Notes forming part of the Financial Statements

1. Background:

The Company, pioneered the generation of electricity in India a century ago. Prior to 1st April, 2000 the Tata Electric Companies comprised of the following three Companies -

• The Tata Hydro-Electric Power Supply Company Limited, established in 1910 (Tata Hydro).

• The Andhra Valley Power Supply Company Limited, established in 1916 (Andhra Valley).

• The Tata Power Company Limited, established in 1919 (Tata Power).

With effect from 1st April, 2000, Andhra Valley and Tata Hydro merged into Tata Power to result in one large unified entity. The Company has an installed generation capacity of 3035 MW in India and a brsence in all the segments of the power sector viz. Fuel and Logistics, Generation (thermal, hydro, solar and wind), Transmission and Distribution.

2.1. Significant Accounting Policies:

(a) Basis for Preparation of Accounts:

The Financial Statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The Financial Statements have been brpared on accrual basis under the historical cost convention, except for Fixed Assets at Strategic Engineering Division, that are carried at revalued amount. The accounting policies adopted in the brparation of the Financial Statements are consistent with those followed in the brvious year, except for change in the accounting policy for debrciation at its Strategic Engineering Division (SED), as more fully described in Note 2.2.

(b) Use of Estimates:

The brparation of the Financial Statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in brparation of the Financial Statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.

(c) Cash and Cash Equivalents (for purposes of Cash Flow Statement):

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

(d) Cash Flow Statement:

Cash flows are reported using the indirect method, whereby profit/loss before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(e) Tangible/Intangible Fixed Assets:

(i) Fixed assets, except Tangible Assets at its Strategic Engineering Division are carried at cost less accumulated debrciation/ amortisation and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets upto the date the asset is ready for its intended use. The Company has adopted the provisions of para 46A of the Accounting Standard-11 (AS-11) - "The Effects of Changes in Foreign Exchange Rates", accordingly exchange differences arising on restatement/settlement of long-term foreign currency borrowings relating to acquisition of debrciable fixed assets are adjusted to the cost of the respective assets and debrciated over the remaining useful life of such assets. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and debrciated over the useful life of the principal item of the relevant assets.

Subsequent expenditure on fixed assets after its purchase/completion is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its brviously assessed standard of performance.The Company revalued all its Tangible assets that existed on 1st April, 2013 at its Strategic Engineering Division. The revalued assets are carried at the revalued amounts less accumulated debrciation and impairment losses, if any. Increase in the net book value on such revaluation is credited to "Revaluation reserve account" except to the extent such increase is related to and not greater than a decrease arising from a revaluation/impairment that was brviously recognised in the Statement of Profit and Loss, in which case such amount is credited to the Statement of Profit and Loss. Decrease in book value on revaluation is charged to the Statement of Profit and Loss except where such decrease relates to a brviously recognised increase that was credited to the Revaluation reserve, in which case the decrease is charged to the Revaluation reserve to the extent the reserve has not been subsequently reversed/utilised.

(ii) Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net realisable value and are disclosed separately.

(iii) Capital Work-in-Progress:

Projects under which tangible fixed assets are not yet ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing costs.

(iv) Intangible Assets under Development:

Expenditure on Research and Development [Refer Note 2.1 (l)] eligible for capitalisation are carried as Intangible assets under development where such assets are not yet ready for their intended use.

(f ) Impairment of Assets:

The carrying value of assets / cash generating units at each balance sheet date are reviewed for impairment if any indication of impairment exists. If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognised for such excess amount. The impairment loss is recognised as an expense in the Statement of Profit and Loss, unless the asset is carried at revalued amount, in which case any impairment loss of the revalued asset is treated as a revaluation decrease to the extent a revaluation reserve is available for that asset.

The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their brsent value based on an appropriate discount factor.

When there is indication that an impairment loss recognised for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, to the extent the amount was brviously charged to the Statement of Profit and Loss. In case of revalued assets such reversal is not recognised.

(g) Debrciation/Amortisation:

Debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Debrciation on Tangible fixed assets in respect of electricity business is provided at the rate as well as methodology notified by the Central Electricity Regulatory Commission (Terms and Conditions of Tariff ) Regulations, 2014 generally in accordance with the provision of Schedule II of the Companies Act, 2013.

In respect of assets relating to other business of the Company, debrciation on Tangible fixed assets has been provided on the straight-line method as per the useful life brscribed in Schedule II to the Companies Act, 2013 except in respect of the following category of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, etc.

Motor Vehicles, Launches, Barges - 5 years

Intangible assets are amortised on straight line method over their estimated useful life or 5 years, whichever is lower.

The estimated useful life of the Intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern, if any.

(h) Leases:

Where the Company as a lessor leases assets under finance leases, such amounts are recognised as receivables at an amount equal to the net investment in the lease and the finance income is recognised based on a constant rate of return on the outstanding net investment.Assets leased by the Company in its capacity as lessee where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the brsent value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight line basis, over the lease term.

(i) Investments:

Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments determined on an individual basis. Current investments are carried individually, at the lower of cost and fair value.

Cost of investments include acquisition charges such as brokerage, fees and duties.

(j) Inventories:

Inventories of stores, spare parts, fuel and loose tools are valued at lower of cost (on weighted average basis) and net realisable value after providing for obsolescence and other losses where considered necessary. Work-in-progress and property under development are valued at lower of cost and net realisable value. Cost includes cost of land, material, labour and other appropriate overheads.

(k) Taxes on Income:

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed debrciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed debrciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.

Current and Deferred Tax relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss.

(l) Research and Development Expenses:

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product’s technological feasibility has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilised for research and development are capitalised and debrciated in accordance with the policies stated for tangible/intangible fixed assets.

(m) Warranty Expenses:

Anticipated product warranty costs for the period of warranty are provided for in the year of sale.

(n) Foreign Currency Transactions and Translations:

Initial recognition:

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates brvailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Transactions in foreign currencies entered into by the Company’s integral foreign operations are accounted at the exchange rates brvailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Net investment in non-integral foreign operations is accounted at the exchange rates brvailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Transactions of non-integral foreign operations are translated at the exchange rates brvailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement at the balance sheet date:

Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost.

Foreign currency monetary items (other than derivative contracts) of the Company’s integral foreign operations outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company’s integral foreign operations are carried at historical cost.

Foreign currency monetary items (other than derivative contracts) of the Company’s net investment in non-integral foreign operations outstanding at the balance sheet date are restated at the year-end rates.

All assets and liabilities of non-integral foreign operations are translated at the year-end rates.

Treatment of exchange differences:

Exchange differences arising on settlement/restatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

Exchange differences arising on settlement/restatement of short-term foreign currency monetary assets and liabilities of the Company’s integral foreign operations are recognised as income or expense in the Statement of Profit and Loss.

The exchange differences on restatement of long-term receivables from non-integral foreign operations that are considered as net investment in such operations is accounted as per policy for long-term foreign currency monetary items stated in para below

until disposal/recovery of such net investment, in which case the accumulated balance in "Foreign currency translation reserve" is recognised as income/expense in the same period in which the gain or loss on disposal/recovery is recognised.

The exchange differences relating to non-integral foreign operations are accumulated in a "Foreign currency translation reserve" until disposal of the operation, in which case the accumulated balance in "Foreign currency translation reserve" is recognised as income/expense in the same period in which the gain or loss on disposal is recognised.

The exchange differences arising on settlement/restatement of long-term foreign currency monetary items are capitalised as part of the debrciable fixed assets to which the monetary item relate and debrciated over the remaining useful life of such assets. If such monetary items do not relate to acquisition of debrciable fixed assets, the exchange difference is amortised over the maturity period/upto the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of Profit and Loss. The unamortised exchange difference is carried under Reserves and Surplus as "Foreign currency monetary item translation difference account" net of the tax effect thereon, where applicable.

Accounting of forward contracts:

Premium/discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortised over the period of the contracts if such contracts relate to monetary items as at the Balance Sheet date. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense in the period in which such cancellation or renewal is made. Refer Note 2.1 (o) for accounting for forward exchange contracts relating to firm commitments and highly probable forecast transactions.

(o) Derivative Contracts:

The Company enters into derivative contracts in the nature of foreign currency swaps, currency options, forward contracts with an intention to hedge its existing assets and liabilities, firm commitments and highly probable transactions in foreign currency.

Forward contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for foreign currency transactions and translations. All other derivative contracts are mark-to-market and losses are recognised in the Statement of Profit and Loss. Gains arising on the same are not recognised, until realised, on grounds of prudence.

(p) Employee Benefits:

Employee benefits consist of Provident Fund, Superannuation Fund, Gratuity Scheme, Pension (including Director pension), Post Retirement Medical Benefits, Retirement Gift, Compensated Absences, Hospitalisation in Service and Long-term Service Awards.

Defined contribution plans:

The Company's contributions paid/payable during the year to Provident Fund, Superannuation Fund and Employee State Insurance Scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

Defined benefit plans:

For defined benefit plans in the form of Gratuity, Ex-Gratia Death Benefits, Retirement Gifts, Post Retirement Medical Benefits and Pension (including Director pension), the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet rebrsents the brsent value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the brsent value of available refunds and reductions in future contributions to the schemes.

Short-term employee benefits:

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. The cost of such compensated absences is accounted as under:

(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

Long-term employee benefits:

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the brsent value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled. Hospitalisation in Service and Long Service Awards are recognised as a liability at the brsent value of the defined benefit obligation as at the Balance

Sheet date.

(q) Revenue Recognition:

(i) Revenue from Power Supply and Transmission Charges are accounted for on the basis of billings to consumers/state transmission utility and includes unbilled revenues accrued upto the end of the accounting year.

(ii) The Company determines surplus/deficit (i.e. excess/shortfall of/in aggregate gain over Return on Equity entitlement) for the year in respect of its Mumbai and Jojobera regulated operations (i.e. Generation, Transmission and Distribution) based on the principles laid down under the respective Tariff Regulations as notified by Maharashtra Electricity Regulatory Commission

Notes forming part of the Financial Statements

96th Annual Report 201MERC) and Jharkhand State Electricity Regulatory Commission (JSERC) respectively on the basis of Tariff Orders issued by them. In respect of such surplus/deficit, appropriate adjustments as stipulated under the regulations are made during the year. Further, any adjustments that may arise on annual performance review by MERC and JSERC under the aforesaid Tariff Regulations is made after the completion of such review.

(iii) Delayed payment charges and interest on delayed payments are recognised, on grounds of prudence, as and when recovered/ confirmed by consumers.

(iv) Interest income and guarantee commission is accounted on an accrual basis. Dividend income is accounted for when the right to receive income is established.

(v) Amounts received from consumers towards capital/service line contributions are accounted as a liability and are subsequently recognised as income over the life of the fixed assets.

(vi) Revenue from infrastructure management services is recognised as income as and when services are rendered and no significant uncertainty to the collectability exists.

(vii) Income on contracts in respect of Strategic Engineering Business and Project Management Services are accounted on "Percentage of Completion" basis measured by the proportion that cost incurred upto the reporting date bear to the estimated total cost of the contract.

(viii) Revenue from Sale of Carbon Credit and Renewable Energy Certificate is recognised at the time of sale.

(r) Issue Expenses and Premium on Redemption of Bonds and Debentures:

(i) Expenses incurred in connection with the issue of Euro Notes, Foreign Currency Convertible Bonds, Unsecured Perpetual Securities, Global Depository Receipts and Debentures are adjusted against Securities Premium Account in the year of issue.

(ii) Discount on issue of Bonds, Debentures and Euro Notes are amortised over the tenure.

(iii) Premium on Redemption of Bonds/Debentures, net of tax impact, are adjusted against the Securities Premium Account in the year of issue.

(s) Borrowing Costs:

Borrowing costs include interest, amortisation of ancillary costs incurred. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction/development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

(t) Segment Reporting:

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the Executive Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market/fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and not allocable to segments on reasonable basis have been included under "unallocable revenue/expenses/assets/liabilities".(u) Provisions, Contingent Liabilities and Contingent Assets:

A provision is recognised when the Company has a brsent obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their brsent values and are determined based on the best estimate required to settle the obligations at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements and are disclosed in the Notes. A Contingent asset is neither recognised nor disclosed in the financial statements.

(v) Earnings Per Share:

Basic earnings per share is computed by dividing the profit/loss after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit/loss after tax as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The number of equity shares and potentially dilutive equity shares are adjusted for share splits/reverse share splits and bonus shares, as appropriate.

2.2. During the year, the Company has changed the method of providing debrciation on Tangible fixed assets at its Strategic Engineering Division. Debrciation which was hitherto provided on written down value method is now provided on straight line method based on the useful life provided in Schedule II to the Companies Act, 2013. As a result of the change, the charge on account of debrciation for the year ended 31st March, 2015 is lower by Rs. 18.46 crore (including write back of debrciation of Rs. 22.86 crore upto 31st March, 2014).

2.3. Pursuant to the enactment of the Companies Act, 2013 (the ‘Act’), the Company has, effective 1st April, 2014, reviewed and revised the estimated useful life of certain fixed assets, generally in accordance with the provisions of Schedule II of the Act. Further, debrciation in respect of certain power plants which were hitherto charged on a straight line method at rates provided in the power purchase agreements is from 1st April, 2014, charged on straight line method over the balance useful life using the methodology as notified by the Central Electricity Regulatory Commission (Terms and Conditions of Tariff ) Regulations, 2014. The consequential impact (after considering the transitional provision specified in Schedule II) on the debrciation charged and on the results for the year ended 31st March, 2015 is not material.

In earlier years, the deferred tax liability on timing difference relating to debrciation in respect of the above referred power plants was not recognised since the timing difference was expected to reverse during the tax holiday period in accordance with the Accounting Standard-22 (AS-22) - "Accounting for Taxes on Income". As a result of the change in debrciation as above, the Company has, during the year ended 31st March, 2015, recognised deferred tax liability of Rs. 23.00 crore in respect of the timing difference which is now expected to reverse after the tax holiday period.

2.4. The Company had, during the brvious year ended 31st March, 2014, changed its accounting policy in respect of Tangible assets at its Strategic Engineering Division. These Tangible assets which were hitherto carried at cost have been revalued as at 1st April, 2013. The revaluation is based on a valuation made by an independent valuer using the Debrciated Replacement Cost Method. Accordingly, the gross book value of such assets and the accumulated debrciation as at 1st April, 2013 had increased by Rs. 234.98 crore and Rs. 7.59 crore respectively and Rs. 227.39 crore had been credited to the Revaluation Reserve.

2.5. In an earlier year, in line with the Notification dated 29th December, 2011 issued by the Ministry of Corporate Affairs (MCA), the Company had selected the option given in paragraph 46A of the Accounting Standard-11 (AS-11) - "The Effects of Changes in Foreign Exchange

Rates". Accordingly, the debrciated/amortised portion of net foreign exchange (gain)/loss on long-term foreign currency monetary items for the year ended 31st March, 2015 is Rs. 128.56 crore (31st March, 2014 - Rs. 169.60 crore). The unamortised portion carried forward as at 31st March, 2015 is Rs. 243.60 crore (31st March, 2014 - Rs. 297.64 crore).

3. In an earlier year, the Company had commissioned its 120 MW Unit 4 thermal power unit at Jojobera, Jharkhand. Revenue in respect of this unit is recognised on the basis of a draft Power Purchase Agreement brpared jointly by the Company and its customer which is pending finalisation.

4. (a) Expenditure related to Corporate Social Responsibility as per Section 135 of the Companies Act, 2013 read with Schedule VII thereof Rs. 31.13 crore (including Rs. 11.57 crore paid to Tata Power Community Development Trust).

(b) Gross amount required to be spent during the year Rs. 29.83 crore.

5. (a) The Company has a long-term investment of Rs. 5,980.57 crore (31st March, 2014 - Rs. 5,928.28 crore including advance towards equity) and has extended loans amounting to Rs. 3,034.56 crore (including interest accrued) (31st March, 2014 - Rs. 1,413.46 crore) to Coastal Gujarat Power Limited (CGPL) a wholly owned subsidiary of the Company which has implemented the 4000 MW Ultra Mega Power Project at Mundra ("Mundra UMPP").

CGPL has obligated to charge escalation on 45 percent of the cost of coal in terms of the 25 year power purchase agreement relating to the Mundra UMPP. CGPL's Management has re-assessed the recoverability of the carrying amount of the assets at Mundra as of 31st March, 2015 and concluded that no further provision for impairment is necessary (upto 31st March, 2014 - Rs. 2,650 crore).

In estimating the future cash flows, Management has, based on externally available information, made certain assumptions relating to the future fuel prices, future revenues, operating parameters and the assets' useful life which Management believes reasonably reflects the future expectation of these items. In view of the estimation uncertainties, the assumptions will be monitored on a periodic basis and adjustments will be made if conditions relating to the assumptions indicate that such adjustments are appropriate.

The Company’s investments in Indonesian Coal Companies including Infrastructure Companies through its subsidiaries, were made to secure long-term coal supply. The Management believes that cash inflows (in the nature of profit distribution and profit from sale) from these investments from an economic perspective provide protection from the risk of price volatility on coal to be used in power generation in CGPL, to the extent not covered by price escalations. In order to provide protection to CGPL and to support its cash flows, the Management has committed to a future restructuring under which the Company will transfer at least 75 percent of its equity interests in the Indonesian Coal Companies including Infrastructure Companies to CGPL, subject to receipt of regulatory and other necessary approvals which are being pursued and will also evaluate other alternative options. A valuation of the equity interests in the Indonesian Coal Companies including Infrastructure Companies has been carried out on the basis of certain assumptions, including legal interbrtation that there is reasonable certainty that the mining leases would be extended without significant cost.Further, the Company, through its wholly owned subsidiaries, has entered into agreements on 30th January, 2014 for sale of shares in PT Arutmin Indonesia and its associated infrastructure and trading companies. As per the terms of the agreement, it is proposed to sell its stake in these companies, for a consideration of USD 510 million, subject to tax deductions and other closing adjustments. The completion of the sale transaction is conditional upon the satisfaction or waiver of certain conditions, obtaining requisite consents and certain restructuring actions. The buyer will pay the seller interest on the purchase price from 26th November, 2013 (the effective date) till the completion date. The proposed sale of shares in PT Arutmin Indonesia referred above is consistent with the above intent.

Having regard to the overall returns expected from the Company’s investment in CGPL, including the valuation of investments in the Indonesian Coal Companies including Infrastructure Companies and the proposed future restructuring, no provision for diminution other than temporary, in value of long-term investment in and no provisions for loans to CGPL is considered necessary as at 31st March, 2015.

(b) The Company has an investment in Tata Teleservices Limited (TTSL) of Rs. 735.48 crore (31st March, 2014 - Rs. 735.48 crore). Based on the accounts for the year ended 31st March, 2014, TTSL has accumulated losses which has completely eroded its net worth.

In the opinion of the Management, having regard to the long-term nature of the business, there is no diminution other than temporary, in the value of the investment.

(c) The Company has an investment in Haldia Petrochemicals Limited (HPL) of Rs. 22.50 crore (31st March, 2014 - Rs. 22.50 crore). Based on the accounts for the year ended 31st March, 2014, HPL has accumulated losses which have significantly eroded its net worth.

In the opinion of the Management, having regard to the long-term nature of the business, there is no diminution other than temporary, in the value of the investment.

(d) (i) The Company has invested Rs. 39.30 crore (31st March, 2014 - Rs. 39.30 crore), given loans of Rs. 4.50 crore including interest accrued (31st March, 2014 - Rs. 1.20 crore) to Mandakini Coal Company Limited ("Joint Venture") which had been allotted coal blocks by Government of India through Ministry of Coal.

(ii) The Company has invested Rs. 17.84 crore (31st March, 2014 - Rs. 17.58 crore including advance towards equity) in Tubed Coal Mines Limited ("Joint Venture") which had been allotted coal blocks by Government of India through Ministry of Coal.

(iii) Pursuant to the Order of the Hon’ble Subrme Court dated 24th September, 2014, regarding cancellation of the allotment of coal blocks and the subsequent Coal Mines (Special Provision) Ordinance, 2014, issued by the Government of India, the Company has made an assessment of the recoverability of its investments in and guarantees given to Jointly Controlled Entities viz. Mandakini Coal Company Limited and Tubed Coal Mines Limited, affected by the said Order and recognised, on a prudent basis, a provision for diminution of Rs. 37.10 crore during the year ended 31st March, 2015.

6. Commitments:

(a) Capital Commitments (net of capital advance):

Capital commitments not provided for are estimated at Rs. 662.48 crore (31st March, 2014 - Rs. 681.06 crore).

(b) Commitment towards purchase of Equity Shares of Trust Energy Resources Pte. Limited from Khopoli Investment Limited of Rs. 27.48 crore (31st March, 2014 - Rs. 26.29 crore) subject to approval of Reserve Bank of India.

(c) The Company has signed a Share Purchase Agreement on 10th December, 2014 for acquisition of 100% shareholding in Ideal Energy Projects Limited (IEPL), subject to statutory approvals and certain conditions brcedent. IEPL owns a 540 MW coal based thermal power project in Maharashtra out of which 270 MW was commissioned in May 2013 and is based on domestic coal.

(d) Other Commitments:

(i) In terms of the Sponsor Support agreement entered into between the Company, Coastal Gujarat Power Limited (CGPL) and lenders of CGPL, the Company has undertaken to provide support by way of base equity contribution to the extent of 25% of CGPL’s project cost and additional equity or subordinated loans to be made or arranged for, if required as per the financing agreements to finance the project. The Sponsor Support Agreement also includes support by way of additional financial support for any overrun in project costs, operational loss and Debt Service Reserve Guarantee as provided under the Financing Agreements. Pending achievement of the "Project Financial Completion Date" as defined under the Financing Agreement, the Sponsor support will continue. Further, CGPL has entered into Agreements with the Company, (i) for Additional Subordinated Loan to the extent of USD 50 million (equivalent to Rs. 200.00 crore at a fixed rate of exchange of Rs. 40 = USD 1.00) and (ii) for Additional Subordinated Loans to the extent of Rs. 3,540.00 crore. In accordance with these agreements the Company has provided total Additional Subordinated Loans of Rs. 4,235.82 crore (of which Rs. 1,512.85 crore has been converted into equity) [31st March, 2014 - Additional Subordinated Loans of Rs. 2,793.00 crore (of which Rs. 1,489.41 crore has been converted into equity)] to CGPL. Balance of both the loans would be repaid in accordance with the conditions of the Subordination and Hypothecation Agreements either out of additional equity to be infused by the Company or out of the balance Indian rupee term loans receivable by CGPL in future period, after the fulfillment of conditions in the Coal Supply and Transportation Agreements Completion Date (CSTACD) agreement.

The accrued interest as at 31st March, 2015 aggregating to Rs. 311.59 crore (31st March, 2014 - Rs. 109.87 crore) on Additional Subordinated Loans shall be payable subject to fulfillment of conditions in Subordination Agreement and Coal Supply and Transportation Agreements Completion Date (CSTACD) agreement.

(ii) In respect of NELCO Limited, the Company has undertaken to arrange for the necessary financial support to NELCO Limited in the form of interim Short-term funding for meeting its business requirements.

(iii) The Company has undertaken to arrange for the necessary financial support to its Subsidiaries Khopoli Investments Limited,

Bhivpuri Investments Limited, Industrial Power Utility Limited, Tata Power Jamshedpur Distribution Limited and Tata Power International Pte. Limited.

(iv) In respect of Maithon Power Limited (MPL), the Company jointly with Damodar Valley Corporation (DVC) has undertaken to the lenders of MPL, to provide support by way of base equity contribution and additional equity or subordinated loans to meet the increase in Project Cost. Further, the Company has given an undertaking to MPL to fulfill payment obligations of Tata Power Trading Company Limited (TPTCL) and Tata Power Delhi Distribution Limited (TPDDL) in case of their default.

(v) In terms of br-implementation agreement entered into with Government of Himachal Pradesh and the consortium consisting of the Company and SN Power Holding Singapore Pte. Ltd. (Company being the Lead Member of the consortium) for the investigation and implementation of Dugar Hydro Electric Project, the Company has undertaken as Lead Member to undertake/perform various obligations pertaining to Dugar Project.

(vi) In accordance with the terms of the Share Purchase Agreement and the Shareholder’s Agreement entered into by Panatone Finvest Limited (PFL), an associate of the Company, with the Government of India, PFL has contractually undertaken a "Surplus Land" obligation including agreeing to transfer 45% of the share capital of the Resulting Company, at Nil consideration, to the Government of India and other selling shareholders upon Demerger of the Surplus Land by Tata Communication Limited (TCL). The Company has till date acquired 1,34,22,037 shares of TCL from PFL. The Company would be entitled to be allotted 4.71% of the share capital of the Resulting Company based on its holding of 1,34,22,037 shares of TCL. The Company has undertaken to PFL to bear the "Surplus Land" obligation pertaining to these shares.

(vii) The Company has given an undertaking for non-disposal of shares to the lenders of Tata Power Delhi Distribution Limited in respect of its outstanding borrowings amounting to Rs. 520.78 crore (31st March, 2014 - Rs. 635.13 crore).

(viii) The Company has given letter of comfort to Cennergi Pty. Limited amounting to Rs. 10.67 crore (31st March, 2014 - Rs. 11.67 crore).

7. Contingent Liabilities (to the extent not provided for):

(a) Claims against the Company not acknowledged as debts aggregating to Rs. 1,691.49 crore (31st March, 2014 - Rs. 1,230.81 crore) consist mainly of the following:

(i) Interest and penalty demand disputed by the Company aggregating Rs. 1,151.48 crore (31st March, 2014 - Rs. 795.55 crore) relating to Entry tax claims for the financial years 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10. The Company is of the view, supported by legal opinion, that the demand can be successfully challenged.

(ii) Custom duty claims (including interest and penalty) of Rs. 170.01 crore (31st March, 2014 - Rs. 135.52 crore) disputed by the Company relating to applicability and classification of coal [Payment made under protest against these claims of Rs. 135.52 crore (31st March, 2014 - Rs. 135.52 crore)].

(iii) Way Leave fees (including interest) of Rs. 62.60 crore (31st March, 2014 - Rs. 54.00 crore) claims disputed by the Company relating to rates charged.

(iv) Rates, Cess, Excise and Custom Duty claims disputed by the Company aggregating Rs. 41.14 crore (31st March, 2014 - Rs. 40.95 crore).

(v) A Suit has been filed against the Company claiming compensation of Rs. 20.51 crore (31st March, 2014 - Rs. 20.51 crore) by way of damages for alleged wrongful disconnection of power supply and interest accrued thereon Rs. 120.60 crore (31st March, 2014 - Rs. 116.29 crore).

(vi) Octroi claims disputed by the Company aggregating to Rs. 5.03 crore (31st March, 2014 - Rs. 5.03 crore), in respect of octroi exemption claimed by the Company.

(vii) Compensation disputed by private land owners aggregating to Rs. 22.00 crore (31st March, 2014 - Rs. Nil) on private land acquired under the provisions of Maharashtra Industrial Development Act, 1961.

(viii) Other claims against the Company not acknowledged as debts Rs. 98.12 crore (31st March, 2014 - Rs. 62.96 crore).

(ix) Amounts in respect of employee related claims/disputes, regulatory matters is not ascertainable. Future cash flows in respect of above matters are determinable only on receipt of judgements/decisions pending at various forums/authorities.

(b) Other Contingent Liabilities:

Taxation matters for which liability, relating to issues of deductibility and taxability, is disputed by the Company and provision is not made (computed on the basis of assessments which have been re-opened and assessments remaining to be completed) Rs. 209.52 crore (including interest demanded Rs. 1.17 crore) [31st March, 2014 - Rs. 188.29 crore (including interest demanded Rs. 1.43 crore)].

Future cash flows in respect of above matters are determinable only on receipt of judgements/decisions pending at various forums/authorities.

8. (a) In an earlier year, the Company had provisionally determined Statutory Appropriations and adjustments to be made on Annual Performance Review as per Multi Year Tariff (MYT) Regulations, 2011 for Mumbai Licensed Area for financial year 2011-12. In view of deferment of implementation of MYT Tariffs to 1st April, 2012, as directed by MERC, revenue amounting to Rs. 155.00 crore was reversed in the financial year 2012-13.

The Company had filed a petition at the Appellate Tribunal for Electricity (ATE). ATE in its Order dated 28th November, 2013 had ruled in favour of the Company for implementation of MYT Tariffs effective 1st April, 2011. Accordingly, during the brvious year, the Company had recognised revenue amounting to Rs. 185.00 crore for the financial year 2011-12.

(b) During the brvious year, Maharashtra Electricity Regulatory Commission (MERC) had completed truing-up for the financial year 2011-12 and issued Tariff Orders. In these Tariff Orders, MERC has allowed true-up of the claims made by the Company in respect of earlier years incorporating the impact of favourable ATE Order. Accordingly, during the brvious year, revenue of Rs. 115.00 crore had been recognised in the financial statements.

(c) During the year ended 31st March, 2015 the Appellate Tribunal for Electricity (ATE) in its order dated 27th October, 2014 has allowed the Company’s claim regarding certain expenses which were disallowed/not recognised by MERC in its earlier true-up orders. Accordingly, the Company has treated such expenses as recoverable and has recognised revenue of Rs. 80.00 crore.

9. In respect of the contracts pertaining to the Strategic Engineering Business and Project Management Services, disclosures required as per AS-7 (Revised) are as follows:

(a) Contract revenue recognised as revenue during the year Rs. 530.50 crore (31st March, 2014 - Rs. 343.07 crore).

(b) In respect of contracts in progress –

(i) The aggregate amount of costs incurred and recognised profits upto 31st March, 2015 Rs. 814.84 crore (31st March, 2014 -Rs. 343.15 crore).

(ii) Advances and progress payments received as at 31st March, 2015 Rs. 813.25 crore (31st March, 2014 - Rs. 709.25 crore).

(iii) Retention money included as at 31st March, 2015 in Sundry Debtors Rs. 6.32 crore (31st March, 2014 - Rs. 9.81 crore).

(c) (i) Gross amount due to customers for contract work as a liability as at 31st March, 2015 Rs. 191.44 crore (31st March, 2014 -    Rs. 402.03 crore).

(ii) Gross amount due from customers for contract work as an asset as at 31st March, 2015 Rs. 191.89 crore (31st March, 2014 -Rs. 35.93 crore).

10. The Company is engaged in the business of providing infrastructural facilities as per Section 186(ii) read with Schedule VI of the Act, Accordingly, disclosures under Section 186 of the Act, is not applicable to the Company.

11. Previous year’s figures have been regrouped/reclassified wherever necessary to correspond with the current year’s classification/disclosure.Figures below Rs. 50,000/- are denoted by ‘*’.