Investors

UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND HALF-YEAR ENDED 30^th SEPTEMBER 2010

REPORTING OF SEGMENT-WISE REVENUE, RESULTS AND CAPITAL EMPLOYED FOR THE QUARTER  AND HALF-YEAR ENDED 30^th SEPTEMBER 2010

Notes:

1. (a) The Central Electricity Regulatory Commission (CERC) notified the Tariff Regulations, 2009 (Regulations, 2009) in January 2009, containing inter-alia the terms and conditions for determination of tariff applicable for a period of five years with effect from 1^st April 2009. Pending determination of station-wise tariff by the CERC, sales have been provisionally recognized at Rs.1,262,952  lakh for the quarter and Rs.2,543,124 lakh for the half-year ended 30^th September 2010 respectively (previous quarter and half-yearRs.1,046,965 lakh and Rs.2,244,046 lakh respectively) on the basis of principles enunciated in the said Regulations on the capital cost considering the orders of Appellate Tribunal for Electricity (APTEL) for the tariff period 2004-2009.

The Regulations, 2009 provide that pending determination of tariff by the CERC, the Company has to provisionally bill the beneficiaries at the tariff applicable as on 31^st March 2009 approved by the CERC. The amount provisionally billed during the quarter and for the half-year ended 30^th September 2010 on this basis are Rs.1,219,791 lakh and Rs.2,466,395 lakh respectively (previous quarter and half-year Rs.1,018,526 lakh and Rs.2,167,067 lakh respectively).

(b) Sales includes Rs.18,129 lakh for the quarter and Rs.22,056 lakh for the half-year ended 30^th September 2010 respectively (previous quarter and half-year Rs.110 lakh and Rs. (-)111 lakh respectively) pertaining to previous years recognized based on the orders issued by the CERC/APTEL.

(c) Sales includes Rs.5,030 lakh for the quarter and half-year ended 30^th September 2010 (previous quarter and half-year Rs. Nil) on account of income tax recoverable from customers as per Regulations, 2004. Sales also includes Rs.2,670 lakh for the quarter and Rs.9,066 lakh for the half-year ended 30^th September 2010 respectively on account of deferred tax materialized which is recoverable from customers as per Regulations, 2009.

(d) A sum of Rs.126,268 lakh included in debtors on the basis of certain APTEL orders in favour of the Company have been fully provided for during the quarter and shown as provisions.

2. (a) During the quarter, the Office of the Comptroller & Auditor General of India has expressed an opinion that the rates of depreciation notified by the CERC shall be followed by the Company instead of the rates as per the Companies Act, 1956 for providing depreciation in the accounts. Accordingly, the Company has revised its accounting policies relating to charging of depreciation w.e.f 1^st April 2009 considering the rates and methodology notified by the CERC for determination of tariff through Regulations, 2009. In case of certain assets, the Company has continued to charge higher depreciation based on technical assessment of useful life of those assets. Consequent to this change, prior period depreciation written back is Rs.102,068 lakh for the quarter and half-year ended 30^th September 2010. Depreciation for the quarter and half-year ended 30^th September 2010 is lower by Rs.10,639 lakh. As a result, profit before tax for the quarter and half-year ended 30^th September 2010 is higher by Rs.112,707 lakh.

(b) Due to above change, the amount of advance against depreciation (AAD) required to meet the shortfall in the component of depreciation in revenue over the depreciation to be charged off in future years has been reassessed by the Company station-wise as at 1^st April 2009 and the excess determined amounting to Rs.74,263 lakh has been recognised as prior period sales. Further, an amount of  Rs.6,178 lakh of AAD has been recognised as sales during the quarter and half-year ended 30^th September 2010.

(c) Further due to the above change, deferred tax liability (net) and the deferred tax recoverable from the beneficiaries as at 31^st March 2010 amounting to Rs.304,942 lakh and Rs.284,016 lakh respectively have been reviewed and restated to Rs.438,602 lakh and Rs.380,966 lakh respectively. In terms of Regulation 39, CERC Tariff Regulations, 2009, the Company has determined the amount of the deferred tax liability (net) materialised during the period pertaining to the period up to 31^st March 2009 by identifying the major changes in the elements of deferred tax liability/asset, as recoverable from the beneficiaries. An amount of Rs.9,066 lakhs has been recognised as sales during the half-year and the balance deferred tax liability (net) and the deferred tax recoverable from the beneficiaries as at 30^th September 2010 works out to Rs.429,666 lakh and Rs.371,900 lakh respectively.

3. Interest and finance charges include :

(a) Exchange differences regarded as adjustment to interest costs Rs.3,103 lakh for the quarter and  Rs.7,715 lakh for the half-year ended 30^th September 2010 respectively (previous quarter and half-year Rs.7,485 lakh).

(b) Other exchange differences arising from settlement/translation of foreign currency monetary items denominated in foreign currency (other than long term) amounting to Rs.1,126 lakh for the quarter and Rs.(-) 33 lakh for the half-year ended 30^th September 2010 respectively (previous quarter and half-year Rs.721 lakh and Rs.525 lakh respectively).

4. Fixed assets including CWIP, construction stores & advances include Rs.69,159 lakh in respect of one of the hydro power project, the construction of which has been put under suspension since February 2009 and is now understood to have been recommended for scrapping by the Group of Ministers, Government of India (GOI) along-with the recommendations for compensating the Company for project related expenditure and commitments. Management is confident of reimbursement of the cost, hence no provision is made.

Further, borrowing cost for the said project amounting to Rs.628 lakh for the quarter and  Rs.1,260 lakh for the half-year ended 30^th September 2010 has been accounted as due from GOI.

5. The Company is executing a thermal power project in respect of which possession certificates for 1,489 acres of land has been handed over to the Company and all statutory and environment clearances for the project have been received. Subsequently, a high power committee has been constituted as per the directions of GOI to explore alternate location of the project since present location is stated to be a coal bearing area. Aggregate cost incurred up to 30^th September 2010 Rs.18,775 lakh is included in fixed assets including CWIP, construction stores & advances. Management is confident of recovery of the cost incurred, hence no provision is made.

6. Formula used for computation of coverage ratios DSCR = Earning before Interest, Depreciation and Tax/ (Interest net off transferred to expenditure during construction + Principal repayment) and ISCR = Earning before Interest, Depreciation and Tax/ (Interest net off transferred to expenditure during construction)

7. During the quarter, one unit of 490 MW at Dadri project of the Company has been declared commercial w.e.f 31^st July 2010.

8. During the quarter, the Company has paid final dividend of Rs.0.80 per share (face value Rs.10/- each) for the financial year 2009-10. 

9. Information on investors complaints pursuant to clause 41 of Listing Agreements for the quarter ended 30^thSeptember 2010:

10. Summary of Assets and Liabilities:

11.The above results have been reviewed by the Statutory Auditors as required under Clause 41 of the Listing Agreements.

12. The above results have been reviewed by the Audit Committee of the Board of Directors and approved by the Board of Directors in their meetings held on 26^th October 2010.

13. Figures for the previous period have been regrouped/rearranged wherever necessary.

12. The above results have been reviewed by the Audit Committee of the Board of Directors and approved by the Board of Directors in their meetings held on 26^th October 2010.

13. Figures for the previous period have been regrouped/rearranged wherever necessary.

reviewed by the Statutory Auditors as required under Clause 41 of the Listing Agreements.

For and on behalf of the Board of Directors

Place: New Delhi
Date 26th October 2010

Sd/-
(A. K. SINGHAL)
DIRECTOR (FINANCE)