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Directors Report of NHPC Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present the 39th Annual Report on the performance of your Company along with audited fnancial statements, Auditors'' Report, Report of Secretarial Auditor and review of fnancial statements by the Comptroller and Auditor General of India for the fnancial year ended 31st March, 2015.

1. FINANCIAL RESULTS

The fnancial results for the year ended 31st March, 2015 are summarized in Table 1.

Table 1: Financial Highlights

(Rs. in crores)

PARTICULARS 2014-15 2013-14

Sales 6,736.64 5,335.11

Proft before depreciation, interest, rate regulated income and tax 4,909.86 3,816.22

Depreciation 1,425.87 1,210.76

Proft after depreciation but before rate regulated income, interest and tax 3,483.99 2,605.46

Interest and fnance charges 1,179.77 1,022.40

Proft after depreciation and interest but before rate regulated income and tax 2,304.22 1,583.06

Rate regulated income 521.95 -

Tax 701.70 604.27

Proft after depreciation, interest and tax 2,124.47 978.79

Adjustment arising out of transition provisions for recognising rate regulatory assets 876.10 - (net of provision for income tax)

Surplus of statement of proft and loss of earlier years 7,447.16 7,146.38

Amount written back from bond redemption reserve 15.96 14.25

Amount written back from self-insurance reserve 5.65 3.97

Amount written back from CSR fund 4.59 7.88

Tax on dividend-written back 10.05 5.11

Balance available for appropriation 10,483.98 8,156.38

APPROPRIATIONS

Transfer to bond redemption reserve 379.10 249.45

Transfer to self-insurance fund 55.77 51.74

Transfer to general reserve 7,500.00 -

Transfer to CSR Reserve - 2.30

Transfer to R & D Fund 4.63 17.16

Proposed/fnal dividend 664.27 332.13

Tax on proposed dividend 134.42 56.44

Balance carried over to reserves and surplus 1,745.79 7,447.16

2. DIVIDEND

Your Directors have recommended a fnal dividend of Rs. 0.60 per equity share (excluding dividend tax) for the fnancial year 2014-15. The above amount is inclusive of an interim dividend of Rs. 0.20 per equity share paid in February, 2015. The fnal dividend shall be paid after your approval at the forthcoming Annual General Meeting. On approval, the total dividend payout for the year will be 31.27% of proft after tax. Further, the Board of Directors have transferred Rs. 7,500 crore to general reserve of the Company.

3. POWER GENERATION

With the commercial operation of Unit IV (130 MW) of Parbati-III Power Station on 6th June, 2014, the installed capacity of your Company has increased to 4961.20 MW during the fnancial year 2014-15.

It is a matter of pleasure to inform that your Company has achieved highest ever annual generation of 22038 MUs with 77.3% Plant Availability Factor (PAF) against the target for excellent MOU of 21800 MUs with 76.4% PAF through its 18 power stations. Salal, Uri-I and Sewa-II Power Stations have generated their individual highest annual generation of 3492 MU, 3077 MU and 594 MU respectively.

Uri-II Power Station (240 MW) was under complete shutdown since 20th November, 2014 due to major fre. All the four units of the power station have now been restored. In-spite of above setback, the power station had achieved its Annual Design Energy (1124 MUs) and Normative Annual Plant Availability Factor (55%) during 2014-15. Further, consequent upon sudden increase in water level on 28.06.2015, Chutak Power Station, 44 MW (4 X 11 MW) was under complete shutdown. Mechanical run of one of the units was successfully carried out on 24th July, 2015. Efforts are being made to restore the unit at earliest.

Baira Siul Power Station (180 MW) is completing 35 years of its commercial operation in 2016-17. DPR for renovation, modernization for extension of the life of the power station has been approved by the Board of Directors. The proposal has been submitted to Central Electricity Authority and Central Electricity Regulatory Commission respectively for their vetting and approval.

4. COMMERCIAL PERFORMANCE

Your Company''s commercial performance during the year 2014-15 was as under:

4.1 Billing and Realization

The sales realization during the year was Rs. 5883.32 crore against the billing of Rs. 6676 crore.

As on 31st March, 2015, the outstanding dues pending for more than 60 days were of Rs. 1564 crore. Out of the above, Rs. 1290 crore pertains to PDD, J&K and Rs. 203 crore to BSES Rajdhani Power Limited & BSES Yamuna Power Limited. Your Company has made all out efforts to recover the outstanding dues, including regulation of power supply of defaulting benefciaries.

Most of the benefciary states are now liquidating their dues except Power Development Department (J&K), BSES Rajdhani Power Limited and BSES Yamuna Power Limited.

4.2 Tariff Regulation

Central Electricity Regulatory Commission (CERC) has issued new regulation for fxation of tariff viz. CERC (terms & conditions of tariff) Regulation, 2014 on 21.02.2014, applicable for the period 2014-19. NHPC has submitted new tariff petitions for the period 2014-19 (including truing up petitions) for its seventeen power stations within stipulated time period.

Parbati – III Power Station has been commissioned on 06.06.2014. The provisional tariff order for Parbati – III Power Station has been issued by CERC on 25.06.2014.

Tariff orders for the Teesta Low Dam Project – III and Chamera – III Power Stations have also been issued by CERC vide orders dated 22.01.2015 and 24.03.2015 respectively.

5. CAPITAL STRUCTURE AND NET WORTH

Your Company''s paid-up capital and net worth as on 31.03.2015 was Rs.11,070.67 crore and Rs. 28,286.39 crore respectively.

6. STATUS OF ONGOING PROJECTS

Your Company is presently engaged in the active construction of the following Hydroelectric Projects:

Table 2: Details of Projects under construction during 2014-15

S.No. PROJECT STATE INSTALLED CAPACITY (MW)

i. Teesta Low Dam IV West Bengal 160

ii. Parbati II Himachal Pradesh 800

iii. Subansiri Lower* Assam/Arunachal Pradesh 2,000

iv. Kishanganga Jammu & Kashmir 330

Total 3,290

*The project works are presently at standstill since 16.12.2011 due to agitation by various pressure groups of Assam. Efforts are being made by NHPC and Ministry of Power, Government of India to restart the project at the earliest. Ministry of Power has constituted a Project Oversight Committee (POC) to resolve the various issues. Five rounds of POC meeting have been held so far and the report is expected shortly.

7. NEW PROJECTS

Table 3: Projects under the clearance/approval stage are as under: PROJECTS TO BE EXECUTED BY NHPC ON STAND ALONE BASIS

S. No. PROJECT STATE INSTALLED CAPACITY (MW)

i. Kotli Bhel I-A Uttarakhand 195

ii. Teesta-IV Sikkim 520

iii. Dibang1 Arunachal Pradesh 3,000

iv. Tawang-I Arunachal Pradesh 600

v. Tawang-II Arunachal Pradesh 800

Total: 5,115

PROJECT TO BE EXECUTED THROUGH SUBSIDIARY COMPANY

vi Loktak Downstream HE Project by Manipur 66

Loktak Downstream Hydroelectric Corporation Limited (LDHCL)

vii Solar Power Project at Village Parason Uttar Pradesh 50 (Tehsil-Kalpi) by Bundelkhand Saur Urja Limited2

PROJECT TO BE EXECUTED THROUGH JOINT VENTURE COMPANY

Pakal Dul3, Kiru and Kwar4 HE Projects Jammu & Kashmir 2120

viii by Chenab Valley Power Projects Pvt. Limited (CVPPPL)

ix Chamkharchhu - I5 Bhutan 770

Grand Total: 8,121

Notes:

1. Dibang Multipurpose HE Project has been accorded environmental clearance by Ministry of Environment, Forest and Climate Change on 19.05.2015 with reduction in dam height by 10 meter. The installed capacity due to reduction in dam height is likely to be 2880 MW.

2. Bundelkhand Saur Urja Limited was incorporated as a Joint Venture Company between NHPC Limited and UPNEDA (Uttar Pradesh New and Renewable Energy Development Agency) on 2nd February, 2015.

3. Pakal Dul HE Project (1000 MW) has been sanctioned by the Government of India, but major works are yet to be awarded by M/s Chenab Valley Power Projects Pvt. Limited.

4. Earlier capacities of Kiru and Kwar HE Projects were envisaged as 600 MW and 520 MW respectively. Presently, detailed project reports of Kiru and Kwar HE Projects are under appraisal by Central Electricity Authority for 624 MW & 540 MW respectively.

5. Project to be executed through Joint Venture between NHPC and Druk Green Power Corporation (Bhutanese PSU).

Besides the above projects, two projects viz. Kotlibhel Stage-1B (320 MW) and Kotlibhel Stage II (530 MW) in Uttarakhand were under clearance. Environmental clearance of Kotlibhel-1B has been withdrawn by Ministry of Environment, Forest and Climate Change (MoEF&CC). NHPC has fled a civil appeal before Hon''ble Supreme Court. Further, MoEF&CC has also declined permission for diversion of forest land for the construction of KB-1B and KB-II HE Projects. These two projects are also included in the list of 24 projects, which are under review by Hon''ble Supreme Court.

The Board of Directors of your Company has accorded its approval for discussions with North Eastern Electric Power Corporation Limited (NEEPCO) and thereafter jointly by NHPC & NEEPCO with Govt. of Arunachal Pradesh regarding Siang Upper Stage-I (6000 MW) and Siang Upper Stage-II (3750 MW) Hydro Electric Projects in Arunachal Pradesh. NEEPCO has already signed an agreement for execution of Siang Upper Stage-II HE Project with Government of Arunachal Pradesh.

We are pleased to inform that your Company has signed an agreement with Government of West Bengal and West Benga State Electricity Distribution Company Ltd. for development of four hydroelectric projects of total estimated capacity of 293 MW in Teesta basin. These four projects are Teesta Low Dam-V, Teesta Low Dam I & II combined, Teesta Intermediate Stage and Rammam Stage-I located in District Darjeeling of West Bengal. These projects shall be developed on Build, Own, Operate and Maintain (BOOM) basis by NHPC Ltd.

DIVERSIFICATION

Your Company is diversifying its activities from hydropower to other non-conventional sources of energy viz. Wind and Solar. The activities of the Company for establishment of such projects are as under:

WIND POWER PROJECTS

Your Company has signed a Memorandum of Understanding with Government of Kerala for the development of 82 MW grid interactive wind energy project in Palakkad District on BOOT (Build, Own, Operate and Transfer) basis.

In addition to above, the Board has approved the proposal for the award of EPC contract for the development of 50 MW wind power project in the Jaisalmer District, Rajasthan along with its comprehensive operation & maintenance for 10 years to M/s Inox Wind Limited.

SOLAR POWER PROJECTS

In pursuit of diversifcation and in line with the policies of the Government of India, your Company plans to foray into development of solar power. Your Company has signed an agreement with Kerala State Electricity Board for development of solar power projects in the State of Kerala. As per the agreement, Company shall in frst phase take up implementation of 50 MW grid linked solar power project at West Kallada Grama Panchayat in Kollam District. Your Company has also incorporated a subsidiary company i.e. Bundelkhand Saur Urja Limited with UPNEDA (Uttar Pradesh New and Renewable Energy Development Agency) to implement a 50 MW solar power project at Village Parason, (Tehsil-Kalpi), District-Jalaun, Uttar Pradesh.

8. PROJECTS UNDER DPR PREPARATION

Survey & investigation for preparation of Detailed Project Reports (DPR) of the following hydroelectric projects has been initiated:

Table 4: Survey and Investigation

S. No. PROJECT INSTALLED CAPACITY (MW)

1 Bursar*, J&K 812

2 Dhauliganga Intermediate, Uttarakhand 210

3 Goriganga IIIA, Uttarakhand 120

Total: 1,142 MW

*Earlier Bursar capacity was envisaged as 1020 MW. As per terms of reference of MoEF & CC, the capacity of Bursar is likely to be reduced to 812 MW.

9. RURAL ELECTRIFICATION PROJECTS UNDER RAJIV GANDHI GRAMIN VIDYUTIKARAN YOJNA (RGGVY)

NHPC is implementing rural electrifcation projects under Rajiv Gandhi Gramin Vidyutikaran Yojna (RGGVY) in 27 districts spread over 5 States viz. West Bengal, Bihar, Jammu & Kashmir, Chhattisgarh and Odisha at an estimated cost of Rs. 2844 crore. The scope of work includes electrifcation of 9,310 un-electrifed/de-electrifed villages, 19,882 partially electrifed villages and service connections to 20.74 lakh Below Poverty Line (BPL) households. Out of the above, 9074 un-electrifed/de-electrifed villages, 18854 partially electrifed villages and 16.30 lakh BPL connections are found do-able, as the remaining villages and BPL households are under hindrances due to various reasons which are beyond the control of your Company.

Your Company has completed electrifcation of 9073 un-electrifed/de-electrifed villages, 18825 partially electrifed villages and provided service connections to 16.30 lakh BPL households till 31st March, 2015 (as per latest closure report submitted to State Govt.).

10. RURAL ROADS PROJECT

Construction of rural roads in six districts of Bihar under the Pradhan Mantri Gram Sadak Yojna (PMGSY) is being carried out by your Company pursuant to an MOU with the Ministry of Rural Development, Government of India and the Government of Bihar. These roads will also be maintained by NHPC for fve years after their construction.

Construction contracts for 758 roads of 3,228.82 Km length having cost ofRs. 1,725.65 crore were awarded to NHPC for execution. 747 roads of 3,208 Km length have been completed till the end of fnancial year 2014-15.

11. CONSULTANCY SERVICES

NHPC is providing consultancy services in various felds of hydro power viz. river basin studies, survey works, design and engineering, geological studies, geotechnical studies, hydraulic transient studies, hydrological studies, contract management, construction management, equipment planning, underground construction, testing, commissioning, operation & maintenance etc. to leading global organizations.

Major consultancy assignments are from Central and State Government agencies in India and other countries viz. Bhutan and Ethiopia.

12. GLOBAL INITIATIVES

Under the action plan on India-Bhutan cooperation for the development of 10,000 MW hydropower by the year 2020, NHPC was entrusted with the work for preparation of DPRs of Chamkharchhu-I H.E. Project (770 MW) and preparation of PFRs of Kuri Gongri Reservoir Projects in Bhutan. The fnal DPR for Chamkharchhu-I HE Project submitted to Royal Government of Bhutan/Government of India in March, 2015.

Design & engineering consultancy services are also being provided to Mangdechhu Hydroelectric Project Authority (MHPA) for implementation of Mangdechhu Hydroelectric Project (720 MW) in Bhutan.

NHPC is also engaged with Ethiopia Electric Power Company (EEPCO) for a management consultancy assignment in Consortium with Power Grid Corporation of India Limited (lead partner) and BSES Rajdhani Power Limited.

13. FINANCING OF NEW PROJECTS

As per guidelines issued by CERC for the purpose of tariff fxation, the fnancing of a project is to be considered in 70:30 debt equity ratio.

Your Directors are of the opinion that available internal accruals will be suffcient to fnance the equity component for new projects. The Company is exploring domestic as well as international borrowing options including overseas development assistance provided by bilateral agencies, to mobilize required debt for the planned capacity expansion programme.

Your Company is well positioned to raise the required borrowings with its strong credit rating which is at par with sovereign rating.

14. INFORMATION TECHNOLOGY AND COMMUNICATION

NHPC has very elaborated information technology and communication infrastructure. All its sites are now connected with the corporate offce through multimode, fail-safe communication links using MPLS-VPN/VSAT-Ku band/broadband technologies. NHPC has presently co-located its key servers at TIER-III data centers of National Informatics Centre Service Incorporated (NICSI) at New Delhi and BSNL at Faridabad. Disaster Recovery (DR) site is also operational at NHPC offce at Kolkata. IT & cyber security policy is in place to manage the Information Technology (IT) system to ensure optimum and secure utilization of the assets owned by NHPC.

All key business functions viz. fnance, human resource, procurement & contracts, inventory, project management, power plant operation and maintenance, energy sales and accounting, quality assurance etc. have been implemented in the IFS ERP System.

As per Government of India directives, the procurement process through e- procurement (electronic tender) system is operational in the Company.

15. TRAINING AND HUMAN RESOURCE DEVELOPMENT

The fast changing economic scenario and technological innovations are creating an increasingly competitive market environment. Your Company consistently evaluates the training needs of its employees to keep them updated with latest changes, to improve their productivity and work effciency.

The training programmes are designed to develop and groom internal talent through multi disciplinary programmes. Besides conducting in-house workshops, the Company also organizes training programmes in collaboration with reputed professional / educational institutes like, IIMs /XLRIs / IITs etc. to facilitate advance management and leadership development programmes for its employees.

16. INDUSTRIAL RELATIONS

During the year, industrial relations remained cordial and harmonious at all NHPC projects/power stations/units.

17. RESETTLEMENT AND REHABILITATION

NHPC has its own Resettlement & Rehabilitation (R&R) Policy, 2007 in line with the National Rehabilitation and Resettlement Policy, 2007 (NRRP) and provides certain additional benefts over and above those proposed in NRRP.

The policy aims to address issues like loss of land, houses, other resources and means of livelihood to Project Affected Families (PAFs), who are likely to be affected due to construction of the project. Major emphasis is laid on economic sustenance of PAFs. As per NHPC''s R & R Policy, 0.75% of the hard cost of the project is to be earmarked towards Community and Social Development Plan (CSDP) for implementation in the resettlement zone and affected areas.

However, in view of the new legislation i.e. Right to Fair Compensation & Transparency in Land Acquisition, Resettlement & Rehabilitation Act, 2013, which came in force from 1st January, 2014, both R&R and land acquisition for NHPC projects shall be dealt in accordance with the provisions of the new Act and its Ordinance.

18. VIGILANCE ACTIVITIES

In compliance to guidelines issued by Ministry of Power and Central Vigilance Commission, NHPC has opted for e-procurement solution across the organization. The procurement process of supply/works/contracts cases above the value of Rs. 10 lakh (Rs. 5 lakh w.e.f. 01.04.2015) is being done through e-procurement.

Circulars and guidelines, based upon inspection/intensive examination are being issued from time to time as part of preventive vigilance.

As per CVC guidelines, integrity pact has been implemented successfully for all the procurement of works of the value of Rs. 15 crore and more, and procurement of goods and services of the value of Rs. 25 lakh and more.

Surprise inspections are being conducted by vigilance department at regular intervals. Actionable points identifed by project vigilance offcers are intimated to Head of Projects from time to time. Intensive examinations of works, wherever required, are also carried out by Chief Technical Examiner (CTE) of the CVC from time to time.

Vigilance awareness week and various vigilance awareness programmes are being organised to promote transparency and ethics in working system.

19. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate internal fnancial controls with reference to fnancial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

20. RISK MANAGEMENT

Risk management policy of the Company was formulated as per the requirement of Clause 49 of the Listing Agreement with stock exchanges. The objective of the policy is to protect stakeholders'' value through an integrated risk management policy. Risks identifed by the Company are broadly classifed into the following categories:

Strategic risk: Risks effected by external factors and trends (like Government policy, competition, court rulings or a change in stakeholder requirements) which can adversely impact the Company''s strategic growth trajectory and destroy shareholder value.

Business risk: Risks associated specifcally to the Company and having an adverse impact on the Company''s capability, to execute activities critical for business growth, thereby affecting its near-term performance e.g. occurrence of a risk event, delaying the timely completion of construction activity of a hydro-electric power project leading to the deferment of revenues expected from the project.

Operational risk: Risks associated with operational uncertainties like unpredictable changes in water levels, force majeure events like foods affecting operations, internal risks like attrition etc.

Due to change in business environment, regulatory provisions and present risks applicable to the Company, the existing Risk Management Policy of the Company is being revised.

21. PROCUREMENT FROM MICRO & SMALL ENTERPRISES

Annual procurement plan including items to be procured from Micro & Small Enterprises (MSEs) have been uploaded on NHPC Website for benefts of MSEs. Nodal offcer on behalf of NHPC for co-ordination & implementation of procurement policy has been nominated and conveyed to Ministry of Micro, Small and Medium Enterprises & Ministry of Power.

NHPC has extended benefts under public procurement policy like exemption of tender fee, earnest money deposit, security deposit, purchase preference, interest on delayed payment to MSEs.

Special vendor development program in coordination with Ministry of Micro, Small and Medium Enterprises has also been organized.

22. OFFICIAL LANGUAGE IMPLEMENTATION

Your Company has complied with the provisions of the Offcial Languages Act and relevant rules during the year 2014-15. Efforts were made to improve the progressive use of offcial language in accordance with the policy of the Government of India.

Quarterly meetings of the Offcial Language Implementation Committee (OLIC) are held to review the progress of the use of Hindi at Corporate Offce and its units. Many initiatives like organizing Hindi fortnight, all India Rajbhasha Sammelan, Hindi competitions, Hindi pustak pathan saptah, Hindi kavi sammelan etc, were taken to promote offcial language during the year 2014-15. Hindi workshops and departmental computer workshops were regularly organized in the Corporate Offce. Rajbhasha magazines titled, ''Rajbhasha Jyoti'' and ''Nagar Saurabh'' were also published to encourage use of Hindi.

The Parliament Committee on Offcial Language carried out Rajbhasha inspection in Andaman & Nicobar Project offce at Port Blair and appreciated the efforts made by this offce in the progressive use of Hindi. Further, Rajbhasha inspections were carried out at power stations/projects/regional offces and in various departments of the corporate offce by our senior executives.

23. PR INITIATIVES/AWARENESS ACTIVITIES

Your Company''s achievements were duly highlighted through print and electronic media from time to time to project the role of NHPC as hydropower developer in the country.

Corporate flms on NHPC were screened at a number of platforms to highlight the developmental activities of NHPC. NHPC has also participated in number of exhibitions.

NHPC successfully hosted 19th inter CPSU bridge tournament at NHPC corporate offce, Faridabad from 10th to 12th February, 2015. Teams of NHPC also participated in various other inter CPSU sports tournaments organized under the aegis of Power Sports Control Board, Ministry of Power in 2014-15.

NHPC has coordinated the painting competitions at schools, state and National level in the states of Jammu and Kashmir, Manipur, Sikkim, Arunachal Pradesh and Madhya Pradesh to encourage and spread message about energy conservation. These events were organized on behalf of the Bureau of Energy Effciency (BEE) and Ministry of Power.

24. AWARDS AND RECOGNITION

Today, the ambit of business exceeds the mere goal of proft making and embraces the ethos of corporate citizenship in its practice. Operational excellence is lifeless unless a successful story of holistic development is not put forward by the Company. NHPC endeavors for an all-round growth and the same is refected in the list of awards & achievements.

Awards in Management & Leadership:

- National award for meritorious performance for early completion of Nimoo Bazgo Power Station.

- ''Second prize under Indira Gandhi Rajbhasha award progamme'' for the year 2012-13 for commendable work in implementation of Rajbhasha.

- ''CBIP Award for best performing utility in power sector'' at CBIP Awards.

- ''1st Pt. Madan Mohan Malaviya Bronze Award'' for best CSR Practices in Education.

- ''Most valuable PSU under Mini Ratna category'' at India Today Group PSU Awards.

25. CORPORATE GOVERNANCE REPORT

In compliance to Clause 49(X) of Listing Agreement with stock exchanges and DPE Guidelines on Corporate Governance, a separate section is given at Annexure-I. A certifcate from Practicing Company Secretary regarding compliance of conditions of Corporate Governance in accordance with Clause 49(XI) of the Listing Agreement with stock exchanges and DPE guidelines on Corporate Governance is given at Annexure-II.

26. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In compliance with Clause 49(VIII)(D) of Listing Agreement with stock exchanges and DPE Guidelines on Corporate Governance, a separate report on Management Discussion and Analysis is given at Annexure–III.

27. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are given at Annexure-IV.

28. BUSINESS RESPONSIBILITY REPORT

In compliance with Clause 55 of the Listing Agreement with stock exchanges, a Business Responsibility Report regarding the disclosures of initiatives taken by the Company on environmental, social and governance issues is given at Annexure-V.

29. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

The Company has entered into contracts/arrangements/transactions with its subsidiary and associates companies during the fnancial year 2014-15 for providing consultancy services, leasing out of the properties and manpower services. The contracts/ arrangements/transactions were in the ordinary course of business and on an arm''s length basis. None of the contract/ arrangement/transaction entered into with related parties could be considered material in accordance with the policy on related party transactions.

The policy on related party transactions as approved by the Board may be accessed on the Company''s website at the link: http://www.nhpcindia.com/writereaddata/Images/pdf/Policy- Related-Party-Transaction.pdf

Your Directors draw attention of the members to note no. 29 to the fnancial statement which sets out related party disclosures as per Accounting Standard – 18.

30. REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) & SUSTAINABLE DEVELOPMENT (SD)

Your Company has contributed towards the economic development of the society at large so that the quality of life of internal as well as external stakeholders be improved. The key philosophy of all CSR initiatives of the Company is guided by three core commitments of scale, impact and sustainability.

Your Company has formulated a CSR & Sustainability Policy, which is in line with the provisions of Section 135 of the Companies Act, 2013 read with schedule VII of the Act and guidelines on corporate social responsibility issued by Department of Public Enterprises (DPE), Government of India.

The Corporate Social Responsibility & Sustainability Policy of your Company is available at following link: http://www.nhpcindia.com/writereaddata/Images/pdf/CSR_Policy_Final.pdf

As per Section 135 of the Companies Act, 2013 which became applicable from 01.04.2014, 2% of average net proft for the last 3 fnancial years is to be spent on CSR activities. As per above provision, the amount comes to Rs. 47.64 crore for the fnancial year 2014-15. The Company has spent Rs. 52.24 crore during the year against the said provision.

As such the spending on CSR activities comes to 2.19% of average net proft of last 3 fnancial years. Hence, Company fully utilized the budget allocation for fnancial year 2014-15.

Accordingly, Rs. 4.60 crore has been set-off from unspent fund of Rs. 17.93 crore of previous years created as per DPE guidelines. The major reasons for not utilizing the carried forwarded amount of Rs. 13.33 crore pertaining to previous years are:

1. Most of the works related to construction of toilets under ''Swachh Vidyalaya Abhiyan'' were under different stages of tendering and execution and only part payments were released during the fnancial year 2014-15.

2. Non-fnalization of detailed project report for bio diversity park of Subansiri Lower H.E. Project (2000 MW).

3. Funds for construction of Bilaspur Engineering College in Himachal Pradesh could not be released due to non-fnalization of construction milestones by the State Government.

A separate report on Corporate Social Responsibility (CSR) & Sustainable Development (SD) activities undertaken by your Company during the fnancial year 2014-15 is given at Annexure-VI.

31. EXTRACT OF ANNUAL RETURN

Extract of annual return of the Company in accordance to Section 92(3) of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014 is given at Annexure- VII.

32. RIGHT TO INFORMATION

In compliance to the provisions of the Right to Information Act, 2005, NHPC placed various documents/records on its website during the fnancial year 2014-15. Further, NHPC has designated appellate authority, transparency offcer, Central Public Information Offcer (CPIO) at Corporate Offce and Assistant Public Information Offcers (APIOs) at power stations/projects/ regional offces/units to implement the provisions of Right to Information Act, 2005 (RTI).

During 2014-15, 509 applications were received under RTI, out of which 505 (99.21%) were replied to.

33. AUDITORS AND AUDITORS'' REPORT

SECRETARIAL AUDITOR

The Board has appointed Shri P.S.R. Murthy, Practicing Company Secretary, to conduct Secretarial Audit of the Company for the fnancial year 2014-15. The Secretarial Audit Report is given at Annexure- VIII. The Secretarial Auditor in his report has made certain qualifcations/observations. The qualifcations/observations and reply thereto are as under:

S. No. Qualification/Observation Management Reply

1. The required number of Independent Directors As per Article 34 of the Articles of Association of the Company, under the Listing Agreement with the stock the power to appoint Directors (including Independent exchanges were not inducted. Directors) on the Board of the Company is vested in the President of India. The matter is regularly pursued with the administrative Ministry i.e. Ministry of Power.

2. The Company could not fully utilise the budget As per Section 135 of the Companies Act, 2013, 2% of allocated towards CSR during the fnancial year average net proft for the last 3 fnancial years amounts to 2014-15. Rs. 47.64 Crore. The Company has spent Rs. 52.24 crore against the said provision.

As such the spending on CSR activities comes to 2.19% of average net proft of last 3 fnancial years. Hence, Company fully utilized the budget allocation of fnancial year 2014-15.

The excess amount of Rs. 4.60 crore has been set-off from unspent fund of Rs. 17.93 crore of previous years created as per DPE guidelines. The major reasons for not utilizing the carried forwarded amount of Rs. 13.33 crore are already provided in this report (refer paragraph no. 30).

3. The evaluation criteria for the Members of the As per Articles of Association of the Company, the Directors Board as prescribed and applicable is yet to be are appointed by the President of India. The performance finalised. evaluation of Functional Directors and Nominee Directors is being done by the appointing authority.

The Ministry of Corporate Affairs vide its notifcation dated 05.06.2015 amended Section 134(3)(p) of the Companies Act, 2013 for Government Companies. As per amended provision, the Board of Government Companies are not required to evaluate performance of Directors in case they are evaluated by the Administrative Ministry.

An evaluation mechanism for performance evaluation of Board, its Committees and Independent Directors is under consideration of the Board.

STATUTORY AUDITORS

The Statutory Auditors of NHPC Limited being a Government Company are appointed by the Comptroller and Auditor General of India.

M/s S.N. Nanda and Co., New Delhi, M/s S.N. Dhawan and Co., New Delhi, M/s Ray and Ray, Kolkata and M/s Gupta Gupta & Associates, Jammu, were appointed as Joint Statutory Auditors for the fnancial year 2014-15.

The notes on fnancial statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualifcation, reservation or adverse remark. No instance of fraud has been reported by the Auditors under Section 143(12) of the Companies Act, 2013.

The report of the Statutory Auditors is given at Annexure- IX. The comments of the Comptroller and Auditor General of India along with management reply thereon are given at Annexure-X. The consolidated fnancial statement of the Company along with the Statutory Auditors'' Report are given at Annexure-XI.

COST AUDITORS

In accordance with the Companies (Cost Records and Audit) Rules, 2014, notifed by Ministry of Corporate Affairs on 30th June, 2014, the cost accounts are being maintained by all power stations of the Company. The following frms of Cost Accountants were appointed to conduct audit of cost accounting records of power stations as indicated against their respective names for the fnancial year 2014-15 under Section 148 of the Companies Act, 2013:

Name of the Firm Name of Power Station

M/s Ravi Sahni and Co., New Delhi Salal, Uri-I and Uri-II

M/s Bahadur Murao and Co., Delhi Chamera-I and Bairasiul

M/s S. C. Mohanty and Associates, Bhubaneswar Tanakpur, Dhauliganga and Chamera-III

M/s K. L. Jaisingh and Co., Noida Rangit, Teesta-V and TLDP-III

M/s H. Tara and Co., New Delhi Chutak, Nimmo Bazgo and Parbati-III

M/s V. P. Gupta and Co., Noida Dulhasti and Loktak

M/s S. K. R. and Associates, Jaipur Chamera-II and Sewa-II

Consolidated Cost Audit Report for the FY 2013-14 was fled by M/s Krishan Singh Berk, Lead Cost Auditor on 26th September, 2014 before the due date for fling i.e. 27th September, 2014. The details of cost audit frms for which Cost Audit Report for the FY 2013-14 was fled are given below:

S. Power Stations Cost Auditor Member ship Address No. No.

1. Salal, Uri-I & Uri-II M/s Chandra Wadhwa 6797 204, Krishna House, 4805/24, and Co. Bharat Ram Road, Daryaganj, New Delhi-110002

2. Chamera-I & Sewa-II M/s Krishan Singh Berk 2724 365, Sector-15, Faridabad, Haryana-121007

3. Tanakpur, Dhauliganga & TLDP-III M/s R. J. Goel & Co 14256 31, Community Centre, Ashok Vihar, Phase-I, New Delhi-110052

4. Dulhasti, Chutak & Nimmo M/s Ravi Sahni and Co. 16339 C-40, West Gorakh Park Extension, Bazgo New Delhi-110032

5. Chamera-II, Chamera-III & M/s Bahadur Murao and 5574 Shop No. 25, DDA Market, ''B'' Parbati-III Co. Block, Preet Vihar, Delhi-110092

6. Rangit & Teesta-V M/s S.C. Mohanty and 10924 511, Sahid Nagar, Associates Bhubaneswar-751007

7. Loktak & Baira Siul M/s K. L. Jaisingh & Co 1222 J-7, Sector-XI, Jaisingh House, Noida-201301

Company has also got a study conducted for cost reduction at 11 power stations during the year with a view to control avoidable expenditure.

34. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Companies Act, 2013 and Accounting Standard (AS)-21 on consolidated fnancial statements read with AS-27 on fnancial reporting of interest in joint ventures, the audited consolidated fnancial statements are provided in the Annual Report.

35. PARTICULARS OF LOANS & GUARANTEES GIVEN, INVESTMENTS MADE AND SECURITIES PROVIDED

Particulars of loans & guarantees given, investments made and securities provided are given in the standalone fnancial statements (please refer to Note No. 12 & 15 to the standalone fnancial statements).

Further, Section 186 of the Companies Act, 2013 (except sub-section (1)) regarding loans made, guarantees given or securities provided is not applicable to the Companies engaged in the business of providing infrastructure facilities.

36. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Your Company has the following subsidiary/associates/joint venture Companies as on 31st March, 2015:

Subsidiary Companies

(i) NHDC Limited

NHDC Limited was promoted as a Joint Venture Company between NHPC Limited and the Government of Madhya Pradesh with equity participation of 51% and 49% respectively. The Company is having two operating power stations i.e. Indira Sagar (1000 MW) and Omkareshwar (520 MW) in Madhya Pradesh. The generation from Indira Sagar Power Station and Omkareshwar Power Station during the fnancial year 2014-15 was 2561.73 MU and 1128.91 MU respectively against the target of 2731 MU and 1469 MU. The above two power stations have generated a total of 3690.64 MU of energy during fnancial year 2014-15.

In its diversifcation of activities, Company is venturing into solar power development in the state of Madhya Pradesh, as state is having abundant solar potential blessed with nearly 300 days sun shine. The Company is participating in the 300 MW solar power tariff based competitive bidding invited by MP Power Management Co. Ltd., Jabalpur for the 70 MW project.

During the fnancial year 2014-15, the Company has registered revenue (net) of Rs. 1366.59 crore and proft after tax of Rs. 766.46 crore from operations.

(ii) Loktak Downstream Hydroelectric Corporation Limited

Loktak Downstream Hydroelectric Corporation Limited was promoted as a Joint Venture Company between NHPC Limited and the Government of Manipur with equity shareholding of 74% and 26% respectively for the execution of hydroelectric projects in the state of Manipur by taking over Loktak Downstream Hydroelectric Project (66 MW). The project is at present under survey and investigation stage. All statutory clearances for execution of the project have been obtained. Bids for turnkey execution of the project were invited by the Company and are in evaluation stage.

Further, the Government of Manipur has allocated Thoubal Hydroelectric Scheme (7.5 MW) to the Company. The Board of NHPC Limited has accorded its approval for the equity contribution of the project. The formalities in respect of this project are under fnalization.

(iii) Bundelkhand Saur Urja Limited

Bundelkhand Saur Urja Limited was promoted as a Joint Venture Company between NHPC Limited and UPNEDA (Uttar Pradesh New and Renewable Energy Development Agency) to implement a 50 MW solar power project at Village Parason, (Tehsil-Kalpi), District-Jalaun, Uttar Pradesh. The Company was incorporated on 2nd February, 2015. As per the promoters'' agreement, the equity participation of NHPC shall not be less than 74% and of UPNEDA will not be more than 26% of the total share capital of the Company.

The award of EPC contract for the development of 50 MW solar crystalline photovoltaic grid connected power plant along with associated 132 kV power evacuation equipments is under consideration of the Board of Directors of the Company.

Associate/Joint Venture Companies

(i) Chenab Valley Power Projects Private Limited

Chenab Valley Power Projects Private Limited is a Joint Venture Company between NHPC (49%), Jammu & Kashmir State Power Development Corporation (49%) and PTC India Limited (2%), to harness the vast hydro potential of river Chenab. The Company was incorporated on 13th June, 2011 for development of Pakal Dul HE Project (1000 MW), Kiru H E Project (600 MW) and Kwar H E Project (520 MW) in the state of Jammu & Kashmir. The tender evaluation process for turnkey execution of Pakal Dul HE Project (invited through International Competitive Bidding (ICB) basis) has been completed and is under consideration of the Board of the Company.

The Company has not yet started any operations, as the projects are in the initial stage of development.

(ii) National High Power Test Laboratory Private Limited (NHPTL)

NHPTL was incorporated on 22nd May, 2009 as a Joint Venture Company of NHPC Limited, NTPC Limited, Power Grid Corporation of India Limited and Damodar Valley Corporation (DVC) each having 25% of equity participation. Subsequently, Central Power Research Institute joined the Company after execution of supplementary joint venture agreement. Accordingly, the equity participation of each of the joint venture partner is now 20%. The Company was incorporated to set up an online high power test laboratory for short-circuit test facility in the Country. The Company is constructing High Voltage Transformer (HVTR) Lab and Medium Voltage Transformer (MVTR) Lab at Bina in the state of Madhya Pradesh for short circuit testing of transformers upto 765 kV. The laboratory is expected to be commissioned in 2015. Around 80% - 90% works has been completed till date.

(iii) National Power Exchange Limited

National Power Exchange Limited was incorporated on 11th December, 2008 as a Joint Venture Company of NHPC Limited, NTPC Limited, Power Finance Corporation Limited and Tata Consultancy Services Limited to operate a power exchange at National level. The Company is presently under liquidation. The equity participation of NHPC in the Company is 16.67%. Accordingly, a provision amounting to Rs. 1.06 crore has been made in the books of NHPC Limited towards anticipated loss in the investment made in the Company.

No Company has become/ceased to be a joint venture or associate during the fnancial year 2014-15.

A report on the fnancial position of each of the subsidiaries, associates and joint venture Companies as per the Companies Act, 2013 is provided as annexure to the consolidated fnancial statement and hence not repeated here for the sake of brevity.

The documents in respect of subsidiary companies are not being attached to the audited annual fnancial statements of the Company. In terms of Section 136 of the Companies Act, 2013, any shareholder interested in obtaining a copy of aforesaid documents may write to the Company Secretary, NHPC Limited. This information is also available on the website of the Company i.e. www.nhpcindia.com.

The policy on material subsidiaries as approved by the Board may be accessed on the Company''s website at the link: http://www.nhpcindia.com/writereaddata/Images/pdf/Policy- Material-Subsidiary.pdf

37. DISCLOSURES:

In terms of the requirements of Section 135 and Section 177 of the Companies Act, 2013, the disclosure regarding composition of Committee on Corporate Social Responsibility (CSR) & Sustainability and Audit Committee is as under:

Committee on Corporate Social Responsibility (CSR) and Sustainability

The Committee on Corporate Social Responsibility (CSR) and Sustainability comprises the following members:

1. Shri Atul Kumar Garg, Independent Director-Chairman,

2. Shri D. P. Bhargava, Director (Technical) and

3. Shri R. S. Mina, Director (Personnel).

Audit Committee

The Audit Committee comprises the following members:

1. Shri Atul Kumar Garg, Independent Director-Chairman,

2. Shri Ashoke Kumar Dutta, Independent Director and

3. Shri D. P. Bhargava, Director (Technical).

All the recommendations made by the Audit Committee during the year were accepted by the Board.

Vigil Mechanism

Your Company has a defned and established Whistle Blower Policy (vigil mechanism) for reporting instances of unethical/ improper conduct and taking suitable steps to investigate and correct the same. The Whistle Blower Policy is available on the Company''s website at the link: http://www.nhpcindia.com/writereaddata/images/pdf/wbp.pdf. The provisions of this policy are in line with the provisions of Section 177(9) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with stock exchanges.

During the year 2014-15, no complaint has been reported under Whistle Blower Policy.

Further, no personnel had been denied access to the Audit Committee.

38. DIRECTORS'' RESPONSIBILITY STATEMENT

In compliance to Section 134(3)(c)of the Companies Act, 2013, the Directors hereby confrm the following:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fnancial year and of the proft of the Company for that period;

(c) the Directors had taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis;

(e) the Directors had laid down internal fnancial controls to be followed by the Company and that such internal fnancial controls are adequate and were operating effectively; and

(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

39. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMPs)

The following changes have taken place in the Board of Directors and Key Managerial Personnel of your Company since the last Annual General Meeting:

(i) The Board of Directors has appointed Ms. Krishna Tyagi, Chief Controller of Accounts, Ministry of Power as a Nominee Director w.e.f. 8th July, 2015 consequent upon cessation of Directorship of Shri K. N. Garg, then Member (Hydro), Central Electricity Authority, retired on 30th June, 2015 on attaining the age of superannuation.

(ii) The Board of Directors has appointed Shri Jayant Kumar, Director (Finance) as an Additional Director of the Company w.e.f. 26th May, 2015 pursuant to Ministry of Power''s letter no. 9/1/2014-NHPC of even date. Earlier on cessation of Directorship of Shri A. B. L. Srivastava, then Director (Finance) & Chief Financial Offcer, the additional charge for the post of Director (Finance) was held by Shri R.S. Mina, Director (Personnel) w.e.f. 15th September, 2014. Shri Mina acted as Chief Financial Offcer (CFO) of the Company w.e.f. 26th September, 2014 till the appointment of Shri Jayant Kumar, as CFO of the Company on 29th May, 2015.

(iii) The Board of Directors in its 382nd meeting held on 20th March, 2015 appointed Shri Ashoke Kumar Dutta and Shri Atul Kumar Garg, Independent Directors as Additional Directors of the Company to meet the requirements of the Companies Act, 2013 and Listing Agreement, till the appointment of Independent Directors by the President of India or till the date of next Annual General Meeting, whichever event occurs earlier, as their tenure was completed on 22nd March, 2015, as per respective appointment letters issued by the Ministry of Power.

(iv) Ministry of Power entrusted the additional charge of the post of Director (Projects) to Shri R. S. T. Sai, Chairman & Managing Director w.e.f. 11th March, 2015 on cessation of Directorship of Shri J.K. Sharma, then Director (Projects).

(v) The Board of Directors has appointed Shri Arun Kumar Verma, Joint Secretary (Hydro), Ministry of Power as a Nominee Director on the Board of the Company w.e.f. 17th December, 2014 on cessation of Directorship of Shri Mukesh Jain, then Joint Secretary (Hydro), Ministry of Power w.e.f. 11th November, 2014.

(vi) Shri G.S. Vedi, Shri A.K. Mago and Shri R. Jeyaseelan, Independent Directors ceased to be Directors of the Company w.e.f. 1st November, 2014 on completion of their tenure as per respective appointment orders issued by the Ministry of Power.

(vii) Shri Shantikam Hazarika and Shri A. Gopalakrishnan, Independent Directors ceased to be Directors of the Company w.e.f. 27th September, 2014 due to non-appointment by the shareholders in the last Annual General Meeting of the Company.

All Independent Directors have declared that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Details of board and committee meetings are given in the Corporate Governance Report.

Ministry of Corporate Affairs vide its notifcation dated 5th June, 2015 exempted/amended certain provisions of the Companies Act, 2013 for Government Companies. As per the above notifcation, the Nomination & Remuneration Committee is not required to formulate criteria for appointment of Directors, their remuneration policy and carrying out their performance evaluation in certain cases. Further, the Board of Government Companies are not required to evaluate performance of Directors in case they are evaluated by the administrative Ministry.

Particulars of employees and related disclosure have not been provided in the report pursuant to above notifcation.

As regards policy on remuneration of KMPs (other than Directors) and other employees of the Company, their pay structure, allowances and other benefts are governed by relevant DPE Guidelines. Annual performance evaluation of senior management personnel of the Company is being done as per the "performance appraisal-recording and custody" rules of the Company read with relevant guidelines of Department of Public Enterprises, Govt. of India. An evaluation mechanism for performance evaluation of Board, its Committees and Independent Directors is under consideration of the Board.

The details of familiarisation programme for Directors are put up on the website of the Company at the link: http://www. nhpcindia.com/writereaddata/Images/pdf/FamiliarProg-BOD.pdf

The details of remuneration paid to Directors during the Financial Year 2014-15 have been provided in the Corporate Governance Report.

40. MEETINGS OF THE BOARD

Eleven meetings of the Board of Directors were held during the year 2014-15. For further details, please refer Corporate Governance Report of this Annual Report.

41. GENERAL

No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

4. Neither the Chairman & Managing Director nor the Functional Directors of the Company receive any remuneration or commission from any of its subsidiaries.

5. No signifcant or material orders were passed by the regulators or courts or tribunals which impact the going concern status and Company''s operations in future.

6. No material changes and commitments have occurred after the close of the fnancial year till the date of this report, which affect the fnancial position of the Company.

7. There were no cases fled pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 during the year under review.

42. ACKNOWLEDGEMENT

The Board of Directors acknowledge with deep appreciation, the cooperation and guidance received from the Government of India specially the Ministry of Power, Ministry of Environment, Forest & Climate Change, Department of Public Enterprises, Central Electricity Authority, Central Electricity Regulatory Commission, State Governments and their Ministries and State Electricity Boards. The Board of Directors also conveys their gratitude to the shareholders, banks and fnancial institutions for the confdence reposed by them in the Company.

The Board also appreciates the contribution of contractors, vendors and consultants in the implementation of various projects of the Company.

The Board wish to place on record its appreciation for the constructive suggestions received from Statutory Auditors, Cost Auditors and Offce of the Comptroller and Auditor General of India. Further, the Board wishes to record its deep gratitude to all the members of NHPC family for their whole hearted support. The Board is confdent that employees will continue to contribute their best in the years to come.

For and On behalf of the Board of Directors

(R. S. T. Sai)

Chairman and Managing Director

DIN No.:00171920

Date: 6th August, 2015

Place: Faridabad


Mar 31, 2014

Dear Members,

NHPC Limited.

The Directors are pleased to present the 38th Annual Report on the performance of your Company along with Audited Statement of Accounts, Auditors'' Report and Review of Accounts by the Comptroller and Auditor General of India for the financial year ended 31st March, 2014.

1. FINANCIAL RESULTS

The financial results for the year ended 31st March, 2014 are summarized in Table 1.

Table 1: Financial Highlights (Rs. in crore)

PARTICULARS 2013-14 2012-13

Sales 5,335.11 5,049.13

Profit Before Depreciation, Interest and Tax 3,816.22 4,556.80

Depreciation 1,210.76 969.29

Profit After Depreciation but Before Interest and Tax 2,605.46 3,587.51

Interest and Finance charges 1,022.40 385.38

Profit After Depreciation and Interest but Before Tax 1,583.06 3,202.13

Tax 604.27 853.91

Profit After Depreciation, Interest and Tax 978.79 2,348.22

Surplus of Statement of Profit and Loss of earlier years 7,146.38 5,963.10

Amount written back from Bond Redemption Reserve 14.25 14.25

Amount written back from Self-Insurance Reserve 3.97 0.92

Amount written back from CSR Fund 7.88 -

Tax on Dividend-written back 5.11 4.88

Balance available for appropriation 8,156.38 8,331.37

APPROPRIATIONS

Transfer to Bond Redemption Reserve 249.45 249.17

Transfer to Self-Insurance Fund 51.74 48.84

Transfer to CSR Reserve 2.30 23.50

Transfer to R&D Fund 17.16 -

Proposed/Final Dividend 332.13 738.05

Tax on Proposed Dividend 56.44 125.43

Balance carried over to Reserves and Surplus 7,447.16 7,146.38

The Decline in profit is mainly due to charging off the borrowing cost and other administrative cost of Subansiri Lower & Teesta Low Dam-IV Projects as the construction activities of these Projects were interrupted for a prolonged period.

2. POWER GENERATION

During the year 2013-14, NHPC generated 18,386 MUs of power through 18 Power Stations located in different parts of the Country against the target of 21,465 MUs. The reason for less generation was mainly because of the complete shutdown of 280 MW Dhauliganga Power Station, Uttarakhand, due to flooding of power house by flash floods. Generation from all four units of Dhauliganga Power Station has been restored. The shortfall in generation was also attributable to poor hydrology during the year in some of the Power Stations.

Since last report, 132 MW Teesta Low Dam-III (West Bengal), 45 MW Nimoo Bazgo (Jammu & Kashmir), 240 MW Uri-II (Jammu & Kashmir) and 520 MW Parbati-III (Himachal Pradesh) Power Stations were declared under commercial operation. As such an additional installed capacity of 937 MW was declared under commercial operation since previous report. At present, your Company''s total installed capacity is 6,507 MW including 1520 MW of NHDC Limited, a Subsidiary Company of NHPC.

CERC has issued tariff order for 510 MW Teesta-V Power Station, 45 MW Nimoo Bazgo Power Station, 44 MW Chutak Power Station and 240 MW Uri-II Power Station during the period.

3. PROPOSED DIVIDEND

Your Directors have recommended a dividend of Rs. 0.30 per share (excluding dividend tax) for the year 2013-14. The dividend will be paid after your approval at the forthcoming Annual General Meeting. On approval, the total dividend payout for the year will amount to Rs. 332.13 crore.

4. COMMERCIAL PERFORMANCE

Your Company''s commercial performance during the year 2013-14 was satisfactory. The sales realization during the year was Rs. 6,397 crore (including Rs. 358.76 crore realized from Delhi Transco Limited (DTL)/Delhi Power Company Limited (DPCL) on account of old dues of Delhi Electric Supply Undertaking (DESU) and Rs. 14.64 crore of old dues realized from Manipur) as against Rs. 5,369 crore in the previous year. The bills raised during the year were to the tune of Rs. 5,928 crore compared to the bills of Rs. 5,184 crore in the previous year.

The outstanding dues pending for more than 60 days as on 31st March, 2014 was Rs. 955 crore. Your Company is continuing all its efforts including regulation of Power supply to the defaulting utilities to recover the outstanding dues. Most of the benefi ciary states except J&K are now paying their dues on regular basis.

Central Electricity Regulatory Commission (CERC) Regulations

The CERC has issued Central Electricity Regulatory Commission (Terms & Conditions of Tariff) Regulations, 2014 for the tariff period from 01.04.2014 to 31.03.2019 on 21.02.2014.

Major highlights of the Regulations are:

a) O&M expenses for new Projects have been increased from 2% of capital cost to 2.5% for Power Stations of more than 200 MW and 4% for Power Stations of less than 200 MW.

b) Return on Equity (ROE) has been retained at present level (15.5% for Run of River (ROR) and 16.5% for ROR with pondage/ storage) along with grossing with effective tax rate.

c) Rate of Secondary Energy increased from 80 paisa per unit to 90 paisa per unit.

5. CAPITAL STRUCTURE AND NET WORTH

Your Company''s paid-up capital at present is Rs. 11,070.66 crore compared to last year of Rs. 12,300.74 crore due to buy back of equity shares during the year. The net-worth of the Company as on 31.03.2014 stands at Rs. 26,067.65 crore.

6. STATUS OF ONGOING PROJECTS

Your Company is engaged in the construction of the following Hydroelectric Projects:

Table 2: Details of Projects under construction during 2013-14

S. No. Project State Installed Capacity (MW)

i. Teesta Low Dam IV West Bengal 160

ii. Parbati II Himachal Pradesh 800

iii. Subansiri Lower* Assam/ Arunachal Pradesh 2,000

iv. Kishanganga Jammu & Kashmir 330

Total : 3,290

* The project work is stand still since 16.12.2011. Efforts are being made to restart the project.

7. NEW PROJECTS

Table 3: Projects in the Clearance/Approval Stage are as under: PROJECTS TO BE EXECUTED BY NHPC ON STAND ALONE BASIS

S. No. Project State Installed Capacity (MW)

i. Kotli Bhel I-A Uttarakhand 195

ii. Teesta-IV Sikkim 520

iii. Dibang Arunachal Pradesh 3,000

iv. Tawang-I Arunachal Pradesh 600

v. Tawang-II Arunachal Pradesh 800

Total: 5,115 PROJECT TO BE EXECUTED THROUGH SUBSIDIARY COMPANY

vi. Loktak Downstream Manipur 66

PROJECT TO BE EXECUTED THROUGH JOINT VENTURE

vii. Pakal Dul and others Jammu & Kashmir 2,120

Grand Total: 7,301

On getting necessary approvals, construction activities at respective sites will be started.

In addition to above, your Company is also exploring the possibility of Wind and Solar Power across the Country.

8. PROJECTS UNDER DPR PREPARATION

Survey & Investigation for preparation of Detailed Project Reports (DPR) of the following Projects has been initiated:

Table 4: Survey and Investigation

S. No. Project State Installed Capacity (MW)

i. Bursar J&K 1,020

ii. Dhauliganga Intermediate Uttarakhand 210

iii. Goriganga Uttarakhand 120

Total: 1,350

9. RGGVY - RURAL ELECTRIFICATION (RE) PROJECTS

NHPC is implementing Rural Electrification Projects under Rajiv Gandhi Gramin Vidyutikaran Yojna (RGGVY) in 27 Districts spread over 5 states viz. West Bengal, Bihar, Jammu & Kashmir, Chhattisgarh and Odisha at an estimated cost of Rs. 2,844 crore. Out of total do-able scope of work i.e. Electrification of 9,168 Un-electrifi ed / De-electrifi ed villages, 19,123 partially electrifi ed villages and 18.54 lakh BPL connections, NHPC has completed Electrification of 9,150 Un-electrifi ed / De-electrifi ed villages, 18,957 partially electrifi ed villages and provided service connections to 18.5 lakh BPL households till 31st March, 2014. Balance works are likely to be completed during the current year.

10. RURAL ROADS PROJECT

NHPC had signed an MOU with the Ministry of Rural Development, Government of India and the Government of Bihar for constructing rural roads in Six Districts of Bihar under the Pradhan Mantri Gram Sadak Yojna (PMGSY).

Under the Scheme, 758 roads of 3,228 Km length having cost of Rs. 1,725.65 crore have been awarded by NHPC for execution. Till the end of the financial year, 734 roads of 3,186 Km length have been completed.

11. CONSULTANCY AND BUSINESS DEVELOPMENT SERVICES

NHPC is providing Consultancy services in various fields of Hydro Power viz. River basin studies, Survey works, Design and Engineering, Geotechnical studies, Hydraulic transient studies, Hydrological studies, Construction Management, Testing, Commissioning, Operation & Maintenance etc. to leading organizations globally.

Major Consultancy assignments include assignments from Central and State Government agencies in India and other countries like Bhutan and Ethiopia. Eighty Eight assignments have already been completed, and there are six ongoing assignments presently.

12. GLOBAL INITIATIVES

NHPC is providing Design & Engineering Consultancy services to Mangdechhu Hydroelectric Project Authority (MHPA) for the implementation of 720 MW Mangdechhu Hydroelectric Project in Bhutan.

NHPC is also engaged to provide Management Consultancy to Ethiopia Electric Power Company (EEPCO) through a Consortium led by Power Grid and BSES Rajdhani. The Management contract is for two years duration effective from 25.08.2013.

13. FINANCING OF NEW PROJECTS

As per the Central Electricity Regulatory Commission''s guidelines for the purpose of tariff fixation, the financing of a Project is to be considered in 70:30 Debt Equity Ratio.

In your Directors'' opinion, available internal accruals will be suffi cient to finance the equity component for new Projects. Your Company is well positioned to raise the required borrowings with its low gearing and strong credit ratings, which are at par with sovereign ratings.

The Company is exploring domestic as well as international borrowing options including overseas development assistance provided by bilateral agencies to mobilize the debt required for the planned capacity expansion programme.

14. INFORMATION TECHNOLOGY AND COMMUNICATION

All NHPC''s sites are now connected with Corporate office through multimode, fail-safe communications links using MPLS-VPN/ VSAT-Ku Band / Broadband technologies.

NHPC has presently co-located key servers at TIER-III Data Centre of National Informatics Centre Service Incorporated (NICSI), New Delhi. Disaster Recovery (DR) is in operation at Regional office, Kolkata.

Presently, business functions such as Finance, Human Resources, Procurement & Contracts, Inventory, Project Management and Quality Assurance have been implemented in the IFS ERP System across the organization.

15. TRAINING AND HUMAN RESOURCE DEVELOPMENT

The fast changing economic scenario and technological innovations are creating an increasingly competitive market environment. Your Company consistently evaluates the Training needs of its employees to keep them updated with latest changes and provide relevant knowledge to enhance their productivity and work efficiency.

The training programmes are designed to develop and groom internal talent through multidisciplinary programmes. Besides conducting in-house workshops, the Company also organizes training programmes in collaboration with the reputed educational Institutes like, IIMs/XLRIs/IITs etc. by way of strategic alliance to facilitate advance Management and Leadership development programmes for its employees.

16. INDUSTRIAL RELATIONS

During the year, Industrial Relations remained cordial and harmonious at all NHPC Projects / Power Stations / Units.

17. RESETTLEMENT AND REHABILITATION

NHPC has its own Resettlement & Rehabilitation (R&R) Policy, 2007 in line with the National Rehabilitation and Resettlement Policy (NRRP), 2007. NHPC''s R&R Policy provides certain additional benefits over and above those proposed in NRRP, 2007. The Policy aims to address issues like loss of land, houses, other resources and means of livelihood or social support systems, which Project Affected Families (PAFs) are likely to suffer due to the construction of a Project. Major emphasis is laid on economic sustenance of PAFs. As per NHPC''s R&R policy, up to 0.75% of the hard cost of a Project is earmarked towards Community and Social Development Plan (CSDP) for implementation in the resettlement zone and affected areas.

Further, to implement NHPC''s R&R policy in its true spirit, an Operational Manual for effective implementation of various R&R activities has also been formulated.

However, w.e.f. 1st January, 2014, both land acquisition and R&R are being implemented in line with the Right to Fair Compensation & Transparency in Land Acquisition, Rehabilitation & Resettlement Act, 2013.

18. VIGILANCE ACTIVITIES

Regular and surprise inspections are being conducted by Vigilance Department at regular intervals. Actionable points identified by Project Vigilance officers are intimated to Head of Projects from time to time. Intensive examinations of works, wherever required, are also carried out by Chief Technical Examiner (CTE) of the CVC from time to time.

Integrity Pact has been implemented successfully for all the procurement works of the value of Rs. 15 crore and more, and for procurement of goods and services of the value of Rs. 25 lakh and more as per CVC guidelines.

Circulars and guidelines based on inspection / intensive examination are being issued regularly as part of preventive Vigilance. Vigilance Awareness Week and various vigilance awareness programmes are being conducted to promote transparency and ethics in working system. Further during the year, two conferences cum workshops of Vigilance officers were also conducted at Corporate office.

As a part of transparent procurement system and in compliance to guidelines issued by Ministry of Power and Central Vigilance Commission, NHPC has opted for e-procurement solution across the organization. The process of supply/works/contracts cases over value of Rs. 10 lakh is through e-procurement.

19. IMPLEMENTATION OF THE FRAUD PREVENTION POLICY

NHPC has formulated a Fraud Prevention Policy to carry out its operations with honesty and ultimately enabling the Company to grow faster.

20. OFFICIAL LANGUAGE IMPLEMENTATION

Your Company has complied with the provisions and rules of the Offi cial Languages Act during the year 2013-14. Efforts were made to improve the progressive use of Official Language in accordance with the policy of the Government of India.

Regular quarterly meetings of the Official Language Implementation Committee (OLIC) and Town Official Language Implementation Committee (TOLIC), Faridabad were organized in NHPC Corporate office where progress of use of Hindi was reviewed in the presence of Functional Directors. Many initiatives were taken to promote Official Language like organizing Hindi Fortnight, All India

Rajbhasha Sammelan, Hindi Competitions, Hindi Pustak Pathan Saptah, Hindi Kavya Ghosthi, etc. Thirty Nine Hindi workshops were organized in Corporate office. Rajbhasha magazines titled, ''Rajbhasha Jyoti'' and ''Nagar Saurabh'' were also published.

The Parliament Sub Committee on Official Languages carried out inspection in some of the Units of the Company and appreciated its implementation. Various incentive Schemes have been introduced in the Corporation to encourage the use of Hindi at workplace.

21. PR INITIATIVES / AWARENESS ACTIVITIES

Your Company''s achievements were duly highlighted through print and electronic media from time to time to project NHPC as a leading and strong hydropower developer in the Country.

Corporate fi lms on NHPC and fi lm on environment were screened at a number of platforms to highlight the developmental activities of NHPC. NHPC has also participated in India International Trade Fair 2013.

NHPC successfully hosted 16th Inter CPSU Carom Tournament at Parbati-II Hydroelectric Project from 20th to 23rd March, 2014. Nine Central Power Sector PSUs / Organizations participated in the tournament. Teams of NHPC also participated in various other Inter CPSU sports tournaments organized under the aegis of Power Sports Control Board, Ministry of Power in 2013-14.

To encourage and spread message about energy conservation, NHPC coordinated painting competitions at School, State and National level in the States of Jammu and Kashmir, Manipur, Sikkim, Arunachal Pradesh and Madhya Pradesh. These events were organized by the Bureau of Energy efficiency (BEE) and Ministry of Power.

22. AWARDS AND RECOGNITION

Today, the gambit of Business exceeds the boundaries of mere profit making and embraces the ethos of Corporate Citizenship in its practice. Operational excellence is lifeless unless a successful story of holistic development is not put forward by the Company. NHPC endeavours for an all-round growth and the same is reflected in its long list of awards & achievements both at Corporate and Individual levels.

Awards in Management & Leadership:

Corporate:

- ''Best Value Creating Miniratna'' at the 5th Dalal Street Investment Journal (DSIJ) PSU Awards.

- Gold Medal for ''Excellence in Display'' under the category ''Ministries and Departments Pavilion'' at the India International Trade Fair (IITF) 2013 (along with other Power PSUs under Ministry of Power).

- Special Jury Award for Team NHPC in the Inter Organization Paper Presentation Competition titled ''Quest for Excellence 2013'' organized by Power HR Forum.

Individual:

- Shri A.B.L. Srivastava, Director (Finance) has been conferred with ''Certifi ed Project Director (CPD)'' IPMA Level A by the Institute of Project Management Certifi cation (IPMC). Shri Srivastava has entered a very prestigious league of only 13 CPDs in the Country with a distinction of being the first person with the background of Finance.

- Shri A.B.L. Srivastava, Director (Finance)-''Outstanding Individual Contribution to the Power Sector'' by EPC World Media Group, New Delhi.

- Shri R.S. Mina, Director (Personnel)-''HR Excellence Award'' by Top Rankers Management Consultants, New Delhi.

- Shri R.S. Mina, Director (Personnel)-''HR Leadership Award'' and ''30 Best HR Leaders in PSUs'' by Institute of Public Enterprises.

Sports Corporate:

- NHPC Badminton Team (First position), NHPC Kabaddi Team (Second position) and NHPC Women Carom Team (Third Position)- Inter CPSU Tournaments 2014, Power Sports Control Board.

Individual:

- Ms. Arunachalam Nalini, Assistant Manager (Finance) won 3 Gold medals (Shot put, Discus throw and Badminton mixed doubles) and 1 Bronze medal (Badminton women''s singles) in 6th World Dwarf Games 2013 in Michigan, USA.

23. CORPORATE GOVERNANCE

In compliance with Clause 49(VI) of Listing Agreement and DPE Guidelines on Corporate Governance, a separate section on Corporate Governance is given at Annexure-I and forms part of the Directors'' Report. Further, in compliance with Clause 49(VII) of the Listing Agreement and DPE Guidelines on Corporate Governance, a certificate from Practicing Company Secretary regarding compliance of conditions of Corporate Governance is given at Annexure-II and forms part of the Directors'' Report.

24. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In compliance with Clause 49(IV) (F) of Listing Agreement and DPE Guidelines on Corporate Governance as amended from time to time, a separate report on Management Discussion and Analysis is given at Annexure–III and forms part of Directors'' Report.

25. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to Conservation of Energy, Technology Absorption and Foreign Exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given at Annexure-IV and forms part of the Directors'' Report.

26. PARTICULARS OF EMPLOYEES

In compliance with Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time, the prescribed information is set out at Annexure-V and forms part of the Directors'' Report. This information is also available on NHPC''s website i.e. www.nhpcindia.com.

The Company (excluding Joint Ventures and Subsidiaries) had 9,838 employees as on 31st March, 2014. One employee employed throughout the year was in receipt of remuneration of more than Rs. 60 lakh per annum and 169 employees employed for a part of the year were in receipt of remuneration of more than Rs. 5 lakh per month.

27. BUSINESS RESPONSIBILITY REPORT

In compliance with Clause 55 of the Listing Agreement, a separate section on Business Responsibility Report is given at Annexure-VI.

28. CORPORATE SOCIAL RESPONSIBILITY (CSR) & SUSTAINABLE DEVELOPMENT (SD)

NHPC has contributed towards the economic development of the society at large and towards improving the quality of life of internal as well as external stakeholders. NHPC has a well-defined CSR and Sustainable Development Policy in line with Department of Public Enterprises, Government of India Guidelines. A separate chapter on Corporate Social Responsibility (CSR) & Sustainable Development (SD) is given at Annexure-VII.

29. RIGHT TO INFORMATION ACT, 2005

In compliance with the provisions of the Right to Information Act, 2005, NHPC published various documents/records on its website during the year under review. Assistant Public Information officers were appointed in all Power Stations/ Projects/ Regional offices/ Units to facilitate nationwide access to the information.

30. STATUTORY AUDITORS

The Statutory Auditors of NHPC are appointed by the Comptroller and Auditor General of India. M/s S.N. Nanda and Co., Delhi, M/s Singhi and Co., Kolkata, M/s Gupta Gupta & Associates, Jammu and M/s Tiwari and Associates, Delhi were appointed as Joint Statutory Auditors for the fi nancial year 2013-14.

31. AUDITORS'' REPORT

The Auditors'' Report refers to various notes incorporated by the Company, which are self-explanatory. The report of the Statutory Auditors and management reply thereon is given at Annexure-VIII. The comments of the Comptroller and Auditor General of India is given at Annexure-IX. The Consolidated Financial Statement of the Company along with the Statutory Auditors'' Report is given at Annexure-X.

32. COST AUDITORS

In accordance with the Cost Accounting Records (Electricity Industry) Rules, 2011 and Cost Audit Report Rules, 2011, cost accounts are being maintained by all Power Stations of the Company since 2002-03. The following firms of Cost Auditors were appointed to conduct an audit of Cost Accounting Records as indicated against the name of respective Power Station for the financial year 2013- 14 under Section 233-B of the Companies Act, 1956:

Name of the Firm Name of Power Station

M/s Chandra Wadhwa and Co., New Delhi Salal, Uri-I and Uri-II

M/s R. J. Goel and Co., New Delhi Tanakpur, Dhauliganga and TLDP-III

M/s S. C. Mohanty and Associates, Bhubaneshwar Rangit and Teesta-V

M/s Ravi Sahni and Co., New Delhi Dulhasti, Chutak and Nimoo Bazgo

M/s Krishan Singh Berk, Faridabad Chamera-I and Sewa-II

M/s Bahadur Murao and Co., Delhi Chamera-II, Chamera-IIIand Parbati-III

M/s K. L. Jaisingh and Co., Noida Loktak and Bairasiul

Consolidated Cost Audit Report for the FY 2012-13 was fi led by M/s Krishan Singh Berk, Lead Cost Auditor on 24th September, 2013 The due date for fi ling the same was 27th September, 2013.The details of Cost Audit Firms for which Cost Audit Report for the FY 2012-13 was fi led are given below:

S. No. Power Cost Auditor Membership Address Station No.

1. Uri-I M/s Ravi Sahni and Co. 16339 C-40, West Gorakh Park Extension, New Delhi-110032

2. Dulhasti M/s R.J. Goel and Co. 14256 31, Community Centre, Ashok Vihar, Phase-I, New Delhi-110052

3. Salal M/s R.J. Goel and Co. 14256 31, Community Centre, Ashok Vihar, Phase-I , New Delhi-110052

4. Chamera-I M/s R.M. Bansal and Co. 22583 A-201, Twin Towers, Lakhanpur, Kanpur,Uttar Pradesh-208024

5. Bairasiul M/s Krishan Singh Berk 2724 365, Sector-15, Faridabad, Haryana -121007

6. Chamera-II M/s Krishan Singh Berk 2724 365,Sector-15, Faridabad, Haryana -121007

7. Loktak M/s Ravi Sahni and Co. 16339 C-40, West Gorakh Park Extension, New Delhi-110032

8. Rangit M/s Bahadur Murao and Co. 5574 Shop No. 25, DDA Market, ''B'' Block, Preet Vihar, Delhi- 110092

9. Teesta-V M/s Bahadur Murao and Co. 5574 Shop No.25, DDA Market, ''B'' Block, Preet Vihar, Delhi-110092

10. Dhauliganga M/s Chandra Wadhwa and Co. 6797 204, Krishna House, 4805/24, Bharat Ram Road, Daryaganj, New Delhi-110002

11. Tanakpur M/s Chandra Wadhwa and Co. 6797 204,Krishna House, 4805/24, Bharat Ram Road, Daryaganj, New Delhi-110002

12. Sewa-II M/s R.M. Bansal and Co. 22583 A-201, Twin Towers, Lakhanpur, Kanpur,Uttar Pradesh-208024

13. Chutak M/s S.C. Mohanty and Associates 10924 511, Sahid Nagar, Bhubaneshwar-751007

14. Chamera-III M/s S.C. Mohanty and Associates 10924 511, Sahid Nagar, Bhubaneshwar-751007

Company with a view to control avoidable expenditure has got cost reduction study done for 3 power stations on sample basis.

33. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard (AS)-21 on Consolidated Financial Statements read with AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interest in Joint Ventures, the Audited Consolidated Financia Statements are provided in the Annual Report. A statement of the Holding Company''s interest in the Subsidiary Companies as per Section 212 of the Companies Act, 1956 is annexed to this Annual Report.

34. SUBSIDIARY COMPANIES

Your Company has two Subsidiary Companies namely, NHDC Limited and Loktak Downstream Hydroelectric Corporation Limited The detailed information about these Companies is included in the Management Discussion and Analysis Report and Corporate Governance Report.

The Annual Accounts along with the Auditors'' Report thereon and the Directors'' Report of NHDC Limited and Loktak Downstream Hydroelectric Corporation Limited are not being attached to the Balance Sheet of the Company. In accordance with the genera circular issued by the Ministry of Corporate Affairs, Government of India, any shareholder interested in obtaining a copy of reports pertaining to Subsidiary Companies may write to the Company Secretary, NHPC Limited. The information can also be obtained from www.nhpcindia.com.

The Annual Accounts of the Subsidiary will also be kept open for inspection at the Registered office of the Company and that of the respective Subsidiary Company

The consolidated financial statements presented by the Company include the financial results of its Subsidiaries.

35. DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, the Directors hereby confi rm the following

i) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

i) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period

iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The Directors had prepared the annual accounts on a ''going concern'' basis.

36. BOARD OF DIRECTORS

The present composition structure of Directors is given in the Corporate Governance Report.

Since the last report, Shri A.S. Bakshi, then Chairperson, Central Electricity Authority (CEA) ceased to be a director on the Board w.e.f. 1st August, 2013. Shri K.N.Garg, Member (Hydro), Central Electricity Authority and Shri Mukesh Jain, Joint Secretary (Hydro), Ministry of Power were appointed on the board w.e.f. 7th October, 2013 and 11th November, 2013 respectively. Shri G. Sai Prasad, Joint Secretary (Thermal), Ministry of Power, who was holding additional charge of Chairman & Managing Director ceased to be a Director w.e.f. 08.06.2014. Shri R. S. T. Sai, Chairman & Managing Director, THDC India Limited has assumed the Charge of Chairman & Managing Director, NHPC Limited w.e.f. 08.06.2014 in addition to his existing duties.

37. ACKNOWLEDGEMENTS

The Board of Directors acknowledge, with deep appreciation, the cooperation and guidance received from the Government of India specially the Ministry of Power, State Governments and their Ministries, Departments/Boards, Bankers, Financial Institutions, lenders and investors. The Board places its appreciation for contributions of contractors, vendors and consultants for their efforts in timely completion of Projects.

The Board places its special appreciation to the benefi ciaries drawing Power, State Electricity Boards and other valuable clients for consultancy assignments.

The Board places on record its deep appreciation for the cooperation extended by Statutory Auditors, Cost Auditors and office of the Comptroller and Auditor General of India. Further, the Board wishes to record its deep gratitude to all the members of NHPC family for their whole hearted support. The Board is also confi dent that the employees will continue to contribute their best in the years to come.

For and On behalf of the Board of Directors

(R. S. T. Sai)

Chairman and Managing Director DIN No.:00171920 Date : 14th August, 2014 Place: New Delh


Mar 31, 2013

To the Members of NHPC Limited,

The Directors, we take immense pleasure in presenting the 37th Annual Report of your Company for the financial year ended on 31st March, 2013. The report includes highlights of company''s key performance areas pertaining to 2012-2013, along with the Audited Statement of Accounts, Auditors'' Report, and Review of Accounts by the Comptroller & Auditor General of India.

1. FINANCIAL RESULTS

The financial results for the year ended 31st March, 2013 are summarized in Table 1.

Table 1 Financial Highlights

(Rs. in crore)

Particulars 2012-13 2011-12

Sales 5049.13 5509.65

Profit before Depreciation, Interest and Tax 4556.80 4749.00

Depreciation 969.29 893.86

Profit after Depreciation but before Interest and Tax 3587.51 3855.14

Interest and Finance charges 385.38 338.10

Profit after Depreciation and Interest but before Tax 3202.13 3517.04

Tax 853.91 745.27

Profit after Depreciation, Interest and Tax 2348.22 2771.77

Surplus of Statement of Profit and Loss of earlier years 5963.10 4336.18

Amount written back from Bond Redemption Reserve 14.25 14.25

Amount written back from Self-Insurance Reserve 0.92 -

Tax on Dividend— written back 4.88 3.25

Balance available for appropriation 8331.37 7125.45

APPROPRIATIONS

Transfer to Bond Redemption Reserve 249.17 129.13

Transfer to Self-Insurance Fund 48.84 32.48

Transfer to CSR Reserve 23.50 -

Proposed Final Dividend 738.05 861.06*

Tax on Proposed Dividend 125.43 139.68

Balance carried over to Reserves and Surplus 7146.38 5963.10

* including rounding off difference of Rs. 0.01 crore of last year.

2. POWER GENERATION

During the year 2012-13, NHPC achieved "Excellent" rating for exceeding its annual Memorandum of Understanding (Moll) target by generating 18,162 MUs of power as against the target of 18,107 MUs through 12 existing operating Power Stations located in different parts of the country. Apart from the above, 761 MUs were also generated from new projects commissioned during 2012-13.

Chutak Power Station and Chamera-lll Power Station were declared commercially operational during the year 2012-13. Three units ofTLDP III (West Bengal) each 33 MW have been commissioned in 2012-13. Further, two units of Nimmo Bazgo HE project (Jammu and Kashmir) have been commissioned at partial load.

3. PROPOSED DIVIDEND

Your Directors have recommended a dividend of Re. 0.60 per share (excluding dividend tax) for the year 2012-13. The dividend will be paid after your approval at the forthcoming Annual General Meeting. On approval, the total dividend payout for the year will amount to Rs. 738.04 crore.

4. CAPITAL STRUCTURE AND NET WORTH

Your Company''s paid-up capital remained at Rs.12,300.74 crore during the year. The net-worth of the Company increased to Rs. 27,840.50 crore as on 31st March, 2013 as against Rs. 26,353.53 crore at the end of previous year.

5. STATUS OF ONGOING PROJECTS

During the year 2012-13, your Company had to face many challenges like geological obstacles, natural calamities and local problems. Despite these challenges, the construction activities are progressing satisfactorily and projects are at various stages of completion. During the year 2012-13, your Company was engaged in the construction of 10 hydroelectric projects with an installed capacity of 4,502 MW as per the details given in Table 2.

Table 2: Details of hydroelectric projects under construction during 2012-13.

Name of the Hydroelectric Project State Proposed Installed Capacity (MW)

Chamera-III* Himachal Pradesh 231

Chutak** Jammu and Kashmir 44

Teesta Low Dam III*** West Bengal 132

Uri II Jammu and Kashmir 240

Teesta Low Dam IV West Bengal 160

Nimmo Bazgo**** Jammu and Kashmir 45

Parbati III Himachal Pradesh 520

Parbati II Himachal Pradesh 800

Subansiri Lower Assam/Arunachal Pradesh 2,000

Kishanganga Jammu and Kashmir 330

Total 4,502

* Chamera-lll (231MW) in Himachal Pradesh has been commissioned in July, 2012.

** Chutak (44MW) in Jammu and Kashmir has been commissioned in January, 2013.

*** Out of four units of Teesta Low Dam III HEP (132 MW) in West Bengal, three units (99 MW) have been commissioned in March, 2013 and fourth unit also put on commercial operation in May, 2013

****Out of total three units of Nimmo Bazgo HEP (3X15MW) in Jammu and Kashmir, two units have been commissioned at partial load during the Financial Year 2012-13.

The works at Subansiri Lower H.E Project (2000MW) in Arunachal Pradesh have suffered a temporary setback due to local agitation since 1 6th Dec, 2011 and at present the works of the project are unable to be continued. Since Dec''11 at Parbati II H.E Project, the contract for excavation of headrace tunnel was terminated and fresh tender has already been floated to engage a new contractor.

6. COMMERCIAL PERFORMANCE

Your Company''s commercial performance during the year 2012-13 was satisfactory. The sales realization during the year was Rs. 5,369 crore as against Rs. 4,415 crore in the previous year. The bills amounting to Rs. 5,184 crore (including arrear bills of Rs. 1,055 crore against revision of tariff, water usage charges, tax etc. for the previous years) were raised as against the bills of Rs. 6,101 crore in the previous year. Revised tariff order against review petitions for the period 2009-14 have been issued by Central Electricity Regulatory Commission (CERC) in respect of eight operating power stations.

The outstanding dues pending for more than sixty days as on 31.03.2013 were Rs. 830 crores as against Rs. 1,176 crores on 31.03.2012. Your company has made all out efforts, including regulation of power supply to the defaulting utilities, to recover the outstanding dues. As a result, most of the Beneficiary States are liquidating their dues regularly as per liquidation plan.

During the year 2012-13, the Ministry of Power, Government of India has conveyed its approval to NHPC for payment of outstanding receivable of Rs. 120.81 crore pertaining to M/s Delhi Transco Limited (erstwhile DESU) alongwith an interest of Rs. 240.01 crore, which is likely to be received shortly.

CERC has amended its regulation to enhance the base rate for Return on Equity (ROE) (pre-tax) from 15.5 % to 16.5% in case of storage type generating stations including pumped storage hydro generating stations and run of river generating station with pondage.

These regulations came into effect from the date of their publication in the Official Gazette i.e 31.12.2012.

7. PROJECT MANAGEMENT

Technology is extensively used to monitor the progress of different ongoing projects. Online Project Monitoring Centre has been set up at Corporate Office to facilitate video conferencing and provide live video feeds from cameras installed at strategic locations at sites of projects under construction.

8. NEW SCHEMES

Electricity plays an important role in the growth of an economy. Shortage of coal and other fossil fuel has tilted its focus on the environment friendly Hydro Power. Your Company is currently implementing the growth plan to enhance its power generation capacity. Details of projects awaiting clearance and approval are given in Table 3.

Table 3: Projects in the Clearance/Approval Stage:

UNDER NHPC STAND ALONE

S. No. Name of the project Capacity (MW)

1 KotliBhell-A,Uttarakhand 195

2 Teesta-IV, Sikkim 520

3 Dibang, Arunachal Pradesh 3,000

4 Tawang-I, Arunachal Pradesh 600

5 Tawang-II, Arunachal Pradesh 800

Total 5,115 MW

PROJECT TO BE EXECUTED THROUGH JOINT VENTURES

6 Loktak Downstream, Manipur 66

7 Pakal Dul and others,Jammu and Kashmir 2,120

8 Tipaimukh,Manipur 1,500

Total 3,686 MW

Grand Total 8,801 MW

Detailed Project Reports (DPRs) for all these projects have already been prepared and a majority has been approved by the competent authority. Environmental and Forest Clearances are awaited for some of these projects. Construction activities will start on getting the necessary approvals.

Loktak Downstream Hydroelectric Project in Manipur, Joint Venture Company (JVC) has already been incorporated with State Government for execution of Loktak Downstream Project. In respect of projects for execution in Jammu and Kashmir, the JVC namely M/s Chenab Valley Power Projects (Private) Limited has also been incorporated.

Further, a Memorandum of Understanding (MoU) and Promoter''s Agreement for setting up a Joint Venture Company amongst NHPC Limited, SJVN Limited and Government of Manipur for implementation of Tipaimukh Project was also signed in 2011. However, the Competent Authority has now approved to induct NEEPCO in place of SJVN in the proposed Joint Venture, as JV partner. Accordingly formation ofJVC amongst NHPC, NEEPCO and Government of Manipur is in progress.

Status of various activities in NHDC in Madhya Pradesh, Loktak Downstream Hydroelectric Corporation Limited in Manipur and Chenab Valley Power Projects (Private) Limited in Jammu & Kashmir have been discussed in the Management Discussion and Analysis Report and Corporate Governance Report.

In addition to above, Ministry of Environment and Forests (MOEF) has declined permission for diversion of forest land to two projects namely Kotli Bhel Stage-IB (320 MW) and Kotli Bhel Stage-ll (530 MW) in Uttarakhand (not in table). Further, environment clearance accorded to Kotli Bhel-IB was also withdrawn by MOEF subsequent to which NHPC has filed a civil appeal before the Hon''ble Supreme Court of India.

9. PROJECTS UNDER (DPR / FR) PREPARATION

Preparation of Detailed Project Reports (DPRs), Feasibility Reports (FRs) and Survey & Investigation for the projects are in process, and are mentioned in Table 4.

Table 4: DPRs, FRs and Survey and Investigation

S. No. Projects Capacity (MW)

1 Bursar, J&K 1,020

2 Dhauliganga Intermediate,Uttrakhand* 210

3 Goriganga IIIA, Uttrakhand* 120

Total 1,350 MW

* Implementation Agreement has been signed on 23.01.2013 between NHPC & Govt, of Uttrakhand.

In addition to above, attempts are being made to develop Dulhasti Stage -II (350MW) in Jammu and Kashmir.

10. CONSULTANCY AND BUSINESS DEVELOPMENT SERVICES

Based on Company''s varied expertise and experience acquired over the years, NHPC offers consultancy services in various fields of Hydropower worldwide, such as river basin studies, survey works, design and engineering, geological studies, geo-technical studies, hydraulic transient studies, hydrological studies, contract management, construction management, equipment planning, underground construction, testing, commissioning, operation and maintenance etc. to the leading organizations globally.

Major assignments include, consultancy services to Central and State Government agencies in India and neighbouring countries like Bhutan, Myanmar and Tajikistan.

NHPC has successfully completed eighty four assignments and seventeen are in progress.

11. GLOBAL INITIATIVES

During the Year 2012-13, your Company has made continued efforts towards new global initiatives to achieve its long term strategic objectives. Major foreign assignments completed / in progress during the year 2012-13 are as under:

- Pre-feasibility Report (PFR) for Kuri Gongri Basin Project was submitted to Royal Government of Bhutan/Govt, of India in July, 2012.

- Design and Engineering Consultancy is being offered by NHPC Limited for implementation of Mangdechhu HE Project (720 MW) in Bhutan to Mangdechhu Hydroelectric Project Authority (MHPA)

- The work related to Renovation, Modernisation and Uprating (RMU) of the Varzob-I HE Project in Tajikistan have been completed within scheduled time frame. The project was executed under a Tripartite Agreement signed amongst MEA, BHEL and NHPC.

- Technical Due Diligence Study of Shiroro Hydroelectric Power Station in Nigeria for M/s Dangote Industries Limited was carried out by NHPC Limited.

- In association with PGCIL and BSES Rajdhani an agreement has been signed for providing management consultancy to Ethiopia Electric Power Company (EEPCO).

12. RGGVY - RURAL ELECTRIFICATION (RE) PROJECTS

Your Company is implementing rural electrification projects under the Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) in twenty seven districts of five states, namely West Bengal, Bihar, Jammu and Kashmir, Chhattisgarh and Odisha. The estimated cost of the projects is approximately Rs. 2,837 crore.

Under the scheme, NHPC will undertake electrification of 9,310 Un-electrified and De-electrified (UE/DE) villages, 19,939 Partially Electrified (PE) villages along with providing service connections to 20.74 lac Below Poverty Line (BPL) households.

Your Company has provided electricity to 9,119 Un-electrified/De-electrified villages, 18,076 partially electrified villages and connections to 18.33 Lac BPL households till 31st March, 2013.

13. RURAL ROADS PROJECT

Your Company has signed a Memorandum of Understanding (MoU) with the Ministry of Rural Development, Government of India and Government of Bihar for construction of rural roads in six districts of Bihar under the Pradhan Mantri Gram Sadak Yojana (PMGSY). As per the MoU, NHPC will have responsibility to maintain these roads for five years.

Work on 692 roads covering 2990.14 km have been completed till 31st March, 2013 against the contracts awarded for 758 roads covering 3,228.82 km at a cost of Rs. 1,728.61 crore.

14. INFORMATION TECHNOLOGY AND COMMUNICATION

The Information Technology and Communication infrastructure was upgraded in over fifty four locations. All the sites are now connected with the Corporate Office through multi-mode, fail-safe communication links using MPLS-VPN/VSAT- KuBand/ Broadband technologies.

NHPC has presently co-located key servers at TIER-III Data Centre of NICSI (A Government of India Enterprise) at Delhi. Disaster Recovery (DR) site has also commenced its operations through its Regional Office at Kolkata.

A policy framework has been created to manage the Information Technology (IT) systems to ensure optimum and secure utilization of the assets owned by NHPC.

A host of software applications has been implemented covering key business functions and providing services like Internet, Intranet, Email, Voice, Video Conferencing, Web-casting, Desktop virtualization etc. leveraging the IT and Communication Infrastructure.

Your Company has successfully reduced paper consumption, achieved standardization of data and accuracy of information to a large extent with well planned Information Technology facilities.

SAHAJ SEWA portal has been upgraded and improved to make it employee friendly so that users can have easy access to their personal information etc.

During the year, as per Government directives, the procurement process through Electronic Tender System has been successfully implemented.

15. TRAINING AND HUMAN RESOURCE DEVELOPMENT

The fast changing economic scenario and technological innovations are creating an increasingly competitive market environment. Your Company consistently evaluates and trains its employees to keep them updated with latest changes and relevant knowledge to enhance their productivity and work efficiency.

The training programs are initiated to develop and groom internal talent through multidisciplinary programmes internally and externally.

Besides conducting in-house training workshops, the company also organizes training programs in collaboration with the leading and reputed educational Institutes like, IIMs/XLRIs/IITs etc. by way of strategic alliance to facilitate advance management and leadership development programmes for its employees.

16. EMPLOYEE RELATIONS

During theyear, industrial relations remained cordial and harmoniousatall NHPC projects/stations/units .

17. RESEARCH & DEVELOPMENT

Your Company attaches special attention to Research and Development (R&D) activities to introduce innovations and improvements in its areas of operations. Specific areas in which Research and Development was carried out include:

- Research and Development (R&D) techniques developed in-house to overcome the problem of seepage in reservoirs and structures.

- Development of a Hard Coating Facility for which DPR has been prepared.

- Computational fluid dynamics of water flowing through the penstocks to implement and suggest remedial measures to stop seepage in existing dams and preventive measures in dams under construction.

- A National Perspective Plan (NPP) prepared for Research and Development projects-''Development of Silt Erosion Resistant Material for Turbine of Hydro Generators''.

- Undertaking National Perspective Plan (NPP) projects sponsored by CPRI for carrying out Research and Development (R&D) in ''Tunneling in water charged zones under high hydrostatic pressure''.

18. REHABILITATION AND RESETTLEMENT

NHPC has formulated its own Rehabilitation and Resettlement (R&R) policy in line with the National Rehabilitation and Resettlement Policy (NRRP), 2007 after consultation with various stakeholders.

The policy offers benefits in addition to those proposed in NRRP, 2007. Your Company''s policy aims to address the issues like loss of land, houses, other resources, and means of livelihood or social support systems, that the Project Affected Families (PAFs) may suffer as a result of construction of projects.

Economic sustenance of Project Affected Families (PAFs) is treated with a great level of concern. As provided in the NHPC''s Rehabilitation and Resettlement (R&R) Policy, up to 0.75 percent of the hard cost of a project is kept aside for Community and Social Development Plan (CSDP) towards implementation in the resettlement zone and affected areas.

Further, to implement NHPC''s Rehabilitation and Resettlement (R&R) Policy in its true spirit, an Operational Manual for effective implementation of various Rehabilitation and Resettlement activities has been formulated.

19. FINANCING OF NEW PROJECTS

As per the Central Electricity Regulatory Commission''s guidelines, for the purposes of tariff fixation, the financing of the project is to be considered of in 70:30 Debt Equity Ratio.

In the opinion of your Directors, available internal accruals will be sufficient to finance the equity component for new projects. Your Company is well positioned to raise the required borrowings with its low gearing and strong credit ratings which are at par with sovereign ratings.

The Company is exploring domestic as well as international borrowing options including overseas development assistance provided by bilateral agencies to mobilize the debt required for the planned capacity expansion programme.

20. VIGILANCE ACTIVITIES

NHPC''s Vigilance Division at the Corporate Office has been granted ISO 9001:2008 Certification for implementing Quality Management System by M/s BIS (Bureau of Indian Standard). The entire process has been documented and system of monitoring of vigilance complaints and disciplinary cases have been implemented to avoid delays.

Routine and surprise inspections are conducted by the Vigilance department from time to time. Actionable points identified by Project Vigilance Officers are intimated to Project Head to take necessary steps for corrections.

Intensive examinations of works are also carried out by Chief Technical Examiner (CTE) of the Central Vigilance Commission (CVC) from time to time.

Integrity Pact has been implemented in the company successfully for works of the value of Rs. 15 crores and more and for procurement of goods and services of the value of Rs. 25 lacs and more based on the CVC guidelines.

As a part of a transparent procurement system and in compliance with guidelines issued from MOP and CVC, NHPC has opted for E-procurement solutions in the organization for major procurements. Emphasis has been laid for preventive vigilance by issuing circulars and guidelines based upon inspection/intensive examinations.

Various Vigilance Awareness Programmes were organized to promote transparency, work culture and ethics in the prevailing system. Your Company also conducted a workshop for Vigilance Officers.

21. IMPLEMENTATION OF THE FRAUD PREVENTION POLICY

NHPC has formulated a Fraud Prevention Policy in order to carry out its operations with honesty and drive the country towards growth.

22. OFFICIAL LANGUAGE IMPLEMENTATION

Your Company complied with the provisions and rules of the Official Language Act during the year. Efforts were made to improve the progressive use of official language in accordance with the policy of the Government of India.

The Parliament sub-committee on official language carried out inspections in Teesta Low Dam-IV and Parbati - II H.E Project and appreciated its implementation. Rajbhasha inspections were conducted in the departments of the Corporate Office and at power stations/projects/regional offices.

Regular quarterly meetings of the Official Language Implementation Committee were organized in the Corporate Office where progress of use of Hindi was reviewed in the presence of Directors. Many initiatives were taken to promote official language like organizing Official language Conference, Hindi Fortnight, Regional Rajbhasha Sammelan, All India Kavi Sammelan, Hindi Kavya Path and Bhashan Pratiyogita, Hindi ''Pustak Pathan Saptah, Hindi Kavya Goshthi etc. Rajbhasha magazine titled ''Rajbhasha Jyoti'' was also released bythe Directors.

During this period thirty one workshops were organized in the Corporate Office and employees were given training of Hindi Language and computer typing. Various incentive schemes were introduced to encourage the use of Hindi within the Company.

NHPC has also received the Rajbhasha Shield and Citation as First Prize for two consecutive years i.e. 2011-12 and 2012-13 under the NTPC Rajbhasha Shield Yojna for carrying out outstanding work towards implementation of Rajbhasha among Power Sectors. NHPC has been conferred with Second Prize under the "Indira Gandhi Rajbhasha Shield Yojna" by the Government of India for the year 2010-11 and the award was received from the Hon''ble President of India, Shri Pranab Mukherjee. This is the highest award of Government of India for Rajbhasha.

23. PRINITIATIVES/AWARENESS ACTIVITIES

Your Company''s achievements were duly highlighted through print and electronic media from time to time to project NHPC as a leading and strong hydropower developer in the country.

Image building efforts initiated by NHPC include participation in exhibitions organized by different agencies at different levels and screening of films created to showcase developmental activities of the Company to a varied sections of audience. NHPC also conducted and participated in sports activities under the aegis of the Power Sports Control Board, Ministry of Power from time to time.

To encourage and spread message about energy conservation, NHPC co-ordinated painting competitions at School, State, and National level, in the States of Jammu and Kashmir, Manipur, Sikkim, Arunachal Pradesh and Madhya Pradesh. These events were organized by the Bureau of Energy Efficiency (BEE), and Ministry of Power.

24. AWARDS AND RECOGNITION

The excellent initiatives taken by the Company and employees has won laurels and appreciation from several quarters during the year 2012-2013. Someofthese awardsarementioned herewith:

- IPE Corporate Governance Award: NHPC has been conferred with the ''IPE Corporate Governance Award'' for exemplary initiatives in the area of Corporate Social Responsibility (CSR) by Institute of Public Enterprise (IPE) on 28th Nov, 2012.

- First Prize for Promoting Rajbhasha: Amongst all PSUs, NHPC was awarded First Prize for its outstanding work to promote the use of Rajbhasha, in a function at Srinagar on 24th September, 2012.

- Winner of IPPAI Power Awards "Best Power Producer (Hydro)": NHPC was awarded the "Best Power Producer (Hydro)" at the 13th Regulators and Policymakers Retreat 2012'' function held in Goa on 24th August, 2012.

- Performance Excellence Award: Instituted by the Indian Institution of Industrial Engineering (HIE), NHPC was given the award for the financial year 2010-11 in June, 2012.

- NHPC was conferred with Silver Award in Training Excellence instituted by Greentech Foundation in Association with Indian Institute of Corporate Affairs, Ministry of Corporate Affairs, Government of India.

25. CORPORATE GOVERNANCE

In compliance with Clause 49(VI) of Listing Agreement and DPE Guidelines on Corporate Governance, a separate section on Corporate Governance is given in Annexure - I. Further, in compliance with Clause 49(VII) of the Listing Agreement and DPE Guidelines on Corporate Governance, a Certificate from Practicing Company Secretary regarding compliance of conditions of Corporate Governance is given in Annexure - II and forms part of the Directors'' Report.

26. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In compliance with Clause 49(IV)(F) of Listing Agreement and DPE Guidelines on Corporate Governance as amended from time to time, a separate report on Management Discussion and Analysis is given in Annexure - III and forms part ofthe Directors'' Report.

27. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure - IV and forms part ofthe Directors'' Report.

28. PARTICULARS OF EMPLOYEES

In compliance with Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time, the prescribed information is set out in Annexure - V and forms part of the Directors'' Report. This information is also available on NHPC''s website at www.nhpcindia.com. The Company (excluding Joint Ventures and Subsidiaries) had 10,418 employees as on 31st March 2013. 2 employees employed throughout the year were in receipt of remuneration of more than Rs. 60 lakh per annum and 55 employees employed for a part of the year were in receipt of remuneration of more than Rs. 5 lakh per month.

29. BUSINESS RESPONSIBILITY REPORT

In compliance with Clause 55 of Listing Agreement, a separate section on Business Responsibilty Report has been included and is given in Annexure - VI.

30. SUSTAINABLE DEVELOPMENT AT NHPC

As stipulated under DPE Guidelines on Sustainable Development, a separate chapter on Sustainable Development at NHPC has been given in Annexure - VII.

31. CORPORATE SOCIAL RESPONSIBILITY

Ethically and socially motivated NHPC has contributed towards the economic development of the society at large and towards improving the quality of life of internal as well as external stakeholders. NHPC has well defined CSR and Sustainable Development policy in line with Department of Public Enterprises Guidelines. A number of community development initiatives in the following areas have been undertaken:

Education:

NHPC leads in front when it comes to imparting education, especially to the poor and underprivileged women.

Various Skill Development and Vocational Training Programmes have been initiated to improve quality of life of people living in the surrounding areas ofvarious Project/Power Stations.

A total of 11 (Eleven) ITI''s have been adopted (five in Jammu and Kashmir, four in Uttarakhand and two in Arunachal Pradesh) through Public Private Partnership (PPP) /Vocational Training Improvement Program/Centre of Excellence Scheme (COE).

Women empowerment: NHPC has done a commendable job of empowering women in many ways. It grants scholarships to bright, deserving girl students belonging to economically and socially backward strata of society pursuing education in nearby government school. Your Company has started Vocational Training Centers for women to promote self employment.

Schools have been opened in the areas surrounding Project/Power Stations/Townships to ensure that students are able to pursue their academic ambitions and dreams without economic hindrances.

Health:

Health is a major issue that your company takes very seriously. It has organized during the year medical camps in surrounding areas of Project/Power Stations and distributes free medicines to economically weaker families/individuals.

Keeping women folks and children in mind, NHPC has created an infrastructure that takes care of basic amenities and facilities extended to women, from providing schools, sanitation, maternity centers around NHPC Projects, Power Stations and Townships. Your Company has taken all possible steps within its reach. These steps have brought a remarkable change in the quality of life of these people.

Rural Sports: Rural sports are being promoted by providing sponsorship/equipments and other facilities.

32. RIGHT TO INFORMATION ACT, 2005

In compliance with the provisions of the Right to Information Act, 2005, NHPC published various documents/records on its website during the year under review.

Assistant Public Information Officers were appointed at each of the power stations/projects/regional offices/units to facilitate nationwide access to this information.

33. STATUTORY AUDITORS

The Statutory Auditors of NHPC are appointed by the Comptroller and Auditor General of India. M/s S. N. Nanda and Co., Delhi, M/s Singhi and Co., Kolkata, M/s Baweja and Kaul, Jammu and M/sTiwari and Associates, Delhi were appointed as Joint Statutory Auditors for the financial year 2012-13.

34. AUDITORS'' REPORT

The Auditors'' Report refers to various notes incorporated by the Company in Note no. 30, which are self-explanatory. The report of the Statutory Auditors along with management reply is given in Annexure - VIII. The comments of the Comptroller and Auditor General of India is given in Annexure - IX. The Consolidated Financial Statement of the Company along with the Statutory Auditors'' Report is given in Annexure - X.

35. COST AUDITORS

In accordance with the Cost Accounting Records (Electricity Industry) Rules, 2001, cost accounts are being maintained by all Power Stations of the Company since 2002-03. The cost audit of records for 2012-13 is under process. The following firms of Cost Auditors were appointed to conduct an audit of Cost Accounting Records as indicated against the name of respective Power Station for the financial year 2012-13 under Section 233-B of the Companies Act, 1956:

Name of the Firm Name of Power Station

M/s Chandra Wadhwa and Co., New Delhi Dhauliganga Power Station and Tanakpur Power Station.

M/s Krishan Singh Berk, Faridabad Bairasiul Power Station and Chamera- II Power Station.

M/s R. J. Goel and Co., New Delhi Salal Power Station and Dulhasti Power Station.

M/s Ravi Sahni and Co., New Delhi Uri-I Power Station and Loktak Power Station.

M/s Bahadur Murao and Co., Delhi Rangit Power Station and Teesta-V Power Station.

M/s R. M. Bansal and Co., Kanpur Sewa-ll Power Station and Chamera-I Power Station.

M/s S. C. Mohanty and Associates, Bhubneshwar Chutak Power Station and Chamera- III Power Station.

The Cost Audit Report for the financial year 2011-12 was filed as consolidated one by M/s Krishan Singh Berk, Lead Cost Auditor on 28th December, 2012. The due date for filing the same was 31st December, 2012. The details of Cost Audit Firms for which Cost Audit Report for the financial year 2011-12 was filed are given below:

S. No. Power Name of Cost Auditor Membership Address Station No.

1. Uri-I M/s Ramanathlyer and Co. 13848 BL-4,Paschmi, Shalimar Bagh- 110 088,New Delhi

2. Dulhasti M/s Ramanathlyer and Co. 13848 BL-4,Paschmi, Shalimar Bagh- 110 088,New Delhi

3. Salal M/s R.J.Goeland Co. 56 31,Community Centre, Ashok Vihar,Phase-1, New Delhi - 110 052

4. Chamera-I M/sR.M.Bansal and Co. 3323 A-201,Twin Towers, Lakhan Pur,Kanpur, Uttar Pradesh - 208024

5. Bairasiul M/sKrishan Singh Berk 2724 365,Sector-15, Faridabad- 121 007 (Haryana)

6. Chamera-II M/sKrishan Singh Berk 2724 365,Sector-15, Faridabad- 121 007 (Haryana)

7. Loktak M/s R.J.Goel and Co. 56 31,Community Centre,Ashok Vihar, Phase-1, New Delhi - 110 052

8. Rangit M/sD.Duttand Associates 11633 58,Creek Row, Kolkata-700014

9. Teesta-V M/sD.Duttand Associates 11633 58,Creek Row, Kolkata-700014

10. Dhauliganga M/sChandra Wadhwa and Co. 6797 204,Krishna House, 4805/24,Bharat Ram Road, Daryaganj - 110 002, New Delhi

11. Tanakpur M/s Chandra Wadhwa and Co. 6797 204, Krishna House, 4805/24, Bharat Ram Road, Daryaganj - 110 002, New Delhi

12. Sewa-II M/sR.M.Bansal and Co. 3323 A-201,Twin Towers, Lakhan Pur,Kanpur, Uttar Pradesh - 208024

36. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard (AS)-21 on Consolidated Financial Statements read with AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interest in Joint Ventures, the Audited Consolidated Financial Statements are provided in the Annual Report. A statement of the Holding Company''s interest in the Subsidiary Companies as per Section 212 of the Companies Act, 1956 is annexed to this Annual Report.

37. SUBSIDIARY COMPANIES

Your Company has two Subsidiary Companies namely, NHDC Limited and Loktak Downstream Hydroelectric Corporation Limited the detailed information about these Companies is included in the Management Discussion and Analysis Report.

M/s Chenab Valley Power Projects Private Limited became a subsidiary by virtue of NHPC holding more than 50% of its Paid-up Equity Share Capital ason31.3.2013. The details are also stated in Management Discussion Analysis Report.

The Annual Accounts along with the Auditors'' Report thereon and the Directors'' Report of NHDC Limited, Loktak Downstream Hydroelectric Corporation Limited and Chenab Valley Power Projects Private Limited are not being attached to the Balance Sheet of the Company. In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, any shareholder interested in obtaining a copy of reports pertaining to Subsidiary Companies may write to the Company Secretary, NHPC Limited. The information can also be obtained from www.nhpcindia.com.

The Annual Accounts of the Subsidiary will also be kept open for inspection at the Registered Office of the Company and that of the respective Subsidiary Company.

The consolidated financial statements presented by the Company include the financial results of its Subsidiaries.

38. DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, the Directors hereby confirm the following:

i) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) The Directors had prepared the annual accounts on a going concern basis.

39. RECENT HAPPENINGS

Due to cloud burst and unprecedented high flood in Uttarakhand, water has entered into the Dhauliganga Power Station (280 MW) and submerged all the system on the early hours of 17th June 2013. The generation from the plant has been stopped and efforts are being made to restore the generation at the earliest. In addition to this the water has caused damage to various ancillary structures ofthe project like roads, residential and non-residential buildings. The Power Station is covered under Mega All Risk Insurance Policy for Hydro power station.

40. BOARD OF DIRECTORS

The present composition structure of Directors is given in the Corporate Governance Report.

Since the last report, Shri A. Gopalakrishnan has been re-appointed as Director on 10th March, 2013 subsequent to completion of his earlier tenure on 3rd December, 2012.

41. ACKNOWLEDGEMENTS

Your Directors would like to express their gratitude for the continued support and guidance received from different wings of the Government of India, particularly from the Ministry of Power, the Ministry of Finance, Planning Commission, Ministry of Environment and Forests, Department of Public Enterprises, Ministry of Corporate Affairs, the Central Electricity Authority and Central Water Commission as well as State Governments, the Regional and State Electricity Boards, the beneficiaries drawing power from our power stations as also our other valuable clients for consultancy assignments. Appreciations are also due to various International Financing Institutions as well as Indian Financial Institutions, Bankers, SEBI, Stock Exchanges, Lenders and Investors at large for the confidence reposed in NHPC. The Board also acknowledges and appreciates the contributions made by contactors, vendors, consultants and others for achievement of the desired goals.

Your Directors acknowledge the suggestions received from Statutory Auditors, Cost Auditors and the office of the Comptroller and Auditor General of India and are grateful for their consistent support and cooperation.

Your Directors would also like to place on record their deep and sincere appreciation for the hard work, dedication and unstinting efforts of your Company''s employees to ensure that your Company reaches the pinnacle of success.

For and On behalf of the Board of Directors

(G. Sai Prasad)

Chairman and Managing Director

DIN No.: 00325308

Date: 23.07.2013

Place: New Delhi

 
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