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Notes to Accounts of Tata Power Company Ltd.

Mar 31, 2023

5a Property, Plant and Equipments (Contd.) Estimated useful lives of the Regulated and Non-Regulated assets are as follows:
Type of assets	Useful lives
Hydraulic Works	40 years
Buildings-Plant	5 to 60 years
Buildings-Others	3 to 30 years
Coal Jetty	25 years
Railway Sidings, Roads, Crossings, etc.	5 to 40 years
Plant and Equipments (excluding Computers and Data Processing units)	5 to 40 years
Plant and Equipments (Computers)	3 years
Plant and Equipments (Data Processing units)	6 years
Transmission Lines, Cable Network, etc.	5 to 40 years
Furniture and Fixtures	10 to 15 years
Office Equipments	5 years
Motor Cars	5 to 15 years
Motor Lorries, Launches, Barges etc.	25 to 40 years
Helicopters	25 years

Derecognition

An item of Property, Plant and Equipments is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of Property, Plant and Equipments is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.

Impairment

Impairment of tangible and intangible assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.

When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using an appropriate discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated.

Impairment losses of tangible and intangible assets are recognised in the Statement of Profit and Loss.

Notes:

i. The Company had in accordance with Ind AS 36 - "Impairment of Assets", carried out impairment assessment of its assets of Mundra Ultra Mega Power Project (UMPP), along with investments in Indonesian mining companies PT Kaltim Prima Coal (KPC) and PT Baramulti Suksessarana TBK (BSSR) through intermediate holding companies (associates operating coal mines in Indonesia and supplying coal to Mundra plant for UMPP). All these investment in companies and assets of UMPP constitute a single cash generating unit (CGU) and form part of same segment due to interdependency of cash flows. There are significant losses being incurred in UMPP on account of significant increase in coal prices due to change in Indonesian laws which is offset by the profits earned by the mining companies

The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. For Mundra power plant, future cash flows is estimated based on remaining period of long term power purchase agreement (PPA) and thereafter based on management''s estimate on tariff and other assumptions. Further as discussed in note no.31 to the financial statements, the Supplementary Power Purchase Agreement (SPPA) is likely to be signed and approved; and accordingly the same has been considered in estimating the cashflows. Cash flow projection of mines are derived based on estimated coal production considering renewed license for operating the mines. The license for operating mines are renewed for a period of 10 years with an option of renewal of further period of 10 years with Government of Indonesia. In the past, the Company had recognised an impairment provision of ? 311 crore in CGU.

A reassessment of the assumptions used in estimating the impact of impairment of the cash generating unit (CGU) comprising of UMPP and the Indonesian coal mines, combined with the significant impact of unwinding of a year''s discount on the cash flows, would have resulted in a reversal of ? 311 crore of provision for impairment. Management believes that the reversal of impairment has not resulted from any significant improvement in the estimated service potential of the concerned CGU; and hence the Company has not effected reversal of impairment. Key assumptions used for value in use calculation include coal prices, energy prices post PPA period, signing of SPPA, discount rates and exchange rates. Short term coal prices and energy prices used in three to five years projections are based on market survey and expert analysis report. Afterwards increase in cost of coal and exchange rates are considered based on long term historical trend. Further the management strongly believes that mining Licenses will be renewed post expiry for further period of 10 years by Government of Indonesia. Discount rate represents the current market assessment of the risk specific to CGU taking into consideration the time value of money. Pre tax discount rate used in the calculation of value in use of Property, Plant and Equipments in power plant is 9.60% p.a. (March 31, 2022: 9.45% p.a.) and investment in coal mines and related infrastructure companies is 12.69% p.a. (March 31,2022: 13.44% p.a.)

ii. Pursuant to the agreements signed on April 14, 2022 with Green Forest New Energies Bidco Ltd. (UK) ("Investor") for investment in Tata Power Renewable Energy Limited (TPREL) by the Investor, during the year, the Company has sold its wind assets, rooftop projects, Electric Vehicle (EV) charging business to TPREL and its subsidiary with effect from August 01, 2022 at a consideration of ? 199.12 crore. The said transactions have resulted in net profit of ? 42.74 crore which is disclosed as exceptional items under "Gain on Sale of business to subsidiaries" in the financial statement. The value of Property, Plant and Equipment and Intangible assets transferred in the above transaction is ? 145.88 crore (Gross block ? 244.36 crore & Net Block ? 98.48 crore) and ? 1.25 crore (Gross block ? 1.93 crore & Net Block ? 0.68 crore) respectively..

iii. During the earlier years, the Company had recorded an impairment charge of ? 100 crore (March 31, 2022 - ? 100 crore) in respect of Unit 6 generating station (Generation Segment) located at Trombay.

iv. Refer Note 22 for charge created on Property, Plant and Equipment.

v. Includes gain on fair valuation of land which is not available for distribution is ? 87.88 crore (March 31, 2022 ? 87.88 crore).

vi. During the previous year, the Company sold renewable assets of ? 557.90 crore to Tata Power Renewable Energy Limited and Tata Power Green Energy Limited, pursuant to Business Transfer Agreement as a "going concern" on a slump sale basis effective on or after April 1, 2021.

vii. During the year, the Company has reclassified the following assets to Property, Plant and Equipments from assets held for sale:

a. Land at Tiruldih ? 1.43 crore

b. Land at Vadaval ? 3.21 crore

c. Building at Mumbai (Panvel) ? 0.49 crore

ix. The Company has not revalued its Property, Plant & Equipment (Including Right of use Assets). Thus valuation by registered valuer as defined under Rule 2 of the Companies (Registered Valuer & Valuation) Rules, 2017 is not applicable.

5b Right of Use Assets

Accounting Policy

The Company recognises right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, lease payments made at or before the commencement date less any lease incentives received and estimate of costs to dismantle. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:

- Plant and Equipment - 2 years

- Port and Intake Channels - 40 years

- Leasehold land including sub surface right - 2 to 40 years

5c Intangible Assets

Accounting Policy

Intangible Assets acquired separately

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.

Internally generated Intangible Assets

Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.

Derecognition of Intangible Assets

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in statement of profit and loss when the asset is derecognised.

Useful lives of Intangible Assets

Intangible assets with finite lives are amortised over the useful economic life on straight line basis and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.

v. The Company has invested in unsecured subordinated perpetual securities issued by TP Renewable Microgrid Limited and TP Ajmer Distribution Ltd, its subsidiary companies. These securities are redeemable at the issuer''s option and carry non-cumulative interest coupon at the rate of dividend paid on the issuer''s ordinary shares. The interest can be deferred if the issuer does not pay any dividend on its ordinary shares for the financial year. The issuer has classified this instrument as equity under Ind AS - 32 ''Financial Instruments Presentation''. Accordingly, the Company has classified this investment as Equity Instrument and has accounted at cost as per Ind AS - 27 ''Separate Financial Statements''.

vi. The Company had acquired 51 % stake in TP Central Odisha Distribution Limited (''TPCODL''), TP Western Odisha Distribution Limited (''TPWODL''), TP Southern Odisha Distribution Limited (''TPSODL'') and TP Northern Odisha Distribution Limited (''TPNODL). TPCODL, TPWODL, TPSODL and TPNODL are the licensees to carry out the function of distribution and retail supply of electricity covering the distribution circles of Central, Western,Southern Odisha and Northern Odisha for a period of 25 years effective from June 1,2020, January 1, 2021, January 1,2021 and April 1, 2021 respectively. Further during the current year and previous year, the Company has subscribed to the right issue of equity shares offered by TPCODL,TPWODL,TPSODL and TPNODL.

viii. During the previous year ended March 31, 2022, the Company has subscribed to the right issue of equity shares offered by Tata Projects Limited amounting to ? 573.27 crore.

ix. The Company holds 12.67 crore shares of Tata Teleservices (Maharashtra) Limited ("TTML") designated as fair value through OCI which is carried out at each balance sheet date basis the quoted price. Quoted price of TTML has witnessed significant fluctuation and management believes that the quoted price may not represent the fair value of TTML shares since it has accumulated losses and negative net worth. Accordingly on a conservative basis, the management has not recognized any fair value gain in OCI after September 30, 2021.

x. The Company holds investments in Adjaristsqali Netherlands B.V. (ABV) (a joint venture of the Company operating 187 MW hydro power plant in Georgia) through intermediate holding company Tata Power International Pte. Ltd. (TPIPL). In the past, the Company, in accordance with Ind AS 36 - ''Impairment of Assets'' had recognized impairment provision on investment of ? 552.91 crore including provision of ? 106.82 crore during the year ended March 31, 2022. Based on the recoverability assessment performed by the Company the actual cashflows were in line with estimated cash flow projections. Accordingly there are no trigger for impairment of investments as on March 31,2023.

xi. i. Pursuant to the agreements signed on April 14, 2022 with Green Forest New Energies Bidco Ltd. (UK) ("Investor")

for investment in Tata Power Renewable Energy Limited (TPREL) by the Investor, during the year, the Company has sold its equity investment in Tata Power Solar Systems Ltd., Tata Power Green Energy Ltd., TP Saurya Ltd., TP Kirnali Solar Ltd., TP Solapur Solar Ltd., TP Akkalkot Renewable Ltd., TP Solapur Saurya Ltd., TP Roofurja Renewable Ltd. and Supa Windfarm Ltd to TPREL at a consideration of ? 1,058.04 crore. The said transactions have resulted in net profit of ? 645.35 crore which is disclosed as exceptional items in the standalone financial statement.

ii. During the year, the Company has subscribed to the 25,07,65,416 right issue of equity shares (face value of ? 10 per share) for ? 5,160.00 crore offered by Tata Power Renewable Energy Ltd (''TPREL'') at a premium of ? 195.77 per share. Further during the year TPREL has exercised the option and repaid the investment of ? 3,895.00 crores made by the Company in the Unsecured Perpetual Securities of TPREL.

xii. During the previous year, the Company has sold its investment in Trust Energy Resources Pte. Ltd., a wholly owned subsidiary of the Company to Tata Power International Pte Limited, another wholly owned subsidiary of the company for a consideration of ? 2,126.88 crore ($286 million) and recognised a profit amounting to ? 1,518.93 crore in the standalone financial statement.

Note:

a Company holds security deposits of ? 272.42 crore (March 31,2022 - ? 247.78 crore) in respect of electricity receivables.

b. The carrying amount of trade receivable does not include receivables of ? 1,682.73 crore (March 31, 2022: ? 1,150.64 crore)

which are subject to a factoring arrangement. Under this arrangement, the Company has transferred the relevant receivables to the factor in exchange for cash on non recourse basis. The Company, therefore, has derecognised the said receivables under the said arrangement. Amount received from such customers not transferred to factoring agent is disclosed as financial liability (Refer Note 25).

8 (a) Trade Receivables

As at March 31, 2023, ? 1,086.43 crore (March 31, 2022 - ? 628.66 crore) is due from Brihanmumbai Electric Supply & Transport Undertaking, Maharashtra State Electricity Transmission Company Ltd., Gujarat Urja Vikas Nigam Limited, and Tata Steel Ltd. which represents Company''s large customers who owe more than 5% of the total balance of trade receivables.

In the Generation business, the Company supplies power only to a few customers which are State distribution companies and in Transmission business, the Company provides transmission services to Government Company and hence the Company assesses expected credit allowance on case to case basis.

Accounting Policy

Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards incidental to ownership to the lessee. All other leases are classified as operating lease. Amount due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease. The Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term.

10.1 Leasing Arrangements

There are two types of leasing arrangement:

a) Generation of Power: The Company has entered into Power Purchase Agreements (PPA) with a customer for its assets located at Jojobera. The PPA relate to 30 years of take or pay agreements with the customer to supply electricity at a fixed plus variable charge. The customer, during the term of the PPAs has a right to purchase the assets and at the end of the contract is obligated to purchase the same on the basis of the valuation to be determined as per the PPAs. The Company has recognised an amount of ? 75.42 crore (March 31,2022 ? 77.68 crore) as income for finance lease during the year ended March 31, 2023.

b) Electric Vehicle charging facilities : The Company has entered into arrangement with customer for providing Infrastructure facilities and chargers for public transport utilities. The arrangement is for the period of 10 years for providing and maintaining infrastructure facility at a fixed charge. During the year, the Company has transferred this facilities to TP Solapur Limited w.e.f. August 1,2022. The Company has recognised an amount of ? 0.84 crore (March 31,2022 ? 2.13 crore) as income for finance lease during the year ended March 31, 2023.

Lessor - Operating Lease

The Company has entered into operating leases for its certain building, plant and machinery and other equipment. These typically have lease terms of between 1 and 10 years. The Company has recognized an amount of ? 27.55 crore (March 31, 2022 - ? 20.01 crore) as rental income for operating lease during the year ended March 31, 2023.

16. Cash and Cash Equivalents - At Amortised Cost Accounting Policy

Cash and cash equivalents comprise cash at banks and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. Cash and cash equivalents include balances with banks which are unrestricted for withdrawal and usage.

For the purpose of the Statement of Cash Flows, cash and cash equivalents comprise of cash at banks and short-term deposits, as defined above, net of outstanding bank overdraft as they are considered an integral part of the Company''s cash management.

Non-current assets or disposal group are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such asset or disposal group and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. As at each balance sheet date, the management reviews the appropriateness of such classification.

Non-current assets or disposal group classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Property, plant and equipments and intangible assets once classified as held for sale are not depreciated or amortised.

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:

Notes:

(i) Following Land has been classified as held for sale:

(a) Land at Naraj Marthapur ? 82.30 crore (net of impairment loss of ? 37.00 crore) (March 31, 2022 - ? 81.38 crore (net of impairment loss of ? 37.00 crore))

(b) Leasehold land at Dehrand ? 215.56 crore (net of accumulated depreciation of '' 10.09 crore) (March 31,2022 - ? 215.56 crore (net of accumulated depreciation of '' 10.09 crore)). During the earlier year, the Company had received an advance of ? 113.56 crore (March 31,2022 - ? 113.56 crore) against sale.

(ii) The Company had decided to divest its investments in Itezhi Tezhi Power Corporation (''ITPC'') of ? 275.75 crore along with loans and other receivables amounting to ? 22.74 crore. Accordingly, the said investments along with loans and other receivables have been classified as held for sale.

(iii) During the year, the Company has reclassified the following assets to Property, Plant and Equipments from assets held for sale:

a. Land at Tiruldih ? 1.43 crore (net of impairment loss of ? 33.77 crore) (March 31, 2022 - ? 1.43 crore (net of impairment loss of ? 33.77 crore))

b. Land at Vadaval ? 3.21 crore (March 31,2022 - ? 3.21 crore)

c. Building at Mumbai (Panvel) ? 0.49 crore (March 31, 2022 - '' 0.49 crore)

During the previous year, Company had reassessed the fair value of the contingent consideration receivable from sale of Strategic Engineering Division (SED) and recognized an impairment loss of ? 467.83 crore as exceptional item in the standalone financial statements. The fair value on consideration has been determined based on the expected value of the consideration using discounted present value technique.

19. Regulatory Deferral Account Accounting Policy

The Company determines revenue gaps (i.e. surplus/shortfall in actual returns over returns entitled) in respect of its regulated operations in accordance with the provisions of Ind AS 114 - ''Regulatory Deferral Accounts'' read with the Guidance Note on Rate Regulated Activities issued by The Institute of Chartered Accountants of India (ICAI) and based on the principles laid down under the relevant Tariff Regulations/Tariff Orders notified by the Electricity Regulator and the actual or expected actions of the regulator under the applicable regulatory framework. Appropriate adjustments in respect of such revenue gaps are made in the regulatory deferral account of the respective year for the amounts which are reasonably determinable and no significant uncertainty exists in such determination. These adjustments/accruals representing revenue gaps are carried forward as Regulatory deferral accounts debit/credit balances (Regulatory Assets/Regulatory Liabilities) as the case may be in the Standalone financial statements, which would be recovered/refunded through future billing based on future tariff determination by the regulator in accordance with the electricity regulations. The Company presents separate line items in the balance sheet for:

i. the total of all regulatory deferral account debit balances and related deferred tax balances; and

ii. the total of all regulatory deferral account credit balances and related deferred tax balances.

Rate Regulated Activities

(i) As per Ind AS 114 - ''Regulatory Deferral Accounts'', the business of electricity distribution is a Rate Regulated activity wherein Maharashtra Electricity Regulatory Commission (''MERC''), determines Tariff to be charged from consumers based on prevailing regulations.

MERC Multi Year Tariff Regulations, 2019 (''MYT Regulations''), is applicable for the period beginning from April 1, 2020 to March 31,2025. These regulations require MERC to determine tariff in a manner wherein the Company can recover its fixed and variable costs including assured rate of return on approved equity base, from its consumers. The Company determines the Revenue, Regulatory Assets and Liabilities as per the terms and conditions specified in MYT Regulations.

i The shareholders of the Company in their meeting held on July 7, 2022 approved final dividend of ?1.75 per fully paid share aggregating to ? 559.18 crore for the financial year 2021-2022. The said dividend has been paid to the holders of fully paid equity shares on July 11, 2022.

ii Includes gain on fair valuation of land which is not available for distribution is ? 87.88 crore (March 31, 2022 ? 87.88 crore).

iii The Board of Directors at its meeting held on May 4, 2023 proposed a dividend of ? 2.00 per equity share subject to the approval of the shareholders in the upcoming annual general meeting and has not been included as a liability in the Standalone financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is ? 639.06 crore.

21. Other Equity (Contd.)

Nature and purpose of reserves:

Securities Premium

Securities Premium is used to record the premium on issue of shares and is utilised in accordance with the provisions of the Companies Act, 2013.

Debenture Redemption Reserve

The Company was required to create a Debenture Redemption Reserve out of the profits which are available for payment of dividend for the purpose of redemption of debentures. Pursuant to Companies (Share Capital and Debentures) Amendment Rules, 2019 dated August 16, 2019, the Company is not creating additional debenture redemption reserve (DRR) from the effective date of amendment. DRR created till previous years will be transferred to retained earnings on redemption of debentures.

Capital Redemption Reserve

Capital Redemption Reserve represents amounts set aside on redemption of preference shares.

Capital Reserve

Capital Reserve consists of forfeiture of the amount received from Tata Sons Pvt. Ltd. on preferential allotment of convertible warrants in the Company, on the lapse of the period to exercise right to convert the said warrants and on forfeiture of amounts paid on Debentures.

Statutory Reserve

Statutory Reserve consists of Special Appropriation towards Project Cost, Development Reserve and Investment Allowance Reserve.

Special appropriation to project cost - Due to high capital investment required for the expansion in the electricity industry, the Maharashtra State Government permits part of the capital cost of approved projects to be collected through the electricity tariff and held as a special appropriation.

Special Reserve

Special Reserve Fund represents the amount transferred from the annual profits of Af-Taab pursuant to section 45 of the Reserve Bank of India Act, 1934. Pursuant to scheme of arrangement for merger as mentioned in note 47 to the standalone financial statement, erstwhile Af-taab has ceased to exist and hence the reserves is no longer required and accordingly has been transferred to retained earning.

Retained Earnings

Retained Earnings are the profits/losses of the Company earned/incurred till date net of appropriations.

Equity Instruments through Other Comprehensive Income

This reserve represents the cumulative gains and losses arising on revaluation of equity instruments measured at fair value through other comprehensive income, net of amounts reclassified to retained earnings when those equity instruments are disposed off.

Security

(i) The debentures mentioned in (a) was secured by pari passu charge on all movable fixed assets (excluding land and building), present and future (except wind, solar and Haldia plant assets both present and future) including movable machinery, machinery spares, tools and accessories, present and future, but excluding vehicles, launches and barges.

(ii) The loans and debentures mentioned in (b), (c), (e), (g), (h), (i), (j), (k) and (l) have been secured by pari passu charge on all movable fixed assets (excluding land and building), present and future (except assets of all wind projects both present and future) including movable machinery, machinery spares, tools and accessories, present and future, but excluding vehicles, launches and barges.

(iii) The debentures mentioned in (d) have been secured by a charge on the land situated at Village Takve Khurd (Maharashtra) and movable fixed assets (except the wind assets) including movable machinery, machinery spares, tools and accessories but excluding vehicles, launches and barges, present and future.

(iv) The loans mentioned in (f) have been secured by whole of current assets of the Company, present and future, in a first pari passu manner.

(v) The loans mentioned in (h) for the facility of ? 277.11 Crore and (m) have been secured by first ranking and pari-passu charge by way of hypothecation on all the tangible fixed assets and capital work in progress of the Company (including its power plant at Jojobera and excluding its power plant at Mundra, land and building, leasehold assets/ right of use assets, motor vehicles, launches, barges, helicopters etc, furniture, fixtures and office equipment, solar & windmill assets), present and future.

(vi) The loan mentioned in (h) for the facility of ? 455.00 Crore have been secured by negative lien of on all immovable properties of Mundra power plant , first pari-passu on all movable fixed assets including but not limited to plant & machinery, machinery spares, tolls and accessories, furniture, fixtures, vehicles and other movable fixed assets, both present and future. The said security shall be shared on pari-passu basis inter se with other lenders of the borrower and excluding the other immovable and movable assets of the Company.

Notes:

1. The 10.75% Redeemable Non-Convertible Debentures are redeemable at par at the end of 60 years from the date of allotment viz. August 21, 2072. The Company has exercised the call option to redeem the same on August 21, 2022.

2. The rate of interest for term loans from banks ranges from 5.05% p.a to 9.35% p.a (March 31, 2022 - 5.05% p.a to 8.15% p.a) and rate of interest for term loans from others is 5.70% p.a to 9.90% p.a (March 31,2022 - 7.60% p.a).

23. Lease Liabilities Accounting Policy

At inception of contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At inception or on reassessment of a contract that contains a lease component, the Company allocates consideration in the contract to each lease component on the basis of their relative standalone price.

As a Lessee

i) Lease Liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date if the discount rate implicit in the lease is not readily determinable.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. The carrying amount is remeasured when there is a change in future lease payments arising from a change in index or rate. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset.

ii) Short term leases and leases of low value of assets

The Company applies the short-term lease recognition exemption to its short-term leases. It also applies the lease of low-value assets recognition exemption that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the lease term.

1 (i) The Company has entered into a Suppliers'' Credit Program ("Facility") with a third party whereby the third party shall

pay the said coal suppliers on behalf of the Company and the Company shall pay the third party on the due date along with interest. The Company has utilised USD 229.01 million (March 31, 2022 - USD 43.99 million) of this facility as at March 31,2023. As the Facility provided by the third party is within the credit period provided by the coal vendors, the outstanding liability has been disclosed under other financial liabilities.

(ii) The Company has entered into Usance Payable At Sight Letter of Credit (U-Pas LC) arrangement includes credit availed by the suppliers from banks for goods supplied to the Company. The arrangements are interest bearing, where the Company bears the interest cost and are payable within 180 days as stipulated in Letter of credit. As the Facility arranged is within the credit period provided by the coal vendors, the outstanding liability has been disclosed under other financial liabilities. The Company has utilised USD 74.23 million (March 31, 2022 - Nil) of this facility as at March 31, 2023.

2 Includes amounts outstanding aggregating ? 0.24 crore (March 31, 2022 - ? 0.24 crore) for more than seven years pending disputes and legal cases.

Accounting Policy

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

Present obligations arising under onerous contracts are recognised and measured as provisions with charge to Statement of Profit and Loss. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.

Restructuring provisions are recognised only when the Company has a constructive obligation, which is when: (i) a detailed formal plan identifies the business or part of the business concerned, the location and number of employees affected, a detailed estimate of the associated costs, and the timeline; and (ii) the employees affected have been notified of the plan''s main features.

Defined contribution plans

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

Defined benefits plans

The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in the Statement of Profit and Loss on the earlier of:

- The date of the plan amendment or curtailment, and

- The date that the Company recognises related restructuring costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the Statement of Profit and Loss:

- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non routine settlements; and

- Net interest expense or income.

assumptions are reviewed at each reporting date. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds. The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases are based on expected future inflation rates.

Employee Benefit Plans 1. Defined Contribution plan

a) The Company makes superannuation fund contributions to defined contribution plan for eligible employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs. The Company has no obligation, other than the contribution payable to the fund. The Company recognises contribution payable to the superannuation fund scheme as an expense, when an employee renders the related service.

The Company has recognised ? 7.85 crore (March 31,2022 - ? 7.16 crore) for superannuation contribution in the Statement of Profit and Loss. The contribution payable to the plan by the Company is at rates specified in the rules of the plan.

b) The total expense recognized in Statement of Profit & Loss is ? 1.55 crore (for the year ended March 31, 2022 ? 1.43 crore) represents contribution for the year paid/payable to the Employee Provident Fund. The contribution outstanding as at March 31,2023 of ? Nil (as at March 31,2022 ? 0.35 crore) due in respect of financial year 2022-23 (financial year 2021-22) is payable in the subsequent reporting periods.

2. Defined benefit plans

2.1 The Company operates the following unfunded/funded defined benefit plans:

Funded:

Provident Fund

Funded/Unfunded:

Post Employment Medical Benefits

The Company provides certain post-employment health care benefits to superannuated employees at some of its locations. In terms of the plan, the retired employees can avail free medical check-up and medicines at Company''s facilities.

Pension (including Director pension)

The Company operates a defined benefit pension plan for employees who have completed 15 years of continuous service. The plan provides benefits to members in the form of a pre-determined lumpsum payment on retirement. Executive Director, on retirement, is entitled to pension payable for life including HRA benefit. The level of benefit is approved by the Board of Directors of the Company from time to time.

Ex-Gratia Death Benefit

The Company has a defined benefit plan granting ex-gratia in case of death during service. The benefit consists of a predetermined lumpsum amount along with a sum determined based on the last drawn basic salary per month and the length of service.

Retirement Gift

The Company has a defined benefit plan granting a pre-determined sum as retirement gift on superannuation of an employee. Gratuity

The Company has a defined benefit gratuity plan. The gratuity plan is primarily governed by the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of five years are eligible for gratuity. The level of benefits provided depends on the member''s length of service and salary at the retirement date. In case of funded plan, the fund has the form of a trust and is governed by Trustees appointed by the Company. The Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy in accordance with the trust regulations. From April 1, 2022 employess of CGPL covered in funded plan.

2.7 Risk exposure:

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below: Asset volatility:

The plan liabilities are calculated using a discount rate set with reference to government bond yield. If plan assets underperform this yield, it will result in deficit. These are subject to interest rate risk. To offset the risk, the plan assets have been deployed in high grade insurer managed funds.

Inflation rate risk:

Higher than expected increase in salary and medical cost will increase the defined benefit obligation.

Demographic risk:

This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligations is not straight forward and depends upon the combination of salary increase, discount rate and vesting criterion.

31. Revenue from Operations Revenue recognition Accounting Policy

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

Description of performance obligations are as follows :

(i) Sale of Power - Generation (Thermal and Hydro): Regulated

Revenue from sale of power is recognised net of cash discount over time for each unit of electricity delivered.

The Company as per the prevalent tariff regulations is required to recover its Annual Revenue Requirement (''ARR'') comprising of expenditure on account of fuel cost, operations and maintenance expenses, financing costs, taxes and assured return on regulator approved equity with additional incentive for operational efficiencies. Accordingly, rate per unit is determined using input method based on the Company''s efforts to the satisfaction of a performance obligation to deliver power.

As per tariff regulations, the Company determines ARR and any surplus/shortfall in recovery of the same is accounted as revenue.

(ii) Sale of Power - Generation: Non-regulated

Revenue from sale of power is recognised net of cash discount, rebate, etc. when the power is supplied as it best depicts the value to the customer and complete satisfaction of performance obligation.

Variable Consideration forming part of the total transaction price including compensation on account of change in law will be allocated and recognised when the terms of variable payment relate specifically to the Company''s efforts to satisfy the performance obligation i.e. in the year of occurrence of event linked to variable consideration.

The transaction price has been adjusted for significant financing component, if any and the adjustment is accounted as finance cost. The difference between the revenue recognised and amount invoiced has been presented as deferred revenue/ unbilled revenue.

(iii) Sale of Power - Generation (Wind and Solar)

Revenue from sale of power is recognised net of cash discount over time for each unit of electricity delivered at the contracted rate.

(iv) Transmission of Power

Input method is used to recognize revenue based on the Company''s efforts or inputs to the satisfaction of a performance obligation to deliver power.

As per tariff regulations, the Company determines ARR and any surplus/shortfall in recovery of the same is accounted as revenue.

(v) Sale of Power - Distribution

Revenue from sale of power is recognised net of cash discount over time for each unit of electricity delivered at the pre determined rate.

(vi) Rendering of Services

Revenue from a contract to provide services is recognised over time based on :

Input method where the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of performance obligation. Revenue, including estimated fees or profits, are recorded proportionally based on measure of progress.

Output method where direct measurements of value to the customer based on survey''s of performance completed to date. Revenue is recognised net of cash discount at a point in time at the contracted rate.

(vii) Consumers are billed on a monthly basis and are given average credit period of 30 to 60 days for payment. Wherever applicable no delayed payment charges (''DPC'') is charged for the initial 30 days from the date of receipt of invoice by customers. Thereafter, DPC is charged as per the relevant contracts on the outstanding balance. Revenue in respect of delayed payment charges and interest on delayed payments leviable as per the relevant contracts are recognised on actual realisation or accrued based on an assessment of certainty of realisation supported by either an acknowledgement from customers or on receipt of favourable order from regulator / authorities.

(viii) In the regulated operations of the Company where tariff recovered from consumers is determined on cost plus return on equity, the Income tax cost is pass through cost and accordingly the Company recognises Deferred tax recoverable/payable against any Deferred tax expense/ income. The same is included in ''Revenue from Operations'' in case of Generation and Transmission business.

Transaction Price - Remaining Performance Obligation

The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognised as at the end of the reporting period and an explanation as to when the Company expects to recognise these amounts in revenue. Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts where the revenue recognised corresponds directly with the value to the customer of the entity''s performance completed to date.

The aggregate value of performance obligations that are partially unsatisfied as at March 31,2023, other than those meeting the exclusion criteria mentioned above, is ? 74,806.16 crore (March 31,2022 - ? 71,547.14 crore). Out of this, the Company expects to recognize revenue of around 12.52% within next one year and the remaining thereafter.

Note:

(i) The Company supplied power to Gujarat Urja Vikas Nigam Ltd ("GUVNL") for the period January 1,2022 to May 5, 2022 based on the draft Supplementary Power Purchase Agreement ("SPPA") which is still under discussion and accordingly, during the current year the Company has recognised additional revenue of ? 277.00 crore (March 31,2022: ? 324.00 crore). Management believes that the Company has an enforceable right to recover the tariff as per the draft SPPA and does not expect any significant reversal in the amount recognised as revenue.

(ii) On May 5, 2022, Ministry of Power ("MoP") issued directions under Section 11 of the Electricity Act, 2003 to all imported coal-based power plants including Mundra plant to operate and generate power to their full capacity. Accordingly, the Company has declared availability and supplied power as per the MoP directions from May 6, 2022 to December 31, 2022. Further, the Company has filed petitions with Central Electricity Regulatory Commission (CERC) seeking clarifications on determination of tariff. On September 13, 2022 and January 3, 2023 CERC passed favourable orders in relation to determination of tariff during such period. Accordingly, the Company has recognised revenue based on such orders (Refer note 40(e)).

Contract assets

Contract asset is the right to consideration in exchange for goods or services transferred to the customer. Contract assets are transferred to receivables when the rights become unconditional.

Contract Liabilities

A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the performance obligation is satisfied.

Liability written back in previous year includes, reversal of provision pertaining to fly ash of ? 21.74 crore recognised in earlier years pursuant to an order passed by National Green Tribunal on February 12, 2020. During the previous year, Ministry of Environment, Forest and Climate Change (MoEF&CC) issued a Notification on December 31,2021 prescribing timelines and manner of utilization of legacy ash as on the date of the notification. The Company believes that it will be able to utilize the legacy fly ash within the revised applicable timeline and accordingly the fly ash provision is reversed.

34. Finance Costs Accounting Policy Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

36. Income taxes Accounting Policy Current Tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current income tax related to items recognised outside Statement of Profit and Loss are recognised either in other comprehensive income or in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred Tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Standalone financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

For operations carried out under tax holiday period (Section 80IA of Income Tax Act, 1961), deferred tax assets or liabilities, if any, have been recorded for the tax consequences of those temporary differences between the carrying values of assets and liabilities and their respective tax bases that reverse after the tax holiday ends.

Deferred tax related to items recognised outside profit or loss is recognised either in other comprehensive income or in equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.

a. In previous year, subsequent to the merger of Coastal Gujarat Power Limited (CGPL) with the Company with effect from April 1, 2020, the Company had reassessed its provision for current taxes and had written back an amount of ?87.30 crore relating to previous year.

b. The Company had reassessed the recoverability of unabsorbed depreciation and has recognized deferred tax asset amounting to ? 111.00 crore (March 31, 2022 - ? 968.56 crore and deferred tax asset written off on capital losses amounting to ?230.00 crore).

c. The Company had transitioned to the new tax regime effective April 1, 2020 and accordingly, during the previous year, the Company had remeasured its tax

Mar 31, 2022

i. Aggregate Market Value of Quoted Investments	3,089.45	335.97
ii. Aggregate Carrying Value of Quoted Investments [Refer Note 7(xi)]	620.38	134.59
iii. Aggregate Carrying Value of Unquoted Investments (Net)	10,091.00	9,827.01
iv. Aggregate amount of impairment in value of Investments	620.46	513.64

v. The Company has invested in unsecured subordinated perpetual securities issued by Tata Power Renewable Energy Ltd and TP Renewable Microgrid Limited, its subsidiary companies. These securities are redeemable at the issuer''s option and carry non-cumulative interest coupon at the rate of dividend paid on the issuer''s ordinary shares. The interest can be deferred if the issuer does not pay any dividend on its ordinary shares for the financial year. The issuer has classified this instrument as equity under Ind AS - 32 ''Financial Instruments Presentation''. Accordingly, the Company has classified this investment as Equity Instrument and has accounted at cost as per Ind AS - 27 ''Separate Financial Statements''.

vi. Pursuant to the Share Purchase Agreement (''Agreement'') dated January 4, 2020, in the past the Company had transferred Equity and Preference share of TCL Ceramics Limited ("TCL") to the purchasers as a part of the conditions mentioned in the Agreement subject to final closing. On March 24, 2022, the Company signed an amendment to original share purchase agreement and transferred all the beneficial ownership to the buyer and accordingly TCL ceased to be subsidiary of the Company w.e.f March 24, 2022.

vii. The Company has acquired 51 % stake in TP Central Odisha Distribution Limited (''TPCODL''), TP Western Odisha Distribution Limited (''TPWODL''), TP Southern Odisha Distribution Limited (''TPSODL'') and TP Northern Odisha Distribution Limited (''TPNODL). TPCODL, TPWODL, TPSODL and TPNODL are the licensees to carry out the function of distribution and retail supply of electricity covering the distribution circles of Central, Western,Southern Odisha and Northern Odisha for a period of 25 years effective from 1st June, 2020, 1st January, 2021, 1st January, 2021 and 1st April 2021 respectively. Further during the year, the Company has subscribed to the right issue of equity shares offered by TPCODL,TPWODL,TPSODL and TPNODL.

viii. Shares pledged :

The Company has pledged shares of subsidiaries and joint ventures with the lenders for borrowings availed by the respective subsidiaries and joint ventures.

Details	Category	March 31, 2022 Nos.	March 31,2021 Nos.
Tata Power Renewable Energy Ltd.	Subsidiary	258,114,935	258,114,935
Itezhi Tezhi Power Corporation *	Joint Venture	4,52,500	4,52,500
Mandakini Coal Company Ltd.	Joint Venture	20,043,000	20,043,000
Powerlinks Transmission Ltd.	Joint Venture	238,680,000	238,680,000
Industrial Energy Ltd.	Joint Venture	251,348,400	251,348,400

* Classified as Asset Held For Sale (Refer Note 18a.(iii))

ix. During the year, the Company has subscribed to the right issue of equity shares for ? 573.27 crore offered by Tata Projects Limited.

x. During the year, the Company has sold its investment in Trust Energy Resources Pte. Limited, a wholly owned subsidiary of the Company to Tata Power International Pte Limited, another wholly owned subsidiary of the Company for a consideration of ?2,126.88 crore ($286 million) and recognized a profit amounting to ?1,518.93 crore in the standalone financial statements.

xi. The Company holds 12.67 crore shares of Tata Teleservices (Maharashtra) Limited ("TTML") designated as fair value through OCI which is carried out at each balance sheet date basis the quoted price. Quoted price of TTML has increased from ? 35.35 per share as on September 30, 2021 to ? 166.70 per share as on March 31, 2022. The management believe that this quoted price may not represent the fair value of TTML shares since it has accumulated losses and negative net worth. Accordingly on a conservative basis, the management have not recognized any fair value gain in OCI after September 30, 2021.

xii. The Company holds investments in Adjaristsqali Netherlands B.V. (ABV) (a joint venture of the Company operating 187 MW hydro power plant in Georgia) through intermediate holding company Tata Power International Pte. Ltd. (TPIPL). In the past, the Company, in accordance with Ind AS 36 - ''Impairment of Assets'' had recognized impairment provision on investment of ? 446.09 crore. Pursuant to the decline in the operational performance of the plant, the Company reassessed the recoverability of the investment and recognized a further provision of ? 106.82 crore during the year ended 31^st March, 2022.

The Company has performed the recoverability assessment and determined the value in use based on estimated cash flow projections over the life of the assets included in CGU. Projected cash flows include cash flow projections approved by management for 3 years and the cash flows beyond that has been projected based on the long term forecast.

The following key assumptions were used for performing the valuation:

- Tariff post PPA period of 15 years.

- A pre-tax discount rate of 5.94 % was applied;

xiii The Company and Tata Power Renewable Energy Limited ("TPREL"), a wholly owned subsidiary have entered into binding agreements with Green Forest New Energies Bidco Ltd. (UK) ("Investor") wherein Investor has agreed to invest ? 4,000 crore (~US$ 525 million) by way of equity and compulsorily convertible instruments in TPREL. Green Forest is a consortium led by BlackRock Real Assets along with Mubadala Investment Company. Further, pursuant to this agreement, Company has also agreed to transfer the Roof top solar business, Electronic Vehicle charging business, 20.95 MW Nivade wind asset, 10 MW Visapur wind asset and investment in equity shares of Tata Power Solar System Limited, TP Saurya Limited, Tata Power Green Energy Limited, TP Kirnali Solar Limited, TP Akkalkot Renewable Limited, TP Solapur Solar Limited, TP Roofurja Limited, Supa Windfarm Limited and TP Solapur Saurya Limited to TPREL for a total consideration of ?1,200 crore, subject to closing adjustment and necessary approvals.

a Company holds security deposits of ? 247.78 crore (March 31,2021 - ? 245.75 crore) in respect of electricity receivables.

b The carrying amount of trade receivable does not include receivables of ? 1,150.64 Crore (March 31, 2021: ? 188.67 Crore)

8 (a) Trade Receivables

As at March 31, 2022, ? 628.66 Crore (March 31, 2021 - ? 1,001.63 crore) is due from Brihanmumbai Electric Supply & Transport Undertaking, Maharashtra State Electricity Transmission Company Ltd., Maharashtra State Electricity Distribution Company Ltd, Gujarat Urja Vikas Nigam Limited, Haryana Power Generation Corporation Limited and Tata Steel Ltd. which represents Company''s large customers who owe more than 5% of the total balance of trade receivables.

8. Trade Receivables (Contd.)

During the year, the Company has given loan to its fellow subsidiary company Walwhan Renewable Energy Limited (WREL) which was further given to the subsidiaries of the Company i.e. Tata Power Solar Systems Limited (TPSSL) and Tata Power Green Energy Limited (TPGEL). WREL, TPSSL and TPGEL are registered in India.

10. Finance Lease Receivable - At Amortised Cost

(Unsecured unless otherwise stated)

Accounting Policy

10.1 Leasing Arrangements

There are two types of leasing arrangement:

a) Generation of Power: The Company has entered into Power Purchase Agreements (PPA) with a customer for its assets located at Jojobera. The assets relate to 30 years of take or pay agreements with the customer to supply electricity at a fixed plus variable charge. The customer, during the term of the PPAs has a right to purchase the assets and at the end of the contract is obligated to purchase the same on the basis of the valuation to be determined as per the PPAs. The Company has recognised an amount of ? 77.68 crore as income for finance lease during the year ended March 31, 2022

b) Electric Vehicle charging facilities: The Company has entered into arrangement with customer for providing Infrastructure facilities and chargers for public transport utilities. The arrangement is for the period of 10 years for providing and maintaining infrastructure facility at a fixed charge. The Company has recognised an amount of ? 2.13 crore as income for finance lease during the year ended March 31, 2022

Lessor - Operating Lease

The Company has entered into operating leases for its certain building, plant and machinery and other equipment. These typically have lease terms of between 1 and 10 years. The Company has recognized an amount of ? 20.01 crore (March 31, 2021 - ? 13.60 crore) as rental income for operating lease during the year ended March 31,2022.

1a. During the year, pursuant to the vesting order by the Odisha Electricity Regulatory Commission (''OERC'') for the completion of sale, the equity shares of North Electricity Supply Utility of Odisha has been issued against the advance of ? 191.24 crore which was paid to OERC in the previous year.

11. Other Financial Assets - At Amortised Cost (Unless otherwise stated) (Contd.)

lb. During the current year, pursuant to the allotment of the equity shares of TP Akkalkot Renewable Energy Ltd. to the Company, the advance of '' 12.92 crore has been reclassified to non-current investment.

2. Balances with Banks held as Margin Money Deposits against Guarantees.

3. Previous year includes contingent consideration receivable on sale of Strategic Engineering Division (SED) on achievement

14. Inventories

Accounting Policy

Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on moving weighted average basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Cost of inventory includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Unserviceable/damaged stores and spares are identified and written down based on technical evaluation.

16. Cash and Cash Equivalents - At Amortised Cost Accounting Policy

18a Assets Classified as Held For Sale Accounting Policy

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:

- represents a separate major line of business or geographical area of operations,

- is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations.

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the Statement of Profit and Loss. Additional disclosures are provided hereunder. All other notes to the Standalone financial statements mainly include amounts for continuing operations, unless otherwise mentioned.

(i) Following Land has been classified as held for sale:

(a) Land at Tiruldih ? 1.43 crore (net of impairment loss of ? 34 crore) (March 31, 2021 - ? 1.43 crore)

(b) Land at Vadaval ? 3.21 crore (March 31, 2021 - ? 3.21 crore)

(d) Land at Dehrand ? 215.56 crore (March 31, 2021 - ? 215.56 crore). During the earlier year, the Company had received an advance of ?113.56 crore against sale

(ii) During the year, the Company has reclassified building at Mumbai of ? 8.02 crore from held for sale to Property, Plant and Equipment.

(iii) The Company had decided to divest its investments in Itezhi Tezhi Power Corporation (''ITPC'') of ? 275.75 crore along with loans and other receivables amounting to ? 22.74 crore. Accordingly, the said investments along with loans and other receivables have been classified as held for sale.

(iv) Maharashtra Electricity Regulatory Commission (''MERC'') had ordered termination of Vikhroli Transmission Lines project and accordingly, the Company reclassified the said project as held for sale. During the year, the Company has received an amount of ? 8.44 crore against the said project.

(v) During the year, the Company has reclassified its Investment in Tata Tele Maharashtra Limited from held for sale to NonCurrent Investment.

18c Assets Classified as Held For Sale - Discontinued Operations

In the past, the Company had approved sale of its Strategic Engineering Division (SED) to Tata Advanced Systems Ltd. (TASL) [a wholly owned subsidiary of Tata Sons Pvt. Ltd.] as a going concern on slump sale basis, at an enterprise value of ? 2,230 crore (out of which ?1,040 crore payable at the time of closing and ?1,190 crore payable on achieving certain milestones). Accordingly, SED business segment was presented as discontinued operations. On 31st October, 2020, the Company had completed the sale of its SED to TASL and had received upfront consideration of ?597.00 crore (net of borrowings of ? 537.00 crore transferred to TASL) after certain adjustments as specified in the scheme.

During the year, Company has reassessed the fair value of the contingent consideration receivable and recognized an impairment loss of ?467.83 crore (March 31, 2021: ?160 crore) as exceptional item in the standalone financial statements. The fair value on consideration has been determined based on the expected value of the consideration using discounted present value technique. The fair value has been categorised under Level 3 inputs, the key assumption being expectation of achievement/non achievement of milestones as defined in the scheme of arrangement.

19. Regulatory Deferral Account Accounting Policy

i. the total of all regulatory deferral account debit balances and related deferred tax balances; and

ii. the total of all regulatory deferral account credit balances and related deferred tax balances."

Rate Regulated Activities

MERC Multi Year Tariff Regulations, 2019 (''MYT Regulations''), is applicable for the period beginning from 1st April, 2020 to 31st March, 2025. These regulations require MERC to determine tariff in a manner wherein the Company can recover its fixed and variable costs including assured rate of return on approved equity base, from its consumers. The Company determines the Revenue, Regulatory Assets and Liabilities as per the terms and conditions specified in MYT Regulations.

(ii) Terms/rights attached to equity shares

The Company has issued only one class of equity shares having a par value of ? 1/- per share. Each holder of equity shares is entitled to one vote per share. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

In the earlier year, the Company had raised ? 1,500 crore through issue of Unsecured Perpetual Securities (the "Securities"). These Securities were perpetual in nature with no maturity or redemption and were callable only at the option of the Company. As these Securities were perpetual in nature and ranked senior only to the Share Capital of the Company and the Company does not had any redemption obligation, these were considered to be in the nature of equity instruments. During the year, pursuant to debenture trust deed dated June 23, 2011, the Company has exercised the call option to redeem the Securities on June 2, 2021 along with final interest.

i The shareholders of the Company in their meeting held on July 5, 2021, approved final dividend of ? 1.55 per share aggregating ? 495.28 crore for the financial year 2020-21. The said dividend was paid to the holders of fully paid equity shares on July 7, 2021.

ii Includes gain on fair valuation of land which is not available for distribution ? 87.88 crore

iii The Board of Directors at its meeting held on May 6, 2022 proposed a dividend of ? 1.75 per equity share subject to the approval of the shareholders in the upcoming annual general meeting and has not been included as a liability in the Standalone financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is ? 559.68 crore.

iv During the previous year, the shareholders in the Annual General Meeting dated July 30, 2020 had approved the issuance of 49,05,66,037 equity shares of the face value of ? 1 each at ? 53 per equity share for an amount aggregating to ? 2,600 crores to Tata Sons Pvt Ltd on preferential basis. The Company had allotted the said equity shares to Tata Sons Pvt Ltd on August 13, 2020.

Nature and purpose of reserves:

General Reserve

General Reserve is used to transfer profits from retained earnings for appropriation purposes. The amount is to be utilised in accordance with the provision of the Companies Act, 2013.

Securities Premium

Securities Premium is used to record the premium on issue of shares and is utilised in accordance with the provisions of the Companies Act, 2013.

Debenture Redemption Reserve

Capital Redemption Reserve

Capital Redemption Reserve represents amounts set aside on redemption of preference shares.

Capital Reserve

Statutory Reserve

Statutory Reserve consists of Special Appropriation towards Project Cost, Development Reserve and Investment Allowance Reserve.

Special Reserve

Retained Earnings

Retained Earnings are the profits of the Company earned till date net of appropriations.

Equity Instruments through Other Comprehensive Income

Security

(i) The debentures mentioned in (a) have been secured by pari passu charge on all movable fixed assets (excluding land and building), present and future (except wind, solar and Haldia plant assets both present and future) including movable machinery, machinery spares, tools and accessories, present and future, but excluding vehicles, launches and barges.

(ii) The loans and debentures mentioned in (b), (c), (e), (g), (h), (i), (j) and (k) have been secured by pari passu charge on all movable fixed assets (excluding land and building), present and future (except assets of all wind projects both present and future) including movable machinery, machinery spares, tools and accessories, present and future, but excluding vehicles, launches and barges.

(iv) The Loans mentioned in (f) have been secured by whole of current assets of the Company, present and future, in a first pari passu manner.

Notes:

1. The 10.75% Redeemable Non-Convertible Debentures are redeemable at par at the end of 60 years from the date of allotment viz. August 21, 2072. The Company has the call option to redeem the same at the end of 10 years viz. August 21, 2022 and at the end of every year thereafter.

2 The rate of interest for term loans from banks ranges from 5.05% to 8.15% (March 31, 2021 - 5.45% to 9.83%) and rate of interest for term loans from others is 7.60% (March 31,2021 - 7.60%).

23. Lease Liabilities Accounting Policy

As a Lessee i) Lease Liabilities

ii) Short term leases and leases of low value of assets

Leasing arrangement as Lessee

The Company has lease contracts for various items of plant, machinery, land, vehicles and other equipment used in its operations. Leases of Leasehold land including sub-surface rights and plant and equipment generally have lease term between 2 and 40 years. Generally, the Company is restricted from assigning and subleasing the leased assets.

1 The Company has entered into a Suppliers'' Credit Program ("Facility") with a third party whereby the third party shall pay the said coal suppliers on behalf of the Company and the Company shall pay the third party on the due date along with interest. The Company has utilised USD 43.99 million of this facility as at March 31, 2022. As the Facility provided by the third party is within the credit period provided by the coal vendors, the outstanding liability has been disclosed under other financial liabilities.

2 Includes amounts outstanding aggregating ? 0.21 crore (March 31, 2021 - ? 1.69 crore) for more than seven years pending disputes and legal cases.

27. Provisions

Accounting Policy

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

Defined contribution plans

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

Defined benefits plans

Past service costs are recognised in the Statement of Profit and Loss on the earlier of:

- The date of the plan amendment or curtailment, and

- The date that the Company recognises related restructuring costs

- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non routine settlements; and

- Net interest expense or income.

The cost of the defined benefit gratuity plan and other post-employment medical benefits are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds. The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases are based on expected future inflation rates.

A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.

Employee Benefit Plans 1. Defined Contribution plan

The Company has recognised ? 7.16 crore (March 31, 2021 - ? 7.84 crore) for superannuation contribution in the Statement of Profit and Loss. The contribution payable to the plan by the Company is at rates specified in the rules of the plan.

b) The Company operates defined contribution retirement benefit plans for employees of Mundra Plant. The employees of the Company are members of Employee Provident Fund. The Company is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Company with respect to the retirement benefit plan is to make the specified contributions.

The total expense recognized in Statement of Profit & Loss is ? 1.43 crores (for the year ended March 31,2021 ? 1.44 crores) represents contribution for the year paid/payable to the Employee Provident Fund. The contribution outstanding as at March 31, 2022 of ?.0.35 crore (as at March 31,2021 ? 0.35 crore) due in respect of financial year 2021-22 (financial year 2020-21) is payable in the subsequent reporting periods.

c) The Company is in the process of transferring employees under erstwhile Coastal Gujarat Power Limited to the payroll of the Company. Post transfer, all employees will get transferred to existing provident fund scheme and gratuity fund scheme of the Company.

2. Defined benefit plans

2.1 The Company operates the following unfunded/funded defined benefit plans:

Funded:

Provident Fund

The Company makes Provident Fund contributions to defined benefit plans for eligible employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions as specified are paid to the provident fund trust set by the Company. The Company is generally liable for annual contributions. However, any shortfall in the fund assets based on the government specified minimum rates of return are recognised as an expense in the year it is incurred. Having regard to the assets of the fund and the return on the investments, the Company expects net shortfall of ? Nil.

The actuary has provided a valuation of provident fund liability based on the assumptions listed and determined the net short fall of ? Nil as at March 31, 2022 (March 31,2021 - ? 6.50 crore) which has been recognised as an expense during the year.

The significant assumptions used for the purpose of the actuarial valuations were as follows:

Post Employment Medical Benefits

Pension (including Director pension)

Ex-Gratia Death Benefit

Retirement Gift

The Company has a defined benefit plan granting a pre-determined sum as retirement gift on superannuation of an employee. Gratuity

The Company has a defined benefit gratuity plan. The gratuity plan is primarily governed by the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of five years are eligible for gratuity. The level of benefits provided depends on the member''s length of service and salary at the retirement date. The gratuity plan is a combination of funded plan and unfunded plan. Unfunded plan pertains to employees of erstwhile Coastal Gujarat Power Limited which has been merged with the Company based on National Company Law Tribunal (NCLT) order dated 31.03.2022 . In case of funded plan, the fund has the form of a trust and is governed by Trustees appointed by the Company. The Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy in accordance with the trust regulations.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period. These plans typically expose the Company to actuarial risks such as: Investment Risk, Interest Risk, Longevity Risk and Salary Risk.

The contribution expected to be made by the Company during the financial year 2022-23 is ? 19.97 crore.

2.6 Risk exposure:

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility:

Inflation rate risk:

Higher than expected increase in salary and medical cost will increase the defined benefit obligation.

Demographic risk:

1. The rate of interest for term loans from banks ranges from 4.60% to 9.50% (March 31, 2021 - 6.50% to 9.50%) and loan from others is 3.42% to 6.99% (March 31,2021 - 3.13% to 7.50%).

2. The term loan mentioned in (a) above have been secured by pari passu first charge over all current assets of the Company, present and future, except for specific wind assets.

* While submitting the quarterly statements for all four quarters during the year, the Company inadvertently included and disclosed unapproved regulatory balances as approved. However, subsequent to year end, the Company has communicated to Bank about the said discrepancy. Further, Bank has confirmed that the intention was not to exclude unapproved balances from the receivable and has initiated the process to change the sanction letter wherein total regulatory asset balance should be considered as receivables for the purpose of sanction limit.

# Subsequent to year end, Company has submitted the revised statement for quarter ended December 2021 and receivable balances as per revised statements are in agreement with the books of accounts.

Revenue recognition Accounting Policy

Description of performance obligations are as follows :

(i) Sale of Power - Generation (Thermal and Hydro): Regulated

Revenue from sale of power is recognised net of cash discount over time for each unit of electricity delivered.

As per tariff regulations, the Company determines ARR and any surplus/shortfall in recovery of the same is accounted as revenue.

(ii) Sale of Power - Generation: Non-regulated

(iii) Sale of Power - Generation (Wind and Solar)

Revenue from sale of power is recognised net of cash discount over time for each unit of electricity delivered at the contracted rate.

(iv) Transmission of Power

Revenue from transmission of power is recognised net of cash discount over time for transmission of electricity. The Company as per the prevalent tariff regulations is required to recover its Annual Revenue Requirement (''ARR'') comprising of expenditure on account of operations and maintenance expenses, financing costs, taxes and assured return on regulator approved equity with additional incentive for operational efficiencies. Input method is used to recognize revenue based on the Company''s efforts or inputs to the satisfaction of a performance obligation to deliver power. As per tariff regulations, the Company determines ARR and any surplus/shortfall in recovery of the same is accounted as revenue.

(v) Sale of Power - Distribution

Revenue from sale of power is recognised net of cash discount over time for each unit of electricity delivered at the pre determined rate.

(vi) Rendering of Services

Revenue from a contract to provide services is recognised over time based on : Input method where the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of performance obligation. Revenue, including estimated fees or profits, are recorded proportionally based on measure of progress. Output method where direct measurements of value to the customer based on survey''s of performance completed to date. Revenue is recognised net of cash discount at a point in time at the contracted rate.

There are no significant judgements involved while evaluating the timing as to when customers obtain control of promised goods and services.

Transaction Price - Remaining Performance Obligation

The aggregate value of performance obligations that are partially unsatisfied as at March 31,2022, other than those meeting the exclusion criteria mentioned above, is ? 71,547.14 crore (March 31, 2021 - ? 1,06,758.95 crore). Out of this, the Company expects to recognize revenue of around 11.11% within next one year and the remaining thereafter.

Note:

(i) With respect to Mundra Power Plant, the Company has initiated the discussions with Gujarat Urja Vikas Nigam Limited to enter into a supplementary power purchase agreement (SPPA). The discussions are at very advanced stage and agreement is reached except few items for which discussions are ongoing and accordingly the SPPA is yet to be signed and approved. To ensure continuous supply of power, GUVNL has requested the Company to continue supplying power based on the SPPA which will be effective January 1, 2022. Accordingly the differential revenue of ? 324.00 crore has been recognized on the basis of the current agreed draft of SPPA for the period from January 2022 to March 2022. Management believes that the Company has an enforceable right to recover the tariff as per draft SPPA and does not expect any significant reversal in the amount recognised as revenue.

(ii) As per power purchase agreement for Mundra Power Plant, the Company''s entitlement to capacity revenue is dependent on availability declared. Accordingly, the Company accrues capacity revenue based on actual declared capacity in the past and for the current year. During the year ended March 31, 2022, based on the actual capacity declared, management has recognized an amount of ? 230.47 crore (including ? 123.27 crore relating to earlier years) as a reduction in revenue.

Contract assets

Contract asset is the right to consideration in exchange for goods or services transferred to the customer. Contract assets are transferred to receivables when the rights become unconditional.

Contract Liabilities

32. Other Income Accounting Policy Dividend and Interest income

Dividend income from investments is recognised when the shareholder''s right to receive payment has been established.

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.

Liability written back includes, reversal of provision pertaining to fly ash of ? 21.74 crore recognised in earlier years pursuant to an order passed by National Green Tribunal on February 12, 2020. During the year, Ministry of Environment, Forest and Climate Change (MoEF&CC) issued a Notification on 31st December, 2021 prescribing timelines and manner of utilization of legacy ash as on the date of the notification. The Company believes that it will be able to utilize the legacy fly ash within the revised applicable timeline and accordingly the fly ash provision is reversed.

36. Income taxes Accounting Policy Current Tax

Deferred Tax

a Subsequent to the merger of Coastal Gujarat Power Limited (CGPL) with the Company with effect from April 1, 2020, the Company has reassessed its provision for current taxes and has written back an amount of ?87.30 crore relating to previous year.

b The Company has also reassessed the recoverability of unabsorbed depreciation and brought forward tax losses of CGPL and has recognized deferred tax asset amounting to ? 968.56 crore and has written off deferred tax asset on capital losses amounting to ?230.00 crore.

c The Company has transitioned to the new tax regime effective April 1,2020 and accordingly, during the year, the Company had remeasured its tax balances and reversed the deferred tax asset amounting to ?359.62 crore and written back current tax provision amounting to ?17.81 crore.

1 During the previous year, the Company had entered into a Business Transfer Agreement with Tata Power Renewable Energy Limited and Tata Power Green Energy Limited, wholly owned subsidiaries, for transfer of renewable assets (forming part of renewable segment) as a "going concernâ on a slump sale basis effective on or after April 1, 2021. Consequently, as per the requirement of Ind AS 12, the Company

38. Commitments:

(a) Estimated amount of Contracts remaining to be executed on capital account and not provided for ? 1,920.97 crore (March

31,2021 - ? 2,060.12 crore.)

(b) Other Commitments

(i) The Company has undertaken to arrange for the necessary financial support to its subsidiaries Bhira Investments Pte. Ltd., Khopoli Investments Ltd., Bhivpuri Investments Lt

Mar 31, 2021

Intangible Assets

Accounting Policy

Intangible Assets acquired separately

Internally generated Intangible Assets

Derecognition of Intangible Assets

Useful lives of Intangible Assets

Non-current Investments (Contd.)

The Company, along with its subsidiary, has 30.68% shareholding in TCL Ceramics Ltd (formerly known as Tata Ceramics Ltd.). Further, TCL Ceramics Ltd. has issued Redeemable Cumulative Convertible Preference Shares which have been fully subscribed by the Company and its subsidiaries. As the dividend on the said Preference Shares has remained unpaid for more than two years, the preference shareholders have assumed voting rights along with the equity shareholders. The aggregate voting power (together with voting power on preference shares) with the Company along with its subsidiaries is at 57.07%. As the Company has sufficient dominant voting interest to direct TCL Ceramics Ltd.''s relevant activities, investment in the said Company has been considered as investment in subsidiary.

Pursuant to the Share Purchase Agreement (''Agreement'') dated 4th January, 2020, the Company had transferred its Equity and Preference share to the purchasers as a part of the conditions mentioned in the Agreement subject to final closing. The said shares has been pledged back to the Company by the purchasers till the final closure. As all the conditions related to the closing has not been completed, the Company believes that it still controls TCL Ceramics Ltd. till all the conditions are fulfilled. Hence, no impact of sale of share has been accounted in the Standalone financial statements. The impact of the sale on the Company''s Standalone financial statement will not be significant.

During the year ended 31st March, 2021, the Company has acquired 51 % stake in TP Central Odisha Distribution Limited (''TPCODL''), TP Western Odisha Distribution Limited (''TPWODL'') and TP Southern Odisha Distribution Limited (''TPSODL'') for '' 178.95 crore, '' 255.04 crore and '' 127.52 crore respectively. TPCODL, TPWODL and TPSODL are the licensees to carry out the function of distribution and retail supply of electricity covering the distribution circles of Central, Western and Southern Odisha for a period of 25 years effective from 1st June, 2020, 1st January, 2021 and 1st January, 2021 respectively.

During the year, the Company has received bonus equity shares 25,50,00,000 Nos from Tata Power Delhi Distribution Ltd and subscribed to right issue of equity shares 1,750 Nos from Tata International Ltd.

The Board of Directors of the Company in its meeting held on 12th August, 2020, have approved the Composite scheme of Arrangement for merger of Coastal Gujarat Power Limited and Tata Power Solar Systems Limited (wholly owned subsidiaries) with the Company along with the capital reorganisation after the merger. The Board of Directors have also approved the Scheme of Amalgamation for merger of Af-taab Investment Company Limited (a wholly owned subsidiary) with the Company. The aforesaid schemes have been approved by shareholders of the Company and are subject to the necessary approvals from regulatory authorities including National Company Law Tribunal. Post necessary approvals, the merger will be accounted in accordance with Appendix C of Ind AS 103 - ''Business combinations of entities under common control'' using pooling of interest method.

(a) The Company holds investments in Coastal Gujarat Power Ltd. (CGPL) (a wholly owned subsidiary of the Company operating 4,000 MW Mundra power plant), Indonesian mining companies PT Kaltim Prima Coal (KPC) and PT Baramulti Suksessarana TBK (BSSR) through intermediate holding companies (associates operating coal mines in Indonesia and supplying coal to CGPL) and Trust Energy Resources Pte. Ltd. (TERPL) (shipping company in Singapore providing freight services for coal shipment to CGPL). All these companies constitute a single cash generating unit (CGU) and form part of same segment due to interdependency of cash flows. CGPL is incurring significant losses on account of significant increase in coal prices due to change in Indonesian laws which is offset by the profits earned by the mining companies.

Non-current Investments (Contd.)

The Company has performed the impairment assessment and determined the value in use based on estimated cash flow projections over the life of the assets included in CGU. The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. For Mundra power plant, future cash flows is estimated based on remaining period of long term power purchase agreement (PPA) and thereafter based on management''s estimate on tariff and other assumptions. Cash flow projection of Mines is derived based on estimated coal production considering the renewal of license for operating the Mines. In the past, the Company had recognised an impairment provision of '' 3,555 crore in CGU. A reassessment of the assumptions used in estimating the impact of impairment of the cash generating unit (CGU) comprising of Coastal Gujarat Power Ltd. and the Indonesian coal mines, combined with the significant impact of unwinding of a year''s discount on the cash flows, would have resulted in a reversal of ? 1,625 crore of provision for impairment. Considering the significant uncertainties arising from ongoing renegotiation of the Mundra Power Purchase Agreement, as recommended by the High Powered Committee, and the pending renewal of the mining license at the Indonesian coal mines, the Company has not effected such a reversal. The reversal of impairment has not resulted from any significant improvement in the estimated service potential of the concerned CGU.

Key assumptions used for value in use calculation include coal prices, energy prices post the PPA period, discount rates and exchange rates. Short term coal prices and energy prices used in three to five years projections are based on market survey and expert analysis report. Afterwards increase in cost of coal and exchange rates are considered based on long term historical trend. Further, the Management strongly believes that mine licenses will be renewed post expiry. Discount rate represents the current market assessment of the risk specific to CGU taking into consideration the time value of money. Pre tax discount rate used in the calculation of value in use of investment in power plant is 10.50% p.a. (31st March, 2020: 10.87% p.a.) and investment in coal mines and related infrastructure companies is 14.11% p.a. (31st March, 2020: 12.68% p.a.).

(b) Tata Power International Pte. Ltd. (TPIPL) (a wholly owned subsidiary of the Company) holds investments in Adjaristsqali Netherlands B.V.(ABV) (a joint venture of TPIPL) operating 187 MW hydro power plant in Georgia. During the previous year, the Company has recognised a reversal of '' 235.00 crore comprising of reversal of '' 103.74 crore towards financial guarantee obligation and impairment loss reversal of ''131.26 crore which was disclosed as an exceptional item in the statement of profit and loss.

Trade Receivables

As at 31^st March, 2021, '' 495.13 crore (31st March, 2020 - '' 639.18 crore) is due from Brihanmumbai Electric Supply & Transport Undertaking, Maharashtra State Electricity Transmission Company Ltd.,Tamil Nadu Generation and Distribution Corporation and Tata Steel Ltd. which represents Company''s large customers who owe more than 5% of the total balance of trade receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. The provision matrix at the end of the reporting period is as follows:

Finance Lease Receivable - At Amortised Cost

(Unsecured unless otherwise stated)

Accounting Policy

Leasing Arrangements

The Company has entered into Power Purchase Agreements (PPA) with a customer for its assets located at Jojobera. The assets relate to 30 years of take or pay agreements with the customer to supply electricity at a fixed plus variable charge. The customer, during the term of the PPAs has a right to purchase the assets and at the end of the contract is obligated to purchase the same on the basis of the valuation to be determined as per the PPAs. The Company has recognised an amount of '' 84.66 crore (31st March, 2020 - '' 88.91 crore) as income for finance lease during the year ended 31st March, 2021.

Accounting Policy

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:

- represents a separate major line of business or geographical area of operations,

- is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations.

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit and loss. Additional disclosures are provided hereunder. All other notes to the Standalone financial statements mainly include amounts for continuing operations, unless otherwise mentioned.

(iii) During the previous year, the Company has reclassified following assets from held for sale to Property, Plant and Equipments :

(a) Building at Erangal '' 0.23 crore.

(b) Oil Tankage unit at Trombay (Land '' 0.04 crore, Building and Plant and Equipments '' 4.68 crore).

(iv) During the previous year, the Company has classified Helicopter (Book Value '' 0.17 crore) from Property, Plant and Equipments to held for sale.

(v) During the previous year, Maharashtra Electricity Regulatory Commission (''MERC'') had ordered termination of Vikhroli Transmission Lines project, carried out by the Company and decided to invite fresh bids for completion of the project. MERC had also ordered that cost incurred by the Company shall be reimbursed by the successful bidder. Accordingly, the Company reclassified the said project as held for sale.During the year, the Company has received an amount of '' 118.27 crore against the said project.

. Assets Classified as Held For Sale - Discontinued Operations

During the earlier year, the Company approved sale of its Strategic Engineering Division (SED) to Tata Advanced Systems Ltd. (TASL) [a wholly owned subsidiary of Tata Sons Pvt. Ltd.] as a going concern on slump sale basis, subject to regulatory approvals at an enterprise value of '' 2,230 crore (out of which '' 1,040 crore payable at the time of closing and '' 1,190 crore payable on achieving certain milestones). Accordingly, defence business segment is presented as discontinued operations. On 31st October, 2020, the Company has completed the sale of its SED to TASL and has received upfront consideration of '' 597.00 crores (net of borrowings of '' 537.00 crore transferred to TASL) after certain adjustments as specified in the scheme.

Regulatory Deferral Account

Accounting Policy

i. the total of all regulatory deferral account debit balances and related deferred tax balances; and

ii. the total of all regulatory deferral account credit balances and related deferred tax balances.

Rate Reguiatea Activities

MERC Multi Year Tariff Regulations, 2019 (''MYT Regulations''), is applicable for the period beginning from 1st April, 2020 to 31st March, 2024. These regulations require MERC to determine tariff in a manner wherein the Company can recover its fixed and variable costs including assured rate of return on approved equity base, from its consumers. The Company determines the Revenue, Regulatory Assets and Liabilities as per the terms and conditions specified in MYT Regulations.

Notes:

1. Includes gain on fair valuation of land which is not available for distribution '' 222.31 crore (31st March, 2020 - '' 222.31 crore).

2. The shareholders of the Company in their meeting held on 30th July, 2020 approved final dividend of '' 1.55 per share aggregating '' 419.24 crore for the financial year 2019-20. The said dividend was paid to the holders of fully paid equity shares on 3rd August, 2020.

3. Represents gain/(loss) on sale of certain investments carried at fair value through other comprehensive income transferred to Retained Earnings.

4. In respect of the year ended 31st March, 2021, the directors have proposed a dividend of ''1.55 per share to be paid on fully paid shares. This equity dividend is subject to approval at the annual general meeting and has not been included as a liability in the Standalone financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is '' 495.72 crore.

5. During the year, the shareholders in the Annual General Meeting dated 30th July, 2020 has approved the issuance of 49,05,66,037 equity shares of the face value of '' 1 each at '' 53 per equity share for an amount aggregating to '' 2,600 crores to Tata Sons Pvt Ltd on preferential basis.The Company has allotted the said equity shares to Tata Sons Pvt Ltd on 13th August, 2020.

Nature and purpose of reserves:

General Reserve

General Reserve is used to transfer profits from retained earnings for appropriation purposes. The amount is to be utilised in accordance with the provision of the Companies Act, 2013.

Securities Premium

Securities Premium is used to record the premium on issue of shares and is utilised in accordance with the provisions of the Companies Act, 2013.

Debenture Redemption Reserve

The Company was required to create a Debenture Redemption Reserve out of the profits which are available for payment of dividend for the purpose of redemption of debentures. Pursuant to Companies (Share Capital and Debentures) Amendment Rules, 2019 dated 16th August, 2019, the Company is not creating additional debenture redemption reserve (DRR) from the effective date of amendment. DRR created till previous years will be transferred to retained earnings on redemption of debentures.

Capital Redemption Reserve

Capital Redemption Reserve represents amounts set aside on redemption of preference shares.

Capital Reserve

Statutory Reserve

Statutory Reserve consists of Special Appropriation towards Project Cost, Development Reserve and Investment Allowance Reserve.

Other Equity (Contd.)

Retained Earnings

Retained Earnings are the profits of the Company earned till date net of appropriations.

Equity Instruments through Other Comprehensive Income

Security

(i) The Debentures mentioned in (b) have been secured by a charge on movable properties and assets of the Company at Agaswadi and Visapur in Satara District of Maharashtra and Poolavadi in Tirupur District of Tamil Nadu.

(ii) The Debentures mentioned in (c) have been secured by a pari passu charge on the assets of the wind farms situated at Samana in Gujarat, Gadag in Karnataka and immovable properties in Jamnagar, Gujarat.

(iii) The Debentures mentioned in (d) have been secured by a charge on the land situated at Village Takve Khurd (Maharashtra) and movable fixed assets (except the Wind assets) including movable machinery, machinery spares, tools and accessories but excluding vehicles, launches and barges, present and future.

(iv) The Loans mentioned in (a), (e), (g), (h), (i), (j) and (k) have been secured by pari passu charge on all movable Fixed Assets (excluding land and building), present and future (except assets of all wind projects both present and future) including movable machinery, machinery spares, tools and accessories, present and future, but excluding vehicles, launches and barges.

(v) The Loans mentioned in (f) have also been secured by whole of current assets of the Company, present and future, in a first pari passu manner.

(vi) Part of Loan mentioned in (g) is also secured by second charge on all movable fixed assets and current assets.

(vii) The Loans from Asian Development Bank and Indian Renewable Energy Development Agency Limited mentioned in (l) and (m) respectively have been secured by a charge on the movable and immovable properties situated at Khandke, Brahmanvel and Sadawaghapur in Maharashtra including the projects'' current and future receivables.

Lease Liabilities

Accounting Policy

As a Lessee

i) Right-of-Use Assets

- Plant and Equipment - 2 years

- Leasehold land including Sub-surface rights - 2 to 25 years

The Company presents right-to-use assets that do not meet the definition of investment property in ''Property, Plant and Equipment''.

ii) Lease Liabilities

iii) Short term leases and leases of low value of assets

Leasing arrangement as Lessee

The Company has lease contracts for various items of plant, machinery, land, vehicles and other equipments used in its operations. Leases of Leasehold land including sub-surface rights and plant and equipment generally have lease term between 2 and 25 years. Generally, the Company is restricted from assigning and subleasing the leased assets.

Provisions

Accounting Policy

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

Present obligations arising under onerous contracts are recognised and measured as provisions with charge to statement of profit and loss. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.

Defined contribution plans

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

Defined benefits plans

Past service costs are recognised in the statement of profit and loss on the earlier of:

- The date of the plan amendment or curtailment, and

- The date that the Company recognises related restructuring costs

- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non routine settlements; and

- Net interest expense or income.

1. Defined Contribution plan

The Company makes superannuation fund contributions to defined contribution plan for eligible employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs. The Company has no obligation, other than the contribution payable to the fund. The Company recognises contribution payable to the superannuation fund scheme as an expense, when an employee renders the related service.

The Company has recognised '' 7.84 crore (31st March, 2020 - '' 9.32 crore) for superannuation contribution in the statement of profit and loss. The said amount is excluding of amounts recognised by the Strategic Engineering Division (SED) (Discontinued operations). The contribution payable to the plan by the Company is at rates specified in the rules of the plan.

2. Defined benefit plans

2.1 The Company operates the following unfunded/funded defined benefit plans:

Funded:

Provident Fund

Having regard to the assets of the fund and the return on the investments, the Company expects net shortfall of ? 6.50 crore which has been provided as an expenditure during the year.

The actuary has provided a valuation of provident fund liability based on the assumptions listed and determined the net short fall of ? 6.50 crore as at 31st March, 2021 (31st March, 2020 - ? 10.52 crore) which has been recognised as an expense during the year.

The Company has a defined benefit gratuity plan. The gratuity plan is primarily governed by the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of five years are eligible for gratuity. The level of benefits provided depends on the member''s length of service and salary at the retirement date. The gratuity plan is funded plan. The fund has the form of a trust and is governed by Trustees appointed by the Company. The Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy in accordance with the trust regulations.

Unfunded:

Post Employment Medical Benefits

Pension (including Director pension)

Ex-Gratia Death Benefit

Risk exposure:

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility:

Inflation rate risk:

Higher than expected increase in salary and medical cost will increase the defined benefit obligation.

Demographic risk:

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Revenue from Operations

Revenue recognition Accounting Policy

(i) Sale of Power - Generation (Thermal and Hydro)

Revenue from sale of power is recognised net of cash discount over time for each unit of electricity delivered.

As per tariff regulations, the Company determines ARR and any surplus/shortfall in recovery of the same is accounted as revenue.

(ii) Sale of Power - Generation (Wind and Solar)

Revenue from sale of power is recognised net of cash discount over time for each unit of electricity delivered at the contracted rate.

(iii) Transmission of Power

Input method is used to recognize revenue based on the Company''s efforts or inputs to the satisfaction of a performance obligation to deliver power.

As per tariff regulations, the Company determines ARR and any surplus/shortfall in recovery of the same is accounted as revenue.

(iv) Sale of Power - Distribution

Revenue from sale of power is recognised net of cash discount over time for each unit of electricity delivered at the pre determined rate.

(v) Rendering of Services

Revenue from a contract to provide services is recognised over time based on :

Output method where direct measurements of value to the customer based on survey''s of performance completed to date.

Revenue is recognised net of cash discount at a point in time at the contracted rate.

(vi) Consumers are billed on a monthly basis and are given average credit period of 30 to 45 days for payment. No delayed payment charges (''DPC'') is charged for the initial 30 days from the date of receipt of invoice by customers. Thereafter, DPC is charged as per the relevant contracts on the outstanding balance once the dues are received. Revenue in respect of delayed payment charges and interest on delayed payments leviable as per the relevant contracts are recognised on actual realisation or accrued based on an assessment of certainty of realisation supported by either an acknowledgement from customers or on receipt of favourable order from regulator / authorities.

(vii) In the regulated operations of the Company where tariff recovered from consumers is determined on cost plus return on equity, the Income tax cost is pass through cost and accordingly the Company recognises Deferred tax recoverable/ payable against any Deferred tax expense/ income. The same is included in ''Revenue from Operations'' in case of Generation and Transmission business.

There are no significant judgements involved while evaluating the timing as to when customers obtain control of promised goods and services.

Transaction Price - Remaining Performance Obligation

The aggregate value of performance obligations that are partially unsatisfied as at 31st March, 2021, other than those meeting the exclusion criteria mentioned above is '' Nil (31st March, 2020 - '' 18.59 crore). The Company expects to recognise it as revenue within next one year.

Income taxes Accounting Policy Current Tax

Deferred Tax

Commitments

(a) Estimated amount of Contracts remaining to be executed on capital account and not provided for '' 284.17 crore (31st

March, 2020 - '' 413.08 crore.)

(b) Other Commitments

(i) In terms of the Sponsor Support agreement entered into between the Company, Coastal Gujarat Power Ltd. (CGPL) and INR term lenders (SBI led consortium) of CGPL, the Company has undertaken to provide support by way of base equity contribution to the extent of 25% of CGPL''s project cost and additional equity or subordinated loans to be made or arranged for, if required as per the financing agreements to finance the project. The Sponsor Support Agreement also includes support by way of additional financial support for any overrun in project costs, operational loss and Debt Service Reserve Guarantee as provided under the financing agreements. In terms of the conditions of the financing agreements, the Company has provided support through Unsecured Perpetual securities and Equity of '' 19,777.14 crore (31st March, 2020 - '' 15,629.14 crore) to CGPL.

(ii) The Company has undertaken to arrange for the necessary financial support to its subsidiaries Bhira Investments Pte. Ltd., Khopoli Investments Ltd., Bhivpuri Investments Ltd., TP Renewable Microgrid Ltd. (formerly Industrial Power Utility Ltd.), Tata Power Jamshedpur Distribution Ltd. and Tata Power International Pte. Ltd.

(iii) In respect of Maithon Power Ltd. (MPL), the Company jointly with Damodar Valley Corporation (DVC) has undertaken to the lenders of MPL, to provide support by way of base equity contribution and additional equity or subordinated loans to meet the increase in Project Cost. Further, the Company has given an undertaking to MPL to fulfil payment obligations of Tata Power Trading Company Ltd. (TPTCL) and Tata Power Delhi Distribution Ltd. (TPDDL) in case of their default.

(d) The Company has provided a Bank Guarantee of USD 90 Million ('' 657.99 crore) and Corporate Guarantee of USD 40 Million ('' 292.44 crore) to Oldendorff as per the affreightment contract entered by Trust Energy Resources Pte. Ltd., wholly owned subsidiary of the Company.

(e) During the year, the Company has acquired 51% stake in TP Central Odisha Distribution Limited (''TPCODL''), TP Western Odisha Distribution Limited (''TPWODL'') and TP Southern Odisha Distribution Limited (''TPSODL'') to carry out the function of distribution and retail supply of electricity covering the distribution circles of central, western and southern parts of Odisha. Pursuant to these acquisition and as per the terms of the vesting order, the Company has issued bank guarantee to Odisha Electricity Regulatory Commission (''OERC'') of ''150.00 crore, ''150.00 crore, ''100.00 crore respectively.

(f) OERC had issued a request for proposal for sale of controlling interest in distribution business of North Electricity Supply Utility of Odisha. The Company had bid for it and has been identified as the successful bidder and accordingly the Company issued bank guarantees to OERC of ''150 crore.

(g) The Company has given performance guarantee and letter of credit on behalf of TP Ajmer Distribution Ltd of ''106.17 crore (31st March, 2020 ''105.00 crore) to Ajmer Vidyut Vitran Nigam Ltd as per the distribution franchisee agreement.

(h) The Company has given performance guarantee on behalf of Trust Energy Resources Pte. Ltd. to Maxpente Shipping Corporation of USD 10 Million ('' 73.11 crore) (31st March, 2020 USD 10 Million ('' 74.88 crore) for its obligation under the cost of affreightment contract.

The Company, in respect of the above mentioned contingent liabilities has assessed that it is only possible but not probable that outflow of economic resources will be required.

!9. Other disputes

a. In the previous year, the Company has recognised an expense of '' 276.35 crore net of amount recoverable from customers including adjustment with consumer reserve in relation to Hon''ble Supreme Court''s judgement on standby litigation.

Further in the previous year, Maharashtra Electricity Regulatory Commission (MERC) vide its order dated 30th March, 2020 had allowed the recovery of part of the standby charges amount from the consumers. During the year ended 31st March, 2021, MERC vide its order dated 21st December, 2020, has revised its earlier order and disallowed the recovery of the said amount. Consequently, the Company has recognized an expense of ''109.29 crore (including carrying cost) and disclosed as an exceptional item.

b. In the earlier years, Maharashtra Electricity Regulatory Commission has disallowed certain costs amounting to '' 419.00 crore (adjusted upto the current year) (31st March, 2020 ''359.85 crore) recoverable from consumers in the tariff true up order. The Company has filed appeal against the said order to Appellate Tribunal for Electricity which is pending for final disposal.

c. In an earlier year, Maharashtra Electricity Regulatory Commission has disallowed carrying cost and other costs amounting to ''269.00 (31st March, 2020 ''269.00) which was upheld by the Appellate Tribunal for Electricity (ATE). The Company has filed Special Leave Petition (SLP) against the order of ATE with the Supreme Court which is pending for final disposal.

Earnings Per Share (EPS)

Accounting Policy

Basic earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the standalone

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Financial Instruments (Contd.)

Note:

Certain unquoted investments are not held for trading, instead they are held for medium or long term strategic purpose. Upon the application of Ind AS 109 ''Financial Instruments'', the Company has chosen to designate these investments in equity instruments as at FVTOCI as the management believe this provides more meaningful presentation for medium and long term strategic investments, then reflecting changes in fair value immediately in profit or loss.

The management assessed that the fair value of cash and cash equivalents, other balances with banks, trade receivables, loans, finance lease receivables, unbilled revenues, trade payables, other financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties. The following methods and assumptions were used to estimate the fair values.

- Fair value of the government securities are based on the price quotations near the reporting date. Fair value of the unquoted equity shares have been estimated using market comparable method. The valuation requires management to make certain assumptions about the marketability, active market price, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management''s estimate of fair value for those unquoted equity investments.

- The fair value of the remaining FVTOCI financial assets are derived from quoted market price in active markets.

- The fair value of debentures is determined by using the quoted prices .The own non-performance risk as on 31st March, 2021 was assessed to be insignificant.

- The cost of certain unquoted investments approximate their fair value because there is a wide range of possible fair value measurements and the cost represents the best estimate of fair value within that range.

- The fair value of loans from banks, other current financial liabilities and other non-current financial liabilities is estimated by discounting future cash flow using rates currently available for debt on similar terms, credit risk and remaining maturities.

Fair value hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

Quoted prices in an active market (Level 1): Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. This includes quoted equity instruments, government securities and quoted borrowings (fixed rate) that have quoted price.

Valuation techniques with observable inputs (Level 2): Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This includes derivative financial instruments and unquoted floating and fixed rate borrowings.

Valuation techniques with significant unobservable inputs (Level 3): Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. This includes unquoted equity shares and contingent consideration receivable.

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5 Capital Management & Gearing Ratio

For the purpose of the Company''s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximize the value for shareholders.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. From time to time, the Company reviews its policy related to dividend payment to shareholders, return capital to shareholders or fresh issue of shares. The Company monitors capital using gearing ratio, which is net debt divided by total capital plus net debt. The Company''s policy is to keep the gearing ratio around 50%. The Company includes within net debt, interest bearing loans and borrowings, less cash and bank balances as detailed in the notes below.

The Company''s capital management is intended to create value for shareholders by facilitating the meeting of its long-term and short-term goals. Its Capital structure consists of net debt (borrowings as detailed in notes below) and total equity.

(i) Debt is defined as Non-current borrowings (including current maturities) and Current borrowings (excluding derivative, financial guarantee contracts and contingent considerations) and interest accrued on Non-current and Current borrowings.

(ii) Equity is defined as Equity share capital, Unsecured perpetual securities and other equity.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no significant breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31st March, 2021 and 31st March, 2020.

4 Financial risk management objectives and policies

The Company''s principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables, financial guarantee contracts and other financial liabilities. The main purpose of these financial liabilities is to finance the Company''s operations and to provide guarantees to support its operations. The Company''s principal financial assets include investments, loans, trade and other receivables, cash and cash equivalents, other bank balances, unbilled receivables, finance lease receivables and other financial assets that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management is supported by a risk committee that reviews the financial risks and the appropriate financial risk governance framework for the Company. The Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The risk management polices

Mar 31, 2019

1. Corporate Information:

The Tata Power Company Limited (the âCompanyâ) is a public limited company domiciled and incorporated in India under the Indian Companies Act, 1913. The registered office of the Company is located at Bombay House, 24, Homi Mody Street, Mumbai 400001, India. The Principal business of the Company is generation, transmission and distribution of electricity.

The Company was amongst the pioneers in generation of electricity in India more than a century ago.

The Company has an installed generation capacity of 2,804 MW in India and a presence in all the segments of the power sector viz. Fuel and Logistics, Generation (thermal, hydro, solar and wind), Transmission and Distribution.

2.1 Statement of compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as notified under the Companies (Indian Accounting Standards) Rules, 2015 read with section 133 of the Companies Act, 2013 (as amended from time to time).

2.2 Basis of preparation and presentation

The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value

- derivative financial instruments;

- certain financial assets and liabilities measured at fair value (Refer accounting policy regarding financial instruments);

- employee benefit expenses (Refer Note 32 for Accounting policy).

3. Critical accounting estimates and judgements

In the application of the Companyâs accounting policies, management of the Company is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

The areas involving critical estimates or judgements are:

Estimates used for impairment of property, plant and equipment of certain cash generating units (CGU) - Note 5 Estimated fair value of unquoted securities and impairment of investments - Note 8 Estimation of defined benefit obligation - Note 25 and 32

Estimation of current tax and deferred tax expense (including Minimum Alternate Tax credit) - Note 35

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

Judgement to estimate the amount of provision required or to determine required disclosure related to litigation and claims against the Company - Note 38.

4. Property, plant and equipment Accounting Policy

Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes purchase price (net of trade discount and rebates) and any directly attributable cost of bringing the asset to its working condition for its intended use and for qualifying assets, borrowing costs capitalised in accordance with the Ind AS 23. Capital work in progress is stated at cost, net of accumulated impairment loss, if any. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the statement of profit and loss as incurred.

Depreciation

Depreciation commences when an asset is ready for its intended use. Freehold land and assets held for sale are not depreciated. Regulated Assets:

Depreciation on Property, plant and equipments in respect of electricity business of the Company covered under Part B of Schedule II of the Companies Act, 2013, has been provided on the straight line method at the rates using the methodology as notified by the regulator.

Non-Regulated Assets:

Depreciation is recognised on the cost of assets (other than freehold land and properties under construction) less their residual values over their estimated useful lives, using the straight-line method.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The Company, based on technical assessment made by technical expert and management estimate, depreciates certain items of building, plant and equipments over estimated useful lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.

Decapitalisation

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipments is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of profit and loss.

Impairment

Impairment of tangible and intangible assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.

When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Companyâs CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a PPA period. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, the Company extrapolates cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the market in which the asset is used.

Impairment losses of tangible and intangible assets are recognised in the statement of profit and loss.

5. Investment Property

Accounting Policy

Investment property held to earn rentals or for capital appreciation are stated at cost less subsequent accumulated depreciation and subsequent accumulated impairment loss, if any. Gain or loss on disposal of investment properties is determined as the difference between net disposal proceeds and the carrying amount of the property and is recognised in the statement of profit and loss. Transfer to, or from, investment property is done at the carrying amount of the property.

6. Intangible Assets

Accounting Policy

Intangible assets acquired separately

Internally generated Intangibles

Derecognition of Intangible Assets

Useful lives of Intangible Assets

7. Investments at Fair Value Through Other Comprehensive Income (FVTOCI) reflect investment in quoted and unquoted equity securities. These equity shares are designated as FVTOCI as they are not held for trading purpose and are not in similar line of business as the Company, thus disclosing their fair value change in profit and loss will not reflect the purpose of holding.

(a) The Company holds investments in Coastal Gujarat Power Ltd. (CGPL) (a wholly owned subsidiary of the Company operating 4,000 MW Mundra power plant), Indonesian mining companies PT Kaltim Prima Coal (KPC) and PT Baramulti Suksessarana TBK (BSSR) through intermediate holding companies (associates operating coal mines in Indonesia and supplying coal to CGPL) and Trust Energy Resources Pte. Ltd. (TERPL) and Eastern Energy Pte. Ltd. (EEPL) (shipping companies in Singapore providing freight services for coal shipment to CGPL). All these companies constitute a single cash generating unit (CGU) and form part of same segment due to interdependency of cash flows. CGPL is incurring significant losses on account of significant increase in coal prices due to change in Indonesian laws which is offset by the profits earned by the mining companies.

The Company has performed the impairment assessment and determined the value in use based on estimated cash flow projections over the life of the assets included in CGU. The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Companyâs CGUs to which the individual assets are allocated. For Mundra power plant, future cash flows is estimated based on remaining period of long term power purchase agreement (PPA) and thereafter based on managementâs estimate on tariff and other assumptions. Cash flow projection of Mines is derived based on estimated coal production considering the renewal of license for operating the Mines. During the previous year, the Company had recognised an impairment provision of Rs. 3,555 crore in CGU. A reassessment of the assumptions used in estimating the impact of impairment of the cash generating unit (CGU) comprising of Coastal Gujarat Power Ltd. and the Indonesian coal mines, combined with the significant impact of unwinding of a yearâs discount on the cash flows, would have resulted in a reversal of Rs. 2,100 crore of provision for impairment. Considering the significant uncertainties arising from ongoing renegotiation of the Mundra Power Purchase Agreement, as recommended by the High Powered Committee, and the pending renewal of the mining license at the Indonesian coal mines, the Company has not effected such a reversal. The reversal of impairment has not resulted from any significant improvement in the estimated service potential of the concerned CGU.

Key assumptions used for value in use calculation include coal prices, energy prices post the PPA period, discount rates and exchange rates. Short term coal prices and energy prices used in three to five years projections are based on market survey and expert analysis report. Afterwards increase in cost of coal and exchange rates are considered based on long term historical trend. Further, the Management strongly believes that mine licenses will be renewed post expiry. Discount rate represents the current market assessment of the risk specific to CGU taking into consideration the time value of money. Pre tax discount rate used in the calculation of value in use of investment in power plant is 10.61% p.a. (31st March 2018:11.15% p.a.) and investment in coal mines and related infrastructure companies is 16.31% p.a. (31st March 2018:21.95% p.a.).

During the previous year, the Company performed the impairment assessment and recognised an impairment charge of Rs. 577.55 crore against the carrying value of equity investments in TPIPL. The financial guarantee obligation of Rs. 103.74 crore (31stMarch, 2018 -Rs. 9777 crore) is undertaken on behalf of TPIPL towards the lenders of the said project. The impairment charge and financial guarantee obligation amounting to Rs. 675.32 crore is recorded in the statement of profit and loss and disclosed as an exceptional item in the previous year. Further during the year, Management has re-assessed the impairment and continue to believe that the impairment loss recognised need not be reversed.

8.1 Trade Receivables

As at 31st March, 2019 - Rs. 900.14 crore (31stMarch, 2018 - Rs. 694.48crore) is due from Brihanmumbai Electric Supply & Transport Undertaking, Reliance Infrastructure Ltd., Maharashtra State Electricity Transmission Company Ltd. and Tata Steel Ltd. which represents Companyâs large customers who owe more than 5% of the total balance of trade receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The expected credit loss allowance is not calculated on non current trade receivable on account of dispute. The provision matrix takes into account historical credit loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. The provision matrix at the end of the reporting period is as follows:

9. Finance Lease Receivable - At Amortised Cost

(Unsecured unless otherwise stated)

Accounting Policy Leasing arrangement

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

The Company as lessor

Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amount due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.

9.1 Leasing Arrangements

10. Inventories

Accounting Policy

Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on weighted average basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Cost of inventory includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Unserviceable/damaged stores and spares are identified and written down based on technical evaluation.

11. Cash and Cash Equivalents - At Amortised Cost

Accounting Policy

Cash and cash equivalents in the balance sheet comprise cash at banks and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. Cash and cash equivalents include balances with banks which are unrestricted for withdrawal and usage.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash at banks and short-term deposits, as defined above, net of outstanding bank overdraft as they are considered an integral part of the Companyâs cash management.

12a. Assets Classified as Held For Sale Accounting Policy

Non-current assets or disposal group classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

The Company treats sale/distribution of the asset or disposal group to be highly probable when:

- the appropriate level of management is committed to a plan to sell the asset (or disposal group),

- an active programme to locate a buyer and complete the plan has been initiated (if applicable),

- the asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value,

- the sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and

- actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Property, plant and equipment and intangible assets once classified as held for sale/distribution to owners are not depreciated or amortised.

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:

- represents a separate major line of business or geographical area of operations,

- is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations. Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit and loss. Additional disclosures are provided hereunder. All other notes to the financial statements mainly include amounts for continuing operations, unless otherwise mentioned.

(i) The Company had decided to sell/transfer following land and consequently classified as assets held for sale at lower of carrying amount and fair value less cost to sell:

(a) Land at Belgaum Rs. Nil (31st March, 2018 - Rs. 2.90 crore) has been disposed off in the current year;

(b) Land at Tiruldih Rs. 9.72 crore (net of impairment loss of Rs. 34 crore) (31stMarch,2018 -Rs. 9.72 crore);

(d) Land at Naraj Marthapur Rs. 81.38 crore (net of impairment loss of Rs. 37 crore) (31st March, 2018 -Rs. 81.38 crore);

(e) Land at Hadapsar Rs. 0.08 crore (31stMarch, 2018 - Rs. Nil);

(f) Land at Dehrand Rs. 215.56 crore (31st March, 2018 - Rs. Nil);

(g) Land at Oil Tankage Unit, Trombay (CTTL) Rs. 0.04 crore (31st March, 2018 - Rs. Nil).

(ii) The Company had decided to sell/transfer following buildings and consequently classified as assets held for sale at lower of carrying amount and fair value less cost to sell:

(a) Building at Erangal Rs. 0.23 crore (31stMarch,2018 -Rs. Nil);

(b) Building at Panvel Rs. 0.48 crore (31stMarch, 2018 - Rs. Nil);

(d) Building at Metropolitan Rs. 0.89 crore (31st March, 2018 -Rs. Nil);

(e) Building at Oil Tankage Unit, Trombay (CTTL), Rs. 0.13 crore (31st March, 2018 - Rs. Nil).

(iii) The Company has a Oil Tankage unit at Trombay. During the year, the Company has reclassified the said assets as held for sale. No impairment loss has been recognised on reclassification as the Company expects that the fair value (estimated based on the recent market prices of similar properties in similar locations) less costs to sell is higher than the carrying amount of Rs. 4.55 crore as at 31st March, 2019.

(iv) During the year ended 31st March, 2017, the Company had decided to divest its investment in shares carried at fair value through other comprehensive income in Tata Teleservices (Maharashtra) Ltd. and Tata Teleservices Ltd. Part of the said investments has been disposed off in the current year. Balance investments have been classified as held for sale at fair value of Rs. 38.65 crore as at 31st March, 2019 (31st March, 2018 - Rs. 69.70 crore).

(v) During the year, the Company decided to divest its investments in and loans given to its Joint Venture Company, Itezhi Tezhi Power Corporation Rs. 275.75 crore and Rs. 18.59 crore respectively. Accordingly, the said investments and loans have been classified as held for sale. No impairment loss has been recognised on reclassification as the Company expects that the fair value less costs to sell is higher than the carrying amount of Rs. 275.75 crore and Rs. 18.59 crore as at 31st March, 2019.

During the previous year, the Company decided to divest its investments in its Associate Company, Tata Projects Ltd. (Rs. 85.01 crore). Accordingly, the said investments have been classified as held for sale. No impairment loss has been recognised on reclassification as the Company expects that the fair value less costs to sell is higher than the carrying amount of Rs. 85.01 crore as at 31st March, 2019.

(vi) During the year, the Company sold investments in Panatone Finvest Ltd. (Rs. 600.00 crore) and Tata Communications Ltd. (Rs. 343.81 crore) (Associate Companies) at the sale value of Rs. 1,542.62 crore and Rs. 614.18 crore respectively, which were classified as Assets Held for Sale in the previous year. The resultant gain on sale of investments of Rs. 942.62 crore and Rs. 270.37 crore respectively, has been disclosed as an exceptional items in the Statement of Profit and Loss.

(vii) During the previous year, the Company decided to divest its investments in equity and preference shares of its subsidiary, Tata Ceramics Ltd. Accordingly, the said investments have been classified as held for sale at Rs. Nil (net of impairment Rs. 14.21 crore).

12b. Liabilities directly associated with Assets Classified as Held For Sale

12c. Assets Classified as Held For Sale - Discontinued Operations

During the previous year, the Company approved sale of its Strategic Engineering Division (SED) to Tata Advanced Systems Ltd. (TASL) [a wholly owned subsidiary of Tata Sons Pvt. Ltd.] as a going concern on slump sale basis, subject to regulatory approvals at an enterprise value of Rs. 2,230 crore (out of which Rs. 1,040 crore payable at the time of closing and Rs. 1,190 crore payable on achieving certain milestones). Accordingly, defence business segment is presented as discontinued operations in the segment note. The date of completion of the transaction is subject to approval by National Company Law Tribunal (NCLT) and such other requisite approvals.

13. Regulatory Deferral Account

Accounting Policy

The Company determines revenue gaps (i.e. surplus/shortfall in actual returns over returns entitled) in respect of its regulated operations in accordance with the provisions of Ind AS 114 âRegulatory Deferral Accountsâ read with the Guidance Note on Rate Regulated Activities issued by ICAI and based on the principles laid down under the relevant Tariff Regulations/Tariff Orders notified by the Electricity Regulator and the actual or expected actions of the regulator under the applicable regulatory framework. Appropriate adjustments in respect of such revenue gaps are made in the regulatory deferral account of the respective year for the amounts which are reasonably determinable and no significant uncertainty exists in such determination. These adjustments/accruals representing revenue gaps are carried forward as Regulatory deferral accounts debit/credit balances (Regulatory Assets/Regulatory Liabilities) as the case may be in the financial statements, which would be recovered/refunded through future billing based on future tariff determination by the regulator in accordance with the electricity regulations. The Company presents separate line items in the balance sheet for:

i. the total of all regulatory deferral account debit balances and related deferred tax balances; and

ii. the total of all regulatory deferral account credit balances and related deferred tax balances.

A separate line item is presented in the Statement of Profit and Loss for the net movement in regulatory deferral account. Regulatory assets/ liabilities on deferred tax expense/income is presented separately in the tax expense line item.

Rate Regulated Activities

(i) As per the Ind AS-114 âRegulatory Deferral Accountsâ, the business of electricity distribution is a Rate Regulated activity wherein Maharashtra Electricity Regulatory Commission (MERC), the regulator determines Tariff to be charged from consumers based on prevailing regulations in place.

MERC Multi Year Tariff Regulations, 2015 (MYT Regulations), is applicable for the period beginning from 1st April, 2016 to 31st March, 2021. These regulations require MERC to determine tariff in a manner wherein the Company can recover its fixed and variable costs including assured rate of return on approved equity base, from its consumers. The Company determines the Revenue, Regulatory Assets and Liabilities as per the terms and conditions specified in MYT Regulations.

(ii) Reconciliation of Regulatory Assets/Liabilities of distribution business as per Rate Regulated Activities is as follows:

During the year, pursuant to receipt of true-up tariff order from the Regulatory Commission for the years 2014-15, 2015-16 and 2016-17, the Company has recognised net income of Rs. 91.95 crore comprising of a credit of Rs. 274.26 crore in regulatory income and a charge of Rs. 182.31 crore to revenue from operations.

(ii) Terms/rights attached to Equity Shares

The Company has issued only one class of Equity Shares having a par value of Rs. 1/- per share. Each holder of Equity Shares is entitled to one vote per share. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of Equity Shares held by the shareholders.

In an earlier year, the Company raised Rs. 1,500 crore through issue of Unsecured Perpetual Securities (the âSecuritiesâ). These Securities are perpetual in nature with no maturity or redemption and are callable only at the option of the Company. The distribution on these Securities are 11.40% with a step up provision if the Securities are not called after 10 years. The distribution on the Securities may be deferred at the option of the Company, if during the six months preceding the relevant distribution payment date, the Company has made no payment on, or redeemed or repurchased, any securities ranking pari passu with, or junior to the instrument. As these Securities are perpetual in nature and ranked senior only to the Share Capital of the Company and the Company does not have any redemption obligation, these are considered to be in the nature of equity instruments.

Notes:

1. Includes gain on fair valuation of land which is not available for distribution Rs. 222.31 crore (31st March, 2018 -Rs. 222.31 crore).

2. The shareholders of the Company in their meeting held on 27th July, 2018 approved final dividend of Rs. 1.30 per share aggregating Rs. 351.99 crore (excluding dividend distribution tax) for the financial year 2017-18. The said dividend was paid to the holders of fully paid equity shares on 30th July, 2018.

3. The Company has sold certain investments carried at fair value through other comprehensive income. The resultant (gain)/loss of Rs. 735.49 crore (31stMarch,2018-Rs. (174.74)crore) has been transferred from Equity Instruments through Other Comprehensive Income to Retained Earnings.

4. In respect of the year ended 31st March, 2019, the directors have proposed a dividend of Rs. 1.30 per share (31stMarch, 2018 - Rs. 1.30 per share) to be paid on fully paid shares. This equity dividend is subject to approval at the annual general meeting and has not been included as a liability in the financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs. 351.99 crore (31st March, 2018 -Rs. 351.99 crore) (excluding Dividend Distribution Tax).

Nature and purpose of reserves:

General Reserve

General Reserve is used from time to time to transfer profits from Retained Earnings for appropriation purposes. As the General Reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the General Reserve will not be reclassified subsequently to statement of profit and loss.

Securities Premium

Securities Premium Reserve is used to record the premium on issue of shares and is utilised in accordance with the provisions of the Companies Act, 2013.

Debenture Redemption Reserve

The Company is required to create a Debenture Redemption Reserve out of the profits which are available for payment of dividend for the purpose of redemption of debentures.

Capital Redemption Reserve

Capital Redemption Reserve represents amounts set aside on redemption of preference shares.

Capital Reserve

Statutory Reserves

Statutory Reserve consists of Special Appropriation towards Project Cost, Development Reserve and Investment Allowance Reserve.

Development Reserve / Investment Allowance Reserve - Until 1978, the Companies made appropriations to a Development Reserve and an Investment Allowance Reserve as required by the Income Tax Act, 1956. New appropriations to these reserves are no longer required due to changes in Indian law. An amount equal to 0.5% on the accumulation in the Investment Allowance Reserve was included in the reasonable return calculation.

Retained Earnings

Retained Earnings are the profits of the Company earned till date net of appropriations.

Equity Instruments through Other Comprehensive Income

Security

(i) The Debentures mentioned in (a) have been secured by a charge on movable properties and assets of the Company at Agaswadi and Visapur in Satara District of Maharashtra and Poolavadi in Tirupur District of Tamil Nadu.

(ii) The Debentures mentioned in (b) have been secured by a pari passu charge on the assets of the wind farms situated at Samana in Gujarat, Gadag in Karnataka and immovable properties in Jamnagar, Gujarat.

(iii) The Debentures mentioned in (c) have been secured by a charge on the land situated at Village Takve Khurd (Maharashtra) and movable fixed assets (except the Wind assets) including movable machinery, machinery spares, tools and accessories but excluding vehicles, launches and barges, present and future.

(iv) The Debentures mentioned in (d) and (e) have been secured by a pari passu charge on land in Village Takve Khurd (Maharashtra) and all buildings and structures and all plant and machinery whether fixed or movable attached to the land at the thermal and hydro power stations.

(v) The Loans mentioned in (f), (h), (i) and (j) have been secured by pari passu charge on all movable Fixed Assets (excluding land and building), present and future (except assets of all wind projects both present and future) including movable machinery, machinery spares, tools and accessories, present and future, but excluding vehicles, launches and barges.

(vi) The Loans mentioned in (g) have also been secured by whole of current assets of the Company, present and future, in a first pari passu manner.

(vii) The Loan mentioned in (k) has been secured by pari passu charge on all movable Fixed Assets (excluding land and building), present and future, except (1) assets of 120 MW waste heat recovery plant located at Haldia (2) assets of Strategic Engineering Division (3) assets of all wind projects, both present and future, including movable machinery, machinery spares, tools and accessories, present and future (excluding vehicles, launches and barges, present and future).

(viii) The Loans from Asian Development Bank and Indian Renewable Energy Development Agency Limited mentioned in (l) and (m) respectively have been secured by a charge on the movable and immovable properties situated at Khandke, Brahmanvel and Sadawaghapur in Maharashtra including the projectsâ current and future receivables.

14. Provisions

Accounting Policy

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

Defined contribution plans

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

Defined benefits plans

The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods. Past service costs are recognised in the statement of profit and loss on the earlier of:

- The date of the plan amendment or curtailment, and

- The date that the Company recognises related restructuring costs

- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non routine settlements; and

- Net interest expense or income.

The cost of the defined benefit gratuity plan and other post-employment medical benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds. The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.

Current and other non-current employee benefits

Liabilities recognised in respect of current employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

Liabilities recognised in respect of other non-current employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.

Employee Benefit Plans

1. Defined Contribution plan

The Company has recognised Rs. 9.19 crore (31st March, 2018 - Rs. 9.53 crore) for superannuation contribution in the Statement of Profit and Loss. The said amount is excluding of amounts recognised by the Strategic Engineering Division (SED) (Discontinued operations). The contribution payable to the plan by the Company is at rates specified in the rules of the scheme.

2. Defined benefit plans

2.1 The Company operates the following unfunded/funded defined benefit plans: Funded: Provident Fund

The Company makes Provident Fund contributions to defined benefit plans for eligible employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions as specified under the law are paid to the provident fund set up as a trust by the Company. The Company is generally liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return and recognises such contributions and shortfall, if any, as an expense in the year it is incurred. Having regard to the assets of the fund and the return on the investments, the Company expects shortfall of Rs. 8.27 crore which has been provided as an expenditure during the year.

The significant assumptions used for the purpose of the actuarial valuations were as follows:

Gratuity

The Company has a defined benefit gratuity plan. The gratuity plan is primarily governed by the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of five years are eligible for gratuity. The level of benefits provided depends on the memberâs length of service and salary at the retirement date. The gratuity plan is funded plan. The fund has the form of a trust and is governed by Trustees appointed by the Company. The Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy in accordance with the regulations. The funds are deployed in recognised insurer managed funds in India.

Unfunded:

Post Employment Medical Benefits

Pension (including Director pension)

Ex-Gratia Death Benefit

The Company has a defined benefit plan granting ex-gratia in case of death during service. The benefit consists of a pre-determined lumpsum amount along with a sum determined based on the last drawn basic salary per month and the length of service.

Retirement Gift

The Company has a defined benefit plan granting a pre-determined sum as retirement gift on superannuation of an employee.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

2.6 Risk exposure:

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility:

Inflation rate risk:

Higher than expected increase in salary and medical cost will increase the defined benefit obligation.

Demographic risk:

2.7 Major categories of plan assets:

Plan assets are funded with the trust set up by the Company. The trust invests the funds in various financial instruments. Major categories of plan assets are as follows:

15. Revenue from Operations

Revenue recognition Accounting Policy

Description of performance obligations are as follows :

(i) Sale of Power - Generation (Thermal and Hydro)

Revenue from sale of power is recognised net of cash discount over time for each unit of electricity delivered.

The Company as per the prevalent tariff regulations is required to recover its Annual Revenue Requirement (âARRâ) comprising of expenditure on account of fuel cost, operations and maintenance expenses, financing costs, taxes and assured return on regulator approved equity with additional incentive for operational efficiencies. Accordingly, rate per unit is determined using input method based on the Companyâs efforts to the satisfaction of a performance obligation to deliver power.

As per tariff regulations, the Company determines ARR and any surplus/shortfall in recovery of the same is accounted as revenue.

(ii) Sale of Power - Generation (Wind and Solar)

Revenue from sale of power is recognised net of cash discount over time for each unit of electricity delivered at the contracted rate.

(iii) Transmission of Power

Input method is used to recognize revenue based on the Companyâs efforts or inputs to the satisfaction of a performance obligation to deliver power.

As per tariff regulations, the Company determines ARR and any surplus/shortfall in recovery of the same is accounted as revenue.

(iv) Sale of Power - Distribution

Revenue from sale of power is recognised net of cash discount over time for each unit of electricity delivered at the pre determined rate.

(v) Rendering of Services

Revenue from a contract to provide services is recognized over time based on output method where direct measurements of value to the customer based on surveyâs of performance completed to date. Revenue is recognised net of cash discount at a point in time at the contracted rate.

(vi) Consumers are billed on a monthly basis and are given average credit period of 30 to 45 days for payment. No delayed payment charges (âDPCâ) is charged for the initial 30 days from the date of receipt of invoice by customers. Thereafter, DPC is charged at the rate prescribed by the Power Purchase Agreement on the outstanding balance once the dues are received. Revenue in respect of delayed payment charges and interest on delayed payments leviable as per the relevant contracts are recognised on actual realisation or accrued based on an assessment of certainty of realization supported by either an acknowledgement from customers or on receipt of favourable order from regulator / authorities.

There is no significant judgement involved while evaluating the timing as to when customers obtain control of promised goods and services.

Transaction Price - Remaining Performance Obligation

The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognised as at the end of the reporting period and an explanation as to when the Company expects to recognise these amounts in revenue. Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts as the revenue recognised corresponds directly with the value to the customer of the entityâs performance completed to date.

There are no aggregate value of performance obligations that are completely or partially unsatisfied as of 31st March, 2019, other than those meeting the exclusion criteria mentioned above.

Revenue is disaggregated by type and nature of product or services. The table also includes the reconciliation of the disaggregated revenue with the Companyâs reportable segment.

Contract asset is the right to consideration in exchange for goods or services transferred to the customer. Contract liability is the entityâs obligation to transfer goods or services to a customer for which the entity has received consideration from the customer in advance. Contract assets are transferred to receivables when the rights become unconditional and contract liabilities are recognised as revenue as and when the performance obligation is satisfied.

Significant changes in the contract assets and the contract liabilities balances during the year are as follows:

16. Other Income Accounting Policy Dividend and Interest Income

Dividend income from investments is recognised when the shareholderâs right to receive payment has been established.

17. Finance Costs Accounting Policy Borrowing Costs

Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in statement of profit and loss in the period in which they are incurred.

During the year, the Company sold investments in Tata Communications Limited and Panatone Finvest Limited (Associate Companies) which were classified as assets held for sale in the previous year. The resultant gain on sale of investments of Rs. 1,212.99 crore has been disclosed as an exceptional income in the statement of profit and loss.

The Companyâs investment in equity shares of Tata Teleservices Limited (âTTSLâ) which are measured at Fair Value Through Other Comprehensive Income were classified as held for sale during the previous year. During the year ended 31st March, 2019, the Company has sold the said investment and recognised a gain of Rs. 0.01 crore after reduction in fair value amounting to Rs. 1,438.42 crore recognised in earlier years.

During the previous year ended 31st March, 2018, the Company had written put options on equity shares of TTSL. The changes in the fair value of these put options amounting to Rs. 107.08 crore was recognised as an exceptional expense in the statement of profit and loss.

18. Income taxes Accounting Policy Current Tax

Current income tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred Tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

For operations carried out under tax holiday period (80IA benefits of Income Tax Act, 1961), deferred tax assets or liabilities, if any, have been established for the tax consequences of those temporary differences between the carrying values of assets and liabilities and their respective tax bases that reverse after the tax holiday ends.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.

Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognised as deferred tax asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised. The Company reviews the âMAT credit entitlementâ asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.

In the situations where one or more units of the Company are entitled to a tax holiday under the tax law, no deferred tax (asset or liability) is recognised in respect of temporary differences which reverse during the tax holiday period, to the extent the concerned unitâs gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of temporary differences which reverse after the tax holiday period is recognised in the year in which the temporary differences originate. However, the Company restricts recognition of deferred tax assets to the extent it is probable that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the temporary differences which originate first are considered to reverse first.

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

(ii) In terms of the Sponsor Support agreement entered into between the Company, Coastal Gujarat Power Ltd. (CGPL) and INR term lenders (SBI lead consortium) of CGPL, the Company has undertaken to provide support by way of base equity contribution to the extent of 25% of CGPLâs project cost and additional equity or subordinated loans to be made or arranged for, if required as per the financing agreements to finance the project. The Sponsor Support Agreement also includes support by way of additional financial support for any overrun in project costs, operational loss and Debt Service Reserve Guarantee as provided under the financing agreements. In terms of the conditions of the financing agreements, the Company has provided support through unsecured perpetual securities and Equity of Rs. 15,579.14 crore (31stMarch, 2018 -Rs. 12,153.15 crore) to CGPL.

(iii) The Company has undertaken to arrange for the necessary financial support to its subsidiaries Bhira Investments Pte. Ltd., Khopoli Investments Ltd., Bhivpuri Investments Ltd., Industrial Power Utility Ltd., Tata Power Jamshedpur Distribution Ltd. and Tata Power International Pte. Ltd.

(iv) In respect of Maithon Power Ltd. (MPL), the Company jointly with Damodar Valley Corporation (DVC) has undertaken to the lenders of MPL, to provide support by way of base equity contribution and additional equity or subordinated loans to meet the increase in Project Cost. Further, the Company has given an undertaking to MPL to fulfil payment obligations of Tata Power Trading Company Ltd. (TPTCL) and Tata Power Delhi Distribution Ltd. (TPDDL) in case of their default.

(v) In terms of pre-implementation agreement entered into with Government of Himachal Pradesh and the consortium consisting of the Company and SN Power Holding Singapore Pte. Ltd. (Company being the Lead Member of the consortium) for the investigation and implementation of Dugar Hydro Electric Project, the Company has undertaken as Lead Member to undertake/perform various obligations pertaining to Dugar Project.

* The exposure is considered to the extent of borrowings outstanding in the balance sheet of subsidiaries (includes letter of credit).

d) (i) In respect of the Standby Charges dispute with Adani Electricity Mumbai Limited (Adani Electricity) erstwhile Reliance Infrastructure Ltd. (R-Infra) for the period from 1st April, 1999 to 31st March, 2004, the Appellate Tribunal of Electricity (ATE), set aside the Maharashtra Electricity Regulatory Commission (MERC) Order dated 31st May, 2004 and directed the Company to refund to Adani Electricity as on 31st March, 2004, Rs. 354.00 crore (including interest of Rs. 15.14 crore) and pay interest at 10% per annum thereafter. As at 31st March, 2019 the accumulated interest was Rs. 251.96 crore (31stMarch, 2018 -Rs. 240.76 crore) (Rs. 11.20 crore for the year ended 31st March, 2019). On appeal, the Supreme Court vide its Interim Order dated 7th February, 2007, has stayed the ATE Order and in accordance with its directives, the Company has furnished a bank guarantee of the sum of Rs. 227.00 crore and also deposited Rs. 227.00 crore with the Registrar General of the Court which has been withdrawn by Adani Electricity on furnishing the required undertaking to the Court.

Mar 31, 2018

1. Corporate Information:

The Tata Power Company Limited (the âCompanyâ) is a public limited company domiciled and incorporated in India under the Indian Companies Act, 1913. The registered office of the Company is located at Bombay House, 24, Homi Mody Street, Mumbai 400001, India. The principal business of the Company is generation, transmission and distribution of electricity.

The Company was amongst the pioneers in generation of electricity in India more than a century ago.

2.1 Statement of compliance

2.2 Basis of preparation and presentation

The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:

- certain land and buildings classified as property, plant and equipment,

- derivative financial instruments;

- certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments).

3. Critical accounting estimates and judgements

The areas involving critical estimates or judgements are:

Estimates used for impairment of property, plant and equipment of certain cash generating units (CGU) - Note 5 Estimated fair value of unquoted securities and impairement of investments - Note 8 Estimation of defined benefit obligation - Note 24 and 31

Estimation of current tax and deferred tax expense (including Minimum Alternate Tax credit) - Note 34 Estimates and judgement are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

4 Property, Plant and Equipment

Accounting Policy

Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes purchase price (net of trade discount & rebates) and any directly attributable cost of bringing the asset to its working condition for its intended use and for qualifying assets, borrowing costs capitalised in accordance with the Companyâs accounting policy. Capital work-in-progress is stated at cost, net of accumulated impairment loss, if any. Cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the statement of profit and loss as incurred.

Depreciation

Depreciation commences when an asset is ready for its intended use. Freehold land and assets held for sale are not depreciated.

Regulated Assets:

Depreciation on property, plant and equipment in respect of electricity business of the Company covered under Part B of Schedule II of the Companies Act, 2013, has been provided on the straight line method at the rates using the methodology as notified by the regulator.

Non-Regulated Assets:

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Estimated useful lives of the Regulated and Non-Regulated assets are as follows:

Decapitalisation

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of profit and loss.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

Impairment

Impairment of tangible and intangible assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.

When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Companyâs CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future Cash flows after the fifth year. To estimate Cash flow projections beyond periods covered by the most recent budgets/forecasts, the Company extrapolates Cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the market in which the asset is used.

5. Investment Property

Accounting Policy

Investment property held to earn rentals or for capital appreciation are stated at cost less subsequent accumulated depreciation and subsequent accumulated impairment loss. Gain or loss on disposal of investment properties is determined as the difference between net disposal proceeds and the carrying amount of the property and is recognised in the statement of profit and loss. Transfer to, or from, investment property is done at the carrying amount of the property.

Fair Value :

The Investment Property is located in Mumbai, India, has been reclassified as Property, Plant and Equipment during the year ended 31st March, 2018. The fair value of the property as at 31st March, 2017 and 1st April, 2016 have been arrived at on the basis of a valuation carried out as on the respective dates by independent valuer. The fair value was derived using the market comparable approach based on recent market prices for similar properties in the neighbourhood without significant adjustment being made to the market observable data, but adjusted based on the valuerâs knowledge of the factors specific to the property.

During the year, the Company has started using the said property for its own business purpose and hence transferred the said Investment Property to Property, Plant and Equipment.

6. Intangible Assets

Accounting Policy

Intangible assets acquired separately

Derecognition of Intangible assets.

Useful lives of intangible assets.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.

(a) The Company holds investments in Coastal Gujarat Power Limited (CGPL) (a wholly owned subsidiary of the Company operating 4,000 MW Mundra power plant), Indonesian mining companies PT Kaltim Prima Coal (KPC) and PT Baramulti Suksessarana TBK (BSSR) through intermediate holding companies (associates operating coal mines in Indonesia and supplying coal to CGPL) and Trust Energy Resources Pte. Ltd. (TERPL) and Eastern Energy Pte. Ltd. (EEPL) (shipping companies in Singapore providing freight services for coal shipment to CGPL). All these companies constitute a single cash generating unit (CGU) and form part of Power segment. CGPL is incurring significant losses on account of significant increase in coal prices due to change in Indonesian laws which is offset by the profits earned by the mining companies.

The Company has performed the impairment assessment and determined the value in use based on estimated cash flow projections over the life of the assets included in CGU. Projected cash flows include cash flow projections approved by management covering 3 to 5 year period and the cash flows beyond that has been projected based on the long term forecast.

As a result of this analysis, management has recognized an impairment charge of Rs.3,555 crore in the current year against the carrying value of equity investments in CGPL. The impairment charge is recorded in the statement of profit and loss and disclosed as an exceptional item.

Key assumptions used for value in use calculation include coal prices, energy prices post the PPA period, discount rates and exchange rates. Coal prices and energy prices used in the projections are based on projections made by reputed external experts. Further, the Management has considered renewal of coal mines which would be extended without incurring significant cost. Discount rate represents the current market assessment of the risk specific to CGU taking in to consideration the time value of money. Discount rate used in the calculation of value in use of investment in power plant is 11.15% (PY: 11.15%) and investment in coal mines and related infrastructure companies is 11.45% (PY: 11.45%).

(b) The Company holds investments in Adjaristsqali Netherlands B.V. (ABV) (a joint venture of the Company operating 187 MW hydro power plant in Georgia) through intermediate holding company Tata Power International Pte. Ltd. (TPIPL). ABV was incorporated to setup a hydro power plant in Georgia with an intent to sell power in the open market in Turkey. The continuous fall in power price in the open market in Turkey coupled with continuous devaluation of Turkish Lira indicates a potential impairment of the assets of the Georgia CGU included in Power segment.

As a result of this analysis, management has recognized an impairment charge of Rs.577.55 crore in the current year against the carrying value of equity investments in TPIPL. The financial guarantee obligation of Rs.97.77 crore is undertaken on behalf of TPIPL towards the lenders of the said project. The impairment charge and financial guarantee obligation amounting to Rs.675.32 crore is recorded in the statement of profit and loss and disclosed as an exceptional item.

Key assumptions used for value in use calculation include power prices in the open market in Turkey, discount rates and exchange rates. Discount rate represents the current market assessment of the risk specific to CGU taking in to consideration the time value of money. The discount rate used in the calculation of value in use is 12%.

(c) The Company holds equity shares of Tata Teleservices Limited (TTSL) which are measured at Fair Value Through Other Comprehensive Income. The Company had also written put options on equity shares of TTSL which have been exercised by the holder and the shares have been acquired during the year ended 31st March, 2018. The changes in the fair value of these put options are recognized in the Statement of Profit and Loss. During the year ended 31st March, 2018, the Company recognized a fair value adjustment of Rs.384.88 crore (31st March, 2017 -Rs.114.46 crore) through Other Comprehensive Income and Rs.107.08 crore (31stMarch,2017-â651.45crore) as an exceptional expense in the statement of profit and loss.

7.1 Trade Receivables

The average credit period for the Companyâs receivables from its generation, transmission, distribution and project management services is in the range of 15 to 60 days. No interest is charged on trade receivables till the due date. Thereafter, interest is charged at an average of 1.25% per month for retail electricity consumers on the outstanding balance.

As at 31st March, 2018, Rs.694.48 crore is due from Brihanmumbai Electric Supply & Transport Undertaking, Reliance Infrastructure Ltd., Maharashtra State Electricity Transmission Company Limited and Tata Steel Limited which represents Companyâs large customers who owe more than 5% of the total balance of trade receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The expected credit loss allowance is not calculated on non-current trade receivable since it is a disputed case. The provision matrix takes into account historical credit loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. The provision matrix at the end of the reporting period is as follows:

8. Finance Lease Receivable

(Unsecured unless otherwise stated)

Accounting Policy Leasing arrangement

The Company as lessor

Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.

8.1 Leasing Arrangements

The Company has entered into Power Purchase Agreements (PPA) with a customer for its assets located at Jojobera. The assets relate to 30 years of take or pay agreements with the customer to supply electricity at a fixed plus variable charge. The customer, during the term of the PPAs has a right to purchase the assets and at the end of the contract is obligated to purchase the same on the basis of the valuation determined under the PPAs. This arrangement is an embedded finance lease.

9. Inventories

Accounting Policy

Inventories are stated at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

Raw materials: Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

Costs of inventories are determined on weighted average basis.

Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Unserviceable/damaged stores and spares are identified and written down based on technical evaluation

10. Cash and Cash Equivalents Accounting Policy

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. Cash and cash equivalents include balances with banks which are unrestricted for withdrawal and usage.

11. Assets classified as held for sale Accounting Policy

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such asset and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. As at each balance sheet date, the management reviews the appropriateness of such classification.

Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. The Company treats sale/distribution of the asset or disposal group to be highly probable when: