To

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office of chief Financiar officer/wM&G section

Regd' office: PSEB Head office, The Mall Patiala-147001: ph.No.0175-221.3223 Email: cfo @pspcl.in

Corporate tdentity Number: U40109p82O1OSGC033g13, Website: Wwlv.pspcL!t

Accou nts Circu la r No.04 /2017

L^ Ail Addl.SEs/Sr.Xens / REs in pSpCL

2. AllAccounts Officers in pSpCL.

Memo No: L248/1,479lwM&G /cAC-37Vol-XrV Dated: 1,2.04.2017

Sub: significant Accounting poricies approved by BoD pspcl.

Board of Directors, PSPCL in its 53'd meeting held at Mohali on 0g.02.2017 hasapproved significant Accounting Policies forming part of Standalone Financial statements of pspClfor FY 20151-16' Same are enclosed for information, guidance and strict compliance please.

This issued with the approval of Chief Financial Officer/pSpCl.

--FLDA: As above

Accounts Officer/WM&G,

PSPCL, Patiala.

Endst. No. 1480/1587/wM&G /CAC_37Vot_Xtv Dated: 12.04.2017

copy of the above is forwarded to the following offices for information &necessary action please:

1,. All Engineer_in_Chiefs/Chief Engineers in pSpCL2. All CAOs, FA & CAO in pSpCL

3. All Dy. CEs/SEs in pSpCL

4. Chief Auditor, pSpCL, patiala.5. All Dy. CAOs/ Dy. CAs, Dy. FAs, in pSpCL

6. RAO, pSpCL, patiala^

Accounts Officer/WM&G,

PSPCL, Patiala.

7. SE/tT, pSpCL, patiala for placing on website.

3"1-

Note no. 1 . SIGNIFICANT ACCOUNTTNG POLTCIES

Government of Punjab vide Notification dated 24.12.2012 amended the Transfer Scheme-2010 and vested the following Assets & Liabilities in the Company as on 16.4.2010

Liabilities t in crore Assets { in croreFINANCED BY

STL/MTL 7,057.45 Fixed Assets 37,638.21Payment due onCapital Liabilities

3.13 Less: Accumulated Depreciation 7,795.57

Capital Liabilities 6,L42.56 Net Fixed Assets 29,842.64EquitV 6,081.43 CapitalWlP L,867.87Liability for RBI Bonds L,090.47 Assets not in use 89.23GPF & NPS Liabilitv L,764.30 Deferred costs 7.75Reserve 8,772.66 lntaneible Assets 7.00

lnvestments 328.34Total current Assets (A) 3,47t.24Security Deposit from consumers L,501..32

Other Cu rrent Liabilities 3,200.75

Total Current Liabilities (B) 4,702.07

Net Current Assets (A-B) (1,230.83)

TOTAL 30,912.00 TOTAL 30,912.00

L.

a)

b)

2.

a.

b.

c.

GENERAL

The accounts of the company are being prepared on accrual basis under historicalcost convention, on accounting principles of going concern and in accordance withthe provisions of the Companies Act, 2013.Accounting policies not specifically referred to are consistent and in accordance withgenerally accepted accounting principles and commercial practices,

Fixed Assets & and Capital Work in Progress(CWtPl

The fixed assets are stated at historical cost less accumulated depreciation.lntangible assets are stated at their cost of acquisition less accumulated amortization.The fixed Assets have been taken at the transfer price in respect of the assets

transferred by the State Govt. vide Notification dated 16.04.2010 (Transfer Scheme2010) as amended on 24.12.2012.The amount received till date or to be received in future on account of consumer'scontributions, grants and subsidies towards cost of assets be treated as deferredincome, accounted for as reserve, in the first instance and apportioned to P&L @ 5%

of the balances outstanding under consumer's contributions, grants & subsidiestowards cost of assets at the year end with effect from 1-4-13.

d.

PUNJAB STATE POWER CORPORATION LIMITED

e. All Costs of assets attributable to acquisition/construction of fixed assets tillcommissioning, are capitalized except borrowing costs which are capitalized on thebasis of weighted average formula as under:-A) Average of total opening and closing balance of CWlp.B) Average of opening and crosing outstanding loans for capital works.c) lnterest paid and provided for the year on loans for capital works.D) Capitalization of borrowing cost = C X A/B

Borrowing Costs on projects held-in-abeyance such as SyL are not capitalized andcharged to revenue.The expenditure on capital work in progress is transferred to approprlate assets atthe time of commissioning of project/ work during that year. ln case of abandonedproject, the same is expensed in the year in which it is decided to abandon suchproject.Fixed Assets created on land (not belonging to corporation) are included under FixedAssets.

Expenditure on renovation and Modernization of fixed asset resulting in increasedlife and/or efficiency of an existing asset, is added to the cost of related asset.ln the case of assets put to use, where final settlement of bills with contractor is yetto be effected, capitalization is done up to the claim accepted by Corporation as perthe term ofthe contract.ln respect of supply cum-erection contracts, the value of supplies received at site andaccepted is treated as Capital work-in-progress.Claims for price variation/exchange rate variation in case of contracts are accountedfor on acceptance of claims.

DepreciationDepreciation on the fixed assets of PSPCL w.e.f. 01,.04.20L4 has been formulatedwhich is as under:-The value base for the purpose of depreciation shall be the historical cost of theassets that is actual expenses.Provided that land (under full title) is not a depreciable asset and its cost shall beexcluded from the capital cost while computing depreciation;Treatment of consumer contributions/Capital subsidies/Govt. grants shall be asper policy already mentioned at Sr. no. 2 (d) above.The historical cost of the asset shall include additional capitalisation.The historical cost shall include foreign currency funding converted to equivalentrupees at the exchange rate prevalent on the date when foreign currency wasactually availed but not later than the date of commercial operation.Depreciation shall be chargeable from the first year of operation. ln case ofoperation of the asset for part of the year, depreciation shall be charged on pfo-rata basis.

f.

ob.

h.

3.

a)

b)

t.

t.

c)

d)

e)

f)

PUNJAB STATE POWER CORPORATION LIMITED

1t--')

g) Depreciation shall be calculated annually as per straight-line method over theuseful life of the asset at the rates prescribed below (based on the rates specifiedby the Central Electricity Regulatory Commission).Provided that the total depreciation during the life of the asset shall not exceed90% of the original cost.

AccountCode

Description Rate

10.101 Land owned under full title 0

lo.to2 Land held under lease 3.34

L0.201. Building containing thermo-electric plant 3.34

lo.202 Buildings containing hydro electric generating plant 3.34

10.203 Bldg. containing diesel 3.34

10.206Buildings containing Transmission installations above66KVA 3.34

L0.207Buildings containing Transmission installations below66 KVA 3.34

10.208 Buildings containing Distribution installations. 3.34

10.2L1, Office buildines 3.34

r0.222 Residential colonv for staff. 3.34

70.234 Temporary buildings. 100

70.244 Workshop buildings 3.34

70.24s Other buildines. 3.34

10.301 Diversion tunnels, channels & siphons 5.28

L0.302 Dams up stream and down structure etc. s.28

10.303 Outlet works s.28

10.304 Spillways 5.28

10.30s Hvdro channels-Earth work-Linins 5.28

10.306 Cross drainage works 5.28

10.307 Head regulators 5.28

10.308 Cross regulators & escape channels 5.28

L0.309 Bridses & culverts s.28

10.310 Misc. Works 5.28

L0.321 Reservoir, forebay & intake 5.28

L0.322 Ducts & penstock 5.28

10.323 Bvpass channels & its works 5.28

LO.324 Tail race channel s.28

PUNJAB STATE POWER CORPORATION LIMITED

10.325 Misc. Works 5.2810.330 cooling water systems 5.2810.331 Cooling Towers 5.2810.335 Sweet water arrangement 5.281_0.340 Plant & pipelines for water supply 5.2870.342 Drainage & sewerage - residential colony 5.2810.401 Pucca roads. 3.341,0.402 Kutcha roads. 3.3470.412 Railways sidings. 3.34L0.501 Turbine generator etc. 5.2810.502 Plant foundations for steam power plant 5.28L0.503 Boiler plant & equipment 5.2810.504 Locomotives 5.2810.505 Coal handling Equipments 5.2810.506 Oil storage equipment 5.2810.s07 Ash handling plant & equipment 5.28r_0.508 Water treatment plant 5.2810.s09 lnstrumentation & Controls 5.2810.510 Station piping 5.2810.531 Hydel power generating plant 5.2810.532 JbIt foundation for Hydel power 5.2810.535 Auxiliaries in hydel power plant 5.2810.540 Transformers for repairs 5.2810.541 Transformers and equipments etc. above 100 KVA 5.281.0.542 T/Fs and equipments etc. other than above 100 KVA 5.2810.551 Material ha!dling equipment 5.2810.552 Material handling equipment- cement mixers 5.2810.s53 Material handling equip. - Cranes 5.2810.55s Material handling equipment-others 5.2810.561 Switchgear including cable connections. 5.2810.563 Batteries including charging equipment 5.2810.56s Fabrication /workshop plant &equipments s.2810.s67 Lightening arrestors 5.28

10.57LCommunication equipment:Radio and high frequerrcycarrier system 6.33

PUNJAB STATE POWER CORPORATION LIMITED

10.572Communication equipment: telephone lines andtelephones 6.33

L0.574 Static machine tools & equipment 5.28

L0.576 Air conditionering plant-static 5.28

L0.577 Air conditioning plant- portable 9.50

10.s80 Refrigerators and water coolers. s.28

L0.581 Meter testins laboratorv tools & equipment 5.28

1_0.582 Equipment in hospitals/clinics 5.2&

10.s83 Tools & tackles. s.28

10.584 Fire Fighting Equipment 5.28

L0.585 Hydrogen gas gen. Plant 5.28

L0.586 Surveying, drawing instruments s.28

10.s99 Other Misc. equipments 5.28

10.501 Overhead lines (towers, poles etc.) at nominal voltage 5.28

L0.602

Overhead lines(towers, poles, fixtures, overheadconductors and devices), lines on fabricated steelsupportsoperating at nominal voltage higher than13.2 KV but not exceedins 66 KV

5.28

10.603 Overhead lines on reinforced support 5.28

1_0.604 Overhead lines on treated wood supports 5.28

10.611 Undersround cables includine ioint boxes 5.28

to.6L2 Underground cables - duct system. 5.28

L0.621 Service connections DS and CS 5.28

10.622 Service connections- lndustrial. 5.28

10.623 Service connections -Tubewell 5.28

10.631 Metering equipments. 5.28

L0.641. Street lighting and signal system. 5.28

10.68s M iscellaneous equipments. 5.28

LO.71.O Trucks,Tempos trekkers etc. 9.s0

L0.720 Buses includine mini buses 9.s0

10.730 Jeeps amd motor cars. 9.50

L0.740 Other vehicles. 9.50

1_0.801 Furniture and fixtures office. 6.33

1_0.802 Furniture and fixture Rest/Guest houses etc. 6.33

10.901 Ca lcu lators 6.33

10.902 Type writers and duplicating machines 6.33

PUNJAB STATE POWER CORPORATION LIMITED

10.903 Cash registers machines 6.33

10.904 Computers-end user including software 15

10.904 Com puters-Server 15

10.90s Security equipment (weapons) 6.33

4. !nventories Valuation

1) lnventory other than scrap is valued at cost.2) Cost is determined on Weighted Average method. Cost includes purchase piice, VAT,

Excise and Freight. However, all other material related expenses are charged toRevenue.

3) Scrap is valued at standard rate fixed by the Company.4) Stores issued for Capital Works/Operation and Maintenance works but lying unused

at site, at the year-end, are valued at engineering estimates and taken in stock.

5. Revenue Recognition

a) Revenue from sale of power is accounted for on accrual basis. Revenue includesincome on energy supplied and billed. Provision for unbilled revenues, is made onpro-rata basis. Earning from sale of electricity does not include state levies.

b) Government Subsidy for free supply to Agricultural and Scheduled Cast /BelowPoverty Line Domestic consumers is accounted for on the accrual basis as per actualconsumption.

c) All Expenses are accounted for on accrual basis except T.A., LTC, Medicalreimbursement, Arrear of Pay, D.A. and Administrative & General Charges liketelephone rents etc. which are reflected in account during the period these areactually incurred/paid. No liability on account of DA/ADA is created. lt is accountedfor on cash basis i.e. in the year in which it is paid,

d) Material known liabilities are provided for on the basis of availablei nformation/esti mates.

e) All items of prior period expenses/incomes, non-recurring and extra-ordinaryexpenses / incomes, are disclosed separately.

f) Bills raised for theft of energy, whether on consumers or outsiders are recognized infull as soon as assessment order is received from the competent authority. paymentmade by the consumer under protest is treated as part payment against the billraised.

g) lnterest on investment is accounted for on accrual basis.h) other income is recognized on accrual basis except when ultimate realization of such

income is uncertaini) Liquidated damages/warranty claims and interest on advances to suppliers are

accounted for on actual receipt basis.j) Sale of scrap is accounted for as and when realized.

PUNJAB STATE POWER CORPORATION LIMITED

6. Transactions in foreign currencv:The Foreign Exchange Transactions, if any, are to be dealt with as per AccountingStandard 11" titled "Effects of Changes in Foreign Exchange Rate".

7. ProvisionsProvision for Bad & doubtful Debts is made at the rate of 4% in General i.e. Debtorsfor sale of power within state and an amount equal to75% of PDCOs.

8. Contineent Liabilities.Provisions involving substantial degree of estimation in measurement are recognizedwhen there is a present obligation as a result of past events and it is probable thatthere will be an outflow of resources. Contingent liabilities are not recognized but aredisclosed in the Notes. Contingent assets are neither recognized nor disclosed in thefinancial statements.

9. Miscellaneous

a) Expenses on training and recruitment, research and development are charged torevenue in the respective head of accounts in the year in which these are incurred.

b) Cost of raisin! finance other than Capital Assets is charged to revenue in the year inwhich these are incurred.

c) lncome from Surcharge levied on consumers for delayed payment on energy bills is

accounted for on actual realization basis.

d) lnterest income accrued on Staff Loans & Advances is provided on accrual basis.

However, interest is recovered after recovery of principal amount.e) ln the case of mixed locations where both O&M and Capital works are carried out,

expenses are allocated on percentage basis to capital as well as revenue.f) The cost of new meter used to replace the damaged meter is charged to revenue and

the cost of damaged meter and its accumulated depreciation is not withdrawn.g) All pensionary charges/ pensionary benefits of regular employees, whether in

construction Division or DS/Construction-cum-O&M Divisions, are charged toreven ue.

h) Banking of Power from/to other Power Utilities is netted off from the cost of Power.

10 Terminal benefitsAs per the amendment issued in Transfer Scherne-2010, vide Notification dated24.L2.20!2, the terminal benefits in respect of personnel of erstwhile PSEB are to be

shared between PSPCL & PSTCL in the ratio of 88.64% & 1L.36% respectively for theyear 2010-l-l- onwards. These benefits are to be accounted for on actual payment

basis from zOLO-ttto 2073-L4 and thereafter progressive funding based on actuarialvaluation over a period of 15 years.

PUNJAB STATE POWER CORPORATION LIMITED

LL. Taxes on lncome

a) Currenttax is determined asthe amount payable in respect of taxable lncome of theyear.

b) Deferred tax for the year is recognized on timing; being the difference betweentaxable income and accounting income that originate in one period and are capableof reversal in one or more subsequent periods.

c) Deferred tax assets and liabilities are measured using the tax rates and laws that havebeen enacted orsubstantially enacted by the Balance sheet date.

Deferred tax assets are recognized and carried forward only if there isreasonable and virtual certainty of its realization.

L2. InvestmentsLong term investments are carried at cost, less provision for diminution other thantemporary, if any, in the value of such investments.

13. Misc. ExpenditureExpenditure incurred on identification, survey & feasibility study of project, beforeproject is considered for sanction or rejection, is accounted for under separate headand shown under Deferred Cost. As & when, the decision of competent authority isreceived, expenditure is adjusted accordingly by transferring expenditure to workconcerned if accepted or written off to Profit &Loss Account in case of rejection.

L4. Prior period adiustments.All identifiable/decided items of income and expenditure pertaining to prior periodwhich were not provided in earlier years are accounted for through "Prior PeriodAdjustment Account". The company generally follows the provisions of AccountingStandard -5 (Net Profit or Loss for the period, Prior Period ltems & Changes inAccounting Policies) by separately showing prior period items in Net Profit/Loss forthe period through "Prior Period Adjustment Account',.

15. Proper Disclosure has also given where accounting policy has been changed.

16. Cash Flow Statement is prepared on the basis of lndirect Method to the extentpossible as prescribed in Accounting Standard-3 (Cash Flow Statement)

PUNJAB STATE POWER CORPORATION LIMITED