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NOTES TO ACCOUNTS

NTPC Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 139315.37 Cr. P/BV 1.35 Book Value (₹) 104.67
52 Week High/Low (₹) 150/107 FV/ML 10/1 P/E(X) 13.21
Bookclosure 20/03/2019 EPS (₹) 10.66 Div Yield (%) 3.64
Year End :2018-03 

1.    Formulation of accounting policies

The accounting policies are formulated in a manner that results in financial statements containing relevant and reliable information about the transactions, other events and conditions to which they apply. Those policies need not be applied when the effect of applying them is immaterial.

2.    Useful life of property, plant and equipment and intangible assets

The estimated useful life of property, plant and equipment and intangible assets is 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 of the generation of electricity business is determined by the CERC Tariff Regulations in accordance with Schedule II of the Companies Act, 2013.

The Company reviews at the end of each reporting date the useful life of assets, other than the assets of generation of electricity business which are governed by CERC Regulations, and are adjusted prospectively, if appropriate.

3.    Recoverable amount of property, plant and equipment and intangible assets

The recoverable amount of property, plant and equipment and intangible assets is based on estimates and assumptions regarding 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 and could result in impairment.

4.    Post-employment 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 increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate and documented. However, any changes in these assumptions may have a material impact on the resulting calculations.

5.    Revenues

The Company records revenue from sale of energy based on tariff rates approved by the CERC as modified by the orders of Appellate Tribunal for Electricity, as per principles enunciated under Ind AS 18. However, in cases where tariff rates are yet to be approved, provisional rates are adopted considering the applicable CERC Tariff Regulations.

6.    Leases not in legal form of lease

Significant judgment is required to apply lease accounting rules under Appendix C to Ind AS 17 ‘Determining whether an arrangement contains a lease'. In assessing the applicability to arrangements entered into by the Company, management has exercised judgment to evaluate the right to use the underlying asset, substance of the transactions including legally enforceable agreements and other significant terms and conditions of the arrangements to conclude whether the arrangement needs the criteria under Appendix C to Ind AS 17.

7.    Assets held for sale

Significant judgment is required to apply the accounting of non-current assets held for sale under Ind AS 105 ‘Non-current assets held for sale and discontinued operations'. In assessing the applicability, management has exercised judgment to evaluate the availability of the asset for immediate sale, management's commitment for the sale and probability of sale within one year to conclude if their carrying amount will be recovered principally through a sale transaction rather than through continuing use.

8.    Regulatory deferral account balances

Recognition of regulatory deferral account balances involves significant judgments including about future tariff regulations since these are based on estimation of the amounts expected to be recoverable/payable through tariff in future.

9.    Provisions and contingencies

The assessments undertaken in recognizing 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 required best judgment by management regarding the probability of exposure to potential loss. Should circumstances change following unforeseeable developments, this likelihood could alter.

10.    Impairment test of non-financial assets

The recoverable amount of investment in joint ventures companies is based on estimates and assumptions regarding in particular the future cash flows associated with the operations of the investee Company. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairment.

11.    Income taxes

Significant estimates are involved in determining the provision for income taxes, including amount expected to be paid/ recovered for uncertain tax positions.

a)    The convincing of the title to 10,126 acres of freehold land of value Rs, 1,900.82 crore (31 March 2017: 9,235 acres of value Rs, 1,940.44 crore), buildings and structures of value Rs, 4.97 crore (31 March 2017: Rs, 4.97 crore) and also execution of lease agreements for 10,824 acres of land of value Rs, 1,804.49 crore (31 March 2017: 12,570 acres of value Rs, 1,869.67 crore) in favour of the Company are awaiting completion of legal formalities.

b)    Land includes 284.35 acres of freehold land of value Rs, 0.52 crore (31 March 2017: 284.35 acres of value Rs, 0.52 crore), and 1,939.55 acres of leasehold land of value Rs, 3.81 crore (31 March 2017: 2,026.96 acres of value Rs, 3.68 crore), the value thereof including periodical lease rent accruing thereon is subject to revision on final settlement with the State Government Authorities with demand of late payment charges, if any.

c)    Land does not include value of 34 acres (31 March 2017: 34 acres) of land in possession of the Company. This will be accounted for on settlement of the price thereof by the State Government Authorities.

d)    Land includes 1,298 acres of value Rs, 133.93 crore (31 March 2017: 1,295 acres of value Rs, 155.37 crore) not in possession of the Company. The Company is taking appropriate steps for repossession of the same.

e)    Land includes an amount of Rs, 262.91 crore (31 March 2017: Rs, 262.91 crore) deposited with various authorities in respect of land in possession which is subject to adjustment on final determination of price.

f)    Gross block of land under submergence represents Rs, 576.64 crore (31 March 2017: Rs, 552.52 crore) of freehold land and Rs, 178.83 crore (31 March 2017: Rs, 180.31 crore) of leasehold land. The land has been amortized considering the rate of depreciation provided by the CERC in the tariff regulations and the fact that it will not have any economic value due to deposit of silt and other foreign materials.

g)    Possession of land measuring 98 acres (31 March 2017: 98 acres) consisting of 79 acres of freehold land (31 March 2017: 79 acres) and 19 acres of lease hold land (31 March 2017: 19 acres) of value Rs, 0.21 crore (31 March 2017: Rs, 0.21 crore) was transferred to Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd. (erstwhile UPSEB) for a consideration of Rs, 0.21 crore. Pending approval for transfer of the said land, the area and value of this land has been included in the total land of the Company. The consideration received from erstwhile UPSEB is disclosed under Note 30 - Current liabilities - Other financial liabilities.

h)    Refer Note 56 (b) regarding property, plant and equipment under finance lease.

i)    Based on impairment assessment, the Company has reversed an impairment loss of Rs, 3.75 crore (31 March 2017: Rs, 0.73 crore) during the year in respect of plant and equipment of a Solar PV Station of the Company. Refer Note 63 (a).

j) Spare parts, stand-by equipment and servicing equipment of Rs, 5 lakh and above which meet the definition of property, plant and equipment are capitalized.

k) Refer Note 22 for information on property, plant and equipment pledged as security by the Company.

l) Refer Note 74 (C) (a) for disclosure of contractual commitments for the acquisition of property, plant and equipment.

m) Deduction/adjustments from gross block and depreciation, amortization and impairment for the year includes:

a)    Construction stores are net of provision for shortages pending investigation amounting to Rs, 26.26 crore (31 March 2017: Rs, 14.06 crore).

b)    Pre-commissioning expenses for the year amount to Rs, 544.39 crore (31 March 2017: Rs, 384.87) and after adjustment of pre-commissioning sales of Rs, 77.40 crore (31 March 2017: Rs, 43.06 crore) resulted in net pre-commissioning expenditure of Rs, 466.99 crore (31 March 2017: Rs, 341.81 crore).

c)    Additions to the development of coal mines include expenditure during construction period (net) of Rs, 668.37 crore (31 March 2017: Rs, 335.36 crore) - [Ref. Note 43] and are after netting off the receipts from coal extracted during the development phase amounting to Rs, 464.03 crore (31 March 2017: (-) Rs, 20.82 crore).

d)    Details of exchange differences and borrowing costs capitalized are disclosed in Note 2 (n).

a)    The right of use of land and others are amortized over the period of legal right to use or life of the related plant, whichever is less.

b)    Cost of acquisition of the right for drawl of water amounting to Rs, 203.71 crore (31 March 2017: Rs, 203.71 crore) is included under intangible assets - Right of use - Others.

c)    Deductions/adjustments from gross block and amortization for the year includes:

a)    Investments have been valued as per accounting policy no. C.26.1 (Note 1).

b)    The Board of Directors of NTPC Limited in its meeting held on 28 April 2016 accorded in principle approval for withdrawal from NTPC BHEL Power Projects Private Ltd. (NTPC-BHEL), a Joint Venture of the Company. As NTPC-BHEL was formed by a directive from the GOI, approval of exit from GOI is awaited. Pending withdrawl, provision of Rs, 45.59 crore (31 March 2017: Rs, 28.68 crore) for impairment in the value of investment has been recognized based on the unaudited accounts of NTPC-BHEL as at 31 March 2018.

c)    The Board of Directors of NTPC Limited in its meeting held on 19 June 2014 accorded in principle approval for withdrawal from BF-NTPC Energy Systems Ltd. (BF-NTPC), a joint venture of the Company. As BF-NTPC was formed by a directive from the GOI, approval of the GOI was sought for exit by NTPC Limited. GOI has suggested to wind up BF-NTPC and NTPC Limited has given its consent for winding up. Approval of the GOI has been accorded on 8 January 2018. The winding up of the joint venture is under process. Pending winding-up, provision of Rs, 4.43 crore (31 March 2017: Rs, 3.75 crore) for impairment in the value of investment has been recognized based on the unaudited accounts of BF-NTPC as at 31 March 2018.

d)    The Board of Directors of NTPC Limited in its meeting held on 28 April 2016 accorded in principle approval for withdrawal from Transformers and Electricals Kerala Ltd. (TELK), a Joint Venture of the Company. GOI has accorded its approval for exit of NTPC from the joint venture. The decison of the Board of Directors of NTPC Limited and approval of GOI has been conveyed to the Government of Kerala (JV Partner) & TELK. The government of Kerala has requested NTPC to review the decision. The matter is under examination. Pending decision in this regard, no provision for impairment in the value of investment in TELK is required to be recognized.

e)    The Company had an investment of Rs, 974.30 crore as at 31 March 2017 in the equity shares of Ratnagiri Gas and Power Private Ltd., a joint venture of the Company (RGPPL). During the year, the National Company Law Appellate Tribunal (‘NCLAT') has approved the demerger scheme of Ratnagiri Gas and Power Private Ltd., (‘Demerged Company') with effective date of 1 January 2016 as a result of which all the assets and liabilities of the LNG Terminal (‘demerged undertaking') have been transferred to Konkan LNG Private Ltd. (‘Resulting Company') (KLPL) at book values.

Consequent to demerger, the Resulting Company has allotted equity shares of face value of Rs, 10/- each equivalent to the share entitlement ratio of 143:1000 for each equity shares held in Demerged Company i.e. 13,97,52,264 equity shares of Rs, 10/- each to the Company. Accordingly, the Company has reduced its investment in RGPPL by Rs, 139.75 crore and has recorded ‘Investment in Konkan LNG Private Ltd.' with the same amount.

As required by Ind AS 36, an assessment of impairment of the investment in RGPPL was carried out by an independent expert in the previous year and an loss on the investment in RGPPL amounting to Rs, 782.95 Crore was provided and the same was disclosed as ‘Exceptional items - Impairment loss on investments' in the statement of profit and loss for the year ended 31 March 2017. Consequent to demerger Scheme, the provision for impairment loss in the equity investment of RGPPL of Rs, 782.95 crore as at 31 March 2017 has been bifurcated between RGPPL and KLPL at Rs, 643.20 crore and Rs, 139.75 crore respectively. Refer Note 63 (b).

Based on the above, the impairment loss recognized in the previous year and disclosed under exceptional items, has been written back to the extent of Rs, 26.15 crore thereby reducing the provision for impairment loss in the value of investments in RGPPL to Rs, 617.05 crore. Consequently, the carrying value of investments in RGPPL is Rs, 217.50 crore.

f)    Restrictions for the disposal of investments held by the Company and commitments towards certain subsidiary & joint venture companies are disclosed in Note 74 (C) (b) and (c).

a)    Investments have been valued as per accounting policy no. C.26.1 (Note 1).

b)    The Board of Directors of NTPC Limited in its meeting held on 28 April 2016 accorded in principle approval for withdrawal from PTC India Ltd. (PTC). As the Company was formed by a directive from the GOI, approval of the GOI is awaited for exit by NTPC Limited.

c)    The Board of Directors of NTPC Limited in its meeting held on 27 January 2012 accorded in principle approval for withdrawal from International Coal Ventures Private Ltd. (ICVPL). As the Company was formed by a directive from the GOI, approval of the GOI is awaited for exit by NTPC Limited. Pending withdrawal, the Company had lost the joint control over the entity and accordingly, has classified the investment in ICVPL as ‘Investment in unquoted equity instruments'. Pending withdrawl, no provision for impairment in the value of investment in ICVPL is required to be made.

d)    The Company is of the view that provisions of Ind AS 24 ‘Related Party Disclosures' and Ind AS 111 ‘Joint Arrangements' are not applicable to the investments made in PTC India Ltd. and International Coal Ventures Private Ltd., and the same has been accounted for as per the provisions of Ind AS 109 ‘Financial Instruments'.

e)    No strategic investments in equity instruments measured at FVTOCI were disposed during the financial year 2017-18, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

c)    Other loans represent loan of Rs, 25.07 crore (31 March 2017: Rs, 50.34 crore) given to Andhra Pradesh Industrial Infrastructure Corporation Ltd. (APIIC).

d)    Details of collateral held as security:

-    Loans to the employee are secured against the mortgage of the house properties and hypothecation of vehicles for which such loans have been given in line with the policies of the Company.

-    Loan to APIIC is secured by a guarantee given by the Government of Andhra Pradesh vide GO dated 3 April 2003.

a)    The shares are expected to be allotted within 60 days from the date of payment of the share application money.

b)    Claims recoverable includes Rs, 680.11 crore (31 March 2017: Rs, 619.34 crore) towards the cost incurred upto 31 March 2018 in respect of one of the hydro power projects, the construction of which has been discontinued on the advice of the Ministry of Power (MOP), GOI which includes Rs, 390.59 crore (31 March 2017: Rs, 332.38 crore) in respect of arbitration awards challenged by the Company before Hon'ble High Court. In the event the Hon'ble High Court grants relief to the Company, the amount would be adjusted against Current liabilities - Provisions - Provision for others (Note 32). Management expects that the total cost incurred, anticipated expenditure on the safety and stabilization measures, other recurring site expenses and interest costs as well as claims of contractors/vendors for various packages for this project will be compensated in full by the GOI. Hence, no provision is considered necessary.

c)    Keeping in view the provisions of Appendix C to Ind AS 17 ‘Leases' w.r.t. determining whether an arrangement contains a lease, the Company had ascertained that the Power Purchase Agreement (PPA) entered into for Stage I of a power station with the beneficiary falls under the definition of finance lease. Accordingly, the written down value of the specified assets had been derecognized from PPE and accounted for as Finance lease receivable (FLR) as at the transition date to Ind AS. Recovery of capacity charges towards depreciation (including AAD), interest on loan capital and return on equity (pre-tax) components from the beneficiary are adjusted against the FLR. The interest component of the FLR and amount received on account of revision of tariff of previous periods in respect of the above three elements are recognized as ‘Interest income on assets under finance lease' under ‘Revenue from operations' (Note 36).

a)    I n line with accounting policy no. 15 (Note 1), deferred foreign currency fluctuation asset has been accounted and (-) Rs, 128.39 crore (31 March 2017: (-) Rs, 233.80 crore) being the exchange fluctuations on account of foreign currency loans have been recognized in ‘Energy sales' under ‘Revenue from operations' (Note 36).

b)    Capital advances include amounts given as advance against works to the following private companies (related parties) in which one or more directors of the Company are directors:

c)    Capital advances include Rs, 224.29 crore (31 March 2017: ' 224.29 crore), paid to a contractor pending settlement of certain claims which are under arbitration. The amount will be adjusted in the cost of related work or recovered from the party, depending upon the outcome of the arbitration proceedings.

d)    Advances to contractors and suppliers include payments to Railways amounting to Rs, 2,226.22 crore (31 March 2017: Rs, 2,226.22 crore) under customer funding model as per policy on ‘Participative model for rail-connectivity and capacity augmentation projects' issued by the Ministry of Railways, GOI. As per the policy, an agreement has been signed between the Company and the Ministry of Railways, GOI on 6 June 2016. As per the agreement, railway projects agreed between the Company and Railways will be constructed, maintained and operated by Railways and ownership of the line and its operations and maintenance will always remain with them. Railways will pay up to 7% of the amount invested through freight rebate on freight volumes every year till the funds provided by the Company are fully recovered along-with 5% interest after commercial operation date (COD) of the railway projects. The railway projects as per the agreement are yet to achieve the COD.

e)    Capital advance are secured against the hypothecation of the construction equipment/material supplied by the contractors/suppliers.

f)    Loans given to employees are measured at amortized cost. The deferred payroll expenditure represents the benefits accruing to employees. The same is amortized on a straight-line basis over the remaining period of the loan.

* Refer Note 21 d) regarding fly ash utilization reserve fund.

** Out of advance for DDUGJY Scheme of the GOI. Refer Note 30 (c) and 31 (a).

a) Deposits with original maturity of more than three months and maturing within one year include Rs, 1,743.89 crore (31 March 2017: Rs, 955.33 crore) which has been kept in corporate liquid term deposits with bank. These deposits represents unutilized balance of Medium Term Notes (MTNs) as per MTN programme to partly finance the capital expenditure of ongoing and/or new power projects, coal mining projects, and/or renovation and modernization of power stations and can be utilized only for the stated purposes.

c)    Other loans represent loans of Rs, 0.89 crore (31 March 2017: Rs, 5.00 crore) given to APIIC.

d)    Details of collateral held as security:

-    Loans to the employee are secured against the mortgage of the house properties and hypothecation of vehicles for which such loans have been given in line with the policies of the Company.

-    Loan to APIIC is secured by a guarantee given by the Government of Andhra Pradesh vide GO dated 3 April 2003.

a)    Security deposits (unsecured) include Rs, 27.73 crore (31 March 2017: Rs, 63.31 crore) towards sales tax deposited with sales/ commercial tax authorities, Rs, 272.76 crore (31 March 2017: Rs, 346.30 crore) deposited with Courts, Rs, 177.47 crore (31 March 2017: Rs, 177.06 crore) deposited with LIC for making annuity payments to the land oustees, Rs, 275.05 crore (31 March 2017: Rs, 275.05 crore) deposited with the Water Resource Department, Govt. of Chhattisgarh for drawl of water and Rs, 158.50 crore (31 March 2017: Rs, Nil) deposited against bank guarantee with one of the party as per the direction of the Hon'ble Supreme Court of India, refer Note 56 (b).

b)    Advances - Contractors and suppliers - unsecured includes an amount of Rs, 5,000.00 crore (31 March 2017: Rs, Nil) paid to Indian Railways during the year, towards advance railway freight to be adjusted against freight payable on coal transportation during the year 2018-19 pursuant to an agreement entered into with Indian Railways, Ministry of Railways, GOI.

c)    Advances - Others include prepaid expenses amounting to Rs, 87.39 crore (31 March 2017: Rs, 88.43 crore) and unamortized discount on commercial paper amounting to Rs, 88.40 crore (31 March 2017: Rs, 21.89 crore).

d)    Advances - Related parties include amounts due from the following private companies in which one or more directors

e)    Loans given to employees are measured at amortized cost. The deferred payroll expenditure represents the benefits accruing to employees. The same is amortized on a straight-line basis over the remaining period of the loan.

f)    In the previous year figures, an amount of Rs, 588.10 crore has been regrouped from Advances - Contractors and suppliers - unsecured to Advances - Related parties - Unsecured, to enhance comparability with the current year's financial statements.

Capital reserve represents amount received by the Company during 2001-02 as consideration under settlement for withdrawal from an erstwhile JV project. There is no movement in the capital reserve balance during the year.

Securities premium account is used to record the premium on issue of shares/securities. This amount is utilized in accordance with the provisions of the Companies Act, 2013. There is no movement in the securities premium account balance during the year.

In accordance with applicable provisions of the Companies Act, 2013 read with Rules and as per decision of Board of Directors, the Company has created Debenture Redemption Reserve out of profits of the Company @ 50% of the value of debentures on a prudent basis, every year in equal installments till the year prior to the year of redemption of debentures/bonds for the purpose of redemption of debentures/bonds.

Pursuant to Gazette Notification dated 3 November 2009, issued by the Ministry of Environment and Forest (MOEF), Government of India (GOI), the amount collected from sale of fly ash and fly ash based products should be kept in a separate account head and shall be utilized only for the development of infrastructure or facility, promotion & facilitation activities for use of fly ash until 100 percent fly ash utilization level is achieved.

During the year, proceeds of Rs, 131.02 crore (31 March 2017: Rs, 108.42 crore) from sale of ash/ash products, Rs, 26.74 crore (31 March 2017: Rs, 27.63 crore) towards income on investment have been transferred to fly ash utilization reserve fund. An amount of Rs, 83.23 crore (31 March 2017: Rs, 57.58 crore) has been utilized from the fly ash utilization reserve fund on expenses incurred for activities as specified in the aforesaid notification of MOEF.

The fund balance of Rs, 631.21 crore (31 March 2017: Rs, 556.68 crore) has been kept in ‘Bank balances other than cash & cash equivalents' (Note 15).

a)    Details of terms of repayment and rate of interest

i)    Unsecured foreign currency loans (guaranteed by GOI) - Others carry fixed rate of interest ranging from 1.80% p.a. to 2.30% p.a. and are repayable in 17 to 26 semi annual installments as of 31 March 2018.

ii)    Unsecured foreign currency loans - Banks include loans of Rs, 352.80 crore (31 March 2017: Rs, 463.02 crore) which carry fixed rate of interest of 1.88% p.a. to 4.31% p.a. and loans of Rs, 8,146.27 crore (31 March 2017: Rs, 7,319.45 crore) which carry floating rate of interest linked to 6M USD LIBOR/6 M JPY LIBOR. These loans are repayable in 2 to 21 semi-annual/annual installments as of 31 March 2018, commencing after moratorium period if any, as per the terms of the respective loan agreements.

iii)    Unsecured foreign currency loans - Others include loans of Rs, 3,342.55 crore (31 March 2017: Rs, 3,300.64 crore) which carry fixed rate of interest ranging from 1.88% p.a. to 4.31% p.a. and loans of Rs, 123.58 crore (31 March 2017: Rs, 216.21 crore) which carry floating rate of interest linked to 6M EURIBOR. These loans are repayable in 4 to 22 semi annual installments as of 31 March 2018, commencing after moratorium period if any, as per the terms of the respective loan agreements.

iv)    Unsecured rupee term loans carry interest rate ranging from 6.571% p.a. to 8.76% p.a. with monthly/half-yearly rests. These loans are repayable in quarterly/half-yearly/yearly installments as per the terms of the respective loan agreements. The repayment period extends from a period of 7 to 16 years after a moratorium period of 3 to 6 years.

b)    The finance lease obligations are repayable in installments as per the terms of the respective lease agreements generally

over a period of 4 to 99 years.

c)    There has been no default in repayment of any of the loans or interest thereon as at the end of the year.

I    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of title deeds of the immovable properties pertaining to National Capital Power Station.

II    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Hypothecation of all the present and future movable assets (excluding receivables) of Singrauli Super Thermal Power Station, Anta Gas Power Station, Auraiya Gas Power Station, Barh Super Thermal Power Project, Farakka Super Thermal Power Station, Kahalgaon Super Thermal Power Station, Koldam Hydel Power Project, Simhadri Super Thermal Power Project, Sipat Super Thermal Power Project, Talcher Thermal Power Station, Talcher Super Thermal Power Project, Tanda Thermal Power Station, Vindhyachal Super Thermal Power Station, National Capital Power Station, Dadri Gas Power Station, Feroze Gandhi Unchahar Power Station and Tapovan-Vishnugad Hydro Power Project as first charge, ranking pari passu with charge, if any, already created in favour of the Company's Bankers on such movable assets hypothecated to them for working capital requirement.

III    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage of the immovable properties, on first pari passu charge basis, pertaining to Sipat Super Thermal Power Project by extension of charge already created.

IV    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of the title deeds of the immovable properties pertaining to Sipat Super Thermal Power Project.

V    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai, (II) Hypothecation of all the present and future movable assets (excluding receivables) of Barh Super Thermal Power Project on first pari passu charge basis, ranking pari passu with charge already created in favour of Trustee for other Series of Bonds and (III) Equitable mortgage of the immovable properties, on first pari passu charge basis, pertaining to Ramagundam Super Thermal Power Station by extension of charge already created.

VI    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of title deeds of the immovable properties pertaining to Ramagundam Super Thermal Power Station.

VII    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage of the immovable properties, on first pari passu charge basis, pertaining to National Capital Power Station by extension of charge already created.

VIII    Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai, (II) Hypothecation of all the present and future movable assets (excluding receivables) of Singrauli Super Thermal Power Station, Anta Gas Power Station, Auraiya Gas Power Station, Barh Super Thermal Power Project, Farakka Super Thermal Power Station, Kahalgaon Super Thermal Power Station, Koldam Hydel Power Project, Simhadri Super Thermal Power Project, Sipat Super Thermal Power Project, Talcher Thermal Power Station, Talcher Super Thermal Power Project, Tanda Thermal Power Station, Vindhyachal Super Thermal Power Station, National Capital Power Station, Dadri Gas Power Station, Feroze Gandhi Unchahar Power Station and Tapovan-Vishnugad Hydro Power Project as first charge, ranking pari passu with charge, if any, already created in favour of the Company's Bankers on such movable assets hypothecated to them for working capital requirement and (III) Equitable mortgage of the immovable properties, on first pari passu charge basis, pertaining to Singrauli Super Thermal Power Station by extension of charge already created.

IX    Secured by English mortgage of the immovable properties pertaining to Solapur Super Thermal Power Project on first charge basis.

X    Secured by Equitable mortgage of the immovable properties pertaining to Barh Super Thermal Power Project on first charge basis.

XI    Secured by English mortgage, on pari passu charge basis, of the immovable properties pertaining to Solapur Super Thermal Power Project.

XII    Secured by Equitable mortgage, on pari passu charge basis, of the immovable properties pertaining to Barh Super Thermal Power Project.

XIII    Secured by Equitable mortgage of the immovable properties pertaining to Vindhyachal Super Thermal Power Station on first charge basis.

XIV    Security cover mentioned at Sl. No. I to XIII is above 100% of the debt securities outstanding.

a)    Deferred tax assets and deferred tax liabilities have been offset as they relate to the same governing laws.

b)    CERC Regulations, 2014 provide for recovery of deferred tax liability as on 31 March 2009 from the beneficiaries. Accordingly, deferred tax liability as on 31 March 2009 is recoverable on materialization from the beneficiaries. For the period commencing from 1 April 2014, CERC Regulations, 2014 provide for grossing up of the return on equity based on effective tax rate for the financial year based on the actual tax paid during the year on the generation income. Deferred asset for deferred tax liability for the period commencing from 1 April 2014 will be reversed in future years when the related deferred tax liability forms part of current tax.

c)    Disclosures as per Ind AS 12 ‘Income Taxes' are provided in Note 55.

a)    Details in respect of rate of interest and terms of repayment of current maturities of secured and unsecured non-current borrowings indicated above are disclosed in Note 22.

b)    Unpaid dividends, matured deposits, bonds and interest include the amounts which have either not been claimed by the investors/holders of the equity shares/bonds/fixed deposits or are on hold pending legal formalities etc. Out of the above, the amount required to be transferred to Investor Education and Protection Fund has been transferred.

c)    Other payable - Others mainly includes Rs, 263.10 crore (31 March 2017: Rs, 238.93 crore) towards the implementation of Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) Scheme of the GOI being carried out by the Company. The funds for the implementation of these schemes are provided by the agencies nominated by the GOI in this regard. Further, other payable - others also include Rs, 211.49 crore (31 March 2017: Rs, 120.75 crore) payable to the Department of Water Resource, Government of Odisha and amount payable to hospitals, parties for stale cheques etc.

d)    The Company had obtained exemption from the Ministry of Corporate Affairs (MCA), GOI in respect of applicability of Section 58A from the erstwhile Companies Act, 1956 in respect of deposits held from the dependent of employees who die or suffer permanent total disability under the ‘Employees Rehabilitation Scheme' (said amount is included in Other payable - Others). Consequent upon enactment of the Companies Act, 2013, the Company has written to the MCA for clarification on continuation of above exemption granted earlier, which is still awaited. The Company has been advised that the amount accepted under the Scheme is not a deposit under the Companies Act, 2013.

e)    Payable for capital expenditure include Rs,159.23 crore (31 March 2017: Rs, 146.13 crore) payable to MSME vendors. Detailed disclosures as required under MSMED Act, 2006 are provided in Note 72.

f)    Amounts payable to related parties are disclosed in Note 60.

g)    I n the previous year figures, an amount of Rs, 240.14 crore has been regrouped from Payable to customers to Other payables - Others, to enhance comparability with the current year's financial statements.

Advance received for the DDUGJY (including interest thereon) of Rs, 313.97 crore (31 March 2017: Rs, 597.75 crore) is included in ‘Advance from customers and others'. Refer Note 30 c). Tax deducted at source on the interest is included in ‘Advance tax and tax deducted at source' - Note 11.

a)    Disclosures required by Ind AS 19 ‘Employee Benefits' are provided in Note 57.

b)    Disclosures required by Ind AS 37 ‘Provisions, Contingent Liabilities and Contingent Assets' are made in Note 64.

c)    The pay revision of the employees of the Company is due w.e.f. 1 January 2017. Department of Public Enterprises, GOI (DPE) had constituted the 3rd Pay Revision Committee (PRC) to review the structure of pay scales and allowances/benefits of various categories of Central Public Sector Enterprises. Based on the recommendations of the 3rd PRC, DPE has issued broad guidelines for pay revision. Based on the proposal of the Company to GOI on 6 September 2017, presidential directive has been issued on 10 May 2018. Presidential directive states adherence of relevant DPE guidelines which requires approval of the Board of Directors (BOD) of the Company. Pending approval by the BOD, provision for pay revision has been recognized on an estimated basis amounting to Rs,1,203.28 crore as at 31 March 2018 (31 March 2017: Rs, 260.24 crore).

d)    The Company aggrieved over many of the issues considered by the CERC in the tariff orders for its stations for the period 2004-09 had filed appeals with the Appellate Tribunal for Electricity (APTEL). The APTEL disposed off the appeals favorably directing the CERC to revise the tariff orders as per directions and methodology given. Some of the issues decided in favour of the Company by the APTEL were challenged by the CERC in the Hon'ble Supreme Court of India. Subsequently, the CERC has issued revised tariff orders for all the stations except one for the period 2004-09, considering the judgment of APTEL subject to disposal of appeals pending before the Hon'ble Supreme Court of India.

The Hon'ble Supreme Court of India has dismissed the appeal filed by the CERC and accordingly the directions of APTEL to CERC stands good. Keeping in view the above, the provision created amounting to Rs, 1,156.32 crore made till 31 March 2017 towards anticipated tariff adjustments, has been written back during the year.

e)    Provision for others mainly comprise Rs, 73.15 crore (31 March 2017: Rs, 68.24 crore) towards cost of unfinished minimum work programme demanded by the Ministry of Petroleum and Natural Gas (MoP&NG) including interest thereon in relation to block AA-ONN-2003/2 (Refer Note 65), Rs, 1,279.31 crore (31 March 2017: Rs, 640.25 crore) towards provision for cases under litigation and Rs, 4.62 crore (31 March 2017: Rs, 1.81 crore) towards provision for shortage in property, plant and equipment on physical verification pending investigation.

a)    Advance against depreciation (AAD) was an element of tariff provided under the Tariff Regulations for 2001-04 and 2004-09 to facilitate debt servicing by the generators since it was considered that depreciation recovered in the tariff considering a useful life of 25 years is not adequate for debt servicing. Though this amount is not repayable to the beneficiaries, keeping in view the matching principle, and in line with the opinion of the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI), this was treated as deferred revenue to the extent depreciation chargeable in the accounts is considered to be higher than the depreciation recoverable in tariff in future years. Since AAD is in the nature of deferred revenue and does not constitute a liability, it has been disclosed in this note separately from equity and liabilities.

b)    In line with significant accounting policy no. C.15 (Note 1), an amount of Rs, 297.91 crore (31 March 2017: Rs, 32.92 crore) has been recognized during the year from the AAD and included in energy sales (Note 36). The AAD recognized during the year includes Rs, 125.24 crore for the tariff period 2004-09 in respect of one of the stations as per CERC order dated 18 July 2017. The same has also been recognized as energy sales during the year.

c)    Foreign exchange rate variation (FERV) on foreign currency loans and interest thereon is recoverable from/payable to the customers in line with the Tariff Regulations. Keeping in view the opinion of the EAC of ICAI, the Company is recognizing deferred foreign currency fluctuation asset by corresponding credit to deferred income from foreign currency fluctuation in respect of the FERV on foreign currency loans adjusted in the cost of property, plant and equipment, which is recoverable from the customers in future years as provided in accounting policy no. C.15 (Note 1). This amount will be recognized as revenue corresponding to the depreciation charge in future years. The amount does not constitute a liability to be discharged in future periods and hence, it has been disclosed separately from equity and liabilities.

d)    Government grants include Rs, 575.93 crore (31 March 2017: Rs, 497.14 crore) received from Solar Energy Corporation of India under MNRE Scheme for setting up solar PV power projects.

a)    The CERC notified the Tariff Regulations, 2014 in February 2014 (Regulations, 2014). The CERC has issued tariff orders for all the stations except six stations for the period 2014-19, under Regulations, 2014, and beneficiaries are billed based on such tariff orders issued by the CERC. For other stations, beneficiaries are billed in accordance with the principles given in the Regulations, 2014. The energy charges in respect of the coal based stations are provisionally billed based on the GCV of coal ‘as received', measured at wagon top samples in respect of most of the stations barring a few on the grounds of safety issues, for the quantity supplied through conveyors/road and other difficulties. The amount provisionally billed is Rs, 80,670.65 crore (31 March 2017: Rs, 74,710.65 crore).

b)    The Company has filed a writ petition before the Hon'ble Delhi High Court contesting certain provisions of the Regulations, 2014. As per directions from the Hon'ble High Court on the issue of point of sampling for measurement of GCV of coal on ‘as received' basis, CERC has issued an order dated 25 January 2016 (subject to final decision of the Hon'ble High Court) that samples for measurement of coal on ‘as received' basis should be collected from wagon top at the generating stations. The Company's review petition before the CERC in respect of the above order was dismissed vide their order dated 30 June 2016. Vide order dated 10 November 2016, the Hon'ble Delhi High Court has permitted the Company to approach the CERC with the difficulties being faced in implementation of the order of CERC in this regard and the Company has filed a petition with the CERC. Pending disposal of the petition by the CERC and ratification by the Hon'ble Delhi High Court, measurement of GCV of coal is being done from wagon top samples in respect of most of the stations barring a few on the grounds of safety issues, for the quantity supplied through conveyors/road and other difficulties.

Sales have been provisionally recognized at Rs, 79,683.50 crore (31 March 2017: Rs, 75,800.54 crore) on the said basis.

c)    Sales include Rs, 6.44 crore (31 March 2017: Rs, 995.59 crore) pertaining to previous years recognized based on the orders issued by the CERC/Appellate Tribunal for Electricity (APTEL). This includes reversal of sales amounting to Rs, 267.99 crore in respect of one of the stations, considering the directions issued by the CERC on 28 September 2017. Further, sales for the year amounting to Rs, 96.73 crore has not been recognized considering the said directions.

d)    Sales include Rs, 210.33 crore (31 March 2017: Rs, Nil) on account of income tax refundable to the beneficiaries as per Regulations, 2004. Sales also include Rs, 66.98 crore (31 March 2017: Rs, 46.04 crore) on account of deferred tax materialized which is recoverable from beneficiaries as per Regulations, 2014.

e)    The commercial operation date (COD) of one of the stations of the Company declared by the Company as 14 November 2014 was challenged by one of its beneficiaries. CERC vide order dated 20 September 2017 directed to consider the COD of the said unit as 8 March 2016 in place of 14 November 2014. The Company filed an appeal against this order in APTEL which has been admitted. Pending disposal of the appeal and considering the said order of the CERC, sales of Rs, 248.75 crore recognized till 7 March 2016 has been reversed and balance amounting to Rs, 276.69 crore has been provided as ‘Provision for tariff adjustment' for the period up to 31 March 2017 (Refer Note 41). Sales for the current year has been recognized as per the said order.

f)    Energy sales include electricity duty amounting to Rs, 879.77 crore (31 March 2017: Rs,697.99 crore).

g)    Energy sales are net of rebate to beneficiaries amounting to Rs,752.78 crore (31 March 2017: Rs,469.05 crore).

h)    Other operating revenue includes Rs, 63.41 crore (31 March 2017: Rs, 68.93 crore) towards energy internally consumed, valued at variable cost of generation and the corresponding amount is included in power charges in Note 41.

i)    CERC Regulations provides that where after the truing-up, the tariff recovered is less/more than the tariff approved by the Commission, the generating Company shall recover/pay from/to the beneficiaries the under/over recovered amount along-with simple interest. Accordingly, the interest recoverable from the beneficiaries amounting to Rs, 487.54 crore (31 March 2017: Rs, 397.09 crore) has been accounted as ‘Interest from beneficiaries'. Further, the amount payable to the beneficiaries has been accounted as ‘Interest to beneficiaries' in Note 41.

j) Provision for tariff adjustments written back include Rs,1,156.32 crore written back during the year based on disposal of a petition in favour of the Company by the Hon'ble Supreme Court of India. Refer Note 32 (d).

k) One of the power stations of the Company, having 3 units of 95 MW each and two units of 210 MW each, was issued consent to operate (Renewal) order by Delhi Pollution Control Committee (DPCC) on 2 Jan 2014 which was valid till 31 Jan 2018 with a condition that particulate emission level shall not exceed 150 mg/Nm3. In a volte- face on 8 July 2015, DPCC issued a show cause notice to the station as to why four units out of five units of plant ought not to be closed down for failing to bring down its particulate emission level below 50 mg/Nm3. Further, vide order dtd 31 Dec 2015, DPCC directed that four units out of five units of plant shall not operate. On 11 February 2016, DPCC modified the norms for particulate emission level of the consent to operate from 150 mg/Nm3 to 50 mg/Nm3. Further, vide order dated 21 March 2016, DPCC allowed operation of 2 units of 210 MW subject to meeting the SPM of 50 mg/Nm3. Further, DPCC vide order dated 6 November 2016, directed not to operate all units of station for 10 days which was subsequently extended till further orders. DPCC, vide order dated 14 March 2017 has allowed operation of two units of 210 MW each for the period from 15 March 2017 to 15 October 2017. Subsequently, DPCC vide order dated 1 March 2018 allowed the station to operate two units of 210 MW each from 1 March 2018. Company's petitions to direct beneficiaries for payment of fixed charges on account of closure due to DPCC's directions which are under change in law are pending disposal before the CERC.

l) Keeping in view the provisions of Appendix C to Ind AS 17 Leases w.r.t. determining whether an arrangement contains a lease, the Company has ascertained that the PPA entered into for two of the power stations of the Company fall under operating lease. Recovery of capacity charges towards depreciation (including AAD), interest on loan capital & return on equity (pre-tax) components from the beneficiaries are considered as lease rentals on the assets which are on operating lease.

m) Keeping in view the provisions of Appendix C to Ind AS 17 Leases w.r.t. determining whether an arrangement contains a lease, the Company has ascertained that the PPA entered into for Stage-I of a power station with the beneficiary falls under the definition of finance lease. Accordingly, the written down value of the specified assets has been derecognized from PPE and accounted as Finance Lease Receivable (FLR). Recovery of capacity charges towards depreciation (including AAD), interest on loan capital & return on equity (pre-tax) components from the beneficiary are adjusted against FLR. The interest component of the FLR and amount received on account of revision of tariff of previous periods in respect of the above three elements are recognized as ‘Interest income on Assets under finance lease'.

a)    Disclosures as per Ind AS 19 ‘Employee Benefits' in respect of provision made towards various employee benefits are provided in Note 57.

b)    Salaries and wages include special allowance paid by the Company to eligible employees serving in difficult and far flung areas w.e.f. 26 November 2008. As per the Office Memorandum dated 26 November 2008 of DPE relating to revision of pay scales w.e.f. 1 January 2007, special allowance can be paid to such employees upto 10% of basic pay as approved by concerned administrative ministry. In line with the office memorandum dated 22 June 2010 of DPE, Board of Directors has approved the special allowance (Difficult and Far Flung Areas) to eligible employees. The approval of Ministry of Power, GOI for the same is awaited.

c)    The pay revision of the employees of the Company is due w.e.f. 1 January 2017. The required provision towards revision of pay scales has been recognized during the year. Refer Note 32 (c).

* Carried to capital work-in-progress - (Note 3)

44.    Amount in the financial statements are presented in Rs, Crore (upto two decimals) except for per share data and as otherwise stated. Certain amounts, which do not appear due to rounding off, are disclosed separately.

45.    a) The Company has a system of obtaining periodic confirmation of balances from banks and other parties. There are no

unconfirmed balances in respect of bank accounts and borrowings from banks & financial institutions. With regard to receivables for energy sales, the Company sends demand intimations to the beneficiaries with details of amount paid and balance outstanding which can be said to be automatically confirmed on receipt of subsequent payment from such beneficiaries. In addition, reconciliation with beneficiaries and other customers is generally done on quarterly basis. So far as trade/other payables and loans and advances are concerned, the balance confirmation letters with the negative assertion as referred in the Standard on Auditing (SA) 505 (Revised) ‘External Confirmations', were sent to the parties. Some of such balances are subject to confirmation/reconciliation. Adjustments, if any will be accounted for on confirmation/reconciliation of the same, which in the opinion of the management will not have a material impact.

b) I n the opinion of the management, the value of assets, other than property, plant and equipment and non-current investments, on realization in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

46.    The levy of transit fee/entry tax on supplies of fuel to some of the power stations has been paid under protest as the matters are sub-judice at various courts. In case the Company gets refund/demand from fuel suppliers/tax authorities on settlement of these cases, the same will be passed on to respective beneficiaries.

47.    The environmental clearance (“clearance”) granted by the Ministry of Environment and Forest, Government of India (MoEF) for one of the Company's ongoing project was challenged before the National Green Tribunal (NGT). The NGT disposed the appeal, inter alia, directing that the order of clearance be remanded to the MoEF to pass an order granting or declining clearance to the project proponent afresh in accordance with the law and the judgment of the NGT and for referring the matter to the Expert Appraisal Committee (“Committee”) for its re-scrutiny, which shall complete the process within six months from the date of NGT order. NGT also directed that the environmental clearance shall be kept in abeyance and the Company shall maintain status quo in relation to the project during the period of review by the Committee or till fresh order is passed by the MoEF, whichever is earlier. The Company filed an appeal challenging the NGT order before the Hon'ble Supreme Court of India which stayed the order of the NGT and the matter is sub-judice. Two units of 800 MW have been declared commercial during the year and the last unit of 800 MW capacity is on the verge of completion and expected to be declared commercial in the next financial year. Aggregate cost incurred on the project upto 31 March 2018 is Rs, 15,522.77 crore (31 March 2017: Rs, 14,461.58 crore). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary.

48. The Company is executing a hydro power project in the state of Uttrakhand, where all the clearances were accorded. A case was filed in Hon'ble Supreme Court of India after the natural disaster in Uttrakhand in June 2013 to review whether the various existing and ongoing hydro projects have contributed to environmental degradation. Hon'ble Supreme Court of India on 7 May 2014, ordered that no further construction shall be undertaken in the projects under consideration until further orders, which included the said hydro project of the Company. In the proceedings, Hon'ble Supreme Court is examining to allow few projects which have all clearances which includes the project of the Company where the work has been stopped. Aggregate cost incurred on the project up to 31 March 2018 is Rs, 163.23 crore (31 March 2017: Rs, 160.75 crore). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary.

49    One of the 500 MW unit of a station which was declared commercial on 30 September 2017, met with an unfortunate accident in the boiler occurred due to pressurization of flue gas duct and boiler, damaging the first and second pass of the boiler along-with economizer, outlet duct and hoppers and the unit is under shut down. Payments made towards ex-gratia and treatment charges at various hospitals to the accident victims have been borne by the Company. The unit is covered under insurance policy of the Company against damage to the property. Based on the initial assessment of extent of damage and compensation paid to accident victims, a claim for Rs, 321.74 crore has been lodged with insurance company and accounted for. Discussions are taking place with the equipment supplier for carrying out necessary works for restoration of the unit. The unit is expected to resume operations in the later part of the financial year 2018-19.

50    Disclosure as per Ind AS 1 'Presentation of financial statements’

A)    Changes in significant accounting policies:

During the year, following changes to the accounting policies have been made:

a)    Policy B.1 ‘Statement of compliance' has been modified to include the fact that financial statements are prepared on going concern basis. Additionally, the policy pertaining to first time adoption of Ind AS has been removed as the same is not applicable in the current year.

b)    In addition to above, certain other changes have also been made in the policies nos. A, B.2, C, C.1, C.3, C.4, C.5, C.6, C.8, C.9, C.13, C.15, C.16, C.17, C.19, C.21 and policy D for improved disclosures.

There is no impact on the financial statements due to the above changes, however, the policy numbers have been rearranged in the current year as required.

B)    Reclassifications and comparative figures

Certain reclassifications have been made to the comparative period's financial statements to:

-    enhance comparability with the current year's financial statements

-    ensure compliance with the Guidance Note on Division II - Ind AS Schedule III to the Companies Act, 2013”

(b) Carrying amount of inventories pledged as security for borrowings as at 31 March 2018 is Rs, 4,069.58 crore (31 March 2017: Rs, 4,633.24 crore).

52 Disclosure as per Ind AS 8 'Accounting Policies, Changes in Accounting Estimates and Errors’

a)    Change in depreciation method of mining property:

In accordance with its accounting policies, the Company reviews the depreciation method and useful lives of its assets, other than the assets of generation of electricity business which are governed by CERC Regulations, on an ongoing basis. As a result, during the year, the Company has changed its depreciation method of ‘Mining property' related to coal mining business from ‘Unit of production method' to ‘20 years or life of mine, whichever is less'. This change in estimation has not resulted in any impact on the current financial statements, however this change in estimate may have an impact on future amortization expense, the amount of which is impracticable to determine.

b)    Changes in provision for current tax relating to earlier years

During the year, the Company has changed its estimates for accounting of the provision for current tax in respect of matters in disputes considering the pronouncements of various appellate authorities/courts and the opinion of an independent expert. Accordingly, the cases where the outflow of tax is considered not probable or otherwise, the provision for current tax has been updated. This has led to change in estimation of uncertain tax position and consequential reduction of current tax provision related to earlier years by Rs, 951.30 crore. This change in estimation of uncertain tax positions may also have an impact on future current tax expense, the amount of which is impracticable to determine.

c)    Recent accounting pronouncements Standards issued but not yet effective: Ind AS 115 'Revenue from Contracts with Customers’

On 28 March 2018, Ministry of Corporate Affairs (MCA) has notified the Ind AS 115, ‘Revenue from Contract with Customers'. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further, the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts with customers.

The standard permits two possible methods of transition:

-    Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

-    Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)

The effective date for adoption of Ind AS 115 is financial periods beginning on or after 1 April 2018. The Company will adopt the standard on 1 April 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended 31 March 2018 will not be retrospectively adjusted. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration

On 28 March 2018, MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.

The amendment will come into force from 1 April 2018. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.

53 Disclosure as per Ind AS 10 'Events after the Reporting Period’

Subsequent events:

The Board of Directors of the Company, in its meeting held on 29 December 2017, accorded investment approvals for following acquisitions:

a)    Acquisition of Barauni Thermal Power Station (BTPS) from Bihar State Power Generation Co. Ltd. (BSPGCL)

b)    Acquisition of BSPGCL's equity in Nabinagar Power Generating Company Pvt. Ltd. (NPGCL), a joint venture company

c)    Acquisition of BSPGCL's equity in Kanti Bijlee Utpadan Nigam Ltd. (KBUNL), a subsidiary company

On 15 May 2018, the Company has signed a Memorandum of Understanding (MoU) with Government of Bihar and Bihar power utilities for the above acquisitions.

However, these acquisitions are subject to approval from the concerned regulatory authorities which are not perfunctory and considered to be substantive. Once the requisite approvals are in place, BTPS will be merged with the Company and KBUNL and NPGCL will become wholly owned subsidiaries of the Company. Investments (a) and (b) shall be accounted for as business combination as per Ind AS 103, ‘Business Combinations', once the acquisition date is achieved. Further, investment (c) which is for acquisition of BSPGCL's equity in KBUNL shall be accounted for as transaction with non-controlling interests, as per Ind AS 110, ‘Consolidated Financial Statements'. The Company is unable to estimate the financial effect of above transactions.

Deferred tax asset have not been recognized in respect of the tax losses incurred by the Company that is not likely to generate taxable income in the foreseeable future. In terms of the provisions of the Income Tax Act, 1961, business loss due to unabsorbed depreciation can be carried forward for an unlimited period.

(c) Dividend distribution tax on proposed dividend not recognized at the end of the reporting period

Since year ended 31 March 2018, the Directors have recommended the payment of final dividend amounting to Rs, 1,970.67 crore (31 March 2017: Rs, 1,789.27 crore). The dividend distribution tax on this proposed dividend amounting to Rs, 405.08 crore (31 March 2017: Rs, 364.25 crore) has not been recognized since this proposed dividend is subject to the approval of shareholders in the ensuing Annual General Meeting.

56. Disclosure as per Ind AS 17 'Leases’ a) Operating leases

i. Leases as lessee:

a)    The Company's significant leasing arrangements are in respect of operating leases of premises for residential use of employees, offices and guest houses/transit camps for a period of one to two years. These leasing arrangements are usually renewable on mutually agreed terms but are not non-cancellable. An amount of Rs, 20.82 crore (31 March 2017: Rs, 29.69 crore) towards lease payments (net of recoveries) in respect of premises for residential use of employees is included under ‘Salaries and wages' in Note 38. Lease payments in respect of premises for offices and guest house/transit camps amounting Rs, 23.52 crore (net of recoveries) (31 March 2017: Rs, 24.41 crore) are included under ‘Rent' in Note 41.

b)    The Company has taken a helicopter on wet lease basis for a period of eleven years and the amount of lease charges of Rs,15.63 crore (31 March 2017: Rs, 17.02 crore) is included under ‘Hire charges of helicopter/aircraft' in Note 41. The lease is renewable on mutually agreed terms but are not non-cancellable.

c)    Ministry of Power, Government of India vide its notification no. 2/38/99-BTPS (Volume VII) dated 22 September 2006 transferred land of a power station to the Company on operating lease of 50 years. Lease rent for the year amounting to Rs, 6.29 crore (31 March 2017: Rs, 6.26 crore) has been charged to the statement of profit and loss and included under ‘Rates and taxes' in Note 41.

ii. Leases as lessor

a) The Company has classified the arrangement with its customer for two power stations (one thermal and one gas) as lease based on the principles enunciated in Appendix C of Ind AS 17 and accounted for as operating lease in accordance with those principles. The future minimum lease payments (MLPs) under non-cancellable leases in respect of the same are as follows:

(i)    Thermal Power Station

Power Purchase Agreements (PPA) signed with the beneficiary was operative for a period of five years from the date of takeover of the plant and the agreement may be mutually extended, renewed or replaced by another agreement on such terms and conditions for such further period as the parties may mutually agree.

(ii)    Gas Power Station

PPA signed with the beneficiary on 6 January 1995 was operative for five years from the date of commercial operation of last unit of the station and may be mutually extended, renewed or replaced by another agreement on such terms and on such further period of time as the parties may mutually agree. As per the supplementary agreement dated 15 February 2013 the validity period is extended for a further period of 12 years from 1 March 2013.

c) The Company acquires land on leasehold basis for a period generally ranging from 25 years to 99 years from the government authorities which can be renewed further based on mutually agreed terms and conditions. The leases are non cancellable. These leases are capitalized at the present value of the total minimum lease payments to be paid over the lease term. Future lease rentals are recognized as ‘Finance lease obligation' at their present values. The leasehold land is amortized considering the significant accounting policies of the Company.

ii) Leases as less or:

The Company has classified the arrangement with its customer for Stage I of a power station in the nature of lease based on the principles enunciated in Appendix C of Ind AS 17, ‘Leases' and accounted for as finance lease in accordance with those principles.

The power purchase agreement with the beneficiary is for a period of twenty five years from the date of transfer and the agreement may be mutually extended, renewed or replaced by another agreement on such terms and for such further period of time as the parties may mutually agree.

57. Disclosure as per Ind AS 19 'Employee benefits’

(i) Defined contribution plans: Pension

The defined contribution pension scheme of the Company for its employees which is effective from 1 January 2007, is administered through a separate trust. The obligation of the Company is to contribute to the trust to the extent of amount not exceeding 30% of basic pay and dearness allowance less employer's contribution towards provident fund, gratuity, post retirement medical facility (PRMF) or any other retirement benefits. An amount of Rs, 153.32 crore (31 March 2017: Rs,237.34 crore) for the year is recognized as expense on this account and charged to the statement of profit and loss.

(ii) Defined benefit plans:

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 Company has an obligation to ensure minimum rate of return to the members as specified by GOI. Accordingly, the Company has obtained report of the actuary, based on which overall interest earnings and cumulative surplus is more than the statutory interest payment requirement for all the periods presented. Further, contribution to employees pension scheme is paid to the appropriate authorities.

Based on the actuarial valuation obtained in this respect, the following table sets out the status of the provident fund plan as at balance sheet date:

Pursuant to paragraph 57 of Ind AS 19, accounting by an entity for defined benefit plans, inter-alia, involves determining the amount of the net defined benefit liability (asset) which shall be adjusted for any effect of limiting a net defined benefit asset to the asset ceiling prescribed in paragraph 64. As per Para 64 of Ind AS 19, in case of surplus in a defined benefit plan, an entity shall measure the net defined benefit asset at the lower of actual surplus or the value of the assets ceiling determined using the discount rate. The asset ceiling is the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. Further, paragraph 65 provides that a net defined benefit asset may arise where a defined benefit plan has been overfunded or where actuarial gains have arisen.

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, 55.36 crore (31 March 2017: Rs, 53.17 crore) determined through actuarial valuation. Accordingly, Company has not recognized 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.

B. Gratuity and pension

a)    The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or more is entitled to gratuity at 15 days salary (15/ 26 X last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum of ' 0.20 crore on superannuation, resignation, termination, disablement or on death, considering the provisions of the Payment of Gratuity Act,1972, as amended.

b)    The Company has pension schemes at two of its stations in respect of employees taken over from erstwhile state government power utilities.

The existing schemes stated at (a) and at one of the power stations at (b) above are funded by the Company and are managed by separate trusts. Pension scheme of another power station in respect of employees taken from erstwhile State Government Power Utility is unfunded. The liability for gratuity and the pension schemes as above is recognized on the basis of actuarial valuation.

Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity and pension plan and the amounts recognized in the Company's financial statements as at balance sheet date:

C. Post-Retirement Medical Facility (PRMF)

The Company has Post-Retirement Medical Facility (PRMF), under which the retired employees and their spouses are provided medical facilities in the Company hospitals/empanelled hospitals. They can also avail treatment as out-patient subject to a ceiling fixed by the Company. The liability for the same is recognized annually on the basis of actuarial valuation. A trust has been constituted for its employees superannuated on or after 1 January 2007, for the sole purpose of providing post retirement medical facility to them.

Based on the actuarial valuation obtained in this respect, the following table sets out the status of the PRMF and the amounts recognized in the Company's financial statements as at balance sheet date:

The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Further, the expected return on plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risk of asset management and historical returns from plan assets.

Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. This analysis may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

G. Risk exposure

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

a)    Asset volatility

The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. Most of the plan asset investments are in fixed income securities with high grades and in government securities. These are subject to interest rate risk and the fund manages interest rate risk with derivatives to minimize risk to an acceptable level. A portion of the funds are invested in equity securities and in alternative investments which have low correlation with equity securities. The equity securities are expected to earn a return in excess of the discount rate and contribute to the plan deficit. The Company has a risk management strategy where the aggregate amount of risk exposure on a portfolio level is maintained at a fixed range. Any deviations from the range are corrected by rebalancing the portfolio. The Company intends to maintain the above investment mix in the continuing years.

b)    Changes in discount rate

A decrease in discount rate will increase plan liabilities, although this will be partially offset by an increase in the value of the plans' bond holdings.

c)    Inflation risks

In the pension plans, the pensions in payment are not linked to inflation, so this is a less material risk.

d) Life expectancy

The pension plan obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans' liabilities. This is particularly significant where inflationary increases result in higher sensitivity to changes in life expectancy.

The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans. Within this framework, the Company's ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the appropriate currency.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. The Company uses derivatives to manage some of its risk. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

A large portion of assets in 2018 consists of government and corporate bonds. The plan asset mix is in compliance with the requirements of the respective local regulations.

Expected contributions to post-employment benefit plans for the year ending 31 March 2019 are Rs, 520.48 crore.

The weighted average duration of the defined benefit plan obligation at the end of the reporting period is 15.21 years (31 March 2017: 15.08 years).

(iii) Other long term employee benefit plans

A. 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. Earned leave (EL) is en-cashable while in service. Half-pay leaves (HPL) are en-cashable only on separation beyond the age of 50 years up to the maximum of 300 days. However, total number of leave (i.e. EL & HPL combined) that can be encashed on superannuation shall be restricted to 300 days and no commutation of half-pay leave shall be permissible. The scheme is unfunded and liability for the same is recognized on the basis of actuarial valuation. During the year, provision amounting to Rs, 462.23 crore was reversed on the basis of actuarial valuation at the year end and credited to statement of profit and loss (31 March 2017: debit of Rs, 260.32 crore). The reversal was on account of surge in the encashment of earned leaves by the employees during the year.

B. Other employee benefits

Provision for long service award and family economic rehabilitation scheme amounting to Rs, 7.36 crore (31 March 2017: Rs, 7.73 crore) for the year have been made on the basis of actuarial valuation at the year end and debited to the statement of profit and loss.

58.    Disclosure as per Ind AS 21 'The Effects of Changes in Foreign Exchange Rates’

The amount of exchange differences (net) debited to the statement of profit and loss is Rs, 145.03 crore (31 March 2017: credit of Rs, 5.66 crore).

59.    Disclosure as per Ind AS 23 'Borrowing Costs’

Borrowing costs capitalized during the year is Rs, 4,155.89 crore (31 March 2017: Rs, 4,125.08 crore).

60.    Disclosure as per Ind AS 24 'Related Party Disclosures’

a) List of related parties:

i)    Subsidiary companies:

1.    Bhartiya Rail Bijlee Company Ltd.

2.    Kanti Bijlee Utpadan Nigam Ltd.

3.    NTPC Vidyut Vyapar Nigam Ltd.

4.    NTPC Electric Supply Company Ltd.

5.    Patratu Vidyut Utpadan Nigam Ltd.

ii)    Joint ventures companies:

1.    Utility Powertech Ltd.

2.    NTPC-GE Power Services Private Ltd.

3.    NTPC-SAIL Power Company Ltd.

4.    NTPC Tamil Nadu Energy Company Ltd.

5.    Ratnagiri Gas & Power Private Ltd.

6.    Aravali Power Company Private Ltd.

7.    NTPC BHEL Power Projects Private Ltd.

8.    Meja Urja Nigam Private Ltd.

9.    BF-NTPC Energy Systems Ltd.

10.    Nabinagar Power Generating Company Private Ltd.

11.    Transformers and Electricals Kerala Ltd.

12.    National High Power Test Laboratory Private Ltd.

13.    Energy Efficiency Services Ltd.

14.    CIL NTPC Urja Private Ltd.

15.    Anushakti Vidhyut Nigam Ltd.

16.    Hindustan Urvarak & Rasayan Ltd.

17.    Konkan LNG Private Ltd.

18.    Trincomalee Power Company Ltd.

19.    Bangladesh-India Friendship Power Company Private Ltd.

iii)    Key Management Personnel (KMP): Whole Time Directors

Shri Gurdeep Singh    Chairman & Managing Director

Shri Saptarshi Roy    Director (Human Resources)    W.e.f. 1 November 2016

Shri A.K.Gupta    Director (Commercial)    W.e.f. 3 February 2017

Shri S.K.Roy    Director (Projects)    W.e.f. 19 January 2018

Shri P.K.Mohapatra    Director (Technical)    W.e.f. 31 January 2018

Shri Prakash Tiwari    Director (Operations)    W.e.f. 31 January 2018

e) Terms and conditions of transactions with the related parties

i)    Transactions with the related parties are made on normal commercial terms and conditions and at market rates.

ii)    The Company is assigning jobs on contract basis, for sundry works in plants/stations/offices to M/s Utility Powertech Ltd. (UPL), a 50:50 joint venture between the Company and Reliance Infrastructure Ltd. UPL inter-alia undertakes jobs such as overhauling, repair, refurbishment of various mechanical and electrical equipments of power stations. The Company has entered into Power Station Maintenance Agreement with UPL from time to time. The rates are fixed on cost plus basis after mutual discussion and after taking into account the prevailing market conditions.

iii)    The Company is seconding its personnel to subsidiary and joint venture companies as per the terms and conditions agreed between the companies, which are similar to those applicable for secondment of employees to other companies and institutions. The cost incurred by the Company towards superannuation and employee benefits are recovered from these companies.

v)    Consultancy services provided by the Company to subsidiary and joint venture companies are generally on nomination basis at the terms, conditions and principles applicable for consultancy services provided to other parties.

vi)    Outstanding balances of subsidiary and joint venture companies at the year-end are unsecured and settlement occurs through banking transaction. These balances other than loans are interest free. The Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

vii)    Refer Note 63 (b) and (c) in respect of impairment loss on investment in Ratnagiri Gas & Power Private Ltd., Konkan LNG Private Ltd. and certain other joint venture companies.

viii)    Refer Note 74 (C) towards restrictions on disposal of investment and commitment towards further investments in the subsidiary and joint venture companies.

63. Disclosure as per Ind AS 36 'Impairment of Assets’

As required by Ind AS 36, an assessment of impairment of assets was carried out and based on such assessment, the Company

has accounted impairment losses as under:

a)    Due to decrease in value in use in respect of plant and equipment of a Solar PV Station of the Company which is under ‘Generation of energy segment', an impairment loss of Rs, 4.48 crore was recognized in ‘Depreciation/amortization and impairment expense' in the statement of profit and loss for the year ended 31 March 2016. Out of this, an amount of Rs, 0.73 crore towards the impairment loss was reversed during the year ended 31 March 2017 due to increase in the value in use as compared to the carrying value of the Solar PV Station. The balance amount of Rs, 3.75 crore has been reversed during the year due to increase in the value in use as compared to its carrying value.

For the Company, the recoverable amount of the property, plant and equipment & intangible assets of the CGUs is value in use and amounts to Rs, 1,90,627.27 crore (31 March 2017: Rs, 1,42,042.78 crore). The discount rate used for the computation of value in use for the generating plant is 8.00 % (31 March 2017: 9.13%) and for solar plant is 7.13 % (31 March 2017: 7.95%).

b)    I n the previous year, the Company had an investment of Rs, 974.30 crore as at 31 March 2017 in the equity shares of Ratnagiri Gas & Power Pvt. Ltd. (RGPPL or Demerged Company), a joint venture of the Company. RGPPL had incurred losses during last few years which has resulted in erosion of net worth of the RGPPL. Also, value of RGPPL's assets had declined significantly more than would be expected as a result of the passage of time or normal use. Further, neither Power Block nor LNG Terminal (CGUs) of RGPPL were operating at their installed capacity from last many years. The recoverable amount of this investment was assessed at Rs, 191.35 crore and accordingly the Company had recognized an impairment loss of ' 782.95 crore in respect of such investment and disclosed the same as ‘Exceptional items - Impairment loss on investments' in the statement of profit and loss for the previous year ended 31 March 2017.

During the year, as per demerger scheme Konkan LNG Private Ltd. (KLPL) has allotted equity shares of face value of ' 10/- each equivalent to the share entitlement ratio of 143:1000 for each equity shares held in Demerged Company i.e.13,97,52,264 equity shares of Rs, 10/- each to the Company. Accordingly, the Company has reduced its investment in RGPPL by Rs, 139.75 crore and has recorded ‘Investment in Konkan LNG Private Ltd.' with the same amount.

The impact of assessment of impairment of its investment in RGPPL and KLPL which was carried out by an independent expert, has been explained below:

Reversal of impairment of investments in RGPPL:

Recoverable amount is based on the value in use as its fair value less cost of disposals cannot be estimated.

Recoverable amount of investment in RGPPL has been assessed at Rs, 217.50 crore and is based on the present value of future cash flows expected to be derived from gas based power plant of RGPPL till 31 March 2039. The period is based on the estimated useful life of the power plant. Increase in recoverable amount of investment in RGPPL is due to increase in the value in use as compared to the carrying value of investment. This has led to reversal of provision for impairment by Rs, 165.90 crore in the current year.

Following are the key assumptions used to determine the recoverable amount of investment:

-    Capacity    : 1,967 MW

-    Auxiliary consumption : 2.50%

-    Plant Load Factor (PLF) : 26.10%

-    Tariff    : INR 5.5/kwh (net of transmission charges and losses)

No growth rates have been assumed and the past experience have been considered for future cash flows which are expected to be derived.

The post-tax discount rates used for the future cash flows are in the range of 10.00% to 11.20% (31 March 2017: 9.40% to 11.00%).

Impairment of investments in KLPL:

Recoverable amount is based on the value in use as its fair value less cost of disposals cannot be estimated.

Recoverable amount of investment in KLPL has been assessed at (-) Rs, 127.07 crore and is based on the present value of future cash flows expected to be derived from the LNG terminal till 31 March 2037. The period is based on the estimated useful life of the terminal. Decrease in recoverable amount of investment in KLPL is due to decrease in the value in use as compared to the carrying value of investment. This has resulted in recognition of provision for impairment by Rs, 139.75 crore.

Following are the key assumptions used to determine the recoverable amount of investment:

-    Capacity : FY 2019 till FY 2021 - 30 ships/year; FY 2022 onwards: 80 ships per year

-    Utilisation : FY 2019-22- 80%

FY 2023-26 - 55%

FY 2027 - 65%

FY 2028 and beyond - 70%

-    Annual escalation of tariff - 5.00%

Growth rate of 10.20% has been assumed basis expected increase in number of cargos to be uploaded after FY 2022 on account of completion of breakwater facility and annual increase in tariff by 5.00% every year.

The post-tax discount rates used for the future cash flows are in the range of 12.10% to 13.00%.

Also refer Note 6 (e) in this regard.

c) I n respect of certain other companies, provision for impairment on investments has been recognized at Rs, 50.02 crore (31 March 2017: Rs, 32.43 crore). Also refer Note 6 b) and 6 c) in this regard.

i)    Provision for obligations incidental to land acquisition

Provision for obligations incidental to land acquisition includes expenditure on rehabilitation & resettlement (R&R) including the amounts payable to the project affected persons (PAPs) towards land, expenditure for providing community facilities and expenditure in connection with environmental aspects of the project. The Company has estimated the provision based on the Rehabilitation Action Plan (RAP) approved by the board/competent authority or agreements/directions/ demand letters of the local/government authorities. The outflow of said provision is expected to be incurred immediately on fulfilment of conditions by the land oustees/receipts of directions of the local/government authorities.

ii)    Provision for tariff adjustment

The Company aggrieved over many of the issues considered by the CERC in the tariff orders for its stations for the period 2004-09 had filed appeals with the Appellate Tribunal for Electricity (APTEL). The APTEL disposed off the appeals favourably directing the CERC to revise the tariff orders as per directions and methodology given. Some of the issues decided in favour of the Company by the APTEL were challenged by the CERC in the Hon'ble Supreme Court of India. Subsequently, the CERC had been issuing revised tariff orders for the period 2004-09, considering the judgment of APTEL subject to disposal of appeals pending before the Hon'ble Supreme Court of India. On 10 April 2018, the Hon'ble Supreme Court of India has dismissed the petition and as such the issues decided by APTEL in favour of the Company stands good. Consequently, the provision created till 31 March 2017 amounting to Rs, 1,156.32 crore has been reversed during the year through provision written back in Note 36.

iii)    Provision - Others

Provision for others comprise Rs, 73.15 crore (31 March 2017: Rs, 68.24 crore) towards cost of unfinished minimum work programme demanded by the Ministry of Petroleum and Natural Gas (MoP&NG) including interest thereon in relation to block AA-ONN-2003/2 [Refer Note 66 (b)], Rs, 1,279.31 crore (31 March 2017: Rs,640.25 crore) towards provision for cases under litigation and Rs, 4.62 crore (31 March 2017: Rs, 1.81 crore) towards provision for shortage in property, plant and equipment on physical verification pending investigation.

iv)    In respect of provision for cases under litigation, outflow of economic benefits is dependent upon the final outcome of such cases.

v)    In all these cases, outflow of economic benefits is expected within next one year.

vi)    Sensitivity of estimates on provisions:

The assumptions made for provisions relating to current period are consistent with those in the earlier years. The assumptions and estimates used for recognition of such provisions are qualitative in nature and their likelihood could alter in next financial year. It is impracticable for the Company to compute the possible effect of assumptions and estimates used in recognizing these provisions.

vii)    Contingent liabilities and contingent assets

Disclosure with respect to claims against the Company not acknowledged as debts and contingent assets are made in Note 74.

65.    Disclosure as per Ind AS 38 'Intangible Assets’

Research expenditure charged to revenue during the year is ' 77.67 crore (31 March 2017: ' 80.40 crore).

66.    Disclosure as per Ind AS 106, 'Exploration for and Evaluation of Mineral Resources’

a) The Company along-with some public sector undertakings has entered into Production Sharing Contracts (PSCs) with GOI for three oil exploration blocks namely KG-OSN-2009/1, KG-OSN-2009/4 and AN-DWN-2009/13 under VIII round of New Exploration Licensing Policy (NELP VIII) with 10% participating interest (PI) in each of the blocks.

In the case of Block AN-DWN-2009/13 and KG-OSN-2009/1, the Company along-with the consortium partners has decided to relinquish both the blocks and Oil and Natural Gas Commission (ONGC), the operator has submitted an application to Directorate General of Hydrocarbons (DGH) in this regard.

For the year ended 31 March 2018 and 31 March 2017, there are no income and operating/investing cash flow from exploration activities.

The exploration activities in block KG-OSN-2009/4 were suspended w.e.f. 11 January 2012 due to non-clearance by the Ministry of Defence, GOI. Subsequently, DGH vide letter dated 29 April 2013 has informed ONGC that the block is cleared conditionally wherein block area is segregated between No Go zone, High-risk zone and Permitted zone. As the permitted area is only 38% of the total block area the consortium has submitted proposal to DGH for downward revision of MWP of initial exploration period. DGH has agreed for drilling of one well and have instructed to carry out airborne Full Tensor Gravity Gradiometer (FTG) survey in conditionally & partial cleared area in lieu of MoD proportionate reduced 317 Sq. Km. 3D survey, 589 LKM of 2D survey and drilling of 2 wells.

ONGC has completed drilling of one well. Airborne Full Tensor Gravity Gradiometer (FTG) survey work is also completed.

b) Exploration activities in the block AA-ONN-2003/2 were abandoned in January 2011 due to unforeseen geological conditions and withdrawal of the operator. Attempts to reconstitute the consortium to accomplish the residual exploratory activities did not yield result. In the meanwhile, Ministry of Petroleum & Natural Gas, GoI demanded in January 2011 the cost of unfinished minimum work programme from the consortium with NTPC's share being USD 7.516 million. During the year, provision in this respect has been updated to Rs, 73.15 crore from ' 68.24 crore along-with interest. The Company has sought waiver of the claim citing force majeure conditions at site leading to discontinuation of exploratory activities.

For the year ended 31 March 2018 and 31 March 2017, there are no income and operating/investing cash flow from exploration activities.

c) The Company has entered into production sharing contracts (PSC) with GOI for exploration block namely CB-ONN-2009/5

VIII round of New Exploration Licensing Policy (NELP VIII) with 100% participating interest (PI) in the block.

MWP for the block has been completed. No oil or gas of commercial value was observed in any of the wells. Accordingly, proposal for relinquishment of the block has been submitted to the GOI.

Expenses charged off to the statement of profit and loss for the year includes provision for diminution in the value of inventory of ' 5.59 crore (31 March 2017: ' Nil).

For the year ended 31 March 2018 and 31 March 2017, there are no income and investing cash flow from exploration activities.

d i) As per mining plan of Pakri Barwadih Coal Mining Project (PB), eastern and western quarry of the PB project are under development stage and disclosed in Note 3 - Development of coal mines. Exploration and evaluation activities are taking place at north-west quarry and under ground mine area/dip side area of PB block.

ii) Exploration and evaluation activities are in progress at Banai, Bhalumuda and Mandakini - B coal blocks allotted by the GOI. Geological Report (GR) of Banai has been approved by Ministry of Coal (MoC) and Mining Plan is under preparation by the consultant M/s Central Mine Planning and Design Institute (CMPDI). GR for Bhalumuda coal block has already been submitted to MoC and is under approval. Request sent to Nominated Authority, MoC for integration of both Banai & Bhalumuda blocks. For preparation of GR of Mandakini - B coal block, detailed exploration has been carried out and the work of preparation of Mining Plan & feasibility report has been awarded to M/s CMPDI.

67. Disclosure as per Ind AS 108 'Operating Segments’

A. General Information

The Company has two reportable segments, as described below, which are the Company's strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Chief Operating Decision Maker (CODM) reviews internal management reports on at least a quarterly basis.

The following summary describes the operations in each of the Company's reportable segments:

Generation of energy : Generation and sale of bulk power to State Power Utilities.

Others : It includes providing consultancy, project management and supervision, energy trading, oil and gas exploration and coal mining.

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before income tax, as included in the internal management reports that are reviewed by the Company's Board. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties.

* Includes Rs, 6.44 crore (31 March 2017: Rs, 995.59 crore) for sales related to earlier years.

** Generation segment result would have been Rs, 17,794.92 crore (31 March 2017: Rs,16,769.88 crore) without including the sales related to earlier years.

*** Includes (-) Rs, 3.75 crore (31 March 2017: (-) Rs, 0.73 crore) towards reversal of impairment loss recognized in the profit or loss, in generation of energy segment.

The Company has not disclosed geographical segments as operations of the Company are mainly carried out within the country.

The Company's principal financial liabilities comprise loans and borrowings in foreign as well as domestic currency, trade payables and other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets include borrowings, trade and other receivables, and cash and short-term deposits that derive directly from its operations. The Company also holds equity investments and enter into derivative contracts such as forward contracts, options and swaps. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

The Company is exposed to the following risks from its use of financial instruments:

-    Credit risk

-    Liquidity risk

-    Market risk

This note presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and processes for measuring and managing risk.

Risk management framework

The Company's activities make it susceptible to various risks. The Company has taken adequate measures to address such concerns by developing adequate systems and practices.

In order to institutionalize the risk management in the Company, an elaborate Enterprise Risk Management (ERM) framework has been developed. The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. As a part of the implementation of ERM framework, a ‘Risk Management Committee (RMC)' with functional directors as its members has been entrusted with the responsibility to identify and review the risks, formulate action plans and strategies to mitigate risks on short-term as well as long-term basis.

The RMC meets every quarter to deliberate on strategies. Risks are regularly monitored through reporting of key performance indicators. Outcomes of RMC are submitted for information of the Board of Directors.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations resulting in a financial loss to the Company. Credit risk arises principally from trade receivables, loans, cash and cash equivalents and deposits with banks and financial institutions.

Trade receivables

The Company primarily sells electricity to bulk customers comprising mainly state utilities owned by State Governments. The Company has a robust payment security mechanism in the form of Letters of Credit (LC) backed by the Tri-Partite Agreement (TPA). The TPA were signed among the Govt. of India, RBI and the individual State Governments subsequent to the issuance of the One Time Settlement Scheme of SEBs dues during 2001-02 by the GOI, which was valid till October 2016. Govt of India has approved the extension of these TPAs for another period of 10 years. Most of the States have signed these TPAs and signing is in progress for the balance states.

CERC Tariff Regulations allow payment against monthly bill towards energy charges within a period of sixty days from the date of bill and levy of surcharge @ 18% p.a. on delayed payment beyond sixty days.

A default occurs when in the view of management there is no significant possibility of recovery of receivables after considering all available options for recovery.

As per the provisions of the TPA, the customers are required to establish LC covering 105% of the average monthly billing of the Company for last 12 months. The TPA also provided that if there is any default in payment of current dues by any State Utility the outstanding dues can be deducted from the State's RBI account and paid to the concerned CPSU. There is also provision of regulation of power by the Company in case of non payment of dues and non-establishment of LC.

These payment security mechanisms have served the Company well over the years. The Company has not experienced any significant impairment losses in respect of trade receivables in the past years. Since the Company has its power stations as well as customers spread over various states of India, geographically there is no concentration of credit risk.

Investments

The Company limits its exposure to credit risk by investing in only Government of India Securities, State Government Securities and other counterparties have a high credit rating. The management actively monitors the interest rate and maturity period of these investments. The Company does not expect the counterparty to fail to meet its obligations, and has not experienced any significant impairment losses in respect of any of the investments.

Loans

The Company has given loans to employees, subsidiary companies and other parties. Loans to the employee are secured against the mortgage of the house properties and hypothecation of vehicles for which such loans have been given in line with the policies of the Company. The loan provided to group companies are collectible in full and risk of default is negligible. Loan to APIIC is secured by a guarantee given by the Government of Andhra Pradesh vide GO dated 3 April 2003.

Cash and cash equivalents

The Company held cash and cash equivalents of Rs, 60.49 crore (31 March 2017: Rs,157.12 crore). The cash and cash equivalents are held with banks with high rating.

Deposits with banks and financial institutions

The Company held deposits with banks and financial institutions of Rs, 3,917.89 crore (31 March 2017: Rs, 2,773.37 crore). In order to manage the risk, Company places deposits with only high rated banks/institutions.

(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:

(ii) Provision for expected credit losses

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

The Company has assets where the counter-parties have sufficient capacity to meet the obligations and where the risk of default is very low. Accordingly, no loss allowance for impairment has been recognized.

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

The Company has customers (State government utilities) with capacity to meet the obligations and therefore the risk of default is negligible or nil. Further, management believes that the unimpaired amounts that are past due by more than

30 days are still collectible in full, based on historical payment behaviour and extensive analysis of customer credit risk. Hence, no impairment loss has been recognized during the reporting periods in respect of trade receivables.

Based on historic default rates, the Company believes that no impairment allowance is necessary in respect of any other assets as the amounts of such allowances are not significant.

Liquidity risk

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

The Company has an appropriate liquidity risk management framework for the management of short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

The Company's treasury department is responsible for managing the short-term and long-term liquidity requirements of the Company. Short-term liquidity situation is reviewed daily by the Treasury Department. The Board of directors has established policies to manage liquidity risk and the Company's Treasury Department operates in line with such policies. Any breaches of these policies are reported to the Board of Directors. Long-term liquidity position is reviewed on a regular basis by the Board of Directors and appropriate decisions are taken according to the situation.

Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a month, including the servicing of financial obligations, this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

As part of the CERC Regulations, tariff inter-alia includes recovery of capital cost. The tariff regulations also provide for recovery of energy charges, operations and maintenance expenses and interest on normative working capital requirements. Since billing to the customers are generally on a monthly basis, the Company maintains sufficient liquidity to service financial obligations and to meet its operational requirements.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Company's income. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Board of Directors is responsible for setting up of policies and procedures to manage market risks of the Company. All such transactions are carried out within the guidelines set by the risk management committee.

Currency risk

The Company is exposed to foreign currency risk on certain transactions that are denominated in a currency other than entity's functional currency, hence exposure to exchange rate fluctuations arises. The risk is that the functional currency value of cash flows will vary as a result of movements in exchange rates.

* Rs, 2000.00 crore - ' denominated USD settled Green Masala Bonds.

Out of the above, an amount of Rs, 33.75 crore (31 March 2017: Rs,46.08 crore) is hedged by derivative instruments. In respect of the balance exposure, gain/(loss) on account of exchange rate variations on all long-term foreign currency monetary items and short-term foreign currency monetary items (up to COD) is recoverable from beneficiaries. Therefore, currency risk in respect of such exposure would not be very significant.

Sensitivity analysis

Since the impact of strengthening or weakening of INR against USD, Euro, JPY and other currencies on the statement of profit and loss would not be very significant; therefore, sensitivity analysis for currency risk is not disclosed.

Embedded derivatives

Certain contracts of the Company for construction of power plants with vendors awarded through ICB (International competitive bidding) which are denominated in third currency (i.e. a currency which is not the functional currency of any of the parties to the contract) are falling under the purview of guidance provided as per Ind AS 109, ‘Financial instruments' on derivatives and embedded derivatives. The Company has sought opinion from the Expert Advisory Committee (EAC) constituted by The Institute of Chartered Accountants of India on the above matter vide letter no NTPC/EAC/ICAI dated 29 September 2016. On receipt of opinion/clarification from EAC, Company will account for such contracts.

Interest rate risk

The Company is exposed to interest rate risk arising mainly from non-current borrowings with floating interest rates. The Company is exposed to interest rate risk because the cash flows associated with floating rate borrowings will fluctuate with changes in interest rates. The Company manages the interest rate risks by entering into different kinds of loan arrangements with varied terms (e.g. fixed rate loans, floating rate loans, rupee term loans, foreign currency loans, etc.).

* Includes Rs, 2000.00 crore - ' denominated USD settled Green Masala Bonds and Rs, 2,000 crore ' denominated USD settled Masala bonds (31 March 2017: includes Rs, 2000.00 crore - ' denominated USD settled Green Masala Bonds).

Fair value sensitivity analysis for fixed-rate instruments

The Company's fixed rate instruments are carried at amortized cost. They are therefore not subject to interest rate risk, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Cash flow sensitivity analysis for variable-rate instruments

A change of 50 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for the previous year.

The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements and reports directly to the Director (Finance). The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified. Significant valuation issues are reported to the Company's Audit Committee.

Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes investments in quoted equity instruments. Quoted equity instruments are valued using quoted prices on national stock exchange.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. This level includes mutual funds which are valued using the closing NAV.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level

3. The fair value of financial assets and liabilities included in Level 3 is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes of similar instruments. This level includes derivative MTM assets/liabilities. Fair value of derivative assets/ liabilities such as interest rate swaps and foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing and swap models & present value calculations.

There have been no transfers in either direction for the years ended 31 March 2018 and 2017.

c) Valuation technique used to determine fair value:

Specific valuation techniques used to fair value of financial instruments include:

i)    For financial instruments other than at ii), iii) and iv) - the use of quoted market prices

ii)    For investments in mutual funds - Closing NAV is used.

iii)    For financial liabilities (vendor liabilities, debentures, foreign currency notes, domestic/foreign currency loans): Discounted cash flow; appropriate market borrowing rate of the entity as of each balance sheet date used for discounting.

iv)    For financial assets (employee loans) - Discounted cash flow; appropriate market rate (SBI lending rate) as of each balance sheet date used for discounting.

The carrying amounts of current trade receivables, trade payables, payable for capital expenditure, investment in bonds, cash and cash equivalents and other financial assets and liabilities are considered to be the same as their fair values, due to their short-term nature.

The carrying values for finance lease receivables approximates the fair value as these are periodically evaluated based on credit worthiness of customer and allowance for estimated losses is recorded based on this evaluation. Also, carrying amount of claims recoverable approximates its fair value as these are recoverable immediately.

The fair values for loans, borrowings, non-current trade payables and payable for capital expenditure were calculated based on cash flows discounted using a current discount rate. They are classified at respective levels based on availability of quoted prices and inclusion of observable/non observable inputs.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

70. Capital Management

The Company's objectives when managing capital are to:

-    safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and

-    maintain an appropriate capital structure of debt and equity.

The Board of Directors has the primary responsibility to maintain a strong capital base and reduce the cost of capital through prudent management in deployment of funds and sourcing by leveraging opportunities in domestic and international financial markets so as to maintain investors, creditors & markets' confidence and to sustain future development of the business. The

Board of Directors monitors the return on capital, which the Company defines as result from operating activities divided by total shareholders' equity. The Board of Directors also monitors the level of dividends to equity shareholders.

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

(i)    Total liability to net worth ranges between 2:1 to 3:1.

(ii)    Ratio of EBITDA to interest expense shall not at any time be less than 1.75 : 1

(iii)    Debt service coverage ratio not less than 1.25:1 and account receivable ratio not exceeding 3:1 (in case of foreign currency borrowings)

There have been no breaches in the financial covenants of any interest bearing borrowings.

The Company monitors capital, using a medium term view of three to five years, on the basis of a number of financial ratios generally used by industry and by the rating agencies. The Company is not subject to externally imposed capital requirements.

71. Disclosure as per Ind AS 114, 'Regulatory Deferral Accounts’

(i)    Nature of rate regulated activities

The Company is mainly engaged in generation and sale of electricity. The price to be charged by the Company for electricity sold to its beneficiaries is determined by the CERC which provides extensive guidance on the principles and methodologies for determination of the tariff for the purpose of sale of electricity. The tariff is based on allowable costs like interest, depreciation, operation & maintenance expenses, etc. with a stipulated return.

This form of rate regulation is known as cost-of-service regulations which provide the Company to recover its costs of providing the goods or services plus a fair return.

(ii)    Recognition and measurement

As per the CERC Tariff Regulations, any gain or loss on account of exchange risk variation during the construction period shall form part of the capital cost till the declaration of Commercial Operation Date (COD) to be considered for calculation of tariff. The CERC during the past period in tariff orders for various stations has allowed exchange differences incurred during the construction period in the capital cost. Accordingly, exchange difference arising during the construction period is within the scope of Ind AS 114.

In view of the above, exchange differences arising from settlement/translation of monetary item denominated in foreign currency to the extent recoverable from or payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations are recognized on an undiscounted basis as ‘Regulatory deferral account debit/credit balance' by credit/ debit to ‘Movements in Regulatory deferral account balances' during construction period and adjusted from the year in which the same becomes recoverable from or payable to the beneficiaries. Accordingly, an amount of Rs, 584.72 crore for the year ended as at 31 March 2018 has been accounted for as ‘Regulatory deferral account debit balance' (31 March 2017: Rs, 187.09 crore accounted as ‘Regulatory deferral account credit balance'.)

Revision of pay scales of employees of PSEs are due w.e.f. 1 January 2017 (Refer Note 32). Based on the recommendations of the constituted committee to the Government inter-alia includes superannuation benefits @ 30% of basic + DA to be provided to the employees of CPSEs which includes gratuity at the enhanced ceiling of Rs, 0.20 crore from the existing ceiling of Rs, 0.10 crore. As per Proviso 8(3) of Terms and Conditions of Tariff Regulations 2014 applicable for the period 2014-19, truing up exercise in respect of Change in Law or compliance of existing law will be taken up by CERC. The increase in gratuity from Rs, 0.10 crore to Rs, 0.20 crore falls under the category of ‘Change in law' and a regulatory asset was created in the previous year. During the year, the Payment of Gratuity Act,1972 has been amended and the ceiling has been increased to Rs, 0.20 crore.

Considering the methodology followed by the CERC for allowing impact of the previous pay revision, various tariff orders issued by the CERC under Regulations, 2014 and the above-mentioned provision related to the change in law of CERC Tariff Regulations, 2014, a regulatory asset has been created (Regulatory deferral account debit balance) towards the increase in O&M expenditure due to the pay revision. This will be claimed upon implementation of revision of pay scales and discharge of related liabilities. Accordingly, an amount of Rs, 118.32 crore for the year ended 31 March 2018 has been accounted for as ‘Regulatory deferral account debit balance' (31 March 2017: Rs, 522.83 crore).

(iii)    Risks associated with future recovery/reversal of regulatory deferral account balances:

(i)    demand risk due to changes in consumer attitudes, the availability of alternative sources of supply

(ii)    regulatory risk on account of changes in regulations and submission or approval of rate-setting application or the entity's assessment of the expected future regulatory actions

(iii)    other risks including currency or other market risks, if any

(iv)    Reconciliation of the carrying amounts:

The regulated assets/liability recognized in the books to be recovered from or payable to beneficiaries in future periods are as follows:

work, idle charges etc. These claims are being contested by the Company as being not admissible in terms of the provisions of the respective contracts.

The Company is pursuing various options under the dispute resolution mechanism available in the contracts for settlement of these claims. It is not practicable to make a realistic estimate of the outflow of resources if any, for settlement of such claims pending resolution.

(ii)    Land compensation cases

I n respect of land acquired for the projects, the erstwhile land owners have claimed higher compensation before various authorities/courts which are yet to be settled. Against such cases, contingent liability of Rs, 379.98 crore (31 March 2017: Rs, 349.31 crore) has been estimated.

(iii)    Fuel suppliers

a)    Pending resolution of the issues with the coal companies, an amount of Rs, 2,869.21 crore (31 March 2017: Rs, 2,570.55 crore) towards grade slippage pursuant to third party sampling has been estimated by the Company as contingent liability. Further, an amount of Rs, 678.46 crore (31 March 2017: Rs, 661.50 crore) towards surface transportation charges, custom duty on service margin on imported coal etc. has been estimated by the Company as contingent liability.

b)    Pending resolution of the issues with a fuel company for supply of RLNG, an amount of Rs, 5,821.61 crore (31 March 2017: Rs, 4,173.57 crore) towards the take or pay claim has been estimated by the Company as contingent liability.

The Company is pursuing with the fuel companies, related ministries and other options under the dispute resolution mechanism available for settlement of these claims.

(iv)    Others

In respect of claims made by various State/Central Government departments/Authorities towards building permission fee, penalty on diversion of agricultural land to non-agricultural use, non agricultural land assessment tax, water royalty, other claims, etc. and by others, contingent liability of Rs, 339.17 crore (31 March 2017: Rs, 253.15 crore) has been estimated.

(v)    Possible reimbursement in respect of (i) to (iii) above

The contingent liabilities referred to in (i) above, include an amount of Rs, 648.26 crore (31 March 2017: Rs, 919.33 crore) relating to the hydro power project stated in Note 10 (a) - Other financial assets, for which Company envisages possible reimbursement from the GOI in full. In respect of balance claims included in (i) and in respect of the claims mentioned at (ii) above, payments, if any, by the Company on settlement of the claims would be eligible for inclusion in the capital cost for the purpose of determination of tariff as per CERC Tariff Regulations subject to prudence check by the CERC. In case of (iii), the estimated possible reimbursement by way of recovery through tariff as per Regulations is Rs, 9,199.87 crore (31 March 2017: Rs, 7,373.54 crore).

b.    Disputed tax matters

Disputed income tax/sales tax/excise and other tax matters pending before various Appellate Authorities amount to Rs, 7,907.61 crore (31 March 2017: Rs, 6,934.90 crore). Many of these matters were adjudicated in favour of the Company but are disputed before higher authorities by the concerned departments. In respect of these disputed cases, the Company estimate possible reimbursement of Rs, 3,868.74 crore (31 March 2017: Rs, 3,302.47 crore). The amount paid under dispute/adjusted by the authorities in respect of the cases amounts to Rs, 2,470.24 crore (31 March 2017: Rs, 6,499.22 crore).

c.    Others

Other contingent liabilities amount to Rs, 2,536.13 crore (31 March 2017: Rs, 213.92 crore) which includes claim of Rs, 2,026.30 crore (31 March 2017: Rs, Nil) pending before arbitral tribunal. Refer Note 56 (b).

Some of the beneficiaries have filed appeals against the tariff orders of the CERC. The amount of contingent liability in this regard is not ascertainable.

B.    Contingent assets

While determining the tariff for some of the Company's power stations, CERC has disallowed certain capital expenditure incurred by the Company. The Company aggrieved over such issues has filed appeals with the Appellate Tribunal for Electricity (APTEL)/Hon'ble Supreme Court against the tariff orders issued by the CERC. Based on past experience, the Company believes that a favorable outcome is probable. However, it is impracticable to estimate the financial effect of the same as its receipt is dependent on the outcome of the judgment.

C.    Commitments

a). Estimated amount of contracts remaining to be executed on capital account (property, plant and equipment and intangible assets) and not provided for as at 31 March 2018 is Rs, 38,119.11 crore (31 March 2017: Rs, 48,607.62 crore).

e).    The Company has commitments of Rs, 3,993.01 crore (31 March 2017: Rs, 1,162.56 crore) towards further investment in the subsidiary companies as at 31 March 2018.

f).    The Company has commitments of Rs, 3,748.92 crore (31 March 2017: Rs, 3,073.90 crore) towards further investment in the joint venture entities as at 31 March 2018.

g).    The Company has commitments of Rs, 507.60 crore (31 March 2017: Rs, 507.60 crore) towards further investment in other investments as at 31 March 2018.

h).    The Company has commitments of bank guarantee of 0.50 % of total contract price to be undertaken by NTPC-BHEL Power Projects Private Ltd. limited to a cumulative amount of Rs, 75.00 crore (31 March 2017: Rs, 75.00 crore).

i).    Company's commitment towards the minimum work programme in respect of oil exploration activities of joint operations has been disclosed in Note 66.

j). S.O. 254 (E) dated 25 January 2016 issued by the Ministry of Environment, Forest and Climate Change (MOEF), GOI provides that the cost of transportation of ash for road construction projects or for manufacturing of ash based products or use as soil conditioner in agricultural activity within a radius of hundred kilometers from a coal based thermal power plant shall be borne by such coal based thermal power plant and the cost of transportation beyond the radius of hundred kilometers and up to three hundred kilometers shall be shared equally between the user and the coal based thermal power plant. Further, the coal or lignite based thermal power plants shall within a radius of three hundred kilometers bear the entire cost of transportation of ash to the site of road construction projects under Pradhan Mantri Gramin Sadak Yojna and asset creation programmes of the Government involving construction of buildings, road, dams and embankments. Accordingly, the Company has commitment to bear/share the cost of transportation of fly ash from its coal based stations on lifting of the fly ash by the users. Based on an independent expert opinion, the Company's obligation towards the transportation cost of fly ash will arise only on lifting and transportation of the fly ash. Further, the Company's liability on this account, if any shall be first met from the ‘Fly Ash Utilization Reserve Fund' maintained by the Company in terms of MOEF Notification dated 3 November 2009.

k). Company's commitment in respect of lease agreements has been disclosed in Note 56

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