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Directors Report of Tata Power Company Ltd.

Mar 31, 2023

The Directors are pleased to present to you the fourth integrated report (prepared as per the framework set forth by the International Integrated Reporting Council and in accordance with Global Reporting Initiatives (GRI) Standards 2021) and One Hundred and Fourth Annual Report on the business and operations of your Company along with the audited Financial Statements for the financial year ended March 31,2023.

1. FINANCIAL RESULTS

('' crore)

Sl.

Particulars

Standalone

Consolidated

No.

FY23

FY22

FY23

FY22

(a)

Revenue from Operations*

18,848

11,242

56,033

42,576

(b)

Less: Operating Expenditure

16,116

9,560

47,403

35,305

(c)

Operating Profit

2,732

1,682

8,630

7,271

(d)

Add: Other Income

4,085

2,987

1,438

920

(e)

Earning before Interest, Tax, Depreciation & Amortisation

6,817

4,669

10,068

8,191

(f )

Less: Finance Costs

2,227

2,189

4,372

3,859

(g)

Profit before Depreciation and Tax

4,590

2,480

5,696

4,332

(h)

Less: Depreciation & Amortisation

1,167

1,134

3,439

3,122

(i)

Profit Before Share of Profit of Associates and Joint Ventures

3,423

1,346

2,257

1,210

(j)

Add: Share of Profit of Associates and Joint Ventures

Nil

Nil

3,200

1,943

(k)

Pofit/(Loss) before Exceptional Item

3,423

1,346

5,457

3,153

(l)

(Less)/Add: Exceptional Item

688

1,412

Nil

(150)

(m)

Profit/(Loss) before Tax

4,111

2,758

5,457

3,003

(n)

(Less)/Add: Tax Expenses or credit

(843)

493

(1,647)

(379)

(o)

Net Profit after Tax from Continuing Operations

3,268

3,251

3,810

2,624

(p)

Net Profit/(Loss) before Tax from Discontinued Operations

Nil

(468)

Nil

(468)

(q)

(Less)/Add: Tax Expenses or Credit from Discontinued Operations

Nil

Nil

Nil

Nil

(r)

Net Profit/(Loss) after Tax from Discontinued Operations

Nil

(468)

Nil

(468)

(s)

Net Profit for the year

3,268

2,783

3,810

2,156

(t)

Net Profit for the year Attributable to -

- Owners of the Company

3,268

2,783

3,337

1,742

- Non-controlling interests

Nil

Nil

473

414

(u)

Other Comprehensive income (Net of Tax)

111

314

841

473

(v)

Total Comprehensive Income Attributable to -

3,379

3,097

4,651

2,629

- Owners of the Company

3,379

3,097

4,173

2,215

- Non-controlling interests

Nil

Nil

478

414

including regulatory income/ (expense)

2. FINANCIAL PERFORMANCE AND THE STATE OF THE COMPANY''S AFFAIRS

2.1 CONSOLIDATED

The Operating Revenue stood at ? 56,033 crore in FY23 compared to ? 42,576 crore in FY22 on a consolidated basis. The increase was mainly due to higher generation in Mundra Plant due to operation under direction of Ministry of Power (MoP), higher sales across the Distribution business and higher capacity addition in Renewable business. EBITDA was at ? 10,068 crore in FY23 compared to ? 8,191 crore in FY22 mainly due to lower losses in Mundra Plant [operation

under direction of Ministry of Power (MoP)] and higher capacity addition in Renewable business. Finance costs increased from ? 3,859 crore to ? 4,372 crore mainly due to higher capacity addition in Renewable business and increase in interest rate. The Profits from Joint Ventures (JVs) and Associates were higher mainly due to higher profits from Indonesian coal mines on account of higher coal prices which was partly offset by losses in Tata Projects Limited.

The Consolidated Profit after tax in FY23 was at ? 3,810 crore compared to ? 2,156 crore in FY22 mainly due to improved performance across all businesses.

2.2 STANDALONE

The Operating Revenue was at ? 18,848 crore in FY23 compared to ? 11,242 crore in FY22 on a standalone basis mainly due to higher generation from Mundra plant. The Profit after tax in FY23 was ? 3,268 crore as compared to ? 2,783 crore in FY22 mainly due to lower losses in Mundra (operation under direction of MoP) and higher dividend income offset by increase in deferred tax expenses on account of higher profits.

Refer Section 4 of Management Discussion and Analysis (MD&A) report for details.

No material changes and commitments have occurred after the close of the year under review till the date of this Report which affect the financial position of the Company.

2.3 ANNUAL PERFORMANCE

Details of your Company''s annual financial performance as published on the Company''s website and presented during the Analyst Meet, after declaration of annual results, can be accessed using the following link: https://www.tatapower. com/investor-relations/investor-downloads.aspx.

2.4 INTEGRATED REPORT

Continuing with our commitment towards a sustainable future and focus on governance-based reporting, your Company has progressed to publish fourth Integrated Report highlighting the Company''s efforts to empower all categories of customers and stakeholders with future-ready, smart energy solutions.

3. IMPROVEMENT IN LEVERAGE RATIOS AND CASH FROM OPERATIONS

Your Company''s Net Debt / Underlying EBITDA ratio has shown improvement from 3.92 to 2.66 from FY22 to FY23 on a consolidated level. Further, Net Debt / Equity on a consolidated level has also improved from 1.53 to 1.03 from FY22 to FY23. The improvement in both the above ratios reinforces the Company''s commitment to maintain comfortable debt position for sustainable growth. A brief discussion on the highlights of financial performance of your Company and financial and return ratios is presented in the Investors section of Integrated Report (Pages 64-71).

4. MANAGEMENT DISCuSSION AND ANALYSIS

The Management Discussion and Analysis, as required in terms of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), is annexed to this Report.

5. DIVIDEND

Based on the Company''s performance, the Directors of your Company recommend a dividend of ? 2 per share of ? 1 each, subject to the approval of the Members.

Pursuant to the Finance Act, 2020, dividend income is taxable in the hands of the Members w.e.f. April 1, 2020 and the Company is required to deduct tax at source (TDS) from dividend paid to the Members at prescribed rates as per the Income-tax Act, 1961.

The Register of Members and Share Transfer Books of the Company will remain closed from Thursday, June 8, 2023 to Wednesday, June 14, 2023 (both days inclusive) for the purpose of payment of dividend for the financial year ended March 31, 2023.

According to Regulation 43A of the Listing Regulations, the top 1000 listed entities based on market capitalization, calculated as on 31st March of every financial year are required to formulate a Dividend Distribution Policy which shall be disclosed on the website of the listed entity and a weblink shall also be provided in their Annual Reports. Accordingly, the Dividend Distribution Policy of the Company can be accessed using the following link: https://www.tatapower. com/pdf/aboutus/dividend-policy.pdf.

6. current business

Your Company is present across the entire value chain of power business viz. Generation, Transmission, Distribution, Power Trading, Power Services, Coal Mines and Logistics, Solar PV manufacturing and associated Engineering, Procurement and Construction services (EPC), Consumer facing businesses such as solar rooftop, solar pumps, EV charging, home automation and microgrid. Leading position in many of these segments places your Company as one of India''s largest integrated power companies.

There has been no change in the nature of business of the Company during the year.

As on March 31, 2023, your Company has an installed capacity of 14,110 MW out of which 5,250 MW is from "Clean and Green sources" (Hydro, waste heat recovery, wind and solar) which constitute about 37% of total portfolio. Further, during the year, your Company through Resurgent Power Ventures Pte. Limited (Resurgent Platform), has completed the acquisition of NRSS XXXVI Transmission Limited and South East U.P. Power Transmission Company Limited.

Moving away from conventional coal-based power plants with a commitment to reduce carbon footprint and dependency on fossil fuel-based resources like coal and gas, your Company has decided to focus on renewable generation, venturing into consumer-facing businesses like

solar rooftop, solar pumps, EV charging, home automation as well as tapping into opportunities to widen its distribution network and broaden its customer base.

Steered by a vision of empowering a billion lives through sustainable, affordable and innovative energy solutions, your Company through its subsidiary Tata Power Renewable Energy Limited (TPREL) has always been at the forefront of India''s green energy transition through its vertically integrated offerings - Solar, Wind, Hybrid, Storage and EV Chargers. With a renewable capacity of 6,571 MW, including 2,654 MW projects under various stages of implementation, your Company has emerged as one of the country''s most significant renewable energy players over the years and also one of India''s largest integrated renewable energy companies today.

Your Company sees huge long term value creation opportunity in a ''Comprehensive Broad-based Green Energy Business'' by consolidating its renewable business of Generation assets, Solar EPC & Manufacturing, Rooftop, Solar Pump and EV charging business into one single holding company viz. TPREL. To fund the growth capital of renewable business, your Company has partnered with Global Private Equity players, BlackRock Real Assets (BlackRock) and Mubadala Investment Company (Mubadala) by raising primary equity of ? 4,000 crore by diluting 11.43% stake in TPREL.

Your Company has signed a Memorandum of Understanding (MoU) with the Tamil Nadu Government to invest approx. ? 3,000 crore for setting up a greenfield 4 GW Solar Cell and 4 GW Solar Module manufacturing plant in Tirunelveli District of Tamil Nadu. Further, your Company expanded its state-of-the-art manufacturing facility in Bengaluru, taking the total production capacity of cells and modules to 530 MW and 670 MW respectively. The expansion is based on the significant increase in demand that the Company has seen for its solar modules, as well as the expected increase in demand due to supportive policy steps announced recently by the Government of India for creating ''Atmanirbhar Bharat''.

In view of the rising fuel costs and growing climate change awareness across the globe, your Company took several initiatives to promote Electric Vehicle (EV) solutions. As of March, 2023, your Company had engerised 38,500 home chargers and 3,700 public and semi-public charging points across India. Apart from this, your Company has also energise 234 bus charging points in Mumbai, Delhi and Ahmedabad. Your Company has entered into new collaborations with several Government and private bodies for charging solutions such as Indian Army, Indian Navy, Indian Air Force, Starbucks, The Park Hotels, Indian Hotels Company Limited, National Real Estate Development Council, The Airports Authority of India - Ranchi and Kolkata, Tata Communications Limited, Gujarat Gas Limited,

GAIL (India) Limited, State Bank of India, Kolte Patil Developers Limited, Puri Group, Tata Reality and Infrastructure Limited, ICICI Bank Limited, Bridgestone, India Post and many more.

Your Company has been the front runner for pioneering and implementing new technology to benefit the rural power sector ecosystem. Your Company has joined hands with Small Industries Development Bank of India (SIDBI) to launch an innovative program for setting up 1,000 green energy establishments throughout the nation. This initiative is envisioned with the government''s vision of Atmanirbhar Bharat, which will enable sustainable entrepreneurship models across the nation to lead the empowerment of rural entrepreneurs. Your Company has installed 196 microgrid projects till March 31, 2023 with a consumer base of around 20,000 which is in line with its commitment to provide rural population with affordable, clean and reliable power.

Furthermore, your Company has launched smart energy solutions with the idea of "power of smart" through IOT based Home Automation solutions, smart energy management tools and various other home automation products encouraging customers to implement efficient and cost-effective home automation solutions to manage electricity usage.

Your Company''s subsidiary, Tata Power Solar Systems Limited (TPSSL) has commissioned 1.3 GW of Utility scale projects and has an order book of around 4 GW amounting to more than ? 17,000 crore as on March 31,2023. In addition to this, the order book of Rooftop Solar is 468 MW amounting to ? 1,900 crore. In the solar products domain, your Company is a leading player, with a portfolio of over 97,000 solar agricultural pumps across India.

Your Company''s business portfolio has been discussed in detail in the Sustainable Strategy in Action of Integrated Report (Pages 48-55).

7. RESERVES

As per Standalone financials, the net movement in the reserves of the Company for FY23 and FY22 are as follows:

(^ crore)

Particulars

As of

March 31, 2023

As of March 31, 2022

Capital Redemption Reserve

5

5

Capital Reserve

66

66

Securities Premium

3,108

3,108

Debenture Redemption Reserve

216

297

Retained Earnings

8,669

5,896

Equity Instruments through OCI

656

529

Statutory Reserve

660

660

The Board of Directors has decided to retain the entire amount of profits for FY23 in P&L account.

8. SUBSIDIARIES/JOINT VENTURES/ASSOCIATES

As on March 31, 2023, your Company had 75 subsidiaries (8 were wholly owned subsidiaries), 33 JVs and 5 Associates. 3 companies which are subsidiary as per the Companies Act, 2013 (the Act) have been classified as JVs under Indian Accounting Standards (Ind AS).

During the year under review, the following changes occurred in your Company''s holding structure:

a) The following companies have been incorporated as subsidiaries of the Company:

i) TP Solar Limited

ii) TP Nanded Limited

iii) TP Green Nature Limited

iv) TP Adhrit Solar Limited

v) TP Arya Saurya Limited

vi) TP Saurya Bandita Limited

vii) TP Ekadash Limited

viii) TP Govardhan Creatives Limited

ix) TP Narmada Solar Limited

x) TP Bhaskar Renewables Limited

xi) TP Atharva Solar Limited

xii) TP Vivagreen Limited

xiii) TP Vardhman Surya Limited

xiv) TP Kaunteya Saurya Limited

b) The following companies have been acquired as JVs of the Company:

i) NRSS XXXVI Transmission Limited

ii) South East U.P. Power Transmission Company Limited

c) The following company has ceased to be a JV of the Company:

i) Koromkheti Netherlands BV

Your Company has initiated consolidation and simplification of holding struture for its Renewable company viz. TPREL. The Board of Directors of TPREL approved the Schemes of Arrangement for merger of Tata Power Solar Systems Limited, Walwhan Renewable Energy Limited (including its 19 subsidiaries), TP Wind Power Limited and Chirasthaayee Saurya Limited with TPREL.

A report on the performance and financial position of each of the subsidiaries, JVs and Associates has been provided in Form AOC-1 as per Section 129(2) of the Act.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries are available on the website of the Company https://www.tatapower.com/investor-relations/annual-reports-subsidiaries.aspx.

The policy for determining material subsidiaries of the Company has been provided in the following link: https:// www.tatapower.com/pdf/aboutus/policv-for-determining-material-subsidiaries.pdf.

9. DIRECTORS'' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls (IFCs) and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of IFCs over financial reporting by the Statutory Auditors and the reviews performed by management and the relevant Board Committees, including the Audit Committee of Directors, the Board is of the opinion that the Company''s IFCs were adequate and effective during FY23.

Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. they have selected such accounting policies and applied them consistently and made judgements 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. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

10. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Based on the recommendation of the Nomination and Remuneration Committee (NRC), the Board, vide resolution passed on April 21, 2022, approved the re-appointment of Mr. Kesava Menon Chandrasekhar as Independent Director of the Company for a second consecutive term i.e., from May 4, 2022 to February 19, 2023 (on which date he would complete 75 years of age), subject to the approval of the Members by way of a Special Resolution. Vide Special Resolution passed at the 103rd Annual General Meeting (AGM) held on July 7, 2022, the Members approved the re-appointment of Mr. Chandrasekhar as Independent Director of the Company from May 4, 2022 to February 19, 2023. Accordingly, Mr. Chandrasekhar ceased to be a Director of the Company with effect from close of business hours on February 19, 2023. The Company has placed on record its sincere appreciation of the contribution made by Mr. Chandrasekhar during his tenure on the Board of the Company.

Based on the recommendation of the NRC, the Board, vide resolution passed on October 28, 2022, appointed Mr. Rajiv Mehrishi as an Additional Director (Independent) of the Company, for a term of 5 years commencing from October 28, 2022 upto October 27, 2027. The said appointment of Mr. Mehrishi as an Independent Director was approved by the Members by way of a postal ballot on December 13, 2022, in accordance with the provisions of the Act and the Listing Regulations.

At their 99th AGM held on July 27, 2018, the Members had approved the appointment of Dr. Praveer Sinha as CEO & Managing Director of the Company for a period of 5 years commencing from May 1, 2018 upto April 30, 2023. Pursuant to the provisions of Sections 196, 197, 203 and any other applicable provisions of the Act read along with Schedule V to the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, and based on the recommendation of the NRC of the Company, the Board, vide Resolution passed on March 30, 2023, approved the re-appointment of Dr. Sinha as the CEO & Managing Director of the Company, for another term of 4 consecutive years i.e., with effect from May 1, 2023 upto April 30, 2027 (i.e. date of his superannuation from the services of the Company), subject to the approval of the Members at the ensuing AGM.

Vide his letter dated April 27, 2023, Mr. Banmali Agrawala submitted his resignation from the Board of the Company with effect from close of working day on April 28, 2023. The Company has placed on record its sincere appreciation of the contribution made by Mr. Agrawala during his tenure on the Board of the Company.

In accordance with the requirements of the Act and the Company''s Articles of Association, Mr. Hemant Bhargava retires by rotation and is eligible for re-appointment. Members'' approval is being sought at the ensuing AGM for his re-appointment.

During the year under review, the Non-Executive Directors (NEDs) of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees and commission, as applicable, received by them.

In terms of Section 149 of the Act, Ms. Anjali Bansal, Ms. Vibha Padalkar, Mr. Sanjay V. Bhandarkar, Mr. Ashok Sinha and Mr. Rajiv Mehrishi are the Independent Directors of the Company.

In terms of Regulation 25(8) of the Listing Regulations, they have confirmed that they are not aware of any circumstances or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties. Based upon the declarations received from the Independent Directors, the Board of Directors has confirmed that they meet the criteria of independence as mentioned under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations and that they are independent of the management.

In the opinion of the Board, there has been no change in the circumstances which may affect their status as Independent Directors of the Company and the Board is satisfied of the integrity, expertise and experience (including proficiency in terms of Section 150(1) of the Act and applicable rules thereunder) of all Independent Directors on the Board. Further, in terms of Section 150 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, the Independent Directors of the Company have included their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs.

In terms of Section 203 of the Act, following are the Key Managerial Personnel (KMP) of the Company as on March 31, 2023:

• Dr. Praveer Sinha, CEO & Managing Director

• Mr. Sanjeev Churiwala, Chief Financial Officer

• Mr. Hanoz M. Mistry, Company Secretary

11. ANNUAL EVALUATION OF BOARD

PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND INDIVIDuAL DIRECTORS

The annual evaluation process of the Board of Directors, individual Directors and Committees was conducted in accordance with the provisions of the Act and the Listing Regulations.

The Board evaluated its performance after seeking inputs from all the Directors based on criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the committee members based on criteria such as the composition of committees, effectiveness of committee meetings, etc.

The above criteria are broadly based on the Guidance note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.

The Chairman of the Board had one-on-one meetings with the IDs and the Chairman of the NRC had one-on-one meetings with the Executive and Non-Executive, Non-Independent Directors.

In a separate meeting of IDs, performance of Non-Independent Directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of the Executive Director and NEDs.

The NRC reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. and the Board as a whole.

In the Board meeting that followed the meeting of the IDs and meeting of the NRC, the performance of the Board, its committees and individual Directors was also discussed.

The evaluation process endorsed the Board''s confidence in the ethics standards of the Company, cohesiveness amongst the Board members, flexibility of the Board and management in navigating the various challenges faced from time to time and openness of the management in sharing strategic information with the Board.

12. POLICY ON BOARD DIVERSITY AND

DIRECTOR ATTRIBUTES AND REMUNERATION POLICY FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with Part D of Schedule II to the Listing Regulations, the NRC is responsible for determining qualification, positive attributes and independence of a Director. The NRC is also responsible for recommending to the Board, a policy relating to the remuneration of the Directors, KMP and other employees. In line with this requirement, the Board has adopted the Policy on Board Diversity and Director Attributes, which is provided in Annexure - I to this Report and Remuneration Policy for

Directors, KMP and other employees of the Company, which is reproduced in Annexure - II to this Report.

13. BOARD AND COMMITTEES OF THE BOARD Board Meetings:

6 Board Meetings were held during the year under review. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report. The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority.

Committees of the Board:

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority.

The following statutory Committees constituted by the Board function according to their respective roles and defined scope:

• Audit Committee of Directors

• Nomination and Remuneration Committee

• Corporate Social Responsibility and Sustainability Committee

• Stakeholders Relationship Committee

• Risk Management Committee

Details of composition, terms of reference and number of meetings held for respective Committees are given in the Report on Corporate Governance, which forms a part of this Annual Report.

The Company has adopted a Code of Conduct for its employees including the Managing Director. In addition, the Company has adopted a Code of Conduct for its NonExecutive Directors which includes Code of Conduct for Independent Directors, which suitably incorporates the duties of Independent Directors as laid down in the Act. The same can be accessed using the following link: https://www. tatapower.com/pdf/aboutus/Code-of-Conduct-NEDs.pdf.

All Senior Management personnel have affirmed compliance with the Tata Code of Conduct (TCoC). The CEO & Managing Director has also confirmed and certified the same. The certification is enclosed as Annexure - I at the end of the Report on Corporate Governance.

14. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Your Company is a pioneer in propagating energy conservation and operational efficiency with the objective of providing substantial benefit to customers in the form of reduced emissions, pollutants and deliver cost effective and environment friendly energy solutions.

In Mumbai License area, a unique consumer initiative called ''Be Green'' under Demand Side Management (DSM) was launched for residential customers to purchase energy efficient appliances at discounted prices and doorstep delivery. More than 4,600 appliances were delivered in FY23. It is our endeavour to incorporate cutting-edge energy efficiency technologies in our programs which includes supporting customers to become RE100 compliant by offering 100% green energy, paperless processes, 100% EV vehicles for operation and maintenance crew, demand response program with help of future ready smart meter systems to voluntarily manage consumer''s loads.

These initiatives have been discussed in detail in the information on conservation of energy and technology absorption stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, as amended, attached as Annexure - III to this Report.

15. CORPORATE GOVERNANCE

Pursuant to Regulation 34 of the Listing Regulations, Report on Corporate Governance along with the certificate from a Practicing Company Secretary certifying compliance with conditions of Corporate Governance, forms part of this Annual Report.

16. VIGIL MECHANISM

Your Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour. In line with the TCoC, any actual or potential violation, howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. The role of the employees in pointing out such violations of the TCoC cannot be undermined.

Pursuant to Section 177(9) of the Act, a vigil mechanism was established for directors and employees to report to the management instances of unethical behaviour, actual or suspected, fraud or violation of the Company''s code of conduct or ethics policy. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chief Ethics Counsellor / Chairman of the Audit Committee of Directors of the Company for redressal. No person has been denied access to the Chairman of the Audit Committee of Directors.

17. RISK MANAGEMENT

The Board has formed a Risk Management Committee to frame, implement and monitor the risk management

plan for the Company. The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee of Directors has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. Furthermore, your Company has set up a robust internal audit function which reviews and ensures sustained effectiveness of IFC by adopting a systematic approach to its work. The development and implementation of risk management policy has been covered in the Integrated Report (Pages 44-47).

Internal Financial Control Systems and their Adequacy

Your Company''s internal control systems are commensurate with the nature of its business, the size and complexity of its operations and such IFCs with reference to the Financial Statements are adequate. Your Company has implemented robust processes to ensure that all IFCs are effectively working. For details on IFC systems, please refer Integrated Report (Page 45).

There was a cyber-attack on some of the Information Technology (IT) infrastructure of your Company during the year. Your Company had taken steps to retrieve and restore the systems and has also put in proactive next generation preventive tools and capabilities. Your Company, with the help of external experts, investigated the matter and concluded that there is no significant impact on the operations and financial statements of your Company on account of this incident.

18. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS

No significant and materials orders were passed by the regulators or courts or tribunals impacting the going concern status and your Company''s operations in future. There was no application made or proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year under review.

19. statutory auditors

At the AGM held on July 7, 2022, the Members of the Company approved the re-appointment of M/s. S R B C & CO. LLP (SRBC) (ICAI Firm Registration Number: 324982E/ E300003), as the statutory auditors of the Company for a second term of 5 years commencing from the conclusion of the 103rd AGM of the Company till the conclusion of the 108th AGM of the Company to be held in the year 2027.

20. STATUTORY AUDITOR S REPORT

Your standalone and the consolidated financial statements of the Company have been prepared in accordance with Ind AS notified under Section 133 of the Act.

The Statutory Auditor''s report does not contain any qualifications, reservations, adverse remarks or disclaimers.

The Statutory Auditors of the Company have not reported any fraud to the Audit Committee of Directors as specified under section 143(12) of the Act, during the year under review.

The Statutory Auditors were present in the last AGM.

21. COST AUDITOR AND COST AUDIT REPORT

Your Board has appointed M/s. Sanjay Gupta and Associates (Firm Registration No. 000212), Cost Accountants, as Cost Auditors of the Company for conducting cost audit for FY24. A resolution seeking approval of the Members for ratifying the remuneration of ? 6,50,000 (Rupees Six lakh fifty thousand) plus applicable taxes, travel and actual out-of-pocket expenses payable to the Cost Auditors for FY24 is provided in the Notice of the ensuing AGM. Maintenance of cost records as specified by the Central Government under Section 148 (1) of the Act is not applicable to the Company. The Cost Audit Report does not contain any qualifications, reservations, adverse remarks or disclaimers,

22. SECRETARIAL AUDIT REPORT

Makarand M. Joshi & Co., Company Secretaries (Peer Review Number: 640/2019), were appointed as Secretarial Auditors of your Company to conduct a Secretarial Audit of records and documents of the Company for FY23. The Secretarial Audit Report confirms that the Company has complied with the provisions of the Act, Rules, Regulations and Guidelines and that there were no deviations or non-compliances. The Secretarial Audit Report is provided in Annexure-IV to this Report.

The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks or disclaimers.

As per the requirements of Listing Regulations, Practicing Company Secretaries of the material unlisted subsidiaries of the Company have undertaken secretarial audits of subsidiaries for FY23. The Secretarial Audit Reports of such subsidiaries confirms that they have complied with the provisions of the Act, Rules, Regulations and Guidelines and that there were no deviations or non-compliances.

The Secretarial Audit Reports of the unlisted material subsidiaries viz. Walwhan Renewable Energy Limited, Tata Power Solar Systems Limited, TP Western Odisha Distribution Limited and Tata Power Delhi Distribution Limited have been annexed to this Report.

23. SECRETARIAL STANDARDS

Your Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

24. LOANS, GUARANTEES, SECURITIES AND INVESTMENTS

Your Company, being an infrastructure company, is exempt from the provisions as applicable to loans, guarantees, securities and investments under Section 186 of the Act. Therefore, no details are required to be provided.

25. RELATED PARTY TRANSACTIONS

In line with the requirements of the Act and the Listing Regulations, the Company has formulated a Policy on Related Party Transactions and the same can be accessed using the following link: https://www.tatapower.com/pdf/ aboutus/rpt-policy-framework-guidelines.pdf.

During the year under review, all transactions entered into with related parties were approved by the Audit Committee of Directors. Certain transactions, which were repetitive in nature, were approved through omnibus route. As per the Listing Regulations, if any related party transaction exceeds ? 1,000 crore or 10% of the annual consolidated turnover as per the last audited financial statement whichever is lower, would be considered as material and require Members approval. In this regard, during the year under review, the Company had taken necessary Members approval. However, there were no material transactions of the Company with any of its related parties as per the Act. Therefore, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY23 and, hence, the same is not required to be provided.

26. SUSTAINABILITY

Your Company is committed to the Tata Group values and the nation''s vision for sustainable growth and energy security for all. In addition, strong focus is placed on staying abreast of international practices and societal imperatives, in alignment with the UNSDGs. More than 1/3rd of your Company''s generating capacity comes from clean energy sources like solar, wind, hydro and waste heat recovery with further additions being made through hybrid systems and emerging renewable energy technologies. Your Company is also conscious of rising gen-next consumer sentiment around environmentally responsible lifestyle and consumption and has created multiple products and

services that enable customers to make small changes today for a greener tomorrow.

Your Company has announced its sustainability aspirations in alignment with the Tata Group''s vision of sustainability leadership in Project Aalingana. The ambition is to become Carbon Net Zero before 2045, Water Neutral and Zero Waste to Landfill by 2030 and incorporate No Net Loss to Biodiversity by 2030 and decisive measures have been put into motion to steer this transformation journey. Your Company''s efforts on this path have been validated and acknowledged by external ESG experts, with your Company consistently leading the Energy sector rankings, domestic and global. Your Company represented India to co-create the Global Sustainable Development Goals (SDG) roadmap for electric utilities with World Business Council for Sustainable Development (WBCSD) along with 10 other global energy utilities and has made climate strategy commitments aligned to leading international guidance initiatives like Science Based Targets initiative (SBTi) and Task Force on Climate-related Financial Disclosures (TCFD).

26.1 CARE FOR OUR COMMUNITY/COMMUNITY RELATIONS

Our business is dedicated to transforming millions of lives through sustainable practices, eco-friendly offerings, and holistic community development initiatives. We are proud to have reached some of the most remote areas of India through our Tata Power Community Development Trust (TPCDT), which serves as the foundation for our CSR efforts across geographies.

Your Company has always placed the community at the centre of our existence, and we have identified three focus areas to guide our efforts: Education, Employability and Employment, and Entrepreneurship. These areas are reflected in our five flagship initiatives: Club Enerji (promoting education and energy conservation), Adhikaar (financial and digital inclusion), PayAutention (supporting autism), Roshni (Integrated vocational training) and Anokha Dhaaga (Microenterprises for collectives). We also provide essential enablers to meet community development needs through our special initiatives such as Urja. The Company''s rich culture of volunteering is taken forward by ''Arpan'' programme where employees have clocked over one lakh volunteering hours annually. We remain committed to empowering communities and driving positive change in society.

In FY23, Company''s prized initiatives have made their way into the hearts and minds of people residing in 85 districts spanning across 17 states. This remarkable feat includes touching the lives of 37.17 lakh dwelling in 11 aspirational districts as designated by NITI Aayog, Govt. of India, as well

as uplifting the spirits of marginalized communities through our steadfast commitment towards the Tata Affirmative Action (AA) program.

Your Company takes great pride in joining hands with more than 80 esteemed public institutions, including but not limited to the Integrated Child Development Scheme (ICDS), various government hospitals and schools, as well as gram panchayats and forest divisions. Our joint efforts are aimed towards building a society that is more equitable and empowering for all its members.

Flagship initiatives undertaken across various locations during FY23, can be summarized as below:

• Club Enerji, a dynamic resource and energy conservation initiative, has successfully reached 80 schools in New Delhi, Maharashtra, Karnataka, Madhya Pradesh and Tamil Nadu. With a focus on engaging and inspiring young minds, this initiative is fuelling a movement towards responsible energy consumption and environmental stewardship.

• Adhikaar empowers communities and institutions by fostering financial inclusion and bridging the gap to access government social security and welfare schemes. Adhikaar has already expanded to 80 districts across 13 states in India covering 6.46 lakh beneficiaries: developing 800 Adhikaarpreneurs and unlocking value worth ? 180 crore through government schemes.

• PayAutention, a beacon of hope for those seeking support and guidance on autism spectrum disorder in India. Through this initiative, we have trained 895 Anganwadi workers and members of Women Self Help Groups (SHGs) to identify and provide crucial support for those with Autism. Our outreach efforts have also touched the hearts and minds of over 5,000 community members and has reached 17 states across India. Over 50 national and regional organisations have become part of the National Autism support network in India with PayAutention.

• Roshni has illuminated the path to success for thousands of young minds across the nation. With 64 vocational training centres spanning over 15 districts in 11 states, Roshni has paved the way for the youth to shine in the ever-growing green job sector and unlock their potential as budding entrepreneurs. In FY23, an impressive 39,156 individuals have benefited from this enlightening program.

• Abha initiative empowers women to earn while they learn. This initiative has lit up the lives of women in Delhi, Odisha and Mumbai. Collaborating with over 500 SHGs in Odisha, 200 groups in Delhi, and 200 more

in Mumbai, Abha is making strides towards a brighter and more equitable future.

• Anokha Dhaaga is a group of determined and skilled women, led by their entrepreneurial spirit, embarking on a journey of empowerment and self-reliance. This initiative has trained around 26,170 women across 8 states in India and have designed 40 unique creation.

• Urja initiative has been a driving force in supporting the fundamental requirements of communities, under the area of essential enablers and instrumental in improving the lives of people in rural and urban areas, where basic amenities are scarce. This initiative has been felt far and wide, with nearly 200 public institutions including schools across 18 districts benefiting from the programme. Furthermore, the Lab on Bike programme, which is focused on promoting Science, Technology, Engineering and Mathematics (STEM) education in rural areas, has been successfully rolled out in more than 27 schools in Rajasthan, Madhya Pradesh, Maharashtra and Uttar Pradesh providing experiential learning opportunities to nearly 4,000 children.

• Arpan: The Company''s commitment to social and environmental responsibility appears in its Arpan program, which encourages employees to engage with meaningful initiatives and make a positive impact in their communities. In FY23, 18,638 employees volunteered for the initiative and clocked over 1 lakh volunteering hours. The Company earned eight awards at the Tata Sustainability Conclave in November, 2022 for this initiative.

The CSR policy of the Company has been provided on the Company''s website at https://www.tatapower.com/pdf/ aboutus/csr-policy.pdf.

The Company''s standalone CSR spend for FY23 was ? 4.06 crore against nil CSR obligation (calculated as per Section 135 of the Act). Details of the consolidated CSR activities of your Company and its key subsidiaries are described in Communities section of Integrated Report (Pages 100-107) as well as in the Business Responsibility and Sustainability Report (BRSR). The annual report on CSR activities (standalone) is provided in Annexure - V to this Report. On a consolidated basis, the Company''s Group entities expenditure on CSR activities stood at ? 50.01 crore against the CSR obligation of ? 50.19 crore (calculated as per Section 135 of the Act) in FY23. The balance unspent of CSR obligation has been transferred to Special Bank Account in compliance with the provisions of the Act.

26.2 AFFIRMATIVE ACTION

Your Company is committed to fostering social inclusivity and promoting Affirmative Action. With a steadfast focus on uplifting marginalized communities, it has embarked on a journey that aligns with the Tata philosophy. Through our flagship programs, we aim to make a positive impact on the lives of those who need it the most. Our targeted outreach efforts extend to families from Scheduled Castes, Scheduled Tribes, other backward classes, migrant families, sanitation workers, and individuals with disabilities, among other disadvantaged groups. We believe in creating a level playing field for all, and this is reflected in our vendor enlistment and ordering process.

Our Corporate Contracts department, working in conjunction with Procurement Heads at the division and site level, ensures that SC/ST vendors are given equal opportunities to participate in business ventures. We encourage entrepreneurship and offer a 5% price preference over the L1 bidder, providing a fair chance for these vendors to compete. Moreover, we incentivize the engagement of 50% of the workforce by vendors from the SC/ST community, by offering 1% of the contract value. We understand that entrepreneurship is a key driver of growth, and we are committed to supporting enterprise development in the communities where we operate. Our commitment to social inclusivity is an integral part of our business ethos, and we will continue to work towards creating a level playing field for all.

26.3 SuSTAINABILITY REPORTING

Your Company has voluntarily adopted the International Integrated Reporting Council (IIRC)-IR Framework to prepare its fourth Integrated Report FY23 as per SEBI recommendations in February, 2017. Your Company had also voluntarily prepared the Business Responsibility and Sustainability Report (BRSR) a year before the mandated requirement of FY23 by SEBI in May, 2021 for the top 1,000 listed companies (by market capitalization). Your Company has this year again prepared BRSR with disclosures on both Essential and Leadership Indicators. The content of the report is in accordance with the Global Reporting Initiative (GRI) 2021 standards and aligns to the National Voluntary Guidelines (NVG) on Social, Environmental and Economic responsibilities of the business as well as the United Nations SDGs. The Integrated Report communicates your Company''s performance on financial and non-financial aspects to all stakeholders, underlying the priority of our leadership and strategy towards value creation as well as commitment to a more sustainable future with low-carbon smart energy solutions giving more power to you.

1. Environment

Your Company continues to strive for efficiency in operations and maintenance through adoption of best practices optimizing its efficiency parameters like heat rate and auxiliary power consumption resulting in lower resource consumption and optimal carbon emissions. Your Company has been rated "B" under CDP, a reporting framework disclosure. Continuing its path to be a pioneer for environmental stewardship in power industry, your Company further focusses on efficient use of water, prudent recycling and waste disposal measures and remains committed to comply with regulations. In addition, your Company has adopted Rainwater Harvesting policy and fast implementing this policy across all its locations. Your Company also has been strategically focussing on scaling up renewables business, venturing into new energy efficient green business initiatives like Microgrids, EV charging, Home Automations, Solar Rooftop as well as exploring new opportunities in distribution businesses. All these initiatives reinforce your Company''s commitment towards sustainable Green" growth and encouraging the customer to avail energy efficient, future-ready, smart energy solutions.

A brief outline of your Company''s efforts towards protection of environment and biodiversity is given in the Environment section of Integrated Report (Page 108-123)

2. Health and Safety

Your Company is consciously committed to health and safety of all employees and other stakeholders with a defined safety vision ''To be a leader in Safety work practices in the global power and energy business''. Your Company employs a pro-active and pre-emptive approach to occupational health and safety and is committed to actively drive the agenda through the length and breadth of the organisation. Consequently, 100% of your employees and contractual workforce are trained on various aspects of Occupational Health and Safety management system. Your company maintains and continually improve management systems to eliminate hazards, reduce health & safety risks to all our stakeholders. Close monitoring of safety performance has also helped your Company to track desired goal of "No harm No Injuries". Suraksha mobile application (SAP based) is one such monitoring intervention that enables employees to conveniently report safety observations through Surakha Samwad program. Furthermore, your Company has already started venturing towards application of advanced technologies like digitization, e-enablement of safety

processes, usage of drones, robot, remote monitoring, mechanisation, automization, artificial intelligence, video analytics, virtual reality,safe systems for high-risk activities, etc. to eliminate and minimize the risks associated with various activities for betterment of safety performance. More deployment of advanced technologies, skill set and behavioural interventions are planned in the near future for further enhancement of safety performance. A detailed description of Health and Safety initiatives taken by your Company is outlined in Employees section of Integrated Report (Pages 84-95).

3. Customer Relationship

Your Company is working consistently towards becoming a ''Utility of the Future'' with pioneering energy solutions to create a sustainable future. Building lasting relationships with all our stakeholders, especially our customers, is a responsibility which is owned and cherished. Our focus in our routine operations revolves around our customer affection statement, ''To earn the affection of customers by delivering superior value and superior experience thereby making them ambassadors''. Your Company ensures 100% health and safety communication for products and services through safety signage in and around substations and public places.

Your Company has pledged to continue being a bias free and inclusive organisation. Towards this commitment, as a first among Indian power utilities, the first Divyang managed Customer Relation Centre in Mumbai has been inaugurated to serve all consumers with delight. The centre aims in giving a dignified livelihood by encouraging Persons with Disabilities to fearlessly aspire and achieve their dreams. With UJALA, Bills in Braille, the visually impaired are also empowered to understand their power supply bills and pay bills on time. The introduction of dedicated counters across all Customer Relation Centres in Mumbai for Senior Citizens and Persons with Disabilities, lends further credence to the brand which is synonymous with Care for its customers.

Your Company has achieved an annualized sale of 235 MUs in Green Power in FY23. With the power to choose 100% Green Power for entire consumption, this model has received a boost across all DISCOMS in India. Many states have already implemented this solution within their regulatory framework. In caring for the environment, various measures were adopted to encourage consumers to adopt a digital lifestyle. Around 55% of our consumers are now E-Bill consumers and have supported in paperless billing. In addition, your Company achieved benchmark of 88%

in digital payment amount from its consumers. Further, adoption of digital billing and payment will save an estimated 50 lakh sheets of paper yearly.

A detailed description of your customer relation measures is given in Customers section of Integrated Report (Pages 72-83).

4. Human Resource Management

Your Company firmly believes that employees are its greatest asset. The focus of the Human Resources (HR) strategy is to enable the growth of the Company through talent fulfilment for growth areas, capability building in emerging technologies and building internal talent pipeline. Some of the key talent initiatives are Talent NXT- identification and development of future leaders, 3-tier leadership development framework aimed to build leadership at all levels, future skills academies for building future organisational capabilities, ''Daksha'' for future proofing careers through reskilling and re-deployment. Tata Power Cadre Development Program (TPCDP) is deployed for all trainees joining the Company. The TPCDP framework comprises specialized functional and technical training programs, InnoRise, Youth Power Confluence, MyMentor mentoring program and other focused developmental interventions to familiarize the young workforce with the Company''s business lines, culture and to prepare them for taking larger roles in future.

Your Company is also focused on enabling the overall wellbeing of its employees. The same is ensured by ''A Fuller Life''- a holistic health and wellbeing program for the employees focusing on their physical, mental, psychological, financial and career wellbeing.

Your Company is also working towards enabling the inclusion of a more diverse workforce with focus on Gender Diversity, Generational Diversity and Persons with Disability (PwD). People policies are periodically revised and strengthened in order to address the needs and requirements of the workforce.

A detailed description is given in the Employees section of the Integrated Report (Pages 84-95).

26.4 BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT (BRSR)

In accordance with Regulation 34(2)(f) of the Listing Regulations, BRSR, covering disclosures on the Company''s performance on Environment, Social and Governance parameters for FY23, is part of this Integrated Report. BRSR includes reporting on the nine principles of the National Voluntary Guidelines on social, environmental

and economic responsibilities of business as framed by the MCA. Cross referencing is provided in relevant sections of Integrated Report with suitable references to the BRSR.

26.5 PREVENTION OF SEXuAL HARASSMENT

The Company has zero tolerance for sexual harassment at the workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, to provide protection to employees at the workplace and for the prevention and redressal of complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 have been provided in the Report on Corporate Governance as well as MD&A.

27. ANNuAL RETuRN

Pursuant to Section 92 of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014 as amended, the Annual Return is available on the website of the Company on the following link: https://www.tatapower. com/pdf/investor-relations/Annual-Return-MGT-22-23.pdf.

28. PARTICuLARS OF EMPLOYEES AND

remuneration

The information required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is attached as Annexure - VI.

Statement containing the particulars of top ten employees and the employees drawing remuneration in excess of limits prescribed under Section 197(12) of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is an annexure forming part of this Report. In terms of the proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the Members excluding the aforesaid annexure. The said statement is available for inspection with the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary at [email protected].

Officers of the organisation are classified into five management work levels i.e. MA, MB, MC, MD and ME. The work levels are further divided into grades. Non-management employees are across different grades and also have been classified as unskilled, semi-skilled, skilled and highly skilled.

29. DEPOSITS

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the Balance Sheet.

30. FOREIGN EXCHANGE

Particulars - Standalone

- EARNINGS AND OuTGO

('' crore)

FY23 FY22

Foreign Exchange Earnings

3,386

4,656

Foreign Exchange Outflow mainly on account of:

• Fuel purchase

7,528

4,678

• Interest on overseas creditors, NRI dividends

121

58

• Purchase of capital equipment, components and spares and other miscellaneous expenses

49

31

31. ACKNOWLEDGEMENTS

On behalf of the Directors of the Company, I would like to place on record our deep appreciation to our shareholders, customers, business partners, vendors, bankers, financial institutions and academic institutions for all the support rendered during the year.

The Directors are thankful to the Government of India, the various ministries of the State Governments, the Central and State electricity regulatory authorities, communities in the neighbourhood of our operations, municipal authorities of Mumbai, and local authorities in areas where we are operational in India; as also partners, governments and stakeholders in international geographies where the Company operates, for all the support rendered during the year.

Finally, we appreciate and value the contributions made by all our employees and their families for making the Company what it is.

On behalf of the Board of Directors,

N. Chandrasekaran Chairman

Mumbai, May 4, 2023 (DIN:00121863)


Mar 31, 2021

The Directors are pleased to present to you the second Integrated Report (prepared as per the International Integrated Reporting Council (IIRC) framework and in accordance with Global Reporting Initiatives (GRI) standards: Core options) and One Hundred and Second Annual Report on the business and operations of your Company along with the audited Financial Statements of Account for the financial year ended 31st March 2021.

1. Financial Results

Figures in '' crore

Sl.

Particulars

Standalone

Consolidated

No.

FY21

FY20

FY21

FY20

(a)

Net Sales / Income from Other Operations*

6,480

7,075

33,079

28,948

(b)

Less: Operating Expenditure

4,387

4,794

25,474

21,078

(c)

Operating Profit

2,093

2,281

7,605

7,870

(d)

Add/(Less): Forex Loss

24

(11)

(66)

(116)

(e)

Add: Other Income

1,249

583

439

563

(f)

Less: Finance Cost

1,519

1,510

4,010

4,494

(g)

Profit before Depreciation and Tax

1,847

1,343

3,968

3,823

(h)

Less: Depreciation & Amortisation

669

686

2,745

2,634

(i)

Profit Before Share of Profit of Associates and Joint Ventures

1,178

657

1,223

1,189

(j)

Add: Share of Profit of Associates and Joint Ventures

NIL

NIL

873

953

(k)

Profit Before Exceptional Item

1,178

657

2096

2,142

(l)

Add/(Less): Exceptional Item

(109)

(306)

(109)

226

(m)

Profit/ (Loss) before Tax

1,069

351

1,987

2,368

(n)

Add/(Less): Tax Expenses /(Credit)

(101)

(208)

(502)

(641)

(o)

Net Profit after Tax from Continuing Operations

968

559

1,485

1,727

(p)

Profit/ (Loss) before Tax from Discontinued Operations

(220)

(443)

(220)

(443)

(q)

Add/(Less): Tax Expenses /(Credit) from Discontinued Operations

174

32

174

32

(r)

Net Profit/(Loss) after Tax from Discontinued Operations

(46)

(411)

(46)

(411)

(s)

Net Profit for the year

922

148

1,439

1,316

(t)

Net Profit for the year attributable to -

- Owners of the Company

922

148

1,127

1,017

- Non-controlling interests

NIL

NIL

311

299

(u)

Other Comprehensive income (Net of Tax)

185

(53)

(380)

836

(v)

Total Comprehensive Income for the year

1,107

95

1,059

2,153

(w)

Total Comprehensive Income attributable to -

- Owners of the Company

1,107

95

747

1,856

- Non-controlling interests

NIL

NIL

312

297

*Incl

uding rate regulatory income/(expense)


2. Financial Performance and the State of the Company''s Affairs

2.1. Consolidated

The Operating Revenue was at '' 33,079 crore in FY21 compared to '' 28,948 crore in FY20 on a consolidated basis. This is mainly due to acquisition of three Odisha Distribution Companies (Discoms) and execution of major solar Engineering, Procurement and Construction (EPC) projects during the year. Operating Profit was at '' 7,605 crore which is marginally lower by 3% compared to previous year mainly due to favourable tariff order in Maithon Power Limited (MPL) in previous year, lower PLF from wind farms offset by lower losses in Coastal Gujarat Power Limited

(CGPL) on account of lower coal prices and higher profit from Prayagraj acquisition. Finance costs decreased from '' 4,494 crore to '' 4,010 crore mainly due to repayment of loans from sale of non-core assets, issue of preferential capital and lower rate of interest. The profits from Joint Ventures (JV) and Associates were lower mainly due to lower profits from Indonesian coal mines due to lower coal prices.

The Consolidated Profit after tax in FY21 was at '' 1,439 crore compared to '' 1,316 crore in FY20 mainly due to lower losses in CGPL on account of lower coal prices, higher profit from Prayagraj acquisition and lower finance cost.

2.2. Standalone

The Operating Revenue stood at '' 6,480 crore in FY21 compared to '' 7,075 crore in FY20 on a standalone basis. The decrease was mainly due to lower generation and sales on account of lower demand from procurers and customers due to COVID-19 pandemic. The profit in FY21 was '' 922 crore as compared to '' 148 crore in FY20. The increase in the profit was mainly due to higher dividend from foreign subsidiary and lower impairment loss in Strategic Engineering Division (SED) compared to the previous year.

Refer to Management Discussion and Analysis (MD&A) (Pages 161-183) for more details.

No material changes and commitments have occurred after the close of the year under review till the date of this Report which affect the financial position of the Company.

2.3. Annual Performance

Details of your Company''s annual financial performance as published on the Company''s website and presented during the Analyst Meet, after declaration of annual results, can be accessed using the following link: https://www.tatapower.com/pdf/investor-relations/ analvst-presentation-mav-21.pdf.

2.4. Integrated Report

Continuing with your commitment towards a sustainable future and focus towards governance-based reporting, your Company has progressed to second Integrated Report highlighting the Company''s efforts to empower all categories of customers and stakeholders with future-ready, smart, energy solutions.

3. Improvement in Leverage Ratios and Cash from Operations

Your Company''s Net Debt/Underlying EBIDTA ratio has shown improvement from 4.7 to 4.1 from FY20 to FY21 on a consolidated level reinforcing the Company''s commitment to deleverage its balance sheet. Consequently, Net Debt/ Equity on a consolidated level has improved from 2.0 to 1.4 from FY20 to FY21. Your Company''s efficient working capital management has resulted in an increase of 15% in cash from operations over FY20 (FY21-? 8,458 crore vis-avis FY20-? 7,375 crore). A brief discussion on the highlights of financial performance of your Company and financial & return ratios is presented in the financial capital section of Integrated Report (Pages 104-109).

4. Management Discussion and Analysis

The Management Discussion and Analysis, as required in terms of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), is annexed to this Report.

5. Dividend

The Directors of your Company recommend a dividend of '' 1.55 per share of '' 1 each subject to the approval of the Members.

Pursuant to the Finance Act, 2020, dividend income is taxable in the hands of the shareholders w.e.f. 1st April 2020 and the Company is required to deduct tax at source (TDS) from dividend paid to the Members at prescribed rates as per the Income-tax Act, 1961.

The Register of Members and Share Transfer Books of the Company will remain closed from Saturday, 19th June 2021 to Monday, 5th July 2021 (both days inclusive) for the purpose of payment of dividend for the financial year ended 31st March 2021.

According to Regulation 43A of the Listing Regulations, the top 1000 listed entities based on market capitalization, calculated as on 31st March of every financial year are required to formulate a dividend distribution policy which shall be disclosed on the website of the listed entity and a web-link shall also be provided in their annual reports. Accordingly, the Dividend Policy of the Company can be accessed using the following link: https://www.tatapower. com/pdf/aboutus/dividend-policy.pdf.

6. Current Business

Your Company is present across the entire value chain of power business viz Generation, Transmission, Distribution, Power Trading, Power Services, Coal Mines and Logistics, Solar PV manufacturing and associated EPC services, Consumer-facing businesses such as solar rooftop, solar pumps, EV charging, home automation and microgrid. Leading position in many of these segments places your Company as one of India''s largest integrated power companies.

As on 31st March 2021, your Company had an installed capacity of 12,808 MW out of which 3,948 MW is from "Clean and Green sources" (Hydro, waste heat recovery, wind and solar) which constitutes about 31% of the total portfolio.

Moving away from conventional coal based power plants with a commitment to reduce carbon footprint and dependency on fossil fuel based resources like coal and gas, your Company has decided to focus on renewable generation, consumer-facing businesses like solar rooftop, solar pumps, EV charging, home automation as well as tapping into opportunities to widen its distribution network and broaden its customer base. Your Company has acquired four (4) Discoms in Odisha through competitive bidding which will cater to around 9 million consumers and pursuing similar growth opportunity in distribution. Your Company has installed around 161 microgrid projects as on 31st March 2021 with another 40 projects in the

pipeline in line with its commitment to provide the rural population with affordable, clean and reliable power.

Furthermore, your Company has launched smart energy solutions with the idea of "power of smart" through Internet of Things (IOT) based Home Automation solutions, smart energy management tools and various other home automation products encouraging customers to implement efficient and cost-effective home automation solutions to manage electricity usage.

Focussing on achieving growth in an environmentally responsible and sustainable manner, your Company has added 50 MW Solar PV assets in operating portfolio for supply of power to captive consumers and around 6 MW of rooftop projects in the balance sheet of Tata Power Renewable Energy Limited (TPREL). Your subsidiary, Tata Power Solar Systems Limited (TPSSL) has built a portfolio of 406 MW of solar rooftop projects and have an order book of over 2,800 MW with value of around '' 8,700 crore as on 31st March 2021. In the solar products domain, your Company is a leading player, with a portfolio of over 33,000 solar agricultural pumps in 16 states. Your Company''s business portfolio has been discussed in a greater detail in the Manufactured Capital of Integrated Report (Pages 50-65).

6.1 Preferential Allotment of Equity Shares to Tata Sons Private Limited

Subsequent to approval accorded by the shareholders at the 101st Annual General Meeting of the Company on 30th July 2020, the Company issued and allotted 49,05,66,037 Equity Shares of the Company to its Promoter, Tata Sons Private Limited, at a price of ? 53 (including a premium of ? 52) per Equity Share, aggregating up to ? 2,600 crore, for cash consideration, on a preferential basis. The proceeds of the said Preferential Issue were utilized for repayment of debts of the Company and its subsidiaries.

6.2 Scheme of Amalgamation

With a view to simplify the Corporate structure, your Company has filed the following schemes of merger with the Hon''ble National Company Law Tribunal (NCLT), Mumbai Bench, under the applicable provisions of the Companies Act, 2013 (the Act):

a. Scheme of Amalgamation of Af-Taab Investment Company Limited with the Company.

b. Composite Scheme of Arrangement of Coastal Gujarat Power Limited and Tata Power Solar Systems Limited with the Company along with capital reorganisation after the merger.

The aforesaid Schemes are in the interest of the shareholders, creditors and all other stakeholders of the parties and is not prejudicial to the interests of the

concerned shareholders, creditors of the parties or the public at large.

Both the schemes are pending approvals from Regulatory authorities including NCLT.

7. Reserves

As per Standalone financials, the net movement in the

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amount of profits for FY21 in P&L account.

8. Subsidiaries/Joint Ventures/Associates

As on 31st March 2021, the Company had 59 subsidiaries (44 are wholly owned subsidiaries), 33 JVs and 5 Associates. Of the subsidiaries, 3 companies have been classified as JVs under Indian Accounting Standards (Ind AS).

During the year under review, the following changes occurred in your Company''s holding structure:

a) The Company has acquired 51% stake in the following Odisha Discoms:

i) TP Central Odisha Distribution Limited

ii) TP Western Odisha Distribution Limited

iii) TP Southern Odisha Distribution Limited

Note: The Company has also acquired 51% stake in TP Northern Odisha Distribution Limited on 1st April 2021.

b) The following companies have been incorporated as subsidiaries of the Company:

i) TP Kirnali Solar Limited

ii) TP Solapur Solar Limited

iii) TP Saurya Limited

iv) TP Akkalkot Renewable Limited

v) TP Roofurja Renewable Limited

A report on the performance and financial position of each of the subsidiaries, JVs and Associates has been provided in Form AOC-I as per Section 129(2) of the Act.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company at https://www.tatapower.com/investor-relations/ annual-reports-subsidiaries.aspx.

The policy for determining material subsidiaries of the Company has been provided in the following link: https://www.tatapower.com/pdf/aboutus/policy-for-determining-material-subsidiaries.pdf .

9. Directors'' Responsibility Statement

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the Statutory Auditors and the reviews performed by management and the relevant board committees, including the Audit Committee, the Board is of the opinion that the Company''s Internal Financial Controls were adequate and effective during FY21.

Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirms that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. they have 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. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

10. Directors and Key Managerial Personnel

During the year under review, there was no change in the composition of the Board.

In accordance with the requirements of the Act and the Company''s Articles of Association, Mr. N. Chandrasekaran retires by rotation and is eligible for re-appointment. Members'' approval is being sought at the ensuing 102nd Annual General Meeting (AGM) for his re-appointment.

During the year under review, the Non-Executive Directors (NEDs) of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees and commission, as applicable, received by them.

In terms of Section 149 of the Act, Ms. Anjali Bansal, Ms. Vibha Padalkar, Mr. Sanjay V. Bhandarkar, Mr. Kesava M. Chandrasekhar and Mr. Ashok Sinha are the Independent Directors of the Company. The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the Act and the Listing Regulations.

In terms of Regulation 25(8) of the Listing Regulations, they have confirmed that they are not aware of any circumstances or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties. Based upon the declarations received from the Independent Directors, the Board of Directors has confirmed that they meet the criteria of independence as mentioned under Regulation 16(1)(b) of the Listing Regulations and that they are independent of the management.

In terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, Independent Directors of the Company have included their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs.

Ms. Anjali Bansal, Ms. Vibha Padalkar and Mr. Sanjay Bhandarkar were appointed as Independent Directors by the Members on 23rd August 2017, for a period of five years commencing with effect from 14th October 2016 upto 13th October 2021.

The Board, on 12th May 2021, based on the recommendations of Nomination and Remuneration Committee (NRC) and pursuant to performance evaluation of Ms. Bansal, Ms. Padalkar and Mr. Bhandarkar respectively as a Member of the Board and considering their background, experience and contribution, the continued association of these individuals would be beneficial to the Company,

recommended their respective re-appointments as Independent Directors of the Company, not liable to retire by rotation, for a second term of five (5) years commencing with effect from 14th October 2021 upto 13th October 2026 for approval of the Members by way of a Special Resolution at the ensuing 102nd AGM of the Company.

Accordingly, Members'' approval is being sought at the ensuing 102nd AGM for their respective re-appointments.

Eight Board Meetings were held during the year under review. For further details, please refer to the Report on Corporate Governance, which forms part of the Annual Report.

In terms of Section 203 of the Act, the following are the Key Managerial Personnel (KMP) of the Company as on 31st March 2021:

• Dr. Praveer Sinha, CEO and Managing Director

• Mr. Ramesh N. Subramanyam, Chief Financial Officer

• Mr. Hanoz M. Mistry, Company Secretary

11. Annual Evaluation of Board Performance and Performance of its Committees and Individual Directors

The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and Listing Regulations.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors based on criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members based on criteria such as the composition of committees, effectiveness of Committee meetings, etc.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of the Executive Director and NEDs.

The NRC reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on 5th January 2017.

In a subsequent Board meeting, the performance of the Board, its Committees, and individual Directors was also discussed. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

12. Policy on Board Diversity and Director Attributes and Remuneration Policy for Directors, Key Managerial Personnel and Other Employees

In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with Part D of Schedule II to the Listing Regulations, the NRC is responsible for determining qualification, positive attributes and independence of a Director. The NRC is also responsible for recommending to the Board, a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees. In line with this requirement, the Board has adopted the Policy on Board Diversity and Director Attributes, which is provided in Annexure - I to this Report and Remuneration Policy for Directors, Key Managerial Personnel and other employees of the Company, which is reproduced in Annexure - II to this Report.

13. Committees of the Board

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority.

The following statutory Committees constituted by the Board function according to their respective roles and defined scope:

• Audit Committee of Directors

• Nomination and Remuneration Committee

• Corporate Social Responsibility Committee

• Stakeholders Relationship Committee

• Risk Management Committee

Details of the composition, terms of reference and number of meetings held for respective committees are given in the Report on Corporate Governance, which forms part of the Annual Report.

The Company has adopted a Code of Conduct for its employees including the Managing Director and the Executive Directors. In addition, the Company has adopted a Code of Conduct for its Non-Executive Directors which includes Code of Conduct for Independent Directors which suitably incorporates the duties of Independent Directors as laid down in the Act. The same can be accessed using the following link: https://www.tatapower.com/pdf/ aboutus/Code-of-Conduct-NEDs.pdf.

All Senior Management personnel have affirmed compliance with the Tata Code of Conduct (TCoC). The CEO & Managing Director has also confirmed and certified the same. The certification is enclosed as Annexure - I at the end of the Report on Corporate Governance.

14. Conservation of Energy and Technology Absorption

Your Company continues its journey of growth in a sustainable and responsible manner and has achieved significant conservation of energy through its various Demand Side Management (DSM) initiatives as well as fostering energy efficient appliances at highly discounted prices among its customers. More than 6,000 energy efficient appliances like ceiling fans, air conditioners and LED tube lights have been provided to customers in FY21. Furthermore, around 4,000 Mwh of energy savings have been achieved due to the DSM programme in Mumbai license area. These initiatives have been discussed in greater details in the information on Conservation of Energy and Technology Absorption stipulated under Section 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, which is attached as Annexure - III to this Report.

15. Corporate Governance

Pursuant to Regulation 34 of the Listing Regulations, Report on Corporate Governance along with the certificate from a Practicing Company Secretary certifying compliance with conditions of Corporate Governance forms part of the Annual Report.

16. Vigil Mechanism

Your Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour. In line with the TCoC, any actual or potential violation, howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. The role of the employees in pointing out such violations of the TCoC cannot be undermined.

Pursuant to Section 177(9) of the Act, a vigil mechanism was established for directors and employees to report to the management instances of unethical behaviour, actual or suspected, fraud or violation of the Company''s code of conduct or ethics policy. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chief Ethics Counsellor/Chairman of the Audit Committee of the Company for redressal. No person has been denied access to the Chairman of the Audit Committee.

17. Risk Management

Your Board has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee

is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. Furthermore, your Company has set up a robust internal audit function which reviews and ensures sustained effectiveness of internal financial controls by adopting a systematic approach to its work. The development and implementation of risk management policy has been covered in the Integrated Report (Pages 24-27).

Internal Financial Control Systems and their Adequacy

Your Company''s internal control systems are commensurate with the nature of its business, the size and complexity of its operations and such internal financial controls with reference to the Financial Statements are adequate. Your Company has implemented robust processes to ensure that all internal financial controls are effectively working. For details on internal financial control systems, please refer Integrated Report (Page 26).

18. Details of Significant and Material Orders

No significant and materials orders were passed by the regulators or courts or tribunals impacting the going concern status and your Company''s operations in future.

19. Statutory and Branch Auditors

Members of the Company at the AGM held on 23rd August 2017, approved the appointment of M/s. S R B C & CO. LLP (SRBC) (ICAI Firm Registration Number: 324982E/ E300003), as the statutory auditors of the Company for a period of five years commencing from the conclusion of the 98th AGM held on said date until the conclusion of 103rd AGM of the Company to be held in 2022.

The Company has in its Notice sought approval from the Members for passing a resolution vide Item No.8 authorizing the Board to appoint Branch Auditors of any Branch office of the Company, whether existing or which may be opened/acquired, outside India, to act as Branch Auditors.

20. Statutory Auditors'' Report

The standalone and the consolidated financial statements of the Company have been prepared in accordance with Ind AS notified under Section 133 of the Act.

The Statutory Auditor''s report does not contain any qualifications, reservations, adverse remarks or disclaimers.

The Statutory Auditors were present in the last AGM.

21. Cost Auditor and Cost Audit Report

Your Board has appointed M/s. Sanjay Gupta and Associates (Firm Registration No.000212), Cost Accountants,

as Cost Auditors of the Company for conducting cost audit for the FY22. A resolution seeking approval of the Members for ratifying the remuneration of ? 6,50,000 (Rupees Six lakh fifty thousand) plus applicable taxes, travel and actual out-of-pocket expenses payable to the Cost Auditors for FY22 is provided in the Notice to the ensuing 102nd AGM. Maintenance of cost records as specified by the Central Government under Section 148 (1) of the Act is not applicable to the Company.

22. Secretarial Audit Report

M/s. Makarand M. Joshi & Co., Company Secretaries (Peer Review Number: P2009MH007000), were appointed as Secretarial Auditors of your Company to conduct a Secretarial Audit of records and documents of the Company for FY21. The Secretarial Audit Report confirms that the Company has complied with the provisions of the Act, Rules, Regulations, and Guidelines and that there were no deviations or non-compliances except the observation that the Annual Performance Report (APR) for Itezhi Tezhi Power Corporation Limited (ITPC) is still in the process of filing. This was on account of the delay in approval of accounts by ITPC board. The Secretarial Audit Report is provided in Annexure - IV to this Report.

The Secretarial Audit report does not contain any qualifications, reservations, adverse remarks or disclaimers.

As per the requirements of the Listing Regulations, Practicing Company Secretaries of the material unlisted subsidiary of the Company have undertaken secretarial audit for FY21. The Audit Report of such material unlisted subsidiary confirms that they have complied with the provisions of the Act, Rules, Regulations, and Guidelines and that there were no deviations or non-compliances.

The Secretarial Audit Report of the unlisted material subsidiary viz. Tata Power Delhi Distribution Limited has been annexed along with the report of the Company.

23. Compliance with Secretarial Standards

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

24. Loans, Guarantees, Securities and Investments

Your Company, being an infrastructure company, is exempt from the provisions as applicable to loans, guarantees, security and investments under Section 186 of the Act. Therefore, no details are required to be provided.

25. Related Party Transactions

In line with the requirements of the Act and the Listing Regulations, the Company has formulated a Policy on Related Party Transactions and the same can be accessed using the following link: https://www.tatapower. com/pdf/aboutus/rpt-policy-framework-guidelines.pdf.

During the year under review there were no material transactions of the Company with any of its related parties. Therefore, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY21 and hence the same is not provided.

26. Sustainability

Your Company remains committed to sustainable growth, resource conservation, energy efficiency, habitat protection as a responsible corporate citizen with an aim to achieve carbon neutrality. Your Company''s efforts on sustainability were recognized at various platforms and a testimony to this were the various awards bestowed upon it. Your Company won the best Environment Social and Governance (ESG) disclosure at the Investor Relations Award 2020 and ranked 13th in India''s most sustainable companies with an A rating by BW Business world and Sustain lab Paris. Your Company is the only Indian power utility to co-create Sustainability Development Goal (SDG) roadmap for Electric Utilities with World Business Council for Sustainable Development (WBCSD) along with 10 global power utilities.

26.1 Care For Our Community/Community Relations

Your Company focusses on five thrust areas viz. education, health and sanitation, livelihood and skill building, water and financial inclusivity. In these areas, key flagship interventions were undertaken, Tata Power (Standalone) covered around 12.85 lakh people from Maharashtra, Jharkhand and West Bengal and at group level, your Company''s CSR Initiatives covered around 46.65 lakh beneficiaries across 61 locations in 15 states. The Initiatives are aligned to 6 UN SDGs and Schedule VII to the Act.

As a part of its COVID-19 response initiatives, your Company extended extensive support with a focus on migrant and vulnerable communities to 15 states across the country impacting around 16.59 lakh beneficiaries.

Flagship initiatives undertaken across various locations during FY21 can be summarized as below:

• Financial inclusivity program was undertaken across all major locations with 4.59 lakh beneficiaries

covered with resources worth ? 312 crore accessed under various Government Schemes by communities.

• 1,239 Self-Help Group (SHG) (women) covering 14,325 members involved in various flagship initiatives such as Dhaaga, Abha, Sakhi, Roshni and Samriddhi with cumulative revenue generation of ? 4.70 crore.

• New integrated Vocational Training (VT) centres (Roshni) intervention was launched across Bihar, Maharashtra, Karnataka, Jharkand, Odisha and Tamil Nadu. Total 13 VT centres were set up across all the locations with 88% candidates employed/self-employed through these centers.

• Over 70,000 youth were skilled under Daksh intervention and TPSDI initiatives with 25% youth from Affirmative Action (AA) community benefit from the intervention.

• Water Initiatives resulted in a coverage of 11.85 lakh beneficiaries under demand and supply side management of water initiatives across Delhi, Maharashtra, Gujarat, Rajasthan, Madhya Pradesh, Jharkhand and Tamil Nadu.

The CSR policy of the Company has been provided on the Company''s website at https://www.tatapower.com/pdf/ aboutus/csr-policy.pdf.

The Company''s standalone CSR spend for FY21 stood at ? 3.45 crore against the 2% CSR obligation of ? 3.45 crore. Details of the consolidated CSR activities of your Company and its key subsidiaries are described in Social and Relationship Capital of Integrated Report (Pages 86-103) as well as in the Business Responsibility Report (BRR). The annual report on CSR activities (standalone) is provided in Annexure - V to this Report. On a consolidated basis, the Tata Power Group entities'' expenditure on CSR activities stood at ? 39.24 crore against the CSR obligation of ? 38.60 crore (calculated as per Section 135 of the Act) in FY21.

26.2 Affirmative Action

As a part of AA, your Company continued in its journey of working with local vendors and promoting inclusion of SC/ST in business opportunities. This is driven by Corporate Contracts department with a single point of contact at the Corporate level, as well as at Division/ Site level (Procurement Heads at Division level) to facilitate inclusion of SC/ST vendors. AA process for vendor enlistment and ordering was deployed to encourage and evolve entrepreneurship skill among the communities and enable them to be a part of business ecosystem. It also made them compete with positive discrimination element by offering a price preference of 5% over the L1 bidder and gives incentive of 1% of contract value for engaging

50% workforce from SC/ST community. Your Company also promoted entrepreneurship at community level by supporting enterprise development. In this year, business worth ? 9.63 crore was given to 24 vendors from SC/ST community. SHG members were also supported through income generation activities. Your Company supported youth, women, farmers and fishermen through skilling and livelihood initiatives with a focus to increase the income level making community members selfreliant. This has been further described in greater detail in Social and Relationship Capital of Integrated Report.

26.3 Sustainability Reporting

Your Company has adopted the IIRC-IR Framework to prepare its second Integrated Report 2020-21. SEBI recommended Integrated Reporting to be adopted on a voluntary basis by the top 500 companies, which are required to prepare BRR, in February 2017. The content of the report is in accordance with the Global Reporting Initiative (GRI) standards: Core option and espouses linkages from the National Voluntary Guidelines (NVG) on Social, Environmental and Economic responsibilities of the business as well as the United Nations SDGs. The Integrated Report communicates Tata Power''s performance on financial and non-financial aspects to all stakeholders, underlying the importance of our leadership and strategy towards value creation as well as commitment to empower the customers for future-ready energy providing smart energy solutions paving the way for a sustainable future.

1. Environment

Your Company continues to strive for efficiency in operations and maintenance through adoption of best practices optimizing its efficiency parameters like heat rate and auxiliary resulting in lower resource consumption and lower carbon emissions. Continuing on its path to be a pioneer for environmental stewardship in power industry, your Company further focusses on efficient use of water, prudent recycling and waste disposal measures and remains committed to comply with regulations. Your Company also has been strategically focussing on scaling up renewables business, venturing into new energy efficient green business initiatives like Microgrids, EV charging, Home Automations, Solar Rooftop as well as exploring new opportunities in distribution businesses, All these initiatives reinforces your Company''s commitment towards sustainable "Green" growth and encouraging the customer to avail energy efficient, future-ready, smart energy solutions. A brief outline of your Company''s efforts towards protection of environment and biodiversity is given in the Natural Capital section of Integrated Report (Pages 110-125).

2. Health and Safety

Your Company is consciously committed to health and safety of all employees and other stakeholders with a defined safety vision "To be a leader in Safety Excellence in the global power and energy business". Your Company employs a pro-active and pre-emptive approach to occupational health and safety and is committed to actively drive the agenda through the length and breadth of the organization. Consequently, 100% of your contractual workforce is trained on various aspects of Occupational health and safety. Close monitoring of the safety management system helped your company to enhance standard of Health and Safety. Suraksha mobile app is one such monitoring intervention that enables employees to conveniently report unsafe conditions. Furthermore, your Company''s commitment towards ethos of safety was further demonstrated on various responses during COVID-19 pandemic with a working theme of "Learn from disaster and prepare for a safer future". The key focus of this theme was to ensure that health and safety of employees as well as other stakeholders who are fundamental to business are protected and to strengthen your safety measures through numerous rigorous innovation. Furthermore, your Company has already started venturing towards application of advanced technologies like usage of drones, remote monitoring, safe systems for high risk activities etc. to eliminate and minimize the risks associated with various activities for betterment of safety performance. More deployment of advanced technologies is planned in near future for further enhancement of safety performance. A detailed description of Health and Safety including COVID-19 initiatives taken by your Company is outlined in Human Capital section of Integrated Report (Pages 72-85).

3. Customer Relationship

Your Company is working consistently towards a dedicated theme of energizing and sensitizing your customers for smart and future-ready energy solutions to ensure a sustainable future. This involves various IOT based home automations and smart metering solutions for customers across all segments as well as various DSM programs. Furthermore, your Company has been instrumental in raising energy conservation awareness and reducing the energy cost for the consumers through initiatives such as "Be Green", solar rooftop off-grid solutions and other awareness campaigns. Your Company is steadily transitioning from a B2B or a B2G company to a B2C company with enhanced customer-centricity. The customer base is getting more divergent with ventures such as rural electrification

(microgrids), solar rooftop solutions, Electric Vehicle (EV) charging etc. Your Company has numerous touchpoints to be in constant communication with customers as well as a structured process of tracking complaints and ensuring resolution within pre-defined timelines. Your Company has also been a pioneer in leveraging digital technology to serve customers efficiently. Few of such initiatives are Know Your Energy Consumption (KYEC), Webchat integrated chatbot TINA, e-Nach, all women customer relations centre, etc. Webchat integrated chatbot TINA went live on customer portal on 6th January 2021 through which consumer can have live communication with Company officials. Furthermore, through implementation of e-billing, your Company reinforces its commitment towards saving of trees and ecosystem. In FY21, your Company has added more than 1 lakh customers resulting in a total of more than 1.4 lakh customers availing the facilities of e-billing in Mumbai license area. A detailed description of your customer relation measures is given in the Social and Relationship Capital section in the Integrated Report (Pages 86-103).

4. Human Resource Management

A key area of focus for your Company is to safeguard health and well-being of employees and their families while the employees remain steadfast in their service to the nation by providing electricity. Many policies and benefits were introduced and innovative work formats were implemented to maximize safety during pandemic situation. Your Company also continues to endeavour to create a work environment which is collaborative and learning and growth oriented to enable employees to perform at their full potential. Your Human Resource (HR) strategy adopts a multipronged approach covering all the key facets of employee development. Learning as a stated value of the Company also sets the tone of your Company''s aim to develop competencies to rise to new challenges especially posed by venturing into various segments of renewable energy and new business initiatives. Some of the key HR programmes of your Company are Talent Next, Youth Power Confluence, Gyankosh, Reward & Recognition, etc. A detailed description is given in the Human Capital section of the Integrated Report (Pages 79-80).

26.4 Business Responsibility Report

The BRR is in line with the SEBI requirement based on the "National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business" notified by MCA, Government of India, in July 2011. Your Company reported its performance for FY21 as per the BRR framework, describing initiatives taken from an environmental, social and governance perspective.

As per Regulation 34 of the Listing Regulations, the BRR is attached as a part of this Annual Report. Since the Company is publishing Annual Report under IIRC, report on the nine principles of the NVG on social, environmental and economic responsibilities of business as framed by the MCA, is provided in relevant sections of Integrated Report with suitable references to the BRR.

26.5 Prevention of Sexual Harassment

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 have been provided in the Report on Corporate Governance as well as MD&A.

27. Annual Return

Pursuant to Section 92 of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return is available on the website of the Company on the following link: https://www.tatapower. com/pdf/investor-relations/Annual-Return-MGT-20-21.pdf

28. Particulars of Employees and Remuneration

The information required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is attached as Annexure - VI.

Statement containing particulars of top 10 employees and the employees drawing remuneration in excess of limits prescribed under Section 197 (12) of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of this report. In terms ofproviso to Section 136(1) of the Act, the Report and Accounts are being sent to the Members excluding the aforesaid Annexure. The said Statement is also available for inspection with the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary at [email protected].

Officers of the organisation are classified into five management work levels i.e. MA, MB, MC, MD and ME. The work levels are further divided into grades. Nonmanagement employees are across different grades and also have been classified as unskilled, semi-skilled, skilled and highly skilled.

29. Disclosure requirements

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and such systems are adequate and operating effectively.

30. Deposits

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the Balance Sheet.

31. Foreign Exchange - Earnings and Outgo

Figures in ? crore

Particulars - Standalone

FY21

FY20

Foreign Exchange Earnings

809

125

Foreign Exchange Outflow mainly on account of:

843

1,301

• Fuel purchase

706

1,070

• Interest on foreign currency borrowings, NRI dividends

4

3

• Purchase of capital equipment, components and spares and other miscellaneous expenses

133

228

32. Acknowledgements

On behalf of the Directors of the Company, I would like to place on record our deep appreciation to our shareholders, customers, business partners, vendors - both international and domestic, bankers, financial institutions and academic institutions for all the support rendered during the year.

The Directors are thankful to the Government of India, the various ministries of the State Governments, the central and state electricity regulatory authorities, communities in the neighbourhood of our operations, municipal authorities of Mumbai and local authorities in areas where we are operational in India; as also partners, governments and stakeholders in international geographies where the Company operates, for all the support rendered during the year.

The Directors regret the loss of life due to COVID-19 pandemic and are deeply grateful and have immense respect for every person who risked their life and safety, to fight this pandemic.

Finally, we appreciate and value the contributions made by all our employees and their families for making the Company what it is.

On behalf of the Board of Directors,

N. Chandrasekaran Chairman

Mumbai, 12th May 2021 (DIN: 00121863)


Mar 31, 2019

To the Members,

The Directors are pleased to present to you the Hundredth Annual Report on the business and operations of your Company along with the audited Financial Statements of Account for the year ended 31st March 2019.

1. FINANCIAL RESULTS

(Table 1) Figures in Rs. crore

Standalone

Consolidated

FY19

FY18

FY19

FY18#

(a)

Net Sales/Income from Operations*

7,688

7,301

29,493

26,430

(b)

(Less): Operating Expenditure

(5,302)

(4,924)

(22,995)

(20,453)

(c)

Operating Profit

2,386

2,377

6,498

5,977

(d)

(Less)/: Forex Loss/(Gain)

(11)

(20)

(141)

(114)

(e)

Add: Other Income

516

929

396

433

(f)

(Less): Finance Cost

(1,500)

(1,431)

(4,170)

(3,761)

(g)

Profit before Depreciation and Tax

1,391

1,855

2,583

2,535

(h)

(Less): Depreciation/Amortisation/Impairment

(632)

(663)

(2,393)

(2,346)

(i)

Profit Before Share of Profit of Associates and Joint Ventures

759

1,192

190

189

(j)

Add: Share of Profit of Associates and Joint Ventures

-

-

1,287

1,554

(k)

Profit Before Exceptional Item

759

1,192

1,477

1,743

(l)

(Less)/Add: Exceptional Item

1,168

(4,437)

1,746

1,102

(m)

Profit/ (Loss) before Tax

1,927

(3,245)

3,223

2,845

(n)

(Less)/Add: Tax Expenses or Credit

(92)

166

(656)

(162)

(o)

Net Profit/(Loss) after Tax from Continuing Operations

1,835

(3,079)

2,567

2,683

(p)

Profit/ (Loss) before Tax from Discontinued Operations

(192)

(86)

(192)

(86)

(q)

(Less)/Add: Tax Expenses or Credit from Discontinued Operations

66

14

66

14

(r)

Net Profit/(Loss) after Tax from Discontinued Operations

(126)

(72)

(126)

(72)

(s)

Net Profit for the year

1,709

(3,151)

2,441

2,611

(t)

Net Profit for the year Attributable to -

- Owners of the Company

1,709

(3,151)

2,191

2,408

- Non-controlling interests

-

-

250

203

(u)

Other Comprehensive income (Net of Tax)

(45)

45

165

94

(v)

Total Comprehensive Income Attributable to -

1,664

(3,106)

2,606

2,705

- Owners of the Company

1,664

(3,106)

2,356

2,502

- Non-controlling interests

-

-

250

203

*Including rate regulatory income/(expense)

#Restated - Refer notes to consolidated financial statements

2. FINANCIAL PERFORMANCE AND THE STATE OF THE COMPANY’S AFFAIRS

2.1. CONSOLIDATED

On a Consolidated basis, the Operating Revenue was at Rs. 29,493 crore in FY19, compared to Rs. 26,430 crore in FY18. The increase was mainly due to recovery of higher fuel and power purchase cost related to regulated businesses, capacity addition in renewable business and good operational performance by the businesses. The operating profit for the year under review recorded an 8.72% growth over FY18. Finance costs increased from Rs. 3,761 crore to Rs. 4,170 crore largely due to forex, other credits in FY18 and other one-off items. The profits from Joint Ventures (JV) and Associates were lower mainly due to lower FOB price of coal on account of new regulations in Indonesia impacting the coal mines.

The Consolidated Profit after Tax in FY19 was at Rs. 2,441 crore compared to Rs. 2,611 crore in FY18 mainly due to lower profits from coal companies on account of lower FOB price. The current year exceptional items include gain on sale of investments in associate companies viz. Tata Communications Limited (TCL) and Panatone Finvest Limited (PFL) partially offset by impairment provisions of Rithala plant. The previous year’s exceptional items include reversal of impairment provision of investment in coal mining made in earlier years.

[Refer Section 10 - Management Discussion and Analysis (MD&A) of this report for details]

2.2. STANDALONE

On a Standalone basis, the Operating Revenue stood at Rs. 7,688 crore in FY19 compared to Rs. 7,301 crore in FY18. The increase was mainly due to higher fuel cost and power purchase cost being passed through for the regulated business and positive effect of Multi-Year Tariff (MYT) order for the Mumbai license area.

The profit in FY19 was at Rs. 1,709 crore as compared to a loss of Rs. 3,151 crore last year. This was mainly due to provision of Rs. 4,330 crore for impairment of investments in Mundra, Georgia and Trombay generating station in FY18.

The Earnings per Share (Basic and Diluted) in FY19 stood at Rs. 2.63 before exceptional items and at Rs. 5.90 after exceptional items.

(Refer Section 9 - MD&A of this report for details)

2.3. EXCEPTIONAL ITEMS

CGPL-Coal Mines SBU: Considering the fact that the investment in Indonesian coal mines were made to secure coal supply to CGPL and an adverse impact on CGPL is offset to some extent by the investment in the coal mines, the said investments have been treated as a single Cash Generating Unit (CGU). This has a significant impact on how the impairment of the combined CGU is assessed every year as per Ind AS 36.

The combined effect of these two had resulted in an impairment of Rs. 3,555 crore of the investment in CGPL in the standalone accounts and reversal of impairment of Rs. 1,887 crore (part amount of earlier impairment provided) of investment in coal mining companies in consolidated accounts of FY18.

Entry Tax: The Company had received demands in respect of entry tax on import of fuel for Trombay plant. During the year under review, Government of Maharashtra has notified an amnesty scheme for settlement of arrears of tax, interest and penalty. The Company has decided to avail of the scheme and, accordingly, recognized a provision of Rs. 345 crore towards settlement as per the above scheme. The amount has been recognised as revenue to the extent recoverable from consumers.

Sale of Investments in Associate Companies: During the year under review, the Company sold investments in TCL and PFL which were classified as assets held for sale in FY18. The resultant gain on sale of investments of Rs. 1,213 crore and Rs. 1,897 crore has been included as an exceptional income in the standalone and consolidated financial statements respectively.

Others (only in the consolidated accounts): Impairment of Rs. 106 crore for the carrying amount of Rithala power plant has been made in Tata Power Delhi Distribution Limited (TPDDL) due to no likelihood of its operation with gas not being available at administered prices and the partial disallowance of tariff by Delhi Electricity Regulatory Commission (DERC).

No material changes and commitments have occurred after the close of the year under review till the date of this Report which affect the financial position of the Company.

2.4. ANNUAL PERFORMANCE

Details of the Company’s annual financial performance as published on the Company’s website and presented during the Analyst Meet, after declaration of annual results can be accessed on the Company’s website at https://www.tatapower. com/investor-relations/inv-info-archive.aspx (alternatively, scan the adjacent QR code using a mobile device to read the file on the Company website).

3. DIVIDEND

Based on the Company’s performance, the Directors of your Company recommend a dividend of 130% (Rs. 1.30 per share of Rs. 1 each), subject to the approval of the Members.

According to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the top 500 listed entities based on market capitalization, calculated as on 31st March of every financial year, are required to formulate a dividend distribution policy which shall be disclosed in their annual reports and on their websites. Accordingly, the Dividend Policy of the Company is provided in Annexure-I.

The Dividend Policy of the Company can also be accessed on the Company’s website at https://www.tatapower.com/corporate/policies.aspx (alternatively, scan the adjacent QR code using a mobile device to read the policy on the Company website).

4. CURRENT BUSINESS

Your Company is present across the value chain of power business viz. Generation, Transmission, Distribution, Power Trading, Power Services, Coal Mines and Logistics, Solar Photovoltaic (PV) manufacturing and associated Engineering, Procurement & Construction (EPC) services.

The Company has re-organised itself into 4 business verticals in order to bring focus and accountability. These segments will eventually be converted to Strategic Business Units (SBUs) with individual Profit and Loss (P&L) and Balance Sheet targets of their own and this change shall be reflected in the consolidated financial statement from next year onwards.

Currently, the Company (including its subsidiaries) has nearly 33% of its capacity (in MW terms) in clean and green generation sources (hydro, wind, solar and waste heat recovery).

As on 31st March 2019, the Tata Power group of companies had an operational generation capacity of 10,957 MW from various fuel sources - thermal (coal, gas and oil), hydroelectric, renewable energy (wind and solar PV) and waste heat recovery, details of which are given below in Table 2.

Details of generation businesses in operation (Table 2)

Fuel Source

State

Location

Normative Capacity under management (MW)

PPA Tenure

Return Profile

Category Total (MW)

Thermal -Coal/Oil/Gas

Gujarat

Mundra

4,150

Long term PPA

Bid-based

7,340

Maharashtra

Trombay

1,430*

Medium term PPA

Regulated

Jharkhand

Maithon

1,050

Long term PPA

Regulated

Jharkhand

Jojobera

548

Long term PPA

a) Regulated returns

b) Bilaterally negotiated (captive)

Indonesia

PT Citra Kusuma Perdana

54

Long term PPA

Bilaterally negotiated (captive)

New Delhi

Rithala (Gas based)

108

None

PPA is being pursued

Thermal -Waste Heat Recovery

Jharkhand

Jamshedpur

120

Long term PPA

Bilaterally negotiated (captive)

375

Odisha

Kalinganagar

135

Long term PPA

Bilaterally negotiated (captive)

West Bengal

Haldia

120

Short term PPA

Merchant sale and bilateral contracts

Hydro

Maharashtra

Bhira

300

Medium term PPA

Regulated

693

Maharashtra

Khopoli

72

Maharashtra

Bhivpuri

75

Bhutan

Dagachhu

126

Short term PPA

Merchant sale

Zambia

Itezhi Tezhi

120

Long term PPA

Regulated

Renewables

Maharashtra, Gujarat, Madhya Pradesh, Karnataka, Tamil Nadu, Rajasthan, Andhra Pradesh and South Africa

Wind farms

1,161

Long Term PPA

Feed-in tariff and bid-driven contracts

2,549

Andhra

Pradesh, Bihar,

Delhi, Gujarat,

Haryana,

Jharkhand,

Karnataka,

Madhya

Pradesh, Punjab, Rajasthan, Tamil Nadu, Telangana and Uttar Pradesh

Solar

Photovoltaic (PV)

1,388

Long Term PPA

Feed-in tariff and bid-driven contracts

2,549

Total

10,957

*500 MW capacity (Unit#6) is classified as assets held for sale

Details of other businesses (Table 3)

Business

Entity

Returns/ Earnings Model

Key details

Transmission

Tata Power (TPC - T), Mumbai

25-year license w.e.f. August 2015 - regulated Return on Equity

Approx. 1,188 Ckms. of transmission lines, connecting generating stations to 22 receiving stations.

Powerlinks Transmission Limited (PTL)

Regulated Return on Equity

Approx. 2,328 Ckms. of 220 kV and 400 kV transmission lines to evacuate power from Eastern/North Eastern region to Northern Region.

Distribution

Tata Power (TPC - D), Mumbai

25-year license w.e.f. August 2015 - Regulated Return on Equity

Approx. 4,500 Ckms. of distribution network. Approx. 7 lakh consumers.

TPDDL

Regulated Return on Equity

Approx. 15,081 Ckms. of distribution lines. Over 16.96 lakh consumers.

Tata Power Ajmer Distribution Limited (TPADL)

Distribution Franchisee model

Approx. 2,130 Ckms. of network length. Approx. 1.40 lakh consumers.

Coal Investments

Coal and Infrastructure, Indonesia

Returns based on dynamics in International thermal coal market

Stake in Indonesian mines.

Solar PV

manufacturing, EPC

Tata Power Solar Systems Limited (TPSSL)

Returns based on sector dynamics and market competition

Manufacturing and sale of solar PV cells and modules and EPC services.

Power Trading

Tata Power Trading Company Limited (TPTCL)

Returns based on market dynamics in short term and bilateral power market subject to cap prescribed by CERC

Category I power trading license, which permits the company to trade any quantum of power.

Shipping

Trust Energy Resources Pte. Limited, Singapore (TERPL)

Returns based on long term charters

Vessels operated are of cape size.

Power Services

Tata Power

Returns based on sector dynamics and market competition

One of the leading service providers of project management, O&M and specialized services in the power sector.

Percentage contribution of different business models in the Generation segment (excludes those under construction)

(Table 4)

Model

Returns

Tata Power’s Projects

Capacity (MW)

% of overall capacity

Fixed return on equity

1) Regulated Return on Equity

2) Bilateral captive agreement

1) Mumbai Operations (Trombay & Hydro), Maithon, Jojobera Unit #2 and #3, TPDDL

2) IEL (Unit 5, PH6, KPO), Jojobera Unit#1 and #4, CKP (Indonesia)

3,892

35.5

Fixed Tariff (Renewables)

Feed-in-tariff Bid Driven

Wind and Solar projects

2,549

23.3

Fixed Tariff (Thermal/ Hydro)

Bilateral agreement Bid Driven

CGPL, ITPC (Zambia)

4,270

39.0

Merchant

Market driven

Haldia (120 MW) Dagachhu (126 MW)

246

2.2

Total

10,957

100

As part of its focus to prepare for the next phase of growth, the Company has embarked upon a plan to Simplify, Synergize and Scale-up (3S) its operations. The following key steps were taken during the year under review:

a) Sale of TCL and PFL;

b) Sale of Strategic Engineering Division (SED);

c) Purchase of 100% shares in Energy Eastern Pte Limited (EEPL), a wholly owned subsidiary of CGPL by TERPL, a wholly owned subsidiary of the Company;

d) Exploring opportunities to review and monetize overseas investments;

e) Changes in organisational structure.

Sale of Strategic Engineering Division

Your Company decided to sell SED to Tata Advanced Systems Limited, a wholly owned subsidiary of Tata Sons Private Limited at an enterprise value of Rs. 2,230 crore. SED is engaged in the business of indigenous design, development, production, integration, supply and life cycle support of mission critical defence systems. The Company had identified this business as a non-core activity and was looking for an appropriate buyer to exploit its full potential. This sale has been approved by the Company’s shareholders and is pending approval of National Company Law tribunal (NCLT) and Ministry of Defence. The transaction is proposed to be executed on a slump sale basis. The business value is mainly derived from future projections and orders; hence, the sale consideration has been split into upfront payment and milestone-based earn outs. The upfront payment has been agreed at an enterprise value of Rs. 1,040 crore. The upfront value will be adjusted for working capital changes and any profits or losses accrued till the time of closing. The balance earnout payment of Rs. 1,190 crore is subject to receipt of identified orders spread over the next 6 years.

Thermal Investment Platform - Acquisition of Prayagraj Power Generation Company Limited

Resurgent Power Ventures Pte Limited is a joint venture based out of Singapore between the Company, ICICI Bank Limited and international investors such as Kuwait Investment Authority and State General Reserve Fund of Oman. The Company owns a 26 per cent stake and the balance is held by the other investors.

In September 2018, Renascent Power Ventures Private Limited, a wholly owned subsidiary of Resurgent Power Ventures Pte Limited, Singapore signed a SPA with a consortium of lenders led by State Bank of India to acquire 75.01% stake in Prayagraj Power Generation Company Limited (PPGCL), which owns and operates a 1,980 MW supercritical power plant in the state of Uttar Pradesh.

The project has a 25-year PPA for 90% of generated power with UP Discoms with fuel cost as pass-through and Fuel Supply Agreement (FSA) with Northern Coalfields Limited (NCL) for 90% of its fuel requirement. The matter is pending adjudication by the regulator in light of certain conditions imposed prior to transfer of the ownership of the target company.

5. SUBSIDIARIES/JOINT VENTURES/ASSOCIATES

As on 31st March 2019, the Company had 50 subsidiaries (40 are wholly-owned subsidiaries), 38 Joint Ventures (JVs) and 6 Associates. Of the erstwhile subsidiaries, 3 companies have been classified as JVs under Indian Accounting Standards (Ind AS) and one of the investments has been classified as Associate.

During the year under review, the following changes occurred in your Company’s holding structure:

- The entire shareholding in erstwhile associates i.e. TCL and PFL was sold during the year. Renascent Power Ventures Private Limited was incorporated in India as a 100% subsidiary to an existing associate i.e. Resurgent Power Ventures Pte Limited.

A report on the performance and financial position of each of the subsidiaries, JVs and Associates has been provided in Form AOC-1.

The policy for determining material subsidiaries of the Company has been provided on the Company’s website at https://www.tatapower. com/corpo rate/policies.aspx (alternatively, scan the adjacent QR code using a mobile device to read the policy on the Company website).

6. RESERVES

As per Standalone financials, the net movement in the reserves of the Company for FY19 and FY18 is as follows:

Figures in Rs. crore (Table 5)

Particulars - Standalone

As of 31st March 2019

As of 31st March 2018

Capital Redemption Reserve

1.85

1.85

Capital Reserve

61.66

61.66

Securities Premium

5,634.98

5,634.98

Debenture Redemption Reserve

421.95

1,000.61

General Reserve

3,853.98

3,853.98

Retained Earnings

2,954.12

1,878.99

Equity Instrument through OCI

330.48

(374.12)

Statutory Reserve

660.08

660.08

The Board of Directors has decided to retain the entire amount of profits for FY19 in P&L account.

7. FOREIGN EXCHANGE - EARNINGS AND OUTGO

8. REGULATORY AND LEGAL MATTERS

The businesses of the Company are governed primarily by the Electricity Act, 2003 (EA, 2003) and associated regulations. Mentioned below are the critical regulatory orders pertaining to the Company that were issued during FY19, none of which impact the ‘going concern’ status of your Company.

8.1. COASTAL GUJARAT POWER LIMITED

8.1.1. RECOMMENDATIONS OF THE HIGH-POWERED COMMITTEE (HPC) APPOINTED BY THE GOVERNMENT OF GUJARAT

In order to resolve the viability issues of imported coal-based plants in the state of Gujarat, a HPC was set up by the Government of Gujarat in July 2018 and after several rounds of deliberations with various stakeholders like generators, distribution companies, consumer groups, lenders and others, it submitted its report in October 2018. Thereafter, the Government of Gujarat filed a petition with the Supreme Court of India (SC) for seeking clarification on whether the said report can be implemented and if the existing PPA can be amended. The SC clarified that the PPA can be amended if all the parties to the PPA agree to do so and its own judgement of April 2017 passed in this case shall not prevent such an amendment. It also asked CERC to consider the matter at the earliest. Accordingly, the Company has proceeded to amend the PPA with the five states to whom it is supplying power. The Company is in discussion with all the procurers to obtain their consent to the proposed amendments.

8.1.2. CHANGE IN LAW

The Ministry of Environment, Forest and Climate Change, Government of India (MoEF&CC), vide its notification, has revised the environment emissions norms mandating all thermal power plants to comply with the same by 2022.

CGPL’s PPA provides for considering this as a “Change in Law” event as this law was passed after the bidding date (December 2006). Your Company filed a petition with the CERC for declaring this notification as Change in Law to which the CERC has agreed. This order enables CGPL to recover through tariff, the capital cost and additional operational expenditure required to be incurred to meet the revised norms.

8.2. INDONESIAN COAL MINES

The Indonesian government, in early 2018, introduced a Domestic Market Obligation (DMO) scheme which requires a local coal mining company to sell 25 percent of its production to the domestic market at a fixed price of USD 70/MT or the market rate, whichever is lower, to protect state owned power plants against rising coal prices. This impacted the sale realisation of the mines, thereby impacting their profitability. The validity of the policy is till December 2019 and the Indonesian Government will review the same thereafter.

8.3. MUMBAI OPERATIONS

8.3.1. MULTI YEAR TARIFF ORDERS OF MERC

Maharashtra Electricity Regulatory Commission (MERC) passed its Mid-Term Review (MTR) Orders for Tariff Determination for FY19-20 for Mumbai Generation, Transmission and Distribution Business in the month of September 2018. Review petitions, as relevant, against some of the disallowances in the orders have been filed before the appropriate forum and orders for the same have been issued. Appeals have been filed for various issues against all three orders for Generation, Transmission and Distribution and hearings are yet to commence for the same.

8.3.2. ENTRY TAX

Your Company had filed a writ petition before the Bombay High Court (HC) challenging the constitutional validity of the Maharashtra Entry Tax Act and its applicability on some of our imported raw materials. HC dismissed the writ petition. Aggrieved, your Company filed Special Leave Petitions (SLP) with the SC and obtained a stay order. Thereafter, during the pendency of the SLP, the Government of Maharashtra amended the limitation period under the Entry Tax Act with retrospective effect. Aggrieved by this, your Company filed a Writ Petition in SC on the said issue. SC tagged the same along with our earlier SLP. The matter is now awaited for listing for final hearing and disposal.

The Government of Maharashtra in the meanwhile, has issued an Amnesty Scheme for settlement of arrears of tax, interest and penalty levied, payable or imposed under various acts including Entry Tax. The Company has decided to avail of the scheme and, accordingly, recognized a provision of Rs. 345 crore towards settlement as per the above scheme.

8.3.3. EXTENSION OF PPA BETWEEN TPC - G and BEST

MERC, vide its order dated 27th February 2018, approved extension of the validity of the PPA between Tata Power-Generation (TPC-G) and BEST for 677 MW (excluding Unit#6) till 31st March 2019.

Following a re-tendering process, BEST signed an agreement on 28th March 2019 to extend the PPA with TPC-G for a period of five more years till 31st March 2024.

8.3.4. EXTENSION OF PPA BETWEEN TPC - G AND TPC - D

MERC, vide its order dated 26th March 2019, approved extension of the validity of the PPA between TPC-G and Tata Power-Distribution (TPC-D) for 700 MW (excluding Unit#6) for a period of five more years till 31st March 2024. Both parties signed the PPA on 28th March 2019.

8.3.5. DEEMED CLOSURE OF 400 KV VIKROLI RECEIVING STATION AND ALLIED TRANSMISSION SCHEMES

MERC, vide its order on Tata Power - Transmission’s (TPC-T) Mid Term Review (MTR) Petition, ordered deemed closure of ‘400 kV Receiving station at Vikhroli’ transmission scheme.

TPC-T had filed a review petition seeking withdrawal of this deemed closure order. MERC, in January 2019, dismissed this petition and directed the State Transmission Utility (STU) to submit its recommendations regarding execution of the scheme under tariff-based bidding guidelines. TPC-T has filed an appeal before the Appellate Tribunal (APTEL) challenging the MERC order and sought expeditious disposal of the appeal. The hearings in the matter are in progress.

8.4. MAITHON POWER LIMITED (MPL)

PETITION SEEKING REVERSAL OF LIQUIDATED DAMAGES

CERC provisionally deducted Rs. 160 crore from the capital cost for expected Liquidated Damages (LD). MPL has filed a petition giving details of actual LD recovery and requested the CERC to pass the supplementary order for reversal of this deduction.

8.5. POWERLINKS TRANSMISSION LIMITED (PTL)

TRUING-UP FOR FY10-14 AND MULTI YEAR TARIFF FOR FY14-19

CERC had notified a draft amendment to CERC Tariff Regulations, 2014 abolishing the continuation of transmission majoration factor for PTL. PTL had objected to such an amendment. CERC, vide its amendment notified on 30th January 2019, confirmed admissibility of transmission majoration factor to PTL for a period of 25 years from the date of issue of the transmission license.

8.6. ENVIRONMENTAL NORMS

MoEF&CC, vide its notification has revised the environment emissions norms mandating all thermal power plants to comply with the same. Your Company is in the process of filing a petition with CERC seeking approval for the capital expenditure and tariff revision in lieu of the same for existing thermal units wherever applicable.

9. RISKS AND CONCERNS

Your Company is faced with risks of different types, all of which need different approaches for mitigation. Details of various risks faced by the Company are provided in section 4 of MD&A in this Annual Report.

10. RISK MANAGEMENT FRAMEWORK AND INTERNAL FINANCIAL CONTROLS

Risk Management Framework:

The Company has adopted the Risk Management Policy which can be accessed on the Company’s website at https:// www.tatapower.com/corporate/ policies.aspx (alternatively, scan the adjacent QR Code using a mobile device to read the policy on the Company website). As per the said policy, a standardized Risk Management Process and System has been implemented across Tata Power group. Risk plans have been framed for all identified risks and uploaded in the system with mitigation action, target dates and responsibility. The Risk Register contains the mitigation plans. Functional Risk Management Committees closely monitor and review the risk plans.

As per the Listing Regulations, a Risk Management Committee (RMC) was constituted which currently comprises three Independent Directors and one NonExecutive Director. The RMC meets regularly to review critical strategic risks.

The Company was the first power company in India to get ISO 31000:2009 Statement of Compliance in FY15. In August 2018, the British Standards Institution (BSI) did an assessment of the Company and its eight major subsidiaries and conferred the ‘Statement of Compliance’ for Tata Power Group for ISO 31000:2009. The Company also bagged two awards for its Risk Management System.

The Company has obtained two copyrights for Risk Management - one for its Risk Quantification process and another for its web-based Risk Management System.

Internal Financial Controls and Systems:

The Company has its internal audit function which reviews and ensures sustained effectiveness of Internal Financial Controls (IFC) by adopting a systematic approach to its work.

To fulfil the requirements of the Companies Act, 2013 (Act), the in-house internal audit team integrated IFC controls into risk control matrix (RCM) of enterprise processes in FY18. 100% testing of IFC controls was ensured during process audit or creating separate audit areas of IFC testing where process audits were not due.

On review of the internal audit observations and action taken on audit observations, there are no adverse observations having material impact on financials, commercial implications or material non-compliances which have not been acted upon.

The Company continued the Control Self-Assessment (CSA) process, which included seven Tata Power group companies this year, whereby responses of all process owners were used to assess internal controls in each process. This helps the Company to identify focus audit areas, design the audit plan and support CEO/CFO certifications for internal controls.

11 . SAFETY

Safety is a core value for the Company and is given topmost priority. The Company has developed and implemented standards and procedures, in order to achieve world-class safety practices. This has helped in establishing a safety culture and inculcating safe behaviour among the employees and business associates. This ensures zero harm to everyone associated with the Company’s operations directly or indirectly.

The Company is committed to provide a safe and healthy working environment for its employees and associates. A Company-level occupational health and safety policy exists in line with Tata group’s occupational health and safety policy. This ensures increased vigilance and awareness on health and safety. Safety organisation has been established for developing and implementing Safety Management Systems and to facilitate a change in culture through leadership interventions to mitigate risks.

Safety Statistics FY19: (Table 7)

Sl. No

Safety Parameters in your Company’s work jurisdiction (Tata Power, CGPL, MPL, IEL, CTTL, PTL, TPDDL and TPSSL)

FY19

1

Fatality (Number)

2

2

LTIFR (Lost Time Injuries Frequency Rate per million-man hours)

0.26

3

Total Injury Frequency Rate (No of injuries per million-man hours)

1.72

4

Reporting of Safety Observation (higher the better)

1,40,828

Your Company is deeply aggrieved by the fatalities and accidents. It treats any fatality in any of its premises, of any of its employees, contractor/associate employees or any third party, with equal gravitas and is committed to taking the entire working environment and behaviour to the highest safety standards.

Your Company has increased its efforts on safety by adopting the following safety interventions in FY19 to improve safety in the organisation:

- Launched a campaign on Life Changing Injuries and Fatality Elimination Program (LIFE) across the Company.

- Received ISO 45001:2018 certification due to improvements in the safety management system.

- Used analytics for safety indices to enhance safety performance through evolved insights.

- Organised Best Safety Practices Conclaves for horizontal information sharing.

- Deployed Tata Power’s Safety Management System in JVs and Subsidiaries.

- Used a focussed approach on unsafe work stoppage to eliminate the hazard at source.

- Competency building and site safety enhancement of renewable sites.

12. SUSTAINABILITY

Taking forward the century old legacy of being a responsible corporate citizen, your Company continued its journey of practising sustainability in alignment with the core value of Leadership with Care. For your Company, sustainability is about care for the environment, customers and shareholders, community and for our people.

The Company’s efforts on sustainability were recognized at various platforms and a testimony to this were the various awards bestowed upon it. Your Company was ranked 6th in the Responsible Business Ranking for Sustainability and CSR released in November 2018 and won the ICSI CSR Excellence Award 2018 (in medium category) conducted by the Institute of Company Secretaries of India. Your Company also bagged the 2018 CSR Award for Education and Energy Conservation constituted by Indo-American Chamber of Commerce and Industry. Your Company also got the Social Impact Award for CSR for promoting Best Sanitation Practices at Asia Level and Best Sustainable Green Initiative for the Mahseer conservation program by ACEF Forum 2018.

12.1. CARE FOR OUR COMMUNITY/COMMUNITY RELATIONS

Your Company actively worked on five thrust areas viz. education, health and sanitation, livelihood and skill building, water and financial inclusivity in which fifteen flagship interventions were undertaken in the vicinity of the Company’s business presence and beyond, while maintaining focus on Affirmative Action (AA) initiatives of the Tata group.

The CSR policy of the Company has been provided on the Company’s website at https:// www.tatapower.com/corporate/ policies.aspx (alternatively, scan the adjacent QR code using a mobile device to read the policy on the Company website).

The Company’s standalone CSR spend for FY19 stood at Rs. 12.66 crore against the Act requirement of Rs. 12.65 crore.

Details of the consolidated CSR activities of your Company and its key subsidiaries are listed in the MD&A section of this annual report. The annual report on CSR activities (standalone) is provided in Annexure-II to this Report.

12.2. AFFIRMATIVE ACTION

Under its Affirmative Action (AA) program, your Company continued to focus on upliftment of dalit and tribal communities through 5Es under AA viz. Employment, Entrepreneurship, Employability, Education and Essential Amenities around its operating sites.

As part of the enhanced focus, Tata Power Skill Development Institute (TPSDI) inducted 25% trainees from AA communities and achieved more than 80% placements post-training. In total, 1.3 lakh beneficiaries were covered under AA.

Around 1,050 women were covered under ‘Dhaaga’, a Women Empowerment initiative. Out of this, 20% women were from AA communities and were provided training on garment making, traditional handicrafts and other income generation initiatives which helped them generate Rs. 2,500 as average monthly income.

Besides this, your Company also engaged in nurturing vendors and suppliers from AA communities to help with job creation.

12.3. CLUB ENERJI

Tata Power’s Club Enerji is focused on school students to help champion the noble cause of resource conservation and to enhance moral and civic values. The Club has been working ceaselessly towards creating responsible citizens of tomorrow who focus on conserving energy and natural resources, waste management, combatting climate change and active citizenship. Yearly theme for FY19 was ‘Saying No to Plastics’.

Recognizing the immense value that schools can bring to the initiative and taking due consideration of social needs, the Company started ‘Tata Power Club Enerji’ in 2007 to propagate efficient usage of energy and to educate the society on climate change issues. The program has now reached out to 553 schools across Mumbai, Delhi, Pune, Ahmedabad, Bengaluru, Kolkata, Ajmer, Belgaum, Jamshedpur, Lonavala and five more cities. It has reached out to more than 2.38 crore citizens, collectively saved 29.8 million units. All over India, 2,000 mini clubs have also been formed under the Club Enerji initiative.

Some of key highlights this year include conducting rallies and skits based on resource conservation and saying no to plastics, session on urban bio diversity, a nationwide contest called “Bijli Bachao “which received more than 1,000 entries from India and abroad. Additionally, Club Enerji also collaborated with Yes Bank to spread the message of conservation across its branches. The program is also a case study in IIM Ahmedabad and has been featured at IIM-A’s TEDx event under the theme ‘Inspiring the Future’.

The initiative has won several domestic and international accolades and has also been recognized as a best practice within Tata group. In FY18, Club Enerji won the ABCI award for its module on active citizenship. It also won the prestigious ET CSR Leadership award under the category ‘Cause Branding’ and PRCI (Public Relations Council of India) award for the Club’s revamped website under the ‘Digital Newsletter’ category.

12.4. SUSTAINABILITY REPORTING

Your Company has adopted the Global Reporting Initiative (GRI) Standards for its upcoming Sustainability Report for FY19, which is currently under preparation, to report on sustainability performance specific to the Indian operations of your Company viz. generation, transmission and distribution. The Company’s Sustainability Reports can be accessed on the Company’s website at https://www.tatapower. com/sustainability/communication.aspx (alternatively, scan the adjacent QR code using a mobile device to read the policy on the Company website).

12.5. BUSINESS RESPONSIBILITY REPORT (BRR)

The Business Responsibility Reporting is in line with the SEBI requirement based on the ‘National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business’ notified by Ministry of Corporate Affairs (MCA), Government of India, in July 2011. Your Company reported its performance for FY19 as per the BRR framework, describing initiatives taken from an environmental, social and governance perspective.

12.6. PREVENTION OF SEXUAL HARASSMENT

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 have been provided in the Report on Corporate Governance as well as MD&A.

13. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Change in Board Composition

Mr. Anil Sardana resigned as CEO & Managing Director of the Company effective close of business hours on 30th April 2018.

Mr. Praveer Sinha was appointed as CEO & Managing Director of the Company for a period of 5 years from 1st May 2018 to 30th April 2023. His appointment as CEO & Managing Director was approved at the 99th Annual General Meeting (AGM) by the Members.

Mr. Ashok S. Sethi has superannuated from the services of the Company w.e.f. close of business hours on 30th April 2019, on completing 65 years of age, as per the guidelines adopted by the Company for retirement of Executive Directors. Consequently, he has ceased to be COO & Executive Director of the Company effective the said date. The Board has placed on record its deep sense of appreciation of the valuable contribution made by Mr. Sethi to the operations and growth of the Company during his long association with the Company.

On the recommendation of the Nomination and Remuneration Committee (NRC), Mr. Ashok Sinha was appointed as Additional and Independent Director of the Company for a period of 5 years from 2nd May 2019 to 1st May 2024, subject to approval of the Members at the ensuing general meeting.

In accordance with the requirements of the Act and the Company’s Articles of Association, Mr. Banmali Agrawala retires by rotation and is eligible for re-appointment. Members’ approval is being sought at the ensuing AGM for his re-appointment.

Number of Board Meetings

Seven Board Meetings were held during the year under review. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.

Independent Directors

In terms of Section 149 of the Act and the Listing Regulations, Mr. Nawshir H. Mirza, Mr. Deepak M. Satwalekar, Ms. Anjali Bansal, Ms. Vibha Padalkar, Mr. Sanjay V. Bhandarkar, Mr. K. M. Chandrasekhar and Mr. Ashok Sinha are the Independent Directors of the Company as on date. The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act read with rules framed thereunder and Regulation 16(1)(b) of the Listing Regulations. In terms of Regulations 25(8) of the Listing Regulations, the Independent Directors have confirmed that they are not aware of any circumstance or situation which exists or may be anticipated that could impair or impact their ability to discharge their duties.

At the AGM held on 13th August 2014, Mr. Mirza and Mr. Satwalekar were appointed as Independent Directors of the Company for a period of 5 years. Thus, they will hold office till 12th August 2019.

Key Managerial Personnel

In terms of Section 203 of the Act, the following are the Key Managerial Personnel (KMP) of the Company as on 31st March 2019:

- Mr. Praveer Sinha, CEO and Managing Director

- Mr. Ashok S. Sethi, COO & Executive Director (superannuated on 30th April 2019)

- Mr. Ramesh N. Subramanyam, Chief Financial Officer

- Mr. Hanoz M. Mistry, Company Secretary

Codes of Conduct for Directors and Employees

The Company has adopted a Code of Conduct for its Non-Executive Directors including a code of conduct for Independent Directors which suitably incorporates the duties of Independent Directors as laid down in the Act. The Company has also adopted the Tata Code of Conduct for its employees including the Managing and Executive Directors. The above codes can be accessed on the Company’s website at https:// www.tatapower.com/corporate/ policies.aspx (alternatively, scan the adjacent QR Code using a mobile device to read the policy on the Company website).

In terms of the Listing Regulations, all Directors and senior management personnel have affirmed compliance with their respective codes. The CEO & Managing Director has also confirmed and certified the same, which certification is provided at the end of the Report on Corporate Governance.

14. ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors, pursuant to the provisions of the Act and Listing Regulations.

The performance of the Board was evaluated by the entire Board after seeking inputs from all the Directors on the basis of criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc. The performance of the Committees was evaluated after seeking inputs from the Committee members on the basis of criteria such as the composition of Committees, effectiveness of Committee meetings, etc. The above criteria are based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on 5th January 2017.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, the Board as a whole and the Chairman of the Company after taking into account the views of Executive Directors and Non-Executive Directors, was evaluated. The Board and the NRC reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In the Board meeting that followed the meeting of the Independent Directors and meeting of the NRC, the performance of the Board, its Committees, and individual Directors was also discussed. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

Outcome of evaluation process

Based on inputs received from the members, it emerged that the Board had a good mix of competency, experience, qualifications and diversity. Each Board member contributed in his/her own manner to the collective wisdom of the Board, keeping in mind his/her own background and experience. There was active participation and adequate time was given for discussing strategy. Some of the directors felt that the grievance redressal mechanism of investors etc. required to be reviewed by the Board. Overall, the Board was functioning very well in a cohesive and interactive manner.

15. REMUNERATION POLICY FOR THE DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with Part D of Schedule II to the Listing Regulations, the NRC is responsible for formulating the criteria for determining qualification, positive attributes and independence of a Director. The NRC is also responsible for recommending to the Board, a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees. In line with this requirement, the Board has adopted the Policy on Board Diversity and Director Attributes, which is provided in Annexure-III to this Report and Remuneration Policy for Directors, Key Managerial Personnel and other employees of the Company, which is reproduced in Annexure-IV to this Report.

16. COMMITTEES OF THE BOARD

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority.

The following statutory Committees constituted by the Board function according to their respective roles and defined scope:

- Audit Committee of Directors

- Nomination and Remuneration Committee

- Corporate Social Responsibility Committee

- Stakeholders Relationship Committee

- Risk Management Committee

Details of composition, terms of reference and number of meetings held for respective committees are given in the Report on Corporate Governance, which forms a part of this Report. Further, during the year under review, all recommendations made by the Audit Committee have been accepted by the Board.

17. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION

The information on conservation of energy and technology absorption stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is attached as Annexure - V to this Report.

18. PARTICULARS OF EMPLOYEES AND REMUNERATION

The information required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is attached as Annexure - VI.

The information required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in the Annexure forming part of this Report. In terms of the proviso to Section 136 of the Act, the Report and Accounts are being sent to the Members excluding the aforesaid Annexure. Any member interested in obtaining the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure are related to any Director of the Company.

Officers of the organisation are classified into five management work levels i.e. MA, MB, MC, MD and ME. The work levels are further divided into grades. Non management employees are across different grades and also have been classified as unskilled, semi-skilled, skilled and highly skilled.

19. RELATED PARTY TRANSACTIONS

In line with the requirements of the Act and the Listing Regulations, the Company has formulated a Policy on Related Party Transactions and the same can be accessed on the Company’s website at https:// www.tatapower.com/corporate/ policies.aspx (alternatively, scan the adjacent QR Code using a mobile device to read the policy on the Company website).

During the year under review, all transactions entered into with related parties were approved by the Audit Committee. Details of transactions with related party as per Form AOC-2 are provided in Annexure-VII to this Report.

20. DEPOSITS (Table 8)

Sl. No.

Particulars

Amount in Rs.

1.

Accepted during the year

Nil

2.

Remained unpaid or unclaimed at the end of the year*

2,58,105

3.

Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved

NA

- At the beginning of the year

- Maximum during the year

- At the end of the year

4.

Details of deposits which are not in compliance with the requirements of Chapter V of the Act

NA

21. LOANS, GUARANTEES, SECURITY AND INVESTMENTS

The Company, being an infrastructure company, is exempt from the provisions as applicable to loans, guarantees, security and investments under Section 186 of the Act. Therefore, no details are provided.

22. EXTRACT OF ANNUAL RETURN

Pursuant to Sections 92 & 134(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of Annual Return in Form MGT-9 is provided in Annexure-VIII to this Report.

The extracts of the Annual Return of the Company can also be accessed on the Company’s website at https:// www.tatapower.com/investor-relations/a nnual-return.pdf (alternatively, scan the adjacent QR Code using a mobile device to read the policy on the Company website).

23. STATUTORY AUDITORS

At the 98th AGM held on 23rd August 2017, the Members had approved the appointment of M/s. S R B C & CO. LLP (SRBC), Chartered Accountants (ICAI Firm Registration No.324982E/E300003) as the Statutory Auditors for a period of 5 years commencing from the conclusion of the 98th AGM until the conclusion of the 103th AGM to be held in the year 2022. Pursuant to Sections 139 and 141 of the Act read with the Companies (Audit and Auditors) Rules 2014, SRBC has furnished a certificate of their eligibility and consent as the Auditors of the Company.

The standalone and the consolidated financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Act.

The Statutory Auditor’s report does not contain any qualifications, reservations, adverse remarks or disclaimers.

The Statutory Auditors were present at the last AGM.

24. BRANCH AUDITORS

Members’ approval is being sought vide Item No. 6 of the Notice, for authorizing the Board of Directors to appoint Branch Auditors for the purpose of auditing the accounts maintained at the Branch Offices of the Company abroad.

25. COST AUDITORS

Your Board has appointed M/s. Sanjay Gupta and Associates, Cost Accountants, as Cost Auditors of the Company for conducting cost audit for FY20. A resolution seeking ratification of remuneration payable to the Cost Auditors for FY20 is provided at Item No. 7 of the Notice of the ensuing AGM.

Pursuant to Section 148 of the Act, your Company carries out an annual audit of cost accounts relating to electricity. The Cost Audit Report and the Compliance Report of your Company for FY18, was filed on 13th August 2018 with the Ministry of Corporate Affairs through Extensive Business Reporting Language (XBRL) by M/s. Sanjay Gupta and Associates, Cost Accountants, before the due date of 30th September 2018. Further, the cost accounts and records as required to be maintained under Section 148 of the Act are duly made and maintained by the Company.

26. SECRETARIAL AUDITORS

M/s. Parikh & Associates, Company Secretaries, were appointed as Secretarial Auditors of your Company to conduct a Secretarial Audit of records and documents of the Company for FY19. The Secretarial Audit Report confirms that the Company has complied with the provisions of the Act, Rules, Regulations and Guidelines and that there were no deviations or non-compliances.

The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks or disclaimers. The Secretarial Audit Report is provided in Annexure-IX to this Report.

As per the requirements of the Listing Regulations, Practicing Company Secretaries of the respective material subsidiaries of the Company have undertaken secretarial audits of these subsidiaries for FY19. The Audit Report confirms that the material subsidiaries have complied with the provisions of the Act, Rules, Regulations and Guidelines and that there were no deviations or non-compliances.

27. COMPLIANCE WITH SECRETARIAL STANDARDS

The Company confirms compliance with the applicable requirements of Secretarial Standards 1 and 2.

28. CORPORATE GOVERNANCE

Pursuant to Regulation 34 of the Listing Regulations and relevant sections of the Act, a Management Discussion and Analysis Statement, Report on Corporate Governance and Auditors’ Certificate thereon are included in the Annual Report.

29. VIGIL MECHANISM

Your Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour. In line with the Tata Code of Conduct (TCOC), any actual or potential violation, howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. The role of the employees in pointing out such violations of the TCOC cannot be undermined.

Pursuant to Section 177(9) of the Act and Regulation 4(2)(d)(iv) of the Listing Regulations, a Whistleblower Policy and Vigil Mechanism was established for directors, employees and stakeholders to report to the management instances of unethical behaviour, actual or suspected, fraud or violation of the Company’s code of conduct or ethics policy. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chief Ethics Counsellor (CEC)/Chairman of the Audit Committee of the Company for redressal. The Company has revised the Whistleblower Policy to include “reporting of incidents of leak or suspected leak of unpublished price sensitive information” in terms of SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended from time to time. The revised Policy was recommended by the Audit Committee and approved by the Board at their respective meetings. The updated policy has been posted on the Company’s website at https:// www.tatapower.com/corporate/ policies.aspx (alternatively, scan the adjacent QR Code using a mobile device to read the policy on the Company website). The Company affirms that no personnel have been denied access to the Audit Committee.

30. DIRECTORS’ RESPONSIBILITY STATEMENT

Based on the framework of IFC and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost auditors, secretarial auditors and external consultants including audit of IFC for financial reporting by the statutory auditors and the reviews performed by management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company’s IFC were adequate and effective during FY19.

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed and there are no material departures;

b) the Directors had selected such accounting policies and applied them consistently and made judgements 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;

c) the Directors had taken proper and sufficient 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 financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively (refer section 10);

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

31. ACKNOWLEDGEMENTS

On behalf of the Directors of the Company, I would like to place on record our deep appreciation to our shareholders, customers, business partners, vendors - both international and domestic, bankers, financial institutions and academic institutions for all the support rendered during the year under review.

The Directors are thankful to the Government of India, the various ministries of the State Governments, the central and state electricity regulatory authorities, communities in the neighbourhood of our operations, municipal authorities of Mumbai, and local authorities in areas where we are operational in India; as also partners, governments and stakeholders in international geographies where the Company operates, for all the support rendered during the year under review.

Finally, we appreciate and value the contributions made by all our employees and their families for making the Company what it is.

On behalf of the Board of Directors,

N. Chandrasekaran

Chairman

Mumbai, 2nd May 2019 (DIN: 00121863)


Mar 31, 2018

To the Members,

The Directors are pleased to present to you the Ninety-Ninth Annual Report on the business and operations of your Company along with the audited Financial Statements of Account for the year ended 31st March 2018.

1. FINANCIAL RESULTS

Figures in Rs. crore (Table 1)

Standalone

Consolidated

FY18

FY17#

FY18

FY17#

(a)

Net Sales/Income from Other Operations1

7,301

6,769

28,921

27,286

(b)

(Less): Operating Expenditure

(4,924)

(4,651)

(22,860)

(21,585)

(c)

operating profit

2,377

2,118

6,061

5,701

(d)

(Less)/: Forex Loss/(Gain) (excluding Forex Loss/(Gain) on Borrowings)

(20)

(23)

(114)

(94)

(e)

Add: Other Income

929

995

433

586

(f)

(Less): Finance Cost (including Forex Loss/(Gain) on Borrowings)

(1,431)

(1,319)

(3,723)

(3,365)

(g)

profit before Depreciation and Tax

1,855

1,771

2,657

2,828

(h)

(Less): Depreciation/Amortisation/Impairment

(663)

(605)

(2,398)

(1,956)

(i)

profit before Share of profit of Associates and Joint Ventures

1,192

1,166

259

872

(j)

Add: Share of Profit of Associates and Joint Ventures

-

-

1,554

1,226

(k)

profit before Exceptional Items

1,192

1,166

1,813

2,098

(l)

(Less)/Add: Exceptional Items

(4,437)

(651)

1,102

(651)

(m)

profit/(Loss) before Tax

(3,245)

515

2,915

1,447

(n)

(Less)/Add: Tax Expenses or Credit

166

(120)

(164)

(350)

(o)

Net profit/(Loss) after Tax from Continuing operations

(3,079)

395

2,751

1,097

(p)

Profit/(Loss) before Tax from Discontinued Operations

(86)

16

(86)

16

(q)

(Less)/Add: Tax Expenses or Credit from Discontinued Operations

14

(13)

14

(13)

(r)

Net profit/(Loss) after Tax from Discontinued operations

(72)

3

(72)

3

(s)

Net profit/(Loss) for the year

(3,151)

398

2,679

1,100

(t)

Net profit/(Loss) for the year Attributable to -

- owners of the Company

(3,151)

398

2,477

897

- Non-controlling interests

-

-

202

203

(u)

other Comprehensive income (Net of Tax)

45

(122)

94

(133)

(v)

Total Comprehensive Income

(3,106)

276

2,773

967

Attributable to -

- owners of the Company

(3,106)

276

2,571

764

- Non-controlling interests

-

-

202

203

*Including rate regulatory income/(expense)

#Restated - Refer notes to standalone/consolidated financial statements

2. Financial Performance and The State of The Company’s Affairs

2.1. Consolidated

On a Consolidated basis, the Operating Revenue was at Rs. 28,921 crore in FY18, compared to Rs. 27,286 crore in FY17. The increase was mainly due to higher revenue from the renewables portfolio and higher fuel cost being passed through for the regulated business.

The Consolidated Profit after Tax in FY18 was at Rs. 2,679 crore compared to Rs. 1,100 crore in the previous year mainly due to higher contribution by the coal mines, renewables business and associates, lower foreign exchange losses, recognition of deferred tax assets of certain investments treated as held for sale and reversal of impairment provisions of Coal Companies made in earlier years. This was partly offset by loss towards contractual obligation on account of purchase of shares in Tata Teleservices Limited (TTSL) from NTT DoCoMo Inc., Japan (Docomo). [Refer Section 10 - Management Discussion and Analysis (MD&A) of this report for details]

2.2. STANDALONE

On a Standalone basis, the Operating Revenue stood at Rs. 7,301 crore in FY18 compared to Rs. 6,769 crore in FY17. The increase was mainly due to higher fuel cost and power purchase cost being passed through for the regulated business.

The loss in FY18 was at Rs. 3,151 crore as compared to profit of Rs. 398 crore last year. This was mainly due to impairment provisions made for investments in Coastal Gujarat Power Limited (CGPL), hydro projects in overseas locations and impairment of a unit of Trombay Generating Station. This was partly offset by deferred tax assets recognised on certain investments treated as held for sale.

The Earnings per Share (Basic and Diluted) in FY18 stood at Rs. 4.34 before exceptional items and at Rs. (12.05) after exceptional items.

(Refer Section 9 - MD&A of this report for details)

2.3. EXCEPTIONAL ITEM

CGPL-Coal Mines SBU: The Board after considering the fact that the Indonesian coal mines were acquired to supply coal to CGPL as also to act as a hedge for the coal price risk that the CGPL PPA exposes it to, and considering that the hedge has consistently performed well on an overall basis, has approved treating both as a single cash generating unit. This has a significant impact on how the impairment of the combined CGU is assessed. The past year has shown a consistent increase in the price of coal and this is expected to persist for the foreseeable future. Having regard to this, an impairment of the investment in CGPL has had to be recognized. In addition, a reassessment of electricity prices predicted for the post Power Purchase Agreement (PPA) period also has had a negative impact on the value of CGPL.

The combined effect of these two has resulted in an impairment of Rs.3,555 crore of the investment in CGPL in the standalone accounts. This is because, unlike in the consolidated accounts, in the standalone accounts each investment must be impaired on its own, without setting off the appreciation in other investments and also because in those accounts the investments are carried at cost or lower.

However, in the consolidated accounts the impact is not the same because the losses incurred by CGPL in past years have already been recognized in those accounts over the years. On the other hand, the increase in coal prices has resulted in a positive impact on the value of the coal mines investment, making it possible to reverse an impairment of Rs.1,887 crore accounted for in earlier years when the long-term prediction for coal prices was well below the revised, current prediction.

It may be noted that several assumptions are involved in arriving at the above provisions.

Georgia Hydro Power Project: The standalone accounts contain an impairment provision for the investment in, and commitment to, Tata Power International Pte. Ltd. (TPIPL), a wholly owned subsidiary which had invested in a joint venture company setting up a Hydro power plant in Georgia, aggregating to Rs.675 crore due to depressed power prices in the open market in Turkey coupled with the devaluation of Turkish Lira as also because of a tunnel collapse that has led to a delay in the commercial operation of the plant apart from higher project cost.

The corresponding provision in the consolidated accounts is Rs.528 crore because operating losses have been recognized in the profit and loss account for the difference.

Tata Teleservices Ltd.: A provision has been made for damages of Rs.107 crore towards contractual obligation representing mark to market loss on change in the value of put option on the equity shares of TTSL in both, the standalone as also the consolidated accounts.

Trombay: Your Company has recognized an impairment loss of Rs.100 crore (in both, the standalone as also the consolidated accounts) for one of its units of the Trombay Thermal Power Station consequent on the expiry of its PPA at the end of FY19 with no scope currently existing for finding a buyer for its power.

others (only in the consolidated accounts): Impairment of Rs.38 crore for the carrying amount of Rithala power plant in Tata Power Delhi Distribution Limited due to no likelihood of its operation with gas not being available at administered prices and the partial disallowance of tariff by DERC (appealed against).

Goodwill of Rs.12 crore has been written down in solar power plant acquired by the company consequent on the value for which it was incurred having been realized.

2.4. ANNUAL PERFORMANCE

Details of the Company’s annual financial performance as published on the Company’s website and presented during the Analyst Meet, after declaration of annual results can be accessed using the following link:

https://www.tatapower.com/pdf/investor-relations/analyst-presentation-may-18.pdf (alternately, scan the adjacent QR code using a mobile device to read the file on the Company website).

3. DIVIDEND

Based on the Company’s performance, the Directors of your Company recommend a dividend of 130% (Rs. 1.30 per share of Rs. 1 each), subject to the approval of the Members.

According to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the top 500 listed entities based on market capitalization, calculated as on 31st March of every financial year are required to formulate a dividend distribution policy which shall be disclosed in their annual reports and on their websites. Accordingly, the Dividend Policy of the Company is provided in Annexure-I.

The Dividend Policy of the Company can be accessed using the following link: https://www.tatapower.com/aboutus/dividend-policy.pdf (alternately, scan the adjacent QR code using a mobile device to read the policy on the Company website).

4. CURRENT BUSINESS

Your Company is present across the value chain of power business viz. Generation, Transmission, Distribution, Power Trading, Power Services, Coal Mines and Logistics, Solar Photovoltaic (PV) manufacturing and associated Engineering, Procurement & Construction (EPC) services.

As on 31st March 2018, the Tata Power group of companies had an operational generation capacity of 10,757 MW from various fuel sources - thermal (coal, gas and oil), hydroelectric, renewable energy (wind and solar PV) and waste heat recovery, details of which are given below in Table 2.

Currently, the Company (including its subsidiaries) has nearly 32% of its capacity (in MW terms) in clean and green generation sources (hydro, wind, solar and waste heat recovery). The Company is targeting 40-50% of its total generation capacity from non-fossil fuel based generation sources by 2025.

Details of generation businesses in operation (Table 2)

Fuel Source

State

Location

Normative Capacity (MW)

returns / earnings model

Category total (MW)

Thermal - Coal / Oil / Gas

Gujarat

Mundra

4,150

Long term PPA based on UMPP Bid

7,340

Maharashtra

Trombay

1,430

Extension of Long term PPA - regulated Return on Equity

Jharkhand

Maithon

1,050

Long term PPA - regulated Return on Equity

Jharkhand

Jojobera

428

Long term PPA - regulated Return on Equity and negotiated PPA for Captive Arrangement

Jharkhand

IEL - Jojobera

120

Bilaterally negotiated long term PPA

Indonesia

PT Citra Kusuma Perdana

54

Captive arrangement

New Delhi

TPDDL - Rithala (Gas based)

108

PPA is being pursued

Thermal -Waste Heat Recovery

Jharkhand

IEL - Jamshedpur

120

Bilaterally negotiated long term PPA

375

Odisha

IEL - Kalinganagar

135

Bilaterally negotiated long term PPA

West Bengal

Haldia

120

Merchant sale (100 MW) and bilateral sale to West Bengal (20 MW)

Hydro

Maharashtra

Bhira

300

Long term PPA - regulated Return on Equity

693

Maharashtra

Khopoli

72

Maharashtra

Bhivpuri

75

Bhutan

Dagachhu

126

Merchant

Zambia

ItezhiTezhi

120

Long term regulated return

Renewables

Maharashtra, Gujarat, Madhya Pradesh, Karnataka, Tamil Nadu, Rajasthan, Andhra Pradesh, and South Africa

Wind farms

1161

Long Term PPA based on Feed-in-tariff REC Mechanism

2,349

Renewables

Andhra Pradesh, Bihar, Delhi, Gujarat, Haryana, Jharkhand, Karnataka, Madhya Pradesh, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh

Solar Photovoltaic (PV)

1188

Long Term PPA based on Feed-in-tariff

2,349

Total

10,757

Details of other businesses (Table 3)

Business

Company/Entity/Parent Company

Returns/Earnings Model

Key details

Transmission

Tata Power (TPC - T), Mumbai

25 year license w.e.f August 2015 - regulated Return on Equity

Over 1188 Ckms. of transmission lines, connecting generating stations to 21 receiving stations.

Powerlinks Transmission Limited (PTL)

Regulated Return on Equity

2328 Ckms. of 400 kV transmission lines to evacuate power from Eastern/North Eastern region to Northern Region.

Distribution

Tata Power (TPC - D), Mumbai

25 year license w.e.f August 2015- Regulated Return on Equity

Over 4500 Ckms. of distribution network. Around 6.80 lakh consumers.

Tata Power Delhi Distribution Limited (TPDDL)

Regulated Return on Equity

Approximately 15,081 Ckms. of distribution lines. Over 16.5 lakh consumers.

Tata Power Ajmer Distribution Limited (TPADL)

Distribution Franchise model

Over 2,130 Ckms. of network length. Around 1.34 lakh consumers.

Coal Investments

Coal and Infrastructure, Indonesia

Returns based on dynamics in International thermal coal market

Stake in Indonesian mines.

Solar PV

manufacturing, EPC

Tata Power Solar Systems Limited (TPSSL)

Returns based on sector dynamics and market competition

Manufacturing and sale of solar PV cells and modules and EPC services.

Power Trading

Tata Power Trading Company Limited (TPTCL)

Returns based on market dynamics in short term and bilateral power market subject to cap prescribed by CERC

Category I power trading license, which permits the company to trade any quantum of power.

Shipping

Trust Energy Resources Pte Limited, Singapore (TERPL)

Returns based on long term charters

Vessels operated are of cape size.

Power Services

Tata Power

Returns based on sector dynamics and market competition

A leading service providers of project management, O&M and specialized services in the power sector.

Percentage contribution of different business models (excludes under construction) (Table 4)

Model

Capacity (MW)

% of overall capacity

Returns

Bussiness/Division

Fixed Return on Equity

3724

34.7

1) Regulated Return on Equity

2) Bilateral captive agreement

3) PPA Driven

1) Mumbai Operations (Trombay & Hydro), Maithon, Jojobera Unit #2 and #3, TPDDL Rithala

2) IEL (Unit 5, PH6, KPO), CKP (Indonesia)

3) Haldia (20 MW)

Fixed Tariff (Renewables)

2349

21.8

Feed-in-tariff Bid Driven

Wind and Solar projects

Fixed Tariff

(Conventional Generation)

4458

41.4

Bilateral agreement Bid Driven

Jojobera Unit#1 and #4, CGPL, ITPC (Zambia)

Merchant

226

2.1

Market driven

Haldia (100 MW) Dagachhu (126 MW)

4.1. SALE OF STRATEGIC ENGINEERING DIVISION (SED)

The Board has decided to sell its Defence business, Strategic Engineering Division (SED), to Tata Advanced Systems Limited, a wholly owned subsidiary of Tata Sons Limited at an enterprise value of Rs. 2,230 crore. SED engaged in the business of indigenous design, development, production, integration, supply and life cycle support of mission critical defence systems. This will be subject to National Company Law Tribunal (NCLT), Ministry of Defence, Competition Commission of India and shareholders approval. This business is not a core activity for your Company and it needs a different type of risk appetite and support to grow to its potential.

The transaction is proposed to be executed on a slump sale basis. The valuation of the business has been carried out by independent valuers appointed by the Company. Further, a fairness opinion on valuation has been taken from a Category-1 Merchant Banker. The business value is mainly derived from future projections and orders, hence, the valuation has been structured into upfront payment and earn outs. The upfront payment has been agreed at an enterprise value of Rs. 1,040 crore, whereas the earnout payment of Rs. 1,190 crore is subject to receipt of six identified orders spread over the next 6 years. The upfront value will be adjusted for working capital changes and any profits or losses accrued till the time of closing.

5. subsidiaries/joint ventures/associates

As on 31st March 2018, the Company had 50 subsidiaries (40 are wholly-owned subsidiaries), 37 Joint Ventures (JVs) and 8 Associates. Of the erstwhile subsidiaries, 3 companies have been classified as Joint Ventures under Indian Accounting Standards (Ind AS) and 1 of the investments has been classified as Associate.

During the year, the following changes occurred in your Company’s holding structure:

- Subsidiaries: Chemical Terminal Trombay Limited, an erstwhile subsidiary of the Company merged with the Company during the year. The Company incorporated Tata Power Ajmer Distribution Limited and Far Eastern Natural Resources LLC.

- There was no change in the holding structure of Joint Ventures and Associates during the year.

A report on the performance and financial position of each of the subsidiaries, JVs and Associates has been provided in Form AOC-1.

The policy for determining material subsidiaries of the Company can be accessed using the following link: https://www.tatapower.com/pdf/ aboutus/policy-for-determining-material-subsidiaries.pdf (alternately, scan the adjacent QR code using a mobile device to read the policy on the Company website).

6. RESERVES

The balance in the various reserves of the Company for FY18 and the previous year are as follows:

Figures in Rs. crore (Table 5)

Particulars - standalone

As at 31st March, 2018

As at 31st March, 2017

Capital Redemption Reserve

1.85

1.85

Capital Reserve

61.66

61.66

Securities Premium Account

5,634.98

5,634.98

Debenture Redemption Reserve

1,000.61

1,000.90

General Reserve

3,853.98

3,853.98

Retained Earnings

1,878.99

5,361.42

Investment Revaluation Reserve

(374.12)

(2 53.40)

Statutory Reserve

660.08

660.08

7. FOREIGN EXCHANGE - EARNINGS AND OUTGO

8. REGULATORY AND LEGAL MATTERS

The businesses of the Company are governed primarily by the Electricity Act, 2003 (EA, 2003) and associated regulations. Mentioned below are the critical regulatory orders pertaining to the Company that were issued during FY18, none of which impact the ‘going concern’ status of your Company.

8.1. MUNDRA UMPP

8.1.1. COMPENSATORY TARIFF/FORCE MAJEURE RELIEF

CGPL - Mundra UMPP approached the Central Electricity Regulatory Commission (CERC) for evolving a mechanism for compensating CGPL for the adverse impact of the uncontrollable and unprecedented escalation in the imported coal prices and the change in law in Indonesia (Indonesian Government’s decision to benchmark export coal prices against international prices. The CERC, after considering the recommendations of a committee appointed for the aforesaid purpose vide its order dated 21st February 2014, decided that CGPL was entitled to compensatory tariff from 1st April 2012 over and above the tariff agreed under the PPA with the Procurers, till the hardship on account of Indonesian regulations persisted.

The Procurers challenged the order and filed an appeal with the Appellate Tribunal for Electricity (APTEL) which passed an interim order dated 21st July 2014, directing the Procurers to pay a compensatory tariff from March 2014 onwards, although it stayed the compensation for the prior period, till disposal of the appeal filed before it. On appeal by the Procurers, the interim order of APTEL was set aside by the Supreme Court and APTEL was directed to hear and dispose of the appeals expeditiously.

On 7th April 2016, APTEL, while rejecting the grounds of change in law and use of regulatory powers, remanded the matter to CERC to assess the compensation on grounds of Force Majeure (FM) as permissible under the PPA.

The Procurers, including a consumer group, filed a Civil Appeal before the Supreme Court challenging the FM relief provided as per APTEL’s judgement. The Supreme Court directed that CERC may pass the order on FM relief, but it was to be given effect only with the prior permission of the Supreme Court. Based on the remand by APTEL, the matter was heard by CERC and order passed on 6th December 2016, prescribing the FM relief mechanism.

Subsequently, the civil appeals filed by Procurers and consumer groups were heard before the Supreme Court. The Supreme Court, vide judgement dated 11th April 2017, disposed of the appeal with regard to compensatory tariff, inter alia holding that:

a) CGPL’s case does not fall under the Force Majeure clause in the PPA

b) The Change in Law as defined under PPA contemplates only change in domestic (Indian) laws

The Supreme Court has, however, upheld that the CERC has powers under Section 79(1)(b) of EA, 2003 to regulate, which includes power to determine or adopt tariff even for tariff that is determined under competitive bidding route (Section 63 of EA, 2003). While the Supreme Court held that the Regulatory Commission has the powers under Section 79 of EA, 2003, the judgement did not specifically validate the applicability of said principle to the relief that had been granted by CERC to CGPL earlier.

The Company has been operating and maintaining the 4,150 MW Mundra Ultra Mega Power Station which is operating at benchmark operational parameters and making a significant contribution in ensuring the energy security of the country. While the Company continues to make efforts to seek additional tariff and is engaged with various stakeholders including the Central Government, Procurers and the Lenders, it is pursuing all alternative options at CGPL including sourcing of competitive coal from other relevant geographies as also use low grade and blended coal options to contain the underrecovery at Mundra UMPP. However, with ever-increasing international coal prices, the project is becoming increasingly unviable. A large part of the investment made in the project is also being considered for provisioning in the accounts.

Your Company is exploring all options for the long term sustainability of the power station and to structure the investment in a manner that it earns a reasonable return.

8.1.2. CHANGE IN LAW

CGPL has filed petitions under Change in Law -Operations and Change in Law - Construction before the APTEL against certain disallowances given by the CERC.

Additionally, the CERC passed an order on 14th March 2018 allowing Compensation Cess on actual coal consumed based on Auditors Certificates. Any refund arising due to subsuming of other taxes in GST would need to be settled mutually between the Generators and its Procurers.

8.1.3. PETITION SEEKING IN-PRINCIPLE APPROVAL FOR CAPEX AND OPEX TO COMPLY WITH NEW ENVIRONMENT NORMS

The Ministry of Environment, Forest and Climate Change (MoEF&CC), vide its notification, has revised the environment emissions norms mandating all thermal power plants to comply with the same. Your Company had filed a petition with CERC seeking in-principle approval for the capital expenditure in order to secure finance from the financial institutions so as to comply with the new norms. The matter was heard before CERC to decide whether the above MOEF&CC notification falls under the Change in Law as per the PPA. However, final directions from CERC are awaited.

8.2. MUMBAI OPERATIONS

8.2.1. MULTI YEAR TARIFF (MYT) ORDERS OF MERC

MERC passed its MYT order for the generation business on 8th August 2016, for the transmission business on 30th June 2016 and for the distribution business on 21st October 2016. In FY18, review petitions, as relevant, against these orders, have been filed at the appropriate forums.

8.2.2. NETWORK ROLL-OUT PLAN

The Petition has been disposed of by MERC on 12th June 2017 providing inter alia, criteria and various possible scenarios for providing consumer connections, establishing an institutional mechanism for evaluating and deciding on applications for new connections forwarded by the Distribution Licensees, as also prescribing the protocol for releasing connections to new consumers etc. The said order has been challenged before APTEL by your Company as well as by other Mumbai Discoms and a consumer body. The final hearing on these appeals has been completed and orders are reserved.

8.2.3. TPC-D’S RIGHT TO LAY NETWORK AND ACQUIRE CUSTOMERS

MERC in its order, in the case filed by BEST, ruled in favour of Tata Power Company-Distribution (TPC-D), that it can lay its distribution network in line with the APTEL Judgement in Appeal No. 246 of 2012 and also in line with MERC’s interim order dated 9th November 2015 in case no. 182 of 2014.

MERC in its order dated 24th January 2018, rejected the claim of RInfra-D against TPC-D contravening the decision and the directions of the Commission issued in the interim order dated 9th November 2015, in Case No. 182 of 2014 relating to TPC-D’s right to acquire new or switchover consumers by laying its own network in terms of the APTEL judgement and MERC’s interim order .

8.2.4. DISTRIBUTION LICENSES - APPEAL FILED BY R-INFRA AND BEST

The appeal filed by R-Infra challenging the distribution license granted to TPC-D in August 2014 is pending before APTEL. Further, appeals filed by R-Infra and BEST against the interim order dated 9th November 2016, passed by MERC, are also pending before APTEL. Proceedings in the matter are completed and the order is reserved.

8.2.5. STANDBY CHARGES

On an appeal filed by your Company, the Supreme Court had stayed the operation of the APTEL order in 2007, subject to the condition that your Company deposits an amount of Rs. 227 crore and submits a bank guarantee for an equal amount. Your Company has complied with both the conditions. R-Infra has also subsequently filed an appeal before the Supreme Court challenging the APTEL order. Both the appeals were admitted in 2007. The matter was part heard during this year and the hearings are yet to be completed.

8.2.6. ENERGY CHARGES AND ‘TAKE OR PAY’ OBLIGATION

In a case relating to Take or Pay obligation payable to the Company, the Supreme Court, vide its order dated 14th December 2009, has granted a stay against the APTEL order and has directed R-Infra to deposit with the Supreme Court a sum of Rs. 25 crore and furnish a bank guarantee for the balance amount. No hearings were held during the year on this matter.

8.2.7. ENTRY TAX

Your Company had filed a writ in the Bombay High Court (HC) challenging the constitutional validity of the Maharashtra Entry Tax Act, 2002. HC dismissed the writ petition. Aggrieved, your Company filed Special Leave Petitions (SLP) in the Supreme Court. Vide its order dated 21st October 2016, the Supreme Court passed the order staying the demand of entry tax, by extending the interim stay earlier granted by the High Court. Your Company has filed a writ petition in the Supreme Court, on which the Supreme Court issued a notice and tagged it along with the Company’s SLP. The matter is now awaited for listing for final hearing and disposal.

8.2.8. EXTENSION OF PPA BETWEEN TPC-G AND BEST

BEST and Tata Power Company-Generation (TPC-G) had entered into a PPA dated 21st December 2006 for bulk supply of power. The said agreement was extended from time to time by the parties with due approval of MERC. The term of the existing PPA expired on 31st March 2018.

BEST undertook a competitive bidding process for procurement of 750 MW power for 5 years starting 1st April 2018. However, after completion of the bidding process, BEST filed a petition before MERC seeking cancellation of the bidding process undertaken, approval of timelines for undertaking a fresh competitive bidding process for 5 years starting from 1st April 2019 and the extension of the existing PPA between BEST and TPC-G in terms of Clause 3.3 of the existing PPA.

MERC, vide its order dated 27th February 2018, has approved extension of the validity of the PPA between BEST and TPC-G for 676 MW of power (excluding Unit 6) along with certain other directions to be incorporated in the existing PPA as extended up to 31st March 2019.

8.2.9. EXTENSION OF PPA BETWEEN TPC-G AND TPC-D

TPC-D and TPC-G had entered into PPA dated 23rd December 2006 for bulk supply of power. The said agreement was extended from time to time by the parties with due approval of MERC. The term of the existing PPA was to expire on 31st March 2018.

MERC vide its order dated 27th March 2018, approved the extension of Power Purchase Arrangement between TPC-G and TPC-D for one year from 1st April 2018 to 31st March 2019 for a total capacity of 672 MW.

8.3. JOJOBERA OPERATIONS

8.3.1. MYT Order For jojobera uNIT 2 And uNIT 3 INcluDING TRuE-uP FOR FY 2015-16

On 19th February 2018, JSERC has passed the MYT Order for Jojobera Unit 2 and Unit 3 for the control period FY17-21 together with true-up for FY16.

With respect to the tariff order for the control period FY17-21, a review has been sought from JSERC on a deviation taken on an operating norm. With respect to truing-up for FY16, your Company has taken up review of some claims which have been disallowed before JSERC and appealed at APTEL.

8.4. MAITHON POWER limited (MPL)

8.4.1. REVIEW/APPEAL FILED AGAINST DISALLOWANOES BY CERC FOR TRUING-UP OF TARIFF FOR FY12-14 AND DETERMINATION OF TARIFF FOR FY15-19

MPL had filed a petition for determination of tariff for the period FY15-19 along with the truing-up for FY12-14 on 1st June 2015, before CERC. The proceedings in the above matter had been completed in December 2016 and the order was issued on 26th December 2017. MPL filed a review petition before CERC and appeal before APTEL against the disallowances in the tariff order dated 26th December 2017.

8.4.2. PETITION SEEKING IN-PRINCIPLE APPROVAL FOR CAPEX SCHEMES FOR MEETING NEW ENVIRONMENT NORMS

MPL has approached CEA and MoEF&CC as per directions of CERC, to decide the optimum technology and associated costs, for phasing of implementation of different environment measures in compliance with new environmental norms. It will then approach CERC based on the approval of CEA and direction of MoEF&CC.

8.5. POWERLINKS TRANSMISSION LIMITED (PTL)

8.5.1. TRUING-UPFOR FY10-FY14 AND MULTI YEAR TARIFF FOR FY14-19

Subsequent to the true-up order for FY10-14, CERC directed its staff to examine the impact of Transmission Majoration Factor (TMF) to review the continuation of TMF for subsequent years.

CERC, thereafter, notified a draft amendment to CERC Tariff Regulations, 2014 abolishing the continuation of TMF for PTL. Powerlinks, objecting to such amendment, has filed detailed comments and presented the same before CERC during the public hearing held for the issue. CERC has not issued the final regulations in this regard yet.

9. RISKS AND CONCERNS

Your Company is faced with risks of different types, all of which need different approaches for mitigation. Details of various risks faced by the Company are provided in section 4 of MD&A of this Annual Report.

10. RISK MANAGEMENT FRAMEWORK AND INTERNAL FINANCIAL CONTROLS

Risk Management Framework:

Based on the Risk Management Policy (https://www.tatapower. com/pdf/aboutus/risk-management-policy.pdf) (alternately, scan the adjacent QR Code using a mobile device to read the policy on the Company website), a standardized Risk Management Process and System has been implemented across the Tata Power group. Risk plans have been framed for all identified risks and uploaded in the system with mitigation action, target dates and responsibility. The Risk Register contains the mitigation plans. Functional Risk Management Committees (FRMCs) closely monitor and review the risk plans.

The Apex Risk Management Committee (ARMC) meets every quarter to review key strategic and tactical risks, identify new risks and assess the status of mitigation measures. As per the Listing Regulations, a Risk Management Committee (RMC) was constituted which currently comprises of three Independent Directors, one Non-Executive Director and one Executive Director. The RMC meets regularly to review critical strategic risks.

In FY16 and FY17, the British Standards Institution (BSI) did an assessment of Tata Power and its eight major subsidiaries and conferred the ‘Statement of Compliance’ for Tata Power Group for ISO 31000:2009. Tata Power was the first power company in India to get this recognition in FY15. This year, Tata Power Group’s external ISO assessment is scheduled for July 2018.

Tata Power bagged two prestigious awards at the CRO Leadership Summit and awards conducted by UBS Transformance in November 2017. The Company won the ‘Risk Management Team of the Year, 2017’, and Tata Power’s Chief Risk Officer, Mr. Parshuram Date, was awarded ‘CRO of the Year, 2017’ in the power sector. In January 2018, Tata Power was pronounced as the joint winner in the category - ‘Best Risk Management Framework & Systems - Power’, at the 4th Edition of CNBC-TV18 The India Risk Management Awards. Also, this year, Tata Power has obtained a copyright for its web-based Risk Management System.

Internal Financial Controls and Systems:

The Company has its internal audit function reviews and ensures sustained effectiveness of Internal Financial Controls (IFC) by adopting a systematic approach to its work.

To fulfil the requirements of the Companies Act, 2013 the in-house internal audit team integrated IFC controls into risk control matrix (RCMs) of enterprise processes in FY17. 100% testing of IFC controls was ensured during process audit or creating separate audit areas of IFC testing where process audits were not due.

On review of the internal audit observations and action taken on audit observations, we can state that there are no adverse observations having material impact on financials, commercial implications or material noncompliances which have not been acted upon.

The Company continued the Control Self-Assessment (CSA) process, which included seven Tata Power group companies this year, whereby responses of all process owners are used to assess internal controls in each process. This helps the Company to identify focus audit areas, design the audit plan and support CEO/CFO certifications for internal controls.

11. SAFETY

Safety is a core value of the Company. The Company has adopted a structured approach towards implementation of Safety Policies and Programs to integrate safety with critical business processes with a goal to continuously improve safety performance. Safety organisation has been established for developing and implementing Safety Management Systems and to facilitate a change in culture through leadership interventions to mitigate risks.

Safety Statistics FY18: (Table 7)

Sl. No.

Safety Parameters in your Company’s work jurisdiction (Tata power, CGPL, MPL, LEI, CTTL, PTL, TPDDL and TPSSL)

FY18

FY17

1

Fatality (Number)

1

2

2

LTIFR (Lost Time Injuries Frequency Rate per million man hours)

0.17

0.23

3

Total Injury Frequency Rate (No of injuries per million man hours)

2.26

4.32

4

First Aid Cases (Number)

105

232

Your Company is deeply aggrieved by the fatality and accidents. It treats any fatality in any of its premises, of any of its employees, contractor/associate employees or any third party, with equal gravitas and is committed to taking the entire working environment and behaviour to the highest safety standards.

Your Company has increased its efforts on safety during the year and has adopted the following safety interventions in FY18 to improve safety in the organisation:

- Collaborative Leadership Coaching Program was conducted for identified leaders.

- Safety Code of Conduct (SCoC) was framed and signed off by all employees.

- Integrated safety Key Responsibility Area (KRA) was included in Performance Management System (PMS).

- Enhanced capability building through competency-based training programs at Tata Power Skill Development Institute (TPSDI).

- Implemented the contractors’ safety code of conduct to improve capability and capacity of contractors and evaluated their safety performance for all the stages of contract (registration, bidding and execution).

- Stakeholder ‘Suraksha’ application developed for empowering the business associates to report incidents/observations.

12. SUSTAINABILITY

Your Company successfully completed over 100 years of operations and remains committed to the legacy of being a responsible corporate citizen. It has practised sustainability over these 100 years and thus, reinforced the core value of Leadership with Care. For your Company, sustainability is care for the environment, care for the customers and shareholders, care for the community and care for our people.

The Company’s efforts on sustainability were recognized at various platforms and a testimony to this was the various awards bestowed upon your Company. The Company has received the domain excellence award in biodiversity conservation at the CII ITC Sustainability Awards 2017. Your Company was also ranked 3rd in the Responsible Business Ranking for Sustainability and CSR released in September 2017.

12.1. CARE FOR OUR COMMUNITY/COMMUNITY RELATIONS

Your Company has actively worked on the key focus areas in Corporate Social Responsibility (CSR) covering education, health & sanitation, water, livelihood and employability, social capital and financial inclusivity, as well as rural energy while focusing on Affirmative Action (AA) initiatives of the Tata Group.

Your Company has a unique governance system for Sustainability as a strategic theme. This is guided by the Sustainability Advisory Council (SAC) comprising eminent experts from various fields impacting sustainability.

Tata Power’s CSR initiatives were extended to the geographies where the new solar and wind plants are located.

Your Company’s standalone CSR spend for FY18 stood at Rs. 14.71 crore against the Companies Act, 2013 requirement of Rs. 13.71 crore. Additionally, as a part of disaster relief operations, the Company contributed towards relief efforts in Gujarat.

Independent monitoring, effectiveness of implementation and impact assessment were undertaken to provide feedback and to refine, realign the programs so that the extent and effectiveness of the initiatives could be improved in pursuance of the Company’s objective to improve the quality of life of the community and to get the community’s tacit or implied acceptance of the Company’s co-existence with them.

Details of the CSR activities of your Company and its key subsidiaries are listed in the MD&A section of this annual report.

The annual report on CSR activities is provided in Annexure-II.

12.2. AFFIRMATIVE ACTION

Under its Affirmative Action (AA) program, your Company has implemented several initiatives for Employment, Entrepreneurship, Employability, Education and Essential Amenities for the communities around its operating sites.

The major programs carried out in the neighbourhood of the operating plants and projects are Skill Development Programs (through TPSDI, Industrial Training Institutes and Vocational Trainings), entrepreneurships programs like Maval dairy, sustainable agriculture and supporting Self Help Groups (SHG), and support for educational initiatives like e learning, educational aid and learning camps.

The Company continued its work in areas beyond its areas of operations, such as in Jawahar taluka, Palghar district of Maharashtra, which has a tribal population which constitutes over 90% of the total population with a vast majority being below the poverty line. The activities here include initiatives like generating livelihood opportunities to improve sub-economic status, integrated watershed management program, capacity building through a participatory approach, women’s empowerment through SHGs and a Village Development Council (VDC) for sustainable development. The VDC has elected members from the village, as well as a Tata Power representative and is responsible for the sustainable development of the village.

12.3. CARE FOR OUR ENVIRONMENT

The Company, during the year under review, addressed various aspects of resource conservation, energy efficiency, carbon footprint, renewable power generation, biodiversity and green buildings. Details of initiatives undertaken are given in MD&A Section 8.1.3.

12.4. CLUB ENERJI

Tata Power’s Club Enerji is focused on school students to champion the noble cause of conservation of resources and enhance moral and civic values. The Club has been ceaselessly working towards creating responsible citizens of tomorrow who focus not only on conserving energy and natural resources (like fossil fuel - coal, oil, gas, water; managing waste; afforestation), but also conserve civic, ethical and moral values in society at large.

Recognizing the immense value that schools and school children can bring to the initiative and taking due consideration of the social need, Tata Power started ‘Tata Power Club Enerji’ in 2007 to propagate efficient usage of energy and to educate the society on climate change issues. The program is now in its 10th year and has covered more than 500 schools across Mumbai, Delhi, Pune, Ahmedabad, Bengaluru, Kolkata, Belgaum, Jamshedpur, Lonavala and five more cities. It has reached out to more than 1.93 crore citizens, collectively saved 25 million units of electricity - equivalent to saving 25,000 tons of CO2. All over India, 2,00 Mini Clubs have also been formed under the Club Enerji initiative.

Tata Power Club Enerji also launched its comprehensive online module in November 2015 with an aim to reach out to a larger audience with a vision of transformation and adoption of a holistic and robust approach towards conservation. The module, since its launch, has also reached out to audiences in new international geographies like Philippines, UAE, USA, UK and South Africa and newer national geographies like Chandigarh, Hyderabad and Chennai.

12.5. DEMAND SIDE MANAGEMENT

The Company has been a pioneer in propagating energy conservation and efficiency. Demand-side management (DSM) refers to cooperative activities between the utility and its customers to implement options for increasing the efficiency of energy utilization, with resulting benefits to the customer, utility and the society.

12.6. SUSTAINABLILITY REPORTING

Your Company has adopted the latest Global Reporting Initiative (GRI) Standards for its combined Sustainability Report for FY16-18, which is currently under preparation, to report on its sustainability performance specific to the Indian operations of your Company viz. generation, transmission and distribution. The Company’s Sustainability Reports can be accessed using the following link: https://www.tatapower. com/sustainability/communication.aspx (alternately, scan the adjacent QR code using a mobile device to read the policy on the Company website)

12.7. business responsibility report (BRR)

The Business Responsibility Reporting is in line with the SEBI requirement based on the ‘National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business’ notified by Ministry of Corporate Affairs (MCA), Government of India, in July 2011. Your Company reported its performance for FY18 as per the BRR framework, describing initiatives taken from an environmental, social and governance perspective.

13. directors and key managerial personnel

Change in Board composition

Pursuant to the Guidelines adopted by the Company for retirement of Non-Executive Directors, Dr. Homiar S. Vachha, Independent Director on your Company’s Board, ceased to be Director of the Company effective 23rd April 2017, consequent upon his completing 75 years of age. The Board of Directors place on record their deep appreciation for the contribution made by Dr. Vachha during his tenure.

On the recommendation of the Nomination and Remuneration Committee (NRC), Mr. K. M. Chandrasekhar was appointed as an Additional Director of the Company with effect from 4th May 2017 by the Board of Directors, in accordance with Section 161(1) of the Act and Article 132 of the Company’s Articles of Association. Mr. Chandrasekhar was also appointed as an Independent Director for a period of 5 years with effect from 4th May 2017 upto 3rd May 2022. His appointment as Independent Director was approved at the previous Annual General Meeting (AGM) by the Members.

Mr. Pravin H. Kutumbe, nominee of Life Insurance Corporation of India (LIC) on the Company’s Board, resigned as a Director of your Company effective 20th May 2017. The Board has placed on record its appreciation of the valuable contribution made to the Company by Mr. Kutumbe during his tenure. Mr. Hemant Bhargava, Managing Director of LIC, was then nominated by LIC as Director on the Board. Mr. Bhargava was appointed as an Additional Director of the Company with effect from 24th August 2017, by the Board of Directors, on the recommendation of the NRC, in accordance with Section 161(1) of the Act and Article 132 of the Company’s Articles of Association. Mr. Bhargava holds office only upto the date of the forthcoming AGM and a notice under Section 160(1) of the Act has been received from a Member signifying its intention to propose his appointment as a Director.

Mr. S. Padmanabhan and Ms. Sandhya S. Kudtarkar, NonExecutive Directors on your Company’s Board, resigned from the Board on 16th November 2017. The Board has placed on record its appreciation of the valuable contribution made to the Company by Mr. Padmanabhan and Ms. Kudtarkar during their respective tenures.

Mr. Saurabh Agrawal and Mr. Banmali Agrawala were appointed as Additional Directors of the Company with effect from 17th November 2017, by the Board of Directors, on the recommendation of the NRC, in accordance with Section 161(1) of the Act and Article 132 of the Company’s Articles of Association. Mr. Agrawal and Mr. Agrawala hold office only upto the date of the forthcoming AGM and a notice under Section 160(1) of the Act has been received from a Member signifying its intention to propose their appointment as Directors.

Mr. Anil Sardana resigned as CEO & Managing Director of the Company effective close of business hours on 30th April 2018. The Board has placed on record its deep sense of appreciation of the valuable contribution made by Mr. Sardana to the operations and growth of the Company during his tenure.

On the recommendation of the NRC, Mr. Praveer Sinha was appointed as Additional Director of the Company with effect from 1st May 2018, by the Board of Directors, in accordance with Section 161(1) of the Act and Article 132 of the Company’s Articles of Association. Mr. Sinha holds office only upto the date of the forthcoming AGM and a notice under Section 160(1) of the Act has been received from a Member signifying his intention to propose Mr. Sinha’s appointment as Director. Mr. Sinha was also appointed as CEO & Managing Director of the Company for the period of 5 years commencing from 1st May 2018 to 30th April 2023. His appointment and the terms and conditions of his appointment including remuneration payable to him, require approval of the Members at the ensuing AGM.

In accordance with the requirements of the Act and the Company’s Articles of Association, Mr. N. Chandrasekaran retires by rotation and is eligible for re-appointment. Members’ approval is being sought at the ensuing AGM for his re-appointment.

Number of Board Meetings

Nine Board Meetings were held during the year. For further details, please refer to Report on Corporate Governance, which forms a part of this Annual Report.

Independent Directors

In terms of Section 149 of the Act, Mr. N. H. Mirza, Mr. D. M. Satwalekar, Ms. Anjali Bansal, Ms. Vibha Padalkar, Mr. S. V. Bhandarkar and Mr. K. M. Chandrasekhar are the Independent Directors of the Company. The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the Act.

Key Managerial Personnel

In terms of Section 203 of the Act, the following are the Key Managerial Personnel (KMP) of the Company:

- Mr. Praveer Sinha, CEO and Managing Director

- Mr. Ashok S. Sethi, COO and Executive Director

- Mr. Ramesh N. Subramanyam, Chief Financial Officer

- Mr. Hanoz M. Mistry, Company Secretary

14. ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

The Board of Directors has carried out an annual evaluation of its own performance, performance of the Directors individually as well as the evaluation of the working of its Committees, pursuant to the provisions of the Act, Regulation 25 of the Listing Regulations and the Guidance Note on Board Evaluation issued by SEBI on 5th January 2017.

The following process was adopted for Board evaluation:

i) Feedback was sought from each Director about their views on the performance of the Board, covering various criteria such as degree of fulfilment of key responsibilities, Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning, Board culture and dynamics, quality of relationship between the Board and the Management and efficacy of communication with external stakeholders. Feedback was also taken from every Director on his assessment of the performance of each of the other Directors.

ii) The Nomination and Remuneration Committee (NRC) then discussed the above feedback received from all the Directors.

iii) Based on the inputs received, the Chairman of the NRC also apprised the Independent Directors at their meeting, summarising the inputs received from the Directors as regards Board performance as a whole and of the Chairman. The performance of the Non-Independent Non-Executive Directors and Board Chairman was also reviewed by them.

iv) Post the meeting of the Independent Directors, their collective feedback on the performance of the Board (as a whole) was discussed by the Chairman of the NRC with the Chairman of the Board. It was also presented to the Board and a plan for improvement was agreed upon and is being pursued.

v) Every statutorily mandated Committee of the Board conducted a self-assessment of its performance and these assessments were presented to the Board for consideration. Areas on which the Committees of the Board were assessed included degree of fulfilment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.

vi) Feedback was provided to the Directors, as appropriate. Significant highlights, learning and action points arising out of the evaluation were presented to the Board and action plans drawn up. During the year under report, the recommendations made in the previous year were satisfactorily implemented.

15. REMUNERATION POLICY FOR THE DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with Part D of Schedule II to the Listing Regulations, the NRC is responsible for formulating the criteria for determining qualification, positive attributes and independence of a Director. The NRC is also responsible for recommending to the Board, a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees. In line with this requirement, the Board has adopted the Policy on Board Diversity and Director Attributes, which is provided in Annexure-III to this Report and Remuneration Policy for Directors, Key Managerial Personnel and other employees of the Company, which is reproduced in Annexure-IV to this Report.

16. COMMITTEES OF THE BOARD

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority.

The following statutory Committees constituted by the Board function according to their respective roles and defined scope:

- Audit Committee of Directors

- Nomination and Remuneration Committee

- Corporate Social Responsibility Committee

- Stakeholders Relationship Committee

- Risk Management Committee

Details of composition, terms of reference and number of meetings held for respective committees are given in the Report on Corporate Governance, which forms a part of this Report.

The Board has laid down separate Codes of Conduct for Non Executive Directors and Senior Management personnel of the Company and the same can be accessed using the following link: h ttps://www. tatapower.com/pdf/ aboutus/Code-of-Conduct-NEDs. pdf. (alternately, scan the adjacent QR Code using a mobile device to read the policy on the Company website). All Senior Management personnel have affirmed compliance with the Tata Code of Conduct (TCOC). The CEO & Managing Director has also confirmed and certified the same. The certification is enclosed at the end of the Report on Corporate Governance.

17. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

The information on conservation of energy and technology absorption stipulated under Section 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is attached as Annexure - V to this Report.

18. particulars of employees and remuneration

The information required under Section 197(12) of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is attached as Annexure - VI.

The information required under Rule 5(2) and (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in the Annexure forming part of this Report. In terms of the first provision to Section 136 of the Act, the Report and Accounts are being sent to the Members excluding the aforesaid Annexure. Any member interested in obtaining the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure are related to any Director of the Company.

Officers of the organisation are classified into five management work levels i.e. MA, MB, MC, MD and ME. The work levels are further divided into grades. Nonmanagement employees are across different grades and also have been classified as unskilled, semi-skilled, skilled and highly skilled.

For the officers, Uniform Compensation Structuring (UCS) exercise was undertaken in FY18 to promote talent mobility in the organisation. This will help in ensuring seamless mobility of talent with minimal or no change in CTC across the Tata Power Group. UCS provided an integrated, aligned and uniform view of talent across entities leading to more avenues for growth to available talent across entities. The entire implementation process was done in-house by the HR team in the defined time span.

19. RELATED PARTY TRANSACTIONS

In line with the requirements of the Act and the Listing Regulations, the Company has formulated a Policy on Related Party Transactions and the same can be accessed using the following link: https://www.tatapower.com/pdf/ aboutus/rpt-policy-framework- guidelines.pdf (alternately, scan the adjacent QR code using a mobile device to read the policy on the Company website). Details of Related Party Transactions as per AOC-2 are provided in Annexure-VII to this Report.

20. DEPOSITS (Table 8)

Sl. No.

particulars

Amount in Rs.

1.

Accepted during the year

Nil

2.

Remained unpaid or unclaimed at the end of the year2

2,58,105

3.

Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved

NA

- At the beginning of the year

- Maximum during the year

- At the end of the year

4.

Details of deposits which are not in compliance with the requirements of Chapter V of the Act

NA

*This relates to deposits accepted under the Companies Act, 1956.

21. LOANS, GUARANTEES, SECURITIES AND INVESTMENTS

The Company, being an infrastructure company, is exempt from the provisions as applicable to loans,

guarantees and securities under Section 186 of the Act. The details of investments are provided in the notes to the financial statements.

22. EXTRACT OF ANNUAL RETURN

Pursuant to Section 92 of the Act and Rule 12 of The Companies (Management and Administration) Rules, 2014, the extract of Annual Return in Form MGT-9 is provided in Annexure-VIII to this Report.

23. AUDITORS

M/s S R B C & CO. LLP (SRBC), who is the statutory auditor of your Company, holds office until the conclusion of the hundred and third AGM to be held in the year 2022, subject to ratification of its appointment at every AGM, if required under law.

Members will also be requested to pass a resolution (vide Item No.12 of the Notice) authorizing the Board of Directors to appoint Branch Auditors for the purpose of auditing the accounts maintained at the Branch Offices of the Company abroad.

24. AUDITORS’ REPORT

The standalone and the consolidated financial statements of the Company have been prepared in accordance with Indian Accounting Standards (IndAS) notified under section 133 of the Companies Act, 2013.

25. COST AUDITOR AND COST AUDIT REPORT

M/s Sanjay Gupta and Associates, Cost Accountants, were appointed Cost Auditors of your Company for FY18.

In accordance with the requirement of the Central Government and pursuant to Section 148 of the Act, your Company carries out an annual audit of cost accounts relating to electricity. The Cost Audit Report and the Compliance Report of your Company for FY17, was filed on 8th September 2017 with the Ministry of Corporate Affairs through Extensive Business Reporting Language (XBRL) by M/s Sanjay Gupta and Associates, Cost Accountants, before the due date of 30th September 2017.

26. secretarial audit report

M/s. Parikh & Associates, Company Secretaries, were appointed as Secretarial Auditors of your Company to conduct a Secretarial Audit of records and documents of the Company for FY18. The Secretarial Audit Report confirms that the Company has complied with the provisions of the Act, Rules, Regulations, and Guidelines and that there were no deviations or non-compliances.

The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks or disclaimers. The Secretarial Audit Report is provided in Annexure-IX.

The Company confirms compliance with the requirements of Secretarial Standards 1 and 2.

27. CORPORATE GOVERNANCE

Pursuant to Regulation 34 of the Listing Regulations and relevant sections of the Act, a Management Discussion and Analysis Statement, Report on Corporate Governance and Auditors’ Certificate thereon are included in the Annual Report.

28. VIGIL MECHANISM

Your Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour. In line with the Tata Code of Conduct (TCOC), any actual or potential violation, howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. The role of the employees in pointing out such violations of the TCOC cannot be undermined.

Pursuant to Section 177(9) of the Act, a vigil mechanism was established for directors and employees to report to the management instances of unethical behaviour, actual or suspected, fraud or violation of the Company’s code of conduct or ethics policy. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chief Ethics Counsellor (CEC)/Chairman of the Audit Committee of the Company for redressal.

29. DIRECTORS’ RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost auditors, secretarial auditors and external consultants including audit of IFC for financial reporting by the statutory auditors and the reviews performed by management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company’s IFC were adequate and effective during FY18.

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed and there are no material departures;

b) the Directors had selected such accounting policies and applied them consistently and made judgements 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;

c) the Directors had taken proper and sufficient 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 financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively (refer section 10);

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

30. ACKNOWLEDGEMENTS

On behalf of the Directors of the Company, I would like to place on record our deep appreciation to our shareholders, customers, business partners, vendors - both international and domestic, bankers, financial institutions and academic institutions for all the support rendered during the year.

The Directors are thankful to the Government of India, the various ministries of the state governments, the central and state electricity regulatory authorities, communities in the neighbourhood of our operations, municipal authorities of Mumbai, and local authorities in areas where we are operational in India; as also partners, governments and stakeholders in international geographies where the Company operates, for all the support rendered during the year.

Finally, we appreciate and value the contributions made by all our employees and their families for making the Company what it is.

On behalf of the Board of Directors,

N. Chandrasekaran

Chairman

(DIN: 00121863)

Mumbai, 2nd May 2018


Mar 31, 2017

To the Members,

The Directors are pleased to present to you the Ninety-Eighth Annual Report on the business and operations of your Company and the Statements of Account for the year ended 31st March 2017.

1. FINANCIAL RESULTS

Figures in Rs. crore (Table 1)

Consolidated

Standalone

FY17

FY16

FY17

FY16

(a)

Net Sales / Income from Other Operations*

27,288

28,526

7,282

8,316

(b)

(Less) Operating Expenditure

(22,051)

(22,354)

(5,109)

(5,737)

(c)

Operating Profit

5,237

6,172

2,173

2,579

(d)

(Less) Add: Forex (Loss) Gain

(383)

(663)

(78)

(57)

(e)

Add: Other Income

586

754

992

962

(f)

(Less): Finance Cost

(3,114)

(3,236)

(1,296)

(1,146)

(g)

Profit before Depreciation and Tax

2,326

3,027

1,791

2,338

(h)

(Less): Depreciation / Amortisation / Impairment

(1,989)

(1,649)

(634)

(604)

(i)

Profit Before Exceptional Item

337

1,378

1,157

1,734

(j)

(Less): Exceptional Item

(651)

(98)

(651)

Nil

(k)

Profit (Loss) before Tax

(314)

1,281

506

1,734

(l)

(Less) Add: Tax Expenses or Credit

46

(681)

(223)

(379)

(m)

Net Profit (Loss) after Tax

(268)

600

283

1,355

(n)

Add: Share of Profit of Associates and Joint Ventures

1,217

186

-

-

(o)

Net Profit for the year

949

786

283

1,355

Attributable to -

- Owners of the Company

746

662

283

1,355

- Non-controlling interests

203

124

-

-

(p)

Other Comprehensive income (Net of Tax)

(133)

(23)

(121)

(258)

(q)

Total Comprehensive Income

816

762

162

1,097

Attributable to -

- Owners of the Company

613

639

162

1,097

- Non-controlling interests

203

123

-

-

*Including rate regulatory income (expense)

Details regarding the changes due to the transition to Ind AS are listed in Section 13 of this Board’s Report.

2. FINANCIAL PERFORMANCE AND THE STATE OF THE COMPANY’S AFFAIRS

2.1. CONSOLIDATED

On a Consolidated basis, the Operating Revenue was at Rs. 27,288 crore in FY17, compared to Rs. 28,526 crore in FY16. The decrease was mainly due to lower fuel cost and power purchase cost being passed through for the regulated business.

The Consolidated Profit after Tax in FY17 was at Rs. 746 crore compared to Rs. 662 crore in the previous year mainly due to higher contribution by the coal mines, renewables business and associates and lower foreign exchange losses, offset by loss towards contractual obligation on account of purchase of shares in Tata Teleservices Limited (TTSL) from NTT DoCoMo Inc., Japan (Docomo).

(Refer Section 11 - Management Discussion and Analysis (MD&A) of this report for details)

2.2. STANDALONE

On a Standalone basis, the Operating Revenue stood at Rs. 7,282 crore in FY17 compared to Rs. 8,316 crore in FY16. The decrease was mainly due to lower fuel cost and power purchase cost being passed through for the regulated business.

The Profit after Tax in FY17 was at Rs. 283 crore as compared to Rs. 1,355 crore last year. This was mainly due to loss toward contractual obligation on account of purchase of shares in TTSL form Docomo along with the increase in finance cost softened by the impact of favourable regulatory orders in the previous year.

The Earnings per Share (Basic and Diluted) in FY17 stood at Rs. 0.63.

(Refer Section 10 - MD&A of this report for details)

2.3. EXCEPTIONAL ITEM

In 2008-09, Docomo acquired shares of TTSL from Tata Sons Limited (TSL) and other group companies including your Company. In terms of the Agreements with Docomo, TSL, inter alia, agreed to provide various indemnities and a sale option entitling Docomo to sell its entire shareholding at a minimum predetermined price per share if certain performance parameters were not met by TTSL. Under the provisions of these agreements, your Company was obligated to purchase from Docomo, its holding in TTSL in the proportion of shares sold by the Company to the total secondary sale by the group companies, as a part of the process. The minimum pre-determined price represented 50% of the acquisition price of 2008-09.

Docomo exercised its sale option in July 2014 to sell its entire shareholding at the predetermined price. As the sum payable amounted to a capital account transaction, under the Foreign Exchange Management Act (FEMA), permission of the Reserve Bank of India (RBI) was required. RBI did not permit the acquisition of the shares at the predetermined price as the price was higher than fair market value of the shares. The matter was taken up for arbitration at U.K. by Docomo and it received a favourable award. The arbitration award had to be petitioned by TSL with Delhi High Court for implementation, due to RBI’s objection.

On 28th April 2017, the Delhi High Court, while deciding on the matter, allowed TSL to pay the amounts to Docomo as per arbitration award for acquisition of the shares. This obligated your Company to purchase 11,82,22,767 shares. Consequently, during the year your Company has deposited Rs.790 crore with Delhi High Court through TSL towards its share of the award. Based on the latest available valuation of TTSL shares, the Company has accounted for the loss of Rs.651 crore towards contractual obligation on account of purchase of shares in TTSL in the standalone and consolidated financial statements as an Exceptional Item. Further, since your Company holds 17% stake in Tata Communications Limited, proportionate impact of its share in the loss towards the said contractual obligation has been accounted in the share of profit/(loss) of associates and joint ventures amounting to Rs.146 crore.

2.4 ANNUAL PERFORMANCE

Details of the Company’s annual financial performance as published on the Company’s website and presented during the Analyst Meet, after declaration of annual results can be accessed using the following link: https://www.tatapower.com/pdf/investor-relations/analyst-presentation-may-17.pdf (scan the adjacent QR code on any mobile device smart phone/ tablet to read the policy on the Company website. QR code scanner app can be downloaded free of cost for Android/iOS/Windows devices from respective app stores)

3. DIVIDEND

The Directors of your Company recommend a dividend of 130% (Rs.1.30 per share of Rs.1 each), subject to the approval of the Members.

According to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the top 500 listed entities based on market capitalization (calculated as on 31st March of every financial year) are required to formulate a dividend distribution policy which shall be disclosed in their annual reports and on their websites. Accordingly, the Dividend Policy of the Company is provided in Annexure-I.

The Dividend Policy of the Company has been provided in the following link: https://www.tatapower.com/ aboutus/dividend-policy.pdf (a\temate\y, scan the adjacent QR code using a mobile device to read the policy on the Company website).

4. CURRENT BUSINESS

Your Company is present across the value chain of power business viz. Generation, Transmission, Distribution, Power Trading, Power Services, Coal Mines and Logistics, Solar Photovoltaic (PV) manufacturing and associated Engineering, Procurement, Construction (EPC) services. Apart from the above, your Company is present in defence electronics and applications.

As on date of the report, the Tata Power group of companies had an operational generation capacity of 10,463 MW based on various fuel sources - thermal (coal, gas and oil), hydroelectric power, renewable energy (wind and solar PV) and waste heat recovery.

The Company (including its subsidiaries) has nearly 30% of its capacity (in MW terms) in clean and green generation sources (hydro, wind, solar and waste heat recovery), while the target is to maintain 30-40% of its total generation capacity to be from non-fossil fuel based generation sources by 2025.

Details of generation businesses in operations (Table 2)

Fuel Source

Location

State

Normative capacity under management (MW)

Returns/ Earnings Model

Category Total (MW)

Thermal -Coal / Oil / Gas

Mundra

Gujarat

4,150

Long term PPA based on UMPP Bid

7,322

Trombay

Maharashtra

1,430

Long term PPA - regulated Return on Equity

Maithon

Jharkhand

1,050

Long term PPA - regulated Return on Equity

Jojobera

Jharkhand

428

Long term PPA - regulated Return on Equity and negotiated PPA

Industrial Energy Limited (IEL) -Jojobera

Jharkhand

120

Bilaterally negotiated long term PPA

PT Citra Kusuma Perdana

Indonesia

36

Captive Arrangement

TPDDL Rithala (Gas Based)

New Delhi

108

PPA is being pursued

Thermal -Waste Heat Recovery

IEL - Jamshedpur

Jharkhand

120

Bilaterally negotiated long term PPA

375

IEL - Kalinganagar

Odisha

135

Bilaterally negotiated long term PPA

Haldia

West Bengal

120

Merchant sale (100 MW) and bilateral sale to West Bengal (20 MW)

Hydro

Bhira

Maharashtra

300

Long term PPA - regulated Return on Equity

693

Khopoli

Maharashtra

72

Bhivpuri

Maharashtra

75

Dagachhu

Bhutan

126

PPA with Tata Power Trading Company Limited (TPTCL)

Itezhi Tezhi

Zambia

120

Long term regulated return

Renewables

Wind farms

Maharashtra, Gujarat, Madhya Pradesh, Karnataka, Tamil Nadu, Rajasthan and South Africa

1140

Long term PPA based on Feed-in-tariff REC Mechanism

(includes 30 MW assets of Indo Rama Renewables Jath Limited)

2073

Solar Photovoltaic (PV)

Maharashtra, Gujarat, Tamil Nadu and Delhi

933

Long term PPA based on Feed-in tariff

Total

10,463

NOTE: Trombay Unit 4 - 150 MW has been scrapped during the year and the same has been removed from the total installed capacity.

Details of other businesses (Table 3)

Business

Company/Entity

Location

Returns/ Earnings Model

Key details

Transmission

Tata Power (TPC - T)

Mumbai

25 year license w.e.f August 2015 - regulated Return on Equity

Over 1,200 CKms. of transmission lines, connecting generating stations to 21 receiving stations.

Powerlinks Transmission Limited (PTL)

Eastern/ Northern regions

Regulated Return on Equity

1166 Kms. of 400 kV transmission lines to evacuate power from Eastern/North Eastern region to Northern Region.

Distribution

Tata Power (TPC - D)

Mumbai

25 year license w.e.f August 2015 - regulated Return on Equity

Over 4,300 Ckm of distribution network. Around 6.75 lakh consumers.

Tata Power Delhi Distribution Limited (TPDDL)

New Delhi

Regulated Return on Equity

Approximately 15,000 Ckm of distribution lines. Over 1.58 million consumers.

Coal Investments

Coal and Infrastructure

Indonesia

Returns based on dynamics in international thermal coal market

Stake in Indonesian mines

Solar PV manufacturing, EPC

Tata Power Solar Systems Limited (TPSSL)

Bengaluru

Returns based on sector dynamics and market competition

Manufacturing and sale of solar PV cells and modules and EPC services.

Power Trading

Tata Power Trading Company Limited

Across India

Returns based on market dynamics in short term and bilateral power market subject to cap prescribed by CERC

Category I power trading license, which permits the company to trade any amount of power.

Shipping

Trust Energy Resources Pte. Limited

Singapore

Returns based on long term charters

Operates long term charters to meet captive shipping requirements. Vessels operated are cape size.

Strategic Engineering

Tata Power Strategic Engineering Division (SED)

Mumbai

Returns based on sector dynamics and market competition

Amongst the Indian private sector, SED is one of the leading suppliers of systems integration for defence equipment.

Power Services

Tata Power

Mumbai

Returns based on sector dynamics and market competition

One of the leading service providers of project management, O&M and specialized services in the power sector.

Percentage contribution of different business models (Table 4)

Model

Capacity (MW)

% of overall capacity

Returns

Tata Power projects

Regulated returns

3275

31.3%

Fixed return on equity

Mumbai Operations (Trombay & Hydro), Maithon, Jojobera Unit #2 and #3, TPDDL Rithala

Regulated tariff mechanism (Renewables)

2073

19.8%

Fixed tariff PLF driven

Wind, Solar

Captive power plant

411

3.9%

PPA driven (14-19%)

IEL (Unit 5, PH6, KPO), CKP (Indonesia)

Merchant

226

2.2%

Market driven

Haldia (100MW) Dagachhu (126MW)

MoU/ Bilateral

20

0.2%

PPA driven

Haldia (20MW)

PPA or Bid driven/ Fixed Tariff / Case II

4458

42.6%

Bid driven

Jojobera Unit#1 and #4, CGPL, ITPC (Zambia)

5. SUBSIDIARIES/JOINT VENTURES/ASSOCIATES

As on 31st March 2017, the Company had 49 subsidiaries (38 are wholly-owned subsidiaries), 37 Joint Ventures (JVs) and 8 Associates. Of the erstwhile subsidiaries, 3 companies have been classified as Joint Ventures under Indian Accounting Standards (Ind AS) and 1 of the investments has been classified as Associate.

During the year, the following changes occurred in your Company’s holding structure:

- Subsidiaries: The Company, through its subsidiaries, incorporated Nelco Network Products Limited, Vagarai Windfarm Limited and Chirasthayee Saurya Limited. Further, through its subsidiary Tata Power Renewable Energy Limited, it acquired Welspun Renewables Energy Private Limited and its 19 operating subsidiaries. It also acquired the wind assets of Indo Rama Renewables Jath Limited. Post acquisition of WREPL by TPREL, WREPL acquired one company (Welspun Urja India Limited) and merged one of the19 subsidiaries (Solarsys Energy Private Limited).

- Joint Ventures: The Company formed Resurgent Power Ventures Pte. Ltd. and LTH Milcom Private Limited as joint ventures and divested OTP Geothermal Pte. Ltd., PT Sorik Marapi Geothermal Power and PT OTP Geothermal Services Indonesia, during the year.

- Associates: The Group also divested its holding in ASL Advanced Systems Private Limited.

Report on the performance and financial position of each of the subsidiaries, JVs and Associates has been provided in Form AOC-1.

The policy for determining material subsidiaries of the Company has been provided in the following link: https://www.tatapower.com/aboutus/pdf/dms-policy-15.pdf (alternately, scan the adjacent QR code using a mobile device to read the policy on the Company website).

6. RESERVES

The net movement in the various reserves (Standalone Accounts) of the Company for FY17 and the previous year are as follows:

Figures in Rs. crore (Table 5)

Particulars

FY17

FY16

Capital Redemption Reserve

1.60

1.60

Capital Reserve

61.66

61.66

Securities Premium Account

5,634.98

5,634.13

Debenture Redemption Reserve

1,000.90

545.24

General Reserve

3,866.24

3,866.24

Retained Earnings

4,466.08

5,110.80

Investment Revaluation Reserve

(253.40)

(139.69)

7. FOREIGN EXCHANGE - EARNINGS AND OUTGO

8. REGULATORY AND LEGAL MATTERS

The businesses of the Company are governed primarily by the Electricity Act, 2003 (EA, 2003) and associated regulations. Mentioned below are the critical regulatory orders pertaining to the Company that were issued during FY17, none of which impact the “going concern” status of your Company.

8.1. MUNDRA UMPP

8.1.1. COMPENSATORY TARIFF/ FORCE MAJEURE RELIEF

Coastal Gujarat Power Limited (CGPL) - Mundra UMPP had approached Central Electricity Regulatory Commission (CERC) for evolving a mechanism for compensating CGPL for the adverse impact of the uncontrollable and unprecedented escalation in the imported coal prices and the change in law in Indonesia. CERC had, after considering the recommendations of a Committee appointed for the aforesaid purpose, vide its order dated 21st February 2014, decided that CGPL was entitled to compensatory tariff from 151 April 2012 over and above the tariff agreed under the PPA with the Procurers, till the hardship on account of Indonesian regulations persisted.

The Procurers challenged the order and filed an appeal with Appellate Tribunal for Electricity (APTEL). APTEL passed an interim order dated 21st July 2014, directing the Procurers to pay a compensatory tariff from March 2014 onwards, although it stayed the compensation for the prior period, till disposal of the appeal filed before it. On appeal by the Procurers, the interim order of APTEL was set aside by the Supreme Court and APTEL was directed to hear and dispose off the appeals expeditiously.

On 7th April 2016, APTEL, while rejecting the grounds of change in law and use of regulatory powers, remanded the matter to CERC to assess the compensation on grounds of Force Majeure (FM) as permissible under the PPA.

The Procurers, including a consumer group, filed a Civil Appeal before the Supreme Court challenging the FM relief provided as per APTEL’s judgment. The Supreme Court directed that CERC may pass the Order on FM relief, but it was to be given effect only with the prior permission of the Supreme Court.

Based on the remand by APTEL, matter was heard by CERC and order passed on 6th December 2016, prescribing the FM relief mechanism.

Subsequently, the civil appeals filed by Procurers and consumer groups were heard before the Supreme Court. The Supreme Court vide judgement dated 11th April 2017, disposed off the appeal with regard to compensatory tariff, inter alia holding that:

a) CGPL’s case does not fall under the FM clause in the PPA

b) The Change in Law as defined under PPA contemplates only change in domestic (Indian) laws

The Supreme Court has, however, upheld that the CERC has powers under Section 79(1) (b) of EA, 2003 to regulate, which includes power to determine or adopt tariff even for tariff that is determined under competitive bidding route (Section 63). While the Supreme Court held that the Regulatory Commission has the powers under Section 79 of EA, 2003, the judgement did not specifically validate the applicability of said principle to the relief that had been granted by CERC to CGPL, earlier. Your Company, therefore, is in consultation with its legal counsels for advice on the possible legal options and way forward.

The Company remains committed to operating and maintaining the 4,000 MW Mundra Ultra Mega Power Station which is operating at benchmark operational parameters and is making a significant contribution in ensuring the energy security of the country. While the Company continues to make efforts to seek additional tariff, it is pursuing all alternative options at CGPL including sourcing of competitive coal from other relevant geographies as also use low grade and blended coal options to contain the under-recovery at Mundra UMPP. Efforts are also in progress to optimally refinance debt and minimize the total cost incurred on debt servicing. It may also be noted that the combined investments in the Indonesian coal mines along with investment in coal logistics and CGPL, when considered together, provide a natural hedge towards future fluctuations in coal prices. It may be noted that CGPL project cost does not include the investment made in the coal mines .

For the long-term sustainability of the power station, however, your Company is exploring all options to structure the investment in a manner that it earns a reasonable return.

8.1.2. CHANGE IN LAW

A) CHANGE IN LAW - OPERATIONS

CGPL filed a Petition for its claim under Change in Law relevant to Indian provisions for the period FY12, FY13 and FY14 in June 2015 and CERC passed the order on 17th March 2017, which is consistent with the orders passed by CERC for other generators seeking relief under change in law operations.

B) CHANGE IN LAW - CONSTRUCTION

Petition for claiming the impact of Change in Law - Construction has been filed before CERC in July 2016. The matter has been admitted and is yet to be heard.

8.1.3. PETITION SEEKING IN-PRINCIPLE APPROVAL FOR CAPEX AND OPEX TO COMPLY WITH NEW ENVIRONMENT NORMS

The Ministry of Environment, Forest and Climate Change (MoEF&CC), vide its notification dated 7th December 2015, has revised the environment emissions norms mandating all thermal power plants to comply with new/revised norms. Your Company had filed a petition with CERC seeking in-principle approval for the capital expenditure in order to secure finance from the financial institutions. Meanwhile, your Company is already in compliance with the new norms related to Suspended Particulate Matter (SPM) etc. Though your Company was all prepared to move ahead and complete requirements on time, but for regulatory delays, it is believed that implementations of the proposed regulations is likely to be postponed.

8.1.4. SUO-MOTU PETITION BY CERC ON DECLARATION OF COMMERCIAL OPERATION OF UNITS 20, 30, 40 & 50 OF MUNDRA UMPP

Based on representations made by an individual before Ministry of Corporate Affairs and Securities and Exchange Board of India (SEBI) on the issue of declaration of commercial operations dates for Units 20, 30, 40 and 50 of Mundra UMPP, the matter was referred to CERC and a suo-motu petition has been initiated in the matter. When the matter was listed and heard before CERC on maintainability on 24th May 2016, issues on locus standi of the individual and jurisdiction of CERC were raised by the Company. The matter has been heard by CERC and order reserved on the issue of maintainability of the proceedings. In December 2016, Energy Watchdog has filed an intervention application before CERC with a prayer to allow it to intervene/ participate in the above referred suo-motu petition. On this issue, CEA and WRLDC had earlier reviewed all inputs and given their acceptance on COD dates.

8.2. MUMBAI OPERATIONS

8.2.1. MULTI YEAR TARIFF ORDERS OF MERC

The Multi Year Tariff (MYT) petitions for Mumbai generation, transmission and distribution businesses of the Company were filed with MERC during the year, which included truing-up for FY15 and provisional truing-up for FY16, as also the Annual Revenue Requirement (ARR) for 3rd MYT Control Period from FY17 to FY20 was filed. MERC passed its MYT order for generation business on 8th August 2016; for transmission business on 30th June 2016 and for distribution business on 21st October 2016. Review petitions with MERC and appeals with APTEL have been filed challenging the disallowance by MERC in the tariff orders.

8.2.2. NETWORK ROLL-OUT PLAN

Post the judgement of APTEL in November 2014, your Company submitted its revised network rollout plan in Case No. 182 of 2014. MERC passed an interim order in the said petition on 9th November 2015, directing constitution of a committee to examine and finalize the operational specific matters/physical rollout of network for the consideration of MERC. On 28th March 2016, the committee provided its recommendation to MERC for its consideration and a public hearing was conducted on 21st June 2016. The network rollout plan of your Company is currently pending order of the Commission.

8.2.3. DISTRIBUTION LICENSES - APPEAL FILED BY R-INFRA AND BEST

Appeal filed by Reliance Infrastructure Limited (R-Infra) challenging the distribution license granted to Tata Power -Distribution in August 2014 is pending before APTEL. Further, appeals filed by R-Infra and Brihanmumbai Electric Supply & Transport Undertaking (BEST) against the interim order dated 9th November 2016, passed by MERC, are also pending before APTEL.

8.2.4. MID TERM REVIEW ORDERS - CIVIL APPEAL FILED WITH HON’BLE SUPREME COURT

A civil appeal has been filed by your Company before the Supreme Court challenging the judgement of APTEL in Review Petition No. 13 of 2016 and order dated 3rd June 2016 in appeal nos. 244 and 246 of 2015 dismissing the appeals and review petition filed by Tata Power-Generation and Transmission against the mid-term review orders issued by MERC. The civil appeal was heard on 30th January 2017 and is currently pending before the Supreme Court.

8.2.5. KEY JUDGEMENT - CHALLENGING EOI BY MERC FOR GRANT OF LICENSE

A critical judgement has been passed by APTEL on 4th November 2016, dismissing appeal no. 243 of 2016 filed by BEST against MERC, challenging the invitation for expression of interest issued by MERC for grant of licence to Tata Power - Distribution.

APTEL dismissed the appeal on the grounds that the points raised by BEST have been, inter alia, covered by the judgement of the Supreme Court that there can be a parallel licensee in the area where a local authority is licensed to supply electricity.

8.2.6. KEY JUDGEMENT - ALLOWING TATA POWER TO SUPPLY OUTSIDE THE LICENSE AREA

MERC passed an order dated 10th May 2016, in Case No. 43 of 2016 allowing Tata Power to continue to supply power to six consumers who fall outside the licence area of Tata Power. MERC also disallowed Maharashtra State Electricity Distribution Company Limited’s (MSEDCL) claim on seeking cross subsidy surcharge from the six consumers in its area of supply. MSEDCL’s revenue petition is pending for hearing.

8.2.7. STANDBY CHARGES

On an appeal filed by your Company, the Supreme Court had stayed the operation of the APTEL order in 2007, subject to the condition that your Company deposits an amount of Rs.227 crore and submits a bank guarantee for an equal amount. Your Company has complied with both the conditions. R-Infra has also subsequently filed an appeal before the Supreme Court challenging the APTEL order. Both the appeals have been admitted in 2007. The matter was part heard during the year and the hearings are yet to be completed.

8.2.8. ENERGY CHARGES AND ‘TAKE OR PAY’ OBLIGATION

MERC directed R-Infra to pay Rs.323.87 crore to Tata Power towards its ‘Take or Pay’ obligation for the years 1998-99 and 1999-2000. On an appeal filed by R-Infra, APTEL upheld Tata Power’s contention with regard to payment for energy charges but reduced the rate of interest. As regards the ‘Take or Pay’ obligation, APTEL has ordered that the issue should be examined afresh by MERC after the decision of the Supreme Court in the appeals relating to the distribution license and rebates given by R-Infra. Tata Power and R-Infra have filed appeals with Supreme Court. The Supreme Court, vide its order dated 14th December 2009, has granted stay against the APTEL order and has directed R-Infra to deposit with the Supreme Court a sum of Rs.25 crore and furnish a bank guarantee for the balance amount. No hearings were held during the year on this matter.

8.2.9. ENTRY TAX

Your Company had filed a writ in the High Court at Bombay (HC) challenging the constitutional validity of the Maharashtra Entry Tax Act. HC, vide its order dated 2nd August 2016, dismissed the writ petition. Aggrieved, your Company filed Special Leave Petition (SLP) in the Supreme Court. Vide its order dated 21st October 2016, the Supreme Court passed the order staying the demand of Entry tax, by extending the interim stay earlier granted by the High Court. There is no date fixed for further hearing of the matter and the same will come up in due course.

8.3. JOJOBERA OPERATIONS

8.3.1. APTEL JUDGEMENT FOR JOJOBERA UNIT 2 and UNIT 3

APTEL, in August 2016, passed a favourable order in an appeal filed by your Company challenging some of the findings of the Jharkhand State Electricity Regulatory Commission (JSERC) in the Annual Performance Review (APR) order for FY13 for Jojobera Unit 2 and Unit 3.

8.3.2. ANNUAL PERFORMANCE REVIEW (APR) ORDER FOR FY15-16 FOR JOJOBERA UNIT 2 AND UNIT 3

In January 2017, JSERC passed the APR order for FY16 including truing-up for FY14 and FY15 and revised true-up for FY13 in light of the judgement of APTEL. JSERC has also allowed claims of your Company while carrying out the true-up for FY14 and FY15.

8.3.3. APPROVAL OF THE REVISED PPA OF JOJOBERA UNIT 2 & UNIT 3

JSERC had earlier directed your Company to renegotiate the terms and conditions of the Power Purchase Agreement (PPA) with Tata Steel Distribution Licensee (TSDL) for Jojobera Unit 2 and Unit 3 subsequent to their transition to the regulatory regime. Accordingly, the PPA for the above Units was re-negotiated with TSDL and submitted before JSERC for its approval. JSERC has, in August 2016, accorded its approval on the Revised PPA for Jojobera Unit 2 and Unit 3, which has now been taken up for execution between your Company and TSDL.

8.4. MAITHON POWER LIMITED (MPL)

8.4.1. APPEAL FILED AGAINST DISALLOWANCES BY CERC IN MPL TARIFF ORDER

In May 2016, APTEL passed its judgement on the appeal filed by MPL against the partial disallowance by CERC in its order dated 19th November 2014 of the Interest during Construction (IDC) and cost of secondary fuel oil consumption. APTEL has upheld the findings of CERC and dismissed the plea of MPL. MPL thereafter, has filed a petition for review of the above judgement before APTEL and an appeal with the Supreme Court against APTEL’s judgment. Both the submissions are pending before the respective forums.

8.4.2. APPEAL FILED CHALLENGING DERC ORDER

MPL has challenged, before APTEL, the findings of Delhi Electricity Regulatory Commission (DERC) regarding the jurisdiction of the appropriate Commission pertaining to resolution of disputes arising out of the medium-term PPA between MPL and the Delhi discoms for the period October 2010 to March 2012. APTEL, in its judgement, has directed MPL to approach CERC for resolution of the disputes. Accordingly, MPL has approached CERC with a petition for resolution of the disputes.

8.4.3. TARIFF PETITION FOR FY14-19

MPL has filed a Petition for determination of the tariff for the period FY14-19 along with the truing-up for FY11-14 on 1st June 2015, before CERC. The proceedings in the above matter has been completed in December 2016 and the order is reserved.

8.4.4. PETITION SEEKING IN-PRINCIPLE APPROVAL FOR CAPEX SCHEMES FOR MEETING NEW ENVIRONMENT NORMS

MoEF&CC, vide its notification dated 7th December 2015, has revised the environment emissions norms, mandating all thermal power plants to comply with new/revised norms. Petition (72/MP/2016) filed by MPL seeking in-principle approval of abstract scheme of capex in compliance with new environmental norms has been disposed off by CERC directing MPL to approach CEA and MoEF&CC to decide the optimum technology and associated costs, for phasing of implementation of different environment measures and to then approach CERC based on the approval of CEA and direction of MoEF&CC. MPL has approached CEA and MoEF&CC as per directions of CERC.

8.4.5. PETITION SEEKING CLARIFICATION ON METHODOLOGY OF AVAILABILITY

MPL has filed a miscellaneous petition before CERC seeking clarification on the methodology of computation of availability for generating stations where PPA with the beneficiaries is based on contracted capacity and not on government allocated percentages as in the case of central generating stations. The proceedings in the above matter have been completed in October 2016 and the order is reserved.

8.4.6. GRADE SLIPPAGE

CERC, in 2014 Regulations, changed the methodology of measurement of Gross Calorific Value (GCV) from’as fired’to ‘as received’ basis. TPDDL had filed Petition before CERC against National Thermal Power Corporation (NTPC), Damodar Valley Corporation (DVC) and MPL for measurement of GCV in accordance with the 2014 Regulations. CERC passed directions laying down the procedure for measurement of GCV and CERC is examining the progress made by generating companies in compliance with its directions. MPL has filed affidavits listing out the existing procedure and seeking relaxation in the method prescribed by CERC. The matter is pending before CERC for orders.

8.5. POWERLINKS TRANSMISSION LIMITED (PTL)

8.5.1. TRUING-UP FOR FY10 TO FY13 FOR PTL

CERC, in May 2016, passed the true-up orders for FY10 to FY13 for transmission assets of PTL pertaining to eastern, northern and ER-NR inter-connector region. CERC, in the above order, had approved the annual transmission charges along with the transmission majoration factor for above period. However, CERC has directed its staff to examine the issue of transmission majoration factor and its impact to review the continuation of transmission majoration factor for subsequent years.

8.6. OTHER MATTERS

The Company has had a number of contracts with the M. Pallonji group of companies (MP) over last several years. These include contracts related to barging, dredging, shipping and contracts for painting of the Company’s power stations at Trombay, hydros and Jojobera.

Some of the contracts were awarded long-term as new capital equipment had to be deployed and significant cost and logistics benefits would be achieved vis-a-vis the then prevalent arrangement to get coal to Trombay station.

The Company had followed the requisite processes in award of the contracts and necessary approvals from the Board Committees / Management have been taken as required as per the Schedule of Authorities prevailing at various times.

9. RISKS AND CONCERNS

Your Company is faced with risks of different types, all of which need different approaches for mitigation. Details of various risks faced by the Company are provided in section 4 of MD&A of this Annual Report.

10. RISK MANAGEMENT FRAMEWORK AND INTERNAL FINANCIAL CONTROLS

Risk Management Framework:

Based on the Risk Management Policy (https://www.tatapower.com/aboutus/pdf/risk-management-policy. pdf)(alternately, scan the adjacent QR Code using a mobile device to read the policy on the Company website), a standardized Risk Management Process and System has been implemented across Tata Power Group. Risk plans have been framed for all identified risks and uploaded in the system with mitigation action, target dates and responsibility. This has enabled continuous tracking of status of mitigation action and monitoring of Risk Mitigation Completion Index (RMCI). The Risk Register contains the mitigation plans for eleven categories of risk. Eight Functional Risk Management Committees (FRMCs) closely monitor and review the risk plans. This year, standardisation of risks and mitigation measures was taken up as an exercise to ensure uniformity of risks across Tata Power Group and learning and sharing.

All risks have been classified into strategic, tactical and operational risks. Apex Risk Management Committee (ARMC) meets every quarter to review major strategic and tactical risks, identify new risks and assess the status of mitigation measures. As per the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), a Risk Management Committee (RMC) was constituted which currently comprises 3 Independent Directors, 1 Executive Director, the Chief Financial Officer and the Chief Risk Officer. The RMC meets regularly to review critical strategic risks and summary of top risks of each of the eleven categories and their status in terms of mitigation actions. To increase focus on critical risk groups, all risks have been grouped into 20 risk themes.

In FY15, British Standards Institution (BSI) conferred the ‘Statement of Compliance’ on Tata Power for ISO 31000:2009 - a recognition that implies that the Company has strong processes for risk identification, management and mitigation. Tata Power is the first power company in India to get this recognition. In FY16, BSI did the assessment of Tata Power and its eight major subsidiaries (viz. CGPL, MPL, TPDDL, TPTCL, TPSSL, TPREL, PTL and IEL) and conferred the ‘Statement of Compliance’ for Tata Power Group for ISO 31000:2009. This year, Tata Power Group has again been recommended for conferring the Statement of Compliance, basis BSI’s recent assessment in February 2017.

Internal financial controls and systems:

The Company has its internal audit function which endeavours to make meaningful contributions to the organisation’s overall governance, risk management and internal controls. The function reviews and ensures sustained effectiveness of Internal Financial Controls (IFC) by adopting a systematic approach to its work.

As per the provisions of Section 177 of the Companies Act, 2013 (the Act) and the Audit Committee Charter adopted by the Board of Directors, one of the roles and responsibilities of the Audit Committee, is to review the effectiveness of the Company’s internal control system, including financial controls, information technology security and its control.

Section 143(3) of the Act provides that the Statutory Auditor’s Report shall state whether the Company has an adequate IFC system in place and the operating effectiveness of such controls, for FY16 and beyond.

As per Section 134 of the Act, Directors of listed companies, based on the representations received from the management, are to confirm in the Directors Responsibility Statement that IFC are adequate, as also operating effectively.

With this objective in mind and to fulfil the requirements of the Act, in FY16, the in-house internal audit team, with the support of two expert audit firms, performed the test of design and test of effectiveness of IFC. Scoping was done based on major classes of transactions and account balances. Seven key business cycles, general IT controls and Entity Level controls were considered for review.

The Internal Audit and Risk Management (IARM) function has generally adopted Committee of Sponsoring Organizations (COSO) framework. COSO is a leading framework which provides guidance on the design and evaluation of internal controls. This has been done for 5 elements and 17 principles, which provides assurance of financial controls in place at the level of functional heads and at top management level. This has helped in assessing the effectiveness and efficiency of operational controls, enhanced governance and consideration of anti-fraud expectations, reliability of financial reporting and statutory compliances. Attributes with internal control deficiencies are identified with action plans to be pursued, responsibility centres and target dates for compliances.

For the Business Process level, controls are evaluated through internal audits and Control Self-Assessment (CSA). These CSAs have also been rolled out across other Tata Power group companies too. The effectiveness of the IFC was then tested by an external consultant who found no significant deficiencies. Further, the statutory auditor, through their independent testing of IFC, has also issued an unmodified opinion.

All processes of the Company have been classified under vital, essential and desirable, based on the analysis of process impact on Company’s Strategic Objectives. Post the audit, process is rated through the Risk Control Index and Process Robustness Index given by the Internal Auditors. Also, theme based audits are carried out for certain areas impacted by changing external environment. Significant observations, including recommendations for improvement of the business processes are reviewed by the Management before reporting to the Audit Committee. The Audit Committee then reviews the Internal Audit reports and the status of implementation of the agreed action plan. Post recognition of ‘General Conformance to International Audit Standards’ from Institute of Internal Auditors (IIA Global) in 2013, quality review of audit reports is carried out as per IIA global guidelines before the report is issued. Internal audit process has been standardized across the Tata Power group.

Internal audit plan is executed by an in-house audit team with support from expert Internal Audit firms. This risk based audit plan has been used for subsidiaries and other group companies as well. Your Company has also started its journey towards digitalization through enhanced data analysis on audits which will result in improved quality and focused audits.

Assessment mechanism for measuring the existence and effectiveness of controls are established by the fact that the Value Added Index, which is a measure of effectiveness and contribution of the internal audit to top management and Audit Committee, has improved over the years and so has the Risk Control Index (RCI), thereby giving assurance to management of efficiency and effectiveness of the IFC. The action taken statistics emerging out of internal audit reports for last three years reflect an increase in implementation percentage achieved through rigorous and systematic follow up. Further, the total number of action points has decreased over the last three years, thereby reflecting an improvement in the system and processes.

On review of the internal audit observations and action taken on audit observations, we can state that there are no adverse observations having material impact on financials or commercial implications or material non-compliances which have not been acted upon.

Control Self-Assessment: The Company continued the CSA process this year, whereby responses of all process owners are used to assess internal controls in each process. It was also extended to seven other Tata Power group companies. This helps the Company to identify focus audit areas, design the audit plan and support CEO/CFO certification for internal controls. The CSA questionnaire is designed to test effectiveness of deployment of existing controls for processes which are not to be audited as per the audit plan. The responses received from process owners on the questionnaire are analysed and validated through spot audits. This ensures optimum coverage of audit universe to provide assurance on the operating effectiveness based on results of evaluation across all processes.

Process Robustness Index (PRI): The processes are examined to assess their robustness, primarily from the perspective of system driven controls (SAP, CRM, Documentum etc.), which ensures that deviations from the defined process do not occur due to manual errors. In case controls have not been embedded in the system, other compensating controls such as maker-checker are exercised to assess the robustness of the process. This index is computed on the basis of existence of robust controls and not on the basis of extent of implementation of these controls. Your Company has obtained a copyright for this PRI scoring methodology.

The scores for RCI and PRI for the past 3 years are listed below:

(Table 7)

Scores

FY17

FY16

FY15

Risk control index (RCI)

92

91

88

Process robustness index (PRI)

52

44

40

11. SAFETY

Safety is a core value of the Company. The Company has adopted a structured approach towards implementation of Safety Policies and Programs and integrating safety with critical business processes to continuously improve safety performance. Safety organisation has been established for developing and implementing Safety Management Systems and to facilitate a change in culture through leadership interventions to mitigate risks.

Safety Statistics FY17: (Table 8)

Sl. No.

Safety Parameters in your Company’s work jurisdiction (Tata Power, CGPL, MPL, IEL, CTTL, PTL, TPDDL and TPSSL)

FY17

FY16

1

Fatality (Number)

2

3

2

LTIFR (Lost Time Injuries Frequency Rate per million man hours)

0.23

0.20

3

Total Injury Frequency Rate (No of injuries per million man hours)

4.67

5.16

4

First Aid Cases (Number)

190

325

The Company is deeply aggrieved by the fatalities and accidents. It treats any fatality in any of its premises, of any of its employees, contractor/associate’s employees or any third party with equal gravitas and is committed to taking the entire working environment and behaviour to the highest safety standards.

Your Company has increased its efforts on safety during the year and has taken the following additional steps in FY17 to improve safety:

- Coaching to further improve Felt Leadership at all levels

- Implemented the contractors’ safety code of conduct to improve capability and capacity of contractors

- Structured Reward and Recognition Program which includes consequences and rewards in General Conditions of Contracts (GCC) for associates and contractors

- Enhanced Capability building through competency based training programs, at TPSDI’s state of the art skill building schools, for high risk activities across all levels

- Improvements in the mobile application ‘Suraksha’ on safety for incident reporting

- High visibility safety tours by leadership

- Risk Based Audit program to evaluate implementation of standards and effectiveness of management system

- Implementation of SAP EHSM to integrate safety with business process

12. SUSTAINABILITY

Your Company successfully completed 100 years of operations and remains committed to the legacy of being a responsible corporate citizen. It has practised sustainability over these 100 years and thus, reinforced the core value of Leadership with Care. For your Company, sustainability is care for the environment, care for the customers and shareholders, care for the community and care for our people.

The Company’s efforts on sustainability were recognized at various platforms and a testimony of this was the various awards bestowed upon your Company. The Company has received a high rating of ‘A’ for its sustainability performance according to a new assessment done by Confederation of Indian Industry (CII). It is based on a comprehensive assessment of environmental, social and governance analysis of companies which helps them to measure performance as well as identify risks that challenge sustainability of their business.

The year also saw the launch of the Company’s 7th Sustainability Report for FY16, and the first one to be prepared in accordance with the latest G4 Guidelines of the Global Reporting Initiative (GRI).

12.1. CARE FOR OUR COMMUNITY/COMMUNITY RELATIONS

Your Company has actively worked on the key focus areas in Corporate Social Responsibility (CSR) of education, health, livelihood and employability, social capital and financial inclusivity, as well as rural energy.

Your Company has a unique governance system for Sustainability as a strategic theme. This is guided by the Sustainability Advisory Council (SAC) comprising eminent experts from various fields impacting sustainability.

Your Company’s standalone CSR spend for FY17 stood at Rs. 22.79 crore against the Companies Act requirement of Rs.21.84 crore. Additionally, as a part of disaster relief operations, the Company contributed towards relief efforts in Assam. Besides this, 5 employees were selected to be trained as project managers to be deployed as part of Tata Group relief efforts.

Independent monitoring, effectiveness of implementation and impact assessment were undertaken to provide feedback and to refine, realign the programs so that the extent and effectiveness of the initiatives could be improved in pursuance of Tata Power’s objective to improve the quality of life of the community and to get the community’s tacit or implied acceptance of the Company’s co-existence with them.

Details of the CSR activities of your Company and its key subsidiaries are listed in the MD&A section of this Annual Report. Annual report of CSR activities is provided in Annexure-II.

12.2. AFFIRMATIVE ACTION

Under its Affirmative Action (AA) program, your Company has implemented several initiatives for Employment, Entrepreneurship, Employability, Education and Essential Amenities for the communities around its operating sites.

The major programs carried out in the neighbourhood of the operating plants and projects are Skill Development Programs for youth (Industrial Training Institutes, Business Process Outsourcing training and Vocational Trainings), entrepreneurial programs like fly ash brick making/supporting Self Help Groups (SHG), and support for educational initiatives for school children like scholarships and coaching classes in the evenings along with assistance in the development of adequate infrastructure.

The Company continued its work in areas beyond its areas of operations, such as in Jawhar taluka, Palghar district of Maharashtra, which has a tribal population of over 90% of the total population with a vast majority of them below the poverty line. The activities here include initiatives like generating livelihood opportunities to improve sub-economic status, integrated watershed management program, capacity building through a participatory approach, women’s empowerment through SHGs and a Village Development Council (VDC) for sustainable development. The VDC has elected members from the village, as well as a Tata Power representative and are responsible for the sustainable development of the village.

12.3. CARE FOR OUR ENVIRONMENT

The Company, during the year, addressed various aspects of resource conservation, energy efficiency, carbon footprint, renewable power generation, biodiversity and green buildings. Details of initiatives undertaken are given in MD&A Section 9.1.3

12.4. CLUB ENERJI

Tata Power’s Club Enerji is focused on school students to champion the noble cause of conservation of resources and enhance moral and civic values. The Club has been ceaselessly working towards creating responsible citizens of tomorrow who focus not only on conserving energy and natural resources (like fossil fuel - coal, oil, gas, water; managing waste; afforestation), but also conserve civic, ethical and moral values in society at large.

Tata Power Club Enerji is a sustainability initiative aimed at creating awareness among school students, who in turn, sensitise their families and neighbourhood towards energy and resource conservation through dynamic and innovative measures. The current program is based on the four stage model of Educate (sensitise school children about energy conservation practices), Engage (empower energy champions to spread awareness amongst peers and the community), Enhance (enthuse schools to participate and contribute to Club Enerji initiatives) and Empower (create self-sustaining Mini Clubs that will lead the movement).

Recognizing the immense value that schools and school children can bring to the initiative and taking due consideration of the social need, Tata Power started “Tata Power Club Enerji” in 2007 to propagate efficient usage of energy and to educate the society on climate change issues. Club Enerji covers 500 schools across Mumbai, Delhi, Pune, Ahmedabad, Bengaluru, Kolkata, Belgaum, Jamshedpur, Lonavala and five more cities. It has reached out to more than 1.28 crore citizens, collectively saved 17.26 million units of electricity - equivalent to saving 17,000 tons of CO2. All over India, 1,337 Mini Clubs have also been formed under the Club Enerji initiative.

Tata Power Club Enerji also launched its comprehensive Online Module in November 2015 with an aim to reach out to a larger audience with a vision of transformation and adoption of a holistic and robust approach towards conservation. The module, since its launch, has also reached out to audiences in new international geographies like Philippines, UAE, USA, UK and South Africa and newer national geographies like Chandigarh, Hyderabad and Chennai.

Club Enerji & Greenolution was presented at IIM - Ahmedabad in Feb 2017 in a TEDx IIM Ahmedabad event held on the topic: “Driving Conservation by shaping the future generations”

12.5. DEMAND-SIDE MANAGEMENT

Your Company has been at the forefront of propagating energy conservation and efficiency.

Demand-side management (DSM) refers to cooperative activities between the utility and its customers to implement options for increasing the efficiency of energy utilization, with resulting benefits to the customer, utility and society as a whole.

Industrial, commercial and residential consumers in the city have unique usage patterns. Under “Be Green” initiative, your Company gives an opportunity to Mumbai consumers to exchange their old, inefficient electrical appliances for new, 5 star rated energy efficient appliances at a discounted price. The Company has partnered with leading consumer appliance manufacturers for energy efficient equipment. The consumers appreciate these initiatives as it helps to reduce their energy cost by 30% to 50% without compromising on their comfort and convenience.

During this financial year, these programs received a good response and more than 13,000 energy efficient appliances (LED tube lights, ceiling fans, refrigerators and split ACs) have been distributed in FY17. HVAC Audit, Pump Audit, Power Quality Audit were carried out through Energy Audit program this year. These audits helped consumers to focus on the areas which offer the greatest scope for energy savings.

Your Company also facilitated the implementation of National-level Program (DELP/UJALA) which is being implemented by M/s. EESL, a Union Govt. Undertaking, and aims to increase the penetration of LED lighting technology in the residential sector. The DELP/UJALA program witnessed the distribution of more than 1.1 lakh LED bulbs for Tata Power consumers in Mumbai during FY17.

12.6. SUSTAINABILITY REPORTING

Your Company has adopted the latest Global Reporting Initiative (GRI) G4 guidelines to report on its sustainability performance. The report, prepared in accordance with the comprehensive criteria, is specific to the Indian operations of your Company viz. generation, transmission and distribution of power and highlights the sustainability performance of your Company. The Company’s Sustainability Report is hosted on its website: https://www.tatapower.com/sustainability/sustainability-communications.aspx (alternately, scan the adjacent QR Code using a mobile device to read the policy on the Company website)

12.7. BUSINESS RESPONSIBILITY REPORT (BRR)

The Business Responsibility Reporting was in line with the SEBI requirement based on the ‘National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business’ notified by Ministry of Corporate Affairs (MCA), Government of India, in July 2011. Your Company reported its performance for FY17 as per the BRR framework, describing initiatives taken from an environmental, social and governance perspective. The BRR is hosted on the Company website: https://www.tatapower.com/investor-relations/brr. aspx(alternately, scan the adjacent QR Code using a mobile device to read the policy on the Company website).

12.8. INTEGRATED REPORTING (IR)

Your Company prides itself in making voluntary disclosures to keep its stakeholders fully informed on all aspects of its business. It has decided to take steps to further enhance the disclosures and information provided in its annual report in alignment with the Integrated Reporting framework by International Integrated Reporting Council (IIRC).

13. TRANSITION TO INDIAN ACCOUNTING STANDARDS

With effect from 1st April 2016, your Company was required to align its accounting policies and disclosures with new Indian Accounting Standards or IndAS. Consequently, the financial statements to be issued thereafter are different from those issued from the previous set. Apart from differences in the way assets, liabilities, income, expenses and losses are measured, even the disclosure requirements, as also the various statements comprising the financial report, have substantially changed.

The significant changes that have affected the net worth and the profits are on account of the following:

a) Effect of some erstwhile subsidiaries (IEL, PTL and Dugar Hydro) re-classified as Joint Ventures (JV) and change to Equity Accounting for JVs and reclassified subsidiaries. JVs and erstwhile subsidiaries were earlier consolidated on line by line basis;

b) Tata Power Jojobera Plant and IEL PPA arrangements categorized as Finance Lease, their assets derecognized and treated as Lease Receivables;

c) Fair valuation of current and non-current investments other than investments in subsidiaries, joint ventures and associates. However, certain unquoted investments in Tata group companies have been valued at cost as their fair value based on appropriate methodology is not materially different from their carrying cost;

d) Effective Interest Rate (EIR) Method adopted for Long term borrowings and debentures;

e) Fair valuation of forward and option contracts and IRS;

f) Preference shares considered as compound/debt instrument;

g) Consider Interest and Commission charges for Interest free loan and Guarantee issued to group companies;

h) Reversal of proposed dividend and Dividend Distribution Tax thereon;

i) Change in Deferred Tax computation from P & L approach to Balance Sheet approach; j) De-recognition of Interest on Forex Loan Capitalized;

k) Revamping of the notes to the accounts and much more elaborate disclosures

14. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Directors

Ms. Anjali Bansal, Ms. Vibha Padalkar and Mr Sanjay V. Bhandarkar were appointed as Additional Directors of the Company with effect from 14th October 2016, in accordance with Article 132 of the Company’s Articles of Association and Section 161 of the Act. They hold office only upto the date of the forthcoming Annual General Meeting (AGM) and a Notice under Section 160(1) of the Act has been received from a Member signifying his intention to propose their appointment as Directors. They were also appointed as Independent Directors for a period of 5 years with effect from 14th October 2016 upto 13th October 2021, subject to approval of the Members at the ensuing AGM.

Mr. S. Padmanabhan was appointed as an Additional Director of the Company with effect from 16th December 2016, in accordance with Article 132 of the Company’s Articles of Association and Section 161 of the Act. Mr. Padmanabhan holds office only upto the date of the forthcoming AGM and a Notice under Section 160(1) of the Act has been received from a Member signifying its intention to propose his appointment as Director. Mr. Padmanabhan was nominated as Chairman of the Board of Directors of the Company with effect from 3rdJanuary 2017, by Tata Sons Limited (TSL) pursuant to Article 164(b) of the Company’s Articles of Association, where TSL has the right to nominate the Chairman of the Board of Directors of the Company. He continued as Chairman till 10th February 2017 and thereafter, continues as Non-Executive Director on the Company’s Board.

Mr. N. Chandrasekaran was appointed as an Additional Director of the Company with effect from 11th February 2017, in accordance with Article 132 of the Company’s Articles of Association and Section 161 of the Act. Mr. Chandrasekaran holds office only upto the date of the forthcoming AGM and a Notice under Section 160(1) of the Act has been received from a Member signifying its intention to propose his appointment as Director. Mr. Chandrasekaran was also nominated as Chairman of the Board of Directors of the Company with effect from 11th February 2017, by TSL, pursuant to Article 164(b) of the Company’s Articles of Association.

Mr. K. M. Chandrasekhar was appointed as an Additional Director of the Company with effect from 4th May 2017, in accordance with Article 132 of the Company’s Articles of Association and Section 161 of the Act. Mr. Chandrasekhar holds office only upto the date of the forthcoming AGM and a Notice under Section 160(1) of the Act has been received from a Member signifying his intention to propose his appointment as Director. Mr. Chandrasekhar was also appointed as an Independent Director for a period of 5 years with effect from 4thMay 2017 upto 3rd May 2022, subject to approval of the Members at the ensuing AGM.

Mr. Ashok S. Sethi was re-appointed as COO and Executive Director of the Company for a period commencing from 1st April 2017 till 30th April 2019. His re-appointment and the remuneration payable to him require approval of the Members at the ensuing AGM.

Mr. Cyrus P. Mistry, Non-Executive Chairman on your Company’s Board, resigned as Director effective 19th December 2016. Consequently, Mr. Mistry ceased to be Chairman of the Board of Directors of the Company.

Consequent upon their completing 75 years of age, as required by the guidelines adopted by the Company for retirement of Non-Executive Directors, Mr. Piyush G. Mankad, Mr. Ashok K. Basu and Dr. Homiar S. Vachha, Independent Directors on your Company’s Board, ceased to be Directors of the Company effective 18th November 2016, 24th March 2017 and 23rd April 2017, respectively.

The Board of Directors place on record their deep appreciation for the contribution of these Directors during their tenure.

In accordance with the requirements of the Act and the Company’s Articles of Association, Ms. Sandhya S. Kudtarkar retires by rotation and is eligible for re-appointment.

Nine Board Meetings were held during the year. For further details, please refer to Report on Corporate Governance, which forms a part of this Report.

In terms of Section 149 of the Act, Mr. N. H. Mirza, Mr. D. M. Satwalekar, Ms. Anjali Bansal, Ms. Vibha Padalkar, Mr. S. V. Bhandarkar and Mr. K. M. Chandrasekhar are the Independent Directors of the Company. The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the Act.

Key Managerial Personnel

In terms of Section 203 of the Act, the following are the Key Managerial Personnel (KMP) of the Company:

- Mr. Anil Sardana, CEO and Managing Director

- Mr. Ashok S. Sethi, COO and Executive Director

- Mr. Ramesh N. Subramanyam, Chief Financial Officer

- Mr. Hanoz M. Mistry, Company Secretary

15. ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Pursuant to the provisions of the Act and Regulation 25 of the Listing Regulations, the Board has carried out an annual evaluation of its own performance, performance of the Directors individually as well as the evaluation of the working of its Committees.

The following process was adopted for Board evaluation:

i) Feedback was sought from each Director about their views on the performance of the Board, covering various criteria such as degree of fulfilment of key responsibilities, Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning, Board culture and dynamics, quality of relationship between the Board and the Management and efficacy of communication with external stakeholders. Feedback was also taken from every Director on his assessment of the performance of each of the other Directors.

ii) The Nomination and Remuneration Committee (NRC) then discussed the above feedback received from all the Directors.

iii) Based on the inputs received, the Chairman of the NRC also made a presentation to the Independent Directors at their meeting, summarising the inputs received from the Directors as regards Board performance as a whole and of the Chairman. The performance of the Non-Independent Non-Executive Directors and Board Chairman was also reviewed by them.

iv) Post the meeting of the Independent Directors, their collective feedback on the performance of the Board (as a whole) was discussed by the Chairman of the NRC with the Chairman of the Board. It was also presented to the Board and a plan for improvement was agreed upon and is being pursued.

v) Every statutorily mandated Committee of the Board conducted a self-assessment of its performance and these assessments were presented to the Board for consideration. Areas on which the Committees of the Board were assessed included degree of fulfilment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.

vi) Feedback was provided to the Directors, as appropriate. Significant highlights, learning and action points arising out of the evaluation were presented to the Board and action plans drawn up. During the year under report, the recommendations made in the previous year were satisfactorily implemented.

16. REMUNERATION POLICY FOR THE DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with Part D of Schedule II to the Listing Regulations, the NRC is responsible for formulating the criteria for determining qualification, positive attributes and independence of a Director. The NRC is also responsible for recommending to the Board a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees. In line with this requirement, the Board has adopted the Policy on Board Diversity and Director Attributes, which is reproduced in Annexure-III and Remuneration Policy for Directors, Key Managerial Personnel and other employees of the Company, which is reproduced in Annexure-IV to this Report.

17. COMMITTEES OF THE BOARD

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority. The following statutory Committees constituted by the Board function according to their respective roles and defined scope:

- Audit Committee of Directors

- Nomination and Remuneration Committee

- Corporate Social Responsibility Committee

- Stakeholders Relationship Committee

- Risk Management Committee

Details of composition, terms of reference and number of meetings held for respective committees are given in the Report on Corporate Governance.

The Board has laid down separate Codes of Conduct for Non-Executive Directors and Senior Management personnel of the Company and the same are posted on the Company’s website at https://www.tatapower.com/aboutus/ pdf/Code-of-Conduct-NEDs.pdf. (alternately, scan the adjacent QR Code using a mobile device to read the policy on the Company website). All Senior Management personnel have affirmed compliance with the Tata Code of Conduct (TCOC). The CEO & Managing Director has also confirmed and certified the same. The certification is enclosed at the end of the Report on Corporate Governance.

18. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION

The information on conservation of energy and technology absorption stipulated under Section 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is attached as Annexure - V.

19. PARTICULARS OF EMPLOYEES AND REMUNERATION

The information required under Section 197(12) of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is attached as Annexure - VI.

The information required under Rule 5(2) and (3) ofThe Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in the Annexure forming part of this Report. In terms of the first provision to Section 136 of the Act, the Report and Accounts are being sent to the Members excluding the aforesaid Annexure. Any Member interested in obtaining the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure is related to any Director of the Company.

Officers of the organisation are classified into five management work levels i.e. MA, MB, MC, MD and ME. The work levels are further divided into grades. Non-management employees are across different grades and also have been classified as unskilled, semi-skilled, skilled and highly skilled.

For the officers, a benchmarking exercise was undertaken in FY17 on compensation with the help of a global consultancy firm specializing in remuneration and compensation. The benchmarking was to understand the comparative position of remuneration of the Company’s officers vis-a-vis officers in equivalent grades in ten key companies in the energy and power sector. As per this report, the median salary of officers at your Company in different grades was aligned to the market compensation.

20. RELATED PARTY TRANSACTIONS

In line with the requirements of the Act and the Listing Regulations, the Company has formulated a Policy on Related Party Transactions and the same is uploaded on the Company’s website: https://www.tatapower. com/aboutus/pdf/policy-on-related-party-transactions.pdf(scan the adjacent QR Code to read the details on the Company website). Details of Related Party Transactions as per AOC-2 are provided in Annexure-VII.

21. DEPOSITS (Table 9)

Sl. No.

Particulars

Amount in Rs.

1.

Accepted during the year

Nil

2.

Remained unpaid or unclaimed at the end of the year*.

2,58,105

3.

Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved

NA

- At the beginning of the year

- Maximum during the year

- At the end of the year

4.

Details of deposits which are not in compliance with the requirements of Chapter V of the Act

NA

* This relates to deposits accepted under the Companies Act, 1956.

22. LOANS, GUARANTEES, SECURITIES AND INVESTMENTS

The Company, being an infrastructure company, is exempt from the provisions as applicable to loans, guarantees and securities under Section 186 of the Act. The details of investments are provided in the notes to the financial statements.

23. EXTRACT OF ANNUAL RETURN

Pursuant to Section 92 of the Act and Rule 12 of The Companies (Management and Administration) Rules, 2014, the extract of Annual Return in Form MGT-9 is provided in Annexure-VIII.

24. AUDITORS

M/s Deloitte Haskins & Sells LLP (DHS LLP), who are the statutory auditors of your Company, hold office until the conclusion of this year’s AGM. The Board has recommended appointment of S R B C & CO. LLP (SRBC), Chartered Accountants, as statutory auditors of the Company in place of DHS LLP, the existing auditors of the Company, for a period of 5 years from the conclusion of this 98th Annual General Meeting (AGM) held in 2017 till the conclusion of the 103rd AGM to be held in 2022. In this connection, the attention of the Members is invited for approval of Item No. 5 of the Notice, for appointment of Statutory Auditors.

Members will also be requested to pass a resolution (vide Item No.17 of the Notice) authorizing the Board of Directors to appoint Branch Auditors for the purpose of auditing the accounts maintained at the Branch Offices of the Company abroad.

25. AUDITORS’ REPORT

The standalone and the consolidated financial statements of the Company have been prepared in accordance with Indian Accounting Standards (IndAS) notified under section 133 of the Companies Act, 2013.

The Auditor’s Reports on the standalone and the consolidated financial statements contain the following qualification:

As described in Note 34 (b) and (c) to the standalone IndAS financial statements and Note 34 (ii) and (iii) to the consolidated Ind AS financial statements, the fair value of unquoted equity shares of Tata Teleservices Limited (TTSL) has not been determined as at 31st March, 2017. We are, therefore, unable to comment on whether the carrying value of:

a) Investments in TTSL of Rs.384.88 crore represents the fair value of such investments as at 31st March 2017, and the consequent impact thereof on Other Comprehensive Income, and

b) ’Other advance’, which represent TTSL shares receivable from DoCoMo under a contractual obligation of Rs.138.55 crore as at 31st March, 2017 represents the fair value of such shares and the consequent impact thereof on the Statement of Profit and Loss.

Board’s comments:

The valuation report in respect of investment in TTSL is available from the Company only as at 30th September 2016. The Auditors have qualified their report since TTSL was in the process of working out valuation as at 31st March 2017, when your Company’s accounts were audited and adopted by the Board of Directors.

26. COST AUDITOR AND COST AUDIT REPORT

M/s Sanjay Gupta and Associates, Cost Accountants, were appointed Cost Auditors of your Company for FY17.

In accordance with the requirement of the Central Government and pursuant to Section 148 of the Act, your Company carries out an annual audit of cost accounts relating to electricity. The Cost Audit Report and the Compliance Report of your Company for FY16, was filed on 30th August 2016 with the Ministry of Corporate Affairs through Extensive Business Reporting Language (XBRL) by M/s Sanjay Gupta and Associates, Cost Accountants, before the due date of 30th September 2016.

27. SECRETARIAL AUDIT REPORT

M/s. Parikh & Associates, Company Secretaries, were appointed as Secretarial Auditors of your Company to conduct a Secretarial Audit of records and documents of the Company for FY17. The Secretarial Audit Report confirms that the Company has complied with the provisions of the Act, Rules, Regulations, and Guidelines and that there were no deviations or non-compliances.

The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks or disclaimers. The Secretarial Audit Report is provided in Annexure-IX.

28. CORPORATE GOVERNANCE

At Tata Power, we ensure that we evolve and follow the corporate governance guidelines and best practices sincerely, not just to boost long-term shareholder value, but also to respect minority rights. We consider it our inherent responsibility to disclose timely and accurate information regarding our operations and performance, as well as on the leadership and governance of the Company.

During the second half of the year under review, the Company witnessed a leadership change at Tata Sons Limited (our Promoter). During this period, there were allegations made regarding the ethics and governance of the Company. Clarifications were also sought by the Regulators with respect to certain business decisions and governance process.

We categorically deny these references and would like to impress upon you that your Company has the highest corporate governance standards, robust processes and a duly constituted and independent Board. Your Board exercises its independence both, in letter and spirit. Your Directors understand their fiduciary duties and have always acted in the best interests of the Company and will continue to do so. Equally, your Company has a professional and competent management to run the business. The Board compliments the management team in coping with the leadership transition seamlessly and in remaining steadfast towards achieving set objectives without getting distracted.

Further, during the course of the leadership transition, allegations were made with respect to certain contracts which had been awarded by the Company. In this regard, we would like to place on record the fact that after a careful consideration of the issues involved, the Audit Committee had requested the management to examine whether due process in award of contracts had been followed and necessary approvals had been sought from the concerned authorities, based on which the Audit Committee would decide next steps. The management had compiled the required information and submitted the required data to the Audit Committee. Based on the records, the current management has reviewed the old contracts awarded and confirmed that due process had been followed. The management has since then submitted to the Audit Committee a white paper on the subject, duly confirming that the Company has not been subjected to any commercial deterrent or loss, over the period of such contracts. The Audit Committee has now asked the (external) internal auditors of the Company to study the records and answer certain queries raised by the Audit Committee members. Findings are awaited from the internal auditor in this regard. Management is of the view that the allegations are incorrect.

Queries were also raised with regard to bidding and award of Mundra Project in 2006, which have been appropriately responded to.

The Company employed rigorous processes in preparation of all accounts/ financial statements including detailed review by the Board of Directors and the concerned Committees. The accounts and financial statements of the Company have also been reviewed by the statutory auditors. The Company reiterated that its annual reports, accounts and financial statements, as published from time to time, present a true and fair view of the state of affairs of the Company and its business and the Company has disclosed all material facts as required under applicable laws.

Pursuant to Regulation 34 of the Listing Regulations and relevant sections of the Act, a Management Discussion and Analysis Statement, Report on Corporate Governance and Auditors’ Certificate are included in the Annual Report.

29. VIGIL MECHANISM

Your Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour. In line with the Tata Code of Conduct (TCOC), any actual or potential violation, howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. The role of the employees in pointing out such violations of the TCOC cannot be undermined.

Pursuant to Section 177(9) of the Act, a vigil mechanism was established for directors and employees to report to the management instances of unethical behaviour, actual or suspected, fraud or violation of the Company’s code of conduct or ethics policy. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chief Ethics Counselor (CEC)/Chairman of the Audit Committee of the Company for redressal.

30. DIRECTORS’ RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost auditors, secretarial auditors and external consultants including audit of IFC for financial reporting by the statutory auditors and the reviews performed by management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company’s IFC were adequate and effective during FY17.

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirms that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures in the matter of valuation of certain unquoted investments and the adequacy of the provision for contractual obligation in the matter of NTT Docomo Inc.;

b) the Directors had selected such accounting policies and applied them consistently and made judgements 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;

c) the Directors had taken proper and sufficient 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 financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

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

31. ACKNOWLEDGEMENTS

On behalf of the Directors of the Company, I would like to place on record our deep appreciation to our shareholders, customers, business partners, vendors - both international and domestic, bankers, financial institutions and academic institutions for all the support rendered during the year.

The Directors are thankful to the Government of India, the various Ministries of the State Governments, the Central and State Electricity Regulatory authorities, communities in the neighbourhood of our operations, Municipal authorities of Mumbai, and local authorities in areas where we are operational in India; as also partners, governments and stakeholders in International geographies where the Company operates, for all the support rendered during the year.

Finally, we appreciate and value the contributions made by all our employees and their families for making Tata Power what it is.

On behalf of the Board of Directors,

N. Chandrasekaran

Chairman

Mumbai, 19th May 2017 (DIN: 00121863)


Mar 31, 2016

The Directors are pleased to present the Ninety-Seventh Annual Report on the business, operations and the Statements of Account for the year ended 31st March 2016 of The Tata Power Company Limited (Company).

1. Financial Results

Figures in Rs. crore (Table 1)

Consolidated Standalone FY16 FY15 FY16 FY15

(a) Net Sales/Income from Other Operations* 36,461 34,367 8,438 8,678

(b) Operating Expenditure 28,470 27,426 5,721 6,516

(c) Operating Profit 7,991 6,941 2,717 2,162

(d) Less/(Add): Forex Loss /(Gain) 218 (64) 58 48

(e) Add: Other Income 297 352 555 1,025

(f) Less: Finance Cost 3,477 3,699 1,156 1,048

(g) Profit before Depreciation and Tax 4,593 3,658 2,058 2,091

(h) Less: Depreciation/ Amortisation/Impairment 2,376 2,174 665 575

(i) Profit Before Exceptional Item 2,217 1,484 1,393 1,576

(j) Less: Exceptional Item 281 NIL 226 NIL

(k) Profit before Tax 1,936 1,484 1,167 1,516

(I) Tax Expenses 869 1,075 395 506

(m) Net Profit/(Loss) after Tax 1,067 409 772 1,070

(n) Less: Minority Interest 256 289 - -

(o) Add: Share of Profit of Associates 62 48 - -

(p) Net Profit after Tax, Minority Interest and Share of Profit of Associates 873 168 772 1,010

Including rate regulatory income/(expense)

2. Financial Performance and the state of the Company''s affairs

2.1. Consolidated

On a Consolidated basis, the Operating Revenue increased to Rs. 36,461 crore in FY16, from Rs. 34,367 crore in FY15. The increase was mainly due to higher volumes in power trading amounting to 6,737 MUs (refer section 5.8 of MD&A) and higher revenues from the solar equipment business (Rs. 616 crore- refer section 5.11 of MD&A) offset by lower realisation in coal companies.

The Consolidated Profit after Tax in FY16 increased to Rs.873 crore from Rs. 168 crore in the previous year mainly on account of improved operational performance and reversal of impairment loss amounting to Rs. 2,320 crore (refer section 5.2 of MD&A) in Coastal Gujarat Power Limited (CGPL) offset by lower realisations in coal companies and consequent impairment of goodwill amounting to Rs. 2,533 crore in these companies.

2.2. Standalone

On a Standalone basis, the Operating Revenue reduced to Rs. 8,438 crore in FY16 from Rs. 8,678 crore in FY15, mainly due to lower fuel costs and power purchase cost being passed through for the regulated business.

The Profit after Tax in FY16 was lower atRs. 772 crore as compared to Rs. 1,010 crore last year. This was mainly due to provision for diminution in the value of investments made by your Company to the tune of Rs. 226 crore. The Earnings per Share (Basic) in FY16 stood at Rs. 2.36. The operating profit was higher in standalone owing to all-round improvement in performance of the assets.

3. Dividend

The Directors of your Company recommend a dividend of 130% (Rs. 1.30 per share ofRs. 1 each), subject to the approval of the Members.

4. Centenary Year

Your Company completed 100 years of its operations on 9th February 2015, having started its first Hydroelectric Power Generation Unit at Khopoli in the year 1915. Your Company is the third company amongst various Tata Companies to have achieved this rare milestone and has been contributing to the process of nation building for over a hundred years.

Our revered visionary founder, Mr. Jamsetji Tata conceptualized green and clean Power for the city of Mumbai way back in early 1900. Your Company pursued the founder''s vision by generating hydroelectric power at Khopoli, Maharashtra, harnessing the potential from the lakes located in the surroundings of Lonavala. The electricity, thus generated, was transmitted to the city of Mumbai. Your Company has been intrinsically linked with the economic growth and development of two of the most important cities of the country viz. Mumbai and Delhi.

Not only has your Company been the frontrunner in the power sector in India.it has also been pioneering new technologies in the country and has played a significant role in the economic progress of the country through its value chain of power generation, transmission, distribution, solar & wind energy and its defence related engineering systems & solutions.

Today, Tata Power has spread its wings and established itself internationally too. Quietly, as the country has grown, your Company has made sure that electricity, the invisible force that powers a nation, has always been reliably available wherever our operations exist. Considering the values that Tata Power has been following, ''Invisible Goodness'' was chosen as the theme of our Centenary Year Celebration.

In the Centenary Year, your Company held celebrations at all its key establishments along with our key stakeholders, culminating in a mega ceremony in Mumbai in the esteemed presence of Chief Minister of Maharashtra, Power Minister of Maharashtra and the Mayor of Mumbai. The event was also witnessed by some of the distinguished business leaders and the leadership of the Tata Group. Your Company also launched various initiatives for key stakeholders including the society at large. Tata Power engaged not just with the employees and their family members, but also with many external stakeholders.

The ceremonies and the initiatives undertaken in the Centenary Year were a way of showing your Company''s gratitude to all its stakeholders who have helped the Company in achieving this rare milestone and we believe that it has helped us strengthen relationships with all our stakeholders in our ongoing journey for the next several decades and centuries.

5. Current Business

The key businesses of the Company are in the area of Generation, Transmission, Distribution-cum-Retail, Power Trading, Power Services, Coal Mines and Logistics, Strategic Engineering for defence applications. Solar Photovoltaic (PV) manufacturing and Engineering, Procurement, Construction (EPC) services.

As on date of the report, the Tata Power Group of companies had an operational generation capacity of 9,184 MW based on various fuel sources - thermal (coal, gas and oil), hydroelectric power, renewable energy (wind and solar PV) and waste heat recovery.

The Company (including its subsidiaries) has about 20% of its capacity (in MW terms) in clean and green generation sources (Hydro, Wind, Solar and Waste Heat Recovery), while the target is to have 30-40% of its total generation capacity to be from non-fossil fuel based generation sources by 2025.

Details of generation businesses in operations

(Table 2)

Fuel Source Location State Normative Capacity under management (MW)

Mundra Gujarat 4,150

Trombay Maharashtra 1,580

Maithon Jharkhand 1,050

Thermal- Joiobera Jharkhand 428 Coal/Oil/ Gas IEL-Jojobera Jharkhand 120

TPDDL-Rithala New Delhi 108 (Gas based)

IEL-Jamshedpur Jharkhand 120

Thermal- IEL-Kalinganagar Odisna 135 Waste Heat Haldia West Bengal 120 Recovery

Bhira Maharashtra 300

Khopoli Maharashtra 72

Hydro Bhivpuri Maharashtra 75

Dagachhu Bhutan 126

ItezhiTezhi Zambia 120

Wind farms Maharashtra, 621 Gujarat, Madhya Pradesh Karnataka, Tamil Renewables Nadu, Rajasthan

Solar Photovoltaic Maharashtra, 60 (PV) Gujarat, Tamil Nadu and Delhi

Fuel Source Returns/Earnings Model Category Total (MW)

Thermal-Coal/Oil/Gas Long term PPA based on UMPP Bid

Long term PPA - Regulated Return on Equity

Long term PPA - Regulated Return on Equity

Lonq term PPA - Requlated Return on 7,436 Equity and Negotiated PPA

Bilaterally negotiated Long Term PPA

PPA is being pursued

Thermal-Waste Heat Recovery Bilaterally negotiated Long Term PPA

Bilaterally negotiated Long Term PPA 375

Merchant Sales (100 MW) and Bilateral sale to West Bengal (20 MW)

Hydro Long Term PPA - Regulated Return on Equity 693

Merchant Power Sale

Long Term Regulated Return based project

Renewables Long Term PPA based on Feed-in -tariff REC Mechanism (includes 30 MW assets of Indo Rama Renewables) 681

Long Term PPA based on Feed-in-tariff

Total 9,184

The Company de-commissioned the 81 MW Belgaum Power Plant in June 2015 pursuant to conclusion of the PPA term. Sale of the equipment and establishment is under progress.

6. Subsidiaries/Joint Ventures/Associates

As on 31st March 2016, the Company had 28 Subsidiaries (18 of which were wholly-owned Subsidiaries), 35 Joint Ventures (JVs) and 8 Associates.

During the year, the following changes occurred in your Company''s holding structure:

Subsidiaries: Supa Windfarm Ltd., Nivade Windfarm Ltd. and Poolavadi Windfarm Ltd. were incorporated as wholly owned subsidiaries of Tata Power Renewable Energy Ltd. Tata Ceramics Ltd., an erstwhile Associate, became a subsidiary of the Company. NewGen Saurashtra Windfarms Ltd. was merged with Tata Power Renewable Energy Ltd.

Joint Ventures: Your Company invested in Itezhi Tezhi Power Corporation, a hydro power project in Zambia.

Associates: Your Company and Af-Taab Investment Company Ltd. (a wholly-owned subsidiary of your Company) sold their entire respective stakes in Rujuvalika Investments Ltd.

The report on the performance and financial position of each of the subsidiaries, JVs and associate companies has been provided in Form AOC-1.

The policy for determining material subsidiaries of the Company has been provided in the following link: http://www.tatapower.com/aboutus/pdf/dms-policy-15.pdf (scan the adjacent QR code on any mobile device smart phone/tablet to read the policy on the Company website. QRcode scanner app can be downloaded free of cost for Android/iOS/Windows devices from respective app stores)

7. Reserves

The net movement in the various reserves of the Company for FY16 and the previous year are as follows:

Figures in Rs.crore (Table 4)

Particulars FY16 FY15

Revaluation Reserve NIL (2.48)

Securities Premium Account (1.67) 1,930.97

Debenture Redemption Reserve 110.58 (413.20)

Foreign Currency Translation Reserves (Net) Nil 14.57

Foreign Currency Monetary Item Translation Difference Account 7.42 84.09

General Reserve 77.16 101.03

Surplus in Statement of Profit and Loss 71.85 832.42

8. Foreign Exchange - Earnings and Outgo

A summary of foreign exchange transactions of the Company for FY16 and the previous year are as follows:

Figures in Rs.crore (Table 5)

Particulars - Standalone FY16 FY15

Foreign Exchange Earnings 200 419

Foreign Exchange Outflow mainly on account of: 1,283 1,112

- Fuel purchase 935 793

- Interest on foreign currency borrowings, NRI dividends 41 81

- Purchase of capital equipment,components and spares and other miscellaneous expenses 307 238

9. Regulatory and Legal Matters

The businesses of the Company are governed primarily by the Electricity Act, 2003 (EA, 2003). Mentioned below are the critical regulatory orders pertaining to the Company that were issued during FY16, none of which impact the "going concern" status of your Company.

9.1. Compensatory Tariff For CGPL - Mundra UMPP

Due to unforeseen changes in Indonesian law in 2012 and increase of coal prices relative to predicted/envisaged prices at the time of bidding, CGPL is unable to recover the full cost of fuel through the existing tariff. In view of this, CGPL had filed a petition before Central Electricity Regulatory Commission (CERC) seeking relief by way of an appropriate mechanism to offset this adverse impact. CERC passed an order on 21st February 2014, ruling that the Company will be entitled to compensatory tariff to offset additional fuel costs till the hardship continues on account of increase in coal prices.

The said Order was challenged by the Procurers before the Appellate Tribunal for Electricity (ATE). ATE, in its judgement on 7th April 2016, held that the increase in price of Indonesian coal is a "force majeure" event and has directed CERC to provide relief to CGPL as per the PPA. CGPL has approached CERC for appropriate relief. The matter is now with CERC, where hearings have commenced. The ATE has given 3 months'' time to CERC to determine the compensation.

Kindly refer to section 5.2of MD&A of this Annual Report for further details on the matter.

9.2. Multi Year Tariff Orders of MERC

In August 2013, the Hon''ble Maharashtra Electricity Regulatory Commission (MERC) determined the Multi-Year Tariff (MYT) for all distribution licensees for FY14, FY15 and FY16. Subsequently, the Company had filed Mid Term Review (MTR) petitions for Tata Power - Generation, Transmission and Distribution Business with MERC. MERC passed its order in the said MTR Petitions on 26th June 2015.

Thereafter, the MYT Regulations, 2015 were notified on 8th December 2015 for determination of Aggregate Revenue Requirement and Tariff in all matters covered under the Regulations for the Control Period from 1st April 2016 up to 31st March 2020.

Accordingly, the Mumbai Generation, Transmission and Distribution Businesses of the Company have filed MYT Petitions on 10th February 2016,1st February 2016 and 27th February 2016 respectively, which also include the Truing up of FY15and the provisional Truing up of FY16as per the requirements of the MYT Regulations 2011, applicable for these years. All the three matters are currently pending before MERC.

9.3. Key Judgements of the Hon''ble High Court of Bombay, Hon''ble ATE and MERC

In November 2014, the ATE had quashed all restrictions on movement of consumers between Distribution Licensees, but had directed the Distribution Licensees to limit creation of a parallel network. However, in places where the Company had made considerable investment in laying a network or the works were in advanced stages of completion, such network had been allowed to be commissioned and capitalised.

Subsequent to the aforesaid judgement, your Company submitted its revised Network Rollout Plan (Case No. 182 of 2014). MERC passed an interim Order in the said petition on 9th November 2015, whereby the Commission directed constitution of a Committee to examine and finalize the operational specific matters/physical rollout of network for the consideration of the Commission. On 28th March 2016, the Committee (so constituted by the Commission) provided its recommendation to the Commission for its consideration. MERC decided to constitute a public hearing to take the views of all stakeholders. The Network Rollout Plan of your Company is currently pending approval of the Commission.

Another landmark judgement has been passed by the High Court of Bombay on 2nd March 2016 in a Writ Petition filed by the Municipal Corporation of Greater Mumbai (MCGM) against MERC, challenging its right and power to modify the Standard of Performance (SOP) timelines in the MERC SOP Regulations, 2014. Tata Power was included as a Respondent in the said Writ Petition. The High Court has dismissed the petition for being without any merits and further passed certain strictures against MCGM in the said judgement.

9.4. Annual Performance Review (APR) Order for FY14 for Jojobera Units 2 and 3

Jojobera station of Tata Power Group has 5 units. While Unit 1 and 4 (both 67.5 MW) are tied as captive with Tata Steel plant, Units 2 and 3 (67.5 MW each) are regulated as these have PPAs with licensed Discom promoted by Tata Steel. Jharkhand State Electricity Regulatory Commission (JSERC), on 31st May 2015, passed the APR Order for FY14 including truing-up for FY13 and truing-up of energy charges for FY12 for Jojobera Units 2 and 3 wherein JSERC has approved certain additional capital expenditure schemes pertaining to safety of the units. Your Company has filed an Appeal with ATE challenging a few disallowances in the above APR Order.

9.5. Standby Charges

On an appeal filed by your Company, the Supreme Court had stayed the operation of the ATE order in 2007, subject to the condition that your Company deposit an amount of Rs. 227 crore and furnish a bank guarantee for an equal amount. The Company complied with both the conditions. Reliance Infrastructure Limited (R-lnfra) also subsequently filed an appeal before the Supreme Court challenging the ATE order. Both the appeals were admitted in 2007. However, no hearings were held on the matter during the year.

9.6. Energy Charges and ''Take or Pay'' Obligation

MERC directed R-lnfra to pay Rs. 323.87 crore to the Company as the difference between the rate of Rs. 1.77 per kWh paid and Rs. 2.09 per kWh payable for the energy drawn at 220 kV interconnection towards its Take or Pay'' obligation for the years 1998-99 and 1999-2000. On an appeal filed by R-lnfra, the ATE had upheld the Company''s contention with regards payment for energy charges but reduced the rate of interest. As per the ATE order, the amount payable works out to Rs. 34.98 crore (excluding interest), as on 31st May 2008. As regards the Take or Pay'' obligation, the ATE ordered that the issue be examined afresh by MERC after the decision of the Supreme Court in the appeals relating to the distribution license and rebates given by R-lnfra. Tata Power and R-lnfra filed appeals in the Supreme Court. Both the appeals were admitted and listed for hearing and final disposal. The Supreme Court, vide its order dated 14th December 2009, granted a stay against the ATE order and directed R-lnfra to deposit with the Supreme Court a sum of Rs. 25 crore and furnish a bank guarantee for the balance amount. Pursuant to the liberty granted by the Supreme Court, your Company has withdrawn the above mentioned sum subject to an undertaking to refund the amount with interest, in the event the appeal is decided against the Company. No hearings were held during the year on this matter.

9.7. Entry Tax

Your Company filed a writ in the High Court at Bombay (HC) challenging the constitutional validity of the Maharashtra Entry Tax Act. Hearings on the matter concluded and the HC reserved the order. No date is fixed for pronouncement of the order.

10. Risks and Concerns

Your Company is faced with risks of different types, all of which need different approaches for mitigation. Details of various risks faced by the Company are provided in section 4 of MD&A.

11. Risk Management Framework and Internal Financial Controls

Risk Management Framework:

Based on the Risk Management Policy (http://www.tatapower.com/aboutus/pdf/risk-management-policy.) pdf (alternately, scan the adjacent QR Code using a mobile device to read the policy on the Company website), a standardized Risk Management Process and System has been implemented across Tata Power Group. Risk plans have been framed for all identified risks and uploaded in the system with mitigation action, target dates and responsibility. This has enabled continuous tracking of status of mitigation action and monitoring of Risk Mitigation Completion Index (RMCI). The Risk Register contains the mitigation plans for eleven categories of risk. Eight Functional Risk Management Committees (FRMCs) closely monitor and review the risk plans.

All risks have been classified into strategic, tactical and operational risks. Apex Risk Management Committee (ARMC) meets every quarter to review major strategic and tactical risks, identify new risks and assess the status of mitigation initiatives. As per the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), a Risk Management Committee (RMC) was constituted comprising of 3 Independent Directors, 1 Executive Director, Chief Financial Officer and Chief Risk Officer. The RMC meets regularly to review critical strategic risks and summary of top risks of each of the eleven categories and their status in terms of mitigation actions.

The Company has refined its risk quantification method which helps identify key risks of the organisation and reduce subjectivity in assessment of residual value of each risk. This will further help implement appropriate controls in business processes. Also, grouping of risks has been undertaken for better management control.

Last year, British Standards Institution (BSI) conferred the ''Statement of Compliance''on Tata Power for ISO 31000:2009-a recognition that implies that the Company has strong processes for risk identification, management and mitigation. Tata Power is the first power company in India to get this recognition. In FY16, BSI has done the assessment of Tata Power and its eight major subsidiaries viz, CGPL, MPL, TPDDL, TPTCL, TPSSL, TPREL, PTL and IEL. This year, Tata Power Group has again been recommended for conferring the Statement of Compliance, basis BSI''s recent assessment.

Internal financial controls and systems:

The Company has its internal audit function which endeavours to make meaningful contributions to the organisation''s overall governance, risk management and internal controls. The function reviews and ensures sustained effectiveness of Internal Financial Controls (IFC) by adopting a systematic approach to its work.

As per the provisions of Section 177 of the Companies Act, 2013 (the Act) and the Audit Committee Charter adopted by the Board of Directors, one of the roles and responsibility of the Audit Committee, is to review the effectiveness of the Company''s internal control system, including financial controls, information technology security and its control.

Section 143(3) of the Act, provides that the Statutory Auditor''s Report shall state whether the Company has an adequate IFC system in place and the operating effectiveness of such controls, for FY16 and beyond.

As per Section 134 of the Act, Directors of listed companies, based on the representations received from the management, are to confirm in the Directors Responsibility Statement that IFC are not only adequate, but are also operating effectively.

With this objective in mind and to fulfill the requirements of the Act, in FY16, the in-house internal audit team, with the support of two expert audit firms, performed the test of design and test of effectiveness of IFC. Scoping was done based on major classes of transactions, account balances. Seven key business cycles, general IT controls and Entity Level controls were considered for review.

The Internal Audit and Risk Management (IARM) function has generally adopted Committee of Sponsoring Organizations (COSO) framework. COSO is a leading framework which provides guidance on the design and evaluation of internal controls. This has been done for 5 elements and 17 principles, which provides assurance of financial controls in place at the level of functional heads and at top management level. This has helped in assessing the effectiveness and efficiency of operational controls, enhanced governance and consideration of anti-fraud expectations, reliability of financial reporting and statutory compliances. Attributes with internal control deficiencies are identified with action plans to be pursued, responsibility centres and target dates for compliances.

For the Business Process level, controls are evaluated through internal audits and Control Self-Assessment (CSA). These CSAs have also been rolled out across other Tata Power group companies too. The effectiveness of the IFC was then tested by an external consultant who found no significant deficiencies. Further, the statutory auditor through their independent testing of IFC, has also issued an unmodified opinion.

The Internal Audit process includes review and evaluation of process robustness, effectiveness of controls and compliances. It also ensures adherence to policies and systems, and mitigation of the operational risks perceived for each area under audit. Internal Audit Policy and Manual has been framed, based on which a flexible risk based audit plan has been formulated that aligns with the organizational strategy and impact on business objectives. Internal audits are classified into Process Audits, Spot Audits, etc. depending on the past performance and also the risk perception. All processes of the Company have been classified under vital, essential and desirable, based on the analysis of process impact on Company''s Strategic Objectives. Post the audit, process is rated through the Risk Control Index and Process Robustness Index given by the Internal Auditors. Also, theme based audits are carried out for certain areas impacted by changing external environment. Significant observations including recommendations for improvement of the business processes are reviewed by the Management before reporting to the Audit Committee. The Audit Committee then reviews the Internal Audit reports and the status of implementation of the agreed action plan. Post recognition of ''General conformance to international audit standards'' from Institute of Internal Auditors (IIA Global) in 2013, quality review of audit reports is carried out as per 11A global guidelines before the report is issued. Internal audit process has been standardized across the Tata Power Group.

Internal audit plan is executed by and in-house audit team with support of an expert Internal Audit firm. This risk based audit plan has been used for subsidiaries and other group companies as well.

During the previous years, standardisation and automation of Risk Control Matrix (RCM) project was undertaken and completed with the support of an expert audit firm. RCM is of prime importance as it will form the basis of testing effectiveness and assess compliances to the IFC. This project involved control documentation, identification of common controls, which has facilitated standardisation of control ratings, sample size and testing methodology. This project has resulted in better control and improved quality of audit. Your Company has also started its journey towards digitalization through enhanced data analysis on audits which will result in improved quality and focused audits. This standardisation process continued during in the current year for subsidiaries and certain group companies.

As a step towards achievement of excellence in audit methodology, data analytics software has been developed which assists in scientific sampling and exception reporting after scanning large databases, facilitates automation, builds reliability in analysis of transactions, assists in effective/focussed field work which will improve the quality and give value added results. The by-product of use of this tool is reduction in man weeks and cost of audits of up to 24 man-weeks for FY17.

Changes to the Internal Audit Process in anticipation of the Act were started in the year gone by. These included creation of a comprehensive framework for fraud, moving towards increased reviews and/or internal audits of group companies for greater comfort on the investments in the group companies, increasingly focused on theme audits and greater automation of the internal audit systems.

Assessment mechanism for measuring the existence and effectiveness of controls are established by the fact that the Value Added Index, which is a measure of effectiveness and contribution of the internal audit to top management and Audit Committee, has improved over the years and so has the Risk Control Index (RCI), thereby giving assurance to management of efficiency and effectiveness of the Internal Financial Controls. The action taken statistics emerging out of internal audit reports for last three years reflect an increase in implementation percentage achieved through rigorous and systematic follow up. Further, the total number of action points has decreased over the last three years, thereby reflecting an improvement in the system and processes.

On review of the internal audit observations and action taken on audit observations, we can state that there are no adverse observations having material impact on financials or commercial implications or material non-compliances which have not been acted upon.

Control Self-Assessment: The Company continued the CSA process this year, whereby responses of all process owners are used to assess internal controls in each process. It was also extended to seven other Tata Power group companies. This helps the Company to identify focus audit areas, design the audit plan and support CEO/CFO certification for internal controls. The CSA questionnaire is designed to test effectiveness of deployment of existing controls for processes which are not to be audited as per the audit plan. The responses received from process owners on the questionnaire are analysed and validated through spot audits. This ensures optimum coverage of audit universe to provide assurance on the operating effectiveness based on results of evaluation across all processes.

Process Robustness Index (PRI): The processes are examined to assess their robustness primarily from the perspective of system driven controls (SAP, CRM, Documentum, etc.), which ensures that deviations from the defined process do not occur due to manual errors. In case controls have not been embedded in the system, other compensating controls such as maker-checker are exercised to assess the robustness of the process. This index is computed on the basis of existence of robust controls and not on the basis of extent of implementation of these controls. Your Company has obtained a copyright for this PRI scoring methodology. While the objective of this measure is to bring about the use of IT and Automation/ Digitalization intervention, it is not the intention to have the outcome achieved through embedded computer & IT systems. Therefore, appropriate flexibility for decision making on last mile, basis the outcomes aspired, is allowed.

The following paragraphs bring out the differentiation between IFC and Process Robustness Controls.

Process Robustness Index (PRI): The processes being audited are examined to assess their robustness in terms of control automation, outcome orientation, benchmarking, integration and data/record management. The scope of PRI is not limited to providing assurance on effectiveness of IFC and process controls, rather it is worked out by considering end-to -end process from inputs to outputs, digitalization, improvements and outcome orientation.

There are eight elements based on which the process robustness is assessed - (1) documentation - process, workflow, training manual; (2) controls - manual or system driven; (3) mechanism for obtaining customer inputs; (4) performance measurement tracking; (5) traceability of records; (6) initiatives taken for process improvements; (7) integration of process being audited with other processes and (8) data management. Based on the system maturity, each of the elements is rated.

As an additional support to establish efficiency and effectiveness of IFC, in addition to internal audits, the Company also submits declarations to various regulatory authorities like MERC, SEBI, RBI etc. The statutory auditors carry out an audit at quarterly intervals and these reports have not reported any adverse findings. The Company''s Secretarial Audit carried out in the currentyear has not indicated any reportable lapses.

12. Safety

Safety has been a core value and always is the top priority in your Company. The Company has a structured safety organization for monitoring, implementing and taking corrective actions for safety improvements. There are approximately 12,500 employees and contract workers at various locations of Tata Power Group.

Safety Statistics FY16

(Table 6)

SI. No. Safety Parameters in your Company''s work jurisdiction (Tata Power, CGPL, FY16 FY15 MPL, IEL, CTTL, Powerlinks, TPDDL and TPSSL)

1 Fatality (Number) 3* 3*

2 LTIFR (Lost Time Injuries Frequency Rate per million man hours) 0.2 0.15

3 Total Injury Frequency Rate (No of injuries per million man hours) 5.19 5.64

4 First Aid Cases (Number) 325 592

* - Company''s contractor''s employees

The Company is deeply aggrieved by the fatalities and accidents. It treats any fatality in any of its premises, of any of its employees, contractor/associate''s employees or any third party with equal gravity and is committed to taking the entire working environment and behaviour to the highest safety standards.

Your Company increased its efforts on safety during the year and took the following additional steps in FY16 to improve safety:

Revised the contractors'' safety code of conduct

Included consequences and rewards in General Conditions of Contracts (GCC) for associates and contractors

Enhanced training of contractors'' workers as well as for the family members

Launched a mobile application on safety for incident reporting

Nominated departmental engineers on rotation basis to be safety incharge

Capability building for high risk roles

High visibility safety tours by leadership and safety observations; audits by safety experts

13. Sustainability

Your Company successfully completed lOOyears of its operation and remains committed to the legacy of being a responsible corporate citizen. It has practiced Sustainability over these lOOyears and thus reinforced the core value of Leadership with Care. For your Company, sustainability is care for the environment, care for the customers and shareholders, care for the community and care for our people.

The Company''s efforts on sustainability were recognized at various platforms and a testimony of this were the various awards bestowed upon your Company, the latest being Sustainable Plus Platinum Label for FY15 by Cll''s Centre of Excellence for Sustainable Development (CESD). It is based on a comprehensive assessment of environmental, social and governance analysis of companies which helps them to measure performance as well as identify risks that challenge sustainability of their business.

The year also saw the launch of the Company''s 6th Sustainability Report for FY15, and the first one to be prepared in accordance with the latest G4 Guidelines of the Global Reporting Initiative (GRI).

13.1. Care for our Community, Community Relations (Social and Relationship Capital)

Your Company has actively worked on five thrust areas in Corporate Social Responsibility (CSR) - Primary Education with focus on girl child. Health & Drinking Water, Livelihood & Employability, Social Capital & Infrastructure and Inclusive Growth.

In FY16, the CSR policy for different Tata Power Group companies was aligned to the five thrust areas and programs were rolled out across locations and mapped with Schedule -VII to the Act with timelines and outcome indicators. The same was approved by the CSR Committees of the respective Tata Power Group companies.

In FY16, Tata Power Group companies reached out to more than 250 villages/urban pockets across 7 states. The year saw your Company ramp-up CSR capabilities and operations across all locations by bringing robustness to systems and processes to ensure effective programs which deliver long-term impact and bring changes to the community. This also marked a shift in bringing focus and institutionalisation of 80:20 paradigm of CSR, with 80% allocation of resources on long-term sustainable and thematic programs and 20% resources on location specific programs. Tata Power Community Development Trust (TPCDT), being the developmental vehicle for CSR programs, was assigned to undertake CSR Programs for Tata Power and its Group companies.

Tata Power Skill Development Institute (TPSDI) launched four key centres and training hubs at Trombay and Shahad (Mumbai), Maithon (Jharkhand) and Mundra (Gujarat). TPSDI undertook modular power skills training and positively impacted 1700 persons in FY16.

The total CSR spend for the Company in FY16 stood at Rs. 29.01 crore as against the requirement of Rs. 28.29 croreas per the Act. Additionally, as a part of disaster relief operations, the Company contributed towards relief efforts in Nepal, Georgia and Tamil Nadu.

Independent monitoring, effectiveness of implementation, impact assessment were undertaken to provide feedback and to refine, realign the programs so that the extent and effectiveness of the initiatives could be improved in pursuance of Tata Power''s objective to improve the quality of life of the community and to get community''s tacit or implied acceptance of the Company''s co-existence with them. One such measure which helped in the purpose is Community Engagement Index (CEI).

Your Company encouraged employee volunteering through its Arpan initiative. Volunteering programs were also organized at Jawhar (a district in Maharashtra), where Tata Power runs Affirmative Action (AA) programs. This program provided the employees an opportunity to understand the concerns of the deprived community and disparity in the living standards of a community which is in close proximity to developed cities like Mumbai and Nashik. To promote employee volunteering across all locations of Tata Power, ARPAN Awards were constituted with the aim of institutionalizing efforts through employee volunteering and recognition of divisions for exemplary work in volunteering. Mulshi (Bhira) division of Hydros bagged the award lastyear.

Major highlights of programs in FY16 (Standalone) are as follows:

Reached out to more than 5 lakh beneficiaries through CSR initiatives in Education, Health, Livelihood, Social Capital and Nurturing Sustainability.

Reached out to more than 230 schools covering more than 1 lakh students, through various educational initiatives resulting in substantial attendance improvement and reduction in dropout rates.

Helped provide 6,700 households with access to sanitation/toilet facility covering over 36,700 children.

Maithon hosted the Life Line Express (first hospital on train) serving nearly 6,000 patients providing medical care for the needy, attending to ENT, dental, cleft lip surgery, orthopaedic, epilepsy, gynaecology and eye issues.

Reached out to 167 villages under vocational training/employability program covering over 1,500 youth.

136 villages were covered under Social Capital & Infrastructure creating 363 Self Help Groups across locations.

114 villages were covered under Rural Energy program reaching out to over 5,800 households.

Over 7.5 lakh trees were planted across locations.

1,039 employee volunteers contributed towards 10,854 volunteering hours.

1,400 Solar Lamps were distributed during Tamil Nadu Flood Relief.

Tata Power supported treatment of cancer patients through Tata Medical Centre Trust.

Annual report of CSR activities is provided in Annexure -1.

13.2. Affirmative Action

Under its Affirmative Action (AA) program, your Company has implemented several initiatives for Employment, Entrepreneurship, Employability, Education and Essential Amenities for the communities around its operating sites and adopted community.

The major programs carried out in the neighbourhood of the operating plants and projects include skill development programs for youth (Industrial Training Institutes, Business Process Outsourcing training and vocational trainings), entrepreneurial programs like fly ash brick making/supporting Self Help Groups, assistance in obtaining caste certificate through dedicated drives and support for educational initiatives for school children like scholarships and coaching classes in the evenings along with assistance in the development of adequate infrastructure.

Your Company continued its work in areas beyond its areas of operations, such as in Jawhar taluka, Palghar district of Maharashtra, which has a tribal population of over 90% of the total population, with a vast majority of them below the poverty line. The activities here included new initiatives like livelihood generation - kitchen garden and poultry farming and setting up of the Village Development Committee (VDC). The VDC has elected members from the village as well as Tata Power and are responsible for the sustainable development of the village.

Some major AA program details are:

Promoted 240 community entrepreneurship ventures like fly ash brick making, poultry farming, garment manufacturing, etc. with an investment of Rs. 139 lakh, which helped to increase family incomes upto Rs. 60,000 to Rs. 80,000 per year.

Outsourced Rs. 17.65 crore of products and services from 36 vendors / contractors.

Provided technical and monetary support for various agricultural interventions to enhance the income of about 730 SC/ST farmers.

Supported 731 SC/ST persons across various Industrial Training Institutes (ITIs), skill development programs.

Built a full-fledged hostel foroutstation SC/ST youth at Industrial Training Institutes (ITIs) atMulshi.

Enabled access to computer education and spoken education to 2,422 SC/ST students across locations.

Provided scholarships to 53 SC/ST students amounting to Rs. 13.17 lakh.

Extra/night coaching classes benefited about 318 SC/ST students appearing class X and XII board examination.

Facilitated access to basic essential amenities like safe drinking water, healthcare, solar lights etc. to over 41,000 SC/ST population across locations.

Helped in obtaining 953 caste certificates at Hydros and Jawhar. The process of obtaining certificate is going on for SC/ ST community across divisions.

13.3. Care For Our Environment (Natural Capital)

The Company, during the year, addressed various aspects of resource conservation, energy efficiency, carbon footprint, renewable power generation, biodiversity and green buildings. Details of initiatives undertaken are given in MD&A Section 9.1.3

Natural Capital

Acknowledging the adverse impact on climate change caused by the global industrialization as also by power sector and to ensure a minimal impact on the environment,your Company drew up plans to limit carbon emissions and move towards a portfolio with a significant proportion of clean and green generation. Tata Power Strategic Intent for the year 2025 is to achieve 30-40% generation capacity from non-fossil fuel based generating sources.

Your Company instituted a process of due diligence to consider all its development proposals (Indian/ International) based on some internal criteria considering assessment of land parcel, water source, treatment and disposal of water effluents and solid waste and likely implications on communities around the proposed development. Tata Power continued to implement activities which focus majorly on resource conservation, waste minimisation, energy and water conservation, and reduction in auxiliary power. These initiatives were tracked through its Green Manufacturing Index (GMI).

The Company is proud of the fact that none of its major Indian operations were in close proximity to any nationally or internationally designated Protected Areas (PA) such as national parks, wildlife sanctuaries. World Heritage Sites, etc. and all such areas (if any) were situated further than laid out requirements, from its operations.

Afforestation activities were on-going across the Company to improve greenery. On a local scale, tree cover is needed within the operating stations to maintain ambient microclimatic conditions by reducing the heat island effect. They are also essential in the catchment areas of the Company''s water reservoirs to ensure steady precipitation to fill the reservoirs. The Company thus, indirectly relies on good quality fertile soil, to sustain the tree cover and control the soil erosion. Additionally, mangrove restoration was carried out at Bharuch, Gujarat covering an area of 1000 hectares. The Company relies on mangrove stretches for providing a barrier against natural hazards from the sea since some of the major operating stations as well as transmission lines run in close proximity to the coast.

Highlights of some Biodiversity initiatives:

Mahseer Breeding program- Since 1971, your Company has been involved in the species conservation project with state fisheries departmentthatincluded setting a Mahseer hatchery at Walwhan, Lonavala. In the last 40 years of the execution of the project, more than 1.85 crore fertilized eggs have been obtained from the hatchery and over 10.4 lakh Mahseer fingerlings have been produced. For creating awareness on Mahseer, an International Conference on Conservation of Mahseer was hosted by Tata Power and attended by fisheries scientists from across the country which culminated in the adoption of''Lonavala Declaration''on Mahseer Conservation. Additionally, an awareness campaign. Act for Mahseer was launched for the Company''s internal as well as external stakeholders. The campaign included various components such as Pledging to save the Mahseer, a Mahseer manual, creation of a mascot. Tor and such other activities.

Natural Capital Valuation at Hydros in Western Ghats- Your Company piloted a unique project on the Natural Capital Valuation for its Hydro operations in Lonavala. This is being carried out to understand the impacts and dependencies between the business operations and the ecosystem services and create a tool that helps the business take decisions considering impact on ecology. This initiative is spearheaded by the Natural Capital Coalition. Tata Power has actively tried to develop a methodology through which ecosystem services can be valued and make it a replicable and consistent one which can be integrated into decision making at the managerial level. The scope of the study included operations focusing on all business activities which result in the setting up and running of a Hydro power plant. Tata Power has seven reservoirs spread in and around the Lonavala-Mulshi area in Maharashtra nestled in the Western Ghats which are rich in biodiversity. There are three Hydro power plants which use the water from these reservoirs.

13.4. ClubEnerji

Tata Power''s Club Enerji is focused on school students to champion the noble cause of conservation of resources and moral and civic values. This, in turn, supplements the cause of nation building. The Club has been ceaselessly working towards creating responsible citizens of tomorrow who focus not only on conserving energy and natural resources (like fossil fuel - coal, oil, gas; water; managing waste; afforestation), but also conserve civic, ethical and moral values in society at large.

The Company has further scaled up the magnitude of this initiative by launching an online module of the Club Enerji programme in 2015. The objective of this initiative was to reach out to a larger audience and impact a larger group of IT skilled children with a vision to transform by adopting a holistic and robust approach towards conservation. Tata Power Club Enerji also reaches out to school children through various interactive mediums and sensitizes them on the need to conserve power and resources.

Recognizing the immense value that schools and school children can bring to the initiative and taking due consideration of the social need, Tata Power started "Tata Power Club Enerji" in 2007 to propagate efficient usage of energy and to educate the society on climate change issues. Club Enerji covers 500 schools across Mumbai, Delhi, Pune, Ahmedabad, Bengaluru, Kolkata, Belgaum, Jamshedpur, Lonavala and five more cities. It has reached out to more than 12.8 million citizens, collectively saved 17.26 million units of electricity- equivalent to saving 17,000 tons of C02.1,337 Mini Clubs have also been formed all over India under the Club Enerji initiative.

Tata Power Club Enerji also launched its comprehensive Online Module in November 2015 with an aim to reach out to a larger audience with a vision of transformation and adoption of a holistic and robust approach towards conservation. The module, since its launch, has also reached out to audiences in new international geographies like Philippines, UAE, USA, UK and South Africa and newer national geographies like Chandigarh, Hyderabad and Chennai.

13.5. Demand Side Management

The Company has been at the forefront of propagating energy conservation and efficiency.

Demand-side management (DSM) refers to cooperative activities between the utility and its customers to implement options for increasing the efficiency of energy utilization, with resulting benefits to the customer, utility and society as a whole.

Industrial, commercial and residential consumers in the city have unique usage patterns. Your Company has developed different programmes for each of these categories and has launched a unique consumer initiative called "Be Green". This initiative gives an opportunity to Mumbai consumers to exchange their old, inefficient electrical appliances for new, 5 star rated energy efficient appliances at a discounted price. The Company has partnered with leading consumer appliance manufacturers for energy efficient equipment. The consumers appreciate these initiatives as it helps to reduce their energy cost by 30% to 50% without compromising on their comfort and convenience.

During this financial year, your Company provided to its customers in Mumbai and Delhi 15.5 lakh LED bulbs and also facilitated the replacement of nearly 20,000 inefficient appliances such as old fans, air conditioners etc. with new star rated energy efficient ones.

Large industrial and commercial consumers need detailed analysis of their energy use to identify the saving potential. Your Company carried out energy audits for such consumers at a large discount. The experts mapped their unique power consumption pattern and offered specific recommendations to improve the processes and equipment efficiency. Several large consumers took the benefit of this programme. In FY16.TPDDL became the only power utility to be empanelled with Bureau of Energy Efficiency as Grade 1 ESCO and provided value added energy efficiency services like comprehensive energy audit and implementation of energy performance improvement projects to its consumers.

Along with different programmes and schemes, Tata Power organized consumer awareness programmes to develop a culture of energy efficiency and conservation.

Your Company received the National Energy Conservation Award under the Discom sector from the Ministry of Power, Government of India for the year 2015.

13.6. Sustainability Reporting

Your Company has adopted the latest Global Reporting Initiative (GRI) G4 guidelines to report on its sustainability performance for FY16. The report, prepared in accordance with the comprehensive criteria, is specific to the Indian operations of your Company viz. generation, transmission and distribution of power and highlights the sustainability performance of your Company. Your Company has been recognized as one of India''s most sustainable companies with the Sustainable Plus Platinum Label for FY 2015 by CM. The Company''s Sustainability Report is hosted on its website: http://www.tatapower.com/sustainability/sustainability-communications. aspx (alternately, scan the adjacent QR Code using a mobile device to read the policy on the Company website).

13.7. Business Responsibility Report (BRR)

The Business Responsibility Reporting was in line with the SEBI requirement based on the''National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business'' notified by Ministry of Corporate Affairs (MCA), Government of India, in July 2011. Your Company reported its performance for FY16as per the BRR framework, describing initiatives taken from an environmental, social and governance perspective. The BRR is hosted on the Company website: http://www.tatapower.com/investor-relations/pdf/ business-responsibility-report-fy16.pdf (alternately, scan the adjacent QR Code using a mobile device to read the policy on the Company website).

13.8. Integrated Reporting (IR)

Your Company prides itself in making voluntary disclosures to keep its stakeholders fully informed on all aspects of its business. Your Company decided to take steps to further enhance the disclosures and information provided in its annual report in alignment with the Integrated Reporting framework by International Integrated Reporting Council (IIRC). This year, in addition to the Financial and Manufactured capitals, your Company has included sections on Natural, Intellectual, Human and Social & Relationship Capitals. Over the next few years, your Company will endeavour to cover more aspects in consultation with various stakeholders.

13.9. United Nations Global Compact

Your Company reports on United Nations Global Compact''s (UNGC) ten principles in the areas of Human Rights, Labour standards. Environment and Anti-corruption since 2006. The Company had submitted the 10th Communication on Progress (CoP) to UNGC for FY16.

13.10. Transition to Indian Accounting Standards (IndAS)

With effect from April 1, 2016, your Company is required to align its accounting policies and disclosures with new Indian Accounting Standards or IndAS. Consequently, the financial statements to be issued hereafter will be different from those issued from the current set. Apart from differences in the way assets, liabilities, income, expenses and losses are measured, even the disclosure requirements, as also the various statements comprising the financial report, will substantially change.

In the case of the Company, a number of changes are expected. The most significant change that will affect the net worth as also future profit and loss amounts, will be on account of:

a. The recognition of a fair value gain or loss through profit and loss statement of outstanding derivative contracts that the Company holds at each balance sheet date

b. The recognition of unrealized gain or loss when fair valuing the investments that the Company holds at each balance sheet date

14. Directors and Key Managerial Personnel

Mr. Thomas MathewT, nominee of Life Insurance Corporation of India (LIC) on the Company''s Board, resigned as a Director of your Company effective 30th April 2015. The Board has placed on record its appreciation of the valuable contribution made to the Company by Mr. Mathew during his tenure. Mr. Vijay Kumar Sharma, Managing Director of LIC, was nominated by LIC as Director on the Board effective 19th May 2015. He resigned as Director effective 2nd July 2015. Mr. Pravin H.Kutumbe, Executive Director of LIC, was thereafter nominated by LIC as Director on the Board. Mr. Kutumbe was appointed as an Additional Director with effect from 7th September 2015, in accordance with Article 132 of the Company''s Articles of Association and Section 161 of the Act. Mr. Kutumbe holds office only upto the date of the forthcoming Annual General Meeting (AGM) and a Notice under Section 160(1) of the Act has been received from a Member signifying its intention to propose his appointment as Director.

Mr. R. Gopalakrishnan, Non-Executive Non-independent Director on your Company''s Board, stepped down as Director of the Company effective close of business hours on 24th December 2015, consequent upon his completing 70 years of age, as required by the guidelines adopted by the Company for retirement of Non-Executive Directors. The Board has placed on record its deep sense of appreciation of the immense contribution made to the Company by Mr. Gopalakrishnan during his tenure with the Company since January 1999.

Ms. Vishakha V. Mulye, Independent Director on your Company''s Board, resigned effective close of business on 18th January 2016. The Board has placed on record its appreciation of the valuable contribution made to the Company by Ms. Mulye during hertenure.

Mr. Anil Sardana was re-appointed as CEO and Managing Director of the Company for a period of 5 years from 1st February 2016. His re-appointment and the remuneration payable to him require approval of the Members at the ensuing AGM.

Ms. Sandhya S. Kudtarkar was appointed as an Additional Director with effect from 16th April 2016, in accordance with Article 132 of the Company''s Articles of Association and Section 161 of the Act. Ms. Kudtarkar holds office only upto the date of the forthcoming AGM and a Notice under Section 160(1) of the Act has been received from a Member signifying its intention to propose her appointment as Director.

In accordance with the requirements of the Act and the Company''s Articles of Association, Mr. Anil Sardana retires by rotation and is eligible for re-appointment.

Six Board Meetings were held during the year. For further details, please refer to Report on Corporate Governance, which forms a part of this Report.

In terms of Section 149 of the Act, Dr. H. S. Vachha, Mr. N. H. Mirza, Mr. D. M. Satwalekar, Mr. P. G. Mankad and Mr. A. K. Basu are the Independent Directors of the Company. The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the Act.

In terms of Section 203 of the Act, the following are the Key Managerial Personnel of the Company: Mr. Anil Sardana, CEO and Managing Director Mr. Ashok S. Sethi, COO and Executive Director Mr. Ramesh N. Subramanyam, Chief Financial Officer Mr. Hanoz M. Mistry, Company Secretary

15. Annual Evaluation of Board Performance and Performance of its Committees and Individual Directors

Pursuant to the provisions of the Act and Regulation 25 of the Listing Regulations, the Board has carried out an annual evaluation of its own performance, performance of the Directors individually as well as the evaluation of the working of its Committees.

The following process was adopted for Board evaluation:

i) Feedback was soughtfrom each Director about their views on the performance of the Board covering various criteria such as degree of fulfilment of key responsibilities. Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning. Board culture and dynamics, quality of relationship between the Board and the Management and efficacy of communication with external stakeholders. Feedback was also taken from every Director on his assessment of the performance of each of the other Directors.

ii) The Nomination and Remuneration Committee (NRC) then discussed the above feedback received from all the Directors.

iii) Based on the inputs received, the Chairman of the NRC also made a presentation to the Independent Directors at their meeting, summarising the inputs received from the Directors as regards Board performance as a whole and of the Chairman. The performance of the Non-independent Non-Executive Directors and Board Chairman was also reviewed by them.

iv) Post the meeting of the Independent Directors, their collective feedback on the performance of the Board (as a whole) was discussed by the Chairman of the NRC with the Chairman of the Board. It was also presented to the Board and a plan for improvement was agreed upon and is being pursued.

v) Every statutorily mandated committee of the Board conducted a self-assessment of its performance and these assessments were presented to the Board for consideration. Areas on which the Committees of the Board were assessed included degree of fulfilment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.

vi) Feedback was provided to the Directors, as appropriate. Significant highlights, learning and action points arising out of the evaluation were presented to the Board and action plans drawn up. During the year under report, the recommendations made in the previous year were satisfactorily implemented.

16. Remuneration Policy for the Directors, Key Managerial Personnel and other Employees

In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with Part D of Schedule II to the Listing Regulations, the NRC is responsible for formulating the criteria for determining qualification, positive attributes and independence of a Director. The NRC is also responsible for recommending to the Board a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees. In line with this requirement, the Board has adopted the Policy on Board Diversity and Director Attributes, which is reproduced in Annexure-ll and Remuneration Policy for Directors, Key Managerial Personnel and other employees of the Company, which is reproduced in Annexure-lll to this Report.

17. Committees of the Board

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority. The following statutory Committees constituted by the Board function according to their respective roles and defined scope:

Audit Committee of Directors Nomination and Remuneration Committee Corporate Social Responsibility Committee Stakeholders Relationship Committee Risk Management Committee

Details of composition, terms of reference and number of meetings held for respective committees are given in the Report on Corporate Governance.

The Board has laid down separate Codes of Conduct for Non-Executive Directors and Senior Management personnel of the Company and the same are posted on the Company''s website at https://www.tatapower.com/ aboutus/pdf/Code-of-Conduct-NEDs.pdf (alternately, scan the adjacent QR Code using a mobile device to read the policy on the Company website). All Senior Management personnel have affirmed compliance with the Tata Code of Conduct (TCOC). The CEO & Managing Director, and key managerial personnel have also confirmed and certified the same. The certification is enclosed at the end of the Report on Corporate Governance.

18. Conservation of Energy, Technology Absorption

The information on conservation of energy and technology absorption stipulated under Section 134(3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is attached as Annexure - IV.

18.1. Intellectual Capital

Your Company has been a pioneer in the Indian power industry for bringing in new, innovative and efficient technologies in its core business areas. Technology plays an important role in overall success of business to support our geographical spread, product portfolio, customer reach and future aspirations. Its Mission "Being the Lead Adopter of Technology with a spirit of pioneering and calculated risk taking" enabled it to adopt advanced/disruptive technologies as well as develop some products and technological processes (value added fly ash products, blending of coal, ZLD, network management/ restoration techniques in T&D, etc.) through a structured Short/Medium & Long term technological roadmapin order to:

1. Earn affection of our customers by delivering superior experience and value

2. Drive competitiveness by operating our businesses at benchmark levels

3. Practice "Leadership with Care" by pursuing best practices on Care for Environment, Community, Customers, Shareholders, people and creating a culture that will reinforce our values.

One of the notable examples to show your Company commitment to technology is its investment in the first supercritical ultra - mega thermal power plant in Mundra which reduces the C02 impact on the environment as compared to a subcritical plant of the same size. Your Company also achieved increased efficiencies of solar photovoltaic panels (13% to 16.8%). Since 75% of generation portfolio is through thermal power plants, the Company put in place a dedicated group (Clean Tech & Applied Research) in association with plant operating teams and CTTL to develop value added products from the solid waste i.e. ash which is generated from the thermal power plants. Some of the examples included making bricks, plaster from bottom ash and using fly ash in ultra thin white topping roads and replacement of sand by bottom ash. Clean Tech & Applied research group also developed products and schemes for Decentralised Distributed Generation and commissions demo plants with the help of Hydros. These products were in the early stages of commercialization. The technology and innovation activities were encouraged at Divisional level and the outcomes were showcased in your Company Knowledge and Innovation Fair and rewarded. There is also a Technology Advisory Council (TACT) consisting of experts, which helps in providing expert guidance in developing projects.

Your Company also participated in international exhibitions, conferences, seminars and workshops for capability building as well as for networking. It also collaborated with institutions such as NT Mumbai, BITS (Pilani), MIT, VIT, NSc, etc. to keep a tab on the technological innovations being developed at these premier institutes as also provide internship to students who carry out work in the related fields. Your Company has a dedicated group which scans various technology related developments in the power generation space through forums such as clean tech, i3, trade and investment forums.

There were various Knowledge Sharing Sessions regularly conducted across the divisions to facilitate the transfer of knowledge and sharing of best practices, which were in addition to business level knowledge sharing sessions organised by the business heads. Company wide webinars were conducted, through Tarang'' - a software tool and communication meets for dissemination of information and knowledge across the Company. K-Hub, a web based knowledge repository, captured internal and external, explicit knowledge. There was a bi-annual Knowledge and Innovation Fair which was used to facilitate sharing of best practices and innovations across the organisation.

Your Company collaborated with its OEMs (Original Equipment Manufacturers), suppliers and technology providers to develop customised solutions for its customers. OEMs and technology suppliers were also invited to the Knowledge Sharing Workshops organised by Tata Power to share knowledge and Best Practices with the participants from across locations and divisions of the organisation.

Your Company learnt and adopted best practices from other Tata group companies by actively participating in the various forums like Learning Missions and Tata EDGE. In addition to the above initiatives,Tata Poweralso encouraged its employees to actively participate in the forums created at the Tata Group level like Tata Innoverse and Tata Innovista. Tata Power was one of the early companies to join Tata Innoverse and leveraged the resource available by consistently posting some of its critical challenges in this group forum.

19. Particulars of Employees and Remuneration

The information required under Section 197 (12) of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is attached as Annexure-V.

The information required under Rule 5 (2) and (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in the Annexure forming part of this Report. In terms of the first proviso to Section 136 of the Act, the Report and Accounts are being sent to the Members excluding the aforesaid Annexure. Any Member interested in obtaining the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure is related to any Director of the Company.

Officers of the organization are divided across five work levels i.e. MA, MB, MC, MD and ME. The work levels are further divided into grades. Blue Collared employees are across different grades but have been classified as unskilled, semi-skilled, skilled and highly skilled.

For the officers, a benchmarking exercise was undertaken in FY16 with the help of a global consultancy firm specializing in remuneration & compensation. The benchmarking was to understand the comparative position of remuneration of Tata Power officers vis-a-vis officers in equivalent grades in five key players in the energy and power sector. As per this report, the median salary of officers at Tata Power in different grades was aligned to the market compensation.

The Company a Isobenchmarked remunerations of 9 key positions below CEO &MD level based on the CXO Compensation Study 2016 carried by Tata Group HR.

19.1. Human Capital

Your Company recognises that its people are a key resource and endeavours to enable its employees to deliver on business requirements while meeting their career aspirations. Human resources plays a pivotal role in enabling smooth implementation of key strategic decisions through aligned capability development, leadership development, diversity and industry relations practices.

Capability Development-Your Company takes pride in the technical and functional excellence of its employees. It aims at providing an environment where continuous learning takes place to meet the changing demands and priorities of the business including emerging businesses and geographies. It developed a structured mechanism to support people development as described below:

1. Competency/Learning levels for various roles are regularly evaluated and established

2. Individual level gaps were identified through an assessment mechanism or PMS cycle (Training Need Identification)

3. Training needs were fulfilled through relevant and best in class interventions

4. Job rotation opportunities discussed and enabled where relevant

Also, your Company established Tata Power Skill Development Institute (TPSDI) for addressing the skill gap in power and allied sectors by training incumbents in the community as part of its Corporate Social Responsibility endeavour. TPSDI providedmodular training and certification across a wide range of employable skills, including electrical, mechanical and solar power skills. The skilled manpower from this institute were available not only to Tata Power, but also contributed to power sector companies across the country. The institute has 4 centres in Shahad, Trombay, Maithon &Mundra.

Leadership Development - The current business environment requires a balance between business acumen, strategic thinking, result orientation and people management which are key leadership skills. Your Company has a Leadership Development Framework which caters to the developmental needs of senior leaders and key employees in its talent pool to meet these needs. Leaders undergo various programs like the Tata Group Induction for Business Leaders (new joinees), Tata Group Strategic Leadership Seminar (TGSLS),Tata Group Executive Leadership Seminar (TGELS),Tata Group emerging Leaders Seminar (TGeLS) and Tata Group Management Development Program (TGMDP). For senior leaders, nominations were made last year to Cambridge Sustainability Leadership Program, Spokesperson Media Training, Market segmentation, Safety conference. Enterprise Risk management, Tata Group Learning Mission and the World Utility Summit. Periodic nominations were made to best in class external leadership programs offered by TMTC, IIMs, XLRI, ASCI, and CM as also to the 3 module in-house flagship programs - STEP (StrategicTraining for Employees'' Progress), EDP (Employee Development Program) and MDP (Management Development Program).

Talent Retention - Your Company believes that retaining talent gives a competitive advantage in a fast evolving and challenging business environment. Meritocracy is the central theme for all employee life cycle processes like Recruitment, Performance Management, Rewards & Recognition, Career Growth and Exit Management. Planned interventions were carried out across all levels of management to identify and retain the right talent. Some of these interventions included, Accelerated Career Enhancement (ACE)-a fast track talent management programme, identification of High Potential officers for further development, succession management, Myfeedback - a developmental tool for senior and top management to enable them to obtain developmental feedback whereby learning and development can be initiated by self or aided by the organization and Management Planning Discussion - a career planning exercise for senior management. Your Company has held its attrition rate below 4% for the past four years.

Diversity - Your Company is an Equal Opportunity Employer in all practice areas. Around 35 senior leaders underwent Diversity & Inclusion workshops to ensure that the organizational agenda percolates from the apex leadership and pervades smoothly throughout the organization. In FY16,19 workshops were organized covering around 400 employees for sensitization of employees towards promotion of workplace diversity in addition to cultural sensitivity trainings, mutual respect for affinity groups, community outreach and cultural celebrations at work.

Also, in line with Tata Group''s vision to create 1000 women leaders by 2020, your Company has been promoting gender diversity within the Tata Power Group of companies through focused interventions like International assignments for women, specially designed LDPs for women colleagues, MD''s Dialogue with women employees to encourage women participation in various forums and to address their concerns and challenges and International Women''s Day Celebrations. Additionally, the induction and on boarding of new joinees included direct communication on key themes such as Tata Code of Conduct, Prevention of Sexual Harassment at Work and mutual respect towards colleagues irrespective of their cultural and social background.

Industrial Relations-Cordial relations exist between Managementand Union based on mutual respectand understanding which allows for smooth and uninterrupted functioning of your Company. Meetings were held periodically between Managementand Union to discuss various issues and the Union was consulted on all significant changes. For all operational changes, your Company in consultation with the person concerned, gave a minimum notice period and followed legal requirements. Agreements with the Union have been signed for four years covering aspects related to health and safety, salary, allowances, benefits and productivity clauses, in line with the business requirements.

Your Company has a robust legal compliance monitoring system for labour laws which is reviewed by top Management. It also has benchmark and forward looking practices related to allied workforce wherein all manpower contracts in the Company have been abolished and its entire allied workforce.

20. Related Party Transactions

In line with the requirements of the Act and the Listing Regulations, the Company has formulated a Policy on Related Party Transactions and the same is uploaded on the Company''s website: http://www.tatapower. com/aboutus/pdf/policy-on-related-party-transactions.pdf(scan the adjacent QR Code to read the details on the Company website). Details of Related Party Transactions as per AOC-2are provided in Annexure-VI.

21. Deposits

(Table 7)

SI. No. Particulars Amount in Rs.

1. Accepted during the year Nil

2. Remained unpaid or unclaimed atthe end of the year* 2,58,105

3. Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved

- At the beginning of the year Nil

- Maximum during the year Nil

- At the end of the year Nil

4. Details of deposits which are not in compliance with the requirements of Chapter V of the Act Not Applicable

*This relates to deposits accepted under the Companies Act, 1956.

22. Loans, Guarantees, Securities and Investments

The Company, being an infrastructure company, is exempt from the provisions as applicable to loans, guarantees and securities under Section 186 of the Act. The details of investments are provided in the schedules to the financial statements.

23. Extract of Annual Return

Pursuant to Section 92 of the Act and Rule 12 of The Companies (Managementand Administration) Rules, 2014, the extract of Annual Return in Form MGT-9 is provided in Annexure-VII.

24. Auditors

M/s Deloitte Haskins & Sells LLP(DHS LLP), who is the statutory auditor of your Company, hold office until the conclusion of the Ninety-eighth AGM to be held in the year 2017, subject to ratification of its appointment at every AGM. The Members, year on year, will be requested, to ratify its appointment as Auditor and to authorize the Board of Directors to fix their remuneration. In this connection, the attention of the Members is invited to Item No. 5 of the Notice.

Members will also be requested to pass a resolution (vide Item No.11 of the Notice) authorizing the Board of Directors to appoint Branch Auditors for the purpose of auditing the accounts maintained at the Branch Offices of the Company abroad.

25. Auditors''Report

The Auditor''s Report does not contain any qualifications, reservations or adverse remarks. The consolidated financial i statements of the Company have been prepared in accordance with Accounting Standard 21 on Consolidated Financial Statements, Accounting Standard 23 on Accounting of Investments in Associates and Accounting Standard 27 on Financial Reporting of Interest in Joint Ventures, issued by the Council of The Institute of Chartered Accountants of India.

26. Cost Auditor and Cost Audit Report

M/s Sanjay Gupta and Associates, Cost Accountant, was appointed Cost Auditor of your Company for FY16.

In accordance with the requirement of the Central Government and pursuant to Section 148 of the Act, your Company carries out an audit of cost accounts relating to electricity every year. The Cost Audit Report and the Compliance Report of your Company for FY15, was filed on 11th September, 2015 with the Ministry of Corporate Affairs through Extensive Business Reporting Language (XBRL) by M/s Sanjay Gupta and Associates, Cost Accountants, before the due date of 30th September 2015.

27. Secretarial Audit Report

M/s. Parikh& Associates, Company Secretaries, was appointed as Secretarial Auditor to conduct a Secretarial Audit of records and documents of the Company for FY16. The Secretarial Audit Report confirms that the Company has generally complied with the provisions of the Act, Rules, Regulations, and Guidelines.

The Secretarial Audit Report is provided in Annexure-VIII.

28. Corporate Governance

Pursuant to Regulation 34 of the Listing Regulations and relevant sections of the Act, a Management Discussion & Ana lysis Statement, Report on Corporate Governance and Auditors'' Certificate are included in the Annual Report.

29. Vigil Mechanism

Your Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. In line with the Tata Code of Conduct (TCOC), any actual or potential violation, howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. The role of the employees in pointing out such violations of the TCOC cannot be undermined.

Pursuant to Section 177(9) of the Act, a vigil mechanism was established for directors and employees to report to the management instances of unethical behaviour, actual or suspected, fraud or violation of the Company''s code of conduct or ethics policy. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chief Ethics Counsellor (CEC) / Chairman of the Audit Committee of the Company.

30. Directors'' Responsibility Statement

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost auditors, secretarial auditors and external consultants including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year 2015-16.

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures therefrom;

b) The Directors selected such accounting policies and applied them consistently and made judgements 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;

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company, 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 financial controls to be followed by the Company and that such internal financial 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.

31. Acknowledgements

On behalf of the Directors of the Company, I would like to place on record our deep appreciation to our shareholders, customers, business partners, vendors - both international and domestic, bankers, financial institutions and academic institutions.

The Directors are thankful to the Government of India and the various Ministries, the State Governments and the various Ministries, the Central and State Electricity Regulatory authorities, communities in the neighbourhood of our operations, Corporation and Municipal authorities of Mumbai and local authorities in areas where we are operational.

Finally, we appreciate and value the contributions made by all our employees and their families for making Tata Power what it is.

On behalf of the Board of Directors,

Cyrus P. Mistry

Chairman

(DIN: 00010178)

Mumbai, 23rd May 2016


Mar 31, 2014

To The Members,

The Directors are pleased to present the Ninety-Fifth Annual Report on the business and operations of your Company and the Statements of Account for the year ended 31st March, 2014.

1. Financial Results

Figures inRs. crore

Standalone Consolidated

FY14 FY13 FY14 FY13

(a) Net Sales/Income from Other Operations 8,627 9,567 35,649 33,025

(b) Operating Expenditure 6,073 7,509 27,942 26,386

(c) Operating Profit 2,554 2,058 7,707 6,639

(d) Less: Forex Loss 264 28 789 788

(e) Add: Other Income 656 722 227 369

(f) Less: Finance Cost 868 684 3,440 2,642

(g) Profit before Depreciation and Tax 2,078 2,068 3,705 4,778

(h) Less: Depreciation/Amortisation/ Impairment 587 364 2,730 2,901

(i) Profit before Tax 1,491 7,704 975 1,277

(j) Tax Expenses 537 679 1,008 7,778

(k) Net Profit/(Loss) after Tax 954 7,025 (33) 99

(I) Less: Minority Interest - - 272 208

(m) Add: Share of Profit of Associates - - 45 24

(n) Net Profit after Tax, Minority Interest and Share of Profit of Associates 954 7,025 (260) (85)

2. Dividend

The Directors of your Company recommend a dividend of 125% (^ 1.25 per share) subject to the approval of the Members. The dividend has been increased (from 115% previous year) in view of developments indicating better future prospects, particularly the order on Compensatory Tariff by the Central Electricity Regulatory Commission (CERC).

3. Company''s Performance

3.1 Standalone

On a Standalone basis, the Operating Revenue was lower atRs. 8,627.04 crore, as againstRs. 9,567.28 crore in FY13, a decrease of 10%. However, your Company earned a higher Operating Profit compared to the previous year, but owing to forex losses and reversal of MAT credit accrued in earlier years, your Company reported a Profit after Tax (PAT) of Rs. 954.08 crore, as against Rs. 1,024.69 crore for the previous year. Last year, PAT was higher due to onetime adjustment owing to change in depreciation rate.

Power Business

Operating Revenue for Power Business wasRs. 8,168.70 crore in FY14 as againstRs. 9,157.96 crore in FY13. Lower fuel cost built in the revenue recovery resulted in lower Operating Revenue on a Standalone basis, partly offset by higher transmission charges paid in the Mumbai Regulated business based on the Intra-state transmission order. However, Operating Profit was higher due to favourable Appellate Tribunal Order in Mumbai License Area.

Services Business

Power Services Business had a turnover ofRs. 123.02 crore as againstRs. 116.63 crore in FY13, reflecting a growth of 5%.

Strategic Engineering Division

Tata Power Strategic Engineering Division (SED) booked a turnover ofRs. 335.32 crore in FY14 as againstRs. 292.69 crore in FY13, with the closing order backlog in excess ofRs. 2,400 crore as on 31st March, 2014.

Other Income

Other Income was lower at Rs. 655.76 crore, as against Rs. 721.67 crore in the previous year. This was mainly due to lower income from investment in Fixed Deposits and Mutual Funds. It was driven by higher availability of investible funds in the previous year on account of Hybrid issue ofRs. 1,500 crore during thatyear.

Earnings per share

During FY14, due to higher earnings after full year''s appropriation on unsecured perpetual securities (Rs. 832.20 crore against Rs. 818.07 crore in FY13), Earnings per share (basic) was at 7 3.50 as against f 3.44 in the previous year.

3.2 Consolidated

On a Consolidated basis, the Operating Revenue was higher at Rs. 35,648.70 crore, as against Rs. 33,025.43 crore in FY13, an increase of 8%. The increase was mainly due to Coastal Gujarat Power Limited (CGPL) operating all of its units during the current year, Maithon Power Limited (MPL) tying up sale of additional 150MWon a long term basis with West Bengal State Electricity Distribution Company Limited (WBSEDCL), higher sales by Tata Power Trading Company Limited (TPTCL) and by Tata Power Solar Systems Limited (TPSSL).

Your Company has also reported 16% increase in the Consolidated Operating Profit at Rs. 7,706.45 crore as compared to Rs. 6,638.50 in Previous Year, mainly driven by full operation of Mundra and Maithon plants and favourable order from Appellate Tribunal for Electricity (ATE) for Mumbai operations. This was despite lower coal prices affecting coal mines profitability.

The Consolidated Loss after Tax at Rs. 259.97 crore is higher as compared to the previous year, mainly on account of higher forex losses and finance cost.

4. Subsidiaries/Joint Ventures

With the vision of becoming the most admired and responsible Integrated Power Company with an international footprint, your Company has over the years, forged strategic partnerships through Joint Ventures (JVs) and Subsidiaries. As on 31stMarch, 2014,your Company had 25 Subsidiaries (16 are wholly-owned Subsidiaries), 31 JVs and 10 Associates.

During the year FY14, your Company has acquired/created the following companies as a part of its growth plans: AES Saurashtra Windfarms Private Limited, acquired during the year, contributing 39.2 MW of wind capacity Joint Ventures Adjaristsqali Netherlands BV and Adjaristsqali Georgia LLC, created as investment vehicles for the Georgia Hydro project

Following are the major highlights of FY14 related to your Company''s Subsidiaries/JVs. Operational details of major subsidiaries are available in Management Discussion and Analysis section.

4.1 Coastal Gujarat Power Limited

Coastal Gujarat Power Limited (CGPL), a wholly owned subsidiary of your Company, has implemented and commissioned all five units of the 4,000 MW (5 x 800 MW) Ultra Mega Power Plant (UMPP) at Mundra in Gujarat.

Power Purchase Agreement (PPA)

Due to rise in coal prices and the current structure of the PPA, CGPL is not able to recover the full cost of fuel through its tariff. In view of this, CGPL had submitted a petition to the CERC seeking relief by way of establishment of an appropriate mechanism to offset the adverse impact caused by the steep hike in coal prices. CERC, in its order dated 15th April, 2013, had given the directive to constitute a committee to recommend a quantum of compensatory tariff. Subsequent to the committee report, CERC passed an orderon 21st February, 2014 ruling thatthe company will be entitled to compensatory tariff to offsetadditional fuel costs till the hardship continues on account of increase in coal prices. CERC has stipulated a three year period to undertake review of Compensatory Tariff.

The salient features of CERC order are as follows:

The Commission has fixed operating parameters for arriving at the Compensatory Tariff which shall be effective 1st April, 2013. The Commission has also ordered compensation of losses incurred from the commissioning of the units upto March 2013 amounting toRs. 329 crore to be recovered over 36 equal instalments. In arriving at the Compensatory Tariff, incremental profit from coal mines and 1% of Equity will be deducted.

The Commission has also allowed sale of power to third parties in excess of 80% of the normative availability - to be shared with procurers in the ratio of 60% to procurers and 40% to your Company. The sharing shall be for margin above the variable cost of fuel from the revenue accrued to the company.

The said order has been challenged before the ATE and the hearing has commenced.

Sustainability

In its endeavour to become the ''Neighbour of Choice'', CGPL continues to undertake initiatives for the local community in the areas of livelihood and income generation, education and health. Various community development activities have been undertaken aligned with 5 thrust areas identified to address the need of the stakeholders - Augmenting Primary Education System (Vidya), Building and Strengthening Healthcare Facilities (Arogya and Swachch Jal), Enhancing Programmes on Livelihood and Employability (Samriddhi and Daksh), Building Social Capital and Infrastructure (Sanrachna) and Nurturing Sustainability for Inclusive Growth (Akshay). A Triple Bottom Line Approach'' of sustainable development is being followed to achieve a satisfied community that has trust and faith in the company and its operations. Cooperation from the village Gram Panchayat has led to the formation of the Village Development Advisory Committee (VDAC), which is the first contact pointforthe companyforall developmental workto be carried outin different villages.

The company and its lenders have received complaints from a few NGOs, who have alleged that CGPL has not done enough to protect the livelihood of fishermen in the neighbourhood. Further, there is an allegation that there is an impact to the local community caused by coal, ash and outlet water. The company has engaged with all NGOs who work closely with the local community as well as fishermen who undertake fishing in and around Mundra UMPP area. In addition, various frameworks have been instituted in close consultation with lenders like IFC.ADB and others, for implementation of various programs as well as for constant oversight and monitoring of such initiatives. Besides, the company has undertaken proactive measures to improve the quality of life of local communities including fishermen. The company has furnished all such details to the lending institutions and the same has been acknowledged by them. Based on the inputs from both CGPL and local communities, financial institutions as well as Pollution Control and State authorities are satisfied with the work done by the company.

The company continues to enhance the reach and effectiveness of various initiatives for fishermen communities as well as other communities in its neighbourhood. The company abides by all stipulated norms including mitigation action for any environmental, community and ecological impact.

4.2 Investment in Coal Companies

Your Company continues to hold its equity stake in PT Kaltim Prima Coal (KPC) and PT Baramulti Suksessarana Tbk (BSSR), which continue to be a part of the supply chain forTata Power Group''s coal off-take requirements.

In FY14,your Company signed an agreement to sell its 30% stake in PT Arutmin Indonesia and associated companies in coal trading and infrastructure. The aggregate consideration for Tata Power''s 30% stake is USD 510 million, subject to certain closing adjustments. The sale is subject to certain conditions and restructuring actions, which your Company targets to complete in FY15.

4.3 Maithon Power Limited

Maithon Power Limited (MPL), a Joint Venture between your Company (74%) and Damodar Valley Corporation (DVC, 26%), has set up a 1,050 MW (2 x 525 MW) power plant at Maithon in Jharkhand.

Out of the total capacity of 1,050 MW, 300 MW power had been tied up through long term PPAs, each with DVC, WBSEDCL and Tata Power Delhi Distribution Limited (TPDDL), and balance 150 MW has been tied up under long term PPAwith Kerala State Electricity Board (KSEB) on 31st December, 2013. MPL has applied for Long Term Access of transmission of power to KSEB which is yet to be allotted.

4.4 Tata Power Delhi Distribution Limited

TPDDL, a subsidiary of your Company is a Joint Venture between Tata Power (51%) and the Government of National Capital Territory (NCT) of Delhi (49%). TPDDL has a registered consumer base of 1.4 million and serves a peak load of around 1,500 MW. The company''s operations span across an area of 510 sq. km. in Northern and Northwestern part of Delhi.

Tariffs in the past have been insufficient to ensure recovery of the power purchase costs of the company, which has resulted in accumulation of Regulatory Assets to the tune ofRs. 5,146.39 crore as in FY14. In the spirit of moving towards Cost Reflective Tariff, the Regulator has granted TPDDL an increase in tariff of 55% in the past 3 years. The Regulator has also granted a 8% Deficit Recovery Charge towards amortization of Regulatory Gaps in addition to creation of Power Purchase Adjustment Mechanism to true up for quarterly variations in Power Purchase Costs. Delhi Electricity Regulatory Commission (DERC) has also proposed liquidation of Regulatory Assets over the period of next 8 years.

4.5 Tata Power Renewable Energy Limited

TPREL, a wholly owned subsidiary of your Company, is in the business of setting up power projects based on clean and renewable energy sources such as wind, solar, waste heat recovery and biomass.

During the year, TPREL has successfully commissioned 24 MW out of the 32 MW wind project at Visapur in Maharashtra, and acquired the 39.2 MW operating wind farm at Saurashtra in Gujarat from AES Corporation. This is in addition to the 21 MW wind plant at Dalot, Rajasthan, which was commissioned in FY13 and 25 MW Solar Power Plant at Mithapur, which is operational since January 2012.

The 28.8 MW solar project at Palaswadi in Maharashtra has also been completed, except that the interconnecting transmission line could not be connected to the state grid due to lack of permissions.

4.6 Tata Power Solar Systems Limited

TPSSL, formerly known as Tata BP Solar India Limited has aligned its business segments into three major verticals -

1. Manufacturing of solar photovoltaic (PV) cells: TPSSL is recognised as a Tier 1 module manufacturer and offers market competitive cost and efficiency products to its customers. Due to cheaper imports, the company faces challenges in fully utilizing its manufacturing capacity.

2. Projects: TPSSL completed more than 100 MW of large scale ground mounted solar projects including a 50 MW solar PV project for National Thermal Power Corporation (NTPC). In addition to this, the Company executed a 28.8 MW solar PV project for TPREL and several other small scale and rooftop grid connected solar systems.

3. Products:TPSSL''s Products business grew by more than 20%. The company actively participated in various government programmes, e.g., solar home and street lighting system in Tamil Nadu, solar pumps in Rajasthan and solar power packs in Kerala. While the solar thermal water heater market grew by more than 10%, TPSSL''s market share increased by more than 25%.

4.7 Industrial Energy Limited

Industrial Energy Limited (IEL), a Joint Venture of your Company (74%) with Tata Steel Limited (26%), commenced its operations in May 2009. It is operating a 120 MW coal based plant in Jojobera. It is also operating a 120 MW co-generation plant (Power House #6) in Jamshedpur, inside the Tata Steel plant.

IEL is currently executing a 202.5 MW (3 x 67.5 MW) waste heat recovery project, which will meet the power requirement for Tata Steel''s plant in Kalinganagar, Odisha. The project is in advanced stages of execution.

4.8 Tata Power Trading Company Limited

TPTCL is the second largest power trading company in the country. TPTCL transacted 11,488 MUs during FY14 as compared to 9,431 MUs in the previous year and has shown a CAGRof 31% over the past 5 years.

4.9 International Projects

Your Company''s JV in South Africa, Cennergi (Proprietary) Limited, achieved financial closure of the 134 MW Amakhala Emoyeni Wind Farm and the 95 MW Tsitsikamma Community Wind Farm being implemented by it.

In June 2013, your Company acquired 40% shares in Adjaristsqali Netherlands BV through its wholly owned subsidiary Tata Power International Pte. Ltd. Adjaristsqali Netherlands is implementing hydro projects in Georgia through its 100% subsidiary, Adjaristsqali Georgia LLC.

In April 2013, a Memorandum of Understanding was executed with the Ministry of Electric Power, Government of Myanmar, for development of an imported coal fired power project on Build, Own and Transfer basis.

Your Company has also executed a Memorandum of Understanding in November 2013 with the Ministry of Industry and Trade, Government of Vietnam, for developing the 1,200 MW Long Phu 2 coal fired power project in SocTrang Province of Vietnam on Build, Own and Transfer basis.

5. Credit Rating

As on 31st March, 2014, your Company had the following credit ratings- a Corporate Credit Rating of B with a Positive outlook from Standard & Poor''s Rating Services and a corporate family rating of B1 with a Negative outlook by Moody''s Investor Services. The rating is not for any specific debt issuance of your Company.

Your Company''s INR denominated instruments are rated AA- by CRISIL, and AA by CARE and ICRA. The CRISIL and ICRA ratings have a Negative Outlook. The ratings have been assigned on the basis of consolidated credit profile of Tata Power and its subsidiaries.

6. Sustainability

Your Company is guided by its founder, Mr. Jamsetji Tata, who once said "In a free enterprise, the community is not just another stakeholder in the business but is, in fact, the very purpose of its existence". Your Company firmly believes in integrating its business with the social fabric of the society that it operates in and is a firm supporter of the triple bottom line concept.

The Sustainability thought process has been laid out as a conceptual model with the governing principle of "Leadership with Care". Tata Power embodies the Tata Group''s philosophy of building strong sustainable businesses.''Care''is one of the core values and has the following elements: Care for Environment, Care for Community, Care for Customers and Care for People i.e. employees, shareholders, suppliers, partners etc.

6.1 Your Company''s efforts towards Care for our People, Care for our Community and Care for Environment are elaborated below:

Safety - Care for our People

In Tata Power Safety is a core value over which no business activity has a higher priority. Further, the commitment is shown through the Safety vision, pledge and policy. Apart from this. Safety culture at Tata Power is guided by the 10 commandments of Safety.

Tata Power has an Apex Safety Committee chaired by the CEO & Managing Director which reviews the safety performance and guides the implementation of detailed action plans through Central Safety Committees and Site Implementation teams at all sites. Safety Bipartite Committees structure has been constituted to enhance safety culture and standards in the organisation with the involvement of all employees and reinforce safety as a core value as well as percolate the ownership of safety at individual level with the help of structured reviews and discussion.

Safety practices of Tata Power JVs and subsidiaries are aligned with Tata Power Safety standards and procedures. In FY14, your Company imparted 277,278 man hours of safety training to employees/contract workmen. Your Company has trained 100% of contract employees in FY14 through contractors''safety induction programs.

Safety Statistics FY14:

Sl. No. Safety Parameters FY14 FY13 (For Tata Power, CGPL, MPL, IEL)

1 Fatality (Number) 05 01

2 LTIFR (Lost Time Injuries Frequency Rate per million man hours) 0.41 0.34

3 Total Injuries Frequency Rate (TIFR) (Number of Injuries per million man hours) 13.58 17.88

4 First Aid Cases (Number) 555 757

Care for our Community

Your Company firmly believes in making a positive impact on the community in the vicinity of its operations.

Tata Power Skill Development Institute

The Indian Power sector is poised for significant capacity additions in the 12th and 13th Plan Period needing large scale adequately skilled workforce. There exist skill gaps across the entire value chain. With more and more services being obtained from Service Providers, ensuring that they deploy adequately skilled manpower has become crucial for the industry in general and your Company in particular.

Your Company has set up Tata Power Skill Development Institute (TPSDI) to ensure that workforce deployed by the contractors is adequately skilled. TPSDI would be involved in imparting modular power skills training, testing, certification and accreditation, in a phased manner. To begin with, it would focus on the contractors'' workforce of Tata Power and would over time, cater to other companies in the power sector.

Care for our Environment

Environment management is a value that is embedded in your Company''s DNA and helps in incubating a culture of acting responsibly towards the environment. Your Company addresses various aspects of resource conservation, energy efficiency, carbon footprint, renewable power generation, biodiversity and green buildings. Your Company also follows various measures like Environmental Compliance, Corporate Sustainability Protocol Index (CSPI), Green Manufacturing Index (GMI) to keep track of the initiatives and their impact. The following key initiatives were taken up during FY14:

Measurement, tracking and reduction of Specific Water Consumption

Development of Green Belt at Mundra and Maithon

Sewage Treatment Plants at Hydro stations

Reuse of waste material atTrombay and Distribution divisions

Promoting E-Bill subscription by consumers in Distribution business

These initiatives are expected to improve the performance of individual units on important environmental aspects.

Your Company has focussed its initiatives for sustained ash utilization at all its generating plants using coal. Trombay, Jojoberaand Maithon achieved 100% fly ash utilization whereas CGPL achieved 25% in its first year of full operation, which is in line with regulatory requirements. Special attention has been given for developing new uses of ash and creating value added products from ash.

Your Company has started water foot-printing exercise at its operating locations. This will help in better understanding of watershed, impact of its water discharges and future proofing of water requirements for Company''s operations.

Your Company strives to create environmentally responsible employees by promoting and showcasing individual efforts in green initiatives through Greenolution.

6.2 Club Enerji

Club Enerji, previously known as Tata Power Energy Club, is an initiative that takes energy and resource conservation beyond your Company. This initiative helps in sensitizing the community on sustainability through various conservation ideas. Tata Power Club Enerji reaches out to school children through various interactive mediums and sensitizes them on the need to save power. It has reached out to over 400 schools in India and has sensitised over 7 million citizens, who in turn have helped save more than 11.2 MUs of electricity till date. This saving is equivalent to saving 11,200 tonnes of C02and is enough to light up over 5,200 houses for a year.

The Club has also launched a Civic & Moral Values programme across schools to develop better citizens of tomorrow and also plans to roll out a Waste Management Module.

6.3 Affirmative Action

Under its Affirmative Action (AA) program, your Company has continued to develop deprived communities, particularly Scheduled Castes (SC) and Scheduled Tribes (ST). The Apex Committee led by the CEO & Managing Director, Executive Director and external experts like the Director of Tata Institute of Social Sciences (TISS) continued to give strategic directions on AA.

A comprehensive ''Needs Assessment'' study on AA was conducted covering 100% SC/ST households (over 68,000 persons) across Tata Power divisions, CGPL, MPL and TPDDL

Your Company has implemented several programs for the 4E''s (Employment, Entrepreneurship, Employability and Education) benefiting over 10,500 persons in FY14. The major programs are Skill Development Programs for youth. Rural BPO (Business Process Outsourcing), Entrepreneurship Development (agarbatti manufacturing,fly ash brick manufacturing), upliftment of self-help groups, science laboratory, providing scholarships, extra coaching classes, computer and spoken English classes. Your Company has also started working in Jawahar Taluka in Thane District of Maharashtra, which has a tribal population of over 90% with a vast majority of them below the poverty line. Your Company is engaged with a tribal residential school, a Government ITI through employee volunteering and is also conducting BPO training for youth in association with Tata Consultancy Services (TCS).

6.4 Sustainability Reporting

Your Company is conscious of its role as a Responsible Corporate Citizen and has an uncompromising adherence to demonstrate performance on Sustainability. Your Company has adopted the Global Reporting Initiative (GRI) guidelines to report on its Sustainability performance. The current Sustainability Report FY14 is based on the GRI G3.1 guidelines covering all the 84 indicators. The scope of this report has also been enhanced by including subsidiaries like Chemical Terminal Trombay Limited (CTTL) and also divisions such as SED in the reporting purview. Your Company''s Sustainability Report will be hosted on its website www.tatapower.com.

In the last year, your Company has evolved and deployed policies in areas such as human rights, advocacy, and responsible supply chain management. Your Company became a proud recipient of CM ITC Sustainability Award, 2013 for Significant Achievement on the Journey Towards Sustainable Development. This is a testimony of the Company''s effort on Sustainability.

6.5 Business Responsibility Report (BRR)

The Business Responsibility Reporting is in line with the SEBI requirement based on the ''National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business'' notified by Ministry of Corporate Affairs (MCA), Government of India, in July 2011. Your Company has reported on the framework of BRR, describing initiatives taken by your Company from an environmental, social and governance perspective. The BRR is hosted on the website www.tatapower.com.

6.6 United Nations Global Compact

Your Company adheres to reporting on United Nations Global Compact (UNGC), on ten principles in the areas of Human Rights, Labour standards. Environment and Anti-bribery. Your Company has been reporting to UNGC since 2006 on these principles. In September 2013, your Company had submitted the Communication on Progress (CoP) to UNGC. The Company is also submitting its Sustainability Report to UNGC.

7. Innovation

Your Company follows various sources to keep abreast of developments in the area of clean technologies. Interactions are on with faculty members from leading institutions such as the NT (Bombay), Institute of Chemical Technology (ICT) and various other universities. Technologies in a variety of areas like solar (PV, with trackers, thin-film, concentrated PV and concentrated thermal). Hydro Kinetic Turbine generation, fuel cell (telecom tower application), gasification (biomass, coal), coal drying etc. are being evaluated. The highlights are:

1. Solar Concentrated Thermal: A consortium led by NT, Bombay synchronised the 1 MW solar concentrated thermal power demonstration plant at the National Solar Centre in Gurgaon. Tata Power was handling the Operations & Maintenance of the demonstration plant

2. Solar PV with single axis (E-W) tracking: Your Company commissioned a 70 kW solar PV based power plant under "Revenue on Units Generated basis-Opex model" in Lonavala.The unique feature of this project includes installation of a single axis East-West tracker which tracks the movement of the sun and tilts the angle of the solar panels by 1 degree every 20 minutes. Due to this, the panels are always exposed to direct irradiance which boosts the plant load factor (PLF) by 15%. Commercial viability of this project has been demonstrated

3. Micro Hydro Kinetic Turbine: Your Company has also tested a 10 kW micro hydro kinetic turbine by installing it in the tail race of its hydro station at Bhira. This turbine can generate electricity in water streams having velocities ranging from 0.75 m/s to 4.2 m/s. The turbine requires water depths of 2.5 m from the bed. The power conditioning unit was developed in-house. The system has performed well and has given consistent results. This can in future be replicated in various streams wherein the above conditions are fulfilled

4. Novel Coal Drying Process: An application has been filed for an Indian and an international patent for the drying process. It uses a screw conveyer as a dryer. A preliminary design report has been prepared. The estimated cost of drying will be less than $10/ton of dried coal or less than RsO.IO/kWh.The process was tested and proven at a lab scale with 50 kg batches and has the potential to bring down the cost of drying substantially compared to existing models

5. Bottom ash based brick making: Bottom ash based bricks were manufactured successfully. A patent on the same has been filed

6. Ultra Thin White Topping technology: CTTL, a wholly owned subsidiary of Tata Power, in association with BASF, has developed a concrete mix which can help replacing 40% of cement with Fly Ash. The polyheed admixture developed for Trombay Thermal Station Fly Ash has been used in a demonstration project. A demonstration road stretch of 3.5 mx 100 m has been laid. This road has lower absorption of solar energy (higher reflectivity) and is expected to have a longer service life

8. Foreign Exchange Earnings and Outgo

On a Standalone basis, the foreign exchange earnings of your Company during the year under review amounted to Rs. 335.65 crore (previous year Rs. 359.84 crore), mainly on account of interest, dividend, etc. The foreign exchange outflow during the year was Rs. 1,721.55 crore (previous yearRs. 2,418.14 crore), mainly on account of fuel purchase ofRs. 1,355.10 crore (previous yearRs. 2,202.49 crore), interest on foreign currency borrowings, NRI dividends ofRs. 83.27 crore (previous yearRs. 84.84 crore) and purchase of capital equipment, components and spares and other miscellaneous expenses ofRs. 283.18 crore (previous yearRs. 130.81 crore).

9. Disclosure of Particulars

Particulars required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988are given in the prescribed format as Annexure I to the Directors'' Report.

Particulars of Employees: In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of the employees are set out in the Annexure to the Directors'' Report. However, having regard to the provisions of Section 219 (1)(b)(iv) of the Companies Act, 1956, the Annual Report is being sent to all Members of the Company excluding the aforesaid information. Any Member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

10. Subsidiaries

Vide General Circular No: 2/2011 dated 8th February, 2011, the Ministry of Corporate Affairs, Government of India, has granted a general exemption to companies from attaching the Balance Sheet, Profit and Loss Account and other documents referred to in Section 212(1) of the Companies Act, 1956, in respect of its subsidiary companies, subject to fulfilment of the conditions mentioned therein. Accordingly, the said documents are not being attached with the Balance Sheet of your Company. A gist of the financial performance of the subsidiary companies is contained in the report. The Annual Accounts of the subsidiary companies are open for inspection by any Member/Investor and your Company will make available these documents/details upon request by any Member of the Company or to any investor of its subsidiary companies who may be interested in obtaining the same. Further, the Annual Accounts of the subsidiary companies will be kept open for inspection by any investor at the Registered Office of your Company and that of the subsidiary company concerned, and would be posted onthewebsiteoftheCompanywww.tatapower.com.

11. Directors

Consequent upon his completing 65 years of age, in line with Company''s policy for retirement of Executive Directors, Mr. S. Ramakrishnan stepped down as Director and Executive Director of your Company with effect from close of business hours on 28th February, 2014. The Board has placed on record its appreciation for the valuable contribution made by Mr. Ramakrishnan to your Company.

Mr. Ashok S. Sethi was appointed as an Additional Director with effect from 7th May, 2014, in accordance with Article 132 of the Articles of Association of the Company and Section 161 of the Companies Act, 2013 (the Act). Mr. Sethi holds office only upto the date of the forthcoming AGM and a Notice under Section 160(1) of the Act has been received from a Member signifying its intention to propose Mr. Sethi''s appointment as a Director. The Board also appointed Mr. Sethi as Executive Director effective the same date. His appointment and remuneration require the approval of the Members at the ensuing AGM.

The Company has, pursuant to the provisions of Clause 49 of the Listing Agreements entered into with Stock Exchanges, appointed Dr. Homiar S. Vachha, Mr. Nawshir H. Mirza, Mr. Deepak M. Satwalekar, Mr. Piyush G. Mankad, Mr. Ashok K. Basu and Ms.Vishakha V. Mulyeas Independent Directors of the Company. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49. In accordance with the provisions of Section 149(4) and proviso to Section 152(5) of the Companies Act, 2013, these Directors are being appointed as Independent Directors to hold office as per their tenure of appointment mentioned in the Notice of the forthcoming AGM of the Company.

In accordance with the requirements of the Act and the Articles of Association of the Company, Mr. Cyrus P. Mistry retires by rotation and is eligible for re-appointment.

12. Auditors

Messrs. Deloitte Haskins & Sells LLP (DHS LLP), who are the statutory auditors of your Company, hold office until the conclusion of the forthcoming Annual General Meeting. It is proposed to re-appoint DHS LLP as statutory auditors of the Company from the conclusion of the forthcoming AGM till the conclusion of the Ninety-eighth AGM to be held in the year 2017, subject to ratification of their appointment at every AGM. DHS has, under Section 141 of the Act, furnished a certificate of its eligibility for re-appointment. The Members year on year will be requested, to ratify their appointment as Auditors and to authorize the Board of Directors to fix their remuneration. In this connection, the attention of the Members is invited to Item No.4 of the Notice.

During the year, the Company had received intimation from DHS LLP stating that Deloitte Haskins & Sells had been converted into a Limited Liability Partnership (LLP) under the provisions of the Limited Liability Partnership Act, 2008 with effect from November 20, 2013. In terms of Ministry of Corporate Affairs, Government of India, General Circular No.9/2013 dated April 30,2013, if a firm of Chartered Accountants, being an auditor in a Company under the Act, is converted into an LLP, then such an LLP would be deemed to be the auditor of the said Company. The Board of Directors of the Company have taken due note of this change. Accordingly, the audit of the Company for Financial Year 2013-14 was conducted by DHS LLP.

Members will also be requested to pass a resolution (vide Item No.17 of the Notice) authorizing the Board of Directors to appoint Branch Auditors for the purpose of auditing the accounts maintained at the Branch Offices of the Company abroad.

13. Auditors''Report

The Notes forming part of the Accounts referred to in Auditors''Report of the Company a re self-explanatory and, therefore, do not call for any further explanation under Section 217(3) of the Companies Act, 1956.

The consolidated financial statements of your Company have been prepared in accordance with Accounting Standard 21 on Consolidated Financial Statements, Accounting Standard 23 on Accounting of Investments in Associates and Accounting Standard 27 on Financial Reporting of Interest in Joint Ventures, issued by the Council of The Institute of Chartered Accountants of India.

14. Cost Auditor and Cost Audit Report

M/s Sanjay Gupta and Associates, Cost Accountant, was appointed Cost Auditors of your Company for FY14.

In accordance with the requirement of the Central Government and pursuant to Section 233B of the Companies Act, 1956, your Company carries out an audit of cost accounts relating to electricity every year. The Cost Audit Report and the Compliance Report of your Company for the Financial Year ended 31st March, 2013, by M/s Sanjay Gupta and Associates, Cost Accountants, which was due for filing with the Ministry of Corporate Affairs by 30th September, 2013, was filed on 23rd September, 2013.

15. Corporate Governance

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a Management Discussion and Analysis Statement, Report on Corporate Governance and Auditors'' Certificate, are included in the Annual Report.

16. Directors''Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the operating management, confirm that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed and thatthereare no material departures therefrom;

2. They have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied them consistently and made judgements 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;

3. They have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. They have prepared the annual accounts on a going concern basis.

17. Acknowledgements

On behalf of the Directors of the Company, I would like to place on record our deep appreciation to our Shareholders, Customers, Business Partners, Vendors, both international and domestic. Bankers, Financial Institutions and Academic Institutions.

The Directors are thankful to the Government of India and the various Ministries, the State Governments and the various Ministries, the Central and State Electricity Regulatory authorities. Corporation and Municipal authorities of Mumbai and other cities where we are operational.

Finally, we appreciate and value the contributions made by all our employees and their families for making Tata Power what it is.

On behalf of the Board of Directors,

Cyrus P. Mistry Chairman Mumbai, 29th May 2014


Mar 31, 2013

To The Members,

The Directors are pleased to present the Ninety-Fourth Annual Report on the business and operations of your Company and the statements of account for the year ended 31st March, 2013.

1. FINANCIAL RESULTS Figures in Rs. crore

Tata Power Tata Power Group Standalone Consolidated FY13 FY12 FY13 FY12

(a) Revenue from Operations (Net) 9,567.28 8,495.84 33,025.43 26,001.40

(b) Operating Expenditure 7,543.22 6,711.21 26,580.73 21,101.18

(c) Operating Profit 2,024.06 1,784.63 6,444.70 4,900.22

(d) Add: Other Income 721.67 983.46 369.20 268.76

(e) Less: Finance Costs 678.25 514.87 2,635.53 1,527.09

(f) Profit before Depreciation and Tax 2,067.48 2,253.22 4,178.37 3,641.89

(g) Less: Depreciation/ Amortisation/Impairment 364.10 570.35 2,901.69 3,134.64

(h) Profit before Tax 1,703.38 1,682.87 1,276.68 507.25

(i) Less: Tax Expenses 678.69 513.14 1,177.96 1,475.54

o) Net Profit/(Loss) after Tax 1,024.69 1,169.73 98.72 (968.29)

(k) Less: Minority Interest - - 208.07 190.16

(l) Add: Share of Profit of Associates - - 23.92 70.77

(m) Net Profit/(Loss) after Tax, Minority Interest and 1,024.69 1,169.73 (85.43) (1087.68)

Share of Profit of Associates

2. COMPANY''S PERFORMANCE

2.1 Standalone

On a Standalone basis, your Company earned a higher Profit before Tax (PBT) compared to the previous year. However, owing to higher Tax provisioning, your Company reported a Profit after Tax (PAT) of Rs. 1,024.69 crore, as against Rs. 1,169.73 crore for the previous year.

The Operating Revenue was higher at Rs. 9,567.28 crore, as against Rs. 8,495.84 crore, an increase of 13%. Operating Revenue was higher mainly on account of higher fuel cost built in the Revenue recovery; higher transmission charges paid in the Mumbai Regulated business based on the Intra-state transmission order; higher built-in tariff and through improved operational performance. The Operating Profit was higher by 13%, significantly through improved operational performance and favourable Appellate Tribunal for Electricty (ATE) Order in Mumbai Licence Area. Other Income was lower at Rs. 721.67 crore, as against Rs. 983.46 crore in the previous year. This was mainly due to lower dividend income from Coal investments; driven by lower global coal prices as compared to last year, in spite of higher coal production from the mines.

During FY13, due to lower earnings after full year''s appropriation on unsecured perpetual securities, the Earnings per share (basic) was at Rs. 3.44 as against Rs. 4.53 in the previous year.

2.2 Consolidated

On a Consolidated basis, the Operating Revenue was higher at Rs. 33,025.43 crore, as against Rs. 26,001.40 crore, an increase of 27%. The increase in the Consolidated Operating Revenue was primarily on account of the additional revenue generated from Coastal Gujarat Power Limited (CGPL) and Maithon Power Limited (MPL), higher revenue of Tata Power Delhi Distribution Limited (TPDDL) on account of increase in power purchase cost and higher volume traded by Tata Power Trading Company Limited (TPTCL).

The Consolidated Loss after Tax at Rs. 85.43 crore is lower as compared to the previous year, mainly on account of relatively lesser impairment provisions of the Mundra assets and no charge-off of deferred stripping costs, during the year.

3. DIVIDEND

The Directors of your Company recommend a dividend of 115% (Rs. 1.15 per share) subject to the approval of the Members. The dividend has been reduced (from 125% previous year) due to the ongoing challenge in CGPL caused due to change of law and unprecedented imported coal price increase compared to the bid.

4. SUBSIDIARIES/JOINT VENTURES

With the vision of becoming the most admired and responsible Integrated Power Company with an international footprint, your Company has over the years, forged strategic alliances through Joint Ventures (JVs) and Subsidiaries. As on 31st March, 2013, your Company had 23 Subsidiaries (14 are wholly-owned Subsidiaries), 26 JVs and 10 associates.

During the year 2012-13, your Company has acquired/created the following Subsidiaries or JVs:

- Tata Power Solar Systems Limited (TPSSL) : Acquired 51% of the equity held by BP Alternative Energy Holdings Limited (BP) in TPSSL (formerly Tata BP Solar India Limited) to become a 100% owner of TPSSL.

- PT Baramulti Suksessarana Tbk (BSSR) : Acquired 26% stake in BSSR, Indonesia through its 100% subsidiary Khopoli Investments Limited (Khopoli). PT Antang Gunung Meratus (AGM), a 100% subsidiary of BSSR, and BSSR together own approximately 1 billion tonnes of coal resources in south and east Kalimantan in Indonesia.

- PT Mitratama Perkasa (PTMP): Your Company, through PT Sumber Energi Andalan Tbk (in which it effectively holds 94.61% stake through Trust Energy Resources Pte. Limited), acquired 30% stake in PTMP, a coal mining service provider in Indonesia.

- Tata Power Jamshedpur Distribution Limited (TPJDL): The Company signed a Distribution Franchisee Agreement (DFA) with Jharkhand State Electricty Board (JSEB) on 5th December, 2012 for a period of 15 years for power distribution in the Jamshedpur Circle in Jharkhand, for which the business operations are likely to commence with effect from October, 2013. The area to be served is approximately 3,600 square km, having a consumer base of about 3 lakh.

Following are the salient highlights related to your Company''s substantive Subsidiaries/JVs :

4.1 Coastal Gujarat Power Limited

CGPL, the Company''s wholly owned subsidiary, has implemented and commissioned the 4,000 MW (5 x 800 MW) Ultra Mega Power Plant (UMPP) at Mundra in Gujarat.

Project Commissioning

The fifth and last unit of Mundra UMPP was commissioned on 22nd March, 2013. During the year, four units of Mundra UMPP (4 x 800 MW) were commissioned. With the commissioning of Mundra UMPP, CGPL now holds the record of commissioning the maximum capacity ever during a year (3,200 MW) by any utility, with NTPC closely following at 3,160 MW.

The project continues to abide by stipulated norms for its operations including environment, community engagement and ecological impact.

Power Purchase Agreement (PPA)

Under the existing PPA, CGPL is able to recover partial cost of fuel through its tariff. International coal prices have gone up significantly during the last five years accentuated by the changes in Indonesian coal price regulations. This has led to significant financial burden for CGPL including impairment provisioning against its assets. Your Company is of the view that this is an industry-wide issue and not specific to Mundra UMPP alone and needs urgent resolution.

CGPL had submitted a petition to the Central Electricity Regulatory Commission (CERC) seeking relief by way of establishment of an appropriate mechanism to offset the adverse impact caused by the steep hike in coal prices. After several hearings, CERC, in its order dated 15th April, 2013, has given the directive to constitute a committee to recommend a compensatory tariff.

The above referred committee has begun its discussions and your Company is hopeful of an early resolution.

Provision for Impairment

During the year, the Company made an impairment provision of Rs. 850 crore as against Rs. 1,800 crore for the previous year. Hence, the provision as on 31st March, 2013 stood at Rs. 2,650 crore (Rs. 1,800 crore as on 31st March, 2012).

The coal price assumptions factored at the time of bid were based on the industry outlook existing at that time. The Company had factored the availability of discounts and stable pricing for long term coal contracts which were prevalent at that time. Accordingly, the Company had quoted 45% of the coal cost in the escalable component in its bid. However, due to changes in Indonesian regulation, the Company is exposed to under-recovery of coal costs.

During the year, the Company assessed the cash flows expected to be generated over the useful life of the assets. In estimating the future cash flows, the management has, based on information from independent third parties/institutions, made certain assumptions on a consistent manner, relating to fuel prices, foreign exchange, future revenues and operating parameters, which the management believes reasonably reflect future expectations of these parameters. These assumptions are monitored on a periodic basis by the management and adjustments made as necessary.

Financing

In view of the financial impact as a result of high coal prices, the lenders to the project have sought additional support from Tata Power as part of its sponsor support obligations. Tata Power has offered to transfer the cash flows from the coal investments to meet the debt service of CGPL as an interim arrangement. The Company has sought certain waivers from lenders to enable further disbursements of loans. The same is under discussion and is likely to be finalized shortly.

Sustainability

CGPL, in its endeavour to become the ''Neighbour of Choice'', continues to take initiatives for the local community in the areas of livelihood and income generation, education and health. This has been done by continuously engaging with local communities and by partnering with government agencies.

The Company and some of the project lenders have received certain complaints with regard to social and environmental compliances from organisations claiming to represent sections of the local communities. The Company has clarified to the national and international institutions that it is proactive in its association with the communities around the project area and has ensured compliance to all requirements. Since much of these concerns arise out of inadequate understanding of power plant operations, a website explaining the practices, the societal and environmental safeguards being implemented, has been created to foster better understanding. (www.tatapower.com/cgpl-mundra/myths-realities.aspx).

4.2 Investment in Coal Companies

The performance of the two Indonesian thermal coal companies, viz. PT Kaltim Prima Coal and PT Arutmin Indonesia reveals that while the production during calendar year 2012 was 74.44 MT as against 65.63 MT in calendar year 2011, the coal price realization for the year was US$ 81.01/tonne as compared to US$ 93.20/tonne in the previous year. The lower price of coal impacted the profitability of the coal companies substantially as compared to the earlier years.

In FY13, your Company also acquired 26% stake in BSSR, Indonesia. BSSR has listed its shares on the Indonesian Stock Exchange. Your Company also signed a long term coal supply agreement with AGM.

4.3 Maithon Power Limited

MPL, a JV between your Company (74%) and Damodar Valley Corporation (DVC) (26%), has set up a 1,050 MW (2 x 525 MW) power plant at Maithon in Jharkhand. Commercial operation of Unit 1 of MPL was declared on 1st September, 2011 and Unit 2 commercial operation was declared on 24th July, 2012, with power sale commencing from first day of commercial operation.

Out of the total capacity of 1,050 MW, 300 MW power has been tied up through long term PPAs, each with DVC, WBSEDCL and TPDDL, thus totalling to 900 MW. For the balance 150 MW, long term arrangements are being pursued.

4.4 Tata Power Delhi Distribution Limited

TPDDL (formerly North Delhi Power Limited), a subsidiary of your Company (51% ) with balance shares held by Delhi Power Company Limited, a Government of Delhi undertaking, is engaged in distribution of electicity in North and North-West Delhi and services around 1.3 million consumers spread over an area of 510 square km.

TPDDL''s liquidity position continues to be under considerable stress due to the large accumulated Revenue Gap caused by Regulatory Assets which is non-cash accrued revenue promised by Regulators to be recovered in subsequent years through increased tariffs. The accumulated Revenue Gap recoverable from future tariffs has increased over the years from Rs. 322 crore in FY09 to Rs. 4,712 crore in FY13. This is primarily on account of increase in power purchase cost during the period, which increased from Rs. 2.86/unit in FY09 to Rs. 5.45/unit in FY13 (91% increase) against an average billing rate (excluding Electricity Tax) increase from Rs. 4.52/unit in FY09 to Rs. 6.72/unit in FY13, reflecting a 49% increase over the same period.

Bulk of the tariff increase has taken place mainly in the last two years with an average 22% increase in September, 2011 and another 21% increase thereon from July, 2012 plus levy of 8% Deficit Recovery Surcharge to ensure liquidation of the accumulated Revenue Gaps. Apart from this, quarterly power purchase price adjustment factor was brought in from July, 2012 and presently additional 3% surcharge under Power Purchase Cost Adjustment Charges is being charged. Prior to this tariff increase, the last major tariff revision had been carried out by Delhi Electricity Regulatory Commission (DERC) in FY06 except for a marginal 1% increase in FY08. Although the prevailing increased tariffs are designed to reflect the current costs, they are not able to liquidate the outstanding Revenue Gap and the Regulatory Assets increased by Rs. 758.24 crore during FY13.

Your Company has provided alternative solutions to address the issue of burgeoning Revenue Gap. Appropriate advocacy is being done on this issue.

4.5 Cennergi Projects -Tsitsikamma and Amakhala

Your Company''s JV in South Africa, Cennergi Proprietary Limited, has made steady progress towards achievement of financial closure for two wind projects for which it was declared successful by the Department of Energy, Government of South Africa.

4.6 Tata Power Renewable Energy Limited (TPREL)

TPREL, a wholly owned subsidiary of your Company, is in the business of setting up power projects based on clean and renewable energy sources such as wind, solar, waste heat recovery and biomass.

During the year, TPREL has successfully commissioned the 21 MW wind plant at Dalot, Rajasthan.

4.7 Tata Power Solar Systems Limited (TPSSL)

TPSSL (formerly Tata BP Solar India Ltd.) currently has four business lines: (1) Manufacturing and sale of solar cells and modules; (2) Providing engineering, procurement and construction-cum-commissioning services (EPC) and O&M to solar project developers (3) Developing and selling solar PV products in rural markets and (4) Developing and selling of solar thermal (water heating) products in urban markets.

The Company, consequent to taking over BP''s share, does not have ready access to the European markets. Also, the Company has witnessed cheap imported solar cells and modules flooding the Indian markets, which has resulted in TPSSL achieving substantially lower production of solar cells and modules.

The market outlook for solar energy products and projects continues to look promising despite policy delays in India and TPSSL is significantly increasing its focus on the downstream businesses of EPC services and solar products, and expects to grow revenues in the future.

4.8 Industrial Energy Limited (IEL)

IEL, a JV of your Company (74%) with Tata Steel Limited (26%), commenced its operations in May, 2009. It is operating 120 MW coal based plant in Jojobera. It is also operating 120 MW co-generation plant (PH#6) in Jamshedpur, inside the Tata Steel plant.

IEL is currently executing the 202.5 MW (3 x 67.5 MW) waste heat recovery project, which will meet the power requirement for Tata Steel''s plant in Kalinganagar, Odisha. All clearances for the project are in place; EPC contract has been awarded. Boiler drum of Unit 1 has been lifted in March, 2013. The project is in an advanced stage of completion.

4.9 Tata Power Trading Company Limited (TPTCL)

TPTCL is in the business of power trading since June, 2004 and is the first company in India to receive power trading license from CERC. TPTCL has diversified and strengthened its power portfolio by entering into long term power purchase and sales contracts for sale of power in the long term as well as over the short term, in the merchant market.

The revenue from operations for FY13 was Rs. 3,789.29 crore, as compared to Rs. 1,926.70 crore in the previous year. The PAT increased by 74% to Rs. 24.48 crore, as against Rs. 14.05 crore in the previous year. TPTCL transacted 9,431 MUs during FY13 as compared to 5,583 MUs in the previous year and has shown a CAGR of 41% over the past 5 years. It was ranked the second largest trader with a market share of 13.89% in FY13.

5. CREDIT RATING

As on 31st March, 2013, your Company had the following credit ratings - a Corporate Credit Rating of BB - with a Negative outlook from Standard & Poor''s Rating Services and a corporate family rating of B1 with a Stable outlook by Moody''s Investor Services. The rating is not for any specific debt issuance of the Company.

Your Company''s INR denominated instruments are rated AA by CRISIL, CARE and ICRA. The CRISIL and ICRA ratings have a Negative Outlook. The ratings have been assigned on the basis of consolidated credit profile of Tata Power and its subsidiaries.

6. REGULATORY ENVIRONMENT

Regulatory reforms in the power sector are critical given the current challenges across the value chain. Your Company is actively engaged in addressing the bottlenecks in the regulatory environment and has been working through the Ministry of Power and other stakeholders in the industry with the Advisory Group that has been formulated by the Minister of State for Power.

The key issues that are currently being addressed through this forum are: Resolving Coal and Gas Deficits, Amendments to the Electricity Act, 2003, Transmission Bottlenecks, Standard Bidding Guidelines, Institutional Mechanism for expediting investments and debottlenecking Hydropower projects.

7. SUSTAINABILITY

At Tata Power, the Sustainability thought process - across Economic, Environment, Social and Cultural dimensions, is captured in the Tata Power Sustainability Model which has the over-arching objective of"Leadership with Care". This dovetails well with the Tata Group philosophy of "Improving the quality of life" and Tata Power''s own byline - "Lighting up Lives"

The Tata Power Sustainability Model covers the entire range of stakeholders (customers, shareholders, community, employees, society at large). Your Company has also instituted "CARE" as one of the values of the organization. The enablers to achieving the organization''s objectives are several initiatives including Adoption of Technology, Benchmarking, Advocacy, Leadership and Oversight, Governance processes on sustainability, etc.

7.1 Your Company''s efforts towards Care for our People, for our Community and for the Environment are elaborated below:

Care for our People - Safety

Your Company has declared Safety as a core value and consequently emphasized its intent for maintaining a healthy and safe environment in and around its operating facilities as well as at project sites through its Organizational Health & Safety policies/guidelines.

Highlights of efforts in the area of Safety are as follows:

- The Company is pursuing the process of implementing British Safety Council (BSC) 5 Star Safety Management System (SMS) to further strengthen the internal processes.

- Web based safety training is being pursued to cover 15 critical safety topics. More than 500 employees have been trained on all 15 topics through this initiative.

- A specially designed safety appreciation program titled "Super-Vision for Safety" was launched across Tata Power for first line Supervisors, realizing the importance of effective supervision for reducing the safety risks during execution.

- "Access control" philosophy has been introduced to ensure that only trained and certified persons are deputed in safety critical jobs.

- Safety awareness has been greatly enhanced at homes and schools. This has been achieved through various monthly campaigns.

Specific safety targets with lead and lag indicators are monitored against targets. A summary of safety results achieved (both employees and contract workforce) is given below:

Sl. No. Parameters FY13 FY12 (For Tata Power, CGPL, MPL, IEL, Powerlinks, TPTCL,TPREL and TPSSL)

1 Fatality (Number) 1 1

2 LTIFR (Lost Time Injuries Frequency Rate per million man hours) 0.34 0.20

3 Total Injuries Frequency Rate (TIFR) (Number of Injuries per million man hours) 17.88 20.97

4 First Aid Cases (Number) 757 1,430

We deeply regret to report a fatal accident that took place at CGPL involving a contract worker. Although it is impossible to indemnify the loss of human life, the family of the deceased person has been given financial assistance to reduce the impact of financial distress. A detailed Root Cause Analysis has been conducted to avoid recurrence of such incidents at our sites.

Care for our Community

Your Company has identified the following five thrust areas that can help it focus its community relations efforts, share learning across the multiple locations that it operates in and enable initiatives to make a difference at a regional/state or national scale. The five thrust areas have also been aligned to the national and global frameworks on Community Development. The thrust areas are:

a) Augmenting Rural Primary Education System

b) Building and Strengthening Healthcare Facilities

c) Enhancing Programs on Livelihood and Employability

d) Building Social Capital and Infrastructure

e) Nurturing Sustainability for Inclusive Growth

Your Company is pursuing initiatives across all the identified thrust areas. Presently, Community Relations Iniatives are positively impacting lives of 0.3 million people across 208 villages. About 7,200 hours of volunteering for social causes was generated by employee participation.

Care for our Environment

For Tata Power, "Care for the Environment" implies targeting outcomes in the following areas:

- Compliance at all times to relevant Environment related National/Local standards/Regulatory requirements.

- Commitments have 20-25% of its portfolio from non-Greenhouse Gas (non-GHG) sources.

- Reducing Water consumption; promoting re-useand ensuring necessary quality of discharge waterfromits powerplants.

- Minimizing waste generated; promoting reuse and recycling of waste products (e.g. fly ash, etc.).

- Minimizing emissions like SOx, NOx, Fugitive Dust, Particulate matter, etc.

- Minimizing Soil contamination atarea of operations.

- Preserving the Bio-diversity around our plants.

- Increasing the green cover in the vicinity of its operations.

Your Company has a comprehensive strategy to address the above and perodically reviews the same to drive improvements.

7.2 Club Enerji

Club Enerji, previously known as Tata Power Energy Club, is an initiative that takes energy conservation beyond your Company. This initiative helps in sensitizing the community on sustainability through various conservation ideas. Tata Power Club Enerji reaches out to school children through various interactive mediums and sensitizes them on the need to save power. It has reached out to over 400 schools in India and has sensitised over 5.2 million citizens, who in turn have helped save more than 8.7 MUs of electricity till date. This saving is equivalent to saving 8,700 tonnes of CO2 and is enough to light up approximately 4,070 houses for a year.

In the year 2012, Club Enerji has been bestowed with the Eco Advocate Award by Asia Pacific Enterprise Leadership Awards (APELA) at Singapore. It was recognized at the "2012 International Business Awards" with Gold Stevie Award for being the best Marketing Campaign of the Year 2012 - Energy category. It has also been awarded Gold at the ABCI awards in the category Best Communication material and Bronze for its Resource Conservation Module.

7.3 Affirmative Action

In line with the Tata Group policy, your Company has prepared its Affirmative Action (AA) Policy. Your Company has focused its efforts towards 4Es - Education, Employability, Employment and Entrepreneurship programs for the development of deprived communities, particularly SCs and STs.

During the year, Tata Power covered 6,500 students under education programs and 750 youth and women under skill development training programs. Also, contracts worth Rs. 7 crore were awarded to 10 SC/ST vendors. Your Company has planned to ramp up its AA activities significantly.

7.4 Sustainability Reporting

Your Company is conscious of its role as a Responsible Corporate Citizen and has an uncompromising adherence to the norms of Corporate Governance. This year, your Company commemorates the completion of a decade of the Sustainability Reporting journey with the launch of the Sustainability Report 2012-13. This report is based on the GRI G3.1 guidelines covering all the 84 indicators. The scope of this report has also been enhanced by including the major subsidiaries like CGPL and MPL in the reporting purview. Your Company''s Sustainability Report will be hosted on the website www.tatapower.com.

7.5 Business Responsibility Report (BRR)

Vide its Circular dated 13th August, 2012, Securities and Exchange Board of India (SEBI) mandated the inclusion of BRR as a part of the Annual Report for top 100 listed entities based on their market capitalisation on BSE Limited and National Stock Exchange of India Limited at 31st March, 2012. The said reporting requirement is in line with the ''National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business'' notified by Ministry of Corporate Affairs (MCA), Government of India, in July, 2011. Pursuant to the above, the Stock Exchanges amended the Listing Agreement by inclusion of Clause 55 providing a suggested framework of a BRR, describing initiatives taken by your Company from an environmental, social and governance perspective. In line with the press release and FAQs dated 10th May, 2013 issued by SEBI, your Company''s BRR will be hosted on its website www.tatapower.com. Any shareholder interested in obtaining a physical copy of the same may write to the Company Secretary at the Registered Office of your Company.

7.6 United Nations Global Compact (UNGC)

The Global Compact requires businesses to adhere to ten principles in the areas of human rights, labour standards, environment and anti-bribery. Your Company has been reporting data since 2006 as per the Global Compact Initiative taken up by the Secretary General of the United Nations. For the current year, your Company will submit responses to the Global Compact for its ''Communication on Progress'' on various Principles in its business processes. The details of UNGC compliance will be hosted on www.unglobalcompact.org.

8. INNOVATION

8.1 CleanTech and Non-GHG generation technologies

Your Company follows various sources to keep abreast of the Applied R&D updates on clean technologies. Interactions are on with faculty members from leading institutions such as the IIT, Bombay; University of Mumbai, Institute of Chemical Technology (ICT) and various other universities. Technologies in a variety of areas like solar (PV, thin-film, concentrated PV and concentrated thermal), micro-turbine wind energy generation, CO2 absorption using algae, carbon capture reuse and storage, fuel cell (telecom tower application), gasification (biomass, coal), etc. are being evaluated. During the year, your Company has continued to expand its presence in the field of CleanTech and Non-GHG generation techonologies. The highlights are:

i. Geothermal : Your Company has invested in Geodynamics Limited, a leading Australian company in enhanced geothermal systems. Your Company has invested AUD 50 million in the project so far. Geodynamics has commissioned a 1 MW pilot plant.

ii. Floating Solar PV : Sunengy Pty. Limited is an Australia based start-up company that has designed a floating concentrated PV system using Fresnel lenses. The first string of the 13.5 kW is operational and the performance is being monitored.

iii. Micro-Wind : Micro turbines of capacities of 2 kW from Windtronics, 5 kW and 12 kW from WePower and 5 kW from Unitron have been installed at the test bed site. Another 2 kW Windtronics turbine has been installed and commissioned at Trombay generating station. The turbines are being studied for understanding their performance in Indian conditions.

iv. Solar Concentrated Thermal : A consortium led by IIT, Bombay is on the verge of completion of 1 MW solar concentrated thermal power plant at the National Solar Centre in Gurgaon. Arrangements for commissioning and operating the same are in progress.

v. Biomass Gasification System : An 18 kW Biomass based gasification system has been set up in the Trombay Colony premises. The system consumes 25 kilogram/hour. of biomass as a fuel and the output power will be diverted for the colony consumption.

vi. Continuous Hydro-Thermal Dewatering of Coal : Your Company is working with Exergen Pty. Limited- an Australian company, on a technology that alters chemical properties of coal and makes it hydrophobic. Low grade coal (~ 50% moisture) is processed at 100 Bar pressure and 250O C to produce good quality coal (25% moisture). Exergen is in the process of raising funds to complete the 50TPH plant.

8.2 Strategic Engineering Division (SED)

In FY13, SED reaffirmed its support to the indigenisation goal of the Ministry of Defence through research, design and development of various electronic systems and sub-systems in the areas of Communications, Networking, Voice & Data Processing, Optronics, Airfield and Air Traffic Management.

9. FIXED DEPOSITS

Your Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on 31st March, 2013.

10. FOREIGN EXCHANGE EARNINGS AND OUTGO

On a Standalone basis, the foreign exchange earnings of your Company during the year under review amounted to Rs. 359.84 crore (previous year Rs. 631.78 crore), mainly on account of interest, dividend, etc. The foreign exchange outflow during the year was Rs. 2,418.14 crore (previous year Rs. 2,451.71 crore), mainly on account of fuel purchase of Rs. 2,202.49 crore (previous year Rs. 2,071.89 crore), interest on foreign currency borrowings and NRI dividends of Rs. 84.84 crore (previous year Rs. 70.33 crore) and purchase of capital equipment, components and spares and other miscellaneous expenses of Rs. 130.81 crore (previous year Rs. 309.49 crore).

11. DISCLOSURE OF PARTICULARS

Particulars required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the prescribed format as Annexure I to the Directors'' Report.

Particulars of Employees: In terms of the provisions of Section 217 (2A) of the Companies Act, 1956 (the Act), read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out in the Annexure to the Directors'' Report. However, having regard to the provisions of Section 219 (1)(b)(iv) of the Act, the Annual Report is being sent to all Members of the Company excluding the aforesaid information. Any Member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of your Company.

12. SUBSIDIARIES

Vide General Circular No:2/2011 dated 8th February, 2011, the Ministry of Corporate Affairs, Government of India, has granted a general exemption to companies from attaching the Balance Sheet, Profit and Loss Account and other documents referred to in Section 212 (1) of the Act in respect of its subsidiary companies, subject to fulfilment of the conditions mentioned therein. Accordingly, the said documents are not being attached with the Balance Sheet of the Company. A gist of the financial performance of the subsidiary companies is contained in the report. The Annual Accounts of the subsidiary companies are open for inspection by any Member/Investor and the Company will make available these documents/details upon request by any Member of the Company or to any investor of its subsidiary companies who may be interested in obtaining the same. Further, the Annual Accounts of the subsidiary companies will be kept open for inspection by any investor at the Registered Office of your Company and that of the subsidiary company concerned, and would be posted on the website of the Company www.tatapower.com.

13. DIRECTORS

Mr. Adi J. Engineer, stepped down as Director of your Company with effect from 27th August, 2012, consequent upon his completing 75 years of age, in line with the policy adopted by the Board for retirement of Directors. The Board has placed on record its appreciation for the valuable contribution made to your Company by Mr. Engineer.

Mr. Ratan N. Tata resigned as Chairman of the Board of Directors of the Company with effect from 8th November, 2012. He stepped down as Director with effect from 28th December, 2012 consequent upon his completing 75 years of age (in line with the policy adopted by the Board for retirement of Directors). The Board has placed on record its appreciation for his selfless and tremendous contribution towards the growth of the Company over two decades.

Mr. Cyrus P. Mistry was appointed as Chairman of the Board of Directors in place of Mr. Tata effective 8th November, 2012.

Ms. Vishakha V. Mulye was appointed as Additional Director of the Company, with effect from 28th February, 2013, in accordance with Section 260 of the Act and Article 132 of the Articles of Association of the Company. Ms. Mulye holds office only upto the date of the forthcoming Annual General Meeting and a Notice under Section 257 of the Act has been received from a Member signifying his intention to propose Ms. Mulye''s appointment as a Director.

In accordance with the requirements of the Act and the Articles of Association of the Company, Mr. R. Gopalakrishnan, Mr. N. H. Mirza and Mr. Thomas Mathew T. retire by rotation and are eligible for re-appointment.

14. AUDITORS

Messrs. Deloitte Haskins & Sells (DHS), who are the statutory auditors of your Company, hold office until the conclusion of the ensuing Annual General Meeting. It is proposed to re-appoint DHS to examine and audit the accounts of your Company for FY14. DHS has, under Section 224 (1) of the Act, furnished a certificate of its eligibility for re-appointment. The Members will be requested, as usual, to appoint Auditors and to authorize the Board of Directors to fix their remuneration. In this connection, the attention of the Members is invited to Item No.6 of the Notice.

Members will also be requested to pass a resolution (vide Item No.10 of the Notice) authorizing the Board of Directors to appoint Auditors/Branch Auditors/Accountants for the purpose of auditing the accounts maintained at the Branch Offices of the Company, in India and abroad.

15. AUDITORS'' REPORT

The Notes forming part of the Accounts referred to in Auditors'' Report of the Company are self-explanatory and, therefore, do not call for any further explanation under Section 217(3) of the Act.

The consolidated financial statements of your Company have been prepared in accordance with Accounting Standard 21 on Consolidated Financial Statements, Accounting Standard 23 on Accounting of Investments in Associates and Accounting Standard 27 on Financial Reporting of Interest in Joint Ventures, issued by the Council of The Institute of Chartered Accountants of India.

16. COST AUDITOR AND COST AUDIT REPORT

M/s Sanjay Gupta and Associates, Cost Accountants, were appointed Cost Auditors of your Company for FY13.

In accordance with the requirement of the Central Government and pursuant to Section 233B of the Act, your Company carries out an audit of cost accounts relating to electricity every year. The Cost Audit Report and the Compliance Report of your Company for the Financial Year ended 31st March, 2012, by M/s N. I. Mehta & Co., which was due for filing with the Ministry of Corporate Affairs by 31st January, 2013, was filed on 11th January, 2013.

17. CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a Management Discussion and Analysis Statement, Report on Corporate Governance and Auditors'' Certificate, are included in the Annual Report.

18. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Act, the Directors, based on the representations received from the operating management, confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures therefrom;

ii) They have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied them consistently and made judgements 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) They have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) They have prepared the annual accounts on a going concern basis.

19. ACKNOWLEDGEMENTS

On behalf of the Directors of the Company, I would like to place on record our deep appreciation to our Shareholders, Customers, Business Partners, Vendors, both international and domestic, Bankers, Financial Institutions and Academic Institutions.

The Directors are thankful to the Government of India and the various Ministries, the State Governments and the various Ministries, the Central and State Electricity Regulatory authorities, Corporation and Municipal authorities of the areas where your Company operates and the community associated with its area of operations. The Directors are also thankful to the international Governments and regulatory authorities in the countries that it seeks to grow its business.

Finally, we appreciate and value the contributions made by all our employees and their families for making Tata Power what it is.

On behalf of the Board of Directors,

Cyrus P. Mistry

Chairman

Mumbai, 30th May, 2013


Mar 31, 2012

The Directors are pleased to present the Ninety-Third Annual Report on the business and operations of your Company and the statements of account for the year ended 31st March, 2012.

1. Financial Results Figures in Rs. crore

Standalone Consolidated

FY12 FY11 FY12 FY11

(a) Net Sales / Income from Other Operations 8,495.84 6,918.48 26,001.40 19,450.76

(b) Operating Expenditure 6,711.21 5,330.30 21,101.18 14,857.99

(c) Operating Profit 1,784.63 1,588.18 4,900.22 4,592.77

(d) Add: Other Income (including net gain on exchange) 983.46 493.58 268.76 410.50

(e) Less: Finance costs 514.87 459.80 1,527.09 866.15

(f) Profit before Depreciation and Tax 2,253.22 1,621.96 3,641.89 4,137.12

(g) Less: Depreciation / Amortization / Impairment 570.35 510.14 3,134.64 98024

(h) Profit before Tax 1,682.87 1,111.82 507.25 3,156.88

(i) Less: Tax Expenses 513.14 170.33 1,475.54 974.97

(j) Net Profit after Tax 1,169.73 941.49 (968.29) 2,181.91

(k) Less: Minority Interest - - 190.16 196.50

(I) Add: Share of Profit of Associates - - 70.77 74.19

(m) Net Profit after Tax, Minority Interest and Share of Profit of Associates ' 1,169.73 941.49 (1,087.68) 2,059.60

2. Financial Highlights

2.1 Standalone results

During the year, your Company reported a Profit after Tax (PAT) of Rs. 1,169.73 crore, as against Rs. 941.49 crore for the previous year. The Operating Revenue was higher at Rs. 8,495.84 crore, as against Rs.6,918.48 crore, an increase of 23%. Operating Revenue was higher mainly on account of higher fuel cost. The Operating Profit was higher by 12% due to improved operational performance in Mumbai Operations.

Other Income was higher at Rs. 983.46 crore, as against Rs.493.58 crore in the previous year, a growth of 99%. This was due to higher dividend income from coal companies, forex gains (as the Company adopted the option given in para 46A of AS-11 in the notification issued by Ministry of Company Affairs) and higher treasury income.

Earnings per share (basic) was at Rs. 4.53 as against Rs. 4.08 in the previous year.

2.2 Consolidated results

The Consolidated Operating Revenue which stood at Rs. 26,001.40 crore grew by 34% as against Rs. 19,450.76 crore for the previous year. PAT was at Rs. (1,087.68) crore as against Rs. 2,059.60 crore for the previous year. The increase in the Consolidated Operating Revenue was primarily on account of strong operational performance and higher coal price realization in Indonesian Coal Companies.

The Consolidated PAT is lower mainly on account of provisions made for impairment of Mundra project, reversal of forex gains and charge off of deferred stripping costs by the Indonesian Coal companies.

3. Dividend

The Directors of your Company are pleased to maintain a dividend of 125% (Rs. 1.25 per share) subject to the approval of the shareholders.

4. Existing Businesses

As of 31st March, 2012, The Tata Power Group of Companies had an installed generation capacity of 5,297 MW based on various fuel sources: thermal (coal, gas, oil), hydroelectric power, renewable energy (wind and solar photovoltaic) and waste heat recovery. The details of the installed capacity are given in Table 1.

Table 1: Details of installed capacity

Installed Capacity Category Total

Fuel Source Location State (MW) (MW)

Trombay Maharashtra 1,580

Maithon Jharkhand 1,050

Mundra Gujarat 800

Thermal - Coal / Jojobera Jharkhand 428

Oil/Gas IEL-Jojo bera Jharkhand 120 4,207

Rithala New Delhi 108

Belgaum Karnataka 81

Lodhivali Maharashtra 40

Thermal - Waste IEL- Jojobera Jharkhand 120

240

Heat Recovery Haldia West Bengal 120

Bhira Maharashtra 300

Hydro Khopoli Maharashtra 72 447

Bhivpuri Maharashtra 75

Wind farms Maharashtra, Gujarat,

Renewables Karnataka, Tamil Nadu . 375 403

Solar Photo voltaic Maharashtra, (PV) Gujarat 28

Total 5,297

Thus, your Company has 20.58% of MW capacity through non-Green House Gas (GHG) based generating sources.

Your Company also has businesses of Transmission, Power Distribution-cum-Retail in Mumbai, and other value added businesses.

Table 2: Details of other businesses

Business Location Key details

Over 1,085 circuit kilometers of Transmission Lines, connecting generating Mumbai station in Mumbai Operations to 18 Receiving Stations in Mumbai.

Trans mission Eastern/ North Over 1,166 circuit kilometers of transmission line which transmits surplus power Eastern regions from Eastern / North Eastern region (Siliguri) to Uttar Pradesh (Mandula). Mumbai Over 2,200 circuit kilometers of distribution network. Distri bution New Delhi Over 10,500 circuit kilometers of distribution network.

Mumbai Over 2,85,000 customers with sales of over 5,800 MUs in FY12.

Retai' New Delhi Engaged in serving over 1,300,000 customers with sales of over 7,500 MUs in FY12.

Strategic Mumbai One of the leading suppliers of defence equipment and solutions amongst Electro nics Indian Private Sector.

One of the leading service providers for Project Management, Operations and Power Services Mumbai Maintenance (O&M) and specialized services in the power sector.

5 NEW GENERATION PROJECTS

5.1 Projects Under Construction

Table 3:Details of projects under construction

Fuel Source Location State Capacity Category Total

Thermal - Coal / Oil / Gas Mundra Gujarat 3,200 3,852 Kalinga nagar Odisha 652

Hydro Dagachhu Bhutan 126 126

Renewables Wind farms Maharashtra, Rajasthan 150 150

Total 4,128 4,128

5.1.1 Coastal Gujarat Power Limited (CGPL)

CGPL, the Company's wholly owned subsidiary, is implementing the 4,000 MW (800 Rs.5 units) Ultra Mega Power Project (UMPP) at Mundra in Gujarat. The project, estimated to cost about Rs. 18,000 crore, is progressing as per schedule. The cumulative progress till the end of March 2012 was approximately 95% with total capital commitments of 100% of total equipment ordering and a total actual expenditure of over Rs. 16,000 crore. All major civil, structural, mechanical, electrical and control & instrumentation work is complete and about 6,500 direct and indirect workmen are deployed at the site. Commissioning activities are in full swing in Units 2 to 5, while Unit 1 of 800 MW is in operation.

The turbine erection for other four units is complete and boiler light-up for Units 2, 3 and 4 has been successfully completed. Unit 2 will be synchronized shortly. Unit 3 steam blowing is expected to start in May 2012.The last boiler i.e. Unit 5 boiler is expected to light up in second quarter of FV13.The Power Evacuation System which is being implemented by Power Grid Corporation of India Limited (PGCIL) is nearing completion with 2 out of 3 double circuit lines commissioned. The third and last evacuation line is expected to be commissioned during first quarter of FY13.

Your Company has continued its emphasis on safety, through programs, education and sensitization of workers and supervisors with the help of an NGO.

5.1.2 Kalinganagar, Odisha: 652.5 MW [3 x 67.5 MW (Gas based) 3 x 150 MW (Coal and gas based)]

Both the projects are being executed through Industrial Energy Limited (IEL), a JV of the Company (74%) with Tata Steel Limited (26%). This plant is being set up to cater to the power requirements for a 6 MTPA steel plant for Tata Steel at Kalinganagar in Jajpur district of Odisha.

CPP1 202.5 MW (3 x 67.5 MW): Order recommendations for Engineering, Procurement & Commissioning, Steam Generator (SG), Steam Turbine Generator (STG) and General Civil Works (GCW) packages have been placed on vendors. The project is progressing as per schedule.

CPP2 450 MW (3 x 150 MW): Applications for 'Consent to Establish' and 'Aviation Clearance' have been submitted. Application for long term linkage for 2.3 MTPA has been submitted to Ministry of Coal (MoC), Ministry of Power (MoP) and Central Electricity Authority (CEA). Recommendation from CEA has been sent to MoP and MoC. As an option, use of middling's, tailings from Tata Steel, e-auctioned coal and imported coal is being worked out. Signing of MoU between IEL and Tata Steel Limited for supply of coal is being pursued. The technical specifications for various packages are under finalization.

5.1.3 Dagachhu Hydroelectric Power Project, Bhutan

The 126 MW (2 x 63 MW) Dagachhu project is being implemented by Dagachhu Hydro Power Corporation Limited (a JV of the Company [26%], Druk Green Power Corporation Limited [59%] and National Pension and Provident Fund of Bhutan [15%]) in Bhutan. The civil works are being executed by M/s. Hindustan Construction Company Limited, India. More than 37% of concreting at weir has been completed and for desalted, more than 62% of concreting has been completed. The excavation of connection tunnel has been completed and the tunnel lining is in progress. For head race tunnel, more than 47% of tunnel excavation has been completed. Cumulatively around 6.2 kilometers tunneling has been completed and tunnel lining works have also commenced.

5.1.4 Renewable Energy Projects Wind Power

Your Company is developing wind power projects of over 150 MW in India, of which 80 MW is proposed to be commissioned during FY13 across Maharashtra (50 MW) and Rajasthan (30 MW). The Company's new JV-Cennergi (Pty) Limited has also been selected as a preferred bidder for two wind power projects totaling 234 MW in South Africa.

Solar Power

Your Company is in the process of acquiring suitable land parcels in the states of Maharashtra, Rajasthan, Gujarat and Karnataka to develop solar projects. The Company through Cennergi, is also evaluating development of solar project in South Africa.

25 MW solar project at Mithapur was successfully commissioned and Commercial Operation Date (COD) was achieved on 25th January, 2012,

5.2 Projects Under Planning - India

5.2.1 Coastal Maharashtra Project

During the year, your Company has made further progress in the Coastal Maharashtra project at Dehrand, Maharashtra. Resettlement and Rehabilitation (R&R) agreement has been signed with Government of Maharashtra (GoM) in July 2011. The project has all the statutory clearances for its commencement.

Land acquisition by Maharashtra Industrial Development Corporation Limited (MIDC) as per Maharashtra Industrial Development (MID) Act continued during the year. About 70% (692 out of 993 acres) of private land has been acquired so far. Well structured Community Relations (CR) activities are in place and are being implemented in the villages covered for the project.

While your Company is progressing well with the land acquisition, economic options for coal sourcing and -logistics are under evaluation.

5.2.2 Tiruldih Power Project, Jharkhand

The process of land acquisition for the 1,980 MW (3 x 660 MW) project has achieved significant progress. More than 300 acres of private land has been registered in the name of your Company. The entire land acquisition process is defined to be completed by March 2013. The Company has successfully extended MoU with the Government of Jharkhand (GoJ) which is valid for 3 years. Water allocation of 62 cusecs for the project is expected shortly.

5.2.3 Dugar Hydroelectric JV Project

The consortium of the Company and SN Power Singapore Pte. Limited (SN Power), a subsidiary of Statkraft, Norway, was awarded the Dugar hydroelectric project through a competitive bidding process carried out by the Government of Himachal Pradesh (GoHP). The project is being developed through a Special Purpose Vehicle (SPV), Dugar Hydro Power Limited (DHPL). DHPL is a JV between the Company (50% 1 share) and SN Power (50% -1 share).

Pre-feasibility studies are under progress by the joint project team set up by your Company and SN Power.

5.2.4 Maithon Expansion : 1320 MW (2 x 660)

Ministry of Environment and Forests (MoEF) has issued Terms of Reference for environment clearance. Environment Impact Assessment report along with necessary documents has been submitted for public hearing. Technical presentation at Jharkhand State Pollution Control Board (JSPCB) took place successfully. Coal linkage application has been filed with MoC.

5.2.5 Naraj Marthapur Project, Odisha

The major clearances for the 660 MW Naraj Marthapur project have been obtained. The environmental clearance has been granted by MoEF, subject to clearance from National Board of Wild Life for which the process is on. Proposal for using clean technology is also under discussion for Naraj Marthapur project.

5.3 Projects Under Planning - International

In spite of robust growth in domestic power demand, multiple constraints across the entire value chain have made growth in the country very challenging. Thus, your Company has decided to venture in international markets that offer a greater potential for growth with the strategic intent of maximizing returns and minimizing risks.

5.3.1 Sorik Marapi Geothermal Project - Indonesia

The consortium of your Company, Origin Energy Limited (Origin) and PT. Supraco Indonesia (Supraco) won the Sorik Marapi geothermal concession in a competitive bid process on 2nd September, 2010.

The project is in the exploration phase. Detailed geosciences studies (geological, geochemical and geophysical) have been completed. The preliminary resources assessment report is positive.

Exploratory drilling is expected to commence in Q4 FY13. Sufficient progress is being made in infrastructure planning and development required to carry out the exploratory drilling (like issuance of various permits, land lease/acquisition etc). There has been good engagement with the local community in the Sorik Marapi area through numerous activities led by SMGP's Community Relations. The exploration phase of the project is expected to end in September 2013.

5.3.2 African Power Business - Cennergi

Your Company has formed a 50:50 JV with Exxaro Resources Limited, the second largest coal producer in South Africa. Cennergi, the JV company, would develop power generation projects in South Africa, Botswana, Namibia and other African countries. This company plans to initially develop renewable energy projects and thereafter, coal fired and hydro power plants in the countries of interest. Cennergi was declared successful in two wind projects which were bid in April 2012,ciggregating to 234 MW.

Your Company is actively pursuing business opportunities in other countries as well and hopes to increase its global footprint in the coming years

6. Key Subsidiaries

6.1 Coastal Gujarat Power Limited

CGPL, the Company's wholly owned subsidiary, is implementing the 4,000 MW (800 x 5 units) UMPP at Mundra in Gujarat. The project, estimated to cost Rs. 18,000 crore, is progressing as per schedule. While Unit 1 is under operation, Commissioning activities are in full swing in Units 2 to 5.

Recent changes in Indonesian coal price regulations have resulted in an increase in price of Mundra UMPP's coal off-take arrangements with Indonesian coal companies. In addition to this, there is an unprecedented increase in global coal prices as compared to the year 2006, when the Company had bid for Mundra UMPP. As per the existing Power Purchase Agreement (PPA), there is only a partial pass through of increase in coal price, which is leading to an additional financial burden. Your Company is of the view that this is an industry wide issue and not specific to Mundra UMPP alone.

The issue is being represented to the government of the procuring states and the Central Government in different forums and through different industry associations. The Company is hopeful of fruitful resolution of the issue.

Given the circumstances, as a part of its sponsor support obligation to the project leaders, Tata Power has offered to transfer 75% of the dividend flow of coal SPV (which holds the ownership of 30% equity investment in two coal mines in Indonesia) to CGPL or any other alternate structure/method to support the debt service. Your Company is in discussions with lenders to formalize a suitable structure as part of sponsor support obligation.

CGPL, in its Endeavour to become 'Neighbor of Choice', continues to take initiatives for the local community in the area of livelihood and income generation, education and health as part of its community relationship programme. This is done by continuously engaging with local communities and by partnering with government agencies.

6.2 Industrial Energy Limited (IEL)

IEL commenced operations in May 2009. The 120 MW coal based Unit 5 was commissioned in FY11 in Jojobera in the existing location of Units 1 to 4. It is also operating a 120 MW co-generation plant (Power House 6) in Jamshedpur inside the Tata Steel plant. The Company is progressing to execute a 652.5 MW thermal project in Kalinganagar, Odisha. This plant would meet the power requirement for Tata Steel Limited.

During FY12, IEL earned revenue pf Rs.433.7 crore .(as against previous year revenue of Rs. 125.5 crore) and a PAT of Rs.78.0 crore (as against previous year PAT of Rs. 24.9 crore). The increase in revenue is due to commissioning of 120 MW Unit 6.

Table 4: Details of thermal power generation for FY12 -IEL

Generation (MUs) Generation Availability (%) Plant Load Factor (%)

FY12 FY11 FY12 FY11 FY12 FY11

IEL 1,574 738 94 93 74.5 70

6.3 Maithon Power Limited (MPL)

MPL, a JV between your Company (74%) and Damodar Valley Corporation (DVC) (24%), has set up a 1,050 MW (2 x 525 MW) power plant at Maithon in Jharkhand. Your Company is rendering project management and O&M services to MPL.

Unit 1 COD was declared on 1st September, 2011 with power sale commencing from first day of operation. The power has been tied up in a long term PPA with DVC and a medium term PPA with Tata Power Trading Company Limited (TPTCL). The provisional tariff order for its power sale to DVC has been determined by Central Electricity Regulatory Commission (CERC) in November 2011 till 31st March, 2012. Power sale to TPTCL, which has back to back PPAs with Tata Power Delhi Distribution Limited (TPDDL) and BSES Rajdhani Power Limited (BRPL), was guided by the terms of the respective PPAs.

Unit 2 achieved full load on primary fuel on 23rd March, 2012. Final testing of all the systems is under progress. Unit 2 is planned to be declared commercially operational in H1 FY13.

MPL has obtained necessary approvals for additional funding requirements for the increase in project cost. Your Company has infused equity of Rs. 987.84 crore and the debt drawn by MPL is Rs. 2,998.46 crore. The operational performance for MPL in FY12 is as follows:

Table 5: Operational performance of MPL forFY12

Generation (MUs) Generation Availability (%) PLF (%)

Unit 1 1,225 65 46

Since Unit 2 COD is yet to be declared, the unit performance is not shown in the above table.

MPL is also planning to expand by adding another 1,320 MW capacity consisting of two units of 660 MW each, adjacent to the ongoing 1,050 MW (2 x 525 MW) power plant. Adequate land and water resources are already in place. Application for environment clearance has been made and coal linkage by way of tie up with DVC is being worked out.

6.4 Powerlinks Transmission Limited (PTL)

PTL is a JV between your Company (51%) and PGCIL (49%). PTL transmits power from the 1,020 MW Tata Hydro Electric Power Project in Bhutan and surplus power from the Eastern/North-Eastern region of India through its transmission lines between Siliguri (West Bengal) and Mandaula (Uttar Pradesh), spanning a distance of 1,166 kilometers. The availability of transmission line was maintained at 99.66% for Eastern Region in FY12 (previous year availability: 98.62%) and 99.85% for Northern Region (previous year availability: 99.78%), as against the minimum stipulated availability of 98%.

During FY12, PTL has earned revenues of Rs. 281.63 crore (as against previous year revenues of Rs. 288.41 crore) and a PAT of Rs. 112.35 crore (as against previous year PAT of Rs. 105.68 crore). PTL has paid interim dividend of Rs. 1.25 per share (previous year interim dividend was Rs. 1.4 per share) and recommended final dividend of Rs. 0.65 per share for FY12 (previous year final dividend was Rs. 0.70 per share).

6.5 Tata Power Delhi Distribution Limited (TPDDL)

TPDDL (formerly North Delhi Power Limited) is a subsidiary of your Company (51% share) with balance shares held by Delhi Power Company Limited, a Government of Delhi undertaking. TPDDL is engaged in distribution of electricity in North and North-West Delhi and services around 1.3 million consumers spread over 510 square kilometers. The peak load in this area is about 1,400 MW, with energy consumption of over 7,500 MUs. '

In FY12, TPDDL has earned revenues from operations aggregating to Rs. 5,338.88 crore, a growth of about 30% over the previous year (Rs. 4,119.02 crore). The Company earned PAT of Rs. 338.65 crore in FY12 compared to Rs. 258.18 crore in FY11, reflecting an increase of around 31% over the previous year.

The tariff order for FY12 released by Delhi Electricity Regulatory Commission (DERC) in August 2011 was made effective from September 2011. However, the tariffs fixed by DERC for FY12 are not fully cost reflective. In FY12,TPDDL billed its consumers at rates which factored a power purchase cost of Rs. 4.06 per unit (plus fuel price adjustment surcharge) against an actual cost of Rs. 5.29 per unit. In FY11, power purchase cost of Rs. 2.63 per unit was considered as against actual cost of Rs. 4.26 per unit. The gap in cost recovery in FY11 was because tariff fixed for FY10 continued in FY11.This was due to the stay order of Delhi High Court for release of tariff order for FY11 on a PIL filed before it.

The DERC, in its last tariff order, has stated that it shall Endeavour to recover the past revenue gaps and unrecovered revenue gap for FY12 in the course of forthcoming Multi Year Tariff (MYT) Period (FY13-FY15). The DERC has also issued a letter reiterating the above and confirming that it shall allow carrying cost on the unrecovered revenue gap. Tariff determination process for FY12-FY13 is presently underway. Therefore, TPDDL's current year revenues include Rs. 1,781.63 crore (previous year Rs. 1,156.43 crore) as income recoverable from future tariff.

During FY12.TPDDL was bestowed the 'Asian Power Utility of the Year Award' for 2011, by Asian Power Awards, Singapore for the fifth year in succession,' Utility of the Year' by India Power Awards,' Best Performing Utility (Urban)' by Enertia Awards and the' Safety Innovation Award' by the Institute of Engineers (India).

6.6 Tata Power Trading Company Limited (TPTCL)

TPTCL is in the business of power trading since June 2004 and is the first company in India to receive a power trading license from CERC.

TPTCL transacted 5,583 MUs during the year as compared to 4,354 MUs in the previous year and has shown a CAGR of 36% over the past 5 years. It was ranked the third largest trader with a market share of 10% in FY12.The gross revenue for FY12 was Rs. 1,926.70 crore as compared to Rs. 1,932.05 crore in the previous year. The PAT increased by 52.78% to Rs. 14.05 crore, as against Rs. 9.15 crore in the previous year.

Electricity traded in the short term power market has gradually increased to nearly 7% of the generation, of which close to 5% is via bilateral trading and the balance 2% is through power exchanges. TPTCL has also diversified its supply sources by entering into long term power purchase contracts with various power developers for sale of their power in the long term as well as in the merchant market.

6.7 Trust Energy Resources Pte. Limited (Trust Energy)

Trust Energy, a wholly-owned subsidiary of your Company, was set up in 2008 to manage overseas fuel logistics and coal sourcing, thereby achieving vertical integration in order to support the Company's growing power business.

Trust Energy (along with Energy Eastern Pte. Limited [EEPL], a wholly-owned subsidiary of CGPL) has organized a fleet of five cape size vessels. EEPL has entered into long-term charters for three cape size vessels. The ships have started their commercial operations and are expected to be fully deployed to service the needs of Mundra UMPP, after 2013. Currently, the fleet is chartered out in the open market.

Trust Energy has been awarded the prestigious Approved International Shipping (AIS) scheme from the Government of Singapore, which provides a zero tax incentive, for its shipping income.

6.8 Tata Power Renewable Energy Limited (TPREL)

TPREL is in the business of setting up renewable power projects based on hydro power (25 MW), wind, solar and biomass. TPREL has commissioned its first 25 MW Solar Power Project at Mithapur in January 2012.

TPREL is developing more solar power projects in Maharashtra, Rajasthan, Gujarat and other states and has placed orders for 150 MW wind projects to be set up in Maharashtra and Rajasthan.

TPREL is seeking organic and inorganic growth opportunities with the goal of building a robust portfolio of renewable energy capacity-

6.9 NELCO Limited (NELCO)

NELCO, established in 1940, is listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE).Your Company, along with its subsidiary, holds 50.10% stake in NELCO.

NELCO's Integrated Security & Surveillance Solutions business (ISSS) has been active in providing integrated security and surveillance solutions in the defense sector, government bodies (e.g. Indian Railways) and other industries. It also provides solutions in the field of meteorology and has prestigious contracts from important organizations like Indian

Air Force (IAF) and Indian Meteorology Department (IMD). NELCO is also a leading VSAT service provider in the country catering to a large segment of the market. It has a major presence in the BFSI, Education, Telecom and Oil & Gas sectors due to its innovative solutions. It offers various solutions on the VSAT network which enables internet access, bandwidth on demand, IP multicasting and digital streaming. It has the satellite earth station at Mahape, Navi Mumbai and the same is augmented continuously to keep it current with the latest technology. It currently has around 25,000 VSATs deployed across the country,

NELCO has also started offering Managed Services around Managed Data Center Hosting services, Managed Network services, Remote Infrastructure Monitoring services, Application Performance Monitoring to add on to its basic services offering of VSAT communication.

Tatanet Services Limited (Tatanet), a subsidiary of NELCO, holds the requisite licenses for providing the shared hub VSAT services.

During the 12 months period ended 31st March, 2012, NELCO has posted a total income of Rs. 123.09 crore and net loss of Rs. 12.75 crore.

6.10 Af-Taab Investment Company Limited (Af-Taab)

Af-Taab is a wholly owned investment subsidiary of your Company. During FY12, Af-Taab earned an operating income of Rs. 8.80 crore and PAT of Rs. 5.07 crore, as against Rs. 206.65 crore and Rs. 163.08 crore respectively in FY11.

6.11 Chemical Terminal Trombay Limited (CTTL)

CTTL is a wholly owned subsidiary of your Company offering bulk storage facility of liquid chemicals and petroleum products. CTTL is also in the business of supplementing services for coal handling operations and fly ash disposal management at Trombay generating station. During FY12, CTTL earned an operating income of Rs. 19.15 crore and PAT of Rs. 5.23 crore, as against Rs. 13.38 crore and PAT of Rs. 3.44 crore respectively in FY11.

6.12 Tata BP Solar India Limited (Tata BP Solar)

Tata BP Solar, a JV between your Company (49%) and BP Alternative Energy Holdings Limited (BP) (51%), is a manufacturer of solar cells and modules. On 27th December, 2011, your Company signed Share Purchase Agreement with BP to purchase its 51% equity in the company, on completion of which, your Company will have full ownership.

In FY12, its production of solar cells was 22,538 KW as against 54,482 KW in FY11 and the production of solar modules was 55,977 KW as against 75,194 KW in FY11. During the year, the turnover of the Company was better by 3% to Rs. 930.54 crore (FY11 Rs. 905.93 crore). Total solar market in FY12 grew to about 700-800 MW from 80-100 MW in the previous year. The market is currently highly competitive and fragmented among different companies.

7. Investments in Indonesian Coal Companies

Your Company through its subsidiaries Bhira Investments Limited and Khopoli Investments Limited based in Mauritius and Bhivpuri Investments Limited based in Cyprus has invested in PT Kaltim Prima Coal, PT Arutmin Indonesia, Indocoal Resources (Cayman) Limited, PT Indocoal Kaltim Resources and PT Indocoal Kalsel Resources to acquire a stake of 30% in each of these companies.

The performance of the two Indonesian thermal coal companies, continued to be robust. The production during calendar year 2011 was 65.63 MT as against 60.13 MT in 2010. Coal prices showed good recovery in calendar year 2011. Coal price realization for calendar year 2011 was US$ 93.20/tonne as compared to US$ 70.82/tonne in the previous calendar year. The high price of coal ensured that the profitability of the coal companies improved.

The total external outstanding debt in the coal SPVs stands at US$ 790 million as on 31st March, 2012. This debt was taken for the acquisition of a 30% stake in two major Indonesian coal companies viz. PT Kaltim Prima Coal and PT Arutmin Indonesia and related companies (coal companies) and for other investments out of coal companies including the newly formed JV with Exxaro in South Africa. The debt consists of US$ 450 million of hybrid issue and US$ 340 million of loan with recourse to your Company.

The equity interest in the two Indonesian coal companies provides a price hedge against coal prices to the power business, which uses imported coal, against rising coal prices, besides providing security of fuel supply through the off-take agreements.

8. Sustainability at Tata Power

Sustainability forms the core of your Company's vision - "To be the most admired Integrated Power and Energy Company delivering sustainable value to all stakeholders"

Your Company has always set a standard in adopting sustainable practices in its business and has developed its sustainability model with the intent of 'Leadership with Care'. The key elements of the sustainability model are - Care for our Environment, Care for our Customers, Care for our Employees and Care for our Community.

Some of the key initiatives for community relations carried out by your Company are as follows:

i) An Industrial Training Institute has been started at Mulshi (Maharashtra) to improve employability options for youth in the area.

ii) Skill development trainings are conducted at Maithon (Jharkhand), Trombay (Maharashtra), Naraj Marthapur (Odisha) and hydro power plant areas (Maharashtra) to enable youth to undertake self employment.

iii) Improvement of Education Programs has benefited over 19,000 students in Maithon (whole Nirsa block in Jharkhand), Tiruldih and Jawahar (Thane, Maharashtra).

iv) A rural BPO was set up in Khopoli (Maharashtra) and is currently providing employment to -400 youth.

v) Nursing courses have been conducted for 35 women in the areas adjacent to our hydro power plants and all these women have been successfully employed.

vi) Mobile medical services and specialized medical camps organized by your Company have serviced more than 23,300 patients.

vii) Over 1 million saplings have been planted in our hydro power plant areas (Maharashtra), Naraj Marthapur (Odisha), Jojobera and Maithon (Jharkhand) towards a greener environment.

viii) Tata Power Community Development Trust has played a major role in providing flood relief to the Odisha flood victims in collaboration with NGOs.

ix) Your Company's employees are active volunteers and have contributed over 6,000 hours for various social and environmental causes.

Safety and health of employees are of prime importance to your Company. Further, we have also introduced Greenolution wherein employees are encouraged to carry out green initiatives voluntarily. During the year, your Company has notched up a number of achievements in relation to Sustainability. Your Company adopted Global Reporting Initiative (GRI) guidelines for sustainability reporting and prepared its sustainability report entitled 'Responsible Growth and Beyond' for FY11 based on GRI G3 guidelines. This Sustainability Report was externally assured and accorded A Application Level Check from GRI. Your Company also submitted its response to The Carbon Disclosure Project (CDP), UK an independent not-for-profit organization holding the larqest database for investors. Your Company secured 2nd position in Indian Utilities sector with Carbon Disclosure Leadership Index (CDLI) of 71.

Care for the Environment addresses our commitment towards resource conservation, energy efficiency, carbon footprint, renewable power generation, biodiversity and green buildings. One of our major initiatives towards sensitizing the community on sustainability is the Tata Power Club Enerji (the Club), previously known as Tata Power Energy Club.

In FY12, the Club has reached out to 285 schools nationwide, sensitized over 1.5 million citizens and saved more than 2.48 MUs. The Club has a strong, sustainable and replicable model to spearhead a movement. It has developed 25,348 Energy Champions, 26,273 Energy Ambassadors and 1,029 self-sustaining mini energy clubs this year. This energy brigade is creating a self-sustaining movement on energy conservation across the nation.

The Club has been bestowed the Asian Leadership Award for 'Environmental Leadership and Best Corporate Social Responsibility Practice, 2011'. CMO Asia Awards has recognized the Club as the 'Best Marketing Campaign of the Year, 2011'at Singapore. The Club has also been recognized internationally and was bestowed the' Most Innovative Campaign' award at USA's The Energy Daily's 2010 Leadership Awards.

9. United Nations Global Compact

Your Company has been reporting data since 2006 as per the Global Compact Initiative taken up by the Secretary General of the United Nations in 2002. The Global Compact requires businesses to adhere to ten principles in the areas of human rights, labour standards, environment and anti-bribery. For the current year, the Company has submitted response to the Global Compact for its 'Communication on Progress' on various principles in its business processes.

10 Safety

In your Company, safety is considered of prime importance. Therefore, M/s, DuPont was engaged over a period of three years to bring about a cultural change in the safety processes. Significant advancements in the field of safety have been achieved in FY12 by implementing various safety measures.

An Apex Safety Committee (ASC), chaired by the Managing Director, reviews the Company's safety performance on a regular basis and guides the implementation of detailed action plans through Central Safety Committees and Site Implementation teams at all sites. Safety Management System (SMS) has been upgraded to meet the requirement of British Safety Council (BSC) 5 star SMS model. Several new safety standards and procedures were introduced to ' strengthen the SMS. Access control philosophy was introduced for controlling safety-critical jobs.

Regional Apex Safety Committees were introduced to enable greater participation of line management in safety activities. Dedicated Office Safety Committees were established to drive improvement in offices.

Several risk-based third party safety audits were conducted on electrical, fuel and fire protection systems. Electrical safety audits for customer's premises were introduced to ensure safety of major customers. Several off-the-job safety measures were implemented to enhance the safety awareness on Road safety and Home safety amongst employees' family and amongst school children in the operating vicinity.

11. Renewable and New Technology

Your Company follows various websites and forums to keep abreast of the Research and Development (R&D) updates on clean technologies. Interactions are on with faculty members from the Indian Institute of Technology (IIT), Bombay, University of Mumbai, Institute of Chemical Technology (ICT) and various other universities to stay updated on new technologies in the clean and renewable energy space. Technologies in a variety of areas like C02 absorption using algae, carbon capture reuse and storage, fuel cell (telecom tower application), gasification (biomass, coal), solar (PV, thin-film, concentrated PV and concentrated thermal), micro-turbine wind energy generation, etc. are being evaluated. During the year, your Company has continued to expand its presence in the field of renewable energy. Some key highlights are:

i) Geothermal: Your Company has invested in Geodynamics, a leading Australian company in enhanced geothermal systems with a view to bring the learning from the investment to India. Your Company has invested AU$ 50 million in the project so far. Currently, the fourth injection well is being drilled. Your Company has impaired the investment based on current estimates of value.

ii) Solar Concentrated Thermal: A consortium led by IIT, Bombay is setting up a 1 MW solar concentrated thermal power plant at the National Solar Centre in Gurgaon, outside of New Delhi. Your Company will be providing technical manpower for O&M of this power plant.

iii) Floating Solar PV: Sunengy Pvt. Limited is an Australia based start-up company that has designed a floating concentrated PV system using Fresnel lenses. Your Company is planning to test a 13.5 kW pilot unit at Walwhan Lake in Lonavala.

iv) Micro-Wind: Your Company is setting up a test bed of micro wind turbines for installation and commissioning of selected turbines. This test bed will help the company determine the most cost-effective forms of micro-wind energy. Micro turbines of capacities of 2 kW from Windtronics, 5 kW and 12 kW from We Power and 5 kW from Unitrin have been installed at this site. Another 2 kW Windtronics turbine has been installed and commissioned at Tomboy generating station. The turbines are being studied for understanding their performance in Indian conditions.

v) Biomass Gasification System: Your Company plans to set-up a power generation system utilizing biomass gasification to generate synthetic gas that is fired in a gas engine to generate power. The fuel source (biomass) will be grown in a plantation for the purpose of harvesting in a sustainable manner. The first unit will be 250 KW in capacity and will need 6 tonne/day of biomass.

vi) C02 capture using algae: Your Company is designing a pilot plant that can capture ~10 TPD of C02. This will be the first plant of its kind in India and will have the flexibility to utilize different solvents so that we can compare the latest C02 capture processes. Most of the captured C02 will be reused e.g. for carbonation, dry ice manufacturing or as an algae feed. A part of the captured C02 (1 TPD) will be fed to algae in a Photo Bio Reactor (PBR) system. The algae will be harvested and then value added materials like fish food and neutraceuticals (for human consumption) can be extracted from the algae.

vii) Microwave applications in drying of coal: There are losses in efficiency due to high moisture content in coal used in coal fired power plants. In order to reduce these losses and investigate the possibility of drying of coal using microwave, preliminary studies along with experiments were carried out. The success of the study will pave the path for establishing future capacity. This application would also be useful in the Exergen process for removing the moisture from the coal.

12. Corporate Services

12.1 Financing

Your Company has issued perpetual debentures amounting to Rs. 1,500 crore in June, 2011.The key features are that these debentures are perpetual in nature with no fixed maturity or redemption and are callable only at the option of the Company at the end of the 10th year and annually thereafter. The coupon (which may be deferred at the Company's option, subject to certain conditions being met) on the debentures is set at 11.4% p.a., with a step up of 100 bps if the debentures are not called after 10 years. These debentures rank senior only to share capital of the Company.

Your Company arranged a long term loan of Rs. 800 crore from Infrastructure Development Finance Company Limited (IDFC) for funding the capital expenditure requirements of its Mumbai Operations. This loan carries an interest rate of 1.20% p.a. spread over and above 1 year IDFC benchmark rate prevailing on date of each disbursement. Of this, the Company has availed Rs. 378 crore at an average cost of 11.20% p.a. in FY12.

TPREL tied up the debt requirement of Rs. 255 crore through a consortium of domestic lenders consisting of State Bank of India and Export-Import Bank of India, at an interest rate of 11.25% p.a. (SBI base rate plus'125 bps) with an interest reset at the end of every 12 months.

12.2 Business Excellence

i) Tata Business Excellence Model (TBEM)

This year, exercising the option given by Tata Quality Management Services (TQMS) to high scoring Tata companies, of getting assessed every alternate year, the Company did not participate in the TBEM external assessment process. Instead, the Company implemented a detailed internal assessment process across all the divisions in the Company. The internal assessment process mimicked the external assessment process, to the extent possible.

ii) Organization Transformation (OT)

Your Company continued its efforts in building leaders. As part of the structured OT exercise for officers, 'Leher', provided an opportunity to two hundred officers in the management cadre, across functions, levels and sites to consolidate their learning and effectively spread their individual transformations to others in the Company and enculturise them. The cultural shifts, include taking ownership, collaborative responsiveness, taking decisions that address the greater common good, and working on their own individual development plans. Another OT initiative, 'LASER' (Learn, Apply, Share, Enjoy, Reflect), aimed at achieving high standards of shop-floor excellence and strengthening the relationships between front- line officers and workmen has been implemented. It achieved high levels of success, in terms of relationship building, improving operational efficiencies, and improving the workplace. The programme covered all operating sites and 109 projects were taken up with 42 projects having been completed, yielding an estimated annualized saving of Rs. 1.60 crore.

iii) Structured Problem Solving (SPS)

The SPS programme launched last year in your Company has gathered momentum and over 400 officers from across sites have been trained on SPS. SPS attempts to analyse data available from the various processes, using quality tools, to arrive at solutions for continuous improvements. Of the 105 SPS projects taken up during the year, 62 projects have been completed, reporting an estimated annualised saving of Rs. 34 crore.

iv) 'Sankalp'

Sankalp, a programme to bring in operational excellence, delivery excellence and cost efficiency, using the Total Operational Management methodology has gained strength across the Company. The Sankalp programme, which takes up projects that have a major effect on the Company's profitability, has achieved a saving of Rs. 84 crore accrued during the year. The key projects taken up in Trombay include improvement of heat rates of the 500 MW Unit 5 and the 250 MW Unit 8.

v) Business Process Reengineering (BPR)

The BPR efforts in your Company were concentrated in the specific area of distribution and retail sales in view of the rapid increase in the number of customers in Mumbai. Some of the projects taken up were SAP based Customer Relationship Management (CRM) which would provide a single window for all customer related information and automate workflows for customer facing processes, SAP based Business Communication Management to enable customers to use various channels of communication like interactive voice over telephone, email, SMS and integrating it with CRM etc.

BPR has also undertaken an exercise to study the existing cost structure for generation, transmission and distribution and validate the allocation methodologies.

12.3 Regulatory matters

The business of Tata Power is governed primarily under the Electricity Act, 2003 (EA 2003) and the regulations framed by the regulatory commissions under EA 2003. Every year, each regulated business of your Company is required to file two documents with the concerned regulatory commission - an Annual Performance Review (APR) for the year gone by and Annual Revenue Requirement (ARR) for the coming year. The APR contains details of the actual performance of the business, including all relevant operational and financial details. The ARR contains the projected revenue requirement based on demand projections, fuel cost and plans for operational and capital expenditure.

Of late, regulatory commissions have issued Multi Year Tariff (MYT) regulations that propose a method to fix tariff for a period of five years, with a possibility of a mid-term review. Such MYT regime has been brought by the state regulators of Maharashtra and Jharkhand for a five year period commencing from 1st April, 2011 to 31st March, 2016. Under this regime, a projection of the business parameters have to be made for the five year period. In compliance therefore, this year the Company, in addition to the APR petition, filed documents called the Business Plan and Multi Year Tariff Petition for its Mumbai business as well as two of its units at Jojobera.

12.3.1 Mumbai Operations

i) MERC order for truing up of FY10 and FY11

MERC passed an order in February, 2012 on the Company's truing up petition for FY10 and FY11. In this order, certain expenditures for FY10 and FY11 were disapproved by MERC. An appeal has been filed against such disallowances in the Appellate Tribunal for Electricity (ATE). Recently, the Company was allowed to recover Fuel Adjustment Charge (FAC) on ad-hoc basis by MERC.

ii) Changeover of consumers to Tata Power

Your Company has successfully changed over a large number of consumers from another power distributor. It was contended by the other licensee, that such changeover is causing financial loss due to loss in cross subsidy and this loss needs to be recovered. A petition was filed in MERC, which decided that this would be considered at the time of the tariff filings of the other distributor. MERC, in its order on tariff filing of the other distributor, has determined cross subsidy surcharge for various categories of such changed over consumers. An appeal has been filed in ATE against such determination of cross subsidy surcharge in the parallel licensee scenario.

iii) Laying of network in South Mumbai Area

MERC, in its order in February 2010, had directed your Company to lay distribution network in South Mumbai area for supplying electricity to the consumers. Brihan Mumbai Electricity Supply and Transport Undertaking (BEST), which also has a distribution license in this area, had challenged this Order in ATE under the contention that the Company is not allowed to lay distribution network in South Mumbai as BEST, a local authority already has a network in South Mumbai. In February 2011, ATE dismissed the appeal of BEST and confirmed the order of MERC. BEST then appealed the matter in the Hon'ble Supreme Court and obtained a stay on the judgment of ATE in March 2011. The Hon'ble Supreme Court in October 2011 remanded the matter back to ATE for hearing on merits. ATE, after hearing the case on merits, has passed a judgment in April 2012, dismissed the appeal and upheld the MERC order. The appeal has been admitted on 10th May, 2012. Pending disposal of the appeal, status quo as of that date shall be maintained by the parties.

iv) Approval of PPA between Generation and Distribution businesses of Tata Power

The Generation and Distribution businesses of your Company entered into a PPA for contracting 458 MW power from various units of its generation business with distribution business to meet the rising demand due to change over consumers. The PPA was submitted to MERC for approval under Regulation 25.1 of the MERC (MYT) Regulations, 2011. MERC, in its order in October 2011, approved the above PPA at regulated tariffs.

12.3.2 Eastern Region Operations

i) JSERC Tariff Order of FY12 for Jojobera Unit 2 and Unit 3

The Jharkhand State Electricity Regulation Commission (JSERC) has issued tariff order of Jojobera Unit 2 and Unit 3 for FY12 in August 2011. In its first tariff order for Jojobera Unit 2 and Unit 3 under Generation Tariff Regulations 2010, JSERC has disapproved certain revenue proposed by the Company. An appeal has been filed with ATE against such disallowances and the judgment of ATE on the matter is expected soon.

ii) MYT Business Plan and Petition of Jojobera Unit 2 and Unit 3

Your Company has filed MYT Business Plan and Petition for Jojobera Unit 2 and Unit 3 for the control period (FY13-FY16) to the JSERC and the tariff order of the same is expected soon.

iii) CERC Tariff Order for Maithon Power Project

CERC, after considering Petition No. 274/2010 along with Interlocutory Application Nos. 11/2011 and 14/2011, has passed the tariff order in November 2011 for sale of 150 MW from 525 MW Unit 1 to DVC for FY12. Unit .1 of MPL has been commissioned in September 2011.

12.4 Legal matters

12.4.1 Standby Charges

On an appeal filed by your Company, the Supreme Court has stayed the operation of the ATE order, subject to the condition that the Company deposits an amount of Rs. 227 crore and submits a bank guarantee for an equal amount. Your Company has complied with both the conditions. RInfra has also subsequently filed an appeal before the Supreme Court challenging the ATE order. Both the appeals have been admitted and are listed for hearing and final disposal.

12.4.2 Energy Charges and 'Take or Pay' Obligation

MERC directed RInfra to pay Rs. 323.87 crore to your Company towards the difference between the rate of Rs. 1.77 per kWh paid and Rs. 2.09 per kWh payable for the energy drawn at 220 kV interconnection and towards its 'Take or Pay' obligation for the years 1998 - 1999 and 1999 - 2000. On an appeal filed by RInfra, the ATE upheld the Company's contention with regard to payment for energy charges but reduced the rate of interest. As per the ATE order, the amount payable works out to Rs. 34.98 crore (excluding interest), as on 31st May, 2008. As regards the 'Take or Pay' obligation, the ATE has ordered that the issue should be examined afresh by MERC after the decision of the Supreme Court in the appeals relating to the distribution licence and rebates given by RInfra. The Company and RInfra filed appeals in the Supreme Court. Both the appeals have been admitted and are listed for hearing and final disposal. The Supreme Court, vide its order dated 14th December, 2009, has granted stay against the ATE order and has directed RInfra to deposit with the Supreme Court a sum of Rs. 25 crore and furnish a bank guarantee for the balance amount. Pursuant to the liberty granted by the Supreme Court, the Company has withdrawn the above mentioned sum subject to an undertaking to refund the amount with interest, in the event the appeal is decided against the Company.

13. Foreign Exchange Earnings/Outgo

The foreign exchange earnings of your Company during the year under review amounted to Rs. 631.78 crore (previous year Rs. 117.76 crore), mainly on account of forex interest, etc. The foreign exchange outflow during the year was Rs. 2,448.55 crore (previous year Rs. 1,241.25 crore), mainly on account of fuel purchase of Rs. 2,071.89 crore (previous year Rs. 1,016.83 crore), repayment of foreign currency loans with interest thereon, NRI dividends and Foreign Currency Convertible Bonds (FCCB) interest of Rs. 72.73 crore (previous year Rs. 58.43 crore) and purchase of capital equipment, components and spares and other miscellaneous expenses of Rs. 309.49 crore (previous year Rs. 173.85 crore).

14. Disclosure of Particulars

Particulars required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the prescribed format as Annexure I to the Directors' Report.

Particulars of Employees: In terms of the provisions of Section 217 (2A) of the Companies Act, 1956 (the Act), read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out in. the Annexure to the Directors' Report. However, having regard to the provisions of Section 219 (1)(b)(iv) of the Act, the Annual Report is being sent to all Members of the Company excluding the aforesaid information. Any Member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of your Company.

15. Sub-division of equity shares

At the last Annual General Meeting of the Company, the Members approved sub-division of the Company's equity shares having a face value of Rs. 10/- each into equity shares having a face value of Rs. 1/- each. Accordingly, 24,29,47,084 issued equity shares of the Company, having face value of Rs.10/- each were sub-divided into Rs. 2,42,94,70,840 equity shares having face value of Rs. 1/- each. 27th September, 2011 was fixed as the Record Date for the purpose of the said sub-division. Corporate action to credit the demat accounts of Members was taken on 28th September, 2011. Those who held their shares in physical form, and did not opt to receive their holdings in electronic form, were mailed the share certificate representing their holdings by 10th October, 2011.

16. Subsidiaries

Vide General Circular No: 2 / 2011 dated 8th February, 2011, the Ministry of Corporate Affairs, Government of India, has granted a general exemption to companies from attaching the Balance Sheet, Profit and Loss Account and other documents referred to in Section 212 (1) of the Act in respect of its subsidiary companies, subject to fulfilment of the conditions mentioned therein. Accordingly, the said documents are not being attached with the Balance Sheet of the Company. A gist of the financial performance of the subsidiary companies is contained in the report. The Annual Accounts of the subsidiary companies are open for inspection by any Member/Investor and the Company will make available these documents/details upon request by any Member of the Company or to any investor of its subsidiary companies who may be interested in obtaining the same. Further, the Annual Accounts of the subsidiary companies will be kept open for inspection by any investor at the Company's Head Office and that of the subsidiary company concerned and would be posted on the website of the Company.

17. Directors

Mr Banmali Agrawala, Executive Director, resigned from the services of the Company with effect from close of business hours on 30th November, 2011. The Board has placed on record its appreciation of the valuable contribution made to your Company by Mr Agrawala.

Mr Cyrus P Mistry was appointed as an Additional Director with effect from 23rd December, 2011, in accordance with Article 132 of the Articles of Association of the Company and Section 260 of the Act. Mr Mistry holds office only up to the date of the forthcoming Annual General Meeting (AGM) and a Notice under Section 257 of the Act has been received from a Member signifying his intention to propose Mr Mistry's appointment as a Director.

Dr R H Patil, Director, resigned from the Board with effect from 20th March, 2012. The Board has placed on record its appreciation of the valuable contribution made to your Company by Dr Patil. Dr Patil expired on 12th April, 2012.

In accordance with the requirements of the Act and the Articles of Association of the Company, Mr R N Tata, Dr H S Vachha and Mr A K Basu retire by rotation and are eligible for re-appointment.

18. Auditors

M/s. Deloitte Haskins & Sells (DHS), who are the statutory auditors of the Company, hold office until the conclusion of the ensuing AGM. It is proposed to re-appoint DHS to examine and audit the accounts of the Company for FY13. DHS has, under Section 224 (1) of the Act, furnished a certificate of its eligibility for re-appointment. The Members will be requested, as usual, to appoint Auditors and to authorize the Board of Directors to fix their remuneration. In this connection, the attention of the members is invited to Item No. 6 of the Notice.

Members will also be requested to pass a resolution (vide Item No. 8 of the Notice) authorizing the Board of Directors to appoint Auditors/ Branch Auditors/ Accountants for the purpose of auditing the accounts maintained at the Branch Offices of the Company, in India and abroad.

In accordance with the requirement of the Central Government and pursuant to Section 233B of the Act, the Company carries out an audit of cost accounts relating to electricity every year.

19. Auditors' Report

The Notes forming part of the Accounts referred to in Auditors' Report of the Company are self-explanatory and, therefore, do not call for any further explanation under Section 217 (3) of the Act.

The consolidated financial statements of the Company have been prepared in accordance with Accounting Standard 21 on Consolidated Financial Statements, Accounting Standard 23 on Accounting of Investments in Associates and Accounting Standard 27 on Financial Reporting of Interest in Joint Ventures, issued by the Council of The Institute of Chartered Accountants of India.

20. Corporate Governance

To comply with conditions of Corporate Governance, pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a Management Discussion and Analysis Statement, Report on Corporate Governance and Auditors' Certificate, are included in the Annual Report.

21. Directors' Responsibility Statement

Pursuant to Section 217 (2AA) of the Act, the Directors, based on the representations received from the operating management, confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures there from;

ii) They have, in the selection of the accounting policies, consulted the Statutory Auditors and have 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) They have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) They have prepared the annual accounts on a going concern basis.

22. Acknowledgements

On behalf of the Directors of the Company, I would like to place on record our deep appreciation to our Shareholders, Customers, Business Partners, Vendors, both international and domestic, Bankers, Financial Institutions and Academic Institutions.

The Directors are thankful to the Government of India and the various Ministries, the state Governments and the various Ministries, the Central and State Electricity Regulatory authorities, Corporation and Municipal authorities of Mumbai and other cities where we are operational.

Finally, we appreciate and value the contributions made by all our employees and their families for making Tata Power what it is.

On behalf of the Board of Directors,

R N Tata

Chairman

Mumbai, 22nd May, 2012


Mar 31, 2011

To The Members,

The Directors are pleased to present their Ninety-Second Annual Report on the business and operations of the Company and the statements of account for the year ended 31st March, 2011.

1. FINANCIAL RESULTS

Figures in Rs. crores

Standalone Consolidated FY11 FY10 FY11 FY10

(a) Net Sales / Income from Other Operations. 6,918.48 7,098.27 19,450.76 18,985.84

(b) Operating Expenditure 5,327.55 5,219.66 14,854.36 15,132.64

(c ) Operating Profit 1,590.93 1,878.61 4,596.40 3,853.20

(d) Add: Other Income (including net gain on exchange). 493.58 281.58 410.50 588.88

(e) Less: Interest and Finance Charges 462.02 422.99 868.37 781.82

(f) Profit before Depreciation and Tax. 1,622.49 1,737.20 4,138.53 3,660.26

(g) Less: Depreciation / Amortisation / Impairment. 510.14 477.94 981.06 892.96

(h) Profit before Tax 1,112.35 1,259.26 3,157.47 2,767.30

(i) Less: Provision for Taxes (including provision for Deferred Tax and Fringe Benefit Tax) 170.86 320.50 975.56 628.66

(j) Net Profit after Tax. 941.49 938.76 2,181.91 2,138.64

(k) Less: Minority Interest. - - 196.50 233.46

(l) Add: Share of Profit of Associates. - - 74.19 61.66

(m) Net Profit after Tax, Minority Interest and Share of Profit of Associates 941.49 938.76 2,059.60 1,966.84

(n) Less: Statutory Appropriations. (28.52) (8.89) (28.52) (8.89)

(o) Distributable Profits 970.01 947.65 2,088.12 1,975.73

(p) Add: Balance brought forward from the previous year. 2,417.75 2,253.21 3,640.56 2,476.54

(q) Add: Reserves acquired during the year. - - - (1.90)

(r) Balance 3,387.76 3,200.86 5,728.68 4,450.37 which the Directors have appropriated as under to:

(i) Proposed Dividend. 296.92 285.05 296.92 285.05

(ii) Dividend (in respect of previous year) - 0.31 - 0.31

(iii) Additional Income- tax on Dividend 16.27 37.98 42.53 49.05

(iv) Debenture Redemption Reserve. 24.92 59.77 24.92 59.77

(v) General Reserve 400.00 400.00 430.85 410.61

(vi) Special Reserve Fund - - 32.62 3.02

(vii) Self Insurance Reserve - - - 2.00

(viii) Capital Redemption Reserve - - 1.01 -

TOTAL. 738.11 783.11 828.85 809.81

(s) Leaving a balance of. 2,649.65 2,417.75 4,899.83 3,640.56 to be carried forward

2. FINANCIAL HIGHLIGHTS

2.1 Standalone results

During the year, the Company reported a Profit After Tax (PAT) of Rs. 941.49 crores, as against Rs. 938.76 crores for the previous year. The Operating Revenue was lower at Rs. 6,918.48 crores, as against Rs. 7,098.27 crores, a decline of 3%. Operating Revenue was lower mainly on account of lower fuel cost. The Operating Profit was lower by 15% mainly due to lower generation and lower merchant tariffs in the year, as also due to one-time impact of an order of the Appellate Tribunal for Electricity (ATE) in the previous year.

Other Income was higher at Rs. 493.58 crores, as against Rs. 281.58 crores in the previous year, a growth of 75%. This was mainly due to higher dividend income from the investments made by the Company.

Earnings per share (basic) was at Rs. 40.84, as against Rs. 40.77 in the previous year.

2.2 Consolidated results

The Consolidated Operating Revenue at Rs. 19,450.76 crores grew by 2% and PAT at Rs. 2,059.60 crores grew by 5%, as against Rs. 18,985.84 crores and Rs. 1,966.84 crores respectively, for the previous year. The increase in the Consolidated Operating Revenue was primarily on account of the higher coal price realization in Indonesian Coal Companies. The Consolidated PAT is higher mainly on account of higher profits in the Indonesian Coal Companies as compared to the previous year. The Consolidated PAT growth would have been higher, but for foreign exchange gain of Rs. 358.13 crores in FY10 in Coastal Gujarat Power Limited as compared to Rs. 122.86 crores in FY11.

3. DIVIDEND

The Directors of your Company are pleased to recommend a higher dividend of 125% (Rs. 12.50 per share) for the approval of the shareholders (FY10 dividend of Rs. 12 per share).

4 EXISTING BUSINESSES

As of 31st March, 2011, the Company had an installed generation capacity of 2,887 MW based on various fuel sources: thermal (coal, gas, oil), hydroelectric power, renewable energy (wind and solar photovoltaic) and waste heat recovery. The details of the installed capacity are given in Table 1.

Table 1: Details of installed capacity

Installed Category Total Fuel Source Location State Capacity MW MW

Thermal - Coal / Oil / Gas Trombay Maharashtra 1,580

Jojobera Jharkhand 428 2,089

Belgaum Karnataka 81

Thermal - Waste Heat Recovery Haldia West Bengal 120 120

Hydro Bhira Maharashtra 300

Bhivpuri Maharashtra 75 447

Khopoli Maharashtra 72

Renewables Wind farms Maharashtra Gujarat 228 231 Karnataka

Solar Photovoltaic (PV) Maharashtra 3

Total 2,887 2,887

Thus, the Company has achieved 27.6% of MW capacity through non-Green House Gas (GHG) based generating sources. The Company also has businesses of Transmission, Power Distribution cum Retail in Mumbai, and other value added businesses. Table 2: Details of other businesses

Business Key details

Transmission (Mumbai)

Over 1,080 circuit kms. of transmission lines, connecting generating stations in Mumbai operations to 17 receiving stations in Mumbai.

Distribution (Mumbai)

Over 1,900 circuit kms. of distribution lines.

Retail (Mumbai)

Over 1,60,000 customers with sales of over 4,300 MUs in FY11.

Strategic Electronics

One of the leading suppliers of defence equipment and solutions amongst Indian Private Sector.

Power Services

One of the leading service providers for Project Management, Operations and Maintenance (O&M) and specialized services in the power sector.

4.1 Operational Highlights

The Company registered sales of 16,060 Million Units (MUs) of power in FY11, as against 15,574 MUs in FY10, a growth of 3%. The Company, however, generated 15,325 MUs of power from all its power plants during the year as compared to 15,946 MUs in the previous year, a decrease of 4%. Owing to high oil cost, the Company purchased competitive energy and met the growth needs.

4.2 TATA POWER - MUMBAI OPERATIONS

4.2.1 Generation

The Company's power generation units in the Mumbai Operations Area are at Trombay, Bhira, Bhivpuri, Khopoli, Mulshi as also wind assets at various locations in Maharashtra.

Trombay Thermal Power Station

The Trombay Thermal Power Station has an installed capacity of 1,580 MW, of which primarily 750 MW is coal fired, 650 MW uses oil and gas and the balance 180 MW uses gas as a fuel. However, Unit 5 also has multi-fuel firing capability.

During the year, the station recorded a generation of 9,530 MUs (previous best of 10,168 MUs in FY10) with an all time high coal firing of 2.69 Million Tonnes (MT). The operational performance of the units is given in Table 3.

Table 3: Details of thermal power generation - Trombay

Generation (MUs) Generation Availability (%) Plant Load Factor (PLF) (%)

FY11 FY10 FY11 FY10 FY11 FY10

[Trombay 9,530 10,168 93 87 69 74

While the availability was maintained at higher levels as compared to the past year, the PLF was lower mainly on account of increased purchases of power to offset oil-based generation, in order to deliver lower tariffs for consumers. The Company is also pursuing sourcing of Administered Price Mechanism (APM) gas with the Ministry of Power (MoP) to replace oil-based generation on Unit 6 as well as to operate Unit 4, which is currently on standby due to stringent environmental norms, and thus improve the utilisation of existing assets in Mumbai.

During the year, the Company successfully completed the overhaul of Unit 6, during which the Unit underwent critical component upgradation.

Hydroelectric Power Stations - Bhira, Bhivpuri and Khopoli

The Company has three hydroelectric power generating stations, totalling 447 MW, located in the Raigad district of Maharashtra.

During the year, the three hydroelectric power plants collectively generated 1,310 MUs, as against 1,455 MUs generated in the previous year. This reduction in generation was primarily on account of lower inflow in Bhivpuri and Khopoli lakes due to lean monsoon, resulting in lower lake levels. This has led to a lower PLF as compared to the previous year. The Company has sustained the generation availability of about 97% even with outages taken for the refurbishment of old units at Bhivpuri, major repairs to Bhira Pump Storage Unit guide vane servomotor and Bhivpuri new units' spherical valve seals.

Table 4: Details of hydroelectric power generation

Generation (MUs) Generation Availability (%) PLF (%)

FY11 FY10 FY11 FY10 FY11 FY10

Bhira 318 349 99 99 24 27

Bhira Pump Storage Unit 557 542 98 99 42 41

Bhivpuri 199 305 90 97 30 46

Khopoli 236 259 99 98 37 41

Total 1,310 1,455 97 99 33 37

- Mulshi Solar PV plant

The Company has commissioned a 3 MW grid connected solar PV plant, one of the largest of its kind in Maharashtra, on 31st March, 2011.

- Wind generation assets in Mumbai Operations

The Company has generation assets at Supa, Bramanvel, Khandke, Sadawaghapur, and Visapur that supply wind power to its Mumbai Distribution business. During the year, the Company commissioned an additional 6 MW of wind power capacity in Maharashtra, taking the total installed wind power capacity in Mumbai Operations to 106 MW.

Table 5: Details of installed wind power capacity in Mumbai Operations

Location State Installed Capacity (MW)

Supa Maharashtra 17

Bramanvel Maharashtra 11

Khandke Maharashtra 50

Sadawaghapur Maharashtra 18

Visapur Maharashtra 10

Total 106

During the year, the Company's wind farms in Mumbai Operations generated 168 MUs, as against 166 MUs in the previous year.

Table 6: Details of wind power generation in Mumbai Operations

Generation (MUs) Generation Availability (%) PLF (%)

FY11 FY10 FY11 FY10 FY11 FY10

Supa 23 27 94 98 15 18

Khandke 96 95 99 99 22 22

Bramanvel 16 19 98 96 16 19

Sadawaghapur 25 24 97 97 17 18

Visapur 8 1 99 93 21 6

Total 168 166 97 97 18 18

4.2.2 Transmission

The Company has about 1,082 circuit kms. of transmission network in Mumbai Operations area, comprising 971 circuit kms. of 220 kV / 110 kV overhead lines and 111 circuit kms. of 220 kV / 110 kV underground cables, which connects Trombay and the hydro generating stations to 17 receiving stations spread across the Mumbai Operations area. The transmission lines are used by Tata Power Distribution business, Brihanmumbai Electric Supply and Transport Undertaking (BEST) and Reliance Infrastructure Limited (RInfra). The major highlights for the year were as below:

- During the year, the Company added 35.3 circuit kms. of network and upgraded existing network and systems at several locations.

- 145 kV Gas Insulated Switchgear (GIS) has been commissioned at Backbay for meeting projected growth in BEST area.

- A state-of-the-art SCADA system was commissioned at Dharavi, Parel, Malad and Versova with new Remote Terminal Units.

- Under 'Jan Jagruti Abhiyaan' initiative - an awareness campaign for community safety and overhead line fault reduction - awareness programs for school children were held in Borivali and Kalyan section, covering 2,150 students from 5 schools.

During the year, transmission grid availability was 98.71% (previous year 98.86%), as against the Maharashtra Electricity Regulatory Commission (MERC) norm of 98%.

4.2.3 Distribution

The Company's distribution business in Mumbai has achieved significant growth during the year. The major highlights for the year were as below:

- System availability was maintained at a very high level, with an Average System Availability Index (ASAI) of 99.988% in FY11, as against 99.986% in FY10. This was accompanied by a reduction in the number of technical complaints per 1,000 customers from 13.34 to 11.

- To meet the increase in growth, 3 distribution substations and 65 consumer substations (80 MVA capacity) were commissioned. 152.27 circuit kms. of HT cable network and 97 circuit kms. of LT cable network were added to take the total network length to more than 1,900 circuit kms. (including LT).

4.2.4 Retail

The Company's retail business in Mumbai grew significantly, with retail sales increase of 58% to 4,393 MUs during FY11 from 2,782 MUs in the previous year. The major highlights for the year were as below:

- The Company acquired 98,590 changeover customers (Industrial - 2,396, Commercial - 14,354, Residential - 81,840) and 4,093 direct customers. The total customer base as on 31st March, 2011 was 1,61,183 (34,323 direct customers and 1,26,860 changeover customers).

- Customer satisfaction indexfor direct customers improved to 85 as compared to 84.5 last year. For changeover customers, the index was 80.

- A state-of-the-art meter testing lab was commissioned at Dharavi.The lab is equipped with 4fully automatic energy meter test benches by which 500 meters can be tested in an 8 hour shift, thus significantly increasing the Company's testing capacity.

- A number of services / customer convenience facilities were introduced:

- Master customer care center and 8 bill collection centers were opened.

- A new modern call center was made operational since 2nd July, 2010 for commercial calls. The existing center continues to handle technical calls.

- The customer information portal was revamped with many new customer friendly features like bill calculator, demand side management (DSM) web page, etc.

- Mobile collection van was launched for facilitating cash payments by customers.

- Credit and debit card online payment facility was launched.

4.3 Other power plants of Tata Power

4.3.1 Jojobera Thermal Power Station

The Jojobera Thermal Power Station in Jharkhand has an installed capacity of 428 MW. During the year, the station recorded a generation of 3,078 MUs, which is also the highest ever, as compared to 3,002 MUs in the previous year. The station also achieved highest ever plant availability of 97% during the year. Unit 4 underwent complete turbine overhaul for the first time since commissioning, resulting in improvement in the heat rate of the Unit due to significant improvement in vacuum.

4.3.2 Belgaum Thermal Power Station

The Belgaum Thermal Power Station, an Independent Power Producer in Karnataka, has a heavy fuel oil-based generation capacity of 81 MW. During the year, the plant generated 300 MUs as compared to 394 MUs in the previous year, a decrease of about 24% due to lower demand by Karnataka Power Transmission Corporation Limited during the rainy season and major outages of Units 2, 4 and 5. Demand for the current year was affected due to a better monsoon than the past year, since demand for oil-based generation is primarily for peaking purposes.

4.3.3 Haldia Power Plant

Haldia Power Plant in West Bengal has an installed capacity of 120 MW consisting of 3 Turbine Generator (TG) sets (2 of 45 MW and 1 of 30 MW) and 16 waste heat recovery boilers. This is a green power plant based on waste heat recovery from flue gas

from coke ovens of Tata Steel Limited (Tata Steel). One sixth of the power generated is sold to West Bengal State Electricity Distribution Company Limited and the balance is traded through Tata Power Trading Company Limited (Tata Power Trading). During the year, the collective generation of all units was 760 MUs. The Company completed Unit 1 TG overhauling and annual overhauling (statutory obligations) of all 16 boilers.

During the year, Haldia division undertook several improvement initiatives for improving plant availability and PLF like upgradation of DM plant capacity, flue gas temperature improvement, reduction of unplanned outages and reducing grid failures by implementation of carrier protection and proper relay coordination, etc.

Table 7: Details of thermal power generation outside Mumbai Operations

Generation (MUs) Generation Availability (%) PLF (%)

FY11 FY10 FY11 FY10 FY11 FY10

Jojobera 3,078 3,002 97 93 82 80

Belgaum 300 394 82 79 42 55

Haldia 760 608 92 89 78 70

4.4 Wind Generation outside Mumbai Operations

During the year, the Company acquired a 21 MW wind farm, taking the total installed capacity outside Mumbai operations to 122 MW. The installed capacity for wind power generation at various locations outside Mumbai Operations is given in Table 8.

Table 8: Details of installed wind power capacity outside Mumbai Operations

Location State Installed Capacity (MW)

Samana Gujarat 50

Gadag Karnataka 50

Nivede Maharashtra 21

Total* 122

* Total does not add up due to rounding off.

The collective generation by the wind farms outside Mumbai Operations was 179 MUs during the year as against 154 MUs in the previous year.

Table 9: Details of wind power generation outside Mumbai Operations

Generation (MUs) Generation Availability (%) PLF (%)

FY11 FY10 FY11 FY10 FY11 FY10

Samana 78 79 99 99 18 18

Gadag 80 75 100 99 18 17

Nivede* 22 - 96 - 12 -

Total** 179 154 98 99 17 17

* Acquired in FY11.

** Total does not add up due to rounding off.

4.5 Value Added Businesses

4.5.1 Tata Power Strategic Electronics Division (SED)

SED has been a leading domestic player in the defence systems and engineering space for over four decades and has now emerged as a prime contractor to Ministry of Defence (MoD) for indigenous defence products and systems. During the year, SED has reinforced its position as India's premier private sector defence company in its role as a prime systems integrator with the capability of leading alliances of internationally reputed defence companies, in addition to being recognised as one of the leading suppliers of defence equipment in India.

During FY11, SED had a turnover of Rs. 140.68 crores as against Rs. 122.48 crores in FY10, a growth of 14%. SED ended the year with an order backlog in excess of Rs.1,500 crores. During the year, SED scored a number of achievements. Notable among them are:

- SED was awarded a contract on Modernisation of Airfield Infrastructure - Phase I from the MoD to modernise thirty Indian Air Force Airfields. SED is the first private Indian company to win a prime contract against global competition under a tender categorised as 'Buy Global' under Defence Procurement Procedure 2008.

- Indian Army declared its Pinaka regiment comprising 20 launchers and 8 command posts developed and supplied by SED, as fully operational, after having exercised it tactically and technically in desert terrain in Rajasthan. This is a testimony to the engineering and technical skills of SED as the first private sector company in India to have designed, developed and delivered a weapon system.

- SED successfully delivered the first lot comprising four launchers of Akash Air Force launcher programme to Bharat Electronics Limited.

- SED has received an Expression of Interest (Eol) for Tactical Communication System programme of Indian Army of over USD 1 billion from MoD.

To support MoD's agenda of achieving self-reliance for Indian Defence, SED has made substantial investments through advanced development programmes to realise world-class indigenous products and systems, which enables SED to address future programmes of national importance. With increased private sector participation in defence, SED has the necessary credibility and capability to be a long term reliable partner for India's defence forces.

4.5.2 Power Services Business

The Power Services business is a new division created in FY09 within the Company with a view to leverage the Company's capability and experience in power plant O&M, project management, specialized testing services and related activities. It offers customized solutions to new as well as existing power plants and distribution networks. During the year, the Power Services division has bagged contracts as below:

- O&M Service

- 2 x 525 MW coal fired thermal power plant at Maithon, Jharkhand of Maithon Power Limited.

- 120 MW coal fired thermal power plant at Jojobera, Jharkhand of Industrial Energy Limited.

- 108 MW combined cycle power plant at Rithala, Delhi of North Delhi Power Limited.

- 70 MW coal fired thermal power plant at Korba, Chhattisgarh.

- Specialised Services

- GIS testing services were delivered to a major manufacturer for HV testing of 220 kV GIS at Kalwa, Thane.

- GIS and field testing services were delivered to large executing agencies for their 220 kV GIS at their Bhandup site, Mumbai.

- GIS testing was undertaken for a large EPC contractor relating to the 110 kV GIS at projects in southern India. During FY11, the Power Services Business had a turnover of Rs. 45.45 crores as against Rs. 30.05 crores in FY10, a growth of 50%.

5. NEW GENERATION PROJECTS

5.1 Projects Under Construction

Table 10: Details of projects under construction

Fuel Source Location State Capacity (MW) Category Total (MW)

Mundra Gujarat 4,000 Thermal - Coal / Oil / Gas Maithon Jharkhand 1,050 5,090

Lodhivali Maharashtra 40

Hydro Dagachhu Bhutan 114 114

Renewables Wind farms Maharashtra 150 Tamil Nadu

185 Solar PV Gujarat 35 Maharashtra

Total 5,389 5,389

5.1.1 Coastal Gujarat Power Limited (CGPL)

CGPL, the Company's wholly-owned subsidiary, is implementing the 4,000 MW (800 x 5 units) Ultra Mega Power Project (UMPP) at Mundra in Gujarat. The project, estimated to cost Rs. 17,500 crores, is progressing as per schedule, with engineering, procurement and construction activities in full swing. The cumulative progress till the end of March 2011 was approximately 77% with total capital commitments of 100% of total equipment ordering and a total actual expenditure of Rs. 13,166 crores. Civil, structural, mechanical, electrical and control and instrumentation work is underway with over 11,500 direct and indirect workmen deployed at the site.

Unit 1 boiler was lit up on 22nd March, 2011, and steam blowing is nearing completion. The first unit is expected to be synchronized with the grid in the second quarter of FY12. CGPL has been informed that there is a delay in commissioning of the transmission lines by Power Grid Corporation of India Limited (PGCIL), who are responsible for providing evacuation facilities on behalf of the procurers. However, both PGCIL and other Government agencies involved are making efforts to minimize the delay. The construction and commissioning of balance four units is progressing satisfactorily. The jetties for unloading coal, by Mundra Port and Special Economic Zone Limited, were commissioned in December 2010 and three coal consignments totalling 0.25 MT of coal have already been unloaded in CGPL's stockyard till date. As a part of ongoing efforts, adequate safety systems have been put in place including training and systems developed with the help of leading safety experts like DuPont. Outreach programs are organized with the help of an NGO to build bonds with and sensitize the supervisors, workers and safety stewards.

CRISIL has revised its outlook on the long term loan to 'Positive' from 'Stable', while reaffirming the rating at 'A '. The outlook revision reflects the significant progress made on the project.

CGPL has taken several initiatives for the local community in the area of livelihood and income generation, education and health as part of its community relationship programme involving local communities. A green belt development plan is under implementation to enhance environment improvement in the project area.

CGPL has a subsidiary in Singapore - Energy Eastern Pte. Limited (EEPL) for meeting its fuel logistics.

5.1.2 Maithon Joint Venture Project

Maithon Power Limited (MPL), a joint venture (JV) between the Company (74%) and Damodar Valley Corporation (26%), is constructing a 1,050 MW (2 x 525 MW) power plant at Maithon in Jharkhand. The Company is rendering project management and O&M services to MPL.

Unit 1 has been successfully synchronized with secondary fuel oil on 28th March, 2011. Unit 1 coal firing and Commercial Operation Declaration (COD) is expected before end of H1 FY12. Commissioning of water system, including RW pumps, CW pumps, IDCT 1, etc. is completed and DM plant operation has been put on automation. Stacker reclaimer has been commissioned and coal bunkering for Unit 1 has commenced too. All the balance work pertaining to coal handling and ash handling systems, required for Unit 1 commissioning, is scheduled to be completed before end of H1 FY12.

In Unit 2, the stator was lifted on 31st January, 2011. Turbine erection commenced on 25th March, 2011. Erection work of the boiler is progressing well and boiler light up is expected to be completed by H2 FY12. The unit commissioning is expected to be completed before end of H2 FY12. As of 31st March, 2011, the Company has infused equity of Rs.1,162.92 crores in MPL. The debt drawn by MPL is Rs. 2,420.25 crores.

5.1.3 Diesel Generation (DG) Capacity

The Company has refurbished and converted for dual fuel (natural gas oil) operation the 4 DG sets to be commissioned at Lodhivali. The plant is scheduled to commence commercial operation post receipt of gas from GAIL (India) Limited in H1 FY12.

5.1.4 Dagachhu Hydroelectric Power Project, Bhutan

The 114 MW (2 x 57 MW) Dagachhu project is being implemented by Dagachhu Hydro Power Corporation Limited (a JV of the Company [26%] with Druk Green Power Corporation Limited [59%] and National Pension and Provident Fund of Bhutan [15%]) in Bhutan. Diversion of Dagachhu river for weir construction has been completed and weir foundation is ready for concreting. Concreting of the desilter is in progress. Work for head race tunnel, power house access tunnel, etc. is in progress. Cumulatively, 3.12 kms. of tunnelling has been completed. Manufacturing activities pertaining to bifurcator, distributor, power house crane, switchgear, generator, etc. are in progress and generator frames have already been dispatched to the project site. The project is expected to be commissioned in FY14.

5.1.5 Renewable Projects

- Wind Power

The Company is developing wind power projects of over 200 MW, of which 150 MW is proposed to be commissioned during FY12 across Maharashtra (50 MW) and Tamil Nadu (100 MW).

- Solar Power

The Company is developing a 25 MW solar PV plant at Mithapur in Gujarat through its subsidiary, Industrial Power Infrastructure Limited (IPIL). IPIL has signed a Power Purchase Agreement (PPA) with Gujarat Urja Vikas Nigam Limited for the same. The purchase orders have been placed for the development of solar fields and the project activities have commenced. The Company is also developing a solar PV plant of 10 MW between Mulshi on its own land and on the identified roofs of the plant premises of Tata Motors Limited at Pune.

5.2 Projects Under Planning - India

5.2.1 Coastal Maharashtra Project

During the year, the Company has made further progress in the Coastal Maharashtra project at Dehrand, Maharashtra. All statutory clearances for commencement of initial phase of 1,600 MW are in place. Agreement for fresh water allocation for the project has been signed with the Maharashtra Industrial Development Corporation (MIDC).

Subsequent to the issue of Gazette notification by Government of Maharashtra (GoM) u/s 32(1) of the Maharashtra Industrial Development Act, 1961 (MID Act), a high powered committee of GoM approved the land compensation payable to land owners. Actual compensation disbursement to land owners commenced on 3rd August, 2010, by District Collector as per provision under MID Act. MIDC has so far acquired more than 50% of private land. Acquisition of balance land is in progress.

Socio-economic survey of project affected persons in respective villages has been completed. Economic options for coal logistics are under evaluation.

5.2.2 Tiruldih Power Project, Jharkhand

The process of land acquisition for the 1,980 MW project is in progress and the first tranche of 101 acres of land has been transferred in the name of the Company on 28th March, 2011. The entire land acquisition process is scheduled to be completed by March 2012. The Company is in discussions with the Government of Jharkhand (GoJ) for a Memorandum of Understanding (MoU) for allocation of water, various land related permissions, right of way for transmission lines / water pipelines, coal allocation from Jharkhand State Mineral Development Corporation Limited in exchange for sale of power (25% capacity) from the proposed plant, etc. Application for water allocation of 62 cusecs for the project has been made to the water resource department, GoJ. It is anticipated that the allocation of water will be from Chandil reservoir which is about 25 kms. away from site. In-principle clearance has been received from Railways for transportation of coal from Tubed coal block. On Environmental Clearance (EC), Terms of Reference (ToR) have been approved by Ministry of Environment and Forests (MoEF). Environmental monitoring has been completed and Environmental Impact Assessment (EIA) report is under finalization. Discussions have been initiated with Tata Steel for developing the captive unit and entering into a MoU for the same. The Company expects to issue Notice To Proceed (NTP) for the project around Q4 FY12 (Zero date being considered in Q1 FY13).

5.2.3 Kalinganagar, Orissa 652.5 MW [3 x 67.5 MW (Gas based) 3 x 150 MW (Coal and gas based)]

The project is being executed through Industrial Energy Limited, a JV of the Company (74%) with Tata Steel (26%). Tata Steel has commenced project related works for its 3 MTPA steel plant and has requested the Company to initiate the enabling works related to power plant. RITES, a Government of India (GoI) enterprise, has been appointed as the consultant for preparation of combined Detailed Project Report (DPR) for Tata Steel and the Company's prospective coal unloading arrangements, obtaining approval from East Coast Railways, etc. Tata Steel has already obtained EC for production gas-based plant along with their steel plant. Water allocation has also been obtained. Process has been initiated for obtaining coal linkage, water allocation, EC, etc. for additional coal-based plant. The ToR has been approved by Orissa State Pollution Control Board (OSPCB). Tata Consulting Engineers Limited (TCE) has been engaged as the Owners' Engineer and DPR, plot plan, technical specifications for various packages, etc. are under finalization. Soil investigation is currently underway at the project site and zero date for the gas based project is envisaged in H2 FY12.

5.2.4 Maithon Expansion – 1,320 MW (2 x 660)

The Company has finalised the DPR and initiated studies for obtaining EC for the project. No additional water allocation is required for expansion project as the Water Optimization Study by TCE has confirmed that water allocated for Phase I will suffice the Phase II requirements also. Currently, the environmental consents are in progress. Subsequently, the Company expects to start the site related activities by H1 FY13 and place orders for its main plant equipment in H2 FY13 (Zero date being considered in H2 FY13).

5.2.5 Dugar Hydroelectric JV Project

The consortium of the Company and SN Power Singapore Pte. Limited (SN Power), a subsidiary of Statkraft, Norway, was successful in winning the Dugar hydroelectric power project through a competitive bidding process carried out by the Government of Himachal Pradesh (GoHP). The project is being developed through a Special Purpose Vehicle (SPV), Dugar Hydro Power Limited (DHPL). DHPL is a JV between the Company (50% 1 share) and SN Power (50% - 1 share). The capacity for the project is estimated to be between 236 MW-280 MW. This is a Peaking-Run-of-the-River (PROR) project with storage, for peaking capacity in the lean season. It is the last project in cascade in Himachal Pradesh on the river Chandrabhaga (Chenab).

The letter of intent was issued to the Company on 5th April, 2011, and the letter of allotment on 4th May, 2011. The Pre-implementation Agreement is to be signed with the Directorate of Energy, GoHP, shortly. The Company is undertaking a detailed exploration and design study to plan and finalize the project implementation.

5.2.6 Naraj Marthapur Project, Orissa

The major clearances for the 660 MW Naraj Marthapur project have been obtained. The EC has been granted by MoEF, subject to clearance from National Board of Wild Life for which the process is on.

5.3 Projects Under Planning – International

5.3.1 Tamakoshi - 3 Hydroelectric Power Project, Nepal

On 22nd July, 2010, the Company signed a Shareholders' Agreement (SHA) with SN Power to acquire an equity holding of 50% - 1 share in the project SPV to develop, own and operate the Tamakoshi 3 Hydroelectric Power Project located at the Dolakha and Ramechhap districts in Nepal. The SHA is pending approval of Government of Nepal (GoN).

5.3.2 Sorik Marapi Geothermal Project, Indonesia

On 2nd September, 2010, the consortium of Tata Power – Origin – Supraco was awarded the 240 MW Sorik Marapi geothermal project in Indonesia based on the tariff of USD 0.081 / kWh. The development of the project will require a process of progressively proving the technical and commercial viability of the project while also meeting a range of regulatory obligations.

From the assessment of existing resource data, preliminary locations have been identified for exploration wells within the inferred high temperature resource area. Initial surface exploration (geology, geochemistry and geophysics) have commenced along with community relations activities at the project area. The exploration phase would end by H1 FY13, after which the project implementation details will be finalised.

6. KEY SUBSIDIARIES

6.1 Industrial Energy Limited (IEL)

IEL is presently operating Power House 6 in Jamshedpur and Unit 5 in Jojobera. During the year, IEL earned Revenues of Rs. 125.41 crores and a PAT of Rs. 24.88 crores, as against Rs. 70.74 crores and Rs. 9.46 crores respectively in the previous year. IEL commenced operations in May 2009.

6.1.1 Power House 6 (PH6) at Jamshedpur

120 MW PH6 is the first unit of IEL and is located inside Tata Steel works at Jamshedpur. During the year, PH6 recorded a generation of 738 MUs while achieving generation availability of 93%.

Table 11: Details of thermal power generation for FY11 – IEL

Generation (MUs) Generation Availability (%) PLF (%)

FY11 FY10 FY11 FY10 FY11 FY10

PH6, Jamshedpur 738 563 93 89 70 54

6.1.2 Unit 5 at Jojobera

A 120 MW coal-based power plant has been commissioned at the Company's existing site at Jojobera to cater to the increasing demand of Tata Steel. The COD was declared on 27th March, 2011.

6.2 Maithon Power Limited

MPL is constructing a 1,050 MW (2 x 525 MW) power plant at Maithon in Jharkhand (Refer Section 5.1.2).

6.3 Powerlinks Transmission Limited (PTL)

PTL is a JV between the Company (51%) and PGCIL (49%). PTL transmits power from the 1,020 MW Tala Hydro Electric Power Project in Bhutan and surplus power from the Eastern / North-Eastern region of India through its transmission lines between Siliguri (West Bengal) and Mandaula (Uttar Pradesh), spanning a distance of 1,166 kms. The availability of transmission line was maintained at 98.62% for Eastern Region and 99.78% for Northern Region in FY11, as against the minimum stipulated availability of 98%.

During FY11, PTL has earned revenues of Rs. 288.41 crores (previous year revenues of Rs. 300.98 crores) and a PAT of Rs. 105.68 crores (previous year PAT of Rs. 108.09 crores). PTL has paid interim dividend of Rs. 1.4 per share (previous year interim dividend - Nil) and recommended final dividend of Rs. 0.70 per share for FY11 (previous year final dividend Rs. 1.80 per share).

6.4 North Delhi Power Limited (NDPL)

NDPL, engaged in distribution of electricity in North and North West Delhi, is a subsidiary of the Company (51% share), the balance being held by Delhi Power Company Limited (a Government of Delhi undertaking). NDPL services over one million consumers spread over 510 sq. kms. in the North Delhi area. The peak load in this area is about 1,313 MW, with energy consumption of over 7,300 MUs.

NDPL has earned revenues of Rs. 4,099.85 crores during FY11, a growth of about 21% over the previous year (Rs. 3,393.81 crores). The Company earned PAT of Rs. 258.18 crores in FY11 compared to Rs. 350.73 crores in FY10. PAT for FY10 included reversal of deferred tax liability of earlier years amounting to Rs. 139.15 crores. The Aggregate Technical and Commercial losses have been reduced at the end of FY11 to around 13.2% against the regulatory target of 17%.

The Tariff Order for FY11 was not released by Delhi Electricity Regulatory Commission due to a stay order of Delhi High Court in a Public Interest Litigation filed before it. The stay has now been vacated and tariff for FY12 is under determination. Therefore, NDPL is currently billing its consumers at a rate which was projected for FY10 and based on power purchase cost of Rs. 2.63 per unit as against actual cost of Rs. 3.68 and Rs. 4.21 per unit respectively for FY10 and FY11. Due to the delay in release of tariff order, NDPL's current year revenues include Rs. 1,156.43 crores (previous year Rs. 672.68 crores) as income recoverable from future tariff.

NDPL estimates that it would need an appropriate hike in tariff to recover the regulatory assets. Regulator has issued a letter of comfort to NDPL clarifying that these dues would be recognized in tariff order after prudence checks in course of tariff determination exercise and an amortization plan for these dues along with carrying cost at prevailing rates of interest would be provided in the tariff order expected to be issued by August 2011.

During FY11, NDPL was bestowed the 'Asian Power Utility of the Year Award' for 2010, by Asian Power Awards, Singapore for the fourth year in succession, 'Excellence Award' by Institute of Economic Studies and the Safety Innovation Award 2010 by the Institute of Engineers (India).

6.5 Tata Power Trading Company Limited

Tata Power Trading, incorporated in December 2003 with an equity capital of Rs. 2 crores, was the first company in India to receive a power trading license from the Central Electricity Regulatory Commission (CERC) in June 2004.

Tata Power Trading transacted 4,354 MUs during the year as compared to 4,075 MUs in the previous year and has shown a CAGR of 29% over the past 5 years. It was ranked the fifth largest trader with a market share of 8% in 2011.The gross revenue for FY11 was Rs. 1,933.12 crores as compared to Rs. 2,275.78 crores in the previous year. The decrease in revenue was mainly due to the decrease in the average rate of power from Rs. 5.58 / kWh in FY10 to Rs. 4.43 / kWh in FY11. The PAT increased by 11% to Rs. 9.15 crores, as against Rs. 8.24 crores in the previous year.

Electricity traded in the short term power market has gradually increased to nearly 7% of the generation, of which close to 5% is via bilateral trading and the balance 2% is through power exchanges. With the advent of the power exchanges in 2008 and the priority given to them by CERC for booking of corridors in the day ahead market, volumes on the exchange platform are on an increasing trend. Tata Power Trading has participated actively in the exchange segment. Nearly one third of the total clients registered with the power exchanges are now with Tata Power Trading. In addition to short term trading, Tata Power Trading has also diversified its supply sources by entering into long term power purchase contracts with various power developers for sale of their power in the long term as well as in the merchant market.

6.6 Trust Energy Resources Pte. Limited (Trust Energy)

Trust Energy, a wholly-owned subsidiary of the Company, was set up in 2008 to manage overseas fuel logistics and coal sourcing, thereby achieving vertical integration in order to support the Company's growing power business.

Trust Energy (along with EEPL, a wholly-owned subsidiary of CGPL) has organized a fleet of five Cape size vessels. Trust Energy has purchased two new vessels, Trust Agility, which was delivered in May 2011 and its sister vessel, Trust Integrity due to be delivered in H1 of FY12, both built at STX Offshore and Shipbuilding Company Limited of South Korea. EEPL has entered into long term charters for another three cape size vessels. The shipping operations are scheduled to commence from FY12 with the commissioning of the power plant at Mundra. With increase in the generation portfolio and hence, imported coal requirement of Tata Power, Trust Energy will play an increasingly important role in securitization of coal supply and shipping of imported coal for Tata Power's thermal power generation operations.

6.7 NELCO Limited (NELCO)

NELCO, established in 1940, is listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). The Company, along with its subsidiary, holds 50.1% stake in NELCO.

NELCO's current businesses cater to physical safety and security solutions for defence establishments, homeland security, mass transportation like railways, process monitoring solutions for some specific industries like steel plants, refineries, energy establishments, etc. and turnkey satellite communication networks in India and abroad, including related managed services. It also provides 24 x 7 network management and communication services to more than 400 corporate and enterprise customers in India. Tatanet Services Limited (Tatanet), a subsidiary of NELCO, holds the requisite licenses for providing the shared hub VSAT services. Apart from these, NELCO is providing niche meteorology solutions to sectors like Indian Air Force and meteorology department.

With effect from 28th July, 2010, NELCO has transferred the undertakings which comprise traction electronics, SCADA and industrial drives businesses as a 'going concern' on a slump sale basis to Crompton Greaves Limited for a total consideration of Rs. 81 crores.

During the 12 months period ended 30th September, 2010, NELCO has posted a Total Income of Rs. 142.82 crores and PAT of Rs. 21.40 crores.

6.8 Af-Taab Investment Company Limited (Af-Taab)

Af-Taab is a wholly-owned investment subsidiary of the Company. During FY11, Af-Taab earned an operating income of Rs. 206.65 crores and PAT of Rs. 163.07 crores, as against Rs. 39.55 crores and Rs. 15.07 crores respectively in FY10. The growth in profit is primarily due to sale of long term investments.

6.9 Chemical Terminal Trombay Limited (CTTL)

CTTL is a wholly-owned subsidiary of the Company offering warehousing facility for organic and inorganic chemicals including petrochemicals. During FY11, CTTL earned an operating income of Rs. 13.37 crores and PAT of Rs. 3.44 crores, as against Rs. 11.15 crores and Rs. 3.41 crores respectively in FY10.

7. INVESTMENTS IN INDONESIAN COAL COMPANIES

The outstanding debt taken for the acquisition of a 30% stake in two major Indonesian Coal Companies, PT Kaltim Prima Coal and PT Arutmin Indonesia and related companies (Coal Companies) stood at USD 240 million as on 31st March, 2011 compared to USD 695 million as on 31st March, 2010. The Coal Companies raised USD 450 million in April 2011 through a hybrid issue guaranteed by Tata Power. USD 242 million out of the USD 450 million raised by the hybrid issue were used to prepay the non-recourse loan. The prepayment was with effect from 10th May, 2011.

The performance of the two Indonesian thermal coal companies, viz. PT Kaltim Prima Coal and PT Arutmin Indonesia continued to be robust. The production during calendar year 2010 was 60 MT as against 63 MT in 2009. The main reason for the drop in production was very heavy monsoons during the third calendar quarter. Coal prices showed good recovery in CY10. Coal price realization for the year was USD 68 / tonne as compared to USD 50.6 / tonne in the previous year. These high prices of coal ensured that the profitability of the coal companies improved even with a marginal fall in production.

The equity interest in the two Indonesian Coal Companies provides a natural hedge for the power business, which uses imported coal, against rising coal prices, besides providing security of fuel supply through the offtake agreements.

8. SUSTAINABILITY AT TATA POWER

Sustainability forms the core of the Company's vision - "To be the most admired Integrated Power and Energy Company delivering sustainable value to all stakeholders". In fact, the Company owes its very existence to its founder, Mr Jamsetji Tata's vision that "Clean, cheap and abundant power is one of the basic ingredients for the economic progress of a city, state or country". The vision of the Company's founder is the guiding principle for its sustainability initiatives.

At Tata Power, Sustainability integrates economic progress, social responsibility and environmental concerns with an objective of improving the quality of life for all stakeholders, now and for generations to come. The Company views it as an opportunity to make a difference and remain committed to the issues of resource conservation, energy efficiency, environment protection and enrichment and development of local communities in and around its areas of operations. It is an integral part of the Company's objective of 'Leadership with Care'.

In its drive towards a clean environment, the Company is trying to set standards in the development and implementation of advanced eco-friendly technologies and processes for energy management. The Company is working with policymakers and regulators to advance technology, strengthen the renewable energy portfolio, accelerate the development of cost-effective energy efficiency programs and manage consumers' demand for electricity. The Company has also tied up with various organizations engaged in cutting-edge research in the renewables space and is piloting projects based on geothermal energy, solar concentrators, biomass gasification, etc. - all with a view to bring these to commercial operation and scale in the medium term. During the year, the Company has notched up a number of achievements in relation to Sustainability, chief of which are as below:

- The Company has been bestowed two awards - 'Best performer in the Power Industry' at the Financial Express - Emergent Ventures India Green Business Leadership Awards and Certificate of Merit - Global CSR Awards 2010.

- With a view to bring in external views and insights into the sustainability process, a Sustainability Advisory Council was constituted in FY11, with experts from the field of climate change, community development and sustainable environment management. The council meets regularly and guides the Company in its sustainability and community relations journey, including contributing to strategy development.

- Tata Power Energy Club (the Club)-

- In FY11, the Club has reached out to 285 schools nationwide (Mumbai, Delhi, Kolkata, Pune, Ahmedabad, Bengaluru, Lonavla, Jamshedpur, Belgaum), sensitised over 1.1 million citizens and saved more than 2.4 MUs. The Club has a strong, sustainable and replicable model to spearhead a movement. It has developed 26,895 Energy Champions, 39,356 Energy Ambassadors and 154 self-sustaining mini energy clubs this year. This energy brigade is creating a self- sustaining movement on energy conservation across the nation.

- The Club has also been recognised internationally and was bestowed the 'Most Innovative Campaign' award at USA's The Energy Daily's 2010 Leadership Awards. The Association of Business Communicators of India has bestowed a gold award on the Club for 'Environment Communications' and it has also ranked 2nd among 22 participants in 'Earth Care' category for Siemens Ecovative Award 2010.

- Cumulatively, from 2008 onwards, the Club has reached out to more than 450 schools across India, sensitised more than 2 million citizens and saved more than 3.4 MUs. The Club has an energy brigade comprising 40,445 Energy Champions and 70,450 Energy Ambassadors.

- A BPO unit at Khopoli, a JV of the Company, Mannat Foundation (an NGO formed by the Company) and Tata Business Support Services Limited, has provided jobs to 213 local people in the catchment areas of the Company's hydro power stations.

- Improvement of comprehensive education programme has benefited over 13,000 students with over 600 learning centers in Maithon, Jharkhand.

- HIV/AIDS awareness covered 45,890 people across Mumbai.

- Mobile medical services and health camps by the Company serviced 19,640 patients.

- 1,480 members from 89 Self-Help Groups have saved aboutRs. 12 lakhs.

- Employee volunteers have contributed a total of 6,242 hours for various social and environmental causes.

- The Company has a portfolio of five DSM programs for different category of consumers, thus becoming the first utility in India to launch five DSM programs with approval from the regulator.

- Sustainability awareness sessions have been conducted at various locations of the Company. A total of 1,516 employees have been covered till March 2011.

9. GLOBAL COMPACT COMPLIANCE

The Company has been reporting data since 2006 as per the Global Compact Initiative taken up by the Secretary General of the United Nations in 2002. The Compact requires businesses to adhere to Ten Principles in the areas of human rights, labour standards, environment and anti-bribery. The Company submitted to the Global Compact website its 'Communication on Progress' as required in respect of implementation of the Ten Principles in its business processes. In accordance with the Global Reporting Initiative (GRI) guidelines, the Company is in the process of conducting a Stakeholder and Materiality analysis. The feedback from this study will be used to formulate the Company's Sustainability Report in accordance with the GRI G3 guidelines.

The Company has also adopted Corporate Sustainability Protocol (CSP) since FY11, which is a score based system, intended to improve overall sustainability in the Company. Each division must achieve the yearly target set for the Company. In order to achieve the target, the divisions must set up and implement action plans where the lacunae have been identified. This not only ensures a higher CSP score for their division but helps in achieving overall sustainability targets for the Company.

10. SAFETY

The Company has given safety a high priority, appointing DuPont as a consultant to guide it on its journey to Safety Excellence. A number of initiatives have been taken to embed a culture of safety and safe working practices in the organisation. A detailed corporate safety action plan has been prepared, including the activities that will be guided and supervised by DuPont staff and by the Company staff on a monthly basis. An Apex Safety Committee (ASC) - chaired by the Managing Director - reviews the Company's safety performance every two months and guides the implementation of detailed action plans through Central Safety Committees and Site Implementation teams at all sites. Five Corporate Committees for Safety Observations, Incident Investigation, Rules and Procedures, Capability Building and Contractors Safety Management act as 'Keepers of Standards', introducing new and improved procedures, systems and processes for implementation through the ASC and the local counterparts of the five corporate committees. An integrated Safety Management System based on Occupational Health and Safety Administration Process Safety Management Model was developed and has been implemented across the Company.

New safety work procedures in line with DuPont methodologies have been implemented. Intensive training modules have been organised by DuPont as well as DuPont trained trainers. Various meetings were organised on safety, including a safety strategy meet, a construction safety meet organized at Maithon and an annual safety meet of safety professionals. Safety requirements have been drilled down to the level of contractors' employees and made a part of all contracts.

The Company has also deployed software for recording, analyzing and reporting the results of Safety Training Observation Program (STOP) audits, a proprietary DuPont methodology for safety observations. Additionally, software for safety audits and incident reporting including near-misses with tracking of implementation of recommendations has been deployed. A cross functional audit team trained by DuPont has been conducting audits against safety standards at the Company's project sites at regular intervals.

During the year, the Jojobera Thermal Power Station was bestowed the 'Shreshtha Suraksha Puraskar' award by the National Safety Council of India for the assessment period of 2006 to 2008, and the Trombay Thermal Power Station was bestowed the Greentech Gold award for safety in the Thermal Power Sector.

11. RENEWABLES AND NEW TECHNOLOGY

The Company is a member of the Cleantech Forum and various websites, which helps it to keep abreast of the Research and Development (R&D) updates on clean technologies. Periodic visits to vendors and participation in conferences also assist in identifying and selecting companies for reviewing. Interactions are on with faculty members from the Indian Institute of Technology (IIT) - Bombay, Mumbai University Institute of Chemical Technology (ICT), Massachusetts Institute of Technology (MIT), University of California at Berkeley, Purdue and Washington Universities to stay updated on technology. Various technologies in a variety of areas like CO2 absorption using algae, carbon capture reuse and storage, fuel cell (telecom tower application), gasification (biomass, coal), solar (PV, thin-film and concentrated thermal), micro-turbine wind energy generation, etc. are being evaluated. During the year, the Company has continued to expand its presence in the field of renewable energy. Some key highlights are:

Geothermal - The Company has invested in Geodynamics, a leading Australian company in enhanced geothermal systems with a view to bring the learnings from the investment to India. The Company has invested AUD 50 Million in the project so far.

Solar Concentrated Thermal - The Company is working on two different technologies - a 1 MW unit in association with IIT Bombay and a 500 kW unit with ICT and Tata Steel. Further, field experiments are being carried out to minimize the water resource for cooling purposes by implementing geo-exchange cooling.

Floating Solar PV - Sunengy Pty. Limited (Sunengy) is an Australia based start-up company that has designed a floating concentrated PV system using Fresnel lenses. Tata Power is planning to test a 13.5 kW pilot unit at Walwhan lake. In order to bring the cost of the Sunengy units further down, talks are on with local vendors for supply of parts and manufacturing in India. The project is expected to be completed in FY12.

Micro-Wind - Windtronics wind turbines are 2 kW units with very low cut-in speed. This makes them ideal for Indian conditions where the wind speeds are not very high. Tata Power has completed installation of one of the 2 kW Windtronics micro-wind turbines in the hydro generating area, and the installation of the other unit at Trombay Power station is currently under progress.

Microwave applications in drying of coal - There are losses in efficiency due to high moisture content in coal used in coal fired power plants. In order to reduce these losses and investigate the possibility of drying of coal using microwave, preliminary studies along with experiments were carried out. The success of the study will pave the way for establishing future capacity. This application would also be useful in the Exergen process for removing the moisture from the coal.

CO2 sequestration using algae - The Company is exploring options of capturing the CO2 generated from its thermal power stations using algae. This will essentially reduce the amount of CO2 generated from the plant while assuring sustainable utilization of the CO2. A 10 TPD CO2 capture pilot plant is proposed at Trombay and subsequent usage of the CO2 for algae uptake.

12. CORPORATE SERVICES

12.1 Financing

In April 2011, the Company raised, through its wholly-owned subsidiary - Bhira Investments Limited, a USD 450 Million 60 year (Non-callable for 5 years) hybrid capital securities offering guaranteed by the Company, at 8.5% p.a., payable semi-annually. The proceeds of the issue of the securities will be applied to fund its corporate and acquisitive activities and to repay outstanding loans.

The Company issued 15 year Non-Convertible Debentures (NCDs) aggregating Rs. 350 crores at a fixed interest rate of 9.15% p.a., in July 2010. The proceeds of this issue were utilized to prepay an existing 10.95%, 10 year term loan from Indian Renewable Energy Development Agency Limited (IREDA) availed by the Company for funding its wind projects in Gujarat and Karnataka. The Company issued further 15 year NCDs in September 2010, aggregating Rs. 250 crores, at a fixed interest rate of 9.15% p.a., for meeting its general corporate objectives and part funding wind power project requirements.

IREDA sanctioned a Rs. 450 crores line of credit to the Company at 9.60% p.a., with an interest reset at the end of the 5th year and annually thereafter, for part funding the capital expenditure requirements relating to wind power projects. This line is available for drawdown till March 2012.

The Company availed a term loan of Rs. 150 crores at an interest rate of 10% p.a. from ICICI Bank Limited (ICICI Bank) in July 2010, for partly funding the capital expenditure requirements of its Mumbai Operations. The Company availed an unsecured term loan from ICICI Bank of Rs. 29 crores at the rate of 6% p.a. in March 2011. The proceeds of this loan will be used for developing a few critical technologies in the area of CO2 capture and reuse (using algae) for the power sector and advanced electronics for defence sector.

Moody's has retained the Company's corporate family rating at Ba3 and senior unsecured rating at B1 with a stable outlook, S&P has retained the corporate credit rating to BB- with a positive outlook and ICRA has reaffirmed its LAA rating on the Company's NCDs programme with 'Positive' outlook and also reaffirmed its A1 rating on the Company's commercial paper / short term debt programme.

Trust Energy secured a long term loan of USD 141.84 mn from ICICI Bank Limited (Singapore) on a debt equity ratio of 80:20 to finance the contract price of 2 ships. Till 19th May, 2011, USD 112.21 million has been drawn down under the loan facility.

12.2 Business Excellence

- Tata Business Excellence Model (TBEM)

During the year, the Company continued on its journey of business excellence by strengthening its existing initiatives and introducing a few new ones to cater to the demands of the changing business environment, including in the areas of customer management, process management, operational excellence and cost reduction. The TBEM assessment during the year resulted in a marginal drop in scores, and diagnosed that some of the processes in the organization were now ready for an improvement to the next higher level, and that the organization needs to focus on safety practices that can take the challenge and complexity of doing mega projects in India with world-class safety systems.

- Organisation Transformation (OT)

The OT exercise rolled out during FY09 made significant progress. A total of two hundred officers in the management cadre, across functions, levels and sites have been covered, which is close to the critical mass required for effective transformation. These officers, in critical positions including divisional / departmental heads and functional heads are supporting the organizational interventions like performance management, operational excellence, employee development through role-model leadership, improving employee engagement in their areas of improvement and taking part in improvement initiatives themselves. The cultural shifts, though hard to quantify, include taking ownership, collaborative responsiveness, taking decisions that address the greater common good, and working on their own individual development plans. Another OT initiative, LASER (Learn, Apply, Share, Enjoy, Reflect), aimed at achieving high standards of shop-floor excellence and strengthening the relationships between front-line officers and workmen achieved high levels of success, in terms of relationship building, improving operational efficiencies, and improving the workplace through programmes like autonomous maintenance, 5-S and focused improvement projects, overall equipment effectiveness, safety, etc. The programme covered all operating sites, and resulted in a saving of Rs. 7 crores through focused improvement projects (most projects undertaken are being horizontally deployed, and savings accrual has not been taken on board), and impacted other performance indicators like cycle time reduction in processes, savings in water consumption, improvement in customer facing processes, etc.

Structured Problem Solving (SPS)

The SPS programme has been launched in the Company this year and is presently being extended to the various locations. SPS attempts to analyse data available from the various processes, using quality tools, and arrive at solutions for continuous improvements.

- Sankalp

Sankalp, a programme to bring in operational excellence, delivery excellence and cost efficiency, would be launched in the Company early next year. The preparatory work of team formation has been completed.

12.3 Human Resources Development

During FY11, net addition to manpower was 461 people, primarily to enhance project execution skills and build operations teams for upcoming power plants, taking the total to 4,270

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