1. (a) During the year ended 31st March, 2012, in line with the
Notification dated 29th December, 2011 issued by the Ministry of
Corporate Affairs, the Company has selected the option given in
paragraph 46A of the Accounting Standard11 (AS-11) - "The Effects of
Changes in Foreign Exchange Rates". Accordingly, the Company has, with
effect from 1st April, 2011, depreciated the foreign exchange
(gain)/loss arising on revaluation on long term foreign currency
monetary items in so far as they relate to the acquisition of
depreciable capital assets over the balance life of such assets and in
other cases amortized the foreign exchange (gain)/loss over the
balanced period of such long term foreign currency monetary items. The
depreciated/amortized portion of net foreign exchange (gain)/loss on
such long term foreign currency monetary items for the year ended 31 st
March, 2012 is Rs. 39.01 crore. The unamortized portion carried forward
as at 31st March, 2012 is Rs. 213.56 crore. Had the Company, followed
the earlier policy of charging the entire amount to the Statement of
Profit and Loss, the profit before tax for the year would have been
lower by Rs. 213.56 crore.
(b) During the year, the Company has changed its accounting policy
pertaining to accounting for expenditure incurred on
purchase/implementation of application software which hitherto was
being charged off in the year of accrual and is now being capitalized
and mortised over the useful economic life or 5 years whichever is
lower. This results in a more appropriate presentation. As a result of
this change, the depreciation and amortization for the year is lower by
Rs. 10.07 crore and the profit for the year is higher by Rs. 10.07 crore.
(c) During the previous year, the Company had changed its accounting
policy pertaining to amounts received from consumers towards
capital/service line contributions. These contributions which were
earlier recognized as liability were in the previous year recognized as
income over the life of the fixed assets. Pursuant to this change, a
sum of Rs. 38.90 crore pertaining to earlier years was recognized as
income during the previous year.
(c) Terms/rights attached to Equity Shares
The Company has issued only one class of Equity Shares having a Par
Value of Rs. 1/- per share. Each holder of Equity Shares is entitled to
one vote per share. The dividend proposed by the Board of Directors is
subject to the approval of the shareholders in the ensuing Annual
During the year ended 31st March 2012, the amount of per share dividend
recognized as distribution to equity shareholders was Rs. 1.25 per share
of Face Value of Rs.1/- each (31st March 2011- Rs.12.50 per share of Face
Value of Rs. 10/- each)
In the event of liquidation of the company, the holders of Equity
Shares will be entitled to receive remaining assets of the company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of Equity Shares held by the
(e) In an earlier year, the Company issued 3,000 1.75% Foreign Currency
Convertible Bonds (FCCB) with Face Value of U.S. $ 100,000 each
aggregating to U.S. $ 300 million. The bondholders have an option to
convert these Bonds into Equity Shares, at an initial conversion price
of Rs.145.6125 per share at a fixed rate of exchange on conversion of Rs.
46.81 = U.S. $ 1.00, at any time on and after 31st December, 2009, up to
11th November, 2014. The conversion price is subject to adjustment in
certain circumstances. The FCCB may be redeemed, in whole but not in
part, at the option of the Company at any time on or after 20th
November, 2011 subject to satisfaction of certain conditions. Unless
previously converted, redeemed or repurchased and cancelled, the FCCB
fall due for redemption on 21st November, 2014 at 109.47 percent of
their principal amount together with accrued and unpaid interest.
The unutilized portion of FCCB has been invested in short term deposits
During the year ended 31st March, 2012, the Company raised 1,500 crore
through issue of Unsecured Perpetual Securities (the "Securities").
These Securities are perpetual in nature with no maturity or redemption
and are callable only at the option of the Company. As these securities
are perpetual in nature and ranked senior only to the Share Capital of
the Company, these are considered to be in the nature of equity
instruments, and are not classified as "Debt" and the distribution on
such securities is not considered under "Interest".
Unless all arrears of distribution are fully paid to these Securities,
the company shall not declare or pay any dividends or distributions or
make any other payment on, or will procure that no dividend,
distribution or other payment is made on any securities of the company
ranking pari passu with, or junior to, the Securities, or redeem,
reduce, cancel, buy- back or acquire for any consideration any security
of the company ranking pari passu with, or junior to, the Securities.
The Debentures mentioned in (a) have been secured by a pari passu charge
on Immovable properties at Takve Khurd of Taluka Mawal, District, Pune
and Sub-District Mawal and first pari passu charge on movable fixed
assets (excluding land and building) present and future 'except assets
of all windmill projects, present and future.
g. The Debentures mentioned in (b) have been secured by a first charge
on the assets of the wind farms situated at Samana and Gadag In Gujarat
(i) The Debentures mentioned in (c) and (d) have been secured by a
pari passu charge on (and In Village Takve Khurd (Maharashtra) and
moveable and immovable properties in and outside Maharashtra.
(ii) The Debentures mentioned In (e) have been secured by land In
Village Takve Khurd (Maharashtra), moveable and immovable properties in
and outside Maharashtra, as also all transmission stations/lines,
receiving stations and sub-stations in Maharashtra.
(iii) The loans from HDFC Bank, ICICI Bank and IDBI Bank, mentioned In
(f), (g) and (h) respectively have been secured by a pari passu charge
on all moveable "fixed Assets (excluding land and building), present and
future (except assets of all wind projects both present and future)
Including moveable machinery, machinery spares, tools and accessories.
(iv) The loans from Asian Development Bank and Industrial Renewable
Energy Development Agency mentioned in (i) and respectively have
been secured by a first charge on the tangible moveable properties,
plant & machinery and immovable properties situated at Khandke,
Brahmanvel in Maharashtra.
(v) The loans from Infrastructure Development Finance Limited
mentioned in (k) have been secured by a charge on the moveable assets
except assets of alt windmill projects present and future more
particularly situated in and Samsna in Maharashtra, Karnataka and
vi). The loan from Export Import Bank of India mentioned in (I) has
been secured by receivables (present and future), book debts and
outstanding monies. (x) The loan mentioned in (m) has been secured by
hypothecation of specific assets (vehicles) taken on finance lease.
(i) The Debentures mentioned in (a) above are redeemable at par in
fourteen annual installments of Rs.16 crore and one Installment of Rs.26
crore commencing from 18th September, 2011.
(ii) The Debentures mentioned in (b) above are redeemable at par in ten
annual Installments of Rs.25 crore each and five annual installments of
Rs. 20 crore each commencing from 23rd July, 2011.
(iii) The Debentures mentioned in (c) and (d) are redeemable at par at
the end of 10 years from the respective dates of allotment viz., 25th
April, 2018 and 20th June, 2018.
(iv) The Debentures mentioned in (e) are redeemable at premium In three
installments amounting to Rs. 180 crore, Rs. 240 crore and Rs. 180 crore at
the end of 9th, 10th and 11th year respectively from 18th October,
(v) The loan from HDFC Bank mentioned in (f) is redeemable at par In 36
quarterly installments of Rs. 7.50 crore each commencing from 1 st June
2010 and 4 quarterly installments of 7 82.50 crore each commencing from
30th June, 2020.
(vi) The loan from ICICI Bank mentioned In (g) Is redeemable at par In
16 quarterly Installments of Rs. 7.75 crore each commencing from 31st
October, ."CIO, 4 quarterly installments of Rs. 5 crore each commencing
from 31st October, 2014 and 4 quarterly installments of Rs. 1.50 crore '
each commencing from 31st October, 2015.
(vii) The loan from IDBI Bank of Rs. 300 crore mentioned in (h) is
redeemable at par in 46 quarterly installments of Rs. 3.75 crore each
commencing from 1st October, 2010 and one installment of Rs. 127.50 crore
on 1st April, 2022 and,
The second loan from IDBI Bank of Rs. 400 crore mentioned in (h) is
redeemable at par in 36 quarterly installments of Rs. 5 crore commencing
from 1st April, 2011 and one installment of Rs. 220 crore on 1st April,
(viii) The loan from Asian Development Bank mentioned in (i) is
redeemable at par in 26 semi-annual installments commencing from 15th
(ix) The loan from Industrial Renewable Energy Development Agency of Rs.
95 crore mentioned in (j) is redeemable at par In 26 semi-annual
installments commencing from 15th December, 2007 and,
The second loan from Industrial Renewable Energy Development Agency of
Rs. 450 crore mentioned in (j) is redeemable at par in 24 semi- annual
installments of Rs. 14.63 crore each commencing from 30th June, 2012 and
two semi-annual installments of 749.50 crore each j commencing from 30th
(x) The loan from Infrastructure Development Finance Company Limited of
Rs. 250 crore mentioned in (k) is redeemable at par in 36 quarterly
installments of Rs. 5 crore each commencing from 15th November, 2010 and
four installments of Rs.17.50 crore commencing from 15th November, 2019
The second loan from Development Finance Company Limited
of Rs. 450 crore mentioned in (k) is redeemable at par in 35 quarterly
installments of Rs. 5.65 crore each commencing from 1st October, 2009 and
one installment of Rs. 252.25 crore commencing from 15th July, 2018 and, .
The third loan from Infrastructure Development Finance Limited of Rs. 150
crore mentioned in (k) is redeemable at par in 36 quarterly installments
of Rs. 1.88 crore commencing from 15th May, 2010 and 4 quarterly
installments of Rs. 20.63 crore commencing from 15th May, 2019 and,
The fourth loan from Infrastructure Development Finance Company Limited
of Rs. 800 crore mentioned in (k) is redeemable at par in 40 quarterly
installments of Rs. 15 crore commencing from 15th October, 2013 and 4
quarterly installments of Rs. 50 crore from 15th October, 2023.
(xi) The loan from Export Import Bank of India mentioned in (I) is
redeemable at par in 19 semi-annual installments of USD 372,200 each
commencing from 29th September, 2006.
(xii) 8.50% Euro Notes mentioned in (n) above is repayable fully on
19th August, 2017.
(xiii)The loans from ICICI Bank mentioned in (p) is redeemable at par
in 10 annual installments commencing from 1st April, 2012.
(xiv) Sales Tax Deferral mentioned in (q) above is repayable fully in
Cash credit from Banks is secured against first pari passu charge on
all Current Assets including goods, book debts, receivables and other
moveable Current Assets of the Company. The Cash Credit is repayable on
demand and carries interest @ 11.10% to 12.85% p.a.
Buyer's line of Credit is secured against first pari passu charges on
all Current Assets including goods, book debts, receivables and other
moveable Current Assets of the Company.
** Includes amounts outstanding aggregating Rs. 0.83 crore (31st March,
2011- Rs.0.81 crore) for more than seven years pending legal cases.
2. In an earlier year, the Company had commissioned its 120 MW
thermal power unit at Jojobera, Jharkhand. Revenue in respect of this
unit is recognized on the basis of a draft Power Purchase Agreement
prepared jointly by the Company and its customer which is pending
3. The Company has been legally advised that the Company is
considered to be established with the object of providing
infrastructural facilities and accordingly. Section 372A of the
Companies Act, 1956 is not applicable to the Company.
4. (a) The Company has an investment in Tata Teleservices Limited
(TTSL) of Rs. 735.48 crore (31st March, 2011- Rs. 735.48 crore).
Based on the accounts as certified by the TTSL Management for the year
ended 31 st March, 2012, TTSL has accumulated losses which have
significantly eroded its net worth. In the opinion of the Management,
having regard to the long term nature of the business, there is no
diminution other than temporary, in the value of the investment also
considering the recent Hon'ble Supreme Court judgment cancelling the
three (3) CDMA licenses pertaining to Jammu & Kashmir, Assam and North
East Circles of TTSL.
(b) The Company has an investment in Haldia Petrochemicals Limited
(HPL) of Rs. 22.50 crore (31st March, 2011- Rs. 22.50 crore). Based on the
accounts for the year ended 31st March, 2011, HPL has accumulated
losses which have significantly eroded its net worth. In the opinion of
the Management, having regard to the long term nature of the business,
there is no diminution other than temporary, in the value of the
5. Micro and small enterprises under the Micro, Small and Medium
Enterprises Development Act, 2006 have been determined based on the
information available with the Company and the required disclosures are
Dues to Micro and Small Enterprises have been determined to the extent
such parties have been identified on the basis of information collected
by the Management. This has been relied upon by the auditors.
@ Amounts unpaid to MSM vendors on account of retention money have not
been considered for the purpose of interest calculation.
6. Capital commitments not provided for are estimated at Rs. 477.46
crore (31st March, 2011 - Rs. 903.72 crore)
7. Contingent Liabilities and Other Commitments (to the extent not
(a) Claims against the Company not acknowledged as debts aggregating to
Rs. 234.66 crore (31st March, 2011-1:261.81 crore) consist mainly of the
(i) Octroi claims disputed by the Company aggregating to Rs. 5.03 crore
(31st March, 2011 - Rs. 5.03 crore), in respect of control exemption
claimed by the Company.
(ii) A Suit has been filed against the Company claiming compensation of
Rs. 20.51 crore (31st March, 2011 - Rs. 20.51 crore) by way of damages for
alleged wrongful disconnection of power supply and interest accrued
thereon Rs. 107.68 crore (31st March, 2011 - Rs.103.37 crore).
(iii) Rates, Cess, Way Leave Fees, Entry tax and Duty claims disputed
by the Company aggregating Rs. 68.90 crore (31st March, 2011 - Rs. 87.47
crore). In respect of certain dues as per the terms of an agreement,
the Company has the right to claim reimbursement from a third party.
(iv) Other claims against the Company not acknowledged as debts Rs. 32.54
crore (31st March, 2011 - Rs. 45.43 crore).
(v) Amounts in respect of employee related claims/disputes, regulatory
matters is not ascertainable.
No cash flow in respect of the above items is expected in the near
(b) Taxation matters for which liability, relating to issues of
deductibility and taxability, is disputed by the Company and provision
is not made (computed on the basis of assessments which have been
re-opened and assessments remaining to be completed) Rs. 113.85 crore
(including interest and penalty demanded Rs. 6.31 crore) [(31st March,
2011 - Rs.63.72 crore) (including interest and penalty demanded Rs.15.19
No Cash flow in respect of the above items is expected in the near
(ii) In terms of the Sponsor Support agreement entered into between the
Company, Coastal Gujarat Power Limited (CGPL) and lenders of CGPL, the
Company has undertaken to provide support by way of base equity
contribution to the extent of 25% of CGPL's project cost and additional
equity or subordinated loans to be made or arranged for, if required as
per the financing agreements to finance the project. The sponsor
support also includes support by way of additional equity for any
overrun in project costs and Debt Service Reserve Guarantee as provided
under the financing agreements. The support will cease on the date of
"financial completion" as defined under the relevant financing
agreements. Further, CGPL has entered into Agreements with the Company,
(i) for Additional Subordinated Loan to the extent of U.S. $ 50 million
(equivalent to Rs. 200.00 crore at a fixed rate of exchange of Rs.40.00 =
U.S. $ 1.00) and (ii) for Additional Subordinated Loans to the extent
of Rs. 1,600.00 crore. In accordance with these agreements the Company has
provided total Additional Subordinated Loans of Rs. 212.31 crore (31st
March, 2011 - Rs. 200.00 crore) to CGPL. Both the loans would be repaid
in accordance with the conditions of the Subordination and
Hypothecation Agreements either out of additional equity to be infused
by the Company or out of the balance Indian rupee term loans receivable
by CGPL in future period, after the fulfillment of conditions in the
Coal Supply and Transportation Agreements Completion Date (CSTACD)
The accrued interest as at 31st March, 2012 aggregating to Rs. 36.57
crore (31st March, 2011 - Rs.21.06 crore) on Additional Subordinated
Loans shall be payable subject to fulfillment of conditions in
Subordination Agreement and Coal Supply and Transportation Agreements
Completion Date (CSTACD) agreement.
(d) In respect of NELCO Limited, the Company has undertaken to arrange
for the necessary financial support to NELCO Limited in the form of
interim short term funding for meeting its business requirements.
(e) The Company has undertaken to arrange for the necessary financial
support to its Subsidiary Companies KIL and BHIL.
(f) In respect of the Standby Charges dispute with Reliance
Infrastructure Ltd. (R-lnfra) for the period from 1st April, 1999 to
31st March, 2004, the Appellate Tribunal of Electricity (ATE), set
aside the MERC Order dated 31st May, 2004 and directed the Company to
refund to R-lnfra as on 31st March, 2004, Rs. 354.00 crore (including
interest of Rs. 15.14 crore) and pay interest at 10% per annum
thereafter. As at 31st March, 2012 the accumulated interest was Rs.
173.56 crore (31st March, 2011 - Rs. 162.36 crore) (Rs. 11.20 crore for
the year ended 31st March, 2012). On appeal, the Hon'ble Supreme Court
vide its Interim Order dated 7th February, 2007, has stayed the ATE
Order and in accordance with its directives, the Company has furnished
a bank guarantee of the sum of Rs. 227.00 crore and also deposited Rs.
227.00 crore with the Registrar General of the Court which has been
withdrawn by R-lnfra on furnishing the required undertaking to the
Court. The said deposit has been accounted as "Long term Security
Further, no adjustment has been made for the reversal in terms of the
ATE Order dated 20th December, 2006 of Standby Charges credited in
previous year's estimated at Rs. 519.00 crore, which will be adjusted,
wholly by a withdrawal/set off from certain Statutory Reserves as
allowed by MERC. No provision has been made in the accounts towards
interest that may be finally determined as payable to R-lnfra. Since
1st April, 2004, the Company has accounted Standby Charges on the basis
determined by the respective MERC Tariff Orders.
The Company is of the view, supported by legal opinion, that the ATE's
Order can be successfully challenged and hence, adjustments, if any,
including consequential adjustments to the Deferred Tax Liability Fund
and the Deferred Tax Liability Account will be recorded by the Company
on the final outcome of the matter.
(g) MERC vide its Tariff Order dated 11th June, 2004, had directed the
Company to treat the investment in its wind energy project as outside
the Mumbai Licensed Area, consider a normative debt equity ratio of
70:30 to fund the Company's fresh capital investments effective 1st
April, 2003 and had also allowed a normative interest charge @ 10% p.a.
on the said normative debt. The change to the Clear Profit and
Reasonable Return (consequent to the change in the capital base) as a
result of the above mentioned directives for the period upto 31st
March, 2004, has been adjusted by MERC from the Statutory Reserves
along with the disputed Standby Charges referred to in Note 32(f)
above. Consequently, the effect of these adjustments would be made with
the adjustments pertaining to the Standby Charges dispute as mentioned
in Note 32(f) above.
(h) In an earlier year, in terms of the agreements entered into between
Tata Teleservices Ltd. (TTSL), Tata Sons Ltd. (TSL) and NTT DoCoMo,
Inc. of Japan (Strategic Partner-SP), the Company was given by TSL an
option to sell 2,72,82,177 equity shares in TTSL to the SP, as part of
a secondary sale of 25,31,63,941 equity shares effected along with a
primary issue of 84,38,79,801 shares by TTSL to the SP. Accordingly, in
an earlier year the Company had realized Rs. 316.72 crore on sale of
these shares resulting in a profit of Rs. 255.62 crore.
If certain performance parameters and other conditions are not met by
TTSL by 31st March, 2014 and should the SP decide to divest its entire
shareholding in TTSL, acquired under the primary issue and the
secondary sale and should TSL be unable to find a buyer for such
shares, the Company is obligated to acquire the shareholding of the SP,
at the higher of fair value or 50 percent of the subscription purchase
price, subject to compliance with applicable control regulations, in
proportion of the number of shares sold by the Company to the aggregate
of the secondary shares sold to the SP, or if the SP divests the shares
at a lower price pay a compensation representing the difference between
such lower sale price and the price referred to above.
Further, in the event of breach of the representations and warranties
(other than title and tax) and covenants not capable of specific
performance, the Company is liable to reimburse TSL, on a pro-rata
basis, upto a maximum sum of Rs. 409.51 crore.
The exercise of the option by SP being contingent on several variables,
the liability if any, is considered by Management to be remote and
(i) In accordance with the terms of the Share Purchase Agreement and
the Shareholder's Agreement entered into by Pantone Finevest Ltd.
(PFL), an associate of the Company, with the Government of India, PFL
has contractually undertaken a "Surplus Land" obligation including
agreeing to transfer 45% of the share capital of the Resulting Company,
at Nil consideration, to the Government of India and other selling
shareholders upon Demerger of the Surplus Land by Tata Communication
Limited (TCL).The Company has till date acquired 1,34,22,037 shares of
TCL from PFL. The Company would be entitled to be allotted 4.71% of the
share capital of the Resulting Company based on its holding of
1,34,22,037 shares of TCL. The Company has undertaken to PFL to bear
the "Surplus Land" obligation pertaining to these shares.
(j) The Company has a long term investment of Rs. 4,112.08 crore
(including advance towards equity) (31st March, 2011 - Rs. 3,172.50
crore) and has extended loans amounting to Rs. 248.88 crore (including
interest accrued) (31st March, 2011 Rs. 221.06 crore) to Coastal Gujarat
Power Limited (CGPL) a wholly owned subsidiary of the Company which is
implementing the 4000 MW Ultra Mega Power Project at Mundra ("Mundra
CGPL has agreed to not charge escalation on 55 percent of the cost of
coal in terms of the 25 year power purchase agreement relating to the
Mundra UMPP. As a result of the changes in the fuel prices, CGPL's
Management has assessed the recoverability of the carrying amount of
the assets under construction at Mundra as of 31st March, 2012 of Rs.
16,366.50 crore and concluded that the cash flows expected to be
generated (on completion of construction and commencement of commercial
operations) over the useful life of the asset of 40 years would not be
sufficient to recover the carrying amount of such assets and has
therefore recorded in CGPL's books as at 31st March, 2012, a provision
for an impairment loss of Rs. 1,800.00 crore.
In estimating the future cash flows. Management has, based on
externally available information, made certain assumptions relating to
the future fuel prices, future revenues, operating parameters and the
asset's useful life which Management believes reasonably reflects the
future expectation of these items. In view of the estimation
uncertainties, the assumptions will be monitored on a periodic basis
and adjustments will be made if external conditions relating to the
assumptions indicate that such adjustments are appropriate.
The Company's investments in Indonesian coal companies through its
wholly owned subsidiaries, Bhira Investments Limited and Khopoli
Investments Limited, were made to secure long term coal supply. The
Management believes that cash inflows (in the nature of profit
distribution) from these investments from an economic perspective
provide protection from the risk of price volatility on coal to be used
in power generation in CGPL, to the extent not covered by price
escalations. In order to provide protection to CGPL and to support its
cash flows, the Management has committed to a future restructuring
under which the Company will transfer at least 75 percent of its equity
interests in the Indonesian coal companies to CGPL, subject to receipt
of regulatory and other necessary approvals which are being pursued and
will also evaluate other alternative options.
Having regard to the overall returns expected from the Company's
investment in CGPL, including the proposed future restructuring no
provision for diminution in value of long term investment in CGPL is
considered necessary as at 31st March, 2012.
(k) Uncalled liability on partly paid up shares Rs. 13.33 crore (31st
March, 2011 - Rs. 31.03 crore).
8. (a) During the year, the Company has provisionally determined the
Statutory Appropriations and the adjustments to be . made on Annual
Performance Review as stipulated under the Multi Year Tariff
Regulations, 2011 for its operations in respect of the Mumbai Licensed
(b) During the year, Jharkhand State Electricity Regulatory Commission
(JSERC) for financial year 2011-12 has determined the Annual Revenue
Requirement (ARR) for Units 2 and 3 at Jojobera by treating the entire
capacity as regulated under JSERC (Terms and Conditions for
Determination of Generation Tariff) Regulations, 2010. The Company, on
the basis of legal opinions obtained, has appealed against the
disallowances/deviations at the Appellate Tribunal for Electricity
(ATE), pending disposal of which, a sum of Rs. 34.16 crore has been
accrued as revenue for the year ended 31st March, 2012.
(c) During the year, the Maharashtra Electricity Regulatory Commission
(MERC) has completed truing-up for the financial years 2009-10 and
2010-11 and has accordingly issued Tariff Orders. In these Tariff
Orders, it has disallowed certain claims made by the Company amounting
to Rs. 86.00 crore and Rs. 55.00 crore respectively. The Company intends to
appeal to the Appellate Tribunal for Electricity (ATE) against these
disallowances. Based on the earlier favorable ATE Order on similar
matters, the Company is confident of ATE allowing its claims and
accordingly, the above disallowances have not been recognized in the
(d) In the previous year, ATE in its Order dated 15th February, 2011,
had upheld amongst others the Company's claim towards entitlement of
carrying cost in respect of truing-up done by MERC for financial years
2004-05 and 2005-06. Accordingly, the Company had accounted for an
amount of X 86.00 crore as its entitlement of carrying cost in the
books during the previous year. Consequent to the truing-up Orders
issued by MERC for the financial years 2009-10 and 2010-11 during the
year ended 31st March, 2012, an additional amount of Rs. 65.00 crore has
9. In the matter of claims raised by the Company on R-lnfra, towards
(i) the difference in the energy charges for the period March 2001 to
May 2004 and (ii) for minimum off-take charges of energy for the period
1998 to 2000, MERC has issued an Order dated 12th December, 2007 in
favour of the Company. The total amount payable by R-lnfra, including
interest, is estimated to be Rs. 323.87 crore as on 31st December, 2007.
ATE in its Order dated 12th May, 2008 on appeal by R-lnfra, has
directed R-lnfra to pay the difference in the energy charges amounting
to Rs. 34.98 crore for the period March 2001 to May 2004. In respect of
the minimum off-take charges of energy for the period 1998 to 2000
claimed by the Company from R-lnfra, ATE has directed MERC that the
issue be examined afresh and after the decision of the Hon'ble Supreme
Court in the Appeals relating to the distribution license and rebates
given by R-lnfra. The Company and R-lnfra had filed appeals in the
Hon'ble Supreme Court. The Hon'ble Supreme Court, vide its Order dated
14th December, 2009, has granted stay against ATE Order and has
directed R-lnfra to deposit with the Hon'ble Supreme Court, a sum of Rs.
25.00 crore and furnish bank guarantee of Rs. 9.98 crore. The Company had
withdrawn the above mentioned sum subject to an undertaking to refund
the amount with interest, in the event the Appeal is decided against
the Company. On grounds of prudence, the Company has not recognized any
income arising from the above matters.
10. Employees Benefits:
(a) In an earlier year, the Company had adopted Accounting Standard 15
(AS-15) (Revised 2005) - 'Employee Benefits'. This had resulted in a
transitional liability (net) of Rs.61.70 crore as at 1st April, 2007. In
accordance with the transitional provisions of the Accounting Standard,
the Company had decided to charge the transitional liability as an
expense over a period of 5 years and accordingly, Rs. 2.28 crore (31st
March, 2011 - Rs. 22.40 crore) has been recognized as an expense for the
year under item 1 of Note "24" and balance amount of Rs. Nil (31st March,
2011 - Rs. 2.28 crore) is the unrecognized transitional liability as at
31st March, 2012.
(b) The Company makes contribution towards provident fund and
superannuation fund to a defined contribution retirement benefit plan
for qualifying employees. The provident fund is administered by the
Trustees of Tata Power Consolidated Provident Fund and the
Superannuation Fund is administered by the Trustees of Tata Power
Superannuation Fund. Under the Schemes, the Company is required to
contribute a specified percentage of salary to the retirement benefit
schemes to fund the benefit.
The Rules of the Company's Provident Fund administered by a Trust
require that if the Board of Trustees are unable to pay interest at the
rate declared by the Central Government under para 60 of the Employees'
Provident Fund Scheme, 1952, then the shortfall shall be made good by
the Company. Having regard to the assets of the fund and the return on
the investments, the Company does not expect any shortfall in the
On account of defined contribution plans, a sum of Rs. 26.99 crore (31st
March, 2011 - Rs.29.69 crore) has been charged to the Statement of
Profit and Loss.
(c) The Company operates the following unfunded/funded defined benefit
(i) Ex-Gratia Death Benefits
(ii) Retirement Gifts
(iii) Post Retirement Medical Benefits and
(d) The actuarial valuation of the present value of the defined benefit
obligation has been carried out as at 31st March, 2012. The following
tables set out the amounts recognized in the financial statements as at
31st March, 2012 for the above mentioned defined benefit plans:
(i) Net employee benefit expense (recognized in employee cost) for the
year ended 31st March, 2012:
During the year the Company has paid Rs.40.00 crore to Tata Power
Gratuity Fund. Of the payment of Rs.40.00 crore, Rs. 15.00 crore towards
the current year liability and 125.00 crore towards the Opening
Liability. The balance of the Opening Liability to be funded over a
period of 4 years and hence previous year's figures are not applicable
to the Company.
- Discount rate is based on the prevailing market yields of Indian
Government Securities as at the Balance Sheet date for the estimated
term of the obligation.
- The estimates of future salary increases, considered in actuarial
valuation, take account of the inflation, seniority, promotion and
other relevant factors.
(vi) The contribution expected to be made by the Company during the
financial year 2012-13 has not been ascertained.
11. In respect of the contracts pertaining to the Strategic
Electronics Business and Project Management Services, disclosures
required as per AS-7 (Revised) are as follows:
(a) Contract revenue recognized as revenue during the year Rs. 310.74
crore (31st March, 2011 - Rs. 163.26 crore).
(b) In respect of contracts in progress -
(i) The aggregate amount of costs incurred and recognized profits upto
31st March, 2012 - Rs. 254.50 crore (31st March, 2011- Rs.759.94 crore).
(ii) Advances and progress payments received as at 31st March, 2012 - Rs.
313.01 crore (31st March, 2011 - Rs.244.24 crore).
(iii) Retention money included as at 31st March, 2012 in Sundry Debtors
- Rs. 12.46 crore (31st March, 2011 - Rs.8.39 crore)
(c) (i) Gross amount due to customers for contract work as a liability
as at 31st March, 2012 - Rs. 219.45 crore (31st March, 2011 - Rs. 181.49
(ii) Gross amount due from customers for contract work as an asset as
at 31st March, 2012 - Rs. 99.32 crore (31st March, 2011- f66.63 crore).
12. (a) Total number of electricity units sold and purchased during
the year as certified by Management - 15,240 MUs (31st March, 2011 -
16,060 MUs) and 1,042 MUs (31st March, 2011 -1,510 MUs).
The above loans and advances are long term in nature.
** Excluding interest accrued.
### Right to convert to equity and sub-ordinate loan.
& Provided for.
Note: Previous year's figures are in italics.
13. Derivative instruments and unheeded foreign currency exposures:
(i) Derivative instruments:
The following derivative positions are open as at 31st March, 2012.
These transactions have been undertaken to act as economic hedges for
the Company's exposures to various risks in foreign exchange markets
and may/may not qualify or be designated as hedging instruments. The
accounting for these transactions is stated in Note 2.1 (o) and 2.1
(p). Forward exchange contracts (being derivative instrument), which
are not intended for trading or speculative purposes but for hedge
purposes to establish the amount of reporting currency required or
available at the settlement date of certain payables and receivables.
14. The Revised Schedule VI has become effective from 1st April, 2011
for the preparation of financial statements. This has significantly
impacted the disclosure and presentation made in the financial
statements. Previous year's figures have been regrouped/reclassified
wherever necessary to correspond with the current year's
classification/disclosure. Figures below Rs. 50,000 are denoted by