Bharat Heavy Electricals Ltd. இன் கணக்கு குறிப்புகள்
Mar 31, 2023
c) Terms / rights attached to the equity shares
The company has only one class of equity shares having par value of ''2 per share (previous year '' 2 per share). Each holder of the equity shares is entitled to one vote per share.
d) Issue of bonus share (In immediately preceding five years ended March 31, 2023)
The Company allotted bonus share on October 03, 2017 in the ratio of 1:2 i.e. one equity share for two existing fully paid-up equity shares. Consequently, the paid-up capital was increased from ''489.52 crore in FY 2016-17 to ''734.28 crore in FY 2017-18 by capitalization of reserves.
e) Share buyback (In immediately preceding five years ended March 31, 2023)
The Company vide its Board approval dated October 25,2018, bought back its 18,93,36,645 fully paid-up equity shares of the face value of ''2 each representing 5.16% of the total issued and paid-up equity share capital from the eligible equity shareholders of the Company for an amount of '' 16,28,29,51,470 at a price of '' 86 per equity share in FY 2018-19. Consequently, the paid-up share capital was reduced from '' 734.28 crore in FY 2017-18 to '' 696.41 crore in FY 2018-19.
Nature and purpose of reserves:
(a) Capital reserve : It represents mainly the excess of net assets taken, over the cost of consideration paid during amalgamation of the then subsidiary company (HPVP) with the BHEL.
(b) Capital redemption reserve: The Company has recognised Capital Redemption Reserve on buy back of equity shares from its general reserve.The amount in capital redemption reserve is equal to nominal amount of equity shares bought back.
(c) General reserve: This represents accumulation of profits retained by Company to meet future (known/unknown) obligations.
(d) Retained earnings: Retained earnings are profits that Company has earned till date, less transfer to general reserve, dividends or other distributions to shareholders.
(e) Re-measurement of net defined benefit plans: Differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumption or experience adjustments within the plans, are recognised in ''Other comprehensive income'' and these are subsequently not to be reclassified to the Statement of Profit and Loss.
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Note [32] Contingent liabilities and commitments |
(? in Crore) |
|
|
Particulars |
As at |
As at |
|
March 31, 2023 |
March 31, 2022 |
|
|
A. Contingent liabilities |
||
|
Claims against the company not acknowledged as debt : |
||
|
(a) Sales tax matters |
1227.09 |
1279.61 |
|
(b) Service tax matters |
606.56 |
920.46 |
|
(c) Court & arbitration matters |
711.81 |
592.77 |
|
(d) Excise duty matters |
166.39 |
162.18 |
|
(e) Customs duty and others |
934.51 |
880.06 |
|
(f) Goods &Service Tax |
4.14 |
- |
|
(g) Other matters ( incl. disputed staff cases) |
59.69 |
48.37 |
|
(h) Claim towards Liquidated damages (LD) |
3596.61 |
2872.25 |
|
Total |
7306.80 |
6755.70 |
(i) In view of various court cases, litigations and claims disputed by the Company, the outflow of resources is not ascertainable at this stage. Generally,contingent Liability in respect of court & arbitration cases are shown on award/court judgement and also reviewed on a case to case basis for its reporting in contingent liability.
(ii) It is not practicable for the Company to estimate the timing of actual cash outflows in respect of items (a) to (g) , if any, due to pending resolution of the respective proceedings. However, the chances of cash outflow are contingent.
(iii) Liquidated damages represents likely claims or amount withheld by customer on account of delay in execution of projects which will be settled after commissioning and trial operation of project based on delay analysis and is being disclosed in line with Ind AS -37.
|
(iv) Movement in contingent liabilities (? in Crore) |
||
|
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
|
Balance at the beginning of the year |
6755.70 |
6045.49 |
|
Less: Reduction out of opening balance |
727.70 |
129.84 |
|
Add: Additions (net) during the year |
1278.81 |
840.05 |
|
Balance at the end of the year |
7306.80 |
6755.70 |
|
(? in Crore) |
||
|
Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
|
B. Commitments |
||
|
(a) Estimated amount of contracts, net of advances, remaining to be executed on capital account and not provided for. |
282.05 |
209.20 |
|
-- (The above includes related to acquisition of intangible assets) |
32.71 |
7.56 |
|
(b) Investment in the Joint Venture entity (NBPPL) for which the company has restrictions for their disposal for five years from the date of incorporation /commercial operation of the project/first unit of the project/completion of first EPC contract, as the case may be. This investment has been fully provided for. |
50.00 |
50.00 |
|
(c) In view of the nature of business, being long term construction contracts there may be other commitments for purchase of material etc., which has been considered as normal business process. |
||
Current Financial liabilities includes a sum of '' Nil (previous year '' 100.51 Crore) towards guarantee fee demanded by the Government of India in respect of foreign currency loans taken by the Company at the instance of the Government upto 199091. Since there was no stipulation for payment of such guarantee fee at the time the loans (guaranteed by Government) were taken by the company, the same is reversed after review.
The Company had taken over Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon on April 1, 1999 from Ministry of New and Renewable Energy (MNRE) on lease for a period of 30 years. The formal lease agreement with the Ministry of New and Renewable Energy (MNRE) is yet to be finalised.
Balance shown under Trade receivables, Trade payables, contractors'' advances, deposits and stock / materials lying with subcontractors/ fabricators are subject to confirmation, reconciliation & consequential adjustment, if any. The Company is in the business of long term construction contracts, bills are raised on the customers as per contract in line with billing schedule approved by the customer and the reconciliation is carried out on ongoing basis & provisions made, wherever considered necessary. Final reconciliation with customer is done on completion of project (Trial Operation and PG Test completed). Trade Receivable of Completed Projects stand at ''7963 Cr (Previous Year 7593 Cr.). Out of completed contracts, the projects reconciled with customers have outstanding trade receivables of '' 6185 Cr. (previous year '' 6376 crore).
Lease Commitments - Company as Lessee
The company''s significant leasing agreements are in respect of land, building and EDP equipments. The company has entered into a rate contract for lease arrangement for computer items, printers, video conferecing equipments and peripherals. Assets taken on lease are capitalised and disclosed separately as Right-of-use assets in the property, plant and equipment. The lease rentals are allocated between interest, maintainence and principal value. The interest and maintenance charges are charged to Statement of Profit and Loss and principal amount is adjusted to lease obligations.
The company has applied the following available practical expedients :
(i) The short-term leases exemptions to leases with lease term less than 12 months
(ii) The low value lease exemption to leases where underlying asset is of low value (assets of less than '' 50000 in value).
A. The Company has following Schemes in the nature of Defined Benefits plans :
i) Gratuity Scheme
ii) Post Retirement Medical Scheme
iii) Provident Fund Scheme
iv) Travel claim on Retirement
(i) Gratuity (Funded Plan)
The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum limit of ''20 Lakhs.The gratuity liability arises on account of future payments, which are required to be made in the event of retirement, death in service or withdrawal. The liability has been assessed using projected unit credit actuarial method.
Risk Exposures
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such, company is exposed to various risks such as increase in salary, investment risk, discount rate, mortality, disability and withdrawals.
(ii) Post Retirement Medical Benefits (Funded Plan)
The Company has Post-Retirement Medical benefit (PRMB), under which the retired employees and their spouses are provided medical facilities in the Company hospitals/empanelled hospitals subject to company medical rules.They can also avail treatment as out-patient subject to a ceiling fixed by the Company. The liability for the same is recognised annually on the basis of actuarial valuation.
The weighted average duration of the post retirement medical benefit plan obligation at the end of the reporting period is 12.34 years (31 March 2022: 12.78 years )
Risk Exposure
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks such as increase in medical cost, investment risk, discount rate, mortality, disability and withdrawals.
(iii) Provident Fund
The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The Company has an obligation to ensure minimum rate of return to the members as specified by GOI. Accordingly, the Company has obtained report of the actuary. Wherever as per the actuarial valuation certificate liability for likely interest shortfall arises, the same has been provided in the accounts.
(iv) Travel claim on retirement- (Settlement Allowance - Unfunded Plan)
The settlement allowance is the expenditure reimbursed to an employee towards travel and shifting of baggage for proceeding to home town or any place in India where he or she intends to settle after retirement or death in service for self (including members of his/her family).
B. Long term Leave Liability (Encashable Leave -EL /Half Pay Leave-HPL) - (Unfunded Plan)
The company provides for earned leave benefit and half pay leave to the employees of the company which accrue half yearly at 15 days (maximum) and 10 days respectively. The earned leave is encashable while in service subject to fulfilment of certain conditions. On retirement/superannuation, earned leave & half pay leave put together upto a maximum of 300 days is encashable subject to company policies & leave encashment rules.The leave liability has been treated as other long term benefits and has been assessed using projected unit credit actuarial method.
Construction of power projects is a long cycle business, where the contracts received by the company are either EPC contracts (Engineering, Procurement & Construction) or BTG Packages (i.e. Boiler, Turbine and Generator packages). Power projects are long gestation period projects with normal execution period of contract ranging between 3 to 5 years. BHEL scope of services includes supply of equipment, erection, commissioning, synchronizing the plant to the grid, completing the trial operation and providing the guaranteed parameters.
Although there are several components to the overall scope, such projects are generally considered one performance obligation. The control transfers simultaneously over the execution period as the entity performs rather than at discrete points in time and hence revenue is recognized over the period of time based on measure of progress (input cost method)
Note [41] - Disclosure pursuant to Ind AS-107 [Financial Instruments - Accounting Classifications and Fair value measurements]
The Fair value of cash and cash equivalents, bank balances, loans, trade receivables, trade payables, security deposit and others reasonably approximates their carrying amount. Trade receivables are evaluated after taking into consideration for Expected Credit Losses. Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.
Fair value hierarchy
The fair value of financial instruments have been classified in following categories depending on the inputs used in the valuation technique.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
Financial Risk Management Objectives and Policies
"The company''s activities are exposed to different financial risks arising out of natural business exposures to any company operating in the sector. The management of financial risk has always been an integral part of the company''s business strategies and policies. The company reviews and aligns its policies and guidelines from time to time to address the financial risks in line with the needs and expectations of its various stakeholders. Exposure risk from the use of financial instruments can be categorized as under:
a. Credit risk
b. Liquidity risk
c. Market risk
This note presents information about the Company''s exposure to each of the above risks, the Company''s objectives, policies and processes for measuring and managing risk, and management of Company''s capital. Further quantitative disclosures are included throughout these financial statements.
Risk management framework
BHEL has in place a Board approved Risk Management Charter & Policy which provides overall framework for Risk Management in the company. The objective of the charter is to ensure that the risks are being properly identified, assessed and effectively managed by adopting suitable risk mitigation measures. The company has 3-layer risk management framework. At the first level, the Board Level Risk Management Committee (BLRMC) of the company is assigned with responsibility of reviewing the company''s Risk Governance structure, Risk Assessment & Risk Management framework, Guidelines, Policies and Processes thereof. Risk Management Steering Committee (RMSC) at the second level is responsible for adopting & implementing the risk management framework and leading the risk management initiative across the company. Chief Risk Officer (CRO) being the convener of BLRMC & RMSC is responsible for periodic reporting on risk management to Board/ BLRMC. Key risks being faced by the company are analysed starting from Unit level for their respective areas to prepare risk mitigation plans and to ensure implementation.
a. Management of Credit Risk
Credit risk is considered as an integral part of risk reward balance of doing business. BHEL is involved in setting up of power projects pertaining to Government sector (State utilities, PSU''s, Railways and other govt. departments etc.) and private sectors in India and abroad. The projects are generally funded by Financial Institutions/ banks or payments are covered by Letter of Credit (LC). The project duration ranges from 3 to 5 years and payments are generally realised in stages as per the terms of the contract including advance, progress payments, milestone (including intermediate) payments and also retentions which are released on completion of such projects. Since majority customers'' profile pertains to Government sector, constituting 80% of total receivables coupled with the fact that the company itself is a CPSE, credit risk is relatively low. In respect of private sector customers , the payment terms are mainly through LC. The company has well established review mechanism for receivables at various levels within organisation to ensure proper attention and focus for realisation in line with the company policies, procedures and guidelines.The company uses expected credit loss model to assess the impairment loss or gain and the disclosure of the same is made elsewhere. Further, adequate provisions are maintained to address any eventuality.
The company makes investments out of surplus funds as per policy of the company duly approved by the Board and in line with the DPE guidelines .Credit risk on cash and cash equivalents and term deposits is very limited as the company generally invests in deposits with financially strong banks and financial institutions.
b. Management of Liquidity risk
The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including term deposits and the availability of Funding through an adequate amount of credit facilities to meet obligations as and when due. Robust cash management system and regular monitoring of cash flows enables management to plan and maintain adequate sources to finance its funds requirement throughout the year. Besides adequate cash and bank balances, company enjoys credit facilities. The company is able to meet all its fund requirements from internal resources i.e. the funds generated from operations and also through short-term borrowings for better treasury management operations.
The Company is exposed to certain currency,commodity, interest rate risks arising from its operations. The company has foreign exchange risk management policy to cover the foreign exchange risks.To insulate the company against major commodity price fluctuationframework agreements including price pass through claims are being entered regularly with supply chain partners including suppliers and customers. Surplus funds generated from operation are kept invested in short term deposits with PSU Banks or large sized private banks only and in debt based schemes of public sector mutual funds , thereby minimizing any chance of risk.
The company''s objective, while managing capital is to continue business as a going concern, safeguard,preserve and enhance its capital to provide maximum return to shareholders, benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Board of Directors also monitors the level of dividends to equity shareholders. The Company monitors capital, using a medium term view and long term view, on the basis of a number of financial ratios generally used by industry as well as by the rating agencies. The Company is not subject to externally imposed capital requirements. The Company''s capital structure is managed against the various financial ratios as required to maintain highest credit ratings.
The Segments have been identified as ''Power'' and ''Industry'', based on the orders booked by the respective business sectors. These segments are driven by the three business sectors i.e. Power Sector, Industry sector, International Operations.
The Power segment comprises mainly thermal, gas, hydro and nuclear power plant businesses, related spares & services business apart from new businesses of coal to chemicals, emission control equipment and spares for Non-BHEL sets.
The Industry segment caters to major equipment supplies and EPC works for a variety of sectors including transportation, transmission, defence & aerospace, captive power, renewables, downstream oil & gas, energy storage, and electric mobility, among others.
The order booked by International operation group is taken to Power or Industry as the case may be.
The Company''s Committee of functional Directors has been identified as Chief Operating Decision maker (CODM).
As per SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015, the requisite details of loans and advances in the nature of loans, given by the Company are given below:
i) No loans have been given (other than loans to employees), wherein there is no repayment schedule or repayment is beyond seven years; and
ii) There are no loans and advances in the nature of loans, to firms/companies, in which directors are interested.
Assets and Liabilities are classified between Current and Non-current considering 12 months period as operating Cycle.
The Company has no transactions with companies struck off under section 248 of the Companies Act,2013 or section 560 of the Companies Act,1956.
There were no charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period.
The Company is complying with the number of layers prescribed under clause(87) of section 2 of the Act read with Companies(restriction on number of layers ) Rules, 2017.
No Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.
The Company has no transactions that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act,1961 which is unrecorded in the books of accounts .
The Company has not traded or invested in Crypto currency or Virtual currency during the financial year.
Prior period errors which are material are corrected retrospectively by restating the comparative amount for the prior periods presented in which such error occurred. For the error occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented are restated.
Figures have been rounded off nearest to '''' in crore with two decimal.
Previous year''s figures have been regrouped/ rearranged wherever considered necessary.
Ministry of Corporate Affairs (âMCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as below:
Ind AS 1 - Presentation of Financial Statements
The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 12 - Income Taxes
The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are âmonetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty .The Company does not expect the amendment to have any significant impact in its financial statements.
The Board of Directors has authorised to issue the Financial Statements 2022-23 in its meeting held on May 26, 2023
Mar 31, 2022
(i) The provision for impairment in value of investment in NTPC-BHEL Power Projects Private Limited has been made to the extent of '' 50.00 crore (upto previous year '' 50.00 crore) based on the net financial position. The Board of Directors in its meeting held on February 08, 2018 has accorded in-principle approval for pursuing the winding up of NBPPL. Ministry of Power (MoP) has advised NTPC to consider buying out the stake of BHEL and decide either to continue it as an in-house EPC arm or close it after completion of present work. This advise was noted by NBPPL Board in its meeting held on 29.08.2019.
(ii) Reduction in % of ownership in RPCL is due to subscription of Right issue by the other shareholder M/s KPCL.
(iii) The provision for impairment in value of investment in Powerplant Performance Improvement Limited amounting to '' 2.00 crore (previous year '' 2.00 crore) has been made since the JVC is under liquidation and the amount paid as equity is not recoverable.
c) Terms / rights attached to the equity shares
The company has only one class of equity shares having par value of '' 2 per share (previous year '' 2 per share). Each holder of the equity shares is entitled to one vote per share.
d) Issue of bonus share
The Company allotted bonus share on October 03, 2017 in the ratio of 1:2 i.e. one equity share for two existing fully paid-up equity shares. Consequently, the paid-up capital was increased from '' 489.52 crore in FY 2016-17 to '' 734.28 crore in FY 2017-18 by capitalization of reserves.
e) Share buyback
The Company vide its Board approval dated October 25,2018, bought back its 18,93,36,645 fully paid-up equity shares of the face value of '' 2 each representing 5.16% of the total issued and paid-up equity share capital from the eligible equity shareholders of the Company for an amount of '' 1628,29,51,470 at a price of '' 86 per equity share in FY 2018-19. Consequently, the paid-up share capital was reduced from '' 734.28 crore in FY 2017-18 to '' 696.41 crore in FY 2018-19.
For additions and deduction under each of the above specific heads, SOCIE (Statement of Changes in Equity) may be referred.
Nature and purpose of reserves:
(a) Capital reserve : It represents mainly the excess of net assets taken, over the cost of consideration paid during amalgamation of the then subsidiary company (HPVP) with the BHEL.
(b) Capital redemption reserve: The Company has recognised Capital Redemption Reserve on buy back of equity shares from its general reserve.The amount in capital redemption reserve is equal to nominal amount of equity shares bought back.
(c) General reserve: This represents accumulation of profits retained by Company to meet future (known/unknown) obligations.
(d) Retained earnings: Retained earnings are profits that Company has earned till date, less transfer to general reserve, dividends (incl. dividend distribution tax) or other distributions to shareholders.
(e) Re-measurement of net defined benefit plans: Differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumption or experience adjustments within the plans, are recognised in ''Other comprehensive income'' and these are subsequently not to be reclassified to the Statement of Profit and Loss.
Total Consortium limit (fund based non fund based) of '' 60000 Cr secured by first charge by way of hypothecation of raw materials, components, work in progress, finished goods, stores, trade receivables and other current assets both present and future.
Commercial Papers are in the nature of unsecured short term borrowings.
# Outstanding Bank Guarantees include '' 439 Crores (PY. '' 630 Cr.) on a/c of BGs already replaced but pending vacation as on March 31, 2022. Excluding this, the outstanding BGs as on 31.03.2022 is '' 30930 Cr. (Previous Year 38713 Cr.)
(ii) Loan from Banks in FY 2021-22 represents WCDL (Working Capital Demand Loan) & for Previous Year, '' 200 Cr Loans against Fixed Deposit and balance for WCDL.
(iii) The company has not been declared wilful defaulter by any Bank / Financial Institution.
(iv) The quarterly returns or statements of current assets filed by the Company with Banks or Financial Institutions are in agreement with Books of accounts.
(v) Corporate Guarantees given for own obligations outstanding as on 31.03.2022 is '' 1165 crore (previous year '' 1799 crore).
Basic earnings per equity share is computed by dividing the net profit attributable to the equity shareholders of the Company by the weightage average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit attributable to the equity shareholders of the Company by the weightage average number of equity shares considered for deriving basic earnings per equity share and also the weightage average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
(i) In view of various court cases, litigations and claims disputed by the Company, the outflow of resources is not ascertainable at this stage. Generally,contingent Liability in respect of court & arbitration cases are shown on award/court judgement and also reviewed on a case to case basis for its reporting in contingent liability.
(ii) It is not practicable for the Company to estimate the timing of actual cash outflows in respect of items (a) to (f), if any, due to pending resolution of the respective proceedings. However, the chances of cash outflow are contingent.
(iii) Liquidated damages represents likely claims or amount withheld by customer on account of delay in execution of projects which will be settled after commissioning and trial operation of project based on delay analysis and is being disclosed in line with Ind AS -37.
Current Financial liabilities includes a sum of '' 100.51 crore (previous year '' 100.51 Crore) towards guarantee fee demanded by the Government of India in respect of foreign currency loans taken by the Company at the instance of the Government upto 1990-91. Since there was no stipulation for payment of such guarantee fee at the time the loans (guaranteed by Government) were taken by the company, the matter is being reviewed for appropriate action.
The Company had taken over Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon on April 1, 1999 from Ministry of New and Renewable Energy (MNRE) on lease for a period of 30 years. The formal lease agreement with the Ministry of New and Renewable Energy (MNRE) is yet to be finalised.
Balance shown under Trade receivables, Trade payables, contractors'' advances, deposits and stock / materials lying with subcontractors/ fabricators are subject to confirmation, reconciliation & consequential adjustment, if any. The Company is in the business of long term construction contracts, bills are raised on the customers as per contract in line with billing schedule approved by the customer and the reconciliation is carried out on ongoing basis & provisions made, wherever considered necessary. Final reconciliation with customer is done on completion of project (Trial Operation and PG Test completed). Trade receivable of completed projects stand at '' 7593 crore (previous year '' 7882 crore). Out of completed contracts, the projects reconciled with customers have outstanding trade receivables of '' 6376 crore (previous year '' 6299 crore).
Note [ 36 ]Disclosure on Leases - Ind AS 116
Lease Commitments - Company as Lessee
The company''s significant leasing agreements are in respect of land, building and EDP equipments. The company has entered into a rate contract for lease arrangement for computer items, printers, video conferecing equipments and peripherals. Assets taken on lease are capitalised and disclosed separately as Right-of-use assets in the property, plant and equipment. The lease rentals are allocated between interest, maintainence and principal value. The interest and maintenance charges are charged to Statement of Profit and Loss and principal amount is adjusted to lease obligations.
The company has applied the following available practical expedients :
(i) The short-term leases exemptions to leases with lease term less than 12 months
(ii) The low value lease exemption to leases where underlying asset is of low value (assets of less than '' 50000 in value).
A. The Company has following Schemes in the nature of Defined Benefits plans :
i) Gratuity Scheme
ii) Post Retirement Medical Scheme
iii) Provident Fund Scheme
iv) Travel claim on Retirement
(i) Gratuity (Funded Plan)
The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum limit of '' 20 Lakhs.The gratuity liability arises on account of future payments, which are required to be made in the event of retirement, death in service or withdrawal. The liability has been assessed using projected unit credit actuarial method.
Sensitivities as rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable.
The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. This analysis may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
The weighted average duration of the gratuity defined benefit plan obligation at the end of the reporting period is 14.81 years (31 March 2021: 14.95 years. )
Risk Exposures
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such, company is exposed to various risks such as increase in salary, investment risk, discount rate, mortality, disability and withdrawals.
(ii) Post Retirement Medical Benefits (Funded Plan)
The Company has Post-Retirement Medical benefit (PRMB), under which the retired employees and their spouses are provided medical facilities in the Company hospitals/empanelled hospitals subject to company medical rules.They can also avail treatment as out-patient subject to a ceiling fixed by the Company. The liability for the same is recognised annually on the basis of actuarial valuation.
The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. This analysis may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
The weighted average duration of the post retirement medical benefit plan obligation at the end of the reporting period is 12.78 years (31 March 2021: 12.42 years).
Risk Exposure
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks such as increase in medical cost, investment risk, discount rate, mortality, disability and withdrawals.
(iii) Provident Fund
The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The Company has an obligation to ensure minimum rate of return to the members as specified by GOI. Accordingly, the Company has obtained report of the actuary. Wherever as per the actuarial valuation certificate liability for likely interest shortfall arises, the same has been provided in the accounts.
(iv) Travel claim on retirement - (Settlement Allowance - Unfunded Plan)
The settlement allowance is the expenditure reimbursed to an employee towards travel and shifting of baggage for proceeding to home town or any place in India where he or she intends to settle after retirement or death in service for self (including members of his/her family).
B. Long term Leave Liability (Encashable Leave -EL /Half Pay Leave-HPL) - (Unfunded Plan)
The company provides for earned leave benefit and half pay leave to the employees of the company which accrue half yearly at 15 days (maximum) and 10 days respectively. The earned leave is encashable while in service subject to fulfilment of certain conditions. On retirement/superannuation, earned leave & half pay leave put together upto a maximum of 300 days is encashable subject to company policies & leave encashment rules.The leave liability has been treated as other long term benefits and has been assessed using projected unit credit actuarial method.
The provision for contractual obligation is made considering the effect of time value of money in line with significant Accounting Policy No. 11 to meet the warranty obligations as per the terms and conditions of the contract. The same is retained till the completion of the warranty obligations of the contract. The actual expenses on warranty obligation may vary from contract to contract and on year to year depending upon the terms and conditions of the respective contract. Contractual obligation, pertaining to dues from projects fully provided for, disclosed in Non Current Allowances for B&D Debts in Note 6 and 9.
Based on the historical experience/technical assessment and in line with Significant accounting policy no. 11 (ii) duly approved by the Board, the Company has reassessed the anticipated cost for warranties. Consequently, the additions to Contractual obligation provision is less by '' 293.51 cr. in FY 2021-22.
Construction of power projects is a long cycle business, where the contracts received by the company are either EPC contracts (Engineering, Procurement & Construction) or BTG Packages (i.e. Boiler, Turbine and Generator packages). Power projects are long gestation period projects with normal execution period of contract ranging between 3 to 5 years. BHEL scope of services includes supply of equipment, erection, commissioning, synchronizing the plant to the grid, completing the trial operation and providing the guaranteed parameters.
Although there are several components to the overall scope, such projects are generally considered one performance obligation. The control transfers simultaneously over the execution period as the entity performs rather than at discrete points in time and hence revenue is recognized over the period of time based on measure of progress (input cost method)
Note [41]
The spread of Covid 19 pandemic globally caused disturbance & slow down of the economic activity. This impacted the Company''s operations during the FY 2021-22, which recouped progressively. Based on the internal & external information upto the date of approval of these financial statements,the company expects to recover the carrying amount of its assets,investments,trade receivables,contract assets & inventories. The company will continue to monitor the future economic conditions and assess its impact on its financial statements.
a. The Fair value of cash and cash equivalents, bank balances, loans, trade receivables, trade payables and others reasonably approximates their carrying amount. Trade receivables are evaluated after taking into consideration for Expected Credit Losses. Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.
Fair value hierarchy
The fair value of financial instruments have been classified in following categories depending on the inputs used in the valuation technique.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Financial Risk Management Objectives and Policies
The company''s activities are exposed to different financial risks arising out of natural business exposures to any company operating in the sector. The management of financial risk has always been an integral part of the company''s business strategies and policies. The company reviews and aligns its policies and guidelines from time to time to address the financial risks in line with the needs and expectations of its various stakeholders. Exposure risk from the use of financial instruments can be categorized as under:
a) Credit risk
b) Liquidity risk
c) Market risk
This note presents information about the Company''s exposure to each of the above risks, the Company''s objectives, policies and processes for measuring and managing risk, and management of Company''s capital. Further quantitative disclosures are included throughout these financial statements.
Risk management framework
BHEL has in place a Board approved Risk Management Charter & Policy which provides overall framework for Risk Management in the company. The objective of the charter is to ensure that the risks are being properly identified, assessed and effectively managed by adopting suitable risk mitigation measures. The company has 3-layer risk management framework. At the first level, the Board Level Risk Management Committee (BLRMC) of the company is assigned with responsibility of reviewing the company''s Risk Governance structure, Risk Assessment & Risk Management framework, Guidelines, Policies and Processes thereof. Risk Management Steering Committee (RMSC) at the second level is responsible for adopting & implementing the risk management framework and leading the risk management initiative across the company. Chief Risk Officer (CRO) being the convener of BLRMC & RMSC is responsible for periodic reporting on risk management to Board/ BLRMC. Key risks being faced by the company are analysed starting from Unit level for their respective areas to prepare risk mitigation plans and to ensure implementation.
a) Management of Credit Risk
Credit risk is considered as an integral part of risk reward balance of doing business. BHEL is involved in setting up of power projects pertaining to Government sector (State utilities, PSU''s, Railways and other govt. departments etc.) and private sectors in India and abroad. The projects are generally funded by Financial Institutions/ banks or payments are covered by Letter of Credit (LC). The project duration ranges from 3 to 5 years and payments are generally realised in stages as per the terms of the contract including advance, progress payments, milestone (including intermediate) payments and also retentions which are released on completion of such projects. Since majority customers'' profile pertains to Government sector, constituting 79% of total receivables coupled with the fact that the company itself is a CPSE, credit risk is relatively low. In respect of private sector customers, the payment terms are mainly through LC. The company has well established review mechanism for receivables at various levels within organisation to ensure proper attention and focus for realisation in line with the company policies, procedures and guidelines.The company uses expected credit loss model to assess the impairment loss or gain and the disclosure of the same is made elsewhere. Further, adequate provisions are maintained to address any eventuality.
The company makes investments out of surplus funds as per policy of the company duly approved by the Board and in line with the DPE guidelines. Credit risk on cash and cash equivalents and term deposits is very limited as the company generally invests in deposits with financially strong banks and financial institutions.
b) Management of Liquidity risk
The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including term deposits and the availability of Funding through an adequate amount of credit facilities to meet obligations as and when due. Robust cash management system and regular monitoring of cash flows enables management to plan and maintain adequate sources to finance its funds requirement throughout the year. Besides adequate cash and bank balances, company enjoys credit facilities. The company is able to meet all its fund requirements from internal resources i.e. the funds generated from operations and also through shortterm borrowings for better treasury management operations.
The Company is exposed to certain currency,commodity, interest rate risks arising from its operations. The company has foreign exchange risk management policy to cover the foreign exchange risks.To insulate the company against major commodity price fluctuationframework agreements including price pass through claims are being entered regularly with supply chain partners including suppliers and customesrs. Surplus funds generated from operation are kept invested in short term deposits with PSU Banks or large sized private banks only and in debt based schemes of public sector mutual funds, thereby minimizing any chance of risk.
Foreign currency risk exposure-: The company''s exposure to foreign currency risk at the end of reporting period, are as follows:
(i) The derivative instruments that are hedged and outstanding as on 31.03.2022 is NIL (previous year Nil)
The company''s objective, while managing capital is to continue business as a going concern, safeguard,preserve and enhance its capital to provide maximum return to shareholders, benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Board of Directors also montiors the level of dividends to equity shareholders. The Company monitors capital, using a medium term view and long term view, on the basis of a number of financial ratios generally used by industry as well as by the rating agencies. The Company is not subject to externally imposed capital requirements. The Company''s capital structure is managed against the various financial ratios as required to maintain highest credit ratings.
ii) No loans have been given (other than loans to employees), wherein there is no repayment schedule or repayment is beyond seven years; and
iii) There are no loans and advances in the nature of loans, to firms/companies, in which directors are interested.
Assets and Liabilities are classified between Current and Non-current considering 12 months period as operating Cycle.
The Company has no transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.
There were no charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period.
The Company is complying with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (restriction on number of layers ) Rules, 2017.
No Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.
The Company has no transactions that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 which is unrecorded in the books of accounts.
The Company has not traded or invested in Crypto currency or Virtual currency during the financial year.
Prior period errors which are material are corrected retrospectively by restating the comparative amount for the prior periods presented in which such error occurred. For the error occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented are restated.
Figures have been rounded off nearest to '''' in crore with two decimal.
Previous year''s figures have been regrouped/ rearranged wherever considered necessary.
The Board of Directors has authorised to issue the Financial Statements 2021-22 in its meeting held on May 21,2022.
Mar 31, 2021
(i) The provision for impairment in value of investment in NTPC-BHEL Power Projects Private Limited has been made to the extent of '' 50.00 crore (upto previous year '' 50.00 crore) based on the net financial position. The Board of Directors in its meeting held on February 08, 2018 has accorded in-principle approval for pursuing the winding up of NBPPL. Ministry of Power (MoP) has advised NTPC to consider buying out the stake of BHEL and decide either to continue it as an in-house EPC arm or close it after completion of present work. This advise was noted by NBBPL Board in its meeting held on 29.08.2019.
(ii) Dada Dhuniwale Khandwa Power Limited (DDKPL) stands dissolved vide NCLT order dated 2nd November, 2020. Against the investment of '' 22.50 cr, '' 17.57 cr was received ('' 17.30 cr in FY 2018-19 & '' 0.27 cr in FY 2019-20). Balance '' 4.93 cr has been written off during the year and corresponding provision withdrawn.
(iii) The provision for impairment in value of investment in Powerplant Performance Improvement Limited amounting to '' 2.00 crore (previous year '' 2.00 crore) has been made since the JVC is under liquidation and the amount paid as equity is not recoverable.
The proposal for transfer of 51% stake in BHEL EML, sent by BHEL to Department of Heavy Industry, Govt. of India for approval, has been approved on 11th May 2021. Appropriate action to execute the Agreement with Govt of Kerela and to complete the necessary activities for transfer of Company''s 51% stake in BHEL EML to Govt of Kerela at a consideration of '' 1 only and waiver of working capital loan of '' 3 cr alongwith interest accrued thereon given by BHEL to BHEL EML (refer note 14) is being taken.
) Terms / rights attached to the equity shares
The company has only one class of equity shares having par value of '' 2 per share (previous year '' 2 per share). Each holder of the equity shares is entitled to one vote per share.
) Issue of bonus share
The Company allotted bonus share on October 03, 2017 in the ratio of 1:2 i.e. one equity share for two existing fully paid-up equity shares. Consequently, the paid-up capital was increased from '' 489.52 crore in FY 2016-17 to '' 734.28 crore in FY 2017-18 by capitalization of reserves.
) Share buyback
The Company vide its Board approval dated October 25,2018, bought back its 18,93,36,645 fully paid-up equity shares of the face value of '' 2 each representing 5.16% of the total issued and paid-up equity share capital from the eligible equity shareholders of the Company for an amount of '' 1628,29,51,470 at a price of '' 86 per equity share in FY 2018-19. Consequently, the paid-up share capital was reduced from '' 734.28 crore in FY 2017-18 to '' 696.41 crore in FY 2018-19.
(a) Capital reserve : It represents mainly the excess of net assets taken, over the cost of consideration paid during amalgamation of the then subsidiary company (HPVP) with the BHEL.
(b) Capital redemption reserve: The Company has recognised Capital Redemption Reserve on buy back of equity shares from its general reserve The amount in capital redemption reserve is equal to nominal amount of equity shares bought back.
(c) General reserve: This represents accumulation of profits retained by Company to meet future (known/unknown) obligations.
(d) Retained earnings: Retained earnings are profits that Company has earned till date, less transfer to general reserve, dividends (incl. dividend distribution tax) or other distributions to shareholders.
(e) Re-measurement of net defined benefit plans: Differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumption or experience adjustments within the plans, are recognised in ''Other comprehensive income'' and these are subsequently not to be reclassified to the Statement of Profit and Loss.
(i) The Company has a cash credit limit from banks aggregating to '' 6000 crore (previous year '' 6000 crore) and Company''s counter guarantee / indemnity obligations in regard to bank guarantee / letters of credit limit aggregating to '' 54000 crore (previous year ''54000 crore) sanctioned by the consortium banks. These are secured by first charge by way of hypothecation of raw materials, components, work in progress, finished goods, stores, trade receivables and other current assets both present and future. The outstanding bank guarantees as at 31.03.2021 is '' 39343 Crore (previous year '' 41491 Crore). This figure includes BG of '' 630 crore (previous year '' 971 Crore) issued as replacement and pending for vacation as on 31st March 2021
(ii) Loan from Banks represents loans against Fixed deposits ('' 200 crore) and balance for WCDL (Working Capital Demand Loan). (Previous year loan from Banks represents WCDL).
(iii) Packing Credit in Foreign Currency (PCFC) has been availed by the Company. The outstanding amount of USD 40.50 million is repayable in parts during the months November 2021 to March 2022.
(iv) Buyer''s credit has been availed by the Company. The outstanding amount of USD 6.18 million is repayable in April 2021.
(i) In view of various court cases, litigations and claims disputed by the Company, the outflow of resources is not ascertainable at this stage. Generally,contingent Liability in respect of court & arbitration cases are shown on award/court judgement and also reviewed on a case to case basis for its reporting in contingent liability.
(ii) It is not practicable for the Company to estimate the timing of actual cash outflows in respect of items (a) to (f) , if any, due to pending resolution of the respective proceedings. However, the chances are remote and contingent.
(iii) Liquidated damages represents likely claims or amount withheld by customer on account of delay in execution of projects which will be settled after commissioning and trial operation of project based on delay analysis and is being disclosed in line with Ind AS -37.
Current Financial liabilities includes a sum of '' 100.51 crore (previous year '' 100.51 Crore) towards guarantee fee demanded by the Government of India in respect of foreign currency loans taken by the Company at the instance of the Government upto 1990-91. The matter for its waiver has been taken up with the Government since there was no stipulation for payment of such guarantee fee at the time the loans (guaranteed by Government) were taken by the company.
The Company had taken over Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon on April 1, 1999 from Ministry of New and Renewable Energy (MNRE) on lease for a period of 30 years. The formal lease agreement with the Ministry of New and Renewable Energy (MNRE) is yet to be finalised.
Balance shown under Trade receivables, Trade payables, contractors'' advances, deposits and stock / materials lying with sub-contractors/ fabricators are subject to confirmation, reconciliation & consequential adjustment, if any. The Company is in the business of long term construction contracts, bills are raised on the customers as per contract in line with billing schedule approved by the customer and the reconciliation is carried out on ongoing basis & provisions made, wherever considered necessary. Final reconciliation with customer is done on completion of project (Trial Operation and PG Test completed). Trade receivable of completed projects stand at ''7882 crore (previous year ''8098 crore) . Out of completed contracts, the projects reconciled with customers have outstanding trade receivables of ''6299 crore (previous year ''6676 crore).
Note [45]Disclosure on Leases - Ind AS 116
Lease Commitments - Company as Lessee
The company''s significant leasing agreements are in respect of land, building and EDP equipments. The company has entered into a rate contract for lease arrangement for computer items, printers, video conferecing equipments and peripherals. Assets taken on lease are capitalised and disclosed separately as Right-of-use assets in the property, plant and equipment. The lease rentals are allocated between interest, maintainence and principal value. The interest and maintenance charges are charged to Statement of Profit and Loss and principal amount is adjusted to lease obligations.
The company has applied the following available practical expedients :
(i) The short-term leases exemptions to leases with lease term less than 12 months
(ii) The low value lease exemption to leases where underlying asset is of low value (assets of less than '' 50000 in value).
A. The Company has following Schemes in the nature of Defined Benefits plans :
i) Gratuity Scheme
ii) Post Retirement Medical Scheme
iii) Provident Fund Scheme
iv) Travel claim on Retirement
(i) Gratuity (Funded Plan)
The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum limit of ''20 Lakhs.The gratuity liability arises on account of future payments, which are required to be made in the event of retirement, death in service or withdrawal. The liability has been assessed using projected unit credit actuarial method.
(ii) Post Retirement Medical Benefits (Funded Plan)
The Company has Post-Retirement Medical benefit (PRMB), under which the retired employees and their spouses are provided medical facilities in the Company hospitals/empanelled hospitals subject to company medical rules.They can also avail treatment as out-patient subject to a ceiling fixed by the Company. The liability for the same is recognised annually on the basis of actuarial valuation.
Risk Exposure
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks such as increase in medical cost, investment risk, discount rate, mortality, disability and withdrawals.
(iii) Provident Fund
The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The Company has an obligation to ensure minimum rate of return to the members as specified by GOI. Accordingly, the Company has obtained report of the actuary. Wherever as per the actuarial valuation certificate liability for likely interest shortfall arises, the same has been provided in the accounts.
B. Long Term Leave Liability (Encashable Leave -EL /Half Pay Leave-HPL) - (Unfunded Plan)
The company provides for earned leave benefit and half pay leave to the employees of the company which accrue half yearly at 15 days (maximum) and 10 days respectively. The earned leave is encashable while in service subject to fulfilment of certain conditions. On retirement/superannuation, earned leave & half pay leave put together upto a maximum of 300 days is encashable subject to company policies & leave encashment rules.The leave liability has been treated as other long term benefits and has been assessed using projected unit credit actuarial method.
The company is a central Public Sector undertaking under the administrative control of Ministry of Heavy Industries and majority of its stake is held by Government of India. The significant transactions are with other PSUs, State owned utilities, Railways etc. which are also controlled by Govt. of India directly or indirectly. The transactions with such entities are normal, based on market driven rates at arms length price.
Construction of power projects is a long cycle business, where the contracts received by the company are either EPC contracts (Engineering, Procurement & Construction) or BTG Packages (i.e. Boiler, Turbine and Generator packages). Power projects are long gestation period projects with normal execution period of contract ranging between 3 to 5 years. BHEL scope of services includes supply of equipment, erection, commissioning, synchronizing the plant to the grid, completing the trial operation and providing the guaranteed parameters.
Although there are several components to the overall scope, such projects are generally considered one performance obligation. The control transfers simultaneously over the execution period as the entity performs rather than at discrete points in time and hence revenue is recognized over the period of time based on measure of progress (input cost method)
Note [50]
The Nationwide lockdown, consequent to spread of Covid 19 pandemic globally caused disturbance & slow down of the economic activity. This impacted the Company''s operations during the FY 2020-21, which recouped progressively. Based on the internal & external information upto the date of approval of these financial statements,the company expects to recover the carrying amount of its assets,investments,trade receivables,contract assets & inventories. The company will continue to monitor the future economic conditions and assess its impact on its financial statements.
a. The Fair value of cash and cash equivalents, bank balances, loans, trade receivables, trade payables and others reasonably approximates their carrying amount. Trade receivables are evaluated after taking into consideration for Expected Credit Losses. Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.
Fair value hierarchy
The fair value of financial instruments have been classified in following categories depending on the inputs used in the valuation technique.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
The company''s activities are exposed to different financial risks arising out of natural business exposures to any company operating in the sector. The management of financial risk has always been an integral part of the company''s business strategies and policies. The company reviews and aligns its policies and guidelines from time to time to address the financial risks in line with the needs and expectations of its various stakeholders. Exposure risk from the use of financial instruments can be categorized as under:
a) Credit risk
b) Liquidity risk
c) Market risk
This note presents information about the Company''s exposure to each of the above risks, the Company''s objectives, policies and processes for measuring and managing risk, and management of Company''s capital. Further quantitative disclosures are included throughout these financial statements.
Risk Management Framework
BHEL has in place a Board approved Risk Management Charter & Policy which provides overall framework for Risk Management in the company. The objective of the charter is to ensure that the risks are being properly identified, assessed and effectively managed by adopting suitable risk mitigation measures. The company has 3-layer risk management framework. At the first level, the Board Level Risk Management Committee (BLRMC) of the company is assigned with responsibility of reviewing the company''s Risk Governance structure, Risk Assessment & Risk Management framework, Guidelines, Policies and Processes thereof. Risk Management Steering Committee (RMSC) at the second level is responsible for adopting & implementing the risk management framework and leading the risk management initiative across the company. Chief Risk Officer (CRO) being the convener of BLRMC & RMSC is responsible for periodic reporting on risk management to Board/ BLRMC. Key risks being faced by the company are analysed starting from Unit level for their respective areas to prepare risk mitigation plans and to ensure implementation.
a) Management of Credit Risk
Credit risk is considered as an integral part of risk reward balance of doing business. BHEL is involved in setting up of power projects pertaining to Government sector (State utilities, PSU''s, Railways and other govt. departments etc.) and private sectors in India and abroad. The projects are generally funded by Financial Institutions/ banks or payments are covered by Letter of Credit (LC). The project duration ranges from 3 to 5 years and payments are generally realised in stages as per the terms of the contract including advance, progress payments, milestone payments and also retentions which are released on completion of such projects. Since majority customers profile pertains to Government sector, constituting 78% of total receivables coupled with the fact that the company itself is a CPSE, credit risk is relatively low. In respect of private sectors customers, the payment terms are mainly through LC. The company has well established review mechanism for receivables at various levels within organisation to ensure proper attention and focus for realisation in line with the company policies, procedures and guidelines.The company uses expected credit loss model to assess the impairment loss or gain and the disclosure of the same is made elsewhere. Further, adequate provisions are maintained to address any eventuality.
i) Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
The company makes investments out of surplus funds as per investment policy of the company duly approved by the Board and in line with the DPE guidelines .Credit risk on cash and cash equivalents and term deposits is very limited as the company generally invests in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies.
b) Management of Liquidity risk
The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including term deposits and the availability of Funding through an adequate amount of credit facilities to meet obligations as and when due. Robust cash management system and regular monitoring of cash flows enables management to plan and maintain adequate sources to finance its funds requirement throughout the year. Besides adequate cash and bank balances, company enjoys credit facilities. The company is able to meet all its fund requirements from internal resources i.e. the funds generated from operations and also through short-term borrowings used for better treasury management operations to optimise the returns on investments.
The Company is exposed to certain currency,commodity, interest rate risks arising from its operations. The company has foreign exchange risk management policy to cover the foreign exchange risks.To insulate the company against major commodity price fluctuation,framework agreements including price pass through claims are being entered regularly with supply chain partners including suppliers and customers. Surplus funds generated from operation are kept invested in short term deposits with PSU Banks or large sized private banks only and in debt based schemes of public sector mutual funds , thereby minimizing any chance of risk.
Foreign currency risk exposure The company''s exposure to foreign currency risk at the end of reporting period, are as follows:
(i) The derivative instruments that are hedged and outstanding as on 31.03.2021 is NIL (previous year Nil)
The company''s objective, while managing capital is to continue business as a going concern, safeguard,preserve and enhance its capital to provide maximum return to shareholders, benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Board of Directors also montiors the level of dividends to equity shareholders. The Company monitors capital, using a medium term view and long term view, on the basis of a number of financial ratios generally used by industry as well as by the rating agencies. The Company is not subject to externally imposed capital requirements. The Company''s capital structure is managed against the various financial ratios as required to maintain highest credit ratings.
Assets and Liabilities are classified between Current and Non-current considering 12 months period as operating Cycle.
Weighted average cost of borrowing at 7.07 % (previous year @ 7.07%) as at the year end has been considered for working out present value of long term provisions and expected credit loss.
Prior period errors which are material are corrected retrospectively by restating the comparative amount for the prior periods presented in which such error occurred.For the error occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented are restated.
Figures have been rounded off nearest to '' in crore with two decimal.
Previous year''s figures have been regrouped/ rearranged wherever considered necessary.
The Board of Directors has authorised to issue the Financial Statements 2020-21 in its meeting held on June 11 , 2021
Mar 31, 2018
The shareholders of the Company in their Annual General Meeting held on September 22, 2017 approved the issue of bonus shares in the ratio of 1:2 i.e. one equity share for two existing fully paid up equity share held. The bonus shares were allotted on October 3, 2017. Accordingly post bonus issue, the number of equity shares were increased from 244.76 crore to 367.14 crore. Accordingly, the earning per share for comparative period of March 31, 2017 have also been computed on the basis of new number of shares post bonus issue in line with Ind AS 33 - Earnings per share.
1. Bharat Heavy Electricals Limited (âBHEL or âthe Companyâ) is a public limited company domiciled in India and has its registered office at BHEL House, Siri Fort, New Delhi-110049.
The Company is an integrated power plant equipment manufacturer engaged in design, engineering, manufacture, erection, testing, commissioning and servicing of a wide range of products and services for the core sectors of the economy, viz. Power, Transmission, Industry, Transportation, Renewable Energy, Oil & Gas and Defence.
2. (i) The Company has a Cash credit limit from banks aggregating to RS.5000 crore (previous year RS.5000 crore and Companyâs counter guarantee/indemnity obligations in regard to bank guarantee/letters of credit limit aggregating to RS.55000 crore (previous year RS.55000 crore) sanctioned by the consortium banks. These are secured by first charge by way of hypothecation of raw materials, components, work in progress, finished goods, stores, trade receivables and other current assets both present and future. The outstanding bank guarantees as at March 31, 2018 is RS.43881 crore (previous year RS.40666 crore).
(ii) Corporate Guarantees given for own obligations outstanding as on March 31, 2018 is RS.1747.07 crore (Previous year RS.1733.80 crore).
3. Balance shown under Trade receivables, Trade payables, contractorsâ advances, deposits and stock / materials lying with sub-contractors/ fabricators are subject to confirmation, reconciliation & consequential adjustment, if any. The Company is in the business of long term construction contracts, bills are raised on the customers as per contract as per approved billing schedule by the customer and the reconciliation is carried out on ongoing basis & provisions made, wherever considered necessary. Final reconciliation with customer is done on completion of project (Trial Operation and PG Test completed). The total receivables including long term net of provisions are RS.35493 crore (Previous Year RS.31863 crore), {including deferred debts and other debts of RS.19041 crore (previous year RS.19116 crore)presently not due for payment and RS.7307 crore (previous year RS.6287 crore) outstanding in respect of completed projects}, out of which, the projects reconciled with customers during the year have outstanding debts of RS.6428 crore (previous year RS.5497 crore) in respect of completed projects.
4. The Company had taken over Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon taken on April 1, 1999 from Ministry of New and Renewable Energy (MNRE) on lease for a period of 30 years. The formal lease agreement with the Ministry of New and Renewable Energy (MNRE) is yet to be finalised.
5. Current financial liabilities includes a sum of RS.100.51 crore (previous year RS.100.51 crore) towards guarantee fee demanded by the Government of India in respect of foreign currency loans taken by the Company at the instance of the Government upto 1990-91. The matter for its waiver has been taken up with the Government since there was no stipulation for payment of such guarantee fee at the time the loans (guaranteed by Government) were taken by the company.
6. Research and Development Expenditure
the details of research and development expenditure incurred during the year, which is eligible (other than land or building) of deduction under section 35 (2AB) of the Income tax Act, 1961.
A consortium of BHEL, IGCAR & NTPC has entered into an MOU in August, 2010 for taking up the R&D Project for development of Advanced Ultra Supercritical (AUSC) technology for thermal power plants of future, envisaging reduced coal consumption as well as Carbon Di-Oxide (CO2) emission. Cabinet Committee on Economic Affairs (CCEA) accorded approval to the project in its meeting held on August 10, 2017. the project invloves an estimated expenditure of RS.1554 crore, with a contribution of RS.270 crore from BHEL, RS.50 crore from NTPC, RS.234 crore from IGCAR, RS.100 crore from DST and balance RS.900 crore by Department of Heavy Industries, Government of India for implementation of the R&D project, spreading over a period of three years commencing from 2017-18. BHEL from own contribution has spent RS.23.60 crore in 2017-18 and accounted as R&D expenditure.
7 Jointly controlled Entities and Subsidiary
Details of entities and BHELâs ownership proportion is as stated below:
(a) The provision for impairment in value of investment in NTPC-BHEL Power Projects Private Ltd. has been made to the extent of RS.45.60 crore based on the net financial position.The Board of Directors in its meeting held on February 8, 2018 has accorded in principle approval for pursuing the winding up of NBPPL.
(b) The provision for impairment in value of investment in Powerplant Performance Improvement Ltd. amounting to RS.2 crore has been made since the Company is under liquidation and the amount paid as equity is not recoverable.
(c) The provision for impairment in value of investment in Dada Dhuniwale Khandwa Power Ltd. has been retained to the extent of RS.5.50 crore (previous year RS.6.71 crore) based on the net financial position. The winding of the company is in process. An amount of RS.17 crore has been received on April 27, 2018 against investment of RS.22.50 crore in DDKPL.
(d) Latur Power Company Ltd. has been wound up during the year.
8 Related Parties Transactions
i) Joint Ventures:
BHEL - GE Gas Turbine Services Pvt. Ltd. (BGGTS)
Raichur Power Corporation Ltd. (RPCL)
NTPC - BHEL Power Projects Pvt. Ltd. (NBPPL)
Dada Dhuniwale Khandwa Power Ltd.
Powerplant Performance Improvement Ltd.
Subsidiary Company
BHEL Electrical Machines Limited
Others
Central Government controlled entities Provident fund trusts
Gratuity trusts, PRMB Trust, Pension Trust
ii) Other related parties (Key Management Personnel - Functional Directors: existing and retired and Company Secretary): cMD : Shri Atul Sobti
Functional Directors : S/Shri D. Bandyopadhyay, Amitabh Mathur, S. Biswas, Akhil Joshi, T. Chockalingam
(upto November 30, 2017 )
company Secretary : Shri I.P. Singh
The CMD and functional directors have been allowed the use of staff car for both duty and non-duty journeys.The ceiling of non duty journey is 1000 kms p.m against recovery of prescribed amount in accordance with terms and condition of appointment. The monetary value of the perquisite for the use of car, if calculated in accordance with the provisions of I.T. Rules 1962 would amount to J 0.02 crore (previous year J 0.02 crore)
The company is a Central Public Sector Undertaking under the administrative control of Ministry of Heavy Industries and majority of its stake is held by Government of India. The significant transactions are with other PSUs, State owned utilities, Railways etc. which are also controlled by Government of India directly or indirectly. The transactions with such entities are normal, based on market driven rates at arms length price.
9 As per Section 135 of the Companies Act, 2013 read with guidelines issued by DPE, the Company is required to spend, in every financial year, at least two per cent of the average net profits of the Company made during the three immediately preceding financial years in accordance with its CSR Policy. The details of CSR expenses for the year are as under:
The following dividend were declared and paid during the year:
a The above final dividend figures exclude tax on dividend of RS.38.87 crore (previous year RS.19.93 crore)
b The above interim dividend figures exclude tax on dividend of RS.59.79 crore (previous year RS.39.86 crore)
c The Company has alloted bonus share on October 3, 2017 in the ratio of 1:2. Accordingly,the number of equity shares have increased from 244.76 crore to 367.14 crore. The interim dividend paid in 2017-18 was on enhanced number of equity share of 367.14 crore.
d The company has proposed final dividend @ 51% (RS.1.02 per share, amounting to RS.374.48 crore) on paid up share capital of RS.734.28 crore out of profit for the year 2017-18. The total payout on account of dividend (RS.374.48 crore) alongwith corporate dividend tax (RS.76.97 crore) will be RS.451.45 crore.
e The Board of Directors has authorised to issue the Financial Statements 2017-18 in its meeting held on May 29, 2018.
The estimates of total costs and total revenue in respect of construction contracts in accordance with Ind AS - 11 Construction Contracts are reviewed and up dated periodically to ascertain the percentage completion for revenue recognition. However, it is impracticable to quantify the impact of change in estimates.
10 Leases
Disclosure ind AS 17 - leases Operating lease commitments - company as lessee
The Company is in the practice of taking houses for Employees, Office Buildings and EDP equipment etc. on operating lease both as cancellable and non- cancellable. The total of future minimum lease payments under non-cancellable operating leases for each of the following periods :
11 Disclosure as per Ind AS 19 on âEmployee Benefitsâ
The Company has following Schemes in the nature of Defined Benefits plans
i) Gratuity Scheme
ii) Post Retirement Medical Scheme
iii) Provident Fund Scheme
a. Gratuity (Funded Plan)
The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to gratuity at 15 days salary (15/26 x last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum limit of RS.20 lakhs.The gratuity liability arises on account of future payments, which are required to be made in the event of retirement, death in service or withdrawal. The liability has been assessed using projected unit credit actuarial method. Gratuity Act has been amended and Government has notified increase in maximum Gratuity limit to RS.20 lakhs from earlier limit of RS.10 lakhs during 2017-18.
Sensitivities due to mortality and withdrawals are not material and hence impact of change due to these are not calculated.
Sensitivities as rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable.
The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. This analysis may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Expected contributions to gratuity plans for the year ending March 31, 2019 are RS.126.76 crore
The weighted average duration of the gratuity defined benefit plan obligation at the end of the reporting period is 14.78 years (March 31, 2017: 14.66 years. )
Vi. Risk Exposures
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks such as increase in salary, investment risk, discount rate, mortality, disability and withdrawals.
B. Post Retirement Medical Benefits (Funded Plan)
The Company has Post-Retirement Medical benefit (PRMB), under which the retired employees and their spouses are provided medical facilities in the Company hospitals/empanelled hospitals subject to company medical rules. They can also avail treatment as out-patient subject to a ceiling fixed by the Company. The liability for the same is recognised annually on the basis of actuarial valuation.
The plan assets of the Company are managed by Life Insurance Corporation of India (LIC) through a trust managed by the Company in terms of an insurance policy taken to fund obligations of the Company.
Sensitivity due to mortality and withdrawls are not material and hence impact of change not calculated.
The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. This analysis may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
V. Risk exposure
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks such as increase in medical cost, investment risk, discount rate, mortality, disability and withdrawals.
c. long term leave liability [Encashable leave (El) / half pay leave (HPL)] - (Unfunded plan)
The Company provides for earned leave benefit and half pay leave to the employees of the Company which accrue half yearly at 15 days (maximum) and 10 days respectively. The earned leave is encashable while in service, once in a quarter. encashable leave and half pay leave is encashable upto a maximum of 300 days on superannuation subject to Company policy and leave encashment rules.The leave liability has been treated as other long term benefits and has been assessed using projected unit credit actuarial method.
D. Provident Fund
The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. An amount of RS.275.80 crore (March 31, 2017: RS.282.46 crore) for the year is recognised as expense on this account and charged to the statement of profit and loss. The Company has an obligation to ensure minimum rate of return to the members as specified by Government of India (GOI). Accordingly, the Company has obtained report of the actuary, based on which overall interest earnings and cumulative surplus is more than the statutory interest payment requirement for all the periods presented and wherever as per the actuarial valuation certificate liability for likely interest shortfall arises, the same has been provided in the accounts.
The provision for contractual obligation is made considering the effect of time value of money in line with Significant Accounting Policy no. 11 to meet the warranty obligations as per the terms and conditions of the contract. The same is retained till the completion of the warranty obligations of the contract. The actual expenses on warranty obligation may vary from contract to contract and on year to year depending upon the terms and conditions of the respective contract.
12 Financial Instruments - (Disclosure Ind AS-107) Accounting Classifications and Fair Value Measurements
a The Fair value of cash and cash equivalents, bank balances, loans, trade receivables, trade payables and others approximates their carrying amount. Trade receivables are evaluated after taking into consideration for Expected Credit Losses. Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.
Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 : Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3 : Inputs for the asset or liability that are not based on observable market data (unobservable inputs). b Classification of financial assets / liabilities
c Valuation techniques used to determine fair value
Fair value of unquoted equity instruments is determined using level 3 inputs which include inputs from the financial statements of the investee Company based on net asset value per share.
Reconciliation of fair value measurement of unquoted equity shares classified as FVTPL assets
d Financial Risk Management Objectives and Policies
The Companyâs activities are exposed to different financial risks arising out of natural business exposures to any Company operating in the sector. The management of financial risk has always been an integral part of the Companyâs business strategies and policies. The Company reviews and aligns its policies and guidelines from time to time to address the financial risks in line with the needs and expectations of its various stakeholders. Exposure risk from the use of financial instruments can be categorized as under:
- Credit Risk
- Liquidity Risk
- Market Risk
This note presents information about the Companyâs exposure to each of the above risks, the Companyâs objectives, policies and processes for measuring and managing risk, and management of Companyâs capital. Further quantitative disclosures are included throughout these financial statements.
e Risk Management Framework
BHEL has in place a Board approved Risk Management Charter & Policy which provides overall framework for Risk Management in the Company. The objective of the charter is to ensure that the risks are being properly identified, assessed and effectively managed by adopting suitable risk mitigation measures. The company has 3-layer risk management framework. At the first level, the Board Level Risk Management Committee (BLRMC) of the Company is assigned with responsibility of reviewing the Companyâs Risk Governance structure, Risk Assessment & Risk Management framework, guidelines, policies and processes thereof. Risk Management Steering Committee (RMSC) at the second level is responsible for adopting & implementing the risk management framework and leading the risk management initiative across the Company. Chief Risk Officer (CRO) being the convener of BLRMC & RMSC is responsible for periodic reporting on risk management to Board/ BLRMC. Key risks being faced by the Company are analysed starting from Unit level for their respective areas to prepare risk mitigation plans and to ensure implementation.
f credit Risk Management
Credit risk is considered as an integral part of risk reward balance of doing business. BHEL is involved in setting up of power projects pertaining to Government sector (State utilities, PSUâs, Railways and other Government departments etc.) and private sectors. The projects are generally funded by Financial Institutions / Banks or payments are covered by Letter of Credit (LC). The project duration ranges from 3 to 4 years and payments are generally realised in stages as per the terms of the contract including advance, progress payments, milestone payments and retentions are released on completion of such projects. Since majority customers profile pertains to Government sector, constituting 81% of total receivables coupled with the fact that the company itself is a CPSE, credit risk is relatively low. In respect of private sector customers, the payment terms are mainly through LC. The company has well established review mechanism for receivables at various levels within organisation to ensure proper attention and focus for realisation in line with the Company policies, procedures and guidelines.The Company uses expected credit loss model to assess the impairment loss or gain and the disclosure of the same is made elsewhere. Further, the Company prepares its accounts on conservative basis and adequate provisions are maintained to address any eventuality.
Exposure to credit Risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
g impairment losses
(a) Financial assets for which loss allowance is measured using 12 month expected credit losses
The Company has assets where the counter - parties have sufficient capacity to meet the obligations and where the risk of default is very low.
The movement in the allowance for impairment in respect of loans during the year was as follows :
(b) Reconciliation of impairment loss provisions
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
The Company makes investments out of surplus funds as per investment policy of the Company duly approved by the Board and in line with the DPE guidelines. Credit risk on cash and cash equivalents and term deposits is very limited as the Company generally investsâ in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies.
h Liquidity risk
The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including term deposits to meet obligations as and when due. Robust cash management system and regular monitoring of cash flows enables management to plan and maintain adequate sources to finance its funds requirement throughout the year. Besides adequate cash and bank balances, company enjoys cash credit facilities which has remained unutilised during the year. The company is able to meet all its fund requirements from internal resources i.e. the funds generated from operations.
Accordingly, no liquidity risk is perceived.
The following are the contractual maturities of non-derivative financial liabilities, based on contractual cash flows :
i Market risk
The Company is exposed to certain currency,commodity, interest rate risks arising from its operations. The Company has foreign exchange risk management policy to cover the foreign exchange risks. To insulate the company against major commodity price fluctuation, framework agreements including price pass through claims are being entered regularly with supply chain partners including suppliers and customers. The Company has no borrowings. Surplus funds generated from operation are kept invested in short term deposits with PSU Banks or large sized private banks only and in debt based schemes of public sector mutual funds , thereby minimizing any chance of risk.
j Foreign currency risk exposure : The companyâs exposure to foreign currency risk at the end of reporting period, are as follows :
(i) The derivative instruments that are hedged and outstanding as on March 31, 2018 is NIL (previous year Nil)
(ii) The foreign currency exposures that are not hedged by a derivative instrument or otherwise are as under :
Sensitivity analysis
The impact of strengthening / weakening of the Indian Rupee vis a vis USD, EURO and others as at year end on profit or loss is as shown below. This analysis is based on foreign currency exchange rate variances that the Company considered to be reasonably possible at the end of the reporting period. The analysis is performed on the same basis for previous year, albeit that the reasonably possible foreign exchange rate variances were different, as indicated below.
k capital Management
The Companyâs objective, while managing capital is to continue business as a going concern, safeguard, preserve and enhance its capital to provide maximum return to shareholders and benefits to other stakeholders. The Board of Directors also montiors the level of dividends to equity shareholders. The Company monitors capital, using a medium term view and long term view, on the basis of a number of financial ratios generally used by industry as well as by the rating agencies. The Company is not subject to externally imposed capital requirements. The Companyâs capital structure is managed against the various financial ratios as required to maintain strong credit ratings. The Board of Directors monitors the return on capital.
The Companyâs return on capital is 2.47 % for FY 2017-18 in comparison to 1.54% for FY 2016-17.
13 As per SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015, the requisite details of loans and advances in the nature of loans, given by the company are given below :
i) In respect of Subsidiary Company :
ii) No loans have been given (other than loans to employees), wherein there is no repayment schedule or repayment is beyond seven years; and
iii) There are no loans and advances in the nature of loans, to firms / companies, in which directors are interested.
14 Assets and liabilities are classified between current and non-current considering 12 months period as operating cycle.
15 The wage revision for various cadre of employees is due w.e.f. January 1, 2017. In respect of Executives, pursuant to the issue of Presidential directive during the year, the liability has been provided as part of employee benefits. For Supervisors & Workers, pending finalisation of agreement for wage / salary structure, a provision of RS.760 crore has been kept as on March 31, 2018.
16 Marginal cost of lending rate (MCLR) @8.30% (previous year @9.25%) as at the year end has been considered for working out fair value of consideration and present value of long term provisions.
17 There are net outstanding debts of RS.2197 crore (after adjustment of advances) (previous year RS.2119 crore) pertaining to 27 projects on hold due to various reasons e.g. environment clearance, fuel linkage, land acquisition, fund constraints, force majeure, hold imposed by BHEL due to strategic reasons etc. FG/ WIP of RS.711 crore (previous year RS.777 crore) is also lying in these projects. Provision of RS.1655 crore (previous year RS.1618 crore) for outstanding debts and RS.225 crore (previous year RS.180 crore) for inventory has been provided till March 31, 2018 against these projects in line with the guidelines in this regard.
18 amendment to Standards Effective april 1, 2017
The amendment to Ind AS 7, Statement of Cash Flows and Ind AS 102 Share Based Payments effective from April 1, 2017 does not have any impact / disclosures on financial statements as it does not have any such transactions.
19 Recent accounting Pronouncements ( Effective april 1, 2018)
Ministry of Corporate Affairs (MCA) has notified amendment to Ind AS 21 (The Effects of Changes in Foreign Exchange rates) and Ind AS 115 (Revenue from Contracts with Customers) on March 28, 2018 as part of the Companies (Indian Accounting Standards) Amendment Rules, 2018 effective from April 1, 2018.
Appendix B to Ind AS 21 âForeign Currency Transactions and Advance Considerationâ clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.
Ind AS 115 - Revenue from Contract with Customers: The new standards replaces existing revenue recognition standards Ind AS 11 (Construction Contracts) and Ind AS 18 (Revenue).
Under Ind AS 115 revenue shall recognize when control over goods & services is transferred to customer and in respect of contracts when performance obligation is satisfied over a period, the revenue shall recognize over the period at transaction price. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers. The standard permits retrospective approach in accordance with Ind AS 8 or retrospectively with cumulative effect of initially applying the standard (cumulative catch-up approach)
The Company is in the process of examining and evaluating the impact of the said changes on the Companyâs financial statements.
20 Figures have been rounded off nearest to J in crore with two decimal.
21 Previous yearâs figures have been regrouped/ rearranged wherever considered necessary.
22 Operating Segment
The Segments have been identified as âPowerâ and âIndustryâ based on the orders booked by the respective business sectors. The order booked by International operation group is taken to Power or Industry as the case may be.
The Compnaysâ Committee of Functional Directors (COFD) has been identified as Chief Operating Decision Maker (CODM).
Mar 31, 2017
Note no. 1
Financial Assets -Trade receivables (Current)
Sub-classification
Unsecured, considered good
-(RS.22075.56 Crore (previous year RS.22430.12 Crore))
Doubtful
-(RS.5363.38 Crore (previous year RS.4808.60 Crore))
Current trade receivables include deferred debts (net of provisions)-
-(RS.8747.89 Crore (previous year RS.7915.68 Crore))
Current trade receivables include goods despatched pending billing-
-(RS.1038.38 Crore (previous year RS.678.80 Crore))
Current trade receivables include valuation adjustment-
-(RS.1031.75 Crore (previous year RS.1110.52 Crore))
Current trade receivables include debts outstanding for a period exceeding six months-
-(RS.17252.79 Crore (previous year RS.17723.02 Crore))
Includes:
Due from Directors
-(Rs.Nil (previous year Rs.Nil))
Due from Officers
-(Rs.Nil (previous year Rs.Nil))
Note no. 2
Financial Assets -Loans (Current)
Sub classification:-
Secured, considered good
-(RS.50.88 Crore (previous year RS.37.11 Crore))
Unsecured, considered good
-(RS.84.12 Crore (previous year RS.124.34 Crore))
Doubtful
-(RS.3.89 Crore (previous year RS.4.02 Crore)) includes:
Due from Directors
-(Rs.Nil (previous year Rs.Nil))
Due from Officers
-(RS.0.01 Crore (previous year RS.0.04 Crore))
Note no. 3
Notes to Accounts
Bharat Heavy Electricals Limited (âBHELâ or âthe Companyâ) is a public limited company domiciled in India and has its registered office at BHEL House, Siri fort, New Delhi- 110049.
The Company is an integrated power plant equipment manufacturer engaged in the design, engineering, manufacture, erection, testing, commissioning and servicing of a wide range of products and services for the core sectors of the economy, viz. Power, Transmission, Industry, Transportation, Renewable Energy, Oil & Gas and Defence.
1 First-time Adoption of Ind AS -101
The company has prepared its first Financial Statements in accordance with Ind AS for the year ended 31st MarcRs.2017. For periods up to and including the year ended 31st MarcRs.2016, the Company prepared its financial statements in accordance with Indian GAAP, including accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended). The effective date for Companyâs Ind AS Opening Balance Sheet is 1st April 2015 (the date of transition to Ind AS).
The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31st MarcRs.2017, the comparative information presented in these financial statements for the year ended 31st MarcRs.2016 and in the preparation of an opening Ind AS Balance Sheet as at 1st April 2015 (the Companyâs date of transition). According to Ind AS 101, the first Ind AS Financial Statements must use recognition and measurement principles that are based on standards and interpretations that are effective as at 31st MarcRs.2017, the date of first-time preparation of Financial Statements according to Ind AS. These accounting principles and measurement principles must be applied retrospectively to the date of transition to Ind AS and for all periods presented within the first Ind AS Financial Statements.
Any resulting differences between carrying amounts of assets and liabilities according to Ind AS 101 as on 1st April 2015 compared with those presented in the Indian GAAP Balance Sheet as on 31st MarcRs.2015, were recognized in equity under retained earnings within the Ind AS Balance Sheet, wherever applicable.
An explanation of how the transition from previous GAAP to Ind AS has affected the companyâs financial position and financial performance is set out in the following tables and notes.
Exemptions and Exceptions availed
In the Ind AS Opening Balance Sheet as on 1st April 2015, the carrying amounts of assets and liabilities from the Indian
GAAP as at 31st MarcRs.2015 are generally recognized and measured according to Ind AS in effect as on 31st MarcRs.2017. For certain individual cases, however, Ind AS 101 provides for optional exemptions and mandatory exceptions to the general principles of retrospective application of Ind AS. The Company has used the following exemptions and exceptions in preparing its Ind AS Opening Balance Sheet:
Optional Exemptions Availed:
i) Property, plant and equipment & Intangible assets
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous Indian GAAP (IGAAP) and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38, Intangible Assets. Accordingly, the company has elected to measure all of its property, plant and equipment and intangible assets at their erstwhile Indian GAAP carrying value.
ii) Business Combination
Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. The Company has elected to apply Ind AS 103 âBusiness Combinationsâ prospectively from the date of transition. Accordingly, business combinations occurred prior to 1st April 2015 have not been restated.
iii) Investment in subsidiary and joint ventures:
The Company has elected to measure its investments in subsidiary and joint ventures in the separate financial statements at cost. The cost of investment for the purpose of first financial statements shall be previous Indian GAAP carrying amount net of impairment on the date of transition.
Ind AS Mandatory Exceptions:
i) Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist as on the date of transition to Ind AS. Accordingly Company has classified and measured all its financial assets on the basis of the facts and circumstances that exist as on the date of transition to Ind AS.
ii) Estimates
An entityâs estimates in accordance with Ind AS as on the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous IGAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1 April 2015 are consistent with the estimates as on the same date made in conformity with previous GAAP.
Notes to first-time adoption:
i) Classification of Locomotives as finance lease:
Locomotives given on lease prior to 1st April 2001 were accounted for in accordance with the guidance contained for manufacturer dealer lessor and recognised as Fixed assets under previous IGAAP. Under Ind AS, locomotives given on finance lease has been derecognised by the previous IGAAP net carrying value of RS.2.25 Crore and corresponding finance lease receivable has been recognised on transition date.
ii) Stores and Spares and retrofitting expenses classified as CWIP:
Stores and spares classified as inventory has been capitalized and depreciated over their useful life amounting to RS.1.53 Crore as at April 01, 2015. Further, expenditure on retrofitting works has been capitalised as an item of PPE in FY 2015-16 in line with Ind AS. The net impact is increase in retained earning by RS.0.40 Crore as on 01.04.2015 and increase in profit by RS.1.83 Crore for 2015-16.
iii) Proposed dividend:
Under Indian GAAP, the Company had accounted for proposed dividends relating to year ended 31st MarcRs.2015 in that year, though the approval of that dividend took place after the reporting date. Under Ind AS, proposed dividends do not meet the definition of liability until they have been approved by shareholders at the Annual General Meeting. Company has declared dividend of RS.151.75 Crore (RS.182.64 Crore inclusive of CDT) for the year 2014-15 which is reversed as per Ind AS on transition date, with corresponding effect of increase in retained earnings by RS.182.64 Crore. Dividend of RS.97.90 Crore (RS.117.83 Crore inclusive of CDT) for the year 2015-16 declared in 2016-17 is reversed and dividend of RS.151.75 Crore (RS.182.64 Crore including CDT) of 2014-15 declared in 2015-16 is adjusted. The impact is decrease in retained earnings by RS.64.81 Crore for 2015-16.
iv) Government grants to be shown as deferred income:
Under Indian GAAP, the Company had recognised government grant received amounting to RS.1.38 Crore as capital reserve. Under Ind AS, government grants received for capital assets are to be recognised as deferred income and to be amortized on a systematic basis in line with Ind AS. The amount of RS.1.38 Crore has been reclassified from capital reserve to retained earnings on transition date accordingly.
v) Investments in equity securities classified as at Fair Value through P&L (FVTPL):
As per Ind AS, the Company has classified certain investments amounting to RS.5.91 Crore as at FVTPL. The fair value of these investments have been calculated at RS.8.71 Crore. The gain of RS.2.80 Crore is adjusted to retained earnings as on 1st April, 2015. In FY 2015-16, the fair value of these investment has been calculated as RS.6.67 Crore and the resultant impact of RS.2.04 Crore is accounted through P&L.
vi) Revenue Contracts accounted at percentage of completion method (POCM):
The company has accounted for revenue arising from contracts entered into before 1.4.2003 at POCM as per Ind AS 11. The effect of adjustment is decrease in retained earnings by RS.9.60 Crore with consequential impact on trade receivables and provision for warranty obligation as on April 01, 2015. The effect of adjustment is increase in profit by RS.8.03 Crore with consequent impact on turnover and warranty obligation for 2015-16.
vii) Recognition of other Long term Provisions at present value:
As per Ind AS, long term provisions are to be accounted at present value where obligation are likely to be settled at later date. Accordingly, other long term provisions, wherever applicable, have been measured at present value and the effect of the adjustment is increase in retained earnings by RS.37.22 Crore and decrease in provisions by same amount as on April 01, 2015. The unwinding of interest on these provisions and discounting of provisions with respect to additions made during the year has net impact of decrease in profit by RS.20.57 Crore for 2015-16.
viii) Recognition of Long term Contractual Obligation at present value:
In line with Ind AS where the obligations are likely to be settled at later date and the effect of time value is material, the provision are to be accounted at present value. Accordingly, Long term Contractual obligation have been measured at present value and the effect of the adjustment is increase in retained earnings by RS.538.93 Crore and decrease in provisions by same amount as on April 01, 2015. The effect of unwinding of interest on these provisions and discounting of provision with respect to additions made during the year is decrease in profit by RS.184.06 Crore for 2015-16.
ix) Fair value of consideration:
Ind AS prescribes the revenue recognition in respect of construction contracts at fair value. Generally the transaction value is the fair value of consideration in respect of construction contracts except in certain contracts, where as per contractual payment terms, percentage of advance are lower than deferred debts. The resulted impact has decreased retained earnings by RS.193.49 Crore with corresponding reduction in deferred debtors as at April 01, 2015. The net impact resulted in decrease in turnover by RS.49.53 Crore and increase in other operating income by RS.96.20 Crores, increase in profit by RS.46.66 Crore for 2015-16.
x) Discounting of Deferred Liability:
As per Ind AS where a contractual payment terms contain deferred payments and constitutes a time value of money considering advance percentage, such deferred liability are to be recognised at discounted value and subsequently unwinded as a borrowing cost. The effect of the adjustments increase in retained earnings by RS.60.80 Crores and decrease in deferred liability by same amount as on April 01, 2015.The effect for 2015-16 is decrease in consumption of material cost / sub-contracting cost by RS.22.60 Crore and increase in finance cost by RS.37.99 Crore for unwinding of interest on these liabilities, resulted impact in decrease of profit by RS.15.39 Crore for 2015-16.
xi) Provisions for expected credit loss:
In respect of trade receivable the impairment loss has been computed using expected credit loss considering regression effect for time value. The effect of the adjustment is decrease in retained earnings by RS.2230 Crores as on April 01, 2015. Impact of the adjustment is reversal of provision by RS.328 Crore for 2015-16.
xii) Classification adjustment of Advances restatement:
Re-classification of advances adjustment has been carried out from transition date in line with Ind AS 21, the impact on retained earning is increase by RS.82.54 Crore as on 01.04.2015 and increase in profit by RS.33.43 Crore for 2015-16.
xiii) Deferred Tax:
The impact of transition adjustments together with Ind AS mandate of using balance sheet approach for computation of deferred taxes has resulted in charge to the Reserves, on the date of transition, with consequential impact to the Profit and Loss account for the subsequent periods.
xiv) Other comprehensive income:
Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately. Items that have been reclassified from statement of profit and loss to other comprehensive income includes remeasurement of defined benefit plans of RS.76.38 Crore (net of tax) in 2015-16. Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.
xv) Statement of cash flows:
The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.
2 (i) Cash credit limit from banks aggregating to RS.5000 Crore (previous year RS.5000 Crore) and Companyâs counter guarantee / indemnity obligations in regard to bank guarantee / letters of credit limit aggregating to RS.55000 Crore (previous year RS.55000 Crore) sanctioned by the consortium banks are secured by first charge by way of hypothecation of raw materials, components, work in progress, finished goods, stores, trade receivables and other current assets both present and future. The outstanding bank guarantees as at 31.03.2017 is RS.40666 Crore (previous year RS.45834 Crore).
(ii) Corporate Guarantees given for own obligations outstanding as on 31.03.2017 is RS.1733.80 Crore (Previous year RS.3028.33 Crore).
3 Balance shown under Trade Receivables, Long term Trade Receivables, Trade Payable, contractorsâ advances, deposits and stock / materials lying with sub-contractors/ fabricators are subject to confirmation, reconciliation & consequential adjustment, if any. As the Company is in the business of long term construction contracts, bills are raised on the customers as per contract by the units located at various places as per approved billing schedule by the customer and the reconciliation is carried out on ongoing basis & provisions made, wherever considered necessary. Final reconciliation with customer is done on completion of project (Trial Operation and PG Test completed). The total receivables (including long term) are RS.42510 Crore, (including deferred debts and other debts of RS.20195 Crore presently not due for payment and RS.6287 Crore outstanding in respect of completed projects), out of which, the projects reconciled with customers have outstanding debts of RS.5497 Crore in respect of completed projects.
4 In line with the EAC/ICAI opinion on âFair value of consideration for Construction Contractsâ under Ind AS 11, retention money, relating to the projects where advance %age is less than retention %age as per the terms of contract, is discounted at the time of recognition of turnover.
Out of total deferred debtors (net) of RS.16736.95 Crore (previous year RS.17957.67 Crore), deferred debtors at amortised value representing such retention money as stated above as on 31.03.2017 is RS.1797.27 Crore (previous year RS.1256.57 Crore).
5 Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon was taken on April 1, 1999 from Ministry of New and Renewable Energy (MNRE) on lease for a period of 30 years. The formal lease agreement with the Ministry of New and Renewable Energy (MNRE) is yet to be finalised.
6 Current Financial liabilities includes a sum of RS.100.51 Crore (previous year RS.100.51 Crore) towards guarantee fee demanded by the Government of India in respect of foreign currency loans taken by the Company at the instance of the Government upto 1990-91. The matter for its waiver has been taken up with the Government since there was no stipulation for payment of such guarantee fee at the time the loans (guaranteed by Government) were taken by the company. The Company vide letter dated 09.02.2015 has again requested Department of Heavy Industries (DHI) for waiver of the guarantee fee.
7. Disclosure as per Ind AS 19 on âEmployee benefitsâ
A. Gratuity
The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum of RS.10 Lakhs. The gratuity liability arises on account of future payments, which are required to be made in the event of retirement, death in service or withdrawal. The liability has been assessed using projected unit credit actuarial method.
I. Movement in net defined benefit (asset)/liability on Gratuity plan
II. Details of Plan assets
The following were the principal actuarial assumptions at the reporting date.
IV. Sensitivity analysis
The sensitivity of the defined benefit obligation to changes in the significant principal assumptions is:
Sensitivities due to mortality and withdrawals are not material and hence impact of change not calculated.
Sensitivities as to rate of inflation, rate of increase of pensions in payment, rate of increase of pensions before retirement & life expectancy are not applicable being a lump sum benefit on retirement.
The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. This analysis may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
V. Expected maturity analysis of the gratuity plan in future years
Expected contributions to gratuity plans for the year ending 31st MarcRs.2018 are RS.118.87 Crore
The weighted average duration of the gratuity defined benefit plan obligation at the end of the reporting period is 14.66 years (31 MarcRs.2016: 14.37 years.)
VI. Risk Exposures
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks such as increase in salary, investment risk, discount rate, mortality, disability and withdrawals.
B. Post Retirement Medical Benefits
The Company has Post-Retirement Medical benefit (PRMB), under which the retired employees and their spouses are provided medical facilities in the Company hospitals/empanelled hospitals. They can also avail treatment as out-patient subject to a ceiling fixed by the Company. The liability for the same is recognised annually on the basis of actuarial valuation.
I. Movement in net defined benefit (asset)/liability on Post Retirement Medical Benefit Plan
The plan assets of the Company are managed by Life Insurance Corporation of India through a trust managed by the Company in terms of an insurance policy taken to fund obligations of the Company.
II. Actuarial assumptions
The following were the principal actuarial assumptions at the reporting date.
III. Sensitivity analysis
The sensitivity of the defined benefit obligation to changes in the significant principal assumptions is:
Sensitivity due to mortality and withdrawls are not material and hence impact of change not calculated.
The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. This analysis may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
IV. Expected maturity analysis of the Post retirement medical Benefit plan in future years
Expected contributions to Post retirement medical benefit plan for the year ending 31 MarcRs.2018 are RS.32.30 Crore.
The weighted average duration of the post retirement medical benefit plan obligation at the end of the reporting period is 12.57 years (31 MarcRs.2016: 13.26 years ).
V. Risk Exposure
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks such as increase in salary, investment risk, discount rate, mortality, disability and withdrawals.
C. Long term Leave Liability (EL/HPL) - Unfunded
The company provides for earned leave benefit and half pay leave to the employees of the company which accrue half yearly at 15 days (maximum) and 10 days respectively. The earned leave is encashable while in service and up to a maximum of 300 days on retirement. Half Pay leave is encashable on superannuation or on separation beyond the age of fifty years subject to the overall ceiling of 480 days. The leave liability has been treated as other long term benefits and has been assessed using projected unit credit actuarial method.
I. Movement in net defined benefit (asset)/liability
II. Actuarial assumptions
The following were the principal actuarial assumptions at the reporting date.
The Company pays fixed contribution to provident fund at predetermined rates to a separate trust, which invests the funds in permitted securities. An amount of RS.282.46 Crore (31 MarcRs.2016: RS.278.88 Crore) for the year is recognised as expense on this account and charged to the Statement of Profit and Loss. The Company has an obligation to ensure minimum rate of return to the members as specified by GOI. Accordingly, the Company has obtained report of the actuary, based on which overall interest earnings and cumulative surplus is more than the statutory interest payment requirement for all the periods presented and wherever as per the actuarial valuation certificate liability for likely interest shortfall arises, the same has been provided in the accounts.
The company has PF trusts located at various places covering the employees of the company and managed separately, the details of plan assets and obligations are as follows
8 Leases
The company is in the practice of taking houses for employees, office buildings and EDP equipment etc. on operating lease both as cancellable and non- cancellable. The total of future minimum lease payments under non-cancellable operating leases for each of the following periods was:
Finance lease commitments - Company as Lessee
The Company has taken Land, building, EDP equipment on finance lease. The future minimum lease payments under non-cancellable leases are as follows:
9. Research and Development Expenditure
The details of Research & Development Expenditure incurred during the year, which is eligible (other than land or building) of deduction under section 35 (2AB) of the Income Tax Act, 1961.
10 Related Parties Transactions
i) Joint Ventures:
Power plant Performance Improvement Ltd.
BHEL-GE Gas Turbine Services Pvt. Ltd. (BGGTS)
NTPC-BHEL Power Projects Pvt. Ltd. (NBPPL)
Latur Power Company Ltd.
Raichur Power Corporation Ltd. (RPCL)
Dada Dhuniwale Khandwa Power Ltd.
Subsidiary Company BHEL Electrical Machines Limited Central Government controlled entities Provident fund trusts
Gratuity trusts, PRMB Trust, Pension Trust
ii) Other related parties (Key Management Personnel- Functional Directors: existing & retired and Company Secretary): CMD : Shri Atul Sobti
Functional Directors : S/Shri D. Bandyopadhyay, Amitabh Mathur, S. Biswas, T. Chockalingam, Akhil Joshi (w.e.f. 10.08.2016) & Company Secretary : Shri IP Singh
The CMD and functional directors have been allowed the use of staff car for both duty and non-duty journeys. The ceiling of non duty journey is 1000 kms p.m against recovery of prescribed amount in accordance with terms and condition of appointment. The monetary value of the perquisite for the use of car, if calculated in accordance with the provisions of I.T. Rules 1962 would amount to RS.0.02 Crore (Previous Year RS.0.02 Crore)
The company is a central public sector undertaking under the administrative control of Ministry of Heavy Industries and majority of its stake is held by Government of India. The significant transactions are with other PSUs, State owned utilities, Railways etc. which are also controlled by Govt. of India directly or indirectly. The transactions with such company are based on market driven rates at arms length price.
11 a) Movement In Provisions
b) Liquidated damages are provided in line with the Accounting Policy of the Company and the same is dealt suitably in the accounts on settlement or otherwise. Contingent liability relating to liquidated damages is shown in Para 2 of Note 39.
c) The provision for contractual obligation is made at the rate of 2.5% of the contract revenue considering the effect of time value of money in line with significant Accounting Policy No. 11 to meet the warranty obligations as per the terms and conditions of the contract. The same is retained till the completion of the warranty obligations of the contract. The actual expenses on warranty obligation may vary from contract to contract and on year to year depending upon the terms and conditions of the respective contract.
12. As per Section 135 of the Companies Act, 2013 read with guidelines issued by DPE, the Company is required to spend, in every financial year, at least two per cent of the average net profits of the Company made during the three immediately preceding financial years in accordance with its CSR Policy. The details of CSR expenses for the year are as under:
13. Disclosure as per Ind AS 11 Construction Contracts
a) The disclosures relating to Construction Contracts as per the requirement of Indian Accounting Standard -11 (IndAS-11) Construction Contracts are as follows:
b) The estimates of total costs and total revenue in respect of construction contracts in accordance with IndAS-11 Construction Contracts are reviewed and up dated periodically to ascertain the percentage completion for revenue recognition. However, it is impracticable to quantify the impact of change in estimates.
14 Financial Instruments - Accounting Classifications and Fair value measurements
a The Fair value of cash and cash equivalents, bank balances, loans, trade receivables, trade payables and others approximates their carrying amount. Trade receivables are evaluated after taking into consideration for Expected Credit Losses. Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs) b Financial Assets / Liabilities Classification
c Valuation Techniques used to determine fair value
Fair value of unquoted equity instruments is determined using Level 3 inputs which include inputs from the financial statements of the investee Company based on Net asset value per share.
d Financial Risk Management Objectives and Policies
The companyâs Financial Risk Management is an integral part of business strategies. The Company is exposed to the following risks from its use of financial instruments:
- Credit risk
- Liquidity risk
- Market risk
This note presents information about the Companyâs exposure to each of the above risks, the Companyâs objectives, policies and processes for measuring and managing risk, and the Companyâs management of capital. Further quantitative disclosures are included throughout these financial statements.
e Risk management framework
BHEL has in place a Board approved Risk Management Charter laying down procedures to inform Board members about the risk assessment & minimization. An important purpose of the Charter is to implement a structured and comprehensive risk management system across the company which ensures that the risks are being properly identified and effectively managed. The risk management process includes risk identification, risk assessment, risk evaluation, risk mitigation and regular review & monitoring of risks. BHEL has in place a Board Level Risk Management Committee (BLRMC) with assigned responsibility of reviewing the companyâs risk governance structure, risk assessment & risk management framework, guidelines, policies and processes. Besides this, Risk Management Steering Committee (RMSC) leads the risk management initiative across the company. RMSC members comprising of Executive Directors/ Functional Heads from Corporate Functions and Business sectors are responsible for adopting & implementing the risk management framework. At the divisional level, Risk Management Committees at the Business Sectors/Regions/Units/functions are responsible for review of risk profiles & risk mitigation plans and their implementation at the respective Units/Regions. Order book reduction due to increase in competition, excess domestic manufacturing capacities and low businesses sentiments are the key risk which is being mitigated through expanding the offerings, diversified product profile and focus on EPC business.
f Financial Risk management
Credit Risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables. BHEL is a project oriented organisation with significant operations from power projects. The customer profile consists of around 75% from Govt. Sectors (SEBâs, PSUâs, Railways and other govt. departments). The projects are generally funded by Financial Institutions/ banks or payments are covered by Letter of Credit (LC). In respect of private sectors, the payment terms are mainly through LC. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The disclosure of expected credit losses is made elsewhere.
(i) Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
g Impairment losses
(a) Financial assets for which loss allowance is measured using 12 month expected credit losses
The company has assets where the counter- parties have sufficient capacity to meet the obligations and where the risk of default is very low.
The movement in the allowance for impairment in respect of loans during the year was as follows:
(b) Reconciliation of impairment loss provisions
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
The Company believes that, apart from the above, no impairment allowance is necessary in respect of any other assets. Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by credit rating agencies.
h Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash. The Companyâs approach in managing the same is to ensure, as far as possible, sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions.
The companyâs principal sources of liquidity are cash and cash equivalents, balances with banks and the cash flow that is generated from operations. The company has no outstanding bank borrowings. The company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
The following are the contractual maturities of non-derivative financial liabilities, based on contractual cash flows:
i Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Companyâs income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
The Company is exposed to foreign currency risk on certain transactions that are denominated in a currency other than the entityâs functional currency; hence exposures to exchange rate fluctuations arise. The risk is that the functional currency value of cash flows will vary as a result of movements in exchange rates.
j Foreign currency risk exposure -: The companyâs exposure to foreign currency risk at the end of reporting period, are as follows:
(i) The derivative instruments that are hedged and outstanding as on 31.03.2017 is Nil (previous year Nil)
(ii) The foreign currency exposures that are not hedged by a derivative instrument or otherwise are as under:
Sensitivity analysis
A strengthening of the Indian Rupee, as indicated below, against the USD, Euro, LYD, Oman Riyal and others at 31 March would have increased (decreased) profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Company considered to be reasonably possible at the end of the reporting period. The analysis is performed on the same basis for previous year, albeit that the reasonably possible foreign exchange rate variances were different, as indicated below.
k Capital Management
While managing capital, the Companyâs objective is to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.
The Board of Directors monitors the return on capital, which the Company defines as result from operating activities divided by total shareholdersâ equity. The Board of Directors also monitors the level of dividends to equity shareholders.
The Companyâs return on capital is 1.54% as at 31.03.2017 in comparison to -2.21% as at 31.03.2016.
The Company monitors capital, using a medium term view and long term view, on the basis of a number of financial ratios generally used by industry and by the rating agencies. The Company is not subject to externally imposed capital requirements. The Companyâs capital structure is managed against the various financial ratios as required to maintain strong credit ratings.
15. Dividends
a) The following dividends were declared and paid during the year:
The above final dividend figures exclude tax on dividend of RS.19.93 Crore (previous year RS.30.89 Crore)
The above interim dividend figures exclude tax on dividend of RS.39.86 Crore (previous year RS.NIL Crore)
b) The company has proposed final dividend @ 39% (RS.0.78 Per share, amounting to RS.190.91 Crore) on paid up share capital of RS.489.52 Crore out of profit for the year 2016-17. The total payout on account of dividend (RS.190.91 Crore) along with corporate dividend tax (RS.38.87 Crore) will be RS.229.78 Crore.
c) The Board of Directors has authorised to issue the Financial Statements 2016-17 in its meeting held on 29.05.2017.
16. As per SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the requisite details of loans and advances in the nature of loans, given by the Company are given below:
i) In respect of Subsidiary Company:
ii) No loans have been given (other than loans to employees), wherein there is no repayment schedule or repayment is beyond seven years; and
iii) There are no loans and advances in the nature of loans, to firms/companies, in which directors are interested.
17. Assets and Liabilities are classified between Current and Non-current considering 12 months period as operating Cycle.
18. Pending finalisation of agreement for wage/ salary structure due from 1st January, 2017, a provision of RS.961 Crore (including one time cumulative impact on a/c of gratuity and leave liability of RS.674 Crore) has been made in financial year 2016-17 based on estimates as per third pay revision committee (PRC) recommendation.
19. Marginal Cost of lending rate (MCLR) as applicable to BHEL as at the year end has been considered for working out fair value of consideration and present value of long term provisions.
20. There are net outstanding debts of RS.2119 Crore (after adjustment of advances) pertaining to 27 projects on hold due to various reasons like environment clearance, fuel linkage, land acquisition, fund constraints, force majeure, hold imposed by BHEL due to strategic reasons etc. FG/ WIP of RS.777 Crore is also lying in these projects. Provision of RS.1618 Crore for outstanding debts and RS.180 Crore for inventory has been provided till 31.03.2017 against these projects in line with the guidelines in this regard.
21. Previous yearâs figures have been regrouped/ rearranged wherever considered necessary.
22. Operating Segment
The Segments have been identified as âPowerâ and âIndustryâ based on the orders booked by the respective business sectors. The order booked by International operation group is taken to Power or Industry as the case may be.
The Compnayâs Committee of functional Directors has been identified as Chief Operating Decision maker (CODM).
Mar 31, 2015
1 Contingent liabilities:
Claims against the company not acknowledged as debt :
i) a) Income Tax Pending Appeals Rs. in Crore 16.50 0.90
b) Against which paid under
protest included under the head
"Deposits " Rs. in Crore 0.70 0.00
ii) a) Sales Tax Demand Rs. in Crore 1519.28 1343.70
b) Against which paid under
protest included under the head
"Deposits" Rs. in Crore 267.66 190.51
iii) a) Excise Duty demands Rs. in Crore 530.85 489.55
b) Against which paid under
protest included under the head
"Deposits" Rs. in Crore 23.40 17.75
iv) a) Custom Duty demands Rs. in Crore 2.93 3.14
b) Against which paid under
protest included under the head
"Deposits" Rs. in Crore 2.83 2.89
v) Court & Arbitration cases Rs. in Crore 862.72 1033.93
vi) a) Liquidated Damages Rs. in Crore 4107.19 4347.41
b) Amount deducted by customers
towards LD included in vi)a Rs. in Crore 2405.13 2672.49
vii) Counter Claim by contractors Rs. in Crore 0.61 0.77
viii) a) Service Tax Demand Rs. in Crore 458.95 291.71
b) Against which paid under protest Rs. in Crore 4.36 0.61
ix) Others Rs. in Crore 102.23 65.26
(In view of the various court cases, litigations and claims disputed by
the company, the outflow of resources is not ascertainable at this
stage).
2 a) Cash credit limit from banks aggregating to Rs. 5000 Crore
(previous year Rs. 5000 Crore) and Companys counter guarantee /
indemnity obligations in regard to bank guarantee / letters of credit
limit aggregating to Rs. 55000 Crore (previous year Rs. 50000 Crore)
sanctioned by the consortium banks are secured by first charge by way
of hypothecation of raw materials, components, work in progress,
finished goods, stores, trade receivables and other current assets both
present and future. The outstanding bank guarantees as at 31.03.2015 is
Rs. 44915 Crore (previous year Rs. 45007 Crore).
b) Corporate Guarantees outstanding as on 31.03.2015 is Rs. 2752.27
Crore (Previous year Rs. 3312.07 Crore).
3 Other payable/ liabilities include a sum of Rs. 100.51 Crore
(previous year Rs. 100.51 Crore) towards guarantee fee demanded by the
Government of India in respect of foreign currency loans taken by the
Company at the instance of the Government up to 1990-91. The matter for
its waiver has been taken up with the Government since there was no
stipulation for payment of such guarantee fee at the time the loans
(guaranteed by Government) were taken by the company. The Company vide
letter dated 09.02.15 has again requested Department of Heavy
Industries (DHI) for waiver of the guarantee fee.
4 Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon was taken on
April 1, 1999 from Ministry of New and Renewable Energy (MNRE) on lease
for a period of 30 years. The formal lease agreement with the Ministry
of New and Renewable Energy (MNRE) is yet to be finalised.
5 Balances shown under Trade Receivables, Long term Trade receivable,
Trade payables, contractors advances, deposits and stock/ materials
lying with sub-contractors/ fabricators are subject to confirmation,
reconciliation & consequential adjustment, if any. As the Company is in
the business of long term construction contracts, bills are raised on
the customers as per contract by the units located at various places as
per the approved billing schedule by the customer and the
reconciliation is carried out on ongoing basis & provisions made,
wherever considered necessary. Final reconciliation with customer is
done on completion of project (Trial Operation and PG Test completed).
The total receivables (including long term) are Rs. 42717 Crore,
(including deferred debts Rs. 17267 Crore not due for payment). The
amount reconciled with customer is around Rs. 1900 Crore against the
outstanding amount of Rs. 5412 Crore in completed projects.
6 The disclosure relating to AS-15 (R) - Employee Benefits
a) Gratuity Plan
The gratuity liability arises on account of future payments, which are
required to be made in the event of retirement, death in service or
withdrawal. The liability has been assessed using projected unit credit
actuarial method.
7 Related Party Transactions:
i) Related Parties where control exists (Joint Ventures):
Powerplant Performance Improvement Ltd.
BHEL-GE Gas Turbine Services Pvt. Ltd.
NTPC-BHEL Power Projects Pvt. Ltd.
Raichur Power Corporation Ltd.
Dada Dhuniwale Khandwa Power Ltd.
Latur Power Company Ltd.
ii) Other related parties (Key Management Personnel- Functional
Directors: existing & Company Secretary):
CMD : Shri B. Prasada Rao,
Functional Directors : S/Shri P. K. Bajpai, R Krishnan, W. V. K.
Krishnashankar, Atul Sobti,
T.N. Veeraraghavan (from 07.01.2015) & Company Secretary : Shri I.P.
Singh
8 Assets and Liabilities are classified between Current and
Non-current considering 12 months period as operating Cycle.
9 Item of expense and income less than Rs. one Lakh are not considered
for booking under Prior Period Items.
10 a) The Company has revised the accounting policy for depreciation in
line with Schedule II of the Companies Act, 2013. Assets, for which the
estimated useful life based on the technical evaluation is different
from the life given in the Schedule II, have been disclosed in
significant accounting policy no. 7. Wherever applicable, depreciation
is charged at the increased rate for double and triple shift as
prescribed in Note no. 6 of Schedule II of the Companies Act 2013.
b) Due to the revision in depreciation policy, the depreciation for the
year is higher by Rs. 77.58 Crore and profit before tax for the year is
lower to this extent. Further, an amount of Rs. 40.50 Crore (net of
deferred tax Rs. 21.44 Crore) for assets, whose remaining useful life
is NIL as at 1st April 2014, has been adjusted with the opening balance
of retained earnings.
11 There is an outstanding of Rs. 3376 Crore pertaining to 20 projects
on hold due to various reasons like environment clearance, fuel
linkage, land acquisition, fund constraints, force majeure etc. mainly
hold imposed by BHEL due to strategic reasons. This includes Rs. 1845
Crore outstanding for more than 3 years in respect of 11 projects.
Total advance available against these 20 hold projects is Rs. 1109
Crore.
12 Previous year''s figures have been regrouped/ rearranged wherever
considered necessary.
Mar 31, 2014
S. Description 2013-2014 2012-2013
No.
1 Contingent liabilities:
Claims against the company not acknowledged as debt :
i) a) Income Tax Pending Appeals
Rs. in Crore 0.90 34.05
b) Against which paid under protest
included under the head "Deposits "
Rs. in Crore 0.00 0.00
ii) a) Sales Tax Demand Rs.in Crore 1343.70 876.47
b) Against which paid under protest
included under the head "Deposits"
Rs. in Crore 190.51 121.85
iii) a) Excise Duty demands Rs.in Crore 489.55 333.56
b) Against which paid under protest
included under the head "Deposits"
Rs.in Crore 17.75 8.52
iv) a) Custom Duty demands Rs.in Crore 3.14 0.21
b) Against which paid under protest
included under the head "Deposits"
Rs.in Crore 2.89 0.06
v) Court & Arbitration cases Rs.in Crore 1033.88 726.38
vi) a) Liquidated Damages Rs.in Crore 4347.41 3376.67
b) Amount deducted by customers towards
LD included in
vi)a Rs. in Crore 2672.49 2004.98
vii) Counter Claim by contractors
Rs.in Crore 0.77 0.61
viii) a) Service Tax Demand Rs.in Crore 291.71 165.41
b) Against which paid under protest Rs.in
Crore 0.61 0.01
ix) Others Rs.in Crore 65.31 56.54
x) Corporate Guarantee given on behalf of
subsidiary company Rs.in Crore 0.00 6.56
(In view of the various court cases and litigations and claims disputed
by the company financial impact as to outflow of resources is not
ascertainable at this stage).
2 a) Cash credit limit from banks aggregating to Rs. 5000 Crore (previous
year Rs. 5000 Crore) and Companys counter guarantee / indemnity
obligations in regard to bank guarantee / letters of credit limit
aggregating to Rs. 50000 Crore (previous year Rs. 50000 Crore) sanctioned
by the consortium banks are secured by first charge by way of
hypothecation of raw materials, components, work in progress, finished
goods, stores, trade receivables and other current assets both present
and future. The outstanding bank guarantees as at 31.03.2014 is Rs.
45007 Crore (previous year Rs. 41786 Crore).
b) Corporate Guarantees outstanding as on 31.03.2014 isRs.3312.07 Crore
(Previous yearRs.4717.71 Crore).
3 Other payable/ liabilities include a sum of Rs. 100.51 Crore (previous
year Rs. 100.51 Crore) towards guarantee fee demanded by the Government
of India in respect of foreign currency loans taken by the Company at
the instance of the Government upto 1990-91. The matter for its waiver
has been taken up with the Government since there was no stipulation
for payment of such guarantee fee at the time the loans (guaranteed by
Government) were taken. Vide BHEL letter dated 05.09.2013, Department
of Heavy Industries (DHI) has been again requested for waiver of the
guarantee fee.
4 Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon was taken on
April 1, 1999 from Ministry of Non- conventional Energy Sources on
lease for a period of 30 years. The formal lease agreement with the
Ministry of Non-Conventional Energy Sources is yet to be finalised.
5 Balances shown under Long term Trade receivable, Trade Receivables,
Trade payables, contractors advances, deposits and stock/materials
lying with sub-contractors/fabricators are subject to confirmation,
reconciliation & consequential adjustment, if any. The reconciliation
is carried out on ongoing basis as the Company is in the business of
long term construction contracts & provisions, wherever considered
necessary, have been made in line with the guidelines.
6 The operations of the Tishreen Syrian project site, Libyan project
site, Afganistan, Vietnam, Belarus have been consolidated based on the
unaudited accounts maintained at the regional headquarter at Noida.
7 The details of Research & Development Expenditure incurred during
the year which is deductible (other than land & building) under section
35 (2AB) of the Income Tax Act, 1961.
8 The disclosure relating to derivative instruments:
a) The derivative instruments that are hedged and outstanding as on
31.03.2014 is Nil (previous year Nil).
9 The disclosure relating to AS-15 (R) Â Employee Benefits
a) Gratuity Plan
The gratuity liability arises on account of future payments, which are
required to be made in the event of retirement, death in service or
withdrawal. The liability has been assessed using projected unit credit
actuarial method.
c) Long Term Leave Liability (EL/NEL/HPL)
The company provides for earned leave benefit and half pay leave to the
employees of the company which accrue half yearly at 15 days (maximum)
and 10 days respectively. 73.33% of the earned leave is encashable
while in service and upto a maximum of 300 days on retirement. Half pay
leave is encashable within 3 months prior to superannuation or on
separation beyond the age of 50 years subject to the overall ceiling of
480 days. The leave liability has been treated as other long term
benefits and has been assessed using projected unit credit actuarial
method.
10 Related Party Transactions:
i) Related Parties where control exists (Joint Ventures): Powerplant
Performance Improvement Ltd.
BHEL-GE Gas Turbine Services Pvt. Ltd.
NTPC-BHEL Power Projects Pvt. Ltd.
Raichur Power Corporation Ltd.
Dada Dhuniwale Khandwa Power Ltd.
Latur Power Company Ltd.
ii) Other related parties (Key Management Personnel- Functional
Directors: existing & retired):
S/Shri B.P Rao, Atul Saraya (upto 30.11.2013), O.P Bhutani (upto
31.05.2013), M.K. Dube (upto 31.07.2013), PK. Bajpai, R. Krishnan,
W.V.K. Krishnashankar (w.e.f. 01.08.2013) and Atul Sobti (w.e.f.
01.12.2013)
11 Joint Ventures
Pursuant to compliance of Accounting Standard-27 issued by the
Institute of Chartered Accountants of India, relevant disclosures
relating to Joint ventures are as follows:
b) The provision for diminution in value of investment in Powerplant
Performance Improvement Ltd. has been made since the company is under
liquidation and the amount paid as equity is not recoverable.
b) Liquidated damages are provided in line with the Accounting Policy
of the Company and the same is dealt suitably in the accounts on
settlement or otherwise. Contingent liability relating to liquidated
damages is shown in item No. 5 of Note no. 31
c) The provision for contractual obligation is made at the rate of 2.5%
of the contract revenue in line with significant Accounting Policy
No.15 to meet the warranty obligations as per the terms and conditions
of the contract. The same is retained till the completion of the
warranty obligations of the contract. The actual expenses on warranty
obligation may vary from contract to contract and on year to year
depending upon the terms and conditions of the respective contract.
12 Assets and Liabilities are classified between Current and
Non-current considering 12 months period as operating Cycle.
13 Item of expense and income less than Rs. One Lakh are not considered
for booking under Prior Period Items.
14 Amalgamation of erstwhile Bharat Heavy Plate & Vessels Limited ,
Visakhapatnam with the Company
a) The Board for Industrial and Financial Reconstruction (BIFR) vide
its order dated August 29, 2013 sanctioned the Modified Draft
Rehabilitation Scheme (MDRS) for envisaging merger of Bharat Heavy
Plate & Vessels Limited (BHPV) (100 % subsidiary of BHEL) with the
Company under Section 18(5) of Sick Industrial Companies (Special
Provisions) Act, 1985 ("SICA") with effect from appointed date i.e.
October 01, 2011.
b) The Company has made necessary filings with the Registrar of
Companies on August 30, 2013 (effective date). The scheme of merger has
accordingly been given effect in these accounts.
c) Pursuant to the merger the assets and liabilities of the erstwhile
Bharat Heavy Plate & Vessels Limited (whose principle business was
design, fabrication, supply and erection of heat exchanges, columns,
storage spheres, reactors and related products)were transferred to and
vested on going concern basis in the Company with effect from the
appointed date i.e. October 01, 2011.
d) In terms of the Accounting Standard (AS) 14 - "Accounting for
Amalgamations", the scheme of amalgamation has been accounted for under
the "Pooling of Interests method" wherein all the assets, liabilities
and reserves & surplus/losses of the erstwhile BHPV Limited have been
taken over at their book values as appearing in the books of accounts
as on October 01, 2011.
e) On the amalgamation of the BHPV with the Company, the share capital
of BHPV stand cancelled without any further act or deed or instrument,
from the Appointed Date. Since the Company holds 100% (along with its
nominees) of the issued, subscribed and paid-up capital of BHPV,
neither allotment of any new shares nor any payment was made to any
person whatsoever in consideration or in lieu of the transfer and
vesting of the Undertaking/ Business of BHPV in the Company.
f) The paid up Equity Share Capital of Rs. 33.80 Crore appearing in the
books of account of BHPV and the corresponding Investments of Rs. 1 in
respect thereof appearing in the books of account of the Company stand
cancelled and the difference arising there from amounting to Rs. 33.80
Crore has been adjusted with capital reserves of the Company.
g) Debit balance of Profit and Loss Account of the BHPV amounting to Rs.
278.05 Crore as on 01.10.2011 have been adjusted against surplus
balance in Statement of Profit and Loss of the Company.
15 a) Revenue from operations and Profit before tax includes Rs. 105.04
Crore and Rs. (-)186.55 Crore respectively of HPVP Unit (erstwhile BHPV)
for the current year 2013-14.
b) On account of amalgamation of Bharat Heavy Plate & Vessels Limited,
the Companys wholly-owned subsidiary, with the company with effect from
01 October, 2011, the results pertaining to the year ended 31st March,
2014 are not comparable with that of the corresponding previous year.
c) Previous years figures have been regrouped/rearranged wherever
considered necessary.
Mar 31, 2013
1 Cash credit limit from banks aggregating to Rs. 5000 Crore (previous
year Rs. 3000 Crore) and Company''s counter guarantee / indemnity
obligations in regard to bank guarantee / letters of credit limit
aggregating to Rs. 50000 Crore (previous year Rs. 52000 Crore)
sanctioned by the consortium banks are secured by first charge by way
of hypothecation of raw materials, components, work in progress,
finished goods, stores, trade receivables and other current assets both
present and future. The outstanding bank guarantees as at 31.03.2013 is
Rs. 41786 Crore (previous year Rs. 38200 Crore) and Corporate Guarantee
as on 31.03.2013 is Rs. 4717.71 Crore (Previous year Rs. 4448.14
Crore).
2 Other payable/ liabilities include a sum of Rs. 100.51 Crore
(previous year Rs. 100.51 Crore) towards guarantee fee demanded by the
Government of India in respect of foreign currency loans taken by the
Company at the instance of the Government upto 1990-91. The matter for
its waiver has been taken up with the Government since there was no
stipulation for payment of such guarantee fee at the time the loans
(guaranteed by Government) were taken. Vide BHEL letter dated
19.09.2012, Department of Heavy Industries (DHI) has been again
requested for waiver of the guarantee fee. The matter is under
discussions with DHI.
3 Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon was taken on
April 1, 1999 from Ministry of Non-conventional Energy Sources on lease
for a period of 30 years. The formal lease agreement with the Ministry
of Non-Conventional Energy Sources is yet to be finalised.
4 Balances shown under Trade receivables, Trade payables, contractor''s
advances, deposits and stock/materials lying with
sub-contractors/fabricators are subject to confirmation, reconciliation
& consequential adjustment, if any. The reconciliation is carried out
on ongoing basis as the Company is in the business of long term
construction contracts & provisions wherever considered necessary have
been made in line with the guidelines.
5 a) The operations of the Libyan project site have been consolidated
based on the unaudited accounts maintained at the regional headquarter
at Noida, in view of the turnmoil in Libya.
b) The operations of the Tishreen Syrian project site have been
consolidated based on the unaudited accounts maintained at the regional
headquarter at Noida, as force majeure condition was invoked in Syria
in the second week of June 2012 and the same condition prevails as on
31st March 2013.
6 The disclosure relating to derivative instruments:
a) The derivative instruments that are hedged and outstanding as on
31.03.2013 is Nil (previous year Nil).
b) The foreign currency exposures that are not hedged by a derivative
instrument or otherwise are as under:
7 The disclosure relating to AS-15 (R) - Employee Benefits a) Gratuity
Plan
The gratuity liability arises on account of future payments, which are
required to be made in the event of retirement, death in service or
withdrawal. The liability has been assessed using projected unit credit
actuarial method.
Reconciliation of opening and closing balances of the present value of
the defined benefit obligation as at the year ended are as follows:
8 Related Party Transactions:
i) Related Parties where control exists (Joint Ventures): Powerplant
Performance Improvement Ltd.
BHEL-GE Gas Turbine Services Pvt. Ltd.
NTPC-BHEL Power Projects Pvt. Ltd.
Udangudi Power Corporation Ltd. (Upto 26.03.2013) Raichur Power
Corporation Ltd.
Dada Dhuniwale Khandwa Power Ltd.
Latur Power Company Ltd.
ii) Other related parties (Key Management Personnel- Functional
Directors: existing & retired):
S/Shri B.P. Rao , Atul Saraya, O. P. Bhutani, M.K. Dube , P. K. Bajpai
and R Krishnan (w.e.f. 01.04.2012)
9 During the year the Company has included policies on Use of
estimates, Taxes on income, impairment and Segment reporting. The
impact due to this is NIL as these were already in practice.
10 Assets and Liabilites are classified between Current and Non-current
considering 12 months period as operating cycle.
11 Item of expense and income less than Rs. one Lakh are not considered
for booking under Prior Period Items.
Mar 31, 2012
A) Terms / rights attached to the equity shares:
The company has only one class of equity shares having a par value of Rs.
2 per share (previous year Rs. 10 per share). Each holder of the equity
shares is entitled to one vote per share.
1 Contingent liabilities :
Claims against the company not acknowledged as debt :
i) a Income Tax Pending Appeals Rs. Crore 45.20 32.61
b Against which paid under protest included under
the head "deposits others" Rs. Crore 0.00 0.02
ii) a Sales Tax Demand Rs. Crore 732.70 509.84
b Against which paid under protest included
under the head "Advances Recoverable" Rs. Crore 98.39 92.97
iii) a Excise Duty demands Rs. Crore 320.08 216.14
b Against which paid under protest included
under the head "Advances Recoverable" Rs. Crore 7.84 8.41
iv) a Custom Duty demands Rs. Crore 0.21 0.21
b Against which paid under protest included under
the head "Advances Recoverable" Rs. Crore 0.06 0.06
v) Court & Arbitration cases Rs. Crore 559.23 375.07
vi) a Liquidated Damages Rs. Crore 2283.63 1401.11
b Amount deducted by customers towards
LD included in vi) a Rs. Crore 1579.19 825.70
vii) Counter Claim by contractors Rs. Crore 0.61 0.61
viii) a Service Tax Demand Rs. Crore 132.17 214.13
b Against which paid under protest Rs. Crore 0.00 0.22
ix) Others Rs. Crore 106.34 120.58
x) Corporate Guarantee given on behalf of
subsidiary company (BHPV) Rs. Crore 9.57 -
(In view of the various court cases and litigations and claims disputed
by the company financial impact as to outflow of resources is not
ascertainable at this stage).
2 Cash credit limit from banks aggregating to Rs. 3000 crore (previous
year Rs. 600 crore) and Company's counter guarantee / indemnity
obligations in regard to bank guarantee / letters of credit limit
aggregating to Rs. 52000 Crore (previous year Rs. 49400 Crore) sanctioned
by the consortium banks are secured by first charge by way of
hypothecation of raw materials, components, work in progress, finished
goods, stores, book debts and other current assets both present and
future. The outstanding bank guarantees as at 31.03.2012 is Rs. 38200
Crore (previous year Rs. 37474 Crore) and Corporate Guarantee as on
31.03.2012 is Rs. 4448.14 Crore (Previous year Rs. 4192 Crore).
3 Other payable/ liabilities include a sum of Rs. 100.51 Crore (previous
year Rs.100.51 Crore) towards guarantee fee demanded by the Government of
India in respect of foreign currency loans taken by the company at the
instance of the Government upto 1990-91. The matter for its waiver has
been taken up with the Government since there was no stipulation for
payment of such guarantee fee at the time the loans (guaranteed by
Government) were taken. Vide BHEL letter dated 18.02.2011, Department
of Heavy Industries (DHI) has been again requested for waiver of the
guarantee fee. The matter is under discussions with DHI.
4 Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon was taken on
April 1, 1999 from Ministry of Non- conventional Energy Sources on
lease for a period of 30 years. The formal lease agreement with the
Ministry of Non-Conventional Energy Sources is yet to be finalised.
5 Balances shown under debtors, creditors, contractor's advances,
deposits and stock/materials lying with sub- contractors/fabricators
are subject to confirmation, reconciliation & consequential adjustment,
if any. The reconciliation is carried out ongoing basis as the company
is in the business of long term construction contracts & provisions
wherever considered necessary have been made in line with the
guidelines.
a) The estimates of total costs and total revenue in respect of
construction contracts entered on or after 1st April 2003 in accordance
with Accounting Standard (AS) -7 (R) Construction Contracts are
reviewed and up dated periodically to ascertain the percentage
completion for revenue recognition. However, it is impracticable to
quantify the impact of change in estimates.
6 The company has accounted for leave encashment expenditure with 30
days a month as base for computation of encashment of leave as per
specific instructions from Department of Public Enterprises (DPE) on
the subject. This is against the earlier formula of computation of
leave encashment on 26 days a month as base. The impact due to this
change, is increase in Profit before tax by Rs.180.46 crore for the year
2011-12. However, in some of the units the workers union has filed an
appeal against the change and court has given interim stay order. The
consequentail impact, if any, will be accounted for in the year of
settlement.
7 The operations of the Libyan project site have been consolidated
based on the unaudited accounts maintained at the regional headquarter
at Noida, in view of the ongoing turmoil in Libya.
*The above amount include leave encashment on payment basis & excludes
group insurance premium.
The CMD and functional directors have been allowed the use of staff car
for both duty and non-duty journeys. The ceiling of non duty journey is
1000 kms p.m against recovery of prescribed amount in accordance with
terms and condition of appointment. The monetary value of the
perquisite for the use of car, if calculated in accordance with the
provisions of I.T. Rules 1962 would amount to Rs.0.02 Crore (Previous
Year Rs.0.01 Crore)
8 The disclosure relating to AS-15 (R) - Employee Benefits
a) Gratuity Plan
The gratuity liability arises on account of future payments, which are
required to be made in the event of retirement, death in service or
withdrawal. The liability has been assessed using projected unit credit
actuarial method.
Reconciliation of opening and closing balances of the present value of
the defined benefit obligation as at the year ended are as follows:
9 Related Party Transactions:
i) Related Parties where control exists (Joint Ventures):
Powerplant Performance Improvement Ltd.
BHEL-GE Gas Turbine Services Pvt. Ltd.
NTPC-BHEL Power Projects Pvt. Ltd.
Udangudi Power Corporation Ltd.
Barak Power Pvt. Ltd. (wound up w.e.f. 11.10.2011)
Raichur Power Corporation Ltd.
Dada Dhuniwale Khandwa Power Ltd.
Latur Power Company Ltd. (w.e.f. 06.04. 2011)
ii) Other related parties (Key Management Personnel- Functional
Directors: existing & retired):
S/Shri B.P. Rao , Anil Sachdev (upto 31.03.2012), Atul Saraya, O. P.
Bhutani, M.K. Dube (w.e.f. 25.06.2011) and P. K. Bajpai (w.e.f.
01.07.2011)
a) During the year company has sub-divided existing equity shares of
face value of Rs. 10/- into 5 equity shares of face value of Rs. 2/- each
and the record date was fixed 04.10. 2011. Hence, previous year Basic
and Diluted earning per share has been restated accordingly.
10.1 The company has filed Draft Red Herring Prospectus (DRHP) dated
28.09.2011 with Securities and Exchange Board of India (SEBI) on
30.09.2011 for disinvestment of 5% of the paid up equity capital out of
Government of India's shareholding. Consequent upon the receipt of
'no-objection' for withdrawal of DRHP for FPO, from Department of
Heavy Industry/ Department of Disinvestment, the Board of Directors in
its meeting held on 03.04. 2012 has approved the withdrawal of DRHP
filed by the company with (SEBI).
b) The provision for diminution in value of investment in PPIL has been
made since the company is under liquidation and the amount paid as
equity is not recoverable, the investment in Barak Power Pvt. Ltd. is
written off as the company has been wound up w.e.f. 11.10.2011.
c) Aggregate amount of company's interest in Joint Ventures as per
accounts is as under:
Latur power company Ltd. was incorporated on 06.04.2011. Therefore,
first account of the company are made for the period from 06.04.2011 to
31.03.2012.
11 As per the listing agreement with the Stock Exchanges, the requisite
details of loans and advances in the nature of loans, given by the
Company are given below:
ii) No loans have been given (other than loans to employees), wherein
there is no repayment schedule or repayment is beyond seven years; and
iii) There are no loans and advances in the nature of loans, to
firms/companies, in which directors are interested.
b) Liquidated damages are provided in line with the Accounting Policy
of the company and the same is dealt suitably in the accounts on
settlement or otherwise. Contingent liability relating to liquidated
damages is shown in item No. 5 of Note no. 31
c) The provision for contractual obligation is made at the rate of 2.5%
of the contract revenue in line with significant Accounting Policy
No.14 Note no. 1 to meet the warranty obligations as per the terms and
conditions of the contract. The same is retained till the completion of
the warranty obligations of the contract. The actual expenses on
warranty obligation may vary from contract to contract and on year to
year depending upon the terms and conditions of the respective
contract.
12 The financial statements have been prepared in line with the
requirements of Revised Schedule VI of Companies Act, 1956 as
introduced by the Ministry of Corporate Affairs from financial year
ended on 31st March 2012. Accordingly, assets and liabilities are
classified between current and non-current considering 12 months period
as operating cycle. The adoption of Revised Schedule VI does not impact
recognition and measurement principles followed for preparation of
financial statements. However, it has significant impact on
presentation and disclosures made in the financial statements.
Consequently, the company has re-classified previous year figures to
comfirm to this year classification.
13 Item of expense and income less than Rs. one Lakh are not considered
for booking under Prior Period Items.
Mar 31, 2011
S. Description 2010-11 2009-10
No.
1 Contingent liabilities :
A Claims against the company not
acknowledged as debt :
i) a Income Tax Pending Appeals s Crore 32.61 28.77
b Against which paid under protest
included under the head "deposit
others" s Crore 0.02 0.03
ii) a Sales Tax Demand s Crore 509.84 353.06
b Against which paid under
protest included under the
head "Advances Recoverable" s Crore 92.97 76.91
iii) a Excise Duty demands s Crore 216.14 195.47
b Against which paid under
protest included under the head
"Advances Recoverable" s Crore 8.41 5.01
iv) a Custom Duty demands s Crore 0.21 0.21
b Against which paid under
protest included under the head
"Advances Recoverable" s Crore 0.06 0.06
v) Court & Arbitration cases s Crore 375.07 254.26
vi) a Liquidated Damages s Crore 1401.11 1287.94
b Amount deducted by customers
towards LD included in vi)a s Crore 825.70 730.57
vii) Counter Claim by contractors s Crore 0.61 0.61
viii) a Service Tax Demand s Crore 214.13 105.74
b Against which paid under
protest s Crore 0.22 0.22
ix) Others s Crore 120.58 59.10
(In view of the various court cases and litigations and claims disputed
be the company financial impact as to outflow of resources is not
ascertainable at this stage).
2 Cash credit limit from banks aggregating to s 600 Crore (previous
year s 100 Crore) and Company's counter guarantee / indemnity
obligations in regard to bank guarantee / letters of credit limit
aggregating to s 49400 Crore (previous year s 40000 Crore) sanctioned
by the consortium banks are secured by first charge by way of
hypothecation of raw materials, components, work in progress, finished
goods, stores, book debts and other current assets both present and
future. The outstanding bank guarantees as at 31.03.2011 is s 37474
Crore (previous year s 31541 Crore) and Corporate Guarantee as on
31.03.2011 is s 4192 Crore (Previous year s 1685 Crore).
3 Other liabilities include a sum of s 100.51 Crore (previous year s
100.51 Crore) towards guarantee fee demanded by the Government of India
in respect of foreign currency loans taken by the company at the
instance of the Government upto 1990-91. The matter for its waiver has
been taken up with the Government since there was no stipulation for
payment of such guarantee fee at the time the loans (guaranteed by
Government) were taken. DHI has been again requested for waiver of the
guarantee fee by BHEL vide letter dated 18.02.2011.
4 Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon was taken on
April 1, 1999 from Ministry of Non- conventional Energy Sources on
lease for a period of 30 years. The formal lease agreement with the
Ministry of Non-Conventional Energy Sources is yet to be finalised.
5 Balances shown under debtors, creditors, contractor's advances,
deposits and stock/materials lying with sub- contractors/fabricators
are subject to confirmation, reconciliation & consequential adjustment,
if any. The reconciliation is carried out ongoing basis & provisions
wherever considered necessary have been made in line with the
guidelines.
6 The company has changed the Accounting Policy on Provision for
warranties in respect of AS-7(R) construction contracts during the
year. As against creation of provision for warranties @ 2.5% of
contract value on trial operation, the company has revised it that
company provides warranty cost at 2.5% of the revenue progressively as
and when it recognises the revenue and maintains the same through the
warranty period . This is against the earlier policy of deferring
warranty provision and corresponding revenue till the completion of
Trial Operation. The impact due to change in the accounting policy for
the year 2010-11 is increase in turnover by Rs 2772.79 Crore, Provision
for Contractual Obligation by Rs 2077.31 Crore and Profit before Tax by
Rs 695.48 Crore.
7 The Company has modified the Accounting Policy on Employee Benefits
during the year in respect of leave liability. As against the policy of
creating provision for these leaves on accrual basis, the company
changed it to actuarial valuation basis treating the same as "Other
Long Term Benefits" based on behavioural patterns etc. as per AS-15(R).
The impact due to change in accounting policy for the year 2010-11 is
increase in Profit before Tax by Rs 240.75 Crore.
8 During the year the cranes used at the project sites have been
classified under "General Plant & Machinery" as against the earlier
practice of "Erection Equipment". Accordingly the depreciation rate has
been changed based on a review of their useful life, from 20% p.a. to
8% p.a., with retrospective effect. The impact due to the above change
is decrease in depreciation by Rs. 80.62 Crore ( Rs 49.03 Crore pertains
to earlier years) and increase in profit before tax by Rs46.80 Crore
9 The operations of the Libyan project site has been consolidated
based on the unaudited accounts maintained at the regional headquarter
at Noida, in view of the ongoing turmoil in Libya.
10 The company accounts the leave encashment expenditure with 26 days a
month as base. The company proposed a change in the base as 30 days a
month in line with the directives of Government of India, Department of
Public Enterprise vide their O.M. dated 20.9.2005. However, some of the
workers unions have raised a dispute under section 9(A) of the
Industrial Dispute Act 1947 against the proposed changes in the
calculation of leave encashment with 30 days month base instead of 26
days month. As per section 33 (3) of the Industrial Dispute Act no
employer can alter the service conditions during the pendency of such
proceedings with the Conciliation Officer. Pending final disposal of
the dispute by the Conciliation officer/ Industrial Tribunal, the
status quo is being continued. The proposed change has already been
effected for the employees who have joined/ joining BHEL on or after
1st Jan 2010.
11 The disclosure relating to derivative instruments:
a) The derivative instruments that are hedged and outstanding as on
31.03.2011 is Nil (previous year Nil).
12 The disclosure relating to AS-15 (R) Ã Employee Benefits
a) Gratuity Plan
The gratuity liability arises on account of future payments, which are
required to be made in the event of retirement, death in service or
withdrawal. The liability has been assessed using projected unit credit
actuarial method.
13 Related Party Transactions:
i) Related Parties where control exists (Joint Ventures):
Powerplant Performance Improvement Ltd.
BHEL-GE Gas Turbine Services Pvt. Ltd.
NTPC-BHEL Power Projects Pvt. Ltd.
Udangudi Power Corporation Ltd.
Barak Power Pvt. Ltd.
Raichur Power Corporation Ltd.
Dada Dhuniwale Khandwa Power Ltd.
ii) Other related parties (Key Management Personnel- Functional
Directors: existing & retired):
S/Shri B.P. Rao , Anil Sachdev, Atul Saraya, O. P. Bhutani and C S
Verma (upto 10.06.2010)
14 Joint Ventures / Subsidiaries :
A subsidiary company has been incorporated on 19th January 2011 under
the name of "BHEL Electrical Machnies Limited" which would take up
manufacture of rotating electrical machines, after acquiring the assets
of Kasargod unit of KEL, Kerala. BHEL owns 51% equity in the company
and Govt. of Kerala owns 49%.
Pursuant to compliance of Accounting Standard-27 issued by the
Institute of Chartered Accountants of India, relevant disclosures
relating to Joint Ventures are as follows:
15 The disclosure relating to Accounting Standard -29
b) Liquidated damages are provided in line with the Accounting Policy
of the company and the same is dealt suitably in the accounts on
settlement or otherwise. Contingent liability relating to liquidated
damages is shown in Note No. 5 of Sch-19.
c) The provision for contractual obligation is made at the rate of 2.5%
of the contract revenue in line with significant Accounting Policy
No.14 to meet the warranty obligations as per the terms and conditions
of the contract. The same is retained till the completion of the
warranty obligations of the contract. The actual expenses on warranty
obligation may vary from contract to contract and on year to year
depending upon the terms and conditions of the respective contract.
16 Item of expense and income less than s One Lakh are not considered
for booking under Prior Period Items.
Mar 31, 2010
1. Estimated amount of contracts, net of advances, remaining to be
executed on capital account and not provided for is Rs. 1623.14 crore
(previous year Rs. 1783.78 crore) including Rs. 3.98 crore (previous
year Rs. 24.78 crore) for acquisition of intangible assets.
2. Land and buildings include:
a) 8648.91 acres of land (previous year 9713.445 acres), 36 flats
(previous year 36 flats) and one building (previous year one building)
for which formal transfer/lease deeds have not been executed including
for 71.44 acres of land (previous year 71.44 acres) for which the cost
paid is provisional; registration charges and stamp duty net of
provision already made thereon, would be accounted for on payment.
b) 28.676 acres of land (previous year 28.676 acres) leased to Ministry
of Defence, Government Departments and others.
c) 180 acres of land (previous year 180 acres) being used by the
Ministry of Defence and for which further approval of the competent
authority for continuance of licensing of the land is awaited.
d) 116.365 acres (previous year 116.365 acres) of land is under adverse
possession.
3. Sales and despatches to customers :
(a) Includes Rs. 20.38 crore (previous year Rs. 766.64 crore) based on
provisional prices and Rs. 96.86 crore (previous year Rs. 72.82 crore)
additional claim for despatches made in earlier year in accordance with
price settlement with railways during the year.
(b) Includes Rs. 1108.07 crore (previous year Rs. 923.93 crore) for
escalation claims raised in accordance with the sales contracts,
inclusive of escalation claims on accrual basis to the extent latest
indices were available;
(c) Includes despatches of equipment valued at Rs. 15.57 crore
(previous year Rs. 25.45 crore) held on behalf of customers at their
request for which payment has been received by the Company; and
(d) Excludes Rs. 23.01 crore (previous year Rs. 15.65 crore) for price
reduction due to delay in delivery as per terms of the contract.
4. Contingent Liabilities:
(a) Claims against the company not acknowledged as debt:
(i) Income Tax pending appeals (net of provisions) Rs. 28.77 crore
(previous year Rs. 28.57 crore) against which Rs 0.03 crore (previous
year Rs 0.01 crore) has been paid under protest and included under the
head deposits- others.
(ii) Sales Tax demands Rs. 353.06 crore (previous year Rs. 326.39
crore) against which Rs. 76.91 crore (previous year Rs. 71.56 crore)
has been paid under protest/court orders and included under the head
advances recoverable.
(iii) Excise Duty demands Rs.195.47 crore (previous year Rs. 169.16
crore), against which Rs.5.01 crore (previous year Rs. 5.11 crore) has
been paid under protest/court orders and included under the head
advances recoverable.
(iv) Custom Duty demands Rs. 0.21 crore (previous year Rs. 0.21 crore)
against which Rs. 0.06 crore (previous year Rs. 0.06 crore) has been
paid under protest.
(v) Court / Arbitration cases Rs. 251.34 crore (previous year Rs. 86.06
crore)
(vi) Liquidated Damages Rs. 1287.94 crore (previous year Rs. 1363.44
crore).
(vii) Counter claim by contractors Rs. 0.61 crore (previous year Rs.
40.99 crore).
(viii) Service Tax demand Rs. 105.74 crore (previous year Rs. 70.31
crore) against which Rs. 0.22 crore (previous year Rs. 0.08 crore) has
been deposited against protest.
(ix) Others Rs. 62.02 crore (previous year Rs. 58.77 crore).
In view of the various court cases / litigations and claims disputed by
the company financial impact as to outflow of resources is not
ascertainable at this stage.
(b) Bills discounted under IDBI scheme outstanding at the close of the
year amount to Rs. Nil (previous year Rs. 0.06 crore).
5. The company invested a sum of Rs. 5 crore (previous year Rs. 5
crore) towards equity shares of Rs. 10/- each (at par) in erstwhile
Konark Met Coke Ltd. (KMCL) Bhubneshwar, to secure orders for equipment
being supplied by the company to erstwhile KMCL and Neelachal Ispat
Nigam Ltd. (NINL). Pursuant to order passed by Honble Orissa High
Court, KMCL was amalgamated with NINL u/s 391 read with section 394 of
the Companies Act, 1956 & in terms of the scheme of amalgamation
sanctioned by the Honble High Court, Orissa, NINL had allotted equity
shares aggregating to Rs. 5 crore (previous year Rs. 5 crore) to the
company. The equity participation in NINL is restricted to 7.5% of the
value of the orders received with a maximum of Rs. 17.32 crore
(previous year Rs. 17.32 crore).
6. Cash credit limit (including bills discounting limit in respect of
IDBI Scheme) from banks aggregating to Rs. 100 crore (previous year Rs.
100 crore) and Companys counter guarantee / indemnity obligations in
regard to bank guarantee / letters of credit limit aggregating to Rs.
40000 crore (previous year Rs. 30000 crore ) sanctioned by the
consortium banks are secured by first charge by way of hypothecation of
raw materials, components, work in progress, finished goods, stores,
book debts and other current assets both present and future. The
outstanding bank guarantee as at 31.03.2010 is Rs. 31541 crore
(previous year Rs. 26752 crore) and Corporate Guarantee as on
31.03.2010 is Rs. 1685 crore (previous year Rs.1528 crore).
7. Other liabilities include a sum of Rs. 100.51 crore (previous year
Rs. 100.51 crore) towards guarantee fee demanded by the Government of
India in respect of foreign currency loans taken by the company at the
instance of the Government upto 1990-91. The matter for its waiver has
been taken up with the DHI, Government since there was no stipulation
for payment of such guarantee fee at the time the loans (guaranteed by
Government) were taken. DHI has vide its letter dated 17.03.10 has
intimated that the issue is being examined further.
8. Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon was taken on
April 1, 1999 from Ministry of Non-Conventional Energy Sources on lease
for a period of 30 years. The lease agreement with the Government is
yet to be finalised.
9. Balances shown under debtors, creditors, contractors advances,
deposits and stock/materials lying with sub- contractors/fabricators
are subject to confirmation, reconciliation & consequential adjustment,
if any. The reconciliation is carried out ongoing basis & provisions
wherever considered necessary have been made in line with the
guidelines.
10. The company has changed the accounting practice of provision for
doubtful debts during the year. As against earlier practice of creating
provision on a case to case basis, the company has revised it that
wherever trial operation has been conducted and the debtors are
outstanding for more than three years from the date of trial operation,
provisions (including contractual obligations) shall be equal to the
debtors as prevalent on that date. In line with this any shortfall in
provision with regard to total outstanding has been provided and excess
if any, has been withdrawn. The impact due to change in this accounting
practice is decrease in profit before tax by Rs. 124.61 crore for the
year 2009-10.
11. Further, Bank Guarantees given against release of outstanding
payment from the customer but undischarged, after 3 years from the date
of trial operation, has been reviewed on a case to case basis, for
creating provision, if required. The effect of this for the year is
decrease in profit before tax by Rs. 57 crore.
12. With the introduction of "Cafeteria approach" for perks &
allowances as part of wage revision, earlier practice of LTC/LTA claim
by all employees has been dispensed with and now LTC is one of the
perks & allowances under the cafeteria and employee has an option to
select any of perks & allowances listed under cafeteria approach
subject to a maximum of 46% of basic pay. Hence no separate provision
for LTC for the blocks 2010-11 (as per earlier practice) has been
provided. The effect of this change on Profit before tax for the year
2009-10 is an increase by Rs. 16.71 crore.
13. The company accounts the leave encashment expenditure with 26 days
a month as base. The company proposed a change in the base as 30 days a
month in line with the directives of Government of India, Department of
Public enterprise vide their O.M. dated 20.9.2005. However, some of
the workers unions have raised a dispute under section 9(A) of the
Industrial Dispute Act 1947 against the proposed changes in the
calculation of leave encashment with 30 days month base instead of 26
days month. As per section 33 (3) of the Industrial dispute Act no
employer can alter the service conditions during the pendency of such
proceedings with the Conciliation Officer. Pending final disposal of
the dispute by the Conciliation officer the status quo is being
continued. However, keeping in view the large number of recruitment
envisaged in BHEL, the proposed change has been effected for the
employees who have joined/ joining BHEL on or after 1st January 2010.
14. The details of Research & Development Expenditure (excluding cost
of land & building) incurred during the year which is deductible under
section 35 (2AB) of the Income Tax Act,1961. The registration
formalities for availing such deductions with DSIR has been completed
by March 2010, formal approval letter is awaited from DSIR. However,
the weighted deduction @150% on account of R&D expenses incurred during
the year has been considered while working out the provision for tax /
deferred tax for the year 2009-10.
15. The disclosure relating to AS-15 (R) - Employee Benefits
a) Effective April 1,2006 the company adopted the revised Accounting
Standard 15 (R) on Employee Benefits. The following disclosure sets
out the status as required under AS 15 (R).
b) Gratuity Plan
The gratuity liability arises on account of future payments, which are
required to be made in the event of retirement, death in service or
withdrawal. The liability has been assessed using projected unit credit
actuarial method.
16. Related Party Transactions:
i) Related Parties where control exists (Joint Ventures):
Powerplant Performance Improvement Ltd.
BHEL-GE Gas Turbine Services Pvt. Ltd.
NTPC-BHEL Power Projects Pvt. Ltd.
Udangudi Power Corporation Ltd.
Barak Power Pvt. Ltd.
Raichur Power Corporation Ltd.
Dada Dhuniwale Khandwa Power Ltd. ii) Other related parties (Key
Management Personnel- Functional Directors: existing & retired):
S/Shri B.P. Rao , C.S.Verma, Anil Sachdev, Atul Saraya, O. P. Bhutani
and K.Ravi Kumar
17. Joint ventures / Subsidiaries:
(i) An MoU has been signed on 12th Aug., 2009 between BHELand Mahagenco
for setting up a joint venture company to build, own and operate a
2x660 MW thermal power plant with Supercritical parameters at Latur in
Maharastra.
(ii) An MoU was entered into on 20lh August 2009 with General Electric,
USA for participating in Indian Railways tender for setting up of
Diesel Loco Factory at Marhowra, Bihar.
(iii) An MoU was made on 27th January 2010 with Alstom Transport S.A.,
France for participating in Indian Railways tender regarding setting up
of Electric Loco Assembly and Ancillary unit of Chittaranjan Locomotive
Works (CLW) at Dankuni, WB.
(iv) Company has signed an MoU on 17th February 2010 with Toshiba
Corporation, Japan to expolore the possibility of forming JV Company
for transmission and distribution business in India and other mutually
agreed countries.
(v) A Joint venture company between BHEL and MPPGCL has been formed on
25th February 2010, to Build, Own and Operate a 2x800 MW Thermal power
plant with Supercritical parameters at Khandwa in Madhya Pradesh,
namely Dada Dhuniwale Khandwa Power Ltd.
18. Item of expense and income less than Rs. one Lakh are not
considered for booking under Prior Period Items.
19. Previous years figures have been regrouped/reclassified wherever
practicable to conform to current years presentation.
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Bharat Heavy Electricals Ltd. குறித்த கூடுதல் தகவல்களை
-
Bharat Heavy Electricals Ltd. டூல்ஸ்
- பல்க் டீல்ஸ்
- பிளாக் டீல்ஸ்
-
Bharat Heavy Electricals Ltd. நிறுவன தகவல்கள்
- நிறுவன சுயவிவரம்
- நிறுவன வரலாறு
- நிர்வாக குழு
- மூலதன வடிவம்
- புராடெக்ட் மிக்ஸ்
- வங்கியாளர்/தணிக்கையாளர்/பதிவாளர்
-
நிறுவன வரலாறு
- போனஸ்
- மும்பை பங்குச் சந்தையில் விலை வரலாறு
- என்எஸ்இ விலை வரலாறு
-
Bharat Heavy Electricals Ltd. முக்கிய நிதியில் விகிதங்கள்
- விகிதங்கள்
-
Bharat Heavy Electricals Ltd. முடிவுகள்
- காலாண்டு முடிவுகள்
- அரையாண்டு முடிவுகள்
- 9 மாத முடிவுகள்
- வருடாந்திர முடிவுகள்
-
Bharat Heavy Electricals Ltd. நிதியியல் தகவல்கள்
- தணிக்கை முடிவுகள்
- பணப்பாய்வு
- இருப்பு நிலைக்குறிப்பு
-
Bharat Heavy Electricals Ltd. அறிக்கை
- கணக்கியல் கோட்பாடுகள்
- தணிக்கையாளர்கள் அறிக்கை
- இயக்குநர்கள் அறிக்கை
- கணக்கு குறிப்புகள்
-
Bharat Heavy Electricals Ltd. கார்ப்பரேட் அறிவிப்புகள்
- புத்தக முடிவு
- ஈவுத்தொகை
- நிர்வாகக் குழுக் கூட்டங்கள்
