CESC Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2020

1. Cost of materials consumed = Cost of electrical enerygy purchased + Cost of fuel



2. 2. Other income includes Regulatory income amounting to Rs.297 cr and Rs.532 cr for the quarter ended on 31 March 2020 and year ended on 31 March 2020 respectively.


1. In the above standalone financial results of the Company, revenue from operations has been arrived at based on the relevant orders of the West Bengal Electricity Regulatory Commission (WBERC), the Regulator. The effect of adjustments relating to advance against depreciation, cost of fuel and purchase of power and those having bearing on revenue account, as appropriate, based on the Company's understanding of the applicable available regulatory provisions and available orders of the competent authorities have been included in Regulatory (income) / expense, which may, however, necessitate further adjustments upon receipt of subsequent orders/directions in this regard, including finalisation of the underlying issues relating to mining of coal from Sarisatoli coat mine, which commenced from April, 2015. During the quarter ended 31 March 2020, the Company received the order from WBERC in respect of its Annual Performance Review (APR) for the year ended 31 March 2014 which has determined an amount of Rs. 383 crores as adjustment for the year, to be suitably considered in subsequent tariff and/or other orders. The impact of such order has been considered in these financial results, including in Regulatory income/ (expense) for lhe quarter and year ended 31 March 2020 and also on the Regulatory Deferral Account balances as at 31 March 2020, based on the Company's understanding of the process pertaining to APR, for subsequent years also. These balances have been now recognised with discounting methodology, assuming recovery over a period of time using such rate in consonance with the applicable regulations and application of prudence.

2. The composite Scheme of Arrangement amongst the Company and nine other companies and their respective shareholders has been made effective from 1st October, 2017 except for the de merger of the Generation Undertaking or CESC limited into Haldia Energy Limited, a wholly owned subsidiary of CESC limited ("the said Demerger") However, the said De merger proposal has been withdrawn with effect from 14 November2019 and Haldia Energy limited continues to be a wholly owned subsidiary of the Company.

3. Part A of Schedule II to the Companies Act. 2013 (the Act), inter alia, provides that depreciable amount of an asset is the cost of an asset or other amount substituted for cost Part B of the said Schedule deals with the useful life or residual value of an asset as notified for accounting purpose by a Regulatory Authority constituted under an act of Parliament or by the Central Government for calculating depreciation to be provided for such asset irrespective of the requirement of Schedule II. In terms of applicable Regulations under the Electricity Act, 2003, depreciation on tangible assets other than freehold land is provided on straight line method on a pro-rata basis at the rates specified therein, the bass of which being considered by the West Bengal Electricity Regulatory Commission (Commission) in determining the Company's tariff for the year, which is also required to be used for accounting purpose as specified in the said Regulations. Based on legal opinions and accounting opinions obtained, the Company continues with the consistently followed practice of recouping from the retained earnings an additional charge of depreciation relatable to the increase in value of assets arising from fair valuation, which for the quarter ended 31 December 2019, quarter ended 30 September 2019, quarter ended 31 December 2018, nine months ended 31 December 2019, nine months ended 31 December 2018 and year ended 31 March, 2019 amounts to Rs 74 crore, Rs 72 crore, Rs 76 crore. Rs 219 crore, Rs 230 crore and Rs 307 crore respectively.

4. (i) Other expenses contained in columns (1) to (6) in the above financial results include interest on security deposit of Rs 27 crore. Rs 26 crore, Rs 27 crore Rs.80 crore. Rs.81 crore and Rs.107 crore for the respective periods.
(ii) EPS without Regulatory (income) /expense (net) contained in Columns (1) to (6) in the above financial results works out to Rs 4 86, Rs 17 65, Rs (1.13), Rs 35.77. Rs 29 39 and Rs 37.81 for the respective periods.

5. The Company operates within the framework of Electricity Act, 2003 where tax on profits forms part of chargeable expenditure under the applicable regulations framed thereunder. Accordingly, deferred tax liability or asset is recoverable or payable through future tariff. Hence, recognition of deferred tax asset or liability is done with corresponding recognition of regulatory liability or asset, as applicable, by way of considering equivalent regulatory expense or income as the case may be, which hitherto have been shown under the tax expenses till previous year. Based on an opinion issued by the Expert Advisory Committee of The Institute of Chartered Accountants of India, the presentation of such regulatory expense/income, in respect of deferred tax, has now been included in the above 'Regulatory (income)/ expense (net)*. Consequent to the above. Regulatory (Income) / Expense (net) and Tax expenses has (increased)/ decreased by Rs (40) crore, Rs.(117) crore and Rs 12 crore for the periods mentioned in column (3),(5) and (6) respectively. Consequently, EPS without Regulatory (income)/expense (net) for the period mentioned in Columns (3),(5) and (6) in the above financial results has increased/(decreased) by Rs (2.35), Rs (6.96) and Rs 0.93 for the respective periods.

6. The Company has adopted Ind AS 116 'Leases5 effective 1st April. 2019 as notified by the Ministry of Corporate Affairs (MCA) vide Companies (Indian Accounting Standard). Amendment Rules, 2019, using the modified retrospective method The adoption of this Standard did not have any material impact on the profit for the quarter ended 31 March, 2020.

7. An interim dividend of Rs 320 crore Rs.20per equity share including dividend distribution tax) has been declared on 11th February, 2020 and paid during the quarter.

8. Figures for the quarters ended 31st March, 2020 and 31st March, 2019 are the balancing figures between the audited figures in respect of the full years and the reviewed figures of nine months ended 31st December, 2019 and 31st December, 2018 respectively

9. The Company is primarily engaged in generation and distribution of electricity and does not operate in any other significant reportable segment.

10. India and other global markets experienced significant disruption in operations resulting from uncertainly caused by the worldwide outbreak of Coronavirus pandemic. The Company's business includes Generation and Distribution of power within its licensed area in the slate of West Bengal, India. Considering power supply being an essential service, management believes that there is not much of an impact likely due to this pandemic on the business of the Company , its subsidianes, associate and joint venture except some lower demand and its consequential impact on supply and collection from consumers, which are believed to be temporary in nature. The Company has duly ensured compliance with specific regulatory directives issued in the related matter. The Company is taking all necessary steps and precautionary measures to ensure smooth functioning of its operations/business and to ensure the safely and well-being of all its employees. The Company is closely monitoring developments, its operations, liquidity and capital resources and is activety working to minimize the impact of this unprecedented situation.
The Company has also performed impairment assessment of its investment in subsidiaries. associate and joint venture and based on such assessment, no impairment is required be recognised in respect of such investments.

9. The above results were reviewed by the Audit Committee and taken on record by the Board of Directors at their respective meetings held on 29 June, 2020.

10. Figures for the previous periods have been regrouped / reclassified wherever necessary to conform to current period Classification.

Rabi Chowdhury
Managing Director - Generation

Debasish Benerjee
Managing Director - Distribution