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Notes to Accounts of Power Grid Corporation of India Ltd.

Mar 31, 2015

1.1 Cash equivalent of deemed export benefits availed of Rs. 209.99 crore in respect of supplies effected for East South Inter Connector- II Transmission Project (ESI) and Sasaram Transmission Project (STP), were paid to the Customs and Central Excise Authorities in accordance with direction from Ministry of Power (Govt, of India) during 2002-03 due to non availability of World Bank loan for the entire supplies in respect of ESI project and for the supplies prior to March 2000 in respect of STP project and the same was capitalised in the books of accounts. Thereafter, World Bank had financed both the ESI project and STP project as originally envisaged and they became eligible for deemed export benefits. Consequently, the company has lodged claims with the Customs and Excise Authorities.

In this regard the Cumulative amount received and de-capitalized upto 31st March 2015 is Rs. 12.12 crore (previous year Rs. 12.12 crore). The company continued to show the balance of Rs. 197.87 crore as at 31st March 2015 (previous year Rs. 197.87 crore) in the capital cost of the respective assets / projects pending receipt of the same from Customs and Excise Authorities.

1.2 Out of the proceeds of Follow on Public Offer (FPO) made in Financial Year 2013-14, a sum of Rs. 2975 crore (Previous Year Rs. 2346.31 crore) has been utilised during the year for part financing of capital expenditure on the projects and general corporate purpose as per objects of the issue resulting in complete utilisation of funds amounting to Rs. 5321.31 crore raised through FPO.

1.3 a) Certain balances in Loans and Advances & Trade Payables are subject to confirmation and consequential adjustments, if any.

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

1.4 Information in respect of cost plus consultancy contracts, considering the same as consultancy business as required under Accounting Standard (AS)-7 (Revised 2002) "Construction Contracts " is provided as under :

1.5 The company has been entrusted with the responsibility of billing collection and disbursement (BCD) of the transmission charges on behalf of all the ISTS (Interstate transmission System) licensees through the mechanism of the POC (Point of Connection) charges introduced w.e.f. 01st July 2011 which involves billing based on approved drawl/injection of power in place of old mechanism based on Mega Watt allocation of power by Ministry of Power. By this mechanism, revenue of the company will remain unaffected.

Some of the beneficiaries aggrieved by the POC mechanism have preferred appeal before various High Courts of India. All such appeals have been transferred to Delhi High Court as per order of the Supreme Court on the appeal preferred by the company and company has also requested for directing agitating states to pay full transmission charges as per new methodology pending settlement of the matter. Honorable Delhi High Court has directed all the above beneficiaries to release payments and accordingly the beneficiaries have started making payments as per the said directions.

1.6 CERC issued tariff order dated 29.04.2011 in respect of Barh-Balia Transmission line considering the date of commercial operation (DOCO) 01.07.10 in line with their Regulation. Against this tariff order, one of the beneficiaries filed appeal before the Appellate Tribunal for Electricity (ATE) challenging the tariff approved by CERC based on above DOCO claimed by the company. The ATE vide its order dated 02.07.2012 observed that the DOCO of 01.07.2010 was not appropriate as the appellant had reported that the transmission line was put in regular service from August 2011 i.e. when it was put in regular service when the other end in the scope of the generating company viz. NTPC was completed i.e. August 2011 though Company had completed its scope as on 01.07.2010. Accordingly, the ATE remanded CERC for redetermination of DOCO and tariff of the Transmission line. Upon this, the company filed an appeal in the Supreme Court explaining that the DOCO of 01.07.2010 was as per CERC Regulations. The Hon''ble Supreme Court on 15.03.2013 had stayed all the proceedings before the CERC for the said Transmission System based on the appeal filed by the Company.

The Company had also filed another petition on 28.02.2013 before the Central Electricity Regulatory Commission (CERC) for determination of revised transmission tariff on the basis of revised cost estimate approved by its Board of Directors. Subsequently on 08.10.2013, in its interim order, the Hon''ble Supreme Court has directed the CERC to proceed with determination of tariff for the said Transmission System pending disposal of the appeal regarding determination of DOCO date.The decision of redetermination of DOCO is awaited from CERC.

Since the decision of the date of DOCO is pending before the Supreme Court, and also considering that 01.07.2010 as the correct DOCO as per CERC Regulations, no adjustment has been made in respect of Revenue of Rs. 144.91 crore recognised for the period 01.07.2010 to 31.08.2011.

1.7 As per CERC Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters Regulations, 2009 as amended from time to time, all transmission elements are constructed as per the requirement of the long term customers (LTA) up to 25 years and transmission charges are recoverable from such long term customers. For medium term open access (MTOA), no additional transmission element is constructed but only the existing surplus transmission capacities are utilised. The charges recovered from the MTOA customers, upon utilisation of the surplus capacity which is very small and temporary in nature, are used to reduce the charges of the LTA customers. The company is revenue neutral.

One of the MTOA customer, signed an agreement for MTOA for a period of 3 years from 16.06.2013 but did not utilise the capacity. The company, however, billed the customer as per the agreement. But the MTOA customer defaulted on its dues of Rs.15.64 crore billed during the period from 16.06.2013 to 31.01.2014. Due to non-recovery of dues, the company has cancelled the MTOA w.e.f. 01.02.2014 as per order of the APTEL. The total transmission charges are being recovered from other customers since then. An application, filed by the company is pending before CERC for allowing recovery of the dues of such MTOA customer for the period from 16.06.2013 to 31.01.2014 from other customers during this period. The revenue of the company is not impacted (increase/decrease) due to grant of MTOA or cancellation thereof. Considering that the company is entitled to recover total transmission charges as per CERC sharing regulations, no provision has been made in the accounts for the year ended on 31.03.2015 towards the above dues of the MTOA charges for the period from 16.06.2013 to 31.01.2014

1.8 (i) FERV Loss of Rs. 510.52 crore (Previous Year Rs. 2258.13crore) has been adjusted in the respective carrying amount of Fixed Assets/ Capital work in Progress (CWIP)/lease receivables.

(ii) FERV Gain of Rs. 12.46 crore (Previous Year FERV Loss Rs. 8.34 crore) has been recognised in the Statement of Profit and Loss.

1.9 Change in accounting policy/accounting practice

a) During the Year, material for construction of Substations (including HVDC) is being transferred to Capital Work in Progress (CWIP) during the progress of erection work as against earlier practice of transferring the same on the completion of erection work. The change of practice has resulted in increase in CWIP amount by Rs. 234.43 Crore with corresponding reduction in Construction Stores.

b) The Company has revised depreciation rates on certain fixed assets w.e.f. 01st April, 2014 as per useful life specified in schedule II of the Companies Act, 2013 as reassessed by the company. Accordingly, the company has accounted for additional depreciation charge of Rs.22.31 Crore during the year ended 31st March, 2015 and Rs. 0.05 Crores (net of deferred tax) in reserves in terms of the transitional provisions of said schedule II. Thus, by charging depreciation at the revised depreciation rates, the depreciation charge for the year ended 31st March, 2015 is higher by Rs. 22.31 Crore and profit before tax for the year is lower by Rs. 22.31 Crore.

1.10 Borrowing cost capitalised during the year is Rs. 2459.60 crore (previous year Rs. 2274.62 crore) as per AS 16- "Borrowing Costs".

1.11 Based on information available with the company, there are few suppliers/service providers who are registered as micro, small or medium enterprise under The Micro, Small and Medium Enterprises Development Act,2006 (MSMED Act, 2006). Information in respect of micro and small enterprises as required by MSMED Act, 2006 is given as under:

1.12 Disclosures as per Accounting Standard AS 15 -"Employee Benefits"

Defined employee benefit/ contribution schemes are as under:-

A. Provident Fund

Company pays fixed contribution to Provident Fund at predetermined rate to a separate trust, which invests the funds in permitted securities. Contribution to family pension scheme is paid to the appropriate authorities. The contribution to the fund and EPS scheme for the year amounting to Rs. 76.48 crore(previous year Rs.74.88 crore) has been recognized as expense and is charged to Statement of Profit and Loss. The obligation of the company is limited to such fixed contribution and to ensure a minimum rate of interest on contributions to the members as specified by GOI. As per the report of actuary over all interest earning and cumulative surplus ''is more'' than statutory interest payment requirement. Hence, no further provision is considered necessary.

B. Gratuity

The company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to get gratuity at 15 days salary (15/26 X last drawn basic salary plus, dearness allowance) for each completed year of service on superannuation, resignation, termination, disablement or on death subject to a maximum of Rs. 10 lacs. The scheme is funded by the company and is managed by a separate trust. The liability for the same is recognised on the basis of actuarial valuation on annual basis on the Balance Sheet date.

C. Pension

The Company has scheme of employees defined Pension Contribution. Company contribution is paid to separate trust. Amount of contribution paid/payable for the year is Rs. 73.11 crore (previous year Rs. 60.08 crore) has been recognised as expense and is charged to statement of profit & loss. In addition to above provision for additional contribution of Rs. 87.28 crore for the period from January 2007 to March 2012 has been made during the year as approved by the management.

D. Post-Retirement Medical Facility (PRMF)

The company has Post-Retirement Medical Facility (PRMF), under which retired employees and the spouse are provided medical facilities in the empanelled hospitals. They can also avail treatment as Out-Patient subject to a ceiling fixed by the company. The scheme is unfunded and liability for the same is recognised on the basis of actuarial valuation on annual basis on the Balance Sheet date.

E. Leave Encashment

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 55 years up to the maximum of 300 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.

F. Other Defined Retirement Benefits (ODRB)

The Company has a scheme for settlement at the time of superannuation at home town for employees and dependents to superannuated employees. The scheme is unfunded and liability for the same is recognised on the basis of actuarial valuation on annual basis on the Balance Sheet date.

The above schemes (D,E and F) are unfunded.

G. The summarised position of various defined benefits recognized in the Statement of Profit & Loss and Balance Sheet is as under:- a) Expenses recognised in Statement of profit and loss:

H. Other Employee Benefits

Provision for Long Service Award amounting to Rs. 1.24 crore (previous year Rs. 0.84 crore) has been made on the basis of actuarial valuation at the year end.

J. Actuarial Assumptions

Principal assumptions used for actuarial valuation are:

i) Method used - Projected unit credit ( PUC) (Previous Year (PUC))

ii) Discount rate - 8.00 % (previous year 8.50 %)

iii) Expected rate of return on assets (Gratuity only) - 8.00 % (previous year 8.50%)

iv) Future salary increase- 6.50 % (previous year 6.50%)

The estimate of future salary increases, considered in actuarial valuation, takes into account (i) inflation, (ii) Seniority (iii) Promotion and (iv) 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, assessed risk of asset management and historical return for plan assets.

K. The Company''s best estimate of contribution towards gratuity for the financial year 2015-16 is Rs. 1.51crore (previous year Rs. 4.65 crore)

L. The effect of the percentage point increase/decrease in the medical cost of PRMF will be as under:-

1.13 Disclosure as per AS 17-" Segment Reporting"

a) Business Segments

The company''s principal business is transmission of bulk power across different States of India. However, telecom and consultancy business are also treated as a reportable segment in accordance with para 28 of AS-17 "Segment Reporting".

b) Segment Revenue and Expense

Revenue directly attributable to the segments is considered as Segment Revenue. Expenses directly attributable to the segments and common expenses allocated on a reasonable basis are considered as segment expenses.

c) Segment Assets and Liabilities

Segment assets include all operating assets comprising of net fixed assets, current assets and loan and advances. Construction work-in-progress, construction stores & advances and investments are included in unallocated assets. Segment liabilities include operating liabilities and provisions.

1.14 Disclosure as per AS 18- "Related Party Disclosure" a) List of Related Parties:-

i) Key Management Personnel

Sh. R.N. Nayak Chairman and Managing Director

Sh. I.S. Jha Director (Projects)

Sh. R.T. Agarwal Director (Finance)

Sh. Ravi P Singh Director(Personnel)

Sh. R.P. Sasmal Director(Operations)

Smt. Divya Tandon Company Secretary

ii) Subsidiaries:- Wholly Owned

i) Power System Operation Corporation Limited (POSOCO)

ii) Powergrid NM Transmission Limited

iii) Powergrid Vemagiri Transmission Limited

iv) Powergrid Vizag Transmission Limited

v) Powergrid Unchahar Transmission Limited

vi) Powergrid Kala Amb Transmission Limited (w.e.f 12 May 2014)

vii) Vindhyachal Jabalpur Transmission Limited (w.e.f 26 Feb 2015)

iii) Joint Ventures:-

i) Powerlinks Transmission Limited

ii) Torrent Power Grid Limited

iii) Jaypee Powergrid Limited

iv) Parbati Koldam Transmission Company Limited

v) Teestavalley Power Transmission Limited

vi) North East Transmission Company Limited

vii) National High Power Test Laboratory Private Limited

viii) Energy Efficiency Services Limited.

ix) Bihar Grid Company Limited

x) Kalinga Bidyut Prasaran Nigam Private Limited

xi) Cross Border Power Transmission Company Limited

xii) Power Transmission Company Nepal Ltd

1.15 Disclosure as per AS 19-"Leases"

a) Finance Leases :-

Long Term Loans and Advances and Short Term Loans and Advances include lease receivables representing the present value of future lease rentals receivable on the finance lease transactions entered into by the company with the constituents in respect of State Sector ULDC. Disclosure requirements of Accounting Standard (AS) - 19 "Leases" notified under the Companies Act, 2013 are given as under:

(i) The reconciliation of the lease receivables (as per project cost data submitted to / approved by the CERC for tariff fixation) is as under:

(iii) The unearned finance income as at 31st March, 2015 is Rs. 157.42 crore (previous year Rs. 152.09 crore). (iv) The value of contractual maturity of such leases as per AS-19 are as under :

(v) There are differences in balance lease receivable as at year end as per accounts and tariff records on account of :

(a) Undischarged liabilities amounting to Rs.17.33 crore (Previous Year Rs. 79.62 crore). Such cost become part of project cost only on discharge of such liabilities.

(b) Unamortized FERV on loans included in lease receivable amounting to Rs. 61.14 crore (Previous Year Rs. 62.91 crore). Such FERV are allowed to be recovered as part of tariff on actual payment basis

b) Operating leases:-

The company''s significant leasing arrangements are in respect of operating leases of premises for residential use of employees, offices and guest houses/transit camps are usually renewable on mutually agreed terms but are not non-cancellable. Employees'' remuneration and benefits include Rs. 31.87 crore (previous year Rs. 33.80 crore) towards lease payments, net of recoveries, in respect of premises for residential use of employees. Lease payments of Rs. 10.52 crore (previous year Rs. 11.23 crore) in respect of premises for offices and guest house/transit camps are shown under the head Rent in Note 2.30 Transmission, Administration and Other expenses.

Under the Transmission Service Agreement (TSA) with Powerlinks Transmission Ltd, the company has an obligation to purchase the JV company (Powerlinks Transmission Ltd) at a buyout price determined in accordance with the TSA. Such an obligation may result in case JV company (Powerlinks Transmission Ltd) serves a termination notice either on "POWERGRID event of default" or on "force majeure event" prescribed under TSA. No contingent liability on this account has been considered as the same is not ascertainable.

The company''s share in assets, liabilities, contingent liabilities and capital commitment as on 31st March 2015 and income and expenses for the year in respect of above joint venture entities based on their accounts are given below:-

The figures pertaining to FY 2014-15 are compiled based on unaudited accounts except for Powerlinks Transmission Limited, National High Power Test Laboratory Private Limited and Cross Border Power Transmission Company Limited which are audited.

1.16 Disclosure as per AS 28-" Impairment of assets"

In accordance with Accounting Standard (AS-28) "Impairment of Assets", the company has assessed as on the Balance Sheet date whether there are any indications with regard to impairment of any of the assets. Based on such assessment, it has been ascertained that no potential loss is present. Accordingly, no impairment loss has been provided in the books of accounts.

1.17 Capital and Other Commitments

i) Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 24189.22 crore (previous year Rs. 30175.65 crore).

ii) As at 31st March,2015, the company has commitment of Rs. 427.61 crore (previous year Rs. 812.82 crore) towards further investment in joint venture entities.

iii) As at 31st March,2015, the company has commitment of Rs. 4261.42 crore (previous year Rs. 730.00crore) towards further investment in subsidiary companies.

1.18 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. 219.14 crore (previous year Rs. 211.73 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. 2253.11 crore (previous year Rs. 2393.45 crore) has been estimated.

(iii) Other claims

In respect of claims made by various State/Central Government Departments/Authorities towards building permission fees, penalty on diversion of agriculture land to non-agriculture use, Nala tax, water royalty etc. and by others, contingent liability of Rs. 44.09crore (previous year Rs. 5.80 crore ) has been estimated.

(iv) Disputed Income Tax/Sales Tax/Excise/Municipal Tax Matters

Disputed Income Tax/Sales Tax/Excise/Municipal Tax Matters amounting to Rs. 391.22 crore (previous year Rs. 474.74 crore) are being contested before various Appellate Authorities. Many of these matters are disposed off in favour of the company but are disputed before higher authorities by the concerned departments.

(v) Others

a) Other contingent liabilities amounts to Rs. 303.56 crore (previous year Rs. 778.54 crore)

b) Some of the beneficiaries have filed appeals against the tariff orders of the CERC. The amount of contingent liability in this regard is not ascertainable.

2. Special purpose vehicle (SPV) companies (wholly owned subsidiaries) namely Powergrid NM Transmission Company Ltd (erstwhile Nagapattinam Madugiri Transmission Company Ltd.) , Powergrid Vemagiri Transmission Company Ltd. ( erstwhile Vemagiri Transmission System Limited), Vizag Transmission Limited Unchahar Transmission Limited Kala Amb Transmission Limited and Vindhyachal Jabalpur Transmission Limited has been taken over to carry over the business awarded under Tariff based bidding. Details of Bank guarantees given by the company on behalf of SPV companies towards performance of the work awarded are as under:

1.19 Disclosure as required by Clause 32 of Listing Agreements:

A. Loans and Advances in nature of Loans:

1. To Subsidiary Companies

2. To firms/companies in which directors are interested : NIL

3. Where there is no repayment schedule or repayment beyond seven years or no interest or interest as per Section 186 of The Companies Act 2013 : Rs. 229.70 Crore (Repayment schedule is beyond seven years)

B. Investment by the loanee (as detailed above) in the shares of Power Grid Corporation of India Ltd : NIL

1.20 a) Figures have been rounded off to nearest rupees in crore up to two decimal.

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


Mar 31, 2014

1.1 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. 211.73 crore (previous year Rs. 172.60 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. 2393.45 crore (previous year Rs. 2522.64 crore) has been estimated.

(iii) Other claims

In respect of claims made by various State/Central Government departments/Authorities towards building permission fees, penalty on diversion of agriculture land to non-agriculture use, Nala tax, water royalty etc. and by others, contingent liability of Rs. 5.80 crore (previous year Rs.2.73 crore ) has been estimated.

(iv) Disputed Income Tax/Sales Tax/Excise/Municipal Tax Matters disputed Income Tax/Sales Tax/Excise/Municipal Tax Matters amounting to Rs. 474.74 crore (previous year Rs. 294.86 crore) are pending before various Appellate Authorities and contested before various Appellate Authorities. Many of these matters are disposed off in favour of the company but are disputed before higher authorities by the concerned departments.

(v) Others

a) other contingent liabilities amounts to Rs. 778.54 crore (previous year Rs. 89.78 crore)

b) Some of the beneficiaries have filed appeals against the tariff orders of the CERC. The amount of contingent liability in this regard is not ascertainable.

2. Special purpose vehicle (SPV) companies namely POWERGRID NM Transmission Company Ltd. (wholly owned subsidiary) (erstwhile Nagapattinam Madugiri Transmission Company Ltd.) , POWERGRID Vemagiri Transmission Company Ltd. (wholly owned subsidiary) (erstwhile Vemagiri Transmission System Limited), Vizag Transmission Limited and Unchahar Transmission Limited has been taken over to carry over the business awarded under Tariff based bidding. Bank guarantee of Rs. 45.00 crore (previous year Rs. 45.00 crore ), Rs. Nil (previous year Rs. 36.00 crore), Rs. 45.00 crore and Rs. 5.40 crore respectively has been given by the company on behalf of SPV companies towards performance of the work awarded.

2.50 Vemagiri Transmission Limited was acquired for execution of Vemagiri Transmission system based on Tariff Based Competitive Bidding (TBCB).CERC vide order dated 09.05.2013 and 27.09.2013 interalia stated that Vemagiri Transmission system cannot be executed in its present form and directed CTU to return the bank guarantees of identified long term transmission customers and also directed the customer to return the contract performance guarantee given by POWERGRID. Based on the CERC order, action for winding up Special Purpose Vehicle and recovery of cost incurred by POWERGRID will be taken. Pending any decision for recovery of cost incurred, provision of Rs. 19.40 crore has been made in respect of Investment and advances made by POWERGRID.

1.2 a) Figures have been rounded off to nearest rupees in crore up to two decimal.

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


Mar 31, 2013

1.1 Cash equivalent of deemed export benefits availed of Rs. 209.99 crore in respect of supplies affected for East South Inter Connector-ll Transmission Project (ESI) and Sasaram Transmission Project (STP), were paid to the Customs and Central Excise Authorities in accordance with direction from Ministry of Power (Govt, of India) during 2002-03 due to non availability of World Bank loan for the entire supplies in respect of ESI project and for the supplies prior to March 2000 in respect of STP project and the same was capitalised in the books of accounts. Thereafter, World Bank had financed both the ESI project and STP project as originally envisaged and they became eligible for deemed export benefits. Consequently, the company has lodged claims with the Customs and Excise Authorities.

In the regard the Cumulative amount received and de-capitalized upto 31st March 2013 is Rs. 12.12 crore (Previous year Rs. 12.12 crore). The company continued to show the balance of Rs. 197.87 crore as at 31st March 2013 (Previous year Rs. 197.87 crore) in the capital cost ofthe respective assets / projects pending receipt ofthe same from Customs and Excise Authorities.

1.2 Out of the proceeds of Follow on Public Offer (FPO) made in Financial Year 2010-11, a sum of Rs. 750 crore (Previous Year Rs.1371.17 crore) has been utilised during the year for part financing of capital expenditure on the projects specified for utilization resulting in complete utilisation of funds amounting to Rs. 3721.17 crore raised through FPO.

1.3 a) Certain balances in Loans and Advances & Trade Payables are subject to confirmation and consequential adjustments, if any.

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

1.4 The company has been entrusted with the responsibility of billing collection and disbursement (BCD) ofthe transmission charges on behalf of all the ISTS (Interstate transmission System) licensees through the mechanism ofthe POC (Point of Connection) charges introduced w.e.f. 01-07-2011 which involves billing based on approved drawal/injection of power in place of old mechanism based on Mega Watt allocation of power by Ministry of Power. By this mechanism, revenue of the company will remain unaffected.

Some of the beneficiaries aggrieved by the POC mechanism have preferred appeal before various High Courts of India and continue to make payment as per old system of billing. Due to this, an unrealized amount of Rs. 273.27 crore (previous yearRs. 141.56 crore) is included in Trade Receivables. All such appeals have been transferred to Delhi High Court as per order ofthe Supreme Court on the appeal preferred by the company and company has also requested for directing agitating states to pay full transmission charges as per new methodology pending settlement of the matter.

1.5 (i) FERV Loss ofRs. 1660.02 crore includingRs. 671.89 crore for Previous Year (previous year FERV loss Rs.882.14 crore) has been adjusted in the respective carrying amount of Fixed Assets/Capital work in Progress (CWIP)/lease receivables.

(ii) FERV Gain of Rs.1.16 crore (Previous Year FERV Loss Rs.2.23 crore) has been recognised in the Statement of Profit and Loss.

1.6 Effect due to change in accounting policies during the year -

i) Ministry of Corporate Affairs, Government of India through circular no.25/2012 dated 9th August 2012 has clarified that Para 6 of Accounting Standard (AS)-ll and para 4(e) of AS 16 shall not apply to company which is applying para 46A of AS 11. Consequently, exchange differences arising on settlement/translation of foreign currency loans to the extent regarded as an adjustment to interest cost as per para 4(e) of AS 16 and charged to the statement of profit and loss have now been adjusted in the cost of related capital assets. This change in accounting policy is made effective from 01 April 2011.This change has resulted in increase in Profit before tax for the year byRs. 122.95 crore (includingRs. 66.12 crore for FY 11-12).

ii) In view of opinion ofthe Expert Advisory Committee ofthe Institute of Chartered Accountants of India, unspent expenditure, out ofthe budget for the year towards Corporate Social Responsibility(CSR), which was hitherto being provided for in the statement of Profit & Loss is now being transferred to CSR reserve by appropriating profit. The change has resulted in increase in profit before tax for the year by Rs. 26.06 crore (including Rs.15.26 crore write back of provision for earlier years ).

1.7 Borrowing cost capitalised during the year is Rs. 1824.93 crore (previous Year Rs. 1667.14 crore) as per AS 16- "Borrowing Cost".

1.8 Pending approval ofthe Performance Related Pay ( PRP ) scheme for workmen, provision of Rs.41.48 crore (includingRs. 21.87 crore for earlier years) has been made net of payments made as per old Performance Linked Incentive Scheme.

1.9 Disclosures as per Accounting Standard (AS) 15

Defined employee benefit/ contribution schemes are as under:-

A. ProvidentFund

Company pays fixed contribution to Provident Fund at predetermined rate to a separate trust, which invests the funds in permitted securities. Contribution to family pension scheme is paid to the appropriate authorities. The contribution to the fund for the year amounting to Rs. 66.57 crore(previous yearRs.60.69 crore) has been recognized as expense and is charged to Statement of Profit and Loss. The obligation of the company is limited to such fixed contribution and to ensure a minimum rate of interest on contributions to the members as specified by GOI. As per the report of actuary over all interest earning and cumulative surplus ''is more'' than statutory interest payment requirement. Hence, no further provision is considered necessary.

B. Gratuity

The company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to get gratuity at 15 days salary (15/26 X last drawn basic salary plus, dearness allowance) for each completed year of service on superannuation, resignation, termination, disablement or on death subject to a maximum ofRs. 10 lacs. The scheme is funded by the company and is managed by a separate trust. The liability for the same is recognised on the basis of actuarial valuation on annual basis ontheBalanceSheetdate.

C. Pension

The Company has scheme of employees defined Pension Contribution. Company contribution is paid to separate trust. Amount of contribution paid/payable for the year isRs. 52.24 crore (Previous Year Rs. 30.36 crore) has been recognised as expense and is charged to statement of profit & loss.

D. Post-Retirement Medical Facility (PRMF)

The company has Post-Retirement Medical Facility (PRMF), under which retired employees and the spouse are provided medical facilities in the empanelled hospitals. They can also avail treatment as Out-Patient subject to a ceiling fixed by the company. The scheme is unfunded and liability for the same is recognised on the basis of actuarial valuation on annual basis on the Balance Sheet date.

E. Other Defined Retirement Benefits (ODRB)

The Company has a scheme for settlement at the time of superannuation at home town for employees and dependents to superannuated employees. The scheme is unfunded and liability for the same is recognised on the basis of actuarial valuation on annual basis on the Balance Sheet date.

1.10 Segment information (AS 17):

a) Business Segments

The company''s principal business is transmission of bulk power across different States of India. However, telecom and consultancy business are also treated as a reportable segment in accordance with para 28 ofAS-17 "Segment Reporting".

b) Segment Revenue and Expense

Revenue directly attributable to the segments is considered as Segment Revenue. Expenses directly attributable to the segments and common expenses allocated on a reasonable basis are considered as segment expenses.

c) Segment Assets and Liabilities

Segment assets include all operating assets comprising of net fixed assets, construction work-in-progress, construction stores, investments, loans and advances and current assets. Segment liabilities include long term and short term borrowings, current and non current liabilities and provisions

d) The operation of the company mainly carried out within the country and therefore there is no reportable geographical segment.

1.11 Related Party Disclosures:-

a) List of Related Parties:-

i) Key Management Personnel

Sh. R.N. Nayak Chairman and Managing Director

Sh.I.S.Jha Director(Projects)

Sh. R.T. Agarwal Director (Finance)

Sh. Ravi P Singh Director(Personnel) w.e.f. 01.04.2012

Sh. R.P. Sasmal Director(Operations) w.e.f. 01.08.2012

ii) Subsidiaries:-WhollyOwned

i) Power System Operation Corporation Limited (POSOCO)

ii) Powergrid NM Transmission Limited

iii) Powergrid Vemagiri Transmission Limited

iii)JointVentures:-

i) PowerlinksTransmissionLimited

ii) Torrent Power Grid Limited

iii) Jaypee Powergrid Limited

iv) Parbati Koldam Transmission Company Limited

v) TeestavalleyPowerTransmission Limited

vi) North East Transmission Company Limited

vii) National High Power Test Laboratory Private Limited

viii) Energy Efficiency Services Limited.

ix) BiharGridCompany Limitedw.e.f . 04.01.2013

x) Kalinga Bidyut Prasaran Nigam Private Limited w.e.f. 31.12.2012

xi) Cross Border Power Transmission Company Limited w.e.f. 11.08.2012

1.12 In accordance with Accounting Standard (AS-28) "Impairment of Assets", impairment analysis of assets of transmission activity & telecom activity of the company by evaluation of its cash generating units, was carried out by an outside agency in the year 2004-05 & 2006-07 respectively and since recoverable amount was more than the carrying amount thereof, no impairment loss was recognised. The company has assessed as on the balance sheet date whether there are any indications with regard to impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore no formal estimate of recoverable amount has been made. Accordingly, no impairment loss has been provided in the accounts.

1.13 Capital and Other Commitments

i) Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 43190.76 crore (previous yearRs.41800.14 crore).

ii) As at 31st March,2013, the company has commitment ofRs.1005.31 crore (previous yearRs.149.36 crore) towards further investment in joint venture entities.

iii) As at 31st March,2013, the company has commitment of Rs. 183.33 crore towards further investment in subsidiary companies.

1.14 Contingent Liabilities

1. Claims against the Company not acknowledged as debts in respect of:

(i) Capital Works

Some of the contractors for supply and installation of equipments and execution of works at our projects have lodged claims on the company forRs. 172.60 crore (previous yearRs. 73.15 crore) seeking enhancement of the contract price, revision of work schedule with price escalation, compensation forthe extended period of work, idle charges etc. These claims are being contested bythe Company as being not admissible in terms ofthe provisions ofthe respective contracts.

The company is pursuing various options under the dispute resolution mechanism available in the contract for settlement of these claims. It is not practicable to make a realistic estimate of the outflow of resources, if any, for settlement of such claims pending resolution.

(ii) Land Compensation cases

In respect of land acquired for the projects, the land losers have claimed higher compensation before various authorities/courts which are yet to be settled. In such cases, contingent liability of Rs. 2522.64 crore (previous year Rs.1765.09 crore) has been estimated.

(iii) Otherclaims

In respect of claims made by various State/Central Government Departments/Authorities towards building permission fees, penalty on diversion of agriculture land to non-agriculture use, Nala tax, water royalty etc. and by others, contingent liability of Rs.2.73 crore (previous year Rs.11.72 crore ) has been estimated.

(iv) Disputed Income Tax/Sales Tax/Excise/Municipal Tax Matters

Disputed Income Tax/Sales Tax/Excise/Municipal Tax Matters amounting to Rs. 294.86 crore (previous year Rs. 257.86 crore) are pending before various Appellate Authorities and contested before various Appellate Authorities. Many of these matters are disposed off in favour of the company but are disputed before higher authorities by the concerned departments.

(v) Others

a) Other contingent liabilities amounts to Rs. 89.78 crore (previous yearRs. 80.16 crore)

b)Some of the beneficiaries have filed appeals against the tariff orders of the CERC. The amount of contingent liability in this regard is not ascertainable.

2. Special purpose vehicle(SPV) company namely Powergrid NM Transmission Company Ltd. (wholly owned subsidiary) (erstwhile Nagapaffinam Madugiri Transmission Company Ltd.) and Powergrid Vemagiri Transmission Company Ltd. (wholly owned subsidiary) (erstwhile Vemagiri Transmission System Limited) has been taken over to carry over the business awarded under Tariff based bidding. Bank guarantee ofRs. 45.00 crore (previous yearRs. 45.00 crore) and Rs. 36.00 crore (previous year Nil) respectively has been given by the company on behalf of SPV towards performance of the work awarded.

1.15 a) Figures have been rounded off to nearest rupees in crore up to two decimal.

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


Mar 31, 2012

1.1 Cash equivalent of deemed export benefits availed of Rs. 209.99 crore in respect of supplies affected for East South Inter Connector-II Transmission Project (ESI) and Sasaram Transmission Project (STP), were paid to the Customs and Central Excise Authorities in accordance with direction from Ministry of Power (Govt. of India) during 2002-03 due to non availability of World Bank loan for the entire supplies in respect of ESI project and for the supplies prior to March 2000 in respect of STP project and the same was capitalised in the books of accounts. Thereafter, World Bank had financed both the ESI project and STP project as originally envisaged and they became eligible for deemed export benefits. Consequently, the company has lodged claims with the Customs and Excise Authorities.

During the year, Company has recovered deemed export benefits to the extent of Rs. Nil (Previous year Rs. 0.78 crore). The cumulative amount received and de-capitalized upto 31st March 2012 is Rs. 12.12 crore (Previous year Rs. 12.12 crore). The Company continued to show the balance of Rs. 197.87 crore as at 31st March 2012 (Previous year Rs. 197.87 crore) in capital cost of the respective assets / projects pending receipt of the same from Customs and Excise Authorities.

1.2 Out of the proceeds of Follow on Public Offer (FPO) made in Financial Year 2010-11, a sum of Rs. 1371.17 crore (Previous Year Rs. 1600 crore) has been utilised during the year for part financing of capital expenditure on the projects specified for utilization and the balance amount of Rs. 750crore (Previous year Rs. 2121.17 crore) has been invested in Terms Deposits with Banks.

1.3 a) Certain balances in Loans and Advances & Trade Payable are subject to confirmation and consequential adjustments, if any.

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

1.4 The company has been entrusted with the responsibility of billing collection and disbursement (BCD) of the transmission charges on behalf of all the interstate transmission licensees(ISTS) through the mechanism of the Point of Connection charges(POC) introduced w.e.f. 01-07-2011 which involves billing based on approved drawl/injection of power in place of old mechanism based on Mega Watt allocation of power by Ministry of Power. By this mechanism, revenue of the company will remain unaffected.

Some of the beneficiaries aggrieved by the POC mechanism have preferred appeal before various High Courts of India and continue to make payment as per old system of billing. Due to this, an unrealized amount of Rs. 141.56 crore is included in Trade Receivables. The company has preferred an appeal before the Supreme Court for transferring all the cases in the Delhi High Court and also requested for directing the agitating states to pay full transmission charges as per new methodology pending settlement of the matter.

1.5 i) Foreign Exchange Rate Variation (FERV) loss (to the extent not exceeding the difference between the Interest on foreign currency borrowings and local currency borrowings) has been adjusted to borrowing cost amounting to Rs. 672.44 crore (net of Rs. 246.01 crore FERV loss for the construction projects) {previous year FERV loss of Rs. 74.19 crore (net of Rs. 0.27 crore FERV loss for the construction projects)} towards loan liabilities attributable to fixed assets/CWIP.

ii) FERV Loss of Rs. 882.14 crore (previous year FERV loss Rs. 15.71 crore) has been adjusted in the respective carrying amount of Fixed Assets/Capital work in Progress (CWIP)/lease receivables.

iii) FERV Gain of Rs. Nil ( previous year FERV gain of Rs. 77.96 crore) has been recognized in the Statement of Profit and Loss in respect of loans contracted on or after 1st April, 2004 in terms of provisions of AS-11 (revised 2003)

1.6 FERV Loss of Rs. 588.01 crore (previous year FERV loss Rs. 0.71 crore) has been shown as FERV Recoverable in statement of Profit and Loss.

1.7 Accounting of FERV as stated in note no. 2.38 and 2.39 above, has resulted in decrease in profit for the year by Rs. 84.43 crore (previous year increase in profit by Rs. 4.48 crore).

1.8 Effect due to change in accounting policies during the year -

i) In view of option allowed by Ministry of Corporate Affairs vide its notification dated 29.12.2011 on Accounting

Standard-11, the Company, during the year, has capitalized the Foreign Exchange Rate Variation (FERV) loss arising on account of settlement/restatement of long term monetary liabilities relating to depreciable capital assets. Consequently, FERV loss, which has hitherto charged to Profit &Loss Account has been adjusted in cost of related Fixed Assets/Capital work-in-progress. As a result, profit before tax for the year ended 31.03.2012 after considering the amount of FERV loss recoverable from beneficiaries as per CERC Tariff Regulations 2009 is higher by Rs. 11.93 crore.

ii) Intangible Assets –Right of Way (Afforestation expense) were hitherto amortised over the useful life of related assets. During the year company has changed accounting policy in this regard and now these assets are being amortised following the rates and methodology notified by CERC Tariff Regulation with retrospective effect from 01.04.2009. This has resulted in increase in amortisation for the year and Prior Period amortisation of Rs. 7.62 crore and Rs. 11.40 crore respectively.

1.9 Unspent expenditure of Rs. 2.04 crore out of the budget for the year towards corporate social responsibility(CSR) which was hitherto transferred to CSR reserve by appropriating profit is now provided for by way of charge to statement of Profit and Loss. An amount of Rs. 13.22 crore appropriated to CSR reserve in earlier years has been treated as prior period item .

1.10 Borrowing cost capitalised during the year is Rs. 1667.14 crore (previous Year Rs. 1057.41 crore)

1.11 The guidelines issued by the Department of Public Enterprises (DPE) provide for ceiling of percentage of Performance Related Pay (PRP) payable to executives and non-unionized supervisors within the overall limit of 5% of the year's Profit Before Tax. Provision for PRP in the accounts from financial year 2007-08 onwards are made based on the basis of guidelines issued by DPE. Pending approval of the PRP scheme for non-unionized supervisors, payment are made to executives on provisional basis as per PRP scheme and payment to supervisor is being made in accordance to the old "Performance linked Incentive scheme". Provision net of payment outstanding as on 31.03.2012 is Rs. 215.10 crore (previous year Rs. 190.71 crore)

In respect of Workmen, incentive is being paid as per old "Performance linked incentive scheme".

1.12 Disclosures as per Accounting Standards (AS) 15

Defined employee benefit schemes are as under:- A. Provident Fund

Company pays fixed contribution to Provident Fund at predetermined rate to a separate trust, which invests the funds in permitted securities. Contribution to family pension scheme is paid to the appropriate authorities. The contribution to the fund for the period is Rs. 60.69 crore (previous year Rs. 58.01 crore) recognized as expense and is charged to Statement of Profit and Loss. The obligation of the Company is limited to such fixed contribution and to ensure a minimum rate of interest on contributions to the members as specified by GOI. As per report of actuary over all interest earning and cumulative surplus 'is more' than statutory interest payment requirement. Hence, no further provision is considered necessary.

B. Gratuity

The company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to get gratuity at 15 days salary (15/26 X last drawn basic salary plus, dearness allowance) for each completed year of service on superannuation, resignation, termination, disablement or on death subject to a maximum of Rs. 10 lacs. The scheme is funded by the Company and is managed by a separate trust. The liability for the same is recognised on the basis of actuarial valuation on annual basis on the Balance Sheet date.

C. Post-Retirement Medical Facility (PRMF)

The Company has Post-Retirement Medical Facility (PRMF), under which retired employees and the spouse are provided medical facilities in the empanelled hospitals. They can also avail treatment as Out-Patient subject to a ceiling fixed by the Company. The scheme is unfunded and liability for the same is recognised on the basis of actuarial valuation on annual basis on the Balance Sheet date.

D. Other Defined Retirement Benefits (ODRB)

The Company has a scheme for settlement at the time of superannuation at home town for employees and dependents to superannuated employees. The scheme is unfunded and liability for the same is recognised on the basis of actuarial valuation on annual basis on the Balance Sheet date.

f) During the year the company has provided liability for pension contribution payable as superannuation benefits as per DPE Guidelines amounting to Rs. 30.36 crore (previous year reversal of Rs. 44.26 crore). The Scheme of superannuation benefits is yet to be finalized.

E. Other Employee Benefits

Provision for Leave encashment amounting to Rs. 60.33 crore (previous Year Rs. 16.52 crore) for the year has been made on the basis of actuarial valuation at the year end and charged to Statement of Profit and Loss.

Provision for Long Service Award amounting to Rs. 8.67 crore (including for earlier years Rs. 7.43 crore) have been made on the basis of actuarial valuation at the year end.

G. Actuarial Assumptions

Principal assumptions used for actuarial valuation are:

i) Method used - Projected unit credit (PUC)

ii) Discount rate - 8.5% (previous Year 8%)

ii) Expected rate of return on assets (Gratuity only) – 8.50 % (previous Year 8.50%)

iv) Future salary increase - 6% (previous Year 5.5%)

The estimate of future salary increases, considered in actuarial valuation, takes into account (i) inflation, (ii) Seniority (iii) Promotion and (iv) 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, assessed risk of asset management and historical return for plan assets.

H. The Company's best estimate of contribution towards gratuity for the financial year 2012-13 is Rs. 22.36 crore (previous year Rs. 9.14 crore)

1.13 Segment information:

a) Business Segments

The Company's principal business is transmission of bulk power across different States of India. However, Power System Operation Assets, ULDC, RLDC, telecom and consultancy business are also treated as a reportable segment in accordance with para 28 of AS-17 "Segment Reporting".

b) Segment Revenue and Expense

Revenue directly attributable to the segments is considered as Segment Revenue. Expenses directly attributable to the segments and common expenses allocated on a reasonable basis are considered as segment expenses.

c) Segment Assets and Liabilities

Segment assets include all operating assets comprising of net fixed assets, construction work-in-progress, construction stores, investments, loans and advances and current assets. Segment liabilities include long term and short term borrowings, current and non current liabilities and provisions This does not include transactions with respect to an agreement with Powerlinks Transmission Ltd. Under which transmission charges for transmission line associated with Tala hydro electric power project are raised by Powerlinks Transmission Ltd. to the company which pay the same and collect from the respective beneficiaries.

c) Remuneration to whole time directors including chairman and managing director is Rs. 2.10 crore previous year Rs. 1.77 crore) and amount of dues outstanding to the Company as on 31st March, 2012 are Rs. 0.05 crore (previous year Rs. 0.07 crore).

1.14 Disclosures regarding leases a) Finance Leases :- Long Term Loans and Advances and Short Term Loans and Advances include lease receivables representing the present value of future lease rentals receivable on the finance lease transactions entered into by the company with the constituents in respect of State Sector ULDC, as per the Accounting Standard (AS) – 19 "Leases" notified under the Companies Act, 1956.

b) Operating leases:-

The Company's significant leasing arrangements are in respect of operating leases of premises for residential use of employees, offices and guest houses/transit camps are usually renewable on mutually agreed terms but are not non-cancellable. Employees' remuneration and benefits include Rs. 32.40 crore (previous Year Rs. 26.67 crore) towards lease payments, net of recoveries, in respect of premises for residential use of employees. Lease payments of Rs. 8.14 crore (previous Year Rs. 6.27 crore) in respect of premises for offices and guest house/transit camps are shown under Rent in Note 2.30 Transmission, Administration and Other expenses.

Under the Transmission Service Agreement (TSA) with Powerlinks Transmission Ltd, the company has an obligation to purchase the JV company (Powerlinks Transmission Ltd) at a buyout price determined in accordance with the TSA. Such an obligation may result in case JV company (Powerlinks Transmission Ltd) serves a termination notice either on "POWERGRID event of default" or on "force majeure event" prescribed under TSA. No contingent liability on this account has been considered as the same is not ascertainable.

The above joint venture companies are incorporated in India. The company's share in assets, liabilities, contingent liabilities and capital commitment as on 31st March 2012 and income and expenses for the year in respect of above joint venture entities based on their accounts are given below:-

1.15 In accordance with AS-28 "Impairment of Assets", impairment analysis of assets of transmission activity & telecom activity of the company by evaluation of its cash generating units, was carried out by an outside agency in the year 2004-05 & 2006-07 respectively and since recoverable amount was more than the carrying amount thereof, no impairment loss was recognised. The company has assessed as on the Balance Sheet date whether there are any indications with regard to impairment of any of the assets. Based on such assessment it has been ascertained that no potential loss is present and therefore no formal estimate of recoverable amount has been made. Accordingly, no impairment loss has been provided in the accounts.

1.16 Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 41949.50 crore (previous year Rs. 30612.06 crore).

1.17 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. 73.15 crore (previous year Rs. 1780.92 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. 1765.09 crore (previous year Rs. 1328.87 crore) has been estimated.

iii) Other claims

In respect of claims made by various State/Central Government Departments/Authorities towards building permission fees, penalty on diversion of agriculture land to non-agriculture use, Nala tax, water royalty etc. and by others, contingent liability of Rs. 11.72 crore (previous year Rs. 52.92 crore ) has been estimated.

iv) Disputed Tax/Sales Tax/Excise Matters

Disputed Income Tax/Sales Tax/Excise Matters are pending before various Appellate Authorities amounting to Rs. 257.86 crore (previous year Rs. 102.57 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.

v) Others

a) Other contingent liabilities amounts to Rs. 80.16 crore (previous year Rs. 105.98 crore)

b) Some of the beneficiaries have filed appeals against the tariff orders of the CERC. The amount of contingent liability in this regard is not ascertainable.

2. Special purpose vehicle(SPV) company namely Nagapattinam Madugiri Transmission Company Ltd. (wholly owned subsidiary) has been taken over to carry over the business awarded under Tariff based bidding. Bank guarantee of Rs. 45.00 crore has been given by the company on behalf of SPV towards performance of the work awarded.

1.18 a) Figures have been rounded off to nearest rupees in crore up to two decimal.

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


Mar 31, 2011

1 a) The company owns 5377 hectare (Previous Year 4703 hectare) of land amounting to Rs.845.81 crore (Previous Year Rs.536.56 crore) which has been classified into freehold and leasehold based on available documentation.

b) The company's land in the State of Jammu & Kashmir amounting to Rs.22.91 crore (Previous Year Rs.19.89 crore) and in certain other cases (value not ascertainable), the conveyancing of title to the freehold land and execution/registration of lease agreements in favour of the company is pending for completion of legal formalities.

c) Freehold land includes Rs.33.71 crore (previous year Rs.33.71 crore) in respect of land acquired for residential complex at gurgaon for which conveyance deed in favour of the Company is yet to be executed.

d) Leasehold land includes Rs.7.64 crore (previous year Rs.7.64 crore) in respect of land acquired for office complex on perpetual lease basis with an unlimited useful life at Katwaria Sarai, New Delhi and hence no depreciation is charged.

2. Township buildings includes Rs.7.27 crore (previous year Rs.7.27 crore) for 28 flats at Mumbai, for which registration in favour of the company is pending.

3. Plant and machinery under substation in fixed assets (Schedule No 6) includes company's share of Rs.3.80 crore (previous year Rs.3.80 crore) in common services and facilities of 400 Kv sub-stations of Uttar Pradesh state electricity board (UPSEB) and Rajasthan state electricity board (RSEB) pending execution of formal agreements for joint ownership.

4. Cash equivalent of deemed export benefits availed of Rs.209.99 crore in respect of supplies affected for East South Inter Connector-II Transmission Project (ESI) and Sasaram Transmission Project (STP), were paid to the Customs and Central Excise Authorities in accordance with direction from Ministry of Power (govt of India) during 2002-03 due to non availability of world Bank loan for the entire supplies in respect of ESI project and for the supplies prior to March 2000 in respect of STP. Thereafter, world Bank had financed both the ESI project and STP as originally envisaged and they became eligible for deemed export benefits. Consequently, the company lodged claims with the Customs and Excise Authorities.

During the year, company recovered deemed export benefits to the extent of Rs.0.78 crore (Previous year Rs.1.49 crore) and de-capitalized in respective assets. The cumulative amount received and de-capitalized upto 31st March 2011 is Rs.12.12 crore (Previous year Rs.11.34 crore). The company continued to show the balance of Rs.197.87 crore as at 31st March 2011 (Previous year Rs.198.65 crore) in capital cost of the respective assets / projects pending receipt of the same from Customs and Excise Authorities.

5. Pending reconciliation, materials amounting to Rs.34.68 crore (previous year Rs.106.33 crore) (included under Construction Stores – schedule 8) in commissioned lines is shown as construction stores lying with contractors.

6. The transmission systems situated in Jammu and Kashmir have been taken over by the Company w.e.f. 1st April,1993 from National Hydroelectric Power Corporation Ltd. (NHPC) upon mutually agreed terms, pending completion of legal formalities.

7. Hon'ble High Court of Karnataka has declared the Karnataka Special Tax on Entry of Certain goods Act,2004 as illegal and directed the concerned authority to refund the amount of Entry Tax collected since inception of the Act. The government of Karnataka has filed a writ petition before divisional bench of Hon'ble Karnataka High Court which has stayed the refund of Entry Tax collected by it. The Company capitalised Rs.13.62 crore paid towards entry tax in earlier years. The same will be decapitalised upon final resolution of the issue.

8. a) Balances in Loans and Advances, material with contractors, Sundry Creditors, Advances from customers and Sundry Debtors are subject to confirmation and consequential adjustments, 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.

9. During the year, 400 Kv Koldam -Nalagarh (D/C QUAD conductor) line along with 400 Kv Line Bays at Nalagarh end have become ready for intended use of evacuation of power from Koldam Hydro Electric Project of National Thermal Power Corporation (NTPC) from 01.04.2010.Accordingly the asset was capitalized in accordance with the Accounting Policy No. 4.4 of the Company and net revenue expenditure of Rs.22.07 crore (including Depriciation of Rs.9.66 crore ) has been charged to Profit and loss Account.

The generation unit of Koldam HEP is yet to be commissioned. Clause 3 (12) (c ) of the CERC (Terms and Conditions of Tariff) Regulations 2009 applicable for the block period 2009-14 provides for approval of the Date of Commercial operation (DoCo), prior to the element coming into regular service for evacuation of power. A petition has been filed by the Company before CERC for approval of DoCo w.e.f. 01/04/2010 and the corresponding transmission charges. Pending approval of DoCo and the transmission charges of the asset by CERC no revenue has been recognized during the year.

10. Cash and Bank Balances include Rs.38.41 crore (previous year Rs.34.53 crore) on account of tax deducted at source on perquisites to employees as per the provisions of the Income Tax Act, 1961, which was deposited in a separate bank account as per orders of the Hon'ble Calcutta High Court.

11. a) The company has been providing for depreciation at the rates notified for the purpose of recovery of tariff, by CERC.

MoP has issued tariff policy which provides that rates of depreciation notified by CERC would be applicable for the purpose of tariff as well as accounting.

In accordance with the Tariff Policy, CERC has notified norms for the block period 2009-14 which provides for specified depreciation rates in first 12 years and thereafter amortisation of residual value over the residual life. Accordingly, depreciation on the transmission assets for the year has been provided as per rates and methodology notified under CERC Regulations. b) Depreciation charge for the year is lower by Rs.64.82 crore (previous year Rs.50.69 crore) as compared to the depreciation as per rates provided in the Schedule XIv of the Companies Act, 1956.

12. Effects due to changes in accounting policies during the year

a) In view of an opinion of the expert advisory committee (EAC) of the Institute of Chartered Accountants of India, capital expenditure on assets not owned by the company, which was hitherto amortized over a period of four years, is now charged off to revenue as and when incurred. The unamortized balance as on 01/04/2010 under Fixed Assets and CwIP Schedule has been written off as prior period expenditure. This has resulted in decrease in profit by Rs.3.56 crore (including prior period impact of Rs.4.22 crore) with corresponding decrease in CwIP/Fixed Asset. The matter has been referred to EAC for reconsideration.

b) Leasehold land, which was hitherto depreciated over the tenure of the lease, is now depreciated in 25 years or tenure of the lease whichever is less in accordance with the rate and methodology specified in CERC (Terms & Conditions of Tariff) Regulations, 2009 with retrospective effect from 01/04/2009. This has resulted in decrease in profit by Rs.5.21 Crore (including prior period impact of Rs.2.10 Crore).

c) Liabilities for price variation/ exchange rate variation in case of contracts which were hitherto accounted for on acceptance/receipt of claims are now being accounted for on estimated basis as per terms of the contracts. The above change has resulted in increase in liability by Rs.191.26 Crore with corresponding increase in CwIP/Fixed Assets. The above has also resulted in decrease in Profit by Rs.10.49 crore.

d) Liquidated damages / warranty claims which were hitherto being accounted for on receipt / certainty of receipt, are now recognized when no significant uncertainty as to measurability and collectability exists. The above has resulted in Decrease in liability by Rs.59.70 crore with corresponding decrease in CwIP/Fixed Assets. The above has also resulted in decrease in Profit by Rs.2.98 Crore.

e) CERC Tariff Regulations 2009 for block period 2009-14 provide that tariff for additional capital expenditure incurred after the date of commercial operation shall be allowed based on the projected expenditure. In view of the above, Transmission income in respect of additional capitalization, which was hitherto accounted for on the basis of specific order by the CERC, is now being accounted for on accrual basis based on actual expenditure incurred from year to year after date of commercial operation. This has resulted in increase in transmission income amounting to Rs.57.17 crore (including Rs.17.47 crore for financial year 2009-10).

f) The expenditure on Corporate Social Responsibility (CSR) which was, hitherto, incurred / appropriated out of profit to the extent of 0.75% of net profit of the preceding financial year, is now being incurred / appropriated to the extent of 1.00% of such profit. This has resulted in additional expenditure/appropriation of Rs.5.10 crore for the year.

g) Surcharge, which was, hitherto, accounted for on receipt / certainty of receipt, is now being accounted for when no significant uncertainty as to measurability and collectability exists. The above change has resulted in increase in profit due to accounting of additional surcharge of Rs.5.14 crore for the year.

13. In accordance with the CERC Tariff Regulations, 2009

a) The Company has billed and recognized transmission income as per tariff orders issued by CERC applicable for the block period 2009-14.

b) where tariff has not been approved under block period 2009-14, in respect of assets commissioned upto 31.03.2009, the Company has billed transmission charges as approved by CERC for the block period 2004-09 as applicable as on 31.03.2009 and recognized revenue as per norms for the block period 2009-14.

c) where tariff has not been approved by CERC under block period 2009-14 in respect of assets commissioned after 01/04/2009, the Company has recognized revenue of Rs.1207.39 crore based on Tariff Norms 2009-14 and the same is yet to be billed pending issuance of tariff orders by CERC for which petitions have been filed by the Company. However, CERC has amended the regulation 5 of the principal regulations vide its notification dated 02.05.2011 to the effect that Commission may consider in its discretion to grant provisional tariff upto 95% of the annual fixed cost of the project claimed in the application subject to adjustment after the final tariff order has been issued.

d) Pending certification of monthly transmission system availability by the Regional Power Committee (RPC) of some of the regions, transmission incentive of Rs.16.14 Crore has been recognized provisionally based on latest month's availability.

e) Transmission income of Rs.172.79 crore (previous year Rs.180.77 crore) has been recognised as income of the year, on issuance of final tariff orders by CERC in respect of provisional recognition of revenue in earlier years.

f) The Company has allowed rebate against payment received through LC / cheques / RTgS for effecting better and timely recovery of dues from State Power Utilities on consistent basis.

g) The Sundry Debtors - other Debts in schedule – 11 includes an amount of Rs.2152.71 crore (previous year Rs.1582.32 Crore) on account of unbilled revenue in view of recognition of revenue as per CERC Tariff Norms applicable for 2009-14.

14. Following the CERC order dated 03/08/2010, wherein the staff of the Commission was directed to prepare and submit draft amendment to the tax rate as per the Finance Act for the relevant year, various formalities for amending regulations including issue of draft amendments inviting comments from the stake holders and holding of public hearing in this respect has been completed but the final amendment is yet to be notified by CERC. Pending notification of the amendments by CERC, Return on Equity (RoE) component of transmission charges amounting to Rs.241.52 crore for the year has been recognized by grossing up the RoE using the applicable MAT rate of 19.9305% applicable for the year as against MAT rate of 11.33% applicable for the F.Y. 2008-09 ( on the basis of which billing is being made).

Revenue of Rs.132.47crore pertaining to F.Y. 2009-10 on account of above using the applicable MAT rate of 16.995% applicable for the year as against MAT rate of 11.33% applicable for the F.Y. 2008-09 ( on the basis of which billing is being made). has also been recognised during the year.

The total amount on account of above of Rs.373.99 crore is yet to be billed by the Company

b) Loans and Advances includes Rs.49.04 Crore (including interest of Rs.0.34 Crore charged on estimated bases) advanced to PoSoCo for day to day operations pending realisation of dues by PoSoCo.

15. During the year company made Follow on Public offer (FPo) and allotted 420,884,123 fresh equity shares of face value of Rs.10 each at a premium of Rs.80 each (Rs.75.50 each for retail investors) and further allotted 420,884,123 equity shares of Rs.10 each for a consideration of Rs.90 each (Rs.85.50 each to retail investors) being disinvestment on behalf of President of India on 23 rd November 2010. The company received Rs.3721.17 crore through fresh issue of shares including share premium of Rs.3300.29 crore and sale proceeds of equity of government of India amounting to Rs.3721.17 crore which was paid to government of India. out of the proceeds, a sum of Rs.1600 crore has been utilized during the year for part financing of capital expenditure on the projects specified for utilization and the balance amount has been invested as per the investment policy of the company.

Issue expenses of Rs.8.28 crore (Net after adjustment of government of India share of Issue expenses of Rs.7.64 crore) has been adjusted against Share Premium account (Schedule -2).

16. a) (i) FERv loss (to the extent not exceeding the difference between the Interest on foreign currency borrowings and local currency borrowings) has been adjusted to borrowing cost amounting to Rs.74.19 crore (net of Rs.0.27 crore FERv loss for the construction projects) {previous year FERv loss of Rs.2.17 crore (net of Rs.1.05 crore FERv loss for the construction projects)} towards loan liabilities attributable to fixed assets.

(ii) FERV Loss of Rs.15.71 crore (previous year FERv gain Rs.704.85 crore) has been adjusted in the respective carrying amount of Fixed Assets/Capital work in Progress (CwIP)/lease receivables.

(iii) FERv gain of Rs.77.96 crore ( previous year FERv gain of Rs.475.54 crore) has been recognized in the profit and loss Account in respect of loans contracted on or after 1st April, 2004 in terms of provisions of AS-11 (revised 2003)

b) other Income for the year include an amount of Rs.0.07 crore being the FERv gain on Current Assets (previous year FERv gain of Rs.0.34 crore).

17. FERv Loss of Rs.0.71 crore (previous year FERv gain Rs.471.30 crore) has been shown as FERv Recoverable and Rs.(1.49) crore has been shown as depreciation amortisation (previous year Rs.1.47 crore depreciation amortisation ) as per Accounting Policy No.9.3 and 9.4.

19. Accounting of FERv as stated in note nos. 18 and 19 above, has resulted in increase in profit for the year by Rs.4.48 crore ( previous year increase in profit by Rs.3.54 crore).

20. other Income includes Rs.20.26 crore (previous year Rs.26.53 crore) being the amount transferred from grants- in- Aid received in respect of Chandrapur HvDC, NER ULDC (for six months ended on 30.09.2010) and Salakati as per Accounting Policy No. 3.1.

21. The company is following AS-15 (revised 2005) 'Employee Benefits'. Defined employee benefit schemes are as under:- A. Provident Fund Company pays fixed contribution to Provident Fund at predetermined rate to a separate trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognized as expense and is charged to profit and loss a/c. The obligation of the company is limited to such fixed contribution. However, the trust is required to pay a minimum rate of interest on contributions to the members as specified by goI. The fair value of the assets of the provident fund including the return on the assets thereof, as on the balance sheet date is greater than the obligations under the defined contribution plan.

B. gratuity

The company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to get gratuity at 15 days salary (15/26 X last drawn basic salary plus, dearness allowance) for each completed year of service on superannuation, resignation, termination, disablement or on death subject to a maximum of Rs.10 lacs. The scheme is funded by the company and is managed by a separate trust. The liability for the same is recognised on the basis of actuarial valuation on annual basis. The additional gratuity liability provision under wage revision as on 31.03.2010 on enhanced limit from Rs.3.5 lacs to Rs.10 lacs on account of pay revision due for Supervisors and workmen amounting to Rs.54.88 crore was reversed. After revision of the limit from Rs.3.5 lacs to Rs.10 lacs during the FY 2010-11, the impact on valuation due to enhanced limit for Supervisors and workmen is Rs.78.32 crore.

C. Post-Retirement Medical Facility (PRMF)

The company has Post-Retirement Medical Facility (PRMF), under which retired employees and the spouse are provided medical facilities in the empanelled hospitals. They can also avail treatment as out-Patient subject to a ceiling fixed by the company. The scheme is unfunded and is recognised in profit and loss a/c on the basis of actuarial valuation on annual basis.

D. other Defined Retirement Benefits (oDRB)

The Company has a scheme for settlement at the time of superannuation at home town for employees and dependents. The scheme is unfunded and is recognised in profit and loss a/c on the basis of actuarial valuation on annual basis.

b) weighted average rate of return on plan assets during the year is 8.79% (previous year 8.73%)

f) During the year the company has provided liability towards contribution to the gratuity Trust of Rs.93.84 crore (Previous Year Rs.81.23 crore) out of which 2.70 Crore is recoverable from PoSoCo, PRMF of Rs.37.99 crore (Previous Year Rs.13.15 crore) and to oDRB of Rs.0.82 crore (Previous Year Rs.1.76 crore). Consequent upon settlement of wage revision of workmen & Supervisiors, provision of Rs.60.22 crore, has been reversed by crediting salary after retaining provision made in the earlier years Rs.67.52 crore towards superannuation benefits as per DPE guidelines. The scheme of superannuation benefits is yet to be finalised.

E. other Employee Benefits

Provision for Leave encashment amounting to Rs.16.52 crore (Previous Year Rs.4.00 crore) for the year has been made on the basis of actuarial valuation at the year end and charged to Profit and Loss Account.

g. Actuarial Assumptions

Principal assumptions used for actuarial valuation are:

i) Method used - Projected unit credit ( PUC)

ii) Discount rate: 8% (Previous Year 7.5%)

iii) Expected rate of return on assets (gratuity only): 8.50 % (Previous Year 8.50%)

iv) Future salary increase: 5.5% (Previous Year 5%)

The estimate of future salary increases, considered in actuarial valuation, takes into account (i) inflation, (ii) Seniority (iii) Promotion and (iv) other relevant factors, such as supply and demand in the employment market.

a) Business segments

The company's principal business is transmission of bulk power across different States of India. However, Power System operation Assets, ULDC, RLDC, telecom and consultancy business are also treated as a reportable segment in accordance with para 28 of AS-17 "Segment Reporting".

b) segment revenue and expense

Revenue directly attributable to the segments is considered as Segment Revenue. Expenses directly attributable to the segments and common expenses allocated on a reasonable basis are considered as segment expenses. Consultancy allowance paid to all the employees has been considered as expense of 'Consultancy Segment'.

c) segment assets and Liabilities

Segment assets include all operating assets comprising of net fixed assets, construction work-in-progress, construction stores, investments, loans and advances and current assets. Segment liabilities include loan liabilities, current liabilities and provisions.

d) The company has transmission projects located within the country and no geographical segment is distinguishable.

22. related Party Disclosures:-

a) Joint Ventures:-

i) Powerlinks Transmission Limited

ii) Torrent Power grid Limited

iii) Jaypee Powergrid Limited

iv) Parbati Koldam Transmission Company Ltd

v) Teestavalley Power Transmission Limited

vi) North East Transmission Company Limited

vii) National High Power Test Laboratory Private Limited

viii) Energy efficiency Services Limited.

b) subsidiaries:-

Power System operation Corporation Limited (PoSoCo)

The name of another subsidiary, namely Byrnihat Transmission Company Ltd. has been struck off from the Register and the

Company has been dissolved during the year.

23. a) Key management Personnel

Sh. S.K. Chaturvedi Chairman and Managing Director

Sh. J. Sridharan Director (Finance) (Superannuated on 30th April, 2011)

Sh. v.M. Kaul Director (Personnel)

Sh. R.N.Nayak Director (operations)

Sh. I.S.Jha Director (Projects)

Sh. Rakesh Jain Director

Dr. M. Ravi Kant Director

Dr. P.K. Shetty Director (Retired on 9th July 2010 and re-appointed vide order dated 19th october 2010 w.e.f 10th July, 2010)

Dr. A.S. Narag Director (Retired on 9th July 2010 and re-appointed vide order dated 19th october 2010 w.e.f 10th July, 2010)

Sh. Anil K. Agarwal Director (Retired on 9th July 2010 and re-appointed vide order dated 19th october 2010 w.e.f 10th July, 2010)

Sh. F.A. vanderavala Director (Retired on 9th July 2010 and re-appointed vide order dated 19th october 2010 w.e.f 10th July, 2010)

Sh. S.C. Tripathi Director (ceased to be Director w.e.f. 24th April, 2011)

Dr. Ashok Khanna Director (ceased to be Director w.e.f. 24th April, 2011)

Smt. Sarita Prasad Director

c) Transactions with the related parties at 24 (b) above are as follows:

In addition to transactions disclosed at note no. 16, company has paid System and Market operation and other charges of Rs.7.79 Crore and availed a rebate of Rs.0.11 Crore. Company has also recovered Rs.2.57 Crore from PoSoCo towards dark fiber lease charges.

24. Remuneration to whole time directors including chairman and managing director is Rs.1.77 crore (previous year Rs.1.58 crore) and amount of dues outstanding to the company as on 31st March, 2011 are Rs.0.07 crore (previous year Rs.0.09 crore). Director's sitting fee Rs.0.28 crore (Previous Year Rs.0.25 crore) for independent directors.

25. Employees' remuneration and benefits include the following for the directors, including chairman and managing director and excluding arrears paid to ex-directors.

26. In addition to the above remuneration, the whole time directors have been allowed to use the staff car (including for private journeys) on payment of Rs.780/- p.m. as contained in the Ministry of Finance (BPE) Circular No.2(18)/pc/64 dt. 29th November, 1964 as amended.

27. Disclosures regarding leases

a) Finance Leases :- Loans and Advances (Schedule 14) include lease receivables representing the present value of future lease rentals receivable on the finance lease transactions entered into by the company with the constituents in respect of State Sector ULDC, as per the Accounting Standard (AS) – 19 "Leases" issued by the Institute of Chartered Accountants of India.

b) operating leases:- The company's significant leasing arrangements are in respect of operating leases of premises for residential use of employees, offices and guest houses/transit camps are usually renewable on mutually agreed terms but are not non-cancellable. Employees' remuneration and benefits include Rs.26.67 crore (Previous Year Rs.19.61 crore) towards lease payments, net of recoveries, in respect of premises for residential use of employees. Lease payments of Rs.6.27 crore (Previous Year Rs.5.40 crore) in respect of premises for offices and guest house/transit camps are shown under Rent in Schedule-23 – Transmission, Administration and other expenses.

28. Joint venture entities:-

In addition, the share application money of Rs.8.92 crore and Rs.24.38 crore given to North East Transmission Company Ltd. and Energy Efficiency Services Limited respectively, has been included in Advance – others in Schedule no. 14 pending allotment of shares.

Under the Transmission Service Agreement (TSA) with Powerlinks Transmission Ltd, the company has an obligation to purchase the Jv company (Powerlinks Transmission Ltd) at a buyout price determined in accordance with the TSA. Such an obligation may result in case Jv company (Powerlinks Transmission Ltd) serves a termination notice either on "POWERGRID event of default" or on "force majeure event" prescribed under TSA. No contingent liability on this account has been considered as the same is not ascertainable.

29. In accordance with AS-28 "Impairment of Assets", impairment analysis of assets of transmission activity of the company by evaluation of its cash generating units, was carried out by an outside agency in the year 2004-05 and since recoverable amount was more than the carrying amount thereof, no impairment loss was recognised. Similarly, impairment analysis of telecom assets was carried out during 2006-07 and since the recoverable amount was more than the carrying amount of assets, no impairment loss was recognized. In the current year, there is no indication of impairment which requires re- estimating the recoverable amount of the assets.

30. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.30612.06 crore (previous year Rs.20952.14 crore).

31. No provision has been made for tax demands amounting to Rs.102.57 crore (previous year Rs.194.68 crore) and other demands (amount not ascertainable), for which appeals / litigation are pending, and the same have been shown as contingent liabilities

32. Disclosure in respect of contingent liabilities as required in AS 29 of 'Provisions, Contingent Liabilities and Contingent Assets':

Contingent Liabilities:

a) Contingent Liabilities as stated in Schedule 18 are dependent upon the outcome of court/appellate authorities/ out of court settlement, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, disposal of appeals.

b) Reimbursement of outflow in respect of 'Claims against the Company not acknowledged as debt' and 'Disputed tax demands-Income Tax' (limited to Income Tax on core activity only) as stated in Schedule 18 - Contingent Liability, is dependent on the admittance of petition to be filed with CERC and in remaining cases no reimbursement is expected.

33. a) Based on the information available with the company, there are no suppliers/service providers who are registered as micro, small or medium enterprises under "The Micro, Small and Medium Enterprises Development Act, 2006" as on 31st March, 2011.

b) No payment is due for more than 30 days as at 31st March, 2011 in respect of purchases / services made from small scale/ancillary industries.

34. a) Figures have been rounded off to nearest rupees in crore.

b) Previous year figures have been regrouped / rearranged wherever necessary.


Mar 31, 2010

1 Township buildings includes Rs. 7.27 crore (previous year Rs. 7.27 crore) for 28 flats at Mumbai, for which registration in favour of the company is pending.

2 Plant and machinery under substation in fixed assets (Schedule No 6) includes companys share of Rs. 3.80 crore (previous year Rs. 3.80 crore) in common services and facilities of 400 KV sub-stations of Uttar Pradesh state electricity board and Rajasthan state electricity board pending execution of formal agreements for joint ownership.

3 Cash equivalent of deemed export benefits availed of Rs. 209.99 crore in respect of supplies affected for East South Inter Connector-II Transmission Project (ESI) and Sasaram Transmission Project (STP), were paid to the Customs and Central Excise Authorities in accordance with direction from Ministry of Power (Govt of India) during 2002-03 due to non availability of World Bank loan for the entire supplies in respect of ESI project and for the supplies prior to March 2000 in respect of STP. Thereafter, World Bank had financed both the ESI project and STP as originally envisaged and they became eligible for deemed export benefits. Consequently, the company lodged claims with the Customs and Excise Authorities.

During the year, company recovered deemed export benefits to the extent of Rs. 1.49 crore (Previous year Rs. 4.39 crore) and de-capitalised in respective assets. The cumulative amount received and de-capitalised upto 31st March 2010 is Rs. 11.34 crore (Previous year Rs. 9.85 crore). The company continued to show the balance of Rs. 198.65 crore as at 31st March 2010 (Previous year Rs. 200.14 crore) in capital cost of the respective assets / projects pending receipt of the same from Customs and Excise Authorities.

4 Pending reconciliation, materials amounting to Rs. 106.33 crore (previous year Rs. 47.81 crore) is included under construction stores – schedule 8 as construction stores with contractors in commissioned lines.

5 The transmission systems situated in Jammu and Kashmir have been taken over by the Company w.e.f. 1st April,1993 from National Hydroelectric Power Corporation Ltd. (NHPC) upon mutually agreed terms, pending completion of legal formalities.

6 Honble High Court of Karnataka has declared the Karnataka Special Tax on Entry of Certain Goods Act,2004 as illegal and directed the concerned authority to refund the amount of Entry Tax collected since inception of the Act. The government of Karnataka has filed a writ petition before divisional bench of Honble Karnataka High Court which is yet to come up for hearing. The Company capitalised Rs. 13.62 crore paid towards entry tax. The same will be decapitalised upon final resolution of the issue.

7 During the year 400kV Kudankulam-Tirunelveli D/C (Quad) Lines I & II have become ready for intended use of evacuation of power from the Kudankulam Atomic Power Project of Nuclear Power Corporation of India Ltd (NPC) from 01.04.2009. Accordingly these Transmission Lines were capitalised w.e.f 01.04.2009 in accordance with the Accounting Policy No. 4.4 of the Company. The generating unit of NPC is not yet commissioned. The Company has an agreement dated 13th December 2004 with NPC for indemnification of the expenditure towards interest during construction (IDC) including FERV and Govt Guarantee fees for the delay in commissioning of the generating unit for a period upto one year from the date of capitalisation.

However, the tariff regulations 2009 for the block period 2009-14 provides for approving the Date of Commercial Operation (DOCO) by CERC prior to the transmission line coming into regular service for evacuation of power in respect of which petition has been filed by the Company. Pending approval of DOCO of the transmission lines by CERC and settlement of indemnification amount with NPC, no revenue has been recognised during the year.

1 a) The company owns 4703 hectare (Previous Year 4138 hectare) of land valuing Rs. 536.56 crore (Previous Year Rs. 438.27 crore) which has been classified into freehold and leasehold based on available documentation.

b) The companys land in the State of Jammu & Kashmir amounting to Rs. 19.89 crore (Previous Year Rs. 18.78 crore) and in certain other cases (value not ascertainable), the conveyancing of title to the freehold land and execution/ registration of lease agreements in favour of the company is pending for completion of legal formalities.

c) Freehold land includes Rs. 33.71 crore (previous year Rs. 31.91 crore) in respect of land acquired for residential complex at Gurgaon for which conveyance deed in favour of the Company is yet to be executed. d) Leasehold land includes Rs. 7.64 crore (previous year Rs. 7.64 crore) in respect of land acquired for office complex on perpetual lease basis with an unlimited useful life at Katwaria Sarai, New Delhi and hence no depreciation is charged.

2 Township buildings includes Rs. 7.27 crore (previous year Rs. 7.27 crore) for 28 flats at Mumbai, for which registration in favour of the company is pending.

3 Plant and machinery under substation in fixed assets (Schedule No 6) includes companys share of Rs. 3.80 crore (previous year Rs. 3.80 crore) in common services and facilities of 400 KV sub-stations of Uttar Pradesh state electricity board and Rajasthan state electricity board pending execution of formal agreements for joint ownership.

4 Cash equivalent of deemed export benefits availed of Rs. 209.99 crore in respect of supplies affected for East South Inter Connector-II Transmission Project (ESI) and Sasaram Transmission Project (STP), were paid to the Customs and Central Excise Authorities in accordance with direction from Ministry of Power (Govt of India) during 2002-03 due to non availability of World Bank loan for the entire supplies in respect of ESI project and for the supplies prior to March 2000 in respect of STP. Thereafter, World Bank had financed both the ESI project and STP as originally envisaged and they became eligible for deemed export benefits. Consequently, the company lodged claims with the Customs and Excise Authorities.

During the year, company recovered deemed export benefits to the extent of Rs. 1.49 crore (Previous year Rs. 4.39 crore) and de-capitalised in respective assets. The cumulative amount received and de-capitalised upto 31st March 2010 is Rs. 11.34 crore (Previous year Rs. 9.85 crore). The company continued to show the balance of Rs. 198.65 crore as at 31st March 2010 (Previous year Rs. 200.14 crore) in capital cost of the respective assets / projects pending receipt of the same from Customs and Excise Authorities.

5 Pending reconciliation, materials amounting to Rs. 106.33 crore (previous year Rs. 47.81 crore) is included under construction stores – schedule 8 as construction stores with contractors in commissioned lines.

6 The transmission systems situated in Jammu and Kashmir have been taken over by the Company w.e.f. 1st April,1993 from National Hydroelectric Power Corporation Ltd. (NHPC) upon mutually agreed terms, pending completion of legal formalities.

7 Honble High Court of Karnataka has declared the Karnataka Special Tax on Entry of Certain Goods Act,2004 as illegal and directed the concerned authority to refund the amount of Entry Tax collected since inception of the Act. The government of Karnataka has filed a writ petition before divisional bench of Honble Karnataka High Court which is yet to come up for hearing. The Company capitalised Rs. 13.62 crore paid towards entry tax. The same will be decapitalised upon final resolution of the issue.

8 During the year 400kV Kudankulam-Tirunelveli D/C (Quad) Lines I & II have become ready for intended use of evacuation of power from the Kudankulam Atomic Power Project of Nuclear Power Corporation of India Ltd (NPC) from 01.04.2009. Accordingly these Transmission Lines were capitalised w.e.f 01.04.2009 in accordance with the Accounting Policy No. 4.4 of the Company. The generating unit of NPC is not yet commissioned. The Company has an agreement dated 13th December 2004 with NPC for indemnification of the expenditure towards interest during construction (IDC) including FERV and Govt Guarantee fees for the delay in commissioning of the generating unit for a period upto one year from the date of capitalisation. However, the tariff regulations 2009 for the block period 2009-14 provides for approving the Date of Commercial Operation (DOCO) by CERC prior to the transmission line coming into regular service for evacuation of power in respect of which petition has been filed by the Company. Pending approval of DOCO of the transmission lines by CERC and settlement of indemnification amount with NPC, no revenue has been recognised during the year.

9. Service Tax is leviable on services notified under section 65 of the Finance Act, 1994. "Transmission of Power" is not a specified service in the said list. However, The Service Tax Authorities are interpreting Transmission of Power as taxable service under the head "Business Support Service" w.e.f 1st May 2006 given in the list of taxable services. Accordingly, the company has received Order-in-Original from Central Excise Department at Shillong (Rs. 66 crore) & appealed before CESTAT, Kolkata.A Show Cause Notices from Service Tax / Central Excise Department at New Delhi (Rs. 413 crore & Rs. 241 crore) Nagpur (Rs. 237 crore) and Patna (Rs. 209 crore) along with interest and penalties leviable thereon. All the cases were transferred before Commissioner Service Tax, New Delhi vide CBEC Order No. 2/2010 dated 22.01.2010. In addition, the Service Tax Authorities are gathering information from other regional offices of the company. The company has obtained legal opinion in the matter and necessary reply and appeal have been filed with the concerned authorities.

Based on the legal opinion and the fact that transmission of power is not covered in the list of taxable services under section 65 of the Finance Act, the company has not provided for the liability on account of Service Tax on transmission charges.

CBEC vide Notification No. 11/2010 dated 27.02.2010 has exempted Transmission of Power from the Service Tax net. As the notification is silent about the past period, the matter has been referred by Ministry of Power to Ministry of Finance. The same is still pending with Ministry of Finance. The estimated amount of Service Tax liability of Rs. 2,820.68 crore (including interest of Rs. 537.71 crore) for the period from 1st May, 2006 to February 2010 (Previous year Rs. 2041 Crore including interest of Rs. 308 crore) is shown as contingent liability for the company as a whole. Moreover, petition has been filed with the Central Electricity Regulatory Commission (CERC) for reimbursement of service tax, if levied by revenue authorities, since service tax is an Indirect Tax and is a pass through item in transmission tariff.

10. a) Balances in Loans and Advances, material with contractors, Sundry Creditors, Advances from customers and Sundry Debtors are subject to confirmation and consequential adjustments, 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.

11. Cash and Bank Balances include Rs. 34.53 crore (previous year Rs. 30.72 crore) on account of tax deducted at source on perquisites to employees as per the provisions of the Income Tax Act, 1961, which was deposited in a separate bank account as per Orders of the Honble Calcutta High Court.

12. Bonds Series XXXI & XXXII amounting to Rs. 2047.50 crore & Rs. 1035 crore respectively issued during the year, have been classified as Secured upon execution of trust deed on 19 May 2010 (previous year Bonds Series XXIX amounting to Rs. 1297.50 crore classified as unsecured pending execution of trust deed).

13. a) The company has been providing for depreciation at the rates notified for the purpose of recovery of tariff, by CERC. The issue of charging depreciation at rates different from the rates specified under Companies Act, 1956 has been referred by the Comptroller & Auditor General of India (C&AG) to the Ministry of Power (MOP) during the block year 2004-09 and the same is pending for disposal. However, MOP has issued tariff policy for the block year 2009-14, which provides that rates of depreciation notified by CERC would be applicable for the purpose of tariff as well as accounting.

In accordance with the Tariff Policy, CERC has notified norms for the block period 2009-14 which provides for specified depreciation rates in first 12 years and thereafter amortisation of residual value over the residual life as against average 2.91% in the block period 2004-09.

Accordingly, depreciation on the transmission assets for the year has been provided as per above rates and methodology. Thus, by charging depreciation at the aforesaid rates, the depreciation charge for the year is higher by Rs. 675.23 crore as compared to the depreciation charge as per rates notified by CERC for the block year 2004-09 which were being followed upto 31/03/2009.

b) Depreciation charge for the year is lower by Rs. 50.69 crore (previous year Rs. 781.29 crore) as compared to the depreciation as per rates provided in the Schedule XIV of the Companies Act, 1956.

14. Effects due to changes in accounting policies during the year

The matter regarding allocation of Common Expenses of Corporate office, Regional Offices and Projects, common to operation and construction activities, was referred to Expert Advisory Committee (EAC) of Institute of Chartered Accountant of India (ICAI). Upon receipt of Opinion from EAC, such expenses which were hitherto allocated to various diversified activities of the company viz. transmission, telecom, consultancy and Accelerated Power Development and Reform Program (APDRP) in the ratio of the respective income/reimbursement of each activity and further allocated between revenue and Incidental Expenditure during Construction in the proportion of Transmission Charges and Telecom Income to annual capital outlay have now been identified and allocated on systematic basis with retrospective effect from 1st April, 2008.

The above has resulted in increase in current year expenditure by Rs. 86.35 crore & prior period expenditure by Rs. 91.92 crore and thereby reduction in profit for the year by Rs. 178.27 crore with corresponding decrease in CWIP and Gross Block.

15. a) Upon the implementation of the revised pay scales as per the guidelines issued by Department of Public Enterprise (DPE) from time to time, the company has revised the pay scales for the executives effective from 01.01.2007 and the payments made during the current financial year have been adjusted against the provision held on 31.03.2009 for pay revision amounting to Rs. 249.41 crore for executives.

b) Further, a provision of Rs. 6.20 crore (previous year Rs. 56.82 crore) has been made towards superannuation benefit scheme for executives being the balance permissible amount under DPE guidelines for which scheme is yet to be finalized.

c) Pending the implementation of Pay revision for the supervisors and workmen, the company has made a provision of Rs. 106.79 crore (Previous Year Rs. 45.09 crore) aggregating to Rs. 279.90 crore as on 31.03.2010 (previous year Rs. 173.11 crore) on an estimated basis having regard to the guidelines issued from time to time by DPE and principles of wage revision implemented in respect of executives of the company. Against the above provision, adhoc advance of Rs. 57.01 crore (previous year Rs. 40.44 crore) has been paid which has been included under loans and advances- Schedule no 14.

d) Further Provision for Performance Related Pay (PRP) of Rs. 74.96 crore (net of adjustment of Rs. 32.02 crore being excess provision made last year) (Previous Year Rs. 76.78 crore) has been made as per DPE guidelines, as part of wage revision in respect of Executives and Supervisors.

16. a) Central Electricity Regulatory Commission (CERC), constituted under erstwhile Electricity Regulatory Commission Act, 1998, issued orders in December, 2000 with respect to the norms, principles and availability based tariff. An appeal was filed by the Company against the above orders before the Honble Delhi High Court which was subsequently transferred to the Appellate Tribunal for Electricity (ATE) on its formation. The ATE has dismissed the appeal on the ground of its power to deal with regulations notified by CERC. Against the said dismissal order of ATE, NTPC Ltd. preferred an appeal before the Honble Supreme Court impleading POWERGRID as one of the respondents. Since the subject matter of the appeal is for restoration of certain components of tariff on par with the erstwhile Government of India (GOI) norms, which will be more favourable than CERC norms, the impact of the appeal shall not result in reduction of revenue.

The Company has followed the CERC Tariff regulations, 2001 and 2004 for recognition of revenue for block period 2001-04 & 2004-09 respectively.

b) In exercise of powers u/s 178 of Electricity Act 2003, Central Electricity Regulatory Commission (CERC) has notified CERC (Terms and Conditions of Tariff) Regulations 2009 vide order dated 19th January, 2009 for determination of transmission tariff for the block period 2009-14. The norms include the following major items:

i) Return on Equity to be allowed @ 17.48% pre tax (15.5% post tax) in place of 14% post tax in the block of 2004-09.

ii) Additional return on equity @0.5% if projects are completed within the time limits specified by CERC against nil in block of 2004-09.

iii) Recovery of Depreciation @ 5.28% (T/L and S/S) in first 12 years and there after recovery based on residual value over the residual life in place of average 2.91% in the block of 2004-09.

iv) Availability Incentives linked with monthly transmission charges instead of increased return on equity in the block period 2004-09.

Transmission charges of Rs. 4985.18 crore for the year have been provisionally recognised based on the above norms for the block period 2009-14 and as per accounting policy of the Company pending filing of petitions. Further Rs. 1014.15 crore has been recognised awaiting issuance of project specific tariff orders by CERC for which petitions have been filed.

c) As prescribed by the CERC Tariff Regulations, 2009, pending final determination of tariff by CERC as per the Tariff norms, 2009, billing has been made provisionally on the basis of tariff as approved by CERC and applicable as on 31.03.2009. The difference between recognition of income for the year 2009-10 and provisional billing has resulted in an increase in sundry debtors by an amount of Rs. 883.48 crore

d) Transmission income of Rs. 180.77 crore (previous year 219.37 crore) has been recognised as income of the year on issuance of final tariff orders by CERC in respect of provisional recognition of revenue in earlier years. e) The tariff norms for the block period 2009-14 notified by CERC provides that the rate of return on equity (ROE) shall be computed by grossing up the base rate of 15.5% with the tax rate applicable to the Company (MAT @ 11.33%) for the year 2008-09 which shall be trued up separately for each year with respect to the actual tax rate applicable, in line with the provisions of the relevant Finance Act of the respective year, for the tariff period alongwith the tariff petition for the next tariff period. An application has filed with CERC for grossing of ROE based on the MAT rate applicable for the respective financial year. Pending disposal of application by CERC, ROE amounting to Rs. 132.47 crore, being the difference of grossing up @ 16.995% (being the MAT rate for financial year 2009-10) and @ 11.33% as aforesaid, has not been recognised.

17. Advance Against Depreciation (AAD) was included in the Transmission income on repayment of entire loan deployed in the specific project by spreading the AAD over the residual life of the project upto 31.03.2009. Due to change of tariff norms w.e.f. 01/04/2009, the same has now been taken to transmission income after 12 years from the year of commercial operation. The above income is recognised being the lower of AAD outstanding and the difference between the depreciation charge in accounts and depreciation recovery through tariff.

The change has resulted in increase in transmission income by Rs. 7.20 crore and profit by same amount.

18. a) The Regional Load Despatch Centres (RLDCs) of Central Electricity Authority were transferred to the company (along with associated manpower) during the earlier years as per orders of Ministry of Power, Government of India (GOI). The Assets of RLDCs are being used by the company pending transfer of ownership and determination of cost of assets so taken over.

b) The company had set up a wholly owned subsidiary company on 20th March 2009 namely "Power System Operation Corporation Limited" (POSOCO) for taking over Power System Operation Segment. The same is considered as Discontinuing Operation as per Accounting Standard 24. The System Operation segment of the company along with associated manpower are in the process of being transferred w.e.f 01.04.2010. An amount of Rs. 0.05 crore (Previous Year Share application money of Rs. 0.05 crore) has been subscribed towards share capital. The amount of Rs. 1.28 crore, incurred by the Company towards incorporation and other administrative expenses of POSOCO, has been shown as advance recoverable.

c) The Company has identified assets (Gross Block) of Rs. 269.98 crore as on 31.03.2010 to be transferred to POSOCO. Revenue of Rs. 224.58 crore (including other income mainly STOA charges and bank interest) emanating from such assets has been recognised based on the CERC (fees and charges of Regional Load Despatch Centre and other related matters) Regulations, 2009 dt 18.09.2009 notified by CERC. Pending transfer of Assets/Liabilities to POSOCO, the revenue, expenses, assets and liabilities have been depicted as a separate segment. d) After transfer of such identified assets to POSOCO, part of the ULDC assets of the Central portion mainly communication systems and the SLDC systems consisting of the entire state portion would continue to be operated and maintained by the Company as per the committees constituted for the purpose. An application has been filed before CERC under Regulation- 44 (Power to Relax), for extending the CERC (Terms and Conditions of Tariff) Regulations, 2009 for the "Communication Systems and "SLDC System" with certain modifications in Depreciation, O&M etc. Pending finalisation of the decision of CERC in this regard, tariff for "Communication Systems and "SLDC System" have been accounted as per rates applicable during the previous block 2004-09.

19. a) (i) FERV loss (to the extent not exceeding the difference between the Interest on foreign currency borrowings and local currency borrowings) has been adjusted to borrowing cost amounting to Rs. 2.17 crore (net of Rs. 1.05 crore FERV loss for the construction projects) {previous year FERV loss of Rs. 404.86 crore (net of 190.47 core FERV loss for the construction projects)} towards loan liabilities attributable to fixed assets.

(ii) FERV Gain of Rs. 704.85 crore (previous year FERV Loss Rs. 967.71 crore) has been adjusted in the respective carrying amount of Fixed Assets/Capital work in Progress (CWIP)/lease receivables. (iii) FERV Gain of Rs. 475.54 crore (previous year FERV Loss of Rs. 538.48 crore) has been recognised in the profit and loss Account in respect of loans contracted on or after 1st April,2004 in terms of provisions of AS-11 (revised 2003)

b) Other Income for the year include an amount of Rs. 0.34 crore being the FERV gain on Current Assets (previous year FERV loss of Rs. 1.69 crore included in Finance Charges).

20. FERV Gain of Rs. 471.30 crore (previous year FERV Loss Rs. 889.82 crore) has been shown as FERV Payable and Rs. 1.47 crore has been shown as depreciation amortisation (previous year Rs. 17.55 crore depreciation write back) as per Accounting Policy No.8.3 and 8.4. In the Previous Year, Rs. 51.02 crore was shown as FERV Payable on account of Prior Period Expenditure

21. Accounting of FERV as stated in note nos. 20 and 21 above has resulted in increase in profit for the year by Rs. 3.54 crore (previous year reduction in profit by Rs. 86.99 crore).

22. Other Income includes Rs. 26.53 crore (previous year Rs. 18.42 crore) being the amount transferred from Grants- in- Aid received in respect of Chandrapur HVDC, NER ULDC and Salakati as per Accounting Policy No. 3.1.

23. The company is following AS-15 (revised 2005) Employee Benefits from 1st April, 2007. Defined employee benefit schemes are as under:-

A. Provident Fund

Company pays fixed contribution to Provident Fund at predetermined rate to a separate trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognised as expense and is charged to profit and loss a/c. The obligation of the company is limited to such fixed contribution. However, the trust is required to pay a minimum rate of interest on contributions to the members as specified by GOI. The fair value of the assets of the provident fund including the return on the assets thereof, as on the balance sheet date is greater than the obligations under the defined contribution plan.

B. Gratuity

The company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to get gratuity at 15 days salary (15/26 X last drawn basic salary plus, dearness allowance) for each completed year of service on superannuation, resignation, termination, disablement or on death subject to a maximum of Rs. 3.50 Lacs on pre revised pay scales due for revision effective from 01.01.2007 for supervisors and workmen and Rs. 10 Lacs for executives on revised pay scales implemented from 01.01.2007. The provision for additional gratuity liability on enhanced limit from Rs. 3.50 lacs to Rs. 10 lacs on revised scales due for revision for supervisors and workmen amounting to Rs. 54.88 crore has been provided under wage revision. The scheme is funded by the company and is managed by a separate trust. The liability for the same is recognised on the basis of actuarial valuation on annual basis.

C Post-Retirement Medical Facility (PRMF)

The company has Post-Retirement Medical Facility (PRMF), under which retired employees and the spouse are provided medical facilities in the empanelled hospitals. They can also avail treatment as Out-Patient subject to a ceiling fixed by the company. The scheme is unfunded and is recognised in profit and loss a/c on the basis of actuarial valuation on annual basis.

D. Other Defined Retirement Benefits (ODRB) The Company has a scheme for settlement at the time of superannuation at home town for employees and dependents. The scheme is unfunded and is recognised in profit and loss a/c on the basis of actuarial valuation on annual basis.

24. In the pay revision implemented for executives, expenditure on account of Leave Travel Concession (LTC) has been included as one of the component of perquisites w.e.f. 26.11.2008. Now a fixed sum is being paid to executives on account of LTC on monthly basis. Similar provision has also been made in respect of wage revision due for the supervisors and workmen category of employees. Accordingly, LTC which was hitherto being accounted for on the basis of actuarial valuation on annual basis is now being accounted based on actual expenditure incurred. Provision for unclaimed LTC of Rs. 17.45 crore has been written back including a sum of Rs. 14.72 crore (adjusted against the General Reserve as per the transitional provisions of AS-15 in the Financial Year 2007-08) which has been directly credited to General Reserve.

a) Business Segments

The companys principal business is transmission of bulk power across different States of India. However, Power System Operation Assets, ULDC, telecom and consultancy business are also treated as a reportable segment in accordance with para 28 of AS-17 "Segment Reporting".

b) Segment Revenue and Expense

Revenue directly attributable to the segments is considered as Segment Revenue. Expenses directly attributable to the segments and common expenses allocated on a reasonable basis are considered as segment expenses. Consultancy allowance paid to all the employees has been considered as expense of Consultancy Segment.

c) Segment Assets and Liabilities Segment assets include all operating assets comprising of net fixed assets, construction work-in-progress, construction stores, investments, loans and advances and current assets. Segment liabilities include loan liabilities, current liabilities and provisions.

d) The company has transmission projects located within the country and no geographical segment is distinguishable.

25. Related Party Disclosures:-

a) Related Parties:-i)

List of Joint Ventures:-Powerlinks

Transmission Limited, Torrent Power Grid Limited, Jaypee Powergrid Limited, Parbati Koldam Transmission Company Ltd, POWERGRID IL&FS Transmission Pvt. Ltd.*, Teestavalley Power Transmission Limited, North East Transmission Company Limited, National High Power Test Laboratory Private Limited, Energy efficiency Services Limited.

ii) Subsidiaries:-

Byrnihat Transmission Company Limited**

Power System Operation Corporation Limited

* JV is under liquidation u/s 560 of Companies Act 1956

** Filing of liquidation of the subsidiary is under process.

28. Key Management Personnel

Sh. S.K. Chaturvedi Chairman and Managing Director Sh. J. Sridharan Director (Finance) Sh. V.M. Kaul Director (Personnel) Sh. R.N.Nayak Director (Operations) (w.e.f. 16th May, 2009) Sh. I.S.Jha Director (Projects) (w.e.f. 1st September, 2009) Dr. P.K. Shetty Director Dr. A.S. Narag Director Sh. Anil K. Agarwal Director Sh. F.A. Vanderavala Director Sh. S.C. Tripathi Director Sh. Ashok Khanna Director Smt. Sarita Prasad Director Sh. Sudhir Kumar Director (w.e.f. 22nd May,2009 to 10th December,2009) Sh. Rakesh Jain Director (w.e.f. 09th June, 2009) Sh. I.C.P Keshari Director (from 6th March,2009 to 21st May,2009) Sh. M. Ravi Kant Director (w.e.f. 11th December,2009)

Sh. S. Majumdar Director (Projects) (Superannuated on 31st August, 2009)

26. Remuneration to whole time directors including chairman and managing director is Rs. 1.58 crore (previous year Rs. 0.45 crore) and amount of dues outstanding to the company as on 31st March, 2010 are Rs. 0.09 crore (previous year Rs. 0.06 crore). Directors sitting fee Rs. 0.25 crore (Previous Year Rs. 0.13 crore) for independent directors.

27. In addition to the above remuneration, the whole time directors have been allowed to use the staff car (including for private journeys) on payment of Rs. 780/- p.m. as contained in the Ministry of Finance (BPE) Circular No.2(18)/pc/64 dt. 29th November, 1964 as amended.

28. Disclosures regarding leases

a) Finance Leases :-Loans and Advances (Schedule 14) include lease receivables representing the present value of future lease rentals receivable on the finance lease transactions entered into by the company with the constituents in respect of State Sector ULDC, as per the Accounting Standard (AS) – 19 "Leases" issued by the Institute of Chartered Accountants of India.

29. Consolidated Financial Statements

The company has made investments of Rs. 0.05 crore each in the equity shares of wholly owned subsidiary companies

(i) Byrnihat Transmission Company Ltd. (liquidation proceedings initiated) and (ii) Power System Operation Corporation Limited (POSOCO).

No consolidated financial statements are prepared since the transactions of the subsidiaries are not material.

30. In accordance with AS-28 "Impairment of Assets", impairment analysis of assets of transmission activity of the company by evaluation of its cash generating units, was carried out by an outside agency in the year 2004-05 and since recoverable amount was more than the carrying amount thereof, no impairment loss was recognised. Similarly, impairment analysis of telecom assets was carried out during 2006-07 and since the recoverable amount was more than the carrying amount of assets, no impairment loss was recognised. In the current year, there is no indication of impairment which requires re-estimating the recoverable amount of the assets.

31. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 20952.14 crore (previous year Rs. 16418.24 crore).

32. No provision has been made for tax demands amounting to Rs. 194.68 crore (previous year Rs. 172.69 crore) and other demands (amount not ascertainable), for which appeals / litigation are pending, and the same have been shown as contingent liabilities under schedule no 18.

33. Disclosure in respect of contingent liabilities as required in AS 29 of Provisions, Contingent Liabilities and Contingent Assets:

Contingent Liabilities:

a) Contingent Liabilities as stated in Schedule 18 are dependent upon the outcome of court/appellate authorities/ out of court settlement, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, disposal of appeals.

b) Reimbursement of outflow in respect of Claim against the Company not acknowledged as debt and Disputed tax demands-Income Tax (limited to Income Tax on core activity only)/and service tax on transmission charges as stated in Schedule 18 of Contingent Liability, is dependent on the admittance of petition to be filed with CERC and in remaining cases no reimbursement is expected.

34. a) Based on the information available with the company, there are no suppliers/service providers who are registered as micro, small or medium enterprises under "The Micro, Small and Medium Enterprises Development Act, 2006" as on 31st March, 2010.

b) No payment is due for more than 30 days as at 31st March, 2010 in respect of purchases / services made from small scale/ancillary industries.

35. a) Figures have been rounded off to nearest rupees in crore. b) Previous year figures have been regrouped / rearranged wherever necessary.


Mar 31, 2003

1. The Transmission Systems situated in Jammu and Kashmir associated with National Hydroelectric Power Corporation Ltd. (NHPC) have been taken over by the Company w.e.f. 01.04.93 as mutually agreed upon with NHPC but regularisation is pending for completion of legal formalities.

2. The Regional Load Despatch Centres (RLDCs) of Central Electricity Authority were transferred to the Company (alongwith associated manpower) during the earlier years as per the orders of Ministry of Power, Government of India. The Assets of RLDCs are used by the company pending transfer of ownership and determination of cost of assets so taken over.

3. 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.

b) In certain cases, the conveyancing of title to the freehold land and execution of lease agreement (value not ascertained) in favour of the company is pending for completion of legal formalities.

c) Leasehold land includes Rs. 764 lacs (previous year Rs.764 lacs) for land acquired in Katwaria Sarai, New Delhi. As the land is acquired on perpetual lease and does not have a limited useful life, no depreciation has been charged.

d) Value of buildings include Rs. 722 lacs (previous year Rs.722 lacs) for 28 flats at Mumbai, for which registration in favour of the company is pending.

e) Freehold land includes Rs. 4604 lacs (previous year Rs. 4092 lacs) for land acquired for Corporate Office / Residential Complex at Gurgaon for which transfer deed in favour of the company is yet to be executed.

4. Pending reconciliation, materials amounting to Rs. 78 lacs(previous year Rs. 80 lacs) in commissioned lines is shown as construction stores lying with contractors.

5. Fixed Assets include companys share of Rs. 562 lacs (previous year Rs.562 lacs) in common services and facilities-of 400 KV sub- stations of Uttar Pradesh State Electricity Board (UPSEB) and Rajasthan State Electricity Board (RSEB) pending execution of formal agreements for joint ownership.

6. a) An amount of Rs. 23547 lacs (previous year - Rs. 10968 lacs) being exchange rate difference in respect of Fixed Assets and Capital Work in Progress has been adjusted in the carrying amount during the year.

b) Other Finance charges for the year include an amount of Rs. 146 lacs (previous year Rs. 29 lacs) being the negative exchange rate difference on Current Assets. Other Income for the year include an amount of Rs. Nil (previous years - Rs. 11 lacs) being the favorable exchange rate difference on current assets.

7. a) i) Balances in Sundry Debtors, Loans, Advances and Material with Contractors are confirmed and reconciled except in some cases.

ii) Balances in Sundry Creditors are pending confirmation from the parties.

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.

8. I. CANBANK FINANCIAL SERVICES LIMITED (CANFINA)

a) During the year 1991-92, pursuant to a contract with CANFINA, the company allotted Bonds worth Rs. 12000 lacs and placed a deposit of Rs. 11080 lacs with them (net of front -end fee of Rs. 920 lacs) as a condition of the same contract. CANFINA defaulted on deposit repayment after making repayment of Rs. 1680 lacs. Pursuant to such default in 1993-94, the company forfeited bonds worth Rs.10320 lacs against deposit of Rs.9400 lacs and write-back of front-end fee of Rs. 920 lacs. Subsequently, during 1994-95, the company restored deposits of Rs. 9400 lacs by credit to Capital Reserve in accordance with legal advice.

b) During 1998-99, on maturity of Rs. 1680 lacs worth of bonds not forfeited, the company repaid Rs. 103.34 lacs to third parties duly recognised by the company as holders, and in exercise of its lien on balance Rs.1576.66 lacs, set it off against deposits with CANFINA.

c) The company has neither accounted for interest income of Rs. 939 lacs (previous year Rs.939 lacs), cumulative Rs. 11709 lacs on deposit with CANFINA, nor has accounted for cumulative interest of Rs. 1876 lacs payable upto maturity on bonds worth Rs.1576.66 lacs which were set-off against deposit with CANFINA in the year 1998-99.

d) An adhoc provision of Rs. 5000 lacs against amount recoverable from CANFINA is held pending settlement of the above matters.

II. ANDHRA BANK FINANCIAL SERVICES LTD.(ABFSL)

a) During the year 1991-92, pursuant to a contract with ABFSL, the company allotted Bonds worth Rs. 2500 lacs and placed a deposit of Rs. 2150 lacs with them (net of front-end fee of Rs. 350 lacs) as a condition of the same contract. ABFSL defaulted on deposit repayment. Pursuant to such default, during 1993-94, the company forfeited bonds worth Rs.2100 lacs by adjustment of deposit of Rs.1806 lacs and write-back of front-end fee of Rs.294 lacs. Subsequently, during 1994-95, the company restored deposit of Rs. 1806 lacs by credit to Capital Reserve in accordance with legal advice.

b) The company has neither accounted for interest income of Rs. 296 lacs (previous year Rs.296 lacs), cumulative Rs. 3272 lacs, on deposit with ABFSL, nor has accounted for cumulative interest of Rs. 360 lacs, payable upto maturity on bonds worth Rs.400 lacs held by ABFSL.

c) Bonds worth Rs. 400 Lacs held in the name of ABFSL have matured on 10.03.2002. Since the matter is under dispute / subjudice, the maturity proceeds have been shown under Other Liabilities.

9. Share Capital Deposit of Rs. 3881 lacs (previous year Rs. 3881 lacs) represents the value of shares to be allotted against purchase consideration payable to Government of India for ex-NHPC lines.

10. a) Cash & Bank Balance includes Rs. 327 lacs on account of deduction of Tax at Source on perquisites to employees as per the provisions of the Income Tax Act, 1961 and deposited in a separate bank account as per Orders of the Honble Kolkata High Court.

b) Balance with Scheduled Banks in term deposits include Rs. 855 lacs (previous year Rs. 803 lacs) FDR pledged with Principal Chief Conservator of Forest, Shimla (Himachal Pradesh) against compensatory afforestation.

11. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances and payments) is Rs. 262336 lacs (previous year Rs. 219261 lacs).

12. No payment is overdue for the purchases made from small scale/ancillary industries. Hence, no-provision for interest has been made in the accounts.

13. Provision has not been made for entry tax and sales tax on works contracts and materials issued to contractors, for which appeals are pending and/or the amounts are not ascertainable.

14. a) Central Electricity Regulatory Commission (CERC), constituted under Electricity Regulatory Commission Act, 1998, issued orders in December, 2000 with respect to the norms, principles and availability based tariff. An appeal was filed by the Company against the above orders before the Honble Delhi High Court, which is yet to be disposed. Pending disposal of appeal, CERC notified tariff norms effective from 1st April, 2001. The transmission income for the year has been accounted for provisionally on the basis of tariff determined as per CERC norms, subject to adjustment after final notification of tariff.

b) Transmission Income for NER constituents has been accounted for at the UCPTT rate of 35 paise per unit, as frozen in the 43rd NEREB meeting. In 47th NEREB meeting, it was decided that if the generation is less, the balance amount shall be kept separately and shall be adjusted when generation is more. Based on normative energy, tariff is Rs. 9118 lacs. Because of more powerflow, an amount of Rs. 10000 lacs (previous year Rs. 9313 lacs) has been accounted for as Transmission Income from NER Constituents.

c) Consequent upon disallowance of depreciation on Grant utilised for Chandrapur HVDC project by CERC, an amount of Rs. 10050 lacs accounted for as Transmission Income upto last year has been reduced from the Transmission Income in the current year.

15. The Company had been providing depreciation upto 31.03.2001 as per the rates notified by Govt. of India (GOI) u/s 75A of the Electricity (Supply) Act which correspond to the depreciation rates considered in the GOI norms for tariff. Central Electricity Regulatory Commission (CERC) notified tariff norms effective from 01.04.2001 which provide for amended rates of depreciation for the purpose of recovery of tariff. However, the rates of depreciation notified by the GOI u/s 75A of the Electricity (Supply) Act, 1948, have not been amended to correspond with the CERC rates. Pending amendment of GOI notification of rates of depreciation as recommended by CERC, the depreciation on fixed assets has been provided at the rates specified in the CERC notification for recovery of tariff. The depreciation charged for the year is lower by Rs. 46106 lacs (previous year Rs. 42340 lacs) as compared to rates prescribed under Electricity (Supply) Act, 1948.

16. a) Trading of Power generated by Chukha Hydel Power Corporation Limited and Kurichhu Hydel Power Corporation Limited has been transferred to Power Trading Corporation Ltd. with effect from 01.10.2002. A sum of Rs. 16246 lacs is outstanding under Sundry Debtors as on 31.03.2003 for the Power sold.

b) Purchase of power is net of subsidy of Rs. 4240 lacs (Previous year Rs. 4134 lacs) from Ministry of External Affairs.

17. Certain accounting policies have undergone change during the year The impact of change in accounting policies, on the accounts for the year, is as under:

a) Surcharge, which was hitherto accounted for on receipt basis is now accounted for on receipt / certainty of receipt. This change in policy has resulted in increase in other income and profit by Rs. 19229 lacs.

b) In line with the Accounting Standard (AS) - 2 on Valuation of Inventories and Accounting Standard (AS) -10 on Accounting for Fixed Assets, during the year the company has capitalised w.e.f 01.04.1999, insurance spares which were previously treated as inventory, resulting in increase in fixed assets and decrease in current assets by Rs. 1878 lacs. This change has also resulted in increase in depreciation by Rs. 50 lacs, prior period depreciation by Rs. 182 lacs and decrease in profit by Rs. 232 lacs.

c) Levelling, clearing and grading charges of land, which were hitherto included in the cost of land, have been capitalised as part of the cost of the buildings retrospectively. This change has resulted in increase in the cost of Buildings and decrease in the cost of land by Rs. 2556 lacs. This change has also resulted in increase in depreciation by Rs. 67 lacs, prior period depreciation by Rs. 738 lacs and decrease in profit by Rs. 805 lacs.

18. Some of the beneficiaries have not reimbursed the Income Tax recovery billed for the period upto 31.03.2003. Considering this aspect as significant uncertainty of recovery, Income- tax recovery billed to such beneficiaries amounting to Rs. 209 lacs (Grossed up Rs. 227 lacs) {previous year Rs. 565 lacs (Grossed up Rs. 612 lacs)} has not been accounted for.

19. Other Income includes Rs. 1156 lacs (previous year- Rs. 1156 lacs) being the amount transferred from Capital Reserve (Grants- in- Aid) as per Accounting Policy No. 1.0.

20. The Government of India Scheme of April, 2002, for one-time settlement of the dues of State Electricity Boards (SEBs) envisages " issue of 8.50 % tax-free bonds by the respective State Government for the outstanding amount due and settlement of surcharge outstanding to the Company as on September 30, 2001.

a) No bonds have been issued by any State Government as per the scheme so far. Pending issue of bonds, the terms and conditions of the settlement scheme have not been given effect to in the accounts.

b) The bonds issued by SEBs after March 1,1998 and outstanding as on September 30, 2001 (existing bonds), are also eligible for conversion into 8.50% tax-free bonds. The existing bonds carry a higher coupon and continue to be legally valid till withdrawn / replaced by SEBs. Revenue has been recognised as per the coupon of the existing bonds. However, provision of Rs. 2207 lacs (previous year Rs. 3360 lacs)has been made during the year towards interest differential on the said bonds.

21. The deferred tax liability for the year amounting to Rs. 2944 lacs (previous year Rs. 3440 lacs) has been provided after adjusting the amount recoverable from beneficiaries. The deferred tax liability of Rs. 19403 lacs upto the year ended 31.03.2002 has been revised to Rs. 20342 lacs resulting in total deferred tax liability as on 31.03.2003 to Rs. 23286 lacs. Major components of deferred tax liabilities and assets are given as under:

22. Tariff Notifications provide for availability based incentive to be recovered from the SEBs. As required in MOP letter no F. NO.2/3/ Powergrid/Tariff/98 dt. 04.02.99 availability in respect of all the Regions for the year has been certified by the concerned Regional Electricity Boards. Based on certification, incentive of Rs. 7962 lacs (previous year Rs. 6735 lacs) has been accounted for during the year. In addition, a sum of Rs. 1466 lacs for earlier years has also been accounted as incentive on final certification of availability.

23. a) Consequent upon diversification into Telecom business, the company has incurred capital expenditure of Rs. 31461 lacs upto 31.03.2003 (previous year Rs. 22911 lacs) which has been included under Gross Block, Capital Work in Progress, Construction Stores and Advances. Out of this, Rs. 17091 lacs have been capitalised on commisioning of two (previous year Rs. 4720 lacs for three) telecom links. Operation of telecom links has resulted in net loss during the year of Rs. 471 lacs (previous year Rs. 42 lacs).

b) Revenue expenditure of Rs. 102 lacs relating to Telecom Business, which was included under Miscellaneous Expenditure (to the extent not written off) in the financial year 2000-01, is being amortised over five years starting from the financial year 2001 -02.

c) In respect of Telecom Business, a Bank Guarantee of Rs. 10000 lacs has been issued favouring Department of Telecommunication by creating a charge on the Current Assets.

24. The Electricity Act, 2003 has replaced the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commission Act, 1998 applicable to the company, with effect from 10.06.2003.

a) Business Segments

The Companys principal business is transmission of bulk power across different States of India and sale of Power. Other business includes provides consultancy, RLDC, Telecom etc.

b) Segment Revenue and Expense

Revenue directly attributable to the segments is considered as Segment Revenue. Expenses directly attributable to the segments and common expenses allocated on a reasonable basis are considered as segment expenses.

c) Segment Assets and Liabilities

Segment assets include all operating assets comprising of net fixed assets 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 current liabilities and provisions.

d) The company has Transmission Projects located within the country and no geographical segment is distinguishable.

27. A. Related Party Transactions

a) Related parties:

i) Joint ventures: Power Trading Corporation of India Limited, Investment in equity shares during the year - NIL, Cumulative Investment: Rs. 1200 lacs.

ii) Subsidiary : Tala Delhi Transmission Limited, Investment in equity shares during the year - NIL, Cumulative Investment: Rs. 5 lacs. Certificate of Commencement of Business not yet received.

iii) Subsidiary : Bina Dehgam Transmission Company Limited, Investment in Equity shares during the year - Rs. 5 lacs. Certificate of Commencement of Business not yet received.

iv) Directors: Sh. R.P. Singh, Dr. V.K. Garg, Sh. Bhanu Bhushan, Sh. S.C. Misra, Sh. U.C. Misra, Sh. A.K. Kutty, Sh. M. Sahoo, Sh. A.I. Bunet, Sh. P. l. Suvrathan, Sh. R. Ramanujam, Sh. V.V.R.K. Rao.

b) Remuneration to whole time Directors including Chairman & Managing Director is disclosed in Note No. 29.

c) Advances due from whole time Directors including Chairman and Managing Director are disclosed under Schedule-8 - Current assets, loans and advances.

d) There are no non-official part time Directors in this Financial Year. Last year non-official part-time Directors were paid a sitting fee of Rs.0.20 lac.

B. Consolidated Financial Statements

The Company has made investment of Rs. 5 lacs each in the Equity shares of Tala Delhi Transmission Limited and Bina Dehgam Transmission Company Limited, subsidiary companies. As the Company intends to transfer the control in the near future, the accounts of these subsidiaries are not consolidated.

28. a) Figures have been rounded off to nearest rupees in lacs.

b) Previous year figures have been regrouped/rearranged wherever necessary.

29. a) Employees remuneration and benefits include the following for the Directors, including Chairman and Managing Director:

b) In addition to the above remuneration, the Whole time Directors have been allowed to use the staff car (including for private journeys) on payment of Rs. 780/- p.m. as contained in the Ministry of Finance (BPE) Circular No.2(18)/pc/64 dt. 29.11.64 as amended.

32. ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956. BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE.

v) GENERIC NAMES OF PRINCIPAL PRODUCT/SERVICE OF COMPANY

Item code No. NOT APPLICABLE

Product Description: Transmission, Central Transmission Utility function and Sale of Power