Power Grid Corporation of India Ltd Management Discussions.

1. Economic Outlook

The annual average GDP growth (%) data of 2014-18, as per World Economic Outlook (April 2019 database) of International Monetary Fund, exhibits that India has emerged as the fastest growing major economy in the world. India has now become the sixth largest economy in the World. The GDP of India has grown at 6.8% during 2018-19 as against the 7.2% during 2017-18. The GDP growth for the year 2019-20 is projected at 7%. This is against the worlds growth of 3.6% during 2018 and projected growth of 3.3% during 2019.

2. Sectoral Outlook

Indias energy mix is dominated by coal (49.6%), followed by oil (28%), biomass (11.6%), gas (7.3%), renewable and clean energy (2.2%) and nuclear energy (1.2%). However, the share of electricity, one of the most critical components of infrastructure for economic growth, in energy mix in 2014 was only 17% as against 23% in OECD countries. The development of adequate electricity infrastructure is essential for sustained growth of economy as well as for energy security. The Government of India has identified power sector as one of the key sectors of focus, so as to promote sustained industrial growth.

Indias installed capacity and its transmission infrastructure is amongst the largest in the world. However, for the distribution sector, which has been historically plagued by various techno-commercial issues, Government of India has undertaken a number of policy and reform based initiatives like SAUBHAGYA, Affordable 24x7 Power for All, IPDS, UDAY, UJALA, Energy Efficiency etc. for growth of the sector.

The country has been successively witnessing considerable growth in the sector, as listed hereunder:

FY14-15 FY17-18 FY18-19 Growth

(1-year)

Growth

(FY15-FY19) CAGR

Generation
Total Installed Capacity (incl. RE) GW 274.90 344.00 356.10 3.52% 6.68%
Renewable Capacity GW 38.96 69.02 77.64 12.49% 18.81%
Total Generation (incl. RE) BU 1110.07 1308.15 1376.10 5.19% 5.52%
Generation from RE sources(BU) 61.79 101.84 126.76 24.47% 19.68%
Transmission
Transmission Lines (ckm) 313437 390970 413407 5.74% 7.17%
Tranformation Capacity (MVA) 596100 826958 899663 8.79% 10.84%
Inter-Regional Power Transfer Capacity (MW) 46450 86450 99050 14.57% 20.84%
Inter-Regional Power Transfer (BU) 84.37 150.05 181.74 21.13% 21.15%
Power Markets
Short Term Transactions (Nos.) 38048 49900 51218 2.64% 7.71%
Short Term Transactions (Energy Transacted) BU 80.87 104.63 120.97 15.62% 10.59%
Power Supply Position
Peak Demand vs Peak Met (GW) 148.17 / 141.16 164.07 / 160.75 177.02 / 175.53 NA NA
Energy Demand vs Energy Met (BU) 1068.92 / 1030.79 1213.33 / 1204.70 1274.60 / 1267.53 NA NA

NITI Aayogs Strategy for New India@75 study considers harnessing of RE sources, which are a strategic national resource, to be a part of Indias vision to achieve social equity and energy transition with energy security, a stronger economy, and climate change mitigation.

In this direction, the Govt. is following a focused approach to increase the RE capacity in the country to 175GW by 2022 and in the longer time horizon, it is also committed to achieve about 40 percent cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030, in line with its Intended Nationally Determined Contribution as submitted to the UNFCCC.

Further, as per National Electricity Plan 2018-based on 19th EPS, some of the projections for Indian Power Sector are as follows:

Peak Demand to rise to 226 GW by 2022 and to 299 GW by 2027 7 Installed Capacity to increase to 479 GW by 2022 and 619 GW by 2027

Energy Requirement to be 1,566 BU in 2022 and 2047 BU in 2027

Inter-Regional Power Transfer Capacity to increase to 118,050 MW by 2022

Share of RE in Installed Capacity to be 36.5 % by 2022 and 44.4 % by 2027

Share of RE in Total Generation to be 20.1% by 2022 and 24.44 % by 2027

Also, the broad indicators of Draft Energy Policy, NITI Aayog (2017) also point towards a sustained growth for electricity sector in the country.

Annual Energy Consumption to rise from 670kgoe in 2015-16 to 1055-1184 kgoe in 2040

Electricity share to rise from 17% of Total Energy Consumption in 2014 to 26% of total energy demand by 2040

Indias Electricity Supply to rise to 4800BU by 2040

RE Capacity share of ~50-56% of Total Installed Capacity by 2040

re Generation share ~ 29%-36% in overall power generation by 2040

Per Capita Consumption to increase to 2911-2984 units by 2040

Immense potential for electrification of energy demand - household, transportation, cooking, agriculture and industry

Greater use of electricity- an important source for de-carbonisation

3. Indian Transmission Sector

The inter-State transmission has seen considerable growth in the past decade, which led to the creation of a synchronous National Grid, One Nation-One Grid-One Frequency and has been an enabler of power markets in the country. The investments in intra-State transmission sector are also picking up albeit slowly.

The transmission requirements are sensitive to load growth and generation additions and therefore the overall emerging power sector scenario in India augurs well for transmission sector, which is a vital link in the power supply value chain.

4. OPPORTUNITIES AND THREATS/CHALLENGES

The Government of India, focused on long term energy security as well as kick-starting the growth of economy towards Worlds Third largest economy, has been consistently addressing both supply and demand side issues through policy and reforms for ensuring sustained development of the Indian Power Sector. Growing power demand as a result of Govts focus on improving the distribution sector- the last mile in power; addition of RE capacity; addition of capacities in conventional generation sources; cross-border linkages and adoption of new technologies to address challenges linked to RE integration are likely to be the growth drivers for power transmission in India.

Transmission:

(i) Inter-State Transmission driven by RE Integration

In order to increase the RE capacity from the current level of 78 GW to the set target of 175GW in India by 2022, substantial capacities in Solar and Wind are required to be taken up. These capacity additions are likely to come up in the RE rich states viz. Gujarat, Rajasthan and Tamil Nadu. Studies for integration of such RE capacities with the National Grid have been undertaken and transmission requirements for about 66.5GW of new RE capacity has been assessed in two phases - 29 GW by December, 2020, and 37.5 GW by December, 2021. As per the latest estimates, this creates an opportunity of more than 43,000 crore in inter-State transmission by December, 2021 of which works of about Rs 11,400 crore have been allocated for taking up implementation, either through POWERGRID or through the bidding route.

Further, Govt. of India is also planning to unlock the Solar potential in Leh-Ladakh region of J&K, which can create additional opportunities for the sector.

To provide support to RE integration, the sector envisages new opportunities in creation of balancing infrastructure like STATCOMs, SVCs, Battery Storage also. However, the modalities for the same are yet to be finalized.

(ii) Intra-State Transmission

GOIs Ujwal DISCOM Assurance Yojana (UDAY) scheme has resulted in improved financial position of various State utilities. Improved financials coupled with anticipated demand are making way for the State utilities to undertake various intra-state transmission projects, thereby creating further investment opportunities.

(iii) Cross-Border Inter-connections

The cross border power transfer by India with neighboring countries is taking place through inter-Governmental bilateral cooperation which plans for cross border interconnection, system operation, etc. Indias vision to have a multi-country grid (SAARC/ BIMSTEC) for optimal utilization of resources in the region can be achieved through creation of additional and strengthening of existing cross-border interconnections. While Nepal and Bhutan are envisaged to have surplus power in future, Bangladesh would be a net importer trying to reduce its power costs by replacing existing costly power with cheaper power. Similarly, the Govt. is also engaging with Myanmar and Sri Lanka for interconnections. Further, "Guidelines on Cross Border Trade of Electricity" issued by Govt. of India envisage evolving a dynamic and robust electricity infrastructure for cross border transactions to meet the demand of the participating countries by utilizing the available resources in the region and having reliable grid operation and transmission of electricity across the borders. These are expected to provide new opportunities.

Upcoming/ planned projects and projects under discussion/ finalization have been discussed in the Directors Report.

(iv) Other emerging opportunities

Govt. of Indias thrust on seamless and flexible grid interconnection, energy security, development of smart cities, digitization and improving financial health of DISCOMs are creating more business opportunities in the field of Consultancy and Telecom and also new business opportunities in the area of battery storage, distribution, smart grid and smart cities, advance metering infrastructure, railways etc.

5. Companys Outlook

(i) Transmission

Your Company is one of the largest transmission companies in the world and Indias principal power transmission company, operating primarily in inter-State transmission sector. Your Company is also Indias Central Transmission Utility (CTU). The size of the power transmission network (along with its subsidiaries acquired through tariff based competitive bidding) being operated/maintained, Telecom and consultancy business are discussed in the Directors Report.

As brought out above, Indian power transmission sector has substantial growth opportunities, your Company being a major player in the sector expects to garner a substantial portion of the business potential.

(ii) Telecom

The Telecom business is witnessing major shift in the manner in which the bandwidth is consumed- from telephone calls to data. With the launch of 5G in future and other requirements like data localization, the requirement for bandwidth and other telecom services offers tremendous opportunities for service providers. Your Company is all geared up to tap this opportunity and has been continuously augmenting its all-India network by adding new routes, new locations and has also taken steps for establishment of separate 100 G internet network with SD-WAN facility. Your Company is also adding new services like MPLS-VPN, peering with content delivery networks, drop & carry broadcasting services etc. to increase the offering basket to its customers.

In order to increase your Companys telecom services portfolio and to provide a green and clean solution to bridge the urban-rural telecom divide in the country, it has been exploring the use of its transmission towers as telecom towers while also providing power to the associated telecom equipment viz. mobile antennae, MW antennae, electronic equipment etc. placed on the tower. Your Company believes that the telecom players, with such composite solution, would be able to optimize their capex and opex and reduce dependency on diesel generators. Subsequent to successful running of such telecom tower pilot since 2017 and recent approval from the regulator, CERC, your Company now intends to launch the business commercially in the coming year.

Considering synergies with the existing power and telecom businesses, your Company is also studying Data Centres as a business opportunity to tap the emerging requirements.

(iii) Consultancy - Domestic & International

Your Company is providing consultancy services in areas related to power transmission to its clients which include various departments and agencies of the Government, CPSEs, state and private power utilities and the Indian Railways. Its completed works and pace of works under implementation for such utilities will help it further expand its consultancy business within the country.

Your Company, in line with its stated Vision - to be Global Transmission Company with Leadership in Emerging Markets and as part of Govt. of Indias global outreach aspirations from its CPSEs, is also exploring global opportunities in power transmission. Based on its past experience, your Company is continuously scouting for opportunities in Africa, Asia, Middle East and CIS countries. Your Company has been providing Consultancy, Project Management and Asset Management Services to various clients and has footprints in 20 countries, spread across Asia, Africa, CIS countries and Asia-Pacific. The clientele includes state-owned power utilities, multilateral funding agencies like World Bank, ADB, IFC and Govt. of India. From its earlier approach of largely relying on nomination based projects, your Company has now increased its participation in tendered out projects. A number of proposals submitted by your Company are expected to be finalized in FY 2020.

Your Companys performance and latest status of works under implementation has been discussed in the Directors Report.

(iv) Other emerging opportunities

Your Company has been preparing itself for such new emerging opportunities like Distribution, Energy Efficiency, Smart Grid & Smart City, Grid Scale Battery Storage in the power sector and has been undertaking projects in these areas through Govt. of Indias Schemes (rural electrification and IPDS in Distribution), specific assignments for power utilities and from CPSEs in manufacturing/ process industries (energy efficiency), consultancy assignments from States (Smart City & Smart Grid), pilot projects (Smart Grid, Grid Scale Battery Storage and eV charging infrastructure).

(v) Distribution

Recently, your Company and NTPC have entered into an agreement for setting up, National Electricity Distribution Company Limited (NEDCL) through a 50:50 joint venture to undertake electricity distribution business and related activities.

(vi) Energy Efficiency

Your Company is regularly exploring opportunities in the area of energy efficiency and demand side management. In this regard, it intends to take up agriculture pump replacement project in the State of Uttar Pradesh for which an MOU has been signed with the

State Government. your Company expects to explore similar opportunities with other states and institutes also in the coming year.

6. Major Constraints / Challenges / Threats faced in construction, operation & maintenance of Transmission systems and mitigation thereof:

Conserving Right-of-Way (RoW) through forests, agricultural land, urban areas, industrial establishments as well as other infrastructure, upgradation of transfer capacity of lines matching with power transfer requirement, land availability & acquisition for substations are major areas of concern in development of transmission network in the Country. Major constraints & concerns and your Companys efforts in development, operation & maintenance of ISTS are:

I. Challenges in Construction

a) Right of Way (RoW) constraints;

b) Difficulty in acquisition of land, both in terms of required size & location, for construction of Substation;

c) Forest clearance;

d) Inadequate skilled manpower in transmission line construction activities and in the area of new technologies.

II. Challenges in Operations and Maintenance

Your Company has been managing its vast transmission network which is expanding and getting complex along with ageing assets. For maintaining high level of transmission system availability, your Company has been aiming at improving operational efficiency.

III. Initiatives to address/ mitigate the above challenges / concerns

Your Company has been taking various initiatives to address/ mitigate the above concerns through introduction as well as deployment of new technologies in the Indian power system, which are discussed herein below:

a) Addressing Right of Way (RoW) constraints:

Your Company has been adopting higher voltage levels, specially designed towers and new technologies to gradually increase the power carrying capacity of transmission lines to optimize the RoW requirement. Some of the technological initiatives taken by your Company are as under:

(i) Route alignment & detailed survey using modern techniques

Surveying is an important aspect of transmission line for the purpose of assessing RoW and optimizing the cost of transmission line based on selecting the shortest route, selection of optimum foundations based on type of terrain, areas prone to landslides, submergence, minimizing number of river-crossing towers, accessibility / approachability for construction as well as from law and order point of view, etc. Alignments are considered keeping in mind the above-mentioned factors during site selection, with minor alterations often added to avoid environmentally sensitive areas and settlements at execution stage.

Your Company has been using modern techniques for route alignment viz. GIS/ GPS, satellite imaging etc., which helped in detailed mapping of the right-of-way, ground profiling along with geographical details of the location, site constraints, etc.

(ii) Adoption of higher voltage for bulk power transfer

With introduction of higher capacity transmission systems like 765 kV Double Circuit transmission lines, 800 kV HVDC, considerable reduction could be achieved in RoW requirement per MW of power transfer e.g. For transfer of bulk power to Southern Region, another 800 kV 6000 MW HVDC link between Raigarh to Pugalur is under construction. For transfer of 2000 MW power to Kerala, Your Company is implementing 320 kV HVDC VSC technology partly overhead using narrow based towers and partly underground with 320 kV DC XLPE cable to take care of RoW issues.

Towards development of 1200kV Ultra High Voltage (UHV) AC technology, the highest transmission voltage level in the world, your Company has successfully established a 1200 kV UHVAC National Test Station at Bina and commissioned 1200kV single and double circuit transmission line sections along with associated 1200 kV bays as a pilot project using indigenously developed equipment. The power flow through 1200kV National Test Station has commenced successfully. This has facilitated availability of UHV class equipment in India. Long-term field operation and tests are being carried out for performance monitoring of 1200kV UHVAC equipment.

(iii) Use of High Performance Conductors in existing & new lines

High performance conductors of different configurations having the capacity to carry more power within the same transmission corridor does away with the need of creating new parallel corridors and helps in conservation of scarce land, RoW and forest resources, etc. Keeping in view the aforesaid advantages, initiatives have already been taken by your Company for re-conductoring of some of the existing lines where power flow constraints were experienced. Your Company has used twin HTLS conductors instead of quad / triple bundle ACSR conductors in multi-circuit stretches. As on March,2019 reconductoring of 400 kV D/C Maithon RB- Maithon line, 400kV D/C Rangpo-New Siliguri transmission line & 220kV Purnea-North Purnea line are under implementation in this regard.

(iv) Selection of appropriate type of towers

Proper design and construction of transmission line towers is not only important for speedy implementation of projects; safe & reliable operation of power system but also assume great significance in cost of the project and conservation of RoW. A large number of tower designs, approximately 200 numbers, for different wind zones, configurations, complexities & voltage levels have been developed in-house & successfully tested by your Company towards its endeavor to address problem in densely populated urban areas, conservation of forest & scarce RoW, etc.

b) Managing scarcity of land for construction of Substation

In order to reduce problems of land acquisition and related Rehabilitation & Resettlement and to reduce the substation land requirement, your Company has constantly upgraded and improvised by investing in new technologies like Gas Insulated Substations (GIS) which requires substantially lesser land area in comparison to the conventional Air Insulated substations (AIS). Your Company had established its first GIS Substation in 2007 and presently more than 40 GIS Substations have been commissioned.

Further, many substations, where additional capacities (bays) were required to be created, your Company used hybrid technology. Air Insulated Substations have been extended with Gas Insulated Switchgear. Your Company has taken up implementation of such schemes in Sundergarh, Muzzafarpur, Gaya, Gwalior, Malerkotla substations etc.

c) Obtaining Forest Clearances

Due to very lengthy and cumbersome process, obtaining forest clearance has been a big challenge for timely completion of projects. However, your Companys concerted efforts and many proactive decisions taken by Ministry of Environment, Forests & Climate Change (MoEFCC) / Govt. of India have resulted into simplification of forest clearance process to a large extent particularly for linear projects including transmission lines. Moreover, making forest clearance process online and time bound also helped in expediting the process by the concerned forest officials.

d) Addressing issues of inadequate skilled manpower in construction activities, O&M and implementation of new technologies

For overall skill development in the Country, particularly in the area of Power Transmission Line Construction, Capacity Building Programmes are being conducted with the help of vendors of Transmission Line construction and more than 316 youths were trained during FY 2018-19. Cumulatively, about 4332 persons have been trained up to 31st March,2019.

IV Increasing operational & maintenance efficiency

Your Company is geared to consistently maintain the high standards of availability and reliability of its transmission system through latest maintenance practices using state-of the art technologies. Maintenance activities are planned well in advance and an Annual Maintenance Plan is chalked out for every asset through live line or shutdown maintenance, as per technical feasibility.

The proactive approach of your Company in managing the maintenance and refurbishment of the transmission assets has minimized the tripping of lines especially due to fog, pollution and other natural causes. Your Company has also adopted the best of technological tools available for better operational performance and in this direction following latest technologies have been adopted by your Company:

(i) Software Tools for monitoring of Transformers and Reactors: Your Company has successfully developed software tool completely in-house for centralized real time monitoring of transformers and reactors by integrating the sensors installed in the transformers and reactors for Dissolved Gas Analysis. Online monitoring of transformers/reactors is aimed at detecting early stages of faults initiation and hence reducing sudden catastrophic failures of the same. The software tool is operational at National Transmission Asset Management Centre (NTAMC) and Regional Transmission Asset Management Centers (RTAMC).

(ii) Development and operationalization of Software based Transformer Health Indexing System:

Transformers are the most critical assets of the transmission system and are present in large nos. in your Company. Condition monitoring of these costly equipment is of prime importance. Towards condition assessment of the transformers in a more efficient way, your Company is now developing a software tool for health indexing. The tool will be utilized for residual life assessment of the equipment at a later date. This tool would help in ranking of the fleet of transformers based on their condition, which will help in taking timely decisions for repair, refurbishment or replacement and thus investment planning.

(iii) Adoption of latest technology for better availability of transmission lines

• Aerial patrolling of transmission lines is being carried out by your Company using Helicopter equipped with Gimbal mounted LIDAR (Light Detection and Ranging), Thermo-vision Camera, Corona Camera, high resolution video and digital camera to identify the defects.

Your Company has developed an Application for patrolling of transmission lines. Patrolling of towers and defects rectification is being ensured through the APP. This helps in updating of data on real time basis which results into effective monitoring of critical locations.

• Online fault locator

Travelling Wave online fault locator has been implemented in 25 high capacity lines for accurate estimation of fault locations. This has helped in reducing the downtime of transmission lines by identifying the faults in the shortest possible time.

• State-of-the-art condition monitoring techniques for substation equipment are being used for detection of defects at incipient stage. These include Frequency Response Analysis for Transformers and Reactors, variable frequency capacitance and tan-delta measurement for Transformer/ Reactor bushings and Current Transformer, Dynamic Contact Resistance Measurement for Circuit Breakers, Third Harmonic Resistive Current measurement for Surge Arrestors, Thermo-vision scanning of substation equipment, etc. These techniques have proved to be very useful in detection of defects at an early stage. Preventive/ corrective actions were taken in advance and major failures were averted. In addition, periodic oil parameter checks, Dissolved Gas Analysis (DGA) of Transformers/ Reactors, particle counts, inhibitor content test are very useful for diagnosis of the problem and life enhancement of the Transformers/Reactors, which your Company has implemented successfully.

• Implementation of Series Reactor: Increase in interconnections and concentration of Generation / Loads have caused increase in short circuit level. In certain areas, these short circuit levels are reaching to the maximum capability of equipment which is in operation and it is expected to go beyond the present capability in future. Your company has installed and commissioned 4 numbers of Series Reactor at Ballabhgarh and Mandola substations in National Capital Region (NCR) area to take care of the existing substations. Further, your Company is providing high capability equipment in all new substations.

• Introduction of Resin Impregnated paper bushings: Your Company has introduced Resin Impregnated Paper (RIP) bushings having superior characteristics over Oil Impregnated Paper (OIP) bushings technology for 800kV Transformers and Reactors for their increased availability. The chances of fire breaking out on RIP bushings are minimal and catastrophic effects of its failure on nearby equipment in switchyard are very little.

• On line Transient monitoring systems are being introduced at 765kV and 400kV substations to monitor switching and lightning surges. This would help in analyzing condition of the substation equipment as well as investigating the causes of failures.

• Digital Substations: Gaining experience from the pilot projects on Process Bus technology at Bhiwadi substation and Neemrana substation, your Company has initiated a project at Malerkotla substation for retrofitting conventional protection and control schemes with advanced automation systems. Also your Company is utilizing Process Bus technology on the upcoming 220/66kV GIS substation project at Chandigarh. The new scheme is expected to ease the maintenance, simplify trouble shooting and reduce restoration time in case of any eventuality besides reduction of footprint by replacing large amount of copper cables with minimal fiber optic cables.

• Your Company has installed a number of Static Synchronous Compensators (STATCOMs) in the 400kV grid to improve the grid reliability and stability. Company has commissioned STATCOMs at Solapur & Gwalior in Western Region, Lucknow & Nalagarh in Northern region and Ranchi, Jeypore & Kishanganj in Eastern Region). These State- of- the art STATCOMs would enhance the reliability of the GRID and improve voltage stability limit.

Further, 03 numbers of STATCOMs in Southern region are at final stages of implementation and would be progressively commissioned. Further one Thyristor Controller Reactor (500 MVAR) in Kurukshera is also being implemented to improve the static as well as dynamic voltage profile of Kurukshetra HVDC station.

7. Revenue related Risks

The regulatory framework in India is evolving and regulatory changes, if any, could have an impact on our business, results of operations and financial condition.

Despite best possible coordinated efforts, there could be mismatch in the commissioning of generation units vis-a-vis the associated transmission system due to delays in the materialization of some of the generation projects.

In fourth amendment to the Central Electricity Regulatory Commission (Indian Electricity Grid Code) Regulations,effective from 06.04.2016, provision has been made to sign the implementation agreement with the generating companies and transmission licensees implementing the upstream / downstream network under cost plus to cover the mismatch. CERC in its Tariff Regulations, 2019 has stipulated the methodology for treatment of mismatch with generation and/or upstream/ downstream network or with ISTS system being developed by other transmission licensees. In case the transmission asset is prevented from regular service due to mismatch in commissioning, your Company can approach CERC for approval of date of commercial operation and payment of transmission charges.

For projects being implemented under TBCB route, in case the transmission asset is prevented from regular service due to mismatch in commissioning of the downstream/upstream network, the tariff is recoverable from the defaulting Agency(ies) through bilateral billing.

The Central Electricity Regulatory Commission (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010 which came into effect from 01.07.2011, provides for computation of Point of Connection (PoC) charges and losses by introducing new

methodology for sharing of transmission charges. However, States namely Bihar, Odisha, West Bengal, Maharashtra and Jharkhand had challenged the aforesaid sharing methodology in the court of law and final decision is awaited. In terms of interim order of the Delhi High Court, all the above States are, however, making payment as per said Regulation. CERC has notified the third amendment to the said Sharing Regulations leading to change in sharing pattern.

Realization of dues by your Company has been fairly good in the past, in spite of the stressed financial conditions of the DISCOMS and IPPs. GOI introduced measures like UDAY and other reforms to improve the financial condition of the DISCOMs have assisted in realization of dues. In addition, your Company has a payment security mechanism with the State Power Utilities in the form of Letters of Credit (LC) backed by the Tri-Partite Agreements (TPA). As per the provisions of the TPA, the customers are required to establish LC covering 105% of the average monthly billing of your Company for last 12 months. The TPA was signed amongst Government of India (GoI), Reserve Bank of India and the individual State Governments subsequent to the issuance of the One Time Settlement Scheme of State Electricity Boards dues during FY 2001-02 by the GoI, which was valid till Oct.Rs 2016. GoI has approved the extension of these TPAs for a further period of 10 years. 29 States/Union Territories have executed the agreements for extension of TPAs and matter is being pursued with the remaining States/ Union Territories. The TPA also provides that if there is any default in payment of current dues by any State Utility, the outstanding dues beyond 90 days can be deducted from the States RBI account and paid to the concerned CPSU. There is also provision for regulation of power by your Company as per CERC regulations in case of non-payment of dues and non-establishment of LC; for termination of Transmission Service Agreement (TSA) in case of default in establishment of LC and payment of transmission charges.

In respect of trade receivables from Telecom and Consultancy, customer credit risk is managed by regular monitoring of the outstanding receivables and follow-up with the consumer for realization.

Tariff Regulations, 2019

The transmission charges of your Companys assets are regulated by Central Electricity Regulatory Commission and are determined by tariff norms which are applicable for a period of 5 years. CERC vide notification dated 7th March, 2019 notified the Tariff Regulations applicable for transmission system including communication system used for inter-state transmission of electricity for the Tariff Block 2019-24, which is effective from 01.04.2019 and shall remain in force till 31.03.2024. Major changes affecting revenue of your Company under the Tariff Regulations applicable for Tariff Block 2019-24 are as under:

(i) Return on Equity (RoE) to be charged from customers has been retained as in previous block and shall be allowed to be computed at the base rate of 15.5%. Additional RoE on early commissioning of project elements(s) has been dispensed with. ROE for Additional capitalization after cut-off date (i.e., after 3 years) beyond original scope (excluding Additional capitalization due to change in law) shall be computed on weighted average rate of interest on actual loan portfolio of your Company;

(ii) For projects which have completed useful life as on or after 01.04.2019, equity in excess of 30% shall not be taken into account for tariff computation. Few Projects of POWERGRID where we have equity component more than30% will get impacted. However, over the 5 years, the impact is not very significant.

(iii) Late payment surcharge @18% per annum applicable after 45 days. Receivables reduced to 45 days of transmission chargesfor allowing Interest on Working Capital.;

(iv) Rebate @ 1.5% for payments made within 5 days (against earlier provision of 2% for payments made within 2 days); @ 1% rebate on payments made between 5 -30 days.

(v) O&M norms for Communication System introduced as 2% of the capital cost subject to actuals at the time of truing up.

(vi) Security Expenses and Capital Spares for transmission system shall be allowed separately after prudence check by CERC during the tariff determination process.

(vii) Availability of AC system to be worked out on monthly basis and that of HVDC on cumulative annual basis for all HVDC systems.

(viii) Normative Availability: AC System - 98%, HVDC- 95% (85% for first 12 months for new HVDC system). Availability for purpose of Incentive: HVDC system - 97.5% (increase from 96%), AC System-98.5%, No incentive payable for availability beyond 99.75%.

(ix) Provisions related to mismatch in commissioning of the transmission systems have been introduced i.e. in case of delay attributable to transmission licensees.

8. Risk Management Framework

To minimize the uncertainties and complexities associated with your Companys business operations and growth objectives, an Enterprise Risk Management (ERM) framework has been implemented. ERM is a structured, consistent and continuous process for identification, assessment, monitoring and management of risks. As per this framework, the significant business processes / risks are monitored and controlled through various Key Performance Indicators (KPIs).

Your company has duly constituted a Risk Management Committee and designated a Chief Risk Officer. The said Committee meets at regular intervals and reviews KPIs and major business risks and provides corrective measures to improve business process efficiencies, wherever required. The ERM approach has helped your Company to improve strategic decisions making within the Organization and also in better identifying risks and opportunities.

9. Internal Financial Control and Adequacy

Your Company has a comprehensive internal control mechanism in place to verify the Accounting and Financial Management System, adequacy of controls, material checks, financial propriety aspects and compliance implementation mechanism. The elaborated guidelines for preparation of Accounts are followed consistently for uniform compliance.

In line with the provisions of Section 179 read with Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 the Internal Auditors were appointed by the Board of Directors. Regular and exhaustive Internal Audit on half yearly basis is carried out by the experienced Cost / Chartered Accountant Firms in close co-ordination with Companys own Internal Audit department to ensure that all checks and balances are in place and all internal controls/systems are in order. The Corporate Internal Audit Department also carries out System Audit and Management Audit to reassure the effectiveness of internal control mechanism. The scope of the Internal Audit is derived from the Internal Audit Plan approved by the Audit Committee.

The Audit Committee meets at regular intervals. The significant / material audit findings are placed before the Audit Committee for review, discussion and subsequent action.

10. Integrated Management Policy:

POWERGRID is committed to:

• establish and maintain an efficient and effective "National Grid" with due regard to time, cost, technology and value addition,

• sustainable development through conservation of natural resources and adopting environment friendly technology on principles of Avoidance, Minimization and Mitigation,

• ensure safe, occupational hazard free and healthy work environment,

• to the satisfaction of stakeholders in all areas of its activities and shall endeavor to improve continually its management systems and practices in conformity to legal and regulatory provisions.

11. Financial Discussion and Analysis Comparison of Fiscal 2019 to Fiscal 2018.

( in Crore)

Particulars Fiscal 2019 Fiscal 2018
Revenue from Operations 34,119.12 29,764.59
Other Income 1,498.95 1,001.73
Total 35,618.07 30,766.32

Total income during Fiscal 2019 was 35,618.07 crore, which represented an increase of 15.77% over the total income of 30,766.32 crore during Fiscal 2018. During Fiscal 2019, transmission and transmission-related activities constituted 92.21% of our total income, with the balance coming from our consultancy, telecommunication business and other income.

12. Income

12.1. Revenue from Operations

( in Crore)

Revenue from Operations Fiscal 2019 Fiscal 2018
Revenue from transmission charges 32,844.94 28,495.82
Consultancy- Project Management & Supervision 610.93 662.18
Revenue from telecom 663.25 606.59
Total 34,119.12 29,764.59

Factors affecting your Companys results of operations • Tariff norms

Our charges for transmission customers are governed by tariff norms notified by the CERC pursuant to Central Government Tariff Policy and legislation. Under the Tariff Regulations applicable for Tariff Block 2014-19, your company has been permitted to charge its customers, the transmission charges for recovery of annual fixed cost ("AFC") consisting of various tariff components such as Return on Equity, Interest on Outstanding Debt, Depreciation, Operation & Maintenance expenditure and Interest on Working Capital. FY 2018-19 is the terminal year for determination of tariff for assets of your Company as per the norms of Tariff block 2014-19. Transmission charges payable to your Company from FY 2019-20 till 2023-24 shall be determined as per CERC Terms & Conditions of Tariff for 2019-24 (Tariff Regulations, 2019) notified on 7th March, 2019.

The Return on Equity is computed on pre-tax basis by grossing up the base rate of return on equity of 15.5% at the effective tax rate of the respective financial year. An additional Return on Equity (ROE) of 0.5% allowed for project(s) completed within the timelines specified under the CERC Tariff Regulations for projects more than 50 kilometers. Similarly, ROE may be reduced by 1% for such period as may be decided by CERC, if any transmission system is declared under commercial operation without commissioning of data telemetry, communication system up to load dispatch centre or protection system.

The repayment of loan capital for each year of the tariff period 2014-19 is deemed to be equal to the depreciation allowed for that year. Despite any moratorium period availed by your company, the repayment of loan is considered for tariff from the first year of commercial operation of the project and shall be equal to the annual depreciation allowed.

For interest on working capital, the working capital amount is calculated as - (i) consisting of receivables equivalent to two months of transmission charges; (ii) maintenance spares @ 15% of operation and maintenance expenses and (iii) operation & maintenance expenses for one month. Rate of interest on working capital for the year is on normative basis and is equal to the Base Rate plus 350 basis points of State Bank of India (Bank Rate) as on 1.4.2014 or as on 1st April of the year in which the transmission system is declared under commercial operation during the tariff period 2014-19, whichever is later.

For projects being implemented under TBCB route, the tariff is not on cost plus basis and is discovered through tariff based bidding process wherein the successful bidder would be the one who has quoted the lowest levelized tariff for a period of 35 years for establishing transmission projects on a build, own, operate and maintain basis.

The sharing of transmission charges as determined by CERC for cost plus projects and as adopted by CERC for TBCB projects shall be as per CERC (Sharing of Transmission Charges & Losses in Interstate Transmission System) Regulations, 2010, which came into force from 01.07.2011. Your Company, as CTU, is performing the activity of Billing, Collection and Disbursement (BCD) on behalf of all the ISTS licensees and also some of the non-ISTS licensees, whose lines have been certified by RPCs to be used as deemed ISTS.

Certain expenses and income, allowed under CERC Regulations are required to be reimbursed/passed on to Beneficiaries in future, are to be accounted in the Statement of Profit and Loss as per the provisions of IndAS 114 Regulatory Deferral Accounts. Such expenses and income, to the extent recoverable/payable as part of tariff under CERC Regulations are treated as Regulatory Deferral Assets/Liabilities.

• Foreign Exchange Rate Variation

Your company under the Tariff Regulations for the tariff block 2014-19 has an option to hedge foreign exchange exposure in respect of the interest on foreign currency loan and repayment of foreign loan acquired for the transmission system, in part or full and recover the cost of hedging of Foreign Exchange Rate Variation (FERV) corresponding to the normative foreign debt, in the relevant year.

If hedging of the foreign exchange exposure is not undertaken, the extra rupee liability towards interest payment and loan repayment corresponding to the normative foreign currency loan in the relevant year is permissible, provided it is not attributable to the generating company or the transmission licensee or its suppliers or contractors.

FERV arising during the construction period for settlement/ translation of monetary items (other than non-current loans) denominated in foreign currency to the extent recoverable/ payable to the beneficiaries as capital cost as per CERC Tariff Regulations are accounted as Regulatory Deferral Account Balance.

In respect of foreign currency borrowings drawn on are after 1st April, 2016, exchange differences arising from foreign currency borrowings to the extent regarded as an adjustment to interest costs are treated as borrowing cost. Other exchange differences are recognized in the Statement of Profit & Loss Account.

12.2 Revenue from other Services

Your company also earns revenue from Consultancy (including project management and supervision services) and Telecommunication business. Our consultancy income mainly consists of fee for the execution of transmission- and communication system-related projects on a turnkey basis and technical consulting assignments for Indian state utilities, joint venture companies and utilities in other countries. The income from Consultancy business against sale of services during the Fiscal 2019 was 610.93 crore as against 662.18 crore during the Fiscal 2018, a decrease of 7.74%. The consultancy revenue moderated as a number of assignments including the prestigious and challenging 220kV Srinagar Leh Transmission System Project have been completed during the year.

The revenue from our telecommunication business is mainly on account of leasing bandwidth of our fibre-optic lines. The income from Telecom Business during the Fiscal 2019 was 663.25 crore as against 606.59 crore during Fiscal 2018, an increase of 9.34%.

12.3 Other Income

Your companys other income was Rs 1,498.95 crore during Fiscal 2019, an increase of 49.64% over the other income of Rs 1,001.73 crore during Fiscal 2018.

The other income increased mainly due to increase in interest on loan to Subsidiaries and dividend income from Subsidiaries/Joint Ventures.

13. Expenses

Expenses have been categorized as (i) Employees benefits expense (ii) Finance Costs (iii) Depreciation and Amortization expense

(iv) Other expenses.

Your companys total expenditure was Rs 24,129.09 crore during Fiscal 2019, an increase of 17.72% over the total expenditure of Rs 20,496.70 crore during Fiscal 2018. The total expenditure as a percentage of total income was 67.74 % during Fiscal 2019 compared to 66.62 % during Fiscal 2018.

13.1 Employees benefits expense

Employees benefits expenses include salaries and wages, Performance Related Pay, allowances, benefits, contributions to provident and other funds and staff welfare expenses.

Employee benefit expenses increased by 11.54% to Rs 1,783.57 crore during Fiscal 2019 from Rs 1,599.09 crore during Fiscal 2018 due to increase in Pay revision and capitalization of new transmission system during the year.

13.2 Finance Cost

Finance cost increased by 19.77% to 9,091.42 crore during Fiscal 2019 from 7,590.66 crore during Fiscal 2018. The increase was mainly due to interest on loans from Secured/Unsecured redeemable Bonds and Indian Banks & Financial Institutions for newly commissioned projects during Fiscal 2019 & Fiscal 2018 and interest on loan to subsidiaries.

13.3 Depreciation and Amortisation Expenses

Your companys depreciation and amortization expenses increased by 12.20% to Rs 10,200.67 crore during Fiscal 2019 from Rs 9,091.25 crore during Fiscal 2018. The increase was mainly because of the commissioning of new transmission assets.

The depreciation provided is related to transmission business on straight line method following the rates and methodology notified by the CERC for the purpose of tariff.

Depreciation on assets of telecom and consulting business is provided for on straight line method as per useful life specified in Schedule- II of the Companies Act, 2013. ULDC assets commissioned prior to 1st April, 2014 are depreciated on straight line method@ 6.67% per annum.

13.4 Other Expenses

Other expenses primarily consist cost of Repair and Maintenance of Buildings, Plant and Machinery, Power Charges, Security expenses, vehicle hiring charges, travelling expenses, CSR expenses and FERV. Other expenses increased by 37.81% to Rs 3,053.43 crore during Fiscal 2019 from Rs 2,215.70 crore during Fiscal 2018. The increase in other expenses is mainly on account of increase in repair & maintenance cost of Plant & machinery, provision for doubtful debts , CSR expenses and FERV.

14. Profit before Tax & Regulatory Deferral Account Balances

Your companys Profit before Tax & Regulatory Deferral Account Balances during Fiscal 2019 was Rs 11,488.98 crore, an increase of 11.87% over our profit before tax & Regulatory Deferral Account Balances of Rs 10,269.62 crore during Fiscal 2018.

14.1 Tax Expenses

Tax expenses consist of Current tax and Deferred tax.

14.2 Current Tax

During Fiscal 2019, we provided for Rs 2,489.43 crore as against Rs 2,169.01 crore during Fiscal 2018. The increase in Tax expense is due to increase in Profit before tax.

14.3 Deferred Tax

Provision for deferred tax is made in respect of timing difference mainly on account of higher depreciation charge available under income tax provisions.

During Fiscal,2019 we provided Deferred Tax (3,465.87) crore as against Rs 3,140.15 crore during Fiscal 2018. The decrease in deferred tax is due to recognition of MAT credit of 5,935.70 crore during Fiscal, 2019 as it is probable that future economic benefit will flow to your Company in the form of availability of set off against future income tax liability.

Further matter regarding presentation of "Deferred Tax Assets against Deferred Tax liability" in Balance Sheet and Statement of Profit & Loss was referred to Expert Advisory Committee (EAC) of Institute of Chartered Accountants of India. As per opinion received during Fiscal, 2019 Deferred Assets against Deferred Liability which was hitherto netted with Deferred Tax Liability is classified as Regulatory Deferral Account Balance in Balance Sheet and Statement of Profit & Loss Account.

14.4 Net Movement in Regulatory Deferral Account Balances (Net of Tax)

Net movement in Regulatory Deferral Account Balances-Income/(Expenses) net of tax for Fiscal 2019 stood at (Rs2,526.87) crore as against Rs 3,284.19 crore during Fiscal 2018. The increase in expenses against income is due to implementation of Expert Advisory Committee (EAC) opinion as explained above, MAT credit and Regulatory Deferral Account Balance of Foreign currency fluctuations and Employee benefit expenses.

15. Profit after Tax

Your companys Profit after Tax during Fiscal 2019 was Rs 9,938.55 crore, an increase of 20.55% over Profit after Tax of Rs 8,244.65 crore during Fiscal 2018.

16. Return on Net Worth

Your companys Return on Net worth during Fiscal 2019 is 16.84% in comparison to 15.15% during Fiscal 2018. Increase in Return on Net worth is mainly due to capitalization of new assets, increase of dividend from subsidiaries & JVs and reduction of Tax expenses during the year.

17. Financial ratios

Particulars FY 2018-19 FY 2017-18 % Changes
Debtors Turnover 8.25 8.68 -4.95
Inventory Turnover 29.71 30.43 -2.36
Interest Coverage Ratio 3.45 3.61 -4.43
Current Ratio 0.56 0.46 21.74
Debt Equity Ratio 71:29 71:29 0.00
Operating Profit Margin (%) # 30.02 31.83 -5.69
Net Profit Margin (%) 29.13 27.70 5.16

Note: # Operating profit = Profit Before Tax (excluding Deferred assets for deferred tax liability) less Other Income.

18. Other Comprehensive Income (Net of Tax)

Your companys other comprehensive income (net of tax) during Fiscal 2019 was (16.30) crore in comparison to 8.03 crore during Fiscal 2018. Decrease in other comprehensive income is due to decrease in value of investment in PTC India Limited shares and increase in provision for certain expenses based on actuary valuation.

19. Credit Ratings

Your Companys financial prudence is reflected in the strong credit rating accorded by ratings agencies. For details, refer Report on Corporate Governance.

20. Liquidity and Capital Resources

Your company depends on both internal and external sources of liquidity to provide working capital and to fund capital requirements. As at March 31, 2019, your company had cash and cash equivalents of Rs 3,643.14 crore as against Rs 1,516.21crore as at March 31,2018. As at March 31, 2019, your Company had undrawn cash credit facilities of approximately Rs 300 crore ("cash credit") towards our working capital facilities.

 21 Cash Flows in crore

Year ended March 31,

2019 2018
Net cash from operating activities 23,148.92 21,880.78
Net cash (used in) investment activities (18,648.45) (22,980.98)
Net cash used in Financing activities (2,373.54) (612.02)
Cash and cash equivalents at the end of the year 3,643.14 1,516.21

21.1 Net Cash from Operating Activities

Your companys net cash flows from operating activities are principally used to service long-term debt, for capital expenditures, for investments and for payment of dividend. The net cash from operating activities was Rs 23,148.92 crore during Fiscal 2019 as against Rs 21,880.78 crore during Fiscal 2018.

21.2 Net Cash used in Investment Activities

Your companys net cash used in investing activities during Fiscal 2019 was primarily reflected in expenditure on Property, Plant & Equipment and Capital Work-in-Progress of Rs 19,462.03 crore, Loans & Advances to Subsidiaries & Joint Ventures of Rs 2,770.73 crore investment in Subsidiaries & Joint Ventures of Rs 1,166.44 crore and receipt of interest on deposits, bonds and loans to subsidiaries of Rs 906.23 crore and receipt of grant of Rs 3,684.53 crore. The Companys net cash used in investing activities was Rs 18,648.45 crore during Fiscal 2019 as against Rs 22,980.98 crore during Fiscal 2018.

21.3 Net Cash used in Financing Activities

During Fiscal 2019, your company raised Rs 19,489.58 crore of new long term borrowings. These borrowings included principally Rupee bonds and foreign currency borrowings. Your Company repaid Rs 9,495.60 crore of long term borrowings and paid interest and finance charges of Rs 10,266.04 crore. During the Fiscal 2019, your Company paid dividend of 4,514.87 crore comprising final dividend of Rs 1,464.85 crore for Fiscal 2018 and interim dividend of Rs 3,050.02 crore for Fiscal 2019.

22. Capital Expenditure

Your companys capital expenditure is primarily for the installation of new transmission capacity and the expansion of existing capacity. Our capital expenditure during Fiscal 2019 and Fiscal 2018, was Rs 25,807 crore and Rs 25,791 crore, respectively which includes CAPEX for TBCB companies of 4,008 Crore( Previous Year 5,027 Crore).

23. Non-current Assets

Your companys Non-current Assets were Rs 2,20,517.42 crore and Rs 2,00,290.72 crore as at March 31, 2019 and March 31, 2018, respectively. Non current assets have been categorized as (i) Property, Plant & Equipment; (ii) Capital work in progress; (iii) other intangible assets; (iv) Intangible assets under development.; (v) Investments; (vi) Loans; (vii) other non-current financial assets and (viii) other non-current assets.

23.1 Property, Plant and Equipment

Property, Plant & Equipment (Net Block) increased to Rs 1,62,266.88 crore during Fiscal 2019 from Rs 1,52,243.89 crore during Fiscal 2018 an increase by 6.58%. Property, Plant & Equipment mainly consists of Land, Buildings, Transmission Lines, Substations, HVDC, ULDC Equipment, Furniture & Fixtures etc.

23.2 Capital work in progress

Your companys capital work-in-progress was Rs 33,364.02 crore and Rs 30261.17 crore, as at March 31, 2019 and 2018, respectively, a increase of 10.25%. The cost of materials consumed, erection charges and other expenses incurred for the implementation of projects are shown on the balance sheet as capital work-in-progress, pending capitalization of the completed project. The change in this amount is due to capitalization of a number of transmission projects on commissioning of these projects and due to undertaking of new transmission projects.

23.3 Other Intangible assets

Other Intangible Assets consist of Electronic Data Processing Software, Right of Way-Afforestation Expenses, Telecom licenses. The value of unamortized Intangible assets (Net) increased to Rs 1,593.10 crore during Fiscal 2019 from Rs 1,366.46 crore during Fiscal 2018, an increase by 16.59%.

23.4 Intangible assets under development

Right of way-afforestation expenses and expenses incurred for development of 1200 kV Transmission system are shown on the balance sheet as Intangible assets under development. The value of Intangible assets under development was Rs 214.06 crore and 45.95 crore as at March 31, 2019 and 2018, respectively, on account of capitalization of expenditures on Transmission Projects during Fiscal 2019.

23.5 Investments

Investments have been classified into quoted and un-quoted categories. As at March 31, 2019, the quoted and un-quoted investments were 88.14 crore and Rs 2668.39 crore as against Rs 104.88 crore and Rs 1503.36 crore, respectively as at March 31, 2018. Investments under Quoted category are investments made in PTC Limited computed at Fair Value. Investments Under Unquoted category during Fiscal 2019 consist equity investment in joint venture and subsidiary companies mainly at cost. Major investments in Joint venture & subsidiaries as on 31.03.2019 are:

Name of the Subsidiary/Joint Venture Amount invested ( in crore)

Subsidiaries

1 Power Grid NM Transmission Limited 264.00
2 Power Grid Vizag Transmission Limited 209.73
3 Power Grid Unchahar Transmission Limited 12.96
4 Power Grid Kala Amb Transmission Limited 61.00
5 Power Grid Warora Transmission Limited 326.30
6 Power Grid Jabalpur Transmission Limited 173.15
7 Power Grid Parli Transmission Limited 228.50
8 Power Grid Southern Interconnector Transmission System Limited Joint Ventures 515.50
9 Powerlinks Transmission Limited 229.32
10 Torrent Power Grid Limited 23.40
11 Jaypee Power Grid Limited 78.00
12 Parbati Koldam Transmission Company Limited 70.94
13 Teestavalley Power Transmission Limited 105.56
14 North East Transmission Company Limited 106.96
15 National High Power Test Laboratory Private Limited 30.40
16 Cross Border Power Transmission Company Limited. 12.62
17 Bihar Grid Company Limited 171.69
18 Power Transmission Company Nepal Limited 6.50

23.6 Loans ( Non Current)

The Loans have been classified as Loans to Related Parties & Loans to Employees. As at March 31, 2019, Loans to Related Parties and Loans to Employees were Rs 10,526.96 crore and Rs 182.03 crore as against 8,113.20 crore and Rs 139.92 crore, respectively as at March 31, 2018. The increase in Loans from Fiscal 2018 to Fiscal 2019 was mainly due to increase in Unsecured Loans to Subsidiaries which are executing Projects acquired by your Company through Tariff Based Competitive Bidding (TBCB) route.

23.7 Other non-current financial assets

Your companys other non-current financial assets was Rs 4,548.37 crore and 866.35 crore as on March 31, 2019 and 2018, respectively. Other non-current financial asset mainly consist of Recoverable from GOI fully service Bond and Lease Receivables. Company has issued GOI fully service bonds amounting to Rs 3,487.50 crore during FY 2018-19 for raising of Extra Budgetary Recovery (EBR) for GOI scheme of Power System Development fund in terms of letter no. 7/1/2018-OM dated 21st January, 2019 of Ministry of Power, Govt. Of India (GOI) for meeting accrued liabilities for creation of Capital Assets. The repayment of principal and the interest payment on such bonds shall be met by GOI.

23.8 Other non-current assets

Your companys other non-current assets was Rs 5,065.44 crore and Rs 5,645.51 crore, as at March 31, 2019 and 2018, respectively, a decrease by 10.27%. Other non-current assets mainly comprise of advances for Capital Expenditure, deferred foreign currency Fluctuation Asset, advance recoverable in kind or for value to be received.

24. Current Assets

Your companys Current Assets were Rs 17,872.31 crore and Rs 12,300.20 crore as at March 31, 2019 and March 31, 2018, respectively. Current Assets have been categorized as (i) Inventories; (ii) Trade receivables; (iii) Cash & Cash Equivalents; (iv) Bank Balances other than cash and cash equivalents (v) Loans (vi) other current financial assets (vii) other current assets.

24.1 Inventories

Inventories are valued at lower of the cost, determined on weighted average basis, and net realizable value. The inventories were Rs 1,226.28 crore as at March 31, 2019 as against Rs 1,038.45 crore as at March 31, 2018. Our inventories consists components, spares & other spare parts, loose tools, consumable stores and other items. The cost of inventories increased during Fiscal 2019 as compared with Fiscal 2018, on account of your company continuing to expand the transmission network and capitalization of new projects.

24.2 Trade Receivables

Trade Receivables consist mainly of receivables relating to transmission services, and also receivables from consultancy services and telecom services. Our Trade Receivables as on March 31, 2019 and 2018 were Rs 4,628.74 crore and Rs 3,638.96 crore, respectively. Trade receivables increased by 27.20% during Fiscal 2019 as compared to Fiscal 2018.

Substantially, all of our receivables are covered by letters of credit, following which we have no material debt collection problems. The average collection period for trade receivables is 44 days during Fiscal 2019 as compared to 42 days during Fiscal 2018.

24.3 Cash & Cash Equivalents

Cash and Cash Equivalents as on March 31, 2019 and 2018 were Rs 3,643.14 crore and Rs 1,516.21 crore, respectively. Cash & Cash Equivalents increased by 140% during Fiscal 2019 as compared to Fiscal 2018 mainly on account of term deposits (with maturity less than 3 months) held in respect of consultancy clients and Others. As on March 31, 2019, Rs 172.13 crore was in current account and non designated term deposits, which was available to your Company for general purpose.

24.4 Bank Balances other than cash & cash equivalents

Bank and other cash & cash equivalents as on March 31, 2019 and 2018 were 688.90 crore and 654.22 crore, respectively. Bank Balances other than cash & cash equivalents increased by 5.30% during Fiscal 2019 as compared to Fiscal 2018 mainly on account of term deposits in banks for consultancy clients and Others.

24.5 Loans

Loans as on March 31, 2019 and 2018 were Rs 416.87 crore and Rs 46.88 crore, respectively. Loans during Fiscal 2019 as compared to Fiscal 2018 increased mainly on account of current maturities of Loans to Subsidiaries and Loan to Joint Venture Companies.

24.6 Other current financial assets.

Other current financial assets as on March 31, 2019 and 2018 were 6,853.20 crore and Rs 4,869.92 crore, respectively mainly consisting unbilled revenue. Other current financial assets increased by 40.73% during Fiscal 2019 as compared to Fiscal 2018 mainly on account of increase in unbilled revenue.

24.7 Other Current Assets

Our other current assets as at March 31, 2019 and 2018 were Rs 415.18 crore and Rs 535.56 crore respectively.

25. Indebtedness.

Your Company relies on both Rupee and foreign currency denominated borrowings. A significant part of Companys external funding has been through long-term foreign currency loans from multilateral agencies such as the World Bank and the Asian Development Bank (guaranteed by GOI). Following table sets forth, by currency, our outstanding debt and its maturity profile (currency conversions are as of 31st March, 2019):

(Rs in Crore)

Loan Name 2019-20 2020-21 2021-22 2022-23 Beyond 2022-23 Total
Domestic Bonds (1) 6,742.97 5,007.97 8,223.73 6,090.23 48,423.97 74,488.87
Domestic Loans (2) 1,454.00 1,454. 00 1,454 .00 2,004.00 19,824.00 26,190.00
Foreign Loans
US$ 1,993.63 2,119.48 2,090.82 5,550.74 21,897.55 33,652.22
EUR 246.98 434.69 421.13 421.13 2,564.14 4,088.07
SEK 297.73 297.73 206.08 206.08 875.68 1,883.30
JPY 11.53 11.53 11.53 11.53 1,437.78 1,483.90
TOTAL (3) 2,549.87 2,863.43 2,729.56 6,189.48 26,775.15 41,107.49
GRAND TOTAL (1+2+3) 10,746.84 9,325.40 12,407.29 14,283.71 95,023.12 1,41,786.36

25.1 Long-term borrowings

Your companys long-term borrowings (excluding current maturities) as at March 31, 2019 and 2018 were Rs 1,31,039.51 crore and Rs 1,22,420.32 crore, respectively. Long-term borrowings include amounts raised from our private placement of bonds, term loans from banks and financial institutions. Due to the increased investment in new projects during the last year, our borrowings have increased by 7.04%.

25.2 Secured Loans

Our secured loans (excluding current maturities of long term loans) as at March 31, 2019 and 2018 were Rs 1,05,223.31 crore and Rs 1,06,965.71 crore, respectively. Most of these loans have been secured by floating charges on the moveable and immovable properties of Your Company. The following table presents the secured debt as at 31st March, 2019:

Amount (Rs in crore) % of total secured debt
Bonds denominated in Rupees 64,746.11 61.53
Term Loans and Other Loans From Banks and Financial Institutions:
Denominated in Foreign Currency 28,293.20 26.89
Denominated in Rupees 12,184.00 11.58
Total 1,05,223.31 100

3 unsecured Loans

Our unsecured loans (excluding current maturities as at March 31, 2019 and 2018 were Rs 25,816.20crore and Rs 15,454.61crore respectively, which consist of domestic bonds, foreign currency bonds, loans from foreign financial institutions/ Banks such as the Natixis (Formerly Credit National) in France, Japan International Cooperation Agency (Formerly Japan Bank for International Co-operation) in Japan, Skandinaviska Enskilda Banken AB (publ.) in Sweden and AB Svensk Exportkredit, Sweden.

The following table presents our unsecured debt as at March 31, 2019:

Amount (Rs in crore) % of total unsecured debt
Bonds denominated in Foreign Currency & Domestic Bonds 6,470.40 25.06
Term Loans, From Banks and Foreign Currency Loans:
Denominated in Foreign Currency 6,793.80 26.32
Denominated in Rupees 12,552.00 48.62
Total 25,816.20 100

26. Advance Against Depreciation (AAD)

Advance against depreciation (AAD) was a component of tariff that was permitted to be charged under CERC regulations for the Block 2004-09, to cover shortfall in respect of depreciation in a year on assets, for repayment of debts. AAD was done away with in the tariff block 2009-2014 and depreciation rate were reworked. Due to change in these tariff norms and the depreciation rates w.e.f. 1.04.2009, the outstanding AAD has been taken to transmission income after 12 years from the date of commercial operation to the extent the depreciation charged in respect of transmission system is more than the depreciation recovery under tariff. As on 31st March, 2019, AAD has decreased by 12% from Rs 1,504.09 crore during Fiscal 2018 to Rs 1,323.45 crore during Fiscal 2019.

27. Current liabilities

Your companys current liabilities as at 31st March, 2019 were Rs 32,114.14 crore (previous year Rs 26,899.93 crore). The current liabilities include (i) Borrowings, (ii) Trade payables (iii) other current financial liabilities (iv) other current liabilities; (v) Provisions and (vi) Current Tax liabilities at March 31, 2019 were 19.38% higher as compared to 31st March, 2018.

27.1 Borrowings

Your companys Short-term Borrowings are from Banks and through issue of Commercial Paper. These Borrowings as at March 31, 2019 and 2018 were Rs 4,300 crore and Rs 1,000 crore, respectively.

27.2 Trade payables

Your companys Trade payables as at March 31, 2019 and 2018 were Rs 364.11 crore and Rs 240.34 crore respectively. Trade payables at March 31, 2019 were 51.50% higher as compared to March 31, 2018.

27.3 Other Current Financial Liabilities

Your companys other current financial liabilities as at March 31, 2019 and 2018 were Rs 22,886.18 crore and Rs 21,505.61 crore respectively. Other current financial liabilities mainly include current maturities of long term borrowings through secured & unsecured Bonds, foreign currency loans, dues for capital expenditure, deposits/retention money from contractors and others etc. Other current financial liabilities at March 31, 2019 were 6.42% higher as compared to March 31, 2018.

27.4 Other Current liabilities

Your Companys other current liabilities as at March 31, 2019 and 2018 were Rs 3,863.26 crore and Rs 2,687.33 crore respectively. Other current liabilities at March 31, 2019 were 43.76% are higher as compared to March 31, 2018 mainly on account of advances from customers.

27.5 Provisions

Your Companys provisions for Employee Benefits etc. as on March 31,2019 and 2018 stood at 700.59 crore and Rs 1,059.58 crore respectively.

28. BUSINESS AND FINANCIAL REVIEW OF JOINT VENTURE COMPANIES and SUBSIDIARIES for FY 2018-19:

28.1. Joint Venture Companies:

I. Powerlinks Transmission Limited (POWERLINKS):

POWERGRID and Tata Power Company Limited are the Joint Venture Partners in this Joint Venture Company and hold 49% and 51% equity, respectively. Your Company was incorporated to undertake the implementation of Transmission Lines associated with Tala HEP, East-North interconnector and Northern Region Transmission System from Siliguri in West Bengal via Bihar to Uttar Pradesh and was the first public - private partnership in Power Transmission.

As on 31.03.2019, POWERLINKS has Authorized share capital of Rs 483.60 crore and paid-up capital of Rs 468.00 crore. POWERGRIDs share in the paid up capital is Rs 229.32 crore.

POWERLINKS had progressively commissioned the project by August, 2006. POWERLINKS has paid dividend amounting to Rs 16.05 crore (interim) and Rs 18.35 Crore (final) for Fiscal 2019.

Financial Highlights of the Company:

(Rs in Crore)

Particulars Fiscal 2019 Fiscal 2018
POWERGRIDs investment in Equity 229.32 229.32
Gross Income 155.57 173.90
Profit after Tax 112.57 124.84
Earning per Share* 2.41 2.66

*Face value per Share is Rs 10 each.

II. Jaypee Powergrid Limited (JPL):

POWERGRID and Jaiprakash Power Ventures Limited are the Joint Venture Partners in this Joint Venture Company and hold 26% and 74% equity, respectively. The Company was incorporated to undertake the implementation of transmission system to evacuate power generated by 1000 MW Karcham Wangtoo Hydro Electric Power Project in Kinnaur District in Himachal Pradesh, from Wangtoo to Abdullapur.

As on 31.03.2019, JPL has Authorized share capital of Rs 300 crore and paid-up capital of Rs 300 crore. POWERGRIDs share in the paid up capital is 78 crore.

The project was progressively commissioned in April, 2012. JPL has paid dividend amounting to Rs 5.07 crore (interim) for Fiscal 2019. Financial Highlights of the Company:

(Rs in Crore)

Particulars Fiscal 2019 Fiscal 2018
POWERGRIDs investment in equity 78.00 78.00
Gross Income 164.85 168.73
Profit /(loss)after Tax 63.02 67.17
Earnings per Share* 2.10 2.24

*Face value per Share is Rs 10/- each.

III. Torrent Powergrid Limited (TPL):

POWERGRID and Torrent Power Limited are the Joint Venture Partners in this Joint Venture Company and hold 26% and 74% equity, respectively. The Company was incorporated to undertake the implementation of transmission system associated with 1100MW Gas Based project (Sugen) Generation Station of Torrent Power Ltd. (TPL) at Akhakhol in Surat District of Gujarat.

As on 31.03.2019, TPL has Authorized share capital of Rs 125.00 crore and paid-up capital of Rs 90.00 crore. POWERGRIDs share in the paid up capital is Rs 23.40 crore.

The project was progressively commissioned in March, 2011. TPL has paid dividend amounting to Rs 3.28 crore (interim) and recommended final dividend of 0.70 Crore for Fiscal 2019.

Financial Highlights of the Company:

(Rs in Crore)

Particulars Fiscal 2019 Fiscal 2018
POWERGRIDs investment in Equity 23.40 23.40
Gross Income 49.43 66.74
Profit after Tax 19.14 39.73
Earning per Share* 2.13 4.41

*Face value per Share is Rs 10/- each.

IV. North East Transmission Company Ltd.(NETC):

POWERGRID entered into a Joint Venture Agreement with ONGC Tripura Power Project Company Ltd. (OPTC), Government of Tripura,

Manipur, Mizoram, Assam Electricity Grid Corporation Ltd, Meghalaya and Nagaland for establishment of Transmission Line of 400kV D/C Palatana- Silchar Bongaigoan Transmission Project associated with 726.6 MW Palatana Gas base Power Project in the state of Tripura.

As on 31.03.2019, NETC has Authorized capital of 600 crore and paid-up share capital of Rs 411.40 crore. POWERGRIDs share in the paid up capital is Rs 106.96 crore.

The project was progressively commissioned in February, 2015. NETCL has paid dividend amounting to Rs 5.35 crore (interim) and Rs 5.35 crore (final) for Fiscal 2019.

Financial Highlights of the Company

(Rs in Crore)

Particulars Fiscal 2019 Fiscal 2018
POWERGRIDs investment in Equity 106.96 106.96
Gross Income 341.07 353.20
Profit after Tax 65.56 83.84
Earning per Share* 1.59 2.04

*Face value per Share is Rs 10/- each.

V. Parbati Koldam Transmission Company Limited (PKTCL)

POWERGRID and Reliance Energy Limited (REL) now Reliance Infrastructure Ltd are the Joint Venture Partners in this Joint Venture Company and hold 26% and 74% equity, respectively. The Company was incorporated to undertake the implementation of transmission lines associated with Parbati-II (800 MW) HEP and Koldam (800 Mw) HEP.

As on 31.03.2019, PKTCL has Authorized share capital of Rs 331.00 crore and paid-up capital of Rs 272.84 crore. POWERGRIDs share in the paid up capital is 70.94 crore.

The Project commissioned progressively in NovRs 2015. PKTCL has paid dividend amounting to Rs 10.64 crore for Fiscal 2019.

Financial Highlights of the Company:

(Rs in crore)

Particulars Fiscal 2019 Fiscal 2018
POWERGRIDs investment in Equity 70.94 70.94
Gross Income 166.88 174.78
Profit after Tax 49.23 27.18
Earning per Share* 1.80 1.00

*Face value per Share is Rs 10/- each.

VI. Teestavalley Power Transmission Limited (TPTL)

POWERGRID and Teesta Urja Ltd are the Joint Venture Partners in this Joint Venture Company and hold 26% and 74% equity, respectively. The Company was incorporated to undertake the implementation of transmission lines associated with 1200 MW Teesta-III Hydro Electric Power Project to Kishanganj sub-station.

As on 31.03.2019, TPTL has Authorized Share Capital of Rs 500 Crore and Paid-Up Capital of Rs 373.88 Crore. POWERGRIDs share in the paid up capital was Rs 105.56 Crore.

The Project commissioned progressively in FebRs 2019.

Financial Highlights of the Company:

(Rs in crore)

Particulars Fiscal 2019 Fiscal 2018
POWERGRIDs investment in Equity 105.56 94.28
Gross Income 85.62 30.99
Profit after Tax (1.19) (6.54)
Earning per Share* (0.03) (0.18)

*Face value per Share is Rs 10/- each.

VII. National High Power Test Laboratory Private Limited (NHPTL):

NHPTL is a joint venture Company of NTPC, NHPC, POWERGRID, DVC & CPRI with equal equity participation of 20% each. The main aim of the NHPTL is to establish an online high power short circuit test facility in the country. This Facility is being established for the first time in the country at Bina (M.P.) to provide a full range of short circuit testing for the electrical equipment in conformance to Indian and International Standards.

As on 31.03.2019, the Authorized share capital of the Company was Rs 153 crore while paid up share capital was Rs 152 crore. POWERGRIDs share in the paid up capital was Rs 30.40 crore.

High Voltage Transformer (HVTR) Section of Laboratory under Phase-I put under commercial operation with effect from 1st July, 17. The Phase-I is capable of catering the requirement of Short Circuit Test of Electric Transformer from 50MVA, 132kV Class to 315MVA, 400 kV Class which is being enhanced upto 500 MVA, 400 kV class and 500 MVA, 765 kV class. Medium Voltage Transformer (MVTR) Section is under implementation.The project has no operating profit.

VIII. Bihar Grid Company Limited (BGCL):

POWERGRID entered into a Shareholders Agreement on 29.12.2012 with Bihar State Power (Holding) Company Limited {BSP(H)CL} for implementation of Intra-State Transmission System in the State of Bihar on 50:50 equity participation basis.

As on 31.03.2019, the authorized Share Capital of BGCL is 800 Crore and the Paid-up Capital is Rs 343.37 Crore, POWERGRIDs share in the paid up capital was Rs 171.68 Crore.

The Company is implementing Bihar Transmission System Strengthening Schemes in Phase IV, Part I worth Rs 2041 crore. The majority of Part-I Project is under commercial operation. Further, Phase IV, Part II works worth Rs 1,688 crore are under implementation.

Financial Highlights of the Company:

(Rs in crore)

Particulars Fiscal 2019 Fiscal 2018
POWERGRIDs investment in Equity 171.68 156.24
Gross Income 290.67 210.73
Profit after Tax 24.63 25.92
Earning per Share* 0.71 0.82

*Face value per Share is Rs 10/- each.

IX. Kalinga Bidyut Prasaran Nigam Private Limited (KBPNL):

POWERGRID has entered into a Shareholders Agreement on 04.01.2013 with Odisha Power Transmission Corporation Limited (OPTCL) for implementation of Intra State Transmission System in the State of Odisha on the basis of 50:50 equity participation. No business has been undertaken by this Company. The Board of Directors of POWERGRID and OPTCL had approved closure of the Company. The winding up proceeding of M/s KBPNL has already been taken up and NIL Accounts for F.Y-2018-19 has been prepared. Requisite formalities for closure of the Company under fast track exit mode are under process.

X. RINL POWERGRID TLT Private Limited (RPTPL)

POWERGRID and RINL had formed a joint venture Company, "RINL POWERGRID TLT Private Limited (RPTPL)", on 50:50 equity participation basis, for setting up a Transmission Line Tower (TLT) manufacturing plant at Visakhapatnam with a view to exploit the emerging opportunity in transmission line tower manufacturing business. As on 31.03.2019, the JV Company has Authorized share capital of Rs 50 crore and paid up share capital of Rs 8.00 crore. However, keeping in view the business scenario of tower manufacturing, the Board of Directors of POWERGRID accorded in-Principle approval for closure of the Company.RINL is seeking approval of Ministry of Steel for Closure of RPTPL.

XI. Cross Border Power Transmission Company Limited (CPTCL):

POWERGRID entered into Shareholders Agreement on 9th July, 2012 with IL&FS Energy Development Company Limited (IEDCL), SJVN Limited (SJVN) & Nepal Electricity Authority (NEA) of Nepal and formed a JV Company under the name "Cross Border Power Transmission Company Ltd" (CPTC) incorporated in India for implementation of Indian portion viz. Muzaffarpur - Sursand section (India Portion) of 400 kV D/C Muzaffarpur - Dhalkebar Indo-Nepal Cross Border transmission line. The Shareholding of POWERGRID, SJVN, IEDCL and NEA in the said JV Company is 26%, 26%, 38% and 10% respectively. The Audited cost of the India Portion is Rs 242.55 crore and the Project is being implemented with debt: equity as 80:20.

As on 31.03.2019, CPTC has Authorized share capital of 75 crore and paid-up capital of Rs 48.50 crore. At present, POWERGRID equity is Rs 12.61 crore. The India Portion is under commercial operation w.e.f. 19th February, 2016.

CPTC has paid dividend (interim) of 10% amounting to Rs 1.26 crore for Fiscal 2019.

XII. Power Transmission Company Nepal Limited (PTCN):

POWERGRID entered into a "Joint Venture cum Share Purchase Agreement" on 5th April, 2014 with Nepal Electricity Authority(NEA), Hydroelectricity Investment & Development Company Ltd (HIDCL) of Nepal and IL&FS Energy Development Company Ltd (IEDCL), India and formed a JV Company under the Name "Power Transmission Company Nepal Ltd" (PTCN) incorporated in Nepal for implementation of Dhalkebar - Bhittamod 400 kV Transmission Line (Nepal Portion of 400 kV D/C Dhalkebar - Muzaffarpur Indo-Nepal Cross Border transmission line.) The Shareholding of NEA, POWERGRID, HIDCL and IEDCL in the said JV Company is 50%, 26%, 14% and 10% respectively. The Audited cost of the Nepal Portion is INR. 101 crore and the project has been implemented on 70:30 debt:equity ratio.

As on 31.03.2019, PTCN has Authorized, issued & paid-up share capital of NPR 45 crore. At present, POWERGRID equity is NPR 11.70 crore including 1,30,000 equity shares of NPR 100/- each of Bonus Shares. The line is under commercial operation w.e.f. 19th February, 2016.

The Dhalkebar - Muzaffarpur Indo-Nepal Cross Border Transmission line is being used for Transmission of power between India & Nepal. Energy Efficiency Services Limited (EESL):

POWERGRID entered into a Joint Venture Agreement with NTPC Ltd., Power Finance Corporation Ltd. and Rural Electrification Corporation Ltd. The JV Company viz. Energy Efficiency Services Limited will promote measures of Energy efficiency, Energy Conservation and Climate Change and is carrying out business related to energy audit of Govt. buildings, consultancy assignments etc.

As on 31.03.2019, the Authorised Share Capital of EESL is Rs 3500 crore and Paid-up Share Capital is 675.20 crore. POWERGRIDs share in the paid up capital was Rs 37.70 crore (5.58%).

Financial Highlights of the Company: (Rs in crore)

Particulars Fiscal 2019 Fiscal 2018
POWERGRIDs investment in Equity 37.70 22.5
Gross Income 1935.67 1410.70
Profit after Tax 95.09 39.46
Earning per Share* 1.45 0.85

*Face value per Share is Rs 10/- each.

Note: For the purpose of consolidation of Accounts, EESL has not been considered as a Joint Venture Company.

28.2 SUBSIDIARY COMPANIES:

I. POWERGRID NM TRANSMISSION LIMITED

POWERGRID NM Transmission Company Limited (PNMTL) was acquired by POWERGRID on March 29, 2012 under Tariff Based Competitive Bidding for establishing Transmission System associated with IPPs of Nagapattinam / Cuddalore Area (Package A) from PFC Consulting Ltd (the Bid Process Co-coordinator). The Transmission System comprising 765kV D/C and 765kV S/C traverses the states of Tamil Nadu and Karnataka. PNMTL was granted transmission license by CERC in June, 2013.

As on 31.03.2019, PNMTL has an Authorized and Paid up Share Capital of Rs 264crore each. The project elements have been progressively commissioned and the entire project has been commissioned on 26.01.2019.

(Rs in crore)

Particulars FY2018-19 FY2017-18
Gross Income 16.14 0.38
Profit after Tax (63.56) (83.14)

II. POWERGRID VIZAG TRANSMISSION LIMITED

POWERGRID VIZAG Transmission Company Limited (PVTL) was acquired by POWERGRID on August 30,2013 under Tariff Based Competitive Bidding for establishing Transmission System for System Strengthening in Southern Region for import of power from Eastern Region from REC Transmission Projects Company Limited (the Bid process Coordinator). The transmission system comprising Srikakulam-Vemagiri 765kV D/C line & Khammam -Nagarjunasar 400kV D/C Line traverses through the states of Andhra Pradesh and Telengana. PVTL was granted transmission license by CERC in January, 2014.

As on 31.03.2019, PVTL has an Authorized and Paid up Share Capital of Rs 220 crore & Rs 209.73crore respectively. The project has been commissioned on 1st February, 2017. PVTL has paid dividend amounting to Rs 27.89 crore for Fiscal 2019.

(Rs in crore)

Particulars FY2018-19 FY2017-18
Gross Income 298.24 244.14
Profit after Tax 100.16 77.67

III. POWERGRID UNCHAHAR TRANSMISSION LIMITED

POWERGRID Unchahar Transmission System Limited (PUTL) was acquired by POWERGRID on March 24, 2014 under Tariff Based Competitive bidding from REC Transmission Projects Company Limited (the Bid Process Co-ordinator) for establishment of Transmission System for ATS of Unchahar TPS. The transmission system comprising 400 kV D/C traverses the state of Uttar Pradesh. The Company was granted transmission license by CERC in July, 2014.

As on 31.03.2019, PUTL has an Authorized Share Capital of Rs 14crore and Paid-up Share Capital of Rs 12.96crore.

The Project has been commissioned on 23.09.2016. PUTL has paid dividend (interim) of 15% amounting to Rs 1.94 crore for Fiscal 2019.

(Rs in crore)

Particulars FY2018-19 FY2017-18
Gross Income 23.47 16.34
Profit after Tax 9.81 9.05

IV. POWERGRID KALA AMB TRANSMISSION LIMITED

POWERGRID Kala Amb Transmission Limited (PKATL) was acquired by POWERGRID on May 12, 2014 under Tariff Based Competitive bidding from REC Transmission Projects Company Limited (the Bid Process Co-ordinator) for establishment of Transmission System for Northern Region system Strengthening Scheme, NRSS-XXXI (Part-A). The Transmission System comprising 400/220 kV GIS substation, 400 kV D/C LILO and Series Compensation is to traverse the state of Himachal Pradesh. The Company was granted transmission license by CERC in September, 2014.

As on 31.03.2019, PKATL has an Authorized and Paid-up Share Capital of 61crore each. The project has been commissioned on 12.07.2017.

PKATL has paid interim dividend of 0.68 per equity share amounting to Rs 4.15 Crore in December 2018 and second interim dividend of 0.80 per equity share amounting to Rs 4.88 Crore in March 2019. Thus, the aggregate interim dividend payout for the Fiscal 2019 amounts to Rs 9.03 crore.

(Rs in crore)

Particulars FY2018-19 FY2017-18
Gross Income 60.30 37.77
Profit after Tax 13.08 7.52

V. POWERGRID JABALPUR TRANSMISSION LIMITED

POWERGRID Jabalpur Transmission Limited (PJTL) was acquired by POWERGRID on February 26, 2015 under Tariff Based Competitive bidding from REC Transmission Projects Company Limited (the Bid Process Co-ordinator) for establishment of Transmission System Strengthening associated with Vindhyachal-V. The transmission system comprising 765kV D/C transmission line traverse the State of Madhya Pradesh. The Company was granted transmission license by CERC in June, 2015.

As on 31.03.2019, PJTL has Authorized Share Capital of Rs 300crore and Paid up Share Capital of Rs 173.15crore.

The project had been completed and declared for commercial operation w.e.f. 01.01.2019.

(Rs in crore)

Particulars FY2018-19 FY2017-18
Gross Income 61.05 -
Profit after Tax 10.15 -

VI. POWERGRID WARORA TRANSMISSION LIMITED

POWERGRID Warora Transmission Limited (PWTL) was acquired by POWERGRID on April 24, 2015 under Tariff Based Competitive bidding from REC Transmission Projects Company Limited (the Bid Process Co-ordinator) for establishment of Transmission System Associated with Gadarwara STPS (2 x 800 MW) of NTPC (Part-A). The transmission system traverses through the States of Maharashtra and Madhya Pradesh and comprises 765kV D/C, 400kV D/C transmission lines and establishment of 2X1500 MVA 765/400 kV new substation in Warora. The Company was granted transmission license by CERC in August, 2015.

As on 31.03.2019, PWTL has an Authorized Share Capital of Rs 425crore and Paid up Share Capital of Rs 326.30crore.

The project elements have been progressively commissioned and the entire project has been commissioned on 10.07.2018.

PWTL has paid interim dividend of 0.65 per equity share amounting to Rs 15.75 Crore in December 2018 and second interim dividend of 0.06 per equity share amounting to Rs 1.96 Crore in March 2019. Thus, the aggregate interim dividend payout for the Fiscal 2019 amounts to Rs 17.71 crore.

(Rs in crore)

Particulars FY2018-19 FY 2017-18
Gross Income 280.62 63.70
Profit after Tax 59.67 28.94

VII. POWERGRID PARLI TRANSMISSION LIMITED

POWERGRID Parli Transmission Limited (PPTL) was acquired by POWERGRID on April 24, 2015 under Tariff Based Competitive bidding from REC Transmission Projects Company Limited (the Bid Process Co-ordinator) for establishment of Transmission System Associated with Gadarwara STPS (2 x 800 MW) of NTPC (Part-B). The transmission system traverses through the State of Maharashtra and comprises 765kV D/C, 400kV D/C transmission lines and establishment of 2X1500 MVA 765/400 kV new substation in Parli. The Company was granted transmission license by CERC in July, 2015.

As on 31.03.2019, PPTL has an Authorized Share Capital of Rs 350crore and Paid-up Share Capital of Rs 228.50crore.

The project elements have been progressively commissioned and the entire project has been commissioned on 04.06.2018.

PPTL has paid interim dividend of 0.90 per equity share amounting to Rs 12.47 Crore in December 2018 and second interim dividend of 0.15 per equity share amounting to Rs 3.43 Crore in March 2019. Thus, the aggregate interim dividend payout for the Fiscal 2019 amounts to Rs 15.90 crore.

(Rs in crore)

Particulars FY2018-19 FY 2017-18
Gross Income 283.92 -
Profit after Tax 65.01 -

VIII. POWERGRID SOUTHERN INTERCONNECTOR TRANSMISSION SYSTEM LIMITED

POWERGRID Southern Interconnector Transmission System Limited (PSITSL) was acquired by POWERGRID on December 4, 2015 under Tarrif based Competitive bidding from REC Transmission Projects Company Limited (the Bid Process Co-ordinator) for "Strengthening of Transmission System Beyond Vemagiri Project on build, own operate and maintain (BOOM) basis. The transmission project comprising of 765 kV & 400 kV, D/C transmission lines is to traverse the states of Andhra Pradesh, Telangana & Karnataka and include establishment of one 765/400 kV Substation as well as 400kV bay extension at two existing sub-stations in the state of Andhra Pradesh. The Company was granted transmission license by CERC in March, 2016.

As on 31.03.2019, PSITSL has an Authorized Share Capital of 675crore and Paid up Share Capital of Rs 515.504 crore. Two elements of the projects have been commissioned on 06.08.2018 and 28.02.2019. The remaining elements are under implementation.

(Rs in crore)

Particulars FY2018-19 FY2017-18
Gross Income 33.15 -
Profit after Tax (1.56) -

IX. POWERGRID MEDINIPUR - JEERAT TRANSMISSION LIMITED

POWERGRID Medinipur-Jeerat Transmission Limited (PMJTL) (was acquired by POWERGRID on March 28, 2017 under Tariff based competitive bidding from PFC Consulting Limited (the Bid Process Coordinator) for Transmission System associated with "765kV Strengthening in Eastern Region (ERSS-XVIII). The Transmission System includes establishment of 765kV and 400kV Transmission lines which is to traverse the states of West Bengal and Jharkhand including establishment of two new 765/400kV Substations in West Bengal. The Company was granted transmission license by CERC in June, 2017.

As on 31.03.2019, PMJTL has an Authorized Share Capital of Rs 1.00 crore and Paid up Share Capital of 0.01crore. The Project is under implementation.

X. POWERGRID MITHILANCHAL TRANSMISSION LIMITED

POWERGRID Mithilanchal Transmission Limited (PMTL), formerly known as ERSS XXI Transmission Limited, was acquired by POWERGRID on January 12, 2018 under Tariff based competitive bidding from REC Transmission Projects Company Limited (the Bid Process Coordinator) for Transmission System associated with "Establish Transmission System for Eastern Region Strengthening Scheme - XXI (ERSS-XXI)". The Transmission System includes establishment of 400kV Transmission lines in the state of Bihar including establishment of three new 400/220/132 kV Substations in Bihar. The Company was granted transmission license by CERC in April, 2018.

As on 31.03.2019, PMTL has an Authorized and Paid up Share Capital of Rs 5Lakh each. The Project is under implementation.

XI. POWERGRID VARANASI TRANSMISSION SYSTEM LIMITED

POWERGRID Varanasi Transmission System Limited (PVTSL), formerly known as WR-NR Power Transmission Limited was acquired by POWERGRID on March 27, 2018 under Tariff Based Competitive Bidding from REC Transmission Projects Company Limited (the Bid Process Co-ordinator) for establishing Transmission System for new Western Region - Northern Region 765kV Inter Regional Corridor. The Transmission System includes establishment of a 765kV D/C Transmission Line from Vindhyachal pooling station to Varanasi and traverses the states of Madhya Pradesh and Uttar Pradesh. The Company was granted transmission license by CERC in August, 2018.

As on 31.03.2019, PVTSL has Authorized and Paid up Share Capital of Rs 5Lakh each. The Project is under implementation.

XII. POWERGRID JAWAHARPUR FIROZABAD TRANSMISSION LIMITED

POWERGRID Jawaharpur Firozabad Transmission Limited (PJFTL) (formerly known as Jawaharpur Firozabad Transmission Limited) was acquired by POWERGRID on December 21, 2018 under Tariff based competitive bidding from REC Transmission Projects Company Limited (the Bid Process Coordinator) for establishing Transmission System for Evacuation of Power from 2 X 660 MV Jawaharpur Thermal Power Project and Construction of 400 kV Substation at Firozabad along with associated Transmission Lines and is an Intra State Transmission Project.

As on 31.03.2019, PJFTL has an Authorized and Paid up Share Capital of Rs 5Lakh each. Application for obtaining transmission license has been filed to UPERC.

XIII. POWERGRID VEMAGIRI TRANSMISSION LIMITED

POWERGRID Vemagiri Transmission Limited was acquired by POWERGRID on April 18, 2012 under Tariff Based Competitive bidding for establishing Transmission system associated with IPPs of Vemagiri Area (Package A) from REC Transmission Projects Company Limited (the Bid Process Co-ordinator). The transmission system comprising 765kV D/C lines was to traverse the state of Andhra Pradesh and Telangana.

As on 31.03.2019, POWERGRID Vemagiri Transmission Limited has an Authorized Share Capital and Paid up Share Capital of Rs 5Lakh each.

CERC vide Order dated 06.04.2015 stated that Vemagiri-Khammam-Hyderabad 765 kV D/C lines under the project is neither required as an evacuation line nor as a system strengthening line, no useful purpose will be served by adopting the transmission charges and granting license to the petitioner for the said transmission line and has withdrawn the regulatory approval for the Transmission project.

GRID CONDUCTORS LIMITED

Grid Conductors Limited (GCL), a wholly owned subsidiary of POWERGRID incorporated on 15.09.2015 to set up an aluminum conductor manufacturing plant at Angul, Odisha. The Company did not carry out any business activity since incorporation and an application to strike off the name of the Company through Fast Track Exit Scheme was filed with Registrar of Companies (ROC). ROC vide Notice dated 09.08.2018 has struck off the name from its records.

29. Consolidated financial statements of POWERGRID

The consolidated financial statements have been prepared in accordance with Indian Accounting Standards (IndAS) 110- Consolidated Financial Statements and Indian Accounting Standards (IndAS) 28 - Investments in Associates and Joint Ventures. On consolidated basis, the Total Income of the Company, during F.Y.2018-19, stood at Rs 35,661.32 crore against Rs 30,430.54 crore during F.Y.2017-18 registering an increase of about 17.19%. Total Expenses as on 31.03.2019 stood at Rs 24,116.10 crore as against Rs 20,391.92 crore as on 31.03.2018. Profit after Tax during FY 2018-19 increased by 22.30% vis-a-vis FY 2017-18. A brief summary of the results on a consolidated basis is given below:

(Rs in crore)

FY 2018-19 FY 2017-18
Total Income 35,661.32 30,430.54
Profit before Tax & Regulatory Deferral Account Balances 11,674.04 10,186.56
Profit after Tax 10,033.52 8,204.00
Net Cash from operating activities 23,380.67 22,710.12

30. Cautionary Statement

Statement in the Management Discussion and Analysis and Directors Report describing Your Companys objectives, projections and estimates are forward looking statements and progressive within the meaning of applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions Government Policies and other incidental factors. Readers are cautioned not to place undue reliance on the forward looking statements.

For and on behalf of the Board of Directors
(Ravi P.Singh)
Place: New Delhi Director (Personnel) & CMD DIN:05240974
Date: 19th July, 2019