1.18 Provisions, Contingent Liabilities and Contingent Assets
a) A provision is recognised when:
i. the Company has present legal or constructive obligation as result of past event;
ii. it is probable that an outflow of economic benefits will be required to settle the
obligation; and
iii. a reliable estimate can be made of the amount of the obligation.
b) If the effect of the time value of money is material, provision are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is
recognized as finance cost.
c) The amount recognised as provision is the best estimate of consideration required to
settle the present obligation at reporting date, taking into account the risks and
uncertainties surrounding the obligation.
d) When some or all of the economic benefits required to settle a provision are expected
to be recovered from a third party, the receivable is recognised as an asset if it is
virtually certain that reimbursement will be received and the amount of the receivable
can be measured reliably.
e) Contingent liabilities are possible obligations that arise from past events and whose
existence will only be confirmed by the occurrence or non-occurrence of one or more
future events not wholly within the control of the Company. Where it is not probable
that an outflow of economic benefits will be required, or the amount cannot be
estimated reliably, the obligation is disclosed as a contingent liability, unless the
probability of outflow of economic benefits is remote. Contingent liabilities are
disclosed on the basis of judgment of the management. These are reviewed at each
balance sheet date and are adjusted to reflect the current management estimate.
f) Liability for claims against the Company is recognized on acceptance by the
Company/ receipt of award from the Arbitrator and the balance claim, if disputed/
contested by the contractor is shown as contingent liability. The claims prior to
arbitration award stage are disclosed as contingent liability.
g) Contingent asset is a possible asset that arises from past events and whose existence
will be confirmed only by the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the company. Contingent assets are
disclosed in the financial statements when inflow of economic benefits is probable on
the basis of judgement of management. These are reviewed at each balance sheet
date and are adjusted to reflect the current management estimate.
1.19 Revenue Recognition and Other Income
Company’s revenues arise from sale of energy, consultancy services and other
income. Other income comprises interest from banks, employees, contractors etc.,
dividend from investments in joint venture companies, surcharge received from
beneficiaries for delayed payments, sale of scrap, other miscellaneous income, etc.
1.19.1 Revenue from Sale of Energy
a) Revenue from operations of the company mainly consists from plants regulated under
the Electricity Act, 2003. Accordingly, the Central Electricity Regulatory Commission
(CERC) determines the tariff on the norms prescribed in the tariff regulations as
applicable from time to time. Revenue from sale of energy is accounted for as per tariff
notified by CERC. In case of power stations where the tariff rates are yet to be
approved, provisional rates are adopted considering the applicable CERC Tariff
Regulations. Further, recovery/refund towards foreign currency variation in respect of
foreign currency loans is accounted for on year to year basis. Revenue from sale of
energy is recognized once the electricity has been transmitted to customers and
control over the product is transferred to the customers. As at each reporting date,
revenue from operations includes an accrual for energy sales transmitted to
customers but not yet billed (unbilled Revenue/ contract assets).
b) Part of revenue from energy sale where CERC tariff Regulations are not applicable is
recognized based on the rates, terms & conditions mutually agreed with the
beneficiaries.
c) Rebate to customers as early payment incentive is deducted from the amount of
revenue from energy sales.
d) Incentives/disincentives are accounted for based on the norms notified/approved by
the Central Electricity Regulatory Commission.
e) Recovery/ refund towards foreign currency variation in respect of foreign currency
loans are recognised on year to year basis based on regulatory norms.
f) Advance Against Depreciation (AAD) considered as deferred income in earlier years
is included in sales on straight line basis over the balance useful life after 31st March
of the year closing after a period of 12 years from the date of commercial operation of
the Hydro Power Station, considering the total useful life of the Hydro Power Station
as 40 years.
g) Revenue from sale of energy through trading is recognized based on the rates, terms
& conditions mutually agreed with the beneficiaries.
1.19.2 Revenue from Consultancy Services
Revenue from consultancy services rendered is recognised in the statement of profit
and loss in proportion to the stage of completion of the transaction at the reporting
date. The stage of completion is assessed by reference to actual progress/ technical
assessment of work executed, in line with the terms of respective consultancy
contracts. Claims for reimbursement of expenditure are recognized as other income,
as per the terms of consultancy contracts.
1.19.3 Income arising from sale of CERs-carbon credit is recognized on transfer/ sale
of carbon credits i.e. when there is certainty regarding ultimate collection.
1.19.4 Other Income
a) Interest/Surcharge on late payment/ overdue sundry debtors for sale of energy are
recognised when no significant uncertainty as to measurability or collectability exists.
b) Dividend income is recognized when the company’s right to receive payment is
established.
c) Interest/surcharge/liquidated damages recoverable from suppliers and contractors,
wherever there is uncertainty of realisation/acceptance are accounted for on
receipts/acceptance.
d) Interest income on financial assets as subsequently measured at amortized cost is
recognised on a time-proportion basis using the effective interest method. Interest
income on impaired loans/receivable is recognised using the original effective
interest rate.
e) Compensation from third parties including from insurance are accounted for on
certainty of realization.
1.20 Employee Benefits
Employee benefits consist of wages, salaries, benefits in kind, provident fund,
pension, gratuity, post-retirement medical facilities, leave benefits and other terminal
benefits etc.
a) Defined Contribution Plans
i) A defined contribution plan is a post-employment benefit plan under which an entity
pays fixed contributions into separate trust and will have no legal or constructive
obligation to pay further amounts. Obligations for contributions to defined
contribution plans are recognised as an employee benefit expense in the periods
during which services are rendered by employees.
ii) The company also has Defined Contribution Pension Scheme for providing pension
benefit. The obligation of the company is to contribute the extent of amount not
exceeding 30% of basic pay and dearness allowance less employer
contribution/liability towards provident fund, gratuity, post-retirement medical facility
(PRMF). The liability for the same is recognized on accrual basis. The scheme is
funded by company and managed by separate trust created for this purpose.
b) Defined Benefit Plans
i. A defined benefit plan is a post-employment plan other than a defined contribution
plan.
ii. The Company pays fixed contribution to Provident Fund at predetermined rates to a
separate trust, which invests the fund in permitted securities. The obligation of the
company is limited to such fixed contribution and to ensure a minimum rate of return
to the members as specified by GOI.
iii. The gratuity scheme is funded by the company and is managed by a separate trust.
Company’s liability is determined by the qualified actuary using the projected unit
credit method at the year-end and any shortfall in the fund size maintained by the
trust is additionally provided for by the company.
iv. The company has a Post Retirement Medical Facility (PRMF), under which retired
employees, spouse and eligible parents of retired employee are provided medical
facilities in the company hospitals/ empanelled hospitals/ other hospitals. They can
also avail treatment as Out- patient subject to rules and regulations made by the
Company.
v. The company also has other benefit plans allowance on retirement/ death and
memento on superannuation.
vi. The Company’s net obligation in respect of defined benefit plans is calculated
separately for each plan by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior periods; that benefit is
discounted to determine its present value. The fair value of any plan assets is
deducted. The discount rate is based on the prevailing market yields of Indian
government securities as at the reporting date that have maturity dates
approximating the terms of the Company’s obligations and that are denominated in
the same currency in which the benefits are expected to be paid.
vii. Service cost & net interest on the net defined benefit liability (asset) are recognised in
the Statement of Profit and Loss or included in the carrying amount of an asset if
another standard permits such inclusion in the period in which they arise.
viii. Re-measurements comprising of actuarial gains and losses, the effect of the asset
ceiling, excluding amounts included in net interest on the net defined benefit liability
and the return on plan assets (excluding amounts included in net interest on the net
defined benefit liability), are recognised immediately in the OCI in the period in which
they occur. Remeasurements are not reclassified to profit or loss in subsequent
periods.
c) Other Long-term employee benefits
Benefits under the Company’s leave encashment scheme constitute other long term
employee benefits.
The Company’s net obligation in respect of long-term employee benefits is the
amount of future benefits that employees have earned in return for their service in the
current and prior periods. The scheme is unfunded and liability for the same is
recognised on the basis of actuarial valuation. Actuarial gains or losses are
recognised in the Statement of Profit and Loss or included in the carrying amount of
an asset if another standard permits such inclusion in the period in which they arise.
Benefits under the Company’s leave encashment, long-service award and economic
rehabilitation scheme constitute other long term employee benefits.
The Company’s net obligation in respect of these long-term employee benefits is
calculated separately for each plan by estimating the amount of future benefit that
employees have earned in return for their service in the current and prior periods; that
benefit is discounted to determine its present value and the fair value of any related
assets is deducted. The discount rate is based on the prevailing market yields of
Indian government securities as at the reporting date that have maturity dates
approximating the terms of the Company’s obligations and that are denominated in
the same currency in which the benefits are expected to be paid.
The actuarial calculation is performed annually by a qualified actuary using the
projected unit credit method. Any actuarial gains or losses are recognized in
statement of profit and loss account in the period in which they arise.
The obligations are presented as current liabilities in the balance sheet if the entity
does not have an unconditional right to defer settlement for at least twelve months
after the reporting period, regardless of when the actual settlement is expected to
occur.
d) Short-term Benefits
Short-term employee benefit obligations are measured on an undiscounted basis
and are expensed in the period in which the service is provided.
e) Terminal Benefits
Expenses incurred on terminal benefits in the form of ex-gratia payments and notice
pay on voluntary retirement schemes, if any, are charged to the profit and loss in the
year of incurrence of such expenses.
1.21 Depreciation and amortization
a) Depreciation on Property, Plant & Equipment of the Company’s Operating Units is
charged to the Statement of Profit & Loss on the straight-line method, using the rates
and methodology prescribed by the Central Electricity Regulatory Commission
(CERC) for tariff determination, except for assets specified in Policy No. 1.21(c)
below. This is in compliance with the provisions of Part B of Schedule II of the
Companies Act, 2013.
b) Depreciation on Property, Plant & Equipment of other than Operating Units of the
Company is charged to the extent of 90% of the cost of the asset following the rates
notified by CERC for the fixation of tariff except for assets specified in policy no.
1.21(c) below.
c) Depreciation on the following items of Property, Plant and Equipment is charged on
straight line method on estimated useful life:
i. Computer & Peripherals depreciated fully (100%) in 3 years.
ii. Mobile Phones depreciated fully (100%) in 2 years.
iii. Furniture & Fixture, Office Equipment and Electrical Equipment are depreciated
in 5-15 years with residual value of 10%.
iv. Solar and Wind Power plants which are not governed by CERC regulation are
depreciated in 25 years with residual value of 10%.
The useful life of these assets are reviewed from time to time and adjusted
prospectively, wherever required.
d) Depreciation on additions to /deductions from Property, Plant & Equipment during
the year is charged on pro-rata basis from / up to the month on which the asset is
available for use / disposed.
e) Temporary erections are depreciated fully (100%) in the year of acquisition
/capitalization.
f) Assets costing upto '5000/- are fully depreciated in the year of acquisition.
g) Expenditure on software recognized as ‘Intangible Asset’ and is amortized fully on
straight line method over a period of legal right to use or three years, whichever is less.
Other intangible assets with a finite useful life are amortized on a systematic basis
over its useful life. The amortisation period and the amortisation method of intangible
assets with a finite useful l ife is reviewed at each financial year end.
h) Right-of-use land and buildings relating to generation of electricity business governed
by CERC Tariff Regulations are fully amortized over lease period or life of the related
plant whichever is lower following the rates and methodology notified by the CERC
Tariff Regulations.
Right-of-use land and buildings relating to generation of electricity business which are
not governed by CERC tariff Regulations are fully amortized over lease period or life of
the related plant whichever is lower.
Other Right of use assets are depreciated from the commencement date on a
straight-line basis over the shorter of the lease term and useful life of the underlying
asset.
i) Tangible Assets created on leasehold land are depreciated to the extent of 90% of
original cost over the balance available lease period of respective land from the date
such asset is available for use or at the applicable depreciation rates & methodology
notified by CERC tariff regulations for such assets, whichever is higher.
j) Where the cost of depreciable assets has undergone a change during the year due to
increase/decrease in long term liabilities on account of exchange fluctuation, price
adjustment, settlement of arbitration/court cases, change in duties or similar factors,
the unamortized balance of such assets is depreciated prospectively over the residual
life of such asset determined following the applicable accounting policies relating to
depreciation/ amortization.
k) Where the life and / or efficiency of an asset is increased due to renovation and
modernization, the expenditure thereon along with its unamortized depreciable
amount is charged prospectively over the revised / remaining useful l ife determined by
technical assessment.
l) Spares parts procured along with the Plant & Machinery or subsequently which are
capitalized and added in the carrying amount of such item are depreciated over the
residual useful life of the related plant and machinery at the rates and methodology
notified by the CERC.
m) Expenditure on Catchment Area Treatment (CAT) Plan during construction is
capitalized along with dam/civil works. Such expenditure during O&M stage is
charged to revenue in the year of incurrence of such expenditure.
1.22 Income Taxes
Income tax expense comprises current tax and deferred tax. Current Tax is
recognised in the Statement of Profit and Loss, except to the extent that it relates to
items recognised directly in equity or other comprehensive income, in which case the
tax is also recognised directly in equity or in other comprehensive income.
a) Current income tax
Current tax is expected tax payable on taxable profit for the year, using tax rates
enacted or substantively enacted at the balance sheet date and any adjustments to
tax payable i n respect of previous years.
b) Deferred tax
Deferred tax is recognised using the balance sheet method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or
substantively enacted by the reporting date. Deferred tax assets and liabilities are
offset if there is a legally enforceable right to offset current tax liabilities and assets,
and they relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle current tax liabilities
and assets on a net basis or their tax assets and liabilities will be realised
simultaneously.
Deferred tax is recognised in the statement of profit and loss except to the extent that it
relates to items recognised directly in other comprehensive income or equity, in
which case it is recognised in other comprehensive income or equity.
A deferred tax asset is recognised to the extent that it is probable that future taxable
profits will be available against which the temporary difference can be utilised.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with
the tax laws in India, which is likely to give future economic benefits in the form of
availability of set off against future income tax liability. MAT credit is recognized as
deferred tax asset in the balance sheet when the asset can be measured reliably and it
is probable that the future taxable profit will be available against which MAT credit can
be utilized.
1.23 Dividend Distribution:
Final Dividends and interim dividends payable to Company’s shareholders are
recognized and accounted for in the period in which they are approved by the
shareholders and the Board of Directors respectively.
1.24 Segment Reporting:
a) Segments have been identified taking into account nature of product and differential
risk and returns of the segment. These business segments are reviewed by the
Management.
b) Electricity generation is the principal business activity of the company. Other
operations viz., Consultancy works etc. do not form a reportable segment as per the
Ind AS -108 - ‘Operating Segments’.
c) The company is having a single geographical segment as all its Power Stations are
located within the Country.
1.25 Statement of Cash Flows
a) Cash and cash equivalents includes cash/Drafts/Cheques on hand, deposits held at
call with financial institutions, other short-term highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in value, and bank
overdrafts. However for Balance Sheet presentation, bank overdrafts are shown
within “Borrowings” under current liabilities.
b) Statement of cash flows is prepared in accordance with the indirect method (whereby
profit or loss is adjusted for effects of non-cash transactions) prescribed in Ind AS-7
“Statement of Cash Flows”
1.26 Material prior period errors
Material prior period errors are corrected retrospectively by restating the comparative
amounts for the prior periods presented in which error occurred. If the error occurred
before the earliest period presented, opening balances of assets, liabilities and equity
for the earliest period presented, are restated.
1.27 Earnings per share
a) Basic earnings per equity share is computed by dividing the net profit or loss
attributable to equity shareholders of the Company by the weighted average number
of equity shares outstanding during the financial year.
b) Diluted earnings per equity share is computed by dividing the net profit or loss
attributable to equity shareholders of the Company by the weighted average number
of equity shares considered for deriving basic earnings per equity share and also the
weighted average number of equity shares that could have been issued upon
conversion of all dilutive potential equity shares.
c) Basic and diluted earnings per equity share are also presented using the earnings
amounts excluding the movements in regulatory deferral account balances.
1.28 Current versus 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:
a) Expected to be realised or intended to be sold or consumed in the normal operating cycle
b) Held primarily for the purpose of trading
c) Expected to be realised within twelve months after the reporting period, or
d) 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:
a) It is expected to be settled in the normal operating cycle
b) It is held primarily for the purpose of trading
c) It is due to be settled within twelve months after the reporting period, or
d) It does not have the right at the end of the reporting period 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 and liabilities are classified as non-current assets and
liabilities.
1.29 Miscellaneous
Minimum two percent of average profit (before tax) of three immediately preceding
financial years is transferred to CSR Trust for incurring expenditure towards
Corporate Social Responsibility (CSR).
(a) Secured by mortgage/hypothecation of all assets of Dhaulasidh Hydro Electric Project.
(b) Secured by first charge by way of mortgage/hypothecation/ assignment or otherwise on all assets of Luhri Hydro Electric Project Stage-1.
(c) Collateral security by way of first charge on Escrow Account, debt service reserve and on future cash flow of the company related to the PPAs of
NJHPS with Haryana, Chandigarh and Delhi.
(d) Collateral security by way of hypothecation on Escrow Account opened by company for depositing the return on equity of NJHPS.
(e) Secured by first charge on existing and future movable and immovable project assets, with asset coverage of at least 110% of the loan amount.
(f) The company has availed borrowings from JBIC for the construction of two projects being executed by SJVN Green Energy Limited (SGEL), a
wholly owned subsidiary of the company. Since, the loan has been availed for the construction of projects of SGEL, the same is being provided to
SGEL on the same terms and conditions, and has been shown under Non-current Financial Assets (note no.2.6). Borrowing costs incurred on this
loan have been included in Finance Cost (note no. 2.36), and the interest receivable on the same from SGEL has been included in Other Income
(note no. 2.34) (refer to the footnote to the note no.2.36).
1 The CERC vide Order dated 15th March, 2024 has notified the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations,
2024 (Tariff Regulations, 2024) for determination of tariff for the period 2024-29. The tariff for the period 2024-29 in respect of Rampur Hydro Power
Station (RHPS) of the Company has been approved by CERC, whereas tariff order in respect of Nathpa Jhakri Hydro Power Station (NJHPS) with effect
from 1st April, 2024 is pending. Accordingly, billing to beneficiaries in respect of NJHPS has been done provisionally in accordance with the tariff
approved and applicable as on 31st March, 2024 in terms of the aforesaid regulations.
Power generated from Naitwar Mori Hydro Power Station (NMHPS) is being sold through Power Exchanges and bilateral agreements.
2 Energy sales and interest from beneficiaries include an amount of ? 429.54 crore and ? 241.44 crore respectively pertaining to earlier years, recognised
pursuant to receipt of the tariff order for truing-up of tariff for the period 2019-24 in respect of NJHPS & RHPS and provisional tariff order for the period
2024-29 in respect of RHPS (P.Y. : Nil).
2.43 Disclosure under the provisions of IND-AS 19 ‘Employee Benefits’
a) Defined Contribution plans:
(i) Pension:
The Company has Defined Contribution Pension Scheme and is contributing to the National Pension System (NPS). The liability for the same is
recognized on accrual basis. An amount of ? 9.46 Crore (P.Y: ? 14.59 Crore) is recognized towards employer's contributions to NPS during the
year.
b) Defined benefit plans:
(i) Employers contribution to Provident Fund:
The Company pays fixed contribution to Provident Fund at predetermined rates to a separate trust, which invests the fund in permitted securities.
The obligation of the company is limited to such fixed contribution and to ensure a minimum rate of return to the members as specified by GOI. The
liability for the same is recognized on the basis of actuarial valuation. EPFO has not yet notified the interest rate on the employees provident fund for
the F.Y. 2025-26. Pending notification of the rate by the Government, actuarial valuation has been carried out considering the provisional interest
rate of 8.25% recommended by Ministry of Labour. However, actual obligation, if any shall be ascertained and paid to the trust after the notification of
the rate by EPFO. Further, contribution to employee pension scheme has been 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:
*Out of the above an amount of ?8.19 Crore (P.Y.: ?5.45 Crore) has been transferred to expenditure attributable to construction period and an amount of
?5.81 Crore (P.Y.: ?5.23 Crore) is recoverable from subsidiaries.
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 ? 61.69 Crore (P.Y.: ? 12.08 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.
(viii) Risk exposure
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follow:-
A) Salary Increases- Actual salary increases will increase the Plan's liability. Increase in salary increase rate assumption in future valuations will also
increase the liability.
B) Medical cost increase- Increase in actual medical cost per retiree will increase the plans liability. Increase in medical cost per retiree rate
assumption will also increase the liability.
C) Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the
last valuation date can impact the liability.
D) Discount Rate : Reduction in discount rate in subsequent valuations can increase the plan's liability.
E) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
F) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can
Impact Plan's liability.
c) Other Long Term Employee Benefit Plans
The company provides for earned leave benefit and half pay leave to the employees of the company which accrue annually at 30 days and 20 days
respectively. Earned leave (EL) and Half pay leave (HPL) are en-cashable subject to limits and other conditions specified for the same. The scheme is
un-funded and liability for the same is recognised on the basis of actuarial valuations.
During the year, provision amounting to ? 16.11 Crore has been made on the basis of actuarial valuation at the year end and debited to statement of profit
and loss (P.Y.: ? 22.91 Crore).
b) Investment in joint venture companies
The company's interest in joint ventures as at 31st March, 2026 are set out below which in the opinion of the management, are material to the company.
The entities listed below have share capital consisting solely of equity shares, which are held directly by the company. The country of incorporation or
registration is also their principal place of business and the proportion of ownership interest is the same as the proportion of voting rights held.
1. Equity investments in subsidiary and joint venture companies are measured at cost as per the provisions of I nd AS 27 on ‘Separate financial statements'.
2. The Company has 41.94% (PY: 41.94%) interest in Cross Border Power Transmission Company Limited. During the previous year, the Company
increased its shareholding in its joint venture, Cross Border Power Transmission Company Limited (CPTC), from 26% to 41.94% by acquiring 77,30,227
additional equity shares of ?10 each for a total consideration of ?14.73 crore. The company is domiciled in India and is incorporated under the provisions
of the Companies Act applicable in India. The Company is principally engaged in establishment, operation & maintenance and transfer of Indian Portion
of Indo-Nepal Cross Border Transmission Line from Muzaffarpur to Dhalkebar.
2.49 Disclosure as per Ind AS 36 ‘Impairment of Assets’
As required by Ind AS 36 - Impairment of Assets, an assessment was carried out as at the reporting date to evaluate whether any indication exists that a
Cash Generating Unit (CGU) may be impaired. This evaluation considered various internal and external indicators, including prevailing market
conditions, regulatory landscape, operational performance, and expectations of future economic benefits associated with the assets. Wherever such
indicators are identified, the recoverable amount of the CGU is determined by estimating the present value of future cash flows expected to arise from
the continued use of the asset, using assumptions such as generation potential, tariffs and a discount rate.
Based on the above, impairment losses of ? 174.11 Crore (P.Y.: ? Nil) has been recognised under the depreciation, amortisation and impairment
expenses in the Statement of Profit and Loss for the year ended 31st March 2026 in respect of following projects:
a) Provision for Pay Revision
This includes provisions made for arrears related to the 2016 pay revision, which are payable to employees of HPSEB on deputation.
b) Provision for Performance Related Pay
Short-term Provision has been recognised in the accounts towards Performance Related Pay/ incentive to employees on the basis of management
estimates as per company's rules in this regard which are based on the guidelines of the Department of Public Enterprises, Government of India.
c) Provision for Interest on Arbitration Awards
This includes provisions created on the basis of arbitration/court award as to probable outflow in respect of interest on contractors claims against which
arbitration award/Court decision have been received and which have been further challenged in a Court of Law. Utilization/outflow of the provision is to
be made on the outcome of the case
d) Provision for Local Area Development Expenses
This includes mainly provision made towards expenditure on Local Area Development Authority in respect of various Hydro Power Projects in
Himachal Pradesh.
e) Other Provisions
Due to non-feasibility of the original project plan of Luhri Stage-II HEP, pending approval of revised upstream reservoir elevation by the Government of
Himachal Pradesh and deletion of the project by CEA from the list of projects under Survey & Investigation in the country, the Company, as a matter of
prudence, has created a provision amounting to ? 18.03 crore (P.Y.: Nil) crore during the year.
f) In respect of provision for cases under litigation, outflow of economic benefits is dependent upon the final outcome of such cases.
g) In all these cases, outflow of economic benefits is expected within next one year.
(i) Capital works
Contractors have lodged claims aggregating to ? 551.80 Crore (P.Y.: ? 288.17 Crore) against the Company on account of rate & quantity deviation, cost
relating to extension of time and idling charges due to stoppage of work/delays in handing over the site etc. These claims are being contested by the
company as being not admissible in terms of provisions of the respective contracts or are laying at arbitration tribunal/other forums/under examination
with the Company.
(ii) Land Compensation cases
In respect of land acquired for the projects, some of the land oustees have filed claims for higher compensation amounting to ? 105.28 Crore (P.Y.: ?
25.06 Crore) before various authorities/courts. Company has shown the same as contingent liability as possibility of any outflow in settlement of these
claims is considered as remote.
(iii) Disputed Tax Demand
The Income Tax Department had raised a demand of ? 96.80 Crore (P.Y.: ? 88.19 Crore) for various assessment years. The company is contesting the
cases & filed appeals with appropriate Income Tax Appellate Authorities. Consequently, company has deposited ? 9.37 Crore (P.Y.: ? 9.37 Crore)
towards disputed income tax demands. There is also a contingent liability amounting to ? 1.55 Crore (P.Y.: ? 1.55 Crore) towards TDS, GST and other
tax matters.
(iv) Guarantees
The Company has given a corporate guarantee in favour of the lenders of SJVN Arun-3 Power Development Company Pvt. Ltd., a subsidiary company,
for the loans availed by the subsidiary for development of the Arun-3 Hydro Electric Project. The guarantee has been provided as collateral security for
project financing and the lenders hold primary security over the assets of the subsidiary. Based on the assessment of the financial position and
underlying asset cover of the subsidiary, the management does not expect any probable outflow of economic resources in respect of the said guarantee
as at the reporting date. Accordingly, the amount outstanding against such borrowings as on 31.03.2026 amounting to ?4,442.24 Crore (Previous Year:
?3,421.41 Crore) has been disclosed as a contingent liability.
(v) Water cess
The Government of Himachal Pradesh, through its notification dated 16.02.2023, imposed water cess on the generation of electricity in Himachal
Pradesh. The Company operates two projects totalling 1912 MW in the state. A water cess bill amounting to ? 280.19 Crore has been issued by the
Government of Himachal Pradesh. However, the Government of India, Ministry of Power, through letters dated 25.04.2023 and 25.10.2023, has
declared this imposition as illegal and unconstitutional, advising states against levying any taxes/duties contrary to constitutional provisions and
recommending their withdrawal. Additionally, CPSEs have been advised not to make payments for such taxes and to challenge them in court. As a
precautionary measure, the Company filed a writ petition against the said notification. Subsequently, the Hon'ble High Court of Himachal Pradesh has
ruled in favour of the Company, declaring the levy unconstitutional. However, the Government of Himachal Pradesh has filed an appeal to the Supreme
Court against the decision. The amount billed till date has been disclosed as contingent liabilities.
(vi) Damage Compensation in Project Affected Areas
People in the vicinity of projects under development by the Company in the state of Himachal Pradesh have raised claims for compensation
aggregating to ? 182.96 Crore (Previous year: Nil ) pertaining to crop damage / reduction in productivity, and structural cracks. Pending formulation of
policy/directives from the Government, these claims have been disclosed as contingent liabilities.
(vii) Levy of Land Revenue
Pursuant to the Notification dated 03.02.2026 issued by the Department of Settlement, Government of Himachal Pradesh, levying land revenue/
assessment on hydro power projects in the State, land revenue/ assessment has also been levied in respect of Nathpa Jhakri Hydro Power Station and
Rampur Hydro Power Station of the Company. The Company has filed petitions before the Hon'ble High Court challenging the said levy and,
accordingly, the amount involved as per the said notification has been disclosed as contingent liability. Further, even in the event of crystallization of the
liability, the same would be recoverable from beneficiaries/ customers as a pass-through item under the applicable tariff regulations and, therefore,
would not have any material impact on the Company.
(viii) Others
Others primarily comprise possible obligations to the Government of Himachal Pradesh for the Moin & Koel quarries pertaining to the projects under
development by the Company.
(b) The above contingent liabilities do not include contingent liabilities on account of pending cases in respect of service matters & others where the
amount cannot be quantified.
(c) It is not practicable to ascertain and disclose the uncertainties relating to outflow in respect of contingent liabilities.
(d) The company's management does not expect that the above claims/obligations (including under litigation), when ultimately concluded and
determined, will have a material and adverse effect on the company's results of operations or financial condition.
B) FAIR VALUATION MEASUREMENT
(i) 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 value are disclosed in the financial statements. To provide an indication
about the reliability of the inputs used in determining fair value, the company has to classify its financial instruments into the three levels prescribed
under the accounting standards.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and traded bonds that have
quoted price. The fair value of all equity instruments including bonds which are traded in the recognised Stock Exchange and money markets are
valued using the closing prices as at the reporting date.
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 includes security deposits/ retention money and loans at below market rates of interest.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
(ii) Valuation techniques and process used to determine fair values
The Company values financial assets or financial liabilities using the best and most relevant data available. Specific valuation techniques used to
determine fair value of financial instruments includes:
- Use of Quoted market price or dealer quotes for similar instruments.
- Fair value of remaining financial instruments is determined using discounted cash flow analysis.
The company has a team that performs the valuation of financial assets and liabilities required for financial reporting purpose.
Significant Estimates:
1. The Carrying amount of Trade and other receivables, Cash and cash equivalents, Short-term loans and advances, Short term borrowings, Trade
payables and other current financial liabilities are considered to be the same as their fair values, due to their short term nature.
2. For financial assets and financial liabilities measured at fair value, the carrying amounts are equal to the fair value.
(2) Financial Risk Management
Financial risk factors
The Company's principal financial liabilities comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to manage
finances for the Company's operations. The Company has loan and other receivables, trade and other receivables, investments and cash and short¬
term deposits that arise directly from its operations. The Company's activities expose it to a variety of financial risks:
i) Credit risk
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The
company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities including deposits with banks
and financial institutions.
ii) Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable
losses.
iii) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices
comprise three types of risk: currency rate risk, interest rate risk and other price risks. Financial instruments affected by market risk include loans and
borrowings, deposits, investments. Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. This is based on the financial assets and financial liabilities held as at 31st March, 2026 and 31st March, 2025.
The company operates mainly in regulated environment. Tariff of major hydro power stations of the company is fixed by the Central Electricity Regulatory
Commission (CERC) through Annual Fixed Charges (AFC) comprising the following five components: 1. Return on Equity (RoE), 2. Depreciation,
3. Interest on Loans, 4. Operation & Maintenance Expenses and 5. Interest on Working Capital Loans. In addition to the above, Foreign Currency
Exchange Variation and Taxes are also recoverable from Beneficiaries in terms of the Tariff Regulations. Hence variation in interest rate, currency
exchange rate variations and other price risk variations in respect of major hydro power stations are recoverable through tariff and do not impact the
profitability of the company.
The company's risk management is carried out as per policies approved by Board of Directors from time to time.
(A) Credit Risk
The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with
banks and other financial instruments.
a) Trade Receivables
The Company extends credit to customers in normal course of business. The Company monitors the payment track record of the customers.
Outstanding customer receivables are regularly monitored. The Company evaluates the concentration of risk with respect to trade receivables as
low, as its customers are mainly state government authorities and operate in largely independent markets.
CERC tariff regulations 2024-29 allows the Company to raise bills on beneficiaries for late-payment surcharge which adequately compensates the
Company for time value of money arising due to delay in payment. Further, the fact that beneficiaries are primarily State Governments/ State
Discoms and considering the historical credit loss experience for trade receivables, the Company does not envisage either impairment in the value of
receivables from beneficiaries or loss due to time value of money due to delay in realization of trade receivables.
b) Financial assets at amortised cost
Employee Loans: The Company has given loans to employees at concessional rates as per the Company's policy which have been measured at
amortised cost at Balance Sheet date. The recovery of the loan is on fixed instalment basis from the monthly salary of the employees. Management
has assessed the past data and does not envisage any probability of default on these loans.
c) Financial instruments and cash deposits
The Company considers factors such as track record, size/net worth of the institution/bank, market reputation and service standards and limits and
policies as approved by the board of directors to select the banks with which balances and deposits are maintained. The Company invests surplus
cash in short term deposits with scheduled Banks.
(B) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate
amount of committed credit facilities to meet obligations when due.
The Company's objective is to maintain optimum levels of liquidity at all times to meet its cash and collateral requirements. The Company relies on a mix of
borrowings, capital infusion and excess operating cash flows to meet its need for funds. The current committed lines of credit and internal accruals are
sufficient to meet its short to medium term expansion needs. The Company monitors rolling forecasts of its liquidity requirements to ensure that it has
sufficient cash to meet capital expenditure and operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at
all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
(C) Market Risk:
The sensitivity analysis excludes the impact of movements in market variables on the carrying value of post-employment benefit obligations provisions
and on the non-financial assets and liabilities. The sensitivity of the relevant Statement of Profit and Loss item is the effect of the assumed changes in the
respective market risks. The Company's activities expose it to a variety of financial risks, including the effects of changes in interest rates.
(i) Interest rate risk and sensitivity
The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's long term debt obligations with
floating interest rates and any changes in the interest rates environment may impact future cost of borrowing.
(ii) Price Risk:
(a) Price Risk Exposure
The company has no exposure to price risk as there is no investment in equity shares which are listed in recognised stock exchange and are publicly
traded in the stock exchanges.
(iii) Foreign Currency Risk
The Company is exposed to foreign exchange rate fluctuations risk on certain transactions in a currency other than entity's functional currency. The risk
is that the functional currency value of cash flows will vary as a result of movements in exchange rates. However, in respect of power plants for which
tariff is determined as per CERC Regulations , the company is compensated for variability in foreign currency exchange rate through recovery by way of
tariff adjustments.
As per accounting policy of the company transactions in foreign currency are initially recorded at exchange rate prevailing on the date of transaction. At
each Balance Sheet date, monetary items denominated in foreign currency are translated at the exchange rates prevailing on that date. Non-monetary
items denominated in foreign currency are reported at the exchange rate prevailing at the date of transaction.
Exchange differences arising on translation or settlement of monetary items are recognised in the statement of profit and loss in the year in which it
arises with the exception that exchange differences on long term monetary items related to acquisition of fixed assets entered up to March 31,2016 are
adjusted to carrying cost of fixed assets.
(3) Capital Management
(a) Capital Risk Management
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial
covenants. The primary objective of the Company's capital management is to maximize the shareholder value. The Company's primary objective when
managing capital is to ensure that it maintains an efficient capital structure and healthy capital ratios and safeguard the Company's ability to continue as
a going concern in order to support its business and provide maximum returns for shareholders. The Company also proposes to maintain an optimal
capital structure to reduce the cost of capital. No changes were made in the objectives, policies or processes during the year ended 31st March, 2026.
The Company monitors capital using Debt Equity ratio, which is total debt divided by total capital. The Debt Equity ratio are as follows:
2.53 Disclosure relating to creation of Regulatory Deferral Accounts as per Ind AS 114
a) The company is mainly engaged in generation and sale of electricity. The price to be charged by the company for electricity sold to its customers 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.
b) As per the CERC Tariff regulations any gain or loss on account of exchange rate variation during the construction period shall form part of the capital
cost till the declaration of commercial operation date. Exchange differences arising from settlement/translation of monetary item denominated in
foreign currency to the extent recoverable from or payable to beneficiaries in subsequent periods as per CERC Tariff Regulations are recognized on an
undiscounted basis as regulatory deferral account debit/credit balance by credit/debit to movements in regulatory deferral account balances and
adjusted from the year in which the same becomes recoverable from or payable to the beneficiaries.
c) Interest charged to profit & loss account on account of arbitration awards in respect of hydro plants is included in regulatory deferral account debit
balance as the same is recoverable from beneficiaries through tariff in future.
d) Risks associated with future recovery/reversal of regulatory deferral account balances:
i) Demand risk due to changes in consumer attitudes, the availability of alternative sources of supply.
ii) Regulatory risk on account of changes in regulations and submission or approval of rate-setting application or the entity's assessment of the
expected future regulatory actions.
iii) Other market risks, if any.
2.54 Disclosure as per Ind AS 115, ‘Revenue from Contract with Customers'
I) Nature of goods and services
The revenue of the Company comprises of income from energy sales, energy trading and consultancy 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:
IV) Contract balances
Contract assets are recognised when there is excess of revenue recognised 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 including unbilled revenue, contract assets and advances from customers:
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 beneficiaries. 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 Consultancy:
For consultancy, transaction price for remaining performance obligations amounts to ? 1.58 Crore ( P.Y.: ? 14.09 Crore), which shall be received over
the contract period in proportion of the 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.
2.55 Disclosures as per Ind AS 116 ‘Leases’
1. The Company has adopted Ind AS 116-Leases effective 1st April, 2019, using the modified retrospective method. On the date of initial application, the
lease liability has been measured at the present value of the remaining lease payments and right of use assets has been recognised at an amount
equal to the lease liabilities.
2. Practical expedients applied as per Ind AS 116
a) Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.
b) Applied the exemption not to recognize ROU assets and liabilities for leases with less than 12 months of lease term on the date of initial application.
c) Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.
3. The details of the contractual maturities of lease liabilities as at March 31,2026 on an undiscounted basis are as follows:
2.58 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/emails 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.
2.62 Disclosure related to Corporate Social Responsibility (CSR)
As per the Companies Act, 2013, the company is required to spend at least two per cent of the average net profits of the company made during the
three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. Accordingly, an amount of ? 28.02 Crore [(2%
of Average Profit Before Tax of immediately previous three years (P.Y ? 28.33 Crore, 2% of Average Profit Before Tax of immediately previous three
years)] was required to be spent on CSR during the year.
During the year, the company has paid an amount of ? 29.82 Crore (P.Y: ? 31.50 Crore) to the CSR trust formed to manage the CSR activities.
Further, an amount of ? 0.18 Crore (P.Y: Nil) was incurred directly by the Company on CSR activities. Such expenditure has been recognised as CSR
expense in accordance with the Accounting Policy of the Company.
The management has decided not to avail the set-off facility provided under sub-section (5) of Section 135 of the Companies Act, 2013. Accordingly,
the excess amount will not be carried forward for set-off against CSR obligations of the succeeding three financial years.
a) Break-up of CSR expenditures incurred as intimated by CSR Trust under various heads is as below :
(a) The decrease in current ratio during the year is on attributable to long term borrowing maturing during the year which are part of current liabilities.
(b) The decrease in the trade receivables turnover ratio during the year is primarily due to higher billing on account of truing up/ provisional tariff
orders, resulting in higher trade receivables.
(c) The increase in Trade Payables turnover ratio is due to decrease in average trade payables during the current year as compared to the previous
year with negligible change in the numerator.
(d) The increase is attributable to higher dividend receipts compared to the previous year.
2.64 Three hydro power projects-210 MW Luhri Hydro Electric Project Stage-1,382 MW Sunni Dam Hydro Electric Project and 66 MW Dhaulasidh Hydro
Electric Project were allotted to SJVN through Memorandum of Understanding (MOU) by the Government of Himachal Pradesh (GoHP). As per
clause 6 of the MoU, the detailed terms and conditions of Implementation Agreement shall be formulated with the mutual consent of GoHP and SJVN.
GoHP vide letter dated 06.08.2022 forwarded mutually agreed Implementation Agreement to be signed between GoHP and SJVN. However,
Implementation Agreement for these projects is yet to be signed. Pending signing of mutually Agreed implementation agreement, SJVN has
commenced work on these projects to avoid time and cost overruns.
The Government of Himachal Pradesh has issued a notice with regard to commencement of work on these project in absence of implementation
agreement. GoHP seeks to re-negotiate the previously agreed terms & conditions and relaxations in respect of these projects before signing of
Implementation Agreement. SJVN has submitted the replies to the above notice and also filed a petition in the Hon'ble High Court of Himachal
Pradesh to address the issue. The Hon'ble High Court has directed GoHP that no coercive action shall be taken against SJVN with regard to the
subject matter of dispute. The case is currently pending and the Company is actively engaged in resolving the matter. Vide letter dated 22.04.2025,
Government of Himachal Pradesh has indicated the Government's intention to consider taking back these projects. Based on the current
circumstances and pending final decisions of the Hon'ble High Court of HP, the expenditure related to these projects upto 31.03.2026 amounting to
? 864.65 Crore and ? 3,068.49 Crore under Property, Plant and Equipment/ Intangible assets and Capital Work-in-Progress, continues to be
recognized in the financial statements respectively.
2.65 Pursuant to the notifications issued by the Ministry of Labour and Employment, the Code on Wages, 2019, the Code on Social Security, 2020, the
Industrial Relations Code, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 (collectively referred to as the “New Labour
Codes”) became effective from November 21,2025. Further, the corresponding Rules under the aforesaid Codes have been notified by the Central
Government with effect from May 08, 2026 and the impact, if any, arising therefrom shall be reviewed by the Company. Based on the available
information, clarifications and FAQs, the impact of the New Labour Codes is not material and has been recognised in the financial statements for the
year ended March 31,2026.
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