. 79,683.50 crore) on the said basis.

b)    Sales include Rs. 0.02 crore (31 March 2018: Rs. 210.33 crore) on account of income tax refundable to the beneficiaries as per Regulations, 2004. Sales also include Rs. 82.68 crore (31 March 2018: Rs. 66.98 crore) on account of deferred tax materialised which is recoverable from beneficiaries as per Regulations, 2014.

c)    Sales include (-) Rs. 2,775.82 crore (31 March 2018: Rs. 6.44 crore) pertaining to previous years recognised based on the orders issued by the CERC/Appellate Tribunal for Electricity (APTEL). This includes reversal of sales amounting to Rs. 2,926.47 crore in respect of one of the stations, considering the directions issued by the CERC and subsequent developments as detailed in Note 32 d) below.

d)    The commercial operation date (COD) of one of the stations of the Company declared by the Company as 14 November 2014 was challenged by one of its beneficiaries. CERC vide order dated 20 September 2017, directed to consider the COD of the said unit as 8 March 2016 in place of 14 November 2014. The CERC further directed that the revenue earned over and above fuel cost from sale of infirm power from 15 November 2014 to 7 March 2016, be adjusted in the capital cost of the said unit. The Company filed an appeal against this order in APTEL on 11 October 2017. Pending disposal of the appeal and considering the said order of the CERC, sales for the year 2017-18 was recognised as per CERC order and provision for tariff adjustment was made for the sales recognised till March 2017.

On 25 January 2019, APTEL disposed off the Company’s appeal by upholding the said CERC order. Further, the Company’s appeal against the said CERC order has also been dismissed by the Hon’ble Supreme Court of India on 5 April 2019.

Consequently, provision for tariff adjustment amounting to Rs. 276.69 crores, expenditure of Rs. 2,708.88 crore and sales of Rs. 2,926.47 crore for the period from 15 November 2014 to 31 March 2018 have been reversed and related adjustment have been carried out in the property, plant and equipment (Note-2) during the year. This has resulted in increase in profit for the year by Rs. 59.10 crore and reduction in PPE amounting to Rs. 499.37 crore.

e)    Energy sales include electricity duty amounting to Rs. 904.35 crore (31 March 2018: Rs.879.77 crore).

f)    Energy sales are net of rebate to beneficiaries amounting to Rs. 815.80 crore (31 March 2018: Rs.752.78 crore).

g)    Other operating revenue includes Rs. 64.07 crore (31 March 2018: Rs. 63.41 crore) towards energy internally consumed, valued at variable cost of generation and the corresponding amount is included in power charges in Note 37.

h)    CERC Regulations provides that where after the truing-up, the tariff recovered is less/more than the tariff approved by the Commission, the generating Company shall recover/pay from/to the beneficiaries the under/over recovered amount along-with simple interest. Accordingly, the interest recoverable from the beneficiaries amounting to Rs. 90.02 crore (31 March 2018: Rs. 487.54 crore) has been accounted as ‘Interest from beneficiaries’. Further, the amount payable to the beneficiaries has been accounted as ‘Interest to beneficiaries’ in Note 37.

i)    Keeping in view the provisions of Appendix C to Ind AS-17 on Leases w.r.t. determining whether an arrangement contains a lease, the Company has ascertained that the PPA entered into for two of the power stations of the Company fall under the definition of operating lease. Recovery of capacity charges towards depreciation (including AAD), interest on loan capital & return on equity (pre-tax) components from the beneficiaries are considered as lease rentals on the assets which are on operating lease.

j) Keeping in view the provisions of Appendix C to Ind AS-17 on Leases w.r.t. determining whether an arrangement contains a lease, the Company has ascertained that the PPA entered into for Stage-I of a power station with the beneficiary falls under the definition of finance lease. Accordingly, the written down value of the specified assets has been derecognised from PPE and accounted as Finance Lease Receivable (FLR). Recovery of capacity charges towards depreciation (including AAD), interest on loan capital & return on equity (pre-tax) components from the beneficiary are adjusted against FLR. The interest component of the FLR and amount received on account of revision of tariff of previous periods in respect of the above three elements are recognised as ‘Interest income on Assets under finance lease’.

a)    During the development stage of mine, transfer price of coal extracted from Company’s captive mine has been determined considering the notified price of Coal India Ltd. for equivalent grade of coal. The same has been netted from the cost of captive coal and carried to ‘Development of coal mines’ (Note 3) through ‘Transferred to expenditure during development of coal mines’ (Note 39).

b)    Details in respect of payment to auditors:

Payment to the auditors includes Rs. 0.24 crore (31 March 2018: Rs. 0.33 crore) relating to earlier year.

c)    CERC Regulations provides that where after the truing-up, the tariff recovered is more than the tariff approved by the Commission, the generating Company shall pay to the beneficiaries the over recovered amount along-with simple interest. Accordingly, the interest payable to the beneficiaries amounting to Rs. Nil (31 March 2018: Rs. 12.00 crore) has been accounted and disclosed as ‘Interest to beneficiaries’.

d)    Water charges include amount provided against the demand of Rs. Nil (31 March 2018: Rs. 305.55 crore) at one of the power stations by the state authority for earlier years.

e)    Miscellaneous expenses include expenditure on books & periodicals, workshops, operating expenses of DG sets, brokerage and commission, bank charges, furnishing expenses, etc.

f)    Provisions for arbitration cases include an amount of Rs. 394.07crore (31 March 2018: Rs. Nil) pertaining to the dispute with the operator referred in Note 57 (iii) (b) estimated and provided against the award pronounced by the arbitral tribunal for which the Company has filed an appeal before Hon’ble High Court of Delhi.

g)    Provisions for tariff adjustment include an amount of Rs. Nil (31 March 2018: Rs. 276.69 crore) pertaining to the period from 15 November 2014 to 31 March 2017 in respect of CERC order for shifting of COD of one of the stations of the Company. (Refer Note 32).

h)    Provisions for shortages in stores include provision for shortage of coal observed on physical verification, beyond the Company’s norms, amounting to Rs. 75.32 crore (31 March 2018: Rs. 10.98 crore)

i)    Provisions - Others include provision for doubtful debts and shortages in property, plant and equipment.

1.    a) The Company has a system of obtaining periodic confirmation of balances from banks and other parties. There are no unconfirmed balances in respect of bank accounts and borrowings from banks & financial institutions. With regard to receivables for energy sales, the Company sends demand intimations to the beneficiaries with details of amount paid and balance outstanding which can be said to be automatically confirmed on receipt of subsequent payment from such beneficiaries. In addition, reconciliation with beneficiaries and other customers is generally done on quarterly basis. So far as trade/other payables and loans and advances are concerned, the balance confirmation letters with the negative assertion as referred in the Standard on Auditing (SA) 505 (Revised) ‘External Confirmations’, were sent to the parties. Some of such balances are subject to confirmation/reconciliation. Adjustments, if any will be accounted for on confirmation/reconciliation of the same, which in the opinion of the management will not have a material impact.

b) In the opinion of the management, the value of assets, other than property, plant and equipment and non-current investments, on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

2.    The levy of transit fee/entry tax on supplies of fuel to some of the power stations has been paid under protest as the matters are sub-judice at various courts. In case the Company gets refund/demand from fuel suppliers/tax authorities on settlement of these cases, the same will be passed on to respective beneficiaries.

3.    The environmental clearance (“clearance”) granted by the Ministry of Environment and Forest, Government of India (MoEF) for one of the Company’s project consisting of three units of 800 MW each, was challenged before the National Green Tribunal (NGT). The NGT disposed off the appeal, inter alia, directing that the order of clearance be remanded to the MoEF to pass an order granting or declining clearance to the project proponent afresh in accordance with the law and the judgement of the NGT and for referring the matter to the Expert Appraisal Committee (“Committee”) for its re-scrutiny, which shall complete the process within six months from the date of NGT order. NGT also directed that the environmental clearance shall be kept in abeyance and the Company shall maintain status quo in relation to the project during the period of review by the Committee or till fresh order is passed by the MoEF, whichever is earlier. The Company filed an appeal challenging the NGT order before the Hon’ble Supreme Court of India which stayed the order of the NGT and the matter is sub-judice. All the three units of 800 MW each have since been declared commercial. Aggregate cost incurred on the project upto 31 March 2019 is Rs. 15,598.80 crore (31 March 2018: Rs. 15,522.77 crore). Management is confident that the approval for the project shall be granted, hence no provision is considered necessary.

4.    The Company is executing a hydro power project in the state of Uttrakhand, where all the clearances were accorded. A case was filed in Hon’ble Supreme Court of India after the natural disaster in Uttrakhand in June 2013 to review whether the various existing and ongoing hydro projects have contributed to environmental degradation. Hon’ble Supreme Court of India on 7 May 2014, ordered that no further construction shall be undertaken in the projects under consideration until further orders, which included the said hydro project of the Company. In the proceedings, Hon’ble Supreme Court is examining to allow few projects which have all clearances which includes the project of the Company where the work has been stopped. Aggregate cost incurred on the project up to 31 March 2019 is Rs. 163.33 crore (31 March 2018: Rs. 163.23 crore). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary.

5.    In compliance to order of Delhi Polution Control Committee (DPCC) dated 25 July 2018, operations of one of the power stations of the Company has been permanently discontinued w.e.f.15 October 2018. Consequently, plant & machinery and other assets of the power station are in the process of disposal and/or being utilised at other locations of the Company. Further, Property, plant and equipment of Rs. 47.16 crore has been derecognised and charged to the statement of profit and loss (Refer Note 37) and an amount of Rs. 98.90 crore transferred to ‘Assets held for disposal’ at their estimated net realisable value (Refer Note 17).

6.    Disclosure as per ind As 1 ‘presentation of financial statements’

a)    Changes in significant accounting policies:

During the year, following changes to the accounting policies have been made:

i)    Policy C.6 ‘Development expenditure on coal mines’ has been modified considering the expected time for delivering sustainable operations by the coal mines. Refer Note 47(B) for nature, impact and detailed disclosures for this change in accounting policy.

ii)    Policy C.22 ‘Business combinations’ has been included in the significant accounting policies as the same is applicable during the current year as a result of acquisition of business of Barauni Thermal Power Station. Refer Note 59 for detailed disclosures.

iii)   &nbs


Mar 31, 2018

1.    Formulation of accounting policies

The accounting policies are formulated in a manner that results in financial statements containing relevant and reliable information about the transactions, other events and conditions to which they apply. Those policies need not be applied when the effect of applying them is immaterial.

2.    Useful life of property, plant and equipment and intangible assets

The estimated useful life of property, plant and equipment and intangible assets is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.

Useful life of the assets of the generation of electricity business is determined by the CERC Tariff Regulations in accordance with Schedule II of the Companies Act, 2013.

The Company reviews at the end of each reporting date the useful life of assets, other than the assets of generation of electricity business which are governed by CERC Regulations, and are adjusted prospectively, if appropriate.

3.    Recoverable amount of property, plant and equipment and intangible assets

The recoverable amount of property, plant and equipment and intangible assets is based on estimates and assumptions regarding in particular the expected market outlook and future cash flows associated with the power plants. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairment.

4.    Post-employment benefit plans

Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, the rate of salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate and documented. However, any changes in these assumptions may have a material impact on the resulting calculations.

5.    Revenues

The Company records revenue from sale of energy based on tariff rates approved by the CERC as modified by the orders of Appellate Tribunal for Electricity, as per principles enunciated under Ind AS 18. However, in cases where tariff rates are yet to be approved, provisional rates are adopted considering the applicable CERC Tariff Regulations.

6.    Leases not in legal form of lease

Significant judgment is required to apply lease accounting rules under Appendix C to Ind AS 17 ‘Determining whether an arrangement contains a lease'. In assessing the applicability to arrangements entered into by the Company, management has exercised judgment to evaluate the right to use the underlying asset, substance of the transactions including legally enforceable agreements and other significant terms and conditions of the arrangements to conclude whether the arrangement needs the criteria under Appendix C to Ind AS 17.

7.    Assets held for sale

Significant judgment is required to apply the accounting of non-current assets held for sale under Ind AS 105 ‘Non-current assets held for sale and discontinued operations'. In assessing the applicability, management has exercised judgment to evaluate the availability of the asset for immediate sale, management's commitment for the sale and probability of sale within one year to conclude if their carrying amount will be recovered principally through a sale transaction rather than through continuing use.

8.    Regulatory deferral account balances

Recognition of regulatory deferral account balances involves significant judgments including about future tariff regulations since these are based on estimation of the amounts expected to be recoverable/payable through tariff in future.

9.    Provisions and contingencies

The assessments undertaken in recognizing provisions and contingencies have been made in accordance with Ind AS 37 ‘Provisions, contingent liabilities and contingent assets'. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss. Should circumstances change following unforeseeable developments, this likelihood could alter.

10.    Impairment test of non-financial assets

The recoverable amount of investment in joint ventures companies is based on estimates and assumptions regarding in particular the future cash flows associated with the operations of the investee Company. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairment.

11.    Income taxes

Significant estimates are involved in determining the provision for income taxes, including amount expected to be paid/ recovered for uncertain tax positions.

a)    The convincing of the title to 10,126 acres of freehold land of value Rs, 1,900.82 crore (31 March 2017: 9,235 acres of value Rs, 1,940.44 crore), buildings and structures of value Rs, 4.97 crore (31 March 2017: Rs, 4.97 crore) and also execution of lease agreements for 10,824 acres of land of value Rs, 1,804.49 crore (31 March 2017: 12,570 acres of value Rs, 1,869.67 crore) in favour of the Company are awaiting completion of legal formalities.

b)    Land includes 284.35 acres of freehold land of value Rs, 0.52 crore (31 March 2017: 284.35 acres of value Rs, 0.52 crore), and 1,939.55 acres of leasehold land of value Rs, 3.81 crore (31 March 2017: 2,026.96 acres of value Rs, 3.68 crore), the value thereof including periodical lease rent accruing thereon is subject to revision on final settlement with the State Government Authorities with demand of late payment charges, if any.

c)    Land does not include value of 34 acres (31 March 2017: 34 acres) of land in possession of the Company. This will be accounted for on settlement of the price thereof by the State Government Authorities.

d)    Land includes 1,298 acres of value Rs, 133.93 crore (31 March 2017: 1,295 acres of value Rs, 155.37 crore) not in possession of the Company. The Company is taking appropriate steps for repossession of the same.

e)    Land includes an amount of Rs, 262.91 crore (31 March 2017: Rs, 262.91 crore) deposited with various authorities in respect of land in possession which is subject to adjustment on final determination of price.

f)    Gross block of land under submergence represents Rs, 576.64 crore (31 March 2017: Rs, 552.52 crore) of freehold land and Rs, 178.83 crore (31 March 2017: Rs, 180.31 crore) of leasehold land. The land has been amortized considering the rate of depreciation provided by the CERC in the tariff regulations and the fact that it will not have any economic value due to deposit of silt and other foreign materials.

g)    Possession of land measuring 98 acres (31 March 2017: 98 acres) consisting of 79 acres of freehold land (31 March 2017: 79 acres) and 19 acres of lease hold land (31 March 2017: 19 acres) of value Rs, 0.21 crore (31 March 2017: Rs, 0.21 crore) was transferred to Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd. (erstwhile UPSEB) for a consideration of Rs, 0.21 crore. Pending approval for transfer of the said land, the area and value of this land has been included in the total land of the Company. The consideration received from erstwhile UPSEB is disclosed under Note 30 - Current liabilities - Other financial liabilities.

h)    Refer Note 56 (b) regarding property, plant and equipment under finance lease.

i)    Based on impairment assessment, the Company has reversed an impairment loss of Rs, 3.75 crore (31 March 2017: Rs, 0.73 crore) during the year in respect of plant and equipment of a Solar PV Station of the Company. Refer Note 63 (a).

j) Spare parts, stand-by equipment and servicing equipment of Rs, 5 lakh and above which meet the definition of property, plant and equipment are capitalized.

k) Refer Note 22 for information on property, plant and equipment pledged as security by the Company.

l) Refer Note 74 (C) (a) for disclosure of contractual commitments for the acquisition of property, plant and equipment.

m) Deduction/adjustments from gross block and depreciation, amortization and impairment for the year includes:

a)    Construction stores are net of provision for shortages pending investigation amounting to Rs, 26.26 crore (31 March 2017: Rs, 14.06 crore).

b)    Pre-commissioning expenses for the year amount to Rs, 544.39 crore (31 March 2017: Rs, 384.87) and after adjustment of pre-commissioning sales of Rs, 77.40 crore (31 March 2017: Rs, 43.06 crore) resulted in net pre-commissioning expenditure of Rs, 466.99 crore (31 March 2017: Rs, 341.81 crore).

c)    Additions to the development of coal mines include expenditure during construction period (net) of Rs, 668.37 crore (31 March 2017: Rs, 335.36 crore) - [Ref. Note 43] and are after netting off the receipts from coal extracted during the development phase amounting to Rs, 464.03 crore (31 March 2017: (-) Rs, 20.82 crore).

d)    Details of exchange differences and borrowing costs capitalized are disclosed in Note 2 (n).

a)    The right of use of land and others are amortized over the period of legal right to use or life of the related plant, whichever is less.

b)    Cost of acquisition of the right for drawl of water amounting to Rs, 203.71 crore (31 March 2017: Rs, 203.71 crore) is included under intangible assets - Right of use - Others.

c)    Deductions/adjustments from gross block and amortization for the year includes:

a)    Investments have been valued as per accounting policy no. C.26.1 (Note 1).

b)    The Board of Directors of NTPC Limited in its meeting held on 28 April 2016 accorded in principle approval for withdrawal from NTPC BHEL Power Projects Private Ltd. (NTPC-BHEL), a Joint Venture of the Company. As NTPC-BHEL was formed by a directive from the GOI, approval of exit from GOI is awaited. Pending withdrawl, provision of Rs, 45.59 crore (31 March 2017: Rs, 28.68 crore) for impairment in the value of investment has been recognized based on the unaudited accounts of NTPC-BHEL as at 31 March 2018.

c)    The Board of Directors of NTPC Limited in its meeting held on 19 June 2014 accorded in principle approval for withdrawal from BF-NTPC Energy Systems Ltd. (BF-NTPC), a joint venture of the Company. As BF-NTPC was formed by a directive from the GOI, approval of the GOI was sought for exit by NTPC Limited. GOI has suggested to wind up BF-NTPC and NTPC Limited has given its consent for winding up. Approval of the GOI has been accorded on 8 January 2018. The winding up of the joint venture is under process. Pending winding-up, provision of Rs, 4.43 crore (31 March 2017: Rs, 3.75 crore) for impairment in the value of investment has been recognized based on the unaudited accounts of BF-NTPC as at 31 March 2018.

d)    The Board of Directors of NTPC Limited in its meeting held on 28 April 2016 accorded in principle approval for withdrawal from Transformers and Electricals Kerala Ltd. (TELK), a Joint Venture of the Company. GOI has accorded its approval for exit of NTPC from the joint venture. The decison of the Board of Directors of NTPC Limited and approval of GOI has been conveyed to the Government of Kerala (JV Partner) & TELK. The government of Kerala has requested NTPC to review the decision. The matter is under examination. Pending decision in this regard, no provision for impairment in the value of investment in TELK is required to be recognized.

e)    The Company had an investment of Rs, 974.30 crore as at 31 March 2017 in the equity shares of Ratnagiri Gas and Power Private Ltd., a joint venture of the Company (RGPPL). During the year, the National Company Law Appellate Tribunal (‘NCLAT') has approved the demerger scheme of Ratnagiri Gas and Power Private Ltd., (‘Demerged Company') with effective date of 1 January 2016 as a result of which all the assets and liabilities of the LNG Terminal (‘demerged undertaking') have been transferred to Konkan LNG Private Ltd. (‘Resulting Company') (KLPL) at book values.

Consequent to demerger, the Resulting Company has allotted equity shares of face value of Rs, 10/- each equivalent to the share entitlement ratio of 143:1000 for each equity shares held in Demerged Company i.e. 13,97,52,264 equity shares of Rs, 10/- each to the Company. Accordingly, the Company has reduced its investment in RGPPL by Rs, 139.75 crore and has recorded ‘Investment in Konkan LNG Private Ltd.' with the same amount.

As required by Ind AS 36, an assessment of impairment of the investment in RGPPL was carried out by an independent expert in the previous year and an loss on the investment in RGPPL amounting to Rs, 782.95 Crore was provided and the same was disclosed as ‘Exceptional items - Impairment loss on investments' in the statement of profit and loss for the year ended 31 March 2017. Consequent to demerger Scheme, the provision for impairment loss in the equity investment of RGPPL of Rs, 782.95 crore as at 31 March 2017 has been bifurcated between RGPPL and KLPL at Rs, 643.20 crore and Rs, 139.75 crore respectively. Refer Note 63 (b).

Based on the above, the impairment loss recognized in the previous year and disclosed under exceptional items, has been written back to the extent of Rs, 26.15 crore thereby reducing the provision for impairment loss in the value of investments in RGPPL to Rs, 617.05 crore. Consequently, the carrying value of investments in RGPPL is Rs, 217.50 crore.

f)    Restrictions for the disposal of investments held by the Company and commitments towards certain subsidiary & joint venture companies are disclosed in Note 74 (C) (b) and (c).

a)    Investments have been valued as per accounting policy no. C.26.1 (Note 1).

b)    The Board of Directors of NTPC Limited in its meeting held on 28 April 2016 accorded in principle approval for withdrawal from PTC India Ltd. (PTC). As the Company was formed by a directive from the GOI, approval of the GOI is awaited for exit by NTPC Limited.

c)    The Board of Directors of NTPC Limited in its meeting held on 27 January 2012 accorded in principle approval for withdrawal from International Coal Ventures Private Ltd. (ICVPL). As the Company was formed by a directive from the GOI, approval of the GOI is awaited for exit by NTPC Limited. Pending withdrawal, the Company had lost the joint control over the entity and accordingly, has classified the investment in ICVPL as ‘Investment in unquoted equity instruments'. Pending withdrawl, no provision for impairment in the value of investment in ICVPL is required to be made.

d)    The Company is of the view that provisions of Ind AS 24 ‘Related Party Disclosures' and Ind AS 111 ‘Joint Arrangements' are not applicable to the investments made in PTC India Ltd. and International Coal Ventures Private Ltd., and the same has been accounted for as per the provisions of Ind AS 109 ‘Financial Instruments'.

e)    No strategic investments in equity instruments measured at FVTOCI were disposed during the financial year 2017-18, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

c)    Other loans represent loan of Rs, 25.07 crore (31 March 2017: Rs, 50.34 crore) given to Andhra Pradesh Industrial Infrastructure Corporation Ltd. (APIIC).

d)    Details of collateral held as security:

-    Loans to the employee are secured against the mortgage of the house properties and hypothecation of vehicles for which such loans have been given in line with the policies of the Company.

-    Loan to APIIC is secured by a guarantee given by the Government of Andhra Pradesh vide GO dated 3 April 2003.

a)    The shares are expected to be allotted within 60 days from the date of payment of the share application money.

b)    Claims recoverable includes Rs, 680.11 crore (31 March 2017: Rs, 619.34 crore) towards the cost incurred upto 31 March 2018 in respect of one of the hydro power projects, the construction of which has been discontinued on the advice of the Ministry of Power (MOP), GOI which includes Rs, 390.59 crore (31 March 2017: Rs, 332.38 crore) in respect of arbitration awards challenged by the Company before Hon'ble High Court. In the event the Hon'ble High Court grants relief to the Company, the amount would be adjusted against Current liabilities - Provisions - Provision for others (Note 32). Management expects that the total cost incurred, anticipated expenditure on the safety and stabilization measures, other recurring site expenses and interest costs as well as claims of contractors/vendors for various packages for this project will be compensated in full by the GOI. Hence, no provision is considered necessary.

c)    Keeping in view the provisions of Appendix C to Ind AS 17 ‘Leases' w.r.t. determining whether an arrangement contains a lease, the Company had ascertained that the Power Purchase Agreement (PPA) entered into for Stage I of a power station with the beneficiary falls under the definition of finance lease. Accordingly, the written down value of the specified assets had been derecognized from PPE and accounted for as Finance lease receivable (FLR) as at the transition date to Ind AS. Recovery of capacity charges towards depreciation (including AAD), interest on loan capital and return on equity (pre-tax) components from the beneficiary are adjusted against the FLR. The interest component of the FLR and amount received on account of revision of tariff of previous periods in respect of the above three elements are recognized as ‘Interest income on assets under finance lease' under ‘Revenue from operations' (Note 36).

a)    I n line with accounting policy no. 15 (Note 1), deferred foreign currency fluctuation asset has been accounted and (-) Rs, 128.39 crore (31 March 2017: (-) Rs, 233.80 crore) being the exchange fluctuations on account of foreign currency loans have been recognized in ‘Energy sales' under ‘Revenue from operations' (Note 36).

b)    Capital advances include amounts given as advance against works to the following private companies (related parties) in which one or more directors of the Company are directors:

c)    Capital advances include Rs, 224.29 crore (31 March 2017: ' 224.29 crore), paid to a contractor pending settlement of certain claims which are under arbitration. The amount will be adjusted in the cost of related work or recovered from the party, depending upon the outcome of the arbitration proceedings.

d)    Advances to contractors and suppliers include payments to Railways amounting to Rs, 2,226.22 crore (31 March 2017: Rs, 2,226.22 crore) under customer funding model as per policy on ‘Participative model for rail-connectivity and capacity augmentation projects' issued by the Ministry of Railways, GOI. As per the policy, an agreement has been signed between the Company and the Ministry of Railways, GOI on 6 June 2016. As per the agreement, railway projects agreed between the Company and Railways will be constructed, maintained and operated by Railways and ownership of the line and its operations and maintenance will always remain with them. Railways will pay up to 7% of the amount invested through freight rebate on freight volumes every year till the funds provided by the Company are fully recovered along-with 5% interest after commercial operation date (COD) of the railway projects. The railway projects as per the agreement are yet to achieve the COD.

e)    Capital advance are secured against the hypothecation of the construction equipment/material supplied by the contractors/suppliers.

f)    Loans given to employees are measured at amortized cost. The deferred payroll expenditure represents the benefits accruing to employees. The same is amortized on a straight-line basis over the remaining period of the loan.

* Refer Note 21 d) regarding fly ash utilization reserve fund.

** Out of advance for DDUGJY Scheme of the GOI. Refer Note 30 (c) and 31 (a).

a) Deposits with original maturity of more than three months and maturing within one year include Rs, 1,743.89 crore (31 March 2017: Rs, 955.33 crore) which has been kept in corporate liquid term deposits with bank. These deposits represents unutilized balance of Medium Term Notes (MTNs) as per MTN programme to partly finance the capital expenditure of ongoing and/or new power projects, coal mining projects, and/or renovation and modernization of power stations and can be utilized only for the stated purposes.

c)    Other loans represent loans of Rs, 0.89 crore (31 March 2017: Rs, 5.00 crore) given to APIIC.

d)    Details of collateral held as security:

-    Loans to the employee are secured against the mortgage of the house properties and hypothecation of vehicles for which such loans have been given in line with the policies of the Company.

-    Loan to APIIC is secured by a guarantee given by the Government of Andhra Pradesh vide GO dated 3 April 2003.

a)    Security deposits (unsecured) include Rs, 27.73 crore (31 March 2017: Rs, 63.31 crore) towards sales tax deposited with sales/ commercial tax authorities, Rs, 272.76 crore (31 March 2017: Rs, 346.30 crore) deposited with Courts, Rs, 177.47 crore (31 March 2017: Rs, 177.06 crore) deposited with LIC for making annuity payments to the land oustees, Rs, 275.05 crore (31 March 2017: Rs, 275.05 crore) deposited with the Water Resource Department, Govt. of Chhattisgarh for drawl of water and Rs, 158.50 crore (31 March 2017: Rs, Nil) deposited against bank guarantee with one of the party as per the direction of the Hon'ble Supreme Court of India, refer Note 56 (b).

b)    Advances - Contractors and suppliers - unsecured includes an amount of Rs, 5,000.00 crore (31 March 2017: Rs, Nil) paid to Indian Railways during the year, towards advance railway freight to be adjusted against freight payable on coal transportation during the year 2018-19 pursuant to an agreement entered into with Indian Railways, Ministry of Railways, GOI.

c)    Advances - Others include prepaid expenses amounting to Rs, 87.39 crore (31 March 2017: Rs, 88.43 crore) and unamortized discount on commercial paper amounting to Rs, 88.40 crore (31 March 2017: Rs, 21.89 crore).

d)    Advances - Related parties include amounts due from the following private companies in which one or more directors

e)    Loans given to employees are measured at amortized cost. The deferred payroll expenditure represents the benefits accruing to employees. The same is amortized on a straight-line basis over the remaining period of the loan.

f)    In the previous year figures, an amount of Rs, 588.10 crore has been regrouped from Advances - Contractors and suppliers - unsecured to Advances - Related parties - Unsecured, to enhance comparability with the current year's financial statements.

Capital reserve represents amount received by the Company during 2001-02 as consideration under settlement for withdrawal from an erstwhile JV project. There is no movement in the capital reserve balance during the year.

Securities premium account is used to record the premium on issue of shares/securities. This amount is utilized in accordance with the provisions of the Companies Act, 2013. There is no movement in the securities premium account balance during the year.

In accordance with applicable provisions of the Companies Act, 2013 read with Rules and as per decision of Board of Directors, the Company has created Debenture Redemption Reserve out of profits of the Company @ 50% of the value of debentures on a prudent basis, every year in equal installments till the year prior to the year of redemption of debentures/bonds for the purpose of redemption of debentures/bonds.

Pursuant to Gazette Notification dated 3 November 2009, issued by the Ministry of Environment and Forest (MOEF), Government of India (GOI), the amount collected from sale of fly ash and fly ash based products should be kept in a separate account head and shall be utilized only for the development of infrastructure or facility, promotion & facilitation activities for use of fly ash until 100 percent fly ash utilization level is achieved.

During the year, proceeds of Rs, 131.02 crore (31 March 2017: Rs, 108.42 crore) from sale of ash/ash products, Rs, 26.74 crore (31 March 2017: Rs, 27.63 crore) towards income on investment have been transferred to fly ash utilization reserve fund. An amount of Rs, 83.23 crore (31 March 2017: Rs, 57.58 crore) has been utilized from the fly ash utilization reserve fund on expenses incurred for activities as specified in the aforesaid notification of MOEF.

The fund balance of Rs, 631.21 crore (31 March 2017: Rs, 556.68 crore) has been kept in ‘Bank balances other than cash & cash equivalents' (Note 15).

a)    Details of terms of repayment and rate of interest

i)    Unsecured foreign currency loans (guaranteed by GOI) - Others carry fixed rate of interest ranging from 1.80% p.a. to 2.30% p.a. and are repayable in 17 to 26 semi annual installments as of 31 March 2018.

ii)    Unsecured foreign currency loans - Banks include loans of Rs, 352.80 crore (31 March 2017: Rs, 463.02 crore) which carry fixed rate of interest of 1.88% p.a. to 4.31% p.a. and loans of Rs, 8,146.27 crore (31 March 2017: Rs, 7,319.45 crore) which carry floating rate of interest linked to 6M USD LIBOR/6 M JPY LIBOR. These loans are repayable in 2 to 21 semi-annual/annual installments as of 31 March 2018, commencing after moratorium period if any, as per the terms of the respective loan agreements.

iii)    Unsecured foreign currency loans - Others include loans of Rs, 3,342.55 crore (31 March 2017: Rs, 3,300.64 crore) which carry fixed rate of interest ranging from 1.88% p.a. to 4.31% p.a. and loans of Rs, 123.58 crore (31 March 2017: Rs, 216.21 crore) which carry floating rate of interest linked to 6M EURIBOR. These loans are repayable in 4 to 22 semi annual installments as of 31 March 2018, commencing after moratorium period if any, as per the terms of the respective loan agreements.

iv)    Unsecured rupee term loans carry interest rate ranging from 6.571% p.a. to 8.76% p.a. with monthly/half-yearly rests. These loans are repayable in quarterly/half-yearly/yearly installments as per the terms of the respective loan agreements. The repayment period extends from a period of 7 to 16 years after a moratorium period of 3 to 6 years.

b)    The finance lease obligations are repayable in installments as per the terms of the respective lease agreements generally

over a period of 4 to 99 years.

c)    There has been no default in repayment of any of the loans or interest thereon as at the end of the year.

I    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of title deeds of the immovable properties pertaining to National Capital Power Station.

II    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Hypothecation of all the present and future movable assets (excluding receivables) of Singrauli Super Thermal Power Station, Anta Gas Power Station, Auraiya Gas Power Station, Barh Super Thermal Power Project, Farakka Super Thermal Power Station, Kahalgaon Super Thermal Power Station, Koldam Hydel Power Project, Simhadri Super Thermal Power Project, Sipat Super Thermal Power Project, Talcher Thermal Power Station, Talcher Super Thermal Power Project, Tanda Thermal Power Station, Vindhyachal Super Thermal Power Station, National Capital Power Station, Dadri Gas Power Station, Feroze Gandhi Unchahar Power Station and Tapovan-Vishnugad Hydro Power Project as first charge, ranking pari passu with charge, if any, already created in favour of the Company's Bankers on such movable assets hypothecated to them for working capital requirement.

III    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage of the immovable properties, on first pari passu charge basis, pertaining to Sipat Super Thermal Power Project by extension of charge already created.

IV    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of the title deeds of the immovable properties pertaining to Sipat Super Thermal Power Project.

V    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai, (II) Hypothecation of all the present and future movable assets (excluding receivables) of Barh Super Thermal Power Project on first pari passu charge basis, ranking pari passu with charge already created in favour of Trustee for other Series of Bonds and (III) Equitable mortgage of the immovable properties, on first pari passu charge basis, pertaining to Ramagundam Super Thermal Power Station by extension of charge already created.

VI    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of title deeds of the immovable properties pertaining to Ramagundam Super Thermal Power Station.

VII    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage of the immovable properties, on first pari passu charge basis, pertaining to National Capital Power Station by extension of charge already created.

VIII    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai, (II) Hypothecation of all the present and future movable assets (excluding receivables) of Singrauli Super Thermal Power Station, Anta Gas Power Station, Auraiya Gas Power Station, Barh Super Thermal Power Project, Farakka Super Thermal Power Station, Kahalgaon Super Thermal Power Station, Koldam Hydel Power Project, Simhadri Super Thermal Power Project, Sipat Super Thermal Power Project, Talcher Thermal Power Station, Talcher Super Thermal Power Project, Tanda Thermal Power Station, Vindhyachal Super Thermal Power Station, National Capital Power Station, Dadri Gas Power Station, Feroze Gandhi Unchahar Power Station and Tapovan-Vishnugad Hydro Power Project as first charge, ranking pari passu with charge, if any, already created in favour of the Company's Bankers on such movable assets hypothecated to them for working capital requirement and (III) Equitable mortgage of the immovable properties, on first pari passu charge basis, pertaining to Singrauli Super Thermal Power Station by extension of charge already created.

IX    Secured by English mortgage of the immovable properties pertaining to Solapur Super Thermal Power Project on first charge basis.

X    Secured by Equitable mortgage of the immovable properties pertaining to Barh Super Thermal Power Project on first charge basis.

XI    Secured by English mortgage, on pari passu charge basis, of the immovable properties pertaining to Solapur Super Thermal Power Project.

XII    Secured by Equitable mortgage, on pari passu charge basis, of the immovable properties pertaining to Barh Super Thermal Power Project.

XIII    Secured by Equitable mortgage of the immovable properties pertaining to Vindhyachal Super Thermal Power Station on first charge basis.

XIV    Security cover mentioned at Sl. No. I to XIII is above 100% of the debt securities outstanding.

a)    Deferred tax assets and deferred tax liabilities have been offset as they relate to the same governing laws.

b)    CERC Regulations, 2014 provide for recovery of deferred tax liability as on 31 March 2009 from the beneficiaries. Accordingly, deferred tax liability as on 31 March 2009 is recoverable on materialization from the beneficiaries. For the period commencing from 1 April 2014, CERC Regulations, 2014 provide for grossing up of the return on equity based on effective tax rate for the financial year based on the actual tax paid during the year on the generation income. Deferred asset for deferred tax liability for the period commencing from 1 April 2014 will be reversed in future years when the related deferred tax liability forms part of current tax.

c)    Disclosures as per Ind AS 12 ‘Income Taxes' are provided in Note 55.

a)    Details in respect of rate of interest and terms of repayment of current maturities of secured and unsecured non-current borrowings indicated above are disclosed in Note 22.

b)    Unpaid dividends, matured deposits, bonds and interest include the amounts which have either not been claimed by the investors/holders of the equity shares/bonds/fixed deposits or are on hold pending legal formalities etc. Out of the above, the amount required to be transferred to Investor Education and Protection Fund has been transferred.

c)    Other payable - Others mainly includes Rs, 263.10 crore (31 March 2017: Rs, 238.93 crore) towards the implementation of Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) Scheme of the GOI being carried out by the Company. The funds for the implementation of these schemes are provided by the agencies nominated by the GOI in this regard. Further, other payable - others also include Rs, 211.49 crore (31 March 2017: Rs, 120.75 crore) payable to the Department of Water Resource, Government of Odisha and amount payable to hospitals, parties for stale cheques etc.

d)    The Company had obtained exemption from the Ministry of Corporate Affairs (MCA), GOI in respect of applicability of Section 58A from the erstwhile Companies Act, 1956 in respect of deposits held from the dependent of employees who die or suffer permanent total disability under the ‘Employees Rehabilitation Scheme' (said amount is included in Other payable - Others). Consequent upon enactment of the Companies Act, 2013, the Company has written to the MCA for clarification on continuation of above exemption granted earlier, which is still awaited. The Company has been advised that the amount accepted under the Scheme is not a deposit under the Companies Act, 2013.

e)    Payable for capital expenditure include Rs,159.23 crore (31 March 2017: Rs, 146.13 crore) payable to MSME vendors. Detailed disclosures as required under MSMED Act, 2006 are provided in Note 72.

f)    Amounts payable to related parties are disclosed in Note 60.

g)    I n the previous year figures, an amount of Rs, 240.14 crore has been regrouped from Payable to customers to Other payables - Others, to enhance comparability with the current year's financial statements.

Advance received for the DDUGJY (including interest thereon) of Rs, 313.97 crore (31 March 2017: Rs, 597.75 crore) is included in ‘Advance from customers and others'. Refer Note 30 c). Tax deducted at source on the interest is included in ‘Advance tax and tax deducted at source' - Note 11.

a)    Disclosures required by Ind AS 19 ‘Employee Benefits' are provided in Note 57.

b)    Disclosures required by Ind AS 37 ‘Provisions, Contingent Liabilities and Contingent Assets' are made in Note 64.

c)    The pay revision of the employees of the Company is due w.e.f. 1 January 2017. Department of Public Enterprises, GOI (DPE) had constituted the 3rd Pay Revision Committee (PRC) to review the structure of pay scales and allowances/benefits of various categories of Central Public Sector Enterprises. Based on the recommendations of the 3rd PRC, DPE has issued broad guidelines for pay revision. Based on the proposal of the Company to GOI on 6 September 2017, presidential directive has been issued on 10 May 2018. Presidential directive states adherence of relevant DPE guidelines which requires approval of the Board of Directors (BOD) of the Company. Pending approval by the BOD, provision for pay revision has been recognized on an estimated basis amounting to Rs,1,203.28 crore as at 31 March 2018 (31 March 2017: Rs, 260.24 crore).

d)    The Company aggrieved over many of the issues considered by the CERC in the tariff orders for its stations for the period 2004-09 had filed appeals with the Appellate Tribunal for Electricity (APTEL). The APTEL disposed off the appeals favorably directing the CERC to revise the tariff orders as per directions and methodology given. Some of the issues decided in favour of the Company by the APTEL were challenged by the CERC in the Hon'ble Supreme Court of India. Subsequently, the CERC has issued revised tariff orders for all the stations except one for the period 2004-09, considering the judgment of APTEL subject to disposal of appeals pending before the Hon'ble Supreme Court of India.

The Hon'ble Supreme Court of India has dismissed the appeal filed by the CERC and accordingly the directions of APTEL to CERC stands good. Keeping in view the above, the provision created amounting to Rs, 1,156.32 crore made till 31 March 2017 towards anticipated tariff adjustments, has been written back during the year.

e)    Provision for others mainly comprise Rs, 73.15 crore (31 March 2017: Rs, 68.24 crore) towards cost of unfinished minimum work programme demanded by the Ministry of Petroleum and Natural Gas (MoP&NG) including interest thereon in relation to block AA-ONN-2003/2 (Refer Note 65), Rs, 1,279.31 crore (31 March 2017: Rs, 640.25 crore) towards provision for cases under litigation and Rs, 4.62 crore (31 March 2017: Rs, 1.81 crore) towards provision for shortage in property, plant and equipment on physical verification pending investigation.

a)    Advance against depreciation (AAD) was an element of tariff provided under the Tariff Regulations for 2001-04 and 2004-09 to facilitate debt servicing by the generators since it was considered that depreciation recovered in the tariff considering a useful life of 25 years is not adequate for debt servicing. Though this amount is not repayable to the beneficiaries, keeping in view the matching principle, and in line with the opinion of the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI), this was treated as deferred revenue to the extent depreciation chargeable in the accounts is considered to be higher than the depreciation recoverable in tariff in future years. Since AAD is in the nature of deferred revenue and does not constitute a liability, it has been disclosed in this note separately from equity and liabilities.

b)    In line with significant accounting policy no. C.15 (Note 1), an amount of Rs, 297.91 crore (31 March 2017: Rs, 32.92 crore) has been recognized during the year from the AAD and included in energy sales (Note 36). The AAD recognized during the year includes Rs, 125.24 crore for the tariff period 2004-09 in respect of one of the stations as per CERC order dated 18 July 2017. The same has also been recognized as energy sales during the year.

c)    Foreign exchange rate variation (FERV) on foreign currency loans and interest thereon is recoverable from/payable to the customers in line with the Tariff Regulations. Keeping in view the opinion of the EAC of ICAI, the Company is recognizing deferred foreign currency fluctuation asset by corresponding credit to deferred income from foreign currency fluctuation in respect of the FERV on foreign currency loans adjusted in the cost of property, plant and equipment, which is recoverable from the customers in future years as provided in accounting policy no. C.15 (Note 1). This amount will be recognized as revenue corresponding to the depreciation charge in future years. The amount does not constitute a liability to be discharged in future periods and hence, it has been disclosed separately from equity and liabilities.

d)    Government grants include Rs, 575.93 crore (31 March 2017: Rs, 497.14 crore) received from Solar Energy Corporation of India under MNRE Scheme for setting up solar PV power projects.

a)    The CERC notified the Tariff Regulations, 2014 in February 2014 (Regulations, 2014). The CERC has issued tariff orders for all the stations except six stations for the period 2014-19, under Regulations, 2014, and beneficiaries are billed based on such tariff orders issued by the CERC. For other stations, beneficiaries are billed in accordance with the principles given in the Regulations, 2014. The energy charges in respect of the coal based stations are provisionally billed based on the GCV of coal ‘as received', measured at wagon top samples in respect of most of the stations barring a few on the grounds of safety issues, for the quantity supplied through conveyors/road and other difficulties. The amount provisionally billed is Rs, 80,670.65 crore (31 March 2017: Rs, 74,710.65 crore).

b)    The Company has filed a writ petition before the Hon'ble Delhi High Court contesting certain provisions of the Regulations, 2014. As per directions from the Hon'ble High Court on the issue of point of sampling for measurement of GCV of coal on ‘as received' basis, CERC has issued an order dated 25 January 2016 (subject to final decision of the Hon'ble High Court) that samples for measurement of coal on ‘as received' basis should be collected from wagon top at the generating stations. The Company's review petition before the CERC in respect of the above order was dismissed vide their order dated 30 June 2016. Vide order dated 10 November 2016, the Hon'ble Delhi High Court has permitted the Company to approach the CERC with the difficulties being faced in implementation of the order of CERC in this regard and the Company has filed a petition with the CERC. Pending disposal of the petition by the CERC and ratification by the Hon'ble Delhi High Court, measurement of GCV of coal is being done from wagon top samples in respect of most of the stations barring a few on the grounds of safety issues, for the quantity supplied through conveyors/road and other difficulties.

Sales have been provisionally recognized at Rs, 79,683.50 crore (31 March 2017: Rs, 75,800.54 crore) on the said basis.

c)    Sales include Rs, 6.44 crore (31 March 2017: Rs, 995.59 crore) pertaining to previous years recognized based on the orders issued by the CERC/Appellate Tribunal for Electricity (APTEL). This includes reversal of sales amounting to Rs, 267.99 crore in respect of one of the stations, considering the directions issued by the CERC on 28 September 2017. Further, sales for the year amounting to Rs, 96.73 crore has not been recognized considering the said directions.

d)    Sales include Rs, 210.33 crore (31 March 2017: Rs, Nil) on account of income tax refundable to the beneficiaries as per Regulations, 2004. Sales also include Rs, 66.98 crore (31 March 2017: Rs, 46.04 crore) on account of deferred tax materialized which is recoverable from beneficiaries as per Regulations, 2014.

e)    The commercial operation date (COD) of one of the stations of the Company declared by the Company as 14 November 2014 was challenged by one of its beneficiaries. CERC vide order dated 20 September 2017 directed to consider the COD of the said unit as 8 March 2016 in place of 14 November 2014. The Company filed an appeal against this order in APTEL which has been admitted. Pending disposal of the appeal and considering the said order of the CERC, sales of Rs, 248.75 crore recognized till 7 March 2016 has been reversed and balance amounting to Rs, 276.69 crore has been provided as ‘Provision for tariff adjustment' for the period up to 31 March 2017 (Refer Note 41). Sales for the current year has been recognized as per the said order.

f)    Energy sales include electricity duty amounting to Rs, 879.77 crore (31 March 2017: Rs,697.99 crore).

g)    Energy sales are net of rebate to beneficiaries amounting to Rs,752.78 crore (31 March 2017: Rs,469.05 crore).

h)    Other operating revenue includes Rs, 63.41 crore (31 March 2017: Rs, 68.93 crore) towards energy internally consumed, valued at variable cost of generation and the corresponding amount is included in power charges in Note 41.

i)    CERC Regulations provides that where after the truing-up, the tariff recovered is less/more than the tariff approved by the Commission, the generating Company shall recover/pay from/to the beneficiaries the under/over recovered amount along-with simple interest. Accordingly, the interest recoverable from the beneficiaries amounting to Rs, 487.54 crore (31 March 2017: Rs, 397.09 crore) has been accounted as ‘Interest from beneficiaries'. Further, the amount payable to the beneficiaries has been accounted as ‘Interest to beneficiaries' in Note 41.

j) Provision for tariff adjustments written back include Rs,1,156.32 crore written back during the year based on disposal of a petition in favour of the Company by the Hon'ble Supreme Court of India. Refer Note 32 (d).

k) One of the power stations of the Company, having 3 units of 95 MW each and two units of 210 MW each, was issued consent to operate (Renewal) order by Delhi Pollution Control Committee (DPCC) on 2 Jan 2014 which was valid till 31 Jan 2018 with a condition that particulate emission level shall not exceed 150 mg/Nm3. In a volte- face on 8 July 2015, DPCC issued a show cause notice to the station as to why four units out of five units of plant ought not to be closed down for failing to bring down its particulate emission level below 50 mg/Nm3. Further, vide order dtd 31 Dec 2015, DPCC directed that four units out of five units of plant shall not operate. On 11 February 2016, DPCC modified the norms for particulate emission level of the consent to operate from 150 mg/Nm3 to 50 mg/Nm3. Further, vide order dated 21 March 2016, DPCC allowed operation of 2 units of 210 MW subject to meeting the SPM of 50 mg/Nm3. Further, DPCC vide order dated 6 November 2016, directed not to operate all units of station for 10 days which was subsequently extended till further orders. DPCC, vide order dated 14 March 2017 has allowed operation of two units of 210 MW each for the period from 15 March 2017 to 15 October 2017. Subsequently, DPCC vide order dated 1 March 2018 allowed the station to operate two units of 210 MW each from 1 March 2018. Company's petitions to direct beneficiaries for payment of fixed charges on account of closure due to DPCC's directions which are under change in law are pending disposal before the CERC.

l) Keeping in view the provisions of Appendix C to Ind AS 17 Leases w.r.t. determining whether an arrangement contains a lease, the Company has ascertained that the PPA entered into for two of the power stations of the Company fall under operating lease. Recovery of capacity charges towards depreciation (including AAD), interest on loan capital & return on equity (pre-tax) components from the beneficiaries are considered as lease rentals on the assets which are on operating lease.

m) Keeping in view the provisions of Appendix C to Ind AS 17 Leases w.r.t. determining whether an arrangement contains a lease, the Company has ascertained that the PPA entered into for Stage-I of a power station with the beneficiary falls under the definition of finance lease. Accordingly, the written down value of the specified assets has been derecognized from PPE and accounted as Finance Lease Receivable (FLR). Recovery of capacity charges towards depreciation (including AAD), interest on loan capital & return on equity (pre-tax) components from the beneficiary are adjusted against FLR. The interest component of the FLR and amount received on account of revision of tariff of previous periods in respect of the above three elements are recognized as ‘Interest income on Assets under finance lease'.

a)    Disclosures as per Ind AS 19 ‘Employee Benefits' in respect of provision made towards various employee benefits are provided in Note 57.

b)    Salaries and wages include special allowance paid by the Company to eligible employees serving in difficult and far flung areas w.e.f. 26 November 2008. As per the Office Memorandum dated 26 November 2008 of DPE relating to revision of pay scales w.e.f. 1 January 2007, special allowance can be paid to such employees upto 10% of basic pay as approved by concerned administrative ministry. In line with the office memorandum dated 22 June 2010 of DPE, Board of Directors has approved the special allowance (Difficult and Far Flung Areas) to eligible employees. The approval of Ministry of Power, GOI for the same is awaited.

c)    The pay revision of the employees of the Company is due w.e.f. 1 January 2017. The required provision towards revision of pay scales has been recognized during the year. Refer Note 32 (c).

* Carried to capital work-in-progress - (Note 3)

44.    Amount in the financial statements are presented in Rs, Crore (upto two decimals) except for per share data and as otherwise stated. Certain amounts, which do not appear due to rounding off, are disclosed separately.

45.    a) The Company has a system of obtaining periodic confirmation of balances from banks and other parties. There are no

unconfirmed balances in respect of bank accounts and borrowings from banks & financial institutions. With regard to receivables for energy sales, the Company sends demand intimations to the beneficiaries with details of amount paid and balance outstanding which can be said to be automatically confirmed on receipt of subsequent payment from such beneficiaries. In addition, reconciliation with beneficiaries and other customers is generally done on quarterly basis. So far as trade/other payables and loans and advances are concerned, the balance confirmation letters with the negative assertion as referred in the Standard on Auditing (SA) 505 (Revised) ‘External Confirmations', were sent to the parties. Some of such balances are subject to confirmation/reconciliation. Adjustments, if any will be accounted for on confirmation/reconciliation of the same, which in the opinion of the management will not have a material impact.

b) I n the opinion of the management, the value of assets, other than property, plant and equipment and non-current investments, on realization in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

46.    The levy of transit fee/entry tax on supplies of fuel to some of the power stations has been paid under protest as the matters are sub-judice at various courts. In case the Company gets refund/demand from fuel suppliers/tax authorities on settlement of these cases, the same will be passed on to respective beneficiaries.

47.    The environmental clearance (“clearance”) granted by the Ministry of Environment and Forest, Government of India (MoEF) for one of the Company's ongoing project was challenged before the National Green Tribunal (NGT). The NGT disposed the appeal, inter alia, directing that the order of clearance be remanded to the MoEF to pass an order granting or declining clearance to the project proponent afresh in accordance with the law and the judgment of the NGT and for referring the matter to the Expert Appraisal Committee (“Committee”) for its re-scrutiny, which shall complete the process within six months from the date of NGT order. NGT also directed that the environmental clearance shall be kept in abeyance and the Company shall maintain status quo in relation to the project during the period of review by the Committee or till fresh order is passed by the MoEF, whichever is earlier. The Company filed an appeal challenging the NGT order before the Hon'ble Supreme Court of India which stayed the order of the NGT and the matter is sub-judice. Two units of 800 MW have been declared commercial during the year and the last unit of 800 MW capacity is on the verge of completion and expected to be declared commercial in the next financial year. Aggregate cost incurred on the project upto 31 March 2018 is Rs, 15,522.77 crore (31 March 2017: Rs, 14,461.58 crore). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary.

48. The Company is executing a hydro power project in the state of Uttrakhand, where all the clearances were accorded. A case was filed in Hon'ble Supreme Court of India after the natural disaster in Uttrakhand in June 2013 to review whether the various existing and ongoing hydro projects have contributed to environmental degradation. Hon'ble Supreme Court of India on 7 May 2014, ordered that no further construction shall be undertaken in the projects under consideration until further orders, which included the said hydro project of the Company. In the proceedings, Hon'ble Supreme Court is examining to allow few projects which have all clearances which includes the project of the Company where the work has been stopped. Aggregate cost incurred on the project up to 31 March 2018 is Rs, 163.23 crore (31 March 2017: Rs, 160.75 crore). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary.

49    One of the 500 MW unit of a station which was declared commercial on 30 September 2017, met with an unfortunate accident in the boiler occurred due to pressurization of flue gas duct and boiler, damaging the first and second pass of the boiler along-with economizer, outlet duct and hoppers and the unit is under shut down. Payments made towards ex-gratia and treatment charges at various hospitals to the accident victims have been borne by the Company. The unit is covered under insurance policy of the Company against damage to the property. Based on the initial assessment of extent of damage and compensation paid to accident victims, a claim for Rs, 321.74 crore has been lodged with insurance company and accounted for. Discussions are taking place with the equipment supplier for carrying out necessary works for restoration of the unit. The unit is expected to resume operations in the later part of the financial year 2018-19.

50    Disclosure as per Ind AS 1 'Presentation of financial statements’

A)    Changes in significant accounting policies:

During the year, following changes to the accounting policies have been made:

a)    Policy B.1 ‘Statement of compliance' has been modified to include the fact that financial statements are prepared on going concern basis. Additionally, the policy pertaining to first time adoption of Ind AS has been removed as the same is not applicable in the current year.

b)    In addition to above, certain other changes have also been made in the policies nos. A, B.2, C, C.1, C.3, C.4, C.5, C.6, C.8, C.9, C.13, C.15, C.16, C.17, C.19, C.21 and policy D for improved disclosures.

There is no impact on the financial statements due to the above changes, however, the policy numbers have been rearranged in the current year as required.

B)    Reclassifications and comparative figures

Certain reclassifications have been made to the comparative period's financial statements to:

-    enhance comparability with the current year's financial statements

-    ensure compliance with the Guidance Note on Division II - Ind AS Schedule III to the Companies Act, 2013”

(b) Carrying amount of inventories pledged as security for borrowings as at 31 March 2018 is Rs, 4,069.58 crore (31 March 2017: Rs, 4,633.24 crore).

52 Disclosure as per Ind AS 8 'Accounting Policies, Changes in Accounting Estimates and Errors’

a)    Change in depreciation method of mining property:

In accordance with its accounting policies, the Company reviews the depreciation method and useful lives of its assets, other than the assets of generation of electricity business which are governed by CERC Regulations, on an ongoing basis. As a result, during the year, the Company has changed its depreciation method of ‘Mining property' related to coal mining business from ‘Unit of production method' to ‘20 years or life of mine, whichever is less'. This change in estimation has not resulted in any impact on the current financial statements, however this change in estimate may have an impact on future amortization expense, the amount of which is impracticable to determine.

b)    Changes in provision for current tax relating to earlier years

During the year, the Company has changed its estimates for accounting of the provision for current tax in respect of matters in disputes considering the pronouncements of various appellate authorities/courts and the opinion of an independent expert. Accordingly, the cases where the outflow of tax is considered not probable or otherwise, the provision for current tax has been updated. This has led to change in estimation of uncertain tax position and consequential reduction of current tax provision related to earlier years by Rs, 951.30 crore. This change in estimation of uncertain tax positions may also have an impact on future current tax expense, the amount of which is impracticable to determine.

c)    Recent accounting pronouncements Standards issued but not yet effective: Ind AS 115 'Revenue from Contracts with Customers’

On 28 March 2018, Ministry of Corporate Affairs (MCA) has notified the Ind AS 115, ‘Revenue from Contract with Customers'. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further, the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts with customers.

The standard permits two possible methods of transition:

-    Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

-    Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)

The effective date for adoption of Ind AS 115 is financial periods beginning on or after 1 April 2018. The Company will adopt the standard on 1 April 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended 31 March 2018 will not be retrospectively adjusted. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration

On 28 March 2018, MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.

The amendment will come into force from 1 April 2018. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.

53 Disclosure as per Ind AS 10 'Events after the Reporting Period’

Subsequent events:

The Board of Directors of the Company, in its meeting held on 29 December 2017, accorded investment approvals for following acquisitions:

a)    Acquisition of Barauni Thermal Power Station (BTPS) from Bihar State Power Generation Co. Ltd. (BSPGCL)

b)    Acquisition of BSPGCL's equity in Nabinagar Power Generating Company Pvt. Ltd. (NPGCL), a joint venture company

c)    Acquisition of BSPGCL's equity in Kanti Bijlee Utpadan Nigam Ltd. (KBUNL), a subsidiary company

On 15 May 2018, the Company has signed a Memorandum of Understanding (MoU) with G


Mar 31, 2017

1. Disclosure as per Ind AS 24 ‘Related Party Disclosures’

a) List of Related parties:

i) Subsidiaries:

1. Bhartiya Rail Bijlee Company Ltd.

2. Kanti Bijlee Utpadan Nigam Ltd.

3. NTPC Vidyut Vyapar Nigam Ltd.

4. NTPC Electric Supply Company Ltd.

5. Patratu Vidyut Utpadan Nigam Ltd.

ii) Joint ventures:

1. Utility Powertech Ltd.

2. NTPC-GE Power Services Private Ltd. (Previously NTPC-Alstom Power Services Private Ltd.)

3. NTPC-SAIL Power Company Ltd. (Previously NTPC-SAIL Power Company Private Ltd.)

4. NTPC-Tamil Nadu Energy Company Ltd.

5. Ratnagiri Gas & Power Private Ltd.

6. Aravali Power Company Private Ltd.

7. NTPC BHEL Power Projects Private Ltd.

8. Meja Urja Nigam Private Ltd.

9. BF-NTPC Energy Systems Ltd.

10. Nabinagar Power Generating Company Private Ltd.

11. Transformers and Electricals Kerala Ltd.

12. National High Power Test Laboratory Private Ltd.

13. Energy Efficiency Services Ltd.

14. CIL NTPC Urja Private Ltd.

15. Anushakti Vidhyut Nigam Ltd.

16. Hindustan Urvarak & Rasayan Ltd.

17. Trincomalee Power Company Ltd.

18. Bangladesh-India Friendship Power Company Pvt.Ltd.

iii) Key Managerial Personnel (KMP):

Shri Gurdeep Singh Chairman and Managing Director

Shri A.K.Jha Director (Technical)

Shri S.C.Pandey Director (Projects)

Shri K.Biswal Director (Finance)

Shri K.K.Sharma Director (Operations)

Shri Saptarishi Roy1 Director (Human Resources)

Shri A.K.Gupta2 Director (Commercial)

Shri U.P.Pani3 Director (Human Resources)

Dr.Pradeep Kumar Non-executive Director

Shri Aniruddha Kumar Non-executive Director

Dr.Gauri Trivedi Non-executive Director

Shri Rajesh Jain Non-executive Director

Shri Seethapathy Chander4 Non-executive Director

Shri Prashant Mehta5 Non-executive Director

Shri K.P.Gupta6 Company Secretary

Shri A.K.Rastogi7 Company Secretary

1. W.e.f. 1 November 2016, 2. W.e.f. 3 February 2017, 3. Upto 31 October 2016, 4. W.e.f. 22 June 2016, 5. Upto 29 July 2016, 6. W.e.f. 22 March 2017 and 7. Upto 28 February 2017

iv) Post Employment Benefit Plans:

1. NTPC Limited Employees Provident Fund

2. NTPC Employees Gratuity Fund

3. NTPC Post Retirement Employees Medical Benefit Fund

4. NTPC Limited Defined Contribution Pension Trust

v) Entities under the control of the same government:

The Company is a Central Public Sector Undertaking (CPSU) controlled by Central Government by holding majority of shares (refer Note 21). Pursuant to Paragraph 25 & 26 of Ind AS 24, entities over which the same government has control or joint control of, or significant influence, then the reporting entity and other entities shall be regarded as related parties. The Company has applied the exemption available for government related entities and have made limited disclosures in the financial statements. Such entities with which the Company has significant transactions include but not limited to Coal India Limited, Singareni Coalfields Ltd., GAIL (India) Ltd., BHEL Ltd., SAIL Ltd., Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd.

vi) Others:

1. NTPC Education and Research Society

2. NTPC Foundation

e) Terms and conditions of transactions with the related parties

i) Transactions with the related parties are made on normal commercial terms and conditions and at market rates.

ii) The Company is assigning jobs on contract basis, for sundry works in plants/stations/offices to M/s Utility Powertech Ltd (UPL), a 50:50 joint venture between the Company and Reliance Infrastructure Ltd. UPL inter-alia undertakes jobs such as overhauling, repair, refurbishment of various mechanical and electrical equipments of power stations. The Company has entered into Power Station Maintenance Agreement with UPL from time to time. The rates are fixed on cost plus basis after mutual discussion and after taking into account the prevailing market conditions.

iii) The Company is seconding its personnel to Subsidiaries and Joint Venture Companies as per the terms and conditions agreed between the companies, which are similar to those applicable for secondment of employees to other companies and institutions. The cost incurred by the Company towards superannuation and employee benefits are recovered from these companies.

iv) The loan given to Kanti Bijlee Utpadan Nigam Ltd., a subsidiary of the Company, is at SBAR (State Bank Advance Rate) adjusted to half yearly rest presently 14.41 % repayable in 14 half-yearly installments starting from 3 April 2010 and last installment repaid on 31 March 2017. The loan of Rs.33.25 crore given to PVUNL, a subsidiary of the Company, is at 10 % p.a. (quarterly rest) repayable in two installments on 30 September 2017 and 30 September 2018. Another loan to Kanti Bijlee Utpadan Nigam Ltd. has been given during the year amounting to Rs.121.00 crore at 10 % p.a. (quarterly rest) repayable in two installments on 30 June 2019 and 31 December 2019.

v) Consultancy services provided by the Company to Subsidiaries and Joint Ventures are generally on nomination basis at the terms, conditions and principles applicable for consultancy services provided to other parties.

vi) Outstanding balances of subsidiaries and joint ventures at the year-end are unsecured and settlement occurs through banking transaction. These balances other than loans are interest free. For the year ended 31 March 2017 and 31 March 2016, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

vii) Refer Note 60 in respect of impairment loss on investment in Ratnagiri Gas & Power Private Ltd.(a JV Company).

As required by Ind AS 36, an assessment of impairment of assets was carried out and based on such assessment, the Company has accounted impairment losses as under:

a) Due to decrease in value in use in respect of plant and equipment of a Solar PV Station of the Company which is under ‘Generation of energy Segment’, an impairment loss of Rs.Nil (31 March 2016: Rs.4.48 crore) was recognised in ‘Depreciation/amortisation and impairment expense’ in the Statement of Profit and Loss. Also Refer Note 2 (j) in this regard.

During the year ended 31 March 2017, an amount of Rs.0.73 crore towards the impairment loss has been reversed due to increase in the value in use as compared to the carrying value of the Solar PV station.

For the Company, the recoverable amount of the PPE & intangible assets of the CGUs is value in use and amounts to Rs.1,42,042.78 crore (31 March 2016: Rs.1,40,717.96 crore). The discount rate used for the computation of value in use for the generating plant is 9.13% (31 March 2016: 8.98%) and for solar plant is 7.95% (31 March 2016: 7.83%).

b) The Company has an investment of Rs.974.30 crore (31 March 2016 and 1 April 2015: Rs.974.30 crore) in the equity shares of M/s Ratnagiri Gas & Power Pvt.Ltd. (RGPPL), a joint venture of the Company. RGPPL has incurred losses during last few years which has resulted in erosion of net worth of the Company. Also, value of RGPPL’s assets has declined during the period significantly more than would be expected as a result of the passage of time or normal use. Further, neither Power Block nor LNG Terminal (CGUs) of RGPPL are operating at their installed capacity from last many years. The recoverable amount of this investment has been assessed at Rs.191.35 crore and accordingly the Company has recognized an impairment loss of Rs.782.95 crore in respect of such investment and disclosed the same as ‘Exceptional items - Impairment loss on investments’ in the Statement of Profit and Loss.

Recoverable amount is based on the value in use as its fair value less cost of disposals cannot be estimated. Value in use of RGPPL has been arrived at by an independent expert after considering the proposed demerger scheme of LNG Terminal and Power Block which has been approved by its Board of Directors with effective date of 1 January 2016 and awaiting approval of NCLT, New Delhi. RGPPL is committed for implementing the plan pursuant to receipt of necessary approvals and has communicated the restructuring scheme to all stake holders.

The recoverable amount is based on the present value of future cash flows expected to be derived from the LNG terminal till 31 March 2037 and Power block till 31 March 2039. These periods has been considered based on the estimated useful lives of the respective CGU’s.

For LNG Terminal, following are the key assumptions which are based on the past experience and expected completion of breakwater facility in 2021 :

Capacity : FY 2018 till 2021 - 30 ships/year; FY 2022 onwards: 80 ships per year Utilisation : FY 2018-21 - 80%

FY 2022-25 - 55%

FY 2026 - 65%

FY 2027 and beyond - 70%

Annual escalation of tariff - 5%

For Power Plant, no growth rates has been assumed and the past experience has been considered for future cash flows which are expected to be derived from this CGU

The post tax discount rates used for the future cash flows are in the range of 9.4% to 11%.

Also Refer Note 6(h) in this regard.

i) Provision for obligations incidental to land acquisition

Provision for obligations incidental to land acquisition includes expenditure on rehabilitation & resettlement (R&R) including the amounts payable to the project affected persons (PAPs) towards land, expenditure for providing community facilities and expenditure in connection with environmental aspects of the project. The Company has estimated the provision based on the Rehabilitation Action Plan (RAP) approved by the board/competent authority or agreements/directions/demand letters of the local/government authorities. The outflow of said provision is expected to be incurred immediately on fulfilment of conditions by the land oustees/receipts of directions of the local/government authorities.

ii) Provision for tariff adjustment

The Company aggrieved over many of the issues considered by the CERC in the tariff orders for its stations for the period 2004-09 had filed appeals with the Appellate Tribunal for Electricity (APTEL). The APTEL disposed off the appeals favourably directing the CERC to revise the tariff orders as per directions and methodology given. Some of the issues decided in favour of the Company by the APTEL were challenged by the CERC in the Hon’ble Supreme Court of India. Subsequently, the CERC has issued revised tariff orders for all the stations except one for the period 2004 09, considering the judgment of APTEL subject to disposal of appeals pending before the Hon’ble Supreme Court of India. Towards the above and other anticipated tariff adjustments, provision of Rs.98.88 crore (31 March 2016: Rs.145.28 crore, 1 April 2015: Rs.148.10 crore) has been made during the year and in respect of some of the stations, an amount of Rs.162.49 crore (31 March 2016: Rs.154.51 crore, 1 April 2015: Rs.180.16 crore) has been written back.

iii) Others

Provision for others comprise Rs.68.24 crore (31 March 2016: Rs.65.35 crore, 1 April 2015: Rs.58.64 crore) towards cost of unfinished minimum work programme demanded by the Ministry of Petroleum and Natural Gas (MoP&NG) including interest thereon in relation to block AA-ONN-2003/2 [Refer Note 63 (b)], Rs.640.25 crore (31 March 2016: Rs.496.44 crore, 1 April 2015: Rs.440.35 crore) towards provision for cases under litigation and Rs.1.81 crore (31 March 2016: Rs.1.87 crore, 1 April 2015: Rs.6.03 crore) towards provision for shortage in property, plant and equipment on physical verification pending investigation.

iv) In respect of provision for cases under litigation, outflow of economic benefits is dependent upon the final outcome of such cases.

v) In all these cases, outflow of economic benefits is expected within next one year.

vi) Sensitivity of estimates on provisions:

The assumptions made for provisions relating to current period are consistent with those in the earlier years. The assumptions and estimates used for recognition of such provisions are qualitative in nature and their likelihood could alter in next financial year. It is impracticable for the Company to compute the possible effect of assumptions and estimates made in recognizing these provisions.

vii) Contingent liabilities and contingent assets

Disclosure with respect to claims against the Company not acknowledged as debts and contingent assets are made in Note 71.

24. First-time adoption of Ind AS

These are the Company’s first financial statements in accordance with Ind AS. For periods up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with previous GAAP, including accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended). The effective date for Company’s Ind AS Opening Balance Sheet is 1 April 2015 (the date of transition to Ind AS).

The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31 March 2017, the comparative information presented in these financial statements for the year ended 31 March 2016 and in the preparation of an opening Ind AS Balance Sheet at 1 April 2015 (the Company’s date of transition). According to Ind AS 101, the first Ind AS financial statements must use recognition and measurement principles that are based on standards and interpretations that are effective at 31 March 2017, the date of first-time preparation of financial statements according to Ind AS. These accounting principles and measurement principles must be applied retrospectively to the date of transition to Ind AS and for all periods presented within the first Ind AS financial statements.

Any resulting differences between carrying amounts of assets and liabilities according to Ind AS 101 as of 1 April 2015 compared with those presented in the previous GAAP Balance Sheet as of 31 March 2015, were recognized in equity under retained earnings within the Ind AS Balance Sheet.

An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

Optional exemptions availed and mandatory exceptions

In the Ind AS Opening Balance Sheet as at 1 April 2015, the carrying amounts of assets and liabilities from the previous GAAP as at 31 March 2015 are generally recognized and measured according to Ind AS in effect as on 31 March 2017. However for certain individual cases, Ind AS 101 provides for optional exemptions and mandatory exceptions to the general principles of retrospective application of Ind AS. The Company has made use of the following exemptions and exceptions in preparing its Ind AS Opening Balance Sheet:

i) Property, plant and equipment & Intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment and intangible assets as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities.

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

ii) Borrowings

Ind AS 101 permits that if it is impracticable for an entity to apply retrospectively the effective interest method in Ind AS 109 ‘Financial Instruments’, the fair value of the financial liability at the date of transition to Ind AS shall be the new amortised cost of that financial liability at the date of transition to Ind AS.

The borrowings outstanding as at the transition date, consists of loans drawn more than fifteen years back, some drawls with multiple tranches in different financial years with varying interest rates. In some cases, the rate of interest on the loans was both fixed and floating in nature and drawl of the loans have been made in multiple installments with each drawl to be treated as a separate transaction for the purpose of computing the amortised cost. In case of some loans the drawl period stretches beyond 3-4 years and in case of loans with floating interest rate, the rates have been reset at frequent intervals and reset rates are also applicable for previous drawls from that date onwards. Implementing the requirement of amortised cost retrospectively is impracticable and also the amount is expected to be immaterial and hence the Company has amortised the transaction costs as an adjustment of interest expense of the term of the related loan w.e.f. the transition date to Ind AS i.e. 1 April 2015.

iii) Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.

Accordingly, the Company has elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.

iv) Designation of previously recognised financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVTOCI on the basis of the facts and circumstances at the date of transition to Ind AS.

The Company has elected to apply this exemption for its investment in equity instruments in PTC (India) Limited .

v) Arrangements containing a lease

Appendix C, Ind AS 17 requires an entity to assess whether an arrangement contains a lease at its inception. However, Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS. The Company has elected to apply this exemption for such contracts/ arrangements.

vi) Long term foreign currency monetary items

The Company has elected to continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP.

vii) Estimates

An entity’s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Investment in equity instruments carried at FVTPL or FVTOCI;

- Investment in debt instruments carried at FVTPL; and

- Impairment of financial assets based on expected credit loss model.

viii) Classification and measurement of financial assets

The Company has also elected the option under Ind AS 101 by not applying the requirement of Ind AS 109 in case of employee loans which requires that these shall be recognized initially at fair value and subsequently at amortized cost. As per the exemption, if an entity finds impracticable to apply retrospectively effective interest method, the fair value of the financial asset at the date of transition to Ind AS shall be the new amortized cost of that financial asset at the date of transition to Ind AS.

Notes to first-time adoption:

(a) Property, plant & equipment

On the transition date, the Company has capitalised certain items of spare parts which are meeting definition of property, plant & equipment as per Ind AS 16 as PPE. Under previous GAAP, these spare parts were recognised as Inventories. As a result, Company has recognised an amount of Rs.155.94 crore from inventories to PPE as at the transition date on which an amount of Rs.49.55 crore has bee n charged as depreciation with corresponding adjustment in retained earnings. For the year ended 31 March 2016, an amount of Rs.79.79 crore has been recognised from inventories to PPE. During the year ended 31 March 2016, value of inventory has increased by an amount of Rs.53.57 crore with corresponding increase in profit due to reversal of repair and maintenance expenses.

In addition to above, Ind AS 16 requires significant component parts of an item of property, plant and equipment to be depreciated separately. As explained in Note 1.C.1, the cost of major inspections/overhauls is capitalised and depreciated separately over the period to the next major inspection/overhaul. For the year ended on 31 March 2016, an amount of Rs.404.81 crore and Rs.10.17 crore has been capitalised under PPE and CWIP respectively, resulting in corresponding increase in profit due to reversal of repair and maintenance expenses. Depreciation on this asset was charged in the statement of profit and loss of Rs.106.04 crore.

Further, there was increase in net block as on 31 March 2016 to the extent of Rs.264.46 crore and decrease of Rs.0.10 crore in intangible assets due to capitalisation of spares & providing depreciation thereon with revised life, depreciation on spares capitalised from inventory, transaction cost adjustment, unwinding of discount on vendor liabilities, amortisation of leased land treated as finance lease, etc.

(b) Borrowings

Under previous GAAP, the Company has followed the policy of charging the transaction costs to the income statement or capitalized to property, plant and equipment as and when incurred. Under Ind AS, transaction costs are amortized as an adjustment of interest expense over the term of the related loan using effective interest rate method. The Company has raised foreign currency bonds/Notes, secured and unsecured loans from banks and financial institutions and other foreign currency term loans on which it has incurred transaction costs. The above resulted in reduction in borrowings as at 31 March 2016 by Rs.29.33 crore with corresponding reduction in profit or loss and CWIP by Rs.1.36 crore and Rs.27.97 crores respectively.

(c) Application of Appendix C, Ind AS 17

The Company has entered into power purchase agreements (PPAs or arrangements) with beneficiaries for generation and supply of electricity. Under the arrangements, beneficiaries pay fixed capacity charges primarily for recovery of capital cost, return on investment, fixed operations and maintenance expense and interest on working capital and variable energy charge primarily for recovery of fuel cost.

Under Ind AS, the amounts receivable under these arrangements have the substance of a lease under the provisions of Appendix C to Ind AS 17 as these arrangements are dependent on use of specific assets and convey the right to use those assets. The evaluation of the arrangements is based on the facts and circumstances existing at the date of transition of the lease. Based on these evaluations, the Company has identified that the arrangements entered into with its customer for one of the station (Stage I) and two stations are to be treated as leases, and analyzed with reference to Ind AS 17 for classification as either finance or operating leases. Accordingly, the arrangement in case of one of the Stage of a station is classified as finance lease and of two stations as operating lease.

Under previous GAAP, the respective power plants were capitalized as fixed assets and the amounts receivable from the beneficiaries were recognized as revenue from sale of electricity.

Under Ind AS, one stage of a station is treated as assets given on finance lease and the amounts receivable from beneficiary has been segregated into finance income, repayment of principal and service income and accounted for accordingly.

On transition date the carrying value of property, plant and equipment has been reduced by Rs.539.92 crore with corresponding increase in other non-current financial assets (finance lease receivable) by Rs.515.19 crore & other current financial assets by Rs.24.72 crore. Further, an amount of Rs.24.48 crore has been transferred from deferred revenue to retained earnings. During the year ended 31 March 2016, property, plant and equipment has been reduced by Rs.27.03 crore with corresponding increase in other current & non current financial assets (finance lease receivable). Further, revenue from sale of energy was reduced by Rs.110.38 crore with corresponding recognition of interest income on assets on finance lease under ‘Other operating income’ by Rs.84.25 crore and reduction in value of finance lease receivable by Rs.26.13 crore.

For stations treated as assets given on operating lease, the amount receivable from beneficiary has been segregated into lease income and service income and lease income is to be recognized in income on a straight line basis over the lease term.

During the year ending 31 March 2016, this adjustment has resulted in a decrease in revenue from sale of electricity by Rs.223.25 crore and corresponding recognition of Lease rentals on assets on operating lease under ‘Other operating revenue’.

(d) Financial liabilities

Under previous GAAP, liabilities such as payable for capital expenditure, retention money etc. are recorded at cost.

However, under Ind AS, liabilities in which the Company has a contractual obligation to deliver cash are classified as financial liabilities and recorded at amortized cost. Therefore, such financial liabilities have been discounted to present value since they do not carry any interest. The upfront benefit on transition date due to the discounting has been adjusted against the retained earnings. Further, interest cost on unwinding of discount has been capitalized to the cost of property, plant and equipment where such interest cost can be capitalized in accordance with Ind AS 23 ‘Borrowing cost’ otherwise charged off to statement of profit or loss.

The effect of the adjustments resulted in reduction of the value of other non current financial liabilities by Rs.411.65 crore along with corresponding increase in retained earnings as on the transition date. During the year ended 31 March 2016, value of financial liabilities was increased by Rs.29.27 crore by corresponding increase/(reduction) in statement of profit and loss, property, plant and equipment and CWIP by Rs.72.80 crore, (-) Rs.52.08 crore and Rs.8.55 crore respectively.

(e) Land under finance lease

Under previous GAAP, leasehold land was capitalized at an amount equal to the upfront payments made at the time of lease. However, under Ind AS, such leases are capitalised at the present value of the total minimum lease payments to be paid over the lease term. Accordingly, future lease rentals have now been recognised as ‘finance lease obligation’ at their present values. The effect of the adjustment has resulted in reduction in retained earnings by Rs.35.32 crore with corresponding increase in non current financial liabilities by Rs.32.18 crore and current financial liabilities by Rs.3.14 crore towards finance lease obligation as at 1 April 2015. During financial year 2015-16 there was increase in PPE by Rs.13.16 crore, reduction in CWIP by Rs.1.19 crore and increase in non current financial liabilities by Rs.7.68 crore and current financial liabilities by Rs.4.29 crore towards finance lease obligations. There was insignificant impact on profits.

(f) Fair valuation of Investments

Under previous GAAP, the company accounted for long term investments in unquoted and quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind-AS, the Company has designated quoted investments as FVTOCI investments. Ind-AS requires FVTOCI investments to be measured at fair value. The resulting fair value changes in these investments have been recognised in a separate component of equity (FVTOCI reserve) as at the date of transition and subsequently in other comprehensive income.

This has resulted in increase in retained earnings by Rs.85.08 crore with corresponding increase in value of financial assets - investments as at the date of transition. As at 31 March 2016, other comprehensive has decreased by Rs.20.28 crore with corresponding decrease in financial assets - Investments.

(g) Financial assets

Under previous GAAP, employee loans and other long term advances to be settled in cash or another financial asset are recorded at cost.

However, under Ind AS, certain assets covered under Ind AS 32 meet the definition of financial assets which include employee loans and long term advances to be settled in cash or another financial asset are classified as financial assets at amortized cost. Thus in case interest rate on such financial assets is lower than market rate, these financial assets have been discounted to present value.

The effect of the adjustments resulted in reduction in the value of financial assets - loans by Rs.177.63 crore and increase in value of other non-current assets by Rs.160.46 crore & other current assets by Rs.17.18 crore (towards the deferred payroll expenses) on transition date. During the year ended 31 March 2016, the value of financial assets - loans reduced by Rs.0.90 crore with corresponding increase in other non-current and current assets by Rs.0.92 crore and credited the statement of Profit and Loss by Rs.0.02 crore.

(h) Deferred taxes

Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind-AS 12 - Income taxes requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind-AS 12 approach has resulted in insignificant amount of deferred tax on new temporary differences and accordingly not recognised.

(i) Proposed Dividend

Under previous GAAP, the Company had accounted for proposed dividends relating to year ended 31 March 2015 in that year, though the approval of that dividend took place after the reporting date. Under Ind AS, proposed dividends do not meet the definition of liability until they have been approved by shareholders at the Annual General Meeting. Therefore, the Company has not recognized a liability for dividend that has been proposed but will not be approved until after the reporting date.

The effect of the adjustment is to increase the retained earnings by Rs.1,736.71 crores with corresponding decrease in provisions as at 1 April 2015 and Rs.1,732.63 crore as at 31 March 2016.

(j) Electricity duty

Under previous GAAP, sale of electricity was presented as net of electricity duty. Electricity duty was separately presented on the face of statement of profit and loss. However, under Ind AS, sale of electricity is presented inclusive of electricity duty. Thus sale of electricity under Ind AS has increased by Rs.729.20 crore with a corresponding increase in other expenses due to this change.

(k) Employee benefits

Both under previous GAAP and Ind-AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under previous GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind-AS, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognised in Other Comprehensive Income.

As a result, profit for the year ended 31 March 2016 increased by Rs.38.35 crore (net of tax) with corresponding decrease in Other comprehensive income during the year.

(l) Other equity

Retained earnings as at 1 April 2015 has been adjusted consequent to the above Ind AS transition adjustments. Refer ‘Reconciliation of total equity as at 31 March 2016 and 1 April 2015’ as given above for details.

(m) Other comprehensive income

Under previous GAAP, the Company has not presented other comprehensive income (OCI) separately. Items that have been reclassified from statement of profit and loss to other comprehensive income includes remeasurement of defined benefit plans and fair value gain/loss on FVTOCI equity instruments. Hence, previous GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.

(n) Rebate to customers

During the year ending 31 March 2016, Trade receivable has been reduced to the extent of Rs.508.46 crores towards rebate to customers.

(o) Deferred Revenue

On transition date an amount of Rs.24.48 crore has been transferred from deferred revenue to retained earnings and Rs.0.30 crore has been transferred from capital reserve to deferred revenue towards Government grant received. Further during the year ending 31 March 2016 an amount of Rs.125.03 crore has been transfered from capital reserve to deferred revenue towards Government grants received and Rs.0.13 crore transferred from deferred revenue to retained earnings.

(p) Impact of Ind AS adoption on the Statement of Cash Flows for the year ended 31 March 2016:

Cash flow from operating activities under Ind AS has increased mainly due to reclassification of other bank balances from cash and cash equivalents to working capital changes and reclassification of cash flow from investing activities as a result of recognition of certain property, plant & equipment as finance lease receivables, capitalisation of overhauling cost and capital spares as property, plant & equipment and reclassification of certain capital advances to other advances. Further, cash flow from financing activities increased mainly due to reclassification of grants received to deferred revenue.

25. Disclosure as per Ind AS 106, ‘Exploration for and Evaluation of Mineral Resources’

a) The Company along-with some public sector undertakings has entered into Production Sharing Contracts (PSCs) with GOI for three oil exploration blocks namely KG-OSN-2009/1, KG-OSN-2009/4 and AN-DWN-2009/13 under VIII round of New Exploration Licensing Policy (NELP VIII) with 10% participating interest (PI) in each of the blocks. In the case of Block KG-OSN-2009/1 & AN-DWN-2009/13, the Company along-with the consortium partners has decided to relinquish both the blocks and Oil and Natural Gas Commission (ONGC), the operator has submitted an application to Directorate General of Hydrocarbons (DGH) in this regard.

Based on the un-audited statement of the accounts for the above blocks forwarded by ONGC, the operator, the Company’s share in the assets and liabilities as at 31 March 2017 and income and expenses for the year is as under:

For the year 31 March 2017 and 31 March 2016, there are no income and operating/investing cash flow from exploration activities.

The exploration activities in block KG-0SN-2009/4 were suspended w.e.f. 11 January 2012 due to non-clearance by the Ministry of Defence, GOI. Subsequently, DGH vide letter dated 29 April 2013 has informed ONGC that the block is cleared conditionally wherein block area is segregated between No Go zone, High-risk zone and Permitted zone. As the permitted area is only 38% of the total block area the consortium has submitted proposal to DGH for downward revision of MWP of initial exploration period. DGH has agreed for drilling of one well and have instructed to carry out airborne Full Tensor Gravity Gradiometer (FTG) survery in conditionally and partial cleared area in lieu of MoD proportionate reduced 317 Sq KM 3D survey, 589 LKM of 2D survey and drilling of two wells.

ONGC has completed drilling of one well. Airborne Full Tensor Gravity Gradiometer (FTG) survery work is under progress.

b) Exploration activities in the block AA-ONN-2003/2 were abandoned in January 2011 due to unforeseen geological conditions & withdrawal of the operator. Attempts to reconstitute the consortium to accomplish the residual exploratory activities did not yield result. In the meanwhile, Ministry of Petroleum & Natural Gas demanded in January 2011 the cost of unfinished minimum work programme from the consortium with NTPC’s share being USD 7.516 million. During the year, provision in this respect has been updated to Rs.68.24 crore from Rs.65.35 crore along-with interest. The Company has sought waiver of the claim citing force majeure conditions at site leading to discontinuation of exploratory activities.

The Company has accounted for expenditure of Rs.0.07 crore (previous year Rs.0.06 crore) towards the establishment expenses of M/s Geopetrol International, the operator to complete the winding up activities of the Block. The Company’s share in the assets and liabilities as at 31 March 2017 and income and expenses for the year is as under:

For the year 31 March 2017 and 31 March 2016, there are no income and operating/investing cash flow from exploration activities.

c) The Company has entered into production sharing contracts (PSC) with GOI for exploration block namely CB-ONN-2009/5 VIII round of New Exploration Licensing Policy (NELP VIII) with 100% participating interest (PI) in the block.

Minimum Work Program (MWP) for the block has been completed. No oil or gas of commercial value was observed in any of the wells. Accordingly, proposal for relinquishment of the block has been submitted to GOI.

Based on the audited statement of the account for the above block, Company’s assets and liabilities as at 31 March 2017 and expenditure for the year are given below:

Expenses charged off during the year ended 31 March 2017 include opening capital work-in-progress of Rs.74.40 crore as at 1 April 2016.

For the year 31 March 2017 and 31 March 2016, there are no income and investing cash flow from exploration activities.

26. Disclosure as per Ind AS 108 ‘Operating segments’

A. General Information

The Company has two reportable segments, as described below, which are the Company’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Chief operating decision maker (CODM) reviews internal management reports on at least a quarterly basis.

The following summary describes the operations in each of the Company’s reportable segments:

Generation of energy : Generation and sale of bulk power to State Power Utilities.

Other operations : It includes providing consultancy, project management & supervision, oil and gas exploration and coal mining.

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before income tax, as included in the internal management reports that are reviewed by the Company’s Board. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

B. Information about reportable segments and reconciliation to amounts reflected in the financial statements:

* Includes Rs. 995.59 crore (31 March 2016: (-) Rs. 1,642.91 crore) for sales related to earlier years.

** Generation segment result would have been Rs. 16,769.88 crore (31 March 2016: Rs. 15,855.68 crore) without including the sales related to earlier years.

*** Includes (-) Rs. 0.73 crore (31 March 2016: Rs. 4.48 crore) towards impairment loss/(reversal) recognised in the profit or loss, in generation of energy segment.

The Company has not disclosed geographical segments as operations of the Company are mainly carried out within the country.

C. Information about major customers

Revenue from two major customers under ‘generation of energy’ segment is Rs. 8,556.66 crore (31 March 2016: Rs. 8,631.32 crore) and Rs. 8,214.91 crore (31 March 2016: Rs. 6,632.01 crore) which is more than 10% of the Company’s total revenues.

The Company’s principal financial liabilities comprise loans and borrowings in foreign as well as domestic currency, trade payables and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include borrowings, trade & other receivables, and cash and short-term deposits that derive directly from its operations. The Company also holds equity investments and enter into derivative contracts such as forward contracts, options and swaps. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

The Company is exposed to the following risks from its use of financial instruments:

- Credit risk

- Liquidity risk

- Market risk

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk.

Risk management framework

The Company’s activities make it susceptible to various risks. The Company has taken adequate measures to address such concerns by developing adequate systems and practices.

In order to institutionalize the risk manag ement in the Company, an elaborate Enterprise Risk Management (ERM) framework has been developed. The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. As a part of the implementation of ERM framework, a ‘Risk Management Committee (RMC)’ with functional directors as its members has been entrusted with the responsibility to identify and review the risks, formulate action plans and strategies to mitigate risks on short term as well as long term basis.

The RMC meets every quarter to deliberate on strategies. Risks are regularly monitored through reporting of key performance indicators. Outcomes of RMC are submitted for information of the Board of Directors.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations resulting in a financial loss to the Company. Credit risk arises principally from trade receivables, loans & advances, cash & cash equivalents and deposits with banks and financial institutions.

Trade receivables

The Company primarily sells electricity to bulk customers comprising mainly state utilities owned by State Governments. The Company has a robust payment security mechanism in the form of Letters of Credit (LC) backed by the Tri-Partite Agreement (TPA). The TPA were signed among the Govt. of India, RBI and the individual State Governments subsequent to the issuance of the One Time Settlement Scheme of SEBs dues during 2001-02 by the GOI, which was valid till October 2016. Govt of India has approved the extension of these TPAs for another period of 10 years. Most of the States have signed these TPAs and signing is in progress for the balance states.

CERC Tariff Regulations allow payment against monthly bill towards energy charges within a period of sixty days from the date of bill and levy of surcharge @ 18% p.a. on delayed payment beyond sixty days.

A default occurs when in the view of management there is no significant possibility of recovery of receivables after considering all available options for recovery.

As per the provisions of the TPA, the customers are required to establish LC covering 105% of the average monthly billing of the Company for last 12 months. The TPA also provided that if there is any default in payment of current dues by any State Utility the outstanding dues can be deducted from the State’s RBI account and paid to the concerned CPSU. There is also provision of regulation of power by the Company in case of non payment of dues and nonestablishment of LC.

These payment security mechanisms have served the Company well over the years. The Company has not experienced any significant impairment losses in respect of trade receivables in the past years. Since the Company has its power stations as well as customers spread over various states of India, geographically there is no concentration of credit risk.

Investments

The Company limits its exposure to credit risk by investing in only Government of India Securities, State Government Securities and other counterparties have a high credit rating. The management actively monitors the interest rate and maturity period of these investments. The Company does not expect the counterparty to fail to meet its obligations, and has not experienced any significant impairment losses in respect of any of the investments.

Loans

The Company has given loans to employees, subsidiaries and other parties. Loans to the employee are secured against the mortgage of the house properties and hypothecation of vehicles for which such loans have been given in line with the policies of the Company. The loan provided to group companies are collectible in full and risk of default is negligible. Loan to APIIC is secured by a guarantee given by the Government of Andhra Pradesh vide GO dated 3 April 2003.

Cash and cash equivalents

The Company held cash and cash equivalents of Rs.157.12 crore (31 March 2016: Rs.1,372.40 crore, 1 April 2015: Rs.280.65 crore). The cash and cash equivalents are held with banks with high rating.

Deposits with banks and financial institutions

The Company held deposits with banks and financial institutions of Rs.2,773.37 crore (31 March 2016: Rs.3,088.38 crore, 1 April 2015: Rs.12,994.35 crore). In order to manage the risk, Company places deposits with only high rated banks/ institutions.

(i) Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

(ii) Provision for expected credit losses

(a) Financial assets for which loss allowance is measured using 12 month expected credit losses

The Company has assets where the counter-parties have sufficient capacity to meet the obligations and where the risk of default is very low. Accordingly, no loss allowance for impairment has been recognised.

(b) Financial assets for which loss allowance is measured using life time expected credit losses

The Company has customers (State government utilities) with capacity to meet the obligations and therefore the risk of default is negligible or nil. Further, management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historical payment behaviour and extensive analysis of customer credit risk. Hence, no impairment loss has been recognised during the reporting periods in respect of trade receivables.

(iii) Ageing analysis of trade receivables

The ageing analysis of the trade receivables is as below:

(iv) Reconciliation of impairment loss provisions

The movement in the allowance for impairment in respect of financial assets during the year was as follows:

Based on historic default rates, the Company believes that no impairment allowance is necessary in respect of any other assets as the amounts are insignificant.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company has an appropriate liquidity risk management framework for the management of short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

The Company’s treasury department is responsible for managing the short term and long term liquidity requirements of the Company. Short term liquidity situation is reviewed daily by Treasury Department. The Board of Directors has established policies to manage liquidity risk and the Company’s treasury department operates in line with such policies. Any breaches of these policies are reported to the Board of Directors. Long term liquidity position is reviewed on a regular basis by the Board of Directors and appropriate decisions are taken according to the situation.

Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a month, including the servicing of financial obligations, this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

As part of the CERC regulations, tariff inter-alia includes recovery of capital cost. The tariff regulations also provide for recovery of fuel cost, operations and maintenance expenses and interest on normative working capital requirements. Since billing to the customers are generally on a monthly basis, the Company maintains sufficient liquidity to service financial obligations and to meet its operational requirements.

(i) Financing arrangements

The Company had access to the following undrawn borrowing facilities at the end of the reporting period:

(ii) Maturities of financial liabilities

The following are the contractual maturities of derivative and non-derivative financial liabilities, based on contractual cash flows:

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Company’s income. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Board of Directors is responsible for setting up of policies and procedures to manage market risks of the Company. All such transactions are carried out within the guidelines set by the risk management committee.

The Company is exposed to foreign currency risk on certain transactions that are denominated in a currency other than entity’s functional currency, hence exposure to exchange rate fluctuations arises. The risk is that the functional currency value of cash flows will vary as a result of movements in exchange rates.

The currency profile of financial assets and financial liabilities as at 31 March 2017, 31 March 2016 and 1 April 2015 are as below:

Sensitivity analysis

As per the CERC regulations, the gain/loss on account of exchange rate variations on all long term and short term foreign currency monetary items (up to COD) is recoverable from beneficiaries. Hence, the impact of strengthening or weakening of Indian rupee against USD, Euro, JPY and other currencies on the statement of profit and loss would not be very significant. Therefore, sensitivity analysis for currency risk is not disclosed.

Interest rate risk

The Company is exposed to interest rate risk arising mainly from long term borrowings with floating interest rates. The Company is exposed to interest rate risk because the cash flows associated with floating rate borrowings will fluctuate with changes in interest rates. The Company manages the interest rate risks by entering into different kinds of loan arrangements with varied terms (eg. fixed, floating, rupee, foreign currency, etc.).

At the reporting date the interest rate profile of the Company’s interest-bearing financial instruments is as follows:

Fair value sensitivity analysis for fixed-rate instruments

The Company’s fixed rate instruments are carried at amortised cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Cash flow sensitivity analysis for variable-rate instruments

A change of 50 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for the previous year.

27. Fair Value Measurements

a) Financial instruments by category

b) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements and reports directly to the Director (Finance). The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified. Significant valuation issues are reported to the Company’s Audit Committee.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes investments in quoted equity instruments. Quoted equity instruments are valued using quoted prices on national stock exchange. Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. This level includes mutual funds which are valued using the closing NAV.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. The fair value of financial assets and liabilities included in Level 3 is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes of similar instruments. This level includes derivative MTM assets/liabilities. Fair value of derivative assets/liabilities such as Interest rate swaps and foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing and swap models & present value calculations.

There have been no transfers in either direction for the years ended 31 March 2017, 2016 and 2015.

c) Valuation technique used to determine fair value:

Specific valuation techniques used to fair value of financial instruments include:

i) For financial instruments other than at ii), iii) and iv) - the use of quoted market prices

ii) For investments in mutual funds - Closing NAV is used.

iii) For financial liabilities (vendor liabilities, debentures, foreign currency notes, domestic/foreign currency loans):- Discounted cash flow; appropriate market borrowing rate of the entity as of each balance sheet date used for discounting.

iv) For financial assets (employee loans) - Discounted cash flow; appropriate market rate (SBI lending rate) as of each balance sheet date used for discounting.

d) Fair value of financial assets and liabilities measured at amortised cost

The carrying amounts of short term trade receivables, trade payables, capital creditors, investment in bonds, cash and cash equivalents and other financial assets and liabilities are considered to be the same as their fair values, due to their short-term nature.

The carrying values for finance lease receivables approximates the fair value as these are periodically evaluated based on credit worthiness of customer and allowance for estimated losses is recorded based on this evaluation. Also, carrying amount of claims recoverable approximates its fair value as these are recoverable immediately.

The fair values for loans, borrowings, non-current trade payables and capital creditors were calculated based on cash flows discounted using a current discount rate. They are classified at respective levels based on availability of quoted prices and inclusion of observable/non observable inputs.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

28. Capital Management

The Company’s objectives when managing capital are to:

- safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and

- maintain an appropriate capital structure of debt and equity.

The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost of capital through prudent management in deployment of funds and sourcing by leveraging opportunities in domestic and international financial markets so as to maintain investors, creditors & markets’ confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Company defines as result from operating activities divided by total shareholders’ equity. The Board of Directors also monitors the level of dividends to equity shareholders.

Under the terms of major borrowing facilities, the Company is required to comply with the following financial covenants:

(i) Total liability to networth ranges between 2:1 to 3:1.

(ii) Ratio of EBITDA to interest expense shall not at any time be less than 1.75 : 1

(iii) Debt service coverage ratio not less than 1.25:1 and account receivable ratio not exceeding 3:1 (in case of foreign currency borrowings)

There have been no breaches in the financial covenants of any interest bearing borrowings.

The Company monitors capital, using a medium term view of three to five years, on the basis of a number of financial ratios generally used by industry and by the rating agencies. The Company is not subject to externally imposed capital requirements.

The Company monitors capital using gearing ratio which is net debt divided by total equity. Net debt comprises of long term and short term borrowings less cash and cash equivalent. Equity includes equity share capital and reserves that are managed as capital. The gearing ratio at the end of the reporting period was as follows:

29. Disclosure as per Ind AS 114, ‘Regulatory Deferral Accounts’

(i) Nature of rate regulated activities

The Company is mainly engaged in generation and sale of electricity. The price to be charged by the Company for electricity sold to its customers is determined by the CERC which provides extensive guidance on the principles and methodologies for determination of the tariff for the purpose of sale of electricity. The tariff is based on allowable costs like interest, depreciation, operation & maintenance expenses, etc. with a stipulated return.

This form of rate regulation is known as cost-of-service regulations which provide the Company to recover its costs of providing the goods or services plus a fair return.

The Company is eligible to apply Ind AS 114, Regulatory Deferral Accounts. The standard permits an eligible entity to continue previous GAAP (Guidance Note on accounting for Rate Regulated Activities) accounting policy for its regulatory deferral account balances. Hence, Company has opted to continue with its previous GAAP accounting policy for such balances.

(ii) Recognition and measurement

As per the CERC Tariff Regulations, any gain or loss on account of exchange risk variation during the construction period shall form part of the capital cost till the declaration of Commercial Operation Date (COD) to be considered for calculation of tariff. The CERC during the past period in tariff orders for various stations has allowed exchange differences incurred during the construction period in the capital cost. Accordingly, exchange difference arising during the construction period is within the scope of Ind AS 114.

In view of the above, exchange differences arising from settlement/translation of monetary item denominated in foreign currency to the extent recoverable from or payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations are recognized on an undiscounted basis as ‘Regulatory deferral account debit/credit balance’ by credit/debit to ‘Movements in Regulatory deferral account balances’ during construction period and adjusted from the year in which the same becomes recoverable from or payable to the beneficiaries.

Revision of pay scales of employees of PSEs are due w.e.f. 1 January 2017 (Refer Note 33). The recommendations of the constituted committee to the Government inter-alia includes superannuation benefits @ 30% of basic DA to be provided to the employees of CPSEs which includes gratuity at the enhanced ceiling of Rs.0.20 crore and the enhanced amount from Rs.0.10 crore to Rs.0.20 crore will be borne by the Company. As per Proviso 8(3) of Terms and Conditions of Tariff Regulations 2014 applicable for the period 2014-19, truing up exercise in respect


Mar 31, 2016

1. Revenue from operations (gross)

a) The CERC notified the Tariff Regulations, 2014 in February 2014 (Regulations, 2014). Pending issue of provisional/final tariff orders w.e.f. 1st April 2014 for all the stations, beneficiaries are billed in accordance with the tariff approved and applicable as on 31st March 2014 as provided in the Regulations 2014. The energy charges in respect of the coal based stations are provisionally billed based on the GCV ''as received'' measured after the secondary crusher. The amount provisionally billed for the year ended 31st March 2016 is Rs. 69,950.05 crore (previous year Rs. 73,703.99 crore).

b) The Company has filed a writ petition before the Hon''ble Delhi High Court contesting certain provisions of the Tariff Regulations, 2014. On directions from the Hon''ble High Court on the issue of point of sampling for measurement of GCV of coal ''as received'', CERC has issued an order dated 25th January 2016 (subject to final decision of the Hon''ble High Court) that samples for measurement of coal ''as received'' basis should be collected from loaded wagons at the generating stations. Company has filed a review petition in respect of this CERC order on 1st March 2016 and the matter is still sub-judice.

Pending disposal of the review petition and issue of provisional/final tariff orders under Regulations, 2014 by the CERC, Sales have been provisionally recognized at Rs. 71,546.92 crore (previous year Rs. 73,133.81 crore) on the basis of said Regulations, wherein energy charges included in sales, in respect of the coal based stations have been recognized based on the GCV ''as received'' measured after secondary crusher which is generally within the station and at a distance less than one KM from the unloading point of the wagons.

Further, vide order dated 19th February 2016 in respect of a petition filed by a beneficiary, CERC issued directions that the grade slippage between the loading point at the mines'' end and unloading point at the generating stations is to be passed on through tariff to the beneficiaries. In the meantime, in compliance to the CERC directions issued vide said order dated 19th February 2016, efforts are being made to explore the mechanism for measurement of GCV of coal ''as received'', from the loaded wagons at the generating stations.

In the absence of suitable measurement mechanism of comparable GCV, the financial impact, if any, of the difference between the GCV ''as received'' measured after collection of samples from loaded wagons at the generating stations and that of GCV ''as received'' measured after secondary crusher, cannot be quantified and considering the distance between both the measuring points the difference will not be material.

c) Sales for the year ended 31st March 2016 include Rs. 50.74 crore (previous year Rs. 679.62 crore) pertaining to previous years recognized based on the orders issued by the CERC/Appellate Tribunal for Electricity (APTEL).

d) Sales for the year ended 31st March 2016 include (-) Rs. 1,693.65 crore (previous year (-) Rs. 1,399.42 crore) on account of income-tax payable to the beneficiaries as per Regulations, 2004. Sales for the year ended 31st March 2016 also include Rs. 28.12 crore (previous year Rs. 113.96 crore) on account of deferred tax materialized which is recoverable from beneficiaries as per Regulations, 2014.

e) Electricity duty on energy sales amounting to Rs. 729.20 crore (previous year Rs. 669.64 crore) has been reduced from sales in the Statement of Profit and Loss.

f) Revenue from operations include Rs. 81.82 crore (previous year Rs. 86.21 crore) towards energy internally consumed, valued at variable cost of generation and the corresponding amount is included in power charges in Note 26.

g) CERC Regulations provides that where after the truing-up, the tariff recovered is less/more than the tariff approved by the Commission, the generating Company shall recover/pay from/to the beneficiaries the under/over recovered amount along-with simple interest. Accordingly, the interest recoverable from the beneficiaries amounting to Rs. 221.29 crore (previous year Rs. 332.82 crore) has been accounted as ''Interest from beneficiaries''. Further, the amount payable to the beneficiaries has been accounted as ''Interest to beneficiaries'' in Note 26.

h) One of the power stations of the Company, having three units of 95 MW each and two units of 210 MW each, was issued consent to operate (Renewal) order by Delhi Pollution Control Committee (DPCC) on 2nd January 2014 which was valid till 31st January 2018 with a condition that particulate level omission level shall not exceed 150 mg/ Nm3. During the year, in a volte face on 8th July 2015 DPCC issued a Show Cause Notice to the station as to why four units out of five units of plant ought not to be closed down for failing to bring down its particulate level emission level below 50 mg/ Nm3. Further, vide order dated 31st December 2015, DPCC directed four units out of five units of plant shall not operate. Further, vide order dated 21st March 2016, DPCC allowed operation of two units of 210 MW subject to meeting the SPM of 50 mg/Nm3. Company''s petition to direct beneficiaries for payment of fixed charges from 31st December 2015 under change in law is pending disposal before the CERC. Pending disposal of the petition, capacity charges of Rs. 27.88 crore have not been recognised for the period, these units were not allowed to operate.

2. Previous year figures have been regrouped /rearranged wherever considered necessary.

3. Amount in the financial statements are presented in Rs. crore (upto two decimals) except for per share data and as other- wise stated. Certain amounts, which do not appear due to rounding off, are disclosed separately.

4. a) The Company has a system of obtaining periodic confirmation of balances from banks and other parties. There are no unconfirmed balances in respect of bank accounts and borrowings from banks & financial institutions. With regard to receivables for sale of energy, the Company sends demand intimations to the beneficiaries with details of amount paid and balance outstanding which can be said to be automatically confirmed on receipt of subsequent payment from such beneficiaries. In addition, reconciliation with beneficiaries and other customers is generally done on quarterly basis. So far as trade/other payables and loans and advances are concerned, the balance confirmation letters with the negative assertion as referred in the Standard on Auditing (SA) 505 (Revised) ''External Confirmations'', were sent to the parties. Some of such balances are subject to confirmation/reconciliation. Adjustments, if any will be accounted for on confirmation/reconciliation of the same, which in the opinion of the management will not have a material impact.

b) In the opinion of the management, the value of assets, other than fixed assets and non-current investments, on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

5. The levy of transit fee/entry tax on supplies of fuel to some of the power stations has been paid under protest as the matters are subjudice at various courts. In case the Company gets refund/demand from fuel suppliers/tax authorities on settlement of these cases, the same will be passed on to respective beneficiaries.

6. The environmental clearance ("clearance") granted by the Ministry of Environment and Forest, Government of India (MoEF) for one of the Company''s ongoing project was challenged before the National Green Tribunal (NGT). The NGT disposed the appeal, inter alia, directing that the order of clearance be remanded to the MoEF to pass an order granting or declining clearance to the project proponent afresh in accordance with the law and the judgment of the NGT and for referring the matter to the Expert Appraisal Committee ("Committee") for its re-scrutiny, which shall complete the process within six months from the date of NGT order. NGT also directed that the environmental clearance shall be kept in abeyance and the Company shall maintain status quo in relation to the project during the period of review by the Committee or till fresh order is passed by the MoEF, whichever is earlier. The Company filed an appeal challenging the NGT order before the Hon''ble Supreme Court of India which stayed the order of the NGT and the matter is sub-judice. Aggregate cost incurred on the project upto 31st March 2016 is Rs. 11,774.77 crore (previous year Rs. 8,732.44 crore). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary.

7. The Company is executing a hydro power project in the state of Uttrakhand, where all the clearances were accorded. A case was filed in Hon''ble Supreme Court of India after the natural disaster in Uttrakhand in June 2013 to review whether the various existing and ongoing hydro projects have contributed to environmental degradation. Hon''ble Supreme Court of India on 7th May 2014, ordered that no further construction shall be undertaken in the projects under consideration until further orders, which included the said hydro project of the Company. In the proceedings, Hon''ble Supreme Court is examining to allow few projects which have all clearances which includes the project of the Company where the work has been stopped. Aggregate cost incurred on the project up to 31st March 2016 is Rs. 157.31 crore (previous year Rs. 154.57 crore). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary.

8. Disclosure as per Accounting Standard - 1 on ''Disclosure of Accounting Policies''

During the year, following changes in accounting policies have been made:

a) For more appropriate presentation of the financial statements, the accounting policy relating to capital expenditure on assets not owned by Company has been discontinued with retrospective effect. Based on the guidance available in AS 10 notified by MCA on 30th March 2016 such expenditure on assets not owned by the Company have been capitalised retrospectively as part of the cost of project. As a result, cost amortized till 31st March 2015 amounting to Rs. 75.36 crore as per earlier policy has been written back as prior period adjustments and depreciation has been recalculated retrospectively following the rates and methodology notified by the CERC Tariff Regulations. Due to this change, prior period depreciation (net) till 31st March 2015 is (-) Rs. 53.41 crore, depreciation for the year is lower by Rs. 10.08 crore, profit for the year and fixed assets as at 31st March 2016 are higher by Rs. 63.49 crore. Refer Note 12 i).

b) Consequent to adoption of the guidance note on Rate Regulated Activities issued by the ICAI, Policy no. G has been inserted. Detailed disclosure in this regard has been made in Note 48.

c) Considering the adoption of new policy no. G, policy no. N.4 has been modified by replacing the word ''Deferred foreign currency fluctuation asset/liability'' with ''Regulatory asset/liability''.

d) Policy no. O.2.4 related to charging off of the items of prepaid & prior period expenses/income to the natural head of accounts has been modified by increasing the threshold limit from Rs. 1 lakh to Rs. 5 lakh. Consequently, Short term loans & advances (Note 20) are lower by Rs. 0.79 crore, Generation, administration and other expenses are higher by Rs. 4.19 crore (Note 26), Prior period items (Net) (Note 27) is lower by Rs. 3.40 crore and profit for the year is lower by Rs. 0.79 crore.

e) Policy N. 1 & O.1.9 related to income recognition & amortization of machinery spares has been modified for better disclosures.

There is no impact on the accounts due to the changes at sl.no. (b) (c) & (e) above.

9. Disclosure as per Accounting Standard - 5 on ''Net Profit or Loss for the Period'' - Change in accounting estimate

The Company has reviewed and revised the estimated useful life of certain assets as mentioned in accounting policy no. O 1.3, based on technical evaluation. These assets were earlier depreciated as per CERC Regulations as mentioned in accounting policy no. O 1.1. Consequently, with prospectively application, profit for the year ended 31st March 2016 is lower by Rs. 27.43 crore, fixed assets as at 31st March 2016 are lower by Rs. 28.93 crore and capital work-in-progress as at 31st March 2016 are higher byRs. 1.50 crore. (Refer Note 1, Policy no. O.1.3).

10. Disclosure as per Accounting Standard - 11 on ''Effects of Changes in Foreign Exchange Rates''

The effect of foreign exchange fluctuation during the year is as under:

i) The amount of exchange differences (net) debited to the Statement of Profit & Loss is Rs. 22.55 crore (previous year credit of Rs. 15.32 crore).

ii) The amount of exchange differences (net) debited to the carrying amount of fixed assets is Rs. 1,956.61 crore (previous year Rs. 345.96 crore).

11. Disclosure as per Accounting Standard - 15 on ''Employee Benefits'' General description of various employee benefit schemes are as under:

1. Defined Contribution Plans

A. Provident Fund

The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. Contribution to family pension scheme is paid to the appropriate authorities. The contribution of Rs. 242.60 crore (previous year Rs. 236.48 crore) to the trust for the year is recognised as expense and is charged to the Statement of Profit and Loss. The obligation of the Company is to make such fixed contribution and to ensure a minimum rate of return to the members as specified by GOI. As per report of the actuary, overall interest earnings and cumulative surplus is more than the statutory interest payment requirement. Hence, no further provision is considered necessary. The details of fair value of plan assets and obligitions are as under:

B. Pension

The defined contribution pension scheme of the Company for its employees which is effective from 1st January 2007, is administered through a separate trust. The obligation of the Company is to contribute to the trust to the extent of amount not exceeding 30% of basic pay and dearness allowance less employer''s contribution towards provident fund, gratuity, post retirement medical facility (PRMF) or any other retirement benefits. The contribution of Rs. 223.24 crore (previous year Rs. 225.39 crore) to the funds for the year is recognized as an expense and charged to the Statement of Profit and Loss.

2. Defined Benefit Plans

A. Gratuity & Pension

(a) The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum of Rs. 0.10 crore on superannuation, resignation, termination, disablement or on death.

(b) The Company has pension schemes at two of its stations in respect of employees taken over from erstwhile state government power utilities.

The existing schemes stated at (a) and at one of the power stations at (b) above are funded by the Company and are managed by separate trusts. The liability for gratuity and the pension schemes as above is recognised on the basis of actuarial valuation. Based on acturial valuation, best estimate of the contribution towards gratuity/pension for the next financial year is Rs. 19.68 crore.

B. Post-Retirement Medical Facility (PRMF)

The Company has Post-Retirement Medical Facility (PRMF), under which the retired employees and their spouses are provided medical facilities in the Company hospitals/empanelled hospitals. They can also avail treatment as out-patient subject to a ceiling fixed by the Company. The liability for the same is recognised annually on the basis of actuarial valuation. During the year, a trust has been constituted for its employees superannuated on or after 1st January 2007, for the sole purpose of providing post retirement medical benefit to them. The liability as at 31st March 2016 ascertained as per actuarial valuation amounting to Rs. 890.00 crore has been funded to the trust by actual payment.

C. Terminal Benefits

Terminal benefits include baggage allowance for settlement at home town for employees & dependents and farewell gift to the superannuating employees. Further, the Company also provides for pension in respect of employees taken over from ertwhile State Government Power Utility at another station refered at 2.A.(b) above. Liability for the same is recognised based on acturial valuation.

D. Leave

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 50 years up to the maximum of 300 days. However, total number 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.

The above mentioned schemes (C and D) are unfunded and are recognised on the basis of actuarial valuation.

The summarised position of various defined benefits recognised in the Statement of Profit and Loss, Balance Sheet is as under:

12. Disclosure as per Accounting Standard - 16 on ''Borrowing Costs'' Borrowing costs capitalised during the year are Rs. 3,442.62 crore (previous year Rs. 2,969.11 crore).

13 Disclosure as per Accounting Standard - 17 on ''Segment Reporting'' Segment information:

(a) Business segments

The Company''s principal business is generation and sale of bulk power to State Power Utilities. Other business includes providing consultancy, project management and supervision, oil and gas exploration and coal mining.

(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 in respective segments comprising of net fixed assets and current assets, loans and advances. Capital work-in-progress and capital advances are included in unallocated corporate and other assets. Segment liabilities include operating liabilities and provisions.

14. Disclosure as per Accounting Standard - 18 on ''Related Party Disclosures''

a) Related parties:

i) Joint ventures:

Utility Powertech Ltd., NTPC-Alstom Power Services Private Ltd., BF-NTPC Energy Systems Ltd., National Power Exchange Ltd., Pan-Asian Renewables Private Ltd., Trincomalee Power Company Ltd. and Bangladesh-India Friendship Power Company Private Ltd.

ii) Key Managerial Personnel (KMP):

Shri Gurdeep Singh Chairman and Managing Director1

Shri Arup Roy Choudhury Chairman and Managing Director2

Shri I.J. Kapoor Director (Commercial)3

Shri A.KJha Director (Technical)4

Shri U.P.Pani Director (Human Resources)5

Shri S.C.Pandey Director (Projects)

Shri K.Biswal Director (Finance)

Shri K.K.Sharma Director (Operations)

Shri A.K.Rastogi Company Secretary

1. W.e.f. 4th February 2016 2. Upto 31st August 2015 3. Upto 20th August 2015

4. Acted as Chairman and Managing Director for the period from 1st September 2015 to 3rd February 2016

5. Holding additional charge of Director (Commercial) w.e.f 2nd September 2015 iii) Others:

NTPC Education and Research Society

15. Disclosure as per Accounting Standard - 26 on ''Intangible Assets''

Research expenditure charged to revenue during the year is Rs. 108.00 crore (previous year Rs. 97.56 crore).

16. Disclosure as per Accounting Standard - 28 on ''Impairment of Assets''

As required by Accounting Standard (AS) 28 ''Impairment of Assets'', an assessment of impairment of assets was carried out and based on such assessment, the Company has accounted an impairment loss of Rs. 4.48 crore (previous year Nil) which has been recognised in ''Depreciation/Amortisation and Impairment expense'' in the Statement of Profit and Loss in respect of assets falling under ''Generation Segment''. Also refer Note 12(m) in this regard. Further, the amount of impairment loss is not material considering the size of the company, hence other disclosures required by the AS 28 are not applicable to the Company.

17. Guidance Note (GN) on Rate Regulated Activities issued by the ICAI is applicable mandatorily from the financial year 2015-16.

The Company is mainly engaged in generation and sale of electricity. The price to be charged by the Company for electricity sold to its customers is determined by the CERC through tariff regulations. The tariff is based on allowable costs like interest, depreciation, operation & maintenance expenses, etc. with a stipulated return. This form of rate regulation is known as cost-of-service regulations which provide the Company to recover its costs of providing the goods or services plus a fair return. The Company has applied the GN in preparation of financial statements for the year, considering the provisions of Tariff Regulations issued by the CERC.

As per the CERC Tariff Regulations, any gain or loss on account of exchange risk variation during the construction period shall form part of the capital cost from declaration of Commercial Operation Date (COD) to be considered for calculation of tariff. CERC during the past period in tariff orders for various stations has allowed exchange differences incurred during the construction period in the capital cost. Accordingly, exchange difference arising during the construction period is within the scope of the GN.

In view of the above, exchange differences arising from settlement/translation of monetary item denominated in foreign currency (other than long term) to the extent recoverable from or payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations are recognized as ''Regulatory asset/liability'' by credit/debit to ''Regulatory income/expense'' during construction period and adjusted from the year in which the same becomes recoverable from or payable to the beneficiaries.

18. Contingent Liabilities:

a) 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. 8,768.55 crore (previous year Rs. 7,660.88 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 contracts 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 erstwhile land owners have claimed higher compensation before various authorities/courts which are yet to be settled. Against such cases, contingent liability of Rs. 332.34 crore (previous year Rs. 312.37 crore) has been estimated.

(iii) Fuel suppliers

Pending resolution of the issues with fuel companies, an amount of Rs. 2,179.93 crore (previous year Rs. 567.22 crore) towards surface transportation charges, customs duty on service margin on imported coal, grade slippage pursuant to third party sampling etc. has been estimated by the Company as contingent liability

(iv) Others

In respect of claims made by various State/Central Government departments/Authorities towards building permission fee, penalty on diversion of agricultural land to non-agricultural use, non agricultural land assessment tax, water royalty etc. and by others, contingent liability of Rs. 312.94 crore (previous year Rs. 896.34 crore) has been estimated.

(v) Possible reimbursement

The contingent liabilities referred to in (i) above, include an amount of Rs. 1,298.80 crore (previous year Rs. 1,172.56 crore) relating to the hydro power project stated in Note 15 A (b) - Other non current assets, for which Company envisages possible reimbursement from GOI in full. In respect of balance claims included in (i) and in respect of the claims mentioned at (ii) above, payments, if any, by the company on settlement of the claims would be eligible for inclusion in the capital cost for the purpose of determination of tariff as per CERC Regulations subject to prudence check by the CERC. In case of (iii), the estimated possible reimbursement by way of recovery through tariff as per Regulations is Rs. 2,051.77 crore (previous year Rs. 423.36 crore).

b) Disputed tax matters

Disputed income tax/Sales tax/Excise and other tax matters pending before various Appellate Authorities amount to Rs. 7,499.37 crore (previous year Rs. 4,161.87 crore). Many of these matters were disposed off in favour of the Company but are disputed before higher authorities by the concerned departments. In respect of disputed cases, the Company estimate possible reimbursement of Rs. 3,602.24 crore (previous year Rs. 1,508.46 crore).

c) Others

Other contingent liabilities amount to Rs. 164.55 crore (previous year Rs. 309.36 crore).

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.

19. Capital and other commitments

a) Estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st March 2016 is Rs. 55,449.01 crore (previous year Rs. 58,398.91 crore).

b) In respect of investments of Rs. 1,910.35 crore (previous year Rs. 1,822.61 crore) in subsidiary Companies, the Company has restrictions for their disposal as at 31st March 2016 as under:

c) In respect of investments of Rs. 1,800.08 crore (previous year Rs. 1,693.88 crore) in the joint venture entities, the Company has restrictions for their disposal as at 31st March 2016 as under:

d) The Company has commitments of Rs. 3,258.51 crore (previous year Rs. 3,638.40 crore) towards further investment in the joint venture entities as at 31st March 2016.

e) The Company has commitments of Rs. 1,145.14 crore (previous year Rs. 131.82 crore) towards further investment in the subsidiary companies as at 31st March 2016.

f) The Company has commitments of bank guarantee of 0.50 % of total contract price to be undertaken by NTPC-BHEL Power Projects Private Ltd. limited to a cumulative amount of Rs. 75.00 crore (previous year Rs. 75.00 crore).

g) Company''s commitment towards the minimum work programme in respect of oil exploration activity of Cambay Block (100% owned by the company) is Rs. 35.94 crore (USD 5.42 million) (previous year Rs. 140.27 crore, USD 22.41 million).

h) Company''s commitment towards the minimum work programme in respect of oil exploration activities of joint venture operations has been disclosed in Note 45 (b).

i) Company''s commitment in respect lease agreements has been disclosed in Note 43.

20. Corporate Social Responsibility Expenses (CSR)

As per Section 135 of the Companies Act, 2013 read with guidelines issued by DPE, the Company is required to spend, in every financial year, at least two per cent of the average net profits of the Company made during the three immediately preceding financial years in accordance with its CSR Policy. The details of CSR expenses for the year are as under:


Mar 31, 2015

I) Unsecured foreign currency loans (guaranteed by GOI) - Others carry fixed rate of interest ranging from 1.80% p.a. to 2.30% p.a. and are repayable in 23 to 32 semi annual installments as of 31st March 2015.

ii) Unsecured foreign currency loans – Banks include loans of Rs. 642.54 crore (previous year Rs. 589.81 crore) which carry fixed rate of interest of 1.88% p.a. to 4.31% p.a. and loans of Rs. 8,001.83 crore (previous year Rs. 5,958.83 crore) which carry floating rate of interest linked to 6M LIBOR. These loans are repayable in 2 to 24 semiannual installments as of 31st March 2015, commencing after moratorium period if any, as per the terms of the respective loan agreements.

iii) Unsecured foreign currency loans – Others include loans of Rs. 2,516.58 crore (previous year Rs. 1,424.92 crore) which carry fixed rate of interest ranging from 1.88% p.a. to 4.31% p.a and loans of Rs. 705.00 crore (previous year Rs. 995.63 crore) which carry floating rate of interest linked to 6M LIBOR/6M EURIBOR. These loans are repayable in 4 to 22 semiannual installments as of 31st March 2015, commencing after moratorium period if any, as per the terms of the respective loan agreements.

iv) Unsecured rupee term loans carry interest rate ranging from 7.00 % p.a. to 12.40 % p.a. with monthly/half-yearly rests. These loans are repayable in quarterly/half-yearly/yearly installments as per the terms of the respective loan agreements. The repayment period extends from a period of seven to ten years after a moratorium period of six months to six years.

b) The finance lease obligations are repayable in installments as per the terms of the lease agreement over a period of seven years.

c) There has been no default in repayment of any of the loans or interest thereon as at the end of the year.

d) During the year, the Company out of free reserves issued one 8.49% secured non-cumulative non-convertible redeemable taxable fully paid-up debenture of Rs. 12.50 by way of bonus for each fully paid-up equity share of par value of Rs. 10/- amounting to Rs. 10,306.83 crore. Refer Note 3 (c). An amount of Rs. 5,650.00 crore has been utilized till 31st March 2015 for the purpose mentioned in the Scheme of Arrangement.

e) The non current portion of fixed deposits has been repaid during the year in compliance to the provisions of the Companies Act, 2013.

Details of securities

I Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of title deeds of the immovable properties pertaining to National Capital Power Station.

II Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Hypothecation of all the present and future movable assets (excluding receivables) of Singrauli Super Thermal Power Station, Anta Gas Power Station, Auraiya Gas Power Station, Barh Super Thermal Power Project, Farakka Super Thermal Power Station, Kahalgaon Super Thermal Power Station, Koldam Hydel Power Project, Simhadri Super Thermal Power Project, Sipat Super Thermal Power Project, Talcher Thermal Power Station, Talcher Super Thermal Power Project, Tanda Thermal Power Station, Vindhyachal Super Thermal Power Station, National Capital Power Station, Dadri Gas Power Station, Feroze Gandhi Unchahar Power Station and Tapovan-Vishnugad Hydro Power Project as first charge, ranking pari-passu with charge, if any, already created in favour of the Company's Bankers on such movable assets hypothecated to them for working capital requirement.

III Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage of the immovable properties, on first pari-passu charge basis, pertaining to Sipat Super Thermal Power Project by extension of charge already created.

IV Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of the title deeds of the immovable properties pertaining to Sipat Super Thermal Power Project.

V Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai, (II) Hypothecation of all the present and future movable assets (excluding receivables) of Barh Super Thermal Power Project on first pari-passu charge basis, ranking pari passu with charge already created in favour of Trustee for other Series of Bonds and (III) Equitable mortgage of the immovable properties, on first pari-passu charge basis, pertaining to Ramagundam Super Thermal Power Station by extension of charge already created.

VI Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of title deeds of the immovable properties pertaining to Ramagundam Super Thermal Power Station.

VII Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai, (II) Equitable mortgage of the immovable properties, on first pari-passu charge basis, pertaining to National Capital Power Station by extension of charge already created.

VIII Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai, (II) Hypothecation of all the present and future movable assets (excluding receivables) of Singrauli Super Thermal Power Station, Anta Gas Power Station, Auraiya Gas Power Station, Barh Super Thermal Power Project, Farakka Super Thermal Power Station, Kahalgaon Super Thermal Power Station, Koldam Hydel Power Project, Simhadri Super Thermal Power Project, Sipat Super Thermal Power Project, Talcher Thermal Power Station, Talcher Super Thermal Power Project, Tanda Thermal Power Station, Vindhyachal Super Thermal Power Station, National Capital Power Station, Dadri Gas Power Station, Feroze Gandhi Unchahar Power Station and Tapovan-Vishnugad Hydro Power Project as first charge, ranking pari-passu with charge, if any, already created in favour of the Company's Bankers on such movable assets hypothecated to them for working capital requirement and (III) Equitable mortgage of the immovable properties, on first pari-passu charge basis, pertaining to Singrauli Super Thermal Power Station by extension of charge already created.

IX Secured by English mortgage of the immovable properties pertaining to Solapur Super Thermal Power Project on first charge basis.

X Secured by Equitable mortgage of the immovable properties pertaining to Barh Super Thermal Power Project on first charge basis.

XI Security cover mentioned at sl. no. I to X is above 100% of the debt securities outstanding.

a) The net decrease during the year in the deferred tax liability of Rs. 70.65 crore (previous year increase of Rs. 136.31 crore) has been credited to the Statement of Profit and Loss. Further, an amount of Rs. 1.89 crore has been credited to general reserve during the year 2014-15, refer Note 3 d).

b) Deferred tax assets and deferred tax liabilities have been offset as they relate to the same governing laws.

c) CERC Regulations, 2014 provide for recovery of deferred tax liability as on 31st March 2009 from the beneficiaries. Accordingly, deferred tax liability as on 31st March 2009 is recoverable on materialisation from the beneficiaries. For the period commencing from 1st April 2014, Regulations, 2014 provide for grossing up of the return on equity based on effective tax rate for the financial year based on the actual tax paid during the year on the generation income. Deferred asset for deferred tax liability for the year will be reversed in future years when the related deferred tax liability forms a part of current tax.

a) Disclosure with respect to micro and small enterprises as required by the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) is made in Note 50.

b) In line with accounting policy no.M.4 (Note 1), deferred foreign currency fluctuation liability to the extent of Rs. 106.07 crore (previous year Rs. 16.07 crore) has been created during the year.

c) Other liabilities - Others include deposits received from contractors, customers and other parties.

a) Details in respect of rate of interest and terms of repayment of current maturities of secured and unsecured long term borrowings indicated above are disclosed in Note 5.

b) Unpaid dividends, matured deposits, bonds and interest include the amounts which have either not been claimed by the investors/ holders of the equity shares/bonds/fixed deposits or are on hold pending legal formalities etc. Out of the above, the amount required to be transferred to Investor Education and Protection Fund has been transferred.

c) Payable for capital expenditure includes liabilities of Rs. 142.92 crore (previous year Rs. 165.11 crore) towards an equipment supplier pending evaluation of performance and guarantee test results of steam/turbine generators at some of the stations. Pending settlement, liquidated damages recoverable for shortfall in performance of these equipments, if any, have not been recognised.

d) The Company had obtained exemption from the Ministry of Corporate Affairs (MCA), GOI in respect of applicability of Section 58A of Companies Act,1956 in respect of public deposits, for the employees rehabilitation scheme deposits obtained from dependants of employees who die or suffer permanent total disability. Consequent upon enactment of the Companies Act, 2013, the Company has applied to the MCA for continuation of above exemption, which is still awaited. The Company has been advised that the exemption earlier granted shall hold good.

e) Other payables - Others include amount payable to hospitals, retired employees, parties for stale cheques etc.

a) Disclosures required by AS 15 'Employee Benefits' is made in Note 39.

b) Disclosure required by AS 29 'Provisions, Contingent Liabilities and Contingent Assets' is made in Note 48.

c) The Company aggrieved over many of the issues as considered by the CERC in the tariff orders for its stations for the period 2004-09 had filed appeals with the Appellate Tribunal for Electricity (APTEL). The APTEL disposed off the appeals favourably directing the CERC to revise the tariff orders as per directions and methodology given. Some of the issues decided in favour of the Company by the APTEL were challenged by the CERC in the Hon'ble Supreme Court of India. Subsequently, the CERC has issued revised tariff orders for all the stations except one for the period 2004-09, considering the judgment of APTEL subject to disposal of appeals pending before the Hon'ble Supreme Court of India. Towards the above and other anticipated tariff adjustments, provision Of Rs. 148.10 crore (previous year Rs. 121.32 crore) has been made during the year and in respect of some of the stations, an amount of Rs. 180.16 crore ( previous year Rs. 162.56 crore) has been written back.

d) Provision for others comprise Rs. 58.64 crore (previous year Rs. 53.64 crore) towards cost of unfinished minimum work programme demanded by the Ministry of Petroleum and Natural Gas (MoP&NG) including interest thereon in relation to block AA-ONN-2003/2 [Refer Note 46 (b) (ii)],Rs. 440.35 crore (previous year Rs. 378.52 crore) towards provision for litigation cases and Rs. 6.03 crore (previous year Rs. 6.17 crore) towards provision for shortage in fixed assets pending investigation.

a) The conveyancing of the title to 9,701 acres of freehold land of value Rs. 1,963.33 crore (previous year 10,806 acres of value Rs. 2,401.12 crore), buildings & structures of value Rs. 50.43 crore (previous year Rs. 50.32 crore) and also execution of lease agreements for 13,844 acres of land of value Rs. 1,718.54 crore (previous year 11,039 acres, value Rs. 737.70 crore) in favour of the Company are awaiting completion of legal formalities.

b) Leasehold land includes 2,748 acres valuing Rs. 606.83 crore (previous year 818 acres valuing Rs. 29.67 crore) acquired on perpetual lease and accordingly not amortised.

c) Land does not include value of 33 acres (previous year 33 acres) of land in possession of the Company. This will be accounted for on settlement of the price thereof by the State Government Authorities.

d) Land includes 1,302 acres of value Rs. 72.51 crore (previous year 1,523 acres of valueRs. 173.82 crore) not in possession of the Company. The Company is taking appropriate steps for repossession of the same.

e) Land includes an amount of Rs. 179.65 crore (previous yearRs. 168.41 crore) deposited with various authorities in respect of land in possession which is subject to adjustment on final determination of price.

f) Possession of land measuring 98 acres (previous year 98 acres) consisting of 79 acres of freehold land (previous year 79 acres) and 19 acres of lease hold land (previous year 19 acres) of valueRs. 0.21 crore (previous yearRs. 0.21 crore) was transferred to Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd. (erstwhile UPSEB) for a consideration ofRs. 0.21 crore. Pending approval for transfer of the said land, the area and value of this land has been included in the total land of the Company. The consideration received from erstwhile UPSEB is disclosed under Note -10 - 'Other Current Liabilities' - as other liabilities.

g) Ministry of Power, Government of India vide its notification no. 2/38/99-BTPS (Volume VII) dated 22nd September 2006 transferred land of a power station to the Company on operating lease of 50 years. Lease rent for the year amounting toRs. 6.24 crore (previous yearRs. 6.24 crore) has been charged to the Statement of Profit and Loss.

h) The Company has received an opinion from the EAC of the ICAI on accounting treatment of capital expenditure on assets not owned by the Company wherein it was opined that such expenditure are to be charged to the Statement of Profit and Loss as and when incurred. The Company has represented that such expenditure being essential for setting up of a project, the same be accounted in line with the existing accounting practice and sought a review. During the year, ICAI has issued an exposure draft of AS-10 'Property, Plant & Equipment' which would replace the existing AS-10 'Accounting for Fixed Assets'. Para 9 of the said exposure draft and explanation thereto provides for capitalisation of such expenditure along-with the project cost. The final AS-10 'Property, Plant & Equipment' is yet to be issued by the Ministry of Corporate Affairs (MCA), GOI. Pending receipt of communication from the ICAI regarding the review of opinion & notification of the Revised AS-10 by the MCA, the Company continues to account for the said expenditure as per accounting policy no. E.4.

i) Assets under 5 KM scheme of the GOI represent expenditure on electrification of villages within 5 KM periphery of the generation plants of the Company in terms of Ministry of Power (MOP), Government of India scheme.

j) From the accounting periods commencing on or after 7th December 2006, the Company adjusts exchange differences arising on translation/settlement of long-term foreign currency monetary items relating to the acquisition of a depreciable asset to the cost of asset and depreciates the same over the remaining life of the asset.

a) Construction stores are net of provision for shortages pending investigation amounting to Rs. 4.69 crore (previous year Rs. 0.27 crore).

b) Pre-commissioning expenses for the year amount to Rs. 292.74 crore (previous year Rs. 346.09 crore) and after adjustment of pre- commissioning sales of Rs. 50.04 crore (previous yearRs. 29.06 crore) resulted in net pre-commissioning expenditure of Rs. 242.70 crore (previous year Rs. 317.03 crore).

c) Additions to the development of coal mines includes expenditure during construction period (net) of Rs. 153.90 crore (previous year Rs. 260.37 crore).

d) Assets under 5 KM scheme of the GOI represent expenditure on electrification of villages within 5 KM periphery of the generation plants of the Company in terms of Ministry of Power (MOP), Government of India scheme.

a) Investments have been valued as per the accounting policy no.K (Note 1).

b) The Board of Directors of NTPC Limited in its meeting held on 27th January 2012 accorded in principle approval for withdrawal from International Coal Ventures Private Ltd. (a Joint Venture of the Company). Approval of the GoI for the same is awaited, subsequent to which, the process of withdrawal shall commence. No provision towards the diminution other than temporary in the value of investment in International Coal Ventures Private Ltd. is required to be made.

c) The Board of Directors of NTPC Limited in its meeting held on 7th November 2012 has accorded in principle approval for withdrawal from National Power Exchange Ltd. (NPEX) (a Joint Venture of the Company). In the meeting of Group of Promoters (GOP) held on 21st March 2014, GOP recommended for voluntary winding up of NPEX and the same has been adopted by the Board of NPEX in its meeting held on 21st March 2014. Winding up of the Company is underway. Pending winding-up, provision ofRs. 1.06 crore (previous yearRs. 1.06 crore) towards the diminution other than temporary in the value of investment in NPEX has been made.

d) The Board of Directors of NTPC Limited in its meeting held on 19th June 2014 has accorded in principle approval for withdrawal from BF-NTPC Energy Systems Ltd. (a joint venture of the Company). Pending withdrawl, provision of Rs. 3.35 crore (previous year Nil) towards the diminution other than temporary in the value of investment in BF-NTPC Energy Systems Ltd. has been made.

e) The Board of Directors of NTPC Limited in its meeting held on 31st October 2014 approved the proposal for voluntary winding up of Pan-Asian Renewables Private Ltd. (a Joint Venture of the Company). Accordingly, a liquidator has been appointed for dissolution of the Company. The liquidation process is underway. Pending winding-up, provision of Rs. 1.28 crore (previous year Nil) towards the diminution other than temporary in the value of investment in Pan-Asian Renewables Private Ltd. has been made.

f) M/s Ratnagiri Gas & Power Private Ltd (RGPPL), a joint venture of the company, has accumulated losses of Rs. 2,463.35 crore as at 31st March, 2015 as per unaudited accounts. This includes Rs. 1,904.34 crore due to postponement of revenue recognition on conservative basis for the years 2013-14 and 2014-15 in view of disputes raised by its beneficiary though these disputes have already been decided in favour of the RGPPL by the CERC and the APTEL. Keeping in view the ongoing efforts for revival of RGPPL, no provision has been made in respect of the Company's investment of Rs. 974.30 crore (previous year Rs. 974.30 crore) in RGPPL as the diminution in the value is considered as temporary.

g) The Board of Directors of NTPC Limited in its meeting held on 25th March 2015 has accorded in principle approval for withdrawal from NTPC SCCL Global Ventures Pvt. Ltd. (a Joint Venture of the Company). No provision towards the diminution other than temporary in the value of investment in NTPC SCCL Global Ventures Pvt. Ltd. is required to be made.

h) Restrictions for the disposal of investments held by the Company and commitments towards certain Subsidiary & Joint Venture entities are disclosed in Note 53 b) to 53 f).

a) In line with the accounting policy on advance against depreciation, excess of depreciation charged in the books over the depreciation recovered in tariff, amounting toRs. 208.32 crore upto 31st March 2014 has been recognised as prior period sales.

b) During the year, the EAC of the ICAI has opined, on a reference by the Company, that interest paid/payable on land compensation till final award of the Court should be considered as a component of purchase/acquisition price of land since such interest is the result of the process of acquisition of land as per the Act. Any interest beyond the final award of the court should be treated as revenue expenditure and charged to the Statement of Profit and Loss. Accordingly, interest on land compensation amounting toRs. 132.86 crore charged to Statement of Profit & Loss in previous years has been reversed and treated as cost of land by credit to prior period interest.

1. Previous year figures have been regrouped /rearranged wherever considered necessary.

2. Amount in the financial statements are presented inRs. crore (upto two decimals) except for per share data and as other-wise stated. Certain amounts, which do not appear due to rounding off, are disclosed separately.

3. a) Some of the balances of trade/other payables and loans and advances are subject to confirmation/reconciliation. Adjustments, if any will be accounted for on confirmation/reconciliation of the same, which in the opinion of the management will not have a material impact.

b) In the opinion of the management, the value of assets, other than fixed assets and non-current investments, on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

4. In accordance with the principles approved by the Board of Directors of the Company, the dispute with coal suppliers on account of GCV has been settled. Accordingly, against the total disputed billed amount of Rs. 2,578.74 crore (previous year Rs. 4,102.87 crore) as at 31st March 2014, during the year the Company has paid Rs. 1,773.51 crore and provided Rs. 25.48 crore and the remaining amount of Rs. 779.75 crore is settled. Sales corresponding to energy charges recoverable for the amounts paid/provided as above have been recognized on settlement.

5. The levy of transit fee/entry tax on supplies of fuel to some of the power stations has been paid under protest as the matters are subjudice at various courts. In case the Company gets refund/demand from fuel suppliers/tax authorities on settlement of these cases, the same will be passed on to respective beneficiaries.

6. The environmental clearance ("clearance") granted by the Ministry of Environment and Forest, Government of India (MoEF) for one of the Company's project was challenged before the National Green Tribunal (NGT). The NGT disposed the appeal, inter alia, directing that the order of clearance be remanded to the MoEF to pass an order granting or declining clearance to the project proponent afresh in accordance with the law and the judgment of the NGT and for referring the matter to the Expert Appraisal Committee ("Committee") for its re-scrutiny, which shall complete the process within six months from the date of NGT order. NGT also directed that the environmental clearance shall be kept in abeyance and the Company shall maintain status quo in relation to the project during the period of review by the Committee or till fresh order is passed by the MoEF, whichever is earlier. The Company filed an appeal challenging the NGT order before the Hon'ble Supreme Court of India which stayed the order of the NGT and the matter is sub-judice. Aggregate cost incurred on the project upto 31st March 2015 is Rs. 8,732.44 crore (previous year Rs. 4,455.73 crore). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary.

7. The Company is executing a hydro power project in the state of Uttrakhand, where all the clearances were accorded. A case was filed in Hon'ble Supreme Court of India after the natural disaster in Uttrakhand in June 2013 to review whether the various existing and ongoing hydro projects have contributed to environmental degradation. Hon'ble Supreme Court of India on 7th May 2014, ordered that no further construction shall be undertaken in the projects under consideration until further orders, which included the hydro project of the Company. In the proceedings, Hon'ble Supreme Court is examining to allow few projects which have all clearances which includes the project of the Company where the work has been stopped. Aggregate cost incurred on the project up to 31st March 2015 isRs. 154.57 crore (previous yearRs. 145.46 crore). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary.

8. Disclosure as per Accounting Standard - 1 on 'Disclosure of Accounting Policies' During the year, following changes in accounting policies have been made:

a) Policy A 'Basis of preparation' has been modified considering the provisions of the Companies Act, 2013.

b) The Company has revised the accounting policy nos. N.1.1, N.1.2 & N.1.3 regarding depreciation in alignment with Schedule-II to the Companies Act, 2013 which has become applicable from 1st April 2014. Consequently, profit for the year ended 31st March 2015 is lower by Rs. 14.97 crore and fixed assets as at 31st March 2015 are lower byRs. 20.44 crore. Further, an amount of Rs. 3.58 crore (net of deferred tax Of Rs. 1.89 crore) has been recognized in the opening balance of the retained earnings where the remaining useful life of such assets is Nil as at 1st April 2014 in line with the provisions of Schedule-II to the Companies Act, 2013.

c) Policy N.1.11 regarding depreciation on leasehold land and buildings has been modified to cover all the tariff regulations of CERC viz. for thermal, hydro and renewable energy sources.

d) Policy S 'Segment reporting' has been added for improved disclosures.

There is no impact on the accounts due to the changes at sl.no. (a) (c), & (d) above.

9. Disclosure as per Accounting Standard - 11 on 'Effects of Changes in Foreign Exchange Rates' The effect of foreign exchange fluctuation during the year is as under:

i) The amount of exchange differences (net) credited to the Statement of Profit & Loss is Rs. 15.32 crore (previous year debit of Rs. 14.52 crore). ii) The amount of exchange differences (net) debited to the carrying amount of fixed assets isRs. 345.96 crore (previous year Rs. 1,850.39 crore).

10. Disclosure as per Accounting Standard - 12 on 'Accounting for Government Grants' Revenue grants recognised during the year is Rs. Nil (previous year Rs. 0.93 crore).

B. Pension

The defined contribution pension scheme of the Company for its employees which is effective from 1st January 2007, is administered through a separate trust. The obligation of the Company is to contribute to the trust to the extent of amount not exceeding 30% of basic pay and dearness allowance less employer's contribution towards provident fund, gratuity, post retirement medical facility (PRMF) or any other retirement benefits. The contribution of Rs. 225.39 crore (previous year Rs. 641.03 crore including Rs. 346.56 crore for the periods from 1st January 2007 to 31st March 2013) to the funds for the year is recognized as an expense and charged to the Statement of Profit and Loss.

2. Defined Benefit Plans

A. Gratuity & Pension

a) The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum ofRs. 0.10 crore on superannuation, resignation, termination, disablement or on death.

b) The Company has pension schemes at two of its stations in respect of employees taken over from erstwhile state government power utilities. The existing schemes stated at (a) and at one of the power stations at (b) above are funded by the Company and are managed by separate trusts. The liability for gratuity and the pension schemes as above is recognised on the basis of actuarial valuation. The Company's best estimate of the contribution towards gratuity/pension for the financial year 2015-16 is Rs. 28.64 crore.

B. Post-Retirement Medical Facility (PRMF)

The Company has Post-Retirement Medical Facility (PRMF), under which the retired employee and his / her spouse are provided medical facilities in the Company hospitals/empanelled hospitals. They can also avail treatment as out-patient subject to a ceiling fixed by the Company. The liability for the same is recognised on the basis of actuarial valuation.

C. Terminal Benefits

Terminal benefits include baggage allowance for settlement at home town for employees & dependents and farewell gift to the superannuating employees. Further, the Company also provides for pension in respect of employees taken over from erstwhile State Government Power Utility at another station refered at 2.A.(b) above. Liability for the same is recognised based on acturial valuation.

D. Leave

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 50 years up to the maximum of 240 days. 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.

The above mentioned schemes (B, C and D) are unfunded and are recognised on the basis of actuarial valuation.

The summarised position of various defined benefits recognised in the Statement of Profit and Loss, Balance Sheet is as under:

(Figures given in { } are for previous year)

10. Disclosure as per Accounting Standard - 16 on 'Borrowing Costs'

Borrowing costs capitalised during the year are Rs. 2,969.11 crore (previous year Rs. 2,543.96 crore).

11. Disclosure as per Accounting Standard - 17 on 'Segment Reporting' Segment information:

a) Business segments

The Company's principal business is generation and sale of bulk power to State Power Utilities. Other business includes providing consultancy, project management and supervision, oil and gas exploration and coal mining.

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 in respective segments comprising of net fixed assets and current assets, loans and advances. Capital work- in-progress and capital advances are included in unallocated corporate and other assets. Segment liabilities include operating liabilities and provisions.

12. Disclosure as per Accounting Standard - 19 on 'Leases' a) Finance leases

(i) During previous years, the Company took on lease certain vehicles and had option to purchase them as per the terms of the lease agreements. As at 31st March 2015, there are no vehicles on lease.

(ii) The Company has entered into an agreement for coal movement through inland waterways transport. As per the agreement, the operator shall design, build, operate and maintain the unloading infrastructure and material handling system ("facility"), and transfer the same to the Company after expiry of 7 years atRs. 1/-. The facility shall be constructed in two phases of which Phase I has been completed and is under operation. Fair value of the entire facility isRs. 90 crore and the assets and liability in respect of Phase-I have been recognised atRs. 60 crore based on technical assessment. The minimum lease payments shall start on completion of Phase-II of the facility. Amounts payable for the coal transported through Phase-I of the facility are disclosed as contingent rent.

b) Operating leases

The Company's other significant leasing arrangements are in respect of operating leases of premises for residential use of employees, offices and guest houses/transit camps for a period of one to two years. These leasing arrangements are usually renewable on mutually agreed terms but are not non- cancellable. Note 24 - Employee benefits expense includes Rs. 42.83 crore (previous year Rs. 65.85 crore) towards lease payments (net of recoveries) in respect of premises for residential use of employees. Lease payments in respect of premises for offices and guest house/transit camps are included under 'Rent' in Note 26 – 'Generation, administration and other expenses'. Further, the Company has taken a helicopter on wet lease basis for a period of eleven years and the amount of lease charges is included in 'Hire charges of helicopter/aircraft' in Note 26.

13. Disclosure as per Accounting Standard - 26 on 'Intangible Assets' Research expenditure charged to revenue during the year is Rs. 97.56 crore (previous yearRs. 98.52 crore).

14. Disclosure as per Accounting Standard - 28 on 'Impairment of Assets'

As required by Accounting Standard (AS) 28 'Impairment of Assets', an assessment of impairment of assets was carried out and based on such assessment, there has been no impairment loss during the year.

15. Contingent Liabilities:

a) 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. 7,660.88 crore (previous year Rs. 4,134.85 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 contracts 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 erstwhile land owners have claimed higher compensation before various authorities/courts which are yet to be settled. Against such cases, contingent liability of Rs. 312.37 crore (previous yearRs. 393.40 crore) has been estimated.

(iii) Fuel Suppliers

Pending resolution of the issues with fuel companies, an amount of Rs. 567.22 crore (previous year Rs. 647.33 crore) towards surface transportation charges, customs duty on service margin on imported coal, etc. has been estimated by the Company as contingent liability.

(iv) Others

In respect of claims made by various State/Central Government departments/Authorities towards building permission fee, penalty on diversion of agricultural land to non-agricultural use, non agricultural land assessment tax, water royalty etc. and by others, contingent liability of Rs. 896.34 crore (previous year Rs. 1,088.23 crore) has been estimated.

(v) Possible Reimbursement

The contingent liabilities referred to in (i) above, include an amount Of Rs. 1,172.56 crore (previous year Rs. 994.83 crore) relating to the hydro power project stated in Note 15 A (b) - Other non current assets, for which Company envisages possible reimbursement from GOI in full. In respect of balance claims included in (i) and in respect of the claims mentioned at (ii) above, payments, if any, by the company on settlement of the claims would be eligible for inclusion in the capital cost for the purpose of determination of tariff as per CERC Regulations subject to prudence check by the CERC. In case of (iii), the estimated possible reimbursement by way of recovery through tariff as per Regulations is Rs. 423.36 crore (previous yearRs. 637.82 crore).

b) Disputed Tax Matters

Disputed income tax/Sales tax/Excise and other tax matters pending before various Appellate Authorities amount to Rs. 4,161.87 crore (previous year Rs. 1,907.49 crore). Many of these matters were disposed off in favour of the Company but are disputed before higher authorities by the concerned departments. In respect of disputed cases, the company estimate possible reimbursement of Rs. 1,508.46 crore (previous year Rs. 390.37 crore).

c) Others

Other contingent liabilities amount to Rs. 309.36 crore (previous Year Rs. 363.49 crore).

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.


Mar 31, 2014

1. Share capital

a) During the year, the Company has not issued or bought back any shares.

b) The Company has only one class of equity shares having a par value Rs. 10/- per share. The holders of the equity shares are entitled to receive dividends as declared from time to time and are entitled to voting rights proportionate to their share holding at the meetings of shareholders.

c) During the year ended 31st March 2014, the amount of per share dividend recognised as distribution to equity share holders is Rs. 5.75 (previous year Rs. 4.50 and special dividend of Rs. 1.25).

2. Previous year fi gures have been regrouped /rearranged wherever considered necessary.

3. Amount in the financial statements are presented in Rs. crore (upto two decimals) except for per share data and as other-wise stated. Certain amounts, which do not appear due to rounding off, are disclosed separately.

4. a) Some of the balances of trade/other payables and loans and advances are subject to confirmation/reconciliation. Adjustments, if any will be accounted for on confirmation/reconciliation of the same, which in the opinion of the management will not have a material impact.

b) In the opinion of the management, the value of assets, other than fi xed assets and non-current investments, on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

5. Due to variation in the Gross Calorifi c Value (GCV) of coal supplied by coal companies and received at power stations, the Company w.e.f. October/November 2012 released payments on the basis of GCV measured at station end and the difference between the amount billed by the coal companies and the amounts admitted by the Company ("disputed billed amount") were disclosed as contingent liability with corresponding possible reimbursements from the beneficiaries. The issue was taken up with the coal companies directly and through the Ministry of Power and Ministry of Coal, Govt. of India for resolution. This resulted in incorporation of a provision for "Third party sample collection, preparation, testing and analysis" at the loading end in place of joint sampling in the Coal Supply Agreement (CSA), 2012 and amendment to CSA, 2009 which have since been signed with subsidiaries of Coal India Ltd (CIL).

Based on the advice of Government of India, Board of Directors approved the modalities for extrapolation of the third party sample analysis results for the three month period starting October/November 2013 to the supplies during the past period from October/November 2012 till start of third party sampling. On this basis, settlement with some of the CIL subsidiaries has been reached and matter has been taken up with other CIL subsidiaries for early resolution. Following the principles approved by the Board, against the disputed billed amount of Rs. 4,102.87 crore, during the year the Company paid Rs. 1,438.69 crore and provided Rs. 1,440.39 crore. In respect of the balance disputed billed amount of Rs. 1,223.79 crore as at 31st March 2014, taking into account settlements already reached with some of the CIL subsidiaries, an amount of Rs. 1,055.14 crore (previous year Rs. 2,531.10 crore) has been estimated as contingent liability with corresponding possible reimbursements from the beneficiaries {Refer Note 52 (a)(iii)} and remaining amount of Rs.168.65 crore is considered as settled. Sales corresponding to variable charges recoverable for the amounts paid/provided as above have been recognized.

6. The levy of transit fee/entry tax on supplies of fuel to some of the power stations has been paid under protest as the matters are subjudice at various courts. In case the Company gets refund/demand from fuel suppliers/tax authorities on settlement of these cases, the same will be passed on to respective beneficiaries.

7. The environmental clearance ("clearance") granted by the Ministry of Environment and Forest, Government of India (MoEF) for one of the Companys project was challenged before the National Green Tribunal (NGT). The NGT disposed the appeal, inter alia, directing that the order of clearance be remanded to the MOEF to pass an order granting or declining clearance to the project proponent afresh in accordance with the law and the judgment of the NGT and for referring the matter to the Expert Appraisal Committee ("Committee") for its re-scrutiny, which shall complete the process within six months from the date of NGT order. NGT also directed that the environmental clearance shall be kept in abeyance and the Company shall maintain status quo in relation to the project during the period of review by the Committee or till fresh order is passed by the MoEF, whichever is earlier. The Company filed an appeal challenging the NGT order before the Honble Supreme Court of India which stayed the order of the NGT and the matter is sub-judice. Aggregate cost incurred on the project upto 31st March 2014 is Rs. 4,455.73 crore (previous year Rs. 1,691.63 crore).

8. Disclosure as per Accounting Standard - 1 on Disclosure of Accounting Policies During the year, following changes in accounting policies have been made:

a) Policy A "Basis of Preparation" has been amended to refl ect that the financial statements have been prepared inter alia, in accordance with General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs and the Companies Act, 2013 (to the extent notifi ed and applicable).

b) Accounting of capital expenditure on assets not owned by the company for community development is disclosed in accounting policy D.4 instead of in M.a.10 for better presentation.

c) Consequent to the revised guidance note on Accounting for Oil & Gas Producing Activities issued by ICAI becoming effective from 1st April 2013, the policy to charge off exploratory wells-in-progress which have been found dry or not planned to be developed after two years from the date of completion of drilling has been modifi ed and henceforth, such expenditure shall be charged off as and when the wells are determined to be dry/abandoned.

d) Policy M.a.11 has been modifi ed to state that leasehold land and buildings relating to generation of electricity business are fully amortised over the lease period or life of the related plant whichever is lower, to cover both hydro and thermal power plants.

e) Policy H.5 and L.5 regarding accounting of derivative contracts and recovery of cost of hedging from the beneficiaries have been added consequent upon entering into derivative transactions for hedging as per the exchange risk management policy in the current year.

f) In Policy N.1, contribution to pension fund has been included as an employee benefit following the implementation of a contributory pension scheme in the Company in the current year.

g) Policy S "Taxes on Income" has been added for improved disclosures. There is no impact on the accounts due to the above changes.

9. Disclosure as per Accounting Standard - 11 on Effects of Changes in Foreign Exchange Rates The effect of foreign exchange fl uctuation during the year is as under:

i) The amount of exchange differences (net) debited to the statement of profit & loss is Rs. 14.52 crore (previous year Rs. 3.56 crore).

ii) The amount of exchange differences (net) debited to the carrying amount of fixed assets is Rs. 1,850.39 crore (previous year Rs. 1,056.01 crore).

10. Disclosure as per Accounting Standard - 12 on Accounting for Government Grants Revenue grants recognised during the year is Rs. 0.93 crore (previous year Rs. 0.39 crore).

11. Disclosure as per Accounting Standard - 14 on Accounting for Amalgamation

Ministry of Corporate Affairs (MCA) has accorded approval for the Scheme of Amalgamation of NTPC Hydro Ltd. (NHL), a wholly owned subsidiary of NTPC Ltd. engaged in the business of setting up small hydro power projects, with NTPC Ltd. effective from 18th December 2013. As per the Scheme and order of MCA, all assets and liabilities of NHL have been transferred to and vested in the Company w.e.f 1st April 2013. The Company followed Pooling of Interests Method to refl ect the amalgamation. Consequent to the amalgamation, the shares of NHL held by the Company were cancelled and all assets and liabilities of NHL became the assets and liabilities of the Company. Since NHL was a wholly owned subsidiary of the Company, no issue of shares or payment towards purchase consideration was made and no goodwill or capital reserve was recognised on amalgamation.

12. Disclosure as per Accounting Standard - 15 on Employee Benefits

General description of various employee benefit schemes are as under:

A. Provident Fund

Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. Contribution to family pension scheme is paid to the appropriate authorities. The contribution of Rs. 235.63 crore (previous year Rs. 210.07 crore) to the funds for the year is recognised as expense and is charged to the Statement of profit and Loss. The obligation of the Company is to make such fixed contribution and to ensure a minimum rate of return to the members as specifi ed by GOI. As per report of the actuary, overall interest earnings and cumulative surplus is more than the statutory interest payment requirement. Hence, no further provision is considered necessary. The details of fair value of plan assets and obligitions are as under:

B. Gratuity & Pension

(a) The Company has a defi ned benefit gratuity plan. Every employee who has rendered continuous service of fi ve 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 subject to a maximum of Rs. 0.10 crore on superannuation, resignation, termination, disablement or on death.

(b) The Company has pension schemes at two of its stations in respect of employees taken over from erstwhile state government power utilities.

The existing schemes stated at (a) and at one of the power stations at (b) above are funded by the Company and are managed by separate trusts. The liability for gratuity and the pension schemes as above is recognised on the basis of actuarial valuation. The Companys best estimate of the contribution towards gratuity/pension for the fi nancial year 2014-15 is Rs. 44.90 crore.

(c) During the year, a defi ned contribution pension scheme of the Company has been implemented effective from 1st January 2007, for its employees. The scheme is administered through a separate trust. The obligation of the Company is to contribute to the trust to the extent of amount not exceeding 30% of Basic Pay and dearness allowance less employers contribution towards provident fund, gratuity, PRMF or any other retirement benefits.

C. Post-Retirement Medical Facility (PRMF)

The Company has Post-Retirement Medical Facility (PRMF), under which a retired employee and his / her spouse are provided medical facilities in the Company hospitals/empanelled hospitals. They can also avail treatment as out-patient subject to a ceiling fixed by the Company. The liability for the same is recognised on the basis of actuarial valuation.

D. Terminal Benefits

Terminal benefits include baggage allowance for settlement at home town for employees & dependents and farewell gift to the superannuating employees. Further, the Company also provides for pension in respect of employees taken over from erstwhile State Government Power Utility at another station referred at B (b) above. Liability for the same is recognised based on acturial valuation.

E. Leave

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 50 years up to the maximum of 240 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.

The above mentioned schemes (C, D and E) are unfunded and are recognised on the basis of actuarial valuation.

G. Actual return on plan assets Rs. 114.66 crore (previous year Rs. 102.20 crore).

H. Other Employee Benefits

Provision for long service award and family economic rehabilitation scheme amounting to Rs. 3.45 crore (previous year Rs. 3.36 crore) for the year have been made on the basis of actuarial valuation at the year end and debited to the statement of profit & loss.

The estimates of future salary increases considered in actuarial valuation, take account of infl ation, seniority, promotion and 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 held, assessed risk of asset management and historical returns from plan assets.

13. Disclosure as per Accounting Standard - 16 on Borrowing Costs

Borrowing costs capitalised during the year are Rs. 2,543.96 crore (previous year Rs. 2,148.14 crore).

14. Disclosure as per Accounting Standard - 17 on Segment Reporting Segment information:

a) Business segments

The Companys principal business is generation and sale of bulk power to State Power Utilities. Other business includes providing consultancy, project management and supervision, oil and gas exploration and coal mining.

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 in respective segments comprising of net fixed assets and current assets, loans and advances. Construction work-in-progress, construction stores and advances are included in unallocated corporate and other assets. Segment liabilities include operating liabilities and provisions.

15. Disclosure as per Accounting Standard - 18 on Related Party Disclosures

a) Related parties:

i) Joint ventures:

Utility Powertech Ltd., NTPC-Alstom Power Services Private Ltd., BF-NTPC Energy Systems Ltd., National Power Exchange Ltd., Pan-Asian Renewables Private Ltd., Trincomalee Power Company Ltd. and Bangladesh - India Friendship Power Company Private Ltd.

ii) Key Management Personnel:

Shri Arup Roy Choudhury Chairman and Managing Director

Shri I.J. Kapoor Director (Commercial)

Shri N.N. Misra Director (Operations)

Shri A.K. Jha Director (Technical)

Shri U.P. Pani Director (Human Resources)

Shri S.C. Pandey Director (Projects)1

Shri K. Biswal Director (Finance) 2

Shri A.K. Singhal Director (Finance) 3

Shri B.P. Singh Director (Projects) 4

1. W.e.f. 1st October 2013 2. W.e.f. 9th December 2013

3. Up to 8th October 2013

4. Superannuated on 30th September 2013

16. Disclosure as per Accounting Standard - 26 on Intangible Assets

Research expenditure charged to revenue during the year is Rs. 98.52 crore (previous year Rs. 91.85 crore).

17. Disclosure as per Accounting Standard - 28 on Impairment of Assets

As required by Accounting Standard (AS) 28 Impairment of Assets notifi ed under the Companies (Accounting Standards) Rules, 2006, an assessment of impairment of assets was carried out and based on such assessment, there has been no impairment loss during the year.

18. Contingent Liabilities:

a) 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. 4,134.85 crore (previous year Rs. 3,966.11 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 contracts for settlement of these claims. It is not practicable to make a realistic estimate of the outfl ow of resources if any, for settlement of such claims pending resolution.

(ii) Land compensation cases

In respect of land acquired for the projects, the erstwhile land owners have claimed higher compensation before various authorities/ courts which are yet to be settled. Against such cases, contingent liability of Rs. 393.40 crore (previous year Rs. 747.54 crore) has been estimated.

(iii) Fuel Suppliers

Pending resolution of the issues with coal companies as disclosed in Note 32, the difference between the amount billed by the coal companies and the payment released by the company amounts to Rs. 1,055.14 crore (previous year Rs. 2,531.10 crore).

Further, an amount of Rs. 647.33 crore (previous year Rs. 368.67 crore) towards surface transportation charges, customs duty on service margin on imported coal etc. has been disputed by the Company.

(iv) Others

In respect of claims made by various State/Central Government departments/Authorities towards building permission fee, penalty on diversion of agricultural land to non-agricultural use, nala tax, water royalty etc. and by others, contingent liability of Rs. 1,088.23 crore (previous year Rs. 862.81 crore) has been estimated.

(v) Possible Reimbursement

The contingent liabilities referred to in (i) above, include an amount of Rs. 994.83 crore (previous year Rs. 961.24 crore) relating to the hydro power project stated in Note 15 A (b) - Other non current assets, for which Company envisages possible reimbursement from GOI in full. In respect of balance claims included in (i) and in respect of the claims mentioned at (ii) above, payments, if any, by the company on settlement of the claims would be eligible for inclusion in the capital cost for the purpose of determination of tariff as per CERC Regulations subject to prudence check by the CERC. In case of (iii), the estimated possible reimbursement is by way of recovery through tariff as per Regulations, 2009 is Rs. 1,694.00 crore (previous year Rs. 2,792.06 crore).

b) Disputed Income Tax/Sales Tax/Excise Matters

Disputed Income Tax/Sales Tax/Excise matters pending before various Appellate Authorities amount to Rs. 1,907.49 crore (previous year Rs. 1,547.61 crore). Many of these matters were disposed off in favour of the Company but are disputed before higher authorities by the concerned departments. In such cases, the company estimate possible reimbursement of Rs. 390.37 crore (previous year Rs. 365.19 crore).

c) Others

Other contingent liabilities amount to Rs. 363.49 crore (previous year Rs. 251.26 crore).

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.

19. Capital and other commitments

a) Estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st March 2014 is Rs. 63,534.19 crore (previous year Rs. 48,905.56 crore).


Mar 31, 2013

1. Previous year figures have been regrouped /rearranged wherever considered necessary.

2. Amount in the financial statements are presented in Rs. crore (upto two decimals) except for per share data and as other-wise stated. Certain amounts, which do not appear due to rounding off, are disclosed separately.

3. a) Some of the balances of trade/other payables and loans and advances are subject to confirmation/reconciliation. Adjustments, if any will be accounted foron confirmation/reconciliation ofthe same, which in the opinion of the managementwill not have a material impact,

b) In the opinion of the management, the value of assets, other than fixed assets and non-current investments, on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

4. Government of India, Ministry of Power vide its letters F.No.6/1/2007-Fin.(Vol.VIII) dated 5th February 2013 and 29th March 2013 directed Government of National Capital Territory of Delhi (GNCTD) to release payment towards settlement of dues of erstwhile Delhi Electric Supply Undertaking (DESU) amounting to Rs. 835.97 crore as principal and Rs. 1,684.11 crore as interest to the company. Consequently, provision for doubtful debt ofRs. 835.97 crore has been written back (Note 22) and interest ofRs. 1,684.11 crore has been recognised as an exceptional item in the Statement of Profit and Loss during the year.

5. Vide gazette notification F no.22021/1/2008-CRC/ll dated 30.12.2011 issued by Ministry of Coal (MoC), grading and pricing of non-coking coal was migrated from Useful Heat Value (UHV) to Gross Calorific Value (GCV) based system w.e.f. 1st January 2012. The Coal Supply Agreements (CSAs) entered into by the Company were required to be amended to incorporate acceptable procedures for sample collection, preparation, testing and analysis, to facilitate such migration, which are still pending. The Companys Board of Directors approved payments to the coal companies based on the GCV based pricing system, and directed to frame modalities for implementation of GCV based grading system. Accordingly, modalities were framed to effect joint sampling and testing of coal at mine end/station end and future payments to coal companies. The above modalities were communicated to the coal companies w.e.f. October/ November 2012, thereafter the Company released payments on the basis of GCV measured at station end following the implementation of the said modalities since variation in the GCV of coal supplied and received at power stations was noticed. The Company regularly informed coal companies about this variation which has not been accepted by them. The issue has been taken up with the coal companies directly and through the MoP and MoC, GOI for resolution. Pending resolution of the issue, difference between the amount billed by the coal companies and the amounts admitted by the company is disclosed as contingent liability with corresponding possible reimbursements from the beneficiaries (Refer Note-50).

6. The levy of transit fee/entry tax on supplies of fuel to some of the power stations has been paid under protest as the matters are subjudice at various courts. In case the Company gets refund/demand from fuel suppliers/tax authorities on settlement of these cases, the same will be passed on to respective beneficiaries.

7. Disclosure as per Accounting Standard - 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies

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) 11 and para 4 (e) of AS 16 shall not apply to a Company which is applying para 46-A of AS 11. Accordingly, Company has modifed the related accounting policies. Consequently, exchange differences arising on settlement/translation of foreign currency loans to the extent regarded as an adjustment to interest costs as per para 4 (e) of AS 16 and hitherto charged to Statement of Profit and Loss, have now been adjusted in the cost of related assets. As a result, profit for the year ended 31st March 2013 is higher by Rs. 14.80 crore, fixed assets are higher by Rs. 173.56 crore and Deferred Income from Foreign Currency Fluctuation is higher by Rs. 158.76 crore.

ii) During the year, the Company reviewed its policy for accounting of carpet coal which was hitherto charged to the Statement of Profit and Loss and capitalised the cost of carpet coal with the coal handling plant. Consequently, tangible assets and profit for the year are higher by Rs. 20.36 crore.

iii) During the year, the Company has reviewed and modifed the accounting policy related to amortisation of other intangible assets to bring more clarity. However, this does not have any impact on accounts fortheyear.

8. Disclosure as per Accounting Standard - 11 on Effects of Changes in Foreign Exchange Rates

The effect of foreign exchange fluctuation during the year is as under:

i) The amount of exchange differences (net) debited to the statement of profit & loss isRs. 3.56 crore (previous yearRs. 19.66 crore).

ii) The amount of exchange differences (net) debited to the carrying amount of fixed assets isRs. 1,056.01 crore (previous yearRs. 1,661.21 crore).

9. Disclosure as per Accounting Standard - 12 on Accounting for Government Grants

Revenue grants recognised during the year isRs. 0.39 crore (previous yearRs. 0.24 crore).

10. Disclosure as per Accounting Standard - 15 on Employee Benefits

General description ofvarious employee benefit schemes are as under:

A. Provident Fund

Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. Contribution to family pension scheme is paid to the appropriate authorities. The contribution ofRs. 192.88 crore (previous yearRs. 173.46 crore) to the funds for the year is recognised as expense and is charged to the statement of profit and loss. The obligation of the Company is to make such fixed contribution and to ensure a minimum rate of return to the members as specified by GOI. As per report ofthe actuary, overall interest earnings and cumulative surplus is more than the statutory interest payment requirement. Hence, no further provision is considered necessary. The details offairvalue of plan assets and obligitions are as under:

B. Gratuity & Pension

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 subject to a maximum ofRs. 0.10 crore on superannuation, resignation, termination, disablement or on death.

The Company has a scheme of pension at one of the stations in respect of employees taken over from erstwhile state government power utility. In respect of other employees of the Company, pension scheme is yet to be implemented as stated in Note 11.

The existing schemes are funded by the Company and are managed by separate trusts. The liability for the same is recognised on the basis of actuarial valuation.

C. Post-Retirement Medical Facility (PRMF)

The Company has Post-Retirement Medical Facility (PRMF), under which a retired employee and his / her spouse are provided medical facilities in the Company hospitals/empanelled hospitals. They can also avail treatment as out-patient subject to a ceiling fixed by the Company. The liability for the same is recognised on the basis of actuarial valuation.

D. Terminal Benefits

Terminal benefits include settlement at home town for employees & dependents and farewell gift to the superannuating employees. Further, the Company also provides for pension in respect of employees taken over from erstwhile State Government Power Utility at another station. The liability for the same is recognised on the basis of actuarial valuation.

E. Leave

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. 73.33 % of the earned leave is en-cashable while in service, and upto a maximum of 300 days on separation. Half-pay leave is en-cashable only on separation beyond the age of 50 years up to the maximum of 240 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.

The above mentioned schemes (C, D and E) are unfunded and are recognised on the basis of actuarial valuation.

The summarised position ofvarious defined benefits recognised in the statement of profit and loss, balance sheet are as under:

(Figures given in {) are for previous year)

G. Actual return on plan assetsRs. 102.20 crore (previous yearRs. 94.63 crore).

H. Other Employee Benefits

Provision for long service award and family economic rehabilitation scheme amounting to Rs. 3.36 crore (previous yearRs. 4.85 crore) for the year have been made on the basis of actuarial valuation at the year end and debited to the statement of profit & loss.

I. Actuarial Assumptions

Principal assumptions used for actuarial valuation fortheyear ended are:

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and 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 held, assessed risk of asset management and historical returns from plan assets.

J. The Companys bestestimate ofthe contribution towardsgratuity/pension forthe financial year2013-14 isRs. 44.81 crore.

11. Disclosure as per Accounting Standard - 16 on Borrowing Costs

Borrowing costs capitalised during the year are Rs. 2,148.14 crore (previous yearRs. 2,342.21 crore).

12. Disclosure as per Accounting Standard - 17 on Segment Reporting

Segment information:

a) Business segments

The Companys principal business is generation and sale of bulk powerto State Power Utilities. Other business includes providing consultancy, project management and supervision, oil and gas exploration and coal mining.

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 in respective segments comprising of net fixed assets and current assets, loans and advances. Construction work-in-progress, construction stores and advances are included in unallocated corporate and other assets. Segment liabilities include operating liabilities and provisions.

13. Disclosure as per Accounting Standard - 18 on Related Party Disclosures

a) Related parties:

i) Joint ventures:

Utility Powertech Ltd., NTPC-Alstom Power Services Private Ltd., BF-NTPC Energy Systems Ltd., Pan-Asian Renewables Private Ltd., Trincomalee Power Company Ltd. and Bangladesh -India Friendship Power Company Private Ltd.

ii) Key Management Personnel:

Shri Arup Roy Choudhury Chairman and Managing Director

Shri A.K. Singhal Director (Finance)

Shri I.J. Kapoor Director (Commercial)

Shri.B.P.Singh Director (Projects)

Shri D.K. Jain Director (Technical)1

Shri S.P.Singh Director (Human Resources)2

Shri N.N.Mishra Director (Operations)

Shri A.K.Jha Director (Technical)3

Shri U.P.Pani Director (Human Resources)4

1. Superannuated on 30th June 2012 2. Superannuated on 28th February 2013 3. W.e.f. 1st July 2012

4. W.e.f. 1st March 2013

14. Disclosure as per Accounting Standard - 26 on Intangible Assets

Research expenditure charged to revenue during the year is Rs. 91.85 crore (previous year Rs. 29.89 crore).

15. Disclosure as per Accounting Standard - 28 on Impairment of Assets

As required by Accounting Standard (AS) 28 Impairment of Assets notified under the Companies (Accounting Standards) Rules, 2006, the Company has carried out the assessment of impairment of assets. Based on such assessment, there has been no impairment loss during the year.

16. Contingent Liabilities:

a) 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. 3,966.11 crore (previous yearRs. 4,427.27 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 contracts 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 areyetto be settled. In such cases, contingent liability ofRs. 747.54 crore (previousyearRs. 1,173.58 crore) has been estimated.

(iii) Fuel Suppliers

Pending resolution ofthe issues with coal companies as disclosed in Note 33, payments and accounting of coal are being made based on GCV ascertained at station end. The difference between the amount billed by the coal companies and the payment released by the company amounts to Rs. 2,531.10 crore (previous yearRs. Nil).

Further, an amount ofRs. 367.73 crore (previous yearRs. 400.63 crore) towards surface transportation charges, customs duty on service margin on imported coal etc. has been disputed bythe Company.

(iv) Others

In respect of claims made by various State/Central Government departments/Authorities towards building permission fee, penalty on diversion of agricultural land to non-agricultural use, nala tax, water royalty etc. and by others, contingent liability ofRs. 862.81 crore (previous yearRs. 877.47 crore) has been estimated.

(v) Possible Reimbursement

The contingent liabilities referred to in (i) above, include an amount ofRs. 961.24 crore (previous yearRs. 1,769.70 crore) relating to the hydro power project stated in Note 21 b) - Other current assets, for which Company envisages possible reimbursement from GOI in full. In respect of balance claims included in (i) and in respect of the claims mentioned at (ii) above, payments, if any, bythe company on settlement of the claims would be eligible for inclusion in the capital cost for the purpose of determination of tariff as per CERC Regulations subject to prudence check by the CERC. In case of (iii), the estimated possible reimbursement is by way of recovery through tariff as per Regulations, 2009 isRs. 2,792.06 crore (previous yearRs. 283.45 crore).

b) Disputed Income Tax/Sales Tax/Excise Matters

Disputed Income Tax/Sales Tax/Excise matters pending before various Appellate Authorities amount to Rs. 1,547.61 crore (previous yearRs. 3,038.63 crore). Many of these matters were disposed off in favour of the Company but are disputed before higher authorities by the concerned departments. In such cases, the company estimate possible reimbursement ofRs. 365.19 crore (previous yearRs. 2,111.54 crore).

c) Others

Other contingent liabilities amount to Rs. 252.20 crore (previous yearRs. 316.93 crore).

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.

17. Capital and other commitments

a) Estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st March 2013 isRs. 48,905.56 crore (previous yearRs. 29,563.89 crore).

b) In respect of investments ofRs. 3,850.15 crore (previous yearRs. 2,895.97 crore) in the joint venture entities, the Company has restrictions for their disposal ranging from two years to fifteen years from the date of incorporation/allottment of shares/commercial operation ofthe projects as the case may be.

c) In respect of investments ofRs. 892.26 crore (previous yearRs. 866.61 crore) in the subsidiary Companies, the Company has restrictions for their disposal for five years from the date of commercial operation of the respective project.

d) As at 31st March 2013, the Company has commitments ofRs. 4,041.86 crore (previous yearRs. 3,236.96 crore) towards further investment in thejointventure entities.

e) As at 31st March 2013, the Company has commitments ofRs. 1,393.67 crore (previous yearRs. 1,419.32 crore) towards further investment in the subsidiary companies.

f) Companys commitment towards the minimum work programme in respect of oil exploration activity of Cambay Block (100% owned by the company) isRs. 183.45 crore (USD 33.73 million) (previousyearRs. 182.84 crore, USD 35.41 million).

g) Companys comittment towards the minimum work programme in respect oil exploration activities of joint venture operations has been disclosed in Note-45.

h) Companys commitment in respect of further commitments relating to lease agreements has been disclosed in Note - 42.


Mar 31, 2012

1. The financial statements for the year ended 31st March 2011 were prepared as per then applicable, Schedule VI to the Companies Act, 1956. Consequent to the Notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31st March 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this years classifi cation. The adoption of revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

2. Amount in the financial statements are presented in Rs. crore (upto two decimals) except for per share data and as other-wise stated. Certain amounts, which do not appear due to rounding off, are incorporated separately.

3. a) Certain loans & advances and creditors in so far as these have since not been realised/discharged or adjusted are subject to confi rmation/ reconciliation and consequential adjustment, which in the opinion of the management is not material.

b) In the opinion of the management, the value of assets, other than fi xed assets and non-current investments, on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

4. The coal price Notification No 222021 /1/ 2008-CRC-UU dated 31.12.2011 issued by Ministry of Coal (MoC) proposed migration from Useful Heat Value (UHV) to Gross Calorifi c Value (GCV) based pricing of coal, and also increased the coal prices. This was superseded by Notification dated 31.01.2012, partially rolling back the increase in coal prices. Various stakeholders including power utilities and MOP have expressed concern on the switchover from existing UHV to GCV based pricing of coal, without having put in place the prerequisite technical and legal framework. The issue is under deliberation at MOP and Central Electricity Authority with MoC for an early resolution.

Pending resolution of the issues, stations are continuing to make payment and accounting of coal as per the pre-migrated system of UHV based pricing of coal and the difference between the amounts billed by the coal companies and the payments made/accounted for has been shown as contingent liability. Since fuel cost is a pass through component of tariff, the revision of price will not have any adverse impact on the profits of the Company.

5. The levy of transit fee/entry tax/VAT on supplies of fuel to some of the power stations has been paid under protest as the matters are subjudice at various courts. Probable demand for the period upto January 2012 has been included under contingent liabilities. In case the Company gets refund / demand from fuel suppliers/tax authorities on settlement of these cases, the same will be passed on to respective benefi ciaries.

6. Disclosure as per Accounting Standard - 9 on Revenue Recognition

Due to uncertainty of realisation in the absence of sanction by the GOI, the Companys share of net annual profits of one of the stations taken over by the Company in June 2006 for the period 1st April 1986 to 31st May 2006 amounting to Rs. 115.58 crore (previous year Rs. 115.58 crore) being balance receivable in terms of the management contract with the GOI has not been recognised.

7. Disclosure as per Accounting Standard - 11 on Effects of Changes in Foreign Exchange Rates The effect of foreign exchange fl uctuation during the year is as under:

i) The amount of exchange differences (net) debited to the statement of profit & loss is Rs. 19.66 crore (previous year Rs. 6.50 crore).

ii) The amount of exchange differences (net) debited to the carrying amount of fixed assets is Rs. 1,661.21 crore (previous year Rs. 168.29 crore).

8. Disclosure as per Accounting Standard - 12 on Accounting for Government Grants Revenue grants recognised during the year is Rs. 0.24 crore (previous year Rs. 0.43 crore).

9. Disclosure as per Accounting Standard - 15 on Employee Benefits General description of various defi ned employee benefit schemes are as under:

A. Provident Fund

Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. Contribution to family pension scheme is paid to the appropriate authorities. The contribution of Rs. 173.46 crore (previous year Rs. 191.19 crore) to the funds for the year is recognised as expense and is charged to the statement of profit and loss. The obligation of the Company is to make such fixed contribution and to ensure a minimum rate of return to the members as specifi ed by GOI. As per report of the actuary, overall interest earnings and cumulative surplus is more than the statutory interest payment requirement. Hence no further provision is considered necessary.

B. Gratuity & Pension

The Company has a defi ned 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 subject to a maximum of Rs. 0.10 crore on superannuation, resignation, termination, disablement or on death.

The Company has a scheme of pension at one of the stations in respect of employees taken over from erstwhile state government power utility. In respect of other employees of the Company, pension scheme is yet to be implemented as stated in Note 11 b) above.

The existing schemes are funded by the Company and are managed by separate trusts. The liability for the same is recognised on the basis of actuarial valuation.

C. Post-Retirement Medical Facility (PRMF)

The Company has Post-Retirement Medical Facility (PRMF), under which retired employee and the spouse are provided medical facilities in the Company hospitals/empanelled hospitals. They can also avail treatment as out-patient subject to a ceiling fixed by the Company. The liability for the same is recognised on the basis of actuarial valuation.

D. Terminal Benefits

Terminal benefits include settlement at home town for employees & dependents and farewell gift to the superannuating employees. Further, the Company also provides for pension in respect of employees taken over from erstwhile State Government Power Utility at another station. The liability for the same is recognised on the basis of actuarial valuation.

E. Leave

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. 73.33 % of the earned leave is en-cashable while in service, and upto a maximum of 300 days on separation. Half-pay leave is en-cashable only on separation beyond the age of 50 years up to the maximum of 240 days (HPL) as per the rules of the Company. The liability for the same is recognised on the basis of actuarial valuation.

The above mentioned schemes (C, D and E) are unfunded and are recognised on the basis of actuarial valuation.

The summarised position of various defi ned benefits recognised in the statement of profit and loss, balance sheet are as under:

G. Actual return on plan assets Rs. 94.63 crore (previous year Rs. 83.89 crore).

H. Other Employee Benefits

Provision for long service award and family economic rehabilitation scheme amounting to Rs. 4.85 crore (previous year Rs. 2.76 crore) for the year have been made on the basis of actuarial valuation at the year end and debited to the statement of profit & loss.

The estimates of future salary increases considered in actuarial valuation, take account of infl ation, seniority, promotion and 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 held, assessed risk of asset management and historical returns from plan assets.

J. The Companys best estimate of the contribution towards gratuity/pension for the financial year 2012-13 is Rs. 68.59 crore.

10. Disclosure as per Accounting Standard - 16 on Borrowing Costs

Borrowing costs capitalised during the year are Rs. 2,342.21 crore (previous year Rs. 1,743.61 crore).

11. Disclosure as per Accounting Standard - 17 on Segment Reporting

Segment information:

a) Business segments

The Companys principal business is generation and sale of bulk power to State Power Utilities. Other business includes providing consultancy, project management and supervision, oil and gas exploration and coal mining.

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 in respective segments comprising of net fixed assets and current assets, loans and advances. Construction work-in-progress, construction stores and advances are included in unallocated corporate and other assets. Segment liabilities include operating liabilities and provisions.

12. Disclosure as per Accounting Standard - 26 on Intangible Assets

Research expenditure charged to revenue during the year is Rs. 29.89 crore (previous year Rs. 28.30 crore).

b) Joint venture operations:

i) The Company along-with some public sector undertakings has entered into Production Sharing Contracts (PSCs) with GOI for three exploration blocks namely KG- OSN-2009/1, KG-OSN-2009/4 and AN-DWN-2009/13 under VIII round of New Exploration Licensing Policy (NELP VIII) with 10% participating interest (PI) in each of the blocks.

Based on the un-audited statement of the accounts for the above blocks forwarded by M/s Oil & Natural Gas Corporation Ltd., the operator, the Companys share in respect of assets and liabilities as at 31st March 2012 and expenditure for the year are given below:

ii) Exploration activities in the block AA-ONN-2003/2 were abandoned due to unforeseen geological conditions & withdrawal of the operator. Attempts to reconstitute the consortium to accomplish the residual exploratory activities did not yield result. In the meanwhile, MoP&NG demanded from the Company the cost of unfi nished minimum work programme of US$ 7.516 million. During the year, provision of Rs. 41.19 crore along-with interest has been made. The Company has sought waiver of the claim citing force majeure conditions at site leading to discontinuation of exploratory activities.

13. Disclosure as per Accounting Standard - 28 on Impairment of Assets

As required by Accounting Standard (AS) 28 Impairment of Assets notified under the Companies (Accounting Standards) Rules, 2006, the Company has carried out the assessment of impairment of assets. Based on such assessment, there has been no impairment loss during the year.

14. Contingent Liabilities:

a) 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. 4,417.04 crore (previous year Rs. 3,485.85 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 contracts for settlement of these claims. It is not practicable to make a realistic estimate of the outfl ow 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. 1,173.58 crore (previous year Rs. 1,851.08 crore) has been estimated.

(iii) Fuel Suppliers

Pending resolution of the issues disclosed in Note 32, payments and accounting of coal are being made as per the pre-migrated system of UHV based pricing of coal. The difference between the billing by the coal companies on the revised GCV based price and payment released on pre-revised UHV based price amounts to Rs. 399.39 crore (previous year Rs. Nil).

Further, an amount of Rs. 399.42 crore (previous year Rs. 182.22 crore) towards surface transportation charges, customs duty on service margin on imported coal etc. has been disputed by the Company.

(iv) Others

In respect of claims made by various State/Central Government departments/Authorities towards building permission fees, penalty on diversion of agricultural land to non-agricultural use, nala tax, water royalty etc. and by others, contingent liability of Rs. 877.47 crore (previous year Rs. 1,064.40 crore) has been estimated.

(v) Possible Reimbursement

The contingent liabilities referred to in (i) above, include an amount of Rs. 1,769.70 crore (previous year Rs. 1,495.35 crore) relating to the hydro power project stated in Note 21 b) - Other current assets, for which Company envisages possible reimbursement from GOI in full. In respect of balance claims included in (i) and in respect of the claims mentioned at (ii) above, payments, if any, by the company on settlement of the claims would be eligible for inclusion in the capital cost for the purpose of determination of tariff as per CERC Regulations subject to prudence check by the CERC. In case of (iii) & (iv), the estimated possible reimbursement is by way of recovery through tariff as per Regulations, 2009 and others is Rs. 676.32 crore (previous year Rs. 146.97 crore).

b) Disputed Income Tax/Sales Tax/Excise Matters

Disputed Income Tax/Sales Tax/Excise matters pending before various Appellate Authorities amount to Rs. 3,038.63 crore (previous year Rs. 2,465.26 crore). Many of these matters were disposed off in favour of the Company but are disputed before higher authorities by the concerned departments. In such cases, the company estimate possible reimbursement of Rs. 2,111.54 crore (previous year Rs. 1,793.36 crore).

c) Others

Other contingent liabilities amount to Rs. 327.20 crore (previous year Rs. 398.74 crore).

Some of the benefi ciaries have filed appeals against the tariff orders of the CERC. The amount of contingent liability in this regard is not ascertainable.

15. Capital and other commitments

a) Estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st March 2012 is Rs. 29,563.89 crore (previous year Rs. 23,779.74 crore).

b) In respect of investments of Rs. 2,895.97 crore (previous year Rs. 2,440.72 crore) in the joint venture entities, the Company has restrictions for their disposal ranging from two years to twelve years from the date of incorporation/allottment of shares/commercial operation of the projects as the case may be.

c) In respect of investments of Rs. 866.61 crore (previous year Rs. 731.34 crore) in the subsidiary Companies, the Company has restrictions for their disposal for five years from the date of commercial operation of the respective project.

d) As at 31st March 2012, the Company has commitments of Rs. 3,236.96 crore (previous year Rs. 2,340.91 crore) towards further investment in the joint venture entities.

e) As at 31st March 2012, the Company has commitments of Rs. 1,419.32 crore (previous year Rs. 1,561.68 crore) towards further investment in the subsidiary companies.

f) Companys comittment towards the minimum work programme in respect oil exploration activities of joint venture operations has been disclosed in Note 44 b).

g) Companys commitment in respect of further commitments relating to lease agreements has been disclosed in Note 41.


Mar 31, 2011

1. a) The conveyance of title for 11,043 acres of freehold land of valueRs. 538.18 crore (previous year 10,884 acres of valueRs. 507.11 crore) and buildings & structures valued at Rs. 135.58 crore (previous year Rs. 149.05 crore), as also execution of lease agreements for 8,995 acres of land of value Rs. 252.51 crore (previous year 8,958 acres, value Rs. 244.72 crore) in favour of the Company are awaiting completion of legal formalities.

b) Leasehold land includes 819 acres valuing Rs. 29.67 crore (previous year 30 acres valuing Rs.0.05 crore) acquired on perpetual lease and accordingly not amortised.

c) Land does not include cost of 1,181 acres (previous year 1,181 acres) of land in possession of the Company. This will be accounted for on settlement of the price thereof by the State Government Authorities.

d) Land includes 1,245 acres of valueRs. 15.03 crore (previous year 1,247 acres of valueRs. 15.09 crore) not in possession of the Company. The Company is taking appropriate steps for repossession of the same.

e) Land includes an amount of Rs. 118.74 crore (previous year Rs. 115.27 crore) deposited with various authorities in respect of land in possession which is subject to adjustment on final determination of price.

f) Possession of land measuring 98 acres (previous year 98 acres) consisting of 79 acres of free-hold land (previous year 79 acres) and 19 acres of lease hold land (previous year 19 acres) of value Rs. 0.21 crore (previous year Rs. 0.21 crore) was transferred to Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd. (UPRVUNL) for a consideration of Rs. 0.21 crore. Pending approval for transfer of the said land, the area and value of this land has been included in the total land of the Company. The consideration received from UPRVUNL is disclosed under 'Other Liabilities' in Schedule -15 -'Current Liabilities'.

g) The cost of right of use of land for laying pipelines amounting to Rs. 6.46 crore (previous year Rs. 5.76 crore) is included under intangible assets. The right of use, other than perpetual in nature, are amortised over the period of legal right to use as per the rates and methodology notified by CERC Tariff Regulations, 2009 (Regulations, 2009).

h) Cost of acquisition of the right to draw water amounting toRs. 199.52 crore (previous yearRs. 8.41 crore) is included under intangible assets - Right of Use - Others. The right to draw water is amortized considering the life period of 25 years as per the rates and methodology notified by Regulations, 2009.

i) Ministry of Power, Government of India vide its notification no. 2/38/99-BTPS (Volume VII) dated 22nd September 2006 transferred land of a power station to the Company on operating lease of 50 year. Lease rent for the year amounting to Rs. 6.13 crore (previous year Rs. 6.08 crore) has been charged to the statement of Profit & Loss Account.

2 a) The Central Electricity Regulatory Commission (CERC) notified the Regulations, 2009 in January 2009, containing inter-alia the terms and conditions for determination of tariff applicable for a period of five years with effect from 1st April 2009. Pending determination of station-wise tariff by the CERC, sales have been provisionally recognized atRs. 48,935.31 crore (previous year Rs. 44,473.93 crore) for the year ended 31st March 2011 on the basis of principles enunciated in the said Regulations on the capital cost considering the orders of Appellate Tribunal for Electricity (APTEL) for the tariff period 2004-2009 including as referred to in para 2 (d).

Regulations, 2009 provide that pending determination of tariff by the CERC, the Company has to provisionally bill the beneficiaries at the tariff applicable as on 31st March 2009 approved by the CERC. The amount provisionally billed for the year ended 31st March 2011 on this basis isRs. 47,519.21 crore (previous yearRs. 43,765.13 crore).

b) For the units commissioned subsequent to 1st April 2009, pending the determination of tariff by CERC, sales ofRs. 4,528.39 crore (previous year Rs. 1,735.40 crore) have been provisionally recognised on the basis of principles enunciated in the Regulations, 2009. The amount provisionally billed for such units isRs. 4,416.12 crore (previous year Rs. 1,536.50 crore).

c) Sales of Rs. 800.87 crore (previous year Rs. 119.33 crore) pertaining to previous years have been recognized based on the orders issued bytheCERC/APTEL.

d) In respect of stations/units where the CERC had issued tariff orders applicable from 1st April 2004 to 31st March 2009, the Company aggrieved over many of the issues as considered by the CERC in the tariff orders, filed appeals with the APTEL. The APTEL disposed off the appeals favourably directing the CERC to revise the tariff orders as per the directions and methodology given. The CERC filed appeals with the Hon'ble Supreme Court of India on some of the issues decided in favour of the Company by the APTEL. The decision of Hon'ble Supreme Court is awaited. The Company had submitted that it would not press for determination of the tariff by the CERC as per APTEL orders pending disposal of the appeals by the Hon'ble Supreme Court.

Considering expert legal opinions obtained that it is reasonable to expect ultimate collection, the sales for the tariff period 2004-2009 were recognised in earlier years based on provisional tariff worked out by the Company as per the directions and methodology given by the APTEL. As accountal of sales is subject to the decision of the Hon'ble Supreme Court of India, pending decision of the Hon'ble Supreme Court of India, a sum ofRs. 1,262.86 crore included in debtors has been fully provided for during the year. Effect, if any, will be given in the financial statements upon disposal of the appeals.

e) Consequent to issue of additional capitalisation orders by the CERC, advance against depreciation required to meet the shortfall in the component of depreciation to be charged in future years has been reassessed and the excess determined amounting to Rs. 79.75 crore has been recognised as sales.

f) During the year, the CERC has issued tariff orders in respect of some of the stations in compliance with the judgement of APTEL mentioned at para d) above, and the beneficiaries were billed accordingly. Since the orders of CERC include those issues which have been challenged by them before Hon'ble Supreme Court, and are pending disposal, the impact thereof amounting toRs. 252.22 crore has been accounted as Advance from customers' in the Schedule-15 - 'Current Liabilities'.

3. a) Sundry Debtors - Other debts (schedule 11) includes Rs. 2,698.86 crore (previous year Rs. 1,001.15 crore) towards revenue accounted in accordance with the accounting policy no. 12.1 which is yet to be billed.

b) CERC has issued a draft notification dated 3rd September 2010 which inter-alia provides for upfront truing up of un discharged liabilities with regard to capital cost admitted by CERC before 1st April 2009. In anticipation of final notification an estimated amount of Rs. 263.59 crore has been provided for towards tariff adjustment.

4. Due to uncertainty of realisation in the absence of sanction by the Government of India (GOI), the Company's share of net annual profits of one of the stations taken over by the Company in June 2006 for the period 1st April 1986 to 31st May 2006 amounting to Rs. 115.58 crore (previous yearRs. 115.58 crore) being balance receivable in terms of the management contract with the GOI has not been recognised.

5. In terms of guidelines of Department of Public Enterprises (DPE), Government of India (GOI), issued vide OM:2(70)/08-DPE(WC)-GL-XIV/08 dated 26.11.2008 and OM:2(70)/08-DPE(WC)-GL-VII/09 dated 02.04.2009, the Company formulated a defined contribution pension scheme and sent to Ministry of Power (MOP) for their approval. Pending approval of MOP, an amount ofRs. 94.56 crore during the year and cumulatively Rs. 468.78 crore has been provided up to 31st March 2011.

6. The amount reimbursable to GOI in terms of Public Notice No.38 dated 5th November, 1999 and Public Notice No.42 dated 10th October, 2002 towards cash equivalent of the relevant deemed export benefits paid by GOI to the contractors for one of the stations amounted to Rs. 276.80 crore (previous year Rs. 276.80 crore) out of which f 269.70 crore (previous year Rs. 269.70 crore) has been deposited with the GOI and liability for the balance amount of Rs. 7.17 crore (previous year Rs. 7.17 crore) has been provided for. No interest has been provided on the reimbursable amounts as there is no stipulation for payment of interest in the public notices cited above.

7. As per the direction of MOP, a memorandum of understanding was signed between the Company, Gujarat Power Corporation Ltd. (GPCL) and Gujarat Electricity Board (GEB) on 20th February 2004 to set up Pipavav Power Project. The Company disassociated from the Pipavav Power Project, a wholly owned subsidiary of the Company, on 24th May 2007 after obtaining approval from the MOP. MOP, Government of India, conveyed its approval vide Presidential Directive No. 5/5/2004-TH-ll dated 3rd July 2009 for winding-up of the Pipavav Power Development Company Ltd. (PPDCL). The Board of Directors of NTPC Ltd. have also given consent for winding up of the PPDCL.

MOP vide Presidential Directive No. 5/5/2004-TH-ll dated 15th April 2010 conveyed the approval of GOI to permit NTPC for winding up of PPDCL, through striking off the name under Section 560 of the Companies Act, 1956. Registrar of Companies, National Capital Territory of Delhi and Haryana (ROC) has conveyed the name of the PPDCL has been struck-off from the Register of Companies vide their letter dated 28th January 2011.

Accordingly, investment in the PPDCL amounting toRs. 0.37 crore was set off in full against the amount received from GPCL in the earlier years in this regard.

8. The Government of Madhya Pradesh had notified levy of Madhya Pradesh Grameen Avsanrachana Tatha SadakVikas Adhiniyam (MPGATSVA) tax on coal with effect from September 2005. The tax was challenged by the coal supplier before the Hon'bleJabalpur High Court which stayed its collection in April 2006. Hon'bleJabalpur High Court by its order dated 3rd February 2011 has vacated the interim order of April 2006.

The Central Government issued notification no. GSR 322(E) dated 1i Aug 2007, on royalty which provide for adjustment of cess and tax specific to coal bearing lands so as to limit the overall revenue to the royalty.

Various Special Leave Petitions (SLPs) were preferred in the Hon'ble Supreme Court against the levy by the aggrieved parties where-after the Hon'ble Supreme Court passed an interim order staying the coercive collection of the tax. During the year, Hon'ble Supreme Court heard various SLPs and ordered the assessees to file returns and subsequently in 6th December 2010 ordered the assessees to pay the taxes without prejudice to their rights in the pending appeals.

Subsequent to the vacation of the stay, Northern Coal Fields Ltd, filed SLP in the Hon'ble Supreme Court, which was disposed off on 21.4.2011 in terms of its' earlier order dated 6th Dec 2010. In view of this, liability towards MPGATSVA tax for the period from September 2005 to July 2007 amounting toRs. 255.82 crore has been provided for during the year with consequent recognition in sales.

9. As a result of issuance of the New Coal Distribution Policy (NCDP) by Ministry of Coal in October 2007, the Company and Coal India Ltd (CIL) renegotiated the Model Coal Supply Agreement (CSA) and Model CSA was signed between the Company & CIL on 29th May 2009. Based on the Model CSA, coal supply agreements have been signed with the various subsidiary companies of CIL by all excepting three of the coal based stations of the Company. The CSAs are valid for a period of 20 years with a provision for review after every 5 years.

10. The Company challenged the levy of transit fee/entry tax on supplies of coal to some of its power stations and has paid under protest such transit fee/entry tax to Coal Companies/Sales Tax Authorities. Further, in line with the agreement with GAIL India Ltd., the Company has also paid entry tax and sales tax on transmission charges in respect of gas supplies made to various stations in the state of Uttar Pradesh. GAIL India Ltd. has paid such taxes to the appropriate authorities under protest and filed a petition before the Hon'ble High Court of Allahabad challenging the applicability of relevant Act. in case the Company gets refund from Coal Companies/Sales Tax Authorities/GAIL India Ltd. on settlement of these cases, the same will be passed on to respective beneficiaries.

11. MOP, GOI vide letter dated 24.12.2010 has communicated the discontinuation of one of the Hydro Power Projects of the Company in the State of Uttarakhand. Subsequently, the Company has issued Letter of Frustration to the suppliers/vendors of the project.

MOP has sought details of expenditure incurred, committed costs, anticipated expenditure on safety and stabilization measures, other recurring site expenses and interest costs, as well as claims of various packages of contractors/vendors. Management expects that the total cost incurred, anticipated expenditure on safety and stabilization measures, other recurring site expenses and interest costs as well as claims of various packages of contractors/vendors for this project will be compensated in full. Hence, cost incurred on the project up to 31.03.2011 amounting to Rs. 748.82 crore has been accounted as recoverable from GOI and disclosed under 'Claims Recoverable' in 'Loans and Advances' (Schedule -14).

12. Issues related to the evaluation of performance and guarantee test results of steam/turbine generators at some of the stations are under discussion with the equipment supplier. Pending settlement, liquidated damages for shortfall in performance of these equipments have not been recognised.

13. The Company is executing a thermal power project in respect of which possession certificates for 1,489 acres (previous year 1,489 acres) of land has been handed over to the Company and all statutory and environment clearances for the project have been received. Subsequently, a high power committee has been constituted as per the directions of GOI to explore alternate location of the project since present location is stated to be a coal bearing area. Aggregate cost incurred up to 31st March 2011 Rs. 190.19 crore (previous year Rs. 183.10 crore) is included in 'Fixed Assets' (Schedules 6, 7 and 8). Management is confident of recovery of cost incurred, hence no provision is considered necessary.

14. During the year the Company has received an opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India on accounting treatment of capital expenditure on assets not owned by the Company wherein it was opined that such expenditure are to be charged to the statement of Profit & Loss Account as and when incurred. The Company has represented that such expenditure being essential for setting up of a project, the same be accounted in line with the existing accounting practice and sought a review. Pending receipt of communication regarding the review, existing treatment has been continued as per existing accounting policy.

15. a) Certain loans & advances and creditors in so far as these have since not been realised/discharged or adjusted are subject to confirmation/ reconciliation and consequential adjustment, if any.

b) In the opinion of the management, the value of current assets, loans and advances on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

16. Effect of changes in Accounting Policies:

During the year, the Office of the Comptroller & Auditor General of India has expressed an opinion that power sector companies shall be governed by the rates of depreciation notified by the CERC for providing depreciation in respect of generating assets in the accounts instead of the rates as per the Companies Act, 1956. Accordingly, the Company revised its accounting policies relating to charging of depreciation w.e.f 1st April 2009 considering the rates and methodology notified by the CERC for determination of tariff through Regulations, 2009. In case of certain assets, the Company has continued to charge higher depreciation based on technical assessment of useful life of those assets. Consequent to this change, prior period depreciation written back is f 1,116.50 crore, depreciation for the year is lower by Rs. 279.62 crore. As a result, fixed assets and profit before tax for the year is higher by f 1,396.12 crore.

Due to the above change, the amount of advance against depreciation (AAD) required to meet the shortfall in the component of depreciation in revenue over the depreciation to be charged off in future years has been reassessed by the Company station-wise as at 1st April 2009 and the excess determined, amounting to Rs. 727.49 crore has been recognised as prior period sales.

Further, the amount recoverable from the beneficiaries on account of deferred tax materialised for the financial year 2009-10 has been reassessed and excess amount ofRs. 212.67 crore is reversed as'Prior Period Sales'with equivalent reduction in provision for tax of earlier years in the Profit and Loss Account.

Further, due to the above change, deferred tax liability (net) and deferred tax recoverable from the beneficiaries as at 31i March 2010 amounting to Rs. 3,049.41 crore and Rs. 2,840.16 crore respectively have been reviewed and restated to Rs. 4,415.19 crore and Rs. 3,809.69 crore respectively. As a result, deferred tax liability as at 31.03.2010 has increased by Rs. 1,365.78 crore out of which Rs. 969.53 crore is recoverable from the beneficiaries as per Regulation 39 of Regulations, 2009 and net increase is included in the 'Provision for Deferred tax - Earlier years' in the Profit and Loss Account.

17. Revenue grants recognised during the year is Rs. 0.43 crore (previous year Rs. 1.71 crore).

18. Disclosure as per Accounting Standard (AS) 15:

General description of various defined employee benefit schemes are as under:

A. Provident Fund

Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. Contribution to family pension scheme is paid to the appropriate authorities. The contribution of f 191.19 crore (previous year Rs. 159.70 crore) to the funds for the year is recognised as expense and is charged to the Profit & Loss Account. The obligation of the Company is to make such fixed contribution and to ensure a minimum rate of return to the members as specified by GOI. As per report of the actuary, overall interest earnings and cumulative surplus is more than the statutory interest payment requirement. Hence no further provision is considered necessary.

B. Gratuity & Pension

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 subject to a maximum ofRs. 0.10 crore on superannuation, resignation, termination, disablement or on death.

The Company has a scheme of pension at one of the stations in respect of employees taken over from erstwhile State Government Power Utility. In respect of other employees of the Company, pension scheme is yet to be implemented as stated in Note no. 5 above.

The existing schemes are funded by the Company and are managed by separate trusts. The liability for the same is recognised on the basis of actuarial valuation.

C. Post-Retirement Medical Facility (PRMF)

The Company has Post-Retirement Medical Facility (PRMF), under which retired employee and the spouse are provided medical facilities in the Company hospitals / empanelled hospitals. They can also avail treatment as Out-Patient subject to a ceiling fixed by the Company. The liability for the same is recognised on the basis of actuarial valuation.

D. Terminal Benefits

Terminal benefits include settlement at home town for employees & dependents and farewell gift to the superannuating employees. Further, the Company also provides for pension in respect of employees taken over from erstwhile State Government Power Utility at another station. The liability for the same is recognised on the basis of actuarial valuation.

E. Leave

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. 73.33 % of the earned leave is en-cashable while in service, and upto a maximum of 300 days on separation. Half-pay leave is en-cashable only on separation beyond the age of 50 years up to the maximum of 240 days as per the rules of the Company. The liability for the same is recognised on the basis of actuarial valuation.

The above mentioned schemes (C, D and E) are unfunded and are recognised on the basis of actuarial valuation.

The summarised position of various defined benefits recognised in the profit and loss account, balance sheet are as under:

(Figures given in {) are for previous year)

F. Other Employee Benefits

Provision for Long Service Award and Family Economic Rehabilitation Scheme amounting to Rs. 2.76 crore (previous year credit of Rs. 3.42 crore) for the year have been made on the basis of actuarial valuation at the year end and debited to the Profit & Loss Account.

19. The effect of foreign exchange fluctuation during the year is as under:

i) The amount of exchange differences (net) debited to the Profit & Loss Account is Rs. 6.50 crore (previous year credit of Rs. 18.91 crore).

ii) The amount of exchange differences (net) debited to the carrying amount of fixed assets and Capital work-in-progress is Rs. 168.29 crore {previous year credit of Rs. 1,181.54 crore).

20. Borrowing costs capitalised during the year isRs. 1,743.61 crore (previous year Rs. 1,480.40 crore).

21. Segment information:

a) Business Segments:

The Company's principal business is generation and sale of bulk power to State Power Utilities. Other business includes providing consultancy, project management and supervision, oil and gas exploration and coal mining.

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 in respective segments comprising of net fixed assets and current assets, loans and advances. Construction work-in-progress, construction stores and advances are included in unallocated corporate and other assets. Segment liabilities include operating liabilities and provisions.

22. Related Party Disclosures:

a) Related parties:

i) Joint ventures:

Utility Powertech Ltd., NTPC-Alstom Power Services Private Ltd., BF-NTPC Energy Systems Ltd. ii) Key Management Personnel:

Shri Arup Roy Choudhury1 Chairman and Managing Director

Shri R.S. Sharma2 Chairman and Managing Director

Shri Chandan Roy3 Director (Operations)

Shri A.K. Singhal Director (Finance)

Shri R.C. Shrivastav4 Director (Human Resources)

Shri I.J. Kapoor Director (Commercial)

Shri.B.P.Singh Director (Projects)

Shri D.K.Jain5 Director (Technical)

Shri S.P.Singh6 Director (Human Resources)

Shri N.N.Misra7 Director (Operations)

1. W.e.f. 1a September 2010 2. Superannuated on 31st August 2010 3. Superannuated on 31a July 2010 4. Superannuated on 30th June 2010 5.W.e.f. 13thMay2010 6.W.e.f. 16thOctober2010 7.W.e.f. 19thOctober2010.

26. Research and development expenditure charged to revenue during the year is Rs. 28.30 crore (previous year Rs. 20.56 crore).

28. As required by Accounting Standard (AS) 28 'Impairment of Assets' notified under the Companies (Accounting Standards) Rules, 2006, the Company has carried out the assessment of impairment of assets. Based on such assessment, there has been no impairment loss during the year.

30. The pre-commissioning expenses during the year amounting to Rs. 112.75 crore (previous year Rs. 145.88 crore) have been included in Fixed Assets/Capital work-in-progress after adjustment of pre-commissioning sales of Rs. 34.96 crore (previous year Rs. 96.10 crore) resulting in a net pre-commissioning expenditure of Rs. 77.79 crore (previous year Rs. 49.78 crore).

35. Estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st March 2011 is Rs. 23,779.74 crore (previous year Rs. 30,534.58 crore).

36. 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. 3,485.85 crore (previous year Rs. 3,879.77 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. 1,851.08 crore (previous year Rs. 1,786.25 crore) has been estimated.

(iii) Others

In respect of claims made by various State/Central Government departments/Authorities towards building permission fees, penalty on diversion of agricultural land to non-agricultural use, Nala tax, Water royalty etc. and by others, contingent liability ofRs. 1,246.62 crore (previous year Rs. 1,248.78 crore) has been estimated.

The contingent liabilities referred to in (i) above, includes an amount of Rs. 1,495.35 crore relating to the hydro power project stated in Note no. 11 above, for which Company envisages possible reimbursement from GOI in full. In respect of balance claims included in (i) and in respect of the claims mentioned at (ii) above, payments, if any, by the company on settlement of the claims would be eligible for inclusion in the capital cost for the purpose of determination of tariff as perCERC Regulations subject to prudence check by the CERC. In case of (iii), the estimated possible reimbursement is Rs. 146.97 crore (previous year Rs. 428.90 crore).

2. Disputed Income Tax/Sales Tax/Excise Matters

Disputed Income Tax/Sales Tax/Excise matters are pending before various Appellate Authorities amounting to Rs. 2,465.26 crore (previous year Rs. 2,292.41 crore) are disputed by the Company 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. In such cases, the company estimated possible reimbursement of Rs. 1,793.36 crore (previous year Rs. 1,793.36 crore)

3. Others

Other contingent liabilities amounts to Rs. 398.74 crore (previous year Rs. 266.14 crore)

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.

39. Figures have been rounded off to nearest rupees in crores up to two decimals.

40. Previous year figures have been regrouped /rearranged wherever considered necessary.


Mar 31, 2010

1. a) The conveyancing of the title to 10,884 acres of freehold land of value Rs.5,071 million (Previous year 10,844 acres of value Rs.4,950 million) and buildings & structures valued at Rs.1,491 million (previous year Rs.1,137 million), as also execution of lease agreements for 8,958 acres of land of value Rs.2,447 million (previous year 8,820 acres, value Rs.2,720 million) in favour of the Company are awaiting completion of legal formalities.

b) Leasehold land includes 30 acres valuing Rs.1 million (previous year 30 acres valuing Rs.1 million) acquired on perpetual lease and accordingly not amortised.

c) Land does not include cost of 1,181 acres (previous year 1,181 acres) of land in possession of the Company. This will be accounted for on settlement of the price thereof by the State Government Authorities.

d) Land includes 1,247 acres of value Rs.151 million (previous year 1,223 acres of value Rs.110 million) not in possession of the Company. The Company is taking appropriate steps for repossession of the same.

e) Land includes an amount of Rs.1,153 million (previous year Rs.1,243 million) deposited with various authorities in respect of land in possession which is subject to adjustment on final determination of price.

f) Possession of land measuring 98 acres (previous year 98 acres) consisting of 79 acres of free-hold land (previous year 79 acres) and 19 acres of lease hold land (previous year 19 acres) of value Rs. 2 million (previous year Rs.2 million) was transferred to Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd. (erstwhile UPSEB) for a consideration of Rs.2 million. Pending approval for transfer of the said land, the area and value of this land has been included in the total land of the Company. The consideration received from erstwhile UPSEB is disclosed under Other Liabilities in Schedule-15-Current Liabilities.

g) During the year, freehold land measuring 36 acres was handed over by the Government of Uttar Pradesh to Company in exchange of freehold land measuring 35 acres without any financial consideration.

h) The cost of right of use of land for laying pipelines amounting to Rs.58 million (previous year Rs.13 million) is included under intangible assets. The right of use, other than perpetual in nature, are amortised over the legal right to use.

i) Cost of acquisition of the right for drawl of water amounting to Rs.84 million (previous year nil) is included under intangible assets – Right of Use - Others. The right of drawl of water is for thirty years and the cost is accordingly amortized. 2 a) The Central Electricity Regulatory Commission (CERC) notifi ed the Tariff Regulations, 2009 in January 2009, containing inter-alia the terms and conditions for determination of tariff applicable for a period of fi ve years with effect from 1st April 2009. Pending determination of station-wise tariff by the CERC, sales have been provisionally recognized at Rs.444,739 million during the year ended 31st March 2010 on the basis of principles enunciated in the said Regulations on the capital cost considering the orders of Appellate Tribunal for Electricity (ATE) for the tariff period 2004-2009 including as referred to in para 2 (e).

The Tariff Regulations, 2009 provide that pending determination of tariff by the CERC, the Company has to provisionally bill the benefi ciaries at the tariff applicable as on 31st March 2009 approved by the CERC. The amount provisionally billed during the year ended 31st March 2010 on this basis is Rs.437,651 million.

b) For the units commissioned during the year, pending the determination of tariff by CERC, sales of Rs.17,354 million have been provisionally recognised on the basis of principles enunciated in the Tariff Regulations, 2009. The amount provisionally billed for such units is Rs.15,365 million.

c) Sales of (-) Rs.6,006 million (previous year Rs.10,201 million) pertaining to previous years has been recognized based on the orders issued by the CERC/ATE.

d) In terms of Regulation 39, CERC Tariff Regulations, 2009, notifi ed by the CERC, the Company has determined the amount of the Deferred Tax Liability (net) materialised during the year pertaining to the period upto 31st March 2009 by identifying the major changes in the elements of Deferred Tax Liability/Asset, as recoverable from the benefi ciaries and accordingly a sum of Rs.2,485 million (net) has been recognised as Sales during the year.

e) In respect of stations/units where the CERC had issued tariff orders applicable from 1st April 2004 to 31st March 2009, the Company aggrieved over many of the issues as considered by the CERC in the tariff orders, fi led appeals with the ATE. The ATE disposed off the appeals favourably directing the CERC to revise the tariff orders as per the directions and methodology given. The CERC fi led an appeal with the Honble Supreme Court of India on some of the issues decided by the ATE which is pending. The Company has submitted that it would not press for determination of the tariff by the CERC as per ATE orders pending disposal of the appeal by the Honble Supreme Court. Considering expert legal opinions obtained that, it is reasonable to expect ultimate collection, the sales for the tariff period 2004-2009 amounting to Rs.10,443 million were recognised in earlier years based on provisional tariff worked out by the Company as per the methodology and directions as decided by the ATE. Due to further CERC tariff orders received during the year, the provisional sales of Rs.10,443 million has now been reduced to Rs.10,256 million. The sales accounted as above is subject to final outcome of the decision of the Honble Supreme Court of India and consequential effect, if any, will be given in the financial statements upon disposal of the appeal.

3. Sundry debtors – Other Debts, Unsecured (Schedule 11) includes Rs.10,011 million (previous year Rs.3,901 million) towards revenue accounted in accordance with the accounting policy no. 12.1 which is yet to be billed.

4. Government of India in January 2006 notifi ed the Tariff Policy under the provisions of the Electricity Act, 2003 which provides that the rates of depreciation notifi ed by the CERC would be applicable for the purpose of tariff as well as accounting. Subsequent to the notifi cation of the Tariff Policy, CERC through Regulations, 2009 notifi ed the rates of depreciation.

CERC exercising its powers under Section 79 of the Electricity Act, 2003 requested the Ministry of Power to advise the Ministry of Corporate Affairs to notify the rates of depreciation considered by the CERC for tariff determination as depreciation under Section 205 (2) (c) of the Companies Act, 1956. Ministry of Corporate Affairs is yet to notify such rates under Section 205 (2) (c) of the Companies Act, 1956.

The Company has also obtained legal opinions that the Tariff Policy cannot override the provisions of the Companies Act, 1956 and it is required to follow Schedule XIV of the Companies Act, 1956 in the absence of any specifi c provision in the Electricity Act, 2003. Hence provisions of Section 616 of the Companies Act, 1956 are also not applicable in this regard. Accordingly, the Company is charging depreciation consistently at the rates specifi ed in Schedule XIV of the Companies Act, 1956 with effect from the financial year 2004-05 except as stated in accounting policy no.12.2.1.

5. Due to uncertainty of realisation in the absence of sanction by the Government of India (GOI), the Companys share of net annual Profits of one of the stations taken over by the Company in June 2006 for the period 1st April 1986 to 31st May 2006 amounting to Rs.1,155 million (previous year Rs.1,155 million) being balance receivable in terms of the management contract with the GOI has not been recognised.

6. The pay revision of the employees of the Company was due w.e.f. 1st January 2007.

Based on the guidelines issued by Department of Public Enterprises (DPE), Government of India (GOI), the pay revision of the executive category of employees has been approved during the year. Pending fi nalisation of pay revision in respect of employees in the non-executive category, provision of Rs.3,145 million and Rs.6,590 million (previous year Rs.1,767 million and Rs. 3,445 million) has been made for the year and upto year respectively on an estimated basis having regard to the guidelines issued by DPE. A sum of Rs.1,387 million (previous year Rs.748 million) paid as adhoc advance towards pay revision to the employees in the non-executive category is included in Loans and Advances (Schedule 14).

7. The amount reimbursable to GOI in terms of Public Notice No.38 dated 5th November, 1999 and Public Notice No.42 dated 10th October, 2002 towards cash equivalent of the relevant deemed export benefi ts paid by GOI to the contractors for one of the stations amounted to Rs.2,768 million (previous year Rs.2,768 million) out of which Rs.2,696 million (previous year Rs.2,696 million) has been deposited with the GOI and liability for the balance amount of Rs.72 million (previous year Rs.72 million) has been provided for. No interest has been provided on the reimbursable amounts as there is no stipulation for payment of interest in the public notices cited above.

8. As per the direction of the Ministry of Power (MOP), a memorandum of understanding was signed between the Company, Gujarat Power Corporation Ltd. (GPCL) and Gujarat Electricity Board (GEB) on 20th February 2004 to set up Pipavav Power Project. The Company disassociated from the Pipavav Power Project, a wholly owned subsidiary of the Company, on 24th May 2007 after obtaining approval from the MOP. MOP, Government of India, conveyed its approval vide Presidential Directive No. 5/5/2004-TH-II dated 3rd July 2009 for winding-up of the Pipavav Power Development Company Ltd. (PPDCL) pending final settlement of claims with GPCL/Government of Gujarat. The Board of Directors of NTPC Ltd. have also given consent for winding up of the PPDCL.

MOP, GOI through its further Presidential Directive No. 5/5/2004-TH-II dated 15th April 2010 conveyed the approval of GOI to permit NTPC for winding up of PPDCL through striking off the name under Section 560 of the Companies Act, 1956. Accordingly, necessary application/ declarations have been fi led with the Registrar of Companies (ROC) for striking off the name of the Company from the Register of Companies maintained by the ROC.

Pending liquidation of the PPDCL, an amount of Rs.4 million (Previous year Rs.4 million) received from GPCL is included in other liabilities under Current Liabilities (Schedule-15). As full amount has been received towards equity invested, no provision is considered necessary for diminution in the value of investment.

9. Consequent to the notifi cation no.S.O.2804 (E) dated 3rd November 2009, issued by Ministry of Environment and Forest (MoEF), Government of India, direct/indirect expenses relating to fl y ash for the period from 3rd November 2009 to 31st March 2010 amounting to Rs.8 million has been adjusted from Ash Utilisation and Marketing Expenses (Schedule 21) and transferred to the subsidiary company NTPC Vidyut Vyapaar Nigam Limited for adjustment with reserve. The reserve in terms of the said notifi cation is maintained by the said subsidiary company.

10. As a result of issuance of the New Coal Distribution Policy (NCDP) by Ministry of Coal in October 2007, the Company and Coal India Ltd (CIL) renegotiated the Model Coal Supply Agreement (CSA) and Model CSA was signed between the Company & CIL on 29th May 2009. Based on the Model CSA, coal supply agreements have been signed with the various subsidiary companies of CIL by all excepting three of the coal based stations of the Company. The CSAs are valid for a period of 20 years with a provision for review after every 5 years.

11. The Company challenged the levy of transit fee/entry tax on supplies of coal to some of its power stations and has paid under protest such transit fee/entry tax to Coal Companies/Sales Tax Authorities. Further, in line with the agreement with GAIL India Ltd., the Company has also paid entry tax and sales tax on transmission charges in respect of supplies made to various stations in the state of Uttar Pradesh. GAIL India Ltd. has paid such taxes to the appropriate authorities under protest and fi led a petition before the Honble High Court of Allahabad challenging the applicability of relevant Act. In case the Company gets refund from Coal Companies/Sales Tax Authorities/GAIL India Ltd. on settlement of these cases, the same will be passed on to respective benefi ciaries.

12. Fixed assets, capital work-in-progress and construction stores and advances include Rs.6,765 million in respect of one of the hydro power project, the construction of which has been suspended temporarily from 18th May 2009 on the advice of the Ministry of Power, GOI. Presently, the issue regarding resumption of the project is under consideration with the GOI. Pending decision, borrowing costs of Rs.237 million have not been capitalised from the date of suspension.

13. Progress of work under the contract for steam generator and auxiliaries package at one of the project has been affected due to certain disputes with the contractor. While the contractual and other related issues are under deliberation, the contract continues to be in force and supplies of equipment/structural items have been made by the contractor during the year. Construction of other systems for the project is also in progress. Since activities that are necessary to prepare the asset for its intended use are in progress, borrowing costs continue to be capitalised.

14. Issues related to the evaluation of performance and guarantee test results of steam/turbine generators at some of the stations are under discussion with the equipment supplier. Pending settlement, liquidated damages for shortfall in performance of these equipments have not been recognised.

15. The Company is executing a thermal power project in respect of which possession certifi cates for 1,489 acres of land has been handed over to the Company and all statutory and environment clearances for the project have been received. Subsequently, a high power committee has been constituted as per the directions of GOI to explore alternate location of the project since present location is stated to be a coal bearing area. Aggregate cost incurred up to 31st March 2010 Rs.1,831 million is included in Fixed Assets (Schedules 6,7 and 8). Management is confi dent of recovery of cost incurred, hence no provision is considered necessary.

16. a) Certain loans & advances and creditors in so far as these have since not been realised/discharged or adjusted are subject to confi rmation/ reconciliation and consequential adjustment, if any.

b) In the opinion of the management, the value of current assets, loans and advances on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

17. Effect of changes in Accounting Policies:

a) Tariff Regulations, 2009 issued by the CERC provide that the balance depreciable value of the each of the existing stations as on 1st April, 2009 shall be worked out by deducting the cumulative depreciation including the Advance Against Depreciation (AAD) as admitted by the CERC up to 31st March 2009 from the gross depreciable value of the assets thereby merging AAD with depreciation for tariff recovery. Under the said Tariff Regulations, the CERC also has notifi ed the revised rates of depreciation and removed the provision for AAD.

In view of the change in CERC Tariff Regulations, 2009, the Company revised its accounting policy no. 12.1.2 and the amount of AAD required to meet the shortfall in the component of depreciation in revenue over the depreciation to be charged off in future years has been assessed station-wise and wherever an excess has been determined as on 1st April 2009, the same amounting to Rs.3,115 million has been recognised as sales during the year. In addition, Rs.53 million has been recognised as sales during the year out of AAD consequent to this change.

b) Claims on the Company for price variation which were hitherto accounted for on acceptance. During the year, unsettled liabilities for price variation/exchange rate variation in case of contracts are accounted for on estimated basis as per terms of the contracts. Consequently, Profit for the year is lower by Rs. 20 million, fixed assets are higher by Rs.2,849 million and current liabilities are higher by Rs. 2,869 million.

18. Revenue grants recognised during the year is Rs.17 million (previous year Rs.9 million).

19. Disclosure as per Accounting Standard (AS) 15:

General description of various defi ned employee benefi t schemes are as under:

A. Provident Fund

Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. Contribution to family pension scheme is paid to the appropriate authorities. The contribution of Rs. 1,597 million (Previous year Rs. 985 million) to the funds for the year is recognised as expense and is charged to the Profit & Loss Account. The obligation of the Company is to make such fixed contribution and to ensure a minimum rate of return to the members as specifi ed by GOI. As per report of the actuary, overall interest earnings and cumulative surplus is more than the statutory interest payment requirement. Hence no further provision is considered necessary.

B. Gratuity & Pension

The Company has a defi ned benefi t gratuity plan. Every employee who has rendered continuous service of fi ve 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 subject to a maximum of Rs.1 million on superannuation, resignation, termination, disablement or on death.

The Company has a scheme of pension at one of the stations in respect of taken over employees from erstwhile State Government Power Utility. These schemes are funded by the Company and are managed by separate trusts. The liability for the same is recognised on the basis of actuarial valuation.

C. Post-Retirement Medical Facility (PRMF)

The Company has Post-Retirement Medical Facility (PRMF), under which retired employee and the spouse are provided medical facilities in the Company hospitals / empanelled hospitals. They can also avail treatment as Out-Patient subject to a ceiling fixed by the Company.

D. Terminal Benefi ts

Terminal benefi ts include settlement at home town for employees & dependents and farewell gift to the superannuating employees. Further, the Company also provides for pension in respect of taken over employees from erstwhile State Government Power Utility at another station.

E. Leave

The Company provides for earned leave benefi t (including compensated absences) and half-pay leave to the employees of the Company which accrue annually at 30 days and 20 days respectively. 75 % of the earned leave is en-cashable while in service and a maximum of 300 days on superannuation. Half-pay leave is en-cashable only on superannuation up to the maximum of 240 days as per the rules of the Company. The liability for the same is recognised on the basis of actuarial valuation.

The above mentioned schemes (C, D and E) are unfunded and are recognised on the basis of actuarial valuation.

The summarised position of various defi ned benefi ts recognised in the Profit and loss account, balance sheet are as under:

(Figures given in { } are for previous year)

F. Other Employee Benefi ts

Provision for Long Service Award and Family Economic Rehabilitation Scheme amounting to Rs.34 million (credit) (previous year debit of Rs.16 million) for the year have been made on the basis of actuarial valuation at the year end and credited to the Profit & Loss Account.

I. Actual return on plan assets Rs.681 million (previous year Rs.423 million).

J. The Companys best estimate of the contribution towards Gratuity/Pension for the financial year 2010-11 is Rs.320 million.

20. The effect of foreign exchange fl uctuation during the year is as under:i) The amount of exchange differences (net) credited to the Profi t & Loss Account is Rs.189 million (previous year debit of Rs.244 million). ii) The amount of exchange differences (net) credited to the carrying amount of fixed assets and Capital work-in-progress is Rs.11,815 million {previous year Rs.11,649 million (debit)}.

21. Borrowing costs capitalised during the year are Rs.14,804 million (previous period Rs.12,221 million).

22. Segment information:

a) Business Segments:

The Companys principal business is generation and sale of bulk power to State Power Utilities. Other business includes providing consultancy, project management and supervision, oil and gas exploration and coal mining.

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 in respective segments comprising of net fixed assets and current assets, loans and advances. Construction work-in-progress, construction stores and advances are included in unallocated corporate and other assets. Segment liabilities include operating liabilities and provisions.

23. Related Party Disclosures: a) Related parties:

i) Joint ventures:

Utility Powertech Ltd., NTPC-Alstom Power Services Private Ltd., BF-NTPC Energy Systems Ltd.

ii ) Key Management Personnel:

Shri R.S. Sharma Chairman and Managing Director

Shri Chandan Roy Director (Operations)

Shri R.K. Jain1 Director (Technical)

Shri A.K. Singhal Director (Finance)

Shri R.C. Shrivastav Director (Human Resources)

Shri K.B. Dubey2 Director (Projects)

Shri I.J. Kapoor Director (Commercial)

Shri.B.P.Singh3 Director (Projects)

1. Superannuated on 31st December 2009.

2. Superannuated on 31st July 2009. 3. W.e.f. 1st August 2009.

24. Research and development expenditure charged to revenue during the year is Rs.206 million (previous period Rs.81 million).

25. As required by Accounting Standard (AS) 28 Impairment of Assets notifi ed under the Companies (Accounting Standards) Rules, 2006, the Company has carried out the assessment of impairment of assets. Based on such assessment, there has been no impairment loss during the year.

26. The pre-commissioning expenses during the year amounting to Rs.1,459 million (previous year Rs.1,689 million) have been included in Fixed Assets/Capital work-in-progress after adjustment of pre-commissioning sales of Rs.961 million (previous year Rs.1,610 million) resulting in a net pre-commissioning expenditure of Rs. 498 million (previous year Rs.79 million).

27. Estimated amount of contracts remaining to be executed on capital account and not provided for as at 31st March 2010 is Rs. 305,346 million (previous year Rs.272,199 million).

28. 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.38,798 million (previous year Rs.46,623 million) 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 outfl ow 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.17,863 million (previous year Rs.15,515 million) has been estimated.

(iii) Others

In respect of claims made by various State/Central Government departments/Authorities towards building permission fees, penalty on diversion of agricultural land to non- agricultural use, Nala tax, Water royalty etc. and by others, contingent liability of Rs.12,848 million (previous year Rs.12,585 million) has been estimated. This includes amount of Rs.2,558 million (previous year Rs.2,558 million) billed by the Coal supplier on account of MPGATSV tax up to 31st July 2007 which is subject matter of dispute before the Honble Supreme Court.

In respect of (i) and (ii) above, payments, if any, by the company on settlement of the claims would be eligible for inclusion in the capital cost for the purpose of determination of tariff as per CERC Regulations subject to prudence check by the CERC. In case of (iii), the estimated possible reimbursement is Rs. 4,289 million (previous year Rs.2,750 million).

2. Disputed Income Tax/Sales Tax/Excise Matters

Disputed Income Tax/Sales Tax/Excise matters are pending before various Appellate Authorities amounting to Rs. 22,924 million (previous year Rs.682 million) are disputed by the Company 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. In such cases, the company estimated possible reimbursement of Rs.17,934 million (previous year Rs.8 million).

3. Others

Other contingent liabilities amounts to Rs. 2,661 million (previous year Rs.1,698 million). Some of the benefi ciaries have fi led appeals against the tariff orders of the CERC. The amount of contingent liability in this regard is not ascertainable.

29. Figures have been rounded off to nearest rupees in millions.

30. Previous year figures have been regrouped /rearranged wherever necessary.


Mar 31, 2000

CONTINGENT LIABILITIES Rs. in Lakhs

As at 31st As at 31st March 2000 March 1999

Claims against the Company not acknowledged as debts 185780.90 263308.16

Disputed Sales Tax demand 3704.95 2636.29

Disputed Excise demand 85.00 85.00

Others 24690.60 256.15

214261.45 266285.60

1. a) The land owned by the Company has been classified into freehold and leasehold to the extent possible based on available documentation and the balance has been shown as unclassified. The value of land includes land allotted to Project Affected People.

b) i) The conveyancing of the title to 15673 acres of freehold land ( Value Rs.16627.04 lakh) and execution of lease agreements for 5186 acres (Value Rs. 2106.94 lakh) in favour of the Company are awaiting completion of legal formalities.

ii) The value of land shown in the books does not include cost of 1183 acres (Previous year 1183 acres) of land in possession of the Company. This will be accounted for on settlement of the price thereof by the State Governments Authorities.

c) Pending execution of lease/transfer deeds in respect of land and buildings valuing Rs.5802.65 lakh (Previous year Rs.2412.04 lakh), the cost thereof is being amortised provisionally, considering the lease period as 30 years against 50 years considered earlier.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.426323.13 lakh (Previous year Rs.294987.18 lakh).

3. a) Balances shown under advances, debtors, creditors and material in transit/under inspection/lying with contractors/ fabricators and material issued on loan in so far as these have not been since realised/ discharged or adjusted are subject to confirmation/ reconciliation and consequential adjustment, if any.

b) In the opinion of the management, the value of current assets, loans and advances on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

4. Provision has not been made for sales tax on works contracts and material issued to contractors on account of the fact that appeals are pending and amounts are not ascertainable.

5. The matter of levy of electricity duty by the Government of Andhra Pradesh on supplies to State Electricity Boards (SEBs) outside their state is sub-judice, being with the Supreme Court on appeal by the said State Government against the decision of Andhra Pradesh High Court. Should the duty become payable, the liability on this account would be Rs. 53431.88 lakh (Previous year Rs. 47015.81 lakh). Appeals against similar demands raised by the Bihar Government upto 31st March 2000 for Rs. 10056.31 lakh (Previous year Rs. 7129.93 lakh) and by the Government of Madhya Pradesh upto September 1995 for Rs. 27401.60 lakh are pending before the High Court of the respective States. No provision is considered necessary in all these cases as should the liability crystalise, the Company can bill and recover the same from the SEBs outside these States.

6. a) Existing tariff notifications for Singrauli Super Thermal Power Station (STPS), Korba

STPS, Ramagundam STPS, Vindhyachal STPS and Rihand STPS were valid upto 31st October 1997, Unchahar TPS, Anta Gas Based Combined Cycle Power Plant (GBCCPP) & Auraiya GBCCPP upto 31st March 1997, National Capital Thermal Power Project and Kawas GBCCPP upto 31st March 1998, Dadri GBCCPP up to 31st March 1999. These notifications have a provision that same tariff shall continue on adhoc basis till revised by way of further notification. Accordingly, sales have been accounted for based on the provisions in the existing tariff notifications as notified as per Electricity (Supply) Act, 1948 by the Government of India for these power stations. However, in case of the stations where fixed charges portion of the tariff is likely to be lower than the existing one, provision for tariff adjustment amounting to Rs. 37803.98 lakh has been made.

b) Pending final approval of tariff by Central Electricity Regulatory Commission (CERC), sales in case of Kayamkulam Combined Cycle Power Plant, Faridabad Gas Based Combined Cycle Power Project and Unchahar Thermal Power Station -II have been accounted for based on provisional tariff subject to retrospective adjustment.

c) Pending approval/notification incentive has been accounted for on the basis of actual generation with effect from 1st April 1998 whereas disincentive has been accounted for on the basis of actual generation and deemed generation.

d) Supplementary bills for revision of tariff for foreign exchange rate variation and additional capital expenditure are accounted for in the year, the revision of tariff is notified by the Government of India.

e) The Monthly Operating Pattern Adjustment has been accounted for as per the Government of India tariff notifications / agreement with beneficiaries for gas based stations. The same is subject to final certifications for open cycle generation by Regional Electricity Boards / State Load Dispatch Centres.

f) Tariff for the period prior to commercial operation of the first unit of Unchahar Thermal Power Station Stage-II and Vindhyachal Super Thermal Power Station Stage-II has been accounted for on the basis of variable charges notified by the Government of India along with fuel price adjustment for Stage-1 of these stations and provisional variable charges approved by CERC for GT-I in case of Kayamkulam Combined Cycle Power Project. In case of Faridabad Gas Based Combined Cycle Power Project it has been accounted for in accordance with CERC orders. Tariff for pre-commercial operation periods in case of subsequent units has been accounted at provisional rates.

7. In compliance to the conditions laid down by Andhra Bank Financial Services Limited (ABFSL - a wholly owned subsidiary of Andhra Bank), for subscription to 17 % Taxable Bonds of the Company on private placement basis, the Company had kept Rs. 25 crore as Inter Corporate Deposit with ABFSL for a period of six months. The Company has recovered the total amount of deposit including interest at contracted rate and partly the interest for post maturity period of deposit by adjustment of amount payable to ABFSL towards redemption proceeds of NTPC Bonds. The remaining amount of interest for post maturity period will be accounted for on receipt. A civil suit filed by the Company against ABFSL in this regard in the High Court of Delhi is still pending for decision.

8. As per the tariff notifications issued by the Government of India, the incidence of income tax on the income from generation of electricity is recoverable from customers. The amount of Rs. 134550.00 lakh (Previous year Rs. 127854.00 lakh) recoverable from the customers for the year 1999-2000 is included in sundry debtors account. The provision for taxation shown in the profit & loss account is net after the deduction of the income tax recoverable from customers as per the details below mentioned:

9.a) The Company has acquired the ownership of the Tanda Power Station (440 MW) of UP State Electricity Board (UPSEB) with effect from 14th Jan, 2000 for a total consideration of Rs. 1000 crore in accordance with the Uttar Pradesh Electricity Reforms (Transfer of Tanda Generation Undertaking ) Scheme, 2000 framed under the Uttar Pradesh Electricity Reforms Act, 1999, by part adjustment of the amount due from UPSEB to the Company. The fixed and current assets taken over have been classified and accounted for on the basis of value apportioned by an independent valuer.

As per the notification, the assets of the Power Station have been handed over free from all encumbrances. However, the charge created by UPSEB in favour of Life Insurance Corporation (LIC) before the assets were taken over is still to be vacated by LIC.

b) The Company has taken over the Koldam Hydro Electric Power Project from Himachal Pradesh State Electricity Board (HPSEB) as per the agreement with the Government of Himachal Pradesh and HPSEB for a total consideration of Rs.925.25 lakh subject to expenditure certification by Accountant General, Himachal Pradesh. Out of the said amount, expenditure including the assets taken over upto 31st March 2000 for Rs.860.43 lakh have been accounted for and adjusted against the outstanding dues from HPSEB.

10. The effect of foreign exchange fluctuation during the year is as under :

i) The amount of exchange difference (net) credited to the Profit & Loss Account is Rs.51.18 lakh (Previous year debit of Rs. 686.49 lakh).

ii) The amount of exchange difference adjusted by way of addition to the carrying amount of fixed assets and capital work-in-progress is Rs.37417.68 lakh (Previous year Rs.44723.23 lakh).

11. The salary and wages of the employees of the Company are due for revision with effect from 1st January, 1997. While the revision of the salaries for employees in Executive category has been announced on 6th July 2000. the revision of the salaries and wages of the other categories is still pending. The liability on account of revision of the salaries & wages of all the categories of the employees has been estimated and provided for in the books of accounts for the year 1999-2000 for Rs. 20906.13 lakh (Previous year Rs. 9275.38 lakh). Cumulative amount provided for upto 31st March 2000 is Rs. 39377.42 lakh (Previous year Rs. 18471.29 lakh).

12. During the year, the Company has changed certain accounting policies. The consequential impact of the same on the accounts for the year is as under.-

a) Pending approval/notification incentive has been accounted for on the basis of actual generation in place of aggregate of actual and deemed generation with effect from 1st April 1998, which has resulted in decrease in profit for the year by Rs. 22367.38 lakh.

b) Plant and machinery and items of scientific appliances, costing either Rs. 5000 or less were hitherto charged off. The same are now being capitalised and fully depreciated in the following year. The change in the policy has resulted in increase in profit for the year by Rs.3.87 lakh.

c) Wherever lease period has not been notified, land and buildings have been amortised considering lease period as 30 years as against 50 years in the previous years, which has resulted in decrease in profit for the year by Rs.446.28 lakh.

d) Interest to be capitalised was hitherto being worked out on the basis of approved debt- equity ratio of a project/station. The same is now being calculated on the basis of actual availment of loan. The change in the policy has resulted in increase in profit for the year byRs.238.861akh.

e) Pre-paid/prior period items, which were hitherto accounted for upto Rs. 5000/- to the natural head of account are now accounted upto Rs. 100000 in natural heads. The change in the policy has resulted in decrease in profit for the year by Rs.51.07 lakh.

f) The cost of internal electrification in buildings hitherto being depreciated at the rates applicable to buildings is now being worked out on the basis of notified rates under the Electricity (Supply) Act, 1948. The change has resulted in decrease in profit in the year byRs.2144.161akh.

13. Previous years figures have been regrouped/rearranged wherever necessary.

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