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NHPC Ltd. இன் கணக்கு குறிப்புகள்

Mar 31, 2019

Note No. 35 to Standalone Financial Statements

During the year ended on 31.03.2019, retrospective reclassifications/restatements have been carried out in respect of certain items in the financial statements of previous periods. Accordingly, to comply with the requirements of Ind AS 1, the company has presented a 3rd Balance Sheet as at the begnining of preceding period, i.e. as on 01.04.2017. Major restatements/reclassifications are explained as under:-

(A) Restated Standalone Financial Statements for the year ended 31st March, 2018 and as at 1st April, 2017 RESTATED STANDALONE BALANCE SHEET AS AT 31ST MARCH, 2018 and as at 1st April, 2017

PARTICULARS

Note No. of Standalone Financial Statements

Notes

As at 31st March, 2018 (Reported Earlier)

Impact of Restatements/ Reclassifi cations

As at 31st March, 2018 (Restated)

As at 1st April, 2017 (Reported Earlier)

Impact of Restatements/ Reclassifi cations

As at 1st AprilI, 2017 (Restated)

ASSETS

(1) NON-CURRENT ASSETS

a) Property, Plant and Equipment

2.1

35.3

19,066.44

23.67

19,090.11

20,038.58

13.29

20,051.87

b) Capital Work In Progress

2.2

18,813.96

-

18,813.96

17,350.13

-

17,350.13

c) Investment Property

2.3

4.49

-

4.49

4.49

-

4.49

d) Intangible Assets

2.4

923.38

-

923.38

934.14

-

934.14

e) Financial Assets

-

-

-

-

i) Investments

3.1

2,209.56

-

2,209.56

2,100.32

-

2,100.32

ii) Trade Receivables

3.2

184.45

-

184.45

-

-

-

iii) Loans

3.3

35.5

339.88

361.86

701.74

360.96

324.86

685.82

iv) Others

3.4

35.5

1,915.23

(343.81)

1,571.42

1,863.83

(296.84)

1,566.99

f) Non Current Tax Assets (Net)

4

163.67

-

163.67

73.68

-

73.68

g) Other Non Current Assets

5

35.5

1,279.63

518.01

1,797.64

1,125.74

(28.02)

1,097.72

TOTAL NON CURRENT ASSETS

44,900.69

559.73

45,460.42

43,851.87

13.29

43,865.16

(2) CURRENT ASSETS

a) Inventories

6

95.77

-

95.77

91.64

-

91.64

b) Financial Assets

-

-

-

-

i) Trade Receivables

7

1,097.07

-

1,097.07

1,492.90

-

1,492.90

ii) Cash & Cash Equivalents

8

6.96

-

6.96

59.89

-

59.89

(Rs in crore)

PARTICULARS

Note No. of Standalone Financial Statements

Notes

As at 31st March, 2018 (Reported Earlier)

Impact of Restatements/ Reclassifi cations

As at 31st March, 2018 (Restated)

As at 1st April, 2017 (Reported Earlier)

Impact of Restatements/ Reclassifi cations

As at 1st ApriI, 2017 (Restated)

iii) Bank balances other than Cash & Cash Equivalents

9

1,465.43

1,465.43

1,473.25

1,473.25

iv) Loans

10

35.5

46.80

1.17

47.97

43.84

117.40

161.24

v) Others

11

35.5

1,919.42

(536.06)

1,383.36

1,858.25

-

1,858.25

c) Current Tax Assets (Net)

12

0.40

-

0.40

55.93

(0.00)

55.93

d) Other Current Assets

13

35.5

342.18

(1.17)

341.01

475.21

(117.40)

357.81

TOTAL CURRENT ASSETS

4,974.03

(536.06)

4,437.97

5,550.91

-

5,550.91

(3) Regulatory Deferral Account

14

35.1

3,600.46

2,068.75

5,669.21

2,904.32

2,726.24

5,630.56

Debit Balances

TOTAL ASSETS AND REGULATORY DEFERRAL

53,475.18

2,092.42

55,567.60

52,307.10

2,739.53

55,046.63

ACCOUNT DEBIT BALANCES

EQUITY AND LIABILITIES

(1) EQUITY

a) Equity Share Capital

15.1

10,259.32

-

10,259.32

10,259.32

-

10,259.32

b) Other Equity

15.2

18,068.83

23.67

18,092.50

16,682.81

13.29

16,696.10

TOTAL EQUITY

28,328.15

23.67

28,351.82

26,942.13

13.29

26,955.42

(2) LIABILITIES

NON-CURRENT LIABILITIES

a) Financial Liabilities

i) Borrowings

16.1

16,728.20

-

16,728.20

17,245.64

-

17,245.64

ii) Other financial

16.2

38.47

-

38.47

25.63

-

25.63

liabilities

b) Provisions

17

25.47

-

25.47

486.93

-

486.93

c) Deferred Tax Liabilities (Net)

18

35.1

1,076.64

2,068.75

3,145.39

938.49

2,726.24

3,664.73

d) Other non-current Liabilities

19

1,625.00

-

1,625.00

1,472.47

-

1,472.47

TOTAL NON CURRENT LIABILITIES

19,493.78

2,068.75

21,562.53

20,169.16

2,726.24

22,895.40

(Rs in crore)

PARTICULARS

Note No. of Standalone Financial Statements

Notes

As at 31st March, 2018 (Reported Earlier)

Impact of Restatements/ Reclassifi cations

As at 31st March, 2018 (Restated)

As at 1st April, 2017 (Reported Earlier)

Impact of Restatements/ Reclassifications

As at 1st ApriI, 2017 (Restated)

(3) CURRENT LIABILITIES

a) Financial Liabilities

i) Borrowings

20.1

279.99

-

279.99

302.50

-

302.50

ii) Trade Payables

20.2

-

-

-

-

Total outstanding dues of micro enterprises and small enterprises

5.29

5.29

4.28

4.28

Total outstanding dues of Creditors other than micro enterprises and small enterprises

35.5

166.26

10.31

176.57

142.80

17.72

160.52

iii) Other financial liabilities

20.3

35.5

2,778.81

(10.31)

2,768.50

2,549.63

(17.72)

2,531.91

b) Other Current Liabilities

21

669.86

-

669.86

706.65

-

706.65

c) Provisions

22

1,753.04

-

1,753.04

1,489.95

-

1,489.95

d) Current Tax Liabilities (Net)

23

-

-

-

-

-

-

TOTAL CURRENT LIABILITIES

5,653.25

0.00

5,653.25

5,195.81

(0.00)

5,195.81

TOTAL EQUITY & LIABILITIES

53,475.18

2,092.42

55,567.60

52,307.10

2,739.53

55,046.63

(B) RESTATED STANDALONE STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH, 2018

(Rs in crore)

PARTICULARS

Note No. of Standalone Financial Statements

Notes

For the Year ended 31st March, 2018 (Reported Ealier)

Impact of Restatements/ Reclassifications

For the Year ended 31st March, 2018 (Restated)

INCOME

i) Revenue from Operations

24.1

35.5

6,934.03

4.19

6,938.22

ii) Revenue from Power Trading

24.2

-

-

-

iii) Other Income

24.3

35.4 & 35.5

1,491.00

(70.45)

1,420.55

TOTAL INCOME

8,425.03

(66.26)

8,358.77

EXPENSES

i) Generation Expenses

25

716.39

-

716.39

ii) Employee Benefits Expense

26

35.4

1,585.33

(49.44)

1,535.89

iii) Finance Costs

27

922.32

-

922.32

iv) Depreciation and Amortization Expense

28

35.3

1,405.89

(10.38)

1,395.51

v) Other Expenses

29

35.4

989.18

(16.82)

972.36

TOTAL EXPENSES

5,619.11

(76.64)

5,542.47

PROFIT BEFORE EXCEPTIONAL ITEMS, RATE REGULATED ACTIVITIES AND TAX

2,805.92

10.38

2,816.30

Exceptional items

-

PROFIT BEFORE RATE REGULATED ACTIVITIES AND TAX

2,805.92

10.38

2,816.30

Tax Expenses

30

i) Current Tax

35.5

634.68

(6.91)

627.77

ii) Adjustments for Income Tax

35.5

(6.91)

6.91

-

iii) Deferred Tax

35.2

139.32

(657.49)

(518.17)

Total Tax Expenses

767.09

(657.49)

109.60

PROFIT FOR THE YEAR BEFORE NET MOVEMENTS IN REGULATORY DEFERRAL ACCOUNT BALANCES

2,038.83

667.87

2,706.70

Movement in Regulatory Deferral Account Balances (Net of Tax)

31

35.2

719.82

(657.49)

62.33

PROFIT FOR THE YEAR (A)

2,758.65

10.38

2,769.03

OTHER COMPREHENSIVE INCOME (B)

(i) Items that will not be reclassified to profit or loss

(a) Remeasurement of the defined benefit plans

44.78

-

44.78

Less: Income Tax on remeasurement of the defined benefit plans

14.80

-

14.80

Less: Deferred Tax Adjustment Against Deferred Tax Liabilities on Remeasurement of defined benefit plans

(13.85)

-

(13.85)

-Movement in Regulatory Deferral Account Balances-Remeasurement of defined benefit plans

(23.68)

-

(23.68)

Sub total (a)

20.15

-

20.15

(b) Investment in Equity Instruments

(7.30)

-

(7.30)

Sub total (b)

(7.30)

-

(7.30)

Total (i) = (a) (b)

12.85

-

12.85

(ii) Items that will be reclassified to profit or loss

-

Investment in Debt Instruments

(9.09)

-

(9.09)

Less: Income Tax on investment in Debt Instruments

(2.12)

-

(2.12)

Total (ii)

(6.97)

-

(6.97)

Other Comprehensive Income (B) = (i ii)

5.88

-

5.88

TOTAL COMPREHENSIVE INCOME FOR THE YEAR (A B)

2,764.53

10.38

2,774.91

Earning per share (Basic and Diluted) (Equity shares, face value of 10/- each)

Before movements in Regulatory Deferral Account Balances

35.6

1.99

0.65

2.64

After movements in Regulatory Deferral Account Balances

35.6

2.69

0.01

2.70

(C ) STATEMENT OF CHANGES IN EQUITY AS AT 31ST MARCH, 2018 (Extract) OTHER EQUITY

(Rs in crore)

Particulars

Notes

Reserve and Surplus

Other Comprehensive Income

Capital Redemption Reserve

Securities Premium

Bond Redemption Reserve

Research & Development Fund

General Reserve

Surplus/ Retained Earnings

Equity Instruments through OCI

Debt instruments through OCI

Total

Balance as at 1st April, 2017 (As previously Reported)

2,041.42

242.81

1,609.27

43.90

10,088.11

2,522.54

100.08

34.68

16,682.81

Correction of Error (Net of Tax)

35.3

13.29

Restated Balance as at 1st April, 2017

2,041.42

242.81

1,609.27

43.90

10,088.11

2,535.83

100.08

34.68

16,696.10

Profit for the year

-

-

-

-

-

2,769.03

-

-

2,769.03

Other Comprehensive Income

-

-

-

-

-

20.15

(7.30)

(6.97)

5.88

Total Comprehensive Income

-

-

-

-

-

2,789.18

(7.30)

(6.97)

2,774.91

Transfer to Retained Earning

Amount transferred from Bond Redemption Reserve

-

-

(148.17)

-

-

148.17

-

-

-

Amount transferred from Research & Development Fund

-

-

(43.90)

43.90

-

Transfer from Retained Earning

Final Dividend (2016-17)

-

-

-

-

-

(102.60)

-

-

(102.60)

Interim Dividend (2017-18)

(1,149.05)

(1,149.05)

Tax on Dividend

-

-

-

-

-

(126.86)

-

-

(126.86)

Transfer to Bond Redemption Reserve

-

-

668.45

-

-

(668.45)

-

-

-

Balance as at 31st March, 2018

2,041.42

242.81

2,129.55

-

10,088.11

3,470.12

92.78

27.71

18,092.50

Notes :-

35.1 As per CERC Tariff Regulations, deferred tax for the tariff period 2004-09 is recoverable from beneficiaries in the year the same materialises as current tax and for tariff period 2014-19 by way of grossing up of Return on Equity by the effective tax rate based on actual tax paid, Till 31 st March, 2018 the deferred tax recoverable from beneficiaries in future years was adjusted against deferred tax liability. Pursuant to an opinion of the Expert Advisory Committee of the Institute of Chartered Accountants of India obtained during FY 2018-19, the Company has reclassified the deferred tax recoverable as Regulatory Deferral Account balance as against adjusting the same with deferred tax liability. Consequent upon this change, impact of Rs (-) 81.22 crore on account of tax liability pertaining to period 2014-15 to 2017-18 has been adjusted/ considered in the tax computation for the current year.

35.2 Deferred Tax expense to the extent of Rs 657.49 crore of FY 2017-18 has been reclassified/ restated as movement in Regulatory Deferral Account balances consequent upon reclassification of deferred tax recoverable from beneficiaries as explained at SI. No.35.1 above.

35.3 The depreciation on assets acquired and available for use during the " fag-end" as per CERC Tariff Regulations 2014-19 (last 5 years) of the operating life of a Power Station was charged based on the originally estimated useful life as against the extended life of the generating station under CERC Tariff Regulation/ Orders. (Refer S.No-32 of Note 34). As a result, excess depreciation pertaining to earlier periods have been written-back to Property, Plant & Equipment with consequential increase in "Other Equity".

35.4 Till FY 2017-18, reversal of provisions were being presented as "Other Income". Pursuant to an opinion of the Expert Advisory Committee of the Institute of Chartered Accountants of India, the Company has adjusted reversal of provisions of earlier years to the extent of provisions created during the year and consequently "Other Income" and related expenses have also been adjusted to that extent. However there is no impact of such reclassification on the profit of the respective year.

35.5 Further to above, following reclassifications/restatements have also been made in the Balance Sheet and Statement of Profit and Loss to correspond to the current year classification:

a) Deposits of perpetual nature earlier classified as "Other Current Assets"/ "Other Non Current Assets" have been reclassified as "Current-Financial Assets-Loans"/ "Non-Current-Financial Assets-Loans".

b) Interest accrued on Loan to Govt of Arunachal Pradesh, earlier classified as "Financial Assets-Others" has been reclassified as "Financial Assets-Loans" along with the loan balance.

c) Payments made to contractors in pursuance to Niti Aayog guidelines (refer Note 34(1 )(e) of the Financial Statements) earlier presented under "Financial Assets-Current- Others" have been reclassified as "Other Non-Current Assets".

d) Certain liabilities incurred in the normal course of business have been reclassified from "Other Financial Liabilities-Current" to "Trade Payables-Current".

e) Income on account of Generation Based Incentive (GBI) earlier presented as "Other Income" has been reclassified as "Revenue from Operations".

f) In Tax Expenses, Adjustments for Income Tax is clubbed in current taxes.

35.6 Basic and Diluted earning per share for the year 2017-18 have also been restated. The basic and diluted earnings per share has increased by Rs 0.65 before movement in regulatory Deferral Account Balances and by Rs 0.01 per share after movement in regulatory Deferral Account Balances.

35.7 There is no impact due to the above restatement/reclassifications on the Statement of Cash Flow of the Year 2017-18.

For and on behalf of the Board of Directors

VIJAY GUPTA

MAHESH KUMAR MITTAL

BALRAJ JOSHI

Company Secretary

Director (Finance)

Chairman & Managing Director

DIN 02889021

DIN 07449990

As per report of even date

FOR ARORA VOHRA & CO.

FOR DSP & ASSOCIATES

FOR LODHA & CO.

Chartered Accountants

Chartered Accountants

Chartered Accountants

FRN 009487N

FRN: 006791N

FRN: 301051E

(PREM C. BANSAL)

(Sanjay Jain)

(R.R SINGH)

Partner

Partner

Partner

M. No. 083597

M. No. 084906

M. No. 052438

Place : Date:

New Delhi 27th May, 2019


Mar 31, 2018

(I) Reporting entity

NHPC Limited (the “Company”) is a Company domiciled in India and limited by shares. The shares of the Company are publicly traded on the National Stock Exchange of India and BSE Limited. The address of the Company’s registered office is NHPC LIMITED, NHPC Office Complex, Sector-33, Faridabad, Haryana -121003. The Company is primarily involved in the generation and sale of bulk power to various Power Utilities. Other business includes providing consultancy, project management & supervision.

(II) Basis of preparation

(A) Statement of Compliance

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

(B) Basis of Measurement

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

- Certain financial assets and liabilities measured at fair value.

- Plan assets of defined employee benefit plans.

The methods used to measure fair values are discussed in Note 33.

(C) Functional and presentation currency

These financial statements are presented in Indian Rupees (INR), which is the Company’s functional currency. All financial information presented in INR has been rounded off to the nearest crores (upto two decimals) for the Company.

(D) Use of estimates and management judgments

The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that may impact the application of accounting policies and the reported value of assets, liabilities, income, expenses and related disclosures including contingent assets and liabilities at the Balance Sheet date. The estimates and management’s judgments are based on previous experience and other factors considered reasonable and prudent in the circumstances. Actual results may differ from these estimates.

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

In order to enhance understanding of the financial statements, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that may have the most significant effect on the amounts recognised in the financial statements are included in the following notes:

Critical judgments and estimates

a) Determining whether an arrangement contains a lease

Appendix C, Ind AS 17 ‘Determining whether an arrangement contains a lease’ requires an assessment of whether:

- -fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset); and

- -the arrangement conveys a right to use the asset.

Further, an arrangement conveys a right to use the asset if facts and circumstances indicate that it is remote that one or more parties other than the purchaser will take more than an insignificant amount of the output or other utility that will be produced or generated by the asset during the term of the arrangement, and the price that the purchaser will pay for the output is neither contractually fixed per unit of output nor equal to the current market price per unit of output as of the time of delivery of the output.

The Company enters into power purchase agreements with beneficiaries. Power Purchase Agreements (PPA) in the nature of embedded lease with a single beneficiary where the minimum lease term is for the major part of the plant’s economic life and the minimum lease payments amount to substantially all the fair value of the plant are considered as a Finance Lease. Other embedded leases are considered as Operating Lease.

For embedded leases in the nature of a Finance Lease, the investment in the plant is recognised as a Lease Receivable. The minimum lease payments are identified by segregating the embedded lease payments from the rest of the contract amounts. Each lease receipt is allocated between the receivable and finance lease income so as to achieve a constant rate of return on the Lease Receivable outstanding.

In the case of operating leases or embedded operating leases, the lease income from the operating lease is recognised in revenue on a straight-line basis over the lease term. The respective leased assets are included in the Balance Sheet based on their nature.

b) Useful life of Property, Plant and Equipment and Intangible Assets

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

Useful life of the assets used for generation of electricity is determined by the Central Electricity Regulatory Commission (CERC) Tariff Regulations as mentioned in part B of Schedule II of the Companies Act, 2013 except for construction plant & machinery and computers & peripherals which are in accordance with Schedule II of the Companies Act, 2013 and mobile phones which are as per management assessment.

c) Recoverable amount of property, plant and equipment, capital work in progress and intangible assets

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

d) Post-retirement benefit plans

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

e) Revenue

The Company records revenue from sale of power based on Tariff approved by the CERC, as per the principles of Ind AS 18. However, in cases where tariff rates are yet to be approved, provisional rates are adopted considering the applicable CERC Tariff Regulations.

f) Provisions and contingencies

The assessments undertaken in recognising provisions and contingencies have been made in accordance with Ind AS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’. The evaluation of the likelihood of the contingent events has been made on the basis of best judgment by management regarding probable outflow of economic resources. Such estimation can change following unforeseeable developments.

g) Recoverable Amount of Rate Regulated Assets

The operating activities of the Company are subject to cost-of-service regulations whereby tariff charged for electricity generated is based on allowable costs like interest costs, depreciation, operation & maintenance including a stipulated return. Guidance Note on Rate Regulated Activities issued by the ICAI (previous GAAP) and Ind AS 114- ‘Regulatory Deferral Accounts’ permits an entity to include in the rate base, as part of the cost of self-constructed (tangible) PPE or internally generated intangible assets, amounts that would otherwise be recognised as an expense in the statement of profit and loss in accordance with Ind AS. The Company estimates that items of regulatory deferral accounts recognised in the financial statements are recoverable as per the current CERC Tariff regulations 2014-19. However, changes in CERC tariff regulations beyond the current tariff period may affect the recoverability of such balances.

h) Impairment of Trade Receivables

Considering the historical credit loss experience for trade receivables, the Company does not envisage either impairment in the value of receivables from beneficiaries or loss due to time value of money owing to delay in realization of trade receivables, except to the extent already provided for.

i) Investment in Subsidiaries and Joint Ventures

Investment has been carried at costs and as per assessment by the Company, there is no indication of impairment on such investments. Any changes in assumption may have a material impact on the measurement of the recoverable amount.

j) Insurance Claim Recoverable

The recoverable amount of insurance claims in respect of damages to Property, Plant & Equipment is based on estimates & assumptions as per terms and conditions of insurance policies.

1) Expenditure attributable to Construction (EAC) includes Rs.371.10 Crore (Previous year Rs.377.54 Crore) towards borrowing cost capitalised during the period.

2) Capital Work in Progress (CWIP) includes a cumulative expenditure of Rs.1287.92 Crore (Previous Year Rs.1178.32 Crore) on projects under Survey & Investigation stage. Of this, a sum of Rs.43.52 Crore (Previous Year Rs.43.52 Crore) pertains to Subansiri Upper Project, which had been decided by Govt. of Arunachal Pradesh to be handed over to a Private Developer. However, pending handing over of the project & recovery of expenditure incurred on it, the said amount is already provided for in the books as an abundant precaution. Out of the balance of Rs.1244.40 Crore (Previous Year Rs.1134.80 Crore) pertaining to projects with the company, a sum of Rs.562.01 Crore (Previous Year Rs.535.74 Crore) has been provided upto date as an abundant precaution in respect of projects, where uncertainties are attached and Rs.682.39 Crore (Previous Year Rs.599.15 Crore), pertaining to other projects having reasonable certainty of getting clearance, is carried over.

3) Siang Basin, Subansiri Basin & Dibang Multipurpose Projects were taken over from Brahmaputra Board. Pending settlement of accounts with Brahmaputra Board, assets and liabilities have been accounted for to the extent of amounts incurred by the Company on these projects. Siang Lower & Siyom HE Projects (in Siang Basin) & Subansiri Middle (in Subansiri Basin) have since been handed over to Private Developer and liability arising out of settlement of accounts with Brahmaputra Board towards these projects if any, is recoverable from respective Private Developers.

4) Underground Works amounting to Rs.5177.50 Crore (Previous Year Rs.4923.90 Crore) created on Land - Right to use, are included under respective heads of Capital Work in Progress (CWIP).

5) Refer para no. 9 of Note no. 34 for information of non-current assets pledged with banks as security for related borrowings.

6) Capital Expenditure on projects approved by the competent authority undergoes revision over period of time as hydroelectric projects are time intensive and some takes longer period than envisaged. As a consequence the cost escalation occur, which requires approval of competent authority. Pending such approval the expenditure incurred is carried forward in Capital Work in Progress (CWIP).

1) Expenditure attributable to Construction (EAC) includes Rs.377.54 Crore (Previous year Rs.461.70 Crore) towards borrowing cost capitalised during the year.

2) Capital Work in Progress (CWIP) includes a cumulative expenditure of Rs.1178.32 Crore (Previous Year Rs.1069.48 Crore) on projects under Survey & Investigation stage. Of this, a sum of Rs.43.52 Crore (Previous Year Rs.43.52 Crore) pertains to Subansiri Upper Project, which had been decided by Govt. of Arunachal Pradesh to be handed over to a Private Developer. However, pending handing over of the project & recovery of expenditure incurred on it, the said amount is already provided for in the books as an abundant precaution. Out of the balance of Rs.1134.80 Crore (Previous Year Rs.1025.96 Crore) pertaining to projects with the company, a sum of Rs.535.74 Crore (Previous Year Rs.494.40 Crore) has been provided upto date as an abundant precaution in respect of projects, where uncertainties are attached and Rs.599.15 Crore (Previous Year Rs.531.56 Crore), pertaining to other projects having reasonable certainty of getting clearance, is carried over.

3) Siang Basin, Subansiri Basin & Dibang Multipurpose Projects were taken over from Brahmaputra Board. Pending settlement of accounts with Brahmaputra Board, assets and liabilities have been accounted for to the extent of amounts incurred by the Company on these projects. Siang Lower & Siyom HE Projects (in Siang Basin) & Subansiri Middle (in Subansiri Basin) have since been handed over to Private Developer and liability arising out of settlement of accounts with Brahmaputra Board towards these projects if any, is recoverable from respective Private Developers.

4) Underground Works amounting to Rs.4923.90 Crore (Previous Year Rs.4205.33 Crore) created on Land - Right to use, are included under respective heads of Capital Work in Progress (CWIP).

5) Refer para no. 9 of Note no. 34 for information of non-current assets pledged with banks as security for related borrowings.

6) Capital Expenditure on projects approved by the competent authority undergoes revision over period of time as hydroelectric projects are time intensive and some takes longer period than envisaged. As a consequence the cost escalation occur, which requires approval of competent authority. Pending such approval the expenditure incurred is carried forward in Capital Work in Progress (CWIP).

d) The Company has issued only one kind of equity shares with voting rights proportionate to the share holding of the shareholders. These voting rights are exercisable at meeting of shareholders. The holders of the equity shares are also entitled to receive dividend as declared from time to time for them.

e) Shares in respect of each class in the company held by its holding company or its ultimate holding company including shares held by subsidiaries or associates of the holding company or the ultimate holding company in aggregate: NIL

g) Shares reserved for issue under options and contracts/commitments for the sale of shares/disinvestment, including the terms and amounts : NIL

h) In preceding five financial years immediately preceding 31.03.2018, Company has not allotted any equity share as fully paid up pursuant to contract(s) without payment being received in cash/ not allotted any equity share as fully paid up by way of bonus share(s).

i) Terms of any securities convertible into equity shares issued along with the earliest date of conversion in descending order starting from the farthest such date:- NIL

j) Calls unpaid (showing aggregate value of calls unpaid by directors and officers) : NIL

k) Forfeited shares (amount originally paid up) :NIL

l) During the Financial Year 2016-17 the Company has completed buyback of 811347977 shares of Rs.10 each, from the shareholders on a proportionate basis by way of a tender offer at a price of Rs.32.25 per equity share for an aggregate amount of Rs.2616.60 crores in accordance with the provisions of the Companies Act, 2013 and the SEBI regulations.

Nature and Purpose of Reserves

1 Capital Redemption Reserve : The company is required to create a capital redemption reserve from distributable profit if the buy-back of shares is out of free reserves, the nominal value of the shares so purchased is required to be transferred to capital redemption reserve.

2 Securities Premium Account : Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act.

3 Bond Redemption Reserve : The company is required to create a bond redemption reserve out of the profits which is available for the purpose of redemption of bonds.

4 Research & Development Fund : As per the requirement of Department of Public Enterprise (DPE) IOM no. 3(9)/2010-DPE (MoU) dated 23rd September 2011, creation of reserve for Research & Development (R&D) @ 0.5% of Profit after Tax was made a mandatory criteria for performance evaluation under the MoU system for Central Public Sector Companies. Accordingly, the Company had been creating R&D Reserve as per DPE guidelines till FY 2016-17. However, since FY 2016-17, targets for R&D no longer form part of MoU of the Company. Further, keeping in view the industry practice in this regard, the Company has ceased creation of R&D reserve w.e.f. the current financial year and balance of Rs.43.90 Crore in R&D Reserve as on 31st March, 2017 has been transferred to Retained Earnings during the year.

5 FVTOCI-Equity Instruments : The company has elected to recognise changes in the fair value of certain investments in equity securities in Other Comprehensive Income (OCI). These changes are accumulated within the FVOCI equity investments reserve within equity. The company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

6 FVTOCI-Debt Instruments : The company has elected to recognise changes in the fair value of certain investments in debt securities in Other Comprehensive Income. These changes are accumulated within the FVTOCI debt investments reserve within equity. The company transfers amounts from this reserve to retained earnings through P&L when the relevant debt securities are derecognised.

* Particulars of security

1. Secured by pari-passu charge by way of Equitable mortgage/hypothecation against Immovable/Moveable assets (except for Book Debts and Stores) of Company’s Chamera-I Power Station situated in the state of Himachal Pradesh.

2. Secured by pari-passu charge by way of Equitable mortgage/hypothecation against Immovable/Moveable assets (except for Book Debts and Stores) of Company’s Uri-I Power Station situated in the state of Jammu & Kashmir.

3. Secured by pari-passu charge by way of Equitable mortgage/ hypothecation against Immovable / Moveable assets (except for Book Debts and Stores) of Company’s Chamera-II Power Station situated in the state of Himachal Pradesh.

4. Secured by pari-passu charge by way of equitable mortgage and hypothecation against the immovable and moveable assets (except for Book Debts and Stores) of the Company’s Parbati-II HE Project situated in the state of Himachal Pradesh.

5. Secured by pari-passu charge by way of equitable mortgage/hypothecation against immovable/movable assets (except for Book Debts and Stores) of Company’s Teesta Low Dam-III Power Station situated in the state of West Bengal.

6. Secured by pari-passu charge by way of equitable mortgage and charge over all the immoveable and moveable assets (except for Book Debts and Stores) of the Company’s Dhauliganga Power Station situated in the state of Uttrakhand.

7. Secured by way of first charge on pari-passu basis by way of hypothecation on whole of the Company’s movable assets(except for Book Debts and Stores), both present and future, of Dulhasti Power Station situated in the state of Jammu & Kashmir.

8. Secured by a first charge on pari-passu basis by way of equitable mortgage and hypothecation against the immovable and moveable assets (except for Book Debts and Stores) of the Company’s Chamera-III Power Station situated in the state of Himachal Pradesh.

9. Secured by way of first charge on pari-passu basis by way of hypothecation on whole of the Company’s movable assets (except for Book Debts and Stores), both present and future, of Salal Power Station situated in the state of Jammu & Kashmir, Sewa-II Power Station situated in the state of Jammu & Kashmir, Chutak Power Station situated in the state of Jammu & Kashmir, Nimmo-Bazgo Power Station situated in the state of Jammu & Kashmir, Uri-II Power Station situated in the state of Jammu & Kashmir & TLDP-IV Power Station situated in the state of West Bengal.

10. Secured by pari-passu charge by way of equitable mortgage and hypothecation against the immovable and moveable assets (except for Book Debts and Stores) of the Company’s Parbati -III Power Station situated in the state of Himachal Pradesh.

11. Secured by pari-passu charge by way of equitable mortgage/hypothecation against immovable/movable assets (except for Book Debts and Stores) of Company’s Teesta-V Power Station situated in the state of Sikkim.

12. Loans mentioned at sl. nos. C(i),F(i),F(ii) and F(iii) above are guaranteed by Government of India.

13. Secured by pari-passu charge by way of equitable mortgage and hypothecation against the immovable and moveable assets (except for Book Debts and Stores) of the Company’s Parbati -II Power Station situated in the state of Himachal Pradesh.

14. Security creation by pari-passu charge by way of equitable mortgage and hypothecation against the immovable and moveable assets (except for Book Debts and Stores) of the Company’s Parbati -II Power Station situated in the state of Himachal Pradesh and Secured by pari-passu charge by way of hypothecation against the moveable assets (except for Book Debts and Stores) of the Company’s Dulhasti Power Station situated in the state of Jammu & Kashmir is under process.

*1) The Board has resolved to implement the directions of the Ministry of Power (MoP) vide its letter no. 11/17/2009 NHPC/ Vol. III dated 27th December 2013 conveying the approval of Competent Authority about pay scales in respect of below Board level Executives that the pay scales shall be fixed w.e.f. 01.01.2007 after correcting the aberrations in pay scales fixed w.e.f. 01.01.1997 and the deviant pay scales fixed w.e.f. 01.01.1997 shall not be regularized. The MoP has confirmed vide letter no. 11/17/2009-NHPC-Vol. III dated 25th Feb., 2016 that the recovery of personal pay adjustment w.e.f. 01.02.2014 is in conformity with the said directive of the Competent Authority. Accordingly, advance against personal pay adjustment of Rs.31.03 crore paid upto 31.01.2014 has been set-off against the Provision for wage revision. However, pending final decision in the matter, the balance amount of Rs.12.57 crore is continued in advance.

Thus, the cumulative amount provided towards the Personal Pay Adjustment w.e.f 01/02/2014 to 31/03/2018 under the head “Provision for Wage Revision” is Rs.12.57 crore (including provision for the current period Rs.2.47 crore) with corresponding amount shown as “Advance paid”.

2) Information about Provisions are given in para 21 of Note 34 of Balance Sheet

Total carried forward to Statement of Profit & Loss includes Rs.331.39 Crore (Previous period Rs.365.32 Crore) relating to Subansiri Lower Project as explained in para 22 of Note no-34. However Regulatory Deferral Account Balances for an equivalent amount of Rs.331.39 Crore pertaining to Subansiri Lower Project has been recognised as per Ind AS 114-”Regulatory Deferral Accounts”.

i) Credit risk

Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The company is exposed to credit risk from its operating activities (primarily trade receivables/leased assets) and from its financing activities including deposits with banks and financial institutions.

ii) Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses.

iii) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits and investments. Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The company operates in a regulated environment. Tariff of the company is fixed by the Central Electricity Regulatory Commission (CERC) through Annual Fixed Charges (AFC) comprising the following five components:

1. Return on Equity (RoE), 2. Depreciation, 3. Interest on Loans, 4. Operation & Maintenance Expenses and 5. Interest on Working Capital Loans. In addition to the above Foreign Currency Exchange variations and Taxes are also recoverable from Beneficiaries in terms of the Tariff Regulations. Hence variation in interest rate, currency exchange rate variations and other price risk variations are recoverable from tariff and do not impact the profitability of the company.

(B) Credit Risk

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments.

Trade Receivables & lease receivables :-

The Company extends credit to customers in normal course of business. The Company monitors the payment track record of the customers. Outstanding receivables are regularly monitored. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are mainly state government authorities and operate in largely independent markets.

Lease receivables of the company are with regard to Power Purchase Agreements classified as deemed lease as per Appendix C of Ind AS 17- ‘Leases’ as referred to in Note No. 34. The power purchase agreements are for sale of power to single beneficiary and recoverability of interest income and principal on leased assets i.e. PPE of the power stations are assessed on the same basis as applied for trade receivables.

Financial assets at amortised cost :-

Employee Loans: The Company has given loans to employees at concessional rates as per Company’s policy which have been measured at amortised cost at Balance Sheet date. The recovery of the loan is on fixed instalment basis from the monthly salary of the employees. The loans are secured by way of mortgage/hypothecation of the assets for which such loans are given. Management has assessed the past data and does not envisage any probability of default on these loans.

Loans to Govt. of Arunanchal Pradesh : The Company has given loan to Govt. of Arunachal Pradesh at 9% rate of interest as per the terms and conditions of MOU signed between the Company and Govt of Arunachal Pradesh for construction of hydroelectric projects in the state. The loan has been measured at amortised cost. The loan is recoverable from the share of free power of the state government from the first hydroelectric project to be commissioned in the state. Management does not envisage any probability of default on the loan.

Financial instruments and cash deposits :-

The Company considers factors such as track record, size of the bank, market reputation and service standards to select the banks with which balances and deposits are maintained. Generally, the balances are maintained with the banks with which the Company has also availed borrowings. The Company invests surplus cash in short term deposits with scheduled banks. The company has balances and deposits with banks which are well diversified across private and public sector banks with limited exposure with any single bank.

(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 as under:

(ii) Provision for expected credit losses :-

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

The Company assesses outstanding receivables on an ongoing basis considering changes in payment behaviour and provides for expected credit loss on case-to-case basis.

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

CERC Tariff Regulations 2014-19 allow the Company to raise bills on beneficiaries for late-payment surcharge. which adequately compensates the Company for time value of money arising due to delay in payment. Further, the fact that beneficiaries are primarily State Governments/ State Discoms and considering the historical credit loss experience for trade receivables, the Company does not envisage either impairment in the value of receivables from beneficiaries or loss due to time value of money due to delay in realization of trade receivables. However, the Company assesses outstanding trade receivables on an ongoing basis considering changes in operating results and payment behaviour and provides for expected credit loss on case-to-case basis. As at the reporting date company does not envisage any default risk on account of non-realisation of trade receivables.

(iii) Reconciliation of impairment loss provisions

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

(C) Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due.

i) The Company’s objective is to maintain optimum levels of liquidity at all times to meet its cash and collateral requirements. The Company relies on a mix of borrowings and excess operating cash flows to meet its need for funds. The current committed lines of credit and internal accruals are sufficient to meet its short to medium term expansion needs. The Company monitors rolling forecasts of its liquidity requirements to ensure that it has sufficient cash to meet capital expenditure and operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the borrowing limits or covenants (where applicable) are not breached on any of its borrowing facilities.

ii) Maturities of Financial Liabilities:

The amounts disclosed in the table below are the contractual undiscounted cash flows. Balances due within 1 year is equal to their carrying balances as the impact of discounting is not significant.

(D) Market Risk:

The sensitivity analysis excludes the impact of movements in market variables on the carrying value of post-employment benefit obligation provisions and on the non-financial assets and liabilities. The sensitivity of the relevant item of the Statement of Profit and Loss is the effect of the assumed changes in the respective market risks. The Company’s activities expose it to a variety of financial risks, including the effects of changes in interest rates.

(i) Interest rate risk and sensitivity

The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long term debt obligations with floating interest rates. Company’s policy is to maintain most of its borrowings at fixed rate. Company’s fixed rate borrowings are carried at amortised cost and are not subject to interest rate risk. Further the company refinance these debts as and when favourable terms are available. The company is also compensated for variability in floating rate through recovery by way of tariff adjustments under CERC tariff regulations.

Interest Rate Sensitivity Analysis

Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of change in interest rates. With all other variables held constant, the following table demonstrates the impact of borrowing cost on floating rate portion of loans and borrowings.

However there is no impact on profit or loss for increase and decrease in interest rates, as the same is recoverable from beneficiaries through tariff. Company does not have floating rate domestic borrowings as on 31.03.2018

(ii) Price Risk:

(a) Exposure

The company’s exposure to price risk arises from investment in equity shares and debt instruments classified in the financial statements as Fair Value Through OCI. Company’s investment in equity shares are listed in recognised stock exchange and are publicly traded in the stock exchanges. Company’s investment in debt instruments comprise quoted Government Securities and Public Sector Bonds and are publicly traded in the market. The investment has been classified under non-current investment in Balance Sheet.

(b) Price Risk Sensitivity

For Investment in Equity Instruments (Investment in equity shares of IOB and PTC)

The table below summarises the impact of increase/decrease in the market price of investment in equity instruments on the company’s equity for the year:

Sensitivity has been worked out based on the previous 3 years average of six monthly fluctuations in the share price as quoted on the National Stock Exchange (NSE).

For Investment in Debt Instruments (Investments in Govt and PSU Bonds)

The table below summarises the impact of increase/decrease of the market value of the debt instruments on company’s equity for the year:

(iii) Foreign Currency Risk

The company is compensated for variability in foreign currency exchange rate through recovery by way of tariff adjustments under the CERC Tariff Regulations.

(a) Foreign Currency Exposure:

The company’s exposure to foreign currency risk at the end of the reporting period expressed in INR are as follows:

(b) Sensitivity Analysis

There is no impact of foreign currency fluctuations on the profit of the company as these are either adjusted to the carrying cost of respective fixed asset/Capital Work-in-Progress or recovered through tariff as per CERC Tariff Regulation 2014-19.

(3) Capital Management

(a) Capital Risk Management

The primary objective of the Company’s capital management is to maximize the shareholder value. CERC Tariff Regulations prescribe Debt : Equity ratio of 70:30 for the purpose of fixation of tariff of Power Projects. Accordingly the company manages its capital structure to maintain the normative capital structure prescribed by the CERC.

The Company monitors capital using Debt : Equity ratio, which is net debt divided by total capital. The Debt : Equity ratio are as follows:

Note: For the purpose of the Company’s capital management, capital includes issued capital and reserves. Net debt includes interest bearing loans and borrowings.

(b) Loan Covenants:

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

1. Company shall maintain credit rating AAA and if rating comes down, rate of interest shall be increased by 25 basis point for each notch below AAA rating.

2. Debt to net worth should not exceed 2:1.

3. Interest coverage ratio should be more than 2 times and should be calculated as ((Net Profit Non-Cash Expenditures Interest Payable-Non-Cash Income)/Interest Payable))

4. First Charge on Assets with 1:1.33 coverage on pari paasu basis.

During the year the company has complied with the above loan covenants.

NOTE NO. - 1: Other Explanatory Notes to Accounts

1. Disclosures relating to Contingent Liabilities:-

a) Claims against the Company not acknowledged as debts in respect of:

(i) Capital works

Contractors have lodged claims aggregating to Rs.9912.98 Crore (Previous year Rs.9612.16 Crore) against the Company on account of rate & quantity deviation, cost relating to extension of time, idling charges due to stoppage of work/ delays in handing over the site etc. These claims are being contested by the company as being not admissible in terms of provisions of the respective contracts or are lying at arbitration tribunal/other forums/under examination with the Company. These include Rs.3645.08 Crore (Previous year Rs.2858.26 Crore) towards arbitration awards including updated interest thereon, against the Company, which have been challenged/decided to be challenged in the Court of Law.

Management has assessed the above claims and recognized a provision of Rs.441.96 Crore (Previous year Rs.452.88 Crore) based on probability of outflow of resources embodying economic benefits and estimated Rs.9370.30 Crore (Previous year Rs.7848.60 Crore) as the amount of contingent liability i.e. amounts for which Company may be held contingently liable. In respect of such estimated contingent claims either the outflow of resources embodying economic benefits is not probable or a reliable estimate of the amount required for settling the obligation cannot be made. In respect of the rest of the claims/obligations, possibility of any outflow in settlement is considered as remote.

(ii) Land Compensation cases

In respect of land acquired for the projects, some of the erstwhile land owners have filed claims for higher compensation amounting to Rs.49.67 Crore (Previous year Rs.36.09 Crore) before various authorities/courts. Pending settlement, the Company has assessed and provided an amount of Rs.10.99 Crore (Previous year Rs.16.73 Crore) based on probability of outflow of resources embodying economic benefits and estimated Rs.38.68 Crore (Previous year Rs.19.36 Crore) as the amount of contingent liability as outflow of resources is considered as not probable. In respect of the rest of the claims/obligations, possibility of any outflow in settlement is considered as remote.

(iii) Disputed Tax Demands

Disputed Income Tax/Sales Tax/Service Tax/ other taxes/duties matters pending before various appellate authorities amount to Rs.454.44 Crore (Previous year Rs.395.48 Crore). Pending settlement, the Company has assessed and provided an amount of Rs.30.77 Crore (Previous year Rs.21.95 Crore) based on probability of outflow of resources embodying economic benefits and rest of the claims i.e. Rs.423.67 Crore (Previous year Rs.373.53 Crore) are being disclosed as contingent liability as outflow of resources is considered not probable. In respect of the rest of the claims/ obligations, possibility of any outflow in settlement is considered as remote.

(iv) Others

Claims on account of other miscellaneous matters amount to Rs.633.26 Crore (Previous year Rs.622.81 Crore). These claims are pending before various forums. Pending settlement, the Company has assessed and provided an amount of Rs.29.69 Crore (Previous year Rs.36.52 Crore) based on probability of outflow of resources embodying economic benefits and estimated Rs.601.69 Crore Previous year Rs.584.41 Crore) as the amount of contingent liability as outflow of resources is considered as not probable. In respect of the rest of the claims/obligations, possibility of any outflow in settlement is considered as remote.

(b) The above contingent liabilities do not include contingent liabilities on account of pending cases in respect of service matters & others where the amount cannot be quantified.

(c) It is not practicable to ascertain and disclose the uncertainties relating to outflow in respect of contingent liabilities.

(d) There is possibility of reimbursement to the company of Rs.235.73 Crore (Previous year Rs.221.02 Crore) towards above contingent liabilities.

(e) (i) An amount of Rs.536.06 Crore (Previous year ‘ NIL) stands paid towards above Contingent Liabilities in respect of Capital Works, pursuant to Niti Aayog directions issued vide OM No. 14070/14/2016-PPPAU dated 5th September 2016, in cases where Arbitral Tribunals have passed orders in favour of contractors in arbitral proceedings and such awards/orders have been further challenged by the Company in a Court of Law, towards 75% of the arbitral award (including interest payable as per such award) subject to contractors fulfilling the terms and conditions laid down in the Standard Operating Procedures framed by the Company in this regard. The amount so paid is being shown as Current Financial Assets-Others (Note No. 11).

(ii) An amount of Rs.80.81 Crore (Previous year Rs.49.29 Crore) stands paid /deposited with courts towards above contingent liabilities to contest the cases and is being shown as Current Assets.

(f) The company’s management does not expect that the above claims/obligations (including under litigation), when ultimately concluded and determined, will have a material and adverse effect on the company’s results of operations or financial condition.

2. Contingent Assets: Contingent assets in respect of the company are on account of the following:

a) Counter Claims lodged by the company on other entities:

The company has lodged counter claims aggregating to Rs.588.08 Crore (Previous year Rs.399.74 Crore) against claims of other entities. These claims have been lodged on the basis of contractual provisions and are being contested at arbitration tribunal/other forums/under examination with the counterparty. It includes Rs.446.53 Crore (Previous year Rs.317.90 Crore) towards arbitration awards including updated interest thereon.

Based on Management assessment, a favourable outcome is probable in respect of the claims aggregating Rs.587.84 Crore (Previous year Rs.317.90 Crore) and for rest of the claims, the possibility of any inflow is remote. However, the amount has not been recognised.

b) Late Payment Surcharge:

CERC (Terms & Conditions of Tariff) Regulations 2014-19 provide for levy of Late Payment Surcharge by generating company in case of delay in payment by beneficiaries beyond 60 days from the date of presentation of bill. However, pending opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India in this regard, management has continued with its past practice of recognition of surcharge only when no significant uncertainty of ultimate collection exists. Accordingly, late payment surcharge of Rs.188.42 Crore (Previous year Rs.435.20 Crore) has not been recognised.

c) Revenue to the extent not recognised in respect of power stations:

Truing up order of 2009-14 and/or Tariff Order for 2014-19 are pending in respect of Sewa-II, Chamera III, Parbati-III, TLDP-III and TLDP-IV Power stations pending approval of revised cost estimate. Management has assessed the impact of these expenditures on tariff and considers that inflow of Rs.694.94 Crore (Previous year Rs.688.76 Crore) is probable.

d) Business Interruption Losses

Insurance Claims due to Business Interruption Losses in respect of Power Stations are recognised when no significant uncertainty of ultimate collection exists. Management has assessed that claim on account of Business Interruption losses aggregating to Rs.195.04 Crore (Previous Year Rs.345.95 Crore) is probable. Power Station-wise details of claims are given at Para 23 of this Note.

e) Other Cases

Claims on account of other miscellaneous matters amount to Rs.60.34 Crore (Previous year Rs.4.00 Crore). Management has assessed these claims and estimates that inflow of economic benefits of Rs.60.34 Crore (Previous year Rs.4.00 Crore) are probable.

3. Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for are as under:

(b) The Company has commitments of Rs.653.49 Crore (Previous year Rs.619.49 Crore) towards further investment in the subsidiary companies as at 31st March 2018.

(c) The Company has commitments of Rs.577.65 Crore (Previous year Rs.765.20 Crore) towards further investment in the joint venture entities as at 31st March 2018.

4. Pending approval of competent authority, provisional payments / provisions made towards executed quantities of works of some of the items beyond the approved quantities as also for extra items totaling to Rs.5.39 Crore (Previous year Rs.10.05 Crore) are included in Capital Work-in-Progress / Property, Plant and Equipment.

5. Other disclosure under IND AS 11- ‘Construction Contracts’ are as under:

* There is however no impact on profitability of the Company, as the impact of change in foreign exchange rates is recoverable from beneficiaries in terms of prevailing CERC (Terms & Conditions of Tariff) Regulations 2014-19. The exchange rate variation for the year is transferred to deferred foreign currency fluctuation assets (recoverable from beneficiaries) as per Significant Accounting Policy of the Company.

6. Operating Segment:

a) Electricity generation (including income from embedded Finance/ Operating leases) is the principal business activity of the Company. Other operations viz., Contracts, Project Management and Consultancy works do not form a reportable segment as per the Ind AS - 108 on ‘Operating Segment’.

b) The Company has a single geographical segment as all its Power Stations are located within the Country.

The Company is a Central Public Sector Undertaking (CPSU) controlled by Central Government by holding majority of shares. Pursuant to Paragraph 25 & 26 of Ind AS 24, entities over which the same government has control or joint control of, or significant influence, shall be regarded as related parties. The Company has applied the exemptions available for government related entities and have made limited disclosures in the financial Statements in accordance with Ind AS 24.

The Company has business transactions with the state governments and entities controlled by the Govt. of India. Transactions with these entities are carried out at market terms on arms- length basis (except subordinate debts received from Central Govt. at concessional rate) through a transparent price discovery process against open tenders, except in a few cases of procurement of spares/services from Original Equipment Manufacturers (OEMs) for proprietary items on single tender basis due to urgency, compatibility or other reasons. Such single tender procurements are also done through a process of negotiation with prices benchmarked against available price data of same/similar items. Therefore, party-wise details of such transactions have not been given since such transactions are carried out in the ordinary course of business at normal commercial terms and are not considered to be significant.

7. Disclosures Under Ind AS-19 “Employee Benefits”:

(A) Defined Contribution Plans-

(i) Social Security Scheme: The Company has a Social Security Scheme in lieu of the erstwhile scheme of compassionate appointment. The Company also makes a matching contribution per month per employee and such contribution was to be made for 8 years to build up corpus from the date the scheme is in operation i.e. 01.06.2007, which has been extended for another 2 years i.e. up to 31.05.2017 and further extended for another 3 years i.e. up to 31.05.2020. The scheme has been created to take care of and helping bereaved families in the event of death or permanent total disability of its employee. The expenses recognised during the year towards social security scheme is Rs.3.88 Crore (Previous year Rs.4.23 Crore).

(ii) Employees Defined Contribution Superannuation Scheme (EDCSS): The Company has an employee defined contribution superannuation scheme for providing pension benefits to employees. As per the scheme, each employee contributes @ 5% of Basic Pay & Dearness Allowance. The company contributes to the extent of balance available after deducting employers’ contribution to Provident Fund, contribution to Gratuity Trust and REHS Trust, from the amount worked out @ 30% of the Basic Pay & DA. The Scheme is managed by Life Insurance Corporation of India. The expenses recognised during the year towards Employees Defined Contribution Superannuation Scheme (EDCSS) is Rs.67.20 Crore (Previous year Rs.76.18 Crore).

(B) Defined Benefit Plans- Company has following defined post-employment benefit obligations:

(a) Description of Plans:

(i) 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 contribution to the fund for the year is recognised as expense and is charged to the Statement of Profit & Loss/Expenditure Attributable to Construction. The obligation of the Company is to make fixed contribution and to ensure a minimum rate of return to the members as specified by Government of India (GoI).

(ii) Gratuity: The Company has a defined benefit gratuity plan. The ceiling limit of gratuity is fixed as per the Payment of Gratuity Act, 1972, whereby every employee who has rendered continuous service of five years or more is entitled to get gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum of Rs.0.20 Crore on superannuation, resignation, termination, disablement or on death. The plan is being managed by a separate Trust created for the purpose and obligation of the company is to make contribution to the Trust based on actuarial valuation.

(iii) Retired Employees Health Scheme (REHS): The Company has a Retired Employee Health Scheme, under which retired employee and/or spouse of retiree and eligible dependent children of deceased employees are provided medical facilities in the Company hospitals / empanelled hospitals. They can also avail treatment as Out-Patient subject to a ceiling fixed by the Company. The liability for the same is recognised on the basis of actuarial valuation. The Scheme is being managed by a separate Trust created for the purpose and obligation of the company is to make contribution to the Trust based on such actuarial valuation.

(iv) Allowances on Retirement/Death: Actual cost of shifting from place of duty at which employee is posted at the time of retirement to any other place where he / she may like to settle after retirement is paid as per the rules of the Company. In case of death, family of deceased employee can also avail this facility. The liability for the same is recognised on the basis of actuarial valuation.

(v) Memento to employees on attaining the age of superannuation: The Company has a policy of providing Memento valuing Rs.5000/- to employee on superannuation. The liability for the same is recognised on the basis of actuarial valuation

As per the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, the Company has no right to the benefits either in the form of refund from the plan or lower future contribution to the plan towards the net surplus of Rs.19.66 Crore determined through actuarial valuation. Accordingly, Company has not recognised the surplus as an asset, and the actuarial gains in Other Comprehensive Income, as these pertain to the Provident Fund Trust and not to the company.

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

Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such, the company is exposed to various risks as follow -

A) Salary Increase- Actual salary increase will increase the Plan’s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

B) Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount Rate: Reduction in discount rate in subsequent valuations can increase the plan’s liability.

D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan’s liability.

(f) Defined benefit liability and employer contributions: Funding levels are monitored on an annual basis and the current contribution rate is 30% of basic salary & dearness allowance. The Company considers that the contribution rates set at the last valuation date are sufficient to eliminate the deficit over the agreed period and that regular contributions, which are based on service costs, will not increase significantly.

Expected contributions to defined-benefit plans for the year ending March 31, 2019 are Rs.132.53 Crore (March 31, 2018 Rs.137.86 Crore).

The weighted average duration of the defined benefit obligations is 10.38 Years (2017 - 9.62 years).

The expected maturity analysis of undiscounted defined benefit plans is as follows:

(C) Other long-term employee benefits (Leave Benefit): The Company provides for earned leave and half-pay leave to the employees which accrue annually @ 30 days and 20 days respectively. The maximum ceiling of encashment of earned leave is limited to 300 days. However, any shortfall in the maximum limit of 300 days in earned leave on superannuation shall be fulfilled by half pay leave to that extent. The liability for the same is recognised on the basis of actuarial valuation.

The leave obligation covers the Company’s liability towards employees’ leave entitlements. The amount of provision for the year ended 31.03.2018 amounting to Rs.58.96 crore has been disclosed as Current since the same is to be paid to the trust set up by the Company as against in the Previous year wherein the amount of Rs.447.32 crore and Rs.66.14 crore were presented as Non-current and Current respectively as the same was unfunded till 31.03.2017. The current leave obligation estimated to settle within the next 12 months is Rs.46.03 crore (Previous year Rs.66.14 crore).

During the year the Company has created a Leave Encashment Trust to administer the funds towards provision for leave encashment appearing in its books till financial year 2016-17. Accordingly, the Company has remitted Rs.369.27 crore to the trust during the current year being the net liability in respect of leave encashment as on that date.

8. Disclosure related to Confirmation of Balances is as under :

(a) Balances shown under material issued to contractors, claims recoverable including insurance claims, advances for Capital expenditure, Sundry Debtors, Advances to Contractors, Sundry Creditors and Deposits/Earnest money from contractors are subject to reconciliation/ confirmation and respective consequential adjustments. Claims recoverable also include claims in respect of projects handed over or decided to be handed over to other agencies in terms of Government of India directives.

(b) The confirmation from external parties in respect of Trade Receivables, Trade Payables, Deposits, Advances to Contractors/Suppliers/Service Providers/Others including for capital expenditure and material issued to contractors is sought for outstanding balances of Rs.0.05 crore or above in respect of each party as at 31st December of every year. Status of confirmation of balances as at December 31, 2017 as well as amount outstanding as on 31.03.2018 is as under:

(c) In the opinion of the management, unconfirmed balances will not have any material impact.

(ii) Other disclosures:-

(a) Details of expenditure incurred during the year ended on 31.03.2018 paid and yet to be paid along with the nature of expenditure (capital or revenue nature) is as under:-

(b) As stated above, a sum of Rs.1.89 crore out of total expenditure of Rs.38.55 crore is yet to be paid to concerned parties which are included in the relevant head of accounts pertaining to liabilities.

(iii) As per Section 135 read with Section 198 of Companies Act 2013, the amount required to be spent towards CSR works out to Rs.59.52 Crore for financial year 2017-18 (based on 2% of average net profit of preceding three financial years). The Board of Directors had allocated total budget of Rs.59.52 Crore for financial year 2017-18, out of which an amount of Rs.20.97 Crore remained unspent.

9. Disclosures as required under Section 22 of The Micro, Small and Medium Enterprises Development Act, 2006 read with notification of Ministry of Corporate Affairs dated 04.09.2015 (Refer Note no. 20.2 and 20.3 of the Balance Sheet) are as under:

16. Disclosures regarding leases as per IND AS -17 “Leases”:

A) Operating leases- Company as Lessee

a) The Company’s significant leasing arrangements are in respect of operating leases of premises for residential use of employees. These leasing arrangements, which are not non-cancellable, are usually renewable on mutually agreeable terms. Lease payments in respect of premises for residential use of employees amounting to Rs.41.25 Crore (Previous year Rs.45.52 Crore) included under Salaries, wages, allowances in Note 26.

b) The Company has taken premises for offices, guest houses & transit camps on operating leases which are not non-cancellable and are usually renewable on mutually agreeable terms. Lease payments in respect of premises for offices, guest houses & transit camps amounting to Rs.7.05 Crore (Previous year Rs.6.38 Crore) are shown under Rent & Hire Charges in Note 29.

c) The Company has taken vehicles on operating leases generally for a period of 1 to 2 years and such leases are not non-cancellable. Lease payments in respect of hiring of vehicles amounting to Rs.34.16 Crore (Previous year Rs.32.43 Crore) are shown under Rent & Hire Charges in Note 29.

B) Finance Lease - Company as Lessor

The Company has entered into an arrangement with a single beneficiary, PDD J&K for sale of the entire power generated by two power stations, namely Nimmo Bazgo Power Station & Chutak Power Station for 35 years, which is equal to the expected life of these Power Stations. Under the agreements, the customer is obliged to purchase the entire output at prices determined by the Central Electricity Regulatory Commission (CERC). The Company has classified these Power Stations as embedded Finance Lease as per Appendix-C to Ind AS 17- Leases. Other Financial Assets (Current and NonCurrent) include lease receivables representing the present value of future lease rentals receivable on the embedded finance lease arrangements entered into by the company.

C) Operating Lease -Company as Lessor :

The Company has entered into an arrangement with West Bengal State Electricity Board for sale of power from TLDP-III and TLDP-IV power stations for a period of 5 years and with Jodhpur Vidyut Vitran Nigam Ltd. for sale of power from Wind Power Project, Jaisalmer for a period of 3 years. Under the agreements, the customer is obliged to purchase the output at prices determined by the Central Electricity Regulatory Commission. Accordingly, the Company has classified these Power Stations as Operating Leases as per Appendix-C to Ind AS 17- Leases.

* Equity investments in Subsidiaries and Joint Ventures are measured at cost as per the provisions of Ind AS 27 on ‘Separate Financial Statements’.

**During the year, the company has further invested Rs.122.36 crore in Chenab Valley Power Project Ltd. (CVPPL), as a result of which the company’s shareholding increased to 55.39%. However, CVPPL continues to be a Joint Venture owing to control exercised jointly with the other joint venturer, pursuant to the Joint Venture agreement.

10. The management is of the opinion that no case of impairment of assets including regulatory deferral account balances exists under the provisions of Ind AS-36 on “Impairment of Assets” as at 31st March 2018.

11. As per Hydro Policy 2008, energy corresponding to 100 units of electricity is to be provided to each Project Affected Family (PAF) notified by the State Government through the concerned distribution licensee for a period of 10 years from the date of commissioning of a project. Notification by the respective State Governments regarding PAFs is yet to be made. Since the total saleable energy of a power station is to be arrived at by deducting such free power from the design energy, there would not be any impact on the profit of the Company.

12. Pending approval of tariff for the period 2014-19 by Central Electricity Regulatory Commission (CERC) as per notification no. L-1/144/2013/CERC dated 21st February 2014, sales have been recognized provisionally as per tariff notified by CERC for the period 2009-14 in respect of Sewa-II, Chamera-III, TLDP-III and Parbati-III Power Stations. CERC Regulations for the tariff period 2014-19 provide for recovery of income tax from the beneficiaries by way of grossing up of the Return on Equity with effective tax rate of the respective financial year i.e. actual tax paid during the year on the generating income.

13. Nature and details of provisions (refer Note No. 17 and 22 of Balance Sheet)

(i) General

Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a Finance Cost.

(ii) Provision for employee benefits (Other than provisions for defined contribution and defined benefit plans which have been disclosed as per Ind AS-19 at S. No. 10 of Note No. 34):

a) Provision for Performance Related Pay/Incentive:

Short-term Provision has been recognised in the accounts towards Performance Related Pay/ incentive to employees for the year (Previous Year 2016-17) on the basis of Management Estimates as per company’s rules in this regard which are based on the guidelines of the Department of Public Enterprises, Government of India.

b) Provision For Wage Revision as per 3rd Pay Revision Committee (PRC):

Short term provision for wage revision of the employees of the company has been recognised in the accounts for the period 1.01.2017 to 31.03.2018 as per notification of the Department of Public Enterprises, Government of India.

(iii) Other Provisions:

a) Provision For Tariff Adjustment:

Provision for tariff adjustment is made on estimated basis against probable refund to beneficiaries on reassessment of tariff billed, pending approval of Tariff/truing up for the period 2014-19 by Central Electricity Regulatory Commission (CERC).

b) Provision for Livelihood Expenses:

Provision has been recognised at discoun


Mar 31, 2015

1. Secured by pari-passu charge by way of equitable mortgage/hypothecation against the assets (except for Book Debts and Stores) of Company''s Loktak Power Station situated in the state of Manipur.

2. Secured by pari-passu charge by way of equitable mortgage and hypothecation against the immovable and moveable assets (except for Book Debts and Stores) of the Company''s Parbati-II HE Project situated in the state of Himachal Pradesh.

3. Secured by pari-passu charge by way of equitable mortgage/hypothecation against immovable/movable assets (except for Book Debts and Stores) of Company''s Teesta Low Dam-III Project situated in the state of West Bengal.

4. Secured by pari-passu charge by way of equitable mortgage and charge over all the immoveable and moveable assets (except for Book Debts and Stores) of the Company''s Dhauliganga Power Station situated in the state of Uttrakhand.

5. Secured by way of frst charge on pari-passu basis by way of hypothecation on whole of the Company''s movable assets(except for Book Debts and Stores), both present and future, of Dulhasti Power Station situated in the state of Jammu & Kashmir.

6. Secured by exclusive charge by way of equitable mortgage against the assets (except for Book Debts and Stores) of Company''s Bairasiul Power Station situated in the state of Himachal Pradesh.

7. Secured by a frst charge on pari-passu basis by way of equitable mortgage and hypothecation against the immovable and moveable assets (except for Book Debts and Stores) of the Company''s Chamera-III HE Project-situated in the state of Himachal Pradesh.

8. Secured by way of frst charge on pari-passu basis by way of hypothecation on whole of the Company''s movable assets (except for Book Debts and Stores), both present and future, of Salal Power Station situated in the state of Jammu & Kashmir, Sewa-II Power Station situated in the state of Jammu & Kashmir, Chutak Power Station situated in the state of Jammu & Kashmir, Nimmo-Bazgo Power Station situated in the state of Jammu & Kashmir, Uri-II HE Project situated in the state of Jammu & Kashmir & TLDP-IV HE Project situated in the state of West Bengal.

9. Secured by pari-passu charge by way of equitable mortgage and hypothecation against the immovable and moveable assets (except for Book Debts and Stores) of the Company''s Parbati -III Power Station situated in the state of Himachal Pradesh.

10. Secured by pari-passu charge by way of equitable mortgage/hypothecation against immovable/movable assets (except for Book Debts and Stores) of Company''s Teesta-V project situated in the state of Sikkim.

11. Loans mentioned at sl. nos. C(i),C(ii),C(iii),C(iv) and E(i) above are guaranteed by Government of India.

Explanatory Note: -

The Board has resolved to implement the directions of the Ministry of Power (MOP) vide its letter no. 11/17/2009-NHPC/Vol. III dated 27th December 2013 conveying the approval of Competent Authority about pay scales in respect of below Board level Executives that the pay scales shall be fxed w.e.f. 01.01.2007 after correcting the aberrations in pay scales fxed w.e.f. 01.01.1997 and the deviant pay scales fxed w.e.f. 01.01.1997 shall not be regularized. The MoP has been intimated vide letter no.PWA-504-Vol-IV/62 dated 14.05.2014 to confrm that the recovery of personal adjustment w.e.f. 01.02.2014 is in conformity with the said directive of the Competent Authority. In the meanwhile, NHPC Offcers Association has got a stay from Hon''ble High Court of Delhi against the implementation of stoppage of Personal Pay Adjustment (ftment benefts). In view of the directions of the Hon''ble High Court, Personal Pay Adjustments to the employees is continued to be paid along with the Salary. Thus, the cumulative amount provided towards the Personal Pay Adjustment under the head Provision for Wage Revision is Rs. 33.78 crore (including provision for the current year Rs. 6.19 crore) with corresponding amount shown as Advance paid.

Explanatory Note: -

1) Expenditure during Construction (EDC) includes Rs. 330.43 crore (Previous year Rs. 472.52 crore) towards borrowing cost capitalised during the year.

2) Capital Work in Progress (CWIP) includes a cumulative expenditure of Rs. 941.18 crore (Previous Year Rs. 798.99 crore) on projects under Survey & Investigation stage. Of this, a sum of Rs. 43.52 crore pertains to Subansiri Upper Project, which had been decided by Govt. of Arunachal Pradesh to be handed over to a Private Developer, however pending handing over of the project & recovery of expenditure incurred on it, the said amount is already provided for in the books as an abundant precaution. Out of the balance of Rs. 897.66 crore (Previous Year Rs. 755.47 crore) pertaining to projects with the company, a sum of Rs. 161.15 crore (Previous Year Rs. 114.34 crore) has been provided as an abundant precaution in respect of projects, where uncertainties are attached and Rs. 736.51 crore (Previous Year Rs. 641.13 crore), pertaining to other projects having reasonable certainty of getting clearance, is carried over.

3 Siang Basin, Subansiri Basin & Dibang Multipurpose Projects were taken over from Brahmaputra Board. Pending settlement of accounts with Brahmaputra Board, assets and liabilities have been accounted for to the extent of amounts incurred by the Company on these projects. Siang Lower & Siyom HE Projects (in Siang Basin) & Subansiri Middle (in Subansiri Basin) have since been handed over to Private Developer and liability arising out of settlement of accounts with Brahmaputra Board towards these projects is recoverable from respective Private Developers.

4) Underground Works amounting to Rs. 3995.69 crore (Previous Year Rs. 3774.90 crore) created on Land - Right to use, are included under respective heads of Capital Work in Progress (CWIP).

5) Capital Expenditure on projects approved by the competent authority undergoes revision over period of time as hydroelectric projects are time intensive and some takes longer period than envisaged. As a consequence the cost escalation occur, which requires approval of competent authority. Pending such approval the expenditure incurred during the period is carried forward in Capital Work in Progress (CWIP).

Previous year

* On account of transition provision to recognise rate regulatory assets in respect of expenditure incurred during the period of interruption of construction activities i.e. from 16.12.2011 to 31.3.2014 by corresponding credit to opening balance of Surplus.

Explanatory Note: -

National Power Exchange Limited (A Joint Venture of the Company) is under liquidation. Accordingly, upto date provision of Rs. 1.06 Cr (Previous Year Rs. 1.06 Cr.) towards the diminunition in the value of investment in the said joint venture has been made.

Explanatory Note: -

1) Out of the Initial Public Offering (IPO) proceeds of Rs. 6038.55 crore made during fnancial year 2009-10, sale proceeds of Rs. 2012.85 crore was paid to Ministry of Power, Govt. of India and Rs. 4025.70 crore was retained by the company. Out of Rs. 4025.70 crore, a sum of Rs. 3986.99 crore has been utilised up to 31.03.2015 for re-coupment of capital expenditure already incurred from internal accruals on the projects specifed for utilisation and Rs. 38.71 crore recouped for meeting IPO expenditure.

2) Cash and Bank Balances include Rs. 268.05 crore (Previous Year Rs. 320.63 crore), held for Rural Road and Rural Electrifcation works being executed by Company on behalf of other agencies and are not freely available for the business of the Company.

* includes an amount of Rs. 3.80 crore on account of Self Insurance Fund.

Explanatory Note: -

1) Interest accrued on Loan to State Government in settlement of dues from customers includes Rs. 32.97 crore (Previous Year Rs. 32.97 crore) on account of payment of incentive to M/s Delhi Transco Limited. The equivalent amount is appearing as liability under other liabilities in Note-9 (Other Current Liabilities) since the issue of payment of incentive to M/s Delhi Transco has not been resolved yet.

2) Receivable on account of Unbilled Revenue represents i) J&K water cess Rs. 216.38 crore (Previous Year Rs. 210.27 crore) ii) Tax Adjustment Rs. 63.04 crore (Previous Year Rs. (-) 10.34 crore) iii) MEA sales Rs. 4.71 crore (Previous Year Rs. 1.72 crore) iv) Other Rs. 318.34 crore (Previous Year Rs. 224.39 crore)

3) Receivable from Subsidiaries / JV''s mainly includes claim of the company towards capital expenditure incurred on Pakaldul, Kiru & Kawar HE Projects which has been transferred to M/s CVPPPL (a joint venture company of NHPC, JKSPDC and PTC).

4) Surplus Assets / Obsolete Assets held for disposal are shown at lower of book value and net relizable value.

Explanatory Note: -

1) CERC tariff notifcation for the period 2014-19 has been notifed vide notifcation no No.L-1/144/2013/CERC dt 21st February 2014. However, Pending approval of tariff for the period 2014-19 by Central Electricity Regulatory Commission (CERC), sales have been recognized provisionally as per tariff notifed by CERC for the period 2009-14 and taking into account provision towards truing up of capital cost of the power stations in line with CERC tariff regulations 2014. Further for the purpose of recognizing sales, Return on equity ( a component of tariff) has been grossed up using effective tax rate for FY 2014-15.

2) Sales includes Rs. 18.76 crore (Previous year Rs. 60.50 crore ) on account of earlier year sales arising out of fnalisation of tariff in current year.

3) Sales includes Rs. 86.80 crores (Previous year Rs. 20.09 crores) on account of ''deemed generation'' in respect of Chutak and NimmoBazgo Power stations as allowed by ''CERC''.

4) Due to non payment of dues by some of the benefciaries, share of power allocated to them has been regulated in terms of CERC Regulation No.L-1/42/2010-CERC Dated 28th September 2010 and accordingly sales includes an amount of Rs. 122.01 crore (Previous year Rs. 11.01 crore) towards regulated power, which has been sold through bidding at Power Exchange. ibid regulation further provides that margin earned on such sale after adjusting expenditure for effecting sale of regulated power should be passed on to benefciaries, whose power has been regulated. Accordingly an amount of Rs. 67.50 crore (Previous year Rs. 4.94 crore) has been adjusted against the outstanding dues of those benefciaries.

5) Sales includes Rs. 658.21 crore (Previous year Rs. 502.80 crore ) which is yet to be billed.

6) Tariff regulation notifed by CERC vide notifcation dated 21.02.2014 inter-alia provides that capital cost considered for fxation of tariff for current tariff period shall be subject to truing up at the end of the tariff period, which may result in increase or decrease in tariff. Accordingly, an amount of Rs. 143.03 crore (Previous year Rs. 1.13 crore) has been provided in the books during the year as an abundant precaution.

7) In terms of regulation No. 49 of tariff regulation issued vide Central Electricity Regulatory Commission (CERC) notifcation No. L-1/144/2013-CERC dated 21.02.2014, deferred tax liabilities for the period upto 31st March 2009 whenever it materializes is recoverable directly from the benefciaries and are accounted for on yearly basis. Accordingly current year sale includes Rs. 146.11 crore (Previous year Rs. 114.05 crore) on account of deferred tax materialised during the year.

2) Total carried forward to Statement of Proft & Loss includes Rs. 107.02 crore (Previous year Rs. 58.72 crore) relating to Subansiri Lower Project & Teesta Low Dam IV Project as explained in Explanatory Note no 29, para 10 (read with para 23) & para 11 repectively. However Rate Regulatory Assets for an equivalent amount of Rs. 72 crore pertaining to Subansari Lower Project has been recognised in compliance to Guidenance Note on Accounting for Rate Regulated Activities issued by ICAI.

Explanatory Note: -

1) The Company''s signifcant leasing arrangements are in respect of operating leases of premises for offces, guest houses & transit camps. These leasing arrangements, which are not non-cancellable, are usually renewable on mutually agreeable terms. Lease payments in respect of premises for offces, guest house & transit camps are shown in Rent.

2) Pending notifcation of revision order by CERC in respect of truing up application fled by the company under CERC notifcation dated 19.01.2009, an amount of Rs. 20.51 crore (Previous year Rs. 9.29 crore) has been provided in the books during the year ended 31.03.2015 towards Interest to Benefciary States,which may have to be paid in case of reduction in tariff as a result of said revision order.

3) Detail of Audit Expenses are as under: -

4) Total carried forward to Statement of Proft & Loss includes Rs. 68.69 crore (Previous year Rs. 220.70 crore) relating to Subansiri Lower Project & Teesta Low Dam IV Project as explained in Explanatory Note no 29, para 10 (read with para 23) & para 11 repectively. However Rate Regulatory Assets for an equivalent amount of Rs. 62.71 crore pertaining to Subansari Lower Project has been recognised in compliance to Guidenance Note on Accounting for Rate Regulated Activities issued by ICAI.

* Refer para no. 24 to Note No. 29 for the necessary disclosures relating to expenditure on CSR.

NOTE NO. : 12 – OTHER EXPLANATORY NOTES TO ACCOUNTS

1. Disclosure relating to Contingent Liabilities:-

a) Claims against the Company not acknowledged as debts in respect of:

(i) Capital works

Contractors have lodged claims aggregating to Rs. 9014.70 crore (previous year Rs. 8,752.57 crore) against the Company on account of rate & quantity deviation, cost relating to extension of time and idling charges due to stoppage of work/ delays in handing over the site etc. These claims are being contested by the company as being not admissible in terms of provisions of the respective contracts or are lying at arbitration tribunal/other forums/under examination with the Company. It includes Rs. 1,491.31crore (previous year Rs. 761.66 crore) towards arbitration awards including updated interest thereon, against the Company, which have been challenged/decided to be challenged in the Court of Law.

The Management has assessed the above claims and recognized a provision of Rs. 429.61 crore (previous year Rs. 154.56 crore) based on probability of outfow of resources embodying economic benefts and estimated Rs. 8,207.65 crore (previous year Rs. 8,598.01 crore) as the amount of contingent liability i.e. amounts for which Company may be held contingently liable. In respect of such estimated contingent claims either outfow of resources embodying economic benefts is not probable or a reliable estimate of the amount required for settling the obligation cannot be made. In respect of the rest of the claims/obligations, possibility of any outfow in settlement is considered as remote.

(ii) Land Compensation cases

In respect of land acquired for the projects, some of the land losers have fled claims for higher compensation amounting to Rs. 47.53 crore (previous year Rs. 40.28 crore) before various authorities/courts. Pending settlement, the Company has assessed and provided an amount of Rs. 35.16 crore (previous year Rs. 28.63 crore) based on probability of outfow of resources embodying economic benefts and estimated Rs. 12.37 crore (previous year Rs. 11.65 crore) as the amount of contingent liability as outfow of resources is considered as not probable. In respect of the rest of the claims/obligations, possibility of any outfow in settlement is considered as remote.

(iii) Disputed Tax Demands

Disputed Income Tax/Sales Tax/Service Tax/ other taxes/duties matters pending before various appellate authorities amount to Rs. 307.95 crore (previous year Rs. 337.51 crore). Pending settlement, the Company has assessed and provided an amount of Rs. 25.40 crore (previous year Rs. 7.78 crore) based on probability of outfow of resources embodying economic benefts and rest of the claims i.e. Rs. 282.26 crore (previous year Rs. 329.73 crore) are being disclosed as contingent liability as outfow of resources is considered not probable. In respect of the rest of the claims/obligations, possibility of any outfow in settlement is considered as remote.

(iv) Others

Claims on account of other matters amount to Rs. 655.15 crore (previous year Rs. 417.47 crore). These claims are pending before various forums. Pending settlement, the Company has assessed and provided an amount of Rs. 28.94 crore (previous year Rs. Nil crore) based on probability of outfow of resources embodying economic benefts and estimated Rs. 624.43 crore (previous year Rs. 417.47 crore) as the amount of contingent liability as outfow of resources is considered as not probable. In respect of the rest of the claims/obligations, possibility of any outfow in settlement is considered as remote.

The above is summarized as below: (Rs. in crore)

S. Particulars Claims as on Provision Contingent Contingent Addition of No. 31.03. 2015 against the liability as on liability as on contingent claims 31.03.2015 31.03.2014 liability for the year

1. Capital Works 9014.70 429.61 8207.65 8598.01 (390.36)

2. Land Compensation 47.53 35.16 12.37 11.65 0.72

3. Disputed tax matters 307.95 25.40 282.26 329.73 (47.47)

4. Others 655.15 28.94 624.43 417.47 206.96

Total 10025.33 519.11 9126.71 9356.86 (230.15)

(b) The above contingent liabilities do not include contingent liabilities on account of pending cases in respect of service matters & others where the amount cannot be quantifed.

(c) It is not practicable to ascertain and disclose the uncertainties relating to outfow in respect of contingent liabilities.

(d) There is possibility of reimbursement to the company of Rs. 240.85 crore (previous year Rs. 52.24 crore) towards above contingent liabilities.

(e) An amount of Rs. 53.19 crore (previous year Rs. 10.86 crore) stands paid towards above contingent liabilities to contest the cases and is being shown as Current Assets.

The company''s management does not reasonably expect that the above claims/obligations (including under litigation), when ultimately concluded and determined, will have a material and adverse effect on the company''s results of operations or fnancial condition.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 3560.38 crore (Previous year Rs. 3,473.95 crore).

3. Pending approval of competent authority, provisional payments / provisions made towards executed quantities of works of some of the items beyond the approved quantities as also for extra items totalling to Rs. 42.71 crore (Previous year Rs. 38.61 crore) are included in Capital Work-in-Progress/Fixed Asset.

4. a) Balances shown under material issued to contractors, claims recoverable including insurance claims, advances for Capital expenditure, Sundry Debtors, Advances to Contractors, Sundry Creditors and Deposits/Earnest money from contractors are subject to reconciliation/ confrmation and respective consequential adjustments. Claims recoverable also include claims in respect of projects handed over or decided to be handed over to other agencies in terms of Government of India directives. Trade receivables of Rs. 2497.10 crore are outstanding as on 31.03.2015. In the opinion of the management, an amount of Rs. 1714.86 crore was reconciled periodically during the year and unconfrmed balance will not have any material impact.

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

5. During the year, following accounting policies have been modifed/deleted:

(Rs. in crore)

Policy Description Impact on Profit for No. the year

2.5 Policy deleted due to presentation of Fixed Assets declared surplus/ awaiting disposal No impact action in "Other current assets" instead of presenting them as Fixed Assets.

5.2.3 Policy on charging of depreciation in respect of items for which the Company (0.69) assessed rates are used. The policy has been changed to adopt the useful life and residual value as per Schedule-II of the Companies Act, 2013 with effect from 01.04.2014.

5.3 Policy on charging of depreciation in respect of items (excluding immovable assets) 0.58 with written down value of Rs. 5000/- or less at the beginning of the year are fully depreciated during the year with Rs. 1/- as WDV.

7.3 Policy on writing off loose tools in use having value of Rs. 5000/- or more have been (0.10) deleted.

9.3 Policy on expenses on Ex-gratia payments & Notice Pay under Voluntary Retirement No impact as the policy Scheme has been deleted. was redundant.

Besides above, certain other accounting policies have been reworded/re-classifed for the purpose of better disclosure which has no impact on proft.

6. Signifcant Accounting policy No. 2.3.4 (4.4 of FY 2013-14), which was introduced during FY 2013-14, has been referred to Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI) for its opinion. Pending receipt of opinion, the same accounting treatment has been continued and an amount of Rs. 173.61 crore (Previous year Rs. 167.85 crore) has been capitalised/charged to Expenditure during construction till 31.03.2015 as per ibid policy.

7. The Ministry of Environment, Forests & Climate Change (MoEF & CC) vide letter No. F.No.8-85/2011-FC dated 15.04.2015 has accorded the in-principle approval for diversion of forest land for construction of Dibang Multipurpose Project (3000 MW). Further, Environment clearance to the Project has been accorded by MoEF & CC vide letter dated 19.05.2015. In view of above, a sum of Rs. 169.47 crore incurred on the Project is being carried forward as Capital Work in Progress.

8. Kotlibhel-1A project is one of the 24 hydro-electric projects located in the State of Uttarakhand which is covered by the order dated 13.08.2013 of Hon''ble Supreme Court of India directing MoEF not to grant these projects environmental/forest clearance until further order and to examine the signifcant impact on the bio-diversity of Alaknanda & Bhagirathi river basin. Pending adjudication about the fate of this project, the expenditure incurred upto the date of the above order amounting to Rs. 125.53 crore has been kept under capital work in progress. However, subsequent expenditure incurred on this project has been provided for.

9. Board of Directors in its meeting held on 20.03.2014 discussed that the viability of Bursar HE Project is dependent upon fnancial support from Govt. of India and Govt. of Jammu & Kashmir. Ministry of Power (MoP), Govt. of India, was approached to provide funding of Survey & Investigation Expenditure of Bursar Project to make it viable. As advised by the MoP, Ministry of Water Resources (MoWR) was approached to provide funds. In the meeting held in MoWR on 27.04.2015, it has been informed by representatives of MoWR that the request of NHPC for release of funds for preparation of DPR is under consideration for approval of Govt. of India. Accordingly, the preliminary investigations of the project are continued and the expenses of Rs. 177.07 crore incurred thereon are being carried forward as Capital Work in Progress.

10. Construction activities at site of Subansiri Lower Project have been interrupted w.e.f. 16.12.2011 due to protest of anti dam activists. Technical and administrative work is however continuing. Management is making all out efforts to restart the work at site. In line with the opinion of Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI), borrowing cost of Rs. 406.83 crore (up to previous year Rs. 766.90 crore) and administration and other cost of Rs. 115.12 crore (up to previous year Rs. 341.54 crore) have been charged to the Statement of Proft & Loss.

The company has, however, adopted the accounting as per Guidance Note on Rate Regulated Activities issued by the Institute of Chartered Accountants of India which allows recognition of ''Regulatory Asset'' and corresponding ''Regulatory Income'' of the right to recover such expense which are not allowed to be capitalized as part of cost of relevant fxed asset in accordance with the Accounting Standards, but are nevertheless permitted by Central Electricity Regulatory Commission(CERC), the regulator, to be recovered from the benefciaries in future through tariff,. (Detailed disclosure as per the ibid Guidance Note is given at para no. 23 below of this Note.)

11. Active construction work at Teesta Low Dam-IV project, which was interrupted due to stoppage of work by one of the contractors w.e.f. 20.03.2013, has resumed on 01.11.2014. Accordingly, borrowing cost and administrative & other cost amounting to Rs. 43.72 crore for the period from 01.04.2014 upto 31.10.2014 (previous fnancial year Rs. 156.79 crore) has been charged to the Statement of Proft & Loss.

12. The company, under mega insurance policy, has lodged insurance claim, as on date amounting to Rs. 191.58 crore and Rs. 291.56 crore towards Loss of Assets and Business Interruption Loss respectively, in respect of Dhauliganga Power Station, where generation was shut down due to fash foods during June,2013. Till date, interim payment of Rs. 70.10 crore towards loss of assets and Rs. 99.99 crore towards Business Interruption loss has been received. Loss beyond excess clause, if any, to be borne by the company shall be determined after receipt of the fnal survey report and impact thereof shall be accounted for accordingly.

13. On 20th November 2014, accidental fre broke out in the transformer cavern of Uri-II Power Station (240 MW) causing major damages to Electro & Mechanical Equipments and Civil Structures in power house area, resulting in stoppage of generation. Assets of the power station and business interruption loss are covered under mega insurance policy. However, losses upto excess clause as well as beyond the provisions of the insurance policy amounting to Rs. 28.26 crore have been accounted for on estimated basis. Further losses, if any, to be borne by the company shall be determined after receipt of the fnal survey report and impact thereof shall be accounted for accordingly. Restoration work for resumption of generation by the Power Station are underway.

14. The disclosure under Accounting Standard – 7 on Construction Contracts are as under:

(Rs. in crore)

Sl. Particulars 31.03.2015 31.03.2014

1. Aggregate amount of costs incurred and recognised profts (less 409.32 415.65 recognised losses) on contracts in progress upto reporting date.

2. Amount of advances received. 411.55 422.01

3. Amount of retention. Nil Nil

4. The gross amount due from customers for contract works as an asset. Nil 8.82

5. The gross amount due to customers for contract works as a liability. Nil 6.30

15. The effect of foreign exchange fuctuation during the year is as under:

(Rs. in crore)

For the year ended For the year ended 31.03.201 5 31.03.2014

(i) Amount charged to Statement of Proft & Loss excluding depreciation (20.50) 0.60 (as FERV)

(ii) Amount charged to Statement of Proft & Loss excluding depreciation - 29.65 (as Borrowing Cost)*

(iii) Amount charged to Expenditure During Construction (as FERV) 0.63 14.19

(iv) Amount charged to Capital work-in-progress (as FERV) 1.28 (0.02)

(v) Amount adjusted by addition to the carrying amount of fxed assets 215.94 -

* There is however no impact on proftability of the Company, as the impact of change in foreign exchange rates is recoverable from benefciaries in terms of prevailing CERC (terms & conditions of tariff) Regulations. The exchange rate variation for the year is transferred to deferred foreign currency fuctuation assets (recoverable from benefciaries) as per opinion of EAC of ICAI.

16. Disclosure as required by Accounting Standard-15 on ''Employee Benefts'': General description of various employee beneft schemes are as under:

A. Provident Fund

The Company pays fxed contribution to Provident Fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The contribution to the fund for the year is recognised as expense and is charged to the Statement of Proft & Loss/expenditure during construction. The obligation of the Company is to make fxed contribution and to ensure a minimum rate of return to the members as specifed by GoI.

B. Social Security Scheme

The Company has a Social Security Scheme in lieu of compassionate appointment. The Company also makes a matching contribution per month per employee and such contribution is to be made for 8 years to build up corpus from the date the scheme is in operation i.e. 01.06.2007. The scheme has been created to take care of and helping bereaved families in the event of death or permanent total disability of its employee.

C. Employees Defined Contribution Superannuation Scheme

The Company has an employee defned contribution superannuation scheme for providing pension benefts to employees. As per the scheme, each employee contributes @ 5% of Basic Pay & Dearness Allowance. The company contributes to the extent of balance available after deducting employers'' contribution to Provident Fund, contribution to Gratuity trust and REHS, from the amount worked out @ 30% of the Basic Pay & DA. The Scheme is managed by Life Insurance Corporation of India.

D. Gratuity

The Company has a defned beneft gratuity plan. Every employee who has rendered continuous service of fve years or more is entitled to get gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum of Rs. 0.10 crore, on superannuation, resignation, termination, disablement or on death. The plan is being managed by a separate Trust created for the purpose and obligation of the company is to make contribution to the Trust based on actuarial valuation.

E. Leave

The Company provides for earned leave and half-pay leave to the employees which accrue annually @ 30 days and 20 days respectively. The maximum ceiling of encashment of earned leave is limited to 300 days. However, any shortfall in the maximum limit of 300 days in earned leave on superannuation shall be regulated as per the clarifcation issued by the Department of Public Enterprises (DPE), Government of India. The liability for the same is recognised on the basis of actuarial valuation.

F. Retired Employee Health Scheme (REHS)

The Company has a Retired Employee Health Scheme, under which retired employee and spouse of retiree, spouse and eligible dependent children of deceased employees are provided medical facilities in the Company hospitals / empanelled hospitals. They can also avail treatment as Out-Patient subject to a ceiling fxed by the Company. The liability for the same is recognised on the basis of actuarial valuation.

G. Allowance on Retirement / Death

Actual cost of shifting from place of duty at which employee is posted at the time of retirement to any other place where he / she may like to settle after retirement is paid as per the rules of the Company. In case of death, family of deceased employee can also avail this facility. The liability for the same is recognised on the basis of actuarial valuation.

H. Memento to employees on attaining the age of superannuation.

The Company has a policy of providing Memento valuing Rs. 5000/- to employee on superannuation. The liability for the same is recognised on the basis of actuarial valuation.

Schemes described as above at A, B, C & D are funded and rest are unfunded.

Summary of various defned benefts as on 31.03.2015 is as under:

Note: { } contains previous year''s fgures.

Liabilities as on 31.03.2015 on account of Baggage Allowance on retirement & Memento are Rs. 4.95 crore & Rs. 2.75 crore (Previous year Rs. 5.04 crore & Rs. 2.96 crore) respectively.

17. a) Electricity generation is the principal business activity of the Company. Other operations viz., Contracts, Project Management and Consultancy works do not form a reportable segment as per the Accounting Standard-17 on ''Segment Reporting''.

b) The Company is having a single geographical segment as all its Power Stations are located within the Country.

18. In compliance of Accounting Standard-18 on ''Related Party Disclosures'', the required information is as under: -

a) Related Parties

(i) Joint Venture Companies

National Power Exchange Ltd. (The Company is under liquidation).

(ii) Key Management Personnel

Shri R.S.T.Sai Assumed additional charge of the post of CMD w.e.f. 08.06.2014 in addition to his own

duties as CMD,THDC India Ltd.

Shri G. Sai Prasad Former Joint Secretary, Ministry of Power. Held additional charge of CMD of the Company

from 24.07.2012 to 07.06.2014. Ceased to be a director on the Board w.e.f. 08.06.2014.

Shri D. P. Bhargava Director (Technical).

Shri R. S. Mina Director (Personnel). Additional charge of Director (Finance) from 15.09.2014 to

26.05.2015.

Shri Jayant Kumar Director (Finance) w.e.f. 26.05.2015.

Shri Vijay Gupta Company Secretary.

Shri A. B. L.Srivastava Director (Finance) up to 15.09.2014.

Shri J. K. Sharma Director (Projects) up to 11.03.2015.

Remuneration to key management personnel (excluding CMD) for the current year is Rs. 2.21crore (corresponding previous year Rs. 2.08 crore).

b) Transaction carried out with the related parties as at a(i) above - Nil.

14. Disclosure relating to creation of Rate Regulated Assets & recognition of Rate Regulated Income as per the ''Guidance Note on Accounting for Rate Regulated Activities'' issued by the Institute of Chartered Accountants of India (ICAI) :

The company is engaged in construction & operation of hydro electric power projects. The price (tariff) to be charged by the company for electricity sold to its customers, is determined by Central Electricity Regulatory Commission (CERC) under applicable CERC (terms & conditions of tariff) Regulations. The said price (tariff) is based on allowable costs like interest costs, depreciation, operation & maintenance including a stipulated return. This form of rate regulation is known as cost-of-service regulations. The basic objective of such regulations is to give the entity the opportunity to recover its costs of providing the good or service plus a fair return.

For the purpose, the company is required to make an application to CERC based on capital expenditure incurred duly certifed by the Auditors or already admitted by CERC or projected to be incurred upto date of commercial operation and additional capital expenditure duly certifed by the Auditor or projected to be incurred during tariff year. The tariff determined by CERC is recovered from the customers (benefciaries) on whom the same is binding.

The above rate regulation does result into creation of right (asset) or an obligation (liability) as envisaged in the accounting framework which is not the case in other industries. The ICAI has issued a Guidance Note on accounting for Rate Regulated Activities, which is applicable to entities that provide goods or services whose prices are subject to cost-of-service regulations and the tariff determined by the regulator is binding on the customers (benefciaries). As per guidance note, a regulatory asset is recognised when it is probable (a reasonable assurance) that the future economic benefts associated with it will fow to the entity as a result of the actual or expected actions of the regulator under applicable regulatory framework and the amount can be measured reliably.

As explained above, all operating activities of the Company are subject to cost-of-service regulations as it meets the criteria set out in the guidance note hence it is applicable to the Company. Though the Guidance Note is effective from 01.04.2015, the Company has opted to adopt it from the Financial Year 2014-15, since earlier adoption is permitted.

The guidance note also provides that in some cases, a regulator permits an entity to include in the rate base, as part of the cost of self-constructed (tangible) fxed assets or internally generated intangible assets, amounts that would otherwise be recognised as expense in the statement of proft and loss in accordance with Accounting Standards. After the construction is completed, the resulting cost is the basis for depreciation or amortisation and unrecovered investment for rate determination. A regulatory asset is to be recognised by the entity in respect of such costs since the same is recoverable from the customers (benefciaries) in future through tariffs.

As stated in para 10 above, the borrowing cost of Rs. 406.83 crore (up to previous year Rs. 766.90 crore) and administration and other cost of Rs. 115.12 crore (up to previous year Rs. 341.54 crore) incurred on ''Subansiri Lower Project'', wherein the active construction is interrupted since 16.12.2011, have been charged to the Statement of Proft & Loss in compliance of provision of Accounting Standard 10, Accounting for fxed asset & Accounting Standard-16, Borrowing Cost as notifed under the Companies Act, 2013. However such expenditure is permitted under CERC (Terms and Conditions of Tariff) Regulations, 2014 to be recovered through future tariffs.

In pursuance of the above, the company has created regulatory assets and has recognized corresponding regulatory income for the Financial Year 2014-15/credit to the opening balance of surplus against the amount pertaining to the period 16.12.2011 to 31.03.2014 using transition provision as per the ibid Guidance Note as below:

* by corresponding credit to opening balance of Surplus by Rs. 876.10 crore (Rs. 1108.44 crore less provision for Income Tax for Rs. 232.34 crore) [refer- Note No.3-Reserves and Surplus].

** by corresponding credit to current year''s proft through "Regulatory Income".

15. Disclosure related to Corporate Social Responsibility (CSR) (refer Note No.22)

(i) The breakup of CSR expenditure under various heads of expenses incurred during FY 2014-15 is as below:-

(ii) Other disclosures:-

(a) Board of Directors has allocated total budget of Rs. 65.57 crore for FY 2014-15 which consisted of Rs. 47.65 crore based on 2% of average net proft of preceding three fnancial years in terms of Section 135 of Companies Act 2013 and Rs. 17.92 crore out of unspent amount upto FY 2013-14.

(b) Details of expenditure incurred during FY 2014-15 in cash and yet to be paid in cash along with the nature of expenditure (capital or revenue nature) is as under:-


Mar 31, 2014

NOTE NO. 1 OTHER EXPLANATORY NOTES TO ACCOUNTS

1. Disclosure relating to Contingent Liabilities:-

a) Claims against the Company not acknowledged as debts in respect of: (i) Capital works

Contractors have lodged claims aggregating to Rs. 8,752.57 crore (previous year Rs.10,106.82 crore) against the Company on account of rate & quantity deviation, cost relating to extension of time and idling charges due to stoppage of work/ delays in handing over the site etc. These claims are being contested by the company as being not admissible in terms of provisions of the respective contracts or are lying at arbitration tribunal/other forums/under examination with the Company. It includes Rs. 761.66 crore (previous year Rs. 323.70 crore) towards arbitration awards including updated interest thereon against the Company, which has been challenged in the Court of Law. However, out of these claims, the management has assessed and has made consequential provision of Rs.154.56 crore being probable outflow and Rs. 8,598.01 crore has been considered as contingent liability in respect of which either the possibility of outflow is not there or a reliable estimate of probable outflow cannot be made.

(ii) Land Compensation cases

In respect of land acquired for the projects, some of the land losers have fi led claims for higher compensation amounting to Rs. 40.28 crore (previous year Rs. 38.37 crore) before various authorities/courts. Pending settlement, the Company has assessed and provided an amount of Rs. 28.63 crore being probable outflow. In respect of rest of the claims, outflow of resources is considered as not probable.

(iii) Disputed Tax Demands

Disputed Income Tax/Sales Tax/Service Tax matters pending before various appellate authorities amount to Rs. 337.51 crore (previous year Rs. 331.42 crore), in respect of which no outflow of resources is considered probable. Pending their settlement, Company has assessed and provided an amount of Rs. 7.78 crore being probable outflow. In respect of rest of the claims, outflow of resources is considered as not probable.

(iv) Others

Other contingent liabilities amount to Rs. 417.47 crore (previous year Rs. 128.53 crore). These claims are pending before various forums, in respect of which no outflow of resources is considered probable.

(b) The above contingent liabilities do not include contingent liabilities on account of pending cases in respect of service matters & others where the amount cannot be quantifi ed.

(c) It is not practicable to ascertain and disclose the uncertainties relating to outflow in respect of contingent liabilities.

(d) There is possibility of reimbursement to the company of Rs. 52.24 Crore (previous year Rs. 40.71 crore) towards above contingent liabilities.

(e) An amount of Rs.10.86 crore (previous year Rs. 22.31 crore) stands paid towards above contingent liabilities to contest the cases and is being shown as Current Assets.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 3,473.95 Crore (Previous year Rs. 3,958.36 Crore).

3. Consequent upon commissioning of Chamera-III Power Station, some seepage was noticed during the year 2012-13 in hill slopes thereby affecting the houses & fields of local habitats of nearby village. A proposal to acquire the affected land is under consideration of management for which compensation is estimated at Rs.13.76 crore. Further the cost of rectification of seepage is yet to be ascertained.

4. Pending approval of competent authority, provisional payments / provisions made towards executed quantities of works of some of the items beyond the approved quantities as also for extra items totalling to Rs. 38.61 Crore (Previous year Rs.177.81 Crore) are included in Capital Work-in-Progress/Fixed Asset.

5. a) Balances shown under material issued to contractors, claims recoverable including insurance claims, advances for Capital expenditure, Sundry Debtors, Advances to Contractors, Sundry Creditors and Deposits/Earnest money from contractors are subject to reconciliation/ confirmation and respective consequential adjustments. Claims recoverable also include claims in respect of projects handed over or decided to be handed over to other agencies in terms of Government of India directives.

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

6. Company issued Secured, Redeemable, Non-Convertible Tax Free Bonds amounting to Rs. 1,000 Crore during the year with varying tenors. The issue opened on 18.10.2013 and closed on 23.10.2013.The allotment was completed on 02.11.2013 and the security got listed on the stock exchanges on 07.11.2013. Issue proceeds have been utilized for the purpose mentioned in the offer document.

7. Buy-back of 1,230,074,277 equity shares of Rs.10/- each (being 10% of the pre buy-back paid up equity shares) at a price of Rs.19.25 per share from the existing shareholders/ beneficial owners on proportionate basis has been done through Tender Offer Process. Post buy-back, the number of equity share of the company has been reduced to 1,107,06,68,496 from 1,230,07,42,773 and an amount of Rs.1,230.07 Crore equal to face value of the shares bought back has been transferred to Capital Redemption Reserve Account.

8. Tawang HE Project has given capital advance of Rs.1.24 Crore to State Compensatory Afforestation Fund Management & Planning Authority towards bio-diversity study to be conducted through North Eastern Hill University (NEHU) for all proposed hydroelectric projects in Tawang Basin. On receipt of expenditure statement, the above advance shall be adjusted and recoverability from Government of Arunachal Pradesh (GoAP) towards expenditure pertaining to projects other than those undertaken by NHPC would be known. Further, the reimbursement towards expenditure pertaining to projects other than those undertaken by NHPC is receivable as and when other projects come-up for construction.

9. The Forest Advisory Committee (FAC) of the Ministry of Environment & Forest (MoEF) in its meeting held on 12.07.2013 has recommended for rejection of forest clearance in respect of Dibang Multipurpose Project. However on a review request, the Cabinet Committee on Investment (CCI) in its meeting held on 09.12.2013 has decided that MoEF, the competent authority, may grant the requisite clearance for diversion of forest land expeditiously. Accordingly, revised proposal was submitted to MoEF. Although FAC in its meeting held on 29/30.04.2014 has reiterated and recommended rejection of proposal yet MoEF has asked for additional information from the Company for reconsideration of the Project. Pending final clearance, a sum of Rs.149.04 Crore incurred on the Project is being carried forward as Capital Work in Progress.

10. Construction activities at site of Subansiri Lower Project have been interrupted w.e.f. 16.12.2011 due to protest of anti dam activists, however substantial technical and administrative work is continuing. Although construction activities at site are expected to be resumed shortly since the matter is being pursued at the level of Government of India, yet in line with the opinion of Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI), the borrowing cost of Rs.766.90 crore (including previous year amount of Rs. 386.88 crore) and administration and other cost of Rs. 341.54 crore (including previous year fi gure of Rs.139.69 crores) have been charged to the Statement of profit & Loss during the year.

11. Construction activities at Teesta Low Dam-IV Project are progressing at a slow pace w.e.f. 20.03.2013 due to stoppage of work by one of the contractors to whom notice for recovery of the possession of site at risk & cost of contractor have been issued. Under such facts and circumstances, borrowing costs of Rs. 91.35 crore and administration and other cost of Rs. 67.91 crores have been charged to Statement of profit & Loss during the year.

12. Due to cloud burst and unprecedented high fl ood in Uttarakhand in the early hours of June 17, 2013, water entered into Dhauliganga Power Station (280 MW) and submerged all the system resulting into stoppage of generation from the plant and damage to Generating Plant and Machinery and various ancillary structures of the power station. The Assets of the power station and Loss of Generation are covered under Mega Insurance Policy. However, loss beyond excess clause, if any, to be borne by the Company shall be determined after receipt of the Final Survey Report and impact thereof shall be accounted for accordingly. Further, Unit No. 4 & 3 of the power station has been test synchronised with the grid on 30.04.2014 and 01.05.2014 respectively. Northern Region Load Despatch Centre (NRLDC) has approved the Injection Schedule for Unit No. 4 & 3 w.e.f. 03.05.2014 & 06.05.2014 respectively. Pending final settlement, on-account payments of Rs. 35 Crore and Rs. 99.99 Crore have been received from the Insurance Company till date against claim for material damage and business interruption respectively.

13. Kotlibhel-1A project is one of the 24 hydro-electric projects located in the State of Uttarakhand which is covered by the order dated 13.08.2013 of Hon''ble Supreme Court of India directing MoEF not to grant these projects environmental/forest clearance until further order and to examine the significant impact on the bio-diversity of Alaknanda & Bhagirathi river basin. Pending adjudication about the fate of this project, the expenditure incurred upto the date of the above order amounting to Rs.126.37 Crore has been kept under capital work in progress. However, subsequent expenditure incurred on this project has been provided for.

14. Board of Directors in its meeting held on 20.03.2014 discussed that the viability of Bursar HE Project is dependent upon financial support from Govt. of India and Govt. of Jammu & Kashmir. It was accordingly decided to approach Ministry of Power (MoP) for seeking commitment from Govt. of India and Govt. of J&K for financial assistance to make the project viable. It was confi rmed by the Board that if the project is not found viable, the expenses incurred on the project will have to be written off. Subsequently, a meeting was held in MoP on 23.05.2014 in which representative of Ministry of Water Resources (MoWR) and Govt of Jammu & Kashmir were also present and decided to re-submit the proposal to MoP for further taking up the matter with MoWR. It has also been indicated that MoWR would reconsider the proposal for providing funds for preparation of DPR of Bursar HE Project considering it as a National Project. In line with the resolution of the Board, the preliminary investigations of the project are continued and the expenses of Rs.154.64 crore incurred thereon are being carried forward as Capital Work in Progress.

15. Capital expenditure on assets where neither the land nor the asset is owned by the company was being reflected as a distinct item in capital work-in-progress till the period of completion and thereafter in the fixed assets to be amortised over a period of five years from the year in which the first unit of project concerned comes into commercial operation, in accordance with erstwhile accounting policy nos. 2.3 & 5.8 on the issue upto financial year 2012-13. However, during current financial year, the Company has introduced a new accounting policy no. 4.4 on the issue, by virtue of which capital expenditure incurred during construction of project for creation of facilities, over which the company does not have control but the creation of which is essential principally for construction of the project, is charged to ''expenditure during construction''. Accordingly, the following accounting policies have been introduced/ modifi ed/ deleted during the year ended 31.03.2014:

16. During the current year, Company has received opinion from EAC of ICAI on applicability & disclosure under Accounting Standard – 7 on Construction Contracts in respect of Rural Electrification and Rural Road Projects. As per said opinion, disclosure in respect of such works may be given in respect of agency fee/service charges only as that is considered as the revenue of the Company. In view of above, disclosure in respect of previous year has also been revised. The relevant disclosure are as follows:

* There is however no impact on profitability of the Company, as the impact of change in foreign exchange rates is recoverable from benefi ciaries in terms of prevailing CERC (terms & conditions of tariff) Regulations. The exchange rate variation for the year is transferred to deferred foreign currency fl uctuation assets (recoverable from benefi ciaries) as per opinion of EAC of ICAI.

17. Disclosure as required by Accounting Standard-15 on ''Employee Benefits'': a) General description of various employee benefit schemes are as under: defined Contribution Schemes

A. Provident Fund

The Company pays fixed contribution to Provident Fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognised as expense and is charged to the Statement of profit & Loss/expenditure during construction. The obligation of the Company is to make fixed contribution and to ensure a minimum rate of return to the members as specifi ed by GoI.

B. Social Security Scheme

The Company has a Social Security Scheme in lieu of compassionate appointment. The Company also makes a matching contribution per month per employee and such contribution is to be made for 8 years to build up corpus from the date the scheme is in operation i.e. 01.06.2007. The scheme has been created to take care of and helping bereaved families in the event of death or permanent total disability of its employee.

C. Employees Defined Contribution Superannuation Scheme

The Company has an employee defined contribution superannuation scheme for providing pension benefits to employees. As per the scheme, each employee contributes @ 5% of Basic Pay & Dearness Allowance. The company contributes to the extent of balance available after deducting employers'' contribution to Provident Fund, contribution to Gratuity trust and REHS, from the amount worked out @ 30% of the Basic Pay & DA. The Scheme is managed by Life Insurance Corporation of India.

Defined Benefits Schemes

D. Gratuity

The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to get gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum of Rs. 0.10 Crore, on superannuation, resignation, termination, disablement or on death. The plan is being managed by a separate Trust created for the purpose and obligation of the company is to make contribution to the Trust based on actuarial valuation.

E. Leave

The Company provides for earned leave and half-pay leave to the employees which accrue annually @ 30 days and 20 days respectively. The maximum ceiling of encashment of earned leave is limited to 300 days. However, any shortfall in the maximum limit of 300 days in earned leave on superannuation shall be regulated as per the clarifi cation issued by the Department of Public Enterprises (DPE), Government of India. The liability for the same is recognised on the basis of actuarial valuation.

F. Retired Employee Health Scheme (REHS)

The Company has a Retired Employee Health Scheme, under which retired employee and spouse of retiree, spouse and eligible dependent children of deceased employees are provided medical facilities in the Company hospitals / empanelled hospitals. They can also avail treatment as Out-Patient subject to a ceiling fixed by the Company. The liability for the same is recognised on the basis of actuarial valuation.

G. Allowance on Retirement / Death

Actual cost of shifting from place of duty at which employee is posted at the time of retirement to any other place where he / she may like to settle after retirement is paid as per the rules of the Company. In case of death, family of deceased employee can also avail this facility. The liability for the same is recognised on the basis of actuarial valuation.

H. Memento to employees on attaining the age of superannuation.

The Company has a policy of providing Memento valuing Rs. 5000/- to employee on superannuation. The liability for the same is recognised on the basis of actuarial valuation.

Schemes described as above at A, B, C & D are funded and rest are unfunded.

17. a) Electricity generation is the principal business activity of the Company. Other operations viz., Contracts, Project Management and Consultancy works do not form a reportable segment as per the Accounting Standard-17 on ''Segment Reporting''.

b) The Company is having a single geographical segment as all its Power Stations are located within the Country.

18. In compliance of Accounting Standard-18 on ''Related Party Disclosures'', the required information is as under: -

a) Related Parties

(i) Joint Venture Companies

National Power Exchange Ltd.

(ii) Key Management Personnel

Shri G. Sai Prasad

Joint Secretary, Ministry of Power, Government of India. Assigned additional charge of CMD of the Company w.e.f. 24.07.2012.

Shri A. B. L. Srivastava Director (Finance).

Shri D. P. Bhargava Director (Technical)

Shri J. K. Sharma Director (Projects)

Shri R. S. Mina Director (Personnel)

Remuneration to key management personnel (excluding CMD) for the current year is Rs. 2.08 Crore (Previous year Rs. 3.01 Crore).

b) Transaction carried out with the related parties at a(i) above - Nil.

19. a) Interest in Joint Ventures:

* The Company has decided to come out of this joint venture.

** Company is joint venture entity of NHPC, Jammu & Kashmir State Power Development Corporation (JKSPDC) and PTC India Ltd. with equity participation of 49:49:02. During last year, due to less than proportionate contribution by other joint venture partners, proportionate holding of NHPC in the said entity had increased from 49% to 82%. As such, said entity was considered as subsidiary instead of joint venture as at 31.03.2013. However during current year, other partners have also brought in their proportionate share and the said entity has been considered as joint venture of NHPC.

20. The Management is of the opinion that no case of impairment of assets exists under the provision of Accounting Standard-28 on ''Impairment of Assets'' as at 31st March 2014.

21. Opening balances/corresponding figures for previous year have been re-grouped/re-arranged/re-cast, wherever necessary.

22. Subsequent to the approval of accounts for the year ended 31st March 2014 by the Board of Directors on 30th May, 2014, the board of Directors have recommended a dividend @ Rs. 0.30 per share (subject to rounding off to nearest Rupee in terms of Rule 23 of Companies (Central Government''s) General Rules & Forms, 1956) in the meeting held on 07.07.2014. Accordingly the company has made a provision for dividend and dividend distribution tax thereon amounting to Rs. 332.12 Crore and Rs. 56.44 crore respectively. The accounts approved earlier by the Board of Directors have been revised to that extent.


Mar 31, 2013

1. a) Contingent Liabilities as on:- (Rs.in Crore)

Description Opening Balance Closing Balance 01/04/2012 31/03/2013

Claims against the Company not acknowledged as debts in respect of

-Capital Works

-Land Compensation Cases 7615.68 10322.99

-Others 28.18 38.37

-Disputed Income Tax Demand 10.57 24.93

-Disputed Sales Tax Demand 264.01 277.27

-Disputed Service Tax Demand 29.22 29.22

-Others 116.29 128.53

Total 8063.95 10821.31

b) The above contingent liabilities do not include contingent liabilities on account of pending cases in respect of service matters & others where the amount cannot be quantified.

c) Contingent liabilities towards capital works include claims of contractors regarding rate & quantity deviation, cost relating to extension of time and idling charges due to stoppage of work / delays in handing over the site etc. These claims are being contested by the company as being not admissible in terms of provisions of the respective contracts or are lying at Arbitration tribunal/other forums. The above also includes claims of contractors which are under scrutiny at various levels of Management but yet to achieve finality.

d) The Contingent liabilities under the head "Capital Works" includes Rs.323.70 Crore (previous year Rs.347.85 Crore), towards arbitration awards received against the company as outflow is not considered probable in respect of these awards since the same stands challenged in the court of law.

e) It is not practicable to disclose the uncertainties relating to any outflow.

f) There is a possibility of reimbursement to the Company ofRs.40.71 Crore (Previous year Rs.45.17 Crore) towards above contingent liabilities.

g) An amount of Rs.22.31 Crore (Previous year Rs.10.06 Crore) stands paid towards above contingent liabilities to contest the cases and is being shown as Current Assets.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.3958.36 Crore (Previous year Rs.5335.27 crore).

3. Consequent upon commissioning of Chamera-lll Power Station, some seepage has been noticed in hill slopes thereby affecting the houses & fields of local habitants ofthe nearby village. A proposal to acquire the affected land is under consideration of management for which compensation is estimated at Rs.8.40 crore. Further the cost of rectification ofseepage is yet to be ascertained.

4. Pending approval of the competent authority, provisional payments / provisions made towards executed quantities of some of the items beyond the approved quantities as also for extra items totalling to Rs.177.81 Crore (Previous year Rs.241.16 Crore), are included in Capital Work-in-Progress/Fixed Asset.

5. a) Balances shown under material issued to contractors, claims recoverable including insurance claims, advances for Capital expenditure, Sundry Debtors, Advances to Contractors, Sundry Creditors and Deposits/Earnest money from contractors are subject to reconciliation/ confirmation and respective consequential adjustments. Claims recoverable also include claims in respect of projects handed over or decided to be handed over to other agencies in terms of Government of India directives.

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

6. During F.Y 2010-11 Company had received an opinion from the Expert Advisory Committee ofthe Institute of Chartered Accountants of India (EAC of ICAI), according to which the expenditure incurred for creation of assets not within the control of company should be charged to Statement of Profit & Loss in the year of incurrence itself, consequent upon withdrawal of Guidance Note on Expenditure During Construction. The Company has represented to the EAC of ICAI in earlier year that such expenditure, being essential for setting up of a hydro project, should be allowed to be capitalised. The Company is further of the view that capitalization of such expenditure is supported by Exposure Draft on Limited Revision to AS-10 and Guidance Note on Rate Regulated Entity issued by ICAI. Pending receipt of further opinion from the EAC, notification of limited revision to AS-10 and announcement regarding implementation of guidance note on rate regulated entity, the accounting treatment as per existing accounting practices / policies has been continued.

In view of above Rs.37.42 Crore (Previous year Rs.25.54 Crore) (WDV) and Rs.103.58 Crore (Previous year Rs.106.66 Crore) are appearing under the Tangible Asset (Note No.11.1) and Capital work in progress (Note No. 12) respectively towards creation/construction of such assets. In addition, a sum of Rs.123.25 Crore (Previous year Rs.117.81 Crore) incurred after withdrawal of guidance note on capitalisation of EDC is also appearing in Expenditure during Construction under Capital work in progress (Note No. 12).

7. Construction activities at site of Subansiri Lower Project have been interrupted w.e.f 16.12.2011 due to protest of anti dam activists, however substantial technical and administrative work is continuing. As such administration and other general overheads including borrowing cost directly attributable to Project has continued to be capitalised. The construction activities at site are expected to be resumed shortly since the matter is being pursued at the level of Government of India.

8. Disclosure as required by Accounting Standard (AS) 15:

General description of various employee benefit schemes are as under:

Defined Contribution Schemes

A. Provident Fund

The Company pays fixed contribution to Provident Fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognised as expense and is charged to the Statement of Profit & Loss/expenditure during construction. The obligation of the Company is to make fixed contribution and to ensure a minimum rate of return to the members as specified by Gol.

B. Social Security Scheme

The Company has a Social Security Scheme in lieu of compassionate appointment, subject to the condition that the scheme will be withdrawn on introduction of pension scheme. However the proposal for continuation of scheme is under consideration of the Management. As per scheme, employees make monthly contribution at prescribed rates. The Company also makes a matching contribution per month per employee and such contribution is to be made for 8 years to build up corpus from the date the scheme is in operation i.e. 01.06.2007. The scheme has been created to take care of and helping bereaved families in the event of death or permanent total disability of its employee.

C. Employees Defined Contribution Superannuation Scheme

The Company has an employee defined contribution superannuation scheme for providing pension benefits to employees. As per the scheme, each employee contributes @ 5% of Basic Pay & Dearness Allowance. The company contributes to the extent of balance available after deducting employers'' contribution to Provident Fund, contribution to Gratuity trust and REHS, from the amount worked out @ 30% of the Basic Pay & DA. The Scheme is managed by Life Insurance Corporation of India.

Defined Benefits Schemes

D. Gratuity

The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to get gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum of Rs.0.10 Crore, on superannuation, resignation, termination, disablement or on death. The plan is being managed by a separate Trust created for the purpose and obligation of the company is to make contribution to the Trust based on actuarial valuation.

E. Leave

The Company provides for earned leave and half-pay leave to the employees which accrue annually @ 30 days and 20 days respectively. The maximum ceiling of encashment of earned leave is limited to 300 days. However, any shortfall in the maximum limit of 300 days in earned leave on superannuation shall be regulated as per the clarification issued by the Department of Public Enterprises (DPE), Government of India. The liability for the same is recognised on the basis of actuarial valuation.

F. Retired Employee Health Scheme (REHS)

The Company has a Retired Employee Health Scheme, under which retired employee and spouse of retiree, spouse and eligible dependent children of deceased employees 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.

G. Allowance on Retirement / Death

Actual cost of shifting from place of duty at which employee is posted at the time of retirement to any other place where he / she may like to settle after retirement is paid as per the rules of the Company. In case of death, family of deceased employee can also avail this facility.

H. Memento to employees on attaining the age of superannuation.

The Company has a policy of providing Memento valuing Rs.5000/- to employee on superannuation.

Schemes described as above atA,B,C&D are funded and rest are un-funded.

Summary of various defined benefits ason 31.03.2013 is as under:-

9. a) Electricity generation is the principal business activity of the Company. Other operations viz., Contracts, Project Management and Consultancy works do not form a reportable segment as per the Accounting Standard - 17 on Segment Reporting notified under the Companies Accounting Standard Rules, 2006.

b) The Company is having a single geographical segment as all its Power Stations are located within the country.

10. In compliance of Accounting Standard - 18 on related party disclosures notified under the Companies Accounting Standard Rules, 2006, the required information is given as under: -

a) Related Parties

(i) Joint Venture Companies

National Power Exchange Ltd.

(ii) Key Management Personnel

Shri G. Sai Prasad Joint Secretary (Hydro), Ministry of Power, Government of India. Assigned additional charge of

CMD of the Company w.e.f. 24.07.2012.

Shri A. B. L.Srivastava Director (Finance). Additional charge of CMD upto 23.07.2012.

Shri D. P. Bhargava Director (Technical)

Shri J. K. Sharma Director (Projects)

Shri R. S. Mina Director (Personnel)

Remuneration to key management personnel is Rs.3.01 Crore (Previous year Rs.1.08 Crore), which is inclusive of arrears of Rs.1.59 Crore to existing as well as retired directors.

b) Transaction carried out with the related parties at a(i) above - Nil.

11. EarningsPerShare:-

The elements considered for calculation of Earnings Per Share (Basic and Diluted) are as under:

12. The Management is of the opinion that no case of impairment of assets exists under the provision of Accounting Standard (AS) - 28 on Impairment ofAssets as at 31st March 2013.

13. Opening balances/ Corresponding figures for previous year have been regrouped/re-arranged/re-cast wherever necessary.


Mar 31, 2012

In addition to above ornamental changes, earlier Significant Accounting Policy No. 2.6 on Grant-in-aids and 7.4 on valuation of stores at site on engineering estimate basis, being redundant, has been deleted during the current year, having no financial impact.

1. The company has reviewed its methodology of allocation of Corporate Office, Regional Office and administration & general overhead expenses of construction projects and changes have been carried out during the current year. This has resulted in additional charge of Rs. 29.97 Crore in the current year.

2. Disclosure as required by Accounting Standard (AS) 15:

General description of various defined employee benefit schemes are as under:

A. Provident Fund

Company pays fixed contribution to Provident Fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognised as expense and is charged to the profit & loss account/expenditure during construction .The obligation of the Company is to make such fixed contribution and to ensure a minimum rate of return to the members as specified by GOI.

B. Gratuity

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

C. Retired Employee Health Scheme

The Company has a Retired Employee Health Scheme, under which retired employee and spouse of retiree, spouse and dependent children of deceased employees are provided medical facilities in the Company hospitals / empanelled hospitals. They can also avail treatment as Out-Patient subject to a ceiling fixed by the Company.

D. Allowance on Retirement / Death

Actual cost of shifting from place of duty at which employee is posted at the time of retirement to any other place where he / she may like to settle after retirement is paid as per the rules of the corporation. In case of death, family of deceased employee can also avail this facility.

E. Leave

The Company provides for earned leave benefit (including compensated absences) and half-pay leave to the employees of the Company which accrue annually at 30 days and 20 days respectively. 75 % of the earned leave is en-cashable while in service and a maximum of 300 days on superannuation. Half-pay leave is en-cashable only on superannuation up to the maximum of 240 days as per the rules of the Company. The liability for the same is recognised on the basis of actuarial valuation.

F. Social Security Scheme

NHPC has a Social Security Scheme in lieu of compensate appointment subject to the condition that the scheme will be withdrawn on introduction of pension scheme. Corporation makes a matching contribution per month per employee and such contribution is to be made for 8 years to build up corpus. The scheme is in operation since 01.06.2007. The scheme has been created to take care of and helping brieved families in event of death of its employee or permanent total disability.

G. Memento to employees retired on attaining the age of superannuation and settlement allowance to such employees.

NHPC has a policy of providing Memento valuing Rs.5000/- to employee retiring on superannuation.

The above mentioned schemes (B, C, D, E & G) are unfunded and are recognised on the basis of actuarial valuation. Schemes A and F are Defined contribution benefits.

Summary of various defined benefits as on 31.03.2012 is as under:- Table 1:-Key Actuarial assumption for Actuarial Valuation as at:

Note: { } contains previous year's figures.

Liabilities as on 31.03.2012 on account of Baggage Allowance on retirement & Memento are Rs. 0.28 Crore & Rs. 0.01 Crore (Previous year Rs.0.32 Crore & Rs. NIL) respectively.

3. a) Electricity generation is the principal business activity of the Corporation. Other operations viz., Contracts, Project Management and Consultancy works do not form a reportable segment as per the Accounting Standard - 17 on Segment Reporting notified by The Companies Accounting Standard Rules, 2006.

b) The Corporation has power stations located within the country and therefore, geographical segments are inapplicable.

4. The Management is of the opinion that no case of impairment of assets exists under the provision of Accounting Standard (AS) – 28 on Impairment of Assets as at 31st March 2012.

5. Financial Statements for the year have been prepared following the provisions of Schedule VI of the Companies Act, 1956 as revised by Government of India vide notification no. S. O. 447 (E) dated 28.02.2011 read with notification no. F. No. 2/6/2008-CL-V dated 30.03.2011. As such, Corresponding figures for year / Opening balances have been regrouped/re-arranged/re-cast wherever necessary to comply with requirements Revised Schedule VI.


Mar 31, 2011

1. a) Contingent Liabilities as on: -

(Rs. in Crore)

Description Opening Balance Closing Balance

01/04/2010 31/03/2011

Claims against the Company not acknowledged as debts in respect of

- Capital Works 4452.69 5112.64

- Land Compensation Cases 82.82 71.97

- Others

- Disputed Income Tax Demand 0.09 10.99

- Disputed Sales Tax Demand 2099.20 2244.45

- Others 288.96 149.44

Total 6923.76 7589.49

b) The above contingent liabilities do not include contingent liabilities on account of pending cases in respect of service matters & others where the amount cannot be quantified.

c) It is not practicable to disclose the uncertainties relating to any outflow.

d) There is a possibility of reimbursement to Corporation, of Rs.42.39 Crore (Previous year Rs.41.96 Crore) towards above contingent liabilities.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.6286.47 Crore (Previous year Rs.8265.86 crore)

3. The company made initial public offering (IPO) during last financial year i. e. in 2009-10. Out of the IPO proceeds, a sum of Rs.1592.59 Crore has been utilised up to 31.03.2011 for re-coupment of capital expenditure already incurred from internal accruals on the projects specified for utilisation, Rs.2300 Crore has been invested as per extant investment policy of the company, Rs.38.71 Crore recouped for meeting IPO expenditure and balance of Rs.94.40 Crore is lying in bank account under Corporate Liquidity Term Deposit (CLTD).

4. a) Title deeds/title in respect of Land of some Projects/Units amounting to Rs.60.60Crore (Previous year Rs.56.89 crore), covering an area of 2192.36 hectare (Previous year 1864.13 hectare), are yet to be executed/passed. Expenses on stamp duty etc. relating to registration thereof will be accounted for as and when incurred.

b) Land does not include the land taken from Sashatra Seema Bal (SSB) for Subansiri Upper Project on lease for a period of 99 years @ notional rent of Rs.1/- per annum.

5. a) Central Electricity Regulatory Commission (CERC) has notified by Regulations the terms and conditions for determination of tariff applicable with effect from 1st April 2009 for a period of five years vide notification dated 19.01.2009. The petitions for all 12 power stations have since been filed and tariff for 3 power stations already stands approved.

The said regulations inter-alia provides that for the purpose of filing petitions, Return on Equity (ROE, a component of tariff) is to be grossed up using applicable income tax rate for the financial Year 2008-09 and difference in ROE, if any, that may arise due to change in income tax rate during the tariff period 2009-14, is to be claimed in 2014-15. However, keeping in view the provisions of Accounting Standard 9 on Revenue Recognition, tariff has been recomputed based on the principle enunciated in the aforesaid regulation by grossing up the ROE with applicable income tax rate for the financial year 2010-11 and sales have been provisionally recognized at Rs.3852.86 Crore, which includes Rs.391.77 Crore towards grossing up of ROE with applicable tax rates of 2010-11 viz-a-viz tax rates of 2008-09, (Previous year Rs.3306.63 Crore) also taking into consideration the principle of conservatism.

The ibid regulation also provides that pending determination of tariff, the company is to provisionally bill the beneficiary at tariff approved by the CERC as applicable as on 31st March 2009. The amount provisionally billed comes to Rs.3261.42 Crore (Previous year Rs.2901.49 Crore). Accordingly, unbilled sale for the current year comes to Rs.591.44Crore (Previous year Rs.405.14 Crore).

b) Sales of Rs.592.44 crore included in Prior Period Adjustment (Schedule 21) represent the difference due to grossing up of ROE at normal income tax instead of MAT rate, which was considered for grossing up in 2009-10 and other tax adjustments relating to the beneficiary States.

6. Pending approval of the competent authority, provisional payments made towards executed quantities of some of the items beyond approved quantities as also for extra items, are included in Capital Work-in-Progress/Fixed Asset.

7. Capital work in progress includes Rs.648.78 Crore as at 1st April 2010 and Rs.161.25 Crore during the year totalling to Rs.810.03 Crore as at 31.03.2011 on account of Survey & Investigation expenses and Administration & other general overhead expenses of Construction Projects. Similarly Capital Work in Progress includes Rs.172.35 crore on account of Administration & other general overhead expenses of Corporate Office & Regional Offices allocated to these projects during the year. This accounting treatment is being followed consistently in line with the Significant Accounting Policy No.4.1 and 4.3 as such expenditure forms part of Capital cost of the project.

8. a) Balances shown under Material issued to contractors, claims recoverable including insurance claims, advance for Capital Expenditure, Sundry Debtors, Advances to Contractors, Sundry Creditors and Deposits/Earnest money from contractors are subject to reconciliation/ confirmation and respective consequential adjustments. Claims recoverable also include claims in respect of projects handed over or decided to be handed over to other agencies in terms of Government of India Directives.

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

c) Since the issue of payment of incentive to M/s Delhi Transco Limited has not been resolved, Rs.32.97 Crore is continuing under "Other current Assets" (Schedule-9) as well as under "Other Liabilities" (Schedule-10).

d) Debtors include an amount of Rs.120.81 Crore, being recoverable from M/s Delhi Transco Limited (erstwhile DESU) pertaining to period prior to financial Year 1996-97. The case for recovery of the same has been taken up through Ministry of Power with Ministry of Finance, Govt. of India. However, a provision for entire amount has been made in the books during 2008-09 as an abundant precaution.

9. a) Siang Basin, Subansiri Basin & Dibang Multipurpose Projects were taken over from Brahmputra Board. Pending settlement of account with Brahmputra Board, assets and liabilities have been booked to the extent of amounts incurred by the Corporation on these projects. Of the Siang Basin Projects, Siang Lower & Siyom HE Projects have since been handed over to private developer and liability arising out of settlement of accounts with Brahmputra Board towards these projects is recoverable from respective private developer. Upper Siang HE project, a project of Siang basin, has since been allotted to other agency for preparation of Pre-feasibility report and as such expenditure incurred on this project till 31.03.2011 amounting to Rs.37.06 Crore has been provided in the books as abundant precaution.

b) Pakal Dul, Kiru & Kwar HE Projects are to be executed through Joint Venture Company with participation from state Government. Pending formation of Joint Venture Company, expenditure amounting to Rs.145.71 Crore & Rs.61.67 Crore respectively incurred by NHPC on these projects up to 31.03.2011 is appearing under Capital Work-in-Progress.

10. Govt. of Arunachal Pradesh had shown their inclination to hand over Subansiri Upper & Subansiri Middle projects to Independent Power Producer (IPP), on which NHPC had solicited the intervention of Govt. of India. As directed by GoI, Subansiri Middle Project has since been decided to be handed over to M/s Jindal Power Ltd. (JPL) for which an amount of Rs.105.21 Crore has been received by NHPC from M/s JPL. Pending handing over the project to M/s JPL, the amount received from M/s JPL has been adjusted to the extent of amount spent by NHPC towards capital work in progress and for creation of fixed asset of Subansiri Middle Project and the balance is being shown under the head "Other Liabilities" in Schedule 10-"Current Liabilities & Provisions". As regard to Subansiri Upper Project, decision of GOI is still awaited and pending decision, capital expenditure amounting to Rs.0.61 Crore incurred on this project for the year ended 31.03.2011 has been charged to Profit & Loss Account as an abundant precaution, which is in addition to the provision of Rs.19.35 Crore, already existed as at 31.03.2010 towards expenditure incurred on this project during 20.04.2004 to 31.03.2010, the period in which this project was under suspension.

11. CERC while notifying tariff regulation for the period 2009-14 vide notification dated 19.01.2009 has revised the rates of depreciation and has also provided the methodology for computing the depreciation. As per ibid tariff regulation, depreciation is to be calculated at specified depreciation rates till 31st March of the year closing after a period of 12 years from the date of commercial operation of an operating unit and thereafter amortisation of residual depreciable value of the assets over the remaining useful life of operating unit, life of the unit being considered 35 years from the date of commercial operation.

The Company had however provided depreciation in financial year 2009-10, following the rate notified by CERC even in respect of assets of Operating Units, which have completed 12 years as at 31.03.2009. During the year ended 31.03.2011, Company has recomputed its depreciation charge w.e.f. 01.04.2009 in compliance of opinion of the Office of C&AG of India that depreciation is to be provided following the rates of depreciation as well as methodology notified by CERC.

Accordingly, the depreciation charge for the financial year 2009-10 and for the year ended 31.03.2011 has reduced by Rs.96.27 Crore (adjusted as prior period item) and Rs.191.97 Crore respectively. In view of forgoing, the Significant Accounting Policies on 'Depreciation and Amortisation' (Significant Accounting Policy No.5.2.1 to 5.2.4, 5.7, 5.9) and `Machinery Spares' (Significant Accounting Policy No. 3.1(a)) have been suitably reworded to disclose the fact of "rate of depreciation as well as methodology" wherever required.

12. During the year Company has received the opinion from the Expert Advisory Committee of the Institute of Chartered Accountants of India (EAC of ICAI) and as per opinion of EAC, expenditure incurred for creation of assets not within the control of company should be charged to profit & loss account in the year of incurrence itself. The Company has represented to the EAC of ICAI that such expenditure, being essential for setting up of a hydro project, should be allowed to be capitalised. Pending receipt of further opinion / communication from the EAC, the accounting treatment as per existing accounting practices / policies has been continued.

13. In pursuance of the J&K Water Resources (Regulation & Management) Act, 2010, Govt of J&K has levied cess on use of water by power stations in the state of J&K with effect from 10.11.2010, which has since been challenged in J&K High Court. A petition has also been filed with CERC for allowing reimbursement of the said cess being a new levy. However, as an abundant precaution, a provision of Rs.138.87 Crore has been made in the books of accounts.

14. Pending final settlement of arrears of pay revision of Employees w.e.f 01.01.2007, a further provision of Rs.199.69 Crore has been made in the books for the year ended 31.03.2011 on reasonable estimate basis. In addition to this, an amount of Rs.89.11 Crore towards Performance Related Pay Scheme in terms of DPE guidelines, pending approval of the scheme by Board, has also been provided.

15. Disclosure as required by Accounting Standard (AS) 15:

General description of various defined employee benefit schemes are as under:

A. Provident Fund

Company pays fixed contribution to Provident Fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognised as expense and is charged to the profit & loss account .The obligation of the Company is to make such fixed contribution and to ensure a minimum rate of return to the members as specified by GOI.

B. Gratuity

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

C. Retired Employee Health Scheme

The Company has a Retired Employee Health Scheme, under which retired employee and the spouse are provided medical facilities in the Company hospitals / empanelled hospitals. They can also avail treatment as Out-Patient subject to a ceiling fixed by the Company.

D. Allowance on Retirement / Death

Actual cost of shifting from place of duty at which employee is posted at the time of retirement to any other place where he / she may like to settle after retirement is paid as per the rules of the corporation. In case of death, family of deceased employee can also avail this facility.

E. Leave

The Company provides for earned leave benefit (including compensated absences) and half-pay leave to the employees of the Company which accrue annually at 30 days and 20 days respectively. 75 % of the earned leave is en-cashable while in service and a maximum of 300 days on superannuation. Half-pay leave is en-cashable only on superannuation up to the maximum of 240 days as per the rules of the Company. The liability for the same is recognised on the basis of actuarial valuation.

F. Social Security Scheme

NHPC has a Social Security Scheme in lieu of compensate appointment subject to the condition that the scheme will be withdrawn on introduction of pension scheme. Corporation makes a matching contribution per month per employee and such contribution is to be made for 8 years to build up corpus. The scheme is in operation since 01.06.2007. The scheme has been created to take care of and helping brieved families in event of death of its employee or permanent total disability.

The above mentioned schemes (B, C, D and E) are unfunded and are recognised on the basis of actuarial valuation. Schemes A and F are Defined contribution benefits.

16. a) Electricity generation is the principal business activity of the Corporation. Other operations viz., Contracts, Project Management and Consultancy works do not form a reportable segment as per the Accounting Standard - 17 on Segment Reporting issued by the Institute of Chartered Accountants of India.

b) The Corporation has power stations located within the country and therefore, geographical segments are inapplicable.

17. In compliance of Accounting Standard – 18 on related party disclosures issued by the Institute of Chartered Accountants of India, the required information is given as under: -

a) Related Parties

(i) Joint Venture Companies

National Power Exchange Ltd.

(ii) Key Management Personnel

Shri S. K. Garg CMD (retired on attaining the age of superannuation w.e.f. 31.12.2010)

Shri A. B. L.Srivastava Director (Finance) with additional Charge of CMD w.e.f. 01.01.2011.

Shri D. P. Bhargava Director (Technical)

Shri J. K. Sharma Director (Projects)

Shri R. S. Mina Director (Personnel)

18. The Company's significant leasing arrangements are in respect of operating leases of premises for residential use of employees, offices, guesthouses & transit camps. These leasing arrangements, which are not non-cancellable, are usually renewable on mutually agreeable terms. The Schedule of Employees remuneration and benefits includes Rs.26.48 Crore (Previous year Rs. 14.40 Crore) towards lease payments, net of recoveries, in respect of premises for residential use of employees. Lease payments in respect of premises for offices, guest house & transit camps are shown as Rent / Hiring charges under Schedule of Generation, Administration and other expenses.

19. The Management is of the opinion that no case of impairment of assets exists under the provision of Accounting Standard (AS)-28 on Impairment of assets as at 31st March 2011.

20. (a) Cash & Cash equivalents include an amount of Rs.57.39 Crore (Previous year Rs.14.34 Crore) towards margin money kept with banks for opening Letter of Credit or similar facility, which is not available for use as on 31.03.2011.

(b) Cash & cash equivalents include Rs.486.44 Crore, held for Rural Road and Rural Electrification works being executed by Corporation on behalf of other agencies and are not freely available for the business of the Corporation. Similarly "Loans & Advances" under Schedule 9 include Rs.49.40 Crore given as Advance to Contractors & Suppliers in respect of these works.

21. Previous year figures / Opening balances have been regrouped/re-arranged/re-cast wherever necessary.

22. Subsequent to the approval of accounts for the year ended 31st March 2011 by the Board of directors on 27th May, 2011, the members of the Board has recommended dividend @ Rs.0.60/- per share (subject to rounding off to nearest Rupee in terms of Rule 23 of Companies (Central Government's) General Rules & Forms, 1956) on the paid up equity capital of the Company (as per Balance Sheet as at 31st March 2011) for the year ended as at 31st March 2011 in the meeting held on 30.06.2011. Accordingly the Company has reopened and revised its earlier finalized audited accounts for the year ended 31st March 2011 and a provision for dividend amounting to Rs.738.04 Crore (subject to rounding off) @6% on the paid up equity capital amounting to Rs.12300.74 Crore (divided into 1230,07,42,773 equity shares of Rs.10/- each fully paid up) and dividend distribution tax thereon, has been made.


Mar 31, 2010

1. a) Contingent Liabilities as on: -

(Rs. in Crore)

Description Opening Closing Balance Balance 01/04/2009 31/03/2010

Claims against the Company not acknowledged as debts in respect of

- Capital Works 3870.55 4452.69

-Land Compensation Cases 94.61 82.82

-Others

-Disputed Income Tax Demand 0.09 --

-Disputed Sales Tax Demand 2062.41 2099.20

-Others 409.06 288.96

Total 6436.63 6923.76

b) The above contingent liabilities do not include contingent liabilities on account of pending cases in respect of service matters & others where the amount cannot be quantified.

c) The amount of claims where arbitration /court awards have been received but are under examination in the company are continuing as contingent liability and no provision has been created in the books.

d) It is not practicable to disclose the uncertainties relating to any outflow.

e) There is a possibility of reimbursement to Corporation, of Rs. 41.96 Crore (Previous year Rs. 31.58 Crore) towards above contingent liabilities.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 8265.86 Crore (Previous year Rs. 9709.30 crore).

3. a) During the year ended 31.03.2010, the company made initial public offering (IPO) of 167,73,74,015 Shares of Rs. 10/- each for cash at a price of Rs. 36/- per share including premium of Rs. 26/- per share consisting of fresh issue of 111,82,49,343 equity shares by the company including reservation of 4,19,34,350 equity shares for its employees and offer for sale of 55,91,24,672 equity shares by the President of India acting through Ministry of Power, Government of India aggregating to Rs. 6038.55 Crore including premium. The Company retained Rs. 4025.70 Crore as its share proceeds including share premium of Rs. 2907.45 Crore and sale proceeds of the equity of Government of India amounting to Rs. 2012.85 Crore was paid to the Ministry of Power, Government of India. Out of the proceeds, a sum of Rs. 616.06 Crore has been utilised during the year ended 31.03.2010 for re-coupment of capital Expenditure already incurred from internal accruals on the projects specified for utilisation, Rs. 3288 Crore has been invested as per eRs.tant investment policy of the company, Rs. 50 Crore recouped provisionally for meeting IPO Expenditure and balance of Rs. 71.64 Crore is lying in bank account under Corporate Liquidity Term Deposit (CLTD).

b) An amount of Rs. 49.07 Crore has been incurred as Share Issue expenses for IPO, which includes Rs. 10.36 Crore as Government of Indias share, being the selling share holder. Rs. 10.34 Crore has since been recovered from Government of India. NHPCs share of expenses has been adjusted against the Share Premium Account (Schedule 2) in terms of Section 78 of the Companies Act, 1956.

4. a) Title deeds/title in respect of Land of some Projects/Units amounting to Rs. 56.89 Crore (Previous year Rs. 92.69 Crore), covering an area of 1864.13 hectare (Previous year 2046.46 hectare), are yet to be executed/passed. expenses on stamp duty etc. relating to registration thereof will be accounted for as and when incurred.

b) Land does not include the land taken from Sashatra Seema Bal (SSB) for Subansiri Upper Project on lease for a period of 99 years @ notional rent of Re.1/- per annum.

5. a) Central Electricity Regulatory Commission (CERC) has notified by Regulations the terms and conditions for determination of tariff applicable with effect from 1st April 2009 for a period of five years vide notification dated 19.01.2009.

The company has filed tariff petitions up to 31.03.2010 with CERC for determination of tariff for the period 2009-14 in respect of 10 out of 11 power stations. Pending determination of station wise tariff as per aforesaid notification, sales for the current year have been provisionally recognised at Rs. 3306.63 Crore on the basis of the principles enunciated in the said notification. The principle of conservatism has also been kept in view, as the tariff petitions are subject to prudence check by CERC.

The aforesaid CERC notification provides that pending determination of tariff by the CERC, the Company has to provisionally bill the beneficiaries at the tariff approved by the CERC as applicable as on 31st March 2009. The amount provisionally worked out for billing for the year ended 31st March 2010 on this basis is Rs. 2901.49 Crore, which also includes Rs. 194.28 Crore towards Income Tax recoverable.

b) Net Sales for the current year include Rs. 816.51 Crore (excluding income Tax of Rs. 27.63 Crore) towards earlier year sales arising because of finalisation and revision of tariff in respect of Power Stations.

6. Pending approval of the competent authority, provisional payments made towards executed quantities of some of the items beyond approved quantities as also for eRs.tra items, are included in Capital Work-in-Progress/FiRs.ed Asset.

7. a) Balances shown under Material issued to contractors, claims recoverable including insurance claims, advance for Capital Expenditure, Sundry Debtors, Advances to Contractors, Sundry Creditors and Deposits/Earnest money from contractors are subject to reconciliation/ confirmation and respective consequential adjustments. Claims recoverable also include claims in respect of projects handed over or decided to be handed over to other agencies in terms of Government of India Directives.

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

c) Since the issue of payment of incentive to M/s Delhi Transco Limited has not been resolved, Rs. 32.97 Crore is continuing under "Other current Assets" (Schedule-9) as well as under "Other Liabilities" (Schedule-10).

d) Debtors include an amount of Rs. 120.81 Crore, being recoverable from M/s Delhi Transco Limited (erstwhile DESU) pertaining to period prior to Financial Year 1996-97. The case for recovery of the same has been taken up through Ministry of Power with Ministry of Finance, Govt. of India. However, a provision for entire amount has been made in the books during 2008-09 as an abundant precaution.

8. a) Siang Basin, Subansiri Basin & Dibang Multipurpose Projects were taken over from Brahmputra Board. Pending settlement of account with Brahmputra Board, assets and liabilities have been booked to the extent of amounts incurred by the Corporation on these projects. Of the Siang Basin Projects, Siang Lower & Siyom HE Projects have since been handed over to private developer and liability arising out of settlement of accounts with Brahmputra Board towards these projects is recoverable from respective private developer. Upper Siang HE project, a project of Siang Basin, has since been allotted to other agency for preparation of Pre- feasibility report and as such Expenditure incurred on this project till 31.03.2010 amounting to Rs. 37.06 Crore has been provided in the books as abundant precaution.

b) Pakal Dul, Kiru & Kwar HE Projects are to be executed through Joint Venture Company with participation from State Government. Pending formation of Joint Venture Company, Expenditure amounting to Rs. 121.87 Crore & Rs. 42.61 Crore respectively incurred by NHPC on these projects upto 31.03.2010 is appearing under Capital Work-in-Progress.

9. a) Govt. of Arunachal Pradesh has shown their inclination to hand over Subansiri Upper & Subansiri Middle projects to Independent Power Producer (IPP), on which NHPC has solicited the intervention of Govt. of India. Pending final decision for eRs.ecution of these projects, capital Expenditure amounting to Rs. 2.15 Crore and Rs. 0.72 Crore incurred on these projects for current financial year has been charged to Profit & Loss Account as an abundant precaution, which is in addition to the provision of Rs. 32.03 Crore, already created till last year towards Expenditure incurred on these projects during from 20.04.2004 to 31.03.2009, the period in which these projects were under suspension due to Supreme Court Injunction.

b) Pursuant to the order of Govt. of Uttarakhand (GoUK)/ Govt. of India, Corporation has decided to hand over Lakhawar Vyasi Project to Uttrakhand Jal Vidyut Nigam Ltd. (UJVNL). UJVNL has paid Rs. 73.07 Crore, being the reimbursement of Expenditure (including cost of capital & overheads / supervision charges) incurred by NHPC towards the creation of assets/CWIP of the project till 31.03.2009. Pending handing over of the project, the aforesaid amount has been adjusted to the extent of Expenditure incurred by NHPC till said date and balance is appearing as "Other Liabilities" in Schedule 10 - Current Liabilities & Provisions. Further an amount of Rs. 5.88 Crore, being the Expenditure incurred by NHPC on this project during 2009-10 has been provided as an abundant precaution as the date beyond 31.03.2009, up to which Expenditure is reimbursable from UJVNL is yet to be decided.

10. Pending implementation of wage revision of Employees w.e.f 01.01.2007, a provision of Rs. 291.93 Crore (previous year Rs. 202.36 Crore) has been made in the books for current year on reasonable estimate basis.

11. a) Corporation has taken Industrial All Risk (IAR) Insurance Policy w.e.f. 31.07.2009 in lieu of Self Insurance Policy. Accordingly, Self Insurance Reserve for the current year as per Significant Accounting Policy No. 11 (Schedule 23) has been created only up to 30.07.2009 on proportionate basis on the value of Gross Block as at 30.06.2009.

12. Disclosure as required by Accounting Standard (AS) 15:

General description of various defined employee benefit schemes are as under:

A. Provident Fund

Company pays fiRs.ed contribution to Provident Fund at predetermined rates to a separate trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognised as eRs.pense and is charged to the profit & loss account. The obligation of the Company is to make such fiRs.ed contribution and to ensure a minimum rate of return to the members as specified by GOI.

B. Gratuity

The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to get gratuity at 15 days salary (15/26 Rs. last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum of Rs. 0.035 Crore, on superannuation, resignation, termination, disablement or on death. The liability for the same is recognised on the basis of actuarial valuation considering the maximum limit as Rs. 0.10 crore.

C. Retired Employee Health Scheme

The Company has a Retired Employee Health Scheme, under which retired employee and the spouse are provided medical facilities in the Company hospitals / empanelled hospitals. They can also avail treatment as Out-Patient subject to a ceiling fiRs.ed by the Company.

D. Allowance on Retirement / Death

Actual cost of shifting from place of duty at which employee is posted at the time of retirement to any other place where he / she may like to settle after retirement is paid as per the rules of the corporation. In case of death, family of deceased employee can also avail this facility.

E. Leave

The Company provides for earned leave benefit (including compensated absences) and half-pay leave to the employees of the Company which accrue annually at 30 days and 20 days respectively. 75 % of the earned leave is en-cashable while in service and a maximum of 300 days on superannuation. Half-pay leave is en-cashable only on superannuation up to the maximum of 240 days as per the rules of the Company. The liability for the same is recognised on the basis of actuarial valuation.

F. LTC

Employees are entitled to avail LTC in a block of 2 years. Liability for LTC as at 31.03.2010 is provided on the basis of actuarial valuation. The above mentioned schemes (B, C, D, E and F) are unfunded and are recognised on the basis of actuarial valuation.

13. a) Electricity generation is the principal business activity of the Corporation. Other operations viz., Contracts, Project Management and Consultancy works do not form a reportable segment as per the Accounting Standard - 17 on Segment Reporting issued by the Institute of Chartered Accountants of India. b) The Corporation has power stations located within the country and therefore, geographical segments are inapplicable.

14. In compliance of Accounting Standard - 18 on related party disclosures issued by the Institute of Chartered Accountants of India, the required information is given as under: -

a) Related Parties

(i) Joint Venture Companies

National Power exchange Ltd.

(ii) Key Management Personnel

Shri S.K. Garg Chairman & Managing Director

Shri A. B. L. Srivastava Director (Finance)

Shri D. P. Bhargava Director (Technical)

Shri J. K. Sharma Director (Projects) - assumed office w.e.f. 10.04.2009

Shri R. S. Mina Director (Personnel) - assumed office w.e.f. 28.04.2009

15. The Companys significant leasing arrangements are in respect of operating leases of premises for residential use of employees, offices, guesthouses & transit camps. These leasing arrangements, which are not non-cancellable, are usually renewable on mutually agreeable terms. The Schedule of Employees remuneration and benefits includes Rs. 14.40 Crore (Previous year Rs. 12.59 Crore) towards lease payments, net of recoveries, in respect of premises for residential use of employees. Lease payments in respect of premises for offices, guest house & transit camps are shown as Rent / Hiring charges under Schedule of Generation, Administration and other expenses.

16. The Management is of the opinion that no case of impairment of assets exists under the provision of Accounting Standard (AS)-28 on Impairment of assets as at 31st March 2010.

17. (a) Cash & Cash equivalents include an amount of Rs. 14.34 Crore (Previous year Rs. Nil) towards margin money kept with banks for opening Letter of Credit or similar facility, which is not available for use as on 31.03.2010.

(b) Cash & cash equivalents include Rs. 488.41 Crore, held for Rural Road and Rural Electrification works being executed by Corporation on behalf of other agencies and are not freely available for the business of the Corporation. Similarly "Loans & Advances" under Schedule 9 include Rs. 93.58 Crore given as Advance to Contractors & Suppliers in respect of these works.

18. Previous years figures/opening balances have been regrouped/re-arranged/re-cast wherever necessary.


Mar 31, 2009

1. a) Contingent Liabilities as on: -

(Rupees in Crore)

Description Opening Balance Closing Balance 01/04/2008 31/03/2009

Claims against the Company not acknowledged as debts in respect of

- Capital Works 3193.93 3870.55

- Land Compensation Cases 84.48 94.61

- Others

Disputed Sales Tax Demand 2045.53 2062.41

Others 340.02 409.06

Total 5663.96 6436.63

b) The above contingent liabilities do not include contingent liabilities on account of pending cases in respect of service matters & others where the amount cannot be quantified.

c) The amount of claims where arbitration /court awards have been received but are under examination in the company are continuing as contingent liability and no provision has been created in the books.

d) It is not practicable to disclose the uncertainties relating to any outflow.

e) There is a possibility of reimbursement to Corporation, of Rs.31.58 Crore (Previous year Rs. 0.03 Crore) towards above contingent liabilities.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.9709.30 Crore (Previous year Rs. 8454.03 crore).

3. a) Title deeds/title in respect of Land of some Projects/Units amounting to Rs.92.69 Crore (Previous year Rs. 52.10 crore), covering an area of 2046.46 hectare (Previous year 2080.40 hectare), are yet to be executed/passed. Expenses on stamp duty etc. relating to registration thereof will be accounted for as and when incurred.

b) Land does not include the land taken from Sashatra Seema Bal (SSB) on lease for a period of 99 years @ notional rent of Rs.1/- per annum.

c) Land measuring 722 Kanal & 18 marlas and structure created thereon in respect of Salal Power Station, though in possession of J&K Govt., is appearing in respective fixed assets heads.

4. Pending approval of the competent authority, provisional payments made towards executed quantities of some of the items beyond approved quantities as also for extra items, are included in Capital Work-in-Progress/ Fixed Asset.

5. a) Sales for current year include Rs.(-)6.75 Crore towards income tax, billing of which is yet to be done.

b) Sales in respect of Dulhasti & Teesta-V Power Stations have been accounted for based on provisional tariff notified by Central Electricity Regulatory Commission (CERC).

6. a) Balances shown under Material issued to contractors, claims recoverable including insurance claims, advance for Capital Expenditure, Sundry Debtors, Advances to Contractors, Sundry Creditors and Deposits/ Earnest money from contractors are subject to reconciliation/ confirmation and respective consequential adjustments. Claims recoverable also include claims in respect of projects handed over or decided to be handed over to other agencies in terms of Government of India Directives.

b) “Loans & Advances” under Schedule 9 include Rs.244.44 Crore given as Advance to Contractors & Suppliers in respect of Contracts, Project Management and Consultancy Works being executed by Corporation on behalf of other agencies.

c) In the opinion of the management, the value of current assets, loans and advances on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

d) Since the issue of payment of incentive to M/s Delhi Transco Limited has not been resolved, Rs.32.97 Crore is continuing under “Other current Assets” (Schedule-9) as well as under “Other Liabilities” (Schedule-10)

7. a) Siang Basin, Subansiri Basin & Dibang Multipurpose Projects were taken over from Brahmaputra Board.

Pending settlement of account with Brahmaputra Board, assets and liabilities have been booked to the extent of amounts incurred by the Corporation on these projects. Of the Siang Basin Projects, Siang Lower & Siyom HE Projects have since been handed over to private developer and liability arising out of settlement of accounts with Brahmaputra Board towards Siang Lower & Siyom projects is recoverable from respective private developer. Upper Siang HE project, a project of Siang Basin, has since been allotted to other agency for preparation of Pre-feasibility report and as such expenditure incurred on this project till 31.03.2009 amounting to Rs.37.06 Crore has been provided in the books as abundant precaution.

b) Profit on Transfer of Project under “(ii) Other Income” in Schedule 14 pertains to transfer of Lower Siang Project, which has been handed over to private developer as referred to in 7(a) above.

c) Out of Rs. 84.89 Crore, as demanded by JKSPDC for projects taken over by Corporation from J&KPDC, Rs.26 crore has been paid by Corporation against accountal of Rs.33.66 Crore against total demand and Rs.51.23 Crore is appearing under contingent liability, which shall be accounted for in the books on reconciliation of assets of projects thus taken over with accounts submitted by them. The Corporation is also having a claim of Rs.37.55 Crore against JKSPDC in respect of projects handed over or decided to be handed over to JKSPDC.

d) Pakal Dul & Loktak Down Stream HE Projects are to be executed through Joint Venture Companies with participation from State Government. Pending formation of Joint Venture Companies, expenditure amounting to Rs.101.03 Crore & Rs. 30.99 Crore respectively incurred by NHPC on these two projects upto 31.03.2009 is appearing under Capital Work-in-Progress. Similarly Kiru & Kawar HE Projects, entrusted to Corporation for preparation of DPR, are also to be executed through Joint Venture Company. Pending formation of Joint Venture Company, expenditure of Rs.28.49 Crore incurred by Corporation on these Projects is appearing under Capital Work-in-Progress.

8. Project work at Subansiri Upper & Subansiri Middle is under suspension due to the Hon’able Supreme Court order dated 19.04.2004 in Interlocutory Applications (IAs) 966 & 1012, restraining the construction of dam upstream of Subansiri River. Pending disposal of said IAs, capital expenditure of Rs.40.35 crore & Rs.34.78 Crore respectively is appearing under Capital Work In progress and as abundant precaution expenditure incurred towards Survey & Investigation including expenditure during construction on these projects from 20.04.2004 to 31.03.2009 has been provided in the books in current year.

9. Ministry of Power, Govt. of India (GOI) vide its order No. 16/47/2001/-DO (NHPC) dated 08.01.2007 and order No. even dated 08.03.2007 respectively granted approval for Initial Public Offering (IPO) of 10% of paid up Share Capital and to offload 5% of GOI share in the Corporation. The eligible issue expenses will be shared between NHPC & Govt. of India, being the selling shareholder. The expenses pertaining to NHPC will be adjusted from the premium proceeds of the issue.

10. Pending implementation of wage revision of Employees w.e.f 01.01.2007, a provision of Rs.202.36 Crore has been made in the books for current year on reasonable estimate basis.

11. The depreciation on Fixed Assets is charged as per Significant Accounting Policy No.5 (Schedule 23) of the Corporation. Ministry of Power (MOP) has already notified tariff policy which provides that rates of depreciation as notified by the Central Electricity Regulatory Commission (CERC) would be applicable for the purpose of tariff as well as accounting. The revised rates of depreciation as notified by CERC have been made applicable w.e.f. 01.04.2009. Accordingly, the rates notified under present tariff norms have been considered for charging depreciation for the year. The depreciation for the year as per rates prescribed under schedule XIV of the Companies Act, 1956 works out to Rs.390.08 crore more than that worked out as per CERC rates (previous year Rs.338.39 crore). However, the Management considers the depreciation provided in the books as appropriate and adequate keeping in view matching concept of Accounting.

12. a) Electricity generation is the principal business activity of the Corporation. Other operations viz., Contracts, Project Management and Consultancy Works do not form a reportable segment as per the Accounting Standard - 17 on Segment Reporting issued by the Institute of Chartered Accountants of India.

b) The Corporation has Power Stations located within the country and therefore, geographical segments are inapplicable.

13. In compliance of Accounting Standard – 18 on related party disclosures issued by the Institute of Chartered

Accountants of India, the required information is given as under :- a) Whole time Directors:

Shri S. K. Garg Chairman & Managing Director

Shri A. B. L. Srivastava Director (Finance)

Shri D. P. Bhargava Director (Technical)- assumed office w. e. f. 26.03.2009

Shri J. K. Sharma Director (Projects)- assumed office w.e.f. 10.04.2009

Shri R. S. Mina Director (Personnel)- assumed office w.e.f. 28.04.2009

Shri S. K. Chaturvedi Director (Personnel)- relieved w.e.f. 31.07.2008

Shri S. P. Sen Director (Technical) - relieved w.e.f. 08.05.2008

Shri S. K. Dodeja Director (Projects) - superannuated on 31.07.2008

14. The Company’s significant leasing arrangements are in respect of operating leases of premises for residential use of employees, offices, guesthouses & transit camps. These leasing arrangements, which are not non- cancellable, are usually renewable on mutually agreeable terms. The Schedule of Employees remuneration and benefits include Rs.12.59 Crore (Previous year Rs.10.41 Crore) towards lease payments, net of recoveries, in respect of premises for residential use of employees. Lease payments in respect of premises for offices, guest house & transit camps are shown as Rent / Hiring charges under Schedule of Generation, Administration and other expenses.

15. The Management is of the opinion that no case of impairment of assets exists under the provision of Accounting Standard (AS)-28 on Impairment of assets as at 31st March, 2009.

16. (a) Cash & Cash equivalents include an amount of Rs. NIL (Previous year Rs.15.57 Crore) towards margin money kept with banks for opening Letter of Credit or similar facility, which is not available for use as on 31.03.2009.

(b) Cash & cash equivalents include Rs.382.28 Crore, held on behalf of other agencies for execution of Contract, Project Management and Consultancy Works on behalf of such agencies and are not freely available for the business of the Corporation.

17. Previous year’s figures/opening balances have been regrouped/re-arranged/re-cast wherever necessary.

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