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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. (₹) 120416.76 Cr. P/BV 1.09 Book Value (₹) 111.21
52 Week High/Low (₹) 146/107 FV/ML 10/1 P/E(X) 9.53
Bookclosure 21/08/2019 EPS (₹) 12.77 Div Yield (%) 5.00
Year End :2019-03 

Note 1. Company Information and Significant Accounting Policies

A.    Reporting entity

NTPC Limited (the “Company”) is a Company domiciled in India and limited by shares (CIN: L40101DL1975GOI007966). The shares of the Company are publicly traded on the National Stock Exchange of India Limited and BSE Limited. The address of the Company’s registered office is NTPC Bhawan, SCOPE Complex, 7 Institutional Area, Lodi Road, New Delhi - 110003. The Company is primarily involved in the generation and sale of bulk power to State Power Utilities. Other business includes providing consultancy, project management & supervision, energy trading, oil & gas exploration and coal mining.

B.    Basis of preparation

1.    Statement of Compliance

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

These financial statements were authorised for issue by the Board of Directors on 25 May 2019.

2.    Basis of measurement

The financial statements have been prepared on the historical cost basis except for:

-    Certain financial assets and liabilities (including derivative instruments) that are measured at fair value (refer accounting policy regarding financial instruments); and

-    Plan assets in the case of employees defined benefit plans that are measured at fair value.

The methods used to measure fair values are discussed in notes to the financial statements.

Historical cost is the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire assets at the time of their acquisition or the amount of proceeds received in exchange for the obligation, or at the amounts of cash or cash equivalents expected to be paid to satisfy the liability in the normal course of business. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

3.    Functional and presentation currency

These financial statements are presented in Indian Rupees (INR), which is the Company’s functional currency. All financial information presented in INR has been rounded to the nearest crore (upto two decimals), except as stated otherwise.

4.    Current and non-current classification

The Company presents assets and liabilities in the balance sheet based on current/non-current classification.

An asset is current when it is:

-    Expected to be realised or intended to be sold or consumed in normal operating cycle;

-    Held primarily for the purpose of trading;

-    Expected to be realised within twelve months after the reporting period; or

-    Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

-    It is expected to be settled in normal operating cycle;

-    It is held primarily for the purpose of trading;

-    It is due to be settled within twelve months after the reporting period; or

-    There is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets/liabilities are classified as non-current.

C. use of estimates and management judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that may impact the application of accounting policies and the reported value of assets, liabilities, income, expenses and related disclosures concerning the items involved as well as contingent assets and liabilities at the balance sheet date. The estimates and management’s judgments are based on previous experience & other factors considered reasonable and prudent in the circumstances. Actual results may differ from these estimates.

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

In order to enhance understanding of the financial statements, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is as under:

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.

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 115. 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 judgements 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 recognising provisions and contingencies have been made in accordance with Ind AS 37, ‘Provisions, contingent liabilities and contingent assets’. The evaluation of the likelihood of the contingent events has 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 venture 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 conveyancing of the title to 10,124 acres of freehold land of value Rs.1,478.01 crore (31 March 2018: 10,126 acres of value Rs. 1,900.82 crore), buildings and structures of value Rs. 4.55 crore (31 March 2018: Rs. 4.97 crore) and also execution of lease agreements for 10,592 acres of land of value Rs. 1,543.62 crore (31 March 2018: 10,824 acres of value Rs. 1,804.49 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 2018: 284.35 acres of value Rs. 0.52 crore), and 1939.55 acres of leasehold land of value Rs. 3.81 crore (31 March 2018: 1939.55 acres of value Rs. 3.81 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 33 acre (31 March 2018: 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 1,337 acres of value Rs. 133.77 crore (31 March 2018: 1,298 acres of value Rs.133.93 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. 282.92 crore (31 March 2018: 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. 597.94 crore (31 March 2018: Rs. 576.64 crore) of freehold land and Rs.178.83 crore (31 March 2018: Rs.178.83 crore) of leasehold land. The land has been amortised 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 2018: 98 acres) consisting of 79 acres of freehold land (31 March 2018: 79 acres) and 19 acres of lease hold land (31 March 2018: 19 acres) of value Rs. 0.21 crore (31 March 2018: 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 28 - Current liabilities - Other financial liabilities.

h)    Refer Note 49 (b) regarding property, plant and equipment under finance lease.

i)    Based on impairment assessment, the Company has reversed an impairment loss of Rs. Nil (31 March 2018: Rs. 3.75 crore) in respect of plant and equipment of a Solar PV Station of the Company.

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

k) Property, plant and equipment costing Rs.5,000/- or less , are depreciated fully in the year of acquisition.

l) Refer Note 21 for information on property, plant and equipment pledged as security by the Company.

m) Refer Note 69 (C) (a) for disclosure of contractual commitments for the acquisition of property, plant and equipment.

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

o) Exchange differences capitalised are disclosed in the ‘Addition’ column of Capital work-in-progress (CWIP) and allocated to various heads of CWIP in the year of capitalisation through ‘Deductions/Adjustments’ column of CWIP. Exchange differences in respect of assets already capitalised are disclosed in the ‘Deductions/Adjustments’ column of Property, plant and equipment.

p) Gross carrying amount of the fully depreciated property, plant and equipment that are still in use:

q) Business Combinations

Additions column in gross block includes items of property, plant and equipment acquired under business combinations

(Refer Note 59), details of which are as below:

a)    Construction stores are net of provision for shortages pending investigation amounting to Rs. 25.39 crore (31 March 2018: Rs. 26.26 crore).

b)    Pre-commissioning expenses for the year amount to Rs. 622.41 crore (31 March 2018: Rs. 544.39 crore) and after adjustment of pre-commissioning sales of Rs. 71.82 crore (31 March 2018: Rs. 77.40 crore) resulted in net pre-commissioning expenditure of Rs. 550.59 crore (31 March 2018: Rs. 466.99 crore).

c)    Additions to the development of coal mines include expenditure during construction period (net) of Rs. 1,269.79 crore (31 March 2018: Rs. 668.37 crore) - [Ref. Note 39] and are after netting off the receipts from coal extracted during the development phase amounting to Rs. 1,214.99 crore (31 March 2018: Rs. 464.03 crore). Also refer Note 47 (B) relating to change in accounting policy relating to development of coal mines.

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

a)    Investments have been valued as per accounting policy no. C.27.1 (Note 1).

b)    The company entered into a Memorandum of Understanding (MoU) with State Government of Bihar and its affiliate companies on 15 May 2018 for buy-out of equity of Bihar State Power Generation Company Limited (BSPGCL) in Kanti Bijlee Utpadan Nigam Limited (KBUNL) and Nabinagar Power Generating Company Private Limited (NPGCL). Consequently, the Company bought the equity shares of BSPGCL in KBUNL and NPGCL for an amount of Rs. 392.78 crore and Rs. 1,737.19 crore respectively. As a result, KBUNL and NPGCL became wholly-owned subsidiaries of the Company with effect from 29 June 2018.

c)    The Board of Directors of the Company 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 for impairment loss on the entire investment in NTPC-BHEL of Rs. 50.00 crore (upto 31 March 2018: Rs. 45.59 crore) has been made based on the un-audited accounts of NTPC-BHEL as at 31 March 2019.

d)    The Board of Directors of the Company 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 recognised.

e)    The Company has an investment of Rs. 834.55 crore as at 31 March 2019 (31 March 2018: Rs. 834.55 crore) in the equity shares of Ratnagiri Gas and Power Private Ltd. (RGPPL), a joint venture of the Company. During the year, as required by Ind AS 36, an assessment of impairment of the investment in RGPPL was carried out by an independent expert and the provision for impairment loss on the investment in RGPPL has been increased to Rs. 775.02 crore (31 March 2018: Rs. 617.05 crore).

f)    The Company has an investment of Rs. 139.75 crore as at 31 March 2019 (31 March 2018: Rs. 139.75 crore) in the equity shares of Konkan LNG Private Ltd. (KLPL), a joint venture of the Company. Provision for impairment loss on the entire investment in KLPL made in earlier years of Rs. 139.75 crore has been continued.

g)    Restrictions for the disposal of investments held by the Company and commitments towards certain subsidiary & joint venture companies are disclosed in Note 69 (C) (b) and (c).

# Equity shares of Rs. 30,200/- (31 March 2018: Rs. 30,200/-) held in various employee co-operative societies.

a)    Investments have been valued as per accounting policy no. C.27.1 (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 Ministry of Steel, 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 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 the Company. Ministry of Power, GoI conveyed its approval for winding up of BF-NTPC on 8 January 2018. Consequently, liquidator has been appointed in the extra-ordinary general meeting of BF-NTPC held on 9 October 2018. The winding up is under process. Pursuant to winding up proceedings, the Company had lost the joint control over the entity and accordingly, has classified the investment in BF NTPC as ‘Investment in unquoted equity instruments’.

e)    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., International Coal Ventures Private Ltd. and BF-NTPC Energy systems Ltd., and the same has been accounted for as per the provisions of Ind AS 109 ‘Financial Instruments’.

f)    No strategic investments in equity instruments measured at FVTOCI were disposed during the financial year 2018-19, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

c)    Other loans represent loan of Rs. 24.18 crore (31 March 2018: Rs. 25.07 crore) given to Andhra Pradesh Industrial Infrastructure Corporation Ltd. (APIIC).

d)    Details of collateral held as security:

-    Loans to the employees 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 alloted within 60 days from the date of payment of the share application money.

b)    Claims recoverable includes Rs. 719.71 crore (31 March 2018: Rs. 680.11 crore) towards the cost incurred upto 31 March 2019 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. 413.40 crore (31 March 2018: Rs. 390.59 crore) in respect of arbitration awards challenged by the Company before Hon’ble High Court of Delhi. 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 30). Management expects that the total cost incurred, anticipated expenditure on the safety and stabilisation 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 derecognised 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 recognised as ‘Interest income on assets under finance lease’ under ‘Revenue from operations’ (Note 32).

a)    In line with accounting policy no. 15 (Note 1), deferred foreign currency fluctuation asset has been accounted and (-) Rs. 120.25 crore (31 March 2018: (-) Rs. 128.39 crore) being the exchange fluctuations on account of foreign currency loans have been recognised in ‘Energy sales’ under ‘Revenue from operations’ (Note 32).

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 2018: Rs. 224.29 crore), paid to a contractor pending settlement of certain claims which are under arbitration. The amount will be adjusted with 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. 2,097.65 crore (31 March 2018: 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 this 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 upto 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 interest (equal to the prevailing rate of dividend payable by Railways at the time of signing of respective agreements), subject to the rebate not exceeding the freight amount in the accounting year, after commercial operation date (COD) of the railway projects. The said railway projects as per the agreement are yet to achieve the COD.

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

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

a)    Inventory items have been valued as per accounting policy no. C.9 (Note 1).

b)    Inventories - Others includes steel, cement, ash bricks etc.

c)    Refer Note 21 and 46 (b) for information on inventories pledged as security by the Company.

d)    Paragraph 32 of Ind AS 2, ‘Inventories’ provides that materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. The Company is operating in the regulatory environment and as per CERC Tariff Regulations, cost of fuel and other inventory items are recovered as per extant tariff regulations. Accordingly, the realisable value of the inventories is not lower than the cost.

*Refer Note 20 (d) regarding fly ash utilisation reserve fund.

**Out of advance for DDUGJY Scheme of the GOI. Refer Note 28 (c) and 29 (a).

a)    In the previous year, deposits with original maturity of more than three months and maturing within one year included Rs. 1,743.89 crore which was kept in corporate liquid term deposits with a bank. These deposits represented unutilised 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 modernisation of power stations and has since been utilised for the stated purposes.

b)    In line with the guidelines issued by Ministry of New and Renewable Energy (MNRE), GOI under National Solar Mission-II, a Payment Security Fund/Working Capital Fund will be set up/created by the MNRE. Upon creation of the said fund, amounts accrued from encashment of bank guarantee, penalties/liquidated damages on developers deducted by the Company from the Solar Power Developers (SPDs) as per the guidelines of MNRE shall be transferred to this fund. The said fund is yet to be created by MNRE. Pending creation of the fund, amount deducted by the Company on account of liquidated damages/penalties from the SPDs is earmarked for the said fund and is not available for use by the Company. Further, presentation of previous years figures have also been stated.

a)    Security deposits (unsecured) include Rs. 23.48 crore (31 March 2018: Rs. 27.73 crore) towards sales tax deposited with sales/commercial tax authorities, Rs. 299.79 crore (31 March 2018: Rs. 272.76 crore) deposited with Courts, Rs. 188.44 crore (31 March 2018: Rs. 177.47 crore) deposited with LIC for making annuity payments to the land oustees, Rs. 275.05 crore (31 March 2018: Rs. 275.05 crore) deposited with the Water Resource Department, Govt. of Chhattisgarh for drawl of water and Rs. 356.31 crore (31 March 2018: Rs. 158.50 crore) deposited against bank guarantee with one of the party as per the direction of the Hon’ble Supreme Court of India, refer Note 57(iii)(b).

b)    Advances - Contractors and suppliers - unsecured includes an amount of Rs. 5,769.00 crore (31 March 2018: Rs. 5,000.00 crore) paid to Indian Railways to be adjusted against freight payable on coal transportation, pursuant to the agreement entered into with Indian Railways, Ministry of Railways, GOI.

c)    Advances - Others include prepaid expenses amounting to Rs. 104.06 crore (31 March 2018: Rs. 87.39 crore) and unamortised discount on commercial paper amounting to Rs. 126.81 crore (31 March 2018: Rs. 88.40 crore).

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

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

f)    Asset held for disposal includes an amount of Rs. 98.90 crore in respect of one of the power stations which has since been shut down. (Refer Note 44).

a)    Regulatory deferral account balances have been accounted in line with Accounting policy no. C.4 (Note 1). Refer Note 65 for detailed disclosures.

b)    CERC Tariff Regulations, 2014 provide for recovery of deferred tax liability (DTL) as at 31 March 2009 from the beneficiaries. Accordingly, DTL as at 31 March 2009 is recoverable on materialisation from the beneficiaries. Regulations, 2014 provide for grossing-up the rate of 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. Accordingly, deferred tax liability for the period from 1 April 2014 will be reversed in future years when the related DTL forms part of current tax.

Hitherto the Company was disclosing tax expense recoverable from the beneficiaries as a deduction from the related tax expense. Further, ‘Deferred asset for deferred tax liability’ was hitherto disclosed as a deduction from the DTL (net). During the year, the EAC of the ICAI has issued an opinion with regard to presentation of ‘Deferred asset for the deferred tax liability’, wherein it has opined that ‘Deferred asset for DTL’ is in the nature of a ‘Regulatory Deferral Account Balance’ and should be shown as ‘Regulatory deferral account balance’. Considering the EAC opinion, ‘Deferred asset for the deferred tax liability’ which was hitherto presented as a deduction from ‘deferred tax liabilities (net) has been transferred to ‘Regulatory deferral account debit balance’. [Refer Note 47A].

c)    During the year, the Company recognised MAT Credit entitlement for the period commencing from 1 April 2014 amounting to Rs. 8,257.38 crore (31 March 2018 Rs. Nil). Utilisation of MAT Credit will result in lower effective tax rate in future years. Accordingly, ‘Regulatory deferral account balance’ of Rs. 7,615.10 crore (31 March 2018 Rs. Nil) corresponding to the said MAT Credit entitlement has also been recognised pertaining to the beneficiaries.

b) Terms and rights attached to equity shares:

The Company has only one class of equity shares having a par value Rs.10/- per share. The holders of the equity shares are entitled to receive dividends as declared from time to time and are entitled to voting rights proportionate to their share holding at the meetings of shareholders.

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 utilised only for the development of infrastructure or facility, promotion & facilitation activities for use of fly ash until 100 percent fly ash utilisation level is achieved.

During the year, proceeds of Rs.172.02 crore (31 March 2018: Rs. 131.02 crore) from sale of ash/ash products, Rs. 40.65 crore (31 March 2018: Rs. 26.74 crore) towards income on investment have been transferred to fly ash utilisation reserve fund. An amount of Rs. 207.25 crore (31 March 2018: Rs. 83.23 crore) has been utilised from the fly ash utilisation reserve fund on expenses incurred for activities as specified in the aforesaid notification of MOEF.

The fund balance of Rs. 636.63 crore (31 March 2018: Rs. 631.21 crore) has been kept in ‘Bank balances other than cash & cash equivalents’ (Note 14). Refer Note 18 & 65 for ash transportation cost.

General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. The Company has issued 1,64,90,92,880 equity shares of Rs. 10/- each as fully paid bonus shares during the year ended 31 March 2019 (31 March 2018: Nil) in the ratio of one equity share of Rs. 10/- each for every five equity shares held.

The Company has elected to recognise changes in the fair value of certain investments in equity instruments in other comprehensive income. These changes are accumulated in reserve for equity instruments through OCI within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity instruments are derecognised.

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 15 to 24 semi annual installments as of 31 March 2019.

ii)    Unsecured foreign currency loans - Banks include loans of Rs. 243.97 crore (31 March 2018: Rs. 352.80 crore) which carry fixed rate of interest of 1.88% p.a. to 4.31% p.a. and loans of Rs. 10,001.63 crore (31 March 2018: Rs. 8,146.27 crore) which carry floating rate of interest linked to 6M USD LIBOR/6M JPY LIBOR. These loans are repayable in 2 to 19 semi-annual/annual installments as of 31 March 2019, 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. 2,906.14 crore (31 March 2018: Rs. 3,342.55 crore) which carry fixed rate of interest ranging from 1.88% p.a. to 4.31% p.a and loans of Rs. 60.11 crore (31 March 2018: Rs. 123.58 crore) which carry floating rate of interest linked to 6M EURIBOR. These loans are repayable in 2 to 20 semi annual installments as of 31 March 2019, 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 8.50% 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 15 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.

Details of securities

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

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

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

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

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

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

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

a)    Disclosures as required under Companies Act, 2013 / MSMED Act, 2006 are provided in Note 67.

b)    Others mainly include amount payable to the Department of Water Resource, Government of Odisha pursuant to the Resolution No. 11011 dated 18 May 2015.

c)    Amounts payable to related parties are disclosed in Note 53.

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

b)    During the year, the Company has recognised MAT credit available to the Company in future amounting to Rs. 8,257.38 crore (31 March 2018: Rs. Nil) as the same is likely to give future economic benefits in the form of availability of set off against future income tax liability. Out of the above, an amount of Rs.7,615.10 crore (31 March 2018: Rs. Nil) has been recognised as payable to beneficiaries through regulatory deferral account balances.(Also refer Note 18 (c))

c)    Refer Note 18(b) and 47(A) for reclassification of deferred asset for deferred tax liability as per Ind AS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’ and Ind AS 1, ‘Presentation of financial statements’.

d)    Disclosures as per Ind AS 12, ‘Income Taxes’ are provided in Note 48.

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 21.

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 payables - Others’ mainly includes Rs. 472.27 crore (31 March 2018: Rs. 263.10 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 payables - Others’ also include Rs. 319.74 crore (31 March 2018: Rs. 211.49 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 dependants of employees who die or suffer permanent total disability under the ‘Employees Rehabilitation Scheme’ (said amount is included in “Other payables - 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. Based on an expert opinion, the amount accepted under the Scheme is not considered as a deposit under the Companies Act, 2013.

e)    Disclosures as required under the Companies Act, 2013 / MSMED Act, 2006 are provided in Note 67.

f)    Amounts payable to related parties are disclosed in Note 53.

(a) Advance received for the DDUGJY (including interest thereon) of Rs. 58.28 crore (31 March 2018: Rs. 313.97 crore) is included in ‘Advance from customers and others’. Refer Note 28 (c). Tax deducted at source on the interest is included in ‘Advance tax and tax deducted at source’ - Note 10.

a)    Disclosures required by Ind AS 19, ‘Employee Benefits’ are provided in Note 50.

b)    Disclosures required by Ind AS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’ are provided in Note 57.

c)    Provision for employee benefits as of 31 March 2018 included an amount of Rs. 1203.28 crore towards revision of payscales of employees which has been used during the year.

d)    Provision for others mainly comprise Rs. 85.14 crore (31 March 2018: Rs. 73.15 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 60), Rs. 1,908.43 crore (31 March 2018: Rs. 1,279.31 crore) towards provision for cases under litigation and Rs. 3.36 crore (31 March 2018: Rs. 4.62 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. 74.35 crore (31 March 2018: Rs. 297.91 crore) has been recognised during the year from the AAD and included in energy sales (Note 32). The AAD recognised during the previous 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 which was recognised as energy sales during that 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 recognising 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 recognised 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. 535.38 crore (31 March 2018: Rs. 575.93 crore) received from Solar Energy Corporation of India under MNRE Scheme for setting up Solar PV power projects.

a) (i) The CERC notified the Tariff Regulations, 2014 in February 2014 (Regulations, 2014). The CERC has issued tariff orders for all the stations except five 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. 88,278.09 crore (31 March 2018: Rs. 79,231.07 crore).

(ii)    The Company filed a writ petition before the Hon’ble High Court of Delhi contesting certain provisions of the Regulations, 2014 including issue relating to the measurement of GCV. 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 issued an order dated 25 January 2016 that samples for measurement of coal on ‘As received’ basis should be collected from wagon top at the generating stations. Consequent to this order, wagon top Sampling for measurement of ‘As received’ GCV was implemented at NTPC Stations w.e.f 1 October 2016. Thereafter the company approached the CERC with the difficulties being faced in implementation of said order through Petition No. 244/MP/2016 seeking inter-alia a margin in the GCV measured at wagon Top. This petition is pending in CERC.

Pending disposal of the petition by the CERC for the tariff period 2014-19, 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.

The Writ Petition filed in Hon’ble High Court of Delhi was withdrawn without prejudice to the rights and contentions of the Company in the above petition pending before the CERC for adjustments of loss of GCV relating to the period 2014-19. Subsequently, in the Tariff Regulation for the tariff period 2019-24, CERC has allowed a compensation of 85 kcal/kg on the Weighted Average GCV of coal ‘as received’ on account of compensation during storage at the generating stations.

(iii)    Sales have been provisionally recognised at Rs. 89,007.64 crore (31 March 2018: Rs. 79,683.50 crore) on the said basis.

b)    Sales include Rs. 0.02 crore (31 March 2018: Rs. 210.33 crore) on account of income tax refundable to the beneficiaries as per Regulations, 2004. Sales also include Rs. 82.68 crore (31 March 2018: Rs. 66.98 crore) on account of deferred tax materialised which is recoverable from beneficiaries as per Regulations, 2014.

c)    Sales include (-) Rs. 2,775.82 crore (31 March 2018: Rs. 6.44 crore) pertaining to previous years recognised based on the orders issued by the CERC/Appellate Tribunal for Electricity (APTEL). This includes reversal of sales amounting to Rs. 2,926.47 crore in respect of one of the stations, considering the directions issued by the CERC and subsequent developments as detailed in Note 32 d) below.

d)    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 CERC further directed that the revenue earned over and above fuel cost from sale of infirm power from 15 November 2014 to 7 March 2016, be adjusted in the capital cost of the said unit. The Company filed an appeal against this order in APTEL on 11 October 2017. Pending disposal of the appeal and considering the said order of the CERC, sales for the year 2017-18 was recognised as per CERC order and provision for tariff adjustment was made for the sales recognised till March 2017.

On 25 January 2019, APTEL disposed off the Company’s appeal by upholding the said CERC order. Further, the Company’s appeal against the said CERC order has also been dismissed by the Hon’ble Supreme Court of India on 5 April 2019.

Consequently, provision for tariff adjustment amounting to Rs. 276.69 crores, expenditure of Rs. 2,708.88 crore and sales of Rs. 2,926.47 crore for the period from 15 November 2014 to 31 March 2018 have been reversed and related adjustment have been carried out in the property, plant and equipment (Note-2) during the year. This has resulted in increase in profit for the year by Rs. 59.10 crore and reduction in PPE amounting to Rs. 499.37 crore.

e)    Energy sales include electricity duty amounting to Rs. 904.35 crore (31 March 2018: Rs.879.77 crore).

f)    Energy sales are net of rebate to beneficiaries amounting to Rs. 815.80 crore (31 March 2018: Rs.752.78 crore).

g)    Other operating revenue includes Rs. 64.07 crore (31 March 2018: Rs. 63.41 crore) towards energy internally consumed, valued at variable cost of generation and the corresponding amount is included in power charges in Note 37.

h)    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. 90.02 crore (31 March 2018: Rs. 487.54 crore) has been accounted as ‘Interest from beneficiaries’. Further, the amount payable to the beneficiaries has been accounted as ‘Interest to beneficiaries’ in Note 37.

i)    Keeping in view the provisions of Appendix C to Ind AS-17 on 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 the definition of 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.

j) Keeping in view the provisions of Appendix C to Ind AS-17 on 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 derecognised 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 recognised as ‘Interest income on Assets under finance lease’.

a)    During the development stage of mine, transfer price of coal extracted from Company’s captive mine has been determined considering the notified price of Coal India Ltd. for equivalent grade of coal. The same has been netted from the cost of captive coal and carried to ‘Development of coal mines’ (Note 3) through ‘Transferred to expenditure during development of coal mines’ (Note 39).

b)    Details in respect of payment to auditors:

Payment to the auditors includes Rs. 0.24 crore (31 March 2018: Rs. 0.33 crore) relating to earlier year.

c)    CERC Regulations provides that where after the truing-up, the tariff recovered is more than the tariff approved by the Commission, the generating Company shall pay to the beneficiaries the over recovered amount along-with simple interest. Accordingly, the interest payable to the beneficiaries amounting to Rs. Nil (31 March 2018: Rs. 12.00 crore) has been accounted and disclosed as ‘Interest to beneficiaries’.

d)    Water charges include amount provided against the demand of Rs. Nil (31 March 2018: Rs. 305.55 crore) at one of the power stations by the state authority for earlier years.

e)    Miscellaneous expenses include expenditure on books & periodicals, workshops, operating expenses of DG sets, brokerage and commission, bank charges, furnishing expenses, etc.

f)    Provisions for arbitration cases include an amount of Rs. 394.07crore (31 March 2018: Rs. Nil) pertaining to the dispute with the operator referred in Note 57 (iii) (b) estimated and provided against the award pronounced by the arbitral tribunal for which the Company has filed an appeal before Hon’ble High Court of Delhi.

g)    Provisions for tariff adjustment include an amount of Rs. Nil (31 March 2018: Rs. 276.69 crore) pertaining to the period from 15 November 2014 to 31 March 2017 in respect of CERC order for shifting of COD of one of the stations of the Company. (Refer Note 32).

h)    Provisions for shortages in stores include provision for shortage of coal observed on physical verification, beyond the Company’s norms, amounting to Rs. 75.32 crore (31 March 2018: Rs. 10.98 crore)

i)    Provisions - Others include provision for doubtful debts and shortages in property, plant and equipment.

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

2.    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.

3.    The environmental clearance (“clearance”) granted by the Ministry of Environment and Forest, Government of India (MoEF) for one of the Company’s project consisting of three units of 800 MW each, was challenged before the National Green Tribunal (NGT). The NGT disposed off 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 judgement 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. All the three units of 800 MW each have since been declared commercial. Aggregate cost incurred on the project upto 31 March 2019 is Rs. 15,598.80 crore (31 March 2018: Rs. 15,522.77 crore). Management is confident that the approval for the project shall be granted, hence no provision is considered necessary.

4.    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 2019 is Rs. 163.33 crore (31 March 2018: Rs. 163.23 crore). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary.

5.    In compliance to order of Delhi Polution Control Committee (DPCC) dated 25 July 2018, operations of one of the power stations of the Company has been permanently discontinued w.e.f.15 October 2018. Consequently, plant & machinery and other assets of the power station are in the process of disposal and/or being utilised at other locations of the Company. Further, Property, plant and equipment of Rs. 47.16 crore has been derecognised and charged to the statement of profit and loss (Refer Note 37) and an amount of Rs. 98.90 crore transferred to ‘Assets held for disposal’ at their estimated net realisable value (Refer Note 17).

6.    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:

i)    Policy C.6 ‘Development expenditure on coal mines’ has been modified considering the expected time for delivering sustainable operations by the coal mines. Refer Note 47(B) for nature, impact and detailed disclosures for this change in accounting policy.

ii)    Policy C.22 ‘Business combinations’ has been included in the significant accounting policies as the same is applicable during the current year as a result of acquisition of business of Barauni Thermal Power Station. Refer Note 59 for detailed disclosures.

iii)    Certain other changes have also been made in the policies nos. C.1, C.3, C.14, C.15, C.18, C.19, C.21, C.23, C.25, C.27 and policy D for improved disclosures. There is no impact on the financial statements due to these changes, however, the policy numbers have been rearranged in the current year as required.

b)    Refer Note 47(A) for disclosures relating to restatement.

7. Disclosure as per ind AS 2 ‘inventories’

(a) Amount of inventories consumed and recognised as expense during the year is as under:

(b) Carrying amount of inventories pledged as security for borrowings as at 31 March 2019 is Rs. 5,138.41 crore (31 March 2018: Rs. 4,069.58 crore).

8. Disclosure as per ind AS 8 - ‘Accounting Policies, Changes in Accounting Estimates and Errors’

(A) Restatement for the year ended 31 March 2018 and as at 1 April 2017

In accordance with Ind AS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’ and Ind AS 1, ‘Presentation of Financial Statements’, the Company has retrospectively restated its Balance Sheet as at 31 March 2018 and 1 April 2017 (beginning of the preceding period) and Statement of Profit and Loss and Statement of Cash Flows for the year ended 31 March 2018 for the reasons as stated in the notes below. Reconciliation of financial statement line items which are retrospectively restated are as under:

Notes:

(a)    Regulatory deferral account balances

As per CERC Regulations, 2014, the Company is entitled to a fixed return on its investment, net of tax. Consequently, tax is a pass-through cost. The Company followed a practice of recognising an asset (‘Deferred assets for Deferred tax liability’) for the tax liability recognised in the financial statements which is recoverable from the beneficiaries. The Company used to offset deferred asset for deferred tax liability recognised with the deferred tax liabilities (Net) and income on account of deferred asset for deferred tax liability was also offset with the tax expense recognised in the statement of profit and loss.

During the year, based on an opinion pronounced by Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI), the Company has recognised Deferred asset for Deferred tax liability as a regulatory deferral account debit/credit balance in accordance with Ind AS 114, ‘Regulatory Deferral Accounts’.

As a result, regulatory deferral account debit/credit balance has increased with a corresponding increase in Deferred tax liabilities (net) as under:

As at 1 April 2017 : Rs. 4,927.84 crore As at 31 March 2018 : Rs. 7,638.53 crore

Further, for the year ended 31 March 2018, ‘Net movement in regulatory deferral account balances’ has increased by an amount of Rs. 2,707.85 crore in the statement of profit and loss with a corresponding increase in deferred tax expense.

(b)    Property, plant and equipment

The Company was capitalising expenditure incurred under Rehabilitation and Resettlement (R&R) Schemes as cost of land. During the year, an opinion has been pronounced by Expert Advisory Committee (EAC) of Institute of Chartered Accountants of India (ICAI) stating that the R&R expenditure incurred for development activities associated with the project (not merely for acquisition of land) can be considered as directly attributable to the project. Accordingly, R&R expenditure incurred for development activities associated with the project capitalised as cost of land have been reviewed.

(c) Certain reclassifications have been made to the comparative period’s financial statements to enhance comparability with the current year’s financial statements.

(B) Change in accounting policy for ‘Development expenditure on coal mines’:

During the year, the Company has voluntarily changed the accounting policy for ‘Development expenditure on coal mines’ considering the expected time for delivering sustainable operations by the coal mines. Consequently, one of the coal mines has been declared commercial w.e.f. 1 April 2019 instead of 7 December 2018.

The Company has modified the accounting policy with respect to bringing mine under development to revenue by

inserting the words ‘subject to commercial readiness to yield production on a sustainable basis (i.e. when the Company determines that the mining property will provide sufficient and sustainable return relative to its perceived risks and therefore it is considered probable that future economic benefits will flow to the Company)’.

The following financial statement line items for the year ended 31 March 2019 were affected by the voluntary change in accounting policy.

(C) Recent accounting pronouncements Standards / amendments issued but not yet effective:

On 30 March 2019, Ministry of Corporate Affairs (MCA) has notified the following standards / amendments which will come into force from 1 April 2019:

1. Ind As 116 ‘Leases’

Ind AS 116, ‘Leases’ will replace the existing Ind AS 17, ‘Leases’, and related Interpretations. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the lessor. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognise a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments.

There are recognition exemptions for short-term leases and leases of low-value items. Currently, operating lease expenses are charged to the statement of profit and loss. Lessor accounting remains similar to the current standard - i.e. lessors continue to classify leases as finance or operating leases. Further, the new standard contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17.

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 recognised at the date of initial application (modified retrospective approach)

Under modified retrospective approach, the lessee records the lease liability as the present value of the remaining lease payments, discounted at the incremental borrowing rate and the right of use asset either as:

-    Its carrying amount as if the standard had been applied since the commencement date, but discounted at lessee’s incremental borrowing rate at the date of initial application or

-    An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments related to that lease recognised under Ind AS 17 immediately before the date of initial application. Certain practical expedients are available under both the methods.

The Company will adopt the standard on 1 April 2019 by using the modified retrospective approach and accordingly comparatives for the year ended 31 March 2019 will not be retrospectively adjusted.

2.    Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments

Appendix C of Ind AS 12, ‘Uncertainty over Income Tax Treatments’ is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. According to the appendix, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.

The standard permits two possible methods of transition:

-    Full retrospective approach - Under this approach, Appendix C 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 Appendix C recognised by adjusting equity on initial application

The Company will adopt the standard on 1 April 2019 and has decided to adjust the cumulative effect in equity on the date of initial application i.e. 1 April 2019 without adjusting comparatives.

3.    Amendment to ind As 12 ‘income taxes’

The amendments to the guidance in Ind AS 12, ‘Income Taxes’, clarifies that an entity shall recognise the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the past transactions or events that generated distributable profits were originally recognised.

4.    Amendment to Ind AS 19 ‘Employee benefits’

The amendments to the guidance in Ind AS 19, ‘Employee Benefits’, in connection with accounting for plan amendments, curtailments and settlements require an entity:

-    to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement; and

-    to recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognised because of the impact of the asset ceiling.

5.    Amendment to Ind AS 23 ‘Borrowing Costs’

The amendments to the guidance in Ind AS 23, ‘Borrowing Costs’, clarifies the following:

-    while computing the capitalisation rate for funds borrowed generally, borrowing costs applicable to borrowings made specifically for obtaining a qualified asset should be excluded, only until the asset is ready for its intended use or sale.

-    borrowing costs (related to specific borrowings) that remain outstanding after the related qualifying asset is ready for its intended use or sale would subsequently be considered as part of the general borrowing costs.

6.    Amendment to ind As 28 ‘investments in Associates and Joint ventures’

The amendments to the guidance in Ind AS 28, ‘Investments in Associates and Joint Ventures’, clarifies that an entity applies Ind AS 109, ‘Financial Instruments’, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.

7.    Amendment to ind AS 103 ‘Business Combinations’

The amendments to the guidance in Ind AS 103, ‘Business Combinations’, clarifies that when an entity obtains control of a business that is a joint operation, then the acquirer considers such an acquisiton as a business combination achieved in stages and re-measures previously held interests in that business.

8.    Amendment to ind AS 111 ‘Joint Arrangements’

The amendments to the guidance in Ind AS 111, ‘Joint Arrangements’, clarifies that when an entity obtains joint control of a business that is a joint operation, the entity does not re-measure previously held interests in that business.

9.    Amendment to ind AS 109 ‘Financial instruments’

The amendments relate to the existing requirements in Ind AS 109, ‘Financial Instruments’ regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments.

The Company is evaluating the requirements of the above amendments and the effect on the financial statements.

(b)    Tax losses carried forward

There are no unused tax losses to be carried forward as on 31 March 2019 and 31 March 2018.

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

Since year ended 31 March 2019, the Directors have recommended the payment of final dividend amounting to Rs. 2,473.64 crore (31 March 2018: Rs. 1,970.67 crore). The dividend distribution tax on this proposed dividend amounting to Rs. 508.46 crore (31 March 2018: Rs. 405.08 crore) has not been recognised since this proposed dividend is subject to the approval of shareholders in the ensuing Annual General Meeting.

(d)    MAT credit available to the Company in future but not recognised:

MAT credit available to the Company in future but not recognised as at 31 March 2019 is Rs. Nil (31 March 2018: Rs. 7,194.00 crore).

9. 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.5.83 crore (31 March 2018: Rs. 20.82 crore) towards lease payments (net of recoveries) in respect of premises for residential use of employees is included under ‘Salaries and wages’ in Note 34. Lease payments in respect of premises for offices and guest house/ transit camps amounting Rs.13.55 crore (net of recoveries) (31 March 2018: Rs. 23.52 crore) are included under ‘Rent’ in Note 37.

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. 12.36 crore (31 March 2018: Rs. 15.63 crore) is included under ‘Hire charges of helicopter/aircraft’ in Note 37. 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 2018: Rs. 6.29 crore) has been charged to the statement of profit and loss and included under ‘Rates and taxes’ in Note 37. Also refer Note 44.

d)    The Company has taken electrical vehicles on operating lease for a period of six years, which can be further extended at mutually agreed terms. Lease rentals are subject to escalation of 10% per annum. The lease rental expense recognised in the statement of profit and loss for the year in respect of leases is Rs. 0.96 crore (31 March 2018: Rs. 0.04 crore). The future minimum lease payments in respect of non-cancellable leases is as follows:

ii. Leases as lessor

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 take over 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.

The future minimum lease payments in respect of non-cancellable leases is as follows:

b) Finance leases

i) Leases as lessee:

a) The Company has taken certain vehicles on lease for a period of four years, which can be further extended at mutually agreed terms. There are no escalations in the lease rentals as per terms of the agreement. However, the Company has purchase option for such vehicles at the end of the lease term.

Reconciliation between the future minimum lease payments (MLPs) and their present value of MLPs is as under:

b) The Company had entered into an agreement for movement of coal through inland waterways for one of its stations. As per the agreement, the operator was to design, finance, build, operate and maintain the unloading and material handling infrastructure for 7 years after which it was to be transferred to the Company at Rs. 1/-. (Also refer Note 57 (iii)(b))

Reconciliation between the future minimum lease payments (MLPs) and their present value of MLPs is as under:

The total contingent rents recognised as expense during the year is Rs. Nil (31 March 2018: Rs. Nil).

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 capitalised at the present value of the total minimum lease payments to be paid over the lease term. Future lease rentals are recognised as ‘Finance lease obligation’ at their present values. The leasehold land is amortised considering the signifcant accounting policies of the Company

ii) leases as lessor:

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.

10. 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. 207.93 crore (31 March 2018: Rs. 153.32 crore) for the year is recognised 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. 44.88 crore (31 March 2018: Rs. 55.36 crore) determined through actuarial valuation. Accordingly, Company has not recognised the surplus as an asset, and the actuarial gains in ‘Other Comprehensive Income’, as these pertain to the Provident Fund Trust and not to the Company.

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 Rs. 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 recognised 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 recognised 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 recognised 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 recognised in the Company’s financial statements as at balance sheet date:

D. other retirement benefit plans

Other retirement benefit plans include baggage allowance for settlement at home town for employees and dependents and farewell gift to the superannuating employees. The scheme above is unfunded and liability for the same is recognised on the basis of actuarial valuation.

As at 31 March 2019, an amount of Rs. 350.00 crore (31 March 2018: Rs. 500.00 crore) is included in the value of plan assets ( in respect of the reporting enterprise’s own financial instruments (Corporate bonds).

Actual return on plan assets is Rs. 980.08 crore (31 March 2018: Rs. 913.25 crore).

F. Defined benefit obligations

i. Actuarial assumptions

The following were the principal actuarial assumptions at the reporting 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.

ii. Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

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 minimise 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 2019 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 2020 are Rs. 556.11 crore.

The weighted average duration of the defined benefit plan obligation at the end of the reporting period is 15.17 years (31 March 2018: 15.21 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 recognised on the basis of actuarial valuation. During the year, provision amounting to Rs. 137.17 crore has been made on the basis of actuarial valuation at the year end and debited to statement of profit and loss (31 March 2018: reversal of Rs. 462.23 crore on account of surge in the encashment of earned leaves by employees in the previous year)

B. Other employee benefits

Provision for long service award and family economic rehabilitation scheme amounting to Rs. 7.38 crore (31 March 2018: Rs. 7.36 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.

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

The amount of exchange differences (net) credited to the statement of profit and loss is Rs. 20.59 crore (31 March 2018: debited to Statement of profit and loss Rs. 145.03 crore).

12.    Disclosure as per Ind AS 23 ‘Borrowing Costs’

Borrowing costs capitalised during the year is Rs. 4,700.02 crore (31 March 2018: Rs. 4,155.89 crore).

13.    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.

6.    Nabinagar Power Generating Company Ltd. (previously Nabinagar Power Generating Company Pvt. 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 and 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. (under liquidation since 7 October 2018)

10.    Nabinagar Power Generating Company Ltd. (previously Nabinagar Power Generating Company Pvt. 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

1.    Holding additional charge, in addition to Director (Finance), Power Grid Corporation of India Ltd.

2.    Was under suspension w.e.f. 14 December 2017 (vide order from Ministry of Power). Re-joined on 3 November 2018 and continued upto 8 December 2018

iv)    Post employment benefit plans:

1.    NTPC Limited Employees Provident Fund

2.    NTPC Employees Gratuity Fund

3.    NTPC Post Retirement Employees Medical Benefit Fund

4.    NTPC Limited Defined Contribution Pension Trust

v)    Entities under the control of the same government:

The Company is a Central Public Sector Undertaking (CPSU) controlled by Central Government by holding majority of shares (Note 19). Pursuant to Paragraph 25 and 26 of Ind AS 24, entities over which the same government has control or joint control of, or significant influence, then the reporting entity and other entities shall be regarded as related parties. Transactions with these parties are carried out at market terms at arm length basis. The Company has applied the exemption available for government related entities and have made limited disclosures in the financial statements. Such entities with which the Company has significant transactions include but not limited to Coal India Ltd., Singareni Coalfields Ltd., GAIL (India) Ltd., BHEL Ltd., SAIL Ltd., Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd.

vi)    Others:

1.    NTPC Education and Research Society

2.    NTPC Foundation

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 equipment 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.

iv)    Loans granted to subsidiaries and joint venture companies are detailed below:

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 in each financial year through examining the financial position of the related party and the market in which the related party operates.

vii)    Refer Note 56 (b) & (c) in respect of impairment loss on investment in Ratnagiri Gas and Power Private Ltd.and certain other joint venture companies.

viii)    Refer Note 69 (C) towards restrictions on disposal of investment and commitment towards further investments in the subsidiary and joint venture companies.

* Joint Venture Company till 28 June 2018 and a Subsidiary Company w.e.f. 29 June 2018.

*The Company has issued 1,64,90,92,880 equity shares of Rs. 10/- each as fully paid bonus shares during the year ended 31 March 2019 (31 March 2018: Nil) in the ratio of one equity share of Rs. 10/- each for every five equity shares held. This has been considered for calculating weighted average number of equity shares for all comparitive periods presented as per Ind AS 33. In line with the above, EPS for the year ended 31 March 2018 has been restated.

14. 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)    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.1,64,752.24 crore (31 March 2018: Rs. 1,90,627.27 crore). The discount rate used for the computation of value in use for the generating plant is 9.33% (31 March 2018: 8.00%) and for solar plant is 8.49% (31 March 2018: 7.13%).

b)    The Company has investments in Ratnagiri Gas and Power Pvt. Ltd. (RGPPL), a joint venture of the Company. RGPPL had incurred losses during last few years which has resulted in erosion of net worth of 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, Power Block (CGU) of RGPPL is not operating at its installed capacity from last many years. The recoverable amount of this investment was assessed at Rs. 217.50 crore and accordingly the Company had provision for impairment of Rs. 617.05 crore in respect of such investment as at 31 March 2018. During the year, the assessment of impairment of its investment in RGPPL has been carried out by an independent expert, impact of which is explained below:

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. 59.53 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. Decrease in recoverable amount of investment in RGPPL is due to decrease in the value in use as compared to the previous year. This has led to addition in provision for impairment by Rs. 157.97 crore in the current year (31 March 2018: reversal of impairment provision of Rs. 165.90 crore).

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) : 25.40%

-    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 rate used for the future cash flows is 11.20% (31 March 2018: differential rates in the range of 10.00% to 11.20%).

Also refer Note 6 (e) in this regard.

c) In respect of certain investment in other companies, provision for impairment on investments has been recognised at Rs. 189.75 crore (31 March 2018: Rs. 189.77 crore). Also refer Note 6 c) and f) 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

Billing is done based on tariff orders issued under Regulation 2014 except few stations where billing is done on provisional basis due to non-receipt of tariff orders. In such cases, accounting is done based on trued up cash expenditure as per Regulation 2014. Provision for tariff adjustment of Rs. 45.36 crore (31 March 2018: Rs.41.59 crore) is mainly towards the estimated interest payable to beneficiaries at the time of issue of tariff orders has been made on an estimated basis

Further, consequent to the dismissal of the Company’s appeal against the said CERC order by the Hon’ble Supreme Court of India, provision for tariff adjustments of Rs. 276.69 crore (31 March 2018: Rs.1,158.97 crore) was reversed by corresponding adjustment in revenue from operations. (Refer Note 32)

iii)    Provision - Others

(a) Provision for others comprise Rs. 85.14 crore (31 March 2018: Rs. 73.15 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 60 (b)], Rs. 1,908.43 crore (31 March 2018: Rs. 1,279.31 crore) towards provision for cases under litigation and Rs. 3.36 crore (31 March 2018: Rs. 4.62 crore) towards provision for shortage in property, plant and equipment on physical verification pending investigation.

(b) The Company had entered into an agreement for movement of coal through inland waterways for one of its stations. As per the agreement, the operator was to design, finance, build, operate and maintain the unloading and material handling infrastructure for 7 years after which it was to be transferred to the Company at Rs. 1/-. After commencement of the operations, the operator had raised several disputes, invoked arbitration and raised substantial claims on the Company. An amount of Rs. 356.31 crore (31 March 2018: Rs.158.50 crore) has been deposited till 31 March 2019 based on the interim arbitral award and subsequent directions of the Hon’ble Supreme Court of India. During the year, the Arbitral Tribunal has awarded a claim of Rs. 1,891.09 crore plus applicable interest in favour of the operator vide their order dated 27 January 2019. The Company aggrieved by the arbitral award and considering a legal opinion obtained has filed an appeal before Hon’ble High Court of Delhi against the said arbitral award in its entirety. Considering the provisions of Ind AS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’, Significant Accounting Policies of the Company and the principle of conservatism, an amount of Rs. 394.07 crore has been estimated and provided for and an amount of Rs.1,875.73 crore has been disclosed as contingent liability, along with applicable interest. Refer Note 37, 49(b) and Note 69A(c). The amount thus provided is included above under provisions for cases under litigation.

iv)    In respect of provision for cases under litigation, outflow of econmic 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 recognising 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 69.

15.    Disclosure as per ind As 38 ‘intangible Assets’

Research expenditure charged to revenue during the year is Rs. 51.42 crore (31 March 2018: Rs. 77.67 crore).

16.    Disclosure as per ind AS 103 ‘Business Combinations’

Acquisition of Barauni Thermal Power Station (BTPS)

(i)    Pursuant to the Memorandum of Understanding dated 15 May 2018 amongst the Company and Government of Bihar (‘GoB’), Bihar State Power Holding Company Ltd. (‘BSPHCL’), Bihar State Power Generation Company Ltd. (‘BSPGCL’), Bihar State Power Transmission Company Ltd. (‘BSPTCL’), North Bihar Power Distribution Company Ltd. (‘NBPDCL’) and South Bihar Power Distribution Company Ltd. (‘SBPDCL’), all assets and liabilities (including mining rights) of BTPS comprising Stage I (Unit# 6 and 7 - 2X110 MW) and Stage II (Unit# 8 and 9 - 2X250 MW) have been acquired by the Company via Transfer Scheme dated 27 June 2018 (as amended on 15 December 2018) and is effective from 15 December 2018.

Primary reasons for the business combination:

a.    Business development of the Company;

b.    Reduce cost of power generation for the consumers of the Bihar State by bringing in the vast management and operations experience of the Company;

c.    Enhance operational performance of the acquired assets thereby enhancing reliability of power supply in the Bihar State.

(ii)    Consideration transferred

Out of the total purchase consideration of Rs. 2,145.33 crore, the Company paid Rs. 2,018.48 crore as cash and cash equivalents and adjusted Rs. 126.85 crore towards the dues of a subsidiary company.

(iii)    Acquisition related costs

The Company incurred acquisition related costs of Rs. 3.51 crore as general adminsitrative costs. These costs have been included in ‘Employee benefits expense’ and ‘Other expenses’ amounting to Rs. 3.09 crore and Rs. 0.42 crore respectively in the Statement of profit and loss.

(iv)    Goodwill / Capital reserve

Assets and liabilities are recorded at fair value at the date of acquisition. As there is no difference between fair value of the assets & liabilities and the purchase consideration, no goodwill / capital reserve has been recognised.

(v) identifiable assets acquired and liabilities assumed

The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition:

(vi) Revenue and profit contribution

Acquisition of BTPS has contributed Rs. 0.07 crore of revenue and (-) Rs. 4.80 crore to profit before tax, from 15 December 2018 to 31 March 2019. Impact on revenue and profit for the year had the acquisition occurred on 1 April 2018, is not ascertainable.

17. 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-0SN-2009/1, KG-0SN-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-0SN-2009/1, the Company along-with the consortium partners has decided to relinquish both the blocks and Oil and Natural Gas Corporation Ltd. (ONGC), the operator, has submitted an application to Directorate General of Hydrocarbons (DGH) in this regard.

Based on the un-audited statement of the accounts for the above blocks forwarded by ONGC, the operator, the Company’s share in the assets and liabilities and expenses is as under:

For the year ended 31 March 2019 and 31 March 2018, 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. 85.14 crore from Rs. 73.15 crore along-with interest. The Company has sought waiver of the claim citing force majeure conditions at site leading to discontinuation of exploratory activities.

The Company has accounted for expenditure of Rs. 12.10 crore (31 March 2018: Rs. 5.01 crore) towards the establishment expenses of M/s Geopetrol International, the operator to complete the winding up activities of the Block. The Company’s share in the assets and liabilities and expenses is as under:

For the year ended 31 March 2019 and 31 March 2018, 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.

Based on the audited statement of the account for the above block, Company’s share in assets and liabilities and expenses is as under:

Provision of Rs. 6.07 crore as at 31 March 2019 (31 March 2018: Rs. 5.59 crore) has been made towards estimated obsolescence in the inventory.

For the year ended 31 March 2019 and 31 March 2018, 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. At Dulanga mine extraction has already started and at Talaipalli, Chatti-Bariatu and Kerandari coal mining projects land acquisition and other mine development activities are in progress. these mines are also disclosed in Note-3-Development of coal mines.

d ii) Exploration and evaluation activities are in progress at Banai, Bhalumuda and Mandakini - B coal blocks allotted by the GOI. Request sent to Nominated Authority, Ministry of Coal (MoC) for integration of both Banai & Bhalumuda blocks. In respect of Mandakini - B coal block, mining plan has been submitted to MoC for approval.

For the year ended 31 March 2019 and 31 March 2018, there are no incomes, expenses and operating and investing cash flow from coal exploration activities.

d iii) MoC vide letter dated 3 April 2019 has intimated BSPGCL regarding its prior consent for assigning Badam coal block in favour of the Company. Transfer process of this block from BSPGCL to the Company is in progress. (Refer Note 59)

18. 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. Nil (31 March 2018: (-) Rs. 3.75 crore) towards reversal of impairment loss recognised in the profit or loss, in generation of energy segment.

The operations of the Company are mainly carried out within the country and therefore there is no reportable geographical segment.

C. information about major customers

Revenue from customers under ‘Generation of energy’ segment which is more than 10% of the Company’s total revenues, are as under:

19. financial risk management

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 loans, 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 institutionalise 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, unbilled revenue, loans, cash and cash equivalents and deposits with banks and financial institutions.

Trade receivables & unbilled revenue

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.

Unbilled revenue primarily relates to the Company’s right to consideration for work completed but not billed at the reporting date and have substantially the same risk characteristics as the trade receivables for the same type of contracts.

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. 24.38 crore (31 March 2018: Rs. 60.49 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. 2,119.96 crore (31 March 2018: Rs. 3,917.89 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:

* Excluding share application money pending allotment (Refer Note 9)

** Excluding unbilled revenue (Refer Note 16)

(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 recognised.

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

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 recognised during the reporting periods in respect of trade receivables and unbilled revenues.

(iii)    Ageing analysis of trade receivables

The ageing analysis of the trade receivables is as below:

(iv) Reconciliation of impairment loss provisions

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

Based on historic default rates, the Company believes that no impairment allowance is necessary in respect of any other financial 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.

(i) Financing arrangements

The Company had access to the following undrawn borrowing facilities at the end of the reporting period:

(ii) Maturities of financial liabilities

The following are the contractual maturities of derivative and non-derivative financial liabilities, based on contractual cash flows:

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 optimising 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.

The currency profile of financial assets and financial liabilities as at 31 March 2019 and 31 March 2018 are as below:

Out of the above, an amount of Rs. 15.77 crore (31 March 2018: Rs. 33.75 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.).

At the reporting date, the interest rate profile of the Company’s interest-bearing financial instruments is as follows:

Fair value sensitivity analysis for fixed-rate instruments

The Company’s fixed rate instruments are carried at amortised 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.

Of the above mentioned increase in the interest expense, an amount of Rs. 148.40 crore (31 March 2018: Rs. 105.18 crore) is expected to be capitalised and recovered from beneficiaries.

20. Fair Value Measurements

a) Financial instruments by category

b) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

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 categorised 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 maximise 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 2019 and 2018.

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.

21. 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 networth 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.

The Company monitors capital using gearing ratio which is net debt divided by total equity. Net debt comprises of non-current and current borrowings less cash and cash equivalents. Equity includes equity share capital and reserves that are managed as capital. The gearing ratio at the end of the reporting period was as follows:

22. 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

(a)    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 (CO D) 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 differences 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 recognised 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. 35.38 crore for the year ended as at 31 March 2019 has been accounted for as ‘Regulatory deferral account debit balance’ (31 March 2018: Rs. 578.71 crore accounted as ‘Regulatory deferral account dedit balance’.)

(b)    Revision of pay scales of employees of PSEs w.e.f. 1 January 2017 has been implemented based on the guidelines issued by Department of Public Enterprises (DPE). The guidelines provide payment of 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. The Payment of Gratuity Act,1972 has since 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 taken up with CERC through petition. Accordingly, an amount of Rs. 118.26 crore for the year ended 31 March 2019 has been accounted for as ‘Regulatory deferral account debit balance’ (31 March 2018: Rs. 118.32 crore).

(c)    CERC Regulations provide that deferred tax liability upto 31 March 2009 shall be recovered from the beneficiaries as and when the same gets materialised. Further, 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. The Company has recognised a deferred asset for above deferred tax liabilities (Net) in its financial statements (referred to as ‘Deferred asset for deferred tax liability’). 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. The Company was recognising such deferred asset for deferred tax liability as part of Deferred Tax Liabilities (Net) under Note 25. During the year, in line with the opinion of the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI), the same has been reclassified as a regulatory deferral account debit balance. Refer Note 47 (A). Accordingly, an amount of (-) Rs. 5,160.22 crore (31 March 2018: Rs. 2,707.85 crore) for the year ended 31 March 2019 has been accounted for as ‘Regulatory deferral account debit balance’.

(d)The    petition filed by the Company before CERC seeking to reimburse the expenditure on transportation of ash, has been favourably considered by CERC vide order dated 5 November 2018 and it was allowed to reimburse the actual additional expenditure incurred towards transportation of ash in terms of MOEF notification under change in law, as additional O&M expenses, w.e.f. 25 January 2016 subject to prudence check. Keeping in view the above, regulatory asset has been created towards ash transportation expenses in respect of stations where there is shortfall in ash transportation expenses over and above the revenue from sale of ash. Accordingly, an amount of Rs. 179.29 crore (31 March 2018: Rs. Nil) for the year ended 31 March 2019 has been accounted for as ‘Regulatory deferral account debit balance’.

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

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

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

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

(iv)    reconciliation of the carrying amounts:

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

a) regulatory deferral account debit balance - note 18

The regulatory assets recognised in the books to be recovered from the beneficiaries in future periods are as follows:

23. Disclosure as per ind As 115, ‘revenue from contracts with customers’

i. Nature of goods and services

The revenue of the Company comprises of income from energy sales, sale of energy through trading, consultancy and other services. The following is a description of the principal activities:

(a) Revenue from energy sales

The major revenue of the Company comes from energy sales. The Company sells electricity to bulk customers, mainly electricity utilities owned by State Governments as well as private Discoms operating in States. Sale of electricity is generally made pursuant to long-term Power Purchase Agreements (PPAs) entered into with the beneficiaries.

Below are the details of nature, timing of satisfaction of performance obligations and significant payment terms under contracts for energy sales:

(b) Revenue from energy trading, consultancy and other services

(i) Sale of Energy through trading

The Company is purchasing power from the developers and selling it to the Discoms on principal to principal basis.

Below are the details of nature, timing of satisfaction of performance obligations and significant payment terms under contracts for sale of energy through trading:

(ii) Consultancy and other services

The Company undertakes consultancy and turnkey project contracts for domestic and international clients in the different phases of power plants viz. engineering, project management & supervision, construction management, operation & maintenance of power plants, research & development, management consultancy etc.

Below are the details of nature, timing of satisfaction of performance obligations and significant payment terms under contracts for consultancy and other services:

iV. Contract balances

Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are transferred to unbilled revenue when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms. The contract liabilities primarily relate to the advance consideration received from the customers which are referred as ‘advances from customers’.

The following table provides information about trade receivables, unbilled revenue and advances from customers:

** The Company has applied Ind AS 115 using the cumulative effect method. Under this method, the comparative information is not restated.

The Company recognised revenue of Rs. 103.49 crore arising from opening advances from customers as at 1 April 2018.

The amount of revenue recognised in FY 2018-19 from performance obligations satisfied (or partially satisfied) in previous periods, mainly due to change in transaction prices is (-) Rs. 2,775.82 crore.

There have been no significant changes in unbilled revenue and advances from customers during the year ended 31 March 2019.

V. Transaction price allocated to the remaining performance obligations

Performance obligations related to sale of energy:

Revenue from sale of energy is accounted for based on tariff rates approved by the CERC (except items indicated as provisional) as modified by the orders of Appellate Tribunal for Electricity to the extent applicable. In case of power stations, where the tariff rates are yet to be approved/items indicated provisional by the CERC in their orders, provisional rates are adopted considering the applicable CERC Tariff Regulations. Revenue from sale of energy is recognised once the electricity has been delivered to the beneficiary and is measured through a regular review of usage meters. Beneficiaries are billed on a periodic and regular basis. Therefore, transaction price to be allocated to remaining performance obligations cannot be determined reliably for the entire duration of the contract.

Performance obligations related to other contracts:

For rest of the contracts, transaction price for remaining performance obligations amounts to Rs. 715.45 crore (31 March 2018: Rs. 782.83 crore) which shall be received over the contract period in proportion of the work performed/ services provided by the Company.

Vi. Practical expedients applied as per ind AS 115:

a.    The company has not disclosed information about remaining performance obligations that have original expected duration of one year or less and where the revenue recognised corresponds directly with the value to the customer of the entity’s performance completed to date.

b.    The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company has not adjusted any of the transaction prices for the time value of money.

Vii. The Company has not incurred any incremental costs of obtaining contracts with a customer and therefore, not recognised an asset for such costs.

Viii. The Company adopted Ind AS 115 using the cumulative effect method and therefore the comparatives have not been restated and continues to be reported as per Ind AS 11 and Ind AS 18. On account of adoption of Ind AS 115, no cumulative adjustment was required as at 1 April 2018. Further, no financial statement line items are affected in the current year as a result of applying Ind AS 115 as compared to Ind AS 11 and Ind AS 18.

24. Disclosure as required by Schedule V of the SEBi (Listing Obligations and Disclosure Requirements) Regulations, 2015:

A. Loans and advances in the nature of loans:

1. To Subsidiary companies

2. To Joint venture companies

3. To Firms/companies in which directors are interested    : Rs. Nil

B. investment by the loanee (as detailed above) in the shares of NTPC : Rs. Nil

25. Contingent liabilities and commitments

A. Contingent liabilities

a. Claims against the Company not acknowledged as debts

(i)    Capital works

Some of the contractors for supply and installation of equipment and execution of works at our projects have lodged claims on the Company for Rs. 11,460.55 crore (31 March 2018: Rs. 12,533.49 crore) seeking enhancement of the contract price, revision of work schedule with price escalation, compensation for the extended period of 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

In 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. 374.63 crore (31 March 2018: Rs. 379.98 crore) has been estimated.

(iii)    Fuel suppliers

a)    Pending resolution of the issues with the coal companies, an amount of Rs.3,009.74 crore (31 March 2018: Rs. 2,869.21 crore) towards grade slippage pursuant to third party sampling has been estimated by the Company as contingent liability. Further, an amount of Rs. 878.52 crore (31 March 2018: Rs. 678.46 crore) towards surface transportation charges, custom duty on service margin on imported coal etc. has been estimated by the Company as contingent liability.

b)    In the previous year, pending resolution of dispute with fuel company for supply of RLNG, an amount of Rs. 5,821.61 crore towards the take or pay claim was estimated by the Company as contingent liability. During the year, the said dispute has been resolved.

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. 427.24 crore (31 March 2018: Rs. 339.17 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. 682.19 crore (31 March 2018: Rs. 648.26 crore) relating to the hydro power project stated in Note 9(b) - 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. 3,639.64 crore (31 March 2018: Rs. 9,199.87 crore).

b.    Disputed tax matters

Disputed income tax/sales tax/excise and other tax matters pending before various Appellate Authorities amount to Rs. 8,047.86 crore (31 March 2018: Rs. 7,907.61 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. 3,922.55 crore (31 March 2018: Rs. 3,868.74 crore). The amount paid under dispute/adjusted by the authorities in respect of the cases amounts to Rs. 2,513.94 crore (31 March 2018: Rs. 2,470.24 crore).

c.    Others

Contingent liability in respect of bills discounted with banks against trade receivables amounts to Rs. 9,998.99 crore (31 March 2018 Rs. 602.12. crore) (Refer Note-12). In case of any claim on the Company from the banks in this regard, entire amount shall be recoverable from the beneficiaries along with surcharge. Other contingent liabilities amount to Rs. 2,233.08 crore (31 March 2018: Rs. 2,536.13 crore) which includes claim of Rs. 1,875.73 crore (31 March 2018: Rs. 2,026.30 crore) not accepted by the Company. Refer Note 57 (iii)(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

(i)    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 favourable 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 judgement.

(ii)    CERC (Terms & Conditions of Tariff) Regulations 2014-19 provide for levy of Late Payment Surcharge by generating company in case of delay in payment by beneficiaries beyond 60 days from the date of presentation of bill. However, inview of significant uncertainties in the ultimate collection from some of the beneficiaries against partial bills as resolved by the management, an amount of Rs. 63.72 crore as on 31 March 2019 (31 March 2018: Rs.189.47 crore) has not been recognised.

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 2019 is Rs. 38,806.34 crore (31 March 2018: Rs. 38,119.11 crore). Details of the same are as under:

b) In respect of investments of Rs. 7,453.08 crore including share application money pending allotment of Rs. 121.59 crore (31 March 2018: Rs. 2,766.54 crore including share application money pending allotment of Rs. 32.00 crore) in subsidiary companies, the Company has restrictions for their disposal as at 31 March 2019 as under:

c) In respect of investments of Rs. 2,164.50 crore including share application money pending allotment of Rs. 60 crore (31 March 2018: Rs. 3,805.30 crore including share application money pending allotment of Rs. 276.85 crore) in the joint venture companies, the Company has restrictions for their disposal as at 31 March 2019 as under:

d) In respect of other investments of Rs. 1.40 crore (31 March 2018: Rs. 1.40 crore), the Company has restrictions for their disposal as at 31 March 2019 as under:

e)    The Company has commitments of Rs. 4,438.76 crore (31 March 2018: Rs. 3,993.01 crore) towards further investment in the subsidiary companies as at 31 March 2019.

f)    The Company has commitments of Rs. 3,504.83 crore (31 March 2018: Rs. 3,748.92 crore) towards further investment in the joint venture entities as at 31 March 2019.

g)    The Company has commitments of Rs. 507.79 crore (31 March 2018: Rs. 507.60 crore) towards further investment in other investments as at 31 March 2019.

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 2018: 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 60.

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 kilometres 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 kilometres and up to three hundred kilometres 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 kilometres 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 for the said purpose. 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.

An appeal was filed before CERC under ‘Change in Law’ as stipulated in Regulation 8 of CERC 2014 Tariff Regulations, to provide relief in respect of additional expenditure being incurred by the company towards transportation of fly ash, considering the MOEF notification dated 25 January 2016.

During the year, CERC vide order dated 5 November 2018 has allowed reimbursement of actual expenditure incurred over and above the ash fund towards transportation of fly ash in terms of MOEF Notification, as additional O&M expenses, subject to prudence check.

k) Company’s commitment in respect of lease agreements has been disclosed in Note 49.

26. Corporate Social Responsibility Expenses (CSR)

As per Section 135 of the Companies Act, 2013 read with guidelines issued by Department of Public Enterprises, GOI, the Company is required to spend, in every financial year, at least two per cent of the average net profits of the Company made during the three immediately preceding financial years in accordance with its CSR Policy. The details of CSR expenses for the year are as under:

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