Bankers/Lenders

IndianAxis Bank Limited

Bank of Baroda

ICICI Bank Limited

IDBI Bank Limited

IFCI Limited

Indian Overseas Bank

Life Insurance Corporation of India

Oriental Bank of Commerce

Power Finance Corporation Ltd.

Punjab National Bank

State Bank of Hyderabad

State Bank of Indore

Yes Bank Limited

ForeignBayerische Hypo-und Vereinsbank AG - Germany

Calyon, France

Siemens Financial Services GmbH

Board of DirectorsManoj Gaur, Chairman

Sunil Kumar Sharma, Vice-Chairman

S. K. Jain

Gopi K. Arora

B. K. Taparia

B.B.Tandon

B. K. Batra, IDBI Nominee

B. K. Gupta, LIC Nominee

Dr. Ramesh C. Vaish

Dr. E.R.C. Shekar

Dr. D. G. Kakdade

G.P. Gaur

Dr. R. L. Gupta

S. D. Nailwal

Narendra Singh

S. S. Gupta

Rajiv Bhardwaj

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

Suresh Chandra, Whole-time Director

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

ContentsNotice 2

Directors’ Report 6

Report on Corporate Governance 8

Management Discussion & Analysis Report 13

Auditors’ Report 14

Balance Sheet 16

Profit & Loss Account 17

Schedules (A-N) 18

Balance Sheet Abstract-Part IV of Schedule VI 26

Cash Flow Statement 26

Statement Under Section 212 27

Auditors’ Report on Consolidated Accounts 27

Consolidated Accounts 28

Consolidated Cash Flow Statement 34

Annual Report of Subsidiary Company

Jaypee Powergrid Limited 35

Proxy & Attendance Slip

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

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

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

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

Company SecretaryR. S. Kuchhal

Joint President (Finance) & Company Secretary

Auditors M/s. R.Nagpal Associates, Chartered AccountantsNew Delhi – 110 057

NOTICENOTICE is hereby given that the 14th Annual General Meeting of the Members of JAIPRAKASH HYDRO-POWER LIMITED will be held on Tuesday, the 18th August, 2009 at 11.00 A.M. at the Registered Office of the Company at JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat – 173 215, Distt. Solan (H.P.) to transact the following business:

Ordinary Business

1. To receive, consider and adopt the Audited Balance Sheet as at 31st March, 2009, the Profit & Loss Account for the year ended on that date and the Reports of the Directors and Auditors thereon.

2. To confirm interim dividend and declare final dividend on Equity Shares for the Financial Year 2008-09.

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

4. To appoint a Director in place of Dr. R.C. Vaish who retires by rotation and, being eligible, offers himself for re-appointment.

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

6. To appoint a Director in place of Dr. R.L. Gupta who retires by rotation and, being eligible, offers himself for re-appointment.

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

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

Special Business

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

AS ORDINARY RESOLUTIONS :

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

10. “RESOLVED THAT in accordance with and subject to the provisions of Sections 16, 94 and all other applicable provisions if any, of the Companies Act 1956, the Authorised Share Capital of the Company be and is hereby increased from Rs. 500,00,00,000 ( Rupees Five Hundred Crore only) divided into 50,00,00,000 (Fifty Crore) Equity Shares of Rs. 10/- each to Rs. 3000,00,00,000 (Rupees Three Thousand Crore only) divided into 300,00,00,000 (Three Hundred Crore) Equity Share of Rs. 10/- each ranking pari-passu with the existing equity shares of the company”.

“RESOLVED FURTHER THAT the existing clause V of the Memorandum of Association of the company relating to share capital be and is hereby altered by deleting the same and substituting in place and stead thereof, the following new clause V :-

V. The Authorised Share Capital of the Company is Rs. 3000,00,00,000 (Rupees Three Thousand Crore only) divided into 300,00,00,000 (Three Hundred Crore) Equity Shares of Rs. 10/- each

11. “RESOLVED THAT, in supersession of Resolution passed at the 4th Annual General Meeting of the Company held on 24th September, 1999, the consent of the Company be and is hereby accorded in terms of section 293(1)(d) of the Companies Act, 1956 and other applicable provisions, if any, of the Companies Act, 1956 to the Board of Directors of the Company for borrowing from time to time, any sum or sums of monies, which together with the monies already borrowed by the Company (apart from temporary loans obtained or to be obtained from the Company’s Bankers in the ordinary course of business) shall not exceed in the aggregate at any one time Rupees 15000 crores (Rupees fifteen thousend crores) irrespective of the fact

that such aggregate amount of borrowing outstanding at any one time may exceed the aggregate for the time being of the paid-up capital of the Company and its free reserves, that is to say, reserves not set apart for any specific purpose.”

12. “RESOLVED THAT pursuant to the provisions of Sections 198, 269 and 309 read with Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956 and subject to such other approvals, as may be required, the consent of the Company be and is hereby accorded to the appointment of Shri R.K. Narang as Whole-time Director & CFO of the Company for a period of five years w.e.f. 28th June, 2009 on the remuneration and terms and conditions as stated in the explanatory statement annexed to this notice.”

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

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

AS SPECIAL RESOLUTIONS :

13. “RESOLVED THAT in accordance with and subject to the provisions of Section 81, and all other applicable provisions, if any, of the Companies Act, 1956 and/or Foreign Exchange Management Act, 1999 (including any statutory modification(s) or re-enactment thereof), and the applicable Rules, Regulations, Notifications and Circulars, if any, of the Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI) and other concerned and relevant authorities, and other applicable laws, if any, and relevant provisions of the Memorandum and Articles of Association of the Company and subject to such approval(s), consent(s), permission(s) and/or sanction(s) of the Government of India, RBI, SEBI and any other appropriate authority (ies), institution(s) or body(ies), as may be necessary and subject to such conditions as may be prescribed by any of them in granting any such approval, consent, permission or sanction, which the Board of Directors (hereafter referred to as the “Board”, which term shall be deemed to include any Committee thereof), be and is hereby authorized to accept, the Board be and is hereby authorized on behalf of the Company to issue, offer and allot in one or more tranches in the domestic or international markets, by way of Follow-on Public Offer (FPO) and/or on a private placement basis and/or by way of a Qualified Institutions Placement in terms of the Chapter XIII-A of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000, equity shares with voting rights or with differential rights (including non-voting) as to voting, dividend or otherwise in accordance with such rules and subject to such conditions as may be prescribed and/or equity shares in the form of Global Depository Receipts (GDRs) and/or American Depository Receipts (ADRs), and/or Foreign Currency Convertible Bonds (FCCBs), or any other security convertible into equity shares of the Company with voting rights or with differential rights (including non-voting) as to voting, dividend or otherwise in accordance with such rules and subject to such conditions as may be prescribed or any other instrument (hereinafter referred to as the “Securities”), to be subscribed to in foreign currency(ies) by international and/or Indian banks, Institutions, Institutional Investors, mutual funds, companies, other corporate bodies, resident/non-resident Indians, foreign nationals and other eligible Investors, as may be decided by the Board, (hereinafter referred to as “Investors”), whether or not such Investors are members of the Company, at such price as may

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be determined by the Board, upto an aggregate of Rs. 1500 crores (Rupees fifteen hundred crores) in Indian Rupees or equivalent in any foreign currency (inclusive of such premium as may be determined) and such issue and allotment to be made at such time or times, in such tranche or tranches, in such currency or currencies, in such manner and on such terms and conditions (including in relation to secured or unsecured Securities) as may be decided and deemed appropriate by the Board in its sole discretion at the time of issue of allotment.”

“RESOLVED FURTHER THAT in case of a Qualified Institutions Placement(s) pursuant to Chapter XIII-A of the SEBI Guidelines, the allotment of Securities shall only be to Qualified Institutional Buyers within the meaning of Chapter XIII-A of the SEBI Guidelines, such Securities shall be fully paid-up and the allotment of such Securities shall be completed within 12 months from the date of this Resolution.”

“RESOLVED FURTHER THAT the Company and/or any agency or body authorized by the Company, may issue receipts/certificates representing the underlying Securities issued by the Company with such features and attributes as are prevalent in international capital markets for instruments of this nature and provide for the tradability or free transferability thereof as per the international practices and regulations, and under the forms and practices prevalent in the International Markets.”

“RESOLVED FURTHER THAT the Board be and is hereby authorized to issue and allot, from time to time, such number of equity shares at such premium as may be decided by the Board in its absolute discretion, as may be required to be issued and allotted upon conversion of such Securities or as may be necessary in accordance with the terms of the offering, including additional equity shares, all such shares ranking pari- passu with the existing equity shares of the Company in all respects.”

“RESOLVED FURTHER THAT for the purpose of giving effect to any issue or allotment of equity shares or Securities or instruments or Securities representing the same, the Board be and is hereby authorized on behalf of the Company to do all such acts, deeds, matters and things as it may at its discretion, deem necessary or desirable for such purpose, including, without limitation, determining the form and manner of the issue, the class of investors to whom the securities are to be allotted, number of Securities to be allotted in each tranche, issue price, face value, premium amount on issue/conversion of securities/exercise of warrants/redemption of Securities, rate of interest, redemption period, appointment of Managers, Merchant Bankers, Underwriters, Guarantors, Financial and/or Legal Advisors, Depositories, Custodians, Registrars, Trustee, Bankers and all other agencies, entering into or execution of all such agreements/ arrangements /MoUs/documents with any such agencies, listing of the Securities and the equity shares to be issued on conversion of the said Securities on any Indian and/or Foreign Stock Exchange(s), as it may in its absolute discretion deem fit.”

“RESOLVED FURTHER THAT the Board be and is hereby authorized to settle all questions, difficulties or doubts that may arise in regard to the issue, offer or allotment of Securities and utilization of the issue proceeds as it may in its absolute discretion deem fit without being required to seek any further consent or approval of the members or otherwise, with the intent that the members shall be deemed to have given their approval thereto expressly by the authority of this Resolution.”

“RESOLVED FURTHER THAT the Board be and is hereby authorized to delegate all or any of the powers herein conferred to any Committee of Directors or Whole-time Directors or any Director or Directors or any other Officer or Officers of the Company to give effect to the aforesaid Resolution.”

14. “RESOLVED THAT pursuant to the provisions of Section 21

of the Companies Act, 1956 and other applicable provisions of the Companies Act, 1956 if any, and subject to the availability of name and approval of the Registrar of Companies, the name of the company be changed from “JAIPRAKASH HYDRO-POWER LIMITED” to “JAIPRAKASH POWER VENTURES LIMITED”.

“RESOLVED FURTHER THAT upon the said change in the name of the Company becoming complete and effective, the new name be substituted for the existing name wherever it appears in the Memorandum and Articles of Association of the Company, books, records, documents, registers, letter heads, and signboards of the Company”.

“RESOLVED FURTHER THAT the Board of Directors be and is hereby authorized to do all such acts and deeds as may be deemed expedient and necessary to give effect to this resolution.”

By Order of the Board

For JAIPRAKASH HYDRO-POWER LIMITED

R.S.KUCHHALPlace : New Delhi Joint President (Finance) & Date : 3rd July, 2009 Company Secretary

Notes :

(i) Relevant explanatory statement pursuant to Section 173(2) of the Companies Act, 1956, in respect of resolutions set out under item nos. 9 to 14 is appended below.

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

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

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

(v) The Register of Members and Share Transfer Books will remain closed from 12th August, 2009 to 18th August, 2009 (both days inclusive) for payment of final dividend. The dividend on Equity Shares, as recommended by the Board of Directors, if declared at the Annual General Meeting, will be payable to the Members, or their mandatee, subject to the provisions of Section 206A of the Companies Act, 1956, whose names appear on the Register of Members of the company as at the close of business hours on 11th August, 2009. In respect of dematerialized shares, the dividend will be payable to the ‘Beneficial Owners’ of the shares whose names appear in the Statement of Beneficial Ownership, as at the close of business hours on 11th August, 2009, furnished by the National Securities Depository Limited and Central Depository Services (India) Limited.

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

(vii) Members who are still holding shares in physical form are

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advised to dematerialize their shareholding to avail of the benefits of dematerialization which include easy liquidity since trading is permitted only in dematerialized form, electronic transfer, savings in stamp duty, prevention of forgery, etc.

(viii) Any query relating to Accounts or any other items of business set out in the Agenda of the Meeting must be sent to the Company’s Registered Office at JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat – 173 215, Distt. Solan (H.P.) or Corporate Office at Sector-128, Noida- 201 304 at least seven days before the date of the Meeting.

(ix) Members or their respective proxies are requested to :

(a) bring copies of Annual Report sent to the Members as copies of Annual Report shall not be distributed at the Annual General Meeting;

(b) quote their Folio/Client ID & DP ID No. in all correspondence.

(c) note that no gifts/coupons shall be distributed at the Annual General Meeting; and

(x) (a) Relevant details, in terms of Clause 49 of the Listing Agreement, in respect of a Director proposed to be appointed by Resolution no. 9 are provided in the Explanatory Statement attached to the Notice and those of the Directors retiring by rotation and proposed to be re-appointed are given hereunder.

(b) The shareholding of all the Directors in the Company have been disclosed in the Report on Corporate Governance.

Shri Sunil Kumar Sharma

Shri Sunil Kumar Sharma, aged 50 years, is a Science Graduate and possesses 28 years of experience in planning, procurement, execution and management of Projects. He had been responsible for completion of several engineering construction projects including Hotel Siddharth, Hotel Vasant Continental, one million ton per annum capacity cement plant at Rewa and raising the Lakhya Dam in the State of Karnataka. He had been the Director-in-Charge for the underground power house work at Jhakri, Rockfill Dam and Chute & Shaft Spillway works of Tehri Hydel Project besides works at the Chamera-II Hydel Project.

Shri Sunil Kumar Sharma is Executive Vice Chairman of Jaiprakash Associates Limited and Director on the Boards of Jaiprakash Power Ventures Limited, Jaypee Karcham Hydro Corporation Limited, Madhya Pradesh Jaypee Minerals Limited, Jaypee Powergrid Limited, Jaypee Infratech Limited, Himalyan Expressway Limited, Jaypee Ganga Infrastrcuture Corporation Limited, Jaypee Arunachal Power Limited, Jaypee Spa Infocom Limited, Jaypee Hotels & Resorts Limited, Jaypee Ventures Pvt. Limited, JPSK Sports Pvt. Limited, Jaypee Petroleum Pvt.Ltd., Jaypee Hydro-Carbons Pvt. Limited, Suneha Estates Pvt.Limited and Indesign Enterprises Pvt.Ltd.

Dr. R.C. Vaish

Dr. R.C. Vaish, aged 68 years, holds degree in M.A., M. Com., LLB, Ph.D. and Chartered Accountancy. He is a Chartered Accountant with over 44 years’ Post Qualification Experience. Dr. Vaish is an eminent Tax Consultant and specializes in the areas of Corporate Planning, International Taxation and Finance, and Off-Shore Investments. He is a Director on the Boards of Express News Papers Limited, Omax Autos Limited, OCL India Limited, Ansal Properties & Infrastructure Limited and Bharat Consultants Private Limited.

He is also Member of Audit Committee of Omax Autos Limited and Ansal Properties & Infrastructure Limited and Chairman of Remuneration Committee and Omax Autos Limited.

Shri B.K. Taparia

Shri B.K. Taparia, 69, holds degree in M.Com. and is a Certified Associate Member of Indian Institute of Bankers, Mumbai.

Shri Taparia has been a Banker and Ex-Chairman & Managing Director of Industrial Reconstruction Bank of India (presently known

as Industrial Investment Bank of India Ltd.). He is Director on the Boards of Jaiprakash Associates Limited and Jaiprakash Power Ventures Limited. He is also Chairman of Audit Committee and Member of Remuneration Committee of the Company.

Dr. R.L. Gupta

Dr. R.L. Gupta, aged 67 years, holds degree in Civil Engineering from University of Roorkee (now Indian Institute of Technology, Roorkee) and possesses around 46 years of experience in the fields of designing, planning and construction of large hydraulic structures, like Dams, Barrages, Intake works, Canals, Head Regulators, Head Race Tunnels and Under Ground Power Houses.

Dr. R.L. Gupta is a Director on the Board of Jaiprakash Power Ventures Limited and a Whole-time Director of Jaypee Ventures Private Limited.

Shri R.K. Narang

Shri R.K. Narang, aged 60 years, holds a degree in Mechanical Engineering and Diploma in Management Shri Narang has over 35 years’ experience – 10 years in the Manufacturing and 25 years in Finance including Project Appraisal and Financing at Senior Management Level in IFCI.

EXPLANATORY STATEMENT

Following explanatory statements, pursuant to Section 173(2) of the Companies Act,1956 set out the material facts relating to item nos. 9 to 14 mentioned in the accompanying notice dated 3rd July, 2009.

Item No. 9

Shri S.S. Gupta was appointed as additional Director w.e.f. 26th July, 2008 and by virtue of Section 260 of the Companies Act, 1956 and Article 82 of the Articles of Association of the Company, he holds office upto the date of ensuing Annual General Meeting of the Company. The Company has received a notice in writing alongwith a deposit of Rs. 500/- from a member of the Company in terms of Section 257 of the Companies Act, 1956, signifying his intention to propose the candidature of Shri S.S. Gupta for the office of Director at the ensuing Annual General Meeting.

Shri S.S. Gupta, aged about 65 years, is First Class Graduate in Electrical Engineering and MBA (Finance) and has vast experience in the Power Sector. The Board considers that his appointment would be in the best interest of the Company.

None of the Directors of the Company, except Shri S. S. Gupta himself, is concerned or interested in the Resolution.

The Board commends the Resolution for approval of the Members.

Item No. 10The Authorised Share Capital of the Company at present is Rs. 500 crore and Issued, subscribed & paid-up capital is Rs. 491.00 crore.

In view of the proposed amalgamation of Jaiprakash Power Ventures Limited (JPVL) with the Company, the number of shares to be issued, pursuant to the proposed Merger, as well as for raising of Funds, are expected to be substantially in excess of the Company’s current authorized share capital. In order to ensure that the Company’s authorized capital is adequate to meet issue of new equity shares pursuant to the proposed merger and for raising of Funds, it is proposed to increase the Authorised Share Capital to Rs. 3000 crore in accordance with Section 16 and 94 of the Companies Act 1956.

The Board of Directors of the Company at its meeting held on 3rd July, 2009, had approved increase in the Authorised Share Capital of the Company to Rs. 3000 crore, subject to approval of the Members at the ensuing Annual General Meeting.

Increase in Authorised Share Capital would necessitate amendment to Clause-V of the Memorandum of Association of the Company and would require Members’ approval by passing an ordinary Resolution.

None of the Directors is, in any way, concerned or interested in this

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resolution.

The Board commends the Resolution for approval of the Members.

Item No. 11

Section 293(1)(d) of the Companies Act, 1956, requires the consent of the Members in the General Meeting for authorising the Board of Directors to borrow monies (apart from temporary loans obtained from the company’s Bankers in the ordinary course of business) in excess of the aggregate of the paid-up capital and free reserves.

The Members of the company had at the 4th AGM held on 24th September, 1999 approved, inter alia, borrowings in terms of Section 293(1)(d) of the Companies Act, 1956, upto Rs. 1500 crore.

In view of the proposed Amalgamation of Jaiprakash Power Ventures Limited (JPVL) with the company and likely requirement of the funds for implementation of the on-going projects currently being executed by JPVL, the Board of Directors of the Company at its meeting held on 3rd July, 2009, approved enhancement of borrowing powers of the Company to Rs. 15000 crore, subject to approval of the Members at the ensuing Annual General Meeting.

The consent of the members is sought under provisions of Section 293(1)(d) of the Companies Act, 1956, to enable the Directors to borrow upto the aforesaid amount.

None of the Directors is, in any way, concerned or interested in this resolution.

The Board commends this enabling resolution for approval of the members.

Item No.12

The Board at its meeting held on 16th January, 2009 had re-appointed Shri R.K. Narang as Whole-time Director & CFO w.e.f. 28th June, 2009.

The Board considers that the re-appointment of Shri R.K. Narang as Whole-time Director & CFO of the Company for a period of five years w.e.f. 28th June, 2009 on the existing remuneration (revised w.e.f 1st October, 2008) as under, is in the best interest of the Company.

Basic Salary : Rs.1,80,000/- (Rupees One Lac Eighty Thousand & Pay-Scale only) per month in the pay scale of Rs.1,50,000-

15,000-2,25,000-22,500-3,37,500.

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

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

None of the Directors of the Company, except Shri R. K. Narang himself, is concerned or interested in the Resolution.

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

The Board commends the Resolution for approval of the Members.

Item No. 13

The Board of Directors at its meeting held on 3rd July, 2009, based on the recommendations of the Committee of Directors of the Company had approved the Scheme of Amalgamation of Jaiprakash Power Ventures Limited (JPVL) with the Company, subject to approval of the

Members of the Company & JPVL and the Hon’ble High Court, and the Regulatory Authorities. The aforesaid scheme of Amalgamation has also been approved by the Board of Directors of JPVL at its meeting held on 3rd July, 2009.JPVL is executing various Hydro/Thermal Power Projects having a combined potential of over 10,000 MW either directly or through its subsidiaries. For the purpose, the requisite funds would be required for the implementation of various on-going projects, consequent upon the proposed Amalgamation. It is, therefore, proposed to take necessary steps well in time for the raising of funds.The Board of Directors at its meeting held on 3rd July, 2009 had approved raising of funds by way of QIP and/or FCCBs and/or ADRs and/or GDRs and/or Follow-on Public Offer (FPO) upto an aggregate of Rs. 1500 crores in Indian Rupees or equivalent in any foreign currency, as per the guidelines of Government of India / Reserve Bank of India, subject to approval of the Members at the ensuing General Meeting.The said resolution is an enabling resolution conferring authority on the Board to do all acts and deeds, which may be required to issue/offer Securities of appropriate nature at opportune time, including the size, structure, price and timing of the issue(s) /offer (s) at the appropriate time(s). The detailed terms and conditions for the international offering will be determined in consultation with the Lead Mangers, Merchant Bankers, Guarantors, Consultants, Advisors, Underwriters and/or such other intermediaries as may be appointed for the issue/offer. Wherever necessary and applicable, the pricing of the issue/offer will be finalized in accordance with applicable guidelines in force of Government of India, Reserve Bank of India and other appropriate authorities.Section 81 of the Companies Act, 1956, inter-alia, provides that whenever it is proposed to increase the subscribed capital of the Company by further issue/offer and allotment of shares, such shares shall be offered to the existing Shareholders of the Company in the manner laid down in Section 81 unless the shareholders decide otherwise by a Special Resolution. Accordingly, the consent of the shareholders is being sought pursuant to the provisions of the Section 81(1A) and all other applicable provisions of the Companies Act, 1956 and in terms of the provisions of the listing agreements executed by the Company with the Stock Exchanges, authorizing the Board to issue Securities, as stated in the resolution, which would result in issuance of further Securities of the Company to persons other than the existing members of the Company in accordance with the terms and nature of the Securities.None of the directors of the Company is, in any way, concerned or interested in the said resolution, except in their capacity as shareholders of the Company.The Board commends the resolution for approval of the members as a Special Resolution.Item No. 14The Board of Directors at its meeting held on 3rd July, 2009 had approved the amalgamation of Jaiprakash Power Ventures Limited (JPVL) (the Transferor Company) with Jaiprakash Hydro-Power Limited (JHPL) (the Transferee Company) with effect from 1st April, 2009, being the Appointed Date, subject to approval of members of both the Companies and sanction of the Scheme by Hon’ble High Court. JPVL at present operates a 400 MW Hydro-electric Project in Uttarakhand and is also implementing various Hydro / Thermal Power Projects. Upon coming into effect of the Scheme of Amalgamation, the name of the Company is proposed to be changed as Jaiprakash Power Ventures Limited, subject to the availability of the name for registration under Section 21 of the Companies Act, 1956.None of the Directors of the Company is interested or concerned in the resolution.The Board commends the resolution for approval of the Members as a Special Resolution.

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DIRECTORS’ REPORT

To,

The Members

The Directors of your Company are pleased to present the 14th Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2009.

WORKING RESULTS

The working results for the year under report are as under :- (Rs. in Crores) 2008-09 2007-08Gross Revenue 294.03 307.63Less: Rebate for prompt payments 5.15 6.81 288.88 300.82Add: Sale of VERs 7.79 -other income 21.24 41.68Total Income 317.91 342.50Profit before Depreciation & Tax 212.54 218.09Less : Depreciation 46.97 45.88Profit before Tax & extra ordinary items 165.57 172.21Extra-Ordinary items Add : Refund of interest from PFC for earlier years 23.28 –Insurance claim relating to earlier years – 68.40Less : Adjustment of Tariff for FY 04 to FY08 (27.66) – 161.19 240.61Less: Provision for tax 18.33 27.21Profit after Tax 142.86 213.40Add : Surplus brought forward 480.77 364.24Less : Reversal of Foreign Exchange Fluctuation for FY 2007-08 (12.01) 468.76 – 364.24Profit available for Appropriation 611.62 577.64Interim Dividend 36.83 36.83Proposed Final Dividend 36.82 36.82Tax on Dividends 12.52 12.52General Reserve 7.15 93.32 10.70 96.87Balance carried to Balance Sheet 518.30 480.77Basic and Diluted Earning Per Share (EPS) (in Rs.) 2.91 4.35

OPERATIONS

The Plant has been operating very satisfactorily and the Generation and Plant Availability have exceeded, the normative availability and design energy. The Plant Availability and energy generated during the year under report were as under :

Plant Availability Generation (million units)

Actual Energy 12% Free Energy Saleable Energy delivered delivered to Government of Himachal Pradesh

99.65% 1285.75 154.29 *1131.46(against normative (against design availability of 90%) Saleable energy of 1050.06)

* Inclusive of Saleable Secondary Energy 81.40 MUs

DIVIDEND Your directors had declared and paid, in November, 2008 an interim dividend of 7.5% for the Financial Year ended 31st March, 2009 absorbing an amount of Rs. 36.83 crore (excluding Dividend Distribution Tax of Rs. 6.26 crore). In view of the satisfactory working results, the Board has decided to recommend to the Members a final dividend of 7.5% for the Financial Year ended 31st March, 2009. The final dividend will absorb an amount of Rs. 36.82 crore (excluding Dividend Distribution Tax of Rs. 6.26 crore). The total dividend outflow for the year 31st March, 2009 aggregating Rs. 73.65 crore (excluding Dividend Distribution Tax of Rs. 12.52 crore ) represents 15% of the Company’s Paid-up Equity Share Capital.NATIONAL AWARDThe Directors are pleased to inform you that Baspa-II Hydro Power Station has been conferred with the “GOLD SHIELD FOR BEST PERFORMANCE UNDER HYDRO POWER STATION PERFORMANCE AWARD FOR THE YEAR 2007-08” in recognition of its meritorious performance. The award has been instituted by Ministry of Power, Government of India. The award was presented by the Hon’ble President of India at a function organized at Vigyan Bhawan, New Delhi on 17th February, 2009. VERIFIED EMISSION REDUCTIONSThe Directors of your Company are pleased to inform that the Plant had been validated under the Voluntary Carbon Standards 2007 w.e.f. 1st January, 2007. The Verified Emission Reductions (VERs) for the period from 1st January, 2007 to 30th September, 2008 were calculated at 19,19,161 VERs. During the year the Company sold 3,15,000 VERs in the International Market for Rs.7.79 crores.TARIFFThe Hon’ble HPERC has approved the Tariff for the Period FY 2008-09 to 2010-11 vide its Multi Year Tariff (MYT) Order dated 30th March, 2009. The tariff for the year under report, as per the Multi Year Tariff Order dated 30th March, 2009 and in accordance with the Power Purchase Agreement (PPA), works out to Rs. 2.60 per unit for FY 2008-09. The bills are being paid by HPSEB as per the provisions of MYT Order dated 30th March, 2009.SUBSIDIARY COMPANYThe Balance-sheet of Jaypee Power Grid Limited, a subsidiary of the Company, as at 31st March, 2009, its Profit & Loss Account for the year ended on that day and the Reports of the Directors and Auditors thereon and a statement in terms of Section 212 of the Companies Act, 1956 are attached to the Annual Accounts and form part of the Annual Report.CONSOLIDATED FINANCIAL STATEMENTSThe consolidated financial statements of the Company and ‘Jaypee Powergrid Limited’, its subsidiary, prepared in accordance with Accounting Standard AS-21 ‘Consolidated Financial Statements’ prescribed by the Institute of Chartered Accountants of India are annexed to the Annual Accounts and form part of the Annual Report.FUTURE OUTLOOKThe Directors are pleased to report that the generation of energy during the year under report was satisfactory. The Plant availability was 99.65%. The entire energy generated was purchased by HPSEB. HPSEB is making the payment regularly of the energy bills as per Tariff Order passed by Hon’ble HPERC. The availability of water in River Baspa is satisfactory. The Company is hopeful that, barring unforeseen events, the Plant would generate full design energy during the current year.Jaypee Powergrid Limited formed in Joint Venture with Power Grid Corporation of India Limited is developing a transmission system to evacuate power of 1000 MW Karcham Hydro Electric Project and the same is progressing as per schedule. The Company alongwith its affiliate (Jaiprakash Power Ventures Limited) shall be investing upto 74% in the equity share capital of Jaypee Powergrid Limited and the balance 26% shall be subscribed by Power Grid Corporation of India Limited. With the Power Station expected to generate full design energy and sale of VERs coupled with the transmission system being set up

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through the Joint Venture Company, as aforesaid, the future outlook of the Company is bright.COMMITTEE OF DIRECTORSThe Directors had constituted a committe of Directors comprising of Shri Gopi K. Arora, Shri B.K. Gupta (LIC Nominee) and Shri R.K. Narang to look into various options of restructuring the company including amalgamation of companies having synergy with the business of the company.SHARE CAPITALDuring the year under report, there was no change in the Paid-up equity Share Capital of the Company. AUDIT COMMITTEEThe Audit Committee comprising of four Directors, namely Shri B.K. Taparia (Chairman), Shri B. K. Gupta (LIC Nominee), Shri B.K. Batra (IDBI Nominee) and Shri S.D. Nailwal, all Non – Executive Independent Directors, fully meets the requirement of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement with Stock Exchanges.DIRECTORATEDuring the year under report, Shri Jaiprakash Gaur, Founder Chairman resigned as Director w.e.f. 8th January, 2009. The Board places on record its deep appreciation for his vision for setting up the first Hydro-Power Station of this magnitude in the country and immense contribution made by him during his tenure on the Board. Shri S.S. Gupta was appointed as additional Director of the Company w.e.f. 26th July, 2008 and Dr. E.R.C. Shekar was appointed as a Director w.e.f. 16th January, 2009 in the casual vacancy caused due to the resignation of Shri Jaiprakash Gaur. Shri R.K. Narang, was re-appointed as Whole-time Director & CFO for a period of five years, w.e.f. 28th June, 2009.Shri Sunil Kumar Sharma, Shri B.K. Taparia, Dr. R.C. Vaish, Shri R.L. Gupta and Shri R.K. Narang shall retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offer themselves for re-appointment.CORPORATE GOVERNANCEReport on Corporate Governance and Management Discussion & Analysis Report, in terms of Clause 49 of the Listing Agreement together with a Certificate from the Auditors confirming compliance with the conditions of Corporate Governance are annexed and form part of the Annual Report.DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors, based on the representation received from the operating management, certification by the CEO and CFO to the Board of Directors and after due enquiry, confirm in respect of the audited Annual Accounts for the year ended March 31, 2009:i) that in the preparation of the annual accounts, the applicable

accounting standards had been followed and that there were no material departures;

ii) that the Directors had, in consultation with the Statutory Auditors, selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the year ended March 31, 2009 and the profit of the Company for that period;

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

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

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

PARTICULARS OF EMPLOYEES

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

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

Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings & outgo, as per Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 for the year ended 31st March, 2009, are annexed and form an integral part of this report.

NOTES TO THE ACCOUNTS

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

AUDITORS

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

EMPLOYEES RELATIONS

The employee relations continued to be cordial throughout the year. The Board places on record its sincere appreciation for the co-operation & support from the entire team of the Company.

ACKNOWLEDGEMENTS

The Board of Directors places on record its sincere appreciation for and gratitude to the various Departments of Government of India and Government of Himachal Pradesh, Himachal Pradesh State Electricity Board, Himachal Pradesh Electricity Regulatory Commission, Reserve Bank of India, Financial Institutions and Banks, for their continued co-operation and support to the Company.

The Board wish to place on record its appreciation of the unstinting support of the Shareholders of the Company. On behalf of the BoardPlace: New Delhi MANOJ GAUR Date: 7th May, 2009 CHAIRMAN

ANNEXURE TO THE DIRECTORS’ REPORT

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

aggregating Rs. 2,400,000/- or more per annum.(i) Shri J. N. Gaur, Whole-time Director & CEO, Rs.32,71,450/-,

B.E. (Electrical), 76 years, 44 years, 1st October, 1995, Advisor Jaiprakash Associates Limited.

(ii) Shri R. K. Narang, Whole-time Director & CFO, Rs.33,78,316/-, B.E. (Mechanical), 60 years, 38 years, 16th May, 2000, IFCI Limited.

(iii) Shri Suresh Chandra, Whole-time Director, Rs.28,72,119/-, B.E. (Electrical), 65 years, 44 years, 11th January, 2008, Jaypee Ventures Private Limited.

B. Employed for part of the year and in receipt of remuneration aggregating Rs. 200,000/- or more per month : NIL

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

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

2. The Whole-time Directors hold their respective offices for a period of five years from the date of their appointment/re-appointment.

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

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

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

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

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

Himalayan rivers carry lot of silt (with large quartz content) during monsoons causing erosion on turbine runners and other underwater parts. To minimize this erosion due to silt, two more modern technology spare runners with Tungsten Carbide coating employing HVOF thermal spray have been procured. The performance of the same is satisfactory. Further the existing runners have been/are being coated with Tungsten Carbide coating employing HVOF thermal spray from time to time.

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

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

Schedule “N” – Accounting Policies and Notes to the Accounts - under Note No.9 (d) & (e).

REPORT ON CORPORATE GOVERNANCECOROPRATE GOVERNANCE

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

1. COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE The Company’s philosophy on corporate governance aims at attaining the highest level of transparency, accountability towards its

stakeholders, including shareholders, employees, the Government and lenders and to maximize returns to shareholders through creation of wealth on sustainable basis.

2. BOARD OF DIRECTORS The Board of Directors comprised 20 Directors as on 31st March, 2009. As per Clause 49 of Listing Agreement, in case of Non-Executive

Chairman related to the promoter, at least one-half of the Board should comprise of independent Directors. The Board of Directors of the Company headed by Non-Executive Chairman, related to the promoter, has 10 Independent Directors.

Details regarding the category of Directors, attendance of Directors at the Board Meetings and the last Annual General Meeting, number of other Directorships and Committee positions held by them in other Companies as on 31st March, 2009, are given below :-

Name & Designation of the Directors Category Position Last Annual No. of Board No. of other Committee General Meetings Attended Directorships Positions held Meeting against 4 Chairman Member Attended Meetings held during the year

Shri Manoj Gaur, Chairman Non-Executive Promoter No 4 15 - -Shri Sunil Kumar Sharma, Vice-Chairman Non-Executive Promoter Yes 4 14 - -Shri S.K. Jain Non-Executive Promoter No 3 2 1 -Shri Gopi K. Arora Non-Executive Independent No 3 13 1 9Shri B.K. Taparia Non-Executive Independent Yes 4 4 2 1Shri B.K. Batra, (IDBI Nominee) Non-Executive Independent No 3 1 - 1Shri B.K. Gupta, (LIC Nominee ) Non-Executive Independent No 4 -Dr. R.C. Vaish Non-Executive Independent No 1 4 1 2Dr. D.G. Kadkade Non-Executive Promoter No 3 1Shri G.P. Gaur Non-Executive Promoter No 3Dr. R.L. Gupta Non-Executive Independent No 3 1 - -Shri S.D. Nailwal Non-Executive Independent Yes 4 1 - 1Shri Narendra Singh Non-Executive Non-Independent No 3 - - -Shri J.N. Gaur Whole-time Director and Chief Executive Officer Executive - No 3 - -Shri R.K. Narang Whole-time Director and Chief Financial Officer Executive - Yes 4 - - -Shri Rajiv Bhardwaj Non-Executive Independent Yes 4 1 - -Shri B.B. Tandon Non-Executive Independent No 4 13 1 7Shri Suresh Chandra Whole-time Director Executive - No 3 1 - -

Shri S.S. Gupta * Non-Executive Independent NA 2 - - -

Dr. E.R.C. Shekar * Non-Executive Non-Independent NA 1

Notes: (i) Shri Jaiprakash Gaur, Founder Chairman, resigned as Director w.e.f. 8th January, 2009. He attended 3 Board Meetings.

(ii) * Shri S.S.Gupta was appointed as an Additional Director w.e.f. 26th July, 2008 and Dr. E.R.C.Shekar was appointed as a Director w.e.f. 16th January, 2009.

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(iii) Other Directorships of only Indian Public Limited Companies have been considered pursuant to Clause 49 of Listing Agreement.

(iv) Committee positions of only two Committees namely Audit Committee and Investors’/Shareholders’ Grievance Committee have been considered pursuant to Clause 49 of Listing Agreement.

(v) None of the Directors of the Company is related to any other Director.

(vi) Number of Equity Shares held by Directors as on 31st March, 2009 are as under :-

Name Designation No. of Equity Shares held

Shri Manoj Gaur Chairman 41400

Shri Sunil Kumar Sharma Vice-Chairman -

Shri S.K. Jain * Director 25925

Shri Gopi K. Arora Director -

Shri B.K. Taparia Director 5000

Shri B. K. Batra Director (IDBI Nominee) -

Shri B. K. Gupta Director (LIC Nominee) -

Dr. R. C. Vaish Director -

Shri G.P. Gaur Director 20000

Dr. D.G. Kadkade Director 117100

Dr. E. R. C. Shekar Director -

Dr. R.L. Gupta Director 10000

Shri S.D. Nailwal * Director 2200

Shri Narendra Singh Director 28000

Shri B. B. Tandon Director -

Shri S. S. Gupta Director -

Shri Rajiv Bhardwaj Director -

Shri J.N. Gaur Whole-time Director & CEO 10000

Shri R.K. Narang Whole-time Director & CFO 2000

Shri Suresh Chandra Whole-time Director 2000

*Shri S. K. Jain and Shri S.D. Nailwal also hold 100 equity shares each jointly with Jaiprakash Associates Limited (JAL). The beneficial interest of the said shares is with JAL.

Number of Board Meetings held and dates thereof :

During the financial year 2008-09, four meetings of the Board of Directors were held on 25th April, 2008, 26th July, 2008, 23rd October, 2008 and 16th January, 2009. The maximum time gap between two meetings was not more than four calendar months.

Information placed before the Board

Information placed before the Board of Directors broadly covered the items specified in Clause 49 of the Listing Agreement and such other items which are necessary to facilitate meaningful and focused deliberations on issues concerning the Company and taking decisions in an informed and efficient manner. Besides, the Directors on the Board have complete access to all information of the Company, as and when becomes necessary.

3. CODE OF CONDUCT

The Board of Directors has laid down a Code of Conduct for all Board members and senior management personnel of the Company. The Code of Conduct has also been posted on the website of the Company.

All Board members and senior management personnel have, on March 31, 2009, affirmed compliance with the Code of Conduct. A declaration to this effect, duly signed by the CEO is annexed and forms part of this report.

4. AUDIT COMMITTEE

As a measure of good Corporate Governance and to provide assistance to the Board of Directors in fulfilling the Board’s oversight responsibilities, an Audit Committee has been constituted by the Board comprising of four Directors, all being independent. All the members of the Audit Committee have knowledge of Financial and Accounting matters.

The constitution of the Audit Committee also meets the requirements under Section 292A of the Companies Act, 1956 (The Act). The terms of reference and powers of the Audit Committee are in keeping with those contained under Clause 49 of the Listing Agreement and the Act.

Four meetings of the Committee were held during the year i.e. on 25th April 2008, 26th July 2008, 23rd October 2008 and 16th January 2009.

The Audit Committee, inter-alia, reviews :

• Quarterly and Annual Financial Statements

• Annual Budget and Variance Reports

• Significant related party transactions

• Internal Audit Reports

• Recommendations for appointment of Statutory Auditors

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

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

Name & Position Number of Number of Meetings held Meetings attended during the year

Shri B.K. Taparia , Chairman 4 4

Shri B.K. Batra, Member (IDBI – Nominee) 4 2

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

Shri S.D. Nailwal, Member 4 4

5. REMUNERATION COMMITTEE

The Remuneration Committee, constitution of which is a non-mandatory requirement, was constituted by the Board to recommend/review the Remuneration package of the Whole-time Directors. The Remuneration Committee comprises three independent Directors.

Two meetings of the Committee were held on 23rd October, 2008 and 16th January, 2009.

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

Name & Position Number of Number of Meetings held Meetings attended during the year

Shri Gopi K Arora, Chairman 2 1

Shri B.K. Taparia, Member 2 2

Shri B.K. Batra, Member(IDBI Nominee) 2 1

The remuneration package of the Whole-time Directors was reviewed by the Remuneration Committee and the remuneration package of Shri R.K. Narang on his re-appointment was approved by the Remuneration Committee.

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Notes :

1. Remuneration is paid to Whole-time Directors in the form of Salary and Perquisites.

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

a) Executive Directors/Whole-time Directors

Details of remuneration paid to Whole-time Directors for the year ended 31st March, 2009 are as under:

(In Rupees)

Name Designation Salary Other Total Benefits Shri J.N. Gaur Whole-time 17,55,000 15,16,450 32,71,450 Director & CEO

Shri R.K. Narang Whole-time 17,55,000 16,23,316 33,78,316 Director & CFO

Shri Suresh Whole-time Director 15,00,000 13,72,119 28,72,119 Chandra

b) Non-Executive Directors

During the year under report, the Company has not paid any remuneration to Non-Executive Directors except the Sitting Fee @ Rs.20,000/- per meeting for attending the meetings of the Board of Directors and its Committees.

Details of the sitting fee paid to the Non-Executive Directors during the year ended 31st March, 2009 are as under :-

Name of the Director Designation Total sitting fee paid (Rs.)

Shri Manoj Gaur Chairman 80,000Shri Sunil Kumar Sharma Vice-Chairman 80,000Shri S.K. Jain Director 60,000Shri Gopi K Arora Director 80,000Shri B.K. Taparia Director 2,00,000Shri B.K. Batra * Director

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

(LIC Nominee) 1,60,000Dr. R.C. Vaish Director 20,000Dr. D.G. Kadkade Director 1,80,000Shri G.P. Gaur Director 60,000Dr. R.L. Gupta Director 1,80,000Shri S.D. Nailwal Director 2,80,000Shri Narendra Singh Director 60,000Shri Rajiv Bhardwaj Director 80,000Shri B.B. Tandon Director 80,000Shri S.S. Gupta Director 40,000Dr. E.R.C. Shekar Director 20,000

* The Sitting Fee for IDBI nominee was paid directly to IDBI.

6. SHAREHOLDERS’/INVESTORS’ GRIEVANCE COMMITTEE

The Shareholders’/Investors’ Grievance Committee comprised Dr. R.L. Gupta as Chairman, Dr. D.G. Kadkade, Shri J.N. Gaur and Shri S.D.Nailwal as Members. The Committee has been constituted, inter-alia, to consider transfer and transmission of shares, rematerialisation of shares, transposition of names, consolidation of shares, issue of duplicate share certificates etc. and to look into redressal of shareholders’ complaints. During the year, 6 meetings of the Committee were held, as per attendance of the members of the

meetings given below.

Name & Position Number of Number of Meetings held Meetings attended during the year

Dr. R.L. Gupta, Chairman 6 6Dr. D.G. Kadkade, Member 6 6Shri J.N. Gaur, Member 6 4Shri S.D. Nailwal, Member 6 6

No Investors’ reference was pending at the beginning of the year. 273 Investors’ references were received during the year and all the 273 investors’ references were addressed/resolved by 31st March, 2009. Thus, there was no investors’ reference pending as on 31st March, 2009.

7. SUBSIDIARY COMPANY

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

The Minutes of the Board Meetings of the above subsidiary company are placed at the Board Meetings of the Company.

8. RISK MANAGEMENT

The Company manages risks as an integral part of its decision making process. The Audit Committee and the Board of Directors are apprised regarding key risk assessment and risk mitigation mechanism.

9. CEO/CFO CERTIFICATION

In terms of the requirements of Clause 49 (v) of the Listing Agreement, the whole-time Director & CEO and whole-time Director & CFO have submitted necessary certificate to the Board of Directors stating the particulars specified under the said clause.

This certificate has been reviewed and taken on record by the Board of Directors at its meeting held on 7th May, 2009.

10 GENERAL BODY MEETINGS

The details of last three Annual General Meetings are as under :-

Year Venue Date Time Details of Special Resolution passed

2005-06 Hotel Peter Hoff, 30.08.2006 11.00 A.M. Appointment of Chaura Maidan, Shri J.N.Gaur, Shimla -171004 Whole-time (H.P.) Director and CEO, being over 70 years of age

2006-07 JUIT Complex, 27.08.2007 11.00 A.M. – WaknaghatP.O. Dumehar Bani, Kandaghat, Distt. Solan (H.P.)

2007-08 JUIT Complex, 06.08.2008 11.00 A.M. – WaknaghatP.O. Dumehar Bani, Kandaghat-173215

Distt. Solan (H.P.)

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

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11. DISCLOSURES

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

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

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

d. The Company has not adopted any whistle blower policy. However the Employees are free to approach the Management or the Audit Committee on any issue.

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

f. The Company at present has adopted the non-mandatory requirement in regard to constitution of Remuneration Committee, which has been constituted to determine the remuneration package of the whole-time Directors.

12. SECRETARIAL AUDIT FOR RECONCILIATION OF CAPITAL

A qualified practising Company Secretary carried out quarterly secretarial audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit confirmed that the total issued / paid-up capital was in agreement with the aggregate of the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL.

13. MEANS OF COMMUNICATION

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

14. MANAGEMENT DISCUSSION & ANALYSIS REPORT

The Management Discussion and Analysis Report (MD&A) forms part of the Annual Report.

15. COMPLIANCE OFFICER

The Board had designated Shri R.S. Kuchhal, Joint President (Finance) & Company Secretary as the Compliance Officer w.e.f. 1st April, 2009.

Address: Sector-128, Noida-201 304 (U.P.) e-mail: rs.kuchhal@jalindia.co.inPhone: +95-120-4609000 Fax: +95-120-4609464

16. GENERAL SHAREHOLDER INFORMATION

14th Annual General MeetingDay : TuesdayDate : 18th August, 2009Time : 11.00 A.M.Venue : JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat - 173 215, Distt. Solan (H.P.)

17. FINANCIAL CALENDARFor the Financial Year 2008-09, the results were announced on the following dates :

Results Announced on

For 1st Quarter ended on 30-06-2008. 26th July, 2008

For 2nd Quarter ended on 30-09-2008. 23rd October, 2008

For 3rd Quarter ended on 31-12-2008. 16th January, 2009

For the year ended on 31-03-2009 (Audited). 7th May, 2009

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

18. DIVIDEND PAYMENT DATEFor interim dividend for the year 2008-09, the record date was fixed as 31st October, 2008 and dividend was paid on 12th November, 2008. For final dividend recommended at 7.5% for the year 2008-2009, the Company has fixed 12th August, 2009 to 18th August, 2009 (both days inclusive) as the book closure dates and the dividend shall be paid after approval of the Shareholders at the ensuing Annual General Meeting scheduled to be held on 18th August, 2009.

19. LISTING ON STOCK EXCHANGES The Equity shares of the Company are listed on the National Stock Exchange of India Limited (NSE) (Code : JPHYDRO) and The Bombay Stock Exchange Limited (BSE) (Code : 532627), Mumbai. The Company has paid annual listing fees due to NSE and BSE for the year 2009-2010. 10% - 1740 Non-Convertible Debentures of Rs.10 lac each privately placed with Axis Bank Ltd. are listed on The Bombay Stock Exchange Ltd., Mumbai.

20. MARKET PRICE DATA AND PERFORMANCE IN COMPARISON TO BSE -SENSEXThe high and low of the share price of the Company during each month in the last financial year at NSE, BSE and BSE Sensex were as under :-

( Face Value of each Share : Rs.10/-) Month Share Price at Share price at BSE-Sensex BSE (Rs.) NSE (Rs.) High Low High Low High LowApril, 08 74.90 51.05 74.90 51.05 17,480.74 15,297.96May, 08 74.80 60.10 74.80 60.05 17,735.70 16,196.02June, 08 61.80 43.10 61.70 43.10 16,632.72 13,405.54July, 08 56.60 38.00 56.60 38.30 15,130.09 12,514.02Aug., 08 62.00 50.00 62.25 49.90 15,579.78 14,002.43Sept., 08 56.90 38.00 56.00 38.10 15,107.01 12,153.55Oct., 08 43.50 22.65 43.50 22.40 13,203.86 7,697.39Nov., 08 32.85 24.50 33.50 24.30 10,945.41 8,316.39Dec., 08 33.65 24.85 33.80 24.70 10,188.54 8,467.43Jan., 09 36.25 27.50 36.75 27.65 10,469.72 8,631.60Feb., 09 32.00 27.00 31.90 26.90 9,724.87 8,619.22

Mar., 09 30.35 24.35 30.40 24.30 10,127.09 8,047.17

Performance of Share Price of the Company in comparison to BSE

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21. REGISTRAR AND TRANSFER AGENTS

The details of Registrar & Transfer Agent appointed by the Company are as under:

Alankit Assignments Limited

Alankit House, 2E/21, Jhandewalan Extn., New Delhi 110 055

Phone : 91-11-42541234, 23541234

Fax : 91-11-23552001

E-mail : info@alankit.com

Website : www.alankit.com

22. SHARE TRANSFER SYSTEM

The shares received in physical mode, for transfer by the Company, are transferred expeditiously, provided the documents are complete and the relative shares are not under any dispute. The share certificates duly endorsed in favour of the Transferees are returned promptly to shareholders. Confirmations in respect of the requests for dematerialisation of shares are expeditiously sent to the respective depositories i.e. NSDL and CDSL.

23. DISTRIBUTION OF SHAREHOLDING

The distribution of shareholding and shareholding pattern as on 31st March, 2009, were as follows:

Share holding of Shareholders Shares nominal value of

(Rs.) Number As a Number As a %age of %age of Total Total

Upto5,000 3,71,398 99.326 11,31,77,366 23.050

5,001 - 10,000 1,490 0.398 1,09,92,494 2.239

10,001 - 20,000 562 0.150 80,13,306 1.632

20,001 - 30,000 159 0.043 39,40,909 0.802

30,001 - 40,000 76 0.020 26,79,036 0.546

40,001 - 50,000 47 0.013 21,99,363 0.448

50,001 - 1,00,000 99 0.027 75,80,816 1.544

1,00,001 and above 86 0.023 34,24,17,310 69.739

TOTAL 3,73,917 100.00% 49,10,00,600 100.00%

Sensex is as under : Category-wise Shareholding

Category of Shareholder Percentage of holding

Promoters (Jaiprakash Associates Limited) 63.34

Banks/Mutual Funds/FI/FIIs 2.56

NRIs 0.40

Indian Public 33.70

Total 100.00

Note : For the purpose of Regulation 3[e][i] of the Securities and Exchange Board of India [Substantial Acquisition of Shares and Takeovers] Regulations, 1997, the “Group” constitute Shri Jaiprakash Gaur, his associates and Companies as disclosed to Stock Exchanges which include Jaiprakash Associates Limited (JAL), its Subsidiaries, its Associates and other Companies namely, Jaiprakash Enterprises Limited, Siddharth Utility Private Limited, Ironwill Holdings Private Limited and Ironwill Investments Private Limited.

24. DEMATERIALISATION OF SHARES AND LIQUIDITY

At the time of listing of Equity Shares of the Company on 18th April, 2005, the entire share capital of the Company, except for 700 shares held by the original subscribers alongwith Jaiprakash Associates Limited, was in dematerialized form. Thereafter, 46909 Shares have been rematerialized by certain shareholders. The shares of the company are in ‘Futures and options’ segment on NSE & BSE and are actively traded.

25. UNCLAIMED DIVIDENDS

Pursuant to Section 205C of the Companies Act, 1956, there were no unclaimed dividends to be transferred to the Investor Education and Protection Fund of the Central Government during the year.

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

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

27. PLANT LOCATIONS

The Barrage of the 300 MW Power Plant is located on the river Baspa and the underground Power House is on the left bank of River Satluj in Kinnaur District, about 210 KM from Shimla, the capital of Himachal Pradesh.

28. ADDRESS FOR CORRESPONDENCE

Company’s address :

Registered Office : JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat- 173 215, Distt. Solan (H.P.)

Corporate Office : Sector-128, Noida-201 304 (U.P.)

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

Head Office : ‘JA Annexe’, 54, Basant Lok, Vasant Vihar, New Delhi 110 057

29. ELECTRONIC CLEARING SERVICE (ECS)

The Company avails of ECS facility for distribution of dividend in metropolitan cities in respect of those Shareholders who have opted for payment of Dividend through ECS.

30. NON-MANDATORY REQUIREMENTS

The Company has constituted a Remuneration Committee. Relevant details of the Remuneration Committee are provided in paragraph 5 of this Report.

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

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

The Company believes and maintains its Accounts in a transparent manner and aims at receiving unqualified report from the auditors on the financial statements of the Company.

DECLARATION BY THE WHOLE-TIME DIRECTOR & CEO UNDER CLAUSE 49 (ID) OF THE LISTING AGREEMENT

All Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct for the Directors and Senior Management, as approved by the Board, for the year ended 31st March, 2009.

Place : New Delhi J.N. GAURDate : 7th May, 2009 Whole-time Director & CEO

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE COMPLIANCE

To,

The Members of Jaiprakash Hydro-Power Limited

We have examined the compliance of conditions of Corporate Governance by Jaiprakash Hydro-Power Limited for the year ended on 31st March, 2009, as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance, as stipulated in Clause 49 of the Listing Agreement.

We state no investor grievance is pending for a period exceeding one month against the Company.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For R. NAGPAL ASSOCIATESChartered Accountants

R. NagpalPlace : New Delhi PartnerDate : 7th May, 2009 M.No. 81594

MANAGEMENT DISCUSSION AND ANALYSIS REPORTForming part of the Directors’ Report for the year ended 31st March, 2009

i) Industry structure and developments

Power is a key driver for the economic development of a country and for improving the quality of life. The achievement of enhancement of power generation capacity from 1712 MW in 1950 to 1,47,965 MW as on 31st March 2009 is quite impressive in absolute terms. The bulk of this capacity addition has been from thermal and hydropower.

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

Hydroelectric projects despite being recognized as the most economic and preferred source of electricity, share of hydro power has been declining since 1963. The hydro share has declined from 44 per cent in 1970 to 24.9 percent as on 31st March, 2009. During 2008-09, the country’s power capacity addition was only 3,454 MW against its target of 11,000 MW, with thermal accounting for the main share at 2,485 MW. In 2007-08, 9,263 MW capacity was added against the targeted 16,300 MW. The ideal hydro thermal mix is recognised in the ratio of 40:60.

The draft policy on hydro power, initiated in November, 2005, has been finally affected through the Hydro Power Policy 2008. Hydroelectric power generation has been identified as a major thrust area as it enjoys the advantages of clean power, low operating costs and energy security. In order to enable the project developer to recover costs incurred by him for obtaining the project site, he would be allowed a special incentive by way of merchant sale of up to a maximum of 40 per cent of the saleable energy. In order to ensure timely completion of these projects, delays of every 6 months on the date of commissioning would result in a reduction of merchant sales by 5 per cent. The Policy will facilitate hydro capacity additions of 30,000 MW in the Twelfth five-year plan.

ii) Opportunities and Threats

Opportunities

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

The Company has been operating Hydro Power Station, now for more than 6 years. It is in an advantageous position in terms of implementation of Hydro Projects vis-a-vis the new entrants to reap the benefit of growing opportunities in this sector. Again, the Company is fully geared to take the advantage of The Electricity Act, 2003 in terms of diversifying its business into Transmission Sector and has formed a Joint Venture Company namely, Jaypee Powergrid Limited, with Power Grid Corporation of India Limited for developing a Transmission System.

The Company is eligible for VERs under the Voluntary Carbon Standard 2007. The Company has started generating revenue from the sale of VERs.

Threats

Apart from the normal uncertainties applicable to power project development, the Company does not see any perceptible threat to the Company.

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iii) Segment-wise or product-wise performance

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

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

iv) Outlook

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

v) Risks and Concerns

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

vi) Internal Control Systems and their adequacy

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

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

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

vii) Financial performance with respect to operational performance

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

viii) Material developments in Human Resources and Industrial relations

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

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

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

The industrial relations continued to be cordial.

AUDITORS’ REPORT TO THE MEMBERS OF JAIPRAKASH HYDRO-POWER LIMITED

We have audited the attached Balance Sheet of JAIPRAKASH HYDRO-POWER LIMITED as at 31st March 2009 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.We report that:(1) As required by the Companies (Auditor’s Report) Order

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

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

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

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

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

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

(e) On the basis of written representations received from the directors, as on 31st March, 2009, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

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

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2009,

ii) in the case of the Profit & Loss Account, of the profit of the Company for the year ended 31st March 2009.

iii) in the case of the Cash Flow Statement, of the cash flows of the company for the year ended 31st March 2009.

For R. NAGPAL ASSOCIATESChartered Accountants

(R.Nagpal)Place : New Delhi PartnerDated : 7th May, 2009 M.No.81594

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ANNEXURE TO THE AUDITORS’ REPORTReferred to in paragraph 1 of our report of even date on the accounts for the year ended 31st March, 2009 of JAIPRAKASH HYDRO-POWER LIMITED

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

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

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

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

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

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

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

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

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

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

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

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

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

were no arrears of such dues at the year-end which have remained outstanding for a period of more than six months from the date they became payable.

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

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

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

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

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

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

(xv) Where the Company has pledged its shares as collateral security for the financial assistance granted by lenders to Jaypee Powergrid Ltd-Subsidiary Company, the terms and conditions are not prejudicial to the interest of the company.

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

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

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

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

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

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

For R. NAGPAL ASSOCIATESChartered Accountants

(R. Nagpal)Place : New Delhi PartnerDated : 7th May 2009 M.No.81594

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BALANCE SHEETAS AT 31ST MARCH, 2009 (Rs. in Lacs)

SCHEDULE As at 31.3.2009 As at 31.3.2008

SOURCES OF FUNDS

SHAREHOLDERS’ FUNDS

Share Capital A 49,100 49,100

Reserves & Surplus B 58,415 53,947

DEFERRED REVENUE C 7,764 7,056

LOAN FUNDS

Secured Loans D 74,117 82,958

189,396 193,061

APPLICATION OF FUNDS

FIXED ASSETS E

Gross Block 184,813 172,241

Less: Depreciation 26,402 21,712

Net Block 158,411 150,529

Capital Work in Progress 11 158,422 7,849 158,378

INVESTMENTS F 7,525 3,825

CURRENT ASSETS, LOANS & ADVANCES G

Inventories 490 496

Sundry Debtors 12,058 21,435

Cash & Bank Balances 5,034 3,826

Other Current Assets 8,903 10,362

Loans & Advances 9,062 6,986

35,547 43,105

LESS: CURRENT LIABILITIES & PROVISIONS H

Current Liabilities 545 1,098

Provisions 11,553 11,149

12,098 12,247

NET CURRENT ASSETS 23,449 30,858

189,396 193,061

Accounting Policies and Notes to the Accounts N

For and on behalf of the Board

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

For R. NAGPAL ASSOCIATES MANOJ GAURChartered Accountants Chairman

R. Nagpal Partner M. No. 81594

A.B. Chugh R. S. Kuchhal R.K. Narang J. N. GaurPlace : New Delhi Jt. President (Finance) Jt. President (Finance) Whole-time Director Whole-time DirectorDated: 7th May, 2009 & Company Secretary & CFO & CEO

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PROFIT & LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2009 (Rs. in Lacs)

SCHEDULE 2008-09 2007-08

INCOME Sale of Electrical Energy 29,403 30,763 (Net of advance against depreciation - see note 13 of the Schedule ‘N’) Less: Rebate for prompt payments 515 28,888 681 30,082 Sale of Verified Emission Reductions (VERs) 779 – Other Income I 2,124 4,168 31,791 34,250

EXPENDITURE Operation & Maintenance J 843 1,193 Employees’ Remuneration & Benefits K 884 748 Administration & other expenses L 616 571 Interest & Financial Charges M 8,194 9,929 10,537 12,441

OPERATING PROFIT 21,254 21,809 Depreciation 4,697 4,588 PROFIT BEFORE TAX AND EXTRA-ORDINARY ITEMS 16,557 17,221 Extra-ordinary items Add - Refund of interest from PFC for earlier years 2,328 – - Insurance claim relating to earlier years – 6,840 Less - Adjustment of Tariff for FY 04 to FY 08 (2,766) (438) – 6,840

PROFIT BEFORE TAX 16,119 24,061 Provision for Income Tax - For the Year 1,826 2,726 - Earlier Years – (11) Provision for Fringe Benefit Tax 7 1,833 6 2,721

PROFIT AFTER TAX 14,286 21,340 Add: Profit brought forward from previous year 48,077 36,424 Less: Reversal of Foreign Exchange Fluctuation for FY 07-08 (1,201) 46,876 – 36,424

PROFIT AVAILABLE FOR APPROPRIATION 61,162 57,764 Appropriation General Reserve 715 1,070 Interim Dividend 3,683 3,683 Income Tax on Interim Dividend 626 626 Final Dividend 3,682 3,682 Income Tax on Final Dividend 626 9,332 626 9,687

BALANCE CARRIED TO BALANCE SHEET 51,830 48,077 Basic and Diluted Earning Per Share (EPS), (in Rs.) 2.91 4.35

Accounting Policies and Notes to the Accounts N

For and on behalf of the Board

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

For R. NAGPAL ASSOCIATES MANOJ GAURChartered Accountants Chairman

R. Nagpal Partner M. No. 81594

A.B. Chugh R. S. Kuchhal R.K. Narang J. N. GaurPlace : New Delhi Jt. President (Finance) Jt. President (Finance) Whole-time Director Whole-time DirectorDated: 7th May, 2009 & Company Secretary & CFO & CEO

17

(Rs. in Lacs)

As At As At 31.3.2009 31.3.2008

SCHEDULE ‘A’ : SHARE CAPITAL

Authorised Capital

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

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

Issued & Subscribed

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

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

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

by Jaiprakash Associates Limited - the holding company.)

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

49,100 49,100

SCHEDULE ‘B’ : RESERVE AND SURPLUS

General Reserve

As per last Balance Sheet 1,070 –

Add: Transfer from Profit & Loss Account 715 1,785 1,070 1,070

Debenture Redemption Reserve

As per last Balance Sheet 4,800 4,800

Surplus

As per Profit & Loss Account 51,830 48,077

58,415 53,947

SCHEDULE ‘C’ : DEFERRED REVENUE

Advance against depreciation

As per last Balance Sheet 7,056 4,704

Add: For the year 2,352 2,352

Less: Adjustment of Tariff for FY 04 to FY 08 (1,644) 7,764 – 7,056 ( see note 12 of Schdeule ‘N’ )

7,764 7,056

SCHEDULE ‘D’ : SECURED LOANS

(Refer Note 3(a) to 3(d) of Schedule ‘N’ )

DEBENTURES

Redeemable Non-Convertible Debentures 19,156 28,650

TERM LOANS FROM

Financial Institutions 16,395 19,006

Banks 27,039 43,434 24,910 43,916

FOREIGN CURRENCY LOANS

Financial Instituions 705 650

Buyer’s Credit 10,822 11,527 9,742 10,392

74,117 82,958

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(Rs. in Lacs) As at 31.3.2009 As at 31.3.2008SCHEDULE ‘F’ : INVESTMENTS(A) Investment in Subsidiary UNQUOTED (Refer Note 18 of Schedule ‘N’) 7,52,50,000 Equity Shares of Jaypee Powergrid Limited 7,525 740 of Rs. 10/- each fully paid up. (Previous year 74,00,000 Equity Shares)(B) SHARE APPLICATION MONEY – 3,085 Jaypee Powergrid Limited (Subsidiary Company) Total (A+B) 7,525 3,825 Note: Aggregate cost of : Quoted Investments – – Unquoted Investments 7,525 740

SCHEDULE ‘G’ : CURRENT ASSETS, LOANS AND ADVANCESA) CURRENT ASSETSI) Inventories (As per Inventory taken, valued and certified by Management) Stores & Spares 490 496 II) Sundry Debtors (Considered Good) Due for a period exceeding six months 10,035 15,452 Other Debts 2,023 12,058 5,983 21,435 III) Cash and Bank Balances Cash In hand 4 24 Balances with Scheduled Banks (i) In Current Account 107 406 (ii) In Fixed Deposits 307 461 (Pledged with Govt. Deptt./Banks Rs.6,85,362/- Previous year Rs. 21,18,000/-) (iii) In Unpaid Dividend account 130 32 (iv) Trust & Retention Account (i) In Current Account 1,211 2,168 (ii) In Fixed Deposits 3,275 4,486 5,034 735 2,903 3,826 IV) Other Current Assests a) Interest accrued (including interest receivable on Arrears) 2,706 3,839 b) Deferred Receivable 6,197 5,683 c) Insurance claim receivable – 8,903 840 10,362 26,485 36,119

SCHEDULE ‘E’ : FIXED ASSETS (Rs. in Lacs)

Gross Block Depreciation Net Block

S.No. Particulars As at Additions Sale/ As at Upto For the Sale / Upto As at As at 1.4.2008 during Transfer 31.3.2009 31.03.2008 year Transfer 31.3.2009 31.3.2009 31.3.2008 the year during during the year the year

1 LAND Lease hold Land 157 – – 157 19 4 – 23 134 138 Freehold Land 670 110 – 780 – – – – 780 6702 BUILDING, ROAD & BRIDGES 7,658 – – 7,658 600 125 – 725 6,933 7,0583 HYDRAULIC WORKS 55,159 10,315 – 65,474 6,737 1,587 – 8,324 57,150 48,4224 TRANSMISSION LINE 23,793 – – 23,793 3,084 645 3,729 20,064 20,7095 PLANT AND MACHINERY – Generating Equipment 84,092 2,084 – 86,176 11,015 2,290 – 13,305 72,871 73,077 – Others 453 66 – 519 116 23 – 139 380 3376 FURNITURE & FIXTURES 65 – – 65 24 4 – 28 37 417 OFFICE EQUIPMENT 56 5 – 61 22 6 – 28 33 348 VEHICLES 138 – 8 130 95 13 7 101 29 43

TOTAL 172,241 12,580 8 184,813 21,712 4,697 7 26,402 158,411 150,529PREVIOUS YEAR 171,549 701 9 172,241 17,130 4,588 6 21,712 150,529CAPITAL WORK-IN-PROGRESS 11 7,849

19

B) LOANS AND ADVANCES

(Unsecured, considered Good)

i) Advances recoverable in cash or in kind or for value to be received. 114 236

ii) Interest recoverable from Power Finance Corporation 1,736 –

ii) Staff Imprest & advances 9 9

iii) Prepaid Expenses 38 58

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

– others 126 126 100 176

v) Advance Tax & Tax Deducted at Source 7,039 6,507

9,062 6,986

Total (A + B) 35,547 43,105

SCHEDULE “H” : CURRENT LIABILITIES AND PROVISIONS

A) CURRENT LIABILITIES

i) Sundry Creditors

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

Deferred Payments – 358

Others 140 140 331 689

ii) Due to Staff 47 30

iii) Due to Director – 1

iv) Other Liabilities 46 62

v) Interest Accrued but not due on loans 182 284

vi) Investor Education & Protection Fund

(Appropriate amounts shall be transferred to Investor Education &

Protection Fund, as and when due)

– Unclaimed Dividend 130 32

545 1,098

B) PROVISIONS

i) Taxation 7,075 6,651

ii) Fringe Benefit Tax 21 24

iii) Provident fund 11 9

iv) Bonus & Incentive 62 93

v) Gratuity 42 35

vi) Leave Encashment 34 28

vii) Dividend 3,682 3,683

viii) Dividend Tax 626 626

11,553 11,149

Total (A+B) 12,098 12,247

2008-2009 2007-2008

SCHEDULE “I” : OTHER INCOME

Interest on deposits with banks 282 344

(TDS Rs. 63,71,839; Previous Year Rs. 72,96,408)

Interest on Arrears 1,760 2,592

Foreign Exchange Fluctuation – 1,201

Others (including sale of scrap and sundry balances written back) 82 31

2,124 4,168

(Rs. in Lacs) As at 31.3.2009 As at 31.3.2008

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SCHEDULE “J” : OPERATION & MAINTENANCE (O & M)

Stores & Spares consumed 229 319 Repairs to Building 30 40 Repairs to Machinery 234 368 Repairs to Barrage 17 46 O & M Charges of ICF to SJVNL 126 119 Insurance 207 301

843 1,193

SCHEDULE “K” : EMPLOYEES’ REMUNERATION & BENEFITSSalary, Wages & Bonus 683 590 Directors’ Remuneration 79 45 Contribution to Provident and other funds 40 39 Workmen & Staff Welfare Expenses 68 55 Gratuity 7 9 Leave Encashment 7 10

884 748

SCHEDULE “L” : ADMINISTRATION & OTHER EXPENSESRent 50 61 Lease Rent of land 17 9 Advertisement 21 23 Business Promotion 3 3 Telephone and Telex 7 8 Courier & Postage 59 7 Printing & Stationery 38 14 Travelling & Conveyance 64 46 Taxes & Fees 10 – Consultancy, Legal & Professional Fee 101 82 Power & fuel 119 134 Listing Fee 28 15 Vehicle Running & Maintenance 14 12 Directors’ Sitting Fee 18 16 Filling fee for Tariff application – 25 Miscellaneous Expenses 53 102 Internal Audit Fee 5 5 Auditors’ RemunerationFor Audit 8 8 For Tax Audit 1 9 1 9

616 571

SCHEDULE “M” : INTEREST & FINANCIAL CHARGESInterestDebentures 2,323 2,748 Term Loans 5,681 6,965 Working Capital 4 13 Financial chargesDPG Commission 143 151 Front end fee and other charges 43 52

8,194 9,929

SCHEDULE ‘N ’ :ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS

1. Significant Accounting Policies:

a) Basis of Preparation of Financial Statements

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

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

b) Revenue Recognition

(i) Revenue from sale of electrical energy is accounted for on the basis of billing to Himachal Pradesh State Electricity Board (HPSEB) in accordance with the provisions of Power Purchase Agreement dated 4th June 1997, Amendment No.1 dated 07.01.1998 executed between the Company and HPSEB, the Tariff Order dated 24.02.2007 and Multi Year Tariff (MYT) Order dated 30.03.2009 of Hon’ble HPERC.

(ii) Revenue from sale of Verified Emission Reductions (VERs) is accounted for on receipt basis.

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

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

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

c) Fixed Assets

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

d) Depreciation

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

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

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

e) Expenditure during Construction Period

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

f) Foreign Currency Transactions

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

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

(iii) Foreign Exchange gain/loss is being adjusted against the cost of assets in terms of the amendment to Accounting Standard (AS–11) issued vide Notification dated 31st March, 2009 by the Ministry of Corporate Affairs, Govt. of India.

21

(Rs. In Lacs) 2008-2009 2007-2008

g) Investments

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

h) Inventories

Inventories of Stores & Spares are valued at weighted average cost method.

i) Employees’ Benefits

Employees Benefits are provided in the books as per AS-15 (revised) in the following manner:

a) Provident Fund and Pension contribution- as a percentage of salary/wages as per provisions of Employees Provident Funds and Miscellaneous Provisions Act, 1952.

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

j) Borrowing Costs

Borrowing costs attributable to the procurement/construction of fixed assets are capitalised as part of the cost of the respective assets upto the date of commissioning. Other borrowing costs are recognized as expense during the year in which they are incurred.

k) Taxes on Income

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

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

l) Amortization of Miscellaneous expenditure

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

m) Provisions, Contingent Liabilities and Contingent Assets (AS-29)

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and if is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

n) Earnings per share

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

2. Contingent Liabilities: (In Rupees)

(i) Outstanding amount of Letter of Credit 1,33,04,896/-

(Previous year Rs. 4,12,52,083/-)

Margin Money against above 6,85,362/-

(Previous year Rs. 21,18,000/-)

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

(iii) Claims against the company not acknowledged as debts. 6,29,13,672/-

(Previous year Rs. 6,25,91,672/-)

3. (a) Rupee Term Loans, Foreign Currency Loans, Working Capital Facilities and Deferred Payment Guarantee(s) from Financial Institutions and Banks, together with all interest, guarantee commission, liquidated damages, premia on prepayment or on redemption, cost, expenses and other monies stipulated in the Loan Agreements/Deferred Payment Guarantee Agreement are secured by hypothecation of the Company’s movable assets (present and future), equitable mortgage on the immovable assets of the Company and pledge of 29,49,99,900 equity shares held by Jaiprakash Associates Limited in the company, and assignment of all the rights, titles and interest of the Company in all project documents, licenses, permits, approvals etc ranking pari-passu among all the participating Institutions and Banks viz. IDBI, PFC, IFCI, LIC, Bank of Baroda, Punjab National Bank, Indian Overseas Bank, State Bank of Indore, State Bank of Hyderabad and Yes Bank.

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

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

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

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

Institution/Bank Repayment Schedule

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

IFCI Repayment in 48 Equal Installments in (Taken over loan from IIBI) July, August,September and October each year w.e.f July 2005.

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

IFCI Repayment in 32 Equal Installments in (New Loan of Rs. 50 Crs.) July, August, September and October each year w.e.f July 2008.

IDBI Repayment in 32 Equal Installments in (New Loan of Rs. 100 Crs.) July, August, September and October each year w.e.f July, 2008.

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

Institution Rate of Amount Redemption Interest

Axis Bank 10% p.a Rs. 17,400 Lacs In July, August, (1,740 Debentures September and October of Rs. 10 Lacs each each year commencing – Rs. 1,25,000/- per from July 2008 debenture redeemed as on 31.03.2009)

ICICI Bank 10.5% p.a Rs. 15,000 Lacs In July, August, upto14.06.05, (150 Lacs Debentures of September and 8.5% p.a upto Rs. 100 each – Rs. 74/- October each year w.e.f 14.06.08 & per debenture redeemed July 2005

13.15% as on 31.03.2009) thereafter

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

5. (a) Jaiprakash Associates Limited (JAL), the holding Company, has furnished Corporate Guarantees for the financial assistance outstanding as on 31.03.2009 amounting to Rs. 248,41,11,445/- (Previous Year Rs. 525,66,57,330/-) to the Financial Institutions and Banks and have also pledged 29,49,99,900 Equity Shares of Rs.10/- each of the Company held by it with IFCI Ltd. to collaterally secure the financial assistance granted to the Company by the Financial Institutions and Banks, namely ICICI Bank, IDBI, PFC, LIC, IFCI, Bank of Baroda, Punjab National Bank, Indian Overseas Bank, State Bank of Indore, State Bank of Hyderabad, Yes Bank and Axis Bank. ICICI Bank, State Bank of Hyderabad, IDBI, State Bank of Indore, Punjab National Bank, LIC and Indian Overseas Bank have since released the aforesaid corporate guarantees furnished by JAL and Bank of Baroda & IFCI (taken over loan from IIBI) have agreed to release the same subject to similar approval by other Term Lenders to the company.

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

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

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

8. The Rupee value of Foreign Currency Loans has been considered at the bank TT selling rate as at 31st March 2009 i.e. one US Dollar = Rs. 51.18. Pursuant to the Notification dated March 31, 2009 issued by Ministry of Corporate Affairs, Govt. of India, the Company has exercised the option available under the newly inserted Paragraph 46 to the Accounting Standard AS-11 “The effect of changes in Foreign Exchange Rates” to add or deduct the Foreign Exchange Fluctuations to capital cost of the Assets. Accordingly Exchange Fluctuation for FY 08 amounting to Rs.12,00,99,509/- credited to Profit & Loss Account of FY 08

has been debited to the carried forward balance of Profit & Loss Account from previous year and the net exchange fluctuations (FY 08 and FY 09) amounting to Rs. 16,06,97,845/- has been added to the cost of Plant and Machinery.

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

a) Capacity and Production (As certified by the Management) Installed Annual Capacity 300 MW Net Saleable Design Energy at

Interconnection Point 1050.06 Million Units Average Saleable Secondary

Energy at Interconnection Point 155.00 Million Units

TOTAL 1205.06 Million Units

Generation details & parameters Particulars – Saleable Energy 2008-09 2007-08

being 88% saleable part of total generation

Net Saleable Energy (MU) 1131.46 1121.26 Plant Availability 99.65% 99.91%

(b) Details of Stores & Spares Consumed 2008-09 2007-08 Rs. % Rs. % (i) Indigenous 1,66,94,409/- 72.80 3,00,24,513 94.11 (ii) Imported 62,37,235/- 27.20 18,79,426 5.89

2,29,31,644/- 100 3,19,03,939 100

(c) Value of imports on C.I.F. basis 2008-09 2007-08 Rs. Rs. – Payment to Suppliers of Capital Equipment 3,25,84,992/- – – Payment for supplies of

spares 62,37,235/- 18,79,426

(d) Expenditure in Foreign Exchange Travelling (Directors) 21,78,969 8,77,326 Interest to Banks 4,92,31,437 5,70,16,133 Consultancy – 1,80,50,196

(e) Earnings in Foreign Exchange Sale of VERs 7,79,30,663/- Nil

10. Managerial remuneration paid/payable to Whole Time Directors 2008-09 2007-08 Rs. Rs. Salary 50,10,000 28,17,742 Provident Fund 6,01,200 3,38,129 Perquisites 39,10,685 21,63,196

95,21,885 53,19,067

11. Disclosure as required under Notification No. G.S.R. 719 (E) dated 16th November, 2007 issued by the Department of Company Affairs (As certified by the Management):

S.No. Particulars 2008-09 2007-08 Rs. Rs. a) The principal amount and

interest due thereon remaining unpaid to any supplier

– Principal Amount Nil Nil – Interest Amount Nil Nil

b) The amount of interest paid by the buyer in terms of section16 of the Micro Small and Medium Enterprise Development Act, 2006 along with the amounts of payment made to the supplies beyond the appointed day. Nil Nil

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c) The amount of interest due and payable for the year of delay in making payment (which have been paid but beyond the appointed during the year) but without adding the interest specified under the Micro, Smalll and Medium Enterprises Development Act, 2006. Nil Nil

d) The amount of interest accrued and remaining unpaid Nil Nil

e) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of the Micro Small and Medium Enterprise Development Act, 2006 Nil Nil

12. The Himachal Pradesh Electricity Regulatory Commission (HPERC) has passed the Multi Year Tariff (MYT) Order on 30th March, 2009 for FY 09, 10 and 11 and has also revised Tariff for FY 04 to 08 based on actuals for the period. The Company has filed Review Application with HPERC for rectification of certain items of Tariffs for FY 04 to 08 and for FY 09 aggregating to Rs. 146.70 crores. Accordingly, the receivables from HPSEB in respect of review items are subject to disposal of Review Application/other legal remedies available to the Company.

13. As per accounting policy the Advance Against Depreciation amounting to Rs. 2,352 lacs (previous year Rs. 1,692 lacs, net of adjustment of Rs. 660 lacs as per MYT order dated 30.3.2009) has been treated as Deferred Revenue.

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

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

(a) Holding Company Jaiprakash Associates Limited

(b) Subsidiary company Jaypee Powergrid Limited

(c) Fellow subsidiaries (i) Jaypee Hotels Limited (ii) Jaiprakash Power Ventures Limited (iii) Jaypee Karcham Hydro Corporation Limited (iv) Jaypee Cement Limited (v) Gujarat Anjan Cement Limited, Subsidiary of Jaypee

Cement Limited (vi) Jaypee Infratech Limited (vii) Himalayan Expressway Ltd. (viii) Bhilai Jaypee Cement Limited. (ix) Bokaro Jaypee Cement Limited (x) Gujarat Jaypee Cement & Infrastructure Limited (xi) Madhya Pradesh Jaypee Minerals Limited (xii) Jaypee Ganga Infrastructure Corporation Limited (xiii) JPSK Sports Pvt. Ltd. (xiv) Jaypee Aurnachal Power Ltd.,Subsidiary of Jaiprakash

Power Ventures Ltd. (w.e.f. 23.4.2008) (xv) Bina Power Supply Company Ltd., Subsidiary of

Jaiprakash Power Ventures Ltd. (w.e.f.15.5.2008)

(d) Associates

(i) Jaypee Ventures Pvt. Limited. (ii) Indesign Enterprises Pvt Ltd. (iii) JIL Information Technology Limited, Subsidiary of

Jaypee Ventures Pvt. Limited.

(iv) Gaur & Nagi Limited, Subsidiary of JIL information Technology Limited.

(v) Jaiprakash Kashmir Energy Ltd. (vi) Sonebhadra Minerals Pvt. Ltd. (vii) RPJ Minerals Pvt. Ltd. (viii) Jaypee Development Corporation Ltd., Subsidiary of

Jaypee Ventures Pvt. Limited. (ix) Jaypee Petroleum Pvt. Ltd., Subsidiary of Jaypee Ventures

Pvt. Ltd. (w.e.f. 17.4.2008) (x) Jaypee Hydro-Carbons Pvt. Ltd., Subsidiary of Jaypee

Ventures Pvt. Ltd. (w.e.f. 17.4.2008) (xi) Jaypee Spa Infocom Ltd., Subsidiary of Jaypee Ventures

Pvt. Ltd. (w.e.f. 16.5.2008)

(e) Key management Personnel (i) Shri Manoj Gaur, Chairman (ii) Shri Sunil Kumar Sharma, Vice Chairman (iii) Shri J. N. Gaur, Whole Time Director (iv) Shri R. K. Narang, Whole Time Director (v) Shri Suresh Chandra, Whole Time Director

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

Nature of Transactions Related parties (Amount in Rs.)

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

Hire Charges 19,55,17,194

(Previous Year) (13,35,83,310)

Rent 45,23,438 (Previous Year) (44,47,300)

Cement 1,48,20,200 (Previous Year) (10,68,41,000)

Other Expenses 1,08,68,283 2,25,270 14,99,454 (Previous Year) ( – ) (1,15,268 ) (2,39,216)

Salary & Perquisites 95,21,885 (Previous Year) (53,19,067)

Outstandings - Payables Amount Payable 41,55,202 8,500 (Previous Year) (1,18,44,682) ( – )

Outstandings - Receivables Amount Receivables 1,00,00,000 (Previous Year) (1,00,00,000)

Investment in Subsidiary Share Capital: 6,78,50,000 Equity Shares 67,85,00,000 of Jaypee Powergrid Limited (Previous Year-74,00,000 Equity Shares) (7,40,00,000)

Share Application Money: Jaypee Powergrid Limited – (Previous Year) (30,85,00,000)

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

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

(In Rupees)

2008-2009 2007-2008

a) Profit after Tax as per Accounts 142,85,45,078 213,39,93,327

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

c) Earnings Per Share 2.91 4.35

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16. Provident Fund - Defined Contribution Plan

(a) All employees are entitled to Provident Fund benefits. Amount debited to Profit and Loss account including Administrative and DLI charges Rs. 40,38,212/- during the year.

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

S. No. Particulars Non Funded

Gratuity Leave Encashment

I. Expenses recognized in the statement of Profit and loss account for the year ended 31st March, 2009 i) Current Service Cost 9,15,890 (8,33,620) 8,65,538 (7,65,459) ii) Interest Cost 2,83,157 (2,31,494) 2,18,852 (1,71,744) iii) Employee Contribution – – iv) Actuarial (Gains)/Losses (5,21,939) (-4,19,323) (3,68,762) (-3,48,350) v) Past Service Cost – – vi) Settlement Cost – – vii) Total Expenses 6,77,108 (6,45,791) 7,15,628 (5,88,853)

II. Net Assets/(Liability)recognized in the Balance Sheet as at 31st March, 2009 i. Present Value of Defined Benefit Obligation 42,02,582 (35,39,464) 34,24,868 (27,35,655) ii. Fair Value of Plan Assets – – iii. Funded Status (Surplus/(Deficit) (42,02,582) ( -35,39,464) (34,24,868) (-27,35,655) iv. Net Asset/(Liability) as at 31st March, 2009 (42,02,582) (-35,39,464) (34,24,868) (-27,35,655)

III. Change in Obligation during the Year ended 31st March, 2009 i. Present value of Defined Benefit Obligation at the beginning of the year 35,39,464 (28,93,673) 27,35,655 (21,46,802) ii. Current Service Cost 9,15,890 (8,33,620) 8,65,538 (7,65,459) iii. Interest Cost 2,83,157 (-4,19,323) 2,18,852 (1,71,744) iv. Settlement Cost – – v. Past Service Cost – – vi. Actuarial (Gains)/Losses (5,21,939) (-4,19,323) (3,68,762) (-3,48,350) vii. Benefit Payments (13,990) (–) (26,415) (–) viii. Present Value of Defined Benefit of Obligation at the end of the year 42,02,582 (35,39,464) 34,24,868 (27,35,655)

IV. Change in Assets during the Year ended March 31st, 2009 i) Plan Assets at the beginning of the year – – ii) Assets acquired on amalgamation in previous year – – iii) Settlements – – iv) Expected return on Plan Assets – – v) Contribution by Employer – – vi) Actual Benefit paid – – vii) Actuarial Gains/(Losses) – – viii) Plan Assets at the end of the year – – ix) Actual Return on Plan Assets – –

Previous year’s figures are given in brackets.

Actuarial Assumption

i. Discount Rate 8.00%

ii. Mortality LIC(1994-1996) duly modified tables

iii. Turnover Rate Upto 30 year: 2%, From 31-44 years: 5% Above 44 years: 3%

17. (a) Provision of Rs. 18,26,25,002/- (Previous Year Rs. 27,26,16,097.94) towards Minimum Alternate Tax (MAT) as Tax payable under section 115JB of Income Tax Act, 1961 has been made. The

MAT paid by the company for the year is allowed to be carried forward for a period upto next 7 years to be adjusted against the normal tax payable, if any, in those years.

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

(c) Provision of Rs. 7,01,077/- (Previous year Rs. 6,27,758/-) towards Fringe Benefit Tax (FBT) as Tax payable under section 115W of Income Tax Act, 1961 has been made for the current year.

18. (a) Pursuant to the Memorandum Of Understanding signed with Power Grid Corporation of India Ltd.(PGCIL), a Joint Venture Company in the name of ‘Jaypee Powergrid Limited’ (JPPGL) had been incorporated on 05.10.2006 by the Company for developing a Transmission System for the evacuation of power to be generated by the 1000 MW Karcham Wangtoo Hydro Electric Project in the State of Himachal Pradesh, to a suitable interconnection point. The Shareholders’ Agreement had been signed with PGCIL on 22.02.2007 with 74% Equity Participation with a provision of minimum 51% Equity Participation by the Company and balance, if any, by affiliates.

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

(In Rupees)

Name of Company 2008-2009 2007-2008

Jaypee Powergrid Limited (6,78,50,000 67,85,00,000 7,40,00,000 Equity Shares of Rs.10/- each) (Previous year -74,00,000 Equity Shares of Rs. 10 each)

Share Application Money paid to Jaypee Powergrid Limited – 30,85,00,000

(c) 2,25,00,000 equity shares of Rs. 10/- each fully paid (previous year –Nil) held by the company of Jaypee Powergrid Limited (Subsidiary Company) are pledged with IDBI Trusteeship Services Ltd., as collateral security for the financial assistance granted by lenders to Jaypee Powergrid Limited.

19. During the year Baspa II 300 MW Hydroelectric Plant has been recognized for generation of Verified Emission Reductions (VERs) under the Voluntary Carbon Standard 2007 (VCS, 2007) and has entered into an agreement with ECO Act, France for sale of VERs to AREVA France for the period upto 31.12.2010. Revenue from sale of 3,15,000 VERs has been accounted for during the year.

20. The Company has presently one segment i.e. Generation of Hydro-Power, hence, separate segment reporting is not applicable.

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

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

Signature to Schedules “A to “N”

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

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

R.S. Kuchhal J.N. Gaur Jt. President (Finance Whole-time Director & CEO

& Company Secretary

Place : New Delhi A.B.Chugh R.K. NarangDated : 7th May, 2009 Jt. President (Finance) Whole-time Director & CFO

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

I Registration Details

Registration No. 15483 State Code No.06

Balance Sheet Date 31.03.2009

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

Public Issue Nil Rights Issue Nil

Bonus Issue Nil Private Placement Nil

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

As at 31.3.2009

Total Liabilities 189,396

Total Assets 189,396

Sources of Funds

Paid-up Capital 49,100

Reserves & Surplus 58,415

Deferred Revenue 7,764

Secured Loans 74,117

Unsecured Loans –

189,396

Application of Funds

Net Fixed Assets(including CWIP) 158,422

Investments 7,525

Net Current Assets 23,449

Miscellaneous Expenditure –

Accumulated Losses –

189,396

IV Performance of Company (Amount in Rs. Lacs)

Turnover 31,791

Extra-ordinary items (438)

Total Expenditure 15,234

Profit/(Loss) Before Tax 16,119

Profit/(Loss) After Tax 14,286

Earnings Per Share in Rs.(Weighted average) 2.91

Dividend Rate 15%

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

Item Code No.(ITC Code) 8502.30

Product Description Hydro-Power

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

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009(Rs. in Lacs)

2008-09 2007-08

A. Cash flow from operating activities Profit before taxation & Extra ordinary items 16,557 17,221

Add Back Depreciation 4,697 4,588 Deferred Revenue on account of advance against depreciation 708 2,352 Extra Ordinary items (438) – (Gain)/Loss on sale of Assets 1 1 Interest & financial charges 8,194 13,162 9,929 16,870 Deduct: Interest Income (2,042) (2,936) Other Income (82) (2,124) (31) (2,967) Operating profit before working capital changes 27,595 31,124 Add: (Increase)/Decrease in Trade Debtors 9,376 4,177 (Increase)/Decrease in Inventories 6 152 (Increase)/Decrease in Loans and Advances and others (85) 9,297 663 4,992 Deduct: Increase (Decrease) in Trade Payables (549) (3,337) Increase (Decrease) in Provisions (16) (565) 73 (3,264) Cash generated from Operations 36,327 32,852 Adjustments for : Income tax paid ( net of refund) (1,945) (2,506) Net cash inflow from operating activities – ’A’ 34,382 30,346 B. Cash flow from Investing activities Outflow Investment in Fixed Assets/Capital Work in Progress (3,136) (4,129) Investment in Subsidiary (3,700) (3,455) Inflow Sale of Assets 1 1 Insurance claim relating to earlier years – 6,000 Interest Income 2,043 2,936 Other Income 82 2,126 31 8,968 Net cash used in investing activities–‘B’ (4,710) 1,384 C. Cash flow from Financing activities Inflow Increase in Share Capital – – Increase in Borrowings 15,000 – Outflow Decrease in Borrowings (26,649) (19,322) Payment of Dividend and Dividend Distribution Tax (8,519) (4,308) Interest & financial charges paid (8,296) (9,929) Net cash from financing activities–‘C’ (28,464) (33,559) Net increase/(Decrease) in cash or cash equivalent (A+B+C) 1,208 (1,829) Cash & cash equivalent at the commencement of the year (Opening balance ) 3,826 5,654 Cash & cash equivalent at the end of the year (closing balance) 5,034 3,826

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

26

R. Nagpal Manoj GaurPartner ChairmanM.No. 81594

R.S. Kuchhal J.N. Gaur Jt. President (Finance) Whole-time Director

& Company Secretary & CEO

Place : New Delhi A.B.Chugh R.K. NarangDated : 7th May,2009 Jt. President (Finance) Whole-time Director & CFO

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

R.S. Kuchhal J.N. Gaur Jt. President (Finance) Whole-time Director

& Company Secretary & CEO

Place : New Delhi A.B.Chugh R.K. NarangDated : 7th May,2009 Jt. President (Finance) Whole-time Director & CFO

ANNEXURE TO THE BALANCE SHEET AS AT 31ST MARCH, 2009

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO COMPANY’S INTEREST IN THE SUBSIDIARY COMPANY

1 Name of Subsidiary Company Jaypee Powergrid Limited

2 Financial Year of the Subsidiary Company ended on 31.03.2009

3 Number of Shares held by Jaiprakash Hydro- Power Limited at the end of the financial year of the subsidiary company.

(i) Equity Shares of Rs. 10/- each fully paid up 75,250,000

(ii) Extent of holding 60.20%

(iii) Share Application Money (Rs.) –

4 Date from which it became Subsidiary Company 30.01.2007

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

(i) Not dealt with in the Holding Company’s Accounts: (Pls. See Note Below)

(a) For the Financial Year of the Subsidiary N.A

(b) For the Previous Financial Years since it became the Holding Company’s Subsidiary N.A

(ii) Dealt with in the Holding Company’s Accounts: (Pls. See Note Below)

(a) For the Financial Year of the Subsidiary N.A

(b) For the Previous Financial Years since it became the Holding Company’s Subsidiary N.A

6 Changes in the interest of Jaiprakash Hydro Power Limited between the end of the Subsidiary’s Financial Year and 31st March, 2009

Number of Shares acquired N.A

7 Material changes between the end of the Subsidiary’s Financial Year and 31st March, 2009

(i) Fixed Assets (Net Addition) (Capital Work-in-Progress) N.A

(ii) Investments N.A

(iii) Moneys lent by the Subsidiary N.A

(iv) Moneys borrowed by the Subsidiary Company other than for meeting Current Liabilities N.A

Note : Jaypee Powergrid Limited is in preoperational stage.

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

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

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

R.S. Kuchhal J.N. Gaur Jt. President (Finance) Whole-time Director

& Company Secretary & CEO

Place : New Delhi A.B.Chugh R.K. NarangDated : 7th May, 2009 Jt. President (Finance) Whole-time Director & CFO

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

The Board of DirectorsJaiprakash Hydro-Power Limited

1. We have audited the attached consolidated Balance Sheet of Jaiprakash Hydro-Power Limited and its subsidiary, as at 31st March, 2009, and also the Consolidated Profit & Loss Account and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of Jaiprakash Hydro-Power Limited’s management and have been prepared by the management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. We did not audit the financial statements of the subsidiary, whose financial statements reflect total assets of Rs. 293.23 Crores as at 31st March 2009, total revenue of Rs. Nil and total cash flows amounting to Rs. 15.45 Crores for the year then ended. These financial statements and other financial information have been audited by other auditors whose report has been furnished to us. Our opinion is based solely on the report of the other auditors.

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

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

(a) in the case of the Consolidated Balance Sheet, of the state of affairs of Jaiprakash Hydro-Power Limited and its subsidiary as at 31st March, 2009.

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

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

For R. NAGPAL ASSOCIATESChartered Accountants

R.NagpalPlace : New Delhi PartnerDated : 7th May, 2009 M.No. 81594

27

CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2009 (Rs. in Lacs) SCHEDULE As at As at 31.3.2009 31.3.2008

SOURCES OF FUNDS

SHAREHOLDERS’ FUNDS

Share Capital A 49,100 49,100

Reserves & Surplus B 58,415 53,947

MINORITY INTEREST

Share Capital 4,975 3,675

DEFERRED REVENUE C 7,764 7,056

LOAN FUNDS

Secured Loans D 91,125 82,958

211,379 196,736

APPLICATION OF FUNDS

FIXED ASSETS E

Gross Block 184,874 172,269

Less: Depreciation 26,412 21,716

Net Block 158,462 150,553

Capital Work in Progress 19,556 8,187

Incidental Expenditure, Pending Allocation F 5,586 183,604 1,166 159,906

CURRENT ASSETS, LOANS & ADVANCES G

Inventories 490 496

Sundry Debtors 12,058 21,435

Cash & Bank Balances 12,367 9,613

Other Current Assets 9,092 10,403

Loans & Advances 9,188 7,006

43,195 48,953

LESS: CURRENT LIABILITIES & PROVISIONS H

Current Liabilities 3,925 1,132

Provisions 11,679 11,175

15,604 12,307

NET CURRENT ASSETS 27,591 36,646

MISCELLANEOUS EXPENDITURE I 184 184

(To the extent not written off or adjusted)

211,379 196,736

Accounting Policies and Notes to the Accounts O

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

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

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

R.S. Kuchhal J.N. Gaur Jt. President (Finance) Whole-time Director

& Company Secretary & CEO

Place : New Delhi A.B.Chugh R.K. NarangDated : 7th May,2009 Jt. President (Finance) Whole-time Director & CFO

CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009 (Rs. in Lacs) Schedule 2008-09 2007-08

INCOME

Sale of Electrical Energy 29,403 30,763(Net of advance against depreciation - see note 8 of the Schedule ‘O’ )Less: Rebate for prompt payments 515 28,888 681 30,082 Sale of Verified Emission Reductions (VERs) 779Other Income J 2,124 4,168 31,791 34,250 EXPENDITUREOperation & Maintenance K 843 1193Employees’ Remuneration & Benefits L 884 748Administration & other expenses M 616 571Interest & Financial Charges N 8,194 9929 10,537 12,441 Operating Profit 21,254 21,809 Depreciation 4,697 4,588 PROFIT BEFORE TAX AND EXTRA-ORDINARY ITEMS 16,557 17221Extra-ordinary itemsAdd - Refund of interest from PFC for earlier years 2,328 – - Insurance Claim relating to earlier years – 6,840Less - Adjustment of Tariff for FY 04 to FY 08 (2,766) (438) – 6,840 PROFIT BEFORE TAX 16,119 24061Provision for Income Tax- For the Year 1,826 2,726- Earlier Years – (11)- Fringe Benefit Tax 7 1,833 6 2,721

PROFIT AFTER TAX 14,286 21,340 Add: Profit brought forward from previous year 48,077 36,424Less: Reversal of Foreign Exchange Fluctuation for FY 07-08 (1,201) 46,876 – 36,424

PROFIT AVAILABLE FOR APPROPRIATION 61,162 57,764 APPROPRIATION:General Reserve 715 1,070 –Interim Dividend 3,683 3,683 –Income Tax on Interim Dividend 626 626Final Dividend 3,682 3,682Income Tax on Final Dividend 626 9,332 626 9,687.00

BALANCE CARRIED TO BALANCE SHEET 51,830 48,077 Basic and Diluted Earning Per Share (EPS), (in Rs.) 2.91 4.35 Accounting Policies and Notes to the Accounts O

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

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

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

R.S. Kuchhal J.N. Gaur Jt. President (Finance) Whole-time Director

& Company Secretary & CEO

Place : New Delhi A.B.Chugh R.K. NarangDated : 7th May,2009 Jt. President (Finance) Whole-time Director & CFO

28

CONSOLIDATED SCHEDULE “A” (Rs. in Lacs)

As at As at 31.3.2009 31.03.2008

SHARE CAPITAL

Authorised Capital 50,000 50,000

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

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

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

(Out of the above, 31,10,00,600 equity shares are held by Jaiprakash Associates Limited – the holding company.) (Previous year 31,10,00,600 equity shares of Rs. 10/- each ) 49,100 49,100

CONSOLIDATED SCHEDULE “B” : RESERVES AND SURPLUS

General ReserveAs per last Balance Sheet 1,070 – Add: Transferred from Profit & Loss a/c 715 1,785 1,070 1,070

Debenture Redemption ReserveAs per last Balance Sheet 4,800 4,800

SurplusAs per Profit & Loss Account 51,830 48,077

58,415 53,947

CONSOLIDATED SCHEDULE “C” (Rs. in Lacs)

As at As at 31.3.2009 31.03.2008

DEFERRED REVENUE

Advance against depreciation

As per last Balance Sheet 7,056 4,704

Add: For the Year 2,352 2,352

Less : Adjustment of Tariff for FY04 to FY08 (1,644) 7,764 – 7,056

(see note 7 of Schdeule ‘O’ ) 7,764 7,056

CONSOLIDATED SCHEDULE “D” : SECURED LOANS

DEBENTURES:

Redeemable Non-Convertible Debentures 19,156 28,650

TERM LOANS FROM:

Financial Institutions 16,395 19,006

Banks 44,047 60,442 24,910 43,916

FOREIGN CURRENCY LOANS:

Financial Institutions 705 650

Buyer’s Credit 10,822 11,527 9,742 10,392

91,125 82,958

CONSOLIDATED SCHEDULE “E”

FIXED ASSETS (Rs. in Lacs)

GROSS BLOCK DEPRECIATION NET BLOCK

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

01.04.2008 during during the 31.03.2009 31.03.2008 year during the 31.03.2009 31.03.2009 31.03.2008

the year year year

1 LAND

Lease hold Land 157 – – 157 19 4 – 23 134 138

Freehold Land 670 110 – 780 – – – – 780 670

2 BUILDING, ROAD & BRIDGES 7,658 – – 7,658 600 125 – 725 6,933 7,058

3 HYDRAULIC WORKS 55,159 10,315 – 65,474 6,737 1,587 – 8,324 57,150 48,422

4 TRANSMISSION LINE 23,793 – – 23,793 3,085 645 – 3,730 20,063 20,708

5 PLANT AND MACHINERY

– Generating Equipment 84,092 2,083 – 86,175 11,015 2,290 – 13,305 72,870 73,077

– Others 455 70 – 525 117 24 – 141 384 338

6 FURNITURE & FIXTURES 66 3 – 69 25 5 – 30 39 41

7 OFFICE EQUIPMENT 57 10 – 67 22 6 – 28 39 35

8 VEHICLES 162 22 8 176 96 17 7 106 70 66

TOTAL 172,269 12,613 8 184,874 21,716 4,703 7 26,412 158,462 150,553

PREVIOUS YEAR 171,549 729 9 172,269 17,130 4,592 6 21,716 150,553

CAPITAL WORK-IN-PROGRESS 19,556 8,187

29

CONSOLIDATED SCHEDULE “F”

STATEMENT OF INCIDENTAL EXPENDITURE DURING CONSTRUCTION, PENDING ALLOCATION

(Rs. in Lacs)

As at 31.3.2009 As at 31.3.2008

Advertisement & Publicity 25 21Auditors’ Remuneration – For Audit 3 1Bank Charges 5 –Books and Periodicals 2 1Communication Expenses 6 1Consultancy Expenses 1,458 621Crop and Tree Compensation 89 –Depreciation 10 3Directors’ Sitting Fee 10 4Employees Remuneration & Benefits 256 88Finance Charges 602 393Forest Compensation 2,554 34Interest on Term Loans 580 –Legal and Professional Expenses 126 5Licence Fee 4 2Miscellaneous Expenses 23 7Printing & Stationery 4 2Provision for Leave encashment/Gratuity 5 2Provision for Taxation 142 25Rent, Rate & Taxes 10 4Traveling & Conveyance 63 17Vehicle Running & Maintenance 23 6

TOTAL 6,000 1,237Less: – Interest on Short Term Deposit with Banks 400 59 (TDS Rs. 88,36,836; Previous Year Rs. 12,17,227) – Bidding Fee (Net of Expenses) 14 12

TOTAL CARRIED TO BALANCE SHEET 5,586 1,166

CONSOLIDATED SCHEDULE “G” CURRENT ASSETS, LOANS AND ADVANCESA) CURRENT ASSETS

I) Inventories

(As per Inventories taken, valued and certified by Management)

Stores & Spares 490 496

II) Sundry Debtors (Considered Good)

Due for a period exceeding six months 10,035 15,452

Other Debts 2,023 12,058 5,983 21,435

III) Cash and Bank Balances

Cash In hand 5 25

Balances with Scheduled Banks

(i) In Current Account 190 660

(ii) In Fixed Deposits 824 5,993

(Pledged with Govt. Deptt./Banks Rs. 6,85,362/- Previous year Rs. 21,18,000/-)

(iii) In Unpaid Dividend Bank account 130 32

(iv) Trust & Retention Account

(i) In Current Account 2,943 2,168

(ii) In Fixed Deposits 8,275 11,218 12,367 735 2,903 9,613

IV) Other Current Assests

a) Interest accrued ( including interest receivable from HPSEB) 2,714 3,880

b) Price variation Recoverable 181

c) Deferred Receivable 6,197 5,683

d) Insurance Claim – 9,092 840 10,403

34,007 41,947

(Rs. in lacs)

B) LOANS AND ADVANCES As at 31.3.2009 As at 31.3.2008

(Unsecured, considered Good)

i) Advances receivable in cash or in kind or for value to be received. 119 236

ii) Interest recoverable from Power Finance Corporation 1,736 –

iii) Staff Imprest & advances 9 9

iv) Prepaid Expenses 38 58

v) Security Deposits

– with Govt. Deptts.& Public bodies 1 76

– others 127 128 101 177

vi) Advance Tax & Tax Deducted at Source 7,158 6,526

9,188 7,006

Total (A+B) 43,195 48,953

CONSOLIDATED SCHEDULE “H” CURRENT LIABILITIES AND PROVISIONS

A) CURRENT LIABILITIES

i) Sundry Creditors

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

Deferred Payments – 358

Others 1,464 1,464 338 696

ii) Due to Staff 60 39

iii) Due to Directors – 1

iv) Other Liabilities 2,089 80

v) Interest Accrued but not due on loans 182 284

vi) Investor Education & Protection Fund

(Appropriate amounts shall be transferred to Investor Education & Protection Fund, as and when due)

– Unclaimed Dividend 130 32

3,925 1,132

B) PROVISIONS

i) Taxation 7,192 6,674

ii) Fringe Benefit Tax 25 26

iii) Provident fund 11 9

iv) Bonus & Incentive 62 93

v) Gratuity 44 36

vi) Leave Encashment 37 29

vii) Dividend 3,682 3,682

viii) Dividend Tax 626 626

11,679 11,175

Total (A+B) 15,604 12,307

CONSOLIDATED SCHEDULE “I” MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)

Preliminary Expenses 184 34

Add : During the Year – 184 150 184

184 184

CONSOLIDATED SCHEDULE “J” 2008-09 2007-08 OTHER INCOME

Interest on deposits with banks 282 344

(TDS Rs. 63,71,839, Previous Year Rs.72,96,408)

Interest on Arrears 1,760 2,592

Foreign Exchange Fluctuation – 1,201

Others Income 82 31

2,124 4,168

30

(Rs. in lacs)

2008-09 2007-08

CONSOLIDATED SCHEDULE “K” OPERATION & MAINTENANCE

Stores & Spares consumed 229 319Repairs to Building 30 40Repairs to Machinery 234 368Repairs to Barrage 17 46O & M Charges of ICF to SJVNL 126 119Insurance 207 301

843 1,193

CONSOLIDATED SCHEDULE “L” EMPLOYEES’ REMUNERATION & BENEFITS

Salary, Wages & Bonus 683 590Directors’ Remuneration 79 45Contribution to Provident and other funds 40 39Workmen & Staff Welfare Expenses 68 55Gratuity 7 9Leave Encashment 7 10

884 748

CONSOLIDATED SCHEDULE “M” ADMINISTRATION & OTHER EXPENSES

Rent 50 61Lease Rent of land 17 9Advertisement 21 23Business Promotion 3 3Telephone and Telex 7 8Courier & Postage 59 7Printing & Stationery 38 14Travelling & Conveyance 64 46Taxes & Fees 11 –Consultancy, Legal & Professional Fee 101 82Power & fuel 119 134Listing Fee 28 15Vehicle Running & Maintenance 13 12Directors’ Sitting Fee 18 16Filing fee for Tariff application – 25Miscellaneous Expenses 53 102Internal Audit Fee 5 5Auditors’ RemunerationFor Audit 8 8For Tax Audit 1 9 1 9

616 571

CONSOLIDATED SCHEDULE “N” INTEREST & FINANCIAL CHARGES

InterestDebentures 2,323 2,748Term Loans 5,681 6,965Working Capital 4 13Financial chargesDPG Commission 143 151Other charges 43 52

8,194 9,929

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

drawn upto the same reporting date, as that of the Parent Company, Jaiprakash Hydro-

Power Limited (JHPL).

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

concern.

(iv) Accounting policies not specifically referred to otherwise are consistent and in

consonance with generally accepted accounting principles.

Principles of Consolidation

(i) The financial statements of JHPL and its subsidiary are consolidated on a line-by-line

basis, by adding together the book values of like items of assets, liabilities, income and

expenses, after fully eliminating intra-company balances, intra-company transactions

and unrealised profits/losses.

(ii) The financial statements of JHPL and its subsidiary are consolidated using uniform

accounting policies for like transactions and other events in similar circumstances.

Revenue Recognition

(i) Revenue from sale of electrical energy by JHPL is accounted for on the basis of billing

to Himachal Pradesh State Electricity Board (HPSEB) in accordance with the provisions

of Power Purchase Agreement dated 4th June 1997, Amendment No.1 dated 7.1.1998

executed between JHPL and HPSEB and the Tariff Order dated 24.2.2007 and Multi Year

Tariff (MYT) Order dated 30.03.2009 of Hon’ble HPERC.

(ii) Revenue from sale of Verified Emission Reductions (VERs) is accounted for on receipt

basis.

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

earned or incurred.

(iv) Advance against depreciation claimed /to be claimed by JHPL as part of tariff in terms of

PPA during the currency of loans to facilitate repayment installments is treated as ‘Deferred

Revenue’. Such Deferred Revenue shall be included in Sales in subsequent years.

Fixed Assets

Fixed Assets are stated at Cost of acquisition or construction inclusive of freight, erection &

commissioning charges, duties and taxes, expenditure during construction period, Interest on

borrowings and financing cost upto the date of acquisition/installation.

Depreciation

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

(ii) Depreciation has been provided @2.71% p.a. on straight line method on Hydro Electric

Plant of JHPL w.e.f. 24.05.2003 as approved by The Ministry of Company Affairs,

Government of India in exercise of the powers conferred under section 205 (2) (c ) of

the Companies Act 1956 vide their letter no. 45/1/2006-CL-III dated 26.06.2006.

(iii) Fixed Assets other than Hydro Electric Plant of JHPL and all other Assets of Jaypee

Powergrid Limited are depreciated as per straight-line method at the rates specified in

Schedule XIV of the Companies Act, 1956.

Employees’ Benefits

Employees Benefits are provided in the books as per AS-15 (revised) in the following

manner:

i) Provident Fund and Pension contribution- as a percentage of salary/wages as per

provisions of Employees Provident Funds and Miscellaneous Provisions Act, 1952.

ii) Gratuity and Leave Encashment is defined benefit obligation. The liability is provided for

on the basis on Projected Unit Credit Method adopted in the actuarial valuation made at

the end of each financial year.

Inventories

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

Foreign Currency Transactions

(i) Transactions in Foreign Currency are recorded in the Books of Accounts at the rate of

CONSOLIDATED SCHEDULE “O”

ACCOUNTING POLICIES AND NOTES TO THE CONSOLIDATED ACCOUNTS

(A) SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation of Consolidated Financial Statements

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

31

exchange prevailing on the date of transaction.

(ii) All loans and deferred credits repayable in Foreign Currency and outstanding at the

close of the year are expressed in Indian Currency at the rate of exchange prevailing on

the date of the Balance Sheet.

(iii) Foreign Exchange gain/loss is being adjusted against the cost of assets in terms of the

amendment to Accounting Standard (AS–11) issued vide Notification dated 31st March,

2009 by the Ministry of Corporate Affairs, Govt. of India .

Borrowing Costs

Borrowing costs attributable to the acquisition/construction of fixed assets are capitalised as

part of the cost of the respective assets upto the date of commissioning. Other borrowing

costs are recognized as expense during the year in which they arise.

Amortization of Miscellaneous Expenditure

Miscellaneous Expenditure are amortized over a period of 3 years from the date of Commercial

Operation / date of transaction.

Earnings Per Share

Basic earning per equity share is computed by dividing net profit after tax by the weighted

average number of equity shares outstanding during the year.

Expenditure during Construction Period

Expenditure incurred on project Assets during construction period is capitalised and

apportioned to various assets on commissioning of the project.

Taxes on Income

Provision for current tax is made after taking into consideration benefits admissible to the

company under the provisions of the Income Tax Act, 1961.

Deferred Tax Liability is provided in accordance with Accounting Standard [AS-22]. Deferred

Tax Asset and Deferred Tax Liability are computed by applying rates and tax laws that have

been enacted upto the Balance Sheet date.

Segment Reporting

Revenue, operating results, assets and liabilities have been identified to represent separate

segments on the basis of their relationship to the operating activities of the segment.

Assets, Liabilities, Revenue and Expenses which are not allocable to separate segment on a

reasonable basis, are included under “Unallocated”.

Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when

there is a present obligation as a result of past events and if is probable that there will be an

outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes.

Contingent Assets are neither recognized nor disclosed in the financial statements.

(B) NOTES TO THE ACCOUNTS

1. Subsidiary

The Consolidated Financial Statements present the Consolidated Accounts of Jaiprakash

Hydro-Power Limited with its following Subsidiary:

Name of Subsidiary Country of Proportion of

Incorporation Ownership Interest

Jaypee Powergrid Ltd. [JPPGL] India 60.20%

2. Significant Accounting Policies and Notes to these Consolidated Financial Statements

are intended to serve as a means of informative disclosure and a guide to better

understanding the consolidated position of the Companies. Recognising this purpose,

the Company has disclosed such Policies and Notes from the individual financial

statements, which fairly present the needed disclosures.

3. Pursuant to the Memorandum Of Understanding signed with Power Grid Corporation

of India Ltd.(PGCIL), a Joint Venture Company in the name of ‘Jaypee Powergrid Ltd.’

(JPPGL) had been incorporated on 05.10.2006 by the Company for developing a

Transmission System for the evacuation of power to be generated by the 1000 MW

Karcham Wangtoo Hydro Electric Project in the State of Himachal Pradesh, to a suitable

interconnection point. The Shareholders’ Agreement had been signed with PGCIL on

22.2.2007 with 74% Equity Participation with a provision of minimum 51% Equity

Participation by the Company and balance, if any, by affiliates.

Subsequently a deed of Adherence had been executed between JHPL, POWERGRID

and JPVL (Jaiprakash Power Ventures Limited, an affiliate of JHPL) for amendment in

Shareholder’s Agreement to the subscription of the share capital of JPPGL to the tune

of 23% by JPVL out of the 74% Equity to be brought in by JHPL.

4. Contingent Liability not provided for in respect of:

(In Rupees)

2008-09 2007-08

(a) Outstanding Letters of Credit 6,87,63,850 4,12,52,083

Margin Money deposited against the above 6,85,362 21,18,000

(b) Estimated amount of Contracts remaining

to be executed on capital account and not

provided for 117,12,09,398 322,31,61,448

(c) Claims against the Company not

acknowledged as debts 6,29,13,672 6,25,91,672

5. In the opinion of Board of Directors, the “Current Assets, Loans and Advances” have a

value on realisation in the ordinary course of business at least equal to the amount at

which they are stated in the Balance Sheet.

6. Jaiprakash Associates Limited (JAL), the holding Company of Jaiprakash Hydro-

Power Limited (JHPL), has furnished Corporate Guarantees for the financial assistance

outstanding as on 31.03.2009 amounting to Rs. 248,41,11,445/- (Previous Year

Rs. 525,66,57,330/-) to the Financial Institutions and Banks and have also pledged

29,49,99,900 Equity Shares of Rs.10/- each of JHPL held by it with IFCI Ltd. to

collaterally secure the financial assistance granted to JHPL by the Financial Institutions

and Banks, namely ICICI Bank, IDBI, PFC, LIC, IFCI, Bank of Baroda, Punjab National

Bank, Indian Overseas Bank, State Bank of Indore, State Bank of Hyderabad, Yes

Bank and Axis Bank. ICICI Bank, State Bank of Hyderabad, IDBI, State Bank of Indore,

Punjab National Bank, LIC and Indian Overseas Bank have since released the aforesaid

corporate guarantees furnished by JAL and Bank of Baroda & IFCI (taken over loan from

IIBI) have agreed to release the same subject to similar approval by other Term Lenders

to JHPL.

Jaiprakash Hydro-Power Limited, the holding Company of Jaypee Powergrid Limited

(JPPGL) have pledged 2,25,00,000 Equity Shares of Rs. 10/- each, fully paid up of

JPPGL held by it in favour of IDBI Trusteeship Company Limited, Security Trustees to

collaterally secure the financial assistance granted to JPPGL by the lenders.

7. The Himachal Pradesh Electricity Regulatory Commission (HPERC) has passed the

Multi Year Tariff (MYT) Order on 30th March, 2009 for F.Y. 09, 10 and 11 and has also

revised Tariff for F.Y. 04 to 08 based on actuals for the period. The Company has filed

Review Application with HPERC for rectification of certain items of Tariff for FY 04 to

08 and for FY 09 aggregating to Rs.146.70 crores. Accordingly, the receivables from

HPSEB in respect of review items are subject to disposal of Review Application / other

legal remedies available to the Company.

8. As per accounting policy the advance against depreciation of Jaiprakash Hydro-Power

Limited amounting to Rs. 2,352 lacs (previous year Rs. 1,692 lacs, net of adjustment of

Rs. 660 lacs as per MYT order dated 30.3.2009) has been treated as Deferred Revenue.

9. Earnings Per Share is computed in accordance with Accounting Standard –AS20 issued

by the Institute of Chartered Accountants of India.

(In Rupees)

2008-09 2007-08

a) Profit after Tax as per Accounts 142,85,45,078 213,39,93,327

b) Weighted Average of shares outstanding

during the Year 49,10,00,600 49,10,00,600

c) Earnings Per Share 2.91 4.35

32

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

11. Capital Work-in-progress includes Civil Works, Machinery Under Erection and in transit

Construction, Advance to Suppliers, Pre-operative Expenses and Incidental Expenditure

Pending Allocation - Rs. 25143 Lacs (Previous Year Rs. 9352 lacs )

12. Managerial remuneration paid/payable by the Company and its subsidiary to Managing/

Whole-time Directors [excluding provisions for Gratuity & Leave Encashment on

Retirement]:

(In Rupees)

2008-09 2007-08

Salary 81,40,683 55,17,742

Provident Fund Contribution 9,76,882 5,54,129

Perquisites 61,20,424 40,29,797

1,52,37,989 1,01,01,668

13. Related Party disclosures, as required in terms of “Accounting Standard [AS] 18” are

given below:

1. Relationships (Related party relationships are as identified by the Company and

relied upon by the Auditors)

(a) Holding Company

Jaiprakash Associates Limited.

(b) Fellow subsidiaries

(i) Jaypee Hotels Limited

(ii) Jaiprakash Power Ventures Limited

(iii) Jaypee Karcham Hydro Corporation Limited

(iv) Jaypee Cement Limited

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

(vi) Jaypee Infratech Limited

(vii) Himalayan Expressway Ltd.

(viii) Bhilai Jaypee Cement Limited.

(ix) Bokaro Jaypee Cement Limited

(x) Gujarat Jaypee Cement & Infrastructure Limited

(xi) Madhya Pradesh Jaypee Minerals Limited

(xii) Jaypee Ganga Infrastructure Corporation Limited

(xiii) JPSK Sports Pvt. Ltd.

(xiv) Jaypee Aurnachal Power Ltd., Subsidiary of Jaiprakash Power Ventures Ltd.

(w.e.f. 23.4.2008)

(xv) Bina Power Supply Company Ltd., Subsidiary of Jaiprakash Power Ventures

Ltd. (w.e.f. 15.5.2008)

(c) Associate companies:

(i) Jaypee Ventures Pvt. Limited.

(ii) Indesign Enterprises Pvt Ltd.

(iii) JIL Information Technology Limited, Subsidiary of Jaypee Ventures Pvt. Ltd.

(iv) Gaur & Nagi Limited, Subsidiary of JIL Information Technology Limited.

(v) Jaiprakash Kashmir Energy Ltd.

(vi) Sonebhadra Minerals Pvt. Ltd.

(vii) RPJ Minerals Pvt. Ltd.

(viii) Jaypee Development Corporation Ltd., Subsidiary of Jaypee Ventures Pvt. Ltd.

(ix) Jaypee Petroleum Pvt. Ltd., Subsidiary of Jaypee Ventures Pvt. Ltd.

(w.e.f. 17.4.2008)

(x) Jaypee Hydro-Carbons Pvt. Ltd. Subsidiary of Jaypee Ventures Pvt. Ltd.

(w.e.f. 17.4.2008)

(xi) Jaypee Spa Infocom Ltd. Subsidiary of Jaypee Ventures Pvt. Ltd.

(w.e.f. 16.5.2008)

33

(d) Key Management Personnel:

Jaiprakash Hydro-Power Limited

[i] Shri Manoj Gaur, Chairman

[ii] Shri Sunil Kumar Sharma, Vice Chairman

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

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

[v] Shri Suresh Chandra, Whole Time Director

Jaypee Powergrid Limited

[i] Shri Rajiv Bhardwaj, Managing Director

2. Transactions carried out with related parties referred to above:

(In Rupees)

Nature of Transactions Related parties

Expenses Referred in Referred in Referred in Referred in

1(a) above 1(b) above 1(c) above 1(d) above

Hire Charges 19,55,17,194 – – –

(13,35,83,310)

Rent 45,23,438 – – –

(44,47,300)

Cement 1,48,20,200 – – –

(10,68,41,000)

Other Expenses 1,08,68,283 3,34,188 16,40,383 –

( – ) (1,15,268) (12,84,684)

Salary & Perquisites – – – 1,52,37,989

(1,01,01,668)

Outstandings

Receivables 1,00,00,000 – – –

(100,00,000)

Payables 41,55,202 8500

(1,18,44,682) – – –

Guarantees given by the holding company on behalf of JHPL have been mentioned

elsewhere in the Notes to the Accounts.

14. Segment Information

There are no Segment information in this year as JHPL the holding company is engaged

in only Power Generation and Jaypee Powergrid Limited the subsidiary company is yet

to commence commercial operation.

15. Disclosure as required under Notification No. G.S.R. 719 (E) dated 16th November,

2007 issued by the Department of Company Affairs (As certified by the Management):

S.No. Particulars 2008-09 2007-08

(Rs.) (Rs.)

a) The principal amount and interest due

thereon remaining unpaid to any supplier

– Principal Amount Nil Nil

– Interest Amount Nil Nil

b) The amount of interest paid by the buyer

in terms of section16, of the Micro Small

and Medium Enterprise Development

Act, 2006 along with the amounts of

payment made to the suppliers beyond

the appointed day. Nil Nil

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009(Rs. in lacs)

2008-09 2007-08 A. Cash flow from operating Activities Profit before taxation & Extra Ordinary items 16,557 17,218 Add Back Depreciation 4,697 4,591 Deferred Revenue on account of advance against depreiciation 708 2,352 Extra Ordianry Items (438) (Gain)/Loss on sale of Assets 1 1 Interest & Financial charges 8,194 13,162 9,929 16,873 Deduct: Interest Income (2,042) (2,936) Other Income (82) (2,124) (31) (2,967) Operating profit before working capital changes 27,595 31,124 Add: (Increase)/Decrease in Trade Debtors 9,376 4,177 (Increase)/Decrease in Inventories 7 152 (Increase)/Decrease in Loans and Advances and others (238) 9,145 297 4,626 Deduct: Increase (Decrease) in Trade Payables 2,694 (3,310) Increase (Decrease) in Provisions 85 2,779 75 (3,235) Cash generated from Operations 39,519 32,515 Adjustments for : Income tax paid (net of refund) (2,045) (2,507)

Net cash inflow from operating activities – ‘A’ 37,474 30,008

B. Cash flow from Investing Activities Outflow Investment in Fixed Assets (26,690) (5,271) Inflow Sale of Assets 1 1 Insurance Claim – 6,000 Interest Income 2,043 2,936 Other Income 82 2,126 31 8,968 Net cash used in investing Activities – ‘B’ (24,564) 3,697

C. Cash flow from Financing Activities Inflow Increase in Share Capital- Minority Interest 1,300 3,674 Increase in Borrowings 32,008 Outflow Decrease in Borrowings (26,649) (19,322) Preliminary Expenses – (150) Payment of Dividend and Dividend Distribution Tax (8,519) (4,309) Interest & financial charges paid (8,296) (9,929) Net cash in financing Activities – ‘C’ (10,156) (30,036)

Net increase/(Decrease) in cash or cash equivalent (A+B+C) 2,754 3,669

Cash & cash equivalents at the commencement of the year (Opening balance) 9,613 5,944 Cash & cash equivalents at the end of the year (Closing balance) 12,367 9,613

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

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

R.S. Kuchhal J.N. Gaur Jt. President (Finance) Whole-time Director & CEO

& Company Secretary

Place : New Delhi A.B.Chugh R.K. NarangDated : 7th May, 2009 Jt. President (Finance) Whole-time Director & CFO

34

c) The amount of interest due and payable

for the year of delay in making payment

(which have been paid but beyond the

appointed during year) but without

adding the interest specified under

the Micro, Smalll and Medium

Enterprises Development Act,2006. Nil Nil

d) The amount of interest accrued and

remaining unpaid Nil Nil

e) The amount of further interest remaining

due and payable even in the succeeding

years, until such date when the interest

dues above are actually paid to the small

enterprise for the purpose of

disallowance as a deductible

expenditure under section 23 of the

Micro Small and Medium

Enterprise Development Act, 2006 Nil Nil

16. During the year Baspa II 300 MW Hydroelectric Plant has been recognized for generation

of Verified Emission Reductions (VERs) under the Voluntary Carbon Standard 2007

(VCS, 2007) and has entered into an agreement with ECO Act, France for sale of VER

to AREVA France for the period upto 31.12.2010. Revenue from sale of 3,15,000 VERs

has been accounted for during the year.

17. Previous year’s figures have been regrouped/re-arranged wherever considered

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

Signature to Schedules “A to “O”

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

R.Nagpal Manoj GaurPartner ChairmanM.No. 81594

R.S. Kuchhal J.N. Gaur Jt. President (Finance) Whole-time Director & CEO

& Company Secretary

Place : New Delhi A.B.Chugh R.K. NarangDated : 7th May, 2009 Jt. President (Finance) Whole-time Director & CFO

35

DIRECTORS’ REPORTTo,

The Members,

The Directors of your Company have pleasure in presenting the third Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2009.

PROGRESS OF THE PROJECT

Progress at Site

a) The Directors of your Company wish to report that the works at Site are progressing quite satisfactorily and are in line with the scheduled completion :

• The detailed survey and check survey have been concluded to the extent of 91 Kms and 217 Kms respectively.

• Foundations at 200 locations out of 512 locations have been completed.

• Tower Erection work at 51 locations out of 512 locations has been completed.

b) The contracts for supply of Conductors as well as Insulators have been awarded.

c) The Contractors engaged for various packages are well equipped with infrastructure facilities and adequate manpower support and are functioning at various sites at Shoultu, Rampur, Solan, Rajgarh and Yamuna Nagar.

d) The Lenders’ Engineers, M/s. Lahmeyer International, have been visiting the Project site periodically to evaluate the progress of the Project and have expressed their satisfaction with the progress.

e) Authorisations/Approvals:

• The Company has been granted approval on 28th January, 2009 under Section 164 of the Electricity Act, 2003 by Ministry of Power authorising the Company to exercise the powers of Telegraph Authorities.

• The Company has also obtained in-principle approval from Ministry of Environment & Forest for diversion of forest land in the State of Himachal Pradesh. Further action in the matter is in progress.

Financial Progress

The Directors of your Company are pleased to report that the financial closure was achieved during the year and all the financing documents with the lenders have been executed. Accordingly the Company has availed drawals in line with the Project Schedule.

Statement of Incidental Expenditure during construction, pending allocation

As already reported, the Company has not prepared its Profit and Loss Account as the Project is in the construction stage. As per the Statement of Incidental Expenditure during construction, pending allocation, for the year ended 31st March, 2009, an amount of Rs.55.83 crores incurred by the Company has been carried to Balance Sheet which shall be capitalised at an appropriate time.

SHARE CAPITAL

During the year under report,the paid-up share capital of the Company was increased from Rs.10 crores to Rs.125 crores by allotment of additional 11,50,00,000 equity shares of Rs.10/- each to the existing shareholders of the Company.

As on date,Jaiprakash Hydro-Power Limited ,Jaiprakash Power Ventures Limited and Power Grid Corporation of India Limited hold 60.2%,13.8% and 26% respectively of the aggregate equity share capital.Your Company continues to be the subsidiary of Jaiprakash Hydro-Power Limited.

DIRECTORATE

Consequent upon the resignation of Dr. R.P. Singh as Chairman and Managing

Director of Power Grid Corporation of India Ltd., he ceased to be Director/ Chairman of the Company w.e.f. 30th May, 2008, the date of his resignation from the Company. Further, Shri R.B. Mishra, upon his superannuation from Power Grid Corporation of India Ltd., has resigned as Director (Project) w.e.f. 29th September, 2008. The Board places on record and acknowledges the valuable contribution of Dr. R.P. Singh and Shri R.B. Mishra during their tenure as Chairman and Director (Project) respectively of the Company.

In accordance with the provisions of the Shareholders’ Agreement, Shri S.K.Chaturvedi, Chairman and Managing Director of Power Grid Corporation of India Ltd.,was appointed as Additional Director/Non-Executive Chairman of the Company w.e.f. 14th August, 2008.

Shri Prabhakar Singh, Non-Executive Director, was appointed as Whole-time Director/Director (Project) of the Company w.e.f. 5th December, 2008 for a period of two years, pursuant to his nomination by Power Grid Corporation of India Ltd., in terms of provisions of Shareholders’ Agreement.

Shri T.K. Wali was appointed as Additional Director (Non-Executive) w.e.f. 29th September, 2008 as a nominee of Power Grid Corporation of India Ltd., in terms of provisions of Shareholders’ Agreement.

Shri R.K. Narayan and Shri G.P. Singh, shall retire by rotation and being eligible, offer themselves for re-appointment.

AUDIT COMMITTEE

Consequent upon the changes in the Directorate, the Audit Committee was reconstituted on 29th September,2008 and the same comprises of Shri G.P. Singh, Chairman, Shri Suren Jain, Member and Shri T.K. Wali, Member.

DEPOSITS

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

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representation received from the operating management and after due enquiry, confirm the following in respect of the Audited Accounts for the year ended 31st March, 2009:-

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

ii. that the Directors have, in consultation with the Statutory Auditors, selected such accounting policies and applied them consistently and made judgement and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the year ended 31st March, 2009;

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

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

PARTICULARS OF EMPLOYEES

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

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

The information with respect to conservation of energy as per Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988 and forming part of the Directors’ Report for the period ended 31st March, 2009 is not applicable as the Project is still under construction stage.

As regards, the information with respect to Technology Absorption , the Project

36

shall utilize and absorb the modern technology for the construction of the transmission line consistent with the leading practices adopted by Power Grid Corporation of India Limited,which is providing the consultancy for design and engineering.There has not been any Foreign Exchange earnings/outgo.

NOTES ON ACCOUNTS

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

AUDITORS

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

APPRECIATION

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

The Board of Directors acknowledges the efficient and dedicated efforts made by employees at all levels.

On behalf of the Board

Place : Gurgaon S.K.CHATURVEDIDate : 1st May, 2009 CHAIRMAN

ANNEXURE TO THE DIRECTORS’ REPORT

INFORMATION IN PURSUANCE TO SUB-SECTION 2A OF SECTION 217 OF THE COMPANIES ACT, 1956 IS GIVEN BELOW:

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

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

1. Shri Rajiv Ranjan Bhardwaj, Managing Director, Rs. 35,86,328/-, B.Sc.(Hons.) Chemistry; Passed Indian Audit and Accounts Service examination (UPSC), 50, 26, 2nd March,2007, Jaypee Ventures Private Limited, New Delhi.

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

1. Shri R.B.Mishra, Director (Project), Rs.12,43,463/- ,B.E.(Elec), 59 ,38, 2nd March,2007, Power Grid Corporation of India Limited.

2. Shri Prabhakar Singh, Director (Project), Rs. 8,86,313 /-, B.E.(Elec),50, 26, 5th December, 2008, Power Grid Corporation of India Limited.

Notes:

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

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

3. Shri R.B.Mishra ceased to be the Whole-time Director w.e.f 29th September, 2008 .

4. Shri Prabhakar Singh,Whole-time Director holds office for a period of two years from the date of appointment viz. 5th December,2008.

AUDITOR’S REPORTTO THE SHAREHOLDERS OF

JAYPEE POWERGRID LIMITED

1. We have audited the attached Balance Sheet of JAYPEE POWERGRID LIMITED (“the Company”) as at 31st March, 2009 and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. No Profit and Loss Account has been prepared since the Company has yet to commence its revenue operations and necessary details as per part II of Schedule VI of the Companies Act, 1956 have been disclosed in the “Statement of Incidental Expenditure During Construction Pending Allocation”.

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

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

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

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

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

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

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

(v) on the basis of written representations received from the directors, as on March 31, 2009, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956, and;

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

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2009; and

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

For AWATAR & CO.Chartered Accountants

BRIJENDRA AGRAWALPlace : Gurgaon PartnerDate : 1st May, 2009 Membership No. : 087787

37

ANNEXURE TO THE AUDITOR’S REPORT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, custom duty, cess or any other statutory dues were in arrears as on 31st March 2009 for a period more than six months from the date they became payable.

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

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or bank. The Company has not borrowed any amounts by issue of debentures.

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

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

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

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

(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised.

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

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

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

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

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

For AWATAR & CO.Chartered Accountants

BRIJENDRA AGRAWALPlace : Gurgaon PartnerDate : 1st May, 2009 Membership No. : 087787

38

BALANCE SHEET AS AT 31ST MARCH, 2009(In Rupees)

SCHEDULE AS AT AS AT 31.03.2009 31.03.2008 SOURCES OF FUNDSShareholders’ Fund Share Capital A 1,250,000,000 100,000,000Share Application Money – 650,000,000Loan FundsSecured Loans B 1,700,756,018 – 2,950,756,018 750,000,000

APPLICATION OF FUNDSFixed AssetsGross Block C 6,124,364 2,787,500Less: Depreciation 956,458 323,446Net Block 5,167,906 2,464,054Incidental Expenditure, Pending Allocation D 558,599,090 116,587,961Capital Work-in-Progress 1,954,487,894 2,518,254,890 33,762,348 152,814,363Current Assets, Loans & Advances ECash and Bank Balances 733,185,826 578,663,570Other Current Assets 18,879,918 4,115,021Loans and Advances 12,616,696 2,088,952 764,682,440 584,867,543Less: Current Liabilities & Provisions FCurrent Liabilities 337,903,243 3,413,182Provisions 12,663,228 2,653,883 350,566,471 6,067,065Net Current Assets 414,115,969 578,800,478Miscellaneous Expenditure G 18,385,159 18,385,159(To the extent not written off or adjusted) 2,950,756,018 750,000,000Accounting Policies and Notes to the Accounts H As per our report of even date attached to the Balance Sheet.

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

(Brijendra Agrawal) Suren Jain Rajiv BhardwajPartner Director Managing DirectorM.No. 087787 Anita Rikhy Place : Gurgaon Dy. General Manager & Date : 1st May, 2009 Company Secretary

SCHEDULE “D”

STATEMENT OF INCIDENTAL EXPENDITURE DURING CONSTRUCTION, PENDING ALLOCATION FOR YEAR ENDING 31ST MARCH, 2009.

(In Rupees)

AS AT AS AT 31.03.2009 31.03.2008

Advertisement & Publicity 2,537,455 2,082,932

Auditors’ Remuneration

– For Audit 300,350 79,750

– For Tax Audit 22,472 -

Bank Charges 496,607 23,349

Books and Periodicals 145,355 96,030

Communication Expenses 552,771 134,060

Consultancy Expenses 145,778,683 62,146,187

Crop and Tree Compensation 8,866,889 -

Depreciation 956,458 323,446

Directors’ Sitting Fee 1,020,000 360,000

Employees’ Remuneration & Benefits 25,590,720 8,751,932

Finance Charges 60,244,151 39,326,000

Forest Compensation 255,436,214 3,392,361

Interest on Term Loan 57,993,992 -

Legal and Professional Expenses 12,592,644 478,814

License Fee 400,000 200,000

Miscellaneous Expenses 2,319,652 757,819

Printing & Stationery Expenses 437,188 197,477

Provision for Leave Encashment/Gratuity 507,028 201,025

Provision for Taxation 14,236,873 2,452,858

Rent, Rates & Taxes 978,438 361,203

Travelling & Conveyance Expenses 6,246,365 1,729,137

Vehicle Running & Maintenance Expenses 2,321,010 623,374

599,981,315 123,717,754

Less:

– Interest on Short Term Deposit with Banks 39,968,746 5,916,314

(TDS Rs. 8,839,836; Previous Year Rs. 1,217,227)

– Bidding Fee [Net of Expenses] 1,413,479 1,213,479

TOTAL CARRIED TO BALANCE SHEET 558,599,090 116,587,961

Accounting Policies and Notes to the Accounts H

As per our report of even date attached

to the Balance Sheet.

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

(Brijendra Agrawal) Suren Jain Rajiv BhardwajPartner Director Managing DirectorM.No. 087787 Anita Rikhy Place : Gurgaon Dy. General Manager & Date : 1st May, 2009 Company Secretary

(In Rupees)

SCHEDULE “A” SHARE CAPITAL AS AT 31.03.2009 AS AT 31.03.2008

Authorised30,00,00,000 Equity Shares of Rs. 10 each 3,000,000,000 3,000,000,000(Previous year 30,00,00,000 Equity Share of Rs.10/- each) 3,000,000,000 3,000,000,000Issued, Subcribed and Paid-up12,50,00,000 Equity Shares of Rs.10/- each(Previous year 1,00,00,000 Equity Share of Rs. 10/- each)Out of the above, 7,52,50,000 Equity Shares are held by Jaiprakash Hydro-Power Limited, the Holding Company.(Previous year 74,00,000 Equity Share of Rs. 10/- each) 1,250,000,000 100,000,000

1,250,000,000 100,000,000

SCHEDULE “B” SECURED LOANS(Including Interest accrued but not due)Term Loans from Banks 1,700,756,018 –

1,700,756,018 –

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CONSOLIDATED SCHEDULE ‘C’

FIXED ASSETS (In Rupees)

GROSS BLOCK DEPRECIATION NET BLOCK

S.No. Particulars As at Addition Sale/Transfer As at Upto For The Sale/Transfer Upto As at As at 01.04.2008 during during the 31.03.2009 31.03.2008 year during the 31.03.2009 31.03.2009 31.03.2008 the year year year

1 Motor Vehicles 2,366,605 2,163,794 – 4,530,399 184,215 393,054 – 577,269 3,953,130 2,182,390

2 Office Equipment 45,663 481,010 – 526,673 11,475 13,658 – 25,133 501,540 34,188

3 Furniture & 121,216 281,434 – 402,650 92,829 145,809 – 238,638 164,012 28,387 Fixtures

4 EDP Machinery 254,016 410,626 – 664,642 34,927 80,491 – 115,418 549,224 219,089

& Equipment

Total 2,787,500 3,336,864 – 6,124,364 323,446 633,012 – 956,458 5,167,906 2,464,054

Previous Year – 2,787,500 – 2,787,500 – 323,446 – 323,446 2,464,054

Capital Work-in-Progress 1,954,487,894 33,762,348

Note : Depreciation of Rs. 6,33,012/- for the year has been included in Statement of Incidental Expenditure during Construction Pending Allocation.

(In Rupees) As at As at 31.03.2009 31.03.2008

SCHEDULE “E” CURRENT ASSETS, LOANS & ADVANCESA) Current Assetsa) Cash & Bank Balances Cash in Hand 81,800 50,225 Balances with Scheduled Banks i) In Current Accounts 8,204,222 25,413,345 ii) In Fixed Deposits 51,677,561 553,200,000 Trust & Retention Account i) In Current Account 173,222,243 – ii) In Fixed Deposits 500,000,000 733,185,826 – 578,663,570b) Other Current Assets Interest Accrued on Fixed Deposits 779,039 4,115,021 Price Variation Recoverable 18,100,879 18,879,918 – 4,115,021B) Loans and Advancesa) Advances recoverable in cash or in kind or for value to be received. i) Contractors & Suppliers Advances 10,541 – ii) Employees Imprest & Advances 2,249 3,925 iii) Others 500,000 –b) Security Deposit – with Govt. Depts. & Public bodies 101,900 100,000 – Others 39,397 29,800c) Advance Tax & Tax Deducted at Source 11,962,609 12,616,696 1,955,227 2,088,952

Total (A+B) 764,682,440 584,867,543

SCHEDULE “F” CURRENT LIABILITIES & PROVISIONSA) Current Liabilities i) Sundry Creditors – Due to Micro, Small Scale, Medium Scale Enterprises – – – Other Creditors 132,330,862 653,152 ii) Due to Staff 1,293,615 957,823 iii) Other Liabilities 204,278,766 337,903,243 1,802,207 3,413,182

B) Provisions a) Taxation i) Income Tax 11,685,000 2,270,000 ii) Wealth Tax 21,200 6,824 iii) FBT 450,000 176,034 b) Employee Benefits i) Gratuity 183,302 68,783 ii) Leave Encashment 323,726 12,663,228 132,242 2,653,883

Total (A+B) 350,566,471 6,067,065

SCHEDULE “G” MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)Preliminary Expenses 18,385,159 18,385,159

18,385,159 18,385,159

SCHEDULE “H”ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS(A) SIGNIFICANT ACCOUNTING POLICIES General(i) The accounts are prepared on historical cost basis and on the principles of a going

concern. (ii) Accounting policies not specifically referred to otherwise are consistent and in

consonance with generally accepted accounting principles. Revenue RecognitionExpenditure and Income are accounted for on accrual basis.Fixed AssetsFixed Assets are stated at cost of acquisition inclusive of freight, duties, taxes and other incidental expenses related thereto.Capital Work-in-Progress (CWIP)Cost of material purchased/consumed, Erection charges thereon and Advances to Capital Suppliers are shown as Capital Work in Progress (CWIP) till the capitalisation of Project.DepreciationDepreciation on assets is provided on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.Incidental Expenditure during construction period Incidental Expenditure incurred on the Project during implementation will be capitalised and apportioned to various assets on commissioning of the Project.Preliminary Expenses Preliminary expenses shall be written off over a period of 3 years after the commencement of commercial operations. Taxes on Income Taxes comprise of Current Tax, Fringe Benefit Tax and Wealth Tax. Provision for current tax is calculated in accordance with the provisions of the Income Tax Act, 1961 and is made annually based on the tax liability computed after considering tax allowances and exemptions. Consequent to the introduction of Fringe Benefit Tax (FBT) effective 1st April, 2005 the Company provides for and discloses the FBT in accordance with the provisions of Section 115WC of the Income Tax Act, 1961 and the guidance note on FBT issued by the Institute of Chartered Accountants of India. Provision for Wealth Tax is calculated in accordance with the provisions of the Wealth Tax Act, 1957 after considering tax allowances and exemptions.Deferred Tax Assets and Deferred Tax Liability will be calculated by applying rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.Provision, Contingent Liabilities and Contingent AssetsThe Company recognises a provision when there is a present obligation that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received. A

(In Rupees) As at As at 31.03.2009 31.03.2008

40

disclosure for contingent liability is made when, as a result of obligating events, there is a possible obligation on a present obligation that may, but probably will not, require an outflow of resources. Contingent Assets are neither recognized nor disclosed. Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

Employee Benefits

Employee benefits have been recognised in accordance with revised AS-15. Accordingly,

i) Long term compensated absences are provided for based on actuarial valuation at the end of each financial year.

ii) Provident Fund is a defined contribution scheme and the same is administered through contributions to Provident Fund Commissioners.

iii) Gratuity liability is defined benefit obligation and is fully provided for on the basis of Projected Unit Credit (PUC) actuarial valuation made at the end of each financial year.

iv) Actuarial gains/losses are immediately recognised and are not deferred.

(B) NOTES ON ACCOUNTS i) Contingent Liabilities not provided for (In Rupees)

2008- 09 2007- 08

a) Outstanding Letters of Credit 5,54,58,954 – b) Estimated amount of Contract

remaining to be executed on Capital Account (net of advances) 1,171,209,398 3,193,458,276

ii) The joint venture between Jaiprakash Hydro-Power Limited (JHPL) and Power Grid Corporation of India Limited (POWERGRID) is governed by the Shareholders’ Agreement dated 22nd February, 2007 and Deed of Adherance executed between JHPL, Jaiprakash Power Ventures Limited (JPVL), POWERGRID and the company on 24th December, 2007.

Share Application money of Rs. 65 crores received during 2007-08 (Rs.30.85 crores from JHPL, Rs.17.25 crores from JPVL and Rs.16.90 crores from POWERGRID) was converted into share capital pursuant to the allotment of shares on 22nd April, 2008 in the agreed ratio of 51%, 23% and 26% respectively.

Further, the Company allotted 1,30,00,000 equity shares of Rs.10 each to Power Grid Corporation of India Limited and 3,70,00,000 equity shares of Rs. 10 each to Jaiprakash Hydro-Power Limited during 2008-09 and as such the total paid up capital as on 31st March, 2009 stood at Rs.125 crores.

iii) Financing Charges of Rs. 2,09,18,151/- (Previous year – Rs. 3,93,26,000/-) has been paid to the Lenders as processing fees/Facility agent fees on the amount of Term Loans of Rs. 700 Crores (Previous year – Nil) sanctioned by them.

iv) The Financial assistance sanctioned and disbursed/to be disbursed by Banks of Rupee Term Loans of Rs. 700 crores during the year together with payment of all interest at the agreed rates, additional interest in case of default, liquidated damages, reimbursement of all costs, charges and expenses and any other amount due and payable to the Lenders, Facility agent (ICICI Bank),Security Trustee (IDBI Trusteeship Services Ltd.) etc. under the loan documents/Financing documents are secured/to be secured by hypothecation of the Company’s movable assets (present and future), intangible assets including but not limited to the goodwill, undertaking and uncalled capital, revenues and receivables from Project or otherwise, assignment/charge/security interest of the Company’s rights under each of the Project Documents, assignment and/or charge of all licenses, permits, approvals, construction and operating period insurance policies in respect of or in connection with the project, operating cash flows and also including without limitation, the rights, title and interest in the undertakings of the Company, stocks of raw materials, semi-finished and finished goods, consumable stores and all monies, securities, contractor guarantees, performance bonds and any letter of credit provided by any person in favour of the Lenders/Security Trustee etc. ranking pari-passu among all participating Banks viz, ICICI Bank, Punjab National Bank, Central Bank of India, United Bank of India, Indian Overseas Bank, The Jammu and Kashmir Bank Ltd. and further secured by way of pledge of 30% of issued and paid up share capital of the Company. As the paid up capital on the date of execution of documents was Rs.75 crores, 2,25,00,000 equity shares of Rs. 10/- each fully paid up held by Jaiprakash Hydro-Power Limited (JHPL) have been pledged in favour of Security Trustee.

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

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

vii) The Trust and Retention Account (refer Schedule E) is maintained pursuant to the stipulations of the “Financing Agreements” executed with the Lenders.

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

(a) Capacity & Production

Licensed Capacity Not Applicable

Installed Capacity Not Applicable

Actual Production Not Applicable

(b) Expenditure in Foreign Currency (Foreign Exchange Outgo) NIL

The remaining information pursuant to the paragraphs 3 and 4 of Part- II of Schedule- VI to the Companies Act 1956 are either nil or not applicable.

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

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

I. List of Related Parties and relationships

(a) Holding Companies

[i] Jaiprakash Hydro-Power Limited

[ii] Jaiprakash Associates Limited, being holding company of Jaiprakash Hydro-Power Limited

(b) Fellow Subsidiary Companies

[i] Jaiprakash Power Ventures Limited

[ii] Jaypee Hotels Limited

[iii] Jaypee Karcham Hydro Corporation Ltd.

[iv] Jaypee Cement Ltd.

[v] Gujarat Anjan Cement Ltd. (subsidiary of Jaypee Cement Ltd.)

[vi] Jaypee Infratech Ltd.

[vii] Himalyan Expressway Ltd.

[viii] Jaypee Ganga Infrastructure Corporation Ltd.

[ix] Bina Power Supply Company Ltd. (subsidiary of Jaiprakash Power Ventures Ltd.) (w.e.f. 15.05.08)

[x] Madhya Pradesh Jaypee Minerals Ltd.

[xi] Bhilai Jaypee Cement Ltd.

[xii] Gujarat Jaypee Cement & Infrastructure Ltd.

[xiii] JPSK Sports Pvt. Ltd.

[xiv] Bokaro Jaypee Cement Ltd.

[xv] Jaypee Arunachal Power Ltd. (JV subsidiary of Jaiprakash Power Ventures Ltd.) (w.e.f. 23.04.08)

(c) Associate Companies

[i] Jaypee Ventures Pvt. Ltd.

[ii] Jaiprakash Kashmir Energy Ltd.

[iii] JIL Information Technology Ltd. (subsidiary of Jaypee Ventures Pvt. Ltd.)

[iv] Gaur & Nagi Ltd. (subsidiary of JIL Information Technology Ltd.)

[v] Indesign Enterprises Pvt. Ltd.

[vi] RPJ Minerals Pvt. Ltd.

[vii] Sonebhadra Minerals Pvt. Ltd.

[viii] Jaypee Development Corporation Ltd. (subsidiary of Jaypee Ventures Pvt. Ltd.)

[ix] Jaypee Petroleum Pvt. Ltd. (subsidiary of Jaypee Ventures Pvt. Ltd.) (w.e.f. 17.04.08)

[x] Jaypee Hydro-Carbons Pvt. Ltd. (subsidiary of Jaypee Ventures Pvt. Ltd.) (w.e.f. 17.04.08)

[xi] Jaypee Spa Infocom Ltd. (subsidiary of Jaypee Ventures Pvt. Ltd.) (w.e.f. 16.05.08)

(d) Key Management Personnel

[i] Shri Rajiv Ranjan Bhardwaj, Managing Director

[ii] Shri Prabhakar Singh, Whole - time Director (w.e.f. 05.12.2008)

[iii] Shri R.B.Mishra, Whole - time Director (Resigned w.e.f. 29.09.2008)

41

(e) The Shareholding of the Company

S. No. Name of present Proposed Shareholding Present Shareholder(s) as per Deed of Adherence Shareholdingas executed on 24th on 31st March, December, 2007 read with 2009(%) Shareholders’ Agreement.

1 Jaiprakash Hydro-Power Ltd. Holding and Promoter 60.20% (JHPL) Company, to hold at least 51% and not more than 74% Equity Shares

2 Power Grid Corporation To hold 26% Equity Shares. 26.00 % of India Ltd.(POWERGRID)

3 Jaiprakash Power Ventures To hold 23% Equity Shares. 13.80% Ltd.(JPVL) (In the event of non- subscription of any part of its share,JHPL shall make the contribution.)II. Transactions during the period with Related Parties

(In Rupees)

S. No. Nature of Transaction Related Party 2008-09 2007-081. Issue of Equity Jaiprakash Hydro- 67,85,00,000/- 7,35,00,000/- Share Capital Power Ltd. (Out of this, 30,85,00,000/- was received during 2007-08 as share application money.)

Power Grid 29,90,00,000/- 2,58,70,000/- Corporation of (Out of this, India Ltd. 16,90,00,000/- was received during 2007-08 as share application money)

Jaiprakash Power 17,25,00,000/- – Ventures Ltd. (Received during 2007-08 as share application money)

2. Provision of services Jaypee Hotels Ltd. 1,08,918/- –

3. Advance paid Power Grid 1,21,50,283/- 1,08,91,012/- Corporation of India Ltd.

4. Consultancy Power Grid 7,86,51,996/- 5,85,94,616/- Corporation of India Ltd.

5 Advertisement Gaur & Nagi Ltd. 1,40,929/- 10,45,468/-

Transaction related to parties referred in “I (d )” above

Managerial remuneration paid/payable to the Whole-time Directors including earlier Director (Project)

(In Rupees)

S. No. Nature of Transaction 2008- 09 2007- 081. Salary 31,30,683 27,00,0002. Employer’s Cont. to PF 3,75,682 2,16,0003. Other Perks 22,09,739 18,66,601

57,16,104 47,82,601

Remuneration includes Salary, House Rent Allowance and other perquisites like Medical Reimbursement, Company’s Contribution towards Provident Fund, Gas and Electricity etc. (excluding provisions for Gratuity & Leave Encashment on retirement)

An application for obtaining approval of Central Government has been filed for revision of remuneration payable to Managing Director (w.e.f.1st October,2008) as the proposed remuneration exceeds the ceiling limits as per Schedule XIII of the Companies Act, 1956. Same has been approved by the shareholders at the Extra-ordinary General meeting held on 29th December,2008. No provision has been made in the accounts as the approval of Central Government has not yet been received.

x) As per management there are no Small Scale Industrial Undertakings, to whom the Company owes more than Rs.1 lakh outstanding for more than 30 days as on 31st March, 2009.

xi) Disclosure as required under Notification No. G.S.R. 719 (E) dated 16th November, 2007 issued by the Department of Company Affairs (As certified by the Management)

S.No. Particulars Amount (Rs.)

a) The principal amount and interest due thereon remaining unpaid to any supplier

– Principal Amount Nil – Interest Amount Nil b) The amount of interest paid by the buyer in terms of

section16, along with the amounts of payment made to the supplier beyond the appointed day Nil

c) The amount off due and payable for the year of delay in making payment (which have been paid but beyond the appointed during year) but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act, 2006. Nil

d) The amount of interest accrued and remaining unpaid Nil e) The amount of further interest remaining due and

payable even in the succeeding years, until such date when the interest dues above are actually paid to the small enterprise Nil

xii) Provision for Retirement Benefits

a) Gratuity Liability - Defined Benefit Plan which is unfunded

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

In order to comply with revised AS-15, the Company has charged Rs. 1,14,519/- (Previous Year Rs. 68,783/-) in Incidental and Pre-operative Expenses, Pending Allocation for the current year.

b) Leave Encashment Liability - Defined Benefit Plan which is unfunded

In order to comply with revised AS-15, the Company has charged Rs. 1,91,484/- (Previous Year Rs. 1,32,242/-) in Incidental and Pre-operative Expenses, Pending Allocation for current year.

c) Provident Fund - Defined Contribution Plan

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

xiii) Provision of Rs. 1,16,85,000/- towards Income Tax (Previous Year Rs. 22,70,000/-), Rs. 4,50,000/- towards Fringe Benefit Tax (Previous Year Rs. 1,76,034/-) and Rs. 21,200/- towards Wealth Tax (Previous Year Rs. 6,824/-) has been made for the current year.

As commercial operations have not yet commenced, there is no Deferred Tax Asset / Liability as on 31st March, 2009.

xiv) All figures have been rounded off to the nearest rupee.

xv) Previous year figures have been re-grouped/re-arranged wherever considered necessary to make them conform to the figures for the current year.

Signatures to Schedules “A” to “H”

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

(Brijendra Agrawal) Suren Jain Rajiv BhardwajPartner Director Managing DirectorM.No. 087787 Anita Rikhy Place : Gurgaon Dy. General Manager & Dated : 1st May, 2009 Company Secretary

42

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

I Registration Details Registration No. 154627 State Code No. 55 Balance Sheet Date 31.03.2009

II Capital raised during the period (Amount in Rs.Thousands) Public Issue Nil Private Placement 1,150,000 Bonus Issue Nil Others Nil Rights Issue Nil

III Position of Mobilisation and Deployment of Funds (Amount in Rs.Thousands) Total Liabilities 2,950,756 Total Assets 2,950,756

Sources of Funds Paid-up Capital 1,250,000 Reserves & Surplus – Secured Loans 1,700,756 Unsecured Loans – 2,950,756 Application of Funds Net Fixed Assets (including 2,518,255 expenditure during construction) Investments – Net Current Assets 414,116 Miscellaneous Expenditure 18,385 Accumulated Losses – 2,950,756IV Performance of Company (Amount in Rs. Thousands) Turnover } Not Applicable Total Expenditure } since the Profit/Loss Before Tax (+) } Project is under Profit/Loss After Tax (+) } implementation Earning per Share in Rs. } Dividend Rate (%) }V Generic Names of three Principal Products/Services of the Company (as per Monetary terms) Items Code No.(ITC Code) NA Product/Services Description Transmission of Electricity

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

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

(Brijendra Agrawal) Suren Jain Rajiv BhardwajPartner Director Managing DirectorM.No. 087787 Anita Rikhy Place : Gurgaon Dy. General Manager & Dated : 1st May, 2009 Company Secretary

CASH FLOW STATEMENT FOR THE PERIOD ENDING 31ST MARCH, 2009 (In Rupees)

2008-2009 2007-2008

A. Cash flow from operating activities

Add:

(Increase)/Decrease in Loans and Advances and others (25,292,641) (36,766,321)

Deduct:

Increase (Decrease) in Trade Payables 334,490,061 2,753,952

Net cash inflow from operating activities –’A’ 309,197,420 (34,012,369)

B. Cash flow from Investing activities

Outflow

Investment in Fixed Assets/ Capital Work in Progress (2,355,431,182) (114,184,571)

Inflow

Other Income – –

Net cash used in investing activities – ’B’ (2,355,431,182) (114,184,571)

C. Cash flow from Financing activities

Inflow

Increase in Share Capital 500,000,000 712,870,000

Increase in Term Loans 1,700,756,018 -

Outflow

Preliminary Expenses – (15,000,000)

Net cash in financing activities – ’C’ 2,200,756,018 697,870,000

Net increase/(Decrease) in cash or cash equivalent (A+B+C) 154,522,256 549,673,060

Cash & cash equivalent at the commencement of the year (Opening balance) 578,663,570 28,990,510

Cash & cash equivalent at the end of the year (closing balance) 733,185,826 578,663,570

Accounting Policies and Notes to the Accounts H

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

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

(Brijendra Agrawal) Suren Jain Rajiv BhardwajPartner Director Managing DirectorM.No. 087787 Anita Rikhy Place : Gurgaon Dy. General Manager & Dated :1st May, 2009 Company Secretary