PFC Notes to Accounts

1. CASH FLOW STATEMENT


Cash flow statement is prepared in accordance with the indirect method prescribed in Accounting Standard - 3 on Cash Flow Statement.


2. CASH AND CASH EQUIVALENTS


Cash comprises cash on hand, demand deposits with banks, imprest with postal authorities and cheques / drafts / pay orders in hand. The Company considers cash equivalents as all short term balances (with an original maturity of three months or less frommthe date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.


Other Notes on Accounts


3. The Company is a Government Company engaged in extending financial assistance to power sector and is a Systemically Important (Non-Deposit Accepting or Holding) Non-Banking Finance Company (NBFC) registered with Reserve Bank of India as an Infrastructure Finance Company. Equity shares of the Company are listed on NSE and BSE.


4. Contingent Liabilities and Commitments:


(B) Income Tax Demands


Additional demands raised by and paid to the Income Tax Department totaling to Rs,40.53 crore (Previous year Rs,45.23 crore) of earlier years are being contested. Further, the Income Tax Department has filed appeals against the relief allowed by appellate authorities to the Company aggregating to Rs,165.39 crore (Previous year Rs,121.04 crore). The same are also being contested. The Management does not consider it necessary to make provision, as the liability is not considered probable.


(C) Service Tax Demands


Service Tax demand / show cause notices raised by Service Tax Department totaling to Rs,23.51 crore (Previous year Nil) of earlier years are being contested. Further, the Service Tax Department has also filed an appeal before CESTAT against the order of Commissioner (CE&ST) who had dropped a demand of service tax of Rs,1.11 crore (Previous year Rs,1.11 crore). The same is also being contested. The Management does not consider it necessary to make provision, as the liabilities are not considered probable.


5 Other Commitments


Estimated amount of contract remaining to be executed on account of capital account, not provided for, is Nil (Previous year Nil).


* Pertaining to Assessment Year 2001-02 to 2014-15. $ Pertaining to Assessment Year 2001-02 to 2013-14.


A. The Company is creating Debenture Redemption Reserve (DRR) for public issue of bonds or debentures @ 50% (as per MCA Circular No. 6/3/2001 - CL.V dated 18.04.2002) for public issues wherein prospectus had been filed before 11.02.2013 and @ 25% (as required by Companies (Share Capital and Debentures) Rules, 2014) for the subsequent public issues.


B. The Company raises funds through various instruments including series of non-convertible bond issues. During the year, the Company has not defaulted in servicing of its borrowings.


As regards non-convertible Rupee denominated bonds, the previous due date for payment of interest and principal was 31.03.2017.


Rs,Includes JPY loan liability partly hedged through forward rate contract entered for one leg (USD/INR) for USD 45 million / Rs,291.83 crore (Previous year USD / JPY leg USD 105 million / Rs,701.09 crore).


C. The Company amortizes exchange differences on long term foreign currency monetary items over their tenure. Consequently, as at 31.03.2017 unamortized debit balance under Foreign Currency Monetary Item Translation Difference Account (FCMITDA) is Rs,647.56 crore (Previous year debit balance Rs,739.74 crore).


In-case of specific provision in the loan agreement, rate as prescribed in respective loan agreement has been used.


E. During the year ended 31.03.2017, Company has amended the accounting policy for accounting of derivative contracts in order to align it with the ‘Guidance Note on Accounting for Derivative Contracts'''' issued by The Institute of Chartered Accountants of India which has become applicable from 01.04.2016. The said Guidance Note require derivative contracts to be accounted either on fair value basis or as per hedge accounting and the Company has opted for accounting on fair value basis.


Accordingly, Derivative contracts not covered by AS-11 but covered under Guidance Note are measured at fair value with changes in fair value being recognized in the Statement of Profit & Loss. In accordance with the transitional provisions mentioned in the Guidance Note, an amount of Rs,74.35 crore (net of Deferred Tax Liability of Rs,39.35 crore) has been adjusted in the opening balance of reserves, representing the cumulative impact of change in the fair value (gain) of the interest rate swaps till 31.03.2016 net of amount accrued. Thereafter, further fair value gain (net) on interest rate swaps has been booked to the Statement of Profit & Loss. Due to this change in the accounting policy, profit before tax for the year has increased by Rs,178.15 crore.


#Joined the Company on 11.04.2013, KMP from 01.04.2014 as per Companies Act 2013.


B Transactions with Key Management Personnel (KMP):


Managerial remuneration of KMP for the year ended 31.03.2017 is Rs,3.50 crore (Previous year Rs,2.36 crore). Loans & Advances given to KMP is Rs,0.50 crore (Previous year Rs,0.39 crore) as on 31.03.2017.


(i)Financial statements are consolidated as per Accounting Standard 21 - Consolidated Financial Statements and Accounting Standard 27


- Financial Reporting of Interests in Joint Ventures.


(ii)Subsequent to decision by the Board of Directors of respective subsidiaries, merger of PFCCAS with PFCCL is under progress.


(iii)The Board has in- principle approved the merger of PFCGEL with PFCL in meeting held on 9th August 2016 which is under progress.


(iv)Decision of voluntary winding up of PECAP is under consideration of MoP, GoI.


(v)Subsidiary companies were incorporated as SPVs under mandate from the GoI for development of UMPPs with the intention to hand over the same to successful bidders on completion of the bidding process. Financial statements of these subsidiaries are not consolidated, in accordance with paragraph 11 of Accounting Standard-21.


(vi)MoP vide its OM dated 21st June, 2016 has conveyed its approval for the wound up of TAMPL. The related proceedings are under way.


(vii)Board of Directors of NPEL (erstwhile JV of the Company) had approved a plan of Voluntary Liquidation with effect from 28.10.2014. The Voluntary winding up of NPEL has been completed on 26.07.2016. The Company has received Rs,1.21 crore in July 2016 as final settlement from NPEL’s liquidator. Accordingly, during the year, accumulated provision Rs,1.06 crore has been reversed and loss on disposal of investments of Rs,0.98 crore has been recognized. Accordingly financial statements of NPEL have not been consolidated for the FY 2016-17.


(viii)Maximum amount of investment during the year is same as investment at the year-end for each of the entities except NPEL where maximum amount during the year stood at Rs,2.19 crore gross of provision for diminution.


B. None of the related party loanee is holding any equity investment in the Company as on 31.03.2017 (Previous year Nil).


9. A. Major Investments made during the year:


i) During the year, the Company has subscribed to 26,05,42,051 fully paid equity shares of NHPC Limited of face value of Rs,10/- per share under Offer for Sale by GoI. The shares have been subscribed at a cost of Rs,21.78/- per share including brokerage and other statutory charges aggregating to Rs,567.50 crore.


ii) The Company has subscribed to 9,90,00,000 fully paid equity shares of EESL of face value of Rs,10/- per share as on 31.03.2016 and the same have been allotted on 25.04.2016.


B. Conversion of Debt into Equity:


i) In case of a borrower which was classified as a doubtful loan asset, the Company invoked the pledge of equity shares. Accordingly, 6,57,46,779 number of equity shares of Rs,10/- each pledged by the promoters have been transferred to the Company on 01.06.2016. These equity shares have been recognised at a value of Rs,1/-.


Further, 6,61,00,000 number of equity shares of Rs,10/- each have been allotted to the Company on 01.06.2016 on partial conversion of sub-debt loan given earlier to the extent of Rs,66.10 crore. A provision for diminution in value of these shares has been made. The impact of provision after netting the provision earlier made is Rs,46.27 crore. Carrying value of these equity shares as on 31.03.2017 amounts to Rs,1.


As on 31.03.2017, the Company holds 23.32% of paid-up equity share capital of the borrower company.


ii) In case of another borrower, the Company has converted its debt into equity under approved Strategic Debt Restructuring (SDR) package and 27,50,00,000 number of equity shares of Rs,10/- each have been allotted to the Company on 23.02.2017. As at 31.03.2017, provision for diminution in value of investment works out to Rs,81.95 crore. Company has opted to distribute the provision over four quarters in accordance with RBI''''s SDR norms. Accordingly, a provision for diminution in value of investment of Rs,20.49 crore has been provided in the last quarter of the current year. As at 31.03.2017, Company holds 4.81% of paid-up equity share capital of the borrower.


6. Interest Differential Fund (IDF) - KFW


The agreement between KFW and the Company provides that IDF belongs to the borrowers solely and will be used to cover exchange risk variations under this loan and any excess will be used in accordance with the agreement. Balance in IDF has been kept under separate account head titled as Interest Differential Fund - KFW and shown as a liability. Total fund accumulated as on 31.03.2017 is Rs,63.88 crore (Previous year Rs,60.71 crore), after transferring exchange difference of Rs,12.56 crore (Previous year Rs,13.48 crore).


(ii) The Company had sanctioned an amount of Rs,88.90 crore in year 2004 as finance lease for financing wind turbine generator (commissioned on 19.07.2004). Sanction was reduced to Rs,88.85 crore in December 2006. Gross investment stood at the level of Rs,0.89 crore as on 31.03.2017 (Previous year Rs,1.33 crore). Lease rent is to be recovered within a period of 15 Years, starting from 19.07.2004, which comprises of 10 years as primary period and 5 years as secondary period. Secondary period is in force with effect from 19.07.2014.


(iii) The Company had sanctioned an amount of Rs,98.44 crore in year 2004 as finance lease for financing wind turbine generator (commissioned on 18.5.2004). Gross investment stood at Rs,3.45 crore as on 31.03.2017 (Previous year Rs,3.94 crore). Lease rent is to be recovered within a period of 20 years, starting from 18.05.2004, which comprises of 10 years as primary period and a maximum of another 10 years as secondary period. Secondary period is in force with effect from 01.04.2014.


(iv) The Company had sanctioned an amount of Rs,93.51 crore in year 2004 as finance lease for financing wind turbine generator (commissioned on 09.06.2005). Gross investment stood at Rs,3.74 crore as on 31.03.2017 (Previous year Rs,4.21 crore). Lease rent is to be recovered within a period of 19 years 11 months, starting from 09.06.2005, which comprises of 10 years as primary period and a maximum of 9 years and 11 months as secondary period. Secondary period is in force with effect from 01.04.2015.


(v) The Company had sanctioned an amount of Rs,228.94 crore in year 2008 as finance lease for financing wind turbine generator (commissioned on 18.05.2011). Gross investment stood at Rs,327.71 crore as on 31.03.2017 (Previous year Rs,355.30 crore). Lease rent is to be recovered within a period of 25 years, starting from 01.01.2012, which comprises of 18 years as primary period and a maximum of 7 years as secondary period.


(B) The Company''''s operating leases consist of:


Premises for offices and for residential use of employees are lease arrangements, and are usually renewable on mutually agreed terms, and are cancellable. Rent for residential accommodation of employees include Rs,5.61 crore (Previous year Rs,4.65 crore) towards lease payments, net of recoveries in respect of premises for residential use of employees. Lease payments in respect of premises for employees are shown as rent for residential accommodation of employees in Note Part A 16 - Employee Benefit Expenses. Lease payments in respect of premises for offices amounting to ''''0.50 crore (Previous year ''''0.50 crore) are shown as office rent in Note Part A 17 - Other Expenses. Future lease payments in respect of these lease agreements are given below:


7. Implementation of GoI Schemes


(A) Subsidy under Accelerated Generation & Supply Programme (AG&SP):


(i) The Company claimed subsidy from GoI at net present value calculated at indicative interest rates in accordance with GOI''''s letter vide D.0.No.32024 / 17 / 97 - PFC dated 23.09.1997 and 0.M.No.32024 / 23 / 2001 - PFC dated 07.03.2003, irrespective of actual repayment schedule, moratorium period and duration of repayment. Amount of interest subsidy received and to be passed on to the borrower is retained as Interest Subsidy Fund Account. Impact of difference between indicative rate and period considered at the time of claims and at the time of actual disbursement can be ascertained only after end of respective schemes. However, on the basis of projections made for each project (based upon certain assumptions that these would remain same over the projected period of each loan / project), the Company estimated net excess amount of ''''8.67 crore and Rs,93.56 crore as on 31.03.2017 (Previous year Rs,7.80 crore and Rs,87.47 crore) for IX and X Plan, respectively under AG&SP schemes, and there is no shortfall. This net excess amount is worked out on overall basis and not on individual basis and may vary due to change in assumptions, if any, during the projected period such as changes in moratorium period, repayment period, loan restructuring, pre-payment, interest rate reset etc. Any excess / shortfall in the interest subsidy fund will be refunded or adjusted / charged off on completion of respective scheme.


(B) Re-structured Accelerated Power Development and Reforms Programme (R - APDRP):


(i) The Company is Nodal Agency for operationalization and associated service for implementation of R - APDRP.


Amounts received from the GoI under R - APDRP as a Nodal agency for on-lending to eligible borrowers are back to back arrangements with no profit or loss arising to the Company. The amount on-lended but not converted in to grants as per applicable guidelines will become payable along-with interest to the GoI on receipt from borrowers.


(ii) Nodal Agency Fee under R - APDRP scheme for XIth plan is being accounted for @ 1% of sanctioned project cost in three stages - 0.40% on sanction of project, 0.30% on disbursement of funds and remaining 0.30% after completion of the sanctioned project (for Part - A) and verification of AT&C loss of the project areas (for Part - B). In addition, actual expenditure including expenditure allocable on account of Company''''s manpower, incurred for operational zing the R- APDRP is reimbursable by MoP, GoI. The cumulative claim for fee and reimbursement of expenditure is subject to cap of Rs,850 crore or 1.7% of likely project outlay under Part A & B of R-APDRP, whichever is less.


From XIIth plan onwards, in accordance with Company''''s claim, approved by MoP vide its letter dated 31.03.2015 and subsequent clarification issued by MoP vide letter dated 20.05.2015, the Company continues to restrict its claims only to reimbursement of actual expenditure excluding Company''''s own manpower and administrative charges.


“Exclusive of Service Tax


(C) Integrated Power Development Scheme (IPDS)


Ministry of Power on 03.12.2015 has launched IPDS for (i) strengthening of sub-transmission and distribution network in urban areas,


(ii) metering of feeders / distribution transformers / consumers in urban areas and (iii) IT enablement of distribution sector and strengthening of distribution network by subsuming R-APDRP and carrying forward the approved outlay for R-APDRP to IPDS.


The scope of works under IPDS includes work relating to strengthening of sub-transmission and distribution system, including provisioning of solar panels, metering of distribution transformers / feeders / consumers in the urban areas and IT enablement of distribution sector.


The Company has been designated as Nodal Agency for operationalization and implementation of scheme under overall guidance of the MoP, GoI. Role of Nodal agency is mentioned in IPDS scheme which inter-alia includes administration of GoI grant to eligible utilities which can be recalled / pre-closed subject to certain conditions mentioned in IPDS guidelines.


The Company will be eligible for 0.5% of total project cost approved by Monitoring Committee or award cost, whichever is lower, as nodal agency fee to be claimed / accrued as under:


i. 1st installment: 40% of nodal agency fee in financial years in which projects are approved by the Monitoring Committee under IPDS.


ii. 2nd installment: 30% of nodal agency fee on award of approved projects.


iii. 3rd installment: 20% of nodal agency fee after one year of claiming 2nd installment.


iv. 4th installment: 10% of nodal agency fee after completion of works.


8. Government of India Fully Serviced Bonds


For meeting GOI''''s funding requirement of central sector schemes, during the year, the Company has raised an aggregate amount of Rs,5,000 crore through unsecured, redeemable, non-convertible, taxable bonds in the nature of debentures of face value of Rs,10 lacs at par on private placement basis. As per O.M. dated 20.10.2016 of Ministry of Finance, these bonds will be fully serviced by GoI. Accordingly, the amount of such bonds along-with interest is also appearing as recoverable by the Company from GoI.


9. A. Asset classification and Provisioning:


1) The Company has aligned with RBI Prudential norms during the year, contained in RBI''''s “Non-Banking Financial Company


- Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016" as amended from time to time read with specific directions mentioned below:


1. Assets classification norms in line with RBI''''s letter dated 03.10.2016:


i. loan assets (excluding lease asset) outstanding as at 31.03.2017 and overdue for 4 months or more is classified as Non-Performing Asset (NPA) and classification during the year is based on prevailing norm of overdue for 5 months or more,


ii. NPA as at 31.03.2017 for a period not exceeding 14 months is classified as Sub-standard asset and classification during the year is based on prevailing norm of NPA for a period not exceeding 16 months, and


iii. NPA as at 31.03.2017 for a period exceeding 14 months is classified as Doubtful asset and classification during the year is based on prevailing norm of NPA for a period exceeding 16 months.


10. Restructuring Norms:


(i) In line with RBI''''s letter dated 11.06.2014, Transmission & Distribution, Renovation & Modernization and Life Extension projects and also the hydro projects in Himalayan region or affected by natural disasters are regulated by the restructuring norms approved by MoP till 31.03.2017. Accordingly, with effect from 01.04.2017, RBI restructuring norms will be applied for any future restructuring undertaken in these loans.


Further, RBI vide letter dated 11.06.2014 has directed that for new project loans to generating companies restructured w.e.f. 01.04.2015, the provisioning requirement would be 5% and for stock of such outstanding loans as on 31.03.2015 to all generating companies, provisioning shall commence with a provision of 2.75% with effect from 31.03.2015 and reaching 5% by 31.03.2018.


(ii) As regard implementation of RBI restructuring norms (shifting from MoP, GoI approved restructuring norms), based on the various correspondence exchanged, RBI in letter dated 11.04.2017 has stated that in case of a Govt. Sector account, if the project has not commenced commercial operation within DCCO envisaged at the time of financial closure (or revised DCCO within the permissible thresholds as given in RBI Norms for Restructured Advances), the classification is to be done project-wise instead of borrower-wise till 31.03.2022.


1) a) The Company has been applying RBI restructuring norms on new generation loans sanctioned w.e.f. 01.04.2015


(Before 01.04.2015, MoP, GoI approved restructuring norms were applicable).


b) After receipt of RBI letter dated 11.04.2017, Company has adopted RBI restructuring norms on remaining loans (other than loans as stated at 14A(1)(2)(i) above). In generation loans sanctioned before 31.03.2015 and where structuring has been done w.e.f. 01.04.2015, the asset classification has been given effect on 31.03.2017 as per RBI norms with consequent provisioning.


B. Credit Concentration Norms


For credit concentration norms, RBI vide its letter dated 16.06.2016, has extended exemption in respect of exposure to Central / State Government entities till 31.03.2022. Thus, the Company continues to follow MoP approved credit concentration norms for Central / State Government entities.


12. Pursuant to adoption of RBI''''s restructuring norms during the year (shifting from MoP, GoI approved restructuring norms), in respect of loans to state sector, regular in servicing, having no overdoes as on 31.03.2017:


a) Company has categorized standard assets amounting to Rs,35,994.70 crore as restructured standard assets. The provision on such loans has been increased from 0.35% to 4.25%. Thus, profit before tax for the year ended 31.03.2017 has decreased by


b) Company has classified two loan assets as NPA having amount outstanding of Rs,8,284.47 crore as on 31.03.2017, which achieved DCCO on or before 31.03.2017 after 2/3/4 years from original DCCO (as permitted under norms). During the year, un-realized income on these loans amounting to Rs,163.71 crore has been reversed and additional provision of Rs,799.45 crore has been made on such loans. Thus, profit before tax for the year ended 31.03.2017 has decreased by Rs,963.16 crore.


c) Company has classified three loan assets as NPA having amount outstanding of Rs,4,157.28 crore as on 31.03.2017, which by year ended 31.03.2017 could not achieve date of commencement of commercial operation (DCCO) within 2/3/4 years from original DCCO (as permitted under norms). During the year, un-realized income on these loans amounting to Rs,103.04 crore has been reversed and additional provision of Rs,401.18 crore has been made on such loans. Thus, profit before tax for the year ended 31.03.2017 has decreased by Rs,504.22 crore.


d) Company has classified one loan asset as NPA having amount outstanding of Rs,5,793.83 crore as on 31.03.2017, which was restructured after achievement of DCCO. During the year, un-realised income on this loans amounting to Rs,142.03 crore has been reversed and additional provision of Rs,333.14 crore has been made on this loan.


Further, in accordance with borrower-wise asset classification norms, other loans to the same borrower have also been classified as NPA. Hence, un-realised income on such other loans amounting to Rs,118.59 crore has been reversed and additional provision of Rs,489.62 crore has been made on such other loans having amount outstanding of Rs,5,073.73 crore as on 31.03.2017.


Thus, profit before tax for the year ended 31.03.2017 has decreased by Rs,1,083.38 crore.


The profit before tax for the year has decreased by Rs,3,954.55 crore on account of para a to d above.


(1)R/R/R loans on which restructuring provisioning as per RBI norms is applicable, outstanding as at 31.03.2017 amount to Rs,19,445.92 crore in private sector and Rs,35,994.70 crore in Govt. sector as explained at Note Part C-15 (a) above (Previous year Rs,21,479.20 crore in private sector and Rs,10,783.78 crore in Govt. sector).


(2)Includes loans amounting to Rs,23,309.30 crore pertaining to Govt. Sector which became NPA on adoption of RBI RRR Norms during current year as explained at Note Part C-15 (b,c&d) above.


13. Basis of secured / un-secured categorization of loan assets:


a) In cases where Company is a lead or sole lender, it considers the loan asset as secured if hypothecation of movable project assets has been completed and mortgage of more than 50% of the project land for loan assets has been achieved. Further, wherever valuation is required as per applicable norms, the security status is updated on the basis of valuation report.


b) In all other cases, secured / un-secured classification is done on the basis of security status obtained from the lead lender.


14. In case of a restructured loan asset, categorized as sub-standard by the Company on 15.04.2015, the borrower has obtained an ad-interim stay on further proceedings from Hon''''ble High Court of Madras vide order dated 17.06.2015.


The Company had sought a legal opinion with respect to asset classification, based on which, the loan asset was re-classified from restructured sub-standard to restructured standard asset and the NPA provision amounting to ''''339.99 crore made till the date of reclassification was reversed during the previous year.


The matter is sub-judice and ad-interim stay is continuing. Based on the subsequent legal opinion sought, the Company maintained asset classification as standard as on 31.03.2016 and continues the same in the current year also amid further progress in the project.


On 30.06.2016, the Company has moved petition for vacating the order of ad-interim stay. The said petition is pending for hearing. Subsequent to reclassification of the said account in the previous year,


(i) interest / income of ''''413.03 crore accrued and remaining unrealised as on 31.03.2017 has been reversed;


(ii) provision, as applicable based on the existing asset classification as restructured standard asset, has been made which stands at Rs,163.17 crore as on 31.03.2017 (as on 31.03.2016 Rs,148.82 crore);


(iii) provision treating the account as doubtful, on the loan balance of Rs,4,893.39 crore as on 31.03.2017 (as at 31.03.2016 Rs,4,251.91 crore), after considering the provision as stated at (ii) above, has not been recognized amounting to Rs,815.50 crore (previous year Rs,276.37 crore).


15. Disclosures as per Accounting Standard -15 :-


A. Provident fund


The Company pays fixed contribution on account of provident fund at prescribed rates to a separate trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognized as expense and is charged to the statement of profit and loss. The trust has to ensure, a minimum rate of return to the members as specified by GoI. However, any shortfall for payment of interest to members as per specified rate of return has to be compensated by the Company. The Company estimates that no liability will arise in this regard in the near future and hence, no further provision is considered necessary.


B. Gratuity


The Company has a defined gratuity scheme which is managed by a separate trust. The provision for the same has been made on actuarial valuation based on total number of years of service rendered by an employee subject to a maximum amount of Rs,10 lakh per employee.


C. Pension


The Company has a defined contribution pension scheme which is in line with guidelines of the Department of Public Enterprise (DPE) and is managed by a separate trust. Employee and Employer contribution to the fund has been contributed on monthly basis. Pension is payable to the employees of the Company as per the scheme.


D. Post-Retirement Medical Scheme (PRMS)


The Company has Post-Retirement Medical Scheme (PRMS), under which retired employees and their dependent family member are provided with medical facilities in empanelled hospitals. They can also avail reimbursement of out-patient treatment subject to a ceiling fixed by the Company.


This scheme is managed by a separate trust. Trust was registered during the F.Y. 2014-15 in the name of PFC Superannuation Medical Fund and started operations from the FY 2016-17. Provision on this account as on 31.03.2016 amounting to Rs,17.83 crore was transferred by the Company to the trust on 11.07.2016. The provision for the same has been made on actuarial valuation. The trust has to ensure, adequate corpus for meeting the medical expenditure incurred by the retired employees. However, any short fall has to be compensated by the Company. The Company estimates that no liability will arise in this regard in the near future and hence, no further provision is considered necessary.


E. Terminal Benefits


Terminal benefits include settlement in home town for employees & their dependents.


F. Leave


The Company provides for earned leave benefit and half-pay leave benefit to the credit of the employees, which accrues on half-yearly basis @ 15 days and 10 days, respectively. A maximum of 300 days of earned leave can be accumulated at any point of time during the service. There is no limit for accumulation of half pay leave. Earned leave is en-cashable during the service; while half pay leave is not en-cashable during the service or on separation / superannuation before 10 years. On separation after 10 years of service or on superannuation, earned leave plus half pay leave together can be en-cashed subject to a maximum of 300 days. However, there is no restriction in the number of years of service for earned leave encashment on separation from the service.


G. The above mentioned schemes (D, E and F) are unfunded and are recognized on the basis of actuarial valuation.


H. The summarised position of various defined benefits recognized for the year 31.03.2017 in the statement of profit and loss account, balance sheet are given below {Figures in brackets ( ) are for Previous year}:


*During the year, the expenses include Rs,0.09 crore (previous year Rs,0.03 crore), Rs,0.43 crore (previous year Rs,0.55 crore) and Rs,0.29 crore (previous year Rs,0.44 crore) for gratuity, leave and PRMS respectively allocated to subsidiary companies.


vi) During the year, Company has provided liability of Rs,1.41 crore, Rs,4.04 crore, Rs,7.49 crore and Nil (Previous year Rs,0.27 crore, Rs,4.15 crore, Rs,6.39 crore and Nil) towards contribution to the Gratuity Trust, PRMS, leave and towards Pension respectively. Above amount includes Rs,0.09 crore, Rs,0.43 crore and Rs,0.29 crore (Previous year Rs,0.03 crore, Rs,0.55 crore and Rs,0.44 crore) for gratuity, leave and PRMS respectively allocated to subsidiary companies.


I. Other Employee Benefits:-


During the year, provision of Rs,0.21 crore (Previous year Rs,0.33 crore) has been made for Economic Rehabilitation Scheme (ERS) for employees and provision of Rs,0.59 crore (Previous year Rs,0.48 crore) has been made for Long Service Award (LSA) for employees on the basis of actuarial valuation made at end of the year by charging / crediting statement of profit and loss. LSA includes Rs,0.05 crore (Previous year Rs,0.06 crore) allocated to subsidiary companies.


(1)As at 31.03.2017, Bonds of the Company amounting to Rs,0.60 crore (previous year Rs,0.50 crore) are held by PFC Limited Gratuity Trust.


"Estimate of future salary increases considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand in employment market.


(II) Details of Plan Asset:- PRMS


(1)As at 31.03.2017, Bonds of the Company amounting to Nil (previous year Nil) are held by PFC Limited PRMS Trust.


‘Estimates of future salary increases considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in employment market.


K. Employee benefits (viz. Gratuity, PRMS, Terminal Benefits, Leave encashment and other employee benefits) in respect of Company''''s employees working in PFCCAS, PFCGEL and PFCCL (subsidiaries of the Company) on deputation / secondment basis, are being allocated based on a fixed percentage of employee cost.


Consequently, the Board of Directors of the Company in its meeting held on 1st September 2016 has accorded approval for allotment of 132,00,40,704 bonus equity shares (in the ratio of 1:1) to the existing shareholders as on 29.08.2016 (record date). As a result of this, paid up equity share capital of Company has increased from Rs,1,320.04 crore (132,00,40,704 equity shares of Rs,10 each) to Rs,2,640.08 crore (264,00,81,408 no of equity shares of Rs,10 each).


“Declared by Board of Directors in their 359th meeting held on 24.03.2017 and paid on 07.04.2017.


(2) Paid on 01.09.2016.


B) Dividend payable to Non-Resident Shareholders


The Company has not remitted any amount in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders. Particulars of dividends paid / payable to non-resident shareholders (including Foreign Institutional Investors) are given below:


II. Company does not hold any exchange traded Interest Rate (IR) derivatives (Previous year Nil).


III. Qualitative disclosures on Risk Exposure in Derivatives:


a. Company has put in place a Board approved Currency Risk Management (CRM) policy to manage and hedge risks associated with foreign currency borrowing. The said policy prescribes structure and organization for management of associated risks.


b. Company enters into derivatives viz. Principal only Swaps, Interest Rate Swaps and Forward Contracts for hedging the interest / exchange rate risk in Rupee and foreign currency liabilities. As per the CRM Policy, a system for reporting and monitoring of risks is in place; wherein Risk Management Committee consisting of senior executives monitors the foreign currency exchange rate and interest rate risks and are managed through various derivative instruments.


c. These derivative transactions are done for hedging purpose and not for trading or speculative purpose.


d. Reference may be made to Note Part B-8 for relevant accounting policy on derivative transactions.


IV. Quantitative Disclosures on Risk Exposure in Derivatives in respect of Loan Liabilities:


“Interest rate derivatives include derivatives on Rupee liabilities of Rs,6,164.60 crore (Previous year Rs,7,164.60 crore)


(2)Includes JPY loan liability partly hedged through forward rate contract entered for one leg (USD/INR) for Rs,291.83 crore (Previous


(E) Disclosures related to Securitization


I. Company has not entered into any securitization transaction during the year and there is no exposure on account of securitization as at 31.03.2017 (Previous year Nil).


II. Company has not sold any financial assets to Securitization / Asset Reconstruction Company during the year ended 31.03.2017 (Previous Year Nil).


III. Company has not undertaken any assignment transaction during the year ended 31.03.2017 (Previous Year Nil).


IV. Company has neither purchased nor sold any non-performing financial assets during the year ended 31.03.2017 (Previous Year Nil).


III. Details of financing of parent company products:


Company does not have a parent company.


IV. Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the NBFC:


Company has not exceeded its prudential exposure limits against Single Borrower / Group Borrower Limits during FY 2016-17 and FY 2015-16.


V. Unsecured Advances:


Total amount of advances for which intangible securities such as charge over the rights, licenses, authority etc. has been taken is Nil as at 31.03.2017 (Previous year Nil).


(H) Registration obtained from other financial sector regulators:


Nil.


(I) Disclosure of Penalties imposed by RBI and other regulators


During the year ended 31.03.2017, no penalty has been imposed on the Company by RBI and other regulators (Previous Year Nil).


(J) Credit rating


a. Ratings assigned by credit rating agencies and migration of ratings during the year:


(K) Net Profit or Loss for the period, prior period items and changes in accounting policies


Reference may be made to Part A-18 and C-23 of notes to accounts regarding prior period items and changes in accounting policies respectively.


(L) Circumstances in which revenue recognition has been postponed pending the resolution of significant uncertainties


Nil.


(M) Company is preparing Consolidated Financial Statements in accordance with Accounting Standard - 21 and 27. Reference may be made to Part C - 7 (A) of notes to accounts in this regard.


(N) Provisions and Contingencies


Reference may be made to Note Part C-21 for provisions and contingencies.


(O) Draw Down from Reserves


Reference may be made to Note Part C - 31 and Note - Part A - 2.


(P) Concentration of Deposits, Advances, Exposures and NPAs


a. Concentration of Deposits (for deposit taking NBFCs) - Company is a non-deposit accepting NBFC.


e. Sector-wise NPAs:


Company is a Government Company engaged in extending financial assistance to power sector. As at 31.03.2017, the percentage of Gross NPAs to total loan assets stands at 12.50% (Previous year 3.15%).

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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