XXI. Provisions and Contingent Liability Recognition and measurement
A provision is recognized when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Provisions are not discounted to present value.
Contingent liabilities are disclosed when there is (i) a possible obligation arising from past events, the existence of which 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 or (ii) a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
Contingent Liability is not provided for in the accounts and are disclosed by way of notes.
XXII. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
XXIII. Earnings per share
The Company presents basic and diluted Earnings Per Share (EPS) data for its ordinary shares.
Basic EPS is calculated by dividing the Profit or Loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.
Diluted EPS is calculated by taking the weighted average number of ordinary shares which is calculated for basic earnings per share and adjusted to the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. Dilutive potential ordinary shares are deemed to have been converted into ordinary shares at the beginning of the period or, if later, the date of the issue of the potential ordinary shares.
XXIV. Dividend
Dividends and interim dividends paid to Company's shareholders are recognized as changes in equity in the period in which they are approved by the shareholders meeting and the Board of Directors respectively.
XXV. Cash Flow Statement
Cash Flow Statement is prepared as per indirect method prescribed in the Ind AS 7 'Statement of Cash Flow'.
XXVI. Regulatory Deferral Accounts
Income/Expense recognized in the Statement of Profit or Loss to the extent recoverable from/payable to the beneficiaries in the subsequent periods as per CERC tariff regulations are recognized as Regulatory Deferral Account Balances. Regulatory Deferral Account Balances are adjusted from the year in which the same become recoverable from/payable to the beneficiaries.
Pending the disposal of review/ appeal petitions filed by the Company against adverse orders before CERC/SERC/ Other Appellate Authorities, the impact of the said orders are considered under Regulatory Deferral Account in the Profit or Loss of the respective financial year. In case of appeal by the beneficiary against the CERC/SERC orders, the impact on the same is not considered as Regulatory Deferral Liability and disclosed under Contingent Liability.
Regulatory Deferral Account Balances are reviewed and evaluated at each balance sheet date to ensure the underlying activities meet the recognition criteria and it is probable that future economic benefits associated with such balances will flow to the entity. If this criteria are not met this regulatory deferral account balances are derecognized.
Regulatory Deferral Account Balances are presented as separate line item in the Balance Sheet. The movement in the Regulatory Deferral Account Balances for the reporting period is presented as a separate line item in the Statement of Profit and Loss.
a) In respect of land acquired by the company during the periods 1956 to 1977 and 1997 to 2001, ownership is subject to certain restrictions imposed through the assignment deeds and through the Tamil Nadu Acquisition of Land for Industrial Purpose Act, 1997 respectively.
b) PPE Includes assets belonging to Ministry of Coal obtained under Coal Science & Technology Projects. This also includes residual value of assets considered as addition to the assets under Life extension programme.
c) Free hold Land includes acquisition of land relating to Barsingsar extension and Bithnok Power and its related Mining projects amounting to ^ 194.75 crore.
d) All units of Thermal Power Station -I has been retired from operation subsequent to 30.09.2020. The net block of TPS-I assets as on 31.03.2024 amounting to ^ 47.45 Crore are reclassified held for sale as per the requirements of IND AS 105 (Refer Note no 13). Estimated net sale proceeds of the retired assets is expected to be above the residual value of assets appearing in the books.
e) Spares meeting the criteria of PPE and having a value of more than ^ 5 Lakh have been considered for capitalisation.
f) Depreciation on Renewable Assets has been calculated considering 5% residual value in line with guidelines of MNRE/SERC.
g) There is no impairment loss identified for the tangible fixed assets during the year.
h) The company has identified land with limited life and classified the same under the head mining land.
i) Based on physical verification of assets FY 2018-19, FY 2020-21 and FY 2022-23 (including conveyor belts and pipes) the net block of ^ 13.26 crore were written off during the year.
j) Based on physical verification of assets conducted during the previous years, the net book value of assets which are not available has been provided and the same are included as part of asset register.
k) Refer Note no. 17(a) for the property, plant and equipment pledged as security by the Company.
l) Pursuant to Supplementary audit conducted by Comptroller of Auditor General of India under section 143(6)(a) of Companies Act 2013, additional disclosures has been given as follows:
i) NIRL, a wholly owned subsidiary of NLCIL was incorporated on 14.06.2023 for taking over of the existing renewable assets of 1420 MW with net book value (as on 31.03.2024) of ^ 5107 crore under Asset Monetization. Transfer of the asset etc. is under process and exemption of Income Tax is awaited from GoI.
ii) Freehold land includes 122.62 Ha having book value of ^ 5.27 crore which was transferred to the District Collector, Govt of Tamilnadu, vide Gift Deed in May 2024.
Details of Terms of Repayment, Rate of Interest and Security :
a. To meet the fund requirement of Neyveli New Thermal Power Project (NNTPP 1000 MW) borrowing arrangement has been done with:
i) Loan of ^ 3000 Crore was availed from M/s. Power Finance Corporation Ltd. and outstanding amount as at 31.03.2024 is ^ 1800 Crore. The Loan is secured by pari passu charge on project lands & fixed assets of NNTPP, repayable in 20 equal bi-annual instalments commencing from 31.03.2020. The interest rate as on 31.03.2024 is @ 8.81% p.a. (on the basis of 3 year AAA Reuter rate i.e. 7.96% p.a plus fixed spread 0.85%).
ii) NLCIL Bonds 2021 Series-I was issued on 12.02.2021 for an amount of Loan of ^ 1175 Crore @ 6.05% p.a. The Bond is unsecured and will be repayable by bullet payment on 12.02.2026.
NOTE 17 : Financial Liabilities (contd.)
iii) NLCIL Bonds 2021 Series-II was issued on 20.12.2021 for an amount of ^ 500 Crore @ 6.85% p.a., Out of which ^ 295.60 Crore was utilised towards NNTPS project and balance ^ 204.40 Crore was utilised towards general business purpose. This Bond is unsecured and will be repayable by bullet payment on 13.04.2032.
iv) M/s. The South Indian Bank has sanctioned Rupee Term loan of ^ 581 Crore out of which ^ 116.20 Crore was drawn and the undrawn amount is ^ 464.80 Crore as on 31.03.2024. The outstanding balance as on 31.03.2024 is ^ 5,000. This Loan is secured by pari passu charge by hypothecation of Non-Current assets of NNTPS, repayable in 10 equal bi-annual instalments commencing from 30.09.2023. The interest rate as on 31.03.2024 is @ 7.44% p.a. (on the basis of 3M Treasury Bill-FBIL rate i.e. 6.90% p.a plus fixed spread 0.54%)
v) M/s. Indian Overseas Bank has sanctioned Rupee Term loan of ^ 1078 Crore for FGD and other additional scope, and the entire sanctioned amount is undrawn as on 31.03.2024. This Loan is secured by hypothecation of Non-Current Assets of additional Scope NNTPS, repayable in 10 equal bi-annual instalments commencing from 30.04.2025. The interest rate as on 31.03.2024 is @ 7.71% p.a. (on the basis of RBI Repo rate i.e. 6.50% p.a plus fixed spread 1.21%)
b. To meet the fund requirement of Tamilnadu Solar Power Project 500 MW, borrowing arrangement has been done with the following banks:
i) Axis Bank sanctioned a loan of ^ 500 Crore and drawn ^ 500 Crore. The interest rate is on the basis of 5 Year G-Sec rate plus 1.22% fixed spread. Repayment for the loan was started from September'2019 in 10 equal half-yearly instalments and the loan was fully repaid on 08.03.2024. This loan is secured by pari-passu charge on the project assets to the extent of the facility.
ii) Axis Bank sanctioned a loan of ^ 450 Crore and drawn ^ 450 Crore. The outstanding balance as on 31.03.2024 is ^ 44.96 Crore. The interest rate as on 31.03.2024 is 8.39% p.a (On the basis of 5 Year G-Sec Rate i.e. 7.19% plus 1.20% fixed spread). Repayment for the loan started from March' 2020 in 10 equal half-yearly instalments. This loan is secured by pari-passu charge on the project assets to the extent of the facility.
iii) Federal bank sanctioned a loan of ^ 456 Crore and drawn ^ 456 Crore. The outstanding as on 31.03.2024 is ^ 45.55 Crore. The interest rate as on 31.03.2024 is 8.40% p.a. (on the basis of 5 Year G-Sec rate i.e. 7.20% plus 1.20% fixed spread). Repayment for the loan started from March'2020 in 10 equal half-yearly instalments. This loan is secured by pari-passu charge on the project assets to the extent of the facility.
c. To meet the fund requirement of Tamilnadu Solar Power Project 709 MW, borrowing arrangement has been done with SBI for an amount of ^ 2,552 Crore. Out of the facility, ^ 2,319 Crore was drawn & outstanding amount as on 31.03.2024 is ^ 1,425.24 Crore. The Interest rate as on 31.03.2024 is 8.55% p.a. (on the basis of 6 Month MCLR rate @ 8.55%). This loan is repayable in 20 equal half-yearly instalments, first repayment started on 31.12.2020. This loan is secured by pari-passu charge on the project assets to the extent of the facility.
d. To meet the fund requirement of 300 MW Solar Power Project at Barsingsar, Rajasthan, borrowing arrangement has been done with M/s. IndusInd Bank Limited for an amount of ^ 1,000 Crore and entire amount is undrawn as on 31.03.2024. The applicable Interest rate is linked to GoI 3 months Treasury Bill published by FBIL plus fixed spread of 1.17% p.a. This loan is repayable in 20 equal halfyearly instalments, first repayment started on 31.03.2025. This loan is secured by hypothecation of project assets to the extent of the facility.
e. To meet the fund requirement of Talabira Coal Mine II & III, borrowing arrangement has been done with SBI for an amount of ^ 1,680.75 Crore. Out of the facility, ^ 593 Crore was drawn & outstanding as on 31.03.2024 is ^ 88.65 Crore. The interest rate as on 31.03.2024 is 8.55% p.a (on the basis of 6 Months SBI MCLR) repayable in 20 equal half- yearly instalments starting from 30.09.2021. The loan is secured by pari-passu charge on the project assets to the extent of the facility.
f. To meet the General Funding arrangement, NLCIL BONDS 2019 SERIES I was Issued on 29.05.2019 for ^ 1,475 Crore @ 8.09% p.a. and NLCIL BONDS 2020 SERIES I was issued on 27.01.2020 for an amount of ^ 525 Crore @ 7.36% p.a. These Bonds were initially secured by pari-passu 1st charge on the project assets of TPS II Expansion 500 MW (250 MW X 2) Thermal power station (including Land) to
the extent of the facility and subsequently to have sufficient asset cover another security has been created by pari-passu 1st charge on the project assets of 1000 MW (2 X 500 MW) NNTPP, Neyveli project to the extent of ^ 1,184 Crore. These Bonds are repayable on 29.05.2029 & 25.01.2030 respectively. Out of ^ 1,475 Crore, ^ 749.22 Crore and ^ 234.98 Crore has been used towards unlocking of Equity of TPS II Expansion Project (2*250 MW) & Wind 51 MW respectively and balance were used for general purpose.
g. To meet the General Funding arrangement, an unsecured Bonds i.e. NLCIL Bond 2020 Series-II and was issued on 31.07.2020 for ^ 500 Crore carrying an interest rate of 5.34% p.a. which is repayable through bullet payment on 11.04.2025
h. Bi-annual equal repayment (€ 0.219 Million each) of Foreign Currency loan - I from KfW Germany, commenced from 30.12.2001, ending on 30.06.2036. This loan is unsecured and guaranteed by GoI @ guarantee fee of 1.20%. The outstanding loan, Euro 5.49 million carries interest rate @ 0.75% p.a.
i. Bi-annual equal repayment (€ 1.401 Million each) of Foreign Currency loan - II from KfW Germany, commenced from 30.06.2002, ending on 30.06.2037. This loan is unsecured but guaranteed by GoI @ guarantee fee of 1.20%. The outstanding soft loan, Euro 37.84 million carries interest rate @ 0.75% p.a.
j. The company has maintained required asset cover as per the terms of offer document/information memorandum and/or Debenture trust deed, including compliance with all the covenants, in respect of the listed non-convertible debt securities.
k. SEBI Circular on ease of doing business and development of corporate bond markets dated 19th October, 2023 provides for raising 25% of the incremental borrowings by the large corporates, done during FY 2022, FY 2023 and FY 2024 respectively by way of issuance of debt securities till March 31, 2024. However, after considering the liquidity positions and the size of the Bond requirements, the Company did not raise funds by way of issuing any debt securities during the FY 2023-24.
NOTE 40: Disclosure of transactions with the related parties as defined in the Ind AS-24 are given below: (Contd.)
(3) 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.
(4) For the year ended March 31, 2024 and March 31, 2023 the Company has not recorded any impairment of receivables relating to amounts payable by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
(5) Consultancy/Management services provided by the Company to Subsidiaries are generally on nomination basis at the terms, conditions and principles applicable for consultancy/management services provided to other parties.
NOTE 41: Employee benefits
(i) Defined benefit plans:
The defined benefit plan is administered by the LIC which is named as LIC Group Gratuity Fund ('Fund') that is legally separated from the Group. The board of the fund is required by law to act in the best interest of the plan participants and is responsible for setting certain policies (e.g. investment, contribution and indexation policies) of the fund. Their defined benefit plans expose the group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market (investment) risk.
A. Funding
Defined benefit plan is fully funded by the group. The funding requirements are based on the fund's actuarial measurement framework set out in the funding policies of the plan. The funding of the plan is based on a separate actuarial valuation for funding purpose.
The Company has determined that in accordance with the terms and conditions of the defined benefit plan, and in accordance with statutory requirements, the present value of refunds or reductions in future contributions is not lower than the balance of the total fair value of the plan asset less the total present value of obligations.
B. Movement in net defined benefit (Asset) Liabilities Gratuity & Leave Benefit
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 * last drawn basic salary plus dearness allowance) for each completed year of service subject to a maximum of ^ 0.20 Crore on superannuation, resignation, termination, disablement or on death considering the provisions of the Payment of Gratuity Act, 1972, as amended. The gratuity scheme is funded by the Company and is managed by separate trust. The liability for gratuity scheme is recognised on the basis of actuarial valuation.
The Company provide 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 is encashable while in service. Half pay leaves (HPL) are encashable only on separation. However total number of leave that can be encashed on superannuation shall be restricted to 300 days and no commutation of half pay leave shall be permissible. The liability for the same is recognized on the basis of actuarial valuation.
NOTE 44: Disclosure as per Ind AS 116 'Leases'
The companies significant leasing arrangements are in respect of various assets are as follows :
a) Land : The company has lease arrangement with respect to its office and township requirements at various locations (i.e. HUDCO land at Delhi and office & township land in Talabira project, Odisha) for 99 years. The lease rental are fixed for entire lease term, which has been arrived based on lease agreement. The lease can be extended for similar periods on mutually agreed terms after the completion of the current lease period. The company does not have option to buy.
b) Vehicles : The Company has taken certain vehicles (including e-vehicles) on lease for a period extending up to 5 years, which can be further extended at mutually agreed terms. All the lease rental of vehicles are fixed in nature except for e-vehicles Lease rental for which are escalated @10% each year.
c) Plant and Machinery: An agreement has been arrived between NLCIL (the company) and Solar Development Operator (SDO) to use power evacuation facility for a period of 25 years. The lease rental are fixed in nature.
d) Buildings : Premises for use of offices and guest houses on lease are usually renewable on mutually agreeable terms. The lease rental are fixed in nature for one property and escalated by 10% each year for other properties
When measuring lease liabilities, the Company discounted lease payments using its weighted average borrowing rate of long term loans.
(i) Nature of rate regulated activities
The Company is engaged in the business of mining of lignite/coal and generation of power by using lignite as well as renewable energy sources. The price to be charged by the Company for electricity sold to its customers is determined by the Central Electricity Regulatory Commission (CERC)/State Electricity Regulatory Commission (SERC)/bidding process. The CERC provide extensive guidance on the principles and methodologies for determination of the tariff for the purpose of sale of power and transfer of lignite. Presently CERC follows Hybrid Tariff approach wherein most of the components of the tariffs are now allowed on a normative basis irrespective of actual cost, while retaining a few of the cost determinants such as capital cost, additional capitalisation, Water Charges, Security expenses, Capital Spares etc. to be allowed on actual basis subject to a prudence check. Also CERC has notified its second amendment to its tariff regulation 2019-24, where in transfer price of Coal/Lignite will be determined by CERC effective from 01.04.2019. The Company has filed Tariff Petition for tariff period 2019-24 for all its Neyveli mines on July 26, 2022 and for Barsingsar mines on December 26, 2022 in line with regulations. Pending disposal of the said Petition, the Company has filed intralocutory application seeking approval of provisional Lignite transfer price for the Neyveli mines. Subsequently CERC has issued interim lignite transfer price order for the control period 2019-24 and the differential impact on such order is recognised under power sales. Company has also received Input price Tariff Order for 2019-24 with respect to Barsingsar Mines and the differential impact is recognised under power sales. 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 plus service model regulations which enable the Company to recover its costs of providing the goods or services plus a fair return.
(ii) Recognition and measurement
As per the CERC/SERC Tariff Regulations, any gain or loss on account of exchange risk variation during the construction period shall form part of the capital cost till declaration of Commercial Operation Date (COD) to be considered for calculation of tariff. CERC during the past periods in tariff orders for various stations has allowed exchange differences incurred during the construction period in the capital cost. Accordingly, exchange difference arising during the construction period is within the scope of Ind AS 114. Any Tariff difference arising on account of change in additional capital expenditure, water charges, security expenses and Capital Spares based on actuals from that allowed in provisional tariff orders shall be considered under regulatory deferral balances on undiscounted basis. When the Company prefers appeal in APTEL/Other authorities the impact of the adverse items in the order along with period cost if any required is considered under the Regulatory Deferral Account in the Profit or Loss of the respective financial year based on the reliable estimates of the Company on case to case basis. Regulatory deferral account balances are adjusted in the year in which the same become recoverable from or payable to the beneficiaries.
In view of the above, exchange differences arising from settlement/translation of monetary item denominated in foreign currency to the extent recoverable from or payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations are recognized on an undiscounted basis as 'Regulatory deferral account debit/credit balance' by credit/debit to 'Movements in Regulatory deferral account balances' during construction period and Adjustment from the year in which the same becomes recoverable from or payable to the beneficiaries. Accordingly, an amount of ^ 121.06 crore for the year ended 31 March 2024 has been accounted for as 'Regulatory deferral account debit balance' (31st March 2023: ^ 134.24 crore accounted as 'Regulatory deferral account debit balance'.)
As per the CERC tariff regulation the expenses towards capital spares shall be allowed to claim from the beneficiaries based on prudence check at the time of truing up. The company has recognised ^ 18.92 crore for FY 2023-24 (PY: ^ 19.06 Crore) under its regulatory assets.
(iii) Risks associated with future recovery/reversal of regulatory deferral account balances:
i. Demand risk -Availability of alternative and cheaper sources of power may result in reduced demand.
ii. Regulatory risk - the regulatory deferral balances may undergo a change due to the rate setting process or truing up at the end of the tariff period resulting in derecognition of regulatory deferral asset/liability.
iii. Other risks - The Foreign Exchange Variation on actual repayment of loans are eligible for recovery from the customers and hence the risk is mitigated. In respect of disputed orders, where the company has preferred an appeal has recognised Regulatory Deferral Liability which may require economic outflow of resources upon passing of orders by the appellate authorities.
(iv) Reconciliation of the carrying amounts:
The regulated assets/liabilities recognized in the books to be recovered from or payable to beneficiaries in future periods are as follows:
Capital management
The Company's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital, as well as the level of dividends to equity shareholders.
The Board of directors maintains an optimal balance between the higher return that further borrowings may generate vis -s vis the security afforded by sound capital position
Under the terms of major borrowing facilities, the Company is required to comply with the following financial covenants:
Loan from PFC - Debt service coverage ratio not less than 1.50 Neyveli Bond - Minimum asset coverage ratio of 1.0
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 noncurrent borrowings (including current maturities) and current borrowings as specified in Note no.17 (a), 21(a) less cash and cash equivalents (excluding earmarked deposits). Equity includes equity share capital and reserves (excluding earmarked Reserves) that are managed as capital. The gearing ratio at the end of the reporting period was as follows:
NOTE 48: Financial risk management
The treasury function of the company provides services to the business, co-ordinates access to domestic and international financial markets monitors and manages the financial risks relating to the operations through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk) credit risk and liquidity risk.
NOTE 48: Financial risk management (Cont'd)
The Company's principal financial liabilities comprise loans and borrowings in domestic and foreign 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, short term deposits etc.
A) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations resulting in a financial loss to the Company. Credit risk arises principally from trade receivables, loans & advances, cash & cash equivalents and deposits with banks and financial institutions.
Trade receivables
The Company primarily sells electricity to customers comprising, mainly state electrical utilities owned by State Governments and Union Territory. The risk of default in case of power supplied to these state owned companies is considered to be insignificant. The Company has not experienced any significant impairment losses in respect of trade receivables in the past years. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables and unbilled revenues. The provision matrix takes into account available external and internal credit risk factors such as credit defaults and the Company's historical experience for customers.
Since the Company has its customers within different states of India, geographically there is no concentration of credit risk. However, management considers the factors that may influence the credit risk of its customer base, including the default risk of the industry.
At March 31, 2024, the Company's most significant customer, Tamil Nadu Generation & Distribution Co. Ltd (TANGEDCO) accounted for ^ 2,940.57 crore of the trade receivables carrying amount (^ 3,263.54 crore as at March 31, 2023)
Loans and advances
The Company has given loans & advances to its employees. The Company manages its credit risk in respect of Loan and advances to employees through settlement of dues against full & final payment to employees.
Cash and cash equivalents and deposits with banks
The Company has banking operations with highly rated banks including scheduled banks which are owned by Government of India and Private Sector Banks. The risk of default with government controlled entities is considered to be insignificant.
(i) 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/customers have sufficient capacity to meet the obligations and where the risk of default is very low. Hence, no impairment has been recognised during the reporting periods in respect of such assets.
(b) Financial assets for which loss allowance is measured using life time expected credit losses
The company has customers (State government utilities) with strong capacity to meet the obligations. Further, management believes that the unimpaired amounts that are past due by more than 45 days are still collectible in full. However, considering various regulatory and other disputes including historical payment behaviour and analysis of customer credit risk impairment loss has been considered for the reporting period in respect of trade receivables.
(ii) Ageing analysis of trade receivables
The Company's debtors include debtors in respect of TPS, Mines, renewables and also other debtors. As a policy, the Company does an ageing analysis of debtors, the details of which is stated below.
B) 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 manages liquidity risk through cash credit limits and undrawn borrowing facilities by continuously monitoring forecast and actual cash flows.
The Company's treasury department is responsible for managing the short term and long term liquidity requirements of the Company.
Typically the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations, this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
(i) Financing arrangements
The Company had access to the following undrawn borrowing facilities at the end of the reporting period:
a) SBI has sanctioned ^ 1,680.75 Crore Rupee Term Loan facility for Talabira Mine project. Out of the entire facility as on 31.03.2024 the undrawn amount is ^ 1,087.75 Crore. Ref note 17 (a) (e).
b) SBI has sanctioned Rupee term loan of ^ 2,552.00 Crore for solar 709 MW, out of which ^ 2,319.00 Crore has been drawn and the undrawn amount is ^ 233.00 Crore as on 31.03.2024. Ref note 17 (c).
c) SIB has sanctioned Rupee Term loan of ^ 581 Crore for NNTPS, out of which ^ 116.20 Crore was drawn and the undrawn amount is ^ 464.80 Crore as on 31.03.2024. Ref note 17 (a)(iv).
d) IOB has sanctioned Rupee Term loan of ^ 1,078 Crore for additional scope of NNTPS and entire amount is undrawn as on 31.03.2024. Ref note 17 (a)(v).
e) IBL has sanctioned Rupee Term loan of ^ 1,000 Crore for 300 MW Solar Project at Barsingsar Rajasthan and entire amount is undrawn as on 31.03.2024. Ref note 17 (a) (d).
f) SBI has Sanctioned Fund Based Working Capital of ^ 4,000 Crore and Non-Fund based Working Capital of ^ 1,000 Crore. After availing the interchangeability option, the available limit of fund based working capital is ^ 3,750 Crore as on 31.03.2024 (PY ^ 3,502 Crore). Out of which, the availment of fund based working capital as on 31.03.2024 is Nil (PY ^ 498 Crore). Ref Note no. 21 (a).
C) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices which will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return.
D) Currency risk
The Company executes import agreements for the purpose of purchase of capital goods. Up to 31st March, 2016 the Company capitalize the exchange gain/loss on account of re-instatement/actual payment of the vendor liabilities till the date of commercial operation. Such capital cost is allowed by CERC as recovery from beneficiaries. If any exchange gain/loss arise after the date of commercial operation the same will also be recovered from beneficiaries as part of rate regulated asset. From 1st April, 2016 exchange gain/loss on long term foreign
NOTE 58: Additional Disclosures : to the notification dated 24th March 2021, by Ministry of Corporate Affairs
a) Title deeds/Assignment Deeds/Govt.Orders of Immovable Property not held in name of the Company : As on the date of financials all the immovable properties are held in the name of the company by way of Title deed /Assignment deed/Government Order. In certain cases the company is in the process of updation of name in the revenue records.
b) Loans and Advances to Directors, KMPs, & Related Parties : The company has a policy of loans and advances given to its employees including loans and advances given to Directors, KMPs and the related parties. All these loans are paid as in accordance with the Policy adopted by the company and Repayments and interests to be charged accordingly. No loans paid to Directors, KMPs and Related parties are repayable on demand or without specifying the terms of repayment. Hence the additional disclosure as specified in the notification no.GSR 207 (e) dated 24th March 2021 to companies Act 2013 is not applicable to the company.
c) Details of benami Properties : There is no benami properties held by the company as on date of financials. Hence the additional disclosure as specified in the notification no.GSR 207 (e) dated 24th March 2021 to companies Act 2013 is not applicable to the company.
d) Wilful Defaulter : As on date of financials or any of the previous years, the company has not defaulted any of its loans paid to any Banks or Financial Institutions.
f) Compliance with number of layers of companies : Clause (87) of section 2, section 450 read with sub-sections (1) and (2) of section 469 of the Companies Act, 2013 and section 2 Companies (Restriction on number of layers) Rules, 2017, government companies are exempt from requirements of disclosing the number of layers of its holding in subsidiaries. Hence the additional disclosure as specified in the notification no.GSR 207 (e) dated 24th March 2021 to the Companies Act, 2013 is not applicable to the company.
g) Utilisation of Borrowed funds and share premium:
1) The company has not advanced or loaned or invested any funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(is), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall. (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
2) The company has not received any fund from any person(s) or entity(is), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries, the company shall disclose the following.
Hence both the above additional disclosure as specified in the notification no.GSR 207 (e) dated 24th March, 2021 to the Companies Act, 2013 is not applicable to the company.
h) Details of Crypto Currency or Virtual Currency : The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year or any of the previous financial years.
NOTE 59: Additional Disclosures (Contd.)
3) Assets held for sale
4) Revenue Recognition - Unbilled Revenue
5) Provisions and Contingent Liabilities
NOTE 60: Additional Disclosures
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 sale of energy, 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 for sale of power and lignite is generally done on periodical 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. Loan outstanding balances of employees are also reconciled periodically.
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.
c) The Company is facing with deficit in availability of land at Neyveli for lignite mining, which is adversely impacting generation of power, as local District Authorities are facing resistance for taking measurement of structures for further land acquisition and also in getting possession of already acquired land to handover to the Company. On 07.08.2023, Hon'ble Madras High Court pronounced the order that NLCIL to pay ex gratia amount to farmers and to take the possession of the land which was already acquired by NLCIL and paid the land compensation.
To mitigate the said hardship, the company has undertaken substantial efforts, leading to acquisition of requisite quantum of land to meet the thermal units production requirement. The Company is confident of overcoming the challenges on land acquisition at Neyveli mines with sustained efforts, in the near future.
d) As per the requirements of Rule 3(1) of the Companies (Accounts) Rules, 2014, the Company has used SAP for maintaining its books of account for the financial year ended March 31, 2024 which has a feature of recording audit trail of each and every transaction creating an edit log of each change made in the books of account. This feature of recording audit trail has operated throughout the year and was not tampered with during the year.
In respect of 7 external applications that were integrated with SAP software, in connection with Auction & tender system, Integrated Weighment Tracking System, employees advance and reimbursement claims, GST Central Invoicing System & House Allotment, Rent Accounting & other Township related Management System, we confirm that there is no audit trail (edit log) facility that was enabled.
e) Pursuant to Supplementary audit conducted by Comptroller of Auditor General of India under section 143(6)(a) of Companies Act 2013, additional disclosures has been given as follows:
i) The Board has approved an amount of ^ 52.92 crore for PAPs of Talabira II & III, subject to their eligibility and acceptance.
ii) Minimum annual dividend as per DIPAM guidelines shall be 30% of PAT or 5% of Net-worth, whichever is higher. NLCIL has paid 30% of dividend on face value of share which is 2.60% of net worth and the differential amount as per DIPAM guidelines is ^ 383.70 crore for 2023-24. NLCIL has requested for exemption to MoC for the year which is awaited.
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