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Notes to Accounts of Torrent Power Ltd.

Mar 31, 2023

1 During the year, Company has given corporate guarantees in favour of lender of subsidiary company and has recognised fair value of corporate guarantee as equity investment in Surya Vidyut Limited.

2 During the previous year, Company has given corporate guarantees in favour of Lender of subsidiary company and has recognised fair value of corporate guarantee as equity investment in Torrent Solargen Limited.

3 On March 15, 2022, the Company had entered into a Share Purchase Agreement (SPA) and Shareholders Agreement (SHA) with ''The Hon''ble Administrator of the Union Territory of Dadra and Nagar Haveli and Daman and Diu'' (the ''Holding Entity'') and ''Dadra and Nagar Haveli and Daman and Diu Power Distribution Corporation Limited'' (the ''DNHDDPDCL'') for purchase of 51% shares of the DNHDDPDCL from the Holding Entity for a consideration of H 555.00 Crore plus consideration adjustment of H 31.06 Crore as per terms of SPA, on account of notified balance sheet of the DNHDDPDCL as at April 01 ,2022 i.e. total consideration of H 586.06 Crore.

Basis the SPA and SHA read with The Dadra and Nagar Haveli and Daman and Diu Electricity (Reorganisation and Reforms) Transfer Scheme, 2022 (the “transfer scheme”), the effective date of transfer has been notified by the UT Administrator, Union Territory of Dadra and Nagar Haveli and Daman and Diu as April 1, 2022 (''Acquisition date'') for the purpose of implementing the transfer scheme.

DNHDDPDCL is the licensee to carry out the function of distribution and retail supply of electricity in the Dadra and Nagar Haveli District of the Union Territory of Dadra and Nagar Haveli and Daman and Diu for a period of 25 years effective from the acquisition date.

The Company has taken formal takeover of power distribution operations in the Union Territory of Dadra & Nagar Haveli and Daman & Diu from April 1, 2022.

Accordingly, the amount of purchase consideration paid for acquiring the shares of the distribution company has been shown as “Advance against equity investment” under Other financial assets as at March 31, 2022 in the standalone financial results, which has been transferred to Investments in subsidiaries as on Acquisition date.

Consideration adjustment of H 31.06 Crore, included under “Other current financial liabilities”, has been paid subsequent to year end on April 29, 2023.

4 On April 23, 2022, the Company had entered into a Securities Purchase Agreement (SPA) with SkyPower Southeast Asia III Investments Limited, SkyPower Southeast Asia Holdings 2 Limited (the Sellers) for the acquisition of 100% of the share capital and all securities of Sunshakti Solar Power Projects Private Limited (SSPPPL), which operates 50 MW solar power plant, situated in the state of Telangana. On completion of the conditions precedent to SPA, SSPPPL had become wholly owned subsidiary of the Company w.e.f. June 13, 2022.

5 On July 30, 2022, the Company had acquired 100% of paid-up capital of Wind Two Renergy Private Limited (WTRPL) from Inox Green Energy Services Limited (formerly known as Inox Wind Infrastructure Services Limited). WTRPL operates 50 MW Wind power plant, situated in the state of Gujarat. On acquisition of shares, WTRPL had become wholly owned subsidiary of the Company w.e.f. July 30, 2022 which was Associate of the Company till July 29, 2022.

6 On February 10, 2022, the Company had entered into a Share Purchase Agreement (SPA) with Blue Daimond Properties Private Limited and Balarampur Chini Mills Limited, for acquisition of 100% of Shares of Visual Percept Solar Projects Private Limited (VPSPPL), which operates a 25 MW solar power plant, situated in the state of Gujarat. On completion of the conditions precedent to SPA, VPSPPL had become wholly owned subsidiary of the Company w.e.f. February 15, 2022.

7 On September 20, 2021, the Company had entered into a Share Purchase Agreement (SPA) with CESC Limited, Haldia Energy Limited and other Nominal Shareholders for the acquisition of 100% of the share capital of Surya Vidyut Limited (SVL), which operates a 156 MW wind power plants, situated in the states of Gujarat, Maharashtra and Madhya Pradesh. On completion of the conditions precedent to SPA, SVL had become wholly owned subsidiary of the Company w.e.f. March 11, 2022.

8 On July 30, 2021, the Company had entered into a Securities Purchase Agreement (SPA) with Lightsource India Limited and Lightsource Renewable Energy (India) Limited for the acquisition of 100% of the share capital and all securities of Torrent Saurya Urja 6 Private Limited (Formerly known as LREHL Renewables India SPV 1 Private Limited) (TSU6), which operates a 50 MW solar power plant, situated in the state of Maharashtra. On completion of the conditions precedent to SPA, TSU6 had become wholly owned subsidiary of the Company w.e.f. March 25, 2022.

9 The Company has exercised option for conversion of compulsorily convertible debentures (CCD) into Equity shares as per the terms of CCD subscription agreement in March 2023. Subsequent to the year end, Torrent Saurya Urja 6 Private Limited (Formerly known as LREHL Renewables India SPV 1 Private Limited) is under process of allotting 97,05,328 equity shares to the Company; based on fair value of equity shares valued by independent valuer.

10 The Company has exercised option for conversion of compulsorily convertible debentures (CCD) into Equity shares as per the terms of CCD subscription agreement in March 2023. Subsequent to the year end, on May 26, 2023, 15,756 equity shares of SunShakti Solar Power Projects Private Limited have been alloted to the Company; based on fair value of equity shares valued by independent valuer at the time of issue of CCD.

1 On February 08 ,2023, the Company had entered into a Binding term sheet with Powerica Limited and Vestas Wind Technology India Private Limited (the Sellers) for the acquisition of 100% share capital of Airpower Windfarms Private Limited, which holds leasehold revenue land situated in the state of Gujarat for the purpose of development of wind power project. Enterprise value estimated for this acquisition is approx H 21.74 Crore The acquisition is subject to Share Purchase Agreement and/or other allied agreements and customary conditions for transaction closure.

Accordingly, advance amount of H 3.00 Crore given to the sellers as per binding term sheet is shown as “Advance against equity investment” as at March 31, 2023 in standalone financial statement.

1 The cost of stores and spares inventories recognised as an expense includes H 3.66 Crore (Previous year - H 1.36 Crore) in respect of write-downs of inventory to net realisable value determined based on evaluation of slow and non-moving inventories.

2 The above carrying amount of inventories has been mortgaged and hypothecated to secure borrowings of the Company. [Refer note 25]

2 25,74,22,311 equity shares (25,74,22,311 equity shares as at March 31, 2022) of H 10 each fully paid up are held by the Parent Company - Torrent Investments Private Limited.

3 Terms / Rights attached to equity shares :

The Company has only one class of equity shares having par value of H 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

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 preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

6 Distributions made:

Interim dividend for FY 2022-23 of H22.00 per equity share (including H 13.00 per equity share as a special dividend) [Previous year - H 9.00 per equity share] aggregating to H 1,057.36 Crore [Previous year - H 432.56 Crore] was paid in the month of March 2023.

The Board of Directors at its meeting held on May 29, 2023 has recommended a final dividend of 40% (H 4.00 per equity share of par value H 10 each). The proposal is subject to the approval of shareholders at the ensuing Annual General Meeting and if approved, would result in a cash outflow of H 192.25 Crore.

1 Securities premium :

Securities premium reflects issuance of the shares by the Company at a premium, whether for cash or otherwise i.e. a sum equal to the aggregate amount of the premium received on shares is transferred to a “securities premium account” as per the provisions of the Companies Act, 2013. The reserve can be utilised in accordance with the provisions of the Act.

2 Debenture redemption reserve:

The Company was required to create a Debenture Redemption Reserve (DRR) 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 required to create DRR. Accordingly, the Company has not created DRR during the year and DRR created till previous years will be transferred to general reserve on redemption of debentures.

3 Contingency reserve:

As per the provisions of GERC MYT Regulations read with Tariff orders passed by GERC, the Company being a Distribution Licensee makes an appropriation to the contingency reserve to meet with certain exigencies. Investments in Bonds issued by Government of India have been made against such reserve.

4 Special reserve:

As per MYT Regulations (2007), the Company has created a reserve in FY 2011-12 and FY 2012-13, which represents one third amount of controllable gain shall be retained in a special reserve by the Generating Company or Licensee for the purpose of absorbing the impact of any future losses on account of controllable factors.

5 General reserve:

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. The general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income.

6 Retained earnings:

The retained earnings reflect the profit of the company earned till date net of appropriations. The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the balance in this reserve, after considering the requirements of the Companies Act, 2013.

1 Nature of security

The entire immovable and movable assets including current assets, both present and future, of the Company are mortgaged and hypothecated by way of first pari passu charge in favour of lenders for term loans of H 6,194.75 Crore and non convertible debentures of H 2,030.00 Crore along with lenders of cash credits and non-fund based credit facilities, except some assets which, in terms of respective financing documents (including Loan agreements, Debenture Trust deeds), are carved out of security provided to lenders.

3 Undrawn term loans from banks, based on approved facilities, were H 300.00 Crore as at March 31, 2023.

4 Proceeds from term loans and debt instruments raised during the year have been utilized for the purposes for which it was obtained.

As at March 31, 2022

1 Nature of security

The entire immovable and movable assets including current assets, both present and future, of the Company are mortgaged and hypothecated by way of first pari passu charge in favour of lenders for term loans of H 5,806.91 Crore and non convertible debentures of H 1,098.37 Crore along with lenders of cash credits and non-fund based credit facilities, except some assets which, in terms of respective financing documents (including Loan agreements, Debenture Trust deeds), are carved out of security provided to lenders.

1 The entire immovable and movable assets including current assets, both present and future, of the Company are mortgaged and hypothecated by way of first pari passu charge in favour of lenders for working capital facilities and by way of second pari passu charge in favour of lenders for hedge facility.

2 Undrawn cash credit from banks, based on approved facilities, were H 1,150.00 Crore (March 31, 2022 - H 450.00 Crore).

3 During the current and previous year, the Company has used the loans for the purpose for which it was obtained.

4 The Company has borrowings from banks and financial institutions on the basis of security of current assets and quarterly returns or statements of current assets filed are in agreement with the books of accounts.

Note 41 : Impairment Assessment1 DGEN Power Plant

Net carrying value of Property, Plant & Equipment (“PPE") and Right-of-use assets (“ROU") as at March 31, 2023 includes H 1,315.05 Crore pertaining to 1,200 MW DGEN Mega Power Project located at Dahej, Gujarat (“DGEN"). DGEN started commercial operations with effect from November 2014 and thereafter has operated only intermittently / partially due to various factors such as unavailability of domestic gas, high prices of imported gas and nonavailability of power selling arrangement.

In view of the above and given the current economic environment, during the current year, the Company has carried out an impairment assessment of DGEN as at March 31, 2023 by considering the recoverable amount based on value-in-use of DGEN in accordance with Indian Accounting Standard 36 ''Impairment of Assets''. Value-in-use is determined considering a discount rate of 15.00% (March 31, 2022 - 14.50%) and cash flow projections over a period of 17 years (March 31, 2022 - 18 years), being the balance useful life of DGEN in terms of Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019 on the basis that the Company expects to supply power in the future, inter alia, under long term power selling agreements. Based on the assessment, recoverable value of PPE by using value-in-use is H 1,368.00 Crore which is higher than the carrying amount of PPE of H 1,315.05 Crore and accordingly no additional impairment loss is required as at March 31, 2023. The management has conducted sensitivity analysis on impairment test of the value in use of DGEN. The management believes that reasonable possible change in key assumptions would not materially impact the impairment assessment March 31, 2023.

During the earlier years, the Company had provided for impairment loss of H 2,300.00 Crore (including H 1,300.00 Crore during previous year) which has been disclosed as an Exceptional item in the Statement of Profit and Loss.

Assessment of ''value-in-use'' involves several key assumptions including expected demand, future price of fuel, expected tariff rates for electricity, discount rate, exchange rate and electricity market scenario, based on past trends and the current and likely future state of the industry. Management reviews such assumptions periodically to factor updated information based on events or changes in circumstances in order to make fresh assessment of impairment, if any.

2 Investment in Torrent Pipavav Generation Limited

Torrent Pipavav Generation Limited (“TPGL"), a subsidiary of the Company and a joint venture between the Company and Gujarat Power Corporation Limited (“GPCL"), had made payments in nature of compensation for acquisition of private land as per the court orders in Amreli, Gujarat for the purpose of developing a coal-based power plant of 1,000 MW. Due to non-availability of fuel linkage, Government of Gujarat (“GoG") vide its letter dated December 6, 2017, communicated that the said project may not be developed and accordingly, the joint venture is intended to be dissolved. Further, as per the said letter, the cost of land would be reimbursed after the disposal of land. With reference to this, in the month of March 2019, GPCL has written a letter to Collector, Amreli stating that the land is surrendered to the Government of Gujarat and requested Energy and Petroleum Department, GoG to take further action in the matter. It is learnt that the Government of Gujarat is exploring the possibility of usage of Land for industrial purpose. The management has made an impairment assessment of the amount recoverable from Government of Gujarat and concluded that there is no impairment in the carrying amount of the land. Considering the above facts, assets and liabilities are reflected at their net realisable values or cost whichever is lower and the financial results of TPGL for the year ended March 31, 2023 have been prepared on a non - going concern basis. The recovery of carrying amount of equity and loan H 93.45 Crore is also dependent on the availability of buyer for above mentioned land. The Company has invested equity and loan aggregating to H 111.80 Crore in TPGL and impairment in value of investment is of H 18.35 Crore as at March 31, 2023.

Note 44 : Contingent Liabilities, Contingent Assets and Capital Commitments (a) Contingent liabilities

(H in Crore)

As at March 31, 2023

As at March 31, 2022

Disputed income tax matters

23.21

26.46

Disputed sales tax matters

0.96

0.96

Disputed service tax matters

0.49

0.49

Disputed custom duty matters

18.50

18.50

Disputed excise duty matters

0.18

0.18

Disputed stamp duty matters

36.37

36.37

Disputed value added tax matters

2.94

2.94

Claims against the Company not acknowledged as debt [Refer footnote 3]

127.56

163.70

The Company has evaluated the impact of Supreme Court (“SC”) judgement dated February 28, 2019 in the case of Regional Provident Fund Commissioner (II) West Bengal v/s Vivekananda Vidyamandir and Others, in relation to exclusion of certain allowances from the definition of “basic wages” of the relevant employees for the purposes of determining contribution to Provident Fund (“PF”) under the Employees'' Provident Fund & Miscellaneous Provisions Act, 1952. There are interpretation issues relating to the said SC judgement. Based on such evaluation, management has concluded that effect of the aforesaid judgement on the Company is not material and accordingly, no provision has been made in the financial statements.

Footnotes:

1 Management believes that its position on the aforesaid direct and indirect tax demands and other claims against the company will likely be upheld in the appellate process and accordingly no provision has been made in the standalone financial statements for such demands.

2 In respect of the above, the expected outflow will be determined at the time of final resolution of the dispute / matters. No reimbursement is expected.

3 Break up of claims against the Company not acknowledged as debt as under:

(H in Crore)

As at March 31, 2023

As at March 31, 2022

Claim of regulatory surcharge including interest in franchise distribution business

85.89

77.27

Penalty order issued by Directorate General of Foreign Trade (DGFT) in distribution business

-

50.53

Demand including interest for Tariff Indexation for excess energy withdrawn in franchise distribution business

21.83

18.31

Compensation payable for short lifting for material

8.46

8.46

Others

11.38

9.13

127.56

163.70

(b) Contingent assets

(H in Crore)

As at March 31, 2023

As at March 31, 2022

Claim for coal grade slippage

6.92

6.35

Claim of compensation for short lifting of material

8.46

8.46

15.38

14.81

(c) Capital and other commitments

(H in Crore)

As at March 31, 2023

As at March 31, 2022

i) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)

Property, plant and equipment

464.35

642.28

ii) Other commitments

(a) Guarantee given to lender of subsidiary company including interest thereon $

705.05

700.00

(b) Guarantees given in favour of the debenture trustee for NCD issued by subsidiary companies including interest thereon

616.20

616.62

(c) Guarantee given in favour of trustee for loan taken by subsidiary companies including interest thereon $$

480.10

-

(d) Guarantee given in favour of Lender for hedging facility taken by subsidiary companies

24.64

-

$ Utilised as at March 31, 2023 was H 617.99 Crore (March 31, 2022 - H 25.48 Crore).

$$ Utilised as at March 31, 2023 was H 368.47 Crore (March 31, 2022 - H Nil).

Footnote:

1 The guarantees given to lenders of subsidiaries are unlikely to be called, as subsidiaries are in a position to service the loans and interest, covered by such guarantees.

(c) During the year ended March 31, 2023, the Company has not advanced or loaned or invested funds (either borrowed funds or share premium or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

Except as detailed below, during the previous year ended March 31, 2022, the Company has not advanced or loaned or invested funds (either borrowed funds or share premium or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall:

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

above has been received back on April 2, 2022

In respect of the aforesaid loan, the Company has complied with the relevant provisions of the Companies Act, 2013. Further, the said transaction is not violative of the Prevention of Money-laundering Act, 2002.

During the year ended March 31, 2023 and March 31, 2022, the Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b) provide any guarantee, security, or the like on behalf of the ultimate beneficiaries.

(v) Lease asset of Shil, Mumbra and Kalwa (franchise area)

The Company has entered into a Distribution Franchise Agreement (“Agreement”) dated February 11, 2019 with Maharashtra State Electricity Distribution Company Limited (“MSEDCL”) whereby as per the Agreement the Company would distribute the electricity in the area of Shil, Mumbra and Kalwa in Thane District in Maharashtra (“Franchise area”) for 20 years (effective from March 1, 2020).

As per the Agreement the Company would purchase electricity from MSEDCL at the rate which would be derived through mechanism as mentioned in the Agreement which is linked to the number of units purchased and would distribute electricity to the Consumers at the tariff which has been approved by Maharashtra Electricity Regulation Commission (MERC).

Further as per the Agreement the Company has right to use existing assets of MSEDCL in the Franchise area provided it shall perform all the obligations and accepts all liabilities of MSEDCL on behalf of distribution licensee in Franchise area and MSEDCL shall not charge any rent for the use of such assets.

Considering the facts of the arrangement, the Company has the right to obtain substantially all of the economic benefits from use of MSEDCL assets of the Franchise area and the right to direct the use of the said assets for 20 years and accordingly it would meet the definition of Lease as per Ind AS 116. Further, for distribution of electricity, the Company would purchase power from MSEDCL for which payment would be made as per the franchise agreement which is linked to the number of units purchased. Accordingly the payments by the Company to MSEDCL is variable in nature and there are no fixed payments in the form of minimum purchase commitments, take or pay or any sort of fixed charges is required to be made.

Considering the entire payment made by the Company for this arrangement is variable in nature and there would be no lease liability required to be recognised with a corresponding right of use assets on initial recognition in accordance with Ind AS 116 and considering non-availability of relevant observable information for lease payments, management estimates and cost benefit analysis, total consideration payable to MSEDCL towards purchase of electricity has been shown as ''Electrical energy purchased'' in the Financial Statements.

48.1 Defined contribution plan

The Company has defined contribution retirement benefit plans for its employees.

The Company''s contributions to provident fund, pension scheme and employee state insurance scheme are made to the relevant government authorities as per the prescribed rules and regulations. The Company''s superannuation scheme for qualifying employees is administered through its various superannuation trust funds. The Company''s contributions to the above defined contribution plans are recognised as employee benefit expenses in the statement of profit and loss for the year in which they are due. The Company has no further obligation in respect of such plans beyond the contributions made.

The Company''s contribution to provident, pension, superannuation funds and to employees state insurance scheme aggregating to H 43.77 Crore (Previous year - H 42.94 Crore) has been recognised in the statement of profit and loss under the head employee benefits expense [Refer note 37].

48.2 Defined benefit plans

(a) Gratuity

The Company operates through various gratuity trust, a plan, covering all its employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. The gratuity benefits payable to the employees are based on the tenure of employee''s service and last drawn salary at the time of leaving. The employees do not contribute towards this plan and the full cost of providing these benefits are met by the Company. In case of death while in service, the gratuity is payable irrespective of vesting.

The Company makes annual contribution to the gratuity schemes administered by the Life Insurance Corporation of India through its various Gratuity Trust Funds. The liability in respect of plan is determined on the basis of an actuarial valuation.

(b) Risk exposure to defined benefit plans

The plans typically expose the Company to actuarial risks such as: asset volatility, interest rate risk, longevity risk and salary risk as described below:

Asset volatility

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on Indian government securities; if the return on plan asset is below this rate, it will create a plan deficit.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation was carried out at March 31, 2023. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

(f) Category wise plan assets

Contributions to fund the obligations under the gratuity plan are made to the Life Insurance Corporation of India.

(g) Sensitivity analysis

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis given below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.

(h) The weighted average duration of the gratuity plan based on average future service is 18 years (Previous year - 19 years).

(i) Expected contribution to the plan for the next annual reporting period is H Nil (Previous year - H 12.23 Crore).

The leave obligation covers the Company''s liability for sick and earned leave. Under these compensated absences plans, leave encashment is payable to all eligible employees on separation from the Company due to death, retirement or resignation; at the rate of daily last drawn salary, multiplied by leave days accumulated as at the end of relevant period. Refer notes 33 and 37 for the leave encashment provision / charge in the balance sheet and statement of profit and loss.

(a) Capital management

The Company manages its capital structure in a manner to ensure that it will be able to continue as a going concern while optimising the return to stakeholders through the appropriate debt and equity balance.

The Company''s capital structure is represented by equity (comprising equity shares, retained earnings and other reserves as detailed in notes 23,24) and debt (borrowings as detailed in note 25).

The Company''s management reviews the capital structure of the Company on an annual basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital. The Company''s plan is to ensure that the gearing ratio (debt equity ratio) is well within the limit of 2:1. No changes were made in the objectives, policies or process for managing its capital during the year ended March 31, 2023 and March 31, 2022. The Company reviews its Dividend policy from time to time.

(c) Fair value measurement

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:

Level 1 : Inputs are Quoted (unadjusted) market prices in active markets for identical assets or liabilities. This includes quoted equity instruments, investments in mutual funds that have quoted price.

Level 2 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. This includes unquoted floating and fixed rate borrowing.

Level 3 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. This includes unquoted equity shares, loans, security deposits, investments in Debentures, floating rate borrowings.

The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets and liabilities that are not measured at fair value on a recurring basis (but fair value disclosures are required) :

(d) Financial risk management objectives

The Company''s principal financial liabilities, comprise borrowings, employee payables, security deposits from consumers, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations and projects capital expenditure. The Company''s principal financial assets include loans, advances, trade and other receivables and cash and cash equivalents that derive directly from its operations.

The Company''s activities expose it to a variety of financial risks viz foreign currency risk, commodity price risk, interest rate risk, credit risk, liquidity risk etc. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Company''s senior management oversees the management of these risks. It advises on financial risks and the appropriate financial risk governance framework for the Company.

Foreign currency risk

The Company is exposed to foreign currency risks arising from various currency exposures, primarily with respect to the USD and EURO. Foreign currency risks arise from future commercial transactions and recognized assets and liabilities, when they are denominated in a currency other than Indian Rupee.

Commodity price risk

The commodity exposure is mainly on account of fuel, a substantial part of which is a pass through cost and hence the commodity price exposure is not likely to have a material financial impact on the Company.

The Company has exposure to USD / INR exchange rate arising principally on account of import of LNG and import of coal. The extant tariff regulations do not permit the cost of hedging such exposure as a cost to be passed through to the off-takers / beneficiaries. As a result, the Company does not follow a policy of hedging such exposures and actual rupee costs of import of fuel are substantially passed on to the off-takers / consumers, because of which such commodity price exposure is not likely to have a material financial impact on the Company.

Interest rate risk

Most of the Company''s borrowings are on a floating rate of interest. The Company has exposure to interest rate risk, arising principally on changes in Marginal Cost of Funds based Lending Rate (MCLR). The Company uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like non-convertible debentures and short term credit lines besides internal accruals.

Credit risk

Trade receivables:

(1) Exposures to credit risk

The Company is exposed to the counterparty credit risk arising from the possibility that counterparties might fail to comply with contractual obligations. This exposure may arise with regard to unsettled amounts.

(2) Credit risk management

Credit risk is managed and limited in accordance with the type of transaction and the creditworthiness of the counterparty. The Company has established criteria for admission, approval systems, authorisation levels, exposure measurement methodologies, etc. The concentration of credit risk is limited due to the fact that the customer base is large. None of the customers accounted for more than 10% of the receivables and revenue for the year ended March 31, 2023 and March 31, 2022. The Company is dependent on the domestic market for its business and revenues.

The Company''s credit policies and practices with respect to distribution areas are designed to limit credit exposure by collecting security deposits prior to providing utility services or after utility service has commenced according to applicable regulatory requirements. In respect to generation business, Company generally has letter of credits / bank guarantees to limit its credit exposure.

(3) Other credit enhancements

The Company collects the security deposits in the form of Cash or Bank guarantee, considering the relevant electricity regulations under the relevant geographical area to cover its credit risks associated with its trade receivables.

(4) Age of receivables and expected credit loss

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables. The expected credit loss allowance is based on ageing of the days the receivables are due. Trade receivable balances mainly comprise of outstanding from consumers wherein the credit period provided to such consumers is less than 30 days. Based on the historical trend the same is collected well within the credit period.

The policy of the Company is to provide for credit loss takes into consideration of factors such as type of Consumers i.e. Government Consumers / Non Government consumers, Status of Consumers i.e. Live consumers/ Disconnected consumers and Security deposits provided by the Consumer.

The concentration of credit risk is very limited due to the fact that the large customers are mainly government entities and remaining customer base is large and widely dispersed and secured with security deposit.

Other financial assets:

The Company is having balances in cash and cash equivalents, term deposits with banks, Inter corporate deposits, Loans to related parties, investments in government securities and investment in mutual funds. The Company is having balances in cash and cash equivalents, term deposits with scheduled banks with high credit rating and hence perceive low credit risk of default. With respect to investments, the Company limits its exposure to credit risk by investing in liquid securities with counterparties depending on their Composite Performance Rankings (CPR) published by CRISIL. The Company''s investment policy lays down guidelines with respect to exposure per counterparty, rating, processes in terms of control and continuous monitoring. The Company therefore considers credit risks on such investments to be negligible. Loans receivable from related parties have negligible credit risk and hence no risk of default is perceived on them. The recoverable amount of unbilled revenue (including revenue gap/ surplus) perceives low credit risk of default considering applicable tariff regulations / tariff orders, management''s probability estimate and the past trends of approval.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are required to be settled by delivering the cash or another financial asset. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and unused borrowing facilities, by continuously monitoring projected / actual cash flows.

Maturities of financial liabilities:

The Company''s remaining contractual maturity for its financial liabilities with agreed repayment periods is given below. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.

Note 57 : Provision for Onerous Contracts

The Company has a provision of H 124.94 Crore (March 31, 2022 - H 135.76 Crore) in respect of certain onerous contracts towards potential damages and other project related costs, arising from expected delays or failure to set up certain wind power generation capacities, awarded to the Company in a prior period under a competitive bidding process. During the current year H 10.82 Crore provision has been reversed due to writing off of pre-operative expenses (Previous year H 27.57 Crore provision has been reversed due to discharge of bank guarantee). The expected outflow will be determined at the time of final resolution of the matter.

Note 58 : Government Grant (a) Nature of government grant

Ministry of Power, Government of India (GoI), had introduced the Accelerated Power Development & Reforms Programme (APDRP) to achieve reduction in Aggregate Technical & Commercial losses, to strengthen the Transmission & Distribution network and to ensure reliable and quality power supply with adequate consumer satisfaction. The projects approved for financing under the programme are eligible for a grant and soft loan each equivalent to 25% of the project cost from the GoI. The Balance 50% was required to be funded by the Company. There are no unfulfilled conditions or other contingencies attached to these grants.


Mar 31, 2022

1. During the year, Company has given corporate guarantees in favour of Lender of subsidiary company and has recognised fair value of corporate guarantee as equity investment in Torrent Solargen Limited.

2. During the previous year, Company has given financial guarantees in favour of the debenture trustee for NCD issued by subsidiary companies and has recognised fair value of financial guarantee as equity investment in both Jodhpur Wind Farms Private Limited and Latur Renewable Private Limited.

3. On February 10, 2022, the Company has entered into a Share Purchase Agreement (SPA) with Blue Daimond Properties Private Limited and Balarampur Chini Mills Limited, for acquisition of 100% of Shares of Visual Percept Solar Projects Private Limited (VPSPPL), which operates a 25 MW solar power plant, situated in the state of Gujarat. On completion of the conditions precedent to SPA, VPSPPL has become wholly owned subsidiary of the Company w.e.f. February 15, 2022.

4. On September 20, 2021, the Company has entered into a Share Purchase Agreement (SPA) with CESC Limited, Haldia Energy Limited and other Nominal Shareholders for the acquisition of 100% of the share capital of Surya Vidyut Limited (SVL), which operates a 156 MW wind power plants, situated in the states of Gujarat, Maharashtra and Madhya Pradesh. On completion of the conditions precedent to SPA, SVL has become wholly owned subsidiary of the Company w.e.f. March 11, 2022.

5. On July 30, 2021, the Company has entered into a Securities Purchase Agreement (SPA) with Lightsource India Limited and Lightsource Renewable Energy (India) Limited for the acquisition of 100% of the share capital and all securities of LREHL Renewables India SPV 1 Private Limited (LREHL), which operates a 50 MW solar power plant, situated in the state of Maharashtra On completion of the conditions precedent to SPA, LREHL has become wholly owned subsidiary of the Company w.e.f. March 25, 2022.

The Hon''ble Administrator of the Union Territory of Dadra and Nagar Haveli and Daman and Diu (the “Holding Entity”) has issued a Letter of Intent (‘LOI'') dated February 07, 2022 to the Company as a successful bidder , pursuant to its Bid, to purchase 51 % shares in Dadra and Nagar Haveli and Daman and Diu Power Distribution Corporation Limited (the “Distribution company”), (a company incorporated for holding assets of the Electricity Department, Daman and Diu and DNH Power Distribution Corporation Limited (DNH PDCL) related to electricity distribution business), which shall be responsible for distribution and retail supply of electricity and shall hold distribution license in the Union Territory of Dadra and Nagar Haveli and Daman and Diu.

On March 15, 2022, the Company entered into a Share Purchase Agreement (SPA) and Shareholders Agreement (SHA) with the Holding Entity and the Distribution company for purchase of 51% shares of the Distribution company from the Holding Entity.

Basis the Share Purchase Agreement read with The Dadra and Nagar Haveli and Daman and Diu Electricity (Reorganisation and Reforms) Transfer Scheme, 2022 (the “transfer scheme”), the effective date of transfer has been notified by the UT Administrator, Union Territory of Dadra and Nagar Haveli and Daman and Diu as April 1, 2022 for the purpose of implementing the transfer scheme.

As per the transfer scheme, the electricity distribution and retail supply undertakings of the Electricity Department and DNH PDCL including the assets, proceedings and liabilities shall stand transferred to and vested in the distribution company, thereby acquiring control of the electricity distribution business, with effect from the notified transfer date i.e., April 1, 2022. The decisions over the relevant activities of the electricity distribution business shall continue to be taken by the Electricity Department and DNH PDCL until March 31, 2022.

Accordingly, the amount of purchase consideration transferred for acquiring the shares of the distribution company has been shown as “Advance against equity investment” as at March 31, 2022 in the standalone financial statements which shall be reclassified to “investment in subsidiary” on the date of acquisition i.e April 1, 2022.

1. Securities premium :

Securities premium reflects issuance of the shares by the Company at a premium, whether for cash or otherwise i.e. a sum equal to the aggregate amount of the premium received on shares is transferred to a “securities premium account” as per the provisions of the Companies Act, 2013. The reserve can be utilised in accordance with the provisions of the Act.

2. Debenture redemption reserve:

The Company was required to create a Debenture Redemption Reserve (DRR) 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 required to create DRR. Accordingly, the Company has not created DRR during the year and DRR created till previous years will be transferred to retained earnings on redemption of debentures.

3. Contingency reserve:

As per the provisions of GERC MYT Regulations read with Tariff orders passed by GERC, the Company being a Distribution Licensee makes an appropriation to the contingency reserve to meet with certain exigencies. Investments in Bonds issued by Government of India have been made against such reserve.

4. Special reserve:

As per MYT Regulations (2007), the Company has created a reserve in FY 2011-12 and FY 2012-13, which represents one third amount of controllable gain shall be retained in a special reserve by the Generating Company or Licensee for the purpose of absorbing the impact of any future losses on account of controllable factors.

5. General reserve:

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. The general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income.

6. Retained earnings:

The retained earnings reflect the profit of the company earned till date net of appropriations. The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the balance in this reserve, after considering the requirements of the Companies Act, 2013.

1. Nature of security

The entire immovable and movable assets including current assets, both present and future, of the Company are mortgaged and hypothecated by way of first pari passu charge in favour of lenders for term loans of f 5,806.91 Crore and non convertible debentures of f 1,098.37 Crore along with lenders of cash credits and non-fund based credit facilities. (except assets detailed in (i), (ii) & (iii) below which are not provided as security to NCD holders / term loan lender as mentioned therein)

(i) Assets not given as security to non convertible debenture holders of Series no. 5

a. immovable assets, movable fixed assets and debt service reserve accounts pertaining to the Renewable Projects;

b. leasehold land bearing plot nos. B15 to B28 situated in the Atali Industrial Estate in Taluka Vagra, District Bharuch.

(ii) Assets not given as security to non convertible debenture holders of Series no. 6 & 7

a. immovable and movable assets of Renewable Projects;

b. debt service reserve accounts maintained for the benefit of lenders of term loans;

c. investments / deposits made out of Non-Convertible Debenture Reserve;

d. leasehold land bearing plot nos. B15 to B28 situated in the Atali Industrial Estate in Taluka Vagra, District Bharuch;

e. non-agricultural plot of land at village Kamatghar, Taluka Bhiwandi, District Thane bearing survey no. 119, Hissa no. 2/3 along with building thereon;

f. immovable property located at no. 2, Dharam Marg, Chanakya Puri, New Delhi.

(iii) Assets not given as security to lender of f 250.00 Crore term loan availed in March 2022

a. immovable assets of Renewable Projects;

b. leasehold land bearing plot nos. B15 to B28 situated in the Atali Industrial Estate in Taluka Vagra, District Bharuch.

1. The entire immovable and movable assets including current assets, both present and future, of the Company are mortgaged and hypothecated by way of first pari passu charge in favour of lenders for working capital facilities and by way of second pari passu charge in favour of lenders for hedge facility.

2. Undrawn cash credit from banks, based on approved facilities, were f 450.00 Crore as at March 31, 2022.

3. During the year, the Company has used the loans for the purpose for which it was obtained.

4. The Company has borrowings from banks and financial intitutions on the basis of security of current assets and quarterly returns or statements of current assets filed are in agreement with the books of accounts.

1. Disclosure given above presents disaggregated revenue from contracts with customers. The Company believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by market and other economic factors.

2. Timing of revenue recognition (from contract with customers) : Revenue from power supply is recognised over a period of time.

3. Revenue from operations for the previous year ended March 31, 2021 includes f 250.62 Crore on account of favourable orders received from the Appellate Tribunal for Electricity in respect of disputed Revenue Gap related to carrying costs of earlier years.

Note 42: Impairment Assessment

1. DGEN Power Plant

Net carrying value of Property, Plant & Equipment (“PPE”) as at March 31, 2022 includes T 1,378.90 Crore pertaining to 1,200 MW DGEN Mega Power Project located at Dahej, Gujarat (“DGEN”). DGEN started commercial operations with effect from November 2014 and thereafter has operated only intermittently/ partially, including during the year ended March 31,2022, due to various factors such as unavailability of domestic gas, high prices of imported gas and non-availability of power selling arrangement.

In view of the above and given the current economic environment, during the current year, the Company has carried out an impairment assessment of DGEN as at March 31, 2022 by considering the recoverable amount based on value-in-use of DGEN in accordance with Indian Accounting Standard 36 ‘Impairment of Assets''. Value-in-use is determined considering a discount rate of 14.5% (March 31, 2021 - 13%) and cash flow projections over a period of 18 years (March 31, 2021 - 19 years), being the balance useful life of DGEN in terms of Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019 on the basis that the Company expects to supply power in the future, inter alia, under long term power selling agreements. Based on the assessment, recoverable value of PPE by using value-in-use is T 1,378.90 Crore which is lower than the carrying amount of PPE of T 2,678.90 Crore and accordingly additional impairment loss of T 1,300.00 Crore has been provided, which has been disclosed as an Exceptional item in the Statement of Profit and Loss.

Assessment of ''value-in-use'' involves several key assumptions including expected demand, future price of fuel, expected tariff rates for electricity, discount rate, exchange rate and electricity market scenario, based on past trends and the current and likely future state of the industry. Management reviews such assumptions periodically to factor updated information based on events or changes in circumstances in order to make fresh assessment of impairment, if any.

2. Investment in Torrent Pipavav Generation Limited

Torrent Pipavav Generation Limited (“TPGL”), a subsidiary of the Company and a joint venture between the Company and Gujarat Power Corporation Limited (“GPCL”), had made payments in nature of compensation for acquisition of private land as per the court orders in Amreli, Gujarat for the purpose of developing a coal-based power plant of 1,000 MW. Due to non-availability of fuel linkage, Government of Gujarat (“GoG”) vide its letter dated December 06, 2017, communicated that the said project may not be developed and accordingly, the joint venture is intended to be dissolved. Further, as per the said letter, the cost of land would be reimbursed after the disposal of land. With reference to this, in the month of March 2019, GPCL has written a letter to Collector, Amreli stating that the land is surrendered to the Government of Gujarat and requested Energy and Petroleum Department, GoG to take further action in the matter. It is learnt that the Government of Gujarat is exploring the possibility of usage of Land for industrial purpose. The management has made an impairment assessment of the amount recoverable from Government of Gujarat and concluded that there is no impairment in the carrying amount of the land. The timing of the recoverability of the amounts invested in land would depend upon the availability of the buyer. Considering the above facts, assets and liabilities are reflected at their net realisable values or cost whichever is lower and the financial statements of TPGL for the year ended March 31, 2022 have been prepared on a non - going concern basis. The recovery of carrying amount of equity and loan T 93.29 Crore (March 31, 2021 T 92.53 Crore) is also dependent on the availability of buyer for above mentioned land. The Company has invested equity and loan aggregating to T 110.84 Crore (March 31, 2021 T 108.48 Crore) in TPGL and impairment in value of investment is of T 17.55 Crore as at March 31, 2022 (March 31, 2021 T 15.95 Crore).

Management has made an assessment of the amount of taxable income that would be available in future to offset the Accumulated MAT credit entitlement available to the Company.

The assessment of taxable income involved several key assumptions including expected demand, future price of fuel, expected tariff rate for electricity, exchange rate and electricity market scenario, which the management considered reasonable based on past trends, applicable tariff regulations / agreements and current and likely future state of the industry.

A. Unbilled revenue

1. Revenue from contracts with customers include unbilled revenue towards FPPPA claims and other true up adjustments which is recognised considering applicable tariff regulations / tariff orders, past trends of approval and management''s probability estimate.

The Company has not recognized those true up adjustment claims which are subject of dispute and for which the Company is in appeal with regulatory authorities. These are recognised on receipt of final orders of respective regulatory authorities.

1. Service line deposits are collected against the cost of capital work to be carried out for new connection or load extension on application by consumers. On the completion of the work, such contribution is transferred to deferred revenue under the head “other current / non-current liabilities”.

The Company has evaluated the impact of Supreme Court (“SC”) judgement dated February 28, 2019 in the case of Regional Provident Fund Commissioner (II) West Bengal v/s Vivekananda Vidyamandir and Others, in relation to exclusion of certain allowances from the definition of “basic wages” of the relevant employees for the purposes of determining contribution to Provident Fund (“PF”) under the Employees'' Provident Fund & Miscellaneous Provisions Act, 1952. There are interpretation issues relating to the said SC judgement. Based on such evaluation, management has concluded that effect of the aforesaid judgement on the Company is not material and accordingly, no provision has been made in the financial statements.

Footnotes:

1. Management believes that its position on the aforesaid direct and indirect tax demands and other claims against the company will likely be upheld in the appellate process and accordingly no provision has been made in the standalone financial statements for such demands.

2. In respect of the above, the expected outflow will be determined at the time of final resolution of the dispute / matters. No reimbursement is expected.

1. The Company has not given any loans or advances in the nature of loan to any firms / companies, in which Directors are interested.

2. The above loans were given to the subsidiaries and associate for their normal business activities.

The Company is engaged in the business of providing infrastructural facilities as per Section 186 (11) of the Act. Accordingly, disclosure under Section 186 (4) of the Act, is not applicable to the Company.

In respect of the aforesaid loan, the Company has complied with the relevant provisions of the Companies Act, 2013. Further, the said transaction is not violative of the Prevention of Money-laundering Act, 2002.

During the year ended March 31, 2022 and March 31, 2021, the Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b) provide any guarantee, security, or the like on behalf of the ultimate beneficiaries.

(iv) The tota l cash outflow for leases for the year was f 9.38 Crore (March 31, 2021 f 7.10 Crore).

(v) Lease asset of Shil, Mumbra and Kalwa (franchise area)

Torrent Power Limited (“TPL”) has entered into a Distribution Franchise Agreement (“Agreement”) dated February 11, 2019 with Maharashtra State Electricity Distribution Company Limited (“MSEDCL”) whereby as per the Agreement TPL would distribute the electricity in the area of Shil, Mumbra and Kalwa in Thane District in Maharashtra (“Franchise area”) for 20 years (effective from March 01, 2020).

As per the Agreement TPL would purchase electricity from MSEDCL at the rate which would be derived through mechanism as mentioned in the Agreement which is linked to the number of units purchased and would distribute electricity to the Consumers at the tariff which has been approved by Maharashtra Electricity Regulation Commission (MERC).

Further as per the Agreement TPL has right to use existing assets of MSEDCL in the Franchise area provided it shall perform all the obligations and accepts all liabilities of MSEDCL on behalf of distribution licensee in Franchise area and MSEDCL shall not charge any rent for the use of such assets.

Considering the facts of the arrangement, TPL has the right to obtain substantially all of the economic benefits from use of MSEDCL assets of the Franchise area and the right to direct the use of the said assets for 20 years and accordingly it would meet the definition of Lease as per Ind AS 116. Further, for distribution of electricity, TPL would purchase power from MSEDCL for which payment would be made as per the franchise agreement which is linked to the number of units purchased. Accordingly the payments by TPL to MSEDCL is variable in nature and there are no fixed payments in the form of minimum purchase commitments, take or pay or any sort of fixed charges is required to be made.

Considering the entire payment made by TPL for this arrangement is variable in nature and there would be no lease liability required to be recognised with a corresponding right of use assets on initial recognition in accordance with Ind AS 116 and considering non-availability of relevant observable information for lease payments, management estimates and cost benefit analysis, total consideration payable to MSEDCL towards purchase of electricity has been shown as ‘Electrical energy purchased'' in the Financial Statements.

49.1 Defined contribution plan

The Company has defined contribution retirement benefit plans for its employees.

The Company''s contributions to provident fund, pension scheme and employee state insurance scheme are made to the relevant government authorities as per the prescribed rules and regulations. The Company''s superannuation scheme for qualifying employees is administered through its various superannuation trust funds. The Company''s contributions to the above defined contribution plans are recognised as employee benefit expenses in the statement of profit and loss for the year in which they are due. The Company has no further obligation in respect of such plans beyond the contributions made.

The Company''s contribution to provident, pension, superannuation funds and to employees state insurance scheme aggregating to f 42.94 Crore (Previous year - f 40.71 Crore) has been recognised in the statement of profit and loss under the head employee benefits expense [Refer note 38].

49.2 Defined benefit plans

a. Gratuity

The Company operates through various gratuity trust, a plan, covering all its employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. The gratuity benefits payable to the employees are based on the tenure of employee''s service and last drawn salary at the time of leaving. The employees do not contribute towards this plan and the full cost of providing these benefits are met by the Company. In case of death while in service, the gratuity is payable irrespective of vesting.

The Company makes annual contribution to the gratuity schemes administered by the Life Insurance Corporation of India through its various Gratuity Trust Funds. The liability in respect of plan is determined on the basis of an actuarial valuation.

b. Risk exposure to defined benefit plans

The plans typically expose the Company to actuarial risks such as: asset volatility, interest rate risk, longevity risk and salary risk as described below:

Asset volatility

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on Indian government securities; if the return on plan asset is below this rate, it will create a plan deficit.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation was carried out at March 31, 2022. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.

h. The weighted average duration of the gratuity plan based on average future service is 19 years (Previous year - 19 years).

i. Expected contribution to the plan for the next annual reporting period is f 12.23 Crore (Previous year - f 11.46 Crore).

49.3 Other long-term employee benefit obligations

The leave obligation covers the Company''s liability for sick and earned leave. Under these compensated absences plans, leave encashment is payable to all eligible employees on separation from the Company due to death, retirement or resignation; at the rate of daily last drawn salary, multiplied by leave days accumulated as at the end of relevant period. Refer notes 33 and 38 for the leave encashment provision / change in the balance sheet and statement of profit and loss.

E. Terms and conditions of outstanding balances

The transactions with related parties are made in the normal course of business on terms equivalent to those that prevail in arm''s length transactions.

Outstanding balances at the year-end are unsecured.

Footnote:

1. Loans granted to related parties carries interest rate of 7.75% p.a. (Previous year 8.50% p.a.).

A. Capital management

The Company manages its capital structure in a manner to ensure that it will be able to continue as a going concern while optimising the return to stakeholders through the appropriate debt and equity balance.

The Company''s capital structure is represented by equity (comprising issued capital, retained earnings and other reserves as detailed in notes 23,24) and debt (borrowings as detailed in note 25).

The Company''s management reviews the capital structure of the Company on an annual basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital. The Company''s plan is to ensure that the gearing ratio (debt equity ratio) is well within the limit of 2:1.

1. Debt is defined as all long term debt outstanding (including unamortised expense) contingent liability pertaining to corporate / financial guarantee given (to the extent utilised) short term debt outstanding in lieu of long term debt.

2. Total equity is defined as equity share capital all reserve (excluding revaluation reserve) deferred tax liabilities deferrec tax assets - intangible assets - Intangible assets under development.

Loan Covenants

The company has complied with financial covenants specified as per the terms of borrowing facilities.

1. The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature.

2. Non current loan and Inter corporate Deposits carries the interest rates that are variable in nature and hence carrying value is considered as same as fair value.

C. Fair value measurement

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:

Level 1 : Inputs are Quoted (unadjusted) market prices in active markets for identical assets or liabilities. This includes quoted equity instruments, investments in mutual funds that have quoted price.

Level 2 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. This includes unquoted floating and fixed rate borrowing.

Level 3 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. This includes unquoted equity shares, loans, security deposits, investments in Debentures, floating rate borrowings.

D. Financial risk management objectives

The Company''s principal financial liabilities, comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations, routine and projects capital expenditure. The Company''s principal financial assets include loans, advances, trade and other receivables and cash and cash equivalents that derive directly from its operations.

The Company''s activities expose it to a variety of financial risks viz foreign currency risk, commodity price risk, interest rate risk, credit risk, liquidity risk etc. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Company''s senior management oversees the management of these risks. It advises on financial risks and the appropriate financial risk governance framework for the Company.

Foreign currency risk

The Company is exposed to foreign currency risks arising from various currency exposures, primarily with respect to the USD and EURO. Foreign currency risks arise from future commercial transactions and recognized assets and liabilities, when they are denominated in a currency other than Indian Rupee.

The Company''s exposure with regards to foreign currency risk which are not hedged are given below. However, these risks are not significant to the company''s operation and accordingly sensitivity analysis is not given.

Commodity price risk

The commodity exposure is mainly on account of fuel, a substantial part of which is a pass through cost and hence the commodity price exposure is not likely to have a material financial impact on the Company.

The Company has exposure to USD / INR exchange rate arising principally on account of import of LNG and import of coal. The extant tariff regulations do not permit the cost of hedging such exposure as a cost to be passed through to the off-takers / beneficiaries. As a result, the Company does not follow a policy of hedging such exposures and actual rupee costs of import of fuel are substantially passed on to the off-takers / consumers, because of which such commodity price exposure is not likely to have a material financial impact on the Company.

Interest rate risk

Most of the Company''s borrowings are on a floating rate of interest. The Company has exposure to interest rate risk, arising principally on changes in Marginal Cost of Funds based Lending Rate (MCLR). The Company uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like non-convertible debentures and short term credit lines besides internal accruals.

Credit risk

Trade receivables:

1. Exposures to credit risk

The Company is exposed to the counterparty credit risk arising from the possibility that counterparties might fail to comply with contractual obligations. This exposure may arise with regard to unsettled amounts.

2. Credit risk management

Credit risk is managed and limited in accordance with the type of transaction and the creditworthiness of the counterparty. The Company has established criteria for admission, approval systems, authorisation levels, exposure measurement methodologies, etc. The concentration of credit risk is limited due to the fact that the customer base is large. None of the customers accounted for more than 10% of the receivables and revenue for the year ended March 31, 2022 and March 31, 2021. The Company is dependent on the domestic market for its business and revenues.

The Company''s credit policies and practices with respect to distribution areas are designed to limit credit exposure by collecting security deposits prior to providing utility services or after utility service has commenced according to applicable regulatory requirements. In respect to generation business, Company generally has letter of credits / bank guarantees to limit its credit exposure.

3. Other credit enhancements

The Company does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets.

4. Age of receivables and expected credit loss

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 experienced and adjusted for forward - looking information. The expected credit loss allowance is based on ageing of the days the receivables are due.

The concentration of credit risk is very limited due to the fact that the large customers are mainly government entities and remaining customer base is large and widely dispersed and secured with security deposit.

Other financial assets:

The Company is having balances in cash and cash equivalents, term deposits with banks, Inter corporate deposits, Loans to related parties, investments in government securities and investment in mutual funds. With respect to investments, the Company limits its exposure to credit risk by investing in liquid securities with counterparties depending on their Composite Performance Rankings (CPR) published by CRISIL. The Company''s investment policy lays down guidelines with respect to exposure per counterparty, rating, processes in terms of control and continuous monitoring. The Company therefore considers credit risks on such investments to be negligible. Loans receivable from related parties have negligible credit risk and hence no risk of default is perceived on them.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are required to be settled by delivering the cash or another financial asset. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and unused borrowing facilities, by continuously monitoring projected / actual cash flows.

Maturities of financial liabilities:

The Company''s remaining contractual maturity for its financial liabilities with agreed repayment periods is given below. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.

The Company has a provision of ? 135.76 Crore (March 31, 2021 - ? 162.80 Crore) in respect of certain onerous contracts towards potential damages and other project related costs, arising from expected delays or failure to set up certain wind power generation capacities, awarded to the Company in a prior period under a competitive bidding process. During the current year,? 27.57 Crore provision has been reversed due to discharge of Bank Guarantee and ? 0.53 Crore provision has been created. The expected outflow will be determined at the time of final resolution of the matter.

Note 59: Government Grant A. Nature of government grant

Ministry of Power, Government of India (Gol), had introduced the Accelerated Power Development & Reforms Programme (APDRP) to achieve reduction in AT&C losses, to strengthen the T&D network and to ensure reliable and quality power supply with adequate consumer satisfaction. The projects approved for financing under the programme are eligible for a grant and soft loan each equivalent to 25% of the project cost from the Gol. The Balance 50% was required to be funded by the Company. There are no unfulfilled conditions or other contingencies attached to these grants.

Note 60: Scheme of Arrangement

During the previous year, The National Company Law Tribunal (NCLT) vide its Order dated December 17, 2020, has sanctioned the Scheme of Arrangement (the Scheme) for transfer and vesting of Cable Business Undertaking (CBU) of the Company, on a going concern basis by way of slump sale, to TCL Cables Private Limited a wholly owned subsidiary of the Company, under sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The certified copy of the said order has been filed with Registrar of Companies on January 15, 2021 (Effective Date) and the Scheme is legally effective from April 01, 2020 (Appointed Date). Accordingly, the effect of the Scheme has been given in the financial statements for the year ended March 31, 2021 with effect from the Appointed Date instead of Effective date, the date on which the control is transferred by Company, as required under Ind AS 110. Further as per Guidance note issued by Institute of Chartered Accountants of India (ICAI), where a law requires a different treatment, accounting standards are considered to be overruled to that extent.

The CBU had a book value (net of related liabilities) of ? 249.68 Crore (Refer point (b) below) which has been transferred under the Scheme for a lump sum consideration of ? 256.95 Crore based on the report of independent valuer, adjusted for working capital adjustments as per the Scheme. The surplus of consideration over book value of ? 7.27 Crore has been included in Other Income for the financial year ended March 31, 2021.

The Indian Parliament has approved the Code on Social Security, 2020 (“Code”) which may likely impact the obligations of the Company for contribution to employees'' provident fund and gratuity. The effective date from which the Code is applicable and the rules to be framed under the Code are yet to be notified. In view of this, impact if any, of the change will be assessed and accounted in the period in which the Code and the rules thereunder are notified.

Note 68: Registration of Charges

a. The Company has filed Form CHG-4 dated May 26, 2021 for satisfaction of charge with Registrar of Companies - Gujarat, pursuant to repayment of loan for Mahidad project which was required to be filed on October 29, 2019 i.e., delay of approximately 19 months. The reason for the delay was on account of late receipt of No Dues Certificate (NDC) due to restrictions and disruption of operations during COVID - 19 pandemic.

b. The Company has filed Form CHG-1 dated November 25, 2021 for creation of Charge with Registrar of Companies pursuant to fixed deposit overdraft facility which was required to be filed on November 20, 2021 i.e delay of 5 days. The reason for delay was on account of delay in receipt of fixed deposit overdraft letter from bank.

c. The Company has filed Form CHG-1 dated November 26, 2021 for creation of Charge with Registrar of Companies pursuant to fixed deposit overdraft facility which was required to be filed on November 20, 2021 i.e delay of 6 days. The reason for delay was on account of delay in receipt of fixed deposit receipts from bank.

Other than those mentioned above, there are no charges or satisfactions which are yet to be registered with the Registrar of Companies beyond the statutory period.

Note 69: Events Occurring after the Balance Sheet Date

Subsequent to year end, on April 23, 2022, the Company has entered into a Share Purchase Agreement (SPA) with SkyPower Southeast Asia Ill Investments Limited, SkyPower Southeast Asia Holdings 2 Limited (the Sellers) for the acquisition of 100% of the share capital of Sunshakti Solar Power Projects Private Limited, which operates 50 MW solar power plant, situated in the state of Telangana. Enterprise value estimated for this acquisition is approx f 417 Crore subject to closing price adjustments. The acquisition is subject to customary conditions for transaction closure. This is non adjusting event after the balance sheet date.

a. The Company is in compliance with number of layers of companies in accordance with clause 87 of Section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017 during the year ended March 31, 2022 and March 31, 2021.

b. The Company has not invested or traded in Crypto Currency or Virtual Currency during the year ended March 31, 2022 and March 31, 2021.

c. No proceedings have been initiated on or are pending against the Company for holding benami property under the Prohibition of Benami Property Transactions Act, 1988 (as amended in 2016) (formerly the Benami Transactions (Prohibition) Act, 1988 (45 of 1988)) and Rules made thereunder during the year ended March 31, 2022 and March 31, 2021.

d. The Company has not been declared Wilful Defaulter by any bank or financial institution or government or any government authority during the year ended March 31, 2022 and March 31, 2021.

e. During the year ended March 31, 2022 and March 31, 2021, the Company has not surrendered or disclosed as income any transactions not recorded in the books of accounts in the course of tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

Note 71: Approval of Financial Statements

The financial statements were approved for issue by the board of directors on May 10, 2022.


Mar 31, 2021

25,74,22,311 equity shares (25,74,22,311 equity shares as at March 31, 2020) of C10 each fully paid up are held by the Parent Company - Torrent Investments Private Limited (Formerly known as Torrent Private Limited).

Terms / Rights attached to equity shares :

The Company has only one class of equity shares having par value of C10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend,if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

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 preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Aggregate number of equity shares allotted as fully paid up pursuant to contract(s) without payment being received in cash:

During FY 2015-16, the Company allotted 81,68,476 equity shares of C10 each at par to the shareholders of Torrent Cables Limited pursuant to the scheme of amalgamation of Torrent Energy Limited and Torrent Cables Limited with Torrent Power Limited as approved by the Hon''ble Gujarat High Court vide its order dated August 13, 2015.

Distributions made and proposed:

Interim dividend for FY 2020-21 of C5.50 per equity share [Previous year - C11.60 per equity share (including C5.00 per equity share as a special dividend)] aggregating to C264.34 Crore [Previous year - C672.11 Crore (including dividend distribution tax of C114.60 Crore)] was paid in March, 21.

The Board of Directors at its meeting held on May 20, 2021 has recommended a dividend of 55.00% (C5.50 per equity share of par value C10 each).The proposal is subject to the approval of shareholders at the ensuing Annual General Meeting and if approved, would result in a cash outflow of C264.34 Crore.

Securities premium :

Securities premium reflects issuance of the shares by the Company at a premium, whether for cash or otherwise i.e. a sum equal to the aggregate amount of the premium received on shares is transferred to a “securities premium account” as per the provisions of the Companies Act, 2013. The reserve can be utilised in accordance with the provisions of the Act.

Debenture redemption reserve:

The Company was required to create a Debenture Redemption Reserve(DRR) 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 required to create DRR. Accordingly, the Company has not created DRR during the year and DRR created till previous years will be transferred to retained earnings on redemption of debentures.

Contingency reserve:

As per the provisions of GERC MYT Regulations read with Tariff orders passed by GERC, the Company being a Distribution Licensee makes an appropriation to the contingency reserve to meet with certain exigencies. Investments in Bonds issued by Government of India have been made against such reserve.

Special reserve:

As per MYT Regulations (2007), the Company has created a reserve in FY 2011-12 and FY 2012-13, which represents one third amount of controllable gain shall be retained in a special reserve by the Generating Company or Licensee for the purpose of absorbing the impact of any future losses on account of controllable factors.

General reserve:

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. The general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income.

Retained earnings:

The retained earnings reflect the profit of the company earned till date net of appropriations. The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the balance in this reserve, after considering the requirements of the Companies Act, 2013.

Footnotes:

1 Nature of security

The entire immovable and movable assets including current assets, both present and future, of the Company are mortgaged and hypothecated by way of first pari passu charge in favour of lenders for term loans of C5,689.42 Crore and non convertible debentures of C1,211.69 Crore along with lenders of cash credits and non-fund based credit facilities. (except assets detailed in (i) & (ii) below which are not provided as security to holders of non convertible debentures of Series no. 5 and Series no. 6 respectively)

(i) Assets not given as security to non convertible debenture holders of Series no. 5

a. immovable assets, movable fixed assets and debt service reserve accounts pertaining to the Renewable Projects;

b. leasehold land bearing plot nos. B15 and B28 situated in the Atali Industrial Estate in Taluka Vagra, District Bharuch;

(ii) Assets not given as security to non convertible debenture holders of Series no. 6

a. immovable and movable assets of Renewable Projects;

b. debt service reserve accounts maintained for the benefit of lenders of term loans;

c. i nvestments / deposits made out of Non-Convertible Debenture Reserve;

d. leasehold land bearing plot nos. B15 to B28 situated in the Atali Industrial Estate in Taluka Vagra, District Bharuch;

e. non-agricultural plot of land at village Kamatghar, Taluka Bhiwandi, District Thane bearing survey no.119, Hissa no. 2/3 along with building thereon;

f. immovable property located at no. 2, Dharam Marg, Chanakya Puri, New Delhi.

(1) DGEN Power Plant

Net carrying value of Property, Plant & Equipment (“PPE”) as at March 31,2021 includes C2,879.42 Crore pertaining to 1,200 MW DGEN Mega Power Project located at Dahej, Gujarat (“DGEN”). DGEN started commercial operations with effect from November 2014 and thereafter has operated only intermittently / partially, including during the year ended March 31, 2021.

In view of the above and given the current economic environment, the Company has carried out an impairment assessment of DGEN as at March 31, 2021 by considering the recoverable amount based on value in use of DGEN in accordance with Indian Accounting Standard 36 ‘Impairment of Assets''. Value in use is determined considering a discount rate of 13% and cash flow projections over a period of 19 years (March 31,2020 - 20 years), being the balance useful life of DGEN in terms of Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019 on the basis that the Company expects to supply power in the future, inter alia, under long term power purchase agreements. Based on the assessment, recoverable value of PPE by using value in use is C3,007.00 Crore which is higher than the carrying amount of PPE and accordingly no additional impairment provision is required as at March 31,2021. The management has conducted sensitivity analysis on impairment tests of the value in use of DGEN. The management believes that reasonable possible change in key assumption would not materially impact the impairment assessment as at March 31, 2021.

During the previous year, the Company had provided for impairment loss of C1,000.00 Crore, which has been disclosed as ‘Exceptional items''.

Assessment of ‘value-in-use'' involves several key assumptions including expected demand, future price of fuel, expected tariff rates for electricity, discount rate, exchange rate and electricity market scenario, based on past trends and the current and likely future state of the industry. Management reviews such assumptions periodically to factor updated information based on events or changes in circumstances in order to make fresh assessment of impairment, if any.

(2) Investment in Torrent Pipavav Generation Limited

Torrent Pipavav Generation Limited (“TPGL”), a subsidiary of the Company and a joint venture between the Company and Gujarat Power Corporation Ltd. (“GPCL”), had paid for acquisition of land in Amreli, Gujarat for the purpose of developing a coal based power plant of 1,000 MW. Due to non-availability of fuel linkage, Government of Gujarat (“GoG”) vide its letter dated December 06, 2017, communicated that the said project may not be developed and accordingly, the joint venture is intended to be dissolved. With reference to this, in the month of March 2019, GPCL has written a letter to Collector, Amreli stating that the land is surrendered to the Government and requested Energy and Petroleum Department, GoG to take further action in the matter. The management has made an impairment assessment of the carrying amount of the land by comparing it with the circle rates published by GoG for the purpose of levy of stamp duty, on the basis of which it has been concluded that there is no impairment in the carrying amount of the land. The timing of the recoverability of the amounts invested in land would depend upon the availability of the buyer. Considering the above facts, assets and liabilities are reflected at their net realisable values or cost whichever is lower and the financial statements of TPGL for the year ended March 31,2021 have been prepared on a non - going concern basis. The recovery of carrying amount of equity and loan C92.53 Crore (March 31,2020 C92.38 Crore) is also dependent on the availability of buyer for above mentioned land. The Company has invested equity and loan aggregating to C108.48 Crore (March 31, 2020 C106.73 Crore) in TPGL and impairment in value of investment is of C15.95 Crore as at March 31, 2021 (March 31, 2020 C14.35 Crore).

The tax rate used for the reconciliations given above is the actual / enacted corporate tax rate payable by corporate entities in India on taxable profits under the Indian tax law.

Taxation Laws (Amendment) Act, 2019, inter alia, reduced the effective rate of MAT from 21.55% to 17.47%. The net deferred tax credit in the previous year includes the impact of this change amounting to C464.19 Crore, due to the Company''s ability to utilise accumulated MAT credit in future years, not previously recognised. Further the net deferred tax credit in the previous year includes C533.99 Crore, mainly arising on account of a provision for impairment in the carrying value of DGEN Power Plant [Refer note 43], provision for certain onerous contracts [Refer note 60] and reassessment of management''s reasonable estimate for the future taxable profits, which would be available to utilise such additional MAT Credit.

Management has made an assessment of the amount of taxable income that would be available in future to offset the Accumulated MAT credit entitlement available to the Company.

The assessment of taxable income involved several key assumptions including expected demand, future price of fuel, expected tariff rate for electricity, exchange rate and electricity market scenario, which the management considered reasonable based on past trends, applicable tariff regulations / agreements and current and likely future state of the industry.

Unbilled revenue

(1) Revenue from contracts with customers include unbilled revenue towards FPPPA claims and other true up adjustments which is recognised considering applicable tariff regulations / tariff orders, past trends of approval and management''s probability estimate.

The Company has not recognised those truing up adjustment claims which are subject of dispute and for which the Company is in appeal with regulatory authorities. These are recognised on receipt of final orders of respective regulatory authorities.

The Company has evaluated the impact of Supreme Court (“SC”) judgement dated February 28, 2019 in the case of Regional Provident Fund Commissioner (II) West Bengal v/s Vivekananda Vidyamandir and Others, in relation to exclusion of certain allowances from the definition of “basic wages” of the relevant employees for the purposes of determining contribution to Provident Fund (“PF”) under the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952. There are interpretation issues relating to the said SC judgement. Based on such evaluation, management has concluded that effect of the aforesaid judgement on the Company is not material and accordingly, no provision has been made in the financial statements.

(v) Lease asset of Shil, Mumbra and Kalwa (franchise area)

Torrent Power Limited (“TPL”) has entered into a Distribution Franchise Agreement (“Agreement”) dated February 11, 2019 with Maharashtra State Electricity Distribution Company Limited (“MSEDCL'') whereby as per the Agreement TPL would distribute the electricity in the area of Shil, Mumbra and Kalwa in Thane District in Maharashtra (“Franchise area”) for 20 years (effective from March 01, 2020).

As per the Agreement TPL would purchase electricity from MSEDCL at the rate which would be derived through mechanism as mentioned in the Agreement which is linked to the number of units purchased and would distribute electricity to the Consumers at the tariff which has been approved by Maharashtra Electricity Regulation Commission (MERC).

Further as per the Agreement TPL has right to use existing assets of MSEDCL in the Franchise area provided it shall perform all the obligations and accepts all liabilities of MSEDCL on behalf of distribution licensee in Franchise area and MSEDCL shall not charge any rent for the use of such assets.

Considering the facts of the arrangement, TPL has the right to obtain substantially all of the economic benefits from use of MSEDCL assets of the Franchise area and the right to direct the use of the said assets for 20 years and accordingly it would meet the definition of Lease as per Ind AS 116. Further, for distribution of electricity, TPL would purchase power from MSEDCL for which payment would be made as per the franchise agreement which is linked to the number of units purchased. Accordingly the payments by TPL to MSEDCL is variable in nature and there are no fixed payments in the form of minimum purchase commitments, take or pay or any sort of fixed charges is required to be made.

Considering the entire payment made by TPL for this arrangement is variable in nature and there would be no lease liability required to be recognised with a corresponding right of use assets on initial recognition in accordance with Ind AS 116 and considering non-availability of relevant observable information for lease payments, management estimates and cost benefit analysis, total consideration payable to MSEDCL towards purchase of electricity has been shown as ‘Electrical energy purchased'' in the Financial Statements.

(vi) Impact on the financial statements as on April 01, 2019 due to adoption of Ind AS 116

The Company has adopted Ind AS - 116 retrospectively from April 01, 2019, but has not restated comparatives for year ended March 31, 2019, as permitted under the specific transition provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on April 01, 2019. The new accounting policies are disclosed in note 2.20.

On adoption of Ind AS - 116, the Company recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases'' under the principles of Ind AS - 17, Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee''s incremental borrowing rate as of April 01,2019. The weighted average lessee''s incremental borrowing rate applied to the lease liabilities on April 01, 2019 was 9.00%.

(a) Practical expedients applied :

I n applying Ind AS - 116 for the first time, the Company has used the following practical expedients permitted by the standard:

• applying a single discount rate to a portfolio of leases with reasonably similar characteristics

• accounting for operating leases with a remaining lease term of less than 12 months as at April 01, 2019 as short-term leases

• excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application, and

• elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Company relied on its assessment made applying Ind AS - 17 and Appendix C to Ind AS - 17, Determining whether an Arrangement contains a Lease.

• The Company’s significant leasing arrangements, are in respect of land, residential flats, office premises, plant and machinery and equipment taken on lease. The arrangements range, (i) for land between 20 years to 99 years & (ii) for other than land between 11 months to 10 years generally, and are usually renewable by mutual consent on mutually agreeable terms or can be terminated at the option of the Company during the tenure of the lease term. Further the Company has not entered into any material financial lease. Accordingly there were no future minimum lease payments under non-cancellable operating leases required to be disclosed under the previous standard Ind AS - 17.

A The Company has extension and termination options available in the lease contracts and the majority of extension and termination options are exercisable by the Company. Accordingly the Company on adoption of Ind AS 116 Leases has recognised such lease liabilities by measuring present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as April 01, 2019.

) Adjustments recognised in the balance sheet on April 01, 2019

The change in accounting policy affected the following items in the balance sheet on April 01, 2019:

• Right-of-use assets - increased by C188.32 Crore

• Prepayments - decreased by C161.69 Crore

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50.1 Defined contribution plan

The Company has defined contribution retirement benefit plans for its employees.

The Company’s contributions to provident fund, pension scheme and employee state insurance scheme are made to the relevant government authorities as per the prescribed rules and regulations. The Company’s superannuation scheme for qualifying employees is administered through its various superannuation trust funds. The Company’s contributions to the above defined contribution plans are recognised as employee benefit expenses in the statement of profit and loss for the year in which they are due. The Company has no further obligation in respect of such plans beyond the contributions made.

The Company’s contribution to provident, pension, superannuation funds and to employees state insurance scheme aggregating to C40.71 Crore (Previous year - C39.58 Crore) has been recognised in the statement of profit and loss under the head employee benefits expense [Refer note 39].

50.2 Defined benefit plans

(a) Gratuity

The Company operates through various gratuity trust, a plan, covering all its employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. The gratuity benefits payable to the employees are based on the tenure of employee’s service and last drawn salary at the time of leaving. The employees do not contribute towards this plan and the full cost of providing these benefits are met by the Company. In case of death while in service, the gratuity is payable irrespective of vesting.

The Company makes annual contribution to the gratuity schemes administered by the Life Insurance Corporation of India through its various Gratuity Trust Funds. The liability in respect of plan is determined on the basis of an actuarial valuation.

(b) Risk exposure to defined benefit plans

The plans typically expose the Company to actuarial risks such as: asset volatility, interest rate risk, longevity risk and salary risk as described below:

Asset volatility

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on Indian government securities; if the return on plan asset is below this rate, it will create a plan deficit.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation was carried out at March 31, 2021. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

(f) Category wise plan assets

Contributions to fund the obligations under the gratuity plan are made to the Life Insurance Corporation of India.

(g) Sensitivity analysis

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis given below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

The leave obligation covers the Company''s liability for sick and earned leave. Under these compensated absences plans, leave encashment is payable to all eligible employees on separation from the Company due to death, retirement or resignation; at the rate of daily last drawn salary, multiplied by leave days accumulated as at the end of relevant period. Refer notes 33 and 39 for the leave encashment provision / change in the balance sheet and statement of profit and loss.

The Company manages its capital structure in a manner to ensure that it will be able to continue as a going concern while optimising the return to stakeholders through the appropriate debt and equity balance.

The Company''s capital structure is represented by equity (comprising issued capital, retained earnings and other reserves as detailed in notes 23,24) and debt (borrowings as detailed in note 25).

The Company''s management reviews the capital structure of the Company on an annual basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital. The Company''s plan is to ensure that the gearing ratio (debt equity ratio) is well within the limit of 2:1.

(c) Fair value measurement

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:

Level 1 : I nputs are Quoted (unadjusted) market prices in active markets for identical assets or liabilities. This includes quoted equity instruments, investments in mutual funds that have quoted price.

Level 2 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. This includes unquoted floating and fixed rate borrowing.

Level 3 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. This includes unquoted equity shares, loans, security deposits, investments in Debentures, floating rate borrowings.

The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets

and liabilities that are not measured at fair value on a recurring basis (but fair value disclosures are required) :

The Company''s principal financial liabilities, comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations, routine and projects capital expenditure. The Company''s principal financial assets include loans, advances, trade and other receivables and cash and cash equivalents that derive directly from its operations.

The Company''s activities expose it to a variety of financial risks viz foreign currency risk, commodity price risk, interest rate risk, credit risk, liquidity risk etc. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. The Company''s senior management oversees the management of these risks. It advises on financial risks and the appropriate financial risk governance framework for the Company.

Foreign currency risk

The Company is exposed to foreign currency risks arising from various currency exposures, primarily with respect to the USD and EURO. Foreign currency risks arise from future commercial transactions and recognised assets and liabilities, when they are denominated in a currency other than Indian Rupee.

The Company''s exposure with regards to foreign currency risk which are not hedged are given below. However, these risks are not significant to the company''s operation and accordingly sensitivity analysis is not given.

Commodity price risk

The commodity exposure is mainly on account of fuel, a substantial part of which is a pass through cost and hence the commodity price exposure is not likely to have a material financial impact on the Company.

The Company has exposure to USD / INR exchange rate arising principally on account of import of LNG and import of coal. The extant tariff regulations do not permit the cost of hedging such exposure as a cost to be passed through to the off-takers / beneficiaries. As a result, the Company does not follow a policy of hedging such exposures and actual rupee costs of import of fuel are substantially passed on to the off-takers / consumers, because of which such commodity price exposure is not likely to have a material financial impact on the Company.

Interest rate risk

Most of the Company''s borrowings are on a floating rate of interest. The Company has exposure to interest rate risk, arising principally on changes in Marginal Cost of Funds based Lending Rate (MCLR). The Company uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like non-convertible debentures and short term credit lines besides internal accruals.

(1) Exposures to credit risk

The Company is exposed to the counterparty credit risk arising from the possibility that counterparties might fail to comply with contractual obligations. This exposure may arise with regard to unsettled amounts.

(2) Credit risk management

Credit risk is managed and limited in accordance with the type of transaction and the creditworthiness of the counterparty. The Company has established criteria for admission, approval systems, authorisation levels, exposure measurement methodologies, etc. The concentration of credit risk is limited due to the fact that the customer base is large. None of the customers accounted for more than 10% of the receivables and revenue for the year ended March 31, 2021 and March 31, 2020. The Company is dependent on the domestic market for its business and revenues.

The Company''s credit policies and practices with respect to distribution areas are designed to limit credit exposure by collecting security deposits prior to providing utility services or after utility service has commenced according to applicable regulatory requirements. In respect to generation business, Company generally has letter of credits / bank guarantees to limit its credit exposure.

(3) Other credit enhancements

The Company does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets.

(4) Age of receivables and expected credit loss

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 experienced and adjusted for forward- looking information. The expected credit loss allowance is based on ageing of the days the receivables are due.

The concentration of credit risk is very limited due to the fact that the large customers are mainly government entities and remaining customer base is large and widely dispersed and secured with security deposit.

Other financial assets:

The Company is having balances in cash and cash equivalents, term deposits with banks, Inter corporate deposits, Loans to related parties, investments in government securities and investment in mutual funds. With respect to investments, the Company limits its exposure to credit risk by investing in liquid securities with counterparties depending on their Composite Performance Rankings (CPR) published by CRISIL. The Company''s investment policy lays down guidelines with respect to exposure per counterparty, rating, processes in terms of control and continuous monitoring. The Company therefore considers credit risks on such investments to be negligible. Loans receivable from related parties have negligible credit risk and hence no risk of default is perceived on them.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are required to be settled by delivering the cash or another financial asset. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and unused borrowing facilities, by continuously monitoring projected / actual cash flows.

Maturities of financial liabilities:

The Company''s remaining contractual maturity for its financial liabilities with agreed repayment periods is given below. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.

The spread of COVID-19 pandemic had impacted the demand for electricity and collection of electricity bills from consumers during the first half of the current year. Gradual revival of the economy has resulted in an increase in demand for electricity and the measures taken by the Company to recover the dues, has improved the collection efficiency and consequently there is a reversal of past provision for doubtful debts made in earlier periods in the distribution franchisee business.

The Company has considered the all possible impact of COVID-19 pandemic including the second wave of COVID-19 in India in preparation of these standalone financial statements for the year ended March 31, 2021. The Company has made detailed assessment of its liquidity position, recoverability of carrying values of its financial and non-financial assets and impact on revenues and believes that there is no material adjustments required to be made in the financial statements for the year ended March 31, 2021. Management will continue to monitor any material changes to future economic conditions and the impact thereof on the Company.

NOTE 60: PROVISION FOR ONEROUS CONTRACTS

The Company has a provision of C162.80 Crore (March 31, 2020 - C161.78 Crore) in respect of certain onerous contracts towards potential damages and other project related costs, arising from expected delays or failure to set up certain wind power generation capacities, awarded to the Company in a prior period under a competitive bidding process. The expected outflow will be determined at the time of final resolution of the matter.

NOTE 61: GOVERNMENT GRANT

(a) Nature of government grant

Ministry of Power, Government of India (GoI), had introduced the Accelerated Power Development & Reforms Programme (APDRP) to achieve reduction in AT&C losses, to strengthen the T&D network and to ensure reliable and quality power supply with adequate consumer satisfaction. The projects approved for financing under the programme are eligible for a grant and soft loan each equivalent to 25% of the project cost from the GoI. The Balance 50% was required to be funded by the Company. There are no unfulfilled conditions or other contingencies attached to these grants.

The National Company Law Tribunal (NCLT) vide its Order dated December 17, 2020, has sanctioned the Scheme of Arrangement (“the Scheme”) for transfer and vesting of Cable Business Undertaking (“CBU”) of the Company, on a going concern basis by way of slump sale, to TCL Cables Private Limited a wholly owned subsidiary of the Company, under sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The certified copy of the said order has been filed with Registrar of Companies on January 15, 2021 (“Effective Date'''') and the Scheme is legally effective from April 01, 2020 (“Appointed Date”). Accordingly, the effect of the Scheme has been given in the financial statements for the year ended March 31, 2021 with effect from the Appointed Date.

The CBU had a book value (net of related liabilities) of C249.68 Crore (Refer point (b) below) which has been transferred under the Scheme for a lump sum consideration of C256.95 Crore based on the report of independent valuer, adjusted for working capital adjustments as per the Scheme. The surplus of consideration over book value of C7.27 Crore has been included in Other Income for the financial year ended March 31, 2021.

The Indian Parliament has approved the Code on Social Security, 2020 (“Code”) which may likely impact the obligations of the Company for contribution to employees'' provident fund and gratuity. The effective date from which the Code is applicable and the rules to be framed under the Code are yet to be notified. In view of this, impact if any, of the change will be assessed and accounted in the period in which the Code and the rules thereunder are notified.

NOTE 64: APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved for issue by the board of directors on May 20, 2021.



Mar 31, 2019

NOTE 1: PROPERTY, PLANT AND EQUIPMENT (Contd.)

Footnotes:

1 Assets pledged as security:

Entire movable and immovable properties (including capital work-in-progress) with the net carrying amount of Rs,17,353.90 Crore (31st March, 2018 - Rs,17,183.03 Crore) have been mortgaged and hypothecated to secure borrowings of the Company [Refer note 22].

2 Capital commitment:

Refer note 44(c) for disclosure of contractual commitments for the acquisition of property, plant and equipment.

3 Adjustments during the year include capitalization of borrowing costs of ''7.28 Crore (Previous year - Rs,5.77 Crore), which are directly attributable to purchase / construction of qualifying assets in accordance with Ind AS - 23 “Borrowing Costs”.

4 Capital work-in-progress include borrowing costs of Rs,2.67 Crore (31st March, 2018 - ''0.71 Crore), which are directly attributable to purchase / construction of qualifying assets in accordance with Ind AS - 23 “Borrowing Costs.

5 The weighted average rate for capitalization of borrowing cost relating to general borrowing is 8.68% (Previous year 8.55%).

6 Additions to plant and machinery includes capitalization of directly attributable costs incurred by the Company under various headings.

7 Refer note 41(1) for impairment assessment of DGEN power plant.

8 Pro-rata cost of assets owned jointly with Torrent Pharmaceuticals Limited, a fellow subsidiary are as under:

Outstanding at the end of the year 48,06,16,784 48,06,16,784 2 . 25,74,22,311 equity shares (25,74,22,311 equity shares as at 31st March, 2018) of Rs,10 each fully paid up are held by the Parent Company - Torrent Private Limited.

3. Terms / Rights attached to equity shares :

The Company has only one class of equity shares having par value of Rs,10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

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 preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Footnotes:

1. Securities premium:

Securities premium reflects issuance of the shares by the Company at a premium, whether for cash or otherwise i.e. a sum equal to the aggregate amount of the premium received on shares is transferred to a “securities premium account” as per the provisions of the Companies Act, 2013. The reserve can be utilized in accordance with the provisions of the Act.

2. Debenture redemption reserve:

The Company has issued redeemable non-convertible debentures. Consequently, the Company is required under the Companies (Share capital and Debentures) Rules, 2014 (as amended), to create Debenture redemption reserve (DRR), equal to 25% of the value of debentures, out of profits of the Company available for payment of dividend. The Company creates DRR, for the required amount, over the tenure of the debentures, before redemption begins.

3. Contingency reserve:

As per the provisions of GERC MYT Regulations read with Tariff orders passed by GERC, the Company being a Distribution Licensee makes an appropriation to the contingency reserve to meet with certain exigencies. Investments in Bonds issued by Government of India have been made against such reserve.

4. Special reserve:

As per MYT Regulations (2007), the Company has created a reserve in FY 2011-12 and FY 2012-13, which represents one third amount of controllable gain shall be retained in a special reserve by the Generating Company or Licensee for the purpose of absorbing the impact of any future losses on account of controllable factors.

5. General reserve:

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. The general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income.

6. Retained earnings:

The retained earnings reflect the profit of the company earned till date net of appropriations. The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the balance in this reserve, after considering the requirements of the Companies Act, 2013.

1) DGEN Power Plant

Property, Plant & Equipment (“PPE”) includes carrying amount of Rs,4,365 Crore pertaining to 1,200 MW DGEN Mega Power Project located at Dahej, India (“DGEN”). DGEN started commercial operations from November 2014 (“COD”). Due to various factors such as unavailability of domestic gas, high prices of imported gas and non-availability of power purchase agreements DGEN was not operated after COD, except for intermittent periods during FY 2015-16. During the periods of non-operation, DGEN was maintained in cold standby mode for immediate start-up, as and when required.

In view of above conditions, the Company carried out an assessment to test whether the carrying amount as at 31st March, 2019 of PPE of Rs,4,365 Crore in respect of DGEN was required to be impaired in accordance with Indian Accounting Standard 36 (“Ind AS 36”). The assessment was carried out with the help of an external valuer (“expert”). The expert estimated value-in-use by adopting discounted cash flow method for the balance useful life of the DGEN project as at 31st March, 2019 under two scenarios i.e the management case and an alternate case by taking varied sets of assumptions reflective of likely future operating scenarios. The value in use in both the scenarios is higher than the carrying amount of the PPE pertaining to DGEN and accordingly no impairment provision is considered necessary as at 31st March, 2019.

The assessment of value-in-use involved several key assumptions including expected demand, future price of fuel, expected tariff rates for electricity, discount rate, exchange rate and current electricity market scenario which the management considered reasonable based on past trends and the current and likely future state of the industry. Management intends to review such assumptions periodically to factor updated information based on events or changes in circumstances in order to make fresh assessment of impairment, if any. Changes in such key assumptions in future may have a material adverse impact on the value-in-use.

2) Investment in Torrent Pipavav Generation Limited

Torrent Pipavav Generation Limited (“TPGL”), a subsidiary of the Company, had paid for acquisition of land in Amreli, Gujarat for the purpose of developing a coal based power plant of 1,000 MW. Due to non-availability of fuel linkage, the Government of Gujarat vide its letter dated 6th December, 2017 has communicated that the said project may not be developed and accordingly, the joint venture between Torrent Power Limited and Gujarat Power Corporation Limited (GPCL) is intended to be dissolved. The cost of land would be reimbursed through disposal by state government. With reference to this, in the month of March 2019, GPCL has written a letter to Collector, Amreli stating that land is surrendered to the Government and requested Energy and Petroleum Department, Government of Gujarat to take further action in the matter. The management has made an impairment assessment of the land valuation by comparing the carrying value of such land in the books with the stamp value as prescribed by the Superintendent of Stamps, Gandhinagar, Gujarat, on the basis of which it has been concluded that there is no impairment. The recovery of the amount invested as equity and loan aggregating Rs,105.12 Crore is dependent on the ability of the Government to find a buyer for the land.

(a) Contribution received from consumers

(1) Nature of contribution received from consumers

Contributions received from consumers towards property, plant and equipment has been recognized as deferred revenue.

(b) Government grant

(1) Nature of government grant

Ministry of Power, Government of India (GoI), had introduced the Accelerated Power Development & Reforms Programme (APDRP) to achieve reduction in AT&C losses, to strengthen the T&D network and to ensure reliable and quality power supply with adequate consumer satisfaction. The projects approved for financing under the programme are eligible for a grant and soft loan each equivalent to 25% of the project cost from the GoI. The Balance 50% was required to be funded by the Company. There are no unfulfilled conditions or other contingencies attached to these grants.

The Company is in the process of evaluating the impact of the Supreme Court (“SC”) judgment dated 28th February, 2019 in the case of Regional Provident Fund Commissioner (II) West Bengal v/s Vivekananda Vidyamandir and Others, in relation to non-inclusion of certain allowances within the definition of “basic wages” of the relevant employees for the purposes of determining contribution to Provident Fund (“PF”) under the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952. There are interpretation issues relating to the said SC judgment and review petitions are pending before the SC in this matter. In the assessment of the management, the aforesaid matter is not likely to have a significant impact and accordingly, no provision has been made in the financial statements.

Footnote:

In respect of the above, the expected outflow will be determined at the time of final resolution of the dispute / matters. No reimbursement is expected._

iii) Notation agreement with lender for short term finance facilities obtained by associates :

During the year, the Company has entered into an agreement to novate with a lender in respect of two short term finance facilities obtained by two of its associates against which an aggregate amounts of Rs,98.00 Crore is outstanding as on 31st March, 2019. As per the terms of the said agreement, in certain circumstances, the Company will be obligated to purchase the outstanding loan balances if the right is so exercised by the lender, as per the terms of the agreement._

1. Other than above, the Company has not given any loans or advances in the nature of loan to any of its subsidiaries and associates or firms / companies, in which Directors are interested.

2. The above loans were given to the subsidiaries for their normal business activities.

The Company is engaged in the business of providing infrastructural facilities as per Section 186 (11) of the Act. Accordingly, disclosure under Section 186 (4) of the Act, is not applicable to the Company.

NOTE 46: MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 (MSMED ACT, 2006)

Micro and small enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) have been determined based on the information available with the Company and the required disclosures are given below:

The Company’s significant leasing arrangements, other than land, are in respect of residential flats, office premises, plant and machinery and equipment taken on lease. The arrangements range between 11 months and 10 years generally and are usually renewable by mutual consent on mutually agreeable terms. Under these arrangements, generally refundable interest free deposits have been given. The Company has not entered into any material financial lease. The Company does not have any non-cancellable lease.

Leasing arrangements with respect to land range between 25 years to 99 years.

NOTE 7: EMLOYEE BENEFIT PLANS 48.1 Defined contribution plan:

The Company has defined contribution retirement benefit plans for its employees.

The Company’s contributions to provident fund, pension scheme and employee state insurance scheme are made to the relevant government authorities as per the prescribed rules and regulations. The Company’s superannuation scheme for qualifying employees is administered through its various superannuation trust funds. The Company’s contributions to the above defined contribution plans are recognized as employee benefit expenses in the statement of profit and loss for the year in which they are due. The Company has no further obligation in respect of such plans beyond the contributions made.

The Company’s contribution to provident, pension and superannuation funds aggregating to ''35.77 Crore and to employees state insurance scheme of Rs,1.29 Crore (Previous year - ''33.48 Crore & Rs,1.33 Crore respectively) has been recognized in the statement of profit and loss under the head employee benefits expense [Refer note 37].

8 Defined benefit plans:

(a) Gratuity

The Company operates a gratuity plan covering all its employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. The gratuity benefits payable to the employees are based on the tenure of employee’s service and last drawn salary at the time of leaving. The employees do not contribute towards this plan and the full cost of providing these benefits are met by the Company. In case of death while in service, the gratuity is payable irrespective of vesting.

The Company makes annual contribution to the gratuity schemes administered by the Life Insurance Corporation of India through its various Gratuity Trust Funds. The liability in respect of plan is determined on the basis of an actuarial valuation.

(b) Risk exposure to defined benefit plans

The plans typically expose the Company to actuarial risks such as: asset volatility, interest rate risk, longevity risk and salary risk as described below :

Asset volatility

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on Indian government securities; if the return on plan asset is below this rate, it will create a plan deficit.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

NOTE 48: EMLOYEE BENEFIT PLANS (Contd.)

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation was carried out at 31st March, 2019. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

(e) Expenses recognized for defined benefit plan and movement of plan assets and liabilities

Following are the amounts recognized in statement of profit and loss, other comprehensive income, movement in defined benefit liability and movement in plan assets:

(f) Category wise plan assets

Contributions to fund the obligations under the gratuity plan are made to the Life Insurance Corporation of India.

(g) Sensitivity analysis

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis given below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

(h) The weighted average duration of the gratuity plan based on average future service is 13 years (Previous year -13 years).

NOTE 9: EMLOYEE BENEFIT PLANS (Contd.)

(i) Expected contribution to the plan for the next annual reporting period is Rs,18.34 Crore (Previous year - Rs,11.04 Crore).

(j) Cash flow projection from the fund

Projected benefits payable in future years from the date of reporting

10. Other long-term employee benefit obligations :

The lease obligation covers the Company’s liability for sick and earned leave. Under these compensated absences plans, leave encashment is payable to all eligible employees on separation from the Company due to death, retirement or resignation; at the rate of daily last drawn salary, multiplied by leave days accumulated as at the end of relevant period. Refer notes 25, 31 and 37 for the leave encashment provision / change in the balance sheet and statement of profit and loss.

The Chief Operating Decision Maker (CODM) evaluates the Company’s performance and applies the resources to whole of the Company’s business viz. “Generation, Transmission and Distribution of Power” as an integrated utility. Further, the Company’s cable business is not a reportable segment in terms of revenue, profit, assets and liabilities. Hence the Company does not have any reportable segment as per Ind AS - 108 “Operating Segments.

NOTE 11: FINANCIAL INSTRUMENTS AND RISK REVIEW (a) Capital management

The Company manages its capital structure in a manner to ensure that it will be able to continue as a going concern while optimizing the return to stakeholders through the appropriate debt and equity balance.

The Company’s capital structure is represented by equity (comprising issued capital, retained earnings and other reserves as detailed in notes 20, 21) and debt (borrowings as detailed in note 22).

The Company’s management reviews the capital structure of the Company on an annual basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital. The Company’s plan is to ensure that the gearing ratio (debt equity ratio) is well within the limit of 2:1.

Loan covenants

The company has complied with financial covenants specified as per the terms of borrowing facilities.

(c) Fair value measurement

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:

Level 1 : Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

The following table summarizes financial assets and liabilities measured at fair value on a recurring basis and financial assets and liabilities that are not measured at fair value on a recurring basis (but fair value disclosures are required) :

(d) Financial risk management objectives

The Company’s principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations, routine and projects capital expenditure. The Company’s principal financial assets include loans, advances, trade and other receivables and cash and cash equivalents that derive directly from its operations.

The Company’s activities expose it to a variety of financial risks viz foreign currency risk, commodity price risk, interest rate risk, credit risk, liquidity risk etc. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Company’s senior management oversees the management of these risks. It advises on financial risks and the appropriate financial risk governance framework for the Company.

Foreign currency risk

The Company is exposed to foreign currency risks arising from various currency exposures, primarily with respect to the USD and EURO. Foreign currency risks arise from future commercial transactions and recognized assets and liabilities, when they are denominated in a currency other than Indian Rupee.

The Company’s exposure with regards to foreign currency risk which are not hedged are given below. However, these risks are not significant to the company’s operation and accordingly sensitivity analysis is not given.

Commodity price risk

The commodity exposure is mainly on account of fuel, a substantial part of which is a pass through cost and hence the commodity price exposure is not likely to have a material financial impact on the Company.

The Company has exposure to USD / INR exchange rate arising principally on account of import of LNG and import of coal. The extant tariff regulations do not permit the cost of hedging such exposure as a cost to be passed through to the off-takers / beneficiaries. As a result, the Company does not follow a policy of hedging such exposures and actual rupee costs of import of fuel are substantially passed on to the off-takers / consumers, because of which such commodity price exposure is not likely to have a material financial impact on the Company.

Interest rate risk

Most of the Company’s borrowings are on a floating rate of interest. The Company has exposure to interest rate risk, arising principally on changes in Marginal Cost of Funds based Lending Rate (MCLR). The Company uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like non-convertible debentures and short term credit lines besides internal accruals.

Interest rate risk sensitivity:

The below mentioned sensitivity analysis is based on the exposure to interest rates for floating rate borrowings. For this it is assumed that the amount of the floating rate liability outstanding at the end of the reporting period was outstanding for the whole year. If interest rates had been 50 basis points higher or lower, other variables being held constant, following is the impact on profit before tax .

Credit risk

Trade receivables

(1) Exposures to credit risk:

The Company is exposed to the counterparty credit risk arising from the possibility that counterparties (primarily trade receivables, suppliers, contractors etc.) might fail to comply with contractual obligations. This exposure may arise with regard to unsettled amounts and the cost of substituting products and services that are not provided.

(2) Credit risk management:

Credit risk is managed and limited in accordance with the type of transaction and the creditworthiness of the counterparty. The Company has established criteria for admission, approval systems, authorization levels, exposure measurement methodologies, etc. The concentration of credit risk is limited due to the fact that the customer base is large. None of the customers accounted for more than 10% of the receivables and revenue for the year ended 31st March, 2019 and 31st March, 2018. However, the Company is dependent on the domestic market for its business and revenues.

The Company’s credit policies and practices with respect to distribution areas are designed to limit credit exposure by collecting security deposits prior to providing utility services or after utility service has commenced according to applicable regulatory requirements. In respect to generation business, Company generally has letter of credits / bank guarantees to limit its credit exposure.

(3) Other credit enhancements

The Company does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets.

(4) Age of receivables and expected credit loss

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 experienced and adjusted for forward- looking information. The expected credit loss allowance is based on ageing of the days the receivables are due.

The age of receivables and provision matrix at the end of the reporting period is as follows.

Other financial assets

The Company is having balances in cash and cash equivalents, term deposits with banks, investments in government securities and investment in mutual funds. With respect to investments, the Company limits its exposure to credit risk by investing in liquid securities with counterparties depending on their Composite Performance Rankings (CPR) published by CRISIL. The Company’s investment policy lays down guidelines with respect to exposure per counterparty, rating, processes in terms of control and continuous monitoring. The Company therefore considers credit risks on such investments to be negligible.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are required to be settled by delivering the cash or another financial asset. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and unused borrowing facilities, by continuously monitoring projected / actual cash flows.

Maturities of financial liabilities

The Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods is given below. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest (accrued upto 31st March, 2019) and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.

The Company has adopted Ind AS 115, Revenue from Contracts with Customers, from 1st April, 2018. The adoption has resulted changes in accounting policies and adjustment to the amounts recognized in the financial statements. Prior to adoption of Ind AS 115, the company had been recognizing the Fuel and Power Purchase Price Adjustment (“FPPPA’) claims as and when approved by the regulatory authorities and the truing up adjustment claims as and when these were billed to consumers subsequent to approval by the regulatory authorities.

The Company has adopted Ind AS 115 retrospectively with the cumulative effect of initial application recognized in the opening retained earnings on 1st April, 2018. The Company has in the current year recognized revenue on FPPPA claims and other true up adjustments, as per the applicable tariff regulations, management’s probability estimate and the past trends of approval, by applying the guidance on variable consideration under Ind AS 115.

The Company has not recognized those truing up adjustment claims which are subject of dispute and for which the company is in appeal with regulatory authorities.

Due to the application of Ind AS 115, as at 1st April, 2018, retained earnings are higher by Rs,649.42 Crore, unbilled revenue higher by Rs,63715 Crore and sundry payables lower by Rs,12.27 Crore.

Consequent to adoption of Ind AS 115, revenue from operations and profit for the year ended 31st March, 2019, are higher by ''320.00 Crore. Accordingly, as at 31st March, 2019, retained earnings are higher by Rs,969.42 Crore, unbilled revenue higher by Rs,955.71 Crore and sundry payables lower by Rs,13.71 Crore.

NOTE 12:

The figures for the previous year have been regrouped / recast, wherever necessary, to make them comparable with the figures for the current year.

NOTE 13: APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved for issue by the board of directors on 15th May, 2019.


Mar 31, 2017

NOTE 1: CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the course of applying the policies outlined in all notes under note 4 above, the management of the Company are required to make judgments, estimates and assumptions about the carrying amount 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.

Such estimates and associated assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized 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 period, if the revision affects current and future periods.

2 Regulatory matters:

(i) Regulatory deferral accounts1

Ind AS - 114 “Regulatory Deferral Accounts” permits the Company to apply the requirements of this standard in its first Ind AS financial statements if and only if it conducts rate-regulated activities and recognized amounts that qualify as regulatory deferral account balances in its financial statements in accordance with its previous GAAP. As the Company had consistently elected not to recognize the regulatory deferral balances in its previous GAAP, the requirement of IND AS 114 does not apply to the Company.

(ii) Depreciation rates, depreciation method and residual value of property, plant and equipment

In terms of Part B of Schedule II of the Companies Act, 2013, the Company has followed the depreciation rates, depreciation method and residual value of the items of property, plant and equipment as notified by the respective regulators in accordance with the Electricity Act, 2003 with respect to the assets falling under regulated business.

(iii) Security deposits

Considering the historical experience and practical expediency, the Company has exercised its judgment on timing of settlement of security deposit collected from the customers and has accordingly classified the material portion of security deposit as non-current liability.

(iv) Renewable power obligation

The Company has substantially complied with the renewable power obligation, as prescribed by the regulatory authority and do not expect any implication, as in the past.

(v) Environment clearance riski

AMGEN plant is using coal as a fuel. Ministry of Environment Forest and Climate Change (MOEFCC) has made the emission norms for all thermal power plants significantly stringent which would increase the cost of compliance, which cost is expected to be pass through.

3 Property, plant and equipment:

(i) Service concession arrangements

The Company has assessed applicability of Appendix A of Ind AS - 11 “Service Concession Arrangements” with respect to its distribution and transmission assets portfolio. In assessing the applicability, the Company have exercised judgment in relation to the provisions of the Electricity Act, 2003, transmission / distribution license and / or agreements etc. Based on such assessment, it has concluded that Appendix A of Ind AS 11 is not applicable.

(ii) Impairment of property plant and equipment2

At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Recoverable amount of property plant and equipment is the higher of its fair value less costs of disposal and value in use. Value in use is usually determined on the basis of discounted estimated future cash flows. This involves management estimates on anticipated PLF, fuel availability at economical rates, economic and regulatory environment, discount rates and other factors. Any subsequent changes to cash flow due to changes in the above mentioned factors could impact the carrying value of assets.

4 Impairment of financial assets:

(i) Trade receivables2

The Company estimates the credit allowance as per practical expedient based on historical credit loss experience as enumerated in note 67.

(ii) Impairment of investments2

At the end of each reporting period, the Company reviews the carrying amounts of it’s investments when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.

5 Taxation:

(i) Current taxi

The Company has treated certain expenditure as being deductible for tax purposes. However, the tax legislation in relation to this expenditure is not clear and the Company has applied their judgment and interpretation for the purpose taking their tax position.

(ii) Deferred tax assets2

Deferred tax assets are recognized for unused tax losses / credits to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

6 Control assessment:

Control over Torrent Power Grid Limited (“TPGL”)i

The Company has shareholders agreement with Power Grid Corporation of India Limited (PGCIL) wherein the Company holds 74% whilst PGCIL holds 26% of equity shares of Torrent Power Grid Limited (TPGL). As per the shareholders agreement, PGCIL has certain protective rights. PGCIL has also certain participative rights which, the Company believes, are not substantive considering the operation of TPGL and the regulatory environment in which it operates. Consequently, the Company has considered TPGL as it’s subsidiary.

7 Contingencies:

Contingent liabilitites2

In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Potential liabilities that are possible but not probable of crystallizing or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not recognized. Potential liabilities that are remote are neither recognized nor disclosed as contingent liability. The management decides whether the matters needs to be classified as ‘remote’, ‘possible’ or ‘probable’ based on expert advice, past judgments, experiences etc.

The Company has agreement with one of its vendor for the gas supply where it has not complied with the term and conditions with regards to procurement of gas. Considering the industry issue and past experience, the Company believes that the liability with regard to this matter is remote.

8 Employee benefit plans:

Defined benefit plans and other long-term employee benefits2

The present value of obligations under defined benefit plan and other long term employment benefits is determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual development in the future. These include the determination of the discount rate, future salary escalations, attrition rate and mortality rates etc. Due to the complexities involved in the valuation and its long term nature, these obligations are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

9 Long term supply and long term maintenance accruals2:

The Company has applied it’s reasonable estimate for operating parameters and price escalations linked to indices for the purpose of determining the accrual under long term supply and long term maintenance contracts.

1 Critical accounting judgments

2 Key sources of estimation uncertainties

Footnotes:

1. Assets pledged as security:

Entire movable and immovable properties with a carrying amount of ''16,911.44 Crore (31st March, 2016 - ''15,101.86 Crore,1st April, 2015 - ''14,923.90 Crore) have been mortgaged and hypothecated to secure borrowings of the Company (note 24).

2. Capital work in progress:

Capital work-in-progress includes the amount of expenditure recognized as pre-operative expenditure in the course of construction of property, plant and equipment of Rs,2.18 Crore (31st March, 2016 - Rs,5.61 Crore, 1st April, 2015 - Rs,2.60 Crore) (note 49).

3. Capital commitment:

Refer note 46 (c) for disclosure of contractual commitments for the acquisition of property, plant and equipment.

4. Borrowing cost capitalization:

Adjustments during the year include borrowing costs of Rs,4.50 Crore (Previous year - Rs,2.88 Crore), which are directly attributable to purchase / construction of qualifying assets in accordance with Ind AS - 23 “Borrowing Costs.

5. Capital work-in-progress include borrowing costs of Rs,2.42 Crore (31st March, 2016- Rs,0.05 Crore and 1st April, 2015 Rs,0.56 Crore), which are directly attributable to purchase / construction of qualifying assets in accordance with Ind AS - 23 “Borrowing Costs.

6. Foreign currency exchange difference capitalisation:

Adjustments during the year include Rs,0.90 Crore gain (Previous year - Rs,22.10 Crore loss) on account of foreign currency exchange difference.

7. Adjustments during the year include financial compensation received from the EPC contractor towards discharging the EPC contractor from the obligation to attend, complete or resolve the open points and the related warranty claims in terms of the original contract Rs, Nil (Previous year - Rs,88.29 Crore).

8. Adjustments during the year include recovery made from a contractor towards settlement Rs,0.28 Crore (Previous yearRs, Nil)

9. Land includes freehold land amounting to Rs,0.04 Crore (31st March, 2016 - Rs,0.04 Crore, 1st April, 2015 - Rs,0.04 Crore) for which documentations are in progress.

2. 25,74,22,311 equity shares (25,74,22,311 equity shares as at 31st March, 2016 and 25,24,38,986 equity shares as at 1st April, 2015) of Rs,10 each fully paid up are held by the Parent Company - Torrent Private Limited.

3. Terms / Rights attached to equity shares :

The Company has only one class of equity shares having par value of Rs,10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees.The dividend, if any, proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

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 preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

5. Aggregate number of equity shares allotted as fully paid up pursuant to contract(s) without payment being received in cash:

During FY 2015-16, the Company has allotted 81,68,476 equity shares of Rs,10 each at par to the shareholders of Torrent Cables Limited pursuant to the scheme of amalgamation of Torrent Energy Limited and Torrent Cables Limited with Torrent Power Limited as approved by the HonRs,ble Gujarat High Court vide order dated 13th August, 2015.

6. Distributions made and proposed:

The amount of per share dividend recognized as distributions to equity shareholders for the period ended 31st March, 2017 is Rs, Nil (Previous year- Rs,6.00) per equity share.

The Board of Directors at its meeting held on 23rd May, 2017 have recommended a dividend of 22.00% (Rs,2.20 per equity share of par value Rs,10 each).The proposal is subject to the approval of shareholders at the Annual General Meeting and if approved, would result in a cash outflow of approximately Rs,12726 Crore (inclusive of dividend distribution tax of Rs,21.53 Crore)._

Footnotes:

1. Share capital suspense:

81,68,476 equity shares of Rs,10/- each allotted as fully paid-up to the shareholders of Torrent Cables Limited pursuant to the scheme of amalgamation without payment being received in cash.

2. Securities premium reserve:

Securities premium reserve reflects issuance of the shares by the Company at a premium, whether for cash or otherwise i.e. a sum equal to the aggregate amount of the premium received on shares is transferred to a “securities premium account” as per the provisions of the Companies Act, 2013. The reserve is utilised in accordance with the provisions of the Act.

3. Debenture redemption reserve (DRR):

The Company has issued redeemable non-convertible debentures. Consequently, the Company is required under the Companies (Share capital and Debentures) Rules, 2014 (as amended), to create DRR, equal to 25% of the value of debentures, out of profits of the company available for payment of dividend. The Company creates DRR, for the required amount, over the tenure of the debentures, before redemption begins.

4. Contingency reserve:

As per provisions of the GERC MYT Regulations read with Tariff orders passed by GERC, Distribution Licensee makes an appropriation to the contingency reserve to meet with certain exigencies. Investments in Bonds issued by Government of India has been made against such reserve.

5. Special reserve:

As per MYT Regulations (2007), one third amount of controllable gain shall be retained in a special reserve by the Generating Company or Licensee for the purpose of absorbing the impact of any future losses on account of controllable factors.

6. General reserve:

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. The general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income.

7. Retained earnings:

The same reflects surplus / deficit after taxes in the statement of profit and loss. The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the balance in this reserve, after considering the requirements of the Companies Act, 2013.

NOTE 10:

As per the consistent policy followed by the Company, it accounts for the truing-up adjustment claims as and when billed to the consumers. Hon’ble Gujarat Electricity Regulatory Commission (GERC) vide its Tariff Order dated 31st March 2016 has approved recovery of Regulatory Charge of 45 paisa / kWh to address the gap of earlier years for the Company’s distribution areas at Ahmadabad and Surat, against which, review petitions were filed. Subsequently, Hon’ble GERC had issued a Order dated 1st July 2016 revising the Regulatory Charge to 18 paisa / kWh and 17 paisa / kWh for Ahmadabad and Surat license area, respectively, with effect from 1st July, 2016 against which the Company had filed an appeal before Hon’ble Appellate Tribunal for Electricity (APTEL). The Hon’ble APTEL, vide judgment dated 30th March, 2017, has remanded back the matter to Hon’ble GERC for review of Tariff Order dated 31st March 2016 and directed to hear the review Petitions afresh and to pass appropriate order thereon. Pending further orders from Hon’ble GERC, the Company has continued to bill to the consumers the Regulatory Charge of 18 paisa / kWh and 17 paisa / kWh for Ahmadabad and Surat license area, respectively.

NOTE 11: OPERATING LEASE

The Company’s significant leasing arrangements, other than land, are in respect of residential flats, office premises, plant and machinery and equipment taken on lease. The arrangements range between 11 months and 10 years generally and are usually renewable by mutual consent on mutually agreeable terms. Under these arrangements, generally refundable interest free deposits have been given. The Company has not entered into any material financial lease. The Company does not have any non-cancellable lease.

Leasing arrangements with respect to land range between 25 years to 99 years generally.

NOTE 12: EMLOYEE BENEFIT PLANS 53.1 Defined contribution plan:

The Company operates defined contribution retirement benefit plans for all qualifying employees. The assets of the plans are held separately from those of the Company in funds under the control of trustees. Where employees leave the plans prior to full vesting of the contributions, the contributions payable by the Company are reduced by the amount of forfeited contributions.

The Company’s contribution to provident fund, superannuation fund and employee state insurance scheme are determined under the relevant schemes and / or statute and charged to the statement of profit or loss.

The Company’s contribution to provident fund and superannuation fund aggregating to Rs,31.44 Crore (Previous year -Rs,2760 Crore ) has been recognized in the statement of profit and loss under the head employee benefits expense.

13 Defined benefit plans:

(a) Gratuity

The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. The gratuity benefits payable to the employees are based on the employee’s service and drawn salary at the time of leaving. The employees do not contribute towards this plan and the full cost of providing these benefits are met by the Company. In case of death while in service, the gratuity is payable irrespective of vesting.

The Company makes annual contribution to the gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund. The liability in respect of plan is determined on the basis of an actuarial valuation.

(b) Risk exposure to defined benefit plans

The plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on Indian government securities; if the return on plan asset is below this rate, it will create a plan deficit.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out at 31st March, 2017. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

(g) Sensitivity analysis

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis given below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

(h) The weighted average duration of the gratuity plan based on average future service is 16 years (Previous year - 16 years).

(i) Expected contributions to the plan for the next annual reporting period is Rs,30.27 Crore.

(j) Cash flow projection from the fund

Projected benefits payable in future years from the date of reporting

53.3 Other long-term employee benefit obligations :

The lease obligation covers the Company’s liability for sick and earned leave. Under these compensated absences plans, leave encashment is payable to all eligible employees on separation from the Company due to death, retirement, superannuation or resignation; at the rate of daily salary, as per accumulation of leave days as at the end of relevant period. Refer note 27, 33 and 39 with respect to item of balance sheet and profit or loss where such provision / charge has been presented.

The Company does not have any dilutive potential ordinary shares and therefore diluted earnings per share is the same as basic earnings per share.

NOTE 14: IMPAIRMENT ASSESSMENT OF DGEN POWER PLANT

The Company has implemented the 1200 MW gas based power plant at Dahej (DGEN), which started its commercial operations from November 2014. In FY 15-16, the Company could operate the plant for intermittent periods and for the current period it did not operate the plant but maintained it in cold standby mode for immediate start-up, when required.

On account of supply exceeding the demand, there has been substantial reduction in the LNG prices all-over the world. The over-supply position in the world market is expected to continue as more LNG plants are being commissioned in coming 2 to 3 years and as global demand for LNG is expected to be subdued. With this scenario, both the issues relating to gas based power plants in terms of availability and affordability of gas are expected to be resolved to a large extent. Considering the above, the estimated value in use do not indicate any requirement for impairment provision in the carrying amount of the fixed assets of ''4,861.81 Crore of DGEN plant as at 31st March, 2017.

NOTE 15: OPERATING SEGMENT

The CODM evaluates the Company’s performance and applies the resources to its segment viz. “Generation, Transmission and Distribution of Power” Further, the Company’s cable business is not a reportable segment in terms of revenue, profit, assets and liabilities. Hence the Company does not have any reportable segment as per Ind AS - 108 “Operating Segments”

(a) Capital management

The Company manages its capital structure in a manner to ensure that it will be able to continue as a going concern while optimizing the return to stakeholders through the appropriate debt and equity balance.

The Company’s capital structure is represented by equity (comprising issued capital, retained earnings and other reserves as detailed in notes 22,23) and debt (borrowings as detailed in note 24).

The Company’s management reviews the capital structure of the Company on an annual basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital. The Company’s plan is to ensure that the gearing ratio (debt equity ratio) is well within the limit of 2:1.

(c) Financial risk management objectives

The Company’s principal financial liabilities, other than derivatives, comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations, routine and projects capital expenditure. The Company’s principal financial assets include loans, advances, trade and other receivables and cash and cash equivalents that derive directly from its operations.

The Company’s activities expose it to a variety of financial risks viz regulatory risk, interest rate risk, credit risk, liquidity risk etc. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The Company’s senior management oversees the management of these risks. It advises on financial risks and the appropriate financial risk governance framework for the Company.

Regulatory risk

The Company’s substantial operations are subject to regulatory interventions, introduction of new laws and regulations including changes in competitive framework. The rapidly changing regulatory landscape poses a risk to the Company. Also, in particular, the distribution segment lacks due recognition or incentives for its efficient operations in the current regulatory framework. Although, the regulator has approved revision in the Fuel and Power Purchase Price Adjustment (FPPPA) mechanism to allow the full recovery of increased power purchase cost and other expenses through true-up mechanism, yet the full recovery of such costs is getting delayed. Further, the issue of non-pass through of renewable energy certificate costs (to fulfil RPO obligation) through the FPPPA mechanism continues to burden the distribution business. All these issues lead to postponement of recovery of the costs, resulting into deferred recovery and carrying costs.

UNOSUGEN project was set up as an expansion to SUGEN Mega Power project. UNOSUGEN tariff has been determined by Central Electricity Regulatory Commission (CERC). However, such tariff is yet to be adopted by relevant regulatory authority pursuent to the electricity regulations.

The proposed segregation of carriage and content in the Electricity Amendment Bill, 2014 would bring about a substantial change in the way the distribution business is conducted, though not impacting the return on equity on the investments in the distribution infrastructure.

Fuel availability and affordability risk

Unavailability of domestic gas has been adversely affecting the Company’s gas based generation plants since 2012. Lower priority to power sector in the Gas Allocation Policy also poses risk to the Company. Earlier, due to higher cost of imported Liquid Natural Gas (LNG), there was unwillingness of long term buyers to off take power generated from such LNG. However, in the present scenario, the LNG prices have dropped significantly due to international gas glut. In spite of this, the gas based generation capacity of the Company could not be operated at the desired level due to lack of power demand. The Company has tied up its fuel requirements for the period April to December, 2017 for SUGEN plant and it is hopeful for the sustained availability of imported LNG at reasonable rates and increase in power demand due to various Government initiatives.

Foreign exchange risk

The Company is exposed to foreign exchange risks arising from various currency exposures, primarily with respect to the USD and EUR. Foreign exchange risks arise from future commercial transactions and recognized assets and liabilities, when they are denominated in a currency other than Indian Rupee.

The Company’s exposure with regards to foreign exchange risk which are not hedged are given in note 50. However, these risks are not significant to the company’s operation.

Interest rate risk

Most of the Company’s borrowings are on a floating rate of interest. The Company has exposure to interest rate risk, arising principally on changes in Marginal Cost of Funds based Lending Rate (MCLR). The Company uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like non-convertible debentures and short term credit lines besides internal accruals.

Interest rate risk sensitivity:

The below mentioned sensitivity analysis is based on the exposure to interest rates for floating rate borrowings. For this it is assumed that the amount of the floating rate liability outstanding at the end of the reporting period was outstanding for the whole year. If interest rates had been 50 basis points higher or lower, other variables being held constant, following is the impact on profit.

Credit risk

(1) Exposures to credit risk:

The Company is exposed to the counterparty credit risk arising from the possibility that counterparties (primarily trade receivables, suppliers. contractors etc.) might fail to comply with contractual obligations. This exposure may arise with regard to unsettled amounts and the cost of substituting products and services that are not provided.

(2) Credit risk management:

Credit risk is managed and limited in accordance with the type of transaction and the creditworthiness of the counterparty. The Company has established criteria for admission, approval systems, authorization levels, exposure measurement methodologies, etc. The concentration of credit risk is limited due to the fact that the customer base is large. None of the customers accounted for more than 10% of the receivables and revenue for the year ended 31st March, 2017 and 31st March, 2016. However, the Company is dependent on the domestic market for its business and revenues.

The Company’s credit policies and practices with respect to distribution areas are designed to limit credit exposure by collecting security deposits prior to providing utility services or after utility service has commenced according to applicable regulatory requirements. In respect to generation business, Company generally has letter of credits / bank guarantees to limit its credit exposure.

(3) Other credit enhancements

The Company does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets.

(4) Age of receivables and expected credit loss

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 experienced and adjusted for forward- looking information. The expected credit loss allowance is based on ageing of the days the receivables are due and the rates as given in the provision matrix.

The age of receivables and provision matrix at the end of the reporting period is as follows.

Liquidity risk

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

Liquidity table

The Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods is given below. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.

NOTE 16: FAIR VALUE MEASUREMENT AND RELATED DISCLOSURES

Fair value of the Company’s financial assets that are measured at fair value on a recurring basis:

Some of the Company’s financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are determined.

(b) Financial assets and liabilities at amortized cost

The carrying amounts of cash and cash equivalent, other bank balances, trade receivables, loans, other financial assets, current borrowings, trade payables, other financial liabilities are considered to be the same as their fair values, due to their short-term nature.

Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.

Closing balance as at 8th November, 2016 includes amount refunded by employees against advance given to them.

NOTE 17

Details of loans given, investments made and guarantee given covered u/s 186 (4) of the Companies Act, 2013 are given under the respective heads.

NOTE 18:

The figures for the previous year have been regrouped / reclassified, wherever necessary, to make them comparable with the figures for the current year.

Figures are rounded off to nearest lakh. Figures below ''50,000 are denoted by ‘*.

19 : Notes to reconciliations

(a) Under previous GAAP, proposed dividends and related dividend distribution tax are recognized as a provision in the year to which they relate, irrespective of when they are declared. Under Ind AS, dividends to shareholders declared after the end of the reporting period but before the financial statements are authorized for issue are not recognized as a liability at the end of the reporting period, but are disclosed separately in the notes. Accordingly, at the date of transition to Ind AS, a decrease to the extent of such proposed dividend has been recognized in short term provisions and adjusted against retained earnings.

(b) Under previous GAAP, upfront fees paid to the lenders is charged to statement of profit and loss as and when incurred. However, Ind AS - 109 “Financial instruments” requires long term debt to be recognized at amortized cost and upfront fees are charged on the basis of effective interest rate method. The difference resulting from the said treatment has been adjusted against retained earnings as at the date of transition.

(c) Under previous GAAP, deferred taxes were recognized for the tax effect of timing differences between accounting income and taxable income for the year i.e., income statement approach. However, under Ind AS - 12 “deferred taxes” are computed for temporary differences between the carrying amount of an asset or liability in the balance sheet and their respective tax base i.e. balance sheet approach. Further, deferred tax liability has been created on the fair value of the fixed assets taken over by the Company at the time of past business combination with a corresponding adjustment to retained earnings as at the date of transition.

(d) Under the previous GAAP, the Company had accounted for long term trade payables at the undiscounted value. In contrast, Ind AS requires that where the effect of time value of money is material, the amount of trade payables should be the present value of the amount expected to be required to settle the obligation. The difference arising out of such discounting as at the date of transition has been adjusted against retained earnings.

(e) The grant under the Accelerated Power Development and Reforms Programme (APDRP) of the Ministry of Power, Government of India, received by the Company was treated as capital receipt and accounted as capital reserve in previous GAAP. Depreciation on the related assets was also routed through such assets.

Under Ind AS, Government grants related to assets have been presented in the balance sheet only by setting up the grant as deferred revenue.

NOTE 20 : FIRST TIME IND AS ADOPTION RECONCILIATIONS (Contd.)

(f) Under previous GAAP, the Company accounted long term investments (i.e. non-quoted and quoted) at cost less provision other than temporary diminution in the value of investments. Current investments are stated at the lower of cost and fair value. As per the requirements of Ind AS 109, the investments in mutual fund units are to be at fair value. The differences arising out of the above treatment as at the date of transition have been adjusted against retained earnings.

(g) Under previous GAAP, Leasehold land is recorded and classified as fixed assets. However, under Ind AS, lease hold land is recognized as operating lease considering infinite useful life criterion.

(h) Under previous GAAP, amount received from consumer towards overhead / service line contributions was accounted as capital reserve by the Company as the amount was not refundable and subsequently, proportionate amount was transferred to income statement during the expected life of the asset to match the depreciation on total cost of such asset.

Under Ind AS, taking into cognizance of application of Appendix C to Ind AS 18, the balance as at the date of transition towards service line contribution has been transferred to deferred revenue.

(i) Under previous GAAP, the Company accounted the revenue net of excise duties and sales tax. As per requirement of Ind AS, revenue has been shown including excise duty and excise duty has been shown as a part of expenses. Further any sales incentives, discounts or rebates in any form, including cash discounts given to customers has been considered as selling price reductions and accounted as reduction from revenue.

(j) As per the requirement of Ind AS 40, the land held to earn rentals or for capital appreciation or both has been classified as investment property.

NOTE 21: APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved for issue by the board of directors on 23rd May, 2017.


Mar 31, 2015

1 25,24,38,986 equity shares (25,24,38,986 equity shares as at 31st March, 2014) of Rs.10 each fully paid up are held by holding company - Torrent Private Limited.

2 Terms / Rights attached to equity shares :

The Company has only one class of equity shares having par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees.The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

Dividend amount per share recognised as distributions to equity shareholders is Rs.1.50 per equity share during the year ended 31st March, 2015 (Previous year : Rs.0.50 per equity share).

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 preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(Rs. in Crore) As at As at 31st March, 2015 31st March, 2014

3. Contingent liabilities not provided for in respect of:

(i) Letters of credit established and guarantees given by banks on behalf of the Company 3778 103.21

(ii) Disputed income-tax matters 30.79 22.77

(iii) Disputed custom duty matters 18.78 18.78

(iv) Disputed excise duty matters 0.18 0.18

(v) Disputed stamp duty matters 0.35 0.35

(vi) Disputed VAT liability matters 2.15 -

(vii) Claims not acknowledged as debt 10.74 14.83

In respect of the above, the expected outflow will be determined at the time of final resolution of the dispute. No reimbursement is expected.

4. The Company''s significant leasing arrangements are in respect of residential flats, office premises, plant and machinery and equipment''s taken on lease. The arrangements range between 11 months and 10 years generally and are usually renewable by mutual consent on mutually agreeable terms. Under these arrangements, generally refundable interest free deposits have been given. The Company has not entered into any material financial lease. The Company does not have any non-cancellable lease.

5. Employee benefits

The liability on account of gratuity and leave encashment is accounted as per AS 15 (revised) dealing with employee benefits.

The Company operates a defined benefit plan (the Gratuity Plan) covering eligible employees, which provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and tenure of employment.

On account of defined contribution plans, a sum of Rs.20.50 Crore (Previous year - Rs.16.63 Crore) has been charged to the statement of profit and loss.

6. The Company''s primary business segment is Generation and Distribution of Electricity. Based on the guiding principles given in Accounting Standard on "Segment Reporting" (AS-17), this activity falls within a single primary business segment and accordingly the disclosure requirements of AS-17 in this regard are not applicable.

7. Amalgamation

The Board of Directors has approved on 12th May, 2014, the draft Composite Scheme of Amalgamation of Torrent Energy Limited (TEL) and Torrent Cables Limited (TCL) with Torrent Power Limited (TPL) and their respective shareholders and creditors ("the Scheme") under Sections 391 to 394 and other applicable provisions of the Companies Act, 1956. The Appointed Date of the scheme is 1st April, 2014.

TPL has already obtained necessary approval of the Scheme from National Stock Exchange of India Limited and BSE Limited vide their letters dated 26th & 27th August, 2014 respectively. Hon''ble Central Electricity Regulatory Commission (CERC) has also granted its approval to TEL under Section 17 (1) (b) of the Electricity Act, 2003 for its amalgamation with TPL subject to certain procedural conditions vide its order dated 7th January, 2015. TEL has also received the approval from Hon''ble Gujarat Electricity Regulatory Commission (GERC) under section 17 of Electricity Act, 2003 for amalgamation with TPL vide its order dated 1st April, 2015. Such approval is subject to the decision of Hon''ble High Court of Gujarat. As per the directions of the Hon''ble High Court of Gujarat, the meeting of the equity shareholders of TPL & TCL and unsecured creditors of TCL & TEL were held on 30th April, 2015. Further, court convened meeting of the secured creditors of TCL & TEL were held on 1st May, 2015. In accordance with SEBI circular CIR/CFD/DIL/5/2013 dated 4th February, 2013 and CIR/CFD/DIL/8/2013 dated 21st May, 2013, the public shareholders has approved the said amalgamation.

Pending other requisite approvals, including approval of High Court of Gujarat / National Company Law Tribunal as applicable, fulfilment of conditions precedent as mentioned in the Scheme and further actions, the effect of the Scheme has not been considered in the financial statements.

8. During the year, the Company has issued a sale order for the retired 100 MW Gas-based Combined Cycle Power Plant located at Vatva, Ahmedabad and consequently the difference of Rs.22.99 Crore between net book value of fixed assets and the sale value of the same has been disclosed as an ''Exceptional items''.

9. Capitalization of exchange differences

The Ministry of Corporate Affairs (MCA) has issued the amendment dated 29th December, 2011, to AS-11 "The Effects of Changes in Foreign Exchange Rates, to allow companies deferral / capitalization of exchange differences arising on long-term foreign currency monetary items.

In accordance with the amendment to AS 11, the company has capitalized exchange loss, arising on long-term foreign currency loan / capital liability, amounting to Rs.5.54 Crore (Previous year Rs.56.60 Crore) to the cost of capital work in progress / plant and equipments.

10. Expenditure related to Corporate Social Responsibility as per Section 135 of the Companies Act, 2013 read with Schedule VII thereof : Rs.16.30 Crore.

11. Details of loans given, investments made and guarantee given covered u/s 186 (4) of the Companies Act, 2013 are given under the respective heads.

12. Previous year''s figures have been restated / recast, wherever necessary, to conform to this year''s classification. Figures are rounded off to nearest lakh. Figures below Rs.50,000 are denoted by ''*''.


Mar 31, 2014

(Rs. in Crore) As at As at 31st March, 2014 31st March, 2013

1. Contingent liabilities not provided for in respect of:

(i) Letters of credit established and guarantees given by banks on behalf of the Company 103.21 110.64

(ii) Disputed income-tax matters 22.77 31.48

(iii) Disputed custom duty matters 18.78 0.28

(iv) Disputed excise duty matters 0.18 -

(v) Disputed stamp duty matters 0.35 0.37

(vi) Claims not acknowledged as debt 14.83 1.45

In respect of the above, the expected outflow will be determined at the time of fnal resolution of the dispute. No reimbursement is expected.

2. Hon''ble GERC in its true-up orders for FY 2009-10 and FY 2010-11 had directed to credit 1/3rd of the gain on account of controllable factors to a special reserve for the purpose of absorbing the impact of any future controllable losses of the Licensee (including AMGEN) as per the regulations. Accordingly, the company had created the reserve under the head "Consumer benefit Reserve", which has now been renamed as "Special Reserve"

3. Revenue from power supply includes an amount of Rs.85.26 Crore on account of Fuel and Power Purchase Price Adjustment (FPPPA) which has been adjusted against Tariff and Dividend Control Reserve of Rs.11.59 Crore, Contingency Reserve of Rs.61.66 Crore and Consumers'' benefit Account of Rs.12.01 Crore, as per the approval of the Hon''ble Gujarat Electricity Regulatory Commission (GERC) vide its letter no. 0405 dated 3rd March 2014.

4. (i) The Company uses forward contracts to hedge its certain risk associated with foreign currency fuctuation relating to firm commitments. The Company does not use forward contracts for speculative purposes. Outstanding foreign exchange forward contract as at 31st March, 2014 is Rs.Nil (31st March, 2013 Rs.Nil).

5. Based on the information available with the Company, the balance due to Micro and Small Enterprises as defined under MSMED Act, 2006 is Rs.1.60 Crore (31st March, 2013 Rs.1.73 Crore). Interest paid or payable under MSMED Act, 2006 during the year is Rs.0.01 Crore (Previous year Rs.0.01 Crore).

6. The Company''s significant leasing arrangements are in respect of residential fats, office premises, plant and machinery and equipment''s taken on lease. The arrangements range between 11 months and 10 years generally and are usually renewable by mutual consent on mutually agreeable terms. Under these arrangements, generally refundable interest free deposits have been given. The Company has not entered into any material financial lease. The Company does not have any non-cancellable lease.

7. Employee benefits

The liability on account of gratuity and leave encashment is accounted as per AS 15 (revised) dealing with employee benefits.

The Company operates a defined benefit plan (the Gratuity Plan) covering eligible employees, which provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and tenure of employment.

On account of defined contribution plans, a sum of Rs.16.63 Crore (previous year Rs.16.36 Crore) has been charged to the statement of Profit and loss.

8. The Company''s primary business segment is Generation and Distribution of Electricity. Based on the guiding principles given in Accounting Standard on "Segment Reporting" (AS-17), this activity falls within a single primary business segment and accordingly the disclosure requirements of AS-17 in this regard are not applicable.

9. Capitalization of Exchange Differences

The Ministry of Corporate Affairs (MCA) has issued the amendment dated 29th December, 2011 to AS-11

"The Effects of Changes in Foreign Exchange Rates", to allow companies deferral / capitalization of exchange differences arising on long-term foreign currency monetary items.

In accordance with the amendment to AS 11, the company has capitalized exchange loss, arising on long-term foreign currency loan, amounting to Rs.56.60 Crore (31st March, 2013 Rs.22.98 Crore) to the cost of Capital work in progress / plant and equipments.

10. Previous year figures

Previous year''s figures have been restated / recast, wherever necessary, to conform to this year''s classification. Figures are rounded off to nearest lakh. Figures below Rs.50,000 are denoted by ''*''.


Mar 31, 2013

1. (i) The Company uses forward contracts to hedge its certain risk associated with foreign currency fluctuation relating to firm commitments. The Company does not use forward contracts for speculative purposes. outstanding foreign exchange contract as at 31st March, 2013 is Rs. Nil (Previous year Rs. Nil).

(ii) foreign currency exposure not hedged by derivative instruments as at 31st March, 2013 is as under :

2. based on the information available with the Company, the balance due to Micro and small Enterprises as defined under MsMED Act, 2006 is Rs. 1.73 Crore (Previous Year Rs. 2.73 Crore). Interest paid or payable under MsMED Act, 2006 during the year is Rs. 0.01 Crore (Previous year Rs. 0.03 Crore).

3. The Company''s significant leasing arrangements are in respect of residential flats, office premises, plant and machinery and equipment''s taken on lease. The arrangements range between 11 months and 10 years generally and are usually renewable by mutual consent on mutually agreeable terms. Under these arrangements, generally refundable interest free deposits have been given. The Company has not entered into any material financial lease. The Company does not have any non-cancellable lease.

4. Employee benefits

The liability on account of gratuity and leave is accounted as per As 15 (revised) dealing with employee benefits.

The Company operates a defined benefit plan (the Gratuity Plan) covering eligible employees, which provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and tenure of employment.

5. The Company''s primary business segment is Generation and Distribution of Electricity, based on the guiding principles given in Accounting standard on "segment Reporting" (As-17), this activity falls within a single primary business segment and accordingly the disclosure requirements of As-17 in this regard are not applicable.

6. Capitalization of exchange differences

The Ministry of Corporate Affairs (MCA) has issued the amendment dated 29th December, 2011 to As-11.

The Effects of Changes in foreign Exchange Rates, to allow companies deferral / capitalization of exchange differences arising on long-term foreign currency monetary items.

In accordance with the amendment to As 11, the company has capitalized exchange loss, arising on long-term foreign currency loan, amounting to Rs. 22.98 Crore (Previous year: Rs. 23.07 Crore) to the cost of Capital work in progress / plant and equipments.

7. Previous year figures

Previous year''s figures have been restated / recast, wherever necessary, to conform to this year''s classification. figures are rounded off to nearest lakh. figures below Rs. 50,000 are denoted by ''*''.


Mar 31, 2012

1 249,448,986 equity shares (249,322,865 equity shares as at 31st March, 2011) of Rs. 10/- each fully paid up are held by holding company - Torrent Private Limited.

2 Terms/ Rights attached to equity shares :

The Company has only one class of equity shares having par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. Dividend amount per share recognized as distributions to equity shareholders is Rs. 6.50 per equity share during the year ended 31st March, 2012 (Previous year Rs. 5.50 per equity share).

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 preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(Rs. in crores)

As at As at 31st March, 2012 31st March, 2011

3. Contingent liabilities not provided for in respect of:

(i) Letters of credit established and guarantees given by banks on behalf of the Company 121.08 60.46

(ii) Disputed income-tax matters 21.04 23.45

(iii) Disputed sales-tax matters 0.02 0.21

(iv) Disputed custom duty matters 0.44 0.44

(v) Disputed stamp duty matters 0.37 0.26

4. Accounting policy concerning depreciation in respect of assets of Ahmedabad Generation, Ahmedabad Distribution and Surat Distribution has been changed during the year from higher of rates as per Appendix III of CERC Regulation 2009 or rates prescribed under Schedule XIV to the Companies Act 1956 to rates applicable in the year of addition as per CERC Tariff Regulations in context of circular no. 51/23/2011-CL-III dated 31st May, 2011issued by Ministry of Corporate Affairs with effect from 1st April, 2011. Depreciation for the year is lower by Rs. 60.12 crores and profit for the year is higher by Rs. 60.12 crores on account of such changes.

5. The Company has given loans and advances to its subsidiary companies and associate company as under

(a) Other than above, the Company has not given any loans or advances in the nature of loan to any of its subsidiaries and associates or firms / companies, in which Directors are interested.

(b) There are no loans where either repayment schedule is not prescribed or repayment is scheduled beyond seven years. Loans given to above companies are interest free.

6. (i) The Company uses forward contracts to hedge its certain risk associated with foreign currency fluctuation relating to firm commitments. The Company does not use forward contracts for speculative purposes. Outstanding foreign exchange contract as at 31st March, 2012 is Rs. Nil (Previous year Rs. 7.68 crores).

7. Based on the information available with the Company, the balance due to Micro and Small Enterprises as defined under MSMED Act, 2006 is Rs. 2.73 crores (Previous year Rs. 1.49 crores). Interest paid or payable under MSMED Act, 2006 during the year is Rs. 0.03 crores (Previous year Rs. Nil).

8. Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognised as expenses on straight-line basis.

The Company's significant leasing arrangements are in respect of residential flats, office premises, plant and machinery and equipments taken on lease. The arrangements range between 11 months and 10 years generally and are usually renewable by mutual consent on mutually agreeable terms. Under these arrangements, generally refundable interest free deposits have been given. The Company has not entered into any material financial lease. The Company does not have any non-cancellable lease.

9. Employee benefits

The accounting liability on account of gratuity and leave is accounted as per AS 15 (revised) dealing with Employee benefits.

The Company operates a defined benefit plan (the Gratuity Plan) covering eligible employees, which provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and tenure of employment.

10. The Company's primary business segment is Generation and Distribution of Electricity. Based on the guiding principles given in Accounting Standard on "Segment Reporting" (AS-17), this activity falls within a single primary business segment and accordingly the disclosure requirements of AS-17 in this regard are not applicable.

11. Capitalization of exchange differences

The Ministry of Corporate Affairs (MCA) has issued the amendment dated 29th December 2011 to AS 11 "The Effects of Changes in Foreign Exchange Rates," to allow companies deferral / capitalization of exchange differences arising on long-term foreign currency monetary items.

In accordance with the amendment to AS 11, the company has capitalized exchange loss, arising on long-term foreign currency loan, amounting to Rs. 23.07 crores (Previous year Rs. Nil) to the cost of Capital work in progress / plant and equipments.

12. Previous year figures

The Company prepares and presents its financial statements as per Schedule VI to the Companies Act, 1956, as applicable to it from time to time. In view of revision to the Schedule VI as per a notification issued during the year by the Central Government, the financial statements for the financial year ended 31st March, 2012 have been prepared as per the requirements of the Revised Schedule VI to the Companies Act, 1956. The previous year figures have been accordingly regrouped / re-classified to conform to the current year's classification. Figures are rounded off to nearest lakh. Figures below Rs. 50000 are denoted by.


Mar 31, 2011

(Rs. in crores)

As at As at 31st March, 2011 31st March, 2010

1. Contingent Liabilities not provided for in respect of:

(i) Letters of Credit established and Guarantees

given by banks on behalf of the Company 60.46 28.71

(ii) Disputed Income-tax matters 23.45 21.81

(iii) Disputed Sales-tax matters 0.21 0.21

(iv) Disputed Custom Duty matters 0.44 0.44

(v) Disputed Stamp Duty matters 0.26 0.26

(a) Other than above, the Company has not given any loans or advances in the nature of loan to any of its subsidiaries and associates or firms / companies, in which Directors are interested.

(b) There are no loans where either repayment schedule is not prescribed or repayment is scheduled beyond seven years. Loans given to above companies are interest free.

2. (i) The Company uses forward contracts to hedge its risk associated with foreign currency fluctuation relating to firm commitments. The Company does not use forward contracts for speculative purposes. Outstanding foreign exchange contracts as at 31st March, 2011 is Rs.7.68 Crores (Previous Year Rs. Nil).

(ii) Foreign currency exposure not hedged by derivative instruments as at 31st March, 2011 on capital imports amount to Rs.36.73 crores (Previous Year Rs.4.31 crores)

3. Based on the information available with the Company, the balance due to Micro and Small Enterprises as defined under MSMED Act, 2006 is Rs.1.49 crores (Previous Year Rs.1.14 crores). No interest has been paid or payable under MSMED Act, 2006 during the year.

4. Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognised as expenses on straight-line basis.

The Companys significant leasing arrangements are in respect of residential flats, office premises, plant and machinery and equipments taken on lease. The arrangements range between 11 months and 10 years generally and are usually renewable by mutual consent or mutually agreeable terms. Under these arrangements, generally refundable interest free deposits have been given. The Company has not entered into any material financial lease. The Company does not have any non-cancellable lease.

5. Employee Benefits:

The accounting liability on account of gratuity and leave is accounted as per AS 15 (revised 2005) dealing with Employee benefits.

The Company operates a defined benefit plan (the Gratuity Plan) covering eligible employees, which provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees salary and tenure of employment.

6. Note:

The estimates of future salary increases considered in the actuarial valuation take account of inflation, promotion and other relevant factors, such as supply and demand in the employment market. Future separation and Mortality rates are obtained from relevant data of Life Insurance Corporation of India.

7. The Companys primary business segment is Generation and Distribution of Electricity. Based on the guiding principles given in Accounting Standard on “Segment Reporting" [(AS-17) issued by the Institute of Chartered Accountants of India], this activity falls within a single primary business segment and accordingly the disclosure requirements of AS-17 in this regard are not applicable.

8. Previous years figures have been restated, wherever necessary, to conform to this years classification. Figures are rounded off to nearest lakh. Figures below Rs.50000 are denoted by *.


Mar 31, 2010

1. Effective from 1st April, 2009, the Company has changed its policy of charging depreciation on its assets at Sugen, Ahmedabad Generation, Ahmedabad Distribution and Surat Distribution. Depreciation is charged in respect of each category of assets of these units at the higher of the rates prescribed in Appendix III of the Regulation issued by Central Electricity Regulatory Commission dated 19th January, 2009 or rates prescribed under Schedule XIV to the Companies Act, 1956 instead of at the rates prescribed under schedule XIV to the Companies Act, 1956. Consequently, the depreciation charged to the profit & loss account is higher for the year by Rs. 19.89 crores with the corresponding decrease in profit before taxation for the year, by the same amount.

2. During the year, the Company has received show cause notices from the Indirect Tax Authorities claiming recovery of indirect tax. The claim, as ascertained by the authorities, is being contested by the Company. Without prejudice to the stand of the Company and its rights to contest the claim and based on consideration of prudence, the Company has accordingly accounted Rs.107.64 crores for the same in the financial statements.

3. (i) The Company uses forward contracts to hedge its risk associated with foreign currency fluctuation relating to firm commitments. The Company does not use forward contracts for speculative purposes. Outstanding foreign exchange contract as at 31st March, 2010 is Rs.Nil (Previous Year Rs.Nil)

(ii) Foreign currency exposure not hedged by derivative instruments as at 31st March, 2010 on capital imports amount to Rs.4.31 crores (Previous Year Rs.189.09 crores)

4. Based on the information available with the Company, the balance due to Micro and Small Enterprises as defined under MSMED Act, 2006 is Rs.1.14 crores (Previous Year Rs.0.42 crore). No interest has been paid or payable under MSMED Act, 2006 during the year.

5. The confirmations of some of the parties for the amounts due to them / amount due from them as per books of accounts are not received. Necessary adjustments, if any, will be made when the accounts are reconciled / settled.

6. Employee Benefits:

The accounting liability on account of gratuity and leave is accounted as per AS 15 (revised 2005) dealing with Employee benefits.

The Company operates a defined benefit plan (the Gratuity Plan) covering eligible employees, which provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees salary and tenure of employment.

7. Note:

The estimates of future salary increases considered in the actuarial valuation take account of inflation, promotion and other relevant factors, such as supply and demand in the employment market. Future separation and Mortality rates are obtained from relevant data of Life Insurance Corporation of India.

8. The Companys primary business segment is Generation and Distribution of Electricity. Based on the guiding principles given in Accounting Standard on "Segment Reporting" [(AS - 17) issued by the Institute of Chartered Accountants of India], this activity falls within a single primary business segment and accordingly the disclosure requirements of AS - 17 in this regard are not applicable.

Names of relates" parties and description of relationship:

1. Associates AEC Cements & Constructions Limited Tidong Hydro Power Limited

2 Subsidiaries Torrent Power Grid Limited Torrent Pipavav Generation Limited Torrent Energy Limited Torrent Power Bhiwandi Limited

3. Enterprises controlled by the company TPL (Ahmedabad) Gratuity Trust

TPL (Ahmedabad) Superannuation Fund

TPL (Surat) Gratuity Trust

TPL (Surat) Superannuation Fund

TPL (SUGEN) Gratuity Trust

TPL (SUGEN) Superannuation Fund

4. Holding Company / Enterprises controlled by the Holding Company Torrent Private Limited

Torrent Pharmaceuticals Limited

Torrent Cables Limited

Gujarat Lease Financing Limited

Torrent Power Services Private Limited

Heumann Pharma GmbH & Co.Generica KG

Torrent Do Brasil Ltda.

Zao Torrent Pharma

Torrent Pharma GmbH.

Torrent Pharma Inc.

Torrent Pharma Philippines Inc.

Torrent Australasia Pty Ltd.

Laborotrios Torrent SA de CV

Torrent Pharma Japan Co. Ltd.

Torrent Pharma Canada Inc.

Torrent Pharma (Thailand) Co. Ltd.

Norispharm GmbH.

Heunet Pharma GmbH.

Torrent Financiers

5.Key Management Sudhir Mehta Markand Bhatt Murli Ranganathan Personnel Chairman Whole-time Whole-time Director Director

6.Relatives of Key Anita Mehta, Nandini Bhatt, Jayashree M. Wife Wife Ranganathan, Shardaban Arvindbhai Mehta, Bhatt, Wife Mother Samir Mehta, Maltiben Joshi T.P. Ranganathan, Varun Mehta, Sister Father Son Anjuben Trivedi Kaushalya Jinal Mehta, Sister Ranganathan, Son Vasudhaben Mother Meena Modi, Pandya Sister Sister Nayna Shah, Sister Munjal Bhatt, R.Vijay Kumar, Son Brother

Gunjan Bhatt Suhasini M. Son Ranganathan, Daughter

Sujeet M. Ranganathan, Son

7.ENterprises controlled U.N. Mehta Charitable Trust by Key Management Shardaben Mehta Charitable Trust Personnel/Relatives Dushyant Shah Charitable Trust D. N. Modi Charitable Trust Tsunami Tours & Travels Private Limited Torrel Cosmetics Private Limited Zeal Pharmachem India Private Limited Diamond Infrastructure Private Limited U.N. Mehta Institute of Cardiology & Research Centre Munjal Bhatt Associates

9.Previous years figures have been restated, wherever necessary, to conform to this years classification. Figures are rounded off to nearest lakh. Figures below Rs.50000 are denoted by *.

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