Auditors M/s. R.Nagpal Associates, Chartered Accountants

New Delhi

Bankers/LendersA. Indian Axis Bank Ltd.

Bank of Baroda

ICICI Bank Ltd.

Indian Overseas Bank

IDBI Bank Limited

Industrial Investment Bank of India Ltd.

IFCI Limited

Life Insurance Corporation of India

Oriental Bank of Commerce

Punjab National Bank

Power Finance Corporation Ltd.

State Bank of Indore

State Bank of Hyderabad

State Bank of Mysore

State Bank of India

Yes Bank Ltd.

B. Foreign Bayerische Hypo-und Vereinsbank AG - Germany

Calyon, France

Siemens Financial Services GmbH

Board of DirectorsJaiprakash Gaur, Founder Chairman

Manoj Gaur, Chairman

Sunil Kumar Sharma, Vice-Chairman

S.K. Jain

Gopi K. Arora

B.K. Taparia

B.B. Tandon

B.K. Batra, IDBI Nominee

B.K. Gupta, LIC Nominee

Dr. Ramesh C. Vaish

Dr.D.G. Kadkade

G.P. Gaur

Dr.R.L. Gupta

S.D. Nailwal

Narendra Singh

Rajiv Bhardwaj

J.N. Gaur, Whole-time Director & CEO

Suresh Chandra, Whole-time Director

R. K. Narang, Whole-time Director & CFO

ContentsNotice 2

Directors’ Report 5

Report on Corporate Governance 7

Management Discussion & Analysis Report 11

Auditors’ Report 12

Balance Sheet 14

Profit & Loss Account 15

Schedules (A-O) 16

Balance Sheet Abstract-Part IV of Schedule VI 24

Cash Flow Statement 24

Statement Under Section 212 25

Auditors’ Report on Consolidated Accounts 25

Consolidated Accounts 26

Consolidated Cash Flow Statement 31

Annual Report of Subsidiary Company

Jaypee Powergrid Limited 32

Proxy & Attendance Slip

Registered OfficeJUIT Complex, Waknaghat,P.O. Dumehar Bani, Kandaghat – 173 215, Distt. Solan (H.P.)

Corporate OfficeSector-128, Noida-201 304Distt. Gautam Budh Nagar (U.P.)Tel. : +91-120-4609000Fax : +91-120-4609496

Website & E-mailwww.jhpl.com jhpl.investor@jalindia.co.in

Registrar & Transfer AgentsAlankit Assignments Ltd.2E/21, Jhandewalan Extn. New Delhi-110 055Tel. : +91-11-42541234 Fax : +91-11-23552001E-mail : info@alankit.com

NOTICENOTICE is hereby given that the Thirteenth Annual General Meeting of the Members of JAIPRAKASH HYDRO-POWER LIMITED will be held on Wednesday, the 6th August, 2008 at 11.00 A.M. at the Registered Office of the Company at JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat – 173 215, Distt. Solan (H.P.) to transact the following business:

Ordinary Business

1. To receive, consider and adopt the Audited Balance Sheet as at 31st March, 2008, the Profit & Loss Account for the year ended on that date and the Reports of Directors’ and Auditors thereon.

2. To confirm interim dividend and declare final dividend for the Financial Year 2007-08.

3. To appoint a Director in place of Shri Gopi K. Arora who retires by rotation and, being eligible, offers himself for re-appointment.

4. To appoint a Director in place of Shri Manoj Gaur who retires by rotation and, being eligible, offers himself for re-appointment.

5. To appoint a Director in place of Shri Narendra Singh who retires by rotation and, being eligible, offers himself for re-appointment.

6. To appoint a Director in place of Shri S.D. Nailwal who retires by rotation and, being eligible, offers himself for re-appointment.

7. To appoint a Director in place of Shri S.K. Jain who retires by rotation and, being eligible, offers himself for re-appointment.

8. To appoint M/s. R. Nagpal Associates, Chartered Accountants, as Statutory Auditors of the Company, to hold office from the conclusion of this meeting until the conclusion of the next Annual General Meeting and to fix their remuneration.

Special Business

To consider and, if thought fit, to pass with or without modification(s), the following resolutions:

AS ORDINARY RESOLUTIONS:

9. “RESOLVED that Shri Jaiprakash Gaur be and is hereby appointed a Director of the Company, liable to retire by rotation.”

10. “RESOLVED that Shri B.B. Tandon be and is hereby appointed a Director of the Company, liable to retire by rotation.”

11. “RESOLVED THAT pursuant to the provisions of Sections 269, 198 and 309 read with Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956 and subject to such other approvals, as may be required, the consent of the Company be and is hereby accorded to the appointment of Shri Suresh Chandra as Whole-time Director of the Company for a period of five years w.e.f. 11th January, 2008 on the remuneration and terms and conditions as stated in the explanatory statement annexed to this notice.”

“RESOLVED FURTHER that pursuant to Section 198 and all other applicable provisions of the Companies Act, 1956, the remuneration as set out in the explanatory statement annexed to this notice, be paid as minimum remuneration to Shri Suresh Chandra notwithstanding that in any financial year of the Company during his tenure as Whole-time Director, the Company has made no profits or profits are inadequate.”

“RESOLVED FURTHER that the Board of Directors of the Company be and is hereby authorised to alter or vary the terms of appointment of the appointee including relating to remuneration, as it may at its discretion, deem fit from time to time so as not to exceed the limits specified in Schedule XIII to the Companies Act, 1956 (including any statutory modification or re-enactment thereof for the time being in force) or any amendments made thereto.”

12. “RESOLVED THAT pursuant to Section 293 (1) (a) and other applicable provisions, if any, of the Companies Act, 1956 and provisions of the Articles of Association of the Company, the consent of the Company be and is hereby accorded to the Board of Directors of the Company for mortgaging and/or charging immovable and movable properties of the Company as may be required by IFCI Ltd. and IDBI Bank Ltd. in consultation with other lenders, on pari-passu basis, to secure the following financial assistance sanctioned by them for pre-paying the existing high cost debts :-

(i) Rupee Term Loan of Rs. 50 crores lent/agreed to be lent by IFCI Ltd.; and

(ii) Rupee Term Loan of Rs.100 crores lent/agreed to be lent by IDBI Bank Ltd.,

together with interest, compound interest, additional interest, liquidated damages, premia on pre-payments, costs, charges, expenses and other moneys payable by the Company to IFCI Ltd. and IDBI Bank Ltd., under the respective Loan Agreement(s) entered/to be entered into by the Company in respect of the aforesaid financial assistance(s).”

“RESOLVED FURTHER that the mortgage/charge created/to be created and/or all agreements/documents executed/to be executed and all acts done by and with the authority of the Board of Directors be and are hereby confirmed and ratified.”

By Order of the Board

For JAIPRAKASH HYDRO-POWER LTD.

Place : Noida R.K. NARANGDate : 25th April, 2008 Whole-time Director & CFO

Notes :

(i) Relevant explanatory statement pursuant to Section 173(2) of the Companies Act, 1956, in respect of resolutions set out under item nos.9 to 12 is appended below.

ii) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUST BE RECEIVED BY THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE TIME OF MEETING.

(iii) Corporate Members intending to send their authorized representatives are requested to send a duly certified copy of the Board Resolution authorizing such representatives to attend and vote at the Annual General Meeting.

(iv) All documents referred to in the Notice and accompanying explanatory statement are open for inspection at the Registered Office of the Company on all working days, except holidays, between 11.00 A.M. and 1.00 P.M. upto the date of the Annual General Meeting.

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(v) The Register of Members and Share Transfer Books will remain closed from Saturday, the 2nd August, 2008 to Wednesday, the 6th August, 2008 (both days inclusive) for payment of final dividend. The dividend in respect of equity shares, as recommended by the Board of Directors, if declared at the meeting, will be payable to the Shareholders whose names appear in the Company’s Register of Members as at the close of business hours on Friday, the 1st August, 2008. In respect of dematerialized shares, the dividend will be payable to ‘Beneficial Owners’ of the equity shares whose names appear in the Statement of Beneficial Ownership, as at the close of business hours on Friday the 1st August, 2008, furnished by the National Securities Depository Limited and Central Depository Services (India) Limited.

(vi) Members who are holding shares in physical form are requested to notify the change in their respective addresses or Bank details to the Registrar and Transfer Agent (RTA) and always quote their Folio Numbers in all correspondence with the Company and RTA. In respect of holding in electronic form, Members are requested to notify any change in addresses or Bank details to their respective Depository Participants.

(vii) Any query relating to Accounts must be sent to the Company’s Registered Office at JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat – 173 215, Distt. Solan (H.P.) or Corporate Office at Sector-128, Noida- 201 304 at least 7 days before the date of the Meeting.

(viii) (a) Additional details in terms of Clause 49 of Listing Agreement in respect of Directors being re-appointed are given hereunder.

(b) The shareholding of all the Directors in the Company (including those of who are being re-appointed) have been disclosed in the Report on Corporate Governance.

Shri Gopi K. Arora, aged 74 years holds a Master’s Degree in History from Allahabad University and a Master’s Diploma in Public Administration from Harvard University, Boston, USA. Shri Gopi K. Arora joined the Indian Administrative Services (IAS) in 1957 and has over 35 years of service with the Government of India. While in IAS, he has served in various positions in the Government of India including as the Economic Minister with the Embassy of India, Moscow, Russia from 1975 to 1978, as a Joint Secretary in 1983, as an Additional Secretary from 1984 to 1987 and as a Special Secretary in 1987 with the Office of the Prime Minister, Government of India. Further, he has also served as a Secretary in the Ministry of Information and Broadcasting, Government of India in 1988, as Finance Secretary with Ministry of Finance, Government of India from 1989 to 1990 and as the Executive Director representing India, Bangladesh, Bhutan and Sri Lanka at the International Monetary Fund, Washington D.C. from 1990 to 1993.

Shri Gopi K. Arora is on the Board of Alps Industries Limited, Bengal Ambuja Housing Development Limited, ibn 18 Broadcast Limited , HGS India Limited, IL&FS Transportation Network Limited, Infrastructure Leasing and Financial Services Limited, Jaiprakash Associates Limited , Jaiprakash Power Ventures Limited, Jaypee Karcham Hydro Corporation Limited, Noida Toll Bridge Company Limited, Network 18 Media & Investments Limited, Roto Pumps Limited, Television Eighteen India Limited, Sowar Private Limited, Sara Fund Trustee Co. Pvt. Ltd., Krishvidur Services Private Limited and Capital 18 Acquisition Corp. (Foreign Co.).

Shri Manoj Gour, aged 44 years, holds a Degree in Civil Engineering from Birla Institute of Technology and Science, Pilani. Shri Manoj Gaur is the Executive Chairman of Jaiprakash Associates Limited and has 22 years experience of various business of the Jaypee Group, i.e. Engineering Construction, Hydro-Power, Cement, Real Estate, Information Technology, Hospitality and Education initiatives. He is Chairman of Jaypee Infratech Limited, Jaiprakash Enterprises Limited & Gujarat Anjan Cement Limited, Vice-Chairman of Jaypee Hotels Ltd, Jaypee Karcham Hydro Corporation Limited & Jaypee Powergrid Limited, Managing Director of Bhilai Jaypee Cement Limited and Director of Jaiprakash Power Ventures Limited, Gujarat Jaypee Cement & Infrastruture Limited, Jaypee Ganga Infrastructure Corporation Limited, Madhya Pradesh Jaypee Minerals Limited, Himalayan Expressway Limited, Jaypee Arunachal Power Limited, and also Director of Jaypee Ventures Private Limited, Manumanik Estates Private Limited, Avni Housing Private Limited, Indesign Enterprises Private Limited and JPSK Sports Private Limited.

Shri Narendra Singh, aged 74 years, holds Degree in Civil Engineering from University of Roorkee (now Indian Institute of Technology, Roorkee).

Shri Narendra Singh has over 43 years experience in surveys, investigations, planning, detailed designing and construction of hydro-electric and multi-purpose river valley projects. He specialises in design and construction of underground works, powerhouses and hydraulic equipments.

Shri S.D. Nailwal, aged 60 years, is a Fellow Member of the Institute of Company Secretaries of India and has rich experience of over 39 years in the fields of Secretarial, Project Financing, Corporate Planning and Finance & Accounts.

Shri S.D. Nailwal is Whole-time Director & CFO of Jaiprakash Associates Limited

Shri S.K. Jain, aged 70 years, is a Science Graduate and has over 47 years extensive experience of execution of various Engineering projects. Shri S.K. Jain oversees the construction activities and the hydro-power wing of the Jaypee Group. Shri Jain is Vice-Chairman of Jaiprakash Associates Limited, Whole-time Director in Jaypee Ventures Pvt.Ltd., Director of Jaypee Ganga Infrastructure Corporation Limited and Essjay Enterprises Pvt. Ltd.

EXPLANATORY STATEMENT

Following explanatory statements, pursuant to Section 173(2) of the Companies Act,1956 set out the material facts relating to item nos. 9 to 12 mentioned in the accompanying notice dated 25th April, 2008.

Item 9

Shri Jaiprakash Gaur was appointed as additional Director w.e.f. 29th October, 2007. Pursuant to the provisions of Section 260 of the Companies Act, 1956, he holds office upto the date of forthcoming Annual General Meeting. The Company has received a notice in writing alongwith a deposit of Rs. 500/- from a member of the Company in terms of Section 257 of the Companies Act, 1956, signifying his intention to propose the candidature of Shri Jaiprakash Gaur for the office of Director at the forthcoming Annual General Meeting.

Shri Jaiprakash Gaur, aged 77 years, is the Founder of the Jaypee Group and Founder Chairman of the Promoter Company i.e. Jaiprakash Associates Limited. Shri Jaiprakash Gaur, an alumnus of the University of Roorkee (now the Indian Institute of Technology, Roorkee), has been nominated by the President of India as Chairman,

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Board of Governors of IIT Roorkee for 2 terms of 3 years each. Shri Jaiprakash Gaur has spearheaded the growth of the Jaypee Group that had an aggregate turnover of over Rs. 44,067 million in Financial Year 2007-08. Shri Jaiprakash Gaur is guiding force to the Group.

Shri Jaiprakash Gaur is on the Board of Jaiprakash Associates Limited, Jaypee Ganga Infrastructure Corporation Ltd., Jaiprakash Power Ventures Limited, Jaypee Hotels Limited, Jaypee Infratech Limited, Ceekay Estates Private Limited, Manumanik Estates Private Limited, Samsun Estates Private Limited, Dhara Infra Developers Private Limited, Sunvin Estates Private Limited and Jaypee Ventures Private Ltd.

None of the Directors, except the appointee himself and Shri G.P. Gaur, being his brother and Shri Manoj Gaur, being his son, may be deemed to be concerned or interested in the Resolution.

The Directors commend the Resolution for approval of the Members.

Item 10

Shri B.B. Tandon was appointed as additional Director w.e.f. 29th October, 2007. Pursuant to the provisions of Section 260 of the Companies Act, 1956, he holds office upto the date of forthcoming Annual General Meeting. The Company has received a notice in writing alongwith a deposit of Rs. 500/- from a member of the Company in terms of Section 257 of the Companies Act, 1956, signifying his intention to propose the candidature of Shri B.B. Tandon for the office of Director at the forthcoming Annual General Meeting.

Shri B.B. Tandon, aged 67 years, holds Master’s Degree in Economics and is LL.B. from Delhi University. He also holds the Associate Certificate of Indian Institute of Bankers (CAIIB). He was member of Indian Administrative Services (IAS) from 1965 to 2001. Shri B.B. Tandon had held various important positions in the Government of India and State Govt. of Himachal Pradesh (HP) including Principal Secretary, Power and Chairman, Himachal Pradesh State Electricity Board. Shri B.B. Tandon handled several key assignments in the Cabinet Secretariat, Department of Defence Production and Supplies, Ministry of Industry and Ministry of Mines. He was Chief Election Commissioner of India in 2006.

Shri B.B. Tandon is on the Board of Ambuja Cement Foundation, Sagar Sugars & Allied Products Limited, Nagarjuna Fertilisers & Chemicals Limited, Cosmo Ferrites Limited, Precision Pipes & Profiles Limited, Adani Power Limited, Abhishek Global Ventures Limited, Birla Corporation Limited, Oriental Carbon & Chemicals Limited, The Dhampur Sugar Mills Limited, Smart Digivision Private Limited and Canara Bank.

None of the Directors, except the appointee himself, may be deemed to be concerned or interested in the Resolution.

The Directors commend the Resolution for approval of the Members.

Item 11

Shri Suresh Chandra was appointed as Director w.e.f. 11th January, 2008 in the casual vacancy caused due to the resignation of Shri Har Prasad. Shri Suresh Chandra was also appointed as Whole-time Director of the Company.

Shri Suresh Chandra aged 64 years, is an Electrical Engineer and has vast experience of over 43 years in planning, implementation, operation and maintenance of Hydro Power Project.

The Board considers that the appointment of Shri Suresh Chandra

as Whole-time Director of the Company for a period of five years w.e.f. 11th January, 2008 on the following remuneration, is in the best interest of the Company.

Basic Salary : Rs.1,00,000/- per month in the Pay-Scale of& Pay-Scale Rs.1,00,000 – 12,500 – 1,62,500 – 15,000-2,37,500

(next increment shall be admissible on 11th January, 2009 and thereafter on every 11th January of the subsequent year)

Perquisites : Besides the above salary, Shri Suresh Chandra shall be entitled to the perquisites which may include accommodation/HRA, reimbursement of expenses for gas, electricity, water and furnishings, medical reimbursement, LTC, personal accident insurance, use of car and telephone, contribution to provident fund, superannuation fund or annuity fund, gratuity payable at a rate not exceeding half a month’s salary for each completed year of service and leave encashment at the end of the tenure, etc.

Perquisites would be restricted to an amount equal to the annual salary or the amount of entitlement in accordance with Schedule XIII to the Companies Act, 1956 as amended from time to time, whichever is less.

None of the Directors except the appointee himself, may be deemed to be concerned or interested in the Resolution.

This explanatory statement together with the accompanying notice is, and may be treated as an abstract of terms of appointment and memorandum of interest in respect of appointment of Shri Suresh Chandra under Section 302 of the Companies Act, 1956.

The Directors commend the Resolution for approval of the Members.

Item 12

In terms of the provisions of the Loan Agreements entered into by the Company with IFCI Limited and IDBI Bank Ltd. for Rupee Term Loans of Rs.50 crores and Rs.100 crores respectively, the mortgage or charge on all or any of the movable or immovable properties of the Company is to be extended in favour of IFCI Limited and IDBI Bank Limited.

The Company has borrowed the said Rupee Term Loans of Rs. 50 crores and Rs. 100 crores to pre-pay high cost debts of such of the lenders who are not able to bring down the rate of interest to 10.5% per annum in terms of directions of the Hon’ble HPERC.

Section 293 (1)(a) of the Companies Act, 1956, inter alia, provides that the Board of Directors of a public company shall not, without the consent of such public company in general meeting, sell, lease or otherwise dispose off the whole or substantially the whole of the undertaking of the Company or where the Company owns more than one undertaking, of the whole, or substantially the whole of any such undertaking. Since the deed creating the mortgage and/or charge by the Company on its immoveable and moveable properties, as mentioned in the resolution in favour of the Institutions/banks/Debenture holders/Trustees provide for taking over the assets of the Power Station of the Company in the event of default, it is necessary for the members to pass a Resolution under Section 293 (1) (a) of the Companies Act, 1956 for creation of the said mortgage/ charge.

None of the Directors except Shri B.K. Batra, Nominee of IDBI Bank Ltd., may be deemed to be concerned or interested in the Resolution.

The Directors commend the Resolution for approval of the Members.

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DIRECTORS’ REPORT

To,

The Members

The Directors of your Company are pleased to present the Thirteenth Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2008.

WORKING RESULTS

The working results for the year under report are as under :- (Rs. in Crores) Current Year Previous Year 31.03.2008 31.03.2007Gross Revenue 307.63 335.77Less: Rebate for prompt payments 6.81 6.69 300.82 329.08Add: other income 41.68 27.44Total Income 342.50 356.52Profit before Depreciation & Taxation 218.09 221.25Less : Depreciation 45.88 45.62 172.21 175.63Add: Extra-Ordinary items -Insurance claim relating to earlier years 68.40 -Prior Period Adjustments - 49.21 240.61 224.84Less: Provision for taxation 27.21 25.30Profit after taxation 213.40 199.54

OPERATIONS

The performance of the Plant and the Energy generation during the year under report is as under :-

Plant Availability(%) Generation (million units) Net Saleable Energy 99.91 1121.26

The tariff for the year under report, as per the Tariff Order dated 24th February, 2007 and in accordance with the Power Purchase Agreement (PPA), works out to Rs. 2.74 per unit. The generation of the energy during the year was good. 1274.16 MUs including 12% Free Power were delivered at Jhakri to Himachal Pradesh State Electricity Board/ Government of Himachal Pradesh. The Net Saleable Energy for the year was 1121.26 MUs, out of which 1050.06 MUs was the Primary Energy and the balance 71.20 MUs was Secondary Energy.

TARIFF

The Company has filed the tariff application on 30th November, 2007 with Hon’ble HPERC for determination of tariff for Financial Year 2008-09 to 2010-11, which is in process. Pending determination of tariff, Hon’ble HPERC has been requested that payment of monthly energy bills be paid as per the Tariff Order dated 24th February, 2007.

DIVIDEND

Your directors had declared and paid, in September, 2007 an interim dividend of 7.5% for the Financial Year ended 31st March, 2008 absorbing an amount of Rs. 36.83 crore (excluding Dividend Distribution Tax of Rs. 6.26 crore). Your Directors are pleased to report that the Board has decided to recommend a final dividend of 7.5% for the Financial Year ended 31st March, 2008. The final dividend will absorb an amount of Rs.36.82 crore (excluding Dividend Distribution Tax of Rs.6.26 crore). The total dividend outflow for the year 31st March, 2008 aggregating Rs. 73.65 crore (excluding Dividend Distribution Tax of Rs. 12.52 crore ) represents 15% of the Company’s Paid-up Equity Share Capital.

INSURANCE CLAIMS

The Directors wish to report that the Insurance Company has settled

insurance claims at Rs. 68.40 crores for loss of generation during the period of suspension of energy generation (on account of damage to Pothead Yard) from 19th January, 2006 to 2nd May, 2006, out of which Rs. 60 crores had already been received.

The Directors are pleased to report that the restoration works of barrage and installation of the Pothead Yard of the Power House had already been completed. The Protection works of cladding over the Pothead Yard is nearing completion.

SUBSIDIARY COMPANY

The Balance Sheet as at 31st March, 2008 of Jaypee Powergrid Ltd., a subsidiary of your company, is annexed to the Annual Report and Accounts.

CONSOLIDATED FINANCIAL STATEMENTS

A statement under Section 212 of the Companies Act, 1956 in respect of the subsidiary Company is annexed and forms an integral part of this Report. The consolidated financial statements of the Company and its subsidiary company prepared in accordance with Accounting Standards (AS)-21 “Consolidated Financial Statements” prescribed by the Institute of Chartered Accountants of India, form part of the Annual Report and Accounts.

OUTLOOK

The Directors are pleased to report that the generation of energy during the year under report was satisfactory. The Plant availability was 99.91%. The entire energy generated was purchased by HPSEB. HPSEB is making the payment regularly of the energy bills as per Tariff Order passed by Hon’ble HPERC. The availability of water in River Baspa is satisfactory. The Company is hopeful that, barring unforeseen events, the Plant would generate full design energy during the current year.

Jaypee Powergrid Limited formed in Joint Venture with Power Grid Corporation of India Limited is developing a transmission system to evacuate power of 1000 MW Karcham Hydro Electric Project and the same is progressing as per schedule. The Company alongwith its affiliate (Jaiprakash Power Ventures Ltd.) shall be investing upto 74% in the equity share capital of Jaypee Powergrid Ltd. (51% by the Company and 23% by its affiliate) and the balance 26% shall be subscribed by Power Grid Corporation of India Ltd.

With the Power Station expected to generate full design energy coupled with the transmission system being set up through the Joint Venture Company, as aforesaid, the future outlook of the Company is bright.

SHARE CAPITAL

During the year under report, there was no change in the Paid-up equity Share Capital of the Company.

AUDIT COMMITTEE

The Audit Committee consists of Independent Directors, namely Shri B.K. Taparia (Chairman), Shri B.K. Gupta (LIC Nominee), Shri B.K. Batra (IDBI Nominee) and Shri S.D. Nailwal, satisfying the requirements of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement with Stock Exchanges.

DIRECTORATE

During the year under report, Shri Jaiprakash Gaur and Shri B.B. Tandon were appointed as additional directors w.e.f. 29th October, 2007.

Shri Har Prasad and Shri D.N. Davar resigned as Directors w.e.f. 1st January, 2008 and 25th January, 2008 respectively. The Board places on record and acknowledges the valuable contribution of Shri Har Prasad and Shri D.N. Davar during their tenure as directors on the Board of the Company.

Shri Suresh Chandra has been appointed as Director of the Company in the casual vacancy caused due to the resignation of Shri Har Prasad. Shri Suresh Chandra was also appointed as Whole-time Director w.e.f. 11th January, 2008.

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Shri Gopi K. Arora, Shri Manoj Gaur, Shri Narendra Singh, Shri S. D. Nailwal and Shri S. K. Jain retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance together with Auditors’ Certificate on Corporate Governance is appended to the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, a Management Discussion and Analysis report is appended to the Annual Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors, based on the representation received from the operating management, certification by the CEO and CFO to the Board of Directors and after due enquiry, confirm in respect of the audited annual accounts for the year ended March 31, 2008:

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

ii) that the Directors had, in consultation with the Statutory Auditors, 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 for the year ended March 31, 2008 and the profit of the Company for that period;

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

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

DEPOSITS

The Company did not invite / accept any Fixed Deposits from the public during the year under report.

PARTICULARS OF EMPLOYEES

A statement showing the particulars of employees pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended vide Companies (Particulars of Employees) (Amendment) Rules, 2002 is annexed to this report and forms integral part of this report.

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo, as per Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors’ Report for the year ended 31st March, 2008, are annexed to this report.

NOTES ON ACCOUNTS

The Auditors’ Report and Notes on Accounts are self-explanatory.

AUDITORS

M/s. R. Nagpal Associates, Chartered Accountants, Auditors of the Company retire at the conclusion of this Annual General Meeting and, being eligible, offer themselves for re-appointment.

PERSONNEL AND INDUSTRIAL RELATIONS

The industrial relations continued to be cordial. The Directors wish to place on record their appreciation for the contribution of the workers and officers of the Company at all levels.

ACKNOWLEDGEMENTSThe Directors wish to place on record their gratitude to the Government of Himachal Pradesh and Government of India and their various Departments, Himachal Pradesh State Electricity Board, Himachal Pradesh Electricity Regulatory Commission, NHPC (Lenders’ Engineers), Reserve Bank of India, Financial Institutions and Public Sector / Foreign Banks, for their continued co-operation and support. The Board sincerely acknowledges the faith and confidence reposed by the shareholders in the Company. On behalf of the BoardPlace: Noida MANOJ GAUR Date: 25th April, 2008 CHAIRMAN

ANNEXURE TO THE DIRECTORS’ REPORTINFORMATION IN PURSUANCE OF SUB-SECTION 2 A OF SECTION 217 OF THE COMPANIES ACT, 1956 IS GIVEN BELOW :-Name of Employees, Designation/Nature of Duties, Gross Remuneration (Rs.), Qualification, Age (in years), Total experience (in years), Date of commencement of Employment, Previous EmploymentA) Employed throughout the year and in receipt of remuneration

aggregating Rs. 2,400,000/- or more - Shri R. K. Narang, Whole-time Director & CFO, Rs. 24,75,727,

B.E. (Mechanical), 59 yrs, 37years, 16th May, 2000, IFCI LimitedB) Employed for part of the year and in receipt of remuneration

aggregating Rs. 200,000/- or more per month.NIL

Notes:1. Gross remuneration includes salary, house rent allowance and

other perks like medical reimbursement, leave travel assistance, Company’s contribution towards provident fund, etc.

2. The nature of employment of Shri R. K. Narang is contractual.

ANNEXURE TO THE DIRECTORS’ REPORTTHE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988(A) CONSERVATION OF ENERGY Electricity consumption in Power House auxiliaries is mainly

for running governor oil and cooling water pumps and for ventilation, air conditioning and lighting purposes. Effective energy conservation measures are being taken in general and also ensuring that electricity consumption in these auxiliaries is kept at the minimum.

Information in Form A, as prescribed for certain industries, is not applicable to the Company.

(B) TECHNOLOGY ABSORPTION The Hydro-Electric Power Plant was commissioned in May/June,

2003. Every effort was made to ensure that various equipments of the Power House correspond to state of the art technology.

Himalayan rivers carry lot of silt (with large quartz content) during monsoons causing erosion on turbine runners and other underwater parts. To minimize this erosion due to silt, two more modern technology spare runners with Tungsten Carbide coating employing HVOF thermal spray have been procured/ordered. One such runner was put in operation in May 2006 and performance thereafter during the monsoon period, had been quite satisfactory.

Further, for proper maintenance of the plant, innovative technology is being adopted. No specific expenditure on Research and Development is envisaged for the same.

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO Particulars of Foreign Exchange earnings and outgo are given in

Schedule ‘O’ - Notes to the Accounts - under Note No.9.

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REPORT ON CORPORATE GOVERNANCECOROPRATE GOVERNANCE

Commitment to values, fairplay and transparency are the cornerstones of the principles of Corporate Governance.

1. COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE

The Company as a part of Jaypee Group, is committed to attain highest standards of Corporate Governance. The Company’s philosophy on Corporate Governance emanates from its commitment for the highest level of transparency and accountability towards its shareholders, customers, employees, Financial Institutions and Banks and the Government while maintaining steady focus for creation of wealth for stakeholders on sustainable basis.

2. BOARD OF DIRECTORS

The Board of Directors as on 31st March, 2008 consisted of 19 directors. As per Clause 49 of Listing Agreement, where there is Non-Executive Chairman, at least one third of the Board should comprise of independent Directors. The Board of Directors of the Company comprises 9 Independent Directors, besides three Whole-time Directors who are otherwise independent professionals.

The details regarding the attendance of Directors at the Board Meetings, number of other Directorships and Committee positions held by them in other Companies, as on 31st March, 2008, are given below : .

Name & Designation of the Directors Category/ Position Last Annual No. of Board No. of other Committee Positions General Meetings Attended Directorships Meeting out of 5 held excluding Directorship Member Chairman Attended during the year in Private Limited Companies

Shri Jaiprakash Gaur * Non-Executive/ Promoter NA 2 5 - -

Shri Manoj Gaur, Chairman Non-Executive/ Promoter Yes 5 14 - -

Shri Sunil Kumar Sharma, Non-Executive/ Promoter Yes 4 10 1 1 Vice Chairman

Shri S.K. Jain Non-Executive/ Promoter No 3 2 - 1

Shri Gopi K. Arora Non-Executive/ Independent Yes 4 13 6 3

Shri B.K. Taparia Non-Executive/ Independent Yes 5 4 1 2

Shri B.K. Batra (IDBI Nominee) Non-Executive/ Independent No 3 1 3 -

Shrii B.K. Gupta (LIC Nominee ) Non-Executive/ Independent Yes 5 - 1 -

Dr. R.C. Vaish Non-Executive/ Independent No - 5 2 -

Dr. D.G. Kadkade Non-Executive/ Promoter Yes 5 1 1 -

Shri G.P. Gaur Non-Executive/ Promoter No 3 1 - -

Dr. R.L. Gupta Non-Executive/ Independent Yes 5 1 - 1

Shri S.D. Nailwal Non-Executive/ Independent No 4 1 3 -

Shri Narendra Singh Non-Executive/ No 4 - - - Non-Independent

Shri J.N. Gaur Whole-time Director and Chief Executive Officer Executive Yes 5 - 1 -

Shri R.K. Narang Whole-time Director and Chief Financial Officer Executive Yes 5 - - -

Shri Rajiv Bhardwaj Non-Executive/ Yes 5 1 - - Independent

Shri B.B. Tandon* Non-Executive/ Independent NA 2 10 5 1

Shri Suresh Chandra Executive NA 1 - - - Whole-time Director

Notes: *S/Shri Jaiprakash Gaur and B. B. Tandon were appointed as Non-Executive Directors w.e.f. 29th October, 2007 and Shri Suresh Chandra was appointed as Executive Director w.e.f. 11th January, 2008

#Shri Har Prasad resigned as Director w.e.f. 1st January, 2008. He attended 3 Board Meetings and Shri D. N. Davar resigned as Director w.e.f. 25th January, 2008. He attended 5 Board Meetings.

Number of Board Meetings held and dates thereof:

During the financial year 2007-08, 5 meetings of the Board of Directors were held. The meetings were held on 21st April, 2007, 27th July, 2007, 27th August, 2007, 29th October, 2007 and 11th January, 2008. The maximum time gap between two meetings was not more than 4 calender months.

Information placed before the Board

Information placed before the Board of Directors broadly covered the items specified in Clause 49 of the Listing Agreement and

such other items which are necessary to facilitate meaningful and focused deliberations on issues concerning the Company and taking decision in an informed and efficient manner. Besides, the Directors on the Board have complete access to all information of the Company, as and when necessary.

3. CODE OF CONDUCT

The Board of Directors has laid down a Code of Conduct for all Board members and Senior Management Personnel of the Company which is widely circulated amongst members

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of the Board and Senior Management Personnel. The Code of Conduct has been posted on the Company’s website: www.jhpl.com The Members of the Board and Senior Management personnel have affirmed compliance to the said Code of Conduct in writing. Requisite declaration of the CEO to that effect is attached and form part of this report.

4. AUDIT COMMITTEE

As a measure of good Corporate Governance and to provide assistance to the Board of Directors in fulfilling the Board’s oversight responsibilities, an Audit Committee had been constituted by the Board. The constitution of Audit Committee also meets the requirements under Section 292A of the Companies Act, 1956. The terms of reference of the Audit Committee are, as contained under Clause 49 of the Listing Agreement and also conform to the requirements of the Companies Act, 1956. All the four members of the Committee, including its Chairman are Non- Executive and Independent Directors. Four meetings of the Committee were held during the year i.e. on 21st April, 2007, 27th July, 2007, 29th October, 2007 and 11th January, 2008.

The Audit Committee, inter-alia, reviews :

• Quarterly, half-yearly and yearly Financial Statements

• Annual Budget and Variance Reports

• Significant related party transactions

• Audit Reports including Internal Audit Reports

• Recommendation for appointment of Statutory Auditors.

• Management discussion and analysis of financial conditions and results of operations

The constitution of the Committee and attendance at the meetings are as under :

Name & Position Total Meetings held Number of during the tenure Meetings attended of the member

Shri B.K. Taparia , Chairman 4 4

Shri B.K. Batra, Member (IDBI – Nominee) 4 3

Shri B.K. Gupta, Member (LIC – Nominee) 4 4

Shri S.D. Nailwal, Member 4 4

5. REMUNERATION COMMITTEE

The Remuneration Committee comprising of the following Non-Executive and Independent Directors is constituted to recommend /review the remuneration package of the Managing/Whole-time Director(s).

Name Position

Shri Gopi K. Arora Chairman

Shri B.K. Taparia Member

Shri B.K. Batra(IDBI Nominee) Member

One meeting of the Committee was held on 11th January, 2008 and the same was attended by all the members of the Committee.

The remuneration package of Shri Suresh Chandra, Whole-time Director was approved by the Remuneration Committee. The remuneration was paid to Whole-time Directors in the form of Salary and Perquisites.

Details of Remuneration paid to all the Directors for the year:

a) Executive Directors (Managing/Whole-time Directors)

The details of aggregate value of salary and perquisites paid to Whole-time Directors for the year ended 31st March, 2008 and the

number of shares of the Company held by them are as under:

Name Designation Salary (Rs.) Perquisites Total (Rs.) No. of Including shares held P.F.(Rs.) as on 31st March, 2008

Shri J.N. Gaur Whole-time 12,75,000 10,83,392 23,58,393 10,000 Director & CEO

Shri R.K. Narang Whole-time 12,75,000 12,00,727 24,75,727 2,000 Director & CFO

Shri Suresh Whole-time 2,67,742 2,17,206 4,84,948 2,000 Chandra Director

b) Non-Executive Directors

The Company has not paid any remuneration to Non-Executive Directors except the Sitting Fee of Rs.10,000/- (increased to Rs.20,000/- w.e.f. 27th August 2007) per meeting for attending the meetings of the Board of Directors and Committees thereof. The criteria for payment of sitting fees to Non-Executive Directors is based on the decision of the Board and is within the statutory ceiling laid down under the provisions of the Companies Act, 1956.

The details of the sitting fee paid to the Non-Executive Directors during the year under review and the number of shares of the Company held by each Non-Executive Director are as under :-

Name of the Director Designation Total sitting No. of equity fee paid (Rs.) shares held as on 31st March 2008

Shri Jaiprakash Gaur Director & Founder Chairman 40,000 *1,40,000

Shri Manoj Gaur Chairman 80,000 41,400Shri Sunil Kumar Sharma Vice Chairman 70,000 -Shri S.K. Jain Director 70,000 *25,925Shri Gopi K Arora Director 1,00,000 -Shri B.K. Taparia Director 1,60,000 5,000Shri B.K. Batra Director

(IDBI Nominee) #1,20,000 -Shri B.K. Gupta Director

(LIC Nominee) 1,40,000 -Dr. R.C. Vaish Director - -Dr.D.G. Kadkade Director 1,60,000 57,100Shri G.P. Gaur Director 50,000 -Dr. R.L. Gupta Director 1,60,000 10,000Shri S.D. Nailwal Director 2,00,000 200Shri Narendra Singh Director 60,000 28,000Shri Rajiv Bhardwaj Director 80,000 -Shri B. B. Tandon Director 40,000 -

Notes: 1. Sitting Fee represents payment to the Directors for attending meetings of the Board and Committees thereof.

2. # Sitting Fee was paid directly to IDBI. 3. * In addition to this, Shri Jaiprakash Gaur and Shri S. K. Jain

hold 100 equity shares each jointly with Jaiprakash Associates Limited (JAL), the beneficial interest of such shares is with JAL

6. SHAREHOLDERS’/INVESTORS’ GRIEVANCE COMMITTEE

The Shareholders’/Investors’ Grievance Committee comprises Dr. R.L. Gupta (Chairman), Dr. D.G. Kadkade, Shri J.N. Gaur and Shri S.D.Nailwal. The Committee has been constituted, inter-alia, to consider transfer and transmission of shares, rematerialisation of shares, transposition of names, consolidation of shares, issue of duplicate share certificates etc. and to look into redressal of

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shareholders’ complaints. During the year, 5 meetings of the Committee were held and the record of attendance of the members is given below.

Name & Position Total Meetings held Number of during the tenure Meetings of the member attended

Dr. R.L. Gupta, Chairman 5 5

Dr. D.G. Kadkade, Member 5 5

Shri J.N. Gaur, Member 5 2

Shri S.D. Nailwal, Member 5 5

As on 1st April, 2007, there were no pending investors’ references. During the year, the Company had received 380 investors’ references and all the 380 investors’ references were addressed/resolved by 31st March, 2008. Thus, there was no pending reference as on 31st March, 2008.7. Subsidiary Company The Company has one non-listed Indian subsidiary company

viz. Jaypee Powergrid Limited. The said company is a Joint Venture between the Company and Power Grid Corporation of India Ltd. Shri Manoj Gaur, Shri Sunil Kumar Sharma and Shri Rajiv Bhardwaj have been nominated by the Company on the Board of Jaypee Powergrid Limited. Shri Rajiv Bhardwaj is the Managing Director of Jaypee Powergrid Limited.

8. Risk Management The Company manages risks as an integral part of its decision

making process and has a structured framework for risk assessment and minimization procedures.

9. CEO/CFO Certification In terms of the requirements of Clause 49 (v) of the Listing

Agreement, the CEO and CFO have submitted necessary certificate to the Board at its meeting held on 25th April, 2008 stating the particulars specified under the said clause.

10. GENERAL BODY MEETINGS

The details of last three Annual General Meetings are mentioned below :-

Year 2004-05 2005-06 2006-07

Date and Time 12.09.2005 30.08.2006 27.08.2007 10.30 A.M. 11.00 A.M. 11.00 A.M.

Venue of the Hotel Peter Hoff, Hotel Peter Hoff, JUIT Complex, Meeting Chaura Maidan, Chaura Maidan, Waknaghat P.O. Shimla -171004 Shimla -171004 Dumehar Bani, (H.P.) (H.P.) Kandaghat, Distt. Solan (H.P.)

Details of NIL Appointment of NIL Special Shri J.N. Gaur, Whole-time Resolutions Director and CEO, being over 70 years of age.

Note: No resolution was passed through Postal Ballot during last year.

11. DISCLOSURES

a. There were no materially significant related party transactions i.e. transactions of the Company of material nature, with its promoters, the directors or the management, their relatives, etc. that may have potential conflict with the interests of the Company at large. The related party transactions are duly disclosed in the Notes on Accounts to the Balance Sheet.

b. There were no cases of non-compliance by the Company and no penalties, strictures were imposed on the Company by Stock Exchanges or SEBI or any statutory authority, on any matter related to capital markets, during the last three years.

c. No treatment different from the Accounting Standards, prescribed by the Institute of Chartered Accountants of India, has been followed in the preparation of Financial Statements.

d. The Company has complied with the mandatory requirements of Clause 49 of the Listing Agreement.

e. The Company at present has adopted the non-mandatory requirement in regard to constitution of Remuneration Committee. The Company has not adopted any formal whistle blower policy. The employees have access to approach the Management or the Audit Committee on any issue.

12. SECRETARIAL AUDIT FOR RECONCILIATION OF CAPITAL A qualified practising Company Secretary carried out quarterly

secretarial audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audits confirmed that the total issued / paid-up capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL.

13. MEANS OF COMMUNICATION The quarterly, half-yearly and annual results were published in

leading Newspapers which included Economic Times, Business Standard, Financial Express and Divya Himachal. The same were sent to Stock Exchanges and were also displayed on the website of the Company, www.jhpl.com and simultaneously posted on the Electronic Data Information Filing and Retrieval website, namely, www.sebiedifar.nic.in The website is also accessible through a hyperlink ‘EDIFAR’ from SEBI’s official website, www.sebi.gov.in.

14. MANAGEMENT DISCUSSION & ANALYSIS REPORT The Management Discussion and Analysis Report (MD&A) forms

part of the Annual Report.15. COMPLIANCE OFFICER: The Board had designated Shri M.M. Sibbal, General Manager

& Company Secretary as Compliance Officer. However, Shri Sibbal moved from your company to Jaiprakash Power Ventures Limited, another company belonging to Jaypee Group, w.e.f 14.12.2007. Necessary steps have been taken to appoint a Company Secretary in the vacancy so caused. In the meantime, however, the Board has designated Shri A. B. Chugh, Jt. President (Finance) as the Compliance Officer whose particulars are as under:

Address: Sector-128, Noida-201 304 (U.P.) e-mail: ab.chugh@jalindia.co.in Phone: +95-120-4609000 Fax: +95-120-460946416. GENERAL SHAREHOLDERS’ INFORMATION 13th Annual General Meeting Day : Wednesday Date : 6th August, 2008 Time : 11.00 A.M. Venue : JUIT Complex, Waknaghat, P.O. Dumehar Bani,

Kandaghat - 173 215, Distt. Solan (H.P.) Dates of Book Closure : 2nd August, 2008 to 6th August, 2008 (both days inclusive)17. FINANCIAL CALENDAR Details of announcement of Financial Results for different periods

during the year 2007-2008 are as under: Results Announced on For 1st Quarter ended on 30-06-2007. 27th July, 2007 For 2nd Quarter ended on 30-09-2007. 29th October, 2007 For 3rd Quarter ended on 31-12-2007. 11th January, 2008 For the year ended on 31-03-2008 (Audited). 25th April, 2008

The Financial Results were reviewed by the Audit Committee and thereafter approved by the Board.

18. DIVIDEND PAYMENT DATE For interim dividend for the year 2007-08, the record date was

fixed as 12th September, 2007 and dividend was paid within the stipulated time. For final dividend for the year 2007-2008, the

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Company has fixed 2nd August, 2008 to 6th August, 2008 (both days inclusive) as the book closure dates and the dividend shall be distributed after declaration thereof at the forthcoming Annual General Meeting i.e. on or after 18th August, 2008.

19. LISTING ON STOCK EXCHANGES The Equity shares of the Company are listed on the National

Stock Exchange of India Ltd. and The Bombay Stock Exchange Ltd., Mumbai. The Company has paid annual listing fees due to the above Stock Exchanges for the year 2008-2009.

10% - 1740 Non-Convertible Debentures of Rs.10 lac each privately placed with Axis Bank Ltd. have been listed on The Bombay Stock Exchange Ltd., Mumbai.

Stock Code The stock code of the shares listed on the Stock Exchanges, are

as under:

Name of Stock Exchange Code

The Bombay Stock Exchange, Mumbai Ltd. (BSE) 532627

National Stock Exchange of India Limited (NSE) JPHYDRO

ISIN No. INE351F01018

20. Market Price Data and performance in comparison to BSE -Sensex

The high and low of the share price of the Company during each month in the last financial year at NSE, BSE and BSE Sensex were as under :-

Month Share Price at Share price at BSE-Sensex BSE (Rs.) NSE (Rs.)

High Low High Low High LowApril, 07 33.80 27.15 34.00 27.10 14,383.72 12,425.52May, 07 37.50 31.15 37.45 31.20 14,576.37 13,554.34June, 07 37.65 32.00 37.55 32.00 14,683.36 13,946.99July, 07 42.45 34.85 42.40 34.80 15,868.85 14,638.88Aug., 07 51.45 38.15 51.45 38.00 15,542.40 13,779.88Sept.,07 84.90 49.20 84.90 49.20 17,361.47 15,323.05Oct., 07 88.40 60.00 88.35 61.05 20,238.16 17,144.58Nov., 07 118.80 74.50 118.90 75.00 20,204.21 18,182.83Dec., 07 140.00 111.10 139.90 106.25 20,498.11 18,886.40Jan., 08 144.00 54.95 143.40 54.05 21,206.77 15,332.42Feb., 08 92.00 64.70 91.85 64.55 18,895.34 16,457.74Mar., 08 72.50 46.70 71.40 46.50 17,227.56 14,677.24

22. SHARE TRANSFER SYSTEM The Board of Directors has delegated the power of re-materialisation

of shares, transfers and transmission cases, splitting/consolidation of share certificates and issue of duplicate share certificates etc. to Shareholders’/Investors’ Grievance Committee comprising Dr. R.L. Gupta (Chairman), Dr. D.G. Kadkade, Shri J.N. Gaur and Shri S.D. Nailwal, Members.

23. DISTRIBUTION OF SHAREHOLDING The distribution of shareholding as on 31st March, 2008, was as

follows: Share holding of Shareholders Shares nominal value of

(Rs.) Number % to Number % to total Equity Upto 5,000 341017 99.261 101930366 20.76 5,001 – 10,000 1399 0.407 10442368 2.127 10,001 – 20,000 552 0.161 7957152 1.621 20,001 – 30,000 209 0.061 5208015 1.061 30,001 – 40,000 83 0.024 2945185 0.600 40,001 – 50,000 62 0.018 2848294 0.580 50,001 - 1,00,000 110 0.032 7987033 1.627 1,00,001 and above 124 0.037 351682187 71.626 TOTAL 343556 100.00 491000600 100.00

Held by : % holdingPromoters (Jaiprakash Associates Ltd.) 63.34Banks/Mutual Funds/FI/FIIs 3.08NRIs 0.56Indian Public 33.02Note : For the purpose of Regulation 3[e][i] of the Securities and Exchange Board of India [Substantial Acquisition of Shares and Takeovers] Regulations, 1997, the “Group” constitute Shri Jaiprakash Gaur, his associates and Companies as disclosed to Stock Exchanges which include Jaiprakash Associates Limited (JAL), its Subsidiaries, its Associates and other Companies namely, Jaiprakash Enterprises Limited, Siddharth Utility Private Limited, Ironwill Holdings Private Limited and Ironwill Investments Private Limited.

24. DEMATERIALISATION OF SHARES AND LIQUIDITY: At the time of listing of Equity Shares of the Company on 18th

April, 2005, the entire share capital of the Company, except for 700 shares held by the original subscribers alongwith Jaiprakash Associates Ltd., was held in dematerialized form. Thereafter, 47,734 Shares have been rematerialized by certain shareholders. The shares of the company are in ‘Futures and options’ segment on NSE & BSE and are actively traded.

25. UNCLAIMED DIVIDENDS Pursuant to Section 205C of the Companies Act, 1956, there

were no unclaimed dividends to be transferred to the Investors Education and Protection Fund of the Central Government during the year.

26. OUTSTANDING GDRS/ADRS/WARRANTS OR ANY CONVERTIBLE INSTRUMENTS, CONVERSION DATE AND LIKELY IMPACT ON EQUITY

The Company has not issued any GDR/ADR/Warrant or any other convertible instrument.

27. PLANT LOCATIONS The Barrage of the 300 MW Power Plant is located on the river

Baspa and the underground Power House is on the left bank of River Satluj in Kinnaur District, about 210 KM from Shimla, the capital of Himachal Pradesh.

28. ADDRESS FOR CORRESPONDENCE Company’s address : Registered Office : JUIT Complex, Waknaghat,

P.O. Dumehar Bani, Kandaghat- 173 215, Distt. Solan (H.P.)

Corporate Office : Sector-128, Noida-201 304 (U.P.) Distt. Gautam Budh Nagar.

E-mail: jhpl.investor@jalindia.co.in

21. REGISTRAR AND TRANSFER AGENTS: The details of Registrar & Transfer Agent appointed by the

Company are as under: Alankit Assignments Limited Alankit House, 2E/21, Jhandewalan Extn., New Delhi 110 055 Phone : 91-11-42541234, 23541234 Fax : 91-11-23552001 Website : www.alankit.com E-mail address:info@alankit.com E-mail ID of the Company for redressal of investors’ complaints: jhpl.investor@jalindia.co.in

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Registrar & Transfer : Alankit Assignments LimitedAgent’s Address Alankit House, 2E/21 Jhandewalan Extn., New Delhi 110 055 Tel. : 91-11-42541234

Fax : 91-11-23552001 E-mail : info@alankit.com

29. ELECTRONIC CLEARING SERVICE (ECS): The Company availed ECS facility for distribution of dividend in

the metropolitan cities.30. NON-MANDATORY REQUIREMENTS The Company has constituted a Remuneration Committee.

Relevant details of the Remuneration Committee are provided in paragraph 5 of this Report.

As regards training of Board members, the Directors on the Board are seasoned professionals having wide range of expertise in diverse fields. They keep themselves abreast with the latest developments in the field of Management. Technology and Business Environment through various symposiums, seminars, etc.

The Company uploads its Quarterly, Half – Yearly and Annual Results on its web site – www.jhpl.com which is accessible to all. Besides, the Results are also available on www.sebiedifar.nic.in. The results are also reported to Stock Exchanges and published in National Newspapers in English and in Hindi newspapers having wide circulation.

The Company believes in maintaining its Accounts in a transparent manner and aims at receiving unqualified report of auditors on the financial statements of the Company. During the year under review, there is no audit qualification in its financial statements.

DECLARATIONAll Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct of Directors and Senior Management Personnel, as approved by the Board. J.N. GAURDate : 22nd April, 2008 Whole-time Director & CEO

CORPORATE GOVERNANCE COMPLIANCE

CERTIFICATEToThe Members of Jaiprakash Hydro-Power LimitedWe have examined the compliance of conditions of Corporate Governance by Jaiprakash Hydro-Power Limited for the year ended on 31st March, 2008 as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchanges.The compliance of conditions of Corporate Governance is the responsibility of the Management.Our examination was limited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.We state that no investor grievance is pending for a period exceeding one month against the Company.We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For R. NAGPAL ASSOCIATESChartered Accountants

R. NagpalPlace: New Delhi PartnerDate : 25th April, 2008 M.No.81594

MANAGEMENT DISCUSSION AND ANALYSIS REPORT(Forming part of the Directors’ Report for the year ended 31st March, 2008)

I) Industry structure and developments:

Power is a key driver for the economic development of a country and for improving the quality of life. The achievement of increasing generation capacity of power from 1712 MW in 1950 to more than 1,43,061 MW as of 31st March 2008 is quite impressive in absolute terms. The bulk of this capacity addition has been from thermal and hydropower.

Our country is endowed with enormous economically exploitable and viable hydro potential assessed to be about 84,000 MW at 60% load factor (1,48,700 MW installed capacity). However, only 24% of the hydroelectric potential has been harnessed so far and 9% is under various stages of development. Thus, 67% of the potential remains to be exploited.

Hydroelectric projects despite being recognized as the most economic and preferred source of electricity, share of hydro power has been declining since 1963. The hydro share has declined from 44 per cent in 1970 to 24.7 percent as on 31st March, 2008. The ideal hydro thermal mix is recognised in the ratio of 40:60. During the 11th Five Year Plan, the exploitation of the Hydro-Power is expected to be more than 16,500 MW which is more than the aggregate additional Hydro-Power generating capacity commissioned during the last 15 years.Further, the Govt. envisages to exploit 50,000 MW in the 12th Five Year Plan.

ii) Opportunities and Threats:

Opportunities

The Electricity Act, 2003 has ushered a liberal and progressive framework for the Power industry in India. It has removed/reduced entry barriers. This is aimed at promoting competition and protecting interests of consumers. Regulatory framework both at the central level and at the state level exist to provide transparent regulation.

It is expected that Government would initiate advance action for taking up new hydro projects since the ongoing projects will contribute a very small percentage of the desired capacity addition. Towards this end, the Government may take up for execution of all the CEA cleared projects, and take steps to update and obtain clearances for pending Detailed Project Reports. Measures for vigorously starting survey and investigations for new green field sites would also be taken up by the Government expeditiously. In addition, the Government may activate the hydro projects which are either languishing for want of funds or are remaining dormant due to unresolved inter-State issues.

The Company has been operating Hydro Power Station, now for more than 5 years, it is in an advantageous position in terms of implementation of Hydro Projects vis-a-vis the new entrants to reap the benefit of growing opportunities in this sector. Again, the Company is fully geared to take the advantage of The Electricity Act, 2003 in terms of diversifying its business into Transmission Sector and has formed a Joint Venture Company namely, Jaypee Powergrid Limited, with Power Grid Corporation of India Limited for developing a Transmission System.

Threats

The constraints which have affected hydro-power development are lack of proper technical investigations, tunneling and underground works in difficult terrains, financial (deficiencies in providing long term financing), tariff related issues and managerial shortcomings (poor contract management). The hydro projects are also affected by geological surprises (especially in the

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Himalayan region), inaccessibility of the area, problems due to delay in land acquisition, resettlement of project affected families and law & order problem in militant infested areas.

iii) Segment-wise or product-wise performance:

The Company is primarily engaged in generating Hydro-Power and thus has only one segment.

The Company has invested in the equity share capital of a Joint Venture Company (namely, Jaypee Powergrid Limited) with Power Grid Corporation of India Limited for developing a Transmission System to evacuate power to be generated by 1000 MW Karcham Wangtoo Hydro Electric Project in Himachal Pradesh.

iv) Outlook:

With the company’s plant expected to generate full design energy coupled with the Joint Venture of the Company with Power Grid Corporation of India Limited for developing a Transmission System to evacuate power to be generated by 1000 MW Karcham Hydro-Electric Project, the future outlook of the Company is bright.

v) Risks and Concerns:

The Company’s Power Station is located in mountainous region and is thus prone to floods, rock fall etc. However, the Company has taken adequate safeguards in this regard. The Company has fairly stable generation and has been receiving regular payments in respect of sale of energy and is discharging its debt obligations quite regularly.

vi) Internal Control Systems and their adequacy:

Adequate internal control systems exist both at Power Station and at Administrative Office and qualified and experienced executives are in place to monitor the same.

The Company has Management Committee at Power Station to ensure efficient, economical operations and quality control.

The Company, in addition to internal controls, also has Internal audit system in place which is conducted by qualified Chartered Accountants.

vii) Financial performance with respect to operational performance:

The financial performance of the Company with respect to operational performance has been steadily improving ensuring the Company’s commitments of servicing its obligations for meeting its interest and principal repayments to Financial Institutions / Banks and with a long term objective of enhancing shareholders’ value.

viii) Material developments in Human Resources/Industrial relations:

Human resources continued to be recognized as the most valued asset. The Company is adequately manned with professionals in the fields of Engineering, Finance, Administration etc. to take care of all operations and allied activities.

Necessary training for operations and maintenance was initially imparted by the main equipment suppliers namely, Siemens A.G. Consortium, VA-Tech Hydro-Vevey, Alstom, etc. Development of human resources through training is a continuous process and for this purpose the Company has in-built system for identification of training needs and necessary training programmes are organized. Training programs both in-house and by reputed Institutions like Power Management Institute of NTPC are conducted from time to time.

Adequate number of technically qualified and well experienced staff exists for the day-to-day operations of the Company.

The industrial relations continue to be cordial.

AUDITORS’ REPORT TO THE MEMBERS OF JAIPRAKASH HYDRO-POWER LIMITEDWe have audited the attached Balance Sheet of JAIPRAKASH HYDRO-POWER LIMITED as at 31st March 2008 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.We report that:(1) As required by the Companies (Auditor’s Report) Order

2003, as amended by the Companies (Auditor’s Report) (Amendment) Order 2004 (together the ‘Order’) issued by the Central Government of India, in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

(2) Further to our comments in the Annexure referred to in paragraph 1 above:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion, proper books of account have been kept by the Company as required by law so far as appears from our examination of those books;

(c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement referred to in this report, are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement referred to in this report, comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the directors, as on 31st March, 2008, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with significant accounting policies and other notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2008,

ii) in the case of the Profit & Loss Account, of the profit of the Company for the year ended 31st March 2008.

iii) in the case of the Cash Flow Statement, of the cash flows of the company for the year ended 31st March 2008.

For R. NAGPAL ASSOCIATESChartered Accountants

Place : Noida (R.Nagpal)Dated : 25.4.2008 Partner

M.No.81594

12

ANNEXURE TO THE AUDITORS’ REPORTReferred to in paragraph 1 of our report of even date on the accounts for the year ended 31st March 2008 of JAIPRAKASH HYDRO-POWER LIMITED

(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) A substantial portion of the Fixed Assets have been physically verified by the management during the year and to the best of our knowledge and information given to us, no material discrepancies have been noticed on such physical verification.

(c) Fixed assets disposed off during the year, are negligible so as to affect the Company as a going concern.

(ii) (a) The Inventory has been physically verified by the management at reasonable intervals during the year.

(b) In our opinion the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

(iii) The Company has not granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of electrical energy. During the course of our audit we have not observed any continuing failure to correct major weaknesses in internal control system.

(v) Based on the audit procedures applied by us and according to the information and explanations given to us we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section. The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposit from the public during the year.

(vii) The Company has an internal audit system commensurate with its size and nature of its business.

(viii) We have broadly reviewed the books of account relating to material, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) (a) As per records produced before us and according to the information and explanations given to us the Company is generally regular in depositing undisputed statutory dues applicable to it like Provident fund, Income-tax, Customs

duty, Cess etc. with the appropriate authorities, and there were no arrears of such dues at the year-end which have remained outstanding for a period of more than six months from the date they became payable.

(b) As per records produced before us and according to the information and explanations given to us there are no dues of Income-tax, Sales-tax, Customs Duty, Wealth tax, Service Tax, Excise Duty or Cess which have not been deposited on account of any dispute.

(x) The company does not have any accumulated losses at the end of the financial year, and has not incurred any cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to any financial institution, bank or debenture holder.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion the Company is not a chit fund or a nidhi/mutual benefit fund/society. Hence, Clause (xiii) of Para 4 of the Order is not applicable.

(xiv) In our opinion the Company is not dealing in or trading in shares, debentures or other investments. Accordingly, Clause (xiv) of Para 4 of the Order is not applicable.

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions; hence Clause (xv) of Para 4 of the Order is not applicable

(xvi) In our opinion & according to the information & explanation given to us , the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we find that no funds raised on short term basis have been used for long term investment.

(xviii) According to the information and explanations given to us, we are of the opinion that during the year the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the company has created security/charge in respect of secured debentures issued and outstanding at the year end.

(xx) During the year the Company has not raised any money by way of public issues. Hence, Clause (xx) of Para 4 of the Order is not applicable.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year

For R. NAGPAL ASSOCIATESChartered Accountants

Place : Noida (R.Nagpal)Dated : 25.4.2008 Partner

M.No.81594

13

BALANCE SHEETAS AT 31ST MARCH 2008 (Rs. In Lacs)

SCHEDULE As at 31.3.2008 As at 31.3.2007

SOURCES OF FUNDS

SHAREHOLDERS’ FUNDS

Share Capital A 49,100 49,100

Reserves & Surplus B 53,947 41,224

DEFERRED REVENUE C 7,056 4,704

LOAN FUNDS

Secured Loans D 82,958 102,280

-

193,061 197,308

APPLICATION OF FUNDS

FIXED ASSETS E

Gross Block 172,241 171,549

Less: Depreciation 21,712 17,130

Net Block 150,529 154,419

Capital Work in Progress 7,849 158,378 4,421 158,840

INVESTMENTS F 3,825 370

CURRENT ASSETS, LOANS & ADVANCES G

Inventories 496 648

Sundry Debtors 21,435 25,612

Cash & Bank Balances 3,826 5,654

Other Current Assets 10,362 10,101

Loans & Advances 6,986 5,031

43,105 47,046

LESS: CURRENT LIABILITIES & PROVISIONS H

Current Liabilities 1,098 4,435

Provisions 11,149 4,513

12,247 8,948

NET CURRENT ASSETS 30,858 38,098

MISCELLANEOUS EXPENDITURE I - -

(To the extent not written off or adjusted)

193,061 197,308

Accounting Policies and Notes to the Accounts O

For and on behalf of the Board

As per our report of even date attached to the Balance Sheet

For R NAGPAL ASSOCIATES MANOJ GAURChartered Accountants Chairman

R. Nagpal Partner M. No. 81594

Place : Noida A.B. Chugh R.K. NarangDated: 25.4. 2008 Jt. President (Finance) Whole-time Director & CFO

14

PROFIT & LOSS ACCOUNTFor the Year ended 31ST MARCH ‘ 2008 (Rs. In Lacs) SCHEDULE Current Year Previous Year

INCOME

Sale of Electrical Energy 30,763 33,577

(Net of advance against depreciation of Rs 2352 Lac for the year, (previous year Rs. 2352 Lac )

Less: Rebate for prompt payments 681 30,082 669 32,908

Other Income J 4,168 2,744

34,250 35,652

EXPENDITURE

Operation & Maintenance K 739 819

Employees Remuneration & Benefits L 703 558

Administration & other expenses M 1,070 1,139

Interest & Financial Charges N 9,929 11,011

12,441 13,527

Operating Profit 21,809 22,125

Depreciation 4,588 4,562

PROFIT BEFORE TAX AND EXTRA ORDINARY ITEMS 17,221 17,563

Add: Extra ordinary items:

-Prior period adjustments - 4,921

- Insurance claim relating to earlier years 6,840 6,840 - 4,921

PROFIT BEFORE TAX 24,061 22,484

Provision for Income Tax - Current Period 2,726 2,523

- Earlier Years (11) -

Provision for Fringe Benefit Tax 6 2,721 7 2,530

PROFIT AFTER TAX 21,340 19,954

Add: Profit brought forward from previous year 36,424 16,470

PROFIT AVAILABLE FOR APPROPRIATION 57,764 36,424

APPROPRIATION:

General Reserve 1,070 -

Interim Dividend 3,683 -

Income Tax on Interim Dividend 626 -

Final Dividend 3,682 -

Income Tax on Final Dividend 626 9,687 - -

BALANCE CARRIED TO BALANCE SHEET 48,077 36,424

Basic and Diluted Earning Per Share (EPS), (in Rs.) 4.35 4.06

Accounting Policies and Notes to the Accounts O

For and on behalf of the Board

As per our report of even date attached to the Balance Sheet

For R NAGPAL ASSOCIATES MANOJ GAURChartered Accountants Chairman

R. Nagpal Partner M. No. 81594

Place : Noida A.B. Chugh R.K. NarangDated: 25.4. 2008 Jt. President (Finance) Whole-time Director & CFO

15

(Rs. In Lacs)

As At As At 31.3.2008 31.3.2007

SCHEDULE ‘A’ : SHARE CAPITAL

Authorised Capital 50,000 50,000

50,00,00,000 Equity Shares of Rs. 10/- each

(Previous year 50,00,00,000 Equity shares of Rs.10/- each )

Issued & Subscribed

49,10,00,600 Equity Shares of Rs.10/- each 49,100 49,100

(Previous year 49,10,00,600 Equity shares of Rs.10/- each fully paid up)

(Out of the above, 31,10,00,600 equity shares are held

by Jaiprakash Associates Ltd.- the holding company.)

(Previous year 31,10,00,600 equity shares of Rs. 10/- each )

49,100 49,100

SCHEDULE ‘B’ : RESERVE AND SURPLUS

General Reserve

Transfer from P&L a/c 1,070

Debenture Redemption Reserve

As per last Balance Sheet 4,800 5,870 4,800

Surplus

As per Profit & Loss Account 48,077 36,424

53,947 41,224

SCHEDULE ‘C’ :DEFERRED REVENUE

Advance against depreciation

As per last Balance Sheet 4,704 1,662

Add: for the year 2,352 2,352

Add: Prior Period Adjustment - 7,056 690 4,704

7,056 4,704

SCHEDULE ‘D’ : SECURED LOANS

(Refer Note 3(a) to 3(d) of Schedule ‘O’ for Security)

DEBENTURES:

Redeemable Non-Convertible Debentures 28,650 29,900

TERM LOANS FROM:

Financial Institutions 19,006 21,618

Banks 24,910 43,916 33,587 55,205

FOREIGN CURRENCY LOANS:

Financial Instituions 650 832

Buyers’ Credit 9,742 10,392 12,234 13,066

WORKING CAPITAL

Banks - 4,109

82,958 102,280

16

(Rs. In Lacs) As at 31.3.2008 As at 31.3.2007SCHEDULE ‘F’ : INVESTMENTS(A) Investment in SubsidiaryUNQUOTED(Refer Note 19 of Schedule ‘O’) 74,00,000 Equity Shares of Jaypee Powergrid Ltd. of Rs. 10/- each fully paid up. 740 5 (Previous year 50,000 Equity Shares)(B) SHARE APPLICATION MONEY 3,085 365 Jaypee Powergrid Ltd. (Subsidiary Company)

3,825 370

SCHEDULE ‘G’ : CURRENT ASSETS, LOANS AND ADVANCESA) CURRENT ASSETS I) Inventories (As per Inventory taken, valued and certified by Management) Stores & Spares 496 648 II) Sundry Debtors (Considered Good) Due for a period exceeding six months 15,452 18,598 Other Debts 5,983 21,435 7,014 25,612 III) Cash and Bank Balances Cash In hand 24 24 Balances with Scheduled Banks (i) In Current Account 406 476 (ii) In Fixed Deposits 461 4,015 (Pledged with Govt. Deptt./Banks Rs.21,18,000/- Previous year Rs. 14,88,000/-) (iii) In Unpaid Dividend account 32 14 (iv) Trust & Retention Account (i) In Current Account 2,168 3 (ii) In Fixed Deposits 735 2,903 3,826 1,122 1,125 5,654 IV) Other Current Assests a) Interest accrued ( including interest receivable on Arrears) 3,839 4,413 b) Deferred Receivable 5,683 5,688 c) Insurance claim receivable 840 10,362 - 10,101

A 36,119 42,015

SCHEDULE ‘E’ FIXED ASSETS (Rs. In Lacs)

Gross Block Depreciation Net Block

S. Particulars Cost Additions Sale/ Cost Upto For the Sale / Upto As at As at No. As at during Transfer As at 31.03.2007 year Transfer 31.3.2008 31.3.2008 31.3.2007 1.4.2007 the year during 31.3.2008 during the year the year1 LAND Lease hold Land 157 - - 157 17 2 - 19 138 162 Freehold Land 24 646 - 670 - - - - 670 22 BUILDING, ROAD & BRIDGES 7,658 - - 7,658 475 125 - 600 7,058 7,1833 HYDRAULIC WORKS 55,159 - - 55,159 5,242 1,495 - 6,737 48,422 49,9174 TRANSMISSION LINE 23,793 - - 23,793 2,440 644 - 3,084 20,709 21,3535 PLANT AND MACHINERY - Generating Equipment 84,092 - - 84,092 8,736 2,279 - 11,015 73,077 75,356 - Others 415 38 - 453 96 20 - 116 337 3196 FURNITURE & FIXTURES 64 1 - 65 20 4 - 24 41 447 OFFICE EQUIPMENT 40 16 - 56 17 5 - 22 34 238 VEHICLES 147 - 9 138 87 14 6 95 43 60 TOTAL 171,549 701 9 172,241 17,130 4,588 6 21,712 150,529 154,419PREVIOUS YEAR 164,713 6,839 3 171,549 12,570 4,562 2 17,130 154,419CAPITAL WORK IN PROGRESS 7,849 4,421

17

B) LOANS AND ADVANCES

(Unsecured, considered Good)

i) Advances receivable in cash or in kind or for value to be received. 236 188

ii) Staff Imprest & advances 9 8

iii) Prepaid Expenses 58 95

iv) Security Deposits - with Govt. Deptts.& Public bodies 76 173

- others 100 176 100 273

v) Advance Tax & Tax Deducted at Source 6,507 4,467

B 6,986 5,031

(A + B) 43,105 47,046

SCHEDULE ‘H’ : CURRENT LIABILITIES AND PROVISIONS

A) CURRENT LIABILITIES

i) Sundry Creditors

Due to Micro, Small Scale,medium scale enterprises - -

Deferred Payments 358 724

Others 331 689 739 1,463

ii) Due to Staff 30 20

iii) Due to Director 1 3

iv) Other Liabilities 62 2,545

v) Interest Accrued but not Due on loans 284 390

vi) Investors Education & Protection Fund:

(Appropriate amounts shall be transferred to Investor Eductation &

Protection Fund, if and when due)

- Unclaimed Dividend 32 14

A 1,098 4,435

B) PROVISIONS

i) Taxation 6,651 4,403

ii) Fringe Benefit Tax 24 18

iii) Provident fund 9 7

iv) Bonus & Incentive 93 35

v) Gratuity 35 29

vi) Leave Encashment 28 21

v) Dividend 3,683 -

vi) Dividend Tax 626 -

B 11,149 4,513

(A+B) 12,247 8,948

SCHEDULE ‘I’ : MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)

Debt Restructuring expenses - 2,502

Add: Addition during the year - - - 2,502

Less: Written Off - -

Less: Written back - 2,502

- -

(Rs. In Lacs) As at 31.3.2008 As at 31.3.2007

18

(Rs. In Lacs) Current Year Previous Year 31.3.2008 31.3.2007

SCHEDULE-J : OTHER INCOMEInterest on deposits with banks 344 271 (TDS Rs. 7296408 - Previous Year Rs. 6249366 )Interest on Arrears 2,592 2,418 Foreign Exchange Fluctuation 1,201 - Others (including sale of scrap and sundry balances written back) 31 55

4,168 2,744

SCHEDULE-K : OPERATION & MAINTENANCE (O & M)Stores & Spares consumed 319 240 O & M Charges of ICF to SJVNL 119 112 Insurance 301 467 739 819

SHCEDULE-L : EMPLOYEES REMUNERATION & BENEFITSSalary , Wages & Bonus 590 422 Contribution to Provident and other funds 39 23 Workmen & Staff Welfare Expenses 55 88 Gratuity 9 15 Leave Encashment 10 10 703 558

SCHEDULE-M : ADMINISTRATION & OTHER EXPENSESRepairs to Building 40 40 Repairs to Machinery 368 129 Repairs to Barrage 46 378 Rent 61 51 Lease Rent of land 9 22 Advertisement 23 32 Business Promotion 3 3 Telephone and Telex 8 7 Courrier & Postage 7 21 Printing & Stationery 14 18 Travelling & Conveyance 46 49 Taxes & Fees - 10 Consultancy, Legal & Professional Fee 82 89 Power & fuel 134 97 Security & Medical Service - 19 Listing Fee 15 6 Vehicle Running & Maintenance 12 18 Director’s Sitting Fee 16 6 Director’s Remuneration 45 32 Filling fee for Tariff application 25 - Miscellaneous Expenses 102 100 Concurrent Audit Fee 5 5 Auditor’s RemunerationFor Audit 8 6 For Tax Audit 1 9 1 7 1,070 1,139

SCHEDULE-N : INTEREST & FINANCIAL CHARGESInterest Debentures 2,748 2,890 Term Loans 6,965 7,644 Working Capital 13 185 Financial charges DPG Commission 151 243 Front end fee and other charges 52 49 9,929 11,011

SCHEDULE ‘ O ’ - NOTES FORMING PART OF ACCOUNTS

1. Significant Accounting Policies:

a) Basis of Preparation of Financial Statements

(i) The accounts are prepared on the historical cost basis and on the principles of a going concern.

(ii) Accounting policies not specifically referred to otherwise are being consistently followed and are in accordance with generally accepted accounting principles.

b) Revenue Recognition

(i) Revenue from sale of electrical energy is accounted for on the basis of billing to Himachal Pradesh State Electricity Board (HPSEB) in accordance with the provisions of Power Purchase Agreement dated 4th June 1997, Amendment No.1 dated 7.1.1998 executed between the company and HPSEB and the Tariff Order dated 24.2.2007 as passed by Hon’ble HPERC.

(ii) Insurance claims are accounted for on receipt basis or as acknowledged by the Insurance Company.

(iii) Other Income and cost/expenditure are accounted for on accrual basis as they are earned or incurred.

(iv) Advance against depreciation claimed/to be claimed as part of tariff in terms of PPA during the currency of loans to facilitate repayment installment is treated as ‘Deferred Revenue’. Such Deferred Revenue shall be included in Sales in subsequent years.

c) Fixed Assets

Fixed Assets are stated at Cost of procurement or construction inclusive of freight, erection & commissioning charges, duties and taxes, expenditure during construction period, Interest on borrowings and financing costs upto the date of commissioning.

d) Depreciation

(i) Premium on Leasehold Land is amortised over the period of lease.

(ii) Depreciation has been provided @2.71% p.a. on straight line method on Hydro Electric Plant w.e.f. 24.5.2003 as approved by The Ministry of Company Affairs, Government of India in exercise of the powers conferred under section 205 (2) (c ) of the Companies Act 1956 vide their letter no. 45/1/2006-CL-III dated 26.6.2006.

(iii) Fixed Assets other than Hydro Electric Plant are depreciated as per straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956.

e) Expenditure during Construction Period

Expenditure incurred on project/assets during construction/implementation is capitalized and apportioned to project/assets on commissioning.

f) Foreign Currency Transactions

(i) Transactions in Foreign Currency are recorded in the Books of Accounts at the rate of exchange prevailing on the date of transaction.

(ii) All loans and deferred credits repayable in Foreign Currency and outstanding at the close of the year are expressed in Indian Currency at the rate of exchange prevailing on the date of the Balance Sheet i.e. 31.03.08.

(iii) Foreign Exchange gain/loss is being credited/charged to revenue in line with the provisions of Accounting Standard (AS-11).

19

g) Investments

Investments are stated at Cost and where there is permanent diminution in the value of Investments a provision is made wherever applicable. Dividend is accounted for as and when received.

h) Inventories Inventories of Stores & Spares are valued at weighted average

cost method. i) Employee Benefits Employees Benefits are provided in the books as per AS-15

(revised) in the following manner: a) Provident Fund and Pension contribution- as a percentage

of salary/wages as per provisions of Employees Provident Funds and Miscellaneous Provisions Act, 1952.

b) Gratuity and Leave Encashment is defined benefit obligation. The liability is provided for on the basis on Projected Unit Credit Method adopted in the actuarial valuation made at the end of each financial year.

j) Borrowing Costs Borrowing costs attributable to the procurement/construction

of fixed assets are capitalised as part of the cost of the respective assets upto the date of commissioning. Other borrowing costs are recognized as expense during the year in which they arise.

k) Taxes on Income Provision for current tax is being made after taking into

consideration benefits admissible to the company under the provisions of the Income Tax Act, 1961.

Deferred tax liability is computed as per Accounting Standard (AS-22) . Deferred Tax Asset and Deferred Tax Liability are computed by applying rates and tax laws that have been enacted by the Balance Sheet date.

l) Amortization of Miscellaneous expenditure Miscellaneous Expenditure are amortized over a period of 3 years

from the date of Commercial Operation/date of transaction. m) Research and Development Revenue expenditure on research and development is

charged to Profit & Loss Account in the year in which it is incurred. Capital expenditure on research and development is shown as an addition to Fixed Assets.

n) Earnings per share Basic earnings per equity share are being computed by

dividing net profit after tax by the weighted average number of equity shares outstanding during the year.

2. Contingent Liabilities:

(i) Outstanding amount of Letter of Credit Rs. 4,12,52,083/- (Previous year Rs 2,85,59,017/-) Margin Money against above Rs. 21,18,000/- (Previous year Rs. 14,88,000/-)

(ii) Estimated amount of contracts remaining to be executed on Capital Account and not provided for : Rs. 3,01,04,865/-

(Previous year Rs. 3,32,07,130/-)

(iii) Claims against the company not acknowledged as debts. Rs. 6,25,91,672/-

(Previous year Rs.10,61,53,613/-)

3 (a) Rupee Term Loans, Foreign Currency Loans, Working Capital Facilities and Deferred Payment Guarantee(s) from Financial Institutions and Banks, together with all interest, guarantee commission, liquidated damages, premia on prepayment or on redemption, cost, expenses and other monies stipulated in the Loan Agreements/Deferred Payment Guarantee Agreement are secured by hypothecation of the Company’s movable assets (present and future), equitable mortgage on the immovable assets of the Company and pledge of

29,49,99,900 equity shares held by Jaiprakash Associates Limited in the company, and assignment of all the rights, titles and interest of the company in all project documents, licenses, permits, approvals etc ranking pari-passu among all the participating Institutions and Banks viz. IDBI, PFC, IIBI, LIC, Bank of Baroda, Punjab National Bank, Indian Overseas Bank, Central Bank of India, State Bank of Travancore, State Bank of Mysore, State Bank of Indore, State Bank of Patiala, State Bank of Hyderabad and Yes Bank.

3 (b) The Foreign Currency Loans under Buyers’ Credit are guaranteed by Deferred Payment Guarantee issued by Power Finance Corporation Limited.

3 (c) The Non Convertible Debentures, (NCDs) together with all interest, liquidated damages, remuneration payable to Trustees, premium on prepayment or on redemption, cost, expenses and other monies stipulated in the Subscription Agreements/Trustee Agreement are secured by a legal mortgage in English form by way of first mortgage and charge on Company’s properties at Mouje Dhanot, Taluka Kalol, District Mehsana in the state of Gujarat in favour of IDBI Trusteeship Services Ltd. (Trustees) for NCDs of Rs.15,000 Lacs subscribed by ICICI Bank Ltd (since converted into RTL) and Axis Bank Ltd (Trustees) for NCDs of Rs 17,400 Lacs subscribed by Axis Bank Ltd and hypothecation of the Company’s movable assets (present and future), equitable mortgage on the immovable assets of the Company and pledge of shares as stated in 3(a) above held by Jaiprakash Associates Ltd. in the Company, ranking pari-passu among all the participating Institutions and Banks.

3 (d) The working capital facilities sanctioned by Punjab National Bank- Shimla are inter - alia secured by personal guarantees of Shri Jaiprakash Gaur - Founder Promoter, Shri Manoj Gaur - Chairman, Shri S.K.Sharma - Vice Chairman and Shri S. K. Jain - Director of the Company.

4 (a) All Rupee Term Loans are repayable in 44 equal installments payable in July, August, September and October each year commencing from July 2005, with the following variation:

Institution/Bank Repayment Schedule

PFC Repayment in 39 Equal Installments in July, August, September and October each year w.e.f July 2005

IIBI Repayment in 48 Equal Installments in July, August, September and October each year w.e.f July 2005.

Yes Bank Repayable in 36 Equal installments in July, August, September and October each year w.e.f July 2007.

4 (b) The details of Non-Convertible Debentures is as follows:

Institution Rate of Amount Redemption Interest

Axis Bank 10% p.a Rs 17,400 Lacs In July, August, (1,740 Debentures September and of Rs 10 Lacs each) October each year commencing from July 2010

ICICI Bank 10.5% p.a Rs. 15,000 Lacs In July, August, upto (150 Lacs Debentures September and 14.06.05 of Rs 100 each October each and – Rs 25/- per year w.e.f 8.5% p.a debenture July 2005 thereafter redeemed as on 31.03.2008)

20

ICICI Bank vide its letter dated 24th June 2005 has agreed to convert its financial assistance by way of subscription to NCD into Rupee Term Loans subject to completion of the necessary documentation which has since been completed. However, the security creation is under process.

5(a) Jaiprakash Associates Limited (JAL), the holding Company, has furnished Corporate Guarantees for the financial assistance outstanding as on 31.03.2008 aggregating to Rs. 5,25,66,57,330/- (Previous Year Rs. 606,96,21,803/-) to the Financial Institutions and Banks and have also pledged 29,49,99,900 Equity Shares of Rs.10/- each of the Company held by it with IFCI Ltd. to collaterally secure the financial assistance granted to the Company by the Financial Institutions and Banks, namely ICICI Bank, IDBI, PFC, LIC, IIBI, Bank of Baroda, Punjab National Bank, Indian Overseas Bank, Central Bank of India, State Bank of Travancore, State Bank of Mysore, State Bank of Indore, State Bank of Patiala, State Bank of Hyderabad, Yes Bank and Axis Bank. ICICI Bank has since released the aforesaid corporate guarantee furnished by JAL and State Bank of Hyderabad, IDBI, State Bank of Indore, LIC, State Bank of Mysore, Indian Overseas Bank, Bank of Baroda and Central Bank of India have agreed to release the same subject to similar approval by other Term Lenders to the company.

5(b) Plant & Machinery includes a sum of Rs 62,86,78,388 being the cost paid for Inter Connection Facility (ICF) established by Satluj Jal Vidyut Nigam Limited (SJVNL) at their Switch Yard at Jhakri for evacuation of power generated by Baspa II Hydro-Electric Project. The maintenance cost of ICF is paid by the company to SJVNL. Jaiprakash Associates Limited, the holding Company, has furnished Bank Guarantee in favour of SJVNL for Rs. 700 Lacs (Previous Year Rs. 700 Lacs) for any additional payment/bills, if any, as and when raised by SJVNL in respect of the aforesaid ICF.

6. In the opinion of the Board of Directors, the “Current Assets, Loans and Advances” read with note no. 12, have a value on realisation, in the ordinary course of business, at least equal to the amount at which they are stated in the Balance Sheet.

7. The Trust and Retention Account (refer Schedule ‘G’) is maintained pursuant to the stipulations of the ‘Financing Agreements’ executed with the Lenders.

8. The Rupee value of Foreign Currency Loans has been considered at the bank TT selling rate as at 31st March 2008 i.e. one US Dollar = Rs. 39.69. The net decrease on account of Foreign Exchange Fluctuation as on 31.03.2008 amounting to Rs 12,00,99,509/- has been credited as revenue in the Profit & Loss Account in line with provisions of Accounting Standard (AS-11). During the previous year, the net decrease on account of Foreign Exchange Fluctuation amounting to Rs. 2,77,80,501/- was reduced from the cost of Plant & Machinery as per Schedule VI to the Companies Act, 1956.

9. Additional Information pursuant to the provisions of Paragraph 3 and 4 of Part-II of Schedule VI to the Companies Act, 1956:

a) Capacity and Production

(As certified by the Management)

Installed Annual Capacity 300 MW

Net Saleable Design Energy at Interconnection Point 1050.06 Million Units

Average Saleable Secondary Energy at Interconnection Point 155.00 Million Units

TOTAL 1205.06 Million Units

Generation details & parameters

Particulars – Saleable Energy Current Previous being 88% saleable part of Year Year total generation

Net Saleable Energy (MU) 1121.26 1121.54

Plant Availability 99.91% 98.83%

(b) Value of imports on C.I.F. basis 2007-2008 2006-2007 Rs. Rs.

- Payment to Suppliers of

Capital Equipment - - 13,41,04,992

- Payment for supplies of spares 18,79,426 3,05,311

(c) Expenditure in Foreign Exchange:

Travelling (Directors) 8,77,326 9,23,727 Travelling (others) - 1,41,659

Interest to Banks 5,70,16,133 7,63,31,768

Consultancy 1,80,50,196 13,42,858

(d) Details of Stores & Spares Consumed :

Rs. % Rs. %

(i) Indigenous 3,00,24,513 94.11 2,36,44,742 98.73

(ii) Imported 18,79,426 5.89 3,05,311 1.27

(e) Earnings in Foreign Exchange Nil Nil

10. Managerial remuneration paid/payable to Whole Time Directors

2007-2008 2006-2007 (Rs.) (Rs.)

Salary 28,17,742 20,10,000

Provident Fund 3,38,129 2,41,200

Perquisites 21,63,196 15,82,906

11. Information as required under Notification No. G.S.R.719(E) dated 16.11.2007 issued by the Department of Company Affairs in respect of the total amount payable and amount of interest thereon paid during the year and payable at the end of the year to the Sundry Creditors has not been disclosed as the relevant information has not been made available by the respective enterprises as regards to their status/classification into Micro, Small and Medium Enterprises.

12. The Himachal Pradesh Electricity Regulatory Commission (HPERC) has passed the Tariff Order on 24.2.2007 determining (i) the Capital Cost of the Project for the purpose of Tariff at Rs.1533.96 crores and (ii) Tariff from COD of the project till 2007-08. The Commission has also been pleased to determine the arrears payable to JHPL on account of difference of tariff so determined and the payments received by it. The arrears along with interest @ 8% per annum has been regulated through a recovery mechanism over seven years.

The company has filed Review Application with HPERC for amendment of certain items of cost and Tariff which has since been disposed off by HPERC vide its Order dated 7th February, 2008 with directions that the impact of some of the grounds of review shall be given effect to by HPERC in subsequent Tariff proceedings. The impact of the review/amendments as might be approved by HPERC will be accounted for in the books of

21

accounts of the company upon receipt of orders of HPERC in subsequent Tariff proceedings.

13. As per accounting policy the Advance Against Depreciation amounting to Rs. 2,352 lacs (previous year Rs 3,042 Lacs) has been treated as Deferred Revenue to be included in revenue in subsequent years.

14. During the current year the insurers have admitted insurance claim for Loss of Profit on account of suspension of generation during the period from 19th January, 2006 to 2nd May, 2006 due to falling of Bolders on the Pothead Yard at Rs. 68.40 Crores which has been included in Income under the head Extra Ordinary Items in the Profit & Loss Account.

15. Related Party Disclosures, as required in terms of “Accounting Standard [AS] 18” are given below:

(1) Relationships (Related party relationships are as identified by the Company and relied upon by the Auditors)

(a) Holding Company:

Jaiprakash Associates Limited

(b) Subsidiary company:

Jaypee Powergrid Limited

(c) Fellow subsidiaries:

(i) Jaypee Hotels Limited

(ii) Jaiprakash Power Ventures Limited

(iii) Jaypee Karcham Hydro Corporation Limited

(iv) Jaypee Cement Limited

(v) Gujarat Anjan Cement Limited (A Subsidiary of Jaypee Cement Limited)

(vi) Jaypee Infratech Limited (w.e.f. 05.04.07)

(vii) Himalayan Expressway Ltd. (25.05.2007)

(viii) Bhilai Jaypee Cement Limited

(ix) Bokaro Jaypee Cement Limited (w.e.f. 13.03.08)

(x) Gujarat Jaypee Cement & Infrastructure Limited (w.e.f. 26.12.07)

(xi) Madhya Pradesh Jaypee Minerals Limited

(xii) Jaypee Ganga Infrastructure Corporation Limited (w.e.f. 18.03.2008)

(xiii) JPSK Sports Pvt. Ltd. (w.e.f. 07.03.08)

(d) Associates:

(i) Jaypee Ventures (P) Limited

(ii) Indesign Enterprises Pvt Ltd

(iii) JIL Information Technology Limited

(iv) Gaur & Nagi Limited

(v) Jaypee Kashmir Energy Ltd.

(vi) Sonebhadra Minerals Pvt. Ltd.

(vii) RPJ Minerals Pvt. Ltd.

(e) Key management Personnel:

(i) Sh Manoj Gaur,Chairman

(ii) Sh S K Sharma , Vice Chairman

(iii) Shri J N Gaur, Whole Time Director

(iv) Shri R K Narang, Whole Time Director

(v) Shri Suresh Chandra, Whole Time Director (w.e.f 11.01.2008)

(2) Transactions carried out with related parties referred to above:

Nature of Transactions Related parties (Amount in Rs)

Referred in Referred in Referred in Referred in Referred in 1(a) above 1(b) above 1(c) above 1(d) above 1(e) above

ExpensesHiring Charges 13,35,83,310

(Previous Year) (14,77,66,610)

Rent 44,47,300

(Previous Year) (42,74,000)

Cement 10,68,41,000

(Previous Year) (19,98,51,390)

Other Expenses 1,15,268

(Previous Year) (1,89,683)

Salary & Perquisites 53,19,067

(Previous Year) 36,41,199)

Security & Medical -

(Previous Year) (18,62,314)

Outstandings - Payables

Amount Payable 1,18,44,682 -

(Previous Year) (3,37,86,088) (1,29,845)

Outstandings - Receivables

Amount Receivables 1,00,00,000 -

(Previous Year) (1,00,00,000) (12,17,296)

Investment in Subsidiary

Share Capital:

74,00,000 Equity Shares of

Jaypee Powergrid Limited 7,40,00,000

(Previous Year) ( 5,00,000)

Share Application Money:

Jaypee Powergrid Limited 30,85,00,000

(Previous Year) (3,65,00,000)

Guarantees given by the holding company on behalf of the company have been mentioned elsewhere in the notes to accounts.

16. Earnings Per Share is computed in accordance with Accounting Standard –20 issued by the Institute of Chartered Accountants of India.

2007-2008 2006-2007 (Rupees) (Rupees)

a) Profit after Tax as per Accounts 213,39,93,327 199,53,03,720

b) Weighted Average of shares outstanding during the period 49,10,00,600 49,10,00,600

c) Earnings Per Share 4.35 4.06

17. (a) Provident Fund - Defined Contribution Plan

All employees are entitled to Provident Fund benefits. Amount debited to Profit and Loss account Rs. 37,46,893/- during the year.

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(b) Gratuity and Leave encashment - Defined Benefit Plans - Provision made as per actuarial valuation.

S. Particulars Non FundedNo Gratuity Leave Encashment

I. Expenses recognized in the statement of Profit and loss account for the year ended 31st March, 2008 1. Current Service Cost 8,33,620 7,65,459 2. Interest Cost 2,31,494 1,71,744 3. Employee Contribution – – 4. Actuarial (Gains)/Losses (4,19,323) (3,48,350) 5. Past Service Cost – – 6. Settlement Cost – – 7. Total Expenses 6,45,791 5,88,853

II Net Assets/ (Liability)recognized in the Balance Sheet as at 31st March 2008 i. Present Value of Defined 35,39,464 27,35,655 Benefit Obligation ii. Fair Value of Plan Assets – – iii. Funded Status (35,39,464) (27,35,655) (Surplus/(Deficit) iv. Net Asset/(Liability) (35,39,464) (27,35,655) as at March 31st, 2008

III Change in Obligation during the Year ended March 31st ,2008 i. Present value of Defined 28,93,673 21,46,802 Benefit Obligation at the beginning of the year ii. Current Service Cost 8,33,620 7,65,459 iii. Interest Cost 2,31,494 1,71,744 iv. Settlement Cost – – v. Past Services Cost – – vi. Employee Contributions – – vii. Actuarial (Gains)/Losses (4,19,323) (3,48,350) viii. Benefit Payments – – ix. Present Value of Defined 35,39,464 27,35,655 Benefit of Obligation at the end of the year

IV Change in Assets during the Year ended March 31st ,2008 1. Plan Assets at the beginning – – of the year 2. Assets acquired on – – amalgamation in previous year 3. Settlements – – 4. Expected return on Plan – – Assets 5. Contribution by Employer – – 6. Actual Benefit paid – – 7. Actuarial Gains/(Losses) – – 8. Plan Assets at the end of the year – – 9. Actual Return on Plan Assets – –

(a) Actuarial Assumption

i. Discount Rate 8.00% ii. Mortality LIC(1994-1996) duly modified tables iii. Turnover Rate Upto 30 year-3%, 30-44 Years-2%, Above 44-1%

18. (a) Provision of Rs. 27,26,16,097.94 (Previous Year Rs 25,22,83,583.92) towards Minimum Alternate Tax (MAT) as Tax payable under section 115JB of Income Tax Act, 1961 has been made. The MAT paid by the company for the current year is allowed to be carried forward for a period upto next 7 years to be adjusted against the normal tax payable, if any, in those years.

(b) Provision for deferred tax has not been made as deferred tax liability arising due to the timing differences during the tax holiday period is less than the deferred tax asset. However, the provision for deferred tax asset has not been created as a matter of prudence.

(c) Provision of Rs. 6,27,758/- (Previous year Rs 7,20,765/- ) towards Fringe Benefit Tax (FBT) as Tax payable under section 115W of Income Tax Act, 1961 has been made for the current year.

19 (a) Pursuant to the Memorandum Of Understanding signed with Power Grid Corporation of India Ltd.(PGCIL), a Joint Venture Company in the name of ‘Jaypee Powergrid Ltd.’ (JPPGL) has been incorporated on 05.10.2006 by the Company for developing a Transmission System for the evacuation of power to be generated by the 1000 MW Karcham Wangtoo Hydro Electric Project in the State of Himachal Pradesh, to a suitable interconnection point. The Shareholder’s Agreement has since been signed with PGCIL on 22.2.2007 with 74% Equity Participation with a provision of minimum 51% Equity Participation by the Company and balance, if any, by affiliates.

(b) Particulars of Investments made subsequent to the date of previous Balance Sheet:

Name of Company 2007-2008 2006-2007 Rupees Rupees

Jaypee PowerGrid Limited (74,00,000 7,40,00,000 5,00,000 Equity Shares of Rs.10/- each)

Share Application Money paid to 30,85,00,000 3,65,00,000 Jaypee PowerGrid Limited

20. All the figures have been rounded off to the nearest rupees in lacs except in the Notes to the Accounts.

21. Previous year’s figures have been regrouped/re-arranged wherever considered necessary to make them confirm to the figures for the current year.

Signature to Schedules “A to “O”

for R.NAGPAL ASSOCIATES For and on behalf of the BoardChartered Accountants

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

Place : Noida A.B.Chugh R.K. NarangDated : 25.4.2008 Jt. President (Finance) Whole-time Director

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BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE PURSUANT TO PART-IV OF SCHEDULE-VI TO THE COMPANIES ACT, 1956

I Registration Details:

Registration No. 15483 State Code No.06

Balance Sheet Date 31.03.2008

II Capital raised during the period (Amount in Rs.Lacs)

Public Issue Nil Rights Issue Nil

Bonus Issue Nil Private Placement Nil

III Position of Mobilisation and (Amount in Rs. Lacs) Deployment of Funds

As at 31.3.2008

Total Liabilities 193,061

Total Assets 193,061

Sources of Funds

Paid-up Capital 49,100

Share Application Money -

Reserve & Surplus 53,947

Deferred Revenue 7,056

Secured Loans 82,958

Unsecured Loans -

193,061

Application of Funds

Net Fixed Assets(including CWIP) 158,378

Investments 3,825

Net Current Assets 30,858

Miscellaneous Expenditure -

Accumulated Losses -

193,061

IV Performance of Company (Amount in Rs. Lacs)

Turnover 34,250

Extra ordinary item 6,840

Total Expenditure 17,029

Profit/(Loss) Before Tax 24,061

Profit/(Loss) After Tax 21,340

Earnings Per Share in Rs.(Weighted average) 4.35

Dividend Rate 15%

V Generic Names of three Principal Products/Services of the Company (as per Monetary terms)

Item Code No.(ITC Code) 8502.30

Product Description Hydro-Power

for R.NAGPAL ASSOCIATES For and on behalf of the BoardChartered Accountants

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

Place : Noida A.B.Chugh R.K. NarangDated : 25.4.2008 Jt. President (Finance) Whole-time Director

& CFO

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2008(Rs. in Lacs)

CURRENT YEAR PREVIOUS YEAR 31.3.2008 31.3.2007

A. Cash flow from operating activities Profit before taxation & Extra ordinary item 17,221 17,562 Add Back Depreciation 4,588 4,562 Defered Revenue on account of Advance against depreciation 2,352 3,042 Prior Period Adjustments - 4,921 Amount written off- Miscellaneous Expenditure - 2,503 (Gain)/Loss on sale of Assets 1 1 Interest & financial charges 9,929 16,870 11,011 26,040 Deduct: Interest Income (2,936) (2,689) Other Income (31) (2,967) (55) (2,744) Operating profit before 31,124 40,858 working capital changes Add: (Increase)/Decrease in Trade Debtors 4,177 (7,897) (Increase)/Decrease in Inventories 152 15 (Increase)/Decrease in Loans and Advances and others 663 4,992 (8,203) (16,085) Deduct: Increase (Decrease) in Trade Payables (3,337) (1,390) Increase (Decrease) in Provisions 73 (3,264) 22 (1,368) Cash generated from Operations 32,852 23,405 Adjustments for : Interest & financial charges paid (9,929) (11,011) Income tax paid (net of refund) (2,506) (12,435) (3,547) (14,558) Net cash inflow from 20,417 8,847 operating activities-’A’ B. Cash flow from Investing activities Outflow Investment in Fixed Assets/ Capital Work in Progress (4,129) (6,722) Inflow Sale of Assets 1 0 Insurance claim relating to earlier years 6,000 - Interest Income 2,936 2,689 Other Income 31 8,968 55 2,744 Net cash used in 4,839 (3,978) investing activities-‘B’ C. Cash flow from Financing activities Inflow Increase in Share Capital - - Increase in Borrowings - 4,533 Outflow Decrease in Borrowings (19,322) (8,373) Debt Restructuring Ex;penses paid - - Payment of Dividend and Dividend Distribution Tax (4,308) - Investment in Subsidiary (3,455) (370) Net cash in financing activities—‘C’ (27,085) (4,210) Net increase/(Decrease) in cash or cash equivalent (A+B+C) (1,829) 659 Cash & cash equivalent at the commencement of the year (Opening balance) 5,654 4,995 Cash & cash equivalent at the end of the year (Closing balance) 3,826 5,654

for R.NAGPAL ASSOCIATES For and on behalf of the BoardChartered AccountantsR.Nagpal Manoj GaurPartner ChairmanM.No. 81594Place : Noida A.B.Chugh R.K. NarangDated : 25.4.2008 Jt. President (Finance) Whole-time Director

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ANNEXURE TO THE BALANCE SHEET AS AT 31ST MARCH 2008Statement Pursuant to Section 212 of the Companies Act, 1956 relating to

Company’s Interest in the Subsidiary Company

1 Name of Subsidiary Company Jaypee Powergrid Limited

2 Financial Year of the Subsidiary Company ended on 31.03.2008 31.03.2007

3 Num ber of Shares held by Jaiprakash Hydro- Power Limited at the end of the financial year of the subsidiary company (i) Equity Shares of Rs. 10/- each - fully paid - up 7,400,000 50,000 (ii) Extent of holding 74.00% 79.37% (iii) Share Application Money (Rs.) 308,500,000 3,65,00,000 4 Date from which it became Subsidiary Company 30.01.2007 30.01.2007

5 The net aggregate of Profit/(Loss) of the Subsidiary Company as far as it concerns the members of the Holding Company:

(i) Not dealt with in the Holding Company’s (Pls See (Pls See Accounts: Note Below) Note Below) (a) For the Financial Year of the Subsidiary N.A N.A (b) For the Previous Financial Years since it became the Holding Company’s Subsidiary N.A N.A (ii) Dealt with in the Holding (Pls See (Pls See Company’s Accounts: Note Below) Note Below) (a) For the Financial Year of the Subsidiary N.A N.A (b) For the Previous Financial Years since it became the Holding Company’s Subsidiary N.A N.A

6 Changes in the interest of Jaiprakash Hydro Power Limited between the end of the Subsidiary’s Financial Year and 31st March, 2008 Number of Shares acquired N.A N.A

7 Material changes between the end of the Subsidiary’s Financial Year and 31st March, 2008

(i) Fixed Assets (Net Addition) (Capital Work-in-Progress) N.A N.A (ii) Investments N.A N.A (iii) Moneys lent by the Subsidiary N.A N.A (iv) Moneys borrowed by the Subsidiary Company other than for meeting Current Liabilities N.A N.A

Note : Jaypee Powergrid Limited is in preoperational stage.As per our Report of even date attached to the Balance Sheet

for R.NAGPAL ASSOCIATES For and on behalf of the BoardChartered Accountants

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

Place : Noida A.B.Chugh R.K. NarangDated : 25.4.2008 Jt. President (Finance) Whole-time Director

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AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF JAIPRAKASH HYDRO-POWER LIMITED ON THE CONSOLIDATED FINANCIAL STATEMENTS OF JAIPRAKASH HYDRO-POWER LIMITED AND ITS SUBSIDIARY

The Board of Directors

Jaiprakash Hydro-Power Limited

1. We have audited the attached consolidated Balance Sheet of Jaiprakash Hydro-Power Limited and its subsidiary, as at 31st March, 2008, and also the Consolidated Profit & Loss Account and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of Jaiprakash Hydro-Power Limited’s management and have been prepared by the management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing by accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of the subsidiary, whose financial statements reflect total assets of Rs. 73.77 Crores as at 31st March 2008, total revenue of Rs. Nil and total cash flows amounting to Rs. 54.96 Crores for the year then ended. These financial statements and other financial information have been audited by other auditors whose report has been furnished to us. Our opinion is based solely on the report of the other auditors.

4. We report that the consolidated financial statements have been prepared by Jaiprakash Hydro-Power Limited’s management in accordance with the requirements of Accounting Standards (AS) 21, ‘Consolidated Financial Statements’, and Accounting Standards (AS) 23, Accounting for Investments in Associates in ‘Consolidated Financial Statements’ issued by the Institute of Chartered Accountants of India.

5. Based on our audit and on consideration of report of other auditors on separate financial statements and on the other financial information of the components, and to the best of our information and according to the explanations given to us, we are of the opinion that the attached consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Consolidated Balance Sheet, of the state of affairs of Jaiprakash Hydro-Power Limited and its subsidiary as at 31st March, 2008.

(b) in the case of the Consolidated Profit & Loss account, of the profit of Jaiprakash Hydro-Power Limited and its subsidiary for the year ended on that date; and

(c) in the case of the Consolidated Cash Flow Statement, of the cash flows of Jaiprakash Hydro-Power Limited and its subsidiary for the year ended on that date.

For R. NAGPAL ASSOCIATESChartered Accountants

Place : Noida R.NagpalDated : 25.04.2008 Partner M.No. 81594

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CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2008 (Rs. in Lacs) SCHEDULE As at As at 31.3.2008 31.3.2007

SOURCES OF FUNDS

SHAREHOLDERS FUNDS

Share Capital A 49,100 49,100

Reserve & Surplus B 53,947 41,224

MINORITY INTEREST

Share Capital 3,675 1

DEFERRED REVENUE C 7,056 4,704

LOAN FUNDS

Secured Loans D 82,958 102,280

196,736 197,309

APPLICATION OF FUNDS

FIXED ASSETS E

Gross Block 172,269 171,549

Less: Depreciation 21,716 17,130

Net Block 150,553 154,419

Capital Work in Progress 7,849 4,421

Incidental Expenditure Pending Allocation F 1,166 159,568 22 158,862

CURRENT ASSETS, LOANS & ADVANCES G

Inventories 496 648

Sundry Debtors 21,435 25,612

Cash & Bank Balances 9,613 5,944

Other Current Assets 10,403 10,101

Loans & Advances 7,344 5,063

49,291 47,368

LESS: CURRENT LIABILITIES & PROVISIONS H

Current Liabilities 1,132 4,442

Provisions 11,175 4,513

12,307 8,955

NET CURRENT ASSETS 36,984 38,413

MISCELLANEOUS EXPENDITURE I 184 34 (To the extent not written off or adjusted)

196,736 197,309

Accounting Policies and Notes to the Accounts O

As per our report of even date attached to the Balance Sheet

for R.NAGPAL ASSOCIATES For and on behalf of the BoardChartered Accountants

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

Place : Noida A.B.Chugh R.K. NarangDated : 25.4.2008 Jt. President (Finance) Whole-time Director

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CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008 (Rs. in Lacs) Schedule Current Previous Year Year

INCOME

Sale of Electrical Energy 30,763 33,577

(Net of advance against depreciation of Rs 2352 Lacs for the year,

Previous Year Rs. 2352 lacs)

Less: Rebate for prompt payments 681 30,082 669 32,908

Other Income J 4,168 2,744

34,250 35,652

EXPENDITURE

Operation & Maintenance K 739 819

Employees Remuneration & Benefits L 703 558

Administration & other expenses M 1,070 1,139

Interest & Financial Charges N 9,929 11,011

12,441 13,527

Operating Profit 21,809 22,125

Depreciation 4,588 4,562

PROFIT BEFORE TAX AND EXTRA ORDINARY ITEMS 17,221 17,563

Add: Extra ordinary items:

- Prior Period Adjustments - 4,921

- Insurance Claim relating to earlier years 6,840 6,840 - 4,921

PROFIT BEFORE TAX 24,061 22,484

Provision for Taxation

-Current Year 2,726 2,523

-Earlier Years (11)

-Fringe Benefit Tax 6 2,721 7 2,530

PROFIT AFTER TAX 21,340 19,954

Add: Profit brought forward from previous year 36,424 16,470

PROFIT AVAILABLE FOR APPROPRIATION 57,764 36,424

APPROPRIATION:

General Reserve 1,070 -

Interim Dividend 3,683 -

Income Tax on Interim Dividend 626

Final Dividend 3,682

Income Tax on Final Dividend 626 9,687 -

BALANCE CARRIED TO BALANCE SHEET 48,077 -

Basic and Diluted Earning Per Share (EPS), (in Rs.) 4.35 4.06

Accounting Policies and Notes to the Accounts O

As per our Report of even date attached to the Balance Sheet

for R.NAGPAL ASSOCIATES For and on behalf of the BoardChartered Accountants

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

Place : Noida A.B.Chugh R.K. NarangDated : 25.4.2008 Jt. President (Finance) Whole-time Director

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CONSOLIDATED SCHEDULE ‘A’ (Rs. in Lacs)

As at As at 31.3.2008 31.03.2007

SHARE CAPITAL

Authorised Capital 50,000 50,000

50,00,00,000 Equity Shares of Rs. 10/- each

(Previous year 50,00,00,000 Equity shares of Rs.10/- each )

Issued , Subscribed & Paid-up 49,100 49,100

49,10,00,600 Equity Shares of Rs.10/- each

(Previous year 49,10,00,600 Equity shares of

Rs.10/- each fully paid up) (Out of the above,

31,10,00,600 equity shares are held by Jaiprakash

Associates Ltd.- the holding company.) (Previous year 31,10,00,600 equity shares of Rs. 10/- each )

49,100 49,100

CONSOLIDATED SCHEDULE ‘B’ : RESERVE AND SURPLUS

General Reserve

Transfer from Profit & Loss Account 1,070

Debenture Redemption Reserve

As per last Balance Sheet 4,800 4,800

Surplus

As per Profit & Loss Account 48,077 36,424

53,947 41,224

CONSOLIDATED SCHEDULE ‘C’ (Rs. in Lacs)

As at As at 31.3.2008 31.03.2007

DEFERRED REVENUE

Advance against depreciation

As per last Balance Sheet 4,704 1,662

Add: For the Year 2,352 2,352

Add : prior period adjustment - 7,056 690 4,704

7,056 4,704

CONSOLIDATED SCHEDULE ‘D’ : SECURED LOANS

DEBENTURES:

Redeemable Non-Convertible Debentures 28,650 29,900

TERM LOANS FROM:

Financial Institutions 19,006 21,618

Banks 24,910 43,916 33,587 55,205

FOREIGN CURRENCY LOANS:

Financial Institutions 650 832

Buyers’ Credit 9,742 10,392 12,234 13,066

WORKING CAPITAL

Bank - 4,109

82,958 102,280

CONSOLIDATED SCHEDULE ‘E’

FIXED ASSETS Rs. in Lacs

GROSS BLOCK DEPRECIATION NET BLOCK

S.No. Particulars Cost as at Addition Sale/Transfer Cost As at Upto For The Sale/Transfer Upto As at As at

01.04.2007 during during the 31.03.2008 31.03.2007 year during the 31.03.2008 31.03.2008 31.03.2007

the year year year

1 LAND

Lease hold Land 157 - - 157 17 2 - 19 138 162

Freehold Land 24 646 - 670 - - - - 670 2

2 BUILDING, ROAD & BRIDGES 7,658 - - 7,658 475 125 - 600 7,058 7,183

3 HYDRAULIC WORKS 55,159 - - 55,159 5,242 1,495 - 6,737 48,422 49,917

4 TRANSMISSION LINE 23,793 - - 23,793 2,440 645 - 3,085 20,708 21,353

5 PLANT AND MACHINERY

- Generating Equipment 84,092 - - 84,092 8,736 2,279 - 11,015 73,077 75,356

- Others 415 40 - 455 96 21 - 117 338 319

6 FURNITURE & FIXTURES 64 2 - 66 20 5 - 25 41 44

7 OFFICE EQUIPMENT 40 17 - 57 17 5 - 22 35 23

8 VEHICLES 147 24 9 162 87 15 6 96 66 60

TOTAL 171,549 729 9 172,269 17,130 4,592 6 21,716 150,553 154,419

PREVIOUS YEAR 164,713 6,839 3 171,549 12,570 4,562 2 17,130 154,419

CAPITAL WORK IN PROGRESS 7,849 4,421

27

CONSOLIDATED SCHEDULE ‘F’

STATEMENT OF INCIDENTAL EXPENDITURE DURING CONSTRUCTION, PENDING ALLOCATION

(Rs. In Lacs)

As at 31.3.2008 As at 31.3.2007

Consultancy Expenses 621 21Bank Charges - -Legal and Professional Expenses 398 -Miscellaneous Expenses 7 -Printing & Stationery Expenses 2 -Rent, Rate & Taxes 4 1Advertisement & Publicity 21 -Books and Periodicals 1 -Communication Expenses 1 -Computer Spare & Repairs 0 -Depreciation 3 -Salaries 88 -Forest Compensation 34 -Sitting Fee 4 -Licence Fee 2 -Traveling & Conveyance 17 -Vehicle Running & Maintenance 6 -Auditor’s RemunerationAudit Fee Including Service Tax 1 -Provision for Taxations Income Tax 23 - Fringe Benefit Tax 2 - Wealth Tax 0 -Provision for Leave encashment/Gratuity 2 -

TOTAL 1,237 22Less: Short Term Interest on Deposit with Banks 59 Income on FDR’s [TDS Rs. 1217227.00] - Bidding Fee (Net of Expenses) 12

TOTAL CARRIED TO BALANCE SHEET 1,166 22

CONSOLIDATED SCHEDULE ‘G’ : CURRENT ASSETS, LOANS AND ADVANCESA) CURRENT ASSETS I) Inventories (As per Inventory taken, valued and certified by Management) Stores & Spares 496 648 II) Sundry Debtors (Considered Good) Due for a period exceeding six months 15,452 18,598 Other Debts 5,983 21,435 7,014 25,612 III) Cash and Bank Balances Cash In hand 25 24 Balances with Scheduled Banks (i) In Current Account 660 766 (ii) In Fixed Deposits 5,993 4,015 (Pledged with Govt. Deptt./Banks Rs. 21,18,000/- Previous year Rs. 14,88,000/-) (iii) In Unpaid Dividend Bank account 32 14 (iv) Trust & Retention Account (i) In Current Account 2,168 3 (ii) In Fixed Deposits 735 2,903 9,613 1,122 1,125 5,944 IV) Other Current Assests a) Interest accrued (including interest receivable on Arrears) 3,880 4,413 b) Deferred Receivable 5,683 5,688

c) Insurance Claim 840 10,403 - 10,101

A 41,947 42,305

(Rs. in lacs)B) LOANS AND ADVANCES As at 31.3.2008 As at 31.3.2007 (Unsecured, considered Good) i) Advances receivable in cash or in kind or for value to be received. 574 220 ii) Staff Imprest & advances 9 8 iii) Prepaid Expenses 58 95 iv) Security Deposits -with Govt. Deptts.& Public bodies 76 173 - - others 101 177 100 273 v) Advance Tax & Tax Deducted at Source 6,526 4,467

B 7,344 5,063

(A + B) 49,291 47,368

CONSOLIDATED SCHEDULE ‘H’ : CURRENT LIABILITIES AND PROVISIONS

A) CURRENT LIABILITIES

i) Sundry Creditors

Due to Micro, Small Scale,medium scale enterprises - -

Deferred Payments 358 724

Others 338 696 746 1,470

ii) Due to Staff 39 20

iii) Due to Directors 1 3

iv) Other Liabilities 80 2,545

v) Interest Accrued but not Due on loans 284 390

vi) Investors Education & Protection Fund:

(Appropriate amounts shall be transferred to Investor Education &

Protection Fund, if and when due)

-Unclaimed Dividend 32 14

A 1,132 4,442

B) PROVISIONS

i) Taxation 6,674 4,403

ii) Fringe Benefit Tax 26 18

iii) Provident fund 9 7

iv) Bonus & Incentive 93 35

v) Gratuity 36 29

vi) Leave Encashment 29 21

vii) Dividend 3,682

viii) Dividend Tax 626

B 11,175 4,513

(A+B) 12,307 8,955

CONSOLIDATED SCHEDULE ‘I’ : MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)

Preliminary Expenses 34 34

Less: Written Off 150 184 - 34

Debt Restructuring expenses 2,502 2,502

Add: Addition during the year - -

Less: Recovery from HPSEB 2,502 - 2,502 -

184 34

CONSOLIDATED SCHEDULE-J : OTHER INCOME

Interest on deposits with banks 344 271

(TDS Rs. 7296408 - Previous Year Rs.6249366)

Interest on Arrears 2,592 2,418

Foreign Exchange Fluctuation 1,201 -

Others Income 31 55

4,168 2,744

28

(Rs. In Lacs)

As at 31.3.2008 As at 31.3.2007

CONSOLIDATED SCHEDULE-K : OPERATION & MAINTENANCE

Stores & Spares consumed 319 240O & M Charges of ICF to SJVNL 119 112Insurance 301 467

739 819

CONSOLIDATED SHCEDULE-L : EMPLOYEES REMUNERATION & BENEFITS

Salary , Wages & Bonus 590 422Contribution to Provident and other funds 39 23Workmen & Staff Welfare Expenses 55 88Gratuity 9 15Leave Encashment 10 10

703 558

CONSOLIDATED SCHEDULE-M : ADMINISTRATION & OTHER EXPENSES

Repairs to Building 40 40Repairs to Machinery 368 129Repairs to Barrage 46 378Rent 61 51Lease Rent of land 9 22Advertisement 23 32Business Promotion 3 3Telephone and Telex 8 7Courier & Postage 7 21Printing & Stationery 14 18Travelling & Conveyance 46 49Taxes & Fees - 10Consultancy, Legal & Professional Fee 82 89Power & fuel 134 97Security & Medical expenses - 19Listing Fee 15 6Vehicle Running & Maintenance 12 18Director’s Sitting Fee 16 6Director’s Remuneration 45 32Filing fee for Tariff application 25 -Miscellaneous Expenses 102 100Concurrent Audit Fee 5 5Auditor’s RemunerationFor Audit 8 6 For Tax Audit 1 9 1 7

1,070 1,139

CONSOLIDATED SCHEDULE-N : INTEREST & FINANCIAL CHARGES

InterestDebentures 2,748 2,890Term Loans 6,965 7,644Working Capital 13 185Financial chargesDPG Commission 151 243Other charges 52 50

9,929 11,011

upto the same reporting date, as that of the Parent Company, Jaiprakash Hydro-Power Limited (JHPL).

(iii) The accounts are prepared on the historical cost basis and on the principles of a going concern

(iv) Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles.

Principles of Consolidation:

(i) The financial statements of JHPL and its subsidiary are consolidated on a line-by-line basis, by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-company balances, intra-company transactions and unrealised profits / losses.

(ii) The financial statements of JHPL and its subsidiary are consolidated using uniform accounting policies for like transactions and other events in similar circumstances.

Revenue Recognition:

(i) Revenue from sale of electrical energy by JHPL is accounted for on the basis of billing to Himachal Pradesh State Electricity Board (HPSEB) in accordance with the provisions of Power Purchase Agreement dated 4th June 1997, Amendment No.1 dated 7.1.1998 executed between JHPL and HPSEB and the Tariff Order dated 24.2.2007 as passed by Hon’ble HPERC.

(ii) Other Income and cost/expenditure are accounted for on accrual basis as they are earned or incurred.

(iii) Advance against depreciation claimed /to be claimed by JHPL as part of tariff in terms of PPA during the currency of loans to facilitate repayment installment is treated as ‘Deferred Revenue’. Such Deferred Revenue shall be included in Sales in subsequent years.

Fixed Assets:

Fixed Assets are stated at Cost of acquisition or construction inclusive of freight, erection & commissioning charges, duties and taxes, expenditure during construction period, Interest on borrowings and financing costs upto the date of acquisition / installation.

Depreciation:

(i) Premium on Leasehold Land is amortised over the period of lease.

(ii) Depreciation has been provided @2.71% p.a. on straight line method on Hydro Electric Plant of JHPL w.e.f. 24.5.2003 as approved by The Ministry of Company Affairs, Government of India in exercise of the powers conferred under section 205 (2) (c ) of the Companies Act 1956 vide their letter no. 45/1/2006-CL-III dated 26.6.2006.

(iii) Fixed Assets other than Hydro Electric Plant are depreciated by JHPL as per straight-line method at the rates specified in Schedule XIV of the Companies Act, 1956.

Retirement Benefits:

Retirement Benefits are provided in the books in the following manner:

(a) Gratuity and Leave Encashment on Retirement – as per actuarial valuation.

(b) Provident Fund and Family Pension – on accrual basis.

Inventories:

Inventories of Stores & Spares are valued on the basis of Weighted Average Cost Method.

Foreign Currency Transactions:

(i) Transactions in Foreign Currency are recorded in the Books of Accounts at the rate of exchange prevailing on the date of transaction.

(ii) All loans and deferred credits repayable in Foreign Currency and outstanding at the close of the year are expressed in Indian Currency at the rate of exchange prevailing on the date of the Balance Sheet.

(iii) Foreign Exchange gain/loss is being credited/charged to revenue in line with the provisions of Accounting Standard (AS-11).

Borrowing Cost:

Borrowing costs attributable to the acquisition / construction of fixed assets are capitalised as part of the cost of the respective assets upto the date of commissioning. Other borrowing costs are recognized as expense during the year in which they arise. A qualifying asset is one that takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

Amortization of Miscellaneous Expenditure:

Miscellaneous Expenditure are amortized over a period of 3 years from the date of Commercial Operation / date of transaction.

Earnings Per Share:

Basic earnings per equity share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding during the year.

CONSOLIDATED SCHEDULE “O”

ACCOUNTING POLICIES AND NOTES TO THE CONSOLIDATED ACCOUNTS

(A) SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation of Consolidated Financial Statements:

(i) The Consolidated Financial Statements are prepared in accordance with Accounting Standards [AS] 21 on Consolidated Financial Statements, AS-23 on Accounting for Investment in Associates in Consolidated Financial Statements and AS-27 on Financial Reporting of Interests in Joint Ventures.

(ii) The financial statements of the Subsidiary Company used in the consolidation are drawn

29

Expenditure during Construction Period:

Expenditure incurred on project during implementation period is capitalised and apportioned to various assets on commissioning of the project.

Taxes on Income:

Provision for current tax is made after taking into consideration benefits admissible to the company under the provisions of the Income Tax Act, 1961.

Deferred Tax Liability is provided in accordance with Accounting Standard [AS-22]. Deferred Tax Asset and Deferred Tax Liability is calculated by applying rates and tax laws that have been enacted upto the Balance Sheet date.

Segment Reporting:

Revenue, operating results, assets and liabilities have been identified to represent separate segments on the basis of their relationship to the operating activities of the segment. Assets, Liabilities, Revenue and Expenses which are not allocable to separate segment on a reasonable basis, are included under “Unallocated”.

Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised where it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

(B) NOTES TO THE ACCOUNTS

1 Subsidiary

The Consolidated Financial Statements present the Consolidated Accounts of Jaiprakash Hydro-Power Limited with its following Subsidiary:

Name of Subsidiary Country of Proportion of Incorporation Ownership Interest

[a] Jaypee Powergrid Ltd. [JPPGL] India 51%

2 Significant Accounting Policies and Notes to these Consolidated Financial Statements are intended to serve as a means of informative disclosure and a guide to better understanding the consolidated position of the Companies. Recognising this purpose, the Company has disclosed such Policies and Notes from the individual financial statements, which fairly present the needed disclosures.

3 Pursuant to the Memorandum Of Understanding signed with Power Grid Corporation of India Ltd.(PGCIL), a Joint Venture Company in the name of ‘Jaypee Powergrid Ltd.’ (JPPGL) has been incorporated on 05.10.2006 by the Company for developing a Transmission System for the evacuation of power to be generated by the 1000 MW Karcham Wangtoo Hydro Electric Project in the State of Himachal Pradesh, to a suitable interconnection point. The Shareholder’s Agreement has since been signed with PGCIL on 22.2.2007 with 74% Equity Participation with a provision of minimum 51% Equity Participation by the Company and balance, if any, by affiliates.

Subsequently a deed of Adherence was executed between JHPL, POWERGRID and JPVL ( Jaiprakash Power Ventures Limited, an affiliate of JHPL) for amendment in Shareholder’s Agreement to the subscription of the share capital of JPPGL to the tune of 23% by JPVL out of the 74% Equity to be brought in by JHPL.

4 Contingent Liability not provided for in respect of:

Current Year Rs. Previous Year Rs.

(a) Claims against the Company not acknowledged as debts 6,25,91,672 10,61,53,613

(b) Outstanding Letters of Credit 4,12,52,083 2,85,59,017 Margin Money deposited against the above 21,18,000 14,88,000

5 Estimated amount of Contracts remaining to Rs. 322,31,61,448 be executed on capital account and not provided for (Previous Year Rs 3,32,07,130/-)

6 In the opinion of Board of Directors, the “Current Assets, Loans and Advances” have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

7 Jaiprakash Associates Limited (JAL), the holding Company of Jaiprakash Hydro-Power Ltd., has furnished Corporate Guarantees for the financial assistance outstanding as on 31.03.2008 aggregating to Rs. 5,25,66,57,330/- (Previous Year Rs.606,96,21,803/-) to the Financial Institutions and Banks and have also pledged 29,49,99,900 Equity Shares of Rs.10/- each of JHPL held by it with IFCI Ltd. to collaterally secure the financial assistance granted to JHPL by the Financial Institutions and Banks, namely ICICI Bank, IDBI, PFC, LIC, IIBI, Bank of Baroda, Punjab National Bank, Indian Overseas Bank, Central Bank of India, State Bank of Travancore, State Bank of Mysore, State Bank of Indore, State Bank of Patiala, State Bank of Hyderabad, Yes Bank and Axis Bank. ICICI Bank has since released the aforesaid corporate guarantee furnished by JAL and State Bank of Hyderabad, State Bank of Indore, LIC, State Bank of Mysore, Indian Overseas

Bank, Bank of Baroda and Central Bank of India have agreed to release the same subject to similar approval by other Term Lenders to JHPL.

8 The Himachal Pradesh Electricity Regulatory Commission (HPERC) has passed the Tariff Order on 24.2.2007 determining (i) the Capital Cost of the Project for the purpose of Tariff at Rs.1533.96 crores and (ii) Tariff from COD of the project till 2007-08. The Commission has also been pleased to determine the arrears payable to JHPL on account of difference of tariff so determined and the payments received by it. The arrears along with interest @ 8% per annum has been regulated through a recovery mechanism over seven years.

The company has filed Review Application with HPERC for amendment of certain items of cost and Tariff which has since been disposed off by HPERC vide its Order dated 7th February, 2008 with directions that the impact of some of the grounds of review shall be given effect to by HPERC in subsequent Tariff proceedings. The impact of the review/amendments as might be approved by HPERC will be accounted for in the books of accounts of the company upon receipt of orders of HPERC in subsequent Tariff proceedings.

9 As per accounting policy the advance against depreciation of Jaiprakash Hydro-Power Ltd. amounting to Rs. 2352 Lacs (Previous Year Rs 3042 lacs) has been treated as Deferred Revenue to be included in revenue in subsequent years.

10 Earnings Per Share is computed in accordance with Accounting Standard –AS20 issued by the Institute of Chartered Accountants of India.

2007-2008 (Rs) 2006-2007 (Rs)

a) Profit after Tax as per Accounts 213,39,93,327 199,53,03,720

b) Weighted Average of shares outstanding during the period 49,10,00,600 49,10,00,600

c) Earnings Per Share 4.35 4.06

11 Provisions for Taxation have been made as per individual accounts of the Companies.

12 Capital Work-in-progress includes Civil Works, Machinery Under Erection and in transit Construction, Advance to Suppliers, Pre-operative Expenses and Incidental Expenditure Pending Allocation. - Rs. 9015 lacs (Previous Year Rs. 4443 Lacs)

13 Managerial remuneration paid/payable by the Company and its subsidiary to Managing /Whole-time Directors [excluding provisions for Gratuity & Leave Encashment on Retirement]:

2007-08 Rs. 2006-07 Rs.

Salary 55,17,742 20,10,000

Provident Fund Contribution 5,54,129 2,41,200

Perquisites 40,29,797 15,82,906

14 Related Party disclosures, as required in terms of “Accounting Standard [AS] 18” are given below:

Relationships (Related party relationships are as identified by the Company and relied upon by the Auditors)

(a) Holding Company:

Jaiprakash Associates Limited.

(b) Fellow subsidiaries:

(i) Jaypee Hotels Limited

(ii) Jaiprakash Power Ventures Limited

(iii) Jaypee Karcham Hydro Corporation Limited

(iv) Jaypee Cement Limited

(v) Gujarat Anjan Cement Limited (A Subsidiary of Jaypee Cement Limited)

(vi) Jaypee Infratech Limited (w.e.f. 05.04.07)

(vii) Himalayan Expressway Ltd. (25.05.2007)

(viii) Bhilai Jaypee Cement Limited

(ix) Bokaro Jaypee Cement Limited (w.e.f. 13.03.08)

(x) Gujarat Jaypee Cement & Infrastructure Limited (w.e.f. 26.12.07)

(xi) Madhya Pradesh Jaypee Minerals Limited

(xii) Jaypee Ganga Infrastructure Corporation Limited (w.e.f. 18.03.2008)

(xiii) JPSK Sports Pvt. Ltd. (w.e.f. 07.03.08)

(c) Associate companies:

(i) Jaypee Ventures (P) Limited

(ii) Indesign Enterprises Pvt Ltd

(iii) JIL Information Technology Limited

(iv) Gaur & Nagi Limited

30

(v) Jaypee Kashmir Energy Ltd.

(vi) Sonebhadra Minerals Pvt. Ltd.

(vii) RPJ Minerals Pvt. Ltd

(d) Key Management Personnel:

Jaiprakash Hydro-Power Limited

[i] Shri Manoj Gaur, Chairman

[ii] Shri Sunil Kumar Sharma, Vice Chairman

[iii] Shri J N Gaur, Whole-time Director

[iv] Shri R K Narang, Whole-time Director

[v] Shri Suresh Chandra, Whole Time Director (w.e.f 11.01.2008)

Jaypee PowerGrid Limited

[i] Shri Rajiv Bhardwaj, Managing Director

Transactions carried out with related parties referred to above: Amount in Rs.

Related parties)

Nature of Transactions Referred in Referred in Referred in Referred in 1(a) above 1(b) above 1(c) above 1(d) above

Expenses

Hire Charges 13,35,83,310 - - - (4,77,66,610)

Rent 44,47,300 - - - (42,74,000)

Cement 10,68,41,000 - - - (19,98,51,390)

Other Expenses - 1,15,268 - - (1,89,683)

Salary & Perquisites - - - 53,19,067 ( 36,41,199)

Security & Medical - - - - (18,62,314)

Outstandings - -

Receivables 100,00,000 - - - (100,00,000) (.12,17,296)

Payables 1,18,44,682 - - - (3,37,86,088) (1,29,845)

Guarantees given by the holding company on behalf of the JHPL have been mentioned elsewhere in the notes to accounts.

15. Segment Information:

There are no Segment information in this year as JHPL the holding company is engaged in only Power Generation and Jaypee Powergrid Ltd. the subsidiary company is yet to commence commercial operation.

16. Information as required under notification No. G.S.R. 719 (E) dated 16th November, 2007 issued by the Department of Company Affairs in respect of the total amount payable and amount of interest thereon paid during the year and payable at the end of the year to the sundry creditors has not been disclosed as the relevant information has not been made available by the respective enterprises as regard to their status / classification into Micro, Small and Medium enterprises.

17. Previous year’s figures have been regrouped/re-arranged wherever considered necessary to make them confirm to the figures for the current year being the first year of consolidation of accounts, previous year’s figures have not been given.

Signature to Schedules “A to “O”

for R.NAGPAL ASSOCIATES For and on behalf of the BoardChartered Accountants

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

Place : Noida A.B.Chugh R.K. NarangDated : 25.4.2008 Jt. President (Finance) Whole-time Director

& CFO

Consolidated Cash Flow Statement for the Year ended 31st March 2008(Rs. In lacs)

CURRENT YEAR PREVIOUS YEAR A. Cash flow from operating Activities Profit before taxation & Extra ordinary item 17,221 17,563 Add Back Depreciation 4,588 4,562 Deferred Revenue on account of advance against depriciation 2,352 3,042 Prior Period Adjustments 4,921 Amount written off-Miscellaneous Expenditure 2,503 (Gain)/Loss on sale of Assets 1 1 Interest & financial charges 9,929 16,870 11,011 26,040 Deduct: Interest Income (2,936) (2,689) Other Income (31) (2,967) (55) (2,744) Operating profit before working capital changes 31,124 40,859 Add: (Increase)/Decrease in Trade Debtors 4,177 (7,897) (Increase)/Decrease in Inventories 152 15 (Increase)/Decrease in Loans and Advances and others 297 4,626 (8,235) (16,117) Deduct: Increase (Decrease) in Trade Payables (3,310) (1,383) Increase (Decrease) in Provisions 75 (3,235) 22 (1,361) Cash generated from Operations 32,515 23,381 Adjustments for : Interest & financial charges paid (9,929) (11,011) Income tax paid (net of refund) (2,507) (12,436) (3,548) (14,559) Net cash inflow from operating activities -’A’ 20,079 8,822 B. Cash flow from Investing Activities Outflow Investment in Fixed Assets in Cash (5,271) (6,744) Inflow Sale of Assets 1 - Insurance Claim 6,000 - Interest Income 2,936 2,689 Other Income 31 8,968 55 2,744 Net cash used in investing Activities-‘B’ 3,697 (4,000)C. Cash flow from Financing Activities Inflow Increase in Share Capital- Minority Interest 3,674 1 Increase in Borrowings - 4,533 Outflow Decrease in Borrowings (19,322) (8,373) Preliminary Expenses (150) (34) Payment of Dividend and Dividend Tax (4,309) - Net cash in financing Activities-‘C’ (20,107) (3,873) Net increase/(Decrease) in cash or cash equivalent (A+B+C) 3,669 949 Cash & cash equivalents at the commencement of the year (Opening balance ) 5,944 4,995 Cash & cash equivalents at the end of the year (Closing balance) 9,613 5,944

for R.NAGPAL ASSOCIATES For and on behalf of the BoardChartered Accountants

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

Place : Noida A.B.Chugh R.K. NarangDated : 25.4.2008 Jt. President (Finance) Whole-time Director

& CFO

31

32

DIRECTORS’ REPORTTo,

The Members,

The Directors of your Company have pleasure in presenting the second Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2008.

THE PROJECT

(a) Physical Progress

The Detailed Project Report for 220 km 400 Kv Double Circuit Quad Conductor transmission line from Wangtoo to Abdullapur and Loop-in-loop-out connection with existing Baspa Jhakri line with the Karcham Wangtoo HEP power house switchyard at Wangtoo.( Project) has been prepared by Power Grid Corporation of India Limited.(POWERGRID)

The estimated cost of the Project has been assessed at Rs.881.98 crores, including IDC of Rs.89.30 crores based on 4th quarter of 2006 price level. The estimated cost of the Project, including IDC at the projected price levels on the dates on which the capital cost actually arises, is likely to be around Rs.981 crores. However, the final cost will depend upon the actual price levels, cost of right of way through forest and private land and other factors relating to site conditions encountered during the construction. Efforts are being made to advance the Project completion schedule from earlier schedule of December, 2010 to June,2010.

POWERGRID has been engaged as the consultant for Design, Engineering and tender process for the entire line including the sub-station bays at Abdullapur for establishing connection with the POWERGRID system. The responsibility of constructing the sub-station bays has been entrusted to POWERGRID on turnkey basis.

Contracts for Tower Erection Packages were awarded during the year at a total value of Rs. 297 crores.The successful bidders have established their field offices. The bidding process for the supply of conductors and insulators is in progress, which shall be finalised shortly.

All the necessary approvals / consents for implementation of the Project are being / have already been obtained. Govt. of India has approved the diversion of forest land in Haryana. Government of Himachal Pradesh has recommended proposals for forest clearance approval to the Ministry of Environment & Forest (MoEF), Govt of India, New Delhi and approval thereof is expected by July’2008.

Site offices have been opened at Shoultu, Rampur, Solan, Rajgarh and Yamuna Nagar with adequate technically qualified manpower.

(b) Financial Progress

The total Project cost of Rs. 1000 crores is proposed to be met as under:

MEANS OF FINANCING

Rs. in crores

Equity ( Promoters) 300Rupee Term Loan 700TOTAL 1000

Your Directors are pleased to report that the Project of your Company has been appraised by Banks ,with ICICI Bank Limited as the Lead Arranger. They have agreed in principle to grant to the Company Rupee Term Loans of Rs.700 crores The Financial closure is expected to be achieved by end of June ,2008.

Profit and Loss Account of the Company has not been prepared as the Project is in construction stage. However, as per Statement of Incidental Expenditure during construction , pending allocation, for the year ending 31st March,2008 , total amount of Rs 11.66 crores has been carried to Balance Sheet forming part of the Project Cost.

SHARE CAPITAL

As the members are aware, Authorised Share Capital of the Company was increased from Rs. 50 crores to Rs.300 crores.

The paid-up share capital as on 31st March, 2007 stood at Rs. 6,30,000.During the year under report, your Company allotted 73,50,000 equity shares of Rs.10/- each to Jaiprakash Hydro-Power Limited (JHPL) and 25,87,000 equity shares of Rs.10/- each to Power Grid Corporation of India Limited (POWERGRID) and as such the total paid-up share capital of the Company as on 31st March, 2008 stood at Rs.10 crore.

Further, during the year under report, your company had received Rs. 65 crore towards Share Application Money from the Promoters and their Affiliates , namely, Jaiprakash Hydro-Power Limited (JHPL) , Jaiprakash Power Ventures Limited (JPVL) and Power Grid Corporation of India Limited (POWERGRID) in the agreed ratios of 51%, 23% and 26% respectively.

AUDIT COMMITTEE

An Audit Committee of the Board was constituted on 18th September,2007 comprising of S/Shri G.P. Singh, Suren Jain and Prabhakar Singh , Directors of the company satisfying the requirements of Section 292 A of the Companies Act, 1956.

DIRECTORATE

In terms of Clause 4.3 of the Shareholders’ agreement , Shri Vinod Sharma , a nominee of Jaiprakash Hydro-Power Limited was appointed as Additional Director w.e.f. 18th February,2008.Resolution for his appointment as Director has been included in the notice convening the second Annual General Meeting for approval of the shareholders.

Shri Manoj Gaur, Vice- Chairman and Shri Sunil Kumar Sharma , Director retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

DEPOSITS

The Company did not invite / accept any Fixed Deposits from the public during the period under report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representation received from the operating management and after due enquiry, confirm the following in respect of the Audited Accounts for the year ended 31st March, 2008:-

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

ii. that the Directors have, in consultation with the Statutory Auditors, selected such accounting policies and applied them consistently and made judgement and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the year ended 31st March, 2008;

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

iv. that the Annual Accounts have been prepared on a going concern basis.

PARTICULARS OF EMPLOYEES

A statement showing the particulars of employees pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is annexed and forms integral part of the report.

33

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information with respect to conservation of energy as per Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988 and forming part of the Directors’ Report for the period ended 31st March, 2008 is not applicable as the Project is still under construction stage.

As regards, the information with respect to Technology Absorption , the Project shall utilize and absorb the modern technology for the construction of the transmission line consistent with the leading practices adopted by POWERGRID, which is providing the consultancy for design and engineering. There has not been any Foreign Exchange earnings / outgo.

NOTES ON ACCOUNTS

The observations of Auditors and Notes on Accounts are self-explanatory.

AUDITORS

M/s. Awatar & Co. , Chartered Accountants, Auditors of the Company retire at the conclusion of this Annual General Meeting and being eligible offer themselves for re-appointment.

APPRECIATION

The Directors of your Company wish to place on record their gratitude to Government of India, State Government of Himachal Pradesh and Haryana, various Departments and Undertakings of the Central & State Governments, Central Electricity Authority, Himachal Pradesh State Electricity Board , Banks and other authorities for their valuable and continued cooperation & support to the Company.

On behalf of the Board

Place: Gurgaon DR. R.P. SINGH

Date : 22nd April, 2008 CHAIRMAN

ANNEXURE TO THE DIRECTORS’ REPORT

Information in pursuance to Sub-section 2A of Section 217 of the Companies Act, 1956 is given below:

Name of Employee, Designation/Nature of Duties, Gross Remuneration (Rs.), Qualification, Age (in years), Total Experience (in years), Date of commencement of Employment, Previous Employment:

A. Employed throughout the year and in receipt of remuneration aggregating Rs. 24,00,000/- or more

Shri Rajiv Ranjan Bhardwaj, Managing Director, Rs. 29,17, 229 /-, B.Sc. (Hons.) Chemistry; 49, 25, 2nd March, 2007, Jaypee Ventures Private Limited, New Delhi.

Notes:

1. Gross remuneration includes Salary, House Rent Allowance and other perks like Medical Reimbursement, Leave Travel Assistance, Furnishing Allowance, Company’s contribution towards Provident Fund etc. but excludes provision for Gratuity & Leave Encashment.

2. Shri Rajiv Ranjan Bhardwaj, holds the office for a period of three years from the date of appointment viz. 2nd March, 2007.

B. Employed for part of the year and in receipt of remuneration aggregating Rs. 2,00,000/- or more per month

Nil

AUDITOR’S REPORTTO THE SHAREHOLDERS OF

JAYPEE POWERGRID LIMITED

1. We have audited the attached Balance Sheet of JAYPEE POWERGRID LIMITED (“the Company”) as at 31st March, 2008 and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. No Profit and Loss Account has been prepared since the Company has yet to commence its revenue operations and necessary details as per part II of Schedule VI of the Companies Act, 1956 have been disclosed in the “Statement of Incidental Expenditure During Construction Pending Allocation”.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimate made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(i) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

(ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(iii) the Balance Sheet and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(iv) in our opinion, the Balance Sheet and Cash Flow Statement comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) on the basis of written representations received from the directors, as on March 31, 2008, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956, and;

(vi) in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the significant accounting policies and notes thereon, give the information required by the Companies Act, 1956, in the manner so required and gives a true and fair view:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008; and

b) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

For AWATAR & C O.Chartered Accountants

N. AWATARPartner

Place : Gurgaon Membership No. : 005771Date : April 22, 2008

34

ANNEXURE TO THE AUDITOR’S REPORT

(Referred to in paragraph 3 of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets.

(b) As explained to us, the Fixed Assets were physically verified by the Management during the year and no discrepancy had been noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, the Company has not disposed off any substantial part of its fixed assets during the year and as such has not affected the going concern status of the Company.

(ii) The Company does not have any inventory. Therefore, the provisions of clause 4(ii) of the Companies (Auditor’s Report) Order, 2003 is not applicable to the Company.

(iii) (a) The Company has not granted loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of sub-clauses (b), (c) and (d) of clause 4(iii) of the Order are not applicable to the Company.

(b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of sub-clauses (f)) and (g) of clause 4(iii) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventories, fixed assets and services and supplies. During the course of our audit, we have not observed any continuing major weakness in such internal controls.

(v) (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts and arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) Transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public during the year. Therefore, the provisions of clause 4(vi) of the Order are not applicable to the Company.

(vii) The Company did not have the paid-up capital and reserves exceeding rupees fifty lacs as at the commencement of the financial year nor does have any turnover in the financial year and hence, the provisions of clause 4(vii) of the Order are not applicable to the Company.

(viii) According to the information and explanations given to us, the maintenance of cost records is not applicable to the period under report.

(ix) (a) According to the information and explanations given to us, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, income-tax, wealth tax, sales-tax, service tax, custom duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, custom duty, cess or any other statutory dues were in arrears as on 31st March 2008 for a period more than six months from the date they became payable.

(x) The company does not have accumulated losses. The Company has not incurred cash losses during the period covered by our audit.

(xi) In our opinion and according to the information and explanations given to us, the Company has not borrowed any amounts from a financial institution, bank or by issue of debentures. Therefore, the provisions of clause 4(xi) of the Order are not applicable to the Company.

(xii) In our opinion and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from the banks or financial institutions. Therefore, provisions of clause 4(xv) of the Order are not applicable to the Company.

(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, no term loans have been availed by the Company. Therefore, the provisions of clause 4(xvi) of the Order are not applicable to the Company.

(xvii) In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, there are no funds raised on short term basis during the period of our audit report and hence the question of using the same for long term investment does not arise.

(xviii) According to the information and explanations given to us, during the period covered by our audit report, the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the Company has not issued any debentures during the period under audit report.

(xx) During the period covered by our audit report, the Company has not raised any money by way of public issue.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For AWATAR & CO.Chartered Accountants

N. AWATARPlace : Gurgaon PartnerDate : April 22, 2008 Membership No. : 005771

35

BALANCE SHEET AS AT 31ST MARCH 2008RUPEES

PARTICULARS SCHEDULE AS AT AS AT 31.03.2008 31.03.2007 SOURCES OF FUNDS SHARE CAPITAL A 100,000,000 630,000 SHARE APPLICATION MONEY 650,000,000 36,500,000TOTAL SOURCE OF FUNDS 750,000,000 37,130,000APPLICATION OF FUNDSFIXED ASSETS E Gross Block 2,787,500 - Less: Depreciation 323,446 - Net Block 2,464,054 - Incidental Expenditure Pending Allocation 116,587,961 119,052,015 2,213,561 2,213,561CURRENT ASSETS, LOANS & ADVANCES B Cash & Bank Balances 578,663,570 28,990,510 Other Current Assets 4,115,021 - Loans and Advances 35,851,300 3,200,000 618,629,891 32,190,510LESS: CURRENT LIABILITIES & PROVISION C Current Liabilities 3,413,182 659,230 Provisions 2,653,883 - 6,067,065 659,230NET CURRENT ASSETS 612,562,826 31,531,280MISCELLANEOUS EXPENDITURE D 18,385,159 3,385,159(To the extent not written off or adjusted)TOTAL APPLICATION OF FUNDS 750,000,000 37,130,000Accounting Policies and Notes to the Accounts J

As per our report of even date attached to the Balance Sheet.

For AWATAR & CO. For and on behalf of the BoardChartered Accountants

(N.AWATAR) Suren Jain Rajiv BhardwajPartner Director Managing DirectorM.No. 005771 Anita Rikhy Place : Gurgaon Dy. General Manager & Date :22.04.2008 Company Secretary

STATEMENT OF INCIDENTAL EXPENDITURE DURING CONSTRUCTION, PENDING ALLOCATION FOR YEAR ENDING 31ST MARCH, 2008.

RUPEES

PARTICULARS SCHEDULE AS AT AS AT 31.03.2008 31.03.2007

Auditor’s RemunerationAudit Fee Including Service Tax 79,750 23,570Bank Charges 23,349 168Consultancy Expenses F 62,146,187 2,053,992Legal and Professional Expenses G 39,804,814 10,893Miscellaneous Expenses H 721,921 10,349Printing & Stationery Expenses 197,477 12,446Rent, Rates & Taxes 361,203 102,143Advertisement & Publicity 2,082,932 -Books and Periodicals 96,030 -Communication Expenses 134,060 -Computer Spare & Repairs 35,898 -Depreciation 323,446 -Salaries I 8,751,932 -Forest Compensation 3,392,361 -Sitting Fee 360,000 -

Licence Fee 200,000 -Traveling & Conveyance 1,729,137 -Vehicle Running & Maintenance 623,374 -Provision for Taxations Income Tax 2,270,000 -Fringe Benefit Tax 176,034 -Wealth Tax 6,824 -Provision for Leave encashment/Gratuity 201,025 -

TOTAL 123,717,754 2,213,561Less: Short Term Interest on Deposit with Banks 5,916,314 - Income on FDR’s [TDS Rs. 1217227.00] Bidding Fee (Net of Expenses) 1,213,479 -

TOTAL CARRIED TO BALANCE SHEET 116,587,961 2,213,561

Accounting Policies and Notes to the Accounts J

As per our report of even date attached to the Balance Sheet.

for AWATAR & CO. For and on behalf of the BoardChartered Accountants

(N.AWATAR) Suren Jain Rajiv BhardwajPartner Director Managing DirectorM.No. 005771 Anita Rikhy Place : Gurgaon Dy. General Manager & Date :22.04.2008 Company Secretary

(In Rupees)

PARTICULARS AS AT AS AT 31.03.2008 31.03.2007

SCHEDULE “A” SHARE CAPITALAuthorised Capital 3,000,000,000 500,000,000300,000,000 Equity Shares of Rs. 10 each (Previous year 5,00,00,000 Equity Share of Rs.10/- each)Issued, Subscribed and Paid-up 100,000,000 630,0001,00,00,000 Equity Shares of Rs.10/- each(Previous year 63,000 Equity Shares of Rs. 10/- each fully paid up) (Out of the above 74,00,000 Equity Shares are held by Jaiprakash Hydro-Power Limited, the Holding Company.)(Previous year 50,000 Equity Shares of Rs. 10/- each) 100,000,000 630,000

SCHEDULE “B” CURRENT ASSETS LOANS AND ADVANCESA) CURRENT ASSETS Cash & Bank Balances Cash in Hand 50,225 9,247 Balances with Scheduled Banks I) In Current Accounts 25,413,345 28,981,263 II) In Fixed Deposits 553,200,000 578,663,570 - 28,990,510 Other Current Assets Interest Accrued on FDR’s 4,115,021 -

B) LOANS AND ADVANCES a) Advance receivable in cash or in kind or for value to be received. 33,762,348 3,200,000 b) Staff Imprest & Advances 3,925 - c) Security Deposit - with Govt. Depts. & Public bodies 100,000 - - others 29,800 - d) Advance Tax & Tax Deducted at Source 1,955,227 35,851,300 - 3,200,000 Total A + B 618,629,891 32,190,510

36

SCHEDULE “C” CURRENT LIABILITIES AND PROVISIONA CURRENT LIABILITIES i) Sundry Creditors 653,152 635,660 ii) Due to Staff 957,823 - iii) Other Liabilities 1,802,207 3,413,182 23,570 659,230B PROVISIONS i) Income Tax 2,270,000 - ii) Fringe Benefit Tax 176,034 - iii) Wealth Tax 6,824 - iv) Gratuity 68,783 - v) Leave Encashment 132,242 2,653,883 - -

Total A + B 6,067,065 659,230

SCHEDULE “D” MISCELLANEOUS EXPENDITUREPreliminary Expenses 3,385,159 3,385,159

Add: Addition during the year 15,000,000 18,385,159 - 3,385,159

(To the extent not written off or adjusted)

Total 18,385,159 3,385,159

CONSOLIDATED SCHEDULE ‘E’

FIXED ASSETS Rupees

GROSS BLOCK DEPRECIATION NET BLOCK

S.No. Particulars Cost As at Addition Sale/Transfer Cost As at Upto For The Depreciation Sale/Transfer Upto As at 01.04.2007 during during the 31.03.2008 31.03.2007 year Reversed for during the 31.03.2008 31.03.2008 the year year the earlieryear year

1 VEHICLES - 2366605 - 2366605 - 184215 - - 184215 2182390

2 OFFICE EQUIPMENT - 45663 - 45663 - 11475 - - 11475 34188

3 FURNITURE & - 121216 - 121216 - 92829 - - 92829 28387

FIXTURE

4 PLANT AND

MACHINERY - 254016 - 254016 - 34927 - - 34927 219089

TOTAL - 2787500 - 2787500 - 323446 - - 323446 2464054

Rupees

As at As at 31.03.2008 31.03.2007

SCHEDULE F: CONSULTANCY EXPENSESPowergrid Corporation of India Limited [Technical Consultancy] 51,498,333 -Powergrid Corporation of India Limited [Detailed Survey] 7,466,495 538,752Powergrid Corporation of India Limited [Feasibility Report] 1,683,780 1,515,240Others 1,497,579 -

62,146,187 2,053,992

SCHEDULE G: LEGAL AND PROFESSIONAL EXPENSESFinancing Charges 39,326,000 -Others 478,814 10,893

39,804,814 10,893

SCHEDULE H : MISCELLANEOUS EXPENSES

Misc. Expenses 22,080 10,349Staff welfare Expenses 14,960 -Brokerage/Commission 21,300 -Business Promotion Expenses 186,885 -Power Electricity and Water Expenses 121,268 -Seminar/Trainee 12,800 -Office Maintenance 323,438 -Filling Fees 19,190 - 721,921 10,349

SCHEDULE I : EMPLOYEES REMUNERATION & BENEFITSSalary, Wages & Bonus 8,172,086 -Contribution to Provident and other funds 565,846 -Leave Encashment 14,000 -

8,751,932 -

Rupees

As at As at 31.03.2008 31.03.2007

Rupees

As at As at 31.03.2008 31.03.2007

Rupees

As at As at 31.03.2008 31.03.2007

SCHEDULE “J”ACCOUNTING POLICIES AND NOTES ON ACCOUNTS(A) SIGNIFICANT ACCOUNTING POLICIES General :(i) The accounts are prepared on historical cost basis and on the principles of a going concern.(ii) Accounting policies not specifically referred to otherwise are consistent and in

consonance with generally accepted accounting principles.Revenue Recognition :Expenditure and Income are accounted for on accrual basis.Fixed Assets :Fixed Assets are stated at cost of acquisition inclusive of freight, duties, taxes and other incidental expenses related thereto.Depreciation:Depreciation on assets is provided on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.Incidental Expenditure during construction period :Incidental Expenditure incurred on the Project during implementation will be capitalised and apportioned to various assets on commissioning of the Project.Preliminary Expenses :Preliminary expenses shall be written off over a period of 3 years after the commencement of commercial operations.Taxes on Income :Tax expenses comprise of Current Tax, Fringe Benefit Tax, Wealth Tax. Provision for current

37

tax is calculated in accordance with the provisions of the Income Tax Act, 1961 and is made annually based on the tax liability computed after considering tax allowances and exemptions. Consequent to the introduction of Fringe Benefit Tax (FBT) effective 1st April, 2005 the Company provides for and discloses the FBT in accordance with the provisions of Section 115WC of the Income Tax Act, 1961 and the guidance note on FBT issued by the Institute of Chartered Accountants of India. Provision for Wealth Tax is calculated in accordance with the provisions of the Wealth Tax Act, 1957 after considering tax allowances and exemptions.Deferred Tax Assets and Deferred Tax Liability will be calculated by applying rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.Employee Benefits:Employee benefits have been recognized in accordance with revised AS-15. Accordingly,i) Long term compensated absences are provided for based on actuarial valuation at the

end of each financial year.ii) Provident Fund is a defined contribution scheme and the same is administered through

contributions to Provident Fund Commissioners.iii) Gratuity liability is defined benefit obligation and is fully provided for on the basis of PUC

actuarial valuation made at the end of each financial year.iv) Actuarial gains/losses are immediately recognised and are not deferred.(B) NOTES ON ACCOUNTS(i) Contingent Liabilities – Nil.(ii) The Company was incorporated on 5th October, 2006 and was granted the Certificate

of Commencement of Business on 14th February, 2007 and is a joint venture between Power Grid Corporation of India Limited and Jaiprakash Hydro-Power Limited. The joint venture share holding is governed by the Shareholders’ Agreement dated 22nd February, 2007, whereby Power Grid Corporation of India Limited shall hold 26% and Jaiprakash Hydro-Power Limited shall hold 74% of the Equity Share Capital.

During the year under report, JHPL made a request to POWERGRID vide its letter dated 23rd November, 2007 seeking its consent in terms of Clause 8.5 of the Shareholders Agreement to the subscription of the share capital of the Company to the tune of 23% by Jaiprakash Power Ventures Limited (JPVL), an affiliate of JHPL, out of the 74% equity to be brought in by JHPL. POWERGRID accorded its consent vide its letter dated 20th December,2007 subject to submission of a Deed of Adherance to be executed between JHPL,JPVL,POWERGRID and the company.

Accordingly, a deed of adherance was executed between JHPL, JPVL, POWERGRID and the company on 24th December,2007 as per provisions of clause 8.5 of the shareholders’ agreement whereby JPVL undertook the compliance of the obligations of the shareholders’ agreement and JHPL undertook that in the event of default in responsibilities of JPVL, as specified in the shareholders’ agreement, it shall take over notwithstanding the transfer of shares to JPVL. Further, JPVL authorised JHPL to nominate Directors on its behalf on the Board of the company in respect of its shareholding in the company.

Share Application money of Rs. 65 crores has been received by the company in accordance with the revised shareholders’ pattern as per Deed of Adherance.

(iii) Capital commitments: Estimated amount of Contracts remaining to be executed on Capital Accounts (net of advances) and not provided for was Rs.319,30,56,583/-

(iv) Financing Charges of Rs. 393.26 Lacs has been paid to ICICI Bank Limited for arranging Secured Rupee Term Loan of Rs. 700 crores. The Loan has not been availed during the year.

(v) Profit and Loss Account has not been prepared, as the Company has not yet started operations. However, the necessary details as per Part-II of Schedule-VI to the Companies Act, 1956 have been disclosed in the “Statement of Incidental Expenditure During Construction, Pending Allocation”.

(vi) In the opinion of the Board of Directors, Current Assets, Loans and Advances have a value on realization in the ordinary course of business, at least equal to the amount at which these are stated in the Balance Sheet.

(vii) As commercial operations have not yet commenced, therefore there is no Deferred Tax Asset/Liability as on 31st March, 2008.

(viii) Additional information pursuant to provisions of paragraphs 3 and 4 of Part-II of Schedule-VI to the Companies Act, 1956

(a) Capacity & Production Not Applicable Licensed Capacity Installed Capacity Not Applicable Actual Production Not Applicable (b) Expenditure in Foreign Currency:

(Foreign Exchange Outgo) NIL The remaining information pursuant to the paragraphs 3 and 4 of Part- II of Schedule- VI

to the Companies Act 1956 are either nil or not applicable.(ix) Managerial Remuneration paid/payable to Whole-time Directors: Salary Rs. 27,00,000/- Provident Fund Rs. 2,16,000/- Perquisites Rs. 18,66,601/- Remuneration includes Salary, House Rent Allowance and other perquisites like medical

reimbursement, Company’s Contribution towards Provident Fund, Gas, Electricity etc. but excludes provision for Gratuity and Leave encashment.

(x) Additional information as required under Part IV of Schedule VI to the Companies Act 1956:

As per Accounting Standard 18 (AS 18) “Related Party disclosures”, issued by ICAI, the disclosure of transactions with the related party, as defined in the said standard, are given below:-

List of Related Parties and relationships.(a) Holding Companies: [i] Jaiprakash Hydro-Power Limited [ii] Jaiprakash Associates Limited, being holding company of Jaiprakash

Hydro-Power Limited(b) Fellow Subsidiary Companies: [i] Jaiprakash Power Ventures Limited [ii] Jaypee Hotels Limited [iii] Jaypee Karcham Hydro Corporation Ltd. [iv] Jaypee Cement Ltd. [v] Gujarat Anjan Cement Ltd. (subsidiary of Jaypee Cement Ltd.) [vi] Jaypee Infratech Ltd. (w.e.f. 05.04.07) [vii] Himalyan Expressway Ltd. (w.e.f. 25.05.07) [viii] JPSK Sports Pvt. Ltd. (w.e.f. 07.03.08) [ix] Jaypee Ganga Infrastructure Corporation Ltd. (w.e.f. 18.03.08) [x] Madhya Pradesh Jaypee Minerals Ltd. [xi] Bhilai Jaypee Cement Ltd. (w.e.f. 11.04.07) [xii] Gujarat Jaypee Cement & Infrastructure Ltd. (w.e.f. 26.12.07) [xiii] Bokaro Jaypee Cement Ltd. (w.e.f. 13.03.08)

(c) Associate Companies: [i] Jaypee Ventures Pvt. Ltd. [ii] Jaiprakash Kashmir Energy Ltd. [iii] JIL Information Technology Ltd. (subsidiary of Jaypee Ventures Pvt. Ltd.) [iv] Gaur & Nagi Ltd. (subsidiary of JIL Information Technology Ltd.) [v] Indesign Enterprises Pvt Ltd. [vi] RPJ Minerals Pvt. Ltd. [vii] Sonebhadra Minerals Pvt. Ltd. [viii] Jaypee Development Corporation Ltd. (subsidiary of Jaypee Ventures Pvt. Ltd.)

(w.e.f. 05.12.07)

(d) Key Management Personnel: [i] Shri Rajiv Ranjan Bhardwaj, Managing Director [ii] Shri R.B. Mishra, Whole-time Director(e) The shareholding of the Company

S. No. Name of Related Party Relationship1 Jaiprakash Hydro-Power Limited Holding and Promoter Company, to hold 74% Equity Shares as per Shareholders’ Agreement

2. Power Grid Corporation of India Limited To hold 26% Equity Shares as per Shareholders’ Agreement

As per Deed of Adherence executed on 24th December,2007 read with Shareholders’ Agreement , the shareholding of the Company would be as under:

S. No. Name of present/proposed Present/proposed Shareholding Shareholder1 Jaiprakash Hydro-Power Limited Holding and Promoter Company, to hold 51% Equity Shares2 Power Grid Corporation of India Limited To hold 26% Equity Shares.3 Jaiprakash Power - Ventures Limited To hold 23% Equity Shares.

II Transactions during the period with Related Parties.

S. No. Nature of Transaction Related Party

1 Issue of Equity Share Capital 1. Jaiprakash Hydro-Power Limited Rs. 7,35,00,000/-.

2. Power Grid Corporation of India Limited – Rs. 2,58,70,000/-.

2 Consultancy Agreement Awarded 1. Power Grid Corporation ofIndia Limited – Rs. 5, 85,94,616/-

3 Advance paid 1. Power Grid Corporation of India Limited – Rs. 1,08,91,012/-

4 Share Application Money Received. 1. Jaiprakash Hydro- Power Limited - Rs. 30,85,00,000/-. 2. Power Grid Corporation of India Limited Rs. 16, 90, 00, 000/-. 3. Jaiprakash Power Ventures Limited Rs. 17,25,00,000/-.5 Advertisement 1. Gaur and Nagi Limited Rs. 10,45,468

38

(xi) Provision for retirement benefits: a) Gratuity Liability - Defined Benefit Plan which is unfunded In accordance with applicable laws, the Company provides for gratuity, a defined

benefit retirement plan covering eligible employees. The plan provides for, at retirement, death while in employment or on termination of employment an amount based on the respective employees last drawn salary and the years of employment with the Company. The Company makes full provision in the accounts on the basis of actuarial valuation made at the end of each financial year. Under this plan, the settlement obligation remains with the Company.

In order to comply with revised AS-15, the Company has debited Rs.68783/- to Incidental and Pre-operative Expenses Pending Allocation for the current year charge and has been shown as ‘Provision for Gratuity’

b) Leave Encashment Liability - Defined Benefit Plan which is unfunded In order to comply with revised AS-15, the Company has made a provision of

Rs.1,32,242/- towards Leave Encashment debiting Incidental and Pre-operative Expenses Pending Allocation for the current year charge and has been shown as ‘Provision for Leave Encashment’.

c) Provident Fund - Defined Contribution Plan In addition to the above benefits, all employees are entitled to Provident Fund benefits

as per law. For all employees, contributions are made to the regional Provident Fund Commissioners as per law. The Government mandates the annual yield to be provided to the employees on their corpus.

xii) Provision of Rs. 22,70,000/- towards Income Tax, Rs. 1,76,034/- towards Fringe Benefit Tax and Rs. 6824/- towards Wealth Tax has been made for the current year.

(xiii) Information as required under notification No. G.S.R. 719 (E) dated 16th November, 2007 issued by the Depatment of Company Affairs in respect of the total amount payable and amount of interest thereon paid during the year and payable at the end of the year to the sundry creditors has not been disclosed as the relevant information has not been made available by the respective enterprises as regard to their status / classification into Micro, Small and Medium enterprises.

(xiv) All figures have been rounded off to the nearest rupee.(xv) Previous year figures have been regrouped re-arranged whenever considered necessary

to make them conform to the figures for the current year.

Signatures to Schedules “A” to “J”

For AWATAR & CO. For and on behalf of the BoardChartered Accountants

(N.AWATAR) Suren Jain Rajiv BhardwajPartner Director Managing DirectorM.No. 005771 Anita Rikhy Place : Gurgaon Dy. General Manager & Date :22.04.2008 Company Secretary

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILEPURSUANT TO PART IV OF THE COMPANIES ACT, 1956

I Registration Details Registration No. 154627 State Code No. 55 Balance Sheet Date 31.03.2008II Capital raised during the period (Amount in Rs.Thousands) Public Issue Nil Private Placement 99,370 Bonus Issue Nil Others Nil Rights Issue NilIII Position of Mobilisation and Deployment of Funds (Amount in Rs.Thousands) Total Liabilities 750,000 Total Assets 750,000 Sources of Funds Paid-up Capital 100,000 Share Application Money 650,000 Reserves & Surplus - Secured Loans - Unsecured Loans - 750,000 Application of Funds Net Fixed Assets (including 119,052 expenditure during construction)

Investments - Net Current Assets 612,563 Miscellaneous Expenditure 18,385 Accumulated Losses - 750,000IV Performance of Company (Amount in Rs. Thousands) Turnover } Not Applicable Total Expenditure } since the Profit/Loss Before Tax (+) } Project is under Profit/Loss After Tax (+) } implementation Earning per Share in Rs. } Dividend Rate (%) }V Generic Names of three Principal Products/Services of the Company (as per Monetary terms) Items Code No.(ITC Code) NA Product/Services Description Transmission of Electricity

As per our report of even date attached to the Balance Sheet.

For AWATAR & CO. For and on behalf of the BoardChartered Accountants

(N.AWATAR) Suren Jain Rajiv BhardwajPartner Director Managing DirectorM.No. 005771 Anita Rikhy Place : Gurgaon Dy. General Manager & Date :22.04.2008 Company Secretary

CASH FLOW STATEMENT FOR THE PERIOD ENDING 31ST MARCH 2008 (Rupees)A. Cash flow from operating activities Add: (Increase)/Decrease in Loans and Advances and others (36,766,321) Deduct: Increase (Decrease) in Trade Payables 2,753,952 Net cash inflow from operating activities ——’A’ (34,012,369)B. Cash flow from Investing activities Outflow Investment in Fixed Assets/Capital Work in Progress (114,184,571) Inflow Other Income Net cash used in investing activities———’B’ (114,184,571)C. Cash flow from Financing activities Inflow Increase in Share Capital 712,870,000 Outflow Preliminary Expenses 15,000,000 Net cash in financing activities———’C’ 697,870,000 Net increase/(Decrease) in cash or cash equivalent (A+B+C) 549,673,060Cash & cash equivalent at the commencement of the year (Opening balance) 28,990,510Cash & cash equivalent at the end of the year (closing balance) 578,663,570

Accounting Policies and Notes to the Accounts J

As per our report of even date attached to the Balance Sheet.

For AWATAR & CO. For and on behalf of the BoardChartered Accountants

(N.AWATAR) Suren Jain Rajiv BhardwajPartner Director Managing DirectorM.No. 005771 Anita Rikhy Place : Gurgaon Dy. General Manager & Date : 22.04.2008 Company Secretary

ATTENDANCE SLIP

Registered Office: JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat – 173 215, Distt. Solan (H.P.)Corporate Office : Sector-128, Noida-201 304, Distt. Gautam Budh Nagar (U.P.)

NAME OF THE SHAREHOLDER / PROXY* DP ID** Folio No.

Client ID** No. of Shares held

I hereby record my presence at the 13th Annual General Meeting of the Company held at JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat – 173 215, Distt. Solan (H.P.) on Wednesday, the 6th August, 2008 at 11.00 A.M.

SIGNATURE OF THE SHAREHOLDER / PROXY*

* Strike out whichever is not applicable

** Applicable for investors holding shares in electronic form.

Note: Please handover the slip at the entrance of the Meeting venue.

Cut here

PROXY

Registered Office: JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat – 173 215, Distt. Solan (H.P.)Corporate Office : Sector-128, Noida-201 304, Distt. Gautam Budh Nagar (U.P.)

I/We ............................................................................................. of .……..........................................................................................

in the district of………....................................…………………………………………………being a Member(s) of the above named

Company hereby appoint …...................................………………………………………………. of ........................... in the district

of ............................................................ or failing him/her ......................................................... of ........................... in the district

of…......…….…………..……. as my/our proxy to attend and vote for me/us on my/our behalf at the 13th Annual General Meeting

of the Company to be held on 6th August, 2008.

Signed at ……………………….. this…..… …day of………………………………….………………….…2008.

Folio No. DP ID*

No. of Shares held Client ID*

* Applicable for investors holding shares In electronic form.

Notes: .1. The Proxy need not be a member.2. The form of proxy, duly signed across Re.1 revenue stamp should reach the Company, not less than 48 hours before the time

fixed for the meeting.

AffixRe.1

RevenueStamp