PRIVATE PLACEMENT OFFER LETTER DATED 23 PRIVATE PLACEMENT OFFER LETTER · PDF...

PRIVATE & CONFIDENTIAL Private Placement Offer letter For Private Circulation Only

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POWER GRID CORPORATION OF INDIA LTD (A Government of India Enterprise)

Registered Office: B-9, Qutab Institutional Area, KatwariaSarai, New Delhi- 110 016. Corporate Office: “Saudamini”, Plot No.2, Sector 29, Gurgaon (Haryana) – 122 001.

Contact No: (0124) 2822484, 2822485, 2422433 and 2822414 (Gurgaon) Board No.: 0124-2571700-19 Extn. 2484, 2485, 2433, 2414

Fax. (0124) 2571875, 2571896, 2571891 (Gurgaon) CIN No: L40101DL1989GOI038121 Website: www.powergridindia.com

Email -: [email protected]; [email protected];

(This is a Private Placement Offer Letter issued in conformity with Form PAS-4 prescribed under section 42 and Rule 14(1) of Companies (Prospectus and Allotment of Securities) Rules, 2014, Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular no. LAD-NRO/GN/2008/13/127878 dated June 06, 2008, as amended, Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2012 issued vide circular no. LAD-NRO/GN/2012-13/19/5392 dated October 12, 2012, as amended, Securities and Exchange Board of India circular no. CIR/IMD/DF/18/2013 dated October 29, 2013 and as amended, Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2014 issued vide circular no. LAD-NRO/GN/2013-14/43/207 dated January 31, 2014.

(PRIVATE & CONFIDENTIAL) PRIVATE PLACEMENT OFFER LETTER DATED 23rd January 2015

_________________________________________________________________________ PRIVATE PLACEMENT OFFER LETTER FOR PRIVATE PLACEMENT OF SECURED, NON-CONVERTIBLE, NON-CUMULATIVE, REDEEMABLE, TAXABLE BONDS IN THE NATURE OF DEBENTURE OF THE FACE VALUE OF Rs. 40 LAKHS COMPRISING OF 04 STRPPs OF THE VALUE OF RS 10 LAKH EACH FOR CASH AT PAR WORTH Rs. 2580 CRORE AUTHORITY TO THE ISSUE The present issue of bonds is being made pursuant to the resolutions passed under Section 180(1)(a) & 180(1)(c) of the new Companies Act, 2013 and other applicable provisions, if any, of the Companies Act, 2013 by the consent of Shareholders of the Company where the overall borrowing power of POWERGRID was approved at Rs.1,30,000 Crore w.e.f. 27th December, 2013 and pursuant to the resolutions passed under Section 23(1)(b), 42 of the Companies Act, 2013 read with Rule 14(2) of Companies (Prospectus and Allotment of Securities) Rules 2014 other applicable provisions, if any, of the Companies Act, 2013 Shareholders of the Company have approved to raise fund up to Rs 13,500 Crore during the financial year 2014-15 from domestic market in upto Eight tranches / offers and each tranches / offer shall be of Rs 500 Crore / Rs 1000 Crore with Green shoe option by way of private placement of secured/unsecured non-convertible /non-cumulative redeemable, taxable / tax-free bonds. The proposed borrowing is within the overall borrowing limits of POWERGRID.


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TABLE OF CONTENTS Index Title Page No

DEFINITIONS/ABBREVIATIONS 4-5

DISCLAIMER CLAUSE 6-7

1. GENERAL INFORMATION 8-49

a.b. ISSUE INFORMATION

c. BRIEF SUMMARY OF BUSINESS / ACTIVITIES OF ISSUER AND ITS LINE OF BUSINESS

d.e.e(i) MANAGEMENT OF THE COMPANY & CORPORATE STRUCTURE

f.

MANAGEMENT’S PERCEPTION OF RISK FACTOR

g. DETAILS OF DEFAULT

h. DETAILS OF NODAL/COMPLIANCE OFFICER OF THE COMPANY

2.(I) PARTICULARS OF THE OFFER 50-57

from a. to k.

SUMMARY TERM SHEET FOR PRIVATE PLACEMENT ISSUE/ALLOTMENT OF SECURED, NON-CONVERTIBLE, NON-CUMULATIVE, REDEEMABLE, TAXABLE BONDS IN THE NATURE OF DEBENTURES ON PRIVATE PLACEMENT BASIS

2.(II) OTHER PARTICULARS RELATED TO OFFER 58-70

3. DISCLOSURE WITH REGARD TO INTEREST OF DIRECTORS, LITIGATION ETC.

71-119

I. FINANCIAL OR OTHER MATERIAL INTEREST OF DIRECTORS, PROMOTERS OR KEY MANAGERIAL PERSONNEL.....

II

DETAILS OF LITIGATION AND LEGAL ACTION PENDING OR TAKEN BY ANY MINISTRY OR DEPARTMENT OF THE GOVERNMENT.....

III. REMUNERATIONS OF DIRECTORS.....

IV.. RELATED PARTY TRANSACTIONS.....

V. SUMARY OF RESERVATIONS OR QUALIFICATIONS OR ADVERSE REMARKS OF AUDITORS IN THE LAST 5 FINANCIAL YEARS.....

VI. DETAILS OF ANY INQUIRY, INSPECTIONS OR INVESTIGATIONS INITIATED.....


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Index Title Page No

VII. DETAILS OF ACTS OF MATERIAL FRAUDS COMMITTED…..

4. FINANCIAL POSITION OF THE COMPANY 120-164

a. CAPITAL STRUCUTRE OF POWERGRID

b.c. PROFITS OF POWERGRID

d. SUMMARY OF FINANCIAL POSITION OF POWERGRID

e. CASH FLOW STATEMENT FOR THE LAST 3 YEARS

f. CHANGES IN ACCOUNTING POLICIES

g. KEY OPERATIONAL AND FINANCIAL PARAMETERS

h. DEBT EQUITY RATIO PRIOR TO AND AFTER ISSUE OF DEBT SECURITIES

i. DETAILS OF THE BORROWINGS OF POWERGRID

5. DECLARATION BY THE DIRECTORS 165-166

6. ANNEXURES 167-188

CREDIT RATING LETTERS FROM ICRA, CRISIL AND CARE & RATING RATIONALE

BOARD RESOLUTIONS & SHAREHOLDERS APPROVALS

CONSENT LETTER FROM TRUSTEE, RTA & BANKER


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DEFINITIONS/ABBREVIATIONS

Term Description “POWERGRID” / “Company” / “ Corporation” / “Issuer”

“Power Grid Corporation of India Limited, a public limited company incorporated under Companies Act, 1956,

Articles of Association or Articles

The articles of association of the Company, as amended from time to time

Board or Board of Directors The board of directors of the Company Directors The directors of the Company Memorandum of Association or Memorandum

The memorandum of association of the Company, as amended from time to time

Promoter The President of India, acting through the Ministry of Power, Government of India

Registered Office The registered office of the Company, which, is B-9, Qutab Institutional Area, KatwariaSarai, New Delhi 110 016, India

Bondholder/Debenture holder

The holder of the Bonds

Bonds Secured, Non Convertible, Non Cumulative, Redeemable, Taxable Bonds in the nature of Debentures

Depository/ies National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL)

DP Depository Participant

BRR Bond Redemption Reserve

Green shoe Option Right to retain over subscription

I.T. Act The Income-tax Act, 1961 as amended from time to time.

Disclosure Document This Disclosure Document through which the Bonds are being offered for private placement

Issue Private Placement Of Secured, Non Convertible, Non Cumulative, Redeemable, Taxable Bonds in the nature of Debentures of the face value of Rs.40 lakh at Par for Rs. 2580 Crore

Trustees Trustees for the Bondholders

Companies Act The Companies Act, 1956, as amended and/or the Companies Act, 2013, to the extent notified by the Ministry of Corporate


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Term Description Affairs, Government of India as applicable.

CDSL Central Depository Services (India) Limited

Depositories Act The Depositories Act, 1996, as amended from time to time

GoI or Government Government of India

MoP Ministry of Power, Government of India

MoU Memorandum of Understanding

NSDL National Securities Depository Limited

NSE The National Stock Exchange of India Limited

PAN Permanent Account Number allotted under the I.T. Act

RBI The Reserve Bank of India SEBI The Securities and Exchange Board of India constituted under

the SEBI Act SEBI Act Securities and Exchange Board of India Act, 1992, as amended

from time to time SEBI Guidelines SEBI (Issue and Listing of Debt Securities ) Regulations, 2008

& 2012, as amended from time to time STRPPs Separately Transferable Redeemable Principal Parts WDM Wholesale Debt Market APDRP Accelerated Power Development and Reform Programme CEA Central Electricity Authority CERC Central Electricity Regulatory Commission

CTU Central Transmission Utility Electricity Act Electricity Act, 2003 as amended from time to time HVDC High Voltage Direct Current ISTS Inter State & regional electric power transmission system NLDC National Load Dispatch Centre RGGVY Rajiv Gandhi GrameenVidyutikaranYojana RLDC Regional Load Dispatch Centre

SEB State Electricity Board ULDC Unified Load Dispatch Centre

REC Rural Electrification Corporation

TBCB Tariff Based Competitive Bidding

BOOM Built, Own, Operate and Maintain


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DISCLAIMER CLAUSE

This disclosure of Private Placement (“Private Placement Offer letter”) is neither a Prospectus nor a Statement in Lieu of Prospectus. The proposed resource raising through secured, non-convertible, non-cumulative, redeemable, Taxable Bonds to be listed on the Wholesale Debt Market (“WDM”) segment of National Stock Exchange (“NSE”) and or Bombay Stock exchange (“BSE”) (hereinafter referred to as “Bonds”) is being made strictly on a Private Placement basis. It is not, and should not be deemed to constitute an offer or an invitation to subscribe to Bonds issued by Power Grid Corporation of India Limited. (“the Company”/ ”the Issuer”/ ”Corporation”/ “POWERGRID”) by or on behalf of the Company to subscribe for or purchase, any of the Bonds in any jurisdiction or under any circumstances in which such offer or invitation is unauthorized or unlawful. This disclosure is not intended to be circulated to more than 49 persons in case of Non QIB. The contents of this disclosure document are intended to be used by the person to whom it is distributed. It is not intended for distribution to any other person and should not be reproduced. Potential investors are required to make their independent evaluation and judgment before making the investment.

This Private Placement Offer Letter has not been submitted, cleared or approved by SEBI and has been prepared to facilitate investors to take a well informed decision for making investment in the proposed issue. It should be clearly understood that the Company is primarily responsible for the correctness, adequacy and disclosure of all relevant information in this document.

No person is authorized in connection with the issuance and sale of the Bonds, to give any information or to make any representation not contained in this Private Placement Offer Letter, and, if given or made, any information or representation not contained herein must not be relied upon as having been authorized by the Company.

The Bonds will be issued solely and sold on a private placement basis. This Private Placement Offer Letter cannot be acted upon by any person other than to whom it has been specifically addressed. Multiple copies hereof given to the same entity shall be deemed to be given to the same person and shall be treated as such. This Private Placement Offer Letter has been prepared by the Company solely for use in connection with the issue and sale of the Bonds. Each prospective purchaser, by accepting delivery of this Private Placement Offer Letter , agrees to the foregoing and to make no copies of this Private Placement Offer Letter.

The Company believes that the information contained in this Private Placement Offer Letter is accurate in all respects as of the date hereof.

This Private Placement Offer Letter should not be construed as a recommendation by the Company to any person to subscribe /purchase the Bonds. Potential investors should make their own independent investigation of the financial condition or otherwise of the Company and the terms of this private placement and the Bonds, including the merits and risks involved.

This Private Placement Offer Letter is issued by the Company and signed by its authorized signatories.


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Disclaimer Statement from the Issuer

POWERGRID accepts no responsibility for statements made otherwise than in the Private Placement Offer Letter or any other material issued by or at the instance of POWERGRID and anyone placing reliance on any other source of information would be doing so at his own risk.

Disclaimer of the Stock Exchange As required, a copy of this Private Placement Offer Letter has been submitted to the National Stock Exchange of India Ltd. (hereinafter referred to as “NSE”) and or Bombay Stock exchange (“BSE”) for hosting the same on its website. It is to be distinctly understood that such submission of the document with NSE and or BSE or hosting the same on its website should not in any way be deemed or construed that the document has been cleared or approved by NSE and or BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this document; nor does it warrant that this Issuer's securities will be listed or continue to be listed on the Exchange; nor does it take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the POWERGRID. Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to Independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.


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1. GENERAL INFORMATION

1.a.b. ISSUE INFORMATION:

Particulars Details

Name of the Company Power Grid Corporation of India Limited

CIN No. L40101DL1989GOI038121

Website www.powergridindia.com

Email [email protected] [email protected] [email protected]

Registered Office B-9, Qutab Institutional Area, Katwaria Sarai, New Delhi – 110 016

Corporate Office

“Saudamini” Plot No.2, Sector 29, Gurgaon – 122 001

Telephone Nos. R.O. 011-26560112, 26560121, 26564892 Corp. Office : (0124) 2822484, 2822485, 2422433 and 2822414 (Gurgaon) Fax. (0124) 2571875, 2571896, 2571891 (Gurgaon)

Date of Incorporation 23rd October, 1989

Compliance Officer of the Issue

Ms. DivyaTandon Company Secretary, Powergrid Corporation of India Ltd., Email [email protected]

CFO of the Issuer Director (Finance) Powergrid Corporation of India Ltd.,

Arrangers of the instrument

(i) AXIS Bank Ltd.; (ii) ICICI Bank Limited; (iii) Trust Investment Advisors Pvt. Ltd.; (iv) ICICI Securities Primary Dealership Limited; (v) A.K.Capital Services Ltd.; (vi) Kotak Mahindra Bank Limited; (vii) IDFC Limited; (viii) Deutsche Bank AG; (ix) Yes Bank Ltd.; (x) ING VYSYA Bank Ltd.; (xi) Tip Sons Consultancy Services Pvt. Ltd.; (xii) Darashaw & Company Pvt Ltd.; (xiii) Barclays Bank Plc.; (xiv) HDFC Bank Ltd; (xv) SBI Capital Markets Limited; (xvi) LKP Securities Ltd.; (xvii) Edelweiss Financial Services Limited; (xviii) The Hongkong and Shanghai Banking Corporation Limited (HSBC); (xix) SPA Capital Advisors Ltd.; and (xx) Standard Chartered Bank


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Particulars Details

Trustees of the Issue

IDBI Trusteeship Services Limited, Asian Building, Ground Floor 17, R.KamaniMarg, Ballard Estate Mumbai 400 001 Ph : 022-40807000 Fax : 022-66311776 Email : [email protected]

Registrars of the Issue

M/s MCS Limited, F- 65, Okhla Industrial Area, Phase-I, New Delhi-110020 Ph : 011-41406148, 41406149, 41406151, 41709884 Fax : 011-41406148, 41709881 Email : [email protected]

Banker of the Issue

Indian Overseas Bank 10,Parliament Street, Jeevan Deep Building, New Delhi 110 001 Tel:011-23341421,23742559, 23742830 Fax: 011-23348928 Email : [email protected]

Credit Rating Agencies of the Issue

i) ICRA Ltd. Building no.8, 2nd floor Tower A, DLF cyber city Phase II Gurgaon 122002 ii) CRISIL Ltd. Plot No. 46, sector 44 Opposite PF Office, Gurgaon-122003 iii) Credit Analysis & Research Ltd. (CARE) B-47, 3rd floor Inner circle Connaught Place, New Delhi -110001

DETAILS OF STATUTORY AUDITORS* OF THE COMPANY

Name Address Auditor since S.K. Mehta Company, Chartered Accountants

504, Kirti Mahal 19, Rajendra Place, New Delhi 110 008, India

2011-12

Chatterjee& Company Chartered Accountants

153,Rash Behari Avenue, 3rd Floor, Kolkata-700029

2011-12

Sagar& Associates Chartered Accountants

H.No. 6-3-244/5, Saradadevi Street, Prem Nagar, Hyderabad-500 004

2011-12

Being a Government Company, the statutory auditors of the Issuer are appointed by the Comptroller and Auditor General of India (“CAG”). The annual accounts of the issuer are reviewed by CAG and a report is published. *The appointment of the Statutory Auditors for the FY 2014-15 by CAG is still awaited.


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DETAILS OF CHANGES IN AUDITOR SINCE LAST THREE YEARS

Name Address Date of

Appointment

Auditor of the Company

since(in case of resignation)

Remarks

A.R. & Company

Chartered Accountants

C-1,2ndFloor,R.D.C,

RajNagar,Ghaziabad-201 002

2007-08 NA

Appointed by CAG for four

years term

SRI Associates

Chartered Accountants

41,BB Ganguly Street,

Kolkata-700 012 2007-08 NA

Umamaheswara Rao & Company Chartered Accountants

Flat No 5-H,D Block,8-3-324,Krishna Apartments, Yellareddyguda Lane, Ameerpet X Roads, Hyderabad-500 073

2007-08 NA

1.c. BRIEF SUMMARY OF BUSINESS/ACTIVITIES OF ISSUER AND ITS LINE OF BUSINESS

Overview of Our Business/activities:

We are India’s principal Electric Power Transmission Company. As on 30 September, 2014, we own and operate about 1,10,514 circuit kilometers of extra high voltage transmission lines and 186 extra high voltage AC & HVDC substations with a total transformation capacity of 2,15,319 MVA.

We were entrusted with the statutory role of CTU in 1998 by the GOI and continued as CTU under Section 38 of the Electricity Act as amended in 2003. As the CTU, we are responsible for the planning and development of the country’s ISTS network. We are also required to facilitate non-discriminatory open access to available capacity in the ISTS and carry out real time grid management functions through our wholly-owned subsidiary, POSOCO.

We were conferred the status of “Navratna” by the GoI in May 2008, which provides us autonomy to incur capital expenditure without any monetary ceiling for our own projects without


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the GoI approval and allows us to make investments in subsidiaries and joint ventures in India and abroad subject to an investment ceiling set by the GoI. We have been receiving the highest annual performance rating of “Excellent” from the GoI in each year since Fiscal 1994.

We commenced our operations in Fiscal 1991 as National Power Transmission Corporation Limited and changed our name to Power Grid Corporation of India Limited in Fiscal 1993 as part of an initiative of the GoI to consolidate all the ISTS assets of the country in a single entity. Accordingly, from Fiscal 1992 to Fiscal 1994 the transmission assets, including transmission lines and substations, of all central electricity generation utilities that operated on an inter-state or inter-regional basis were transferred to us. Our Equity Shares are currently listed on the BSE and the NSE.

Our Board of Directors had budgeted an investment of about Rs.100000 Crore in transmission projects during the Twelfth Five Year Plan, which began on April 1, 2012 and ends on March 31, 2017, which was further revised to Rs.110000 Crore (Approx) to include new initiatives such as green corridors for renewable energy integration and projects under TBCB route. In Fiscal 2013 and fiscal 2014, we have spent Rs.20037 Crore and Rs22324 Crore respectively (on a standalone basis) towards investment during the Twelfth Five Year Plan. The Twelfth Five Year Plan aims to achieve a national power grid with inter - regional power transfer capacity of approximately 65,550 MW, which would primarily include our transmission system.

The tariff for all our transmission projects assigned to us prior to January 6, 2011 and any new specifically identified projects which may be assigned by the GoI to us shall be based on cost-plus-tariff structure. The tariff based on a cost-plus-tariff structure, which is determined by the CERC, in accordance with the Electricity Act as amended and the CERC (terms and conditions of tariff) Regulations 2014, provides us a return on equity on pre-tax basis at a base rate of 15.5%, to be grossed up by the normal tax rate as applicable for the respective year. Under our tariffs on a cost-plus basis, we receive reimbursements for our operating and maintenance expenses at normative rates rather than actual expenses incurred. In case of projects commissioned on or after April 1, 2014 an additional return on equity of 0.5% may also be allowed if the project is completed within the stipulated time. Pursuant to the Tariff Policy, 2006 which was notified on January 6, 2006, the MoP stipulated that investment by a transmission developer other than a CTU/STU was to be invited through competitive bids and that the tariffs of the transmission line projects to be developed by the CTU/STU after a period of five years or when the CERC is satisfied that the situation was suitable to introduce competition through competitive bidding. With effect from January 6, 2011 all new transmission projects except some specifically identified projects determined by the MoP are to be implemented under TBCB route. Under TBCB, tariff for projects is not on cost-plus basis and bidders are required to quote tariff for a period of 35 years for establishing transmission projects on BOOM (Build, Own, Operate and Maintain) basis. The successful bidder would be the one which had quoted the lowest levelized tariff. In the period from January 6, 2011 to November 30, 2014, we have secured five transmission projects through TBCB each of which are executed by our wholly owned subsidiaries, each of which were acquired by us as part of the TBCB process.


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A crucial aspect of the operation of an electric power system is management of the power flow in real time with reliability and security on a sound commercial and economic basis. Since 1994 the GoI has progressively entrusted us with the operation of the Regional Load Despatch Centers (RLDCs) in each of the five regions namely, North, West, South, East and North East regional grids into which India is divided for purposes of power transmission and operation. As the RLDC operator, we have modernized the RLDCs and SLDCs and their communication networks. The National Load Despatch Centre (NLDC) was constituted pursuant to a MoP notification dated March 2, 2005 and commenced commercial operation beginning April 1, 2009. With the interconnection of all the five regional grids, the entire country now operates on a single frequency along with Bhutan. Cross border exchanges also take place with Bangladesh and Nepal. The NLDC is responsible for monitoring the operations and grid security of the national grid and supervises the scheduling and dispatch of electricity over inter-regional lines as well as cross border lines in coordination with the RLDCs. All bilateral transactions are undertaken through the RLDCs, while transactions facilitated by the power exchanges are undertaken by NLDC. NLDC has also been designated as the central agency for implementing the Renewable Energy Certificate Mechanism, a framework provided by CERC for trading in renewable energy certificates. NLDC is also the Implementing Agency for the computations with respect to sharing of Inter State Transmission System (ISTS) charges and losses in line with CERC Regulations. Our wholly-owned subsidiary, POSOCO, was established in March 2009 to oversee the grid management and load dispatch function of the RLDCs and NLDC. Accordingly, RLDC and NLDC have been transferred to POSOCO and are in operation under POSOCO since October 1, 2010. The fees and charges for our RLDC and NLDC operations are determined by CERC, in accordance with the Electricity Act 2003 and the CERC (Fees and Charges of Regional Load Dispatch Centers and Related Matters) Regulations, 2009.

Leveraging on our strength as India’s principal power transmission company, we have entered into the consultancy business. In our consultancy role, we have been facilitating the implementation of the GoI-funded projects for the distribution of electricity to end-users through the RGGVY" in rural areas.

We have also entered into the telecommunications bandwidth business since 2001. We have been utilizing our nationwide transmission system to create an overhead fibre-optic telecommunication cable network using OPGW on power transmission lines. We believe we are one of the few providers of telecommunications infrastructure with a significant presence in remote and rural areas. The availability of our telecom backbone network has been consistently maintained at 99.94% during Fiscal 2013-14. We have also facilitated telecom connectivity to our neighboring country Bhutan through our OPGW links and by providing domestic bandwidth to International Long Distance ("ILD") operators. We are also one of the implementing agencies for the National Knowledge Network ("NKN") and National Optical Fibre Network ("NOFN"), each a project of GoI. We are certified for PAS 99:2006, which integrates the requirements of ISO 9001:2008 for quality management, ISO 14001:2004 for environment management and OHSAS 18001:2007 for occupational health and safety management systems. We have been certified for compliance to these standards and specifications by BSI Management Systems until June 2016. We are also


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accredited with SA 8000:2008 certificate for social accountability system which is implemented for all our facilities.We seek to operate our transmission system at high levels of efficiency. In Fiscal 2014, we maintained system availability of our transmission system at 99.92%.

The following table presents certain company - wide operating parameters for the periods indicated:

As of March 31

2010 2011 2012 2013 2014 Transmission Network (circuit kilometers)

75,290 82,355 92981 100200 1,06,804

Substations (number) (including GIS )

124 135 150 167 184

Transformation Capacity (MVA)

83,402 93,050 124,525 164,763 2,05,923

For Fiscal

2010 2011 2012 2013 2014

System Availability (%)

99.77% 99.80% 99.94% 99.90% 99.92%

Trippings per line (T/L)

2.07 1.27 0.59 0.58 0.56

Our main objects as contained in our Memorandum of Association are:

1. To plan, promote and develop an integrated and efficient power transmission system network in all its aspects including planning, investigation, research, design and engineering, preparation of preliminary, feasibility and details project reports, construction, operation and maintenance of transmission lines, sub-stations, load dispatch stations and communication facilities and appurtenant works, coordination of integrated operation of regional and national grid system, providing consultancy services in power systems field, execution of turnkey jobs for other utilities/organizations, wheeling of power, purchase and sale of power in accordance with the policies, guidelines and objectives laid down by the Central Government from time to time.

2. To act as an agent of Government/Public Sector Financial institutions, to exercise all the

rights and powers exercisable at any meeting of any company engaged in the planning, investigation, research, design and preparations of preliminary, feasibility and details project reports, manufacture of power plant and equipment, construction, generation, operation and maintenance of power transmission system from power generating stations and projects, transmission, distribution and sale of power in respect of any shares held by the Government, public financial institutions, nationalized banks, nationalized insurance


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companies with a view to secure the most effective utilization of the financial investments and loans in such companies and the most efficient development of the concerned industries.

3. To carry on the business of purchasing, manufacturing, selling, importing, exporting,

producing, trading, manufacturing plant, equipment and otherwise dealing in all aspects of planning, investigation, research, design, engineering and construction and establishment, operation and maintenance of power transmission systems, distribution systems, generating stations, consultancy and execution of turnkey jobs for other utilities/ organizations and purchase and sale of power, power system development, ancillary and other allied industries and for that purpose to install, operate and manage generating stations and all necessary transmission & distribution lines, sub-stations, switchyards, load dispatch stations and communication facilities, establishments and allied works.

4. To plan, promote, develop, erect and maintain, operate and otherwise deal in

telecommunications networks and services in all its aspects including planning, investigation, research, design and engineering, preparation of preliminary, feasibility and definite project reports; to purchase, sell, import, export, assemble, manufacture, install, commission, maintain, operate commercially whether on own or with others, on lease or otherwise, these networks and for such purposes to set up and/or install all requisite communications facilities and other facilities including fibre optic link, digital microwave links, communication cables, other telecommunication means, telephone and other exchanges, coaxial stations, microwave stations, repeater stations, security system databases, billing systems, subscriber management systems and other communication systems whether consisting of sound, visual impulse, or otherwise, existing or that may be developed or invented in the future and to manufacture, purchase, sell, import, export, assemble, take or give on lease/rental/subscription basis or by similar means or otherwise deal in components and other support and ancillary hardware and software systems, accessories, parts and equipment, etc. used in or in connection with the operation of the above communication systems and networks including to deal with telecommunication operators or directly with the general public, commercial companies or otherwise, to obtain the National Long Distance Operator (NLDO) License and acknowledge compliance with the terms and conditions of the License Agreement entered into with the Department of Telecommunications (DOT).

Details of Branches Power Grid has a gigantic transmission network, spread over the length and breadth of the country. Our network can be assessed at our website: http://www.powergridindia.com/_layouts/PowerGrid/WriteReadData/file/All_India_Map_Final.pdf Business carried out by Subsidiaries Our Company has six subsidiaries none of which are listed on any stock exchange in India or overseas. Our subsidiaries have not been declared as sick companies under the Sick Industrial Companies (Special Provisions) Act, 1985, as amended. Further, no applications have been made


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in respect of our subsidiaries to the relevant registrar of companies for striking off their names and no proceedings have been initiated in respect of their winding up.

1. Power System Operation Corporation Limited (“POSOCO”) POSOCO was incorporated on March 20, 2009 under the Companies Act 1956. POSOCO is authorized to plan, promote, develop, supervise, coordinate and control the functioning and operations of RLDCs and NLDC and to ensure integrated operation of the power system, including owning operate and maintain RLDCs and NLDC. The authorized share capital of POSOCO is Rs. 2,000,000,000 divided into 200,000,000 equity shares of Rs. 10 each, and the paid up capital of POSOCO is Rs. 306,400,000 (divided into 30,640,000 equity shares of Rs. 10 each). Our Company, together with its nominees, holds 30,640,000 equity shares in POSOCO, i.e., 100% of the issued and paid up equity share capital of POSOCO.

2. POWERGRID NM Transmission Limited (“PNMTL”)

PNMTL was incorporated on May 20, 2011 as Nagapattinam-Madhugiri Transmission Company Limited under the Companies Act 1956. Subsequently, the name of the company was changed to Powergrid NM Transmission Limited and a fresh certificate of incorporation was issued on September 13, 2012. PNMTL is authorized to plan, promote and develop an integrated and efficient power transmission system network in all aspects. The authorized share capital of PNMTL is 65,00,00,000 divided into 6,50,00,000 equity shares of Rs.10 each, and the paid up capital of PNMTL is Rs.24,00,000 (divided into 2,40,000 equity shares of Rs. 10 each). Our Company, together with its nominees, holds 2,40,000 equity shares in PNMTL, i.e., 100% of the issued and paid up equity share capital of PNMTL.

3. POWERGRID Vemagiri Transmission Limited (“PVTL”)

PVTL was incorporated on April 21, 2011 as Vemagiri Transmission System Limited under the Companies Act 1956. Subsequently, the name of the company was changed to Powergrid Vemagiri Transmission Limited and a fresh certificate of incorporation was issued on September 13, 2012. PVTL is authorized to plan, promote and develop an integrated and efficient power transmission system network in all aspects. The authorized share capital of PVTL is Rs.500,000 divided into 50,000 equity shares of Rs.10 each, and the paid up capital of PVTL is Rs. 500,000 (divided into 50,000 equity shares of Rs. 10 each). Our Company, together with its nominees, holds 50,000 equity shares in PVTL, i.e., 100% of the issued and paid up equity share capital of PVTL. The Transmission System is not taken up pursuant to the CERC order dated 27.09.2013.

4. POWERGRID Vizag Transmission Limited (“PVTL”) PVTL was incorporated on November 30, 2011, under the Companies Act 1956. PVTL is authorized to plan, promote and develop an integrated and efficient power transmission system network in all aspects. The authorized share capital of PVTL is Rs.90,00,00,000


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divided into 9,00,00,000 equity shares of Rs.10 each, and the paid up capital of PVTL is Rs.54,73,00,000 (divided into 5,47,30,000 equity shares of Rs. 10 each). Our Company, together with its nominees, holds 5,47,30,000 equity shares in PVTL, i.e., 100% of the issued and paid up equity share capital of PVTL.

5. POWERGRID Unchahar Transmission Limited (“PUTL”)

PUTL was incorporated on December 17, 2012, under the Companies Act 1956. PUTL is authorized to plan, promote and develop an integrated and efficient power transmission system network in all aspects. The authorized share capital of PUTL is Rs.500,000 divided into 50,000 equity shares of Rs.10 each, and the paid up capital of PUTL is Rs.500,000 (divided into 50,000 equity shares of Rs. 10 each). Our Company, together with its nominees, holds 50,000 equity shares in PUTL, i.e., 100% of the issued and paid up equity share capital of PUTL.

6. POWERGRID Kala Amb Transmission Limited (“PKATL”)

POWERGRID Kala Amb TL was incorporated on July 29, 2013, under the Companies Act 1956 and became a 100% wholly owned subsidiary of POWERGRID on 12th May 2014. POWERGRID Kala Amb TL is authorized to plan, promote and develop an integrated and efficient power transmission system network in all aspects. The authorized share capital of POWERGRID Kala Amb TL is Rs.500,000 divided into 50,000 equity shares of Rs.10 each, and the paid up capital of POWERGRID Kala Amb TL is Rs.500,000 (divided into 50,000 equity shares of Rs. 10 each). Our Company, together with its nominees, holds 50,000 equity shares in POWERGRID Kala Amb TL, i.e., 100% of the issued and paid up equity share capital of POWERGRID Kala Amb TL.

There are no accumulated profits or losses in relation to any of our Subsidiaries that are not accounted for by our Company.

1.d.e. MANAGEMENT OF THE COMPANY Under our Articles of Association, we are required to have not less than four directors and not more than 18 directors. Our Board presently comprises 14 Directors out of which five are our whole-time Directors, two Directors are nominees of the GoI and seven are independent Directors. The following table sets out the details regarding our Board of Directors as of the date of this Prospectus:


17

SL Name / Designation / DIN

Age Address Director of the Company

since

Other Directorships

1 Shri R.N. Nayak, Chairman & Managing Director Occupation: Service

DIN: 02658070

59 Bungalow No. FF-1, Power Grid Residential Township Complex, Sector-43, Gurgaon, Haryana-122002

01.09.2011 1. Power System Operation Corporation Ltd.

2. Teestavalley Power Transmission Ltd.

3. Jaypee Powergrid Ltd.

4. Torrent Power Grid Ltd.

5. Parbati Koldam Transmission Co. Ltd.

6. Powerlinks Transmission Ltd.

7. North East Transmission Co. Ltd.

8. Bihar Grid Co. Ltd.

9. Kalinga Bidyut Prasaran Nigam Pvt. Ltd.

10. Cross Border Power Transmission Co. Ltd.

2. Shri I.S. Jha,

Director (Projects) Occupation: Service DIN: 00015615

55 House No. 654, Sector- 10A, Gurgaon, Haryana- 122001.

01.09.2009 1. Power System Operation Corporation Ltd.

2. Powerlinks Transmission Ltd. 3. Madhya Pradesh Power

Transmission Co. Ltd. 4. Haryana Vidyut Prasaran Nigam

Ltd. 5. Bihar Grid Co. Ltd. 6. Kalinga Bidyut Prasaran Nigam

Pvt. Ltd. 7. POWERGRID Vemagiri

Transmission Ltd. 8. POWERGRID NM Transmission

Ltd. 9. POWERGRID Vizag Transmission

Ltd.


18



since

Other Directorships

3. Shri. R.T. Agarwal, Director (Finance) Occupation: Service DIN:01937329

58 House No. 16, Sector - 41, Gurgaon, Haryana-122001

29.07.2011 1. Parbati Koldam Transmission Co. Ltd.

2. Powerlinks Transmission Ltd

3. Power System Operation Corporation Ltd.

4. POWERGRID NM Transmission Ltd

4. Shri Ravi P. Singh, Director (Personnel) Occupation: Service DIN: 05240974

54 Bungalow No. GG -2, Power Grid Residential Township Complex, Sector -43, Gurgaon, Haryana-122002

01.04.2012 1. Powerlinks Transmission Ltd. 2. PTC India Ltd. 3. POWERGRID NM Transmission

Ltd. 4. POWERGRID Vizag Transmission

Ltd. 5. POWERGRID Unchahar

Transmission Limited

5. Shri R.P. Sasmal, Director (Operations) Occupation: Service DIN:02319702

56 Bungalow No. GG -3, Power Grid Residential Township, Sector -43, Gurgaon, Haryana-122002

01.08.2012 1. Kalinga Bidyut Prasaran Nigam Pvt. Ltd.

2. POWERGRID Vemagiri Transmission Ltd.

3. Cross Border Power Transmission Co. Ltd.

4. Dakshin Haryana Bijli Vitran Nigam Limited

5. POWERGRID Vizag Transmission Limited

6. Delhi Transco Limited 7. POWERGRID Kala Amb

Transmission Limited 6. Dr Pradeep

Kumar, Director J.S. & FA (MOP) Occupation: Service

53 C-II/52, Shahjahan Road, New Delhi-110069

10.09.2013 NTPC Limited


19



since

Other Directorships

DIN:05125269

7. Ms. Jyoti Arora, Director J.S. (Transmission) Occupation: Service DIN:00353071

52 C/5, Tower 6, New Moti Bagh, New Delhi-110021

20.03.2014 1. PTC India Ltd. 2. Power System Operation

Corporation Ltd.

8 Shri Ajay Kumar Mittal, Independent Director Occupation: Chartered Accountant DIN:00322351

53 B-33, UGF, SwasthyVihar, Laxmi Nagar, Delhi-110092.

16-01-2013 Mittal Securities Pvt. Ltd.

9 Shri R.K. Gupta, Independent Director Occupation: Academic DIN:06484088

64 E-6, MDI Campus, Mehrauli Road, Sukhrali, Gurgaon-122001.

16-01-2013 NIL

10 Shri R. Krishnamoorthy, Independent Director Occupation: Service ( Retd) DIN:0529299

69 Flat No. 510, Swapanalok MaangalyaSuryodayaAppartments Hal Varthur Main Road, Marathahalli, Bangalore-

16-01-2013 1. Lanco Anpara Power Ltd. 2. Lanco Infra Tech Ltd. 3. Lanco Hydro Power Ltd.


20



since

Other Directorships

3

560037 Karnataka

11 Shri. Mahesh Shah, Independent Director Occupation: Professional DIN:00405556

61 1/1, Monica Building, 9B, Lord Sinha Road, Kolkata -700071, West Bengal

16-01-2013 1. NMDC Ltd. 2. Inter Corporate Financiers &

Consultants Limited 3. MSV Share and Stock Brokers

Limited

12 Dr. K. Ramalingam, Independent Director Occupation: Service (Retd) DIN: 00207932

65

B-5/54, Safdarjung Enclave, New Delhi-110029.

16-01-2013

NIL

Details of change in the Directors since last three years –

Name Date of Appointment/Resignation

Director of the Company since ( in case of resignation)

Remarks

Mr. R. N. Nayak September 1, 2011

Continuing Appointed as Chairman & Managing Director as per the order of the MOP dated July 22, 2011.

Mr. I.S. Jha September 1, 2009

Continuing Appointed as Director (Projects) as per the order of the MOP dated July 9, 2009.

Mr. R. T. Agarwal July 29, 2011 Continuing Appointed as Director (Finance) as per the order of the MOP dated July 29, 2011.


21

Name Date of Appointment/Resignation

Director of the Company since ( in case of resignation)

Remarks

Mr. Ravi P. Singh April 1, 2012 Continuing Appointed as Director (Personnel) as per the order of the MOP dated February 22, 2012.

Mr. R. P. Sasmal August 1, 2012 Continuing Appointed as Director (Operations) as per the order of the MOP dated August 1, 2012.

Mr. Pradeep Kumar

September 10, 2013

Continuing Appointed as Director as per the order of the MOP dated September 10, 2013.

Mrs. Jyoti Arora March 20, 2014

Continuing Appointed as Director as per the order of the MOP dated March 20, 2014.

Mr. R.K. Gupta January 16, 2013

Continuing Appointed as Non-Official Part Director as per the order of the MOP dated January 16, 2013.

Dr. K. Ramalingam

January 16, 2013


Mr. Ajay Kumar Mittal

January 16, 2013


Mr. R. Krishnamoorthy

January 16, 2013


Mr. Mahesh Shah January 16, 2013


Mr. SantoshSaraf December 27, 2011

December 26, 2014

Ceased to be a Director on completion of tenure as per the order of the MOP dated December 27, 2011.

Ms. Rita Sinha December 27, 2011

December 26, 2014

Ceased to be a Director on completion of tenure as per the order of the MOP dated December 27, 2011.

Ms. Rita Acharya August 26, 2011

February 28, 2014

Ceased to be a Director on attaining the age of Superannuation.


22

1.e(i). CORPORATE STRUCTURE


23

1. f. MANAGEMENT’S PERCEPTION OF RISK FACTORS

INTERNAL RISKS 1. Any changes to the current tariff policy or modifications of our tariffs norms by regulatory

authorities including the Central Electricity Regulatory Commission(“CERC”) and Telecom Regulatory Authority of India (“TRAI”) could have an adverse effect on our business, financial condition and results of operation including through a reduction in our return on equity. –

Pursuant to the Electricity Act, 2003 (“Electricity Act”) a new tariff policy was notified by the Government of India ("GoI") on January 6, 2006. CERC is guided by this policy when specifying the terms and conditions of particular tariffs for transmission projects. The current CERC tariff regulations are the CERC (Terms and Conditions of Tariff) Regulations, 2014 (“CERC Tariff Regulation Fiscal 2015-19”), which are based on a cost-plus-tariff based system and provide us a return on equity on pre-tax basis at a base rate of 15.5%, to be grossed up by the effective tax rate as applicable for the respective year (currently MAT). An additional return on equity of 0.5% may also be allowed if the project is completed within the stipulated time in case of projects commissioned on or after April 1, 2014.. The current tariff regulation will remain in place until March 31, 2019. Under our tariffs on a cost-plus basis, we receive operation and maintenance (O&M) expenses at normative rates, rather than actual expenses incurred. As a result, if our actual O&M expenses exceed the normative amount we receive, our revenue will be reduced by the shortfall amount. The normative rate of O&M expenses notified in the current regulation for fiscal 2015 (with escalation for subsequent years upto fiscal 2019) are lesser than the rates notified earlier for fiscal 2014 in CERC Tariff Regulation Fiscal 2010-14. As the present normative rates have been formulated by CERC based on the actual O&M expenses of POWERGRID for last five fiscals, the projected recovery of O&M expenses may differ as compared to the actual expenses to be incurred during fiscal 2015-19. The increase in benchmark availability and the ceiling thereof for the purpose of incentive may lead to reduction in transmission incentive during the fiscal 2015-19. The CERC (Sharing of Inter State Transmission Charges and Losses) Regulations, 2010 (the“Sharing Regulations”) implemented a “point of connection” method for sharing of transmission charges for the Inter-State Transmission System (“ISTS”) in India to be shared by the users, replacing the previous method of regional “postage stamp” method of sharing of transmission charges. This new regulation came into force with effect from July 1, 2011. This regulation provides that yearly transmission charges and revenue requirements pursuant to the tariff structure will be shared amongst the ISTS users that includes larger generating stations, state electricity boards (“SEBs”), state transmission utilities ("STUs"), bulk consumers connected directly to the inter-state transmission system and any designated entity representing a physically-connected entity. Currently, five of the designated ISTS customers, or DICs, have challenged the “point of connection” method implemented by the CERC before the Delhi High Court. By its interim order dated July 30, 2013, the Delhi High Court has directed payments under the “point of connection” method to be made by the petitioners pending a final decision. In case the matter is not determined in favour of the petitioners or if the petitioners obtain a stay against the Delhi High Court order dated July 30, 2013, we may have to refund the excess payment collected from the petitioners along with interest and collect the same from other users


24

since our tariff is revenue neutral under both methods for sharing of transmission charges, which could lead to a delay in the realization of tariff by us. CERC is in the process of reviewing the Sharing Regulations which may lead to change in sharing pattern. This may further delay the realization of tariff by us. The tariff for our telecommunications business are regulated by the TRAI through its telecommunication tariff orders which specify the ceiling tariff for various capacity levels of bandwidth. The present tariff is based on the Telecommunication Tariff Order 1999 issued by TRAI and as amended from time to time. Over a period of time discounts are offered over the ceiling tariffs issued by TRAI to match market demands and the tariff is continuously declining. TRAI has recently issued Telecommunication Tariff Order (57th Amendment) 2014 on 14th July 2014 wherein regulator has revised down the new ceiling rates for different capacity levels of bandwidth effective from 01st August 2014. Any further downward revision of tariff in future by TRAI may have an adverse impact on the revenue to our telecom business. There can be no assurance that current tariffs or regulations will continue to be applicable and it is possible that changes may occur which could have the effect of, for example, reducing the return on equity currently allowed to us on our transmission projects, reducing the additional return on equity currently allowed to us on our projects if the projects are completed on time, changing our normative rate of recovery of operation and maintenance expenditure or setting additional limitations on our ability to recover the cost of assets we develop or services we provide. In April and June 2010, CERC ordered that the actual capital expenditure we incur in the development of a project should be benchmarked against an acceptable amount of capital expenditure in order to determine whether the actual capital expenditure incurred was reasonable. Any changes to the current tariff policy or modifications of our tariffs by CERC in relation to our transmission business or the TRAI in relation to our telecom business could have a material adverse effect on our business, profitability, financial condition and results of operations and viability of our existing and future projects 2. Our future revenues and results of operations are dependent upon our ability to effectively

secure and build own operate and maintain the projects awarded to us through the tariff based competitive bidding route.-

Pursuant to the Tariff Policy, 2006 which was notified on January 6, 2006, the MoP stipulated that investment by a transmission developer other than a Central Transmission Utility (“CTU”)/STU was to be invited though competitive bids and that the tariffs of the transmission projects to be developed by the CTU/STU after a period of five years or when the CERC is satisfied that the situation was suitable to introduce such competition shall be determined through competitive bidding. With effect from January 6, 2011 all new transmission projects except some specifically identified projects determined by the MoP are to be implemented under the Tariff Based Competitive Bidding ("TBCB") route. Under TBCB, tariff for projects is not on cost-plus basis and bidders are required to quote tariff for a period of 35 years for establishing transmission projects on a built, own, operate and maintain (“BOOM”) basis. The successful bidder would be the one which had quoted the lowest levelized tariff. In the period from January 6, 2011 to November 30, 2014, we have secured five transmission projects through TBCB process, each of which are executed by our wholly owned subsidiaries, each of which were acquired by us as part of the TBCB process.


25

If we are not successful in bidding competitively against our competitors, including Indian and international companies having greater resources and expertise than us, for projects under the TBCB scheme or if we are awarded projects based on bids that we later determine to be unviable or if our revenues and expense reimbursements from such projects are not on commercial terms favorable to us or if we are compelled by any regulatory order or otherwise to execute such projects, our ability to complete awarded projects profitably or at all may be adversely affected, which could materially and adversely affect our business, reputation and financial results. 3. Our financial condition and results of operations may be affected by the amendments to

the CERC (Open Access in Inter-State Transmission) Regulations, 2008

Under the earlier CERC (Open Access in Inter-State Transmission) Regulations, 2008, the transmission charges collected under short term open access were transferred to us, in our capacity as CTU, for further disbursement. The CTU was entitled to retain 25% of the amounts so collected and the balance was disbursed for the respective periods to the long-term customers of the synchronously connected grid. Our transmission income on account of short term open access was Rs.3,254.8 million, Rs.4,425.8 million and Rs.2,033.4 million in Fiscal 2012 and Fiscal 2013 (on a consolidated basis) and the six months ended September 30, 2013 (on a standalone basis), respectively, or 3.12%, 3.36% and 2.69%, respectively of our total revenue from operations for such periods. CERC has now amended this regulation whereby with effect from September 11, 2013, we are required to disburse the entire amount collected by us without retaining the 25% of the amounts so collected under short term open access. As a consequence, we no longer earn revenue from the transmission charges collected under short term open access. However, we have filed a review petition with the CERC against such amendment to the regulation and a hearing is awaited. Our financial condition and results of operations may be affected in case the outcome of such review petition in not in our favour.

4. Most of our revenue is derived from the transmission of power to the State Power Utilities

(“SPUs”), and many of these entities have had weak credit histories in the past. If we are unable to recover all the receivables from the SPUs including the outstanding amounts due to us from such SPUs, our financial position could be adversely affected. –

In accordance with the terms of allocation letters issued by the GoI, we are obliged to undertake the transmission of electricity to SPUs through our transmission system. The SPUs are our largest customers and represent substantially all of our trade receivables and unbilled debtors. We had Rs.28,844.1 million, Rs.32,773.0 million and Rs.38,047.3 million of trade receivables and unbilled debtors as compared to our total income of Rs.110,735.8 million, Rs.137,271.2 million and Rs.77,384.6 million, respectively, in Fiscal 2012 and 2013 (on a consolidated basis) and in the six months ended September 30, 2013 (on a standalone basis), respectively. The SPUs include certain SEBs, and certain other entities that have been created by the unbundling of the remaining SEBs. The SEBs have had weak credit histories in the past. Due to their substantial debt owed to us, a onetime settlement ("OTS"), a "securitization scheme" was implemented by the GoI in 2003 pursuant to which Rs.18,620 million in bonds were issued to us along with Rs.1,540 million as long term advances to “securitize” our past due receivables from the SEBs.


26

In addition, owing to their continued inability to pay amounts outstanding to us and other power companies, a scheme for financial restructuring ("Financial Restructuring Plan") of state distribution companies ("State Discoms") has also been formulated and approved by the GoI to enable the turnaround of the State Discoms and ensure their long term viability. The scheme contains measures to be taken by the State Discoms and state governments for achieving financial turnaround by restructuring of their debt with support through a transitional finance mechanism provided by the GoI. We cannot, assure you that as a result of the OTS and the Financial Restructuring Plan, the creditworthiness of the SPUs will be enhanced or that all of our existing or future trade receivables will be paid. There can also be no assurance that such support and benefits from the GoI may continue or be available to us in the future, which may materially and adversely affect our business and financial results. 5. Our strategic direction, priorities and prospects are controlled and heavily influenced by

the policies of the GoI, which is our controlling shareholder, and federal and state government agencies and regulatory authorities, as well as government-owned and controlled entities with which we have commercial relationships.

As our controlling shareholder and principal regulator, the GoI and its ministries and regulatory authorities, including the MoP and the CERC, control our strategic direction and heavily influence our financial results and prospects. Our status as CTU and our leadership position in the Indian power transmission sector arise from policies over the past two decades by the GoI to consolidate all the ISTS assets of the country in us. The GoI has taken steps to introduce private sector competition in bidding for power transmission projects. The GoI has also proposed that our subsidiary, POSOCO, which performs grid management and load despatch functions as the operator of the National Load Despatch Center (“NLDC”) and the Regional Load Despatch Centers (“RLDCs”), may be made independent from us in the future. The GoI has designated us as a “Navratna” public sector enterprise, thereby entitling us to greater autonomy in some corporate and business decisions; however, such designation may be reviewed or withdrawn in future depending on our financial performance and other factors. Policy decisions taken by the GoI or any regulatory authority affecting our business may not be to our advantage. Such or other decisions that cause us to loose our leadership position in the power transmission sector or our ability to compete effectively may materially and adversely affect our business, prospects and financial results. The revenues we earn from our power transmission projects principally depend on the tariffs stipulated by the CERC for power transmission and the project expenses for which we are reimbursed, which are subject to change and review by the GoI, and may be decreased in future periods or for specific projects if so deemed fit by the GoI or any regulatory authority, which could materially and adversely affect our business, prospects and financial results. A significant part of our business transactions are with government entities or agencies, which may expose us to various risks, including additional regulatory scrutiny and delayed collection of receivables or bad debts. We may be required to undertake a public utility function on behalf of the GoI and projects which may not be profitable or economically remunerative. For example, in our consultancy role, we have been facilitating the implementation of the GoI-funded projects for the distribution of electricity to end-users through the Rajiv Gandhi GrameenVidyutikaranYojana (“RGGVY”) in rural areas. Such projects may take up management, financial and other resources and may be less remunerative compared to the execution of power transmission projects, which may adversely affect our financial performance.


27

Many other key aspects of our business, including our ability to borrow and extent of borrowings in the Indian and international markets, our ability to acquire right of way in land and other inputs for our projects in a timely and cost-effective manner and the international expansion of our operations (including in countries affected by sanctions) are influenced by GoI policies and directions. In addition, the GoI as our majority shareholder will have the power to determine decisions relating to among other things, dividends and further issuance of Equity Shares which may adversely affect the price of the Equity Shares. Such policies and directions may not be commercially favorable to us, which may adversely affect our business, prospects and financial results. 6. Grid disturbances or failures could adversely affect our reputation and our relations with

our regulators and stakeholders. –

Grid disturbances can arise when sufficient imbalances exist between power being delivered to and power being removed from the transmission system. On July 30 and 31, 2012, India experienced grid disturbances which caused large-scale power outages in three of India’s five interconnected power grids. These grid disturbances included part of our transmission lines. The grid disturbances were caused by a combination of factors, including weakened inter-regional corridors affected by multiple outages on other transmission lines, a delay or refusal by power generators to back down (i.e. reducing power generation by generators at the time of reduced demand in order to maintain pre-determined system parameters), overdraw by some of the provincial utilities from the national grid utilizing unscheduled interchange and leading to high loading of certain transmission lines and inadequate response by state load despatch centers (“SLDCs”) to the instructions of RLDCs with respect to managing power offtake from the national grid. Although we employ modern operation as methods and maintenance, load dispatch and communications systems and methods to avoid such outcomes, the Indian power sector faces difficulties in implementing various directives due to electricity being both a Central government and a State government subject, or being on the concurrent list, and therefore resulting in varying priorities of the stakeholders. There can be no assurance that the grid will not again experience disturbances including, as a result of actions taken by power generators or customers, the rapid expansion of regional electricity grids and their integration into a national grid or other reasons or that any such disturbance will be promptly addressed. Long-lasting or repeated disturbances could adversely affect our reputation as a transmission service provider with customers, power generators, industry regulators, stakeholders and others. Such loss of reputation could hurt our business and adversely impact our relations with regulators. 7. Transmission projects require a substantial capital outlay and time before any benefits or

returns on investments are realised and our return on investment in transmission projects may be reduced as a result of our inability to complete our projects on time or at all. –

As India’s principal electricity power transmission company, we generate revenue primarily through tariffs charged for facilitating transmission of electric power from power generation sources to distribution networks or end users. We are constantly required to upgrade and expand our transmission network to meet the country’s increased power demand. Our transmission projects typically require substantial capital outlays and time before the commencement of


28

commercial operation. We generally begin generating a return on investment in a transmission project through collecting tariffs after the commencement of commercial operation, which may be delayed due to various reasons. Further, if a new transmission project is linked to a new generation project, and the generation project is delayed, the return on our investment in the project may be postponed, subject only to the receipt of limited indemnification amounts from the generator, unless we can demonstrate to CERC that we, our contractors and our suppliers were not responsible for the delay. As a result of any such delays, or our inability to demonstrate to the CERC that we are not responsible for such delays or to justify additional capital expenditure caused by the delay to the CERC, our return on investment in the affected transmission project may be lower than originally expected and our business and financial conditions as well as our ability to invest in others or future projects may be materially affected. The time and costs required to complete a transmission project may be subjected to substantial increases due to many factors, including right of way issues in transmission line construction, issues relating to land acquisition for substations, shortage of materials, equipment, technical skills or labour, adverse weather conditions, natural disasters, labour disputes, disputes with contractors, accidents, changes in government priorities and policies, changes in market or economic conditions, delays in obtaining the requisite licenses, permits and approvals from the relevant authorities and other unforeseeable problems and circumstances. Any of these factors may lead to delays in, or prevent the completion of, our projects. CERC may, under the Fiscal 2015-2019 CERC Regulations or under other applicable regulations, approve the commercial operation of our transmission systems prior to such transmission projects coming into regular service and thereby authorise us to receive tariffs from the project’s intended beneficiaries irrespective of the actual transmission of power if we can show that the delay is not attributable to us, our contractors or our suppliers. However, there can be no assurance that we will be able to generate tariffs on these projects prior to the completion of the associated generation projects, that we will receive specified indemnity from owners of a delayed power generation project or that we will be able to demonstrate to CERC that certain delays are not attributable to us, our contractors or our suppliers. Any delays in the commissioning of a transmission project may have an adverse effect on the return on investment for such project and our financial results. 8. Our transmission projects and expansion plans including the construction of the required

infrastructure are subject to a number of contingencies, including our ability to award projects and to ensure timely and quality execution of projects by competent contractors and our ability to effectively acquire and integrate relevant companies and technologies and work effectively with joint venture partners on projects. If these new transmission projects, new projects and expansion plans are affected by such contingencies, our financial condition and results of operations may be adversely affected. –

Our projects and expansion plans are subject to a number of contingencies, including changes in laws and regulations, governmental action or inaction, delays in obtaining permits or approvals, accidents, natural calamities and other factors beyond our control. In addition, we must obtain the right of way to expand our transmission lines and find suitable, available land on which to construct substations. Further, most of our projects are dependent on the availability of


29

competent external contractors for construction, delivery and commissioning, as well as the supply and testing of equipment. We cannot assure that the performance of our external contractors will always meet our terms and conditions or performance parameters. If the performance of contractors is inadequate to our requirements, this could result in incremental cost and time overruns which in turn could adversely affect our new projects and expansion plans. We undertake construction of our transmission and substation projects through third party contractors. Our selection criteria for contractors are primarily based on the technical experience and financial position requirements of the projects. Although we have established internal control procedures such as in the evaluation of contractor’s performance, prior to opening of financial bids, there is no assurance that our contractors will not violate any applicable laws and regulations in their provision of services. If we become aware that any of our contractors is involved in any material breach of applicable laws and regulations, we may not be able to continue with the relevant contracting agreement with such contractor. Although, our contractors furnish performance guarantees valid up to end of warranty period, which is generally 12-18 months, we cannot assure you that we would be able to enforce the performance guarantees from these contractors. The availability of competent construction companies may be limited due to issues relating to availability of skilled manpower and resources and requirement of higher construction skills in construction of 765 kV level transmission network that may be more complex and voluminous and the consequent shortage of construction companies available to undertake large projects in the power sector. Some of the contracts for the Identified Projects which are yet to be awarded, will be awarded by us at an appropriate time during the course of the implementation of the projects. Further, if we are not able to award our projects to competent contractors on a timely basis, or on terms that provide for the timely and cost-effective execution of the project, our projects, including the Identified Projects, may be delayed and our returns on those projects may be affected. Our project costs are calculated on the basis of management estimates and the occurrence of any contingencies beyond our control may affect the returns from the affected projects. In addition, as part of our growth strategy, we may seek to acquire businesses, technologies and products. We may choose to incur additional debt to fund any such expansion plans. Nevertheless, we may fail to complete such acquisitions, or to realize the anticipated benefits of such acquisitions, and may incur unforeseen costs. We may also not realise the anticipated return on equity owing to amongst others, changes in applicable regulations and/or delay in the implementation of our expansion plans. This could negatively affect our business. Further, we have 12 joint ventures, four of which have commenced operations. We also have six subsidiaries, one of which is in commercial operation. If our subsidiaries or joint ventures are not profitable, our financial condition and results of operations may be adversely affected. 9. We may have to dispose off our equity interest in POSOCO which may affect our financial

condition and our results of operations. – NLDC and RLDCs have been established by the Central Government in accordance with the Electricity Act for optimum scheduling and dispatch. Pursuant to a notification of the GoI, the operations of RLDCs and NLDC were transferred from us to our wholly owned subsidiary, POSOCO. The revenue of POSOCO is from the fee and charges payable by the users of the RLDCs which is approved by CERC in accordance with section 28(4) of the EA 2003. At the time the operation of the RLDCs and the NLDC were transferred to POSOCO, the MoP directive


30

of July 2008 had stated that POSOCO may be made an independent company within a period of five years to avoid any conflict of interest with our Company. Should POSOCO be sold or be disposed off entirely, we may not be able to receive the dividends or other benefits which we currently receive from POSOCO. There can be no assurance that any such proposed sale of POSOCO in the future will be made at fair value or otherwise at terms favorable to the Company, which may adversely affect the financial condition and results of operations of the Company.

10. There have been delays in the schedule of implementation and increase in projects costs of

our transmission projects. The scheduled completion dates for our projects are based on management estimates and are subject to the risks arising from delays in land acquisition, forest clearance, contractor performance shortfalls and cost overruns, which may affect our results of operations. –

Our transmission projects are required to achieve commercial operation no later than the scheduled commercial operations date specified under the investment approvals granted by our Board. The scheduled completion dates for our transmission projects are based on CERC stipulated timelines and management estimates and are subject to the risks arising from delay in selection of vendors or contractors for construction of our transmission lines and sub-stations, from contractor performance shortfalls and from non-availability of required equipment and manpower. The scheduled completion dates are also subject to us being able to acquire the land required, obtain forest clearance for diversion of forest land for relevant transmission projects in time and implement the project by such scheduled completion date. We have limited control over the land acquisition process as we need to acquire land through the state government. Similarly, we have limited control over obtaining forest clearances, for diversion of the forest land required for our transmission projects.

Further, our approved project costs are based on management estimates and in respect of projects where the estimated project cost is above Rs.5,000 million, on financial appraisals by certain banks and financial institutions. Our approved project costs are also subject to on-going variation primarily on account of escalation clause for change in the prices of raw materials in the contracts entered into with the contractors, increase/decrease in the actual interest rate from the budgeted interest rate, additional interest costs incurred due to delay in projects and changes in statutory duties and taxes.

If any of these risks materializes, it could give rise to delays, cost overruns, lower or no returns on capital, erosion of capital and reduced revenue for our Company. We cannot assure you that all potential liabilities that may arise from delays or shortfall in performance will be covered or that the damages that may be claimed from such contractors will be adequate to cover any loss of profits resulting from such delays, shortfalls or disruptions. In addition, failure to complete a transmission project according to its original specifications or schedule, if at all, may give rise to potential liabilities. If any delay in completion of our transmission projects were to occur, such delay could adversely affect our business, results of operations and financial condition.

11. Our flexibility in managing our operations is limited by the regulatory environment and the

policies of the GoI which governs the power sector.-

Our businesses are regulated by the Central government and State governments in India, as well as by the governments of other countries in which we operate. We require regulatory approvals, sanctions, licenses, registrations and permissions to operate and expand our businesses. For


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instance, our Company may be required to obtain approval of the Ministry of Environment, Forests and Climate Change (“MoEF&CC”) of the GoI under the Forest (Conservation) Act, 1980 if a transmission project involves the diversion of forest land, and the specific clearance of the Supreme Court of India if such project involves the erection of transmission lines in areas designated as wildlife sanctuaries, national parks and biosphere reserves. The regulatory framework in India continues to evolve and regulatory changes could have an adverse effect on our business, results of operations and financial condition. Non-compliance with any regulation may also lead to penalties, revocation of our permits or licenses or litigation. Future government policies and changes in laws and regulations in India and elsewhere may adversely affect our business and operations, and restrict our ability to do business in our existing and target markets. The timing and content of any new law or regulation is not in our control and such new law or regulation particularly affecting tariffs could have an adverse effect on our business, results of operations and financial condition. The power industry in India is regulated by laws, rules and directives issued by governmental and regulatory authorities. These laws, rules and directives have changed significantly over the years. There are likely to be more reforms, such as reforms implemented under the Electricity Act, in the ensuing years. There can be no assurance that these reforms, including changes to the current regulatory bodies or to the existing rules and directives, will be favourable to our business. If such changes are not favourable, our business and financial results could be adversely affected. We cannot assure you that we will obtain all regulatory approvals, sanctions, licenses, registrations and permissions that we may be required in the future, or receive renewals of existing or future approvals, sanctions, licenses, registrations and permissions in the time frames required for our projects and other operations or at all, which could adversely affect our business. 12. Our Company is currently involved in some proceedings of criminal nature, and any

adverse decision may have a significant adverse effect on our business and results of operations.-

We are currently involved in some criminal proceedings which have been filed against us in various forums, relating to alleged violations of inter-alia the Contract Labour (Regulation and Abolition) Act, 1970, various sections of the Indian Penal Code 1860, provisions of the Industrial Disputes Act, 1947, the Code of Criminal Procedure, 1973 and/or other local or state laws for the time being in force in India. We cannot provide any assurance that these matters will be decided in our favour. Further, there is no assurance that similar proceedings will not be initiated against us in the future. In the event that such matters are decided against us, we may be ordered to take such action which may affect our business or provide relief to petitioners. 13. We have substantial borrowings. In the event we were to default in the repayment of our

debt or not comply with the terms of our loan agreements, our business and results of operations could be adversely affected. Our indebtedness and the conditions and restrictions imposed by our financing arrangements could adversely affect our ability to conduct our business and operations. –

As at March 31, 2014, on a standalone basis, our total outstanding secured borrowings were Rs.76063.44 Crore, our total outstanding unsecured borrowings were Rs.4406.41 Crore and debt


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to equity ratio was 69:31 (excluding current maturities of long term debt). Approximately 68.94% and 31.06% of our outstanding debt as at March 31, 2014 was from domestic and international sources, respectively. We generally meet our debt service obligations and repay our outstanding borrowings using the cash flow produced under our tariffs, which have built-in provisions for the repayment of our debt. However, there can be no assurance that we will in the future be able to pay our debt obligations on time. In the event that the completion of a new project were to be substantially delayed, we might have to service the debt financing for that project before generating any cash flows from that project. Further, an event of default under our loans could occur due to factors beyond our control, such as India failing to remain a member of the Asian Development Bank (“ADB”) or similar multilateral funding agency. If we fail to meet our debt service obligations or if a default otherwise occurs, our lenders could declare us in default under the terms of our borrowings and accelerate the maturity of our obligations. Any such default and acceleration could have a material adverse effect on our cash flows, business, financial condition, and results of operations. Additionally, on October 23, 2013 our Board of Directors has approved a resolution for an increase in our borrowing limit to Rs.1,30,000 Crore from Rs.1,00,000 Crore which is approved by the shareholders of the company. As our current borrowing nears our permissible borrowing limits, we may be limited in our ability to seek further financing should the shareholders approval not be available in a timely manner or at all. Further, there are covenants in the agreements we have entered into with certain banks and financial institutions for our short-term borrowings, medium-term borrowings, long-term borrowings, bond trust deeds and multilateral lending institutions that require us to obtain written consent from lenders for undertaking certain activities. In some of the agreements we are required to ensure that we maintain a self financing ratio of 20% or more of our annual capital expenditure incurred during the previous, current or following financial year. Prior written consent of the lenders is required for, among other circumstances, undertaking restructuring of our Company, creating any mortgage or charge on any of the secured properties or assets and for assigning or transferring all or any of our rights, benefits or obligations under the loan agreements. In addition, some of our loan agreements contain financial covenants that require us to maintain, among other things, high ratings on our debt from credit rating agencies and a specified debt to equity ratio. There can be no assurance that we will be able to comply with these financial or other covenants or that we will be able to obtain the consents necessary to take the actions we believe are required to operate and grow our business, in the future. Furthermore, a default on some of our loans may also trigger cross-defaults under some of our other loans. An event of default under any debt instrument, if not cured or waived, could have a material adverse effect on us. 14. Our expansion plans require significant financial, management and other resources. If we

are unable to expand, our growth plans, financial condition and results of operations could be adversely affected. –

We intend to continue to rapidly increase our capacity to maintain and grow our leadership position as an Indian power transmission company. we have ongoing transmission projects, spread all over India which are in various stages of implementation. We are also in the process of adopting a higher voltage level system for our network..


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We expect that the execution of new transmission and substation projects and our growth strategy will place significant strains on our management, financial and other resources. For instance, in order to manage the execution of new transmission and substation projects and growth effectively, we must implement and improve operational systems, procedures and internal controls on a timely basis. If we fail to implement and improve these systems, procedures and controls on a timely basis, or if there are weaknesses in our internal controls that would result in inconsistent internal standard operating procedures, we may not be able to meet our expected schedule of project implementation, hire or retain employees, pursue new business, complete future strategic agreements or operate our business effectively. There can be no assurance that our existing or future management, operational and financial systems, procedures and controls will be adequate to support future operations or establish or develop business relationships beneficial to our future operations. Further, our continued expansion increases the challenges involved in financial and technical management, recruitment, training and retaining sufficient skilled technical and management personnel, and developing and improving our internal administrative infrastructure. We may intend to evaluate and consider expansion in the future to pursue existing and potential market opportunities. Our inability to manage our business plan effectively and execute our growth strategy could have an adverse effect on our operations, results, financial condition and cash flows. In addition, due to such inability to manage such challenges, we may also be unable to meet the annual performance targets set by the GoI pursuant to an annual MoU that we enter into with the MoP. If we are unable to successfully implement our business plan and growth strategy, our business, results of operations and financial condition would be materially and adversely affected. We have had, and expect to continue to have, substantial liquidity and capital resource requirements for meeting our working capital requirements as well as capital expenditures. We will be required to supplement our cash flow from operations with external sources of financing to meet these requirements, particularly with regard to our plans for transmission infrastructure expansion. Our Board of Directors have budgeted an investment of Rs.1,09,680 Crore during the twelfth five year plan which began on April 1, 2012 and ends on March 31, 2017 (“Twelfth Five Year Plan”). Based on generation capacity targeted during the Twelfth Five Year Plan, our Board of Directors have budgeted capital expenditure of an amount of up to Rs.22450 Crore for expansion in Fiscal 2015 to further develop the national grid, including expanding inter-regional transmission systems, system strengthening schemes and transmission systems and high capacity transmission corridors for evacuation of power from central sector generation projects, ultra mega power projects (“UMPPs”) and independent power producers (“IPPs”). We have in the past been able to finance our projects on competitive terms due in part to our Company achieving a favourable credit rating. There can however, be no assurance that we will achieve such financing in a timely manner and on favourable terms, or at all, or maintain a favourable credit rating. Future debt financing, if available, may result in increased finance charges, increased financial leverage, decreased income available to fund further acquisition and expansions and the imposition of restrictive covenants on our business and operations. In addition, future debt financing may limit our ability to withstand competitive pressures and render us more vulnerable to economic downturns. If we fail to generate or obtain sufficient additional capital in the future, we could be forced to reduce or delay the planned expansion projects or other capital expenditures.


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In addition, due to the number of large-scale infrastructure projects currently under development in India and increased lending by banks and institutions to these projects, it may result in domestic funds not being available or being available on unattractive terms. Therefore, we may be required to seek funding internationally, which may result in unattractive terms and conditions and exposure to higher interest rates and foreign exchange risks. If the funding requirements of a particular expansion project increase, we will need to look for additional sources of finance, which may not be readily available, or may not be available on attractive terms, which may have an adverse effect on the profitability of that project. Our business, financial condition, results of operations and prospects may be adversely affected by any delay or failure to successfully commission these projects. 15. The enactment of The Right to Fair Compensation and Transparency in Land Acquisition,

Rehabilitation and Resettlement Act, 2013 (henceforth referred as The “Land Acquisition Act 2013”), once in operation, may adversely affect our business.-

We are required to acquire land for establishing new sub-stations for setting up of inter-state transmission lines as part of the Transmission Projects undertaken by POWERGRID. The Land Acquisition Act 2013 has become effective from January 01, 2014 by GOI Gazette notification dated December 19, 2013. However, individual states have yet to take decisions on certain provisions and have to set up procedures as per the new Act. Since the Land Acquisition Act, 2013 is already effective from January 01, 2014; we are required to comply with its provisions. Since, most of states are yet to set the procedures as per the new Land Acquisition Act, 2013, the land acquisition for the new substations may take longer time, which may affect timely completion of the project. However, Central Government is reviewing the present Land Acquisition Act to address the concerns of industry.

16. Our business involves various risks. Our insurance coverage may not be sufficient to cover

losses from these risks, our results of operations could be adversely affected.

Our operations are subject to a number of risks generally associated with the transmission of electricity. These risks include explosions, fires, earthquakes and other natural disasters and calamities, breakdowns, failures or substandard performance of equipment, improper installation or operation of equipment, accidents, acts of terrorism, operational problems, transportation interruptions and labour disturbances. These risks can cause personal injury and loss of life and damage to, or the destruction of, property and equipment (including infrastructure developed by us) and may result in the limitation or interruption of our business operations and the imposition of civil or criminal liabilities. We maintain a self-insurance scheme to cover a substantial portion of our business risks. Under this scheme, we contribute an amount equal to 0.1 % of our gross block of fixed assets (except for the value of assets covered under a mega insurance policy) each year into a self-insurance reserve that we account for under our reserves and surplus. We also maintain a mega insurance policy with independent insurers in respect of risks to substation equipment and other selected assets. Under our mega insurance policy all our (i) AC substations equipment in switchyard area including TCSC, FSC or SVCs and Gas Insulated Substations (“GIS”); (ii) all high voltage direct current (“HVDC”) systems (including back-to-back and bi-pole systems); (iii) assets, such as


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transformers and reactors and associated bays, owned by us but installed at SEBs, STUs and power generation facilities; and (iv) all office buildings owned by us and their assets. In addition, we insure our load despatch centres against fire and special perils, theft and burglary. Certain of our telecom assets are insured against fire damage and others are insured against burglary and certain risks of theft. We do not carry any insurance against harm to third parties, other than during the course of construction of our projects. We cannot assure you that if we suffer material losses, our self insurance and insurance arrangements will be sufficient to cover those losses. If our losses are more than our insurance coverage or cannot be recovered through insurance, our business and results of operations could be adversely affected. 17. We have had and continue to have, some limited operations in countries subject to U.S.

and other international trade restrictions, economic embargoes and sanctions.- We provide Consultancy Services to a customer in Myanmar, a country which until recently was subject to extensive U.S., E.U. and international trade restrictions, economic embargoes and sanctions. While the U.S. and E.U. have suspended most sanctions targeting Myanmar, certain sanctions targeting specifically designated individuals and entities remain in place. Sanctions may also be re-imposed by the U.S. or E.U. at any time depending on political developments in Myanmar. Our Consultancy project in Myanmar is supported by the GoI through the Export-Import Bank of India’s line of credit extended to Myanmar Foreign Trade Bank and by a letter of credit from the Myanmar Foreign Trade Bank with us as beneficiary in the amount of approximately US$64 million. We began generating revenue from our business dealings in Myanmar in Fiscal 2013. Although revenue from Myanmar is expected to represent a negligible part of our consolidated revenues in Fiscal 2014 and Fiscal 2015 and has successfully completed exports of all supplies in Fiscal 2014 and only testing and commissioning of some equipments is balance and meager amount is remaining. In July 2010, we entered into a contract with an Iranian entity pursuant to which such Iranian entity would manufacture and install optical fiber ground cables for our optical ground wire (“OPGW”) network in India. The total consideration for the contract was approximately US$2.1 million. Although the Iranian entity carried out preliminary activities under the contract, it was unable to provide the necessary contract performance guarantee due to international sanctions targeting Iran. We have not made any payments under the contract and are currently in discussions with the Iranian entity to terminate the contract. We have however, not been able to encash the bank guarantee for EUR 50,800 furnished by the Iranian entity against performance of the contract. In July 2013, we entered into a contract with an Indian entity to provide Consultancy services in relation to a 500 kV HVDC transmission line project in the Democratic Republic of Congo. There can be no assurance that other persons and entities with whom we now, or in the future may, engage in transactions and employ will not be subject to U.S. or international sanctions. There can be no assurance that the countries in which we currently operate will not be subject to further and more restrictive sanctions in the future.


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In addition, we may incur reputational or other risk as a result of our dealings with sanctioned persons or countries. 18. We do not have intellectual property rights over our corporate logo. – We have applied for registration of our corporate logo, which is currently pending before the Registrar of Trademarks, New Delhi. Currently we do not have a registered trademark over our corporate logo and therefore we do not enjoy the statutory protections accorded to a registered trademark. There can be no assurance that we will be able to obtain registration of our trademark and logo or that third parties will not infringe on our intellectual property, causing damage to our business prospects, reputation and goodwill. 19. If we are unable, to adapt in a timely manner to changing market conditions,

technological changes or customer requirements, our business operations and financial performance could be adversely affected.

Our future success will depend in part on our ability to respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis. We need to continue to invest in new and more advanced technologies and equipment to enable us to respond to emerging power transmission industry standards and practices and telecommunication equipment in a cost-effective and timely manner that is competitive with other transmission and substation projects. The development and implementation of such technology entails significant technical and business risks. We cannot assure you that we will successfully implement new technologies effectively or adapt our processing systems to customer requirements or emerging industry standards. If we are unable, for technical, legal, financial or other reasons, to adapt in a timely manner to changing market conditions, customer requirements or technological changes, our business operations and financial performance could be adversely affected. The telecom industry is subject to rapid and significant changes in technology. We have currently deployed dense wave division multiplexing, or dense wavelength division multiplexing(“DWDM”), synchronous digital hierarchy ("SDH") and Multi-Protocol Label Switching (“MPLS”) communications technologies, which we believe meet the present and near future bandwidth requirements of our customers. However, new technologies, such as 4G and IPv6 and new usage patterns will eventually require equipment upgrades. The technology deployed by us may become obsolete and the technology in which we invest in the future may not perform as expected or may be superseded by competing technologies before our investment costs have been recouped. Our ability to adopt and/or implement new technology in a timely manner may also be impacted by government policy and bureaucracy. In addition, the cost of implementing new technologies, upgrading networks or expanding network capacity to effectively respond to technological changes may be substantial. Our ability to meet such costs will, in turn, depend upon our ability to obtain additional financing on commercially acceptable terms. Moreover, there can be no assurance that technologies will develop according to anticipated schedules, or that they will perform according to expectations or be commercially accepted. If we fail to adopt and successfully implement telecom technologies in a cost effective manner, our telecom business, results of operations and financial condition could be negatively affected.


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20. We undertake some of our projects in joint ventures with third parties, which entails

certain risks. If we are unable to perform or comply with our obligations under the joint venture agreements or if our joint venture arrangements do not succeed, it could affect our business and results of operations.

We have minority investments in most of our joint ventures. As at September 30, 2014, three transmission projects undertaken by our joint ventures namely Powerlinks Transmission Limited, Torrent Power Grid Limited and Jaypee Powergrid Limited were fully operational. Investments through joint ventures may involve risks. Joint venture partners may fail to meet their financial or other obligations in respect of the joint venture. We may also have to incur additional debt funding to fund our investment in the joint ventures. Joint venture partners may have business interests or goals that may differ from our business interests or goals, or those of our shareholders. In joint ventures in which we have a minority interest, our joint venture partner will have effective control with respect to shareholder actions or approvals, except where our affirmative agreement is required under the Companies Act or the terms of the joint venture. Any disputes that may arise between us and our joint venture partners may cause delays in completion or the suspension or abandonment of the project. All agreements in respect of these joint ventures contain clauses wherein we have undertaken not to encumber or alienate our shareholding in the joint ventures for specified periods. For example, in certain joint ventures our shareholding has been locked in for a period of five years and we have agreed that we will not transfer our shareholding to any third party nor will we have the right to increase/decrease our shareholding in the open market without the prior written consent of our joint venture partners or without giving the other party a right of first refusal. Therefore, if we determine that we have sought to pursue participation in a particular project with the wrong partners, we may be unable to change partners or continue to participate in the project as we had planned. Under the terms of certain of our joint ventures, we are required to infuse proportionate equity under certain circumstances, for example, to meet the requirements of lenders or for funding the working capital requirements of the joint venture company and if we fail to subscribe to the additional shares our entitlement will be offered to the other shareholder who is willing to subscribe to such shares. This may result in diluting our shareholding in the joint venture company and in losing our affirmative rights in such joint ventures or our payment of penalties. These covenants may limit our ability to make optimum use of our investments or exit these joint ventures at our discretion, which may have an adverse impact on our financial condition. Additionally, we cannot assure that we will be able to perform or comply with our obligations under the joint venture agreements and our failure to do so mayresult in breach of such agreements and could adversely affect our business and results of operations. Also, under some of our joint venture arrangements, if the joint venture company is unable to commission the project within specified period agreed under our arrangement due to our failure to fulfill our obligations, we would be liable to pay liquidated damages. Under the terms of the Tata SHA, we are obliged to make payment to Powerlinks Transmission System of the full tariff amount due, regardless of our collections from customers. Therefore, we bore the risk of non-collection from customers. We no longer bear this risk under the ‘point of connection’ system. In addition, we may have to buy out the joint venture in case of a default by


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either party or a force majeure event, subject to CERC approval. If we are required to buy out the joint venture, our financial position may be adversely affected. In general, we face the risk in our joint ventures of losing all our equity interest in the event of a material breach of the joint venture entity’s obligations, insolvency of the joint venture entity or similar developments. We have made investment of Nepalese currency 15.6 Million in Power Transmission Company Nepal Limited, under the terms of the PTCN SHA. 21. We may face increased competition for our consulting business and telecommunication

business from Indian and international companies.

Our Consultancy business is subject to competition from various competitors in India and abroad. We are generally awarded domestic Consultancy projects on nomination basis as a result of direct-marketing and by virtue of our being an integrator of range and the depth of our in-house expertise. Some of our domestic competitors for awards are also currently suppliers of goods/services to our Consultancy projects. Most of our international projects are awarded on a competitive bidding process and very few projects are also through government-funded programmes on nomination basis. Our primary international competitors include AECOM SA, AF-Consult Ltd., Lahmeyer International, Fichtner GmbH, GOPA GmbH, Mott MacDonald, NEWJEC Inc., Norplan, KEMA Inc., Energy Services Limited, Parsons Brinkerhoff Pty, Transafrica Pty and SMEC International Pty Limited. In our telecommunication business, we are subject to broad and intense competition for the provision of telecommunication bandwidth services, particularly from telecommunication companies with geographically extensive networks. The increased competition in the telecommunication services industry in India is expected to continue and there may also be increasing competition from global players. Our competitors in the telecommunications business include all major national long distance operators. We have executed agreements to provide telecommunication bandwidth to certain customers, and most of our customers are also our competitors. These competitors provide similar bandwidth services to other telecommunication operators. Many of our competitors in the consulting business and telecommunications business are larger than us and have greater financial resources. They may also benefit from greater economies of scale and operating efficiencies. As a result, our competitors may be able to present lower bids for contracts than we do, causing us to win fewer consultancy assignments and telecommunications customers. Also owing to the slowdown in investments and various uncertainties in the Indian telecom sector, especially after the cancellation of 122 telecom licenses further to the orders of the Supreme Court of India on February 2, 2012, our efforts to provide telecommunication services by co-locating wireless telecom antennas on our tower infrastructure, has only progressed slowly. We cannot assure you that we can compete effectively in the future or that our telecommunication and consultancy business will continue to grow at the same or higher levels compared to our other businesses as compared to past periods. 22. The standalone audited financial statements and the consolidated audited financial

statements of our Company for Fiscal 2013 and Fiscal 2012 draws attention to certain matters emphasized. The report of the auditor in relation to our subsidiary, POSOCO for Fiscal 2013 contains certain qualifications. -


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Our standalone and consolidated audited financial statements for Fiscal 2013 and Fiscal 2012 included in this Prospectus highlight certain matters that affect such financial statements, relating to the provisional recognition of revenue from transmission charges. In connection with the audit of our subsidiary POSOCO, the auditors for POSOCO noted certain qualifications in their audit report for Fiscal 2013 in relation to a change in its accounting policy regarding revenue recognition which resulted in an increase in its profit for the year, provision for income tax and shareholder's funds, all of which is subject to the outcome of the relevant CERC order. There is an uncertainty on account on the recognition of this additional revenue as it is dependent on the outcome of the relevant CERC Order. Should the CERC order fail to allow this additional revenue, the results of operations of POSOCO may be affected. 23. We currently engage in foreign currency borrowing and we are likely to continue to do so

in the future, which exposes us to variation in foreign exchange rates and other potential costs. If we are unable to adequately hedge our foreign currency exposure, our financial condition may be affected. -

While our principal revenues are in Rupees, we borrow funds from outside India in foreign currencies. As at March 31, 2014 (on a consolidated basis), we had Rs.25833.55 Crore equivalent of foreign currency borrowings outstanding. These borrowings are held in currencies such as US Dollars, Euros, Swedish Kroner and Japanese Yen. In the period from April 1, 2013 to March 31, 2014, the Rupee depreciated by more than 10% against the US Dollar owing to amongst others, announcements by the United States Government that it may consider reducing its quantitative easing measures. Accordingly, such depreciation of the Rupee against these currencies will increase the Rupee cost for us for servicing and repaying our foreign currency borrowings. Currently, any transmission-related financial expense that we incur as a result of foreign currency borrowing is passed on to our customers as part of our tariff arrangements. Were this to change, volatility in foreign exchange rates could adversely affect our business. In addition, in the event of disputes under any of our foreign currency borrowings, we may be required by the terms of those borrowings to defend ourselves in foreign court or arbitration proceedings, which could result in additional costs to us. A depreciation of the Rupee would also increase the costs of imports by us and may have an adverse impact on our business, financial condition and results of operation. In addition, our hedging policy and arrangements with respect to our foreign currency exposure may not, when implemented, fully protect us from foreign exchange rate fluctuations. The Fiscal 2015-2019 CERC Regulations provides that the transmission licensee or the generating company may hedge its foreign currency exposure in respect of interest on foreign currency loans and repayment of foreign loans acquired for the generating station or the transmission system, in part or in full in the discretion of the generating company or the transmission license. In this regard, CERC has issued order on February 21, 2014 regarding hedging and we are in the process of formulating our hedging policy pursuant to such orders. 24. Our results of operations could be adversely affected by strikes, work stoppages or

increased wage demands by our employees or other disputes with our employees.

As at December 31, 2014 we had 9,131 employees. Substantially all of our employees at the workman level are affiliated with labour unions.


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We have had no instances of strikes or labour unrest since we commenced operations. There can however be no assurance that we will not experience disruptions in our operations due to disputes or other problems with our work force, which may adversely affect our business and results of operations. Efforts by labour unions to affect compensation and other terms of employment may divert management’s attention and increase operating expenses which could adversely affect our business and results of operations. 25. Litigation and other forms of opposition from local communities and other parties may

adversely affect our results of operations and financial condition. –

The construction and operation of our transmission and substation projects may have certain consequences on grazing, agricultural activities and land development. The environmental impact of a particular transmission projects are not far reaching and are restricted to Right of way. Further, the construction and operation of our transmission and substation projects may affect local communities or may otherwise disrupt their activities and livelihoods, especially during the project construction period. There can be no assurance that we will not be subject to litigation or other forms of opposition from public interest groups, local communities or non-governmental organizations, in relation to the individual’s environmental impact of our transmission projects or in relation to land acquisition and construction activities for our projects and the consequent displacement and rehabilitation of affected communities. Any such claims or other opposition may delay or prevent us from implementing our projects. We may be required to bear substantial compliance, rehabilitation or other significant liabilities, which may lead to significant increase to our project development costs. As a result, our results of operations, financial condition and prospects may be adversely affected. In addition, there are various court proceedings pending against our Company with respect to land acquired for its various projects under the Land Acquisition Act, 1894, the majority of proceedings which relate to demands for increased compensation by landowners. 26. We are entering into businesses that may not be successful. We may not be able to provide

any assurances as to the timing and amount of any returns or benefits that we may receive from these businesses or any other new businesses we may enter into which may affect the results of our operations and financial condition.

We commenced operation with our telecom segment in 2001 and consultancy segment in 1995. We are seeking to diversify our operations and intend to venture into new initiatives such as smart grid, and renewable energy among others. We are also diversifying into value added services like MPLS-VPN services. We are taking initiatives to use our resources efficiently by making efforts to develop smart grid technology in all segments of power system, grid integration of renewable energy sources across India through Green Energy Corridors and by entering into strategic alliances.As we do not have much operating history or significant experience in some of the new ventures compared to our competitors in these businesses, they may involve risks and difficulties with which we may not be familiar. These businesses may require capital and other resources, as well as management attention, which could place a burden on our resources and abilities. These businesses are also subject to significant regulation, which may change. The early stage of these businesses and any changes to the nature of the relevant regulations may


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make it difficult to predict their economic viability. We may not be successful in these businesses and cannot provide you with any assurances as to the timing and amount of any returns or benefits that we may receive from these new businesses or any other new businesses we may enter into. 27. Decrease in demand for our services in the telecommunication segment could affect our

future operating results.

Factors adversely affecting the demand for telecommunication segment in India in general would be likely to adversely affect our future revenues from this business. Such factors could include:

a deterioration in the financial condition of wireless communications service providers generally due to declining tariffs, media convergence, cancellation of telecom licences or other factors;

a decrease in the ability and willingness of wireless communications service providers to maintain or increase capital expenditures;

a decrease in the growth rate of wireless communications generally or of a particular segment of the wireless communications sector;

a decrease in consumer demand for wireless communications services due to adverse general economic conditions or other factors;

adverse developments with respect to governmental licensing of spectrum and changes in telecommunications regulations;

mergers or consolidations among wireless service providers; increased use of network sharing, roaming or resale arrangements by wireless service

providers amongst themselves; delays or changes in the deployment of 3G, 4G, WiMAX or other communications

technologies; delays in regulatory changes that would permit us to use our towers as telecommunication

or broadcasting towers or for other revenue-generating purposes; changing strategies of wireless service providers with respect to owning or sharing

passive infrastructure; adverse developments with regard to zoning, environmental, health and other government

regulations; technological changes generally; and general economic conditions.

Additionally, the purchase orders received by us from our telecommunication customers and the capacity agreements entered into with our customers range from a period of one year to fifteen years. However, these agreements have provisions for earlier termination and as a result there is no assurance that a customer will stay with us for the entire period. The termination of contracts before the expiry period or non-renewal of our existing contracts may adversely affect our results of operations. Our business and proposed capital expenditure plans are based on the premise that the subscriber base for wireless telecommunications services in India will grow at a rapid pace and that Indian wireless service providers will, to a certain degree, adopt the passive infrastructure sharing model. If the Indian wireless telecommunications services market does not grow or grows at a slower rate than we expect, or the behaviours of market players do not meet our current


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expectations, the demand for our services and our growth prospects will be adversely affected, which would have a material adverse effect on our business, results of operations and financial condition. In addition, the development and commercialisation of new technologies designed to improve and enhance the range and effectiveness of cellular telecommunication networks may significantly decrease demand for additional telecommunications infrastructure. 28. Our Consultancy business could be adversely affected if funding for our consulting clients

and their programs were to be reduced by the GoI or foreign governments or institutions. Our Consultancy business mostly includes projects from SPUs and other government-funded programmes where we are one of the agents chosen to implement some or all parts of the project. In the event that SPUs’ or government programmes are reduced, or if we are unable to win new assignments, our Consultancy income would be adversely affected. As more parties enter into the Consultancy business, the Consultancy market will get significantly competitive. Also TBCB together with viability gap funding has been mandated by the GoI for procurement of transmission services in new projects and intra-state transmission projects have moved to a tariff based competitive bidding system from January 2013 which may in turn affect the Consultancy assignments being received from such States. In addition, the International Consultancy projects which we secure are also related to programs funded by multilateral agencies such as the World Bank, or any foreign government. Where such sources of funds for these programs if reduced, our consulting income relating to such programs would be adversely affected. 29. Our success depends in large part upon our management team and skilled personnel and

our ability to attract and retain such persons. The loss of key personnel may have an adverse affect on our business, results of operations, financial condition and growth prospects.

Our future performance depends on the continued service of our management team and skilled personnel. We also face a continuous challenge to recruit and retain a sufficient number of suitably skilled personnel, particularly as we continue to grow. Generally, there is significant competition for management and other skilled personnel in India, and it may be difficult to attract and retain the personnel we need in the future. In particular, we may be unable to compete with private companies for suitably skilled personnel due to their ability to provide more competitive compensation and benefits. The loss of key personnel may have an adverse affect on our business, results of operations, financial condition and growth prospects. 30. The GoI shall continue to hold a majority of our Equity Shares and our other shareholders

will be unable to affect the outcome of shareholder voting. The GoI could require us to take actions designed to serve the public interest in India and not necessarily to maximise our profits. This may affect our financial condition and the results of our operations.

The GoI owns approximately 57.9% of our paid-up equity share capital. Consequently, the GoI, acting through the MoP and MoDoNER, will continue to hold a majority of our Equity Shares and will have the power to appoint and remove our directors and therefore influence the outcome of most proposals for corporate action requiring approval of our Board of Directors or


43

shareholders, such as proposed annual and other plans, revenue budgets, capital expenditures, dividend policy, transactions with other GoI-controlled companies or the assertion of claims against such companies and other public sector companies. In particular, given the importance of the power industry to the economy, the GoI could require us to take actions designed to serve the public interest in India and not necessarily to maximise our profits. In addition, the GoI significantly influences our operations through its various departments and policies. 31. We are, presently, not in compliance with the provisions of the Equity Listing Agreement in

relation to the composition of our Board.

The power to appoint all Directors on our Board vests with the President of India, acting through the MoP. We are not in compliance with the provisions of Clause 49 of the Equity Listing Agreement in relation to the requirement for independent directors on our Board since 27th December 2014, as the term of two independent Directors ended on 26.12.2014. While no notices have been issued against, and no penalties have been imposed on, our Company by the Stock Exchanges, any future non-compliance by us with the Equity Listing Agreement could result in penalties and proceedings, which could have an adverse effect on our business and reputation. 32. The project appraisal reports prepared in relation to our Identified Projects identify

possible risk factors that could adversely affect our Company and its business, prospects, financial condition and results of operations. –

Our Identified Projects have been appraised, with respect to statutory clearances, funding requirements, risk analysis and mitigation mechanism, financial analysis and computation of financial parameters, by IFCI Limited, A.F. Ferguson & Co., ICRA Management Consulting Services Limited, SBI Capital Markets Limited, CRISIL Risk and Infrastructure Solutions Limited and IDBI Capital Market Services Limited. The appraisal agencies in their respective reports, have identified risks in pre-development stage, in construction stage and in operational stage of our Identified Projects. The identified risks in the pre-development stage include non-availability of statutory clearances or delay in obtaining statutory clearances, delay in financial closure and delay in acquisition of land. One of the identified reasons of delay in project execution in the past has been due to time taken in obtaining right of way clearances in inhabited areas. The identified risks in the construction stage include, escalation in project cost due to increase in interest rate or capital cost escalation or adverse movement in exchange rate; and delay in commissioning due to delay in construction of transmission lines for start up power or contractor performance shortfalls. The identified risks related to the construction of 765 kV lines include the limited number of manufacturers of high voltage equipment in India, and the requirement for a high level of expertise and technical know-how, which may not in all cases be readily available. Post construction, the appraisal agencies have specified that risks may arise in relation to realization of tariff being less than anticipated due to change in tariff determination methodology/norms by the CERC or non - payment of charges by beneficiaries/utilities/developers or reduced income due to adverse changes in law or poor availability of the transmission system due to technical reasons which could escalate the operating and management costs during the operation period. Further the appraisal agencies have specified the risks associated with some of our projects being located in states where the threat of Naxal activity is present. These factors may result in an adverse effect on our business and results of operations.


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33. Our Company is involved in certain legal, regulatory and arbitration proceedings that, if determined against us, may have an adverse impact on our financial condition. -

There are certain outstanding legal proceedings against our Company pending at various levels of adjudication before various courts, tribunals, authorities and appellate bodies in India. Should any new development arise, such as, change in applicable laws or rulings against us by the appellate courts or tribunals, we may need to make additional provisions in our financial statements, which may increase our expenses and current liabilities. We also receive requests for providing information under the Right to Information Act, 2005 from various citizens from time to time. In addition our Company is presently and in future may be subject to risks of litigation including public interest litigation, in relation to forest clearance, environmental impact of our project or construction activities of our projects. We are currently, and may in the future be, implicated in lawsuits in the ordinary course of our business, including lawsuits and arbitrations involving compensation for loss of trees, crops or houses, land acquisition disputes, tax matters, civil disputes, labour and service matters, statutory notices, regulatory petitions, consumer cases and other matters. Litigation or arbitration could result in substantial costs to, and a diversion of effort by, us and/or subject us to significant liabilities to third parties. We cannot give you any assurance that these legal proceedings will be decided in our favour. Any adverse decision may have a significant effect on our business including the financial condition of our Company, delay in implementation of our current or future project and results of operations. There can be no assurance that the results of such legal proceedings will not materially harm our business, reputation or standing in the marketplace or that we will be able to recover any losses incurred from third parties, regardless of whether we are at fault. There can be no assurance that losses relating to litigation or arbitration will be covered by insurance, that any such losses would not have a material adverse effect on the results of our operations or financial condition, or that provisions made for litigation and arbitration related losses will be sufficient to cover our ultimate loss or expenditure. Further, prospective investors may note that certain Directors and officials of our Company may have been impleaded in certain of these cases in their respective official capacities.

34. Our Company is presently involved in certain proceedings relating to property tax, and any

adverse decision may have a significant adverse effect on our business and results of operations.–

Our Company has filed a writ petition against the East Delhi Municipal Corporation (“EDMC”) and the GoI before the High Court of Delhi, challenging the assessment order issued by EDMC dated February 2, 2013 whereby the EDMC had imposed a property tax of approximately Rs.388.1 million for the period from April 2004 to March 31, 2013 with respect to certain towers belonging to our Company, on the grounds that under Rule 9(1) and 14 of the Delhi Municipal Corporation (Property Tax) Bye Laws, 2004, ‘towers’ fall within the definition of property and are hence liable to be taxed. Additionally, the North Delhi Municipal Corporation (NDMC), New Delhi, by a notice dated March 15, 2013, has passed assessment order for payment of property tax under Delhi Municipalities payment of property tax under Delhi Municipalities Corporation Act, 1957 and Delhi Municipal Corporation (Property Tax) Bye Laws, 2004 for towers falling within their jurisdiction. Further, the South Delhi Municipal Corporation (SDMC), New Delhi, also passed assessment order for payment of property tax on Towers of powergrid falling within their jurisdiction. Consequently Powergrid filed W.P. No 7142/2013 challenging


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the virus of the Delhi Municipal Corporation (DMC) Act wherein the towers have been subject to assessment for municipal tax. All the three Municipal Corporation Viz EDMC, NDMC & SDMC have been impleaded as parties to the said petition which is pending for hearing before DMC. We cannot provide any assurance that these matters will be decided in our favor. Further, in the event the High Court of Delhi or other relevant authorities decide that our towers fall within the definition of property and are hence liable to be taxed in New Delhi, this may have a significant effect on our business including the financial condition and results of operations of our Company.

35. Our Subsidiaries and joint venture companies are involved in certain legal and regulatory

proceedings that, if determined against our Subsidiaries, may have adverse impact on our Company. –

There are certain outstanding regulatory/legal proceedings pending against our Subsidiary, namely, POSOCO and some of our joint venture companies. These legal proceedings are pending at various levels of adjudication before various courts, tribunals, authorities and appellate bodies in India. Should any new developments arise, such as a change in the Indian law or rulings against them by appellate courts or tribunals, we may need to make provisions in our financial statements, which may increase our expenses and current liabilities. We can give no assurance that these legal proceedings will be decided in their favour. Any adverse decision may have a significant effect on our business, financial condition and results of operations.

36. We are subject to inspections, which may result in investigations, proceedings and

penalties. If one or more of such inspections, investigations or cases leads to a significant award or penalty against us, our business may be adversely affected. -

We are periodically subject to inspection of our work-sites and office locations, including our finance department, by the relevant authorities, including the vigilance wing of the GoI. Certain of these inspections have resulted in investigations and cases commenced against us or some of our employees. Going forward we will remain subject to similar inspections, investigations and cases. If one or more of such inspections, investigations or cases leads to a significant award or penalty against us, our business may be adversely affected. 37. As at March 31, 2014, we had contingent liabilities of Rs.3864.26 million which have not

been provided for in our financial statements and could adversely affect our financial condition.-

As at March 31, 2014, we had contingent liabilities not provided for, as disclosed in the notes to our standalone, unaudited, reviewed financial statements for the year ended March 31, 2014:

(Rs. in Crore) Contingent Liabilities As at March 31, 2014 Claims against the Company not acknowledged as debt in respect of: Capital Works 211.73 Land Compensation Cases 2393.45 Other Claims 5.8 Disputed income tax/sales tax/excise/municipal tax 474.74 Other 778.54


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Total 3864.26 If these contingent liabilities materialize, fully or partly, our financial condition could be materially and adversely affected. Special purpose vehicle (SPV) companies namely Powergrid NM Transmission Company Ltd. (wholly owned subsidiary) (erstwhile Nagapattinam Madugiri Transmission Company Ltd.), Powergrid Vemagiri Transmission Company Ltd. (wholly owned subsidiary) (erstwhile Vemagiri Transmission System Limited), Vizag Transmission Limited and Unchahar Transmission Limited has been taken over to carry over the business awarded under Tariff based bidding. Bank guarantee of Rs 45.00 crore (previous year Rs 45.00 crore ), Rs Nil (previous year Rs 36.00 crore), Rs 45.00 crore and Rs 5.40 crore respectively has been given by the company on behalf of SPV companies towards performance of the work awarded. 38. Our operations in foreign countries are subject to political, economic, regulatory and other

risks of doing business in those countries. Our failure to successfully manage our geographically diverse operations could impair our ability to react quickly to changing business and market conditions and comply with industry standards and procedures. –

We have international operations, including operations in Africa, the Middle East, and South Asia that we either conduct directly or through project-specific consortiums with Indian partners and/ or local partners in that country. We may, at any one time, have a substantial portion of our resources dedicated to projects located in a few countries or a specific geographical region, which exposes us to risks in those jurisdictions. We are involved in 18 international Consultancy projects. These projects are in locations as diverse as Afghanistan, Bangladesh, Bhutan, Congo, Ethiopia, Kazakhstan, Kenya, Kyrgyz Republic, Myanmar, Nepal, Nigeria, Pakistan, Senegal, Sri Lanka, Tajikistan, Tanzania, Uzbekistan and United Arab Emirates. In addition, we have submitted expressions of interest/RFP to clients in various countries including , Ghana, Togo, Georgia, Ukraine, Nepal, Laos, Liberia, Mozambique, Vietnam, Nigeria, Cameroon, , Mali, , Tanzania, Indonesia to participate in international competitive bidding for Consultancy works for various pre-award and post-award services related to Transmission System, Telecom., Load dispatche feasibility studies, engineering Consultancy, procurement, supervision of Construction, capacity-building etc. As many of our clients are governmental entities, we are subject to additional risks, such as risks associated with uncertain political and economic environments and political instability, as well as legal systems, laws and regulations that are different from the legal systems, laws and regulations that we may not be familiar as in India, and which may be less established or predictable than those in more developed countries. In addition, we could be subject to expropriation or deprivation of assets or contract rights, interruptions from war or civil strife, foreign currency restrictions, exchange rate fluctuations and unanticipated taxes or encounter potential incompatibility with foreign joint venture partners or consortium members. Regulatory changes in the foreign countries in which we operate may require us to, among other things, obtain licenses or permits in order to bid on contracts or conduct our operations or enter into a consortium arrangement, joint venture, agency or similar business arrangements with local businesses in order to conduct business in those countries. These laws and regulations may also encourage or mandate the hiring of local contractors and require foreign contractors to employ


47

citizens of, or purchase supplies from within, the relevant country. In addition, we may become involved in proceedings with regulatory authorities that may require us to pay fines, unanticipated taxes comply with more rigorous standards or other requirements or incur capital and operating expenses for compliance with such laws and regulations. Some of our full time employees are located in other countries. In order to manage our day-to-day operations, we must overcome cultural and language barriers and assimilate different business practices. In addition, we are required to create compensation programs, employment policies, codes of conduct and other administrative programs that comply with the laws and customs of different jurisdictions. Our failure to successfully manage our geographically diverse operations could impair our ability to react quickly to changing business and market conditions and comply with industry standards and procedures. 39. Any downgrading of India’s debt rating by an international rating agency could have a

negative impact on our business. – During Fiscal 2013, we obtained our international credit ratings for the first time and were initially rated by Standard and Poor’s (“S&P”) rating services and Fitch Ratings at ‘BBB- (outlook negative)’ consistent with India’s sovereign rating. Both the agencies have further revised the sovereign rating to ‘stable’ from ‘negative’ and accordingly our Ratings by S&P and Fitch have been raised which now stand at ‘BBB- (outlook Stable)’. Since our rating is now aligned to India's sovereign rating, any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies may adversely impact our ability to obtain financing, and the interest rates and other commercial terms at which such financing is available. Such revisions could have an adverse effect on our business and financial condition, our ability to obtain financing for working capital and capital expenditures.

40. Our quarter-to-quarter financial information may not be comparable, because such

financial information varies if a new transmission project is commissioned in a particular quarter.

We start generating income in respect of a transmission project after the completion of the project. At any point in time, we have several ongoing transmission projects with different project completion schedules. As a result, the completion of one or more projects in a particular quarter could increase our income. In such a case, our income in that quarter may not be comparable to our income in previous quarters. 41. Our business and activities will be regulated by the Competition Act, 2012 (the

“Competition Act”) and any application of the Competition Act to us could have a material adverse effect on our business, financial condition and results of operations. -

We own and operate more than 90% of the ISTS as of June 30, 2014 and may be affected by the provisions of the Competition Act that regulate business practices that have an appreciable adverse effect on competition in India, abuse of dominant positions, and mergers and acquisitions. In addition, under the Electricity Act, the CERC (or the relevant State Regulatory Commission) is entitled to issue directions to a licensee or a generating company if such


48

company enters into any agreement or abuses its dominant position or enters into a merger or acquisition which is likely to cause or causes an adverse effect on competition in the electricity industry. The CERC has also published the draft Central Electricity Regulatory Commission (Prevention of Adverse Effect on Competition) Regulations, 2012 (the “Draft Regulations”) which seek to regulate competition among licensee and generating companies. Under the Competition Act, any arrangement, understanding or acting in concert between enterprises, whether formal or informal, which causes or is likely to cause an appreciable adverse effect on competition in India is prohibited and void, and attracts substantial monetary penalties. Any agreement which (i) directly or indirectly determines purchase or sale prices, (ii) limits or controls production, supply, markets, technical development, investment or provision of services, (iii) shares the market or source of production or provision of services by way of geographical area, type of goods or services, or number of customers in the market (or any other similar way) or (iv) directly or indirectly results in bid rigging, is presumed to have an appreciable adverse effect on competition. Under the Competition Act, enterprises or groups which abuse their “dominant position”, including by way of discriminatory conditions in purchase or sale of goods or services or denial of market access, may be subject to substantial monetary and other penalties. “Dominant Position” means a position of strength enjoyed by an enterprise in the relevant market in India which enables it to operate independently of competitive forces or to affect its competitors or consumers or the relevant market in its favor. Though the GoI and the CERC are taking steps through policy initiatives and regulatory mechanisms, such as, TBCB in transmission projects, to curb monopolistic behavior of business entities in the electricity sector in India, if our business activity is viewed to be falling within the purview of the Competition Act, and if we are affected, directly or indirectly, by any provision of the Competition Act, or, when enacted, the Draft Regulations, or its application or interpretation, including any proceedings initiated by the Competition Commission of India (“CCI”) or any other regulatory authority and any adverse publicity that may be generated due to scrutiny or prosecution by the CCI, it may have a material adverse effect on our business, expansion plans (including any mergers and acquisitions), prospects, financial condition and results of operations.


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1.g. DETAILS OF DEFAULT

SI. No.

Particulars Amount Involved

Duration of Default

Present Status

1 Repayment of Statutory Dues Nil - -

2 Repayment of Debentures & Interest thereon Nil - -

3 Repayment of Deposits & Interest thereon Nil - -

4 Repayment of Loan from any bank and Financial Institution,& Interest thereon

Nil - -

1.h DETAILS OF NODAL/ COMPLIANCE OFFICER OF THE COMPANY

Compliance Officer of the Company

Name Ms. Divya Tandon

Designation Company Secretary

Address Powergrid Corporation of India Ltd.,

Saudamini, Plot No. 2, Sector-29, Gurgaon 122001 (Haryana)

Phone Number 011-2571968

Email Id [email protected]


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2. (I) PARTICULARS OF THE OFFER

(a to k) SUMMARY TERM SHEET FOR PRIVATE PLACEMENT ISSUE/ALLOTMENT OF SECURED, NON-CONVERTIBLE, NON-CUMULATIVE, REDEEMABLE, TAXABLE BONDS IN THE NATURE OF DEBENTURES ON PRIVATE PLACEMENT BASIS

Security Name Secured, Non-Convertible, Non-Cumulative, Redeemable, Taxable POWERGRID bonds XLVIII Issue

Issuer Power Grid Corporation of India Limited

Type of Instrument Secured, Non-Convertible, Non-Cumulative, Redeemable, Taxable bonds in the nature of debentures

Nature of Instrument Secured or Unsecured

Secured

Mode of Issue Private placement

Eligible Investors 1. Qualified Institutional Buyers (“QIBs”): Qualified institutional buyer as defined in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended from time to time

2. Companies and Bodies Corporate including Public Sector Undertakings

3. Scheduled Commercial Banks

4. Regional Rural Banks

5. State Co-operative Banks

6. Financial Institutions

7. Insurance Companies

8. Mutual Funds approved by SEBI

9. Provident, Pension, Superannuation & Gratuity Funds

10. Registered Trusts

11. Foreign Institutional Investors (FII) approved by SEBI Merchant Banker(s) approved by SEBI (It may please be noted that in case FIIs are applying for subscribing POWERGRID Bond XLVIII Issue 2014-15, all regulations in respect to FEMA, RBI regulations, Companies Act, Guidelines issued by any statutory authorities and/or any other regulation may be complied and satisfied by themselves before


51

applying to this issue.)

Any other investor authorized to invest in these bonds, subject to confirmation from the issuer.

Listing ( including name of stock

Exchange(s) where it will be listed

and timeline for listing)

The Bonds are proposed to be listed on WDM segment of the NSE and/or BSE. Making listing application to NSE and/or BSE within 15 days from the Deemed Date of Allotment of Bonds and seeking listing permission within 20 days from the Deemed Date of Allotment of Bonds;

Rating of the Instrument CRISIL “AAA/Stable” (pronounced triple A with stable outlook) by CRISIL indicating “highest safety with regard to timely payment of interest and principal on the instrument.

ICRA “[ICRA] AAA” (pronounced ICRA triple A) with stable outlook by ICRA “indicating highest safety and fundamentally strong position”.

'CARE AAA' (pronounced Triple A) by CARE “best credit quality, offering highest safety for timely servicing of debt obligations. Such instruments carry minimal credit risk”.

Date of passing of board resolution

27th March, 2014

Date of passing of resolution in the general meeting, authorizing the offer of securities

21st July, 2014

Kind of securities offered (i.e. whether share or debenture) and class of security

Bonds (Secured, Non-Convertible, Non-Cumulative, Redeemable, Taxable bonds in the nature of debentures)

Price at which the security is being offered including premium, if any alongwith justification of price.

Coupon Rate

Each Bond shall have a face value of Rs 40 Lakhs. comprising of 04 STRPPs of the value of Rs 10 lakh each

8.20 % per annum payable annually

Name and address of the valuer who performed valuation of the security offered

M/s Ajay Agrawal & Co., Chartered Accountants 1/42 Room No-203, Lalita Park, Laxmi Nagar, Delhi-92


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Amount which company (POWERGRID) intends to raise by way of securities) [Issue Size]

Rs 2580 Crore

Option to retain oversubscription (Amount )

The amount of over-subscription to be retained will be decided by the corporation.

Terms of raising of securities: Duration, if applicable, Rate of dividend or rate of interest, mode of payment and repayment a) Tenor

Bonds are redeemable at par in 4 equal installments starting at the end of 5th year from the date of allotment. Each bond will comprise of 4 detachable, Separately Transferable Redeemable Principal Parts (STRPPs) redeemable at par at the end of 5th, 7th, 10th and 15th year respectively. These Principal Parts would be designated and named as A, B, C and D respectively.

b) Redemption Date on which Principal will be repaid.

At the end of 5th,7th, 10th and 15th year respectively from the date of allotment

c) Redemption Amount Rs. 10,00,000 per STRPP.

d) Redemption Premium /Discount

N.A.

d) Coupon Payment Frequency

Annual

e) Coupon payment dates on which coupon will be paid.

The due date of first interest payment will be 23.01.2016 and subsequent interest payment on 23th January every year till redemption.

f) Coupon Type Fixed, floating or other coupon structure.

Fixed

g) Coupon Reset Process (including rates, spread, effective date, interest rate cap and floor etc).

N.A.

h) Day Count Basis Actual/ Actual

Actual/ Actual

i) Interest on Application Money

N.A.

j) Default Interest Rate As per SEBI Notification dated 12th October, 2012

k) Step Up/Step Down Coupon Rate

N.A.

l) Issue Price, the price at which bond is issued

Each Bond shall have a face value of Rs.40 Lakhs comprising of 04 STRPPs of the value of Rs 10 Lakh each

m) Discount at which security is issued and the effective yield as a result of such discount.

N.A.

n) Put option Date N.A.

o) Put option Price N.A.


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p) Call Option Date N.A.

q) Call Option Price N.A.

r) Put Notification Time N.A.

s) Call Notification Time N.A. t) Face Value Each Bond shall have a face value of Rs.40 Lakhs

comprising of 04 STRPPs of the value of Rs 10 Lakh each u) Minimum Application and in multiples of __ Debt securities Thereafter

Rs.20 Crore (50 bonds) and in multiple of Rs 10 Crore (25 bonds) thereafter.

v) Settlement mode of the Instrument

The bonds held in the dematerialized form shall be taken as discharged on payment of the redemption amount by POWERGRID on maturity to the registered bondholders whose name appear in the register of bondholders on the record date. Such payment will be a Legal discharge of the liability of the POWERGRID towards the bondholders. On such payment being made, the Company will inform NSDL/ CDSL and accordingly the account of the Bondholders with NSDL/ CDSL will be adjusted.

w) Business Day Convention In line with the SEBI circular dated October 29, 2013, if the coupon payment date of debt securities falls on a Sunday or a holiday, the coupon payment shall be made on the next working day. If the maturity dates of the debt securities falls a Sunday or a holiday the redemption proceeds shall be paid on the previous working day. * * If the maturity date falls on a holiday, redemption and accrued interest are payable on the immediately previous working day. Refer illustration under heading “Effects of Holidays”

x) Record Date 15 days prior to each Coupon Payment Date

Proposed time schedule: Issue Timing 1. Issue Opening Date 2. Issue Closing Date 4. Pay-in-Date 5. Deemed Date of Allotment

[ 23 January 2015] [ 23 January 2015] [ 23 January 2015] [ 23 January 2015]

Purpose and objects of the offer Objects of the Issue

The Bonds are being raised for carrying out the construction activities of the company for various transmission/telecom schemes approved by competent authorities including Government of India and/or to provide inter corporate loan(s) on cost to cost basis and back to back servicing to Project SPVs acquired by POWERGRID under Tariff Based Competitive Bidding viz., POWERGRID Vizag Transmission Limited,


54

POWERGRID NM Transmission Limited, POWERGRID Unchahar Transmission Limited & POWERGRID Kala Amb Transmission Limited.

Details of the utilization of the Proceeds

The funds would be utilized for transmission/telecom schemes approved by competent authorities including Government of India and/or to provide inter corporate loan(s) on cost to cost basis and back to back servicing to Project SPVs acquired by POWERGRID under Tariff Based Competitive Bidding viz., POWERGRID Vizag Transmission Limited, POWERGRID NM Transmission Limited, POWERGRID Unchahar Transmission Limited & POWERGRID Kala Amb Transmission Limited.

Contribution being made by the promoters or directors either as part of the offer or separately in furtherance of such objects

Nil

Principle terms of assets charge as security, if applicable

Floating Charge by way of unattested memorandum of Hypothecation The whole of the Corporation’s assets except investments, land and buildings. Roads and bridges, water supply, drainage and sewerage and current assets; and shall include all assets both present and future, which are now lying or stored in or about or shall hereafter from time to time during the continuance of these presents be brought into or upon or to be stored or be in or about the Corporation’s premises including its godowns of the Transmission Lines/Sub-Stations or wherever else the same may be or be held by any party to the order of the Corporation or in the course of transit or delivery in the possession of the Corporation and either by way of substitution or addition. Mortgage and charge on the Immovable Property at Mouje Ambheti, Taluka Kaprada in the Registration District of Valsad (Gujarat))Gujarat Properties by way of a Registered Bond Trust Deed. Charge will rank pari-passu with other Term Lenders and Bond Holders and will not be inferior to them.

Security (where applicable) (Including description, type of security, type of charge, likely date of creation of security, minimum security cover, revaluation, replacement of security).

The Bonds will be secured by way of fixed/floating /pari-passu charge on the assets of the Company. The charge will be created in favor of trustees by way of Bond Trust Deed in such form and manner in one or more tranches and through one or more security documents as considered appropriate by the Company of value not less than 1.10 times the value of the Bonds outstanding.

Transaction Documents Debenture Trustee Agreement, Trust deed and Other documents

Issuance mode of the In Demat only


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Instrument

Trading mode of the Instrument In Demat only

Depository National Securities Depository Ltd. And Central Depository Services (India) Ltd.

Conditions Precedent to Disbursement

N.A.

Condition Subsequent to Disbursement

N.A.

Additional Covenants Security Creation: The Issuer has obtained permission/ consents from the existing creditor(s) to create pari passu charge. In case of delay in execution of Bond Trust cum Hypothecation Deed within sixty days of Deemed Date of Allotment of the Bonds,, the Company will refund the subscription with penal/additional interest of 2% p.a. over the coupon rate till the execution of the Bond Trust cum Hypothecation Deed. In case of default in payment of interest and/ or principal redemption on the due dates, the company shall pay additional interest at the rate of 2.00% p.a. over the Coupon Rate for the defaulting period i.e. the period commencing from and including the date on which such amount becomes due and up to but excluding the date on which such amount is actually paid. The Company shall allot the Bonds within sixty days from the date of receipt of the application money for such Bonds and if the Company is not able to allot the Bonds within such period, it shall repay the application money to the subscribers within fifteen days from the date of completion of sixty days and if the Company fails to repay the application money within the aforesaid period, it shall be liable to repay such money with interest at the rate of 12% p.a. from the expiry of the sixtieth day. Listing: The Issuer shall complete all the formalities and seek listing permission within 20 days from the Deemed Date of Allotment. In case of delay in listing of the Bonds beyond 20 days from the Deemed Date of Allotment, the Company shall pay penal interest at the rate of 1.00% p.a. over the Coupon Rate from the expiry of 30 days from the Deemed Date of Allotment till the listing of Bonds to the Bondholder(s).

Events of Default In case of default in payment of interest or delay in list of the debt securities or delay in security creation provision according to SEBI (Issue and Listing of Debt Securities) (Amendment) Regulations, 2012 shall apply

Provisions related to Cross N.A.


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Default Clause Role and Responsibilities of Debenture Trustee

The trustees shall protect the interest of the bondholders in the event of default by POWERGRID in regard to timely payment of interest and repayment of principal and shall take necessary action at the cost of POWERGRID. No bondholder shall be entitled to proceed directly against POWERGRID unless the trustees, having become so bound to proceed, fail to do so.

Conditions precedent to subscription of Bonds

The issuer will receive / accept the subscription from investors subject to the following: 1. Rating letters from at least one rating agency not being more than one month old from the issue opening date; 2. Seek a written consent letter from the Trustees conveying their consent to act as Trustees for the Bondholders; 3. Making an application to NSE/ and or BSE for seeking their in-principle approval for listing of Bonds.

Conditions subsequent to subscription of Bonds

The Issuer shall ensure that the following documents are executed/ activities are completed as per time frame mentioned elsewhere in this Private Placement Offer Letter: 1. Ensuring that the payment made for subscription to the Bonds is made from the bank account of the person/ entity subscribing to the Bonds and keep record of the bank accounts from where payments for subscriptions have been received and in case of subscription to the Bonds to be held by joint holders, monies are paid from the bank account of the person whose name appears first in the Application Form; 2. Maintaining a complete record of private placement offers in Form PAS-5 and filing the such record along with Private Placement Offer Letter in Form PAS-4 with the Registrar of Companies, with fee as provided in Companies (Registration Offices and Fees) Rules, 2014 and with Securities and Exchange Board of India, within a period of thirty days of circulation of the Private Placement Offer Letter; 3. Filing a return of allotment of Bonds with complete list of all Bondholders in Form PAS-3 under section 42(9) of the Companies Act, 2013, with the Registrar of Companies within thirty days of the Deemed Date of Allotment along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014; 4. Credit of demat account(s) of the allottee (s) by number of Bonds allotted within two working days from the Deemed Date of Allotment; 5. Making listing application to NSE and/or BSE within 15 days from the Deemed Date of Allotment of Bonds and


57

seeking listing permission within 20 days from the Deemed Date of Allotment of Bonds; 6. Executing the Debenture/Bond Trust Deed, in favour of the Trustee within sixty days of Deemed Date of Allotment of the Bonds and submit with NSE and/or BSE within five working days of execution of the same for uploading on their website. Besides, the Issuer shall perform all activities, whether mandatory or otherwise, as mentioned elsewhere in this Private Placement Offer Letter.

Governing Law and Jurisdiction The Bonds are governed by and shall be construed in accordance with the existing Indian laws. Any dispute arising thereof will be subject to the jurisdiction of the court of Delhi.

# The Issuer reserves its sole and absolute right to modify (pre-pone/ postpone) the above issue schedule without giving any reasons or prior notice. In such a case, investors shall be intimated about the revised time schedule by the Issuer. The Issuer also reserves the right to keep multiple Deemed Date(s) of Allotment at its sole and absolute discretion without any notice. In case if the Issue Closing Date/ Pay in Dates is/are changed (pre-poned/ postponed), the Deemed Date of Allotment may also be changed (pre-poned/ postponed) by the Issuer at its sole and absolute discretion. Consequent to change in Deemed Date of Allotment, the Coupon Payment Dates and/or Redemption Date may also be changed at the sole and absolute discretion of the Issuer. The application form should be complete in all respect. Incomplete application forms are likely to be rejected.

The amount of the application money may be deposited by way of remittance through RTGS only to Power Grid Corporation of India Ltd C.A. No. 076202000101726 with Indian Overseas Bank, Parliament Street Branch, New Delhi (IFSC Code IOBA0000762) on account of “POWER GRID CORPORATION OF INDIA LIMITED-BONDS APPLICATION MONEY” Application money for BONDS XLVIII-Issue on 23.01.2015.

Note: POWERGRID reserves the right to change the Issue Schedule and also accept or reject any application, in part or in full, without assigning any reason.


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2.(II) OTHER PARTICULAR RELATED TO OFFER

a) MATERIAL EVENT, DEVELOPMENT OR CHANGE AT THE TIME OF ISSUE

The POWERGRID hereby declares that there has been no material event, development or change at the time of issue which may affect the issue or the investor's decision to invest/continue to invest in the debt securities of the POWERGRID.

b) PERMISSION/CONSENT FROM PRIOR CREDITORS

The Corporation hereby confirms that it is entitled to raise money through current issue of bonds without the consent/permission/approval from the Bondholders/Trustees/Lenders/ other creditors of the POWERGRID. The consent from existing lenders has been taken for creating pari-passu charge on the assets of the Corporation.

c) NAME OF THE RECOGNISED STOCK EXCHANGES WHERE SECURITIES ARE PROPOSED TO BE LISTED CLEARLY INDICATING THE DESIGNATED STOCK EXCHANGE

The Secured Redeemable Non-Convertible Non-cumulative Taxable POWERGRID Bonds (XLVIII Issue) in the nature of Debentures are proposed to be listed in the Wholesale Debt Market (WDM) Segment of the National Stock Exchange of India Limited (“NSE”) and/or Bombay stock Exchange Ltd (“BSE”). The POWERGRID shall make an application to the NSE and/or BSE to list the Bonds to be issued and allotted under this Disclosure Document and complete all the formalities relating to listing of the Bonds immediately after the allotment date of the Bond Issue.

In connection with listing of Bonds with NSE and/or BSE, the POWERGRID hereby undertakes that:

1) It shall comply with conditions of listing of bonds as may be specified in the Listing Agreement with NSE and/or BSE;

2) Ratings obtained by the POWERGRID shall be periodically reviewed by the credit rating agencies and any revision in the rating shall be promptly disclosed by the POWERGRID to NSE and/or BSE;

3) Any change in rating shall be promptly disseminated to the holder(s) of the Bonds in such manner as NSE and/or BSE may determine from time to time;

4) The POWERGRID, the Trustee, NSE and/or BSE shall disseminate all information and reports on Bonds including compliance reports filed by POWERGRID and the Trustee regarding the Bonds to the Holder(s) of Bonds and general public by placing them on their website.

5) Trustees shall disclose the information to the holder(s) of the bonds and the general public by issuing a press release in any of the following events:-


59

Default by the POWERGRID to pay interest on Bonds or redemption amount;

Revision of rating assigned to the bonds. The information referred to in Para (4) above shall also be placed on the website of the Trustee, POWERGRID and NSE.

d) STATEMENT CONTAINING PARTICULARS OF THE DATES AND PARTIES TO ALL MATERIAL CONTRACTS & AGREEMENTS INVOLVING FINANCIAL OBLIGATIONS OF THE ISSUER

By very nature of its business, POWERGRID is involved in a large number of transactions involving financial obligations and therefore it may not be possible to furnish details of all material contracts and agreements involving financial obligations of the POWERGRID. However, the contracts referred below (not being contracts entered into the ordinary course of the business carried on by POWERGRID) which are or may be deemed to be material have been entered into by POWERGRID. Copies of documents as given below may be inspected at the Corporate Office of POWERGRID between 10.00 a.m. and 2.00 p.m. on any working day until the issue closing date:-

1. Memorandum and Articles of Association of the POWERGRID as amended from time to time.

2. Board Resolution of the 300th Meeting dated 27 March, 2014 authorizing issue of bonds offered under terms of this Document.

3. Special Resolution approved by Shareholders bearing no. C/COF/11001 dated 21 July, 2014 authorizing issue of bonds.

4. Letter of consent from IDBI Trusteeship Services Limited letter dated 25 November, 2014 for acting as Trustee for and on behalf of the holder(s) of the bonds.

5. Letter of consent from M/s MCS Limited Ref No. MCS/PGBOND/2014-15/NEW dated 25 November, 2014 for acting as Registrars to the Issue.

6. Letter of consent from Indian Overseas Bank Ref No. 0762/PS/PGCIL/XLVIII/2014-15 Dated November 27, 2014 for acting as Banker to the Issue.

7. In-principle approval from NSE Ref No.: NSE/LIST/ 11332 dated 19-January-2015.

8. Letter from CRISIL conveying the credit rating Ref No.NA/PGCIL/SN/30653 dated 05 January, 2015, for the Bonds of the POWERGRID and the rating rationale pertaining thereto.


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9. Letter from ICRA conveying the credit rating Ref No.D/RAT/2014-15/P1/11 dated 26 December, 2014 for the Bonds of the POWERGRID and the rating rationale pertaining thereto.

10. Letter from CARE conveying the credit rating Ref No. CARE/DRO/RL/2014-15/1482 dated January 02, 2015 for the Bonds of the POWERGRID and the rating rationale pertaining thereto.

11. Tripartite Agreement dated 27.04.2004 between the POWERGRID, NSDL and M/s MCS Limited for Issue of Bonds in dematerialized form.

12. Tripartite Agreement dated 04.05.2004 between the POWERGRID, CDSL and M/s MCS Limited for Issue of Bonds in dematerialized form.

OTHER DETAILS

1. BOND REDEMPTION RESERVE

Transfer to BRR suitable amounts in accordance with relevant provisions of the Companies Act, 2013 or other guidelines issued from time to time and in force during the currency of the Bonds/ STRPPs.

2. UNDERTAKING REGARDING COMMON FORM OF TRANSFER

The bonds shall be transferred subject to and in accordance with the rules/procedures as prescribed by the NSDL/CDSL/Depository Participants of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller should give delivery instructions containing details of the buyer's DP account to his depository participant. The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid/redemption will be made to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with the POWERGRID.

The POWERGRID undertakes that it shall use a common form/procedure for transfer of Bonds issued under terms of this Disclosure Document.

3. APPLICATION PROCESS

Procedure for applications by Mutual Funds/FII


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The applications forms duly filled shall clearly indicate the name of the concerned scheme for which application is being made and must be accompanied by certified true copies of

1. SEBI registration certificate

2. Resolution authorizing investment and containing operating instructions.

3. Specimen Signature of authorized signatories

e) DOCUMENTS TO BE PROVIDED BY INVESTORS

Investors need to submit the following documentation, along with the application form, as applicable.

1. Memorandum and Articles of Association / Documents Governing Constitution

2. Resolution authorizing investment

3. Certified True Copy of the Power of Attorney

4. Form 15 AA for investors seeking exemption from Tax deduction at source from interest on the application money.

5. Specimen signatures of the authorized signatories duly certified by an appropriate authority.

6. SEBI Registration Certificate (for Mutual Funds)/Recognition Certificate of Trust – Provident, Pension, Superannuation and Gratuity Fund

7. Permanent Account Number (PAN)

8. Bank / Demat Account Number

f) BANK COLLECTION CENTRE/SUBMISSION OF COMPLETED APPLICATION FORMS AND MODE OF PAYMENT

The amount of the application money may be deposited by way of remittance through RTGS only to POWER GRID CORPORATION INDIA LIMITED Account No. 076202000101726 with Indian Overseas Bank, Parliament Street Branch, New Delhi (IFSC Code IOBA0000762) on account of “POWER GRID CORPORATION INDIA LIMITED-BONDS APPLICATION MONEY” for BONDS XLVIII-Issue.

The application duly filled and affixed the stamp of investor may be deposited to Chief Manager (Finance) Resource Mobilization Section, 4th Floor, POWERGRID


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CORPORATION OF INDIA LTD, Corporate office, “Saudamini”, Plot No.2, Sector 29, Gurgaon – 122001 (Haryana).

The copy of the application with RTGS related details (mentioning UTR number, QIB/Non-QIB status on the top of the application) Depository details (mentioning Depository name, Depository Participant’s name, DP ID, Client ID (house/non-house), PAN number and Bank Account from where such payments for subscription have been made by investors must be faxed on the pay in date immediately to Chief Manager (Finance) Resource Mobilization Section, 4th Floor, POWERGRID CORPORATION OF INDIA LTD, Corporate office, “Saudamini”, Plot No.2, Sector 29, Gurgaon – 122001 (Haryana) to facilitate reconciliation and allotment process of bonds.

g) RIGHT TO ACCEPT / REJECT APPLICATIONS

The Issuer is entitled at its sole and absolute discretion to accept or reject any application, in part or in full, without assigning any reason. Application forms which are incomplete or which do not fulfill the Terms & Conditions indicated on the back of the application form are liable to be rejected.

h) PAYMENT ON APPLICATION

The full face value of the Bonds applied for, is to be paid along with the application form.

i) MINIMUM LOT SIZE

The minimum lot size for trading of the Bonds on the NSE and/or BSE is proposed to be of Rs.10, 00,000.00 (Rupees Ten Lakh Only).

j) MINIMUM SUBSCRIPTION:

As the current issue of bonds is being made on private placement basis, the requirement of minimum subscription shall not be applicable and therefore, POWERGRID shall not be liable to refund the issue subscription(s)/proceed(s) in the event of total issue collection falling short of issue size or certain percentage of issue size.

k) BASIS OF ALLOCATION / ALLOTMENT

On receipt of the Allocation Advice, completed Applications along with details of deposit through RTGS for the requisite amount & other necessary documents may be submitted directly to POWERGRID Corporate office “Saudamini” Sector 29, Plot no. 2 Gurgaon, Haryana on 23.01.2015.


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l) DENOMINATION OF BONDS AND DEPOSITARY ARRANGEMENT

Each Bond shall have a face value of Rs. 40 Lakhs comprising of 04 STRPPs of the value of Rs. 10 lakh each

The investors can hold the bonds only in Electronic (Dematerialized) form and deal with the same as per the provisions of Depositories Act, 1996 as amended from time to time. The Company is making arrangements with National Securities Depository Limited (NSDL) and Central Depository Services (India) Ltd. (CDSL) for the issue of these Bonds in the Electronic (Dematerialized) form. All provisions relating to issue, allotment, transfer, transmission etc in respect of Bonds/STRPPs as prescribed under the Depositories Act, 1996 and the rules made there under will be applicable to the Bonds issued in Dematerialized Form.

Applicants should mention their Depository Participant’s (DP) name, DP-ID and Client-ID (Beneficiary Account Number), clear and legible, in the appropriate place in the Application Form.

m) Depository Arrangement

The Company has made depository arrangements with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for issue and holding of the Bonds in dematerialized form.

As per the provisions of Depositories Act, 1996, the Bonds issued by the Company can be held in a dematerialized form, i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through electronic mode. In this context:

Two tripartite agreements have been signed

1. Tripartite Agreement dated 27.04.2004 between POWERGRID, NSDL and MCS Limited

2. Tripartite Agreement dated 04.05.2004 between POWERGRID, CDSL and MCS Limited

An applicant applying for Bonds must have at least one beneficiary account with any of the Depository Participants (DPs) of NSDL or CDSL prior to making the application.

The applicant must necessarily fill in the details (including the beneficiary account number and Depository Participant’s ID) appearing in the Application form under the heading ‘Request for Bonds in Electronic Form’.

Bonds allotted to an applicant will be credited directly to the applicant’s respective beneficiary account(s) with the DP.


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Names in the application form should be identical to those appearing in the account details in the depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the depository.

1. The address, nomination details and other details of the applicant as registered with his/her DP shall be used for all correspondence with the applicant. The Applicant is therefore responsible for the correctness of his/her demographic details given in the application form vis-à-vis those with his/her DP. In case the information is incorrect or insufficient, the Issuer would not be liable for losses, if any.

n) PAYMENT OF INTEREST

Interest would be payable annually on day count basis i.e. actual/actual. Interest would be payable annually from the date of allotment every year till the final date of redemption. The interest payable to each bondholder shall be paid by way of RTGS (in the bank account appearing in the Demat account) /Interest warrants( at the address appearing in the Demat account) bearing the interest payment dates. Such payments shall be made to the Bondholders whose names appear in the Register of Bondholders on the record date and in case of joint holders to the one whose name appears first in the Register of Bondholders. In the event of the Corporation not receiving any notice of transfer on the record date i.e. 15 days before the interest payment date, the transferee(s) for the Bond shall not have any claim against the Corporation in respect of amount so paid to the registered Bondholders.

Wherever the signature(s) of such transferor(s) in the intimation sent to the Corporation is/are not in accordance with the specimen signature(s) of such transferor(s) available on the records of the Corporation, all payments on such Bond(s) will be kept at abeyance by the Corporation till such time as the Corporation is satisfied in this regard.

No interest / interest on interest shall accrue on the Bonds after the date of maturity of the respective instruments.

o) PAYMENT ON REDEMPTION

The payment of the redemption amount of the Bonds will be made by the Company to the Registered Bondholders recorded in the books of the Company and in the case of joint holders, to the one whose name appears first in the Register of Bondholders as on the record date. In the event of the Company not receiving any notice of transfer, before the record date, the transferee(s) for the Bond(s) shall not have any claim against the Company in respect to the amount so paid to the Registered Bondholders.


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The Bonds held in the Dematerialized Form shall be taken as discharged on payment of the redemption amount by the Company on maturity to the registered Bondholders whose name appears in the Register of Bondholders on the record date. Such payment will be a legal discharge of the liability of the Company towards the Bondholders. On such payment being made, the Company will inform NSDL/ CDSL and accordingly the account of the Bondholders with NSDL/ CDSL will be adjusted.

The Company's liability to the Bondholders towards all their rights including for payment or otherwise shall cease and stand extinguished from the due dates of redemption in all events. Further the Company will not be liable to pay any interest or compensation from the dates of such redemption.

On the Company dispatching the amount as specified above in respect of the Bonds, the liability of the Company shall stand extinguished.

p) EFFECT OF HOLIDAYS

In line with the SEBI circular dated October 29, 2013, if the coupon payment date of debt securities falls on a Sunday or a holiday, the coupon payment shall be made on the next working day. If the maturity dates of the debt securities falls a Sunday or a holiday the redemption proceeds shall be paid on the previous working day. *

* If the maturity date falls on a holiday, redemption and accrued interest are payable on the immediately previous working day.

Refer illustration given below:


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Example:

CASH FLOW FOR BOND SERIES XLVIII (SECURED, NON-CONVERTIBLE, NON-CUMULATIVE, REDEEMABLE, TAXABLE BONDS IN THE NATURE OF DEBENTURE) OF POWERGRID

Interest payment : Annually at 8.20% p.a.on 23th January each year , first Coupon on 23-Jan-2016.

Principal Payment: Repayable in 4 equal installment at the end of 5th, 7th, 10th and 15th year, first installment is due on 23-Jan-2020.

CASH FLOW DUE DATE

NO OF

DAYS INTEREST AMOUNT PRINCIPAL TOTAL

1st Coupon Saturday, January 23, 2016 365 2115600000 2115600000 2 nd Coupon Monday, January 23, 2017 366 2115600000 2115600000 3 rd Coupon Tuesday, January 23, 2018 365 2115600000 2115600000

4 th Coupon Wednesday, January 23,

2019 365 2115600000 2115600000 5 th Coupon Thursday, January 23, 2020 365 2115600000 2115600000 Principal Redemption of ISIN 1 Thursday, January 23, 2020 0 6450000000 6450000000 6 th Coupon Saturday, January 23, 2021 366 1586700000 1586700000 7 th Coupon Saturday, January 22, 2022 364 527450959 527450959 Principal Redemption of ISIN 2 Saturday, January 22, 2022 0 6450000000 6450000000 7 th Coupon Monday, January 24, 2022 366 1060698082 1060698082 8th Coupon Monday, January 23, 2023 364 1054901918 1054901918 9 th Coupon Tuesday, January 23, 2024 365 1057800000 1057800000 10 th Coupon Thursday, January 23, 2025 366 1057800000 1057800000 Principal Redemption of ISIN 3 Thursday, January 23, 2025 0 6450000000 6450000000 11 th Coupon Friday, January 23, 2026 365 528900000 528900000 12 th Coupon Saturday, January 23, 2027 365 528900000 528900000 13 th Coupon Monday, January 24, 2028 366 530349041 530349041 14 th Coupon Tuesday, January 23, 2029 365 527454918 527454918

15 th Coupon Wednesday, January 23,

2030 365 528900000 528900000 Principal Redemption of ISIN 4

Wednesday, January 23, 2030 0 6450000000 6450000000

TOTAL 19567854918 25800000000 45367854918 Note ; It is assumed that all date are Banking Business Days. In case of sudden bank holiday or any day is happened to be holiday, the cash flows will change accordingly


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q) Tax Deduction at Source

Tax applicable under the Income-Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source. Tax exemption certificate/ document, under section 193/194LD/195/196D/197/197A of the Income Tax Act, 1961, if any must be lodged in duplicate at the office of the Issuer, at least 15 days prior to the interest payment date. In case of tax deducted at source, the Company will issue the TDS certificate to the investors.

r) Payments PROCEDURE

The Company will try, as far as possible, to pay interest and principal on the bonds through ECS/direct credit/ RTGS/NEFT/ instruments payable at par as per applicable norms of the Reserve Bank of India.

Dispatch of Documents

The Cheques/ Demand Drafts/other instruments of payment, as the case may be, shall be dispatched by registered post / courier or by hand delivery to the address of the holder whose name appears first in the Register of Bondholders. This will be at the sole risk of the addressee.

Loss of Interest Warrants

Loss of interest warrants should be intimated to POWERGRID. The issue of duplicate interest warrants would be governed by such conditions as may be prescribed by POWERGRID.

Purchase and Sale of Bonds

The Corporation may, at any time and from time to time, purchase Bonds at the price available in the Capital Market in accordance with the applicable laws. Such Bonds may, at the option of the Corporation, be canceled, held or reissued at such a price and on such terms and conditions as the Corporation may deem fit and as permitted by law.

Re-issue of Bonds

Where the Corporation has redeemed any such Bonds, subject to the provisions of the Companies Act and other applicable provisions, the Corporation shall have and shall be deemed always to have had the right to keep such Bonds alive for the purpose of reissue and in exercising such right, the Corporation shall have and shall be deemed always to have had the power to re-issue such Bonds either by re-issuing the same Bonds or by issuing other Bonds in their place.


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s) TRANSFER OF BONDS

All requests for registration of transfer, transmission, etc. along with appropriate documents should be sent to RTA – M/s MCS Limited, F-65, Okhla Industrial Area, Phase-I, New Delhi - 110 020 or such other persons at such addresses as may be notified by the Company from time to time.

Mode of Transfer

The Company is a Government Company within the meaning of Section 617 of the Companies Act, 1956. The bonds will be transferable in accordance with the Provisions of the Companies Act, 1956.

Bonds held in Electronic (Dematerialized) form shall be transferred subject to and in accordance with the rules/procedures as prescribed by the Depository/ Depository Participant of the transferor/transferee and any other applicable laws and rules notified in respect thereof.

Succession

In the event of demise of the sole/first holder of the Bond, the Corporation will recognize the Executor or Administrator of the deceased Bondholder, or a holder of Succession Certificate or other legal representative as having title to the Bonds. The Corporation shall not be bound to recognize such executor, administrator or holder, unless such executor or administrator obtains probate or letter of administration or such holder is the holder of a succession certificate or other legal representation, as the case may be, from a duly constituted Court in India. The Board of Directors, if in their absolute discretion think fit, may dispense with production of probate or letter of administration, in order to recognize such holder as being entitled to the Bonds standing in the name of the deceased Bondholder.

t) SECURITY

The Bonds will be secured by way of floating pari-passu charge on the assets of the Company. The charge will be created by way of Bond Trust Deed in such form and manner in one or more tranches and through one or more security documents as considered appropriate by the Company of value not less than 1.10 times the value of the Bonds outstanding.

The security will be created by the Company, as aforesaid in favor of the Trustees on such of the assets for which the Company obtains, after all due diligence and efforts, the requisite consents and permission applicable under law or in accordance with the contractual conditions of holding of such assets for creating the above-mentioned charge. The creation of such security shall be sufficient compliance of the Company’s obligation to create security.


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u) SERVICING BEHAVIOR ON EXISTING DEBENTURES

POWERGRID confirms that it has been regular in servicing all its past bonds.

v) RIGHTS OF BONDHOLDERS

The Bondholders will not be entitled to any rights and privileges of shareholders other than those available to them under statutory requirements. The Bonds shall not confer upon the holders the right to receive notice, or to attend and vote at the general meetings of the Corporation. The Bonds shall be subjected to other usual terms and conditions, as per the Memorandum and Articles of Association of the Corporation.

Modification of Rights

The rights, privileges, terms and conditions attached to the Bonds may be varied, modified or abrogated with the consent, in writing, of those holders of the Bonds who hold at least three fourth of the outstanding amount of the Bonds or with the sanction accorded pursuant to a special resolution passed at a meeting of the Bondholders, provided that nothing in such consent or resolution which modifies or varies the terms and conditions of the Bonds shall be operative against the Corporation, if the same are not accepted by the Corporation.

w) FUTURE BORROWINGS

The Corporation shall be entitled from time to time to make further issue of Bonds to the public, members of the Corporation and /or any other person(s) and to raise further loans, advances or such other facilities from Banks, Financial Institutions and / or any other person(s) on the security or otherwise of its assets without any further approval from the Bondholders.

Bondholder not a Shareholder:

The Bondholders will not be entitled to any of the rights and privileges available to the Equity Shareholders.

x) TRUSTEES FOR THE BONDHOLDERS

The Company has appointed IDBI Trusteeship Services Limited to act as Trustees for the Bondholders (“Trustees”). The consent letter of the trustee is enclosed in the Appendix, for reference. The Company and the Trustees has entered into a Trustee Agreement. The Bondholder(s) shall, without further act or deed, be deemed to have irrevocably given their consent to the Trustees or any of their agents or authorized officials to do all such acts, deeds, matters and things in respect of or relating to the Bonds as the Trustees may


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in their absolute discretion deem necessary or require to be done in the interest of the Bondholder(s). Any payment made by the Company to the Trustees on behalf of the Bondholder(s) shall discharge the Company pro tanto to the Bondholder(s).

The Trustees will protect the interest of the Bondholders in the event of default by the Company in regard to timely payment of interest and repayment of principal and they will take necessary action at the cost of the Company.

y) UNDERTAKING BY THE ISSUER

The Issuer Company undertakes that:

i. the complaints received in respect of the Issue shall be attended to by the issuer company expeditiously and satisfactorily;

ii. that all the steps for completion of the necessary formalities for listing and commencement of trading at Stock Exchange where the securities are to be listed shall be taken immediately after finalization of basis of allotment

iii. Necessary co-operation to the credit rating agency (ies) shall be extended in providing true and adequate information till the debt obligations in respect of the instrument are outstanding.

iv. That the company shall disclose the complete name and address of the debenture trustee in the annual report

v. That the company shall provide a compliance certificate to the Bond holders (on yearly basis) in respect of compliance with the terms and conditions of issue of Bonds as contained in the document, duly certified by the debenture trustee.

vi. That the company shall furnish a confirmation certificate to the debenture trustee (on yearly basis) that the security created by the company in favour of the Bond holders is properly maintained and is adequate enough to meet the payment obligations towards the Bond holders in the event of default

z) PROJECT COST AND MEANS OF FINANCING, IN CASE OF FUNDING NEW PROJECTS

POWERGRID has planned Rs.22500 Crore for Capital Expenditure for Financial Year

2014-15. POWERGRID will use its own resources (Internal Resources) and debt

(Domestic as well as external commercial borrowing) for financing new projects.


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3. DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS, LITIGATION ETC.

I. Financial or other material interest of the directors, promoters or key managerial personnel in the offer and the effect of such interest in so far as it is different from the interests of other persons.

NIL-

II. Details of litigation or legal action pending or taken by any Ministry or Department of the Govt. or statutory authority against any promoter of the offeree company during the last three years immediately preceding the year of the circulation of the offer letter and any direction issued by such Ministry or Department or statutory authority upon conclusion of such litigation or legal action.

Since the Government of India is the promoter of the company, it is not possible to give details of litigations, legal actions or directions pending or taken by any Ministry or Department of the Government or a statutory authority against the promoter of the company during the last three years.

III. Remuneration of directors (during the current year and last three financial years)

POWERGRID, being a Government Company, the appointment, tenure and remuneration of Directors is decided by the President of India. Remuneration paid to Chairman and Managing Director and Fundamental Directors during the year 2012-2013 was as per terms and condition of the appointment. Independent Directors are paid only sitting fees for Board /Committee meeting attended {rate fixed by the Board within the ceiling fixed for payment of sitting fees without Government approval under the Rule 10B of the Companies (Central Government’s) General Rules and Forms, 1956 read with the Section 310 of the Companies Act, 1956} and in accordance with the Government Guidelines for attending the Board Meeting as well as Committee Meetings.

2014-2015 (01-April-2014 to 30-September-2014)

The remuneration paid to Whole time Directors during the year 2014-2015 (01-April-2014 to 30-September-2014) is as under:

Sl No

Employee Name

Designation Salary (In

Rs) Benefit (in

Rs)

Bonus/ Commission

(in Rs)

Performance Linked

Incentive Total

1 Rabindra Nath Nayak

Chairman & Managing Director

1,224,042.70 1,460,495.50 - 1,643,773.53 4,328,311.73


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Sl No

Employee Name

Designation Salary (In

Rs) Benefit (in

Rs)

Bonus/ Commission

(in Rs)

Performance Linked

Incentive Total

2 Indu Shekhar Jha

Director (Projects)

1,240,382.20 1,353,294.00 - 1,287,405.28 3,881,081.48

3 Sh R. T. Agarwal

Director (Finance)

1,228,909.20 493,796.00 - 1,267,442.18 2,990,147.38

4 Shri Ravi P Singh

Director (Personnel)

1,217,914.20 987,983.00 - 1,243,379.10 3,449,276.30

5 Shri R.P.Sasmal

Director (Operations)

1,194,293.40 651,955.78 - 1,065,551.32 2,911,800.50

2013-2014

The remuneration paid to Whole time Directors during the year 2013-2014 is as under:

SI. No

Directors & CMD

Designation Salary (in Rs)

Benefit (in Rs)

Bonus/ Commis

sion (in Rs)

Performance Linked

Incentive Total

1 Shri R N Nayak

Chairman & Managing Director

2291246.92 454168.00 613614.00 3359028.92

2 Shri I. S. Jha

Director (Projects)

2351387.92 1243485.00 529318.00 4124190.92

3 Sh R. T. Agarwal

Director (Finance)

3112197.92 1134564.00 505947.00 4752708.92

4 Shri Ravi P Singh


2247825.92 429848.00 449004.00 3126677.92

5 Shri R.P.Sasmal


2227734.92 434114.00 433350.00 3095198.92

The Government nominee Directors on the POWERGRID’s Board do not draw any remuneration/sitting fee for attending Board/ Committee meetings from the Company. The Independent Directors were paid sitting fee of Rs 20,000/- per meeting for attending Board/Committee Meetings.

Details of Payment made towards sitting fee to Independent Directors during the year 2013-14 are given below: (Rs in Lakhs)


73

Name of non –official part

time Directors

Sitting fees

Board Meeting Committee of Board of Directors Meeting

Total

Shri Santosh Saraf 2.40 3.40 5.80 Ms. Rita Sinha 2.80 5.00 7.80 Shri R.K .Gupta 3.00 3.40 6.40 Dr. K. Ramalingam 2.80 1.40 4.20 Shri R. Krishnamoorthy 2.40 5.60 8.00 Shri Ajay Kumar Mittal 3.00 5.80 8.80 Shri Mahesh Shah 2.80 1.40 4.20

2012-2013


SI. No.

Directors

Designation (in Rs)

Salary (in Rs)

Benefits (in Rs)

Bonus/ Commission ( in Rs)

Performance Linked Incentives (In Rs)

Total (in Rs)

1 Shri R.N. Nayak

Chairman and Managing Director

2498227.93 286766.00 - 2996648 5781641.93

2 Shri I.S. Jha

Director (Projects)

2923877.00 997421.00 - 2501421 6422719.00

3 Shri R.T. Agarwal

Director (Finance)

2585995.73 945896.00 - 1865447 5397338.73

4 Shri Ravi P. Singh


3719025.33 246609.00 - 146117 4111751.33

5 Shri R.P. Sasmal


1579586.00

216275.00 - 495114 2290975.00

The government nominee directors on the POWERGRID’s Board do not draw any remuneration /sitting fee for attending Board /committee meetings from the company. The independent directors were paid sitting fee for attending Board/Committee Meetings as per the following:

Period Sitting fees (in Rs) 1st April , 2012 to 5th December,2012 15,000 6th December ,2012 to 31st March,2013 20,000

Details of payment made towards sitting fee to independent directors during the year 2012-2013 are given below: ( In LACS)


74

Name of non –official part

time Directors

Sitting fees


Total

Shri Santosh Saraf 2.55 2.80 5.35 Ms. Rita Sinha 2.40 3.35 5.75 Shri R.K .Gupta 0 .60 0.20 0.80 Dr. K. Ramalingam 0.40 NIL 0.40 Shri R. Krishnamoorthy 0.60 0.20 0.80 Shri Ajay Kumar Mittal 0.60 0.40 1.00 Shri Mahesh Shah 0.60 NIL 0.60

2011-2012


SI. No.

Directors

Designation (in Rs)

Salary (in Rs)

Benefits (in Rs)



Total (in Rs)

1 Shri R.N. Nayak ( from 01.09.2011 to 31.03.2012)


858640 414009 - 348600 1621249

2 Shri R.N. Nayak ( from 01.04.2011 to 31.08.2011)

Directors (Operations)

582220 422572 - 981688 1986480

3 Shri I.S. Jha Director (Projects)

1425998 1860870 - 1085861 4372729

4 Shri R.T. Agarwal

Director (Finance)

915375 406176 - 643860 1965411

5 Shri V.M. Kaul


1439658 1414136 - 1314542 4168336

6 Shri S.K. Chaturvedi (from 01.04.2011 to 31.08.2011)


628469 528024 - 1493546 2650039

7 Shri J. Sridharan (from

Director (Finance)

124266 61094 - 943081 1128441


75

SI. No.

Directors

Designation (in Rs)

Salary (in Rs)

Benefits (in Rs)



Total (in Rs)

01.04.2011 to 30.04.2011

The government nominee Directors on the POWERGRID’s Board do not draw any remuneration /sitting fee for attending Board /committee meetings from the company. The independent directors were paid sitting fee of Rs 15,000/- for attending Board/Committee Meetings as per the following:

Details of payment made towards sitting fee to independent directors during the year 2011-2012 are given below: ( In LACS)

Name of non –official part time Directors

Sitting fees


Total

Shri Santosh Saraf 0.75 0.45 1.20 Ms. Rita Sinha 0.45 0.30 0.75 Dr. P.K. Shetty 0.80 - 0.80 Dr A.S. Narang 0.80 0.40 1.20 Shri Anil K. Agarwal 0.60 1.00 1.60 Shri F. A. Vandrewala 0.80 1.00 1.80 Smt. Sarita Prasad 1.00 0.80 1.80

2010-2011


SI. No.

Directors

Designation (in Rs)

Salary (in Rs)

Benefits (in Rs)



Total (in Rs)

1 Shri S.K. Chaturvedi


13,94,013 8,64,840 - 14,46,232 37,05,085

2 Shri R.N. Nayak

Directors (Operations)

12,77,853 7,66,282 - 8,65,445 29,09,580

3 Shri I.S. Jha

Director (Projects)

12,65,707 16,07,906 - 8,50,484 37,24,097

4 Shri V.M. Director 12,87,148 14,18,667 - 9,01,397 36,07,212


76

SI. No.

Directors

Designation (in Rs)

Salary (in Rs)

Benefits (in Rs)



Total (in Rs)

Kaul (Personnel)

5 Shri J. Sridharan

Director (Finance)

13,72,972 8,29,206 - 16,11,127 38,13,305

The government nominee Directors on the POWERGRID’s Board do not draw any remuneration /sitting fee for attending Board /committee meetings from the company. The independent directors were paid sitting fee of Rs 20,000/- for attending Board/Committee Meetings as per the following:

Details of payment made towards sitting fee to independent directors during the year 2010-2011 are given below: (Rs in LACS)

Name of non –official part time Directors

Sitting fees


Total

Dr. P.K. Shetty 2.80 0.40 3.20 Dr A.S. Narang 2.80 1.60 4.40 Shri Anil K. Agarwal 1.20 1.20 2.40 Shri F. A. Vandrewala 1.60 0.80 2.40 Shri S.C. Tripathi* 3.00 1.20 4.20 Shri Ashok Khanna 2.80 3.80 6.60 Smt. Sarita Prasad 3.00 1.40 4.40 $ Gross Amount before TDS

*in addition ,honorarium of Rs 20,000 each was paid to Smt. Sarita Prasad and Shri S.C. Tripathi for R&D Advisory Committee Meeting.

3(iv) POWERGRID: RELATED PARTY TRANSACTIONS

(FY 2013-2014)

RELATED PARTY DISCLOSURES:

a) Lists of Related Parties:

i) Key Management personnel

Sh. R.N. Nayak Chairman and Managing Director


77

Sh. I.S. Jha Director (Projects) Sh. R.T. Agarwal Director (Finance) Sh. Ravi P Singh Director (Personnel) Sh. R.P. Sasmal Director (Operations)

ii) Subsidiaries:- Wholly Owned I) Power System Operation Cooperation Limited(POSOCO) II) Powergrid NM Transmission Limited III) Powergrid Vemagiri Transmission Limited IV) Vizag Transmission Limited (w.e.f. 30th August ,2013) V) Unchahar Transmission Limited (w.e.f 24th March,2014)

iii) Joint ventures:- i) Powerlinks Transmission Limited ii) Torrent Power Grid Limited. iii) Jaypee Powergrid Limited. iv) Parbati Koldam Transmission Company Limited v) Teestavalley Power Transmission Limited. vi) North East Transmission Company Limited. vii) National High Power Test Laboratory Private Limited. viii) Energy Efficiency Services Limited. ix) Bihar Grid Company Limited . x) Kalinga Bidyut Prasaran Nigam Private Limited. xi) Cross Border Power Transmission Company Limited.

b) Transactions with the related parties at (a) above during the year are as follows:

(Rs in crores)

Description Current year (2013-14)

Previous Year (2012-13)

Transactions for services received by the company 17.97 16.29

Power System Operation Corporation Limited 17.53 16.29

North East transmissions Company Limited 0.19 -

Bihar Grid Company Limited 0.25 -

Transactions for services provided by the company 30.21 24.59

Parbati Koldam Transmission Company Limited

2.07 0.17


78



Torrent Power Grid Limited 0.03 0.03

Jaypee Powergrid Limited 0.32 0.06

North East Transmission Company Limited 13.21 22.22

National High Power Test Laboratory Private Limited

8.31 1.54

Powerlinks Transmission Limited 0.09 0.34

Energy Efficiency Services Limited 0.05 -

Power System Operation Corporation Limited - 0.23

Cross Border Power Transmission Company Limited

6.13 -

Amount recoverable at the end of the year 119.93 105.39


0.01 0.01




0.09 0.19

Energy Efficiency Services Limited 0.11 0.02

Bihar Grid Company Limited 2.38 0.08

Kalinga Vidyut Prasaran Nigam Private Limited

0.65 0.05


Powergrid Vemagiri Transmission Limited 19.35 19.20

Powergrid NM Transmission Limited 20.75 20.54

Vizag Transmission Limited 16.14 -


79



Unchahar Transmission Limited 2.75 -

Cross Border Power Transmission Limited 3.29 -

Powerlinks Transmission Limited 0.01 -

Jaypee Powergrid Limited 0.01 -

Amount payable at the end of year 12.57 22.99


0.09 0.09




7.99 20.07


Investment made during the year 39.70 71.97

Jaypee Powergrid Limited - 2.08

Teestavalley Power Transmission Limited 15.60 5.08


15.25 19.50

North East Transmission Company Limited - 14.92

Energy Efficiency Services Limited - 21.87


4.93 0.01

Bihar Grid Company Limited - 0.02

Kalinga Bidyut Prasaran Nigam Private Limited

- 0.01


3.82 8.43


80



Powergrid Vemagiri Transmission Limited - 0.05

Vizag Transmission Limited 0.05 -

Unchahar Transmission Limited 0.05 -

Dividend Received 87.09 58.88



Jaypee Powergrid Limited 9.36 -

Torrent Power Grid Limited 4.68 -

Recovery for the Deputation of Employees 0.40 0.89

Energy Efficiency Services Limited - 0.21


- 0.68

Cross Border Power Transmission Limited 0.33 -

Parbati Koldam Transmission Company Limited 0.07 -

c) As per Central Electricity Regulatory Commission (CERC) (Sharing of Interstate Transmission Charges and losses) Regulation 2010, the Company being the Central Transmission Utility (CTU) under the regulation is entrusted with the responsibility of the Billing , Collection and Distributed of Transmission charges on behalf of all Inter State Transmission System (ISTS) licensee. Accordingly the transaction of company for collection made in capacity of CTU for related parties as under:

(Rs in Crore)



Transactions of the company in capacity of CTU with related

Parties

803.94

591.72


81



Parbati Koldam Transmission Company Limited 0.24 -





d) Remuneration to whole time directors including Chairman and Managing Director is Rs1.92 Crore and amount of dues outstanding to the company as on 31st March 2014 are Rs0.05 Crore.

POWERGRID: Related Party Transaction

(FY 2012-2013)

Related Party Disclosures:

a. List of Related Parties:

i) Key Management Personnel

Sh. R.N. Nayak Chairman and Managing Director Sh. I.S. Jha Director (Projects)

Sh. R.T. Agarwal Director (Finance) Sh. Ravi P Singh Director (Personnel) w.e.f. 01.04.2012 Sh. R.P. Sasmal Director (Operations) w.e.f. 01.08.2012

ii) Subsidiaries: - Wholly Owned

i) Power System Operation Corporation Limited (POSOCO) ii) Powergrid NM Transmission Limited iii) Powergrid Vemagiri Transmission Limited

iii) Joint Ventures:-

i) Powerlinks Transmission Limited

ii) Torrent Power Grid Limited


82

iii) Jaypee Powergrid Limited

iv) Parbati Koldam Transmission Company Limited

v) Teestavalley Power Transmission Limited

vi) North East Transmission Company Limited

vii) National High Power Test Laboratory Private Limited

viii) Energy Efficiency Services Limited.

ix) Bihar Grid Company Limited w.e.f . 04.01.2013

x) Kalinga Bidyut Prasaran Nigam Private Limited w.e.f. 31.12.2012

xi) Cross Border Power Transmission Company Limited w.e.f. 11.08.2012

b) Transactions with the related parties at (a) above during the year are as follows: (Rs in crore)

Particulars Current year (2012-13)


Transactions for services received by the company 16.29 27.39

Power System Operation Corporation Limited

16.29 27.39

Transactions for services provided by the company* 24.59 52.50


0.17 0.51





1.54 2.15




0.23 1.56


83



Amount recoverable 105.39 26.43


0.01 0.08




0.19 0.00



Kalinga Vidyut Prasaran Nigam Private Limited

0.05 0.00


45.15 0.00



Amount payable 22.99 37.89


0.09 0.25




20.07 24.62



0.00 7.85

Investment made 71.97 72.86


84






19.50 0.00




0.01 0.00


Kalinga Bidyut Prasaran Nigam Private Limited

0.01 0.00


8.43 0.00



Dividend Received 58.88 52.37



10.72 7.65

Deputation of Employees 0.89 0.66




0.68 0.00

* This does not include transactions with respect to an agreement with Powerlinks Transmission Ltd. Under which transmission charges for transmission line associated


85

with Talahydro electric power project are raised by Powerlinks Transmission Ltd. to the company which pay the same and collect from the respective beneficiaries.

c) Remuneration to whole time directors including Chairman and Managing Director is Rs2.47 Crore and amount of dues outstanding to the company as on 31st March 2013 are Rs0.07 Crore.

POWERGRID: Related Party Transaction

(FY 2011-12)

Related Party Disclosures:

a) List of Related Parties:

i) Key Management Personnel

Sh. R.N. Nayak Chairman & Managing Director w.e.f. 1st Sept., 2011 Sh. I.S. Jha Director (Projects) Sh. R.T. Agarwal Director (Finance) w.e.f. 29th July, 2011 Sh. V. M. Kaul Director (Personnel) (Superannuated on 31st March, 2012) Sh. S. K. Chaturvedi Chairman & Managing Director (Superannuated on 31st August, 2011)

Sh. J. Sridharan Director (Finance) (Superannuated on 30th April, 2011)

ii) Subsidiaries: i) Power System Operation Corporation Limited (POSOCO) ii) Nagapattinam Madhugiri Transmission Company Limited

iii) Joint Ventures: i) Powerlinks Transmission Limited ii) Torrent Power Grid Limited iii) Jaypee Powergrid Limited iv) Parbati Koldam Transmission Company Limited v) Teestavalley Power Transmission Limited vi) North East Transmission Company Limited vii) National High Power Test Laboratory Private Limited viii) Energy Efficiency Services Limited

b) Transactions with the related parties at (a) above during the year are as follows: (Rs in crore)


86


Previous year (2010-2011)

Transactions during the year for services received by the company

27.39 7.67

Transactions during the year for services provided by the company*

52.50 65.34

Amount recoverable from related parties 36.51 18.02 Amount payable to related parties 37.89 17.40 Investment made during the year 72.86 97.30 Dividend Received 52.37 74.82 Deputation of employees 0.66 NIL

* This does not include transactions with respect to an agreement with Powerlinks Transmission Ltd. Under which transmission charges for transmission line associated with Tala hydro electric power project are raised by Powerlinks Transmission Ltd. to the company which pay the same and collect from the respective beneficiaries.

c) Remuneration to whole time directors including Chairman and Managing Director is Rs2.1 Crore and amount of dues outstanding to the company as on 31st March 2012 are Rs0.05 Crore.


87

3.v Summary of Reservations or Qualifications or Adverse Remarks of Auditors in the last five financial years

AUDITORS’ REPORT (2009-10)

To,

The Members, Power Grid Corporation of India Limited,

1. We have audited the attached Balance Sheet of Power Grid Corporation of India Ltd. as at March 31, 2010, and the Profit and Loss Account and also 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.

2. 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 from material mis-statements. 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. The Company is governed by the Electricity Act, 2003. Though the said Act has repealed the Electricity (Supply) Act 1948 and Electricity Regulatory Commission Act, 1998, certain provisions of the repealed Act, to the extent they are not inconsistent with the provisions of said Act, continued to be applied by the Company while preparing the financial statements. Further, the provisions of the said Act read with the rules thereunder have prevailed wherever the same have been inconsistent with the provisions of the Companies Act, 1956.

4. As required by the Companies (Auditor’s Report) Order, 2003, read with Companies (Auditor’s Report) (Amendment) Order, 2004 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.

5. We draw attention to : a) Note No. 9 regarding levy of Service Tax on transmission charges, and b) Note No. 17 (b) regarding provisional recognition of transmission charges.

6. Further to our comments in the annexure referred to in paragraph 4 above, we report that: a) We have obtained all the information and explanations, which to the best of our

knowledge and belief were necessary for the purposes of our audit.


88

b) 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 the books.

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, subject to our observations in paragraph 3 above, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956.

e) In pursuance to the notification No. GSR 829(E) dated 17.7.2003, issued by the Department of Company Affairs; clause (g) of sub-section (1) of section 274 of Companies Act, 1956 pertaining to disqualification of Directors is not applicable to a Government Company.

f) In our opinion and to the best of our knowledge and according to information and explanation given to us, the said financial statements, read together with the Notes on Accounts given in Schedule 28 and Accounting Policies annexed thereto, in so far as these are not inconsistent with the Electricity Act, 2003, give the information required by the Companies Act, 1956, in the manner so required, and give a true and fair view in conformity with the accounting principles generally accepted in India:

1. in the case of Balance Sheet, of the state of affairs of the Company as at 31st

March, 2010. 2. in the case of Profit and Loss Account, of the profit for the year ended on that date;

and 3. in the case of Cash Flow Statement, of the cash flows of the Company for the year

ended on that date.

For A.R. & Co. For S R I Associates For Umamaheswara Rao & Co.

Chartered Accountants Chartered Accountants Chartered Accountants

Regn No.002744C Regn No.305109E Regn No. 004453S

(Anil Gaur) ( I. Pasha ) ( G. Siva Rama Krishna Prasad)

Partner Partner Partner

Membership No.017546 Membership No.013280 Membership No.024860

Place : New Delhi. Dated : 25th May, 2010.


89

(2009-10) ANNEXURE TO THE AUDITORS’ REPORT RE: POWER GRID CORPORATION OF INDIA LIMITED ANNEXURE REFERRED TO IN PARAGRAPH 4 OF OUR REPORT OF EVEN DATE

1. a) The Company has generally maintained records of Fixed Assets, showing full particulars including quantitative details and situation of Fixed Assets .

b) The assets have been physically verified by external agencies during the year and discrepancies, though not material, noticed on such verification have been reconciled/adjusted in the books of account. In our opinion, frequency of verification is reasonable.

c) During the year the company has not disposed off substantial part of its Fixed Assets.

2. a) Physical verification of inventory has been conducted by external agencies during the year, except for the materials lying with contractors. In our opinion frequency of verification is reasonable.

b) 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 has maintained proper records of inventory. The discrepancies noticed on physical verification of the inventory have been properly dealt with in the books of account except material lying with contractors where verification is not undertaken.

3. The Company has neither 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.

4. In our opinion and according to the information and explanations given to us, there are

adequate internal control systems, commensurate with the size of the Company and the nature of its business, with regard to purchase of inventory and fixed assets and income from transmission, telecom and consultancy activities. During the course of our audit we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the underlying internal control systems.

5. According to the information and explanation given to us, there are no contracts or

arrangements referred to in section 301 of the Companies Act 1956, during the year, to be entered in the register maintained under that section. Accordingly Clause (v) of paragraph 4 of the Order is not applicable.


90

6. Since the Company has not accepted any deposit from the public, the question of

compliance with the directives issued by the Reserve Bank of India and the provisions of section 58-A, 58-AA and other relevant provisions of Companies Act, 1956, and rules framed there under, does not arise.

7. The Company has an Internal Audit system. In our opinion, the scope and coverage of

Internal Audit are commensurate with the size and nature of its business. 8. The Central Government has prescribed maintenance of Cost Records under Section 209

(1)(d) of the Companies Act, 1956 in respect of Transmission & Telecom Operations of the Company. We have broadly reviewed the Records prepared by the Company and are of the opinion that, prima facie, the prescribed records have been made and maintained.

9. a) According to the information and explanation given to us, the Company is regular in

depositing undisputed statutory dues with appropriate authorities including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and other statutory dues applicable to the Company and that there are no undisputed statutory dues outstanding as on 31.3.2010 for a period of more than six months from the date they became payable. As informed, the provisions of the Employees State Insurance Act are not applicable to the Company. Unclaimed bonds of Rs. 0.06 crore and unclaimed dividend of Rs. 2.96 crore which has not exceeded the time limit prescribed under Section 205C of the Companies Act, 1956 are lying as liability towards Investor Education & Protection Fund. b) According to information and explanation given to us, following disputed income tax /

sales tax / customs duty / wealth tax / service tax / excise duty / cess dues have not been deposited.

Particulars Amount

(Rs. in crore) Forum Where Pending

Entry Tax 1.47 Appellate Board, Commercial Tax Department, Madhya Pradesh

Entry Tax 39.16 Dy. Commissioner (Appeals), Commercial Tax Department, Madhya Pradesh

Entry tax 11.41 Joint Commissioner of Commercial Tax (Appeal), Patna

Sales Tax 18.80 Assistant Commissioner, Commercial Tax Department, Madhya Pradesh

Sales Tax 32.64 J&K State Sales Tax Appellate Tribunal Sales Tax 12.68 Dy. Commissioner of Sales Tax


91

Particulars Amount

(Rs. in crore) Forum Where Pending

(Appeal), Jammu, J&K State Service Tax 66.48 Commisioner of Central Excise, Shillong Service Tax 1.57 Commissioner of Central Excise, Patna Service Tax 2.31 Custom, Excise & Service Tax Appellate Tribunal

(CESTAT), New Delhi Service Tax 0.01 Commissioner of Customs & Central Excise,

Hyderabad-II Division. Education Cess 1.21 Dehgam Nagar Palika, Dehgam Diversion Tax (for non-agriculture use of land)

2.23 S D O, Itarsi

Penalty for unauthorized digging of pits

0.35 S D O, Panvel and Dahnu

Income Tax (TDS) on perquisites

34.53 High Court, Kolkata

Income Tax & Interest

1.09 Commissioner of Income Tax ( Appeals), New Delhi.


3.27 Income Tax Appellate Tribunal, Delhi.

10. The Company does not have accumulated losses at the end of financial year and has not

incurred any cash loss in the financial year under audit, and also in the immediately preceding financial year.

11. On the basis of audit procedures adopted by us and according to the records, the Company

has not defaulted in repayment of dues to any financial institution or bank or bondholders. 12. The company has not granted any loans and advances on the basis of security by way of

pledge of shares, debentures and other securities. 13. The company is not a chit fund or nidhi/mutual benefit fund/society. Accordingly, Clause

xiii of paragraph 4 of the Order is not applicable. 14. In our opinion, the Company is not dealing in or trading in shares, debentures, and other

investments. Accordingly, Clause xiv of paragraph 4 of the Order is not applicable. 15. As informed to us, the Company has not given any guarantee for loans taken by others from

banks or financial institutions, except in the case of Power Link Transmission Limited,


92

wherein it has pledged its shares in favour of financial institutions for financial assistance obtained by the said company, as per the terms and conditions of Joint Venture Agreement. In our opinion and to the best of our information and according to explanation given to us, the terms and conditions of share pledge agreement are not, prime facie prejudicial to the interest of the company.

16. In our opinion on an overall basis and according to the information and explanation given

to us, the company has applied the term loans for the purpose; they were raised during the year.

17. In our opinion, on an overall basis, and according to the information and explanation

given to us, the company has not used the funds raised on short term basis for long term investment.

18. The Company has not made any preferential allotment of shares to parties and Companies

covered in the register maintained under section 301 of the Act during the year. 19. The Company has not issued the debentures during the year. 20. The Company, during the year, has not raised any money by public issue. 21. According to the information and explanations given to us, no fraud on or by the

Company has been noticed or reported during the course of our audit. For A.R. & Co. For S R I Associates For Umamaheswara Rao & Co. Chartered Accountants Chartered Accountants Chartered Accountants


(Anil Gaur) ( I. Pasha ) ( G. Siva Rama Krishna Prasad)





93


To,

The Members, Power Grid Corporation of India Limited,

1. We have audited the attached Balance Sheet of Power Grid Corporation of India Ltd. as at March 31, 2011, and the Profit and Loss Account and also 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.

2. 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 from material mis-statements. 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 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, read with Companies

(Auditor’s Report) (Amendment) Order, 2004 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.

4. We draw attention to Note No. 14 (b), (c) and (d) of Schedule 28 – Notes on Accounts regarding provisional recognition of transmission charges.

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

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

b) 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 the books.

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, subject to our observations in paragraph 3 above, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956.

e) In pursuance to the notification No. GSR 829(E) dated 17.7.2003, issued by the Department of Company Affairs; clause (g) of sub-section (1) of section 274 of


94

Companies Act, 1956 pertaining to disqualification of Directors is not applicable to a Government Company.

f) In our opinion and to the best of our knowledge and according to information and explanation given to us, the said financial statements, read together with the Notes on Accounts given in Schedule 28 and Accounting Policies annexed thereto, in so far as these are not inconsistent with the Electricity Act, 2003, give the information required by the Companies Act, 1956, in the manner so required, and give a true and fair view in conformity with the accounting principles generally accepted in India :

I. in the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2011.

II. in the case of Profit and Loss Account, of the profit for the year ended on that date; and

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




(Prabuddha Gupta) ( I. Pasha ) (A. Siva Prasad)





95

(2010-11) ANNEXURE TO THE AUDITORS’ REPORT

RE: POWER GRID CORPORATION OF INDIA LIMITED ANNEXURE REFERRED TO IN PARAGRAPH 4 OF OUR REPORT OF EVEN DATE

1. a) The Company has generally maintained records of Fixed Assets, showing full particulars including quantitative details and situation of Fixed Assets .

b) The assets have been physically verified by external agencies during the year and discrepancies, though not material, noticed on such verification have been reconciled / adjusted in the books of account. In our opinion, frequency of verification is reasonable.


2. a) Physical verification of inventory has been conducted by external agencies during the year, except for the materials lying with contractors. In our opinion frequency of verification is reasonable.


c) The Company has maintained proper records of inventory. The discrepancies noticed on physical verification of the inventory have been properly dealt with in the books of account except material lying with contractors where verification is not undertaken.

3. The Company has neither 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.

4. In our opinion and according to the information and explanations given to us, there are

adequate internal control systems, commensurate with the size of the Company and the nature of its business, with regard to purchase of inventory and fixed assets and income from transmission, telecom and consultancy activities. During the course of our audit we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the underlying internal control systems except in the matter of closing of contracts.


96

5. According to the information and explanation given to us, there are no contracts or arrangements referred to in section 301 of the Companies Act 1956, during the year, to be entered in the register maintained under that section . Accordingly Clause (v) of paragraph 4 of the Order is not applicable.

6. Since the Company has not accepted any deposit from the public, the question of compliance with the directives issued by the Reserve Bank of India and the provisions of section 58-A, 58-AA and other relevant provisions of Companies Act, 1956, and rules framed thereunder, does not arise.

7. The Company has an Internal Audit system. In our opinion, the scope and coverage of

Internal Audit are commensurate with the size and nature of its business. 8. The Central Government has prescribed maintenance of Cost Records under Section 209

(1)(d) of the Companies Act, 1956 in respect of Transmission & Telecom Operations of the Company. We have broadly reviewed the Records prepared by the Company and are of the opinion that, prima facie, the prescribed records have been made and maintained.

9. a) According to the information and explanation given to us, the Company is regular in

depositing undisputed statutory dues with appropriate authorities including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and other statutory dues applicable to the Company and that there are no undisputed statutory dues outstanding as on 31.3.2011 for a period of more than six months from the date they became payable.

As informed, the provisions of the Employees State Insurance Act are not applicable to the Company. Unclaimed bonds of Rs. 0.07 crore and unclaimed dividend of Rs. 4.31 crore which has not exceeded the time limit prescribed under Section 205C of the Companies Act, 1956 are lying as liability towards Investor Education & Protection Fund.

b) According to information and explanation given to us, following disputed demands of income tax / sales tax / customs duty / wealth tax / service tax / excise duty / cess dues have not been deposited.

Particulars

Amount

(Rs. in crore)

Forum Where Pending

Entry Tax 0.01 Appellate Board, Commercial Tax Department, Madhya Pradesh


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Particulars

Amount

(Rs. in crore)

Forum Where Pending


Entry tax 11.40 Joint Commissioner of Commercial Tax (Appeal), Patna

Sales Tax 18.15 Assistant Commissioner, Commercial Tax Department, Madhya Pradesh

Sales Tax 33.89 J&K State Sales Tax Appellate Tribunal

Sales Tax 16.09 Dy. Commissioner of Sales Tax (Appeal), Jammu, J&K State

Service Tax 1.57 Commissioner of Central Excise, Patna

Education Cess 0.82 Dehgam Nagar Palika, Dehgam

Diversion Tax (for non-agriculture use of land)

2.23 S D O, Itarsi

Income Tax (TDS) on perquisites

38.41 High Court, Kolkata


1.13 Commissioner of Income Tax (Appeals), New Delhi.


4.84 Income Tax Appellate Tribunal, Delhi.

10. The Company does not have accumulated losses at the end of financial year and has not incurred any cash loss in the financial year under audit, and also in the immediately preceding financial year.

11. On the basis of audit procedures adopted by us and according to the records, the Company has not defaulted in repayment of dues to any financial institution or bank or bondholders.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The company is not a chit fund or nidhi/mutual benefit fund/society. Accordingly, Clause xiii of paragraph 4 of the Order is not applicable.


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

15. As informed to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions, except in the case of Power Link Transmission Limited, wherein it has pledged its shares in favour of financial institutions for financial assistance obtained by the said company, as per the terms and conditions of Joint Venture Agreement. In our opinion and to the best of our information and according to explanation given to us, the terms and conditions of share pledge agreement are not, prime facie prejudicial to the interest of the company.

16. In our opinion on an overall basis and according to the information and explanation given to us, the company has applied the term loans for the purpose; they were raised during the year.

17. In our opinion, on an overall basis, and according to the information and explanation given to us, the company has not used the funds raised on short term basis for long term investment.

18. The Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under section 301 of the Act during the year.

19. The Company has not issued the debentures during the year.

20. We have verified the end use of money raised by Follow-on Public Offer during the year as stated in the prospectus filed with SEBI, offer document and as disclosed in the note no. 17 of Notes on Accounts to the financial statements.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.




(Prabuddha Gupta) ( I. Pasha ) (A. Siva Prasad)





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To

The Members of Power Grid Corporation of India Limited

1. We have audited the attached Balance Sheet of Power Grid Corporation of India Limited as at 31st March, 2012, and the Statement of Profit and Loss and also 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.

2. 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 from material misstatements. 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 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 sub section (4A) of section 227 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.

4. We draw attention to Note No. 2.25(a) & 2.25(c) in respect of provisional recognition of

revenue from transmission charges.

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

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

b) 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;

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956;


100

e) Being a Government Company, pursuant to the Notification no. GSR 829(E) dated 21.10.2003, issued by the Department of Company Affairs; clause (g) of sub-section (1) of section 274 of Companies Act, 1956 pertaining to disqualification of Directors is not applicable to the Company;

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read together with Accounting Policies and Notes on Accounts annexed thereto give the information required by the Companies Act, 1956, in the manner so required, and give a true and fair view in conformity with the accounting principles generally accepted in India :

i) in the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

ii) in the case of Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

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

For S. K. MEHTA & CO. For CHATTERJEE & CO. For SAGAR & ASSOCIATES


Firm Registration No. 000478N Firm Registration No. 302114E Firm Registration No. 003510S

( S.K.Mehta ) ( S.K. Chatterjee ) ( V.Vidyasagar Babu )


Membership No. 010870 Membership No. 003124 Membership No. 007357

Place: New Delhi. Dated:29th May, 2012.


101

(2011-12)

ANNEXURE TO THE AUDITORS’ REPORT

RE: POWER GRID CORPORATION OF INDIA LIMITED ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

(i) a) The Company has generally maintained records of Fixed Assets, showing full particulars including quantitative details and situation of Fixed Assets.

b) The fixed assets have been physically verified by external agencies during the year and discrepancies, though not material, noticed on such verification have been reconciled/ adjusted in the books of account. In our opinion, frequency of verification is reasonable.


(ii) a) Physical verification of inventories lying with the company has been conducted during the year by the external agencies. In respect of material lying with contractors, company is having system of obtaining confirmation from contractors on periodic basis. In our opinion system and frequency of verification is reasonable.


c) The Company has maintained proper records of inventory. The discrepancies noticed on physical verification of the inventories have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has neither 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.

In view of above, other paragraphs of clause (iii) of paragraph 4 of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems, commensurate with the size of the Company and the nature of its business, with regard to purchase of inventory and fixed assets and income from sales of services. During the course of our audit we have not observed any continuing


102

failure to correct major weaknesses in the underlying internal control systems. However process of contract closing work needs to be further expedited.

(v) According to the information and explanations given to us, there are no contracts or arrangements during the year referred to in section 301 of the Companies Act 1956, to be entered in the register maintained under that section. In view of above other paragraphs of clause (v) of paragraph 4 of the Order are not applicable.

(vi) Since the Company has not accepted any deposit from the public, the question of compliance with the directives issued by the Reserve Bank of India and the provisions of section 58A, 58AA and other relevant provisions of the Companies Act, 1956, and rules framed there under, does not arise.

(vii) The Company has an Internal Audit system. In our opinion, the scope and coverage of Internal Audit are commensurate with the size and nature of its business.

(viii) We have broadly reviewed the cost records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209 (1)(d) of the Companies Act, 1956, in respect of Transmission & Telecom Operations of the Company and we are of the opinion that prima facie the prescribed records have been made and maintained. We have, however, not made detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) a) According to the information and explanations given to us, the Company is regular in depositing undisputed statutory dues with appropriate authorities including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to the Company and that there are no undisputed statutory dues outstanding as on 31st March, 2012 for a period of more than six months from the date they became payable. As informed, provisions of the Employees State Insurance Act are not applicable to the Company.

b) According to information and explanations given to us, following disputed demands of income tax / sales tax / customs duty / wealth tax / service tax / excise duty / cess dues have not been deposited:

Nature of dues Amount

(` Rs in crore) Forum where the disputes are pending

Entry Tax 0.02 Appellate Board, Commercial Tax Department,

Madhya Pradesh



103

Nature of dues Amount

(` Rs in crore) Forum where the disputes are pending

Entry Tax 11.40 Joint Commissioner of Commercial Tax

(Appeal), Patna

Entry Tax 5.98 Honbl. High Court, Punjab & Haryana

Sales Tax 33.89 J&K State, Sales Tax Appellate Tribunal

Sales Tax 18.51 Dy. Commissioner of Sales Tax (Appeal), Jammu, J&K State

Service Tax 1.57 Commissioner of Central Excise, Patna

Diversion Tax (For non-agriculture use of land)

2.23 S D O, Itarsi

Income Tax 160.84 Commissioner of Income Tax (Appeals), Delhi.

Income Tax 2.60 Income Tax Appellate Tribunal, Delhi.

Total 238.09

(x) The Company does not have accumulated losses at the end of financial year and has not incurred any cash loss in the financial year under audit, and also in the immediately preceding financial year.

(xi) On the basis of audit procedures adopted by us and according to the records, the Company has not defaulted in repayment of dues to any financial institution or bank or bondholders.

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

(xiii) The company is not a chit fund or nidhi/ mutual benefit fund/society. Accordingly, Clause (xiii) of paragraph 4 of the Order is not applicable.

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

(xv) In the case of Power Link Transmission Limited, wherein the Company has pledged its shares in favour of financial institutions for financial assistance obtained by the said company, as per the terms and conditions of Joint Venture agreement. According to the information and explanations given to us, except the above, the Company has not given any guarantee for loans taken by others from banks or financial institutions. In our opinion and to the best of our information and according to explanations given to us, the terms and


104

conditions of the above share pledge agreement are not, prime facie, prejudicial to the interest of the company.

(xvi) In our opinion on an overall basis and according to the information and explanations given to us, the company has applied the term loans for the purpose, they were raised during the year.

(xvii) In our opinion, on an overall basis, and according to the information and explanations given to us, the company has not used the funds raised on short term basis for long term investment.

(xviii) 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) The Company has not issued any debentures. However, in respect of certain bonds raised during the year amounting to Rs2,655 crore security/ charge is yet to be created.

(xx) The end use of money raised by Follow-on Public Offer during the year 2010-11 as stated in the draft prospectus filed with SEBI and offer document are disclosed in the Note No. 2.34 to the financial statements and the same has been duly verified by us.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.



Firm Registration No.000478N Firm Registration No. 302114E Firm Registration No. 003510S

(S.K.Mehta) (S.K.Chatterjee) (V.Vidyasagar Babu)



Place: New Delhi. Dated: 29th May, 2012.


105

INDEPENDENT AUDITORS’ REPORT (2012-13)

To

The Members of Power Grid Corporation of India Limited Report on the Financial Statements We have audited the accompanying financial statements of Power Grid Corporation of India Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.


106

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. Emphasis of Matters We draw attention to:

Note 2.25(a) & 2.25(c) of the financial statements, in respect of the provisional recognition of revenue from transmission charges.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required under the provisions of Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Companies Act, 1956, we report that:

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 as required by law have been kept by the Company so far as appears from our examination of those books;

c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;


107

e) in pursuance to the notification No. GSR 829(E) dated 21.10.2003, issued by the Department of Company Affairs; clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 pertaining to disqualification of Directors is not applicable to a Government Company.

For S.K.MEHTA & CO. For CHATTERJEE & CO. For SAGAR & ASSOCIATES



Place of Signature: Gurgaon

Date: 28th May, 2013

(CA Jyoti Bagga) (CA R.N.Basu) (CA B.Srinivasa Rao)




108

(2012-13) Annexure to the Independent Auditors’ Report Re: Power Grid Corporation of India Limited Annexure referred to in our report of even date for the year ended 31st March 2013 (i) a) The Company has generally maintained records of Fixed Assets, showing full

particulars including quantitative details and situation of Fixed Assets.



(ii) a) Physical verification of inventories lying with the company has been conducted during the year by the external agencies. In respect of material lying with contractors, company is having system of obtaining confirmation from contractors on periodic basis. In our opinion system and frequency of verification is reasonable.


c) The Company has maintained proper records of inventory. The discrepancies noticed on physical verification of the inventories have been properly dealt with in the books of account.



(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems, commensurate with the size of the Company and the nature of its business, with regard to purchase of inventory and fixed assets and income from sales of services and goods. During the course of our audit we have not observed any continuing failure to correct major weaknesses in the underlying internal control systems. However process of contract closing work needs to be expedited.

(v) According to the information and explanations given to us, there are no contracts or arrangements during the year referred to in section 301 of the Companies Act 1956, to be


109

entered in the register maintained under that section. In view of above, other paragraphs of clause (v) of paragraph 4 of the Order are not applicable.


(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of business.

(viii) We have broadly reviewed the cost records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956, in respect of Transmission & Telecom Operations of the Company and we are of the opinion that prima facie the prescribed records have been made and maintained. We have, however, not made detailed examination of the cost records with a view to determine whether they are accurate or complete.


b) According to information and explanations given to us, following disputed demands of Income Tax / Sales Tax / Customs Duty / Wealth Tax / Service Tax / Excise Duty / Cess dues have not been deposited:

Name of the Statute

Nature of dues

Amount (Rs in crore)

Period to which the amount relates

Forum where the dispute is pending

Punjab VAT Act, 2005 (Entry Tax)

Entry Tax 8.78 2011-12 to 2012-13

Honbl. High Court, Punjab & Haryana

J&K GST Act 1962

Sales Tax 33.98 1992-93 to 2001-02

J&K State, Sales Tax Appellate Tribunal

J&K GST Act 1962

Sales Tax 18.51 2002-03 to 2007-08

Dy. Commissioner of Sales Tax (Appeals), Jammu, J&K State


110

J&K VAT Act 2005

Sales Tax 0.15 2008-09 Dy. Commissioner of Sales Tax (Appeals), Jammu, J&K State

Finance Act 1994 Service Tax 1.57 2004-05 CESTAT, Kolkata

Finance Act 1994

Service Tax 1.89 2007-08 & 2008-09

Commissioner of Central Excise, Customs & Service Tax, Bhubaneswar.

Income Tax Act 1961

Income Tax 5.04 2008-09 & 2009-10

Commissioner of Income Tax (Appeals), Delhi.

Income Tax Act 1961

Income Tax 157.43 2004-05 to 2007-08

Income Tax Appellate Tribunal, Delhi.

Total 227.35






(xv) In the case of Power Link Transmission Limited, wherein the Company has pledged its shares in favor of financial institutions for financial assistance obtained by the said company, as per the terms and conditions of Joint Venture agreement. According to the information and explanations given to us, except the above, the Company has not given any guarantee for loans taken by others from banks or financial institutions. In our opinion and to the best of our information and according to explanations given to us, the terms and conditions of the above share pledge agreement are not, prime facie, prejudicial to the interest of the company.


111

(xvi) In our opinion on an overall basis and according to the information and explanations given to us, the company has applied the term loans for the purpose they were obtained.



(xix) The Company has not issued any debentures. However, in respect of certain bonds raised during the year amounting to Rs1990 Crore, security/ charge is yet to be created.

(xx) The end use of money raised by Follow-on Public Offer (FPO) during the year 2010-11 as stated in the draft prospectus filed with SEBI and offer document are disclosed in the Note 2.34 to the financial statements. For the interim period the FPO proceeds were kept with Banks as Term Deposits and ultimately utilized for the stated end use and the same has been duly verified by the monitoring agency IFCI Ltd.





(CA Jyoti Bagga) (CA R.N.Basu) (CA B.Srinivasa Rao)



Place of Signature: Gurgaon Dated: 28th May, 2013


112

INDEPENDENT AUDITORS’ REPORT (2013-2014)

To the Members of Power Grid Corporation of India Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Power Grid Corporation of India Limited (“the Company”), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”) read with the general circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;


113

b. in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

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

Emphasis of Matter

We draw attention to:

Note 2.25(a) & 2.25(c) of the financial statements, in respect of the provisional recognition of revenue from transmission charges.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

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 as required by law have been kept by the

Company so far as appears from our examination of those books;

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow

Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and


114

e. in pursuance to the notification No. GSR 829(E) dated 21.10.2003, issued by the Department of Company Affairs; clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 pertaining to disqualification of Directors is not applicable to a Government Company.

For S.K.MEHTA & CO. For CHATTERJEE & CO. For SAGAR & ASSOCIATES



(CA Rohit Mehta) (CA R.N.Basu) (CA B.Aruna)



Place of Signature: New Delhi Dated: 29th May, 2014


115

(2013-2014) Annexure to the Independent Auditors’ Report Re.: Power Grid Corporation of India Limited Annexure referred to in our report of even date for the year ended 31st March, 2014.

(i) a) The Company has generally maintained records, showing full particulars including quantitative details and situation of Fixed Assets.



(ii) a) Physical verification of inventories and construction stores has generally been conducted on periodic intervals. In our opinion system and frequency of verification is reasonable.

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) In our opinion, the Company has maintained proper records of its inventory. The discrepancies noticed on physical verification of the inventories have been properly dealt with in the books of account.



(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems, commensurate with the size of the Company and the nature of its business, with regard to purchase of inventory and fixed assets and income from sales of services and goods. During the course of our audit we have not observed any continuing failure to correct major weaknesses in the underlying internal control systems. However process of contract closing work needs to be expedited.

(v) According to the information and explanations given to us, there are no contracts or arrangements during the year referred to in section 301 of the Companies Act 1956, to be entered in the register maintained under that section. In view of above, other paragraphs of clause (v) of paragraph 4 of the Order are not applicable.


116


(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of business.

(viii) We have broadly reviewed the cost records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956, in respect of Transmission & Telecom Operations of the Company and we are of the opinion that prima facie the prescribed records have been made and maintained. We have, however, not made detailed examination of the cost records with a view to determine whether they are accurate or complete.


b) According to information and explanations given to us, following disputed demands of Income Tax / Sales Tax / Customs Duty / Wealth Tax / Service Tax / Excise Duty / Cess dues have not been deposited:

Name of the Statute

Nature of dues

Amount (Rs in crore)

Period to which the amount relates

Forum where the dispute is pending

Punjab VAT Act, 2005 (Entry Tax)

Entry Tax 9.64 2011-12 to 2013-14 Hon’ble High Court, Punjab & Haryana

J&K GST Act 1962

Sales Tax 33.99 1992-93 to 2001-02 Sales Tax Appellate Tribunal, J&K State,

J&K GST Act 1962

Sales Tax 31.56 2002-03 to 2008-09 Dy. Commissioner of

Sales Tax (Appeals), Jammu.

Finance Act, 1994 Service 1.57 2004-05 CESTAT, Kolkata


117

Tax

Finance Act, 1994

Service Tax

1.89 2007-08 & 2008-09 Commissioner of Central Excise, Customs & Service Tax, Bhubaneswar.

Income Tax Act, 1961

Income Tax

153.76 2010-11 Commissioner of Income Tax (Appeals), Delhi.

Income Tax Act, 1961

Income Tax

162.47 2004-05 to 2009-10 Income Tax Appellate Tribunal, Delhi.

Total 394.88






(xv) In the case of Power Link Transmission Limited, wherein the Company has pledged its shares in favour of financial institutions for financial assistance obtained by the said company, as per the terms and conditions of Joint Venture agreement. According to the information and explanations given to us, except the above, the Company has not given any guarantee for loans taken by others from banks or financial institutions. In our opinion and to the best of our information and according to explanations given to us, the terms and conditions of the above share pledge agreement are not, prime facie, prejudicial to the interest of the company.

(xvi) In our opinion on an overall basis and according to the information and explanations given to us, the company has applied the term loans for the purpose they were obtained.


118



(xix) The Company has not issued any debentures. However, in respect of certain bonds amounting to Rs1999.20 crore, security/ charge is yet to be created.

(xx) The end use of money raised by Follow-on Public Offer (FPO) during the year as stated in the Red Herring Prospectus (RHP) filed with SEBI is disclosed in the Note 2.34 to the Financial Statements. Proceeds utilized during the year have been duly verified by the monitoring agency IFCI Ltd. Unutilized FPO proceeds are kept with Banks as Term Deposits for utilization in future.


Place of Signature: New Delhi Dated: 29th May, 2014

For S. K. MEHTA & CO. For CHATTERJEE & CO. For SAGAR & ASSOCIATES Chartered Accountants Chartered Accountants Chartered Accountants Firm Registration No.000478N Firm Registration No. 302114E Firm Registration No. 003510S (CA Rohit Mehta)

(CA R.N.Basu)

(CA B.Aruna)

Partner Partner Partner Membership No.091382 Membership No.050430 Membership No.216454


119

3.vi

SI. No. Particulars 2013-2014 2013-2012 2012-2011

3.vi.0 Details of any inquiry, inspections or investigations initiated or conducted under the Companies Act

Nil Nil Nil

3.vi.1 Any prosecutions filed (whether pending or not) fines imposed, compounding of offences

Nil Nil Nil

3.vii

SI. No. Particulars 2013-2014 2013-2012 2012-2011

3.vii.0 Details of acts of material frauds committed against the company

Nil Nil Nil


120

4. FINANCIAL POSITION OF THE COMPANY

4. (a) Capital Structure of Power Grid (Rs. in crores)

CHANGES IN ITS CAPITAL STRUCTURE AS ON LAST QUARTER END, FOR THE LAST FIVE YEARS

(Rs. In Crore)

Share Capital 31.03.2014 31-03-2013 31.03.2012

31.03.2011 31.03.2010

Authorized Share Capital

10000.00 10000.00 10000.00 10000.00 10000.00

Issued, Subscribed and Paid up Share Capital

5231.59 4629.73 4629.73 4629.73 4208.84

CHANGES 601.86 420.89

Capital Structure As At 30-09-2014 31-03-2014

4.(a).(i)(a) Authorized 10,00,00,00,000 (previous year 10,00,00,00,000) equity shares of Rs 10/- each

10,000.00 10,000.00

Issued , Subscribed And Paid Up 5231589648 equity shares of Rs 10/- each fully paid up.

5231.59 5231.59

4.(a).(i)(b) Size of the present offer

Not Applicable Not Applicable

4.(a).(i)(c) Paid up capital

(A) After the offer (B) After conversion of convertible instruments (C) Share premium account

Before the offer After the offer

Not Applicable Not Applicable


121

4.(a).(ii) Details of the existing share capital of POWERGRID Date of

Allotment/Transfer and when fully paid

up

Number of Equity Shares

Face Value

(Rs.)

Issue price per

Equity Share (Rs.)

Consideration (cash, bonus, consideration

other than cash)

Nature of Allotment Cumulative Shareholding

October 23, 1989

11 1,000 1,000 Cash Allotment of shares to the President of India, acting through MoP, and his nominees on subscription to the Memorandum and Articles of Association

11

November 9, 1990

5,989 1,000 1,000 Cash Further issue to the President of India, acting through MoP

6,000

December 24, 1990


16,000

June 25, 1991


51,000

October 24, 1991


76,000

March 9, 1992

435,000 1,000 1,000 Cash Further issue to the President of India acting through the MoP

511,000

May 13, 1992


611,000


122

Date of Allotment/Transfer and when fully paid

up


Face Value

(Rs.)

Issue price per

Equity Share (Rs.)


other than cash)


July 30, 1992


627,700

September 22, 1992


639,000

November 19, 1992


675,000

February 3, 1993


695,000

March 22, 1993


711,000

April 22, 1993


751,000

July 9, 1993


1,281,000

November 24, 1993


2,201,000

January 17, 1994


2,381,000

January 17, 1994

77,819 1,000 1,000 Cash Further issue to the President of India,

2,458,819


123


up


Face Value

(Rs.)

Issue price per

Equity Share (Rs.)


other than cash)


acting through the MoDoNER

March 18, 1994


2,828,819

March 18, 1994

52,500 1,000 1,000 Cash Further issue to the President of India, acting through the MoDoNER

2,881,319

June 7, 1994

5,675,000 1,000 1,000 Other than cash against conversion of loan

Further issue to the President of India, acting through MoP

8,556,319

June 7, 1994

1,096,800 1,000 1,000 Partly for consideration other than cash on account of capitalisation of interest


9,653,119

September 27, 1994

17,780,511 1,000 1,000 Partly for consideration other than cash against transfer of assets of NTPC Limited, NHPC Limited and North Eastern Electric Power Corporation Limited


27,433,630


124


up


Face Value

(Rs.)

Issue price per

Equity Share (Rs.)


other than cash)


(“NEEPCO”)

November 8, 1994


27,498,630

April 7, 1995


28,002,230

April 7, 1995


28,059,409

August 31, 1995


28,109,409

August 31, 1995

84,131 1,000 1,000 Other than cash against transfer of assets of Tehri Hydro Development Corporation Limited


28,193,540

January 16, 1996


28,293,540

May 21, 1996

50,000 1,000 1,000 Cash Further issue to the President of India, acting through the

28,343,540


125


up


Face Value

(Rs.)

Issue price per

Equity Share (Rs.)


other than cash)


MoDoNER

June 20, 1996


28,421,540

March 4, 1997


28,571,540

April 10, 1997


28,621,540

September 17, 1997


28,636,540

December 6, 1997


28,686,540

February 2, 1998


28,786,540

March 22, 1999


28,836,540

August 12, 1999

50,000 1,000 1,000 Cash Further issue to the President of India,

28,886,540


126


up


Face Value

(Rs.)

Issue price per

Equity Share (Rs.)


other than cash)


acting through MoP

April 24, 2000


28,916,540

January 5, 2001


28,966,540

January 5, 2001


29,001,740

March 22, 2001


29,059,940

July 26, 2001


29,099,240

March 28, 2002

1,190,746 1,000 1,000 Partly for consideration other than cash against transfer of assets of Neyveli Lignite Corporation Limited


30,289,986

October 25, 2002

62,500 1,000 1,000 Cash Further issue to the President of India, acting through the

30,352,486


127


up


Face Value

(Rs.)

Issue price per

Equity Share (Rs.)


other than cash)


MoDoNER

January 28, 2005

1,300,000 1,000 1,000 Cash Further issue to the President of India, acting through MoP

31,652,486

September 16, 2005


32,652,486

October 17, 2005


33,902,486

January 17, 2006


34,502,486

March 27, 2006


35,846,286

June 13, 2006


36,176,286

July 5, 2006

27,787 1,000 1,000 Other than cash against the transfer of assets of Tehri Hydro Development Corporation Limited*


36,204,073

August 3, 2006

1,200,000 1,000 1,000 Cash Further issue to the President of India,

37,404,073


128


up


Face Value

(Rs.)

Issue price per

Equity Share (Rs.)


other than cash)


acting through MoP

November 23, 2006


37,874,073

Each Equity Share of our Company of face value Rs.1,000 has been split into 100 Equity Shares of the face value of Rs.10 each, pursuant to a shareholders resolution dated March 28, 2007.

April 14, 2007

38,812,000 10 10 Other than cash against transfer of assets of National Hydroelectric Power Corporation Limited


3,826,219,300

September 26, 2007

382,621,930 10 52 Cash Initial Public Offer 4,208,841,230

November 23,2010

420,884,123 10 90 Cash Follow On Public Offer

4,629,725,353

December 17, 2013

601,864,295 10 90 Cash Further Public Offer 5,231,589,648

* Pursuant to the CAG audit with respect to the transfer of assets from Tehri Hydro Development Corporation Limited in August 1993, it was observed that there was an error in arriving at the net purchase consideration by Tehri Hydro Development Corporation Limited at the time of transfer of assets to our Company. The net purchase consideration was consequently amended through letter no. 3/5/2003 – H.I. of the MoP dated September 28, 2006 from Rs.84.13 million to Rs. 111.92 million. Accordingly, our Company was required to issue an additional 27,787 equity shares of Rs. 1,000 each, with effect from August 1, 1993, towards the differential in the net purchase consideration for the assets transferred to our Company.


129

4.a.ii.1 Equity Shares issued for consideration other than cash:

Except as detailed below, no Equity Shares of our Company have been issued for consideration other than cash:

Date of Allotment


Face Value

(Rs.)

Issue price per

Equity Share (Rs.)


other than cash)*

Nature of Allotment

June 7, 1994

5,675,000 1,000 1,000 Other than cash against conversion of loan into equity


June 7, 1994

1,096,800 1,000 1,000 Partly for consideration other than cash on account of capitalisation of interest


September 27, 1994

17,780,511 1,000 1,000 Partly for consideration other than cash against transfer of assets of NTPC Limited, NHPC Limited and NEEPL


August 31, 1995

84,131 1,000 1,000 Other than cash against transfer of assets of Tehri Hydro Development Corporation Limited


March 28, 2002

1,190,746 1,000 1,000 Partly for consideration other than cash against transfer of assets of Neyveli Lignite Corporation Limited



130

Date of Allotment


Face Value

(Rs.)

Issue price per

Equity Share (Rs.)


other than cash)*

Nature of Allotment

July 5, 2006

27,787 1,000 1,000 Other than cash against transfer of assets of Tehri Hydro Development Corporation Limited**


April 14, 2007

38,812,000 10 10 Other than cash against transfer of assets of National Hydroelectric Power Corporation Limited


* The benefits accrued to our Company are as detailed above, including, conversion of loan, capitalization of interest and transfer of assets.

**Pursuant to the CAG audit with respect to the transfer of assets from Tehri Hydro Development Corporation Limited in August 1993, it was observed that there was an error in arriving at the net purchase consideration by Tehri Hydro Development Corporation Limited at the time of transfer of assets to our Company. The net purchase consideration was consequently amended through letter no. 3/5/2003 – H.I. of the MoP dated September 28, 2006 from Rs.84.13 million to 111.92 million. Accordingly, our Company was required to issue an additional 27,787 equity shares of Rs. 1,000 each, with effect from August 1, 1993, towards the differential in the net purchase consideration for the assets transferred to our Company.

CONSOLIDATED SHAREHOLDING PATTERN AS ON 30.09.2014

SI. No

Particulars Total no. of Shares

Total Shares in D-mat

Form

Total Shares in Physical

Form

As % of Total no of Equity

shares

1 PRESIDENT OF

INDIA 3028835198 3028835198 0 57.895122%

2 FOREIGN INSTITUTIONAL

1434061850 1434061850 0 27.411589%


131

SI. No


Total Shares in D-mat

Form

Total Shares in Physical

Form

As % of Total no of Equity

shares

INVESTORS

3 RESIDENT

INDIVIDUALS 201081972 201035803 46169 3.843611%

4 INSURANCE COMPANIES

178692425 178692425 0 3.415643%

5 MUTUAL FUNDS 150625233 150625233 0 2.879148%

6 BODIES

CORPORATES 132881932 132881932 0 2.539991%

7 INDIAN

FINANCIAL INSTITUTIONS

62433543 62433543 0 1.193395%

8 FOREIGN

CORPORATE BODIES

14723476 14723476 0 0.281434%

9 H U F 8512821 8512820 1 0.162720%

10 TRUSTS 6496346 6496346 0 0.124175%

11 EMPLOYEES 4593564 4593564 0 0.087804%

12 CLEARING MEMBERS

3567493 3567493 0 0.068191%

13 NON RESIDENT

INDIANS 3114568 3114568 0 0.059534%

14 BANKS 1969227 1969227 0 0.037641%

Total 5231589648 5231543478 46170 100.00%


132

TOP 10 LARGEST SHAREHOLDERS (As on 30.09.2014)

Sr. No.

Name No of Equity

Shares No of shares in

Demat form

Total Share holding as % of total no of

equity shares

1 PRESIDENT OF INDIA 2927565398 2927565398 55.96%

2 EUROPACIFIC GROWTH

FUND 296023422 296023422 5.66%

3. LIFE INSURANCE

CORPORATION OF INDIA 164489957 164489957 3.14%

4 PRESIDENT OF INDIA 101269800 101269800 1.94%

5. NEW WORLD FUND INC

96958870 96958870 1.85%

6.

AMERICAN FUNDS INSURANCE SERIES

INTERNATIONALFUND 68214040 68214040 1.30%

7

CAPITAL WORLD GROWTH AND INCOME

FUND 64038000 64038000 1.22%

8

COMGEST GROWTH PLC A/C COMGEST GROWTH

EMERGING MAR 54500000 54500000 1.04%

9. COMGEST SA A/C

MAGELLAN 54169544 54169544 1.04%

10.

ICICI PRUDENTIAL LIFE INSURANCE COMPANY

LTD 44784671 44784671 0.86%

Total

3872013702

3872013702 74.01%


133

CONSOLIDATED SHAREHOLDING PATTERN AS ON 31.03.2014

SL No


Total Shares in D-mat Form

Total Shares in Physical Form

As % of Total no of Equity shares

1 President Of India 3028835198 3028835198 0 57.895122 %

2 Foreign Institutional Investors

1368369388 1368369388 0 26.155901 %

3 Resident Individuals 204682336 204634194 48142 3.912431 %

4 Insurance Companies 178721425 178721425 0 3.416197 %

5 Bodies Corporate 138957482 138957482 0 2.656123 %

6 Mutual Funds 126787129 126787129 0 2.423491 %

7 Indian Financial Institutions

117285360 117285360 0 2.241868 %

8 Banks 20553349 20553349 0 0.392870 %

9 Foreign Corporate Bodies 14723476 14723476 0 0.281434 %

10 Clearing Members 9824244 9824244 0 0.187787 %

11 H U F 9491659 9491659 0 0.181430 %

12 Employees 5629341 5629341 0 0.107603 %

13 Trusts 4385685 4385685 0 0.083831 %

14 Non Resident Indians 3343441 3343441 0 0.063909 %

15 Qualified Foreign Investor-Individual

135 135 0 0.000003 %

Total 5231589648 5231541506 48142 100.00 %


134

TOP 10 LARGEST SHAREHOLDERS (As on 31.03.2014)

Sl. No.

Name No of Equity Shares

No of shares in demat form

Total Shareholding

as % of total no of equity shares

1 President Of India 2927565398 2927565398 55.96%

2 Europacific Growth Fund 296023422 296023422 5.66%

3. Life Insurance Corporation Of India 164489957 164489957 3.14%

4 President Of India 101269800 101269800 1.94%

5. New World Fund Inc 92408870 92408870 1.77%

6. American Funds Insurance Series International fund

70440440 70440440 1.35%

7 Capital World Growth And Income Fund

64038000 64038000 1.22%

8 ICICI Prudential Life Insurance Company Ltd

64003238 64003238 1.22%

9. Credit Suisse (Singapore) Limited 38310948 38310948 0.73%

10. Comgest Sa A/C Magellan 37829632 37829632 0.72%

Total 3856379705 3856379705 73.71%

Details of any Acquisition or Amalgamation in the last 1 year: NIL

Details of any Reorganisation or Reconstruction in the last 1 year: NIL


135

4.b & 4.c

Profits of the company (before and after making provision for tax) & Dividends declared by the company with interest coverage ratio for last three years (Standalone Basis) :

SI. No. Parameters FY 2013-14 FY 2012-13 FY 2011-12 4.b.0 EBT 6263.75 5644.86 4597.60 4.b.1 PAT 4497.42 4234.50 3254.95 4.c.0 Dividend amounts 1349.76 1273.18 976.89 4.c.1 Interest Coverage Ratio 4.50 4.73 5.14

4.d Summary of Financial Position of Power Grid Corporation of India (Standalone Basis)

2013-14 2012-13 2011-12

(A)WHAT THE COMPANY OWNED: Gross Fixed Assets 96503.66 80600.05 63387.34

Less: Depreciation 23349.59 19199.41 15725.04

Net Fixed Assets 73154.07 61400.64 47662.30

Capital Work in Progress 31851.41 19114.92 15573.50

Construction Stores 17625.30 15708.62 12610.04

Construction Advances 3853.61 5328.98 5091.23

Investments (including Current Investments) 814.33 964.24 1101.19

Other Non-current Loans & Advances 3189.95 2517.07 1840.20

Current Assets, Loans & Advances 9100.40 6099.09 6329.89

TOTAL (A) 139589.07 111133.56 90208.35

(B) WHAT THE COMPANY OWED: Long Term Loans from: -Financial Institutions 56.11 113.64 181.01

-Foreign Loans 21691.12 18285.67 14352.17

-Bonds 49997.16 43085.29 33443.51

-Other Loans 5045.83 1591.67 1142.50

Total Loans Term Loans 76790.22 63076.27 49119.19

Current maturities of Long Term Loans 3679.63 3111.60 2632.72

Working Capital Loan (short-term) 2700 2000.00 1650.00

Current Liabilities & Provisions 13137.50 9596.90 7088.29


136

2013-14 2012-13 2011-12

Deferred Tax Liability(Net) 2442.96 1959.16 1600.88

Deferred Revenue-Advance against Depreciation 2018.07 2094.96 2143.78

Deferred Revenue-DFCFIE Account 2404.32 1505.61 493.17

Grants in Aid 95.07 117.03 139.32

Long-term Provisions 524.37 442.63 421.49

Other Long-term Liabilities 1337.30 989.93 1431.73

TOTAL (B) 105129.44 84894.09 66720.57

(C) NET WORTH OF THE COMPANY REPRESENTED BY :

(i)Equity capital(including Deposit) 5231.59 4629.73 4629.73

ii) Reserves and Surplus 29181.30 21583.68 18858.05

iii)Less: Misc. Exp. to the extent not written off -

-

TOTAL (C) 34412.89 26213.41 23487.78

(D).COMMITTED RESERVES

i) CSR Activities Reserve 46.74 26.06

TOTAL (D) 46.74 26.06

TOTAL (B+C+D) 139589.07 111133.56 90208.35

CAPITAL EMPLOYED 62737.34

52791.23 42621.18

(Net Fixed Assets + Net Current Assets)

(E) RATIOS

Net Profit to Capital Employed (%) 7.17

8.02 7.64

Net Profit to Net Worth (%) 13.07

16.15 13.86

Net Worth per Rupee of Paid-up Capital (in Rs.) 6.58

5.66 5.07

Debt/Equity Ratio (#) 70:30

72:28 69:31

Current Ratio 0.47:1

0.41:1 0.56:1

Earnings per Share (Diluted EPS) (Rs per Share) 9.36

9.15 7.03


137

2013-14 2012-13 2011-12

Book Value per share ( Rs per share) 65.78

56.62 50.73

Capital Expenditure ( Rs in Crore) 23158

20037 17814

4.e Cash Flow Statement for three years

Particulars

For the year ended 31st

March, 2014


March, 2013


March, 2012 A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit Before Tax 6263.75 5644.86 4597.60

Adjustment for : Depreciation (including prior period) 4010.53 3379.69 2610.29 Transfer from Grants in Aid (21.96) (22.29) (31.99) Deferred revenue - Advance against Depreciation (76.89) (48.82) (32.29) Amortized Expenditure(DRE written off) 0.00 0.00 2.41 Provisions 22.35 2.75 2.30 Transfer from Self Insurance Reserve (5.83) (0.35) (0.81) Net Loss on Disposal / Write off of Fixed Assets 4.63 6.38 1.21 Interest and Finance Charges 3167.52 2609.14 1858.83 Provisions Written Back (5.25) (59.24) (40.79) FERV loss / (gain) 0.00 (73.92) 84.43 Interest earned on Bonds and loans to State Govts. (186.62) (262.46) (81.76) Dividend received (89.01) (60.68) (54.18) Operating profit before Working Capital Changes 13083.22 11115.06 8915.25

Adjustment for : (Increase)/Decrease in Inventories (160.89) (111.21) (58.80)


138

Particulars


March, 2014


March, 2013


March, 2012 (Increase)/Decrease in Trade Receivables (144.99) 120.82 (1201.35) (Increase)/Decrease in Loans and Advances (17.23) (173.82) (1679.43) (Increase)/Decrease in Other current assets 161.42 (412.19) 1590.85 Increase/(Decrease) in Liabilities & Provisions 3370.20 1802.23 (284.70) Increase/(Decrease) in Deferred Income/Expenditure from Foreign Currency Fluctuation(Net) (140.11) (120.48) (45.11) (Increase)/Decrease in Deferred Foreign Currency Fluctuation Asset/Liability(Net) 264.54 135.33 127.63 Cash Generated from Operations 16416.16 12355.74 7364.34 Direct taxes paid (1156.83) (1071.95) (961.81) Net Cash from operating activities 15259.33 11283.79 6402.53 B. CASH FLOW FROM INVESTING ACTIVITIES

Fixed assets (including incidental expenditure during construction)

(873.76) (440.23) (665.88)

Capital work in progress (25419.96) (18611.99) (13861.17) Construction Stores (441.40)

(3336.33) (1860.79) (Increase)/Decrease in Current Investment 0.00 0.00 0.00 (Increase)/Decrease in Investments 148.77 136.95 113.90 (Increase)/Decrease in Long Term Loans under Securitization Scheme 15.42 7.72 15.42 Loans & Advances to Subsidiaries 0.00 0.00 97.20 Lease receivables (24.85) (46.32) 183.26 Interest earned on Bonds and loans to State Govts. 129.14 281.07 89.55 Dividend received 89.01 60.68 54.18 Net cash used in investing activities (26377.63) (21948.45) (15834.33)


139

Particulars


March, 2014


March, 2013


March, 2012

C. CASH FLOW FROM FINANCING ACTIVITIES

Issue of Shares 601.86 0.00 0.00 Premium on Issue of Shares (net of share issue expenses) 4694.74 0.00 0.00 Loans raised during the year 17943.01 18042.83 14363.05 Loans repaid during the year (5222.85) (4248.08) (3666.93) Interest and Finance Charges Paid (2751.84) (2235.59) (1504.94) Dividend paid (1192.21) (1351.89) (949.11) Dividend Tax paid (198.86) (217.52) (153.45) Net Cash from Financing Activities 13873.85

9989.75 8088.62 D. Net change in Cash and Cash equivalents(A+B+C) 2755.55 (674.91) (1343.18) E. Cash and Cash equivalents(Opening balance) 1661.97 2336.88 3680.06 F. Cash and Cash equivalents(Closing balance) 4417.52 1661.97 2336.88

4.f Changes in Accounting Policies

4.f.0 Changes in Accounting Policies during 2013-2014 - NIL -

4.f.1 Changes in Accounting Policies during 2012-2013

i. Ministry of Corporate Affairs, Government of India through circular no.25/2012 dated 9th August 2012 has clarified that Para 6 of Accounting Standards (AS)-11 and para 4(e) of AS 16 shall not apply to company which is applying para 46A of AS 11. Consequently, exchanges differences arising on settlement/ translation of foreign currency loans to the extent regarded as an adjustment to interest cost as per para 4(e) of AS 16 and charged to the statement of profit and loss have now been adjusted in the costs of related capital assets. This change in accounting policy is made effective from 01 April 2011. This change has resulted in increase in Profit before tax for the year by Rs. 122.95 crore (including Rs. 66.12 crore for the FY 11-12).

ii. In view of opinion of the Expert Advisory Committee of the Institute of Chartered Accountants of India, unspent expenditure, out of the budget for the year towards the Corporate Social Responsibility (CSR), which was hitherto being provided for in the


140

statement of Profit & Loss is now being transferred to CSR reserve by appropriating profit. The change has resulted in increase in profit before tax for the year by Rs. 26.06 crore (including Rs. 15.26 crore write back of provision for earlier years).

4.f.2 Changes in Accounting Policies during 2011-2012

i. In view of option allowed by Ministry of Corporate Affairs vide its notification dated 29.12.2011 on Accounting Standards-11, the Company, during the year, has capitalized the Foreign Exchange Rate Variation (FERV) loss arising on account of settlement/ restatement of long term monetary liabilities relating to depreciable capital assets. Consequently, FERV loss, which has hitherto charged to Profit & Loss Account, has been adjusted in cost of related Fixed Assets/ Capital work-in-progress. As a result, profit before tax for the year ended 31.03.2012 after considering the amount of FREV loss recoverable from beneficiaries as per CERC Tariff Regulations 2009 is higher by Rs. 11.93 crore.

ii. Intangible Assets- Right of Way (Afforestation expenses) were hitherto amortized over the useful life of related assets. During the year company has changed accounting policy in this regard and now these assets are being amortized following the rates and methodology notified by CERC Tariff Regulation with retrospective effect from 01.04.2009. This has resulted in increase in amortization for the year and Prior Period amortization of Rs. 7.62 crore and Rs. 11.40 crore respectively.

4.g. KEY OPERATIONAL AND FINANCIAL PARAMETERS FOR THE LAST 3 AUDITED YEARS

Based on Standalone Financial Accounts: (Rs in Crore)

Parameters As at 30-09-2014 FY 2013-14

FY 2012-13 FY 2011-12

For Non Financial Entities Net Worth 36752.55 34412.89 26213.41 23487.78 Total Debt: Of which -Non Current Maturities of Long Term Borrowings

84019.06 76790.22 63076.27 49119.19

Current Maturities-of Long Term Borrowings

4090.54 3679.63 3111.60 2632.72

Short Term Borrowings 4200.00 2700.00 2000.00 1650.00 Net Fixed Assets 80286.03 73154.07 61400.64 47662.30 Non Current Assets 139358.57 130488.67 105034.47 83878.46


141

Parameters As at 30-09-2014 FY 2013-14

FY 2012-13 FY 2011-12

Cash and Cash Equivalents 5443.85 4417.52 1661.97 2336.88 Current Investments 184.35 184.35 183.26 183.26 Current Assets 11104.37 9100.40 6099.09 6329.89 Current Liabilities 20951.31 19517.13 14708.50 11371.01 Net Sales 8384.37 15721.41 13328.74 10785.01 EBITDA 7216.71 13426.95 11532.00 9113.40 EBIT 4850.05 9431.27 8180.08 6540.86 Interest 1917.03 3167.52 2535.22 1943.26 PAT 2337.78 4497.42 4234.50 3254.95 Dividend amounts NIL 1349.76 1273.18 976.89 Current Ratio 0.53:1 0.47:1 0.41:1 0.56:1 Interest Coverage Ratio 4.04 4.50 4.73 5.14 Gross Debt Equity Ratio 71:29 70:30 72:28 69:31 Debt Service Coverage Ratio 2.19 2.14 2.28 2.25

4.h. DEBT EQUITY RATIO PRIOR TO AND AFTER ISSUE OF DEBT SECURITIES (Rs. in Crore)

Particular

Pre – Issue As on 31.03-

2014

Post Issue Rs. 2580 Crore

as on 23-01-2015 Debt Short Term Debt Long Term Debt Total Debt Share holder’s funds Share Capital Free Reserves* Total Share holder’s funds Long Term Debt/Shareholders Fund (Times)

2700.00

80469.85 83169.85

5231.59 29181.30

34412.89

2.34

700.00

92502.84 93202.84

5231.59 31520.96

36752.55

2.52

* Free Reserves as on 30.09.2014 has been considered, since financial results upto the period ending December 2014 is under finalization and audit.


142

4.i. DETAILS OF THE BORROWINGS OF THE COMPANY

The borrowings of POWERGRID as on September 30, 2014 stood as under:-

(i) Secured Borrowings (Rs. in Crore)

Particulars Amount Outstanding

Domestic Bonds 52812.41

Term Loans from Indian Banks 7605.31

Foreign Loans 22791.74

Total 83209.46 (ii) Unsecured Borrowings (Rs. in Crore)

Particulars Amount Outstanding

Term Loans from Financial Institution -

Foreign Loans and Bonds 4900.14

Short term loan 4200.00

Total 9100.14

iii. Domestic Secured Borrowings

The total outstanding amount with respect to our domestic secured borrowings is Rs.7605.31crore (Term Loans from Banks) as on September 30, 2014. The details of these facilities are set forth below.

(Rs. in crore)

S. No.

Name of lender

Type of Facility & Amount Sanctioned

Principal Amount Outstanding (as on 30-09-2014)

Repayment Schedule

Security

1. Punjab National Bank

Term loan of Rs.300crore through agreement dated March 8, 2002

50.00 Repayable in 12 equal annual installments of Rs.25crore, commencing after a moratorium of

Created floating charge by way of hypothecation on fixed assets of our Company to the extent of 1.1 times of the outstanding


143

S. No.

Name of lender



Repayment Schedule

Security

three years loan

2. Oriental Bank of Commerce

Term loan of Rs. 250 crore through agreement dated March 22, 2002

41.67 Repayable in 12 equal annual installments commencing after a moratorium period of three years

Created floating charge by way of hypothecation on the fixed assets of our Company to the extent of 1.1 times of the outstanding loan

3. Life Insurance Corporation of India

Term loan of Rs.884.97 crore through agreement dated October 14, 2003

110.32 Repayable in 13 annual installments commencing from March 31, 2004 as per amortization schedule

Created floating charge on the entire fixed assets of our Company, whether present or future, subject to a minimum asset cover of 1.1 times of the amount of the outstanding loan

4. Life Insurance Corporation of India

Term loan of Rs. 49.32 crore through agreement dated August 31, 2007.

3.32

Repayable in 10 annual installments commencing from March 31, 2008 as per amortization schedule

Created floating charge on entire fixed assets of our Company, both present and future, subject to a minimum

asset cover of 1.10 times of the outstanding loan

5.

State Bank of India

Term Loan Line of Credit (LOC) of Rs

5000.00 Repayable in Twenty two half yearly

Created paripassu charge in favour of the lender by way


144

S. No.

Name of lender



Repayment Schedule

Security

5000 Crs through agreement dated March 21, 2012

installment with 6 months moratorium after disbursement period of 4 years

of hypothecation and charge on the whole of the Company’s assets except investment, land and buildings, roads and bridges, water supply, drainage and sewerage; and current assets and includes all assets, present and future, lying or stored in or about the

Company’s premises including its godowns of

transmission lines and substations or wherever else the same may be or be held by any party to the order of the Company’s or in the course of transit or delivery in the possession of the Company and either by way of substitution or addition

6 State Bank of India

(LOC) of Rs 10000 Crs

2400.00 Repayable in 20 half yearly equal

Created paripassu charge in favour of


145

S. No.

Name of lender



Repayment Schedule

Security

through agreement dated March 19, 2014

installments of Rs 500 Crores each commencing after the expiry of 5th year from the date of first disbursement.

the lender by way of hypothecation and charge on the whole of the Company’s assets except investment, land and buildings, roads and bridges, water supply, drainage and sewerage; and current assets and includes all assets, present and future, lying or stored in or about the

Company’s premises including its godowns of

transmission lines and substations or wherever else the same may be or be held by any party to the order of the Company’s or in the course of transit or delivery in the possession of the Company and either by way of substitution or addition


146

B. Domestic Unsecured Borrowings

The total outstanding amount with respect to our domestic unsecured facilities is Rs. 4200.00 crore as on September 30, 2014. The details of these facilities are set forth below.

(Rs. in crore)

S. No.

Name of lender Type of Facility & Amount Sanctioned

Amount Outstanding (as on 30-09-2014)

Repayment Schedule

1. State Bank of India

Working capital loan of Rs. 2,000.00 Crore as per letter agreement dated January 20, 2014

2000.00 The date of repayment of the entire loan will be after

completion of 12 months

from the date of first drawl of loan

2 HDFC Bank Ltd Working capital loan of Rs700.00 Crore as per letter agreement dated January 20, 2014




3 State Bank of India

Short term bridge loan of Rs 1500 Crore as per agreement dated June 11, 2014




4 ICICI Bank Short term bridge loan of Rs 1500 Crore as per agreement dated June 12, 2014





147

C. Secured Foreign Currency Borrowings The total outstanding amount with respect to our foreign currency secured borrowings is approximately Rs. 22791.74 crore as on September 30, 2014. The details of these facilities are set forth below.

(Rs. in crore)

S. No.

Lender Type of Facility & Amount Sanctioned

Repayment Principal Amount

Outstanding (as on

30-09-2014)

Security

1. International Bank for Reconstruction and Development (World Bank) II

Facility of US$ 450.0 million through agreement dated June 13, 2001.

Repayment in 30 semiannual installments starting from December 15, 2006.

1,595.29

Created paripassu floating charge by way of (i) hypothecation of movable properties pertaining to certain transmission lines and sub-stations. (ii) hypothecation and floating charge over the fixed assets pertaining to certain transmission lines and sub-stations, and (iii) hypothecation and charge on goods and assets Further, created paripassu charge over the mortgage of immovable property, measuring 219,689 square meters at Ambheti of MoujeAmbheti, Taluka Kaprada in Valsad District in the State of Gujarat (“Gujarat Property”)

2. International Bank for Reconstruction and Development (World Bank) III

Facility of US$ 400.0 million through agreement dated May 2, 2006.

Repayment in 30 semiannual installments starting from September 15, 2011.

2,037.74

Created paripassu floating charge by way of (i)hypothecation of movable properties pertaining to certain transmission lines and sub-stations (ii) hypothecation and floating charge over the fixed


148

S. No.



Outstanding (as on

30-09-2014)

Security

assets pertaining to certain transmission lines and sub-stations, and (iii) hypothecation and charge on goods and assets Further, created pari passu charge over the mortgage of the Gujarat Property

3. Asian Development Bank I

Facility of US$ 275.0 million through agreement dated July 18, 1996

Repayment in 32 semiannual installments starting from June 1, 2000.

84.67

Created paripassu floating charge by way of (i)hypothecation of movable properties pertaining to certain transmission lines and sub-stations, (ii) hypothecation and floating charge over the fixed assets pertaining to certain transmission lines and sub-stations, and (iii) hypothecation and charge on goods and assets Further, created pari passu charge over the mortgage of the Gujarat Property

4. Asian Development Bank II

Facility of US$ 250.0 million (comprising a pool based loan and a LIBOR-based loan) through agreement dated December 4, 2000 and

Repayment in 30 semiannual installments starting from June 15, 2006.

958.18

Created paripassu floating charge by way of (i) hypothecation of movable properties pertaining to certain transmission lines and sub-stations (ii) hypothecation and floating charge over the fixed assets pertaining to certain transmission lines and sub-stations, and (iii) hypothecation and


149

S. No.



Outstanding (as on

30-09-2014)

Security

restated agreement dated July 17, 2002

charge on goods and assets Further, created paripassu charge over the mortgage of theGujarat Property

5. Asian Development Bank III

Facility of US$ 400.0 million through agreement dated November 3, 2005

Repayment in 30 semiannual installments starting from January 15, 2010.

2,031.44

Created paripassu floating charge by way of (i) hypothecation of movable properties pertaining to certain transmission lines and sub-stations, (ii) hypothecation and floating charge overthe fixed assets pertaining to certain transmission lines and sub-stations, and (iii) hypothecation and charge on goods and assets Further, created paripassu charge over the mortgage of the Gujarat Property

6. Bank of India, Cayman Islands

Facility of US$ 100.0 million through agreement dated May 28, 1999

Repayment in 38 equal consecutive half-yearly installments starting from June 10, 2004

277.86

Created floating charge on immovable properties of our Company

7. International Bank for Reconstruction and Development (World Bank) IV

Facility of US$ 600.0 million through agreement dated March 28, 2008.

Repayment in 30 semiannual installments starting from November 15, 2013.

3,413.94

Created paripassu floating charge by way of hypothecation and floating charge over the assets Further, created paripassu charge over the mortgage of the Gujarat Property


150

S. No.



Outstanding (as on

30-09-2014)

Security

8. International Bank for Reconstruction and Development (World Bank)IV Additional

Facility of US$ 400.0 million through agreement dated January 27, 2009.

Repayment in 52 semi annual installments starting from February 1, 2013.

2,345.94

Created paripassu charge over the mortgage of the Gujarat Property Hypothecation and paripassu floating charge on the assets of our Company

9. Asian Development Bank IV

Facility of US$ 400.0 million through agreement dated March 28, 2008

Repayment in 40 semiannual installments commencing on May 15, 2013

2,287.84

Created paripassu floating charge by way of (i) hypothecation of movable properties pertaining to certain transmission lines and sub-stations, and (ii) hypothecation and floating charge over the assets Further, created paripassu charge over the mortgage of the Gujarat Property

10. Asian Development Bank V

Facility of US$ 124.0 million through agreement dated March 27, 2009.

Repayment in 40 semiannual installments starting from August 1, 2014.

617.08

Created paripassu floating charge by way of (i) hypothecation of movable properties pertaining to certain transmission lines and sub-stations, and (ii) hypothecation and floating charge over the assets. Further, created paripassu charge over the mortgage of the Gujarat Property


151

S. No.



Outstanding (as on

30-09-2014)

Security

11. International Bank for Reconstruction and Development (World Bank) V

Facility of US$ 1,000.0 million through agreement dated October 13, 2009.

Repayment in 49 semiannual installments starting from January 15, 2015.

3,582.57

Created paripassu charge over the mortgage of the Gujarat Property Hypothecation and paripassu floating charge on the assets of our Company

12. NORDIC INVESTMENT BANK

Facility of SEK607Million and EURO 8.60Million through agreement dated 19.12.2011

Repayment in 10 equal consecutive half yearly installments starting from 31st August 2016.

591.56

Created floating charge on the Company’s assets ranking paripassu with its other secured lenders and at all times providing a security cover of at least 1.10 times of the amount of loan

13. Asian Development Bank VI (2823-IND)

Multi-tranche foreign exchange loan of US$ 76.0 million through a loan agreement dated March 30, 2012

Repayment in 40 half yearly installments starting from June 1, 2017.

302.67

Yet to be secured

14 IFC-A LOAN (31419)

Facility of US$ 100.00 million through agreement dated 24.07.2012

Repayment in 20 equal half yearly installments starting from September15, 2017

621.10 Created paripassu floating charge over the whole of the assets of the Company except investments, land, buildings, roads and bridges, water supply, drainage and sewerage and current assets; and includes all assets both present and future, which are lying or stored in or about or shall from time to time during the continuance of such presents be brought into


152

S. No.



Outstanding (as on

30-09-2014)

Security

or upon or be stored or be in or about the Company’s premises including its godowns of the transmission lines and sub-stations or wherever else the same may be or be held by any party to the order of the Company or in the course of transit or delivery in the possession of the Company and either by way of substitution or addition Further, created pari passu charge over the mortgage of the Gujarat Property

15 IFC-B LOAN (31419)



745.32 Created paripassu floating charge over the whole of the assets of the Company except investments, land, buildings, roads and bridges, water supply, drainage and sewerage and current assets; and includes all assets both present and future, which are lying or stored in or about or shall from time to time during the continuance of such presents be brought into or upon or be stored or be in or about the Company’s premises including its godowns of the transmission lines and sub-stations or wherever else the same may be or be held by any party to


153

S. No.



Outstanding (as on

30-09-2014)

Security

the order of the Company or in the course of transit or delivery in the possession of the Company and either by way of substitution or addition Further, created paripassu charge over the mortgage of the Gujarat Property

16 ICFF LOAN Debt Pool LLP (31419)



310.55 Created paripassu floating charge over the whole of the assets of the Company except investments, land, buildings, roads and bridges, water supply, drainage and sewerage and current assets; and includes all assets both present and future, which are lying or stored in or about or shall from time to time during the continuance of such presents be brought into or upon or be stored or be in or about the Company’s premises including its godowns of the transmission lines and sub-stations or wherever else the same may be or be held by any party to the order of the Company or in the course of transit or delivery in the possession of the Company and either by way of substitution or addition. Further, created paripassu


154

S. No.



Outstanding (as on

30-09-2014)

Security

charge over the mortgage of the Gujarat Property

17 Asian Development Bank VII (2787-IND)

Multi-tranche foreign exchange loan of US$ 500.0 million through a loan agreement dated March 30, 2012

Repayment in 40 semiannual installments starting from February 1, 2017.

622.47 Yet to be secured

18 Asian Development Bank VIII (2788-IND)


Repayment in 22 equal half yearly installments starting from August 1, 2016

365.52 Provide and maintain security interest in favour of the lender equivalent to 110% of the commitment by way of a floating charge on all existing and future fixed and movable assets of the Company, in each case ranking paripassu with other secured creditors and granted pursuant to Documentation satisfactory to the lender

D. Unsecured Foreign Currency Borrowings The total outstanding amount with respect to our foreign currency unsecured borrowings is approximately Rs.4900.14 crore as of September 30, 2014. The details of these facilities are set forth below.

(Rs. in crore)


155

S. No. Lender Type of Facility & Amount Sanctioned

Repayment Amount Outstanding (as on 30-

09-2014) 1. Credit National (now known as

Natixis) acting on behalf of the French Government

Facility of Euros 26.3 million through agreement dated March 11, 1994

Semiannual installments for each tranche starting September 30, 2004.

105.42

2. SkandinaviskaEnskildaBanken Facility of SEK 345.0 million through an agreement dated September 26, 2002

24 semi-annual consecutive installments commencing from September 15, 2005.

56.98

3. The Overseas Economic Cooperation Fund (now known as Japan International Cooperation Agency)

Facility of Japanese Yen 8,497.0 million through agreement dated February 25, 1997

41 semi annual installments beginning February 20, 2007

129.60

4 AB SEK LOAN Facility of SEK 3894.5 million through agreement dated 21.12.2011

24 semiannual installments beginning December 15, 2015

1384.17

5 AB SEK LOAN Facility of EUR 55.01 million through agreement dated 21.12.2011

24 semiannual installments beginning December 15, 2015

118.47

6 Foreign currency notes Foreign currency notes of USD 500 Million

Bullet repayment on 17.01.2023

3,105.50

E. Secured Bonds

Our Company from time to time issues secured bonds on a private placement basis. The total amount outstanding in relation to bonds issued by our Company as on September 30, 2014 is Rs. 52812.41 crore. The details of the outstanding bonds issued by our Company are set forth below:

(Rs in crore )

S. No.

Nature of Bonds / Series Redemption Amount Outstanding (as on 30-

Security


156

09-2014) 1. 10.90% (taxable) non-

cumulative non-convertible secured redeemable bonds of Rs. 761.52 crore allotted on June 21, 2001

Redeemable in 12 equal annual installments commencing from June 21, 2004

63.46 Mortgage of Gujarat Property. Created paripassu charge by hypothecation of assets pertaining to transmission lines and sub-stations associated within CTP – I, Farakka and Chamera-Moga Transmission systems

2. 9.80% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs.543.00 Crore allotted on December 7, 2001

Redeemable in 12 equal annual installments commencing from December 7, 2005

135.75 Created paripassu charge over the mortgage of the Gujarat Property Created paripassu charge by hypothecation of assets pertaining to transmission lines and sub-stations associated within Anta Auriya, Moga-Bhiwani, Chamera-Kishenpur, Sasaram-Allahabad, Loop In Loop Out (“LILO”) of Singrauli, Kanpur and Allahabad Sub-station

3. 9.70% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs.184.50 crore allotted on March 28, 2002

Redeemable in 12 equal annual installments commencing from March 28, 2006.

46.13

Created paripassu charge over the mortgage of the Gujarat Property Created paripassu charge by hypothecation of assets pertaining to transmission lines and sub-stations associated within Kayamkulam and Ramagundam Hyderabad transmission systems

4. 8.63% (taxable) non-cumulative non-convertible secured redeemable bonds of

Redeemable in 12 equal annual installments commencing from

202.50 Created paripassu charge over the mortgage of the Gujarat Property


157

Rs.810 crore allotted on July 31, 2002

July 31, 2006. Created paripassu charge by hypothecation of assets pertaining to transmission lines and sub-stations associated within Kishenpur-Moga and Dulhasti contingency transmission system

5. 6.10% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 699.00 crore allotted on July 17, 2003

Redeemable in 12 equal annual installments commencing from July 17, 2004.

58.25 Created paripassu charge over the mortgage of the Gujarat Property. Created floating charge on the assets of our Company to the extent of 1.1 times of the outstanding amount

6. 6.68% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 900 crore allotted on February 23, 2004

Redeemable in 12 equal annual installments commencing from February 23, 2008.


7. 7.10% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 750 crore allotted on February 18, 2005



8. 7.39% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs.1000.00 crore allotted on September 22, 2005

Redeemable in 10 equal annual installments commencing from September 22, 2009.


9. 8.15% (taxable) non- Redeemable in 12 582.75 Created paripassu


158

cumulative non-convertible secured redeemable bonds of Rs.999.00 crore allotted on March 9, 2006.

equal annual installments commencing from March 9, 2010

charge over the mortgage of the Gujarat Property Created floating charge on the assets of our Company to the extent of 1.1 times of the outstanding amount

10. 9.25% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 495.00 Crore allotted on July 24, 2006.

Redeemable in 12 equal annual installments commencing from July 24, 2010.


11. 8.93% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 1500.00 crore allotted on September 7, 2006

Redeemable in 12 equal annual installments commencing from September 7, 2010.

875.00 Created paripassu charge over the mortgage of the Gujarat Property and Created floating charge on the assets of our Company to the extent of 1.1 times of the outstanding amount

12. 8.73% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 510.00 crore allotted on October 11, 2006

Redeemable in 12 equal annual installments commencing from October 11, 2010


13. 8.68% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 690.00 crore allotted on December 7, 2006.

Redeemable in 12 equal annual installments commencing from December 7, 2010.

460.00 Created paripassu charge over the mortgage of the Gujarat Property andCreated floating charge on the assets of our Company to the extent of 1.1 times of the outstanding amount


159

14. 9.25% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 307.50 crore allotted on February 9, 2007



15. 9.95% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 799.50 crore allotted on March 26, 2007

Redeemable in 12 equal annual installments commencing from March 26, 2011.


16. 10.10% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 1065.00 crore allotted on June 12, 2007

Redeemable in 12 equal annual installments commencing from June 12, 2011.



Redeemable at par in 12 equal annual installments commencing from March 7, 2012






160

19. 9.33% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 2400.00 crore allotted on December 15, 2008

Redeemable at par in 12 equal annual installments commencing from December 12, 2012


20. 9.20% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 1297.50 crore allotted on 12th March, 2009



21. 8.80% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 2332.50 crore allotted on 29th September, 2009

Redeemable at par in 12 equal annual installments commencing from September 29, 2013


22. 8.90% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 2047.50 crore allotted on 25th February, 2010

Redeemable at par in 12 equal annual installments commencing from February 25, 2014


23. 8.84% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 1035.00 crore allotted on 29th March, 2010




161

24. 8.64% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 2880.00 crore allotted on July 8, 2010

Redeemable at par in 12 equal annual installments commencing from July 8, 2014


25. 8.84% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 3487.50 crore allotted on October 21, 2010

Redeemable at par in 12 equal annual installments commencing from October 21, 2014


26. 9.64% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 1957.50 crore allotted on 31ST May,2011

Redeemable at par in 12 equal annual installments commencing from May 31,2015


27. 9.35% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 3090.00 crore allotted on 29th August 2011

Redeemable at par in 15 equal annual installments commencing from 29th August ,2016


28. 9.25% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 1995 crore allotted on 26th December 2011

Redeemable at par in 12 equal annual installments commencing from 26th December 2015



162

29. 9.25% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs. 855 crore allotted on 9th March 2012

Redeemable at par on 9th March 2027


30. 9.40% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs.1800 crore allotted on 29th March 2012

Redeemable at par on 29th March 2027


31. 9.30% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs.3997.50 crore allotted on 28th June 2012

Redeemable at par in 12 equal annual installments commencing from 28thJune 2016


32. 8.85% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs.2842.50 crore allotted on 19th Oct 2012

Redeemable at par in 12 equal annual installments commencing from 19thOctober 2016


33 8.80% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs.1990 crore allotted on 13th Mar, 2013

Redeemable at par on 13th Mar, 2023



163

34 7.93% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs.3126 crore allotted on 20th May, 2013

Redeemable at par in 12 equal annual installments commencing from 20thMay 2017


35 8.70% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs.3966 crore allotted on 15th July, 2013

Redeemable in three equal installments on July 15, 2018, July 15, 2023 and July 15, 2028

3966.00 Created by Paripassu charge over Gujarat Property and ceated Floating charge on the assets of the Company to the extent of 1.1 times of the outstanding amount.

36 9.65%(taxable) bonds of Rs.1999.20 crore allotted on 28th Feb, 2014

Redeemable in 12 equal installments commencing from Feb 28, 2018


37 9.30% (taxable) non-cumulative non-convertible secured redeemable bonds of Rs.4362 crore allotted on 4th September, 2014

Redeemable in 3 equal installments on September 4, 2019, September 4, 2024 and September 4, 2029



164

LIST OF TOP 10 DOMESTIC BOND HOLDERS (Based On Beneficiary Position as on 30-09-2014)

S.N. Name Of Bondholder Address Number of

bonds

1. Life Insurance Corporation Of India

Investment Department 6th Floor, West Wing, Central Office Yogakshema, Jeevan Bima Marg Mumbai-400021

57000

2. CBT EPF-05-B-Dm Standard Chartered Bank, CRESCENZO Securities Services, 3rd Floor C-38/39 G-Block, BKC Bandra (East) Mumbai India-400051

24768

3. Axis Bank Limited Treasury Ops Non Slr Desk Corp Off Axis House Level 4 South Blk Wadia International Centre P B Marg Worli Mumbai-400025

16115

4 Life Insurance Corporation Of India P & Gs Fund

Investment Department, 06th Floor,West Wing, Central Office, yogakshema, Jeevan Bima Marg,Mumbai-400021

13533

5. CBT EPF -11-B-Dm Standard Chartered Bank, CRESCENZO Securities Services, 3rd Floor C-38/39 G-Block, BKC Bandra (East) Mumbai India-400051

13528

6. CBT EPF -05-A-Dm Standard Chartered Bank, CRESCENZO Securities Services, 3rd Floor C-38/39 G-Block, BKC Bandra (East) Mumbai India-400051

13025

7. CBT EPF -05-D-Dm Standard Chartered Bank, CRESCENZO Securities Services, 3rd Floor C-38/39 G-Block, BKC Bandra (East) Mumbai India-400051

12746

8.

Hdfc Standard Life Insurance Company Limited

HDFC Bank Ltd, Custody Services, Lodha - I Think Techno Campus, Off Flr 8, Next To Kanjurmarg Stn, Kanjurmarg East Mumbai-400042

10864

9. CBT EPF -05-C-Dm Standard Chartered Bank, CRESCENZO Securities Services, 3rd Floor C-38/39 G-Block, BKC Bandra (East) Mumbai India-400051

9979

10. SBI LIFE INSURANCE CO.LTD

HDFC BANK LIMITED CUSTODY SERVICES, LODHA-I THINK TECHNO CAMPUS 8TH FLR, NEXT TO KANJURMARG RAILWAY STATION KANJURMARG E MUMBAI-400042

9905


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PRIVATE PLACEMENT OFFER LETTER DATED 23 PRIVATE PLACEMENT OFFER LETTER · PDF...

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