1

P RP RP RP RP R O F I L EO F I L EO F I L EO F I L EO F I L E

Reliance Energy Limited, incorporated in 1929, is a fully integrated utility engaged in the generation, transmission and

distribution of electricity. Reliance Energy Limited is ranked amongst India's top 20 listed private companies in terms

of all major financial parameters, including assets, sales, profits and market capitalization.

Reliance Energy, a member of the Reliance Group, is India's leading private sector utility group, with aggregate

estimated group revenues of Rs 9,500 crore (US $ 2.2 billion) and total assets of Rs. 10,700 crore (US $ 2.4 billion).

The Reliance Energy group distributes more than 21 billion units of electricity to over 25 million consumers in Mumbai,

Delhi, Orissa and Goa, across an area covering 1,24,300 sq. kms.

Reliance Energy generates 941 MW of electricity, through its power plants located in Maharashtra, Andhra Pradesh,

Kerala, Karnataka and Goa. The group is exploring the emerging opportunities in the areas of trading and

transmission of power.

The group also provides a portfolio of value-added services in engineering, procurement and construction (EPC)

contracts through a network of regional offices in India.

V IS ION STVIS ION STVIS ION STVIS ION STVIS ION STAAAAATEMENTTEMENTTEMENTTEMENTTEMENT

To be amongst the most admired and most trusted integrated utility companies in the world, delivering reliable and

quality products and services to all customers at competitive costs, with international standards of customer care –

thereby creating superior value for all stakeholders.

To set new benchmarks in standards of corporate performance and governance through the pursuit of operational and

financial excellence, responsible citizenship, and profitable growth.

REL IANREL IANREL IANREL IANREL IAN CE ENERCE ENERCE ENERCE ENERCE ENERGY MISS ION: EXGY MISS ION: EXGY MISS ION: EXGY MISS ION: EXGY MISS ION: EXCELLENCELLENCELLENCELLENCELLEN CE IN ENERCE IN ENERCE IN ENERCE IN ENERCE IN ENERG YG YG YG YG Y

� To attain global best practices and become a world-class utility.

� To provide uninterrupted, affordable, quality, reliable and clean power, to millions of customers.

� To achieve excellence in service, quality, reliability, safety and customer care.

� To earn the trust and confidence of all customers and stakeholders, exceeding their expectations, and make the

company a respected household name.

� To work with vigour, dedication and innovation, with total customer satisfaction as the ultimate goal.

� To consistently achieve high growth with the highest levels of productivity.

� To be a technology driven, efficient and financially sound organisation.

� To be a responsible corporate citizen nurturing human values and concern for society, the environment and above

all, people.

� To contribute towards community development and nation building.

� To promote a work culture that fosters individual growth, team spirit and creativity to overcome challenges and

attain goals.

� To encourage ideas, talent and value systems.

� To uphold the guiding principles of trust, integrity and transparency in all aspects of interactions and dealings.

This Report is printed on environment-friendly paper.

2

REL PERFORMANREL PERFORMANREL PERFORMANREL PERFORMANREL PERFORMAN CE HIGHLIGHTSCE HIGHLIGHTSCE HIGHLIGHTSCE HIGHLIGHTSCE HIGHLIGHTS

YYYYYear Ended 3ear Ended 3ear Ended 3ear Ended 3ear Ended 31st Mar1st Mar1st Mar1st Mar1st Marccccchhhhh 20052005200520052005 2004 2003 2002 2001 1990 1980 1970 1960 1950 1940 1930

Units Sold -(Million Units) 7969^7969^7969^7969^7969^ 7691 ^ 5880 5676 5415 2899 1316 540 121 25 5 1.4

Maximum Demand MVA 11111320320320320320 1274 1226 1201 1198 546 258 111 29 NA NA NA

High Tension Mains KMs 30303030301111122222 2915 2829 2789 2734 1437 1000 700 326 NA NA NA

Low Tension Mains KMs 30393039303930393039 3002 2965 2923 2870 1671 1143 841 418 NA NA NA

No. of Substations 38483848384838483848 3735 3653 3547 3444 2257 1446 718 226 NA NA NA

No. of Consumers (in '000)Licensed Area - 384 sq.km 23823823823823811111 2329 2223 2142 2067 1210 598 260 80 18 12 1.7

No. of Shareholders 9924399243992439924399243 96485 121913 144809 154993 7397 NA NA NA NA NA NA

FFFFFinancial Data (Rs.in crinancial Data (Rs.in crinancial Data (Rs.in crinancial Data (Rs.in crinancial Data (Rs.in crororororore)e)e)e)e)

Assets :Assets :Assets :Assets :Assets : US$ inmillion

Fixed Assets (Net) 665.60 29292929291111122222 3093 1813 1951 2080 147 43 13.74 3.18 0.78 0.28 0.16

Investments 159.09 696696696696696 2875 1030 611 534 8 3 0.48 0.09 - - -

Current Assets (Net) 1543.54 67536753675367536753 1428 545 867 673 28 7 2.07 0.15 0.2 0.01 -

TTTTTotal Assetsotal Assetsotal Assetsotal Assetsotal Assets 2368.23 1111103603603603603611111 7396 3388 3429 3287 183 53 16.29 3.42 0.98 0.29 0.16

SourSourSourSourSources of Fces of Fces of Fces of Fces of Finance :inance :inance :inance :inance :

Share Capital 42.51 111118686868686 175 138 138 201 13 5 3.59 1.75 0.83 0.24 0.16

Equity Warrants 129.83 568568568568568 - - - - - - - - - - -

Reserves & Surplus 1276.80 55865586558655865586 4936 2426 2540 2375 88 24 5.02 0.88 0.15 0.05 -

Borrowings 854.63 37393739373937393739 2030 632 661 695 27 9 5.23 0.49 - - -

Deposits from Consumers 5.03 2222222222 18 14 17 16 55 15 2.45 0.3 - - -

Deferred Tax Liabilities 59.43 260260260260260 237 178 73 - - - - - - - -

TTTTTotal Liabilitiesotal Liabilitiesotal Liabilitiesotal Liabilitiesotal Liabilities 2368.23 1111103603603603603611111 7396 3388 3429 3287 183 53 16.29 3.42 0.98 0.29 0.16

Gross Revenue 1049.83 45934593459345934593 3583 2777 2783 2778 390 66 7 1 0.31 0.08 0.01

Profit Before Tax 130.29 570570570570570 417 153 302 350 12 7 1 0.29 0.08 0.02 -

Profit After Tax 118.86 520520520520520 367 297 ** 281 321 12 4 1 0.22 0.08 0.02 -

Dividends 19.89 8787878787 70 61 61 62 2 1 0.31 0.14 0.04 0.02 0.01

Dividend Tax 2.74 1111122222 9 8 0.17 7 - - - - - - -

Retained Earnings (includingstatutory reserves) 96.23 424242424211111 295 54 244 227 10 3 1 0.17 0.07 0.02 -

Equity Share Capital 42.51 111118686868686 175 138 138 138 12 4 3 2 1 0.24 0.16

Rate of Dividendon Equity Shares *47% *47%*47%*47%*47%*47% 45% 44% 43% 40% 18% 16% 11% 8% 7% 7% 5%

Earnings Per Share (Rs.)@ US$ 0.64 2828282828 26 22 ** 22 21 10 72 30 13 10 8 2

*Proposed- 14%, Interim-33% @Based on face value of @Based on face value of**Prior to one time Rs. 10 per share Rs. 100 per shareadjustments of Rs. 135 crore

1 US$ = Rs. 43.75 as on 31st March, 20051 crore = 10 million

^ ^ ^ ^ ^ includes sales in respect ofSamalkot and Goa Power Stations

3

BOBOBOBOBOARD OF DIRECTARD OF DIRECTARD OF DIRECTARD OF DIRECTARD OF DIRECTORSORSORSORSORS

Shri Anil D Ambani - Chairman & Managing DirectorShri Satish Seth - Executive Vice ChairmanShri J P Chalasani - Director (Business Development)Shri S C Gupta - Director (Operations)Shri K H Mankad - Director (Finance)Shri Gautam DoshiShri V R GalkarGen V P Malik, PVSM,AVSM (Retd.)Shri S L RaoDr. Leena SrivastavaComComComComCompanpanpanpanpany Secry Secry Secry Secry SecretaretaretaretaretaryyyyyShri Ramesh Shenoy

AAAAAUDIT CUDIT CUDIT CUDIT CUDIT COMMITTEEOMMITTEEOMMITTEEOMMITTEEOMMITTEE

Shri Gautam Doshi (Chairman)Shri V R GalkarGen V P MalikShri S L RaoDr. Leena Srivastava

NNNNNOMINOMINOMINOMINOMINAAAAATION/REMUNERTION/REMUNERTION/REMUNERTION/REMUNERTION/REMUNERAAAAATION CTION CTION CTION CTION COMMITTEEOMMITTEEOMMITTEEOMMITTEEOMMITTEE

Shri Gautam Doshi (Chairman)Gen V P MalikShri S L Rao

SSSSSAFETAFETAFETAFETAFETY & ENVIRY & ENVIRY & ENVIRY & ENVIRY & ENVIRONMENT CONMENT CONMENT CONMENT CONMENT COMMITTEEOMMITTEEOMMITTEEOMMITTEEOMMITTEE

Dr. Leena Srivastava (Chairperson)Shri S C GuptaGen V P Malik

Shri S L Rao

SHAREHOLDERS/INVESTSHAREHOLDERS/INVESTSHAREHOLDERS/INVESTSHAREHOLDERS/INVESTSHAREHOLDERS/INVESTORS’ GRIEVORS’ GRIEVORS’ GRIEVORS’ GRIEVORS’ GRIEVANANANANANCES CCES CCES CCES CCES COMMITTEEOMMITTEEOMMITTEEOMMITTEEOMMITTEE

Shri V R Galkar (Chairman)Shri Gautam DoshiShri K H Mankad

AAAAAUDITUDITUDITUDITUDITORSORSORSORSORS

Chaturvedi & ShahHaribhakti & Co.Price Waterhouse

BBBBBANKERSANKERSANKERSANKERSANKERS

ABN AMRO Bank N.V.Canara BankHDFC Bank LimitedHSBC LimitedICICI Bank LimitedStandard Chartered BankState Bank of IndiaUCO BankUnion Bank of India

CONTENTSCONTENTSCONTENTSCONTENTSCONTENTS

Page NoPerformance Highlights 2Letter to Shareowners 4Distribution Network in Mumbai 6Distribution Network in Delhi 7Notice 8Management Discussion and Analysis Report 9Corporate Governance Report 24Investor Information 35Directors’ Report 45Auditors’ Report 53Balance Sheet 56Profit and Loss Account 57Schedules and Notes 58Glossary 89Nomination Form 91Attendance Slip and Proxy Form 93

REGISTERED OFFICEREGISTERED OFFICEREGISTERED OFFICEREGISTERED OFFICEREGISTERED OFFICE

Reliance Energy Centre, Santa Cruz (E)Mumbai 400 055Telephone: +91 22 2663 9999Facsimile: +91 22 2663 9741Email: helpdesk@rel.co.inWeb site: www.rel.co.in

REGISTRREGISTRREGISTRREGISTRREGISTRAR & TRAR & TRAR & TRAR & TRAR & TRANSFER AGENTANSFER AGENTANSFER AGENTANSFER AGENTANSFER AGENT

Karvy Computershare Pvt Ltd.Karvy House, 46, Avenue 4, Street No.1Banjara Hill +91 40 2332 0666/2330 4703Facsimile: +91 40 2332 3058Email: relenergy@karvy.comWeb site: www.karvy.com

POPOPOPOPOWER PLWER PLWER PLWER PLWER PLANTSANTSANTSANTSANTS

Dahanu PDahanu PDahanu PDahanu PDahanu Pooooowwwwwer Ser Ser Ser Ser Stationtationtationtationtation SamalkSamalkSamalkSamalkSamalkot Pot Pot Pot Pot Pooooowwwwwer Ser Ser Ser Ser StationtationtationtationtationDahanu Road 401 602 Industrial Development AreaThane District Peddapuram MandalMaharashtra Samalkot 533 440

Andhra PradeshGoa PGoa PGoa PGoa PGoa Pooooowwwwwer Ser Ser Ser Ser Stationtationtationtationtation Wind FWind FWind FWind FWind FarararararmmmmmOpp. Sancoale Industrial Near Aimangala 577558Estate, Zuarinagar 403 726 Chitradurga DistrictSancoale, Mormugao, Goa Karnataka

SEVENTSEVENTSEVENTSEVENTSEVENTYYYYY-SIXTH ANNU-SIXTH ANNU-SIXTH ANNU-SIXTH ANNU-SIXTH ANNUAL GENERAL GENERAL GENERAL GENERAL GENERAL MEETINAL MEETINAL MEETINAL MEETINAL MEETINGGGGG

Wednesday, 8th June, 2005 at 11.00 a.m. at Shri BhaidasMaganlal Sabhagriha, U-1 Juhu Development Scheme, VileParle (West), Mumbai 400 056

This Annual Report can be accessed at www.rel.co.in

4

My dear fMy dear fMy dear fMy dear fMy dear felloelloelloelloellow sharw sharw sharw sharw shareoeoeoeoeowners,wners,wners,wners,wners,

It gives me great pleasure to share with you thehighlights of our Company's performance during the year2004-05.

In just over two years after the acquisition of managementcontrol in the Company by the Reliance Group, RelianceEnergy has made significant strides in its operational aswell as financial performance.

We are committed to make Reliance Energy a world-classutility company, benchmarked to international standardsof quality, operational performance, efficiency and customercare, in line with the inspiring vision of Dhirubhai H.Ambani, the legendary founder-chairman of the RelianceGroup.

PPPPPerererererfffffororororormance Rmance Rmance Rmance Rmance Reeeeevievievievieviewwwww

You will be happy to learn that our Company hasachieved rapid transformation in its performance, in itsquest to be amongst the most admired utility companiesin the world.

Today, Reliance Energy is India's leading private sectorutility group, with aggregate group revenues of aroundRs 9,500 crore (US$ 2.2 billion), and gross fixed assets ofRs 10,700 crore (US$ 2.4 billion).

Reliance Energy is also India's most valuable privatesector power company, with market capitalisation of overRs 9,500 crore (US$ 2.2 billion).

We rank among the top 20 private sector listed companiesin the country, in terms of all major financial parameters,such as assets, sales, profits and market capitalisation.

The highlights of our performance for the year 2004-05are:

• Total Income of Rs 4,593 crore (US$ 1.05 billion),against Rs 3,583 crore in the corresponding previousfinancial year, an increase of 28 per cent

• Cash Profit of Rs 970 crore (US$ 222 million), againstRs 686 crore in the corresponding previous financialyear, an increase of 41 per cent

• Net Profit of Rs 520 crore (US$ 119 million), againstRs 367 crore in the corresponding previous financialyear, an increase of 42 per cent

• Cash Earnings Per Share for the year Rs 52 (US$ 1.2),an increase of 33 per cent

• Earnings Per Share (EPS) for the year Rs 28 (US$ 0.6),an increase of 33 per cent

The 42 per cent growth in net profit was achieved, aftertaking into consideration higher provisions/ expensesaggregating Rs 180 crore (US$ 41 million) for the yearended 31st March, 2005. Excluding the above, the netprofit would have been higher at Rs 700 crore (US$ 160million), an increase of 91 per cent.

The Company ranks third among Indian private sectorcompanies in terms of net worth. As on 31st March2005, the net worth of the Company stood at Rs 6,339crore (US$ 1,449 million).

The Company remains debt free at the net level, andenjoys the top-end ratings of 'AAA' and 'Ind AAA' byCRISIL and FITCH, respectively, clearly indicating thefinancial conservatism.

A conservative capital structure, as reflected by a zeronet debt position as on 31st March 2005, coupled withstrong cash reserves provide a robust platform for ourfuture growth.

The turnover of our EPC and Contracts Division was Rs1,235 crore (US$ 282 million) during the year underreview.

In line with the management's decision to focus on theconsiderable in-house opportunities, and selective largeprojects for its EPC and Contracts division, the divisionhad a record order book position of about Rs 3,500crore (US$ 800 million) as on 31st March 2005, asagainst Rs 1,200 crore in the previous year, an increaseof 192 per cent.

On the operational front, the Dahanu Power Stationachieved a record Plant Load Factor of 101.4 per cent,compared to 100.3 per cent last year.

I am sure you will be happy to note that the DahanuPower Station received international recognition duringthe year. It was named as one of the world's top 12plants of 2004 by Platts POWER magazine, in its July/August 2004 issue based on several selection criteriasuch as operational efficiency, minimal environmentalimpact, technology use, financing structure, etc.

During the year, Reliance Energy also received severalother prestigious awards and recognitions for its qualityof operations, safety and environment standards.

Our two distribution companies in Delhi also achieved anotable improvement in both operational and financialperformance during the year.

LETTER TLETTER TLETTER TLETTER TLETTER TO SHAREOO SHAREOO SHAREOO SHAREOO SHAREO WNERSWNERSWNERSWNERSWNERS

5

The aggregate total income of the two Delhi distributioncompanies during the year under review was Rs 3,248crore (US$ 742 million), as against Rs 2,587 crore in theprevious year, an increase of 26 per cent.

The aggregate Profit before Tax (PBT) was Rs 179 crore(US$ 41 million), as against Rs 149 crore in the previousyear, an increase of 20 per cent.

The aggregate technical and commercial (AT&C) losseshave reduced from the actual opening loss levels of51.5 per cent and 63.2 per cent in BSES Rajdhani andBSES Yamuna respectively, to 40.9 per cent and 50.2 percent respectively at the end of the financial year ended31st March 2005. Further reduction in AT&C loss levelswill provide substantial upside to the Delhi companies.

FFFFFocus on Custocus on Custocus on Custocus on Custocus on Customer Satisfomer Satisfomer Satisfomer Satisfomer Satisfactionactionactionactionaction

The year 2004-05 witnessed various steps and initiativesto meet Reliance Energy's commitment to the internationalstandards of customer service. The stress was on consumerinterface initiatives with the aim of achieving world-classstandards.

In a move to further consolidate its position as one ofthe most consumer friendly utilities in the world, RelianceEnergy has launched the first of its kind 'MultilingualPower Bill' in Mumbai. With this move, the Company hasbecome the only utility company in the world to offermultilingual billing choice in as many as 19 Indianlanguages.

Taking forward the philosophy of offering the customerthe bill in his/ her language, Reliance Energy introducedanother path breaking initiative by launching bill for thevisually impaired in Braille.

FFFFFuturuturuturuturuture Gre Gre Gre Gre Grooooowtwtwtwtwthhhhh

The enactment of the Electricity Act 2003 has openedup new opportunities in the Indian power sector. RelianceEnergy has undertaken various initiatives during the yearas part of its 'Well Head to Wall Socket' growth strategy,with high levels of integration.

Reliance Energy is committed to expanding customerbase in its distribution business through new licenses,through open access on existing networks, and /orthrough participation in the privatisation process of stateowned distribution assets. The Company plans to set upgas, wind, hydro and coal based power generationprojects, to match its distribution capability. The Companyis also exploring growth opportunities in the powertransmission sector.

Reliance Energy, through a special purpose vehicle viz.Reliance Energy Generation Limited is setting up a3,740 MW gas based mega power project at DhirubhaiAmbani Energy City, near Dadri in the state of UttarPradesh. With an initial investment outlay of about Rs11,000 crore (US$ 2.5 billion), the power project, to bedeveloped in phases, will also be the world's largest gasbased power generating plant at a single location.

Reliance Energy aims at a leadership role in creatingworld-class power infrastructure in the country in pacewith regulatory changes and reforms in the domesticpower sector.

CorporCorporCorporCorporCorporatatatatate Goe Goe Goe Goe Govvvvvererererernancenancenancenancenance

Reliance Energy is ever at the forefront in introducingbest practices in Corporate Governance. We have reviewedthe revised Clause 49 of the Listing Agreement(implementation whereof is deferred), the Combined Codeon Corporate Governance of the London Stock Exchangeand the Corporate Governance rules of the New YorkStock Exchange. Though none of these is applicable tous, we have proactively revised our governance practiceswhich now substantially conform to these codes andrules.

VVVVValue Cralue Cralue Cralue Cralue Creationeationeationeationeation

The interests of shareholders have always been ourprime focus, and in line with this, we are committed tomaximizing the value for all our shareholders. Sincebecoming a part of the Reliance Group, Reliance Energyhas created over Rs 6,500 crore (US$ 1.5 billion) ofwealth for its shareholders in just over two years, withmarket capitalization increasing from less than Rs 3,000crore (US$ 685 million) to over Rs 9,500 crore (US$ 2.2billion).

We thank each one of you, for your unstinted supportand loyalty, which has made this possible.

Looking FLooking FLooking FLooking FLooking Forororororwwwwwarararararddddd

We are focused on delivering superior value to ourcustomers, ensuring international quality and reliability ofservice.

We are committed to enhancing scale, competitiveness,efficiency and productivity of our businesses, benchmarkedto global standards of excellence.

We will always maintain our conservative financial profile,ensuring high degree of financial flexibility to capturefuture growth opportunities.

We attach high importance to health and safety of ourpeople, and the environment around us.

We remain confident that, over the long term, ouremphasis on consistent performance, financial conservatismand discipline, and generation of superior returns oninvestments, will contribute to further enhancement ofoverall value for all our shareholders.

Anil D. AmbaniAnil D. AmbaniAnil D. AmbaniAnil D. AmbaniAnil D. AmbaniChairman and Managing Director

6

DISTRIBUTION NETWDISTRIBUTION NETWDISTRIBUTION NETWDISTRIBUTION NETWDISTRIBUTION NETW ORK IN MUMBORK IN MUMBORK IN MUMBORK IN MUMBORK IN MUMB A IA IA IA IA I

North Division (Borivli to Bhayender)Jn. of Shankar Lane & S.V.Road, Kandivli (W),

Mumbai 400 067.

Tel. No. 2864 0505, Fax 2807 0013

Central Division (Goregaon to Kandivli)

Tel. No. 2842 0505, Fax 2840 8183

Western Express Highway, Opp. Patel Aluminium,

Dindoshi, Goregaon (E).

Mumbai 400 097.

Tel. No. 2610 0505, Fax 2661 2858

Mumbai 400 055.

Electricity House,

Santacruz (E),

South Division (Bandra to Vileparle)

Tel. No. 2822 0505, Fax 2826 0176

Mumbai 400 093.

Andheri (E),

South Central Division

(Andheri, M.I.D.C., Marol & SEEPZ, Jogeshwari)

Tilak Nagar Road No.3,

Mumbai 400 089

Chembur,

Near Sahakar Cinema,

East Division

(Chunabhatti to Vikhroli

Tel. No. 2524 0505, Fax 2522 1720

MIDC Central Road, Marol Bus Depot,

1) Licensed Area of Supply.................... 384 kms.

2) No. of Consumers................................ 2.38 Millions.

3) Population Coverred........................... Above 90 Lakhs.

4) Maximum Demand.................................... 1,320 MVA.

5) Receiving Stations(R/S)....................... 50 Nos.

6) Sub Stations.......................................... 3,846 Nos.

8) High Tension Mains............................... 3,012.36 kms.

9) Low Tension Mains................................ 3,038.95 kms.

As on 31st March, 2005

& Mankhurd)

LEGEND

7) H. T. Consumers.................................... 397 Nos.

Helpline No. 30303030

BANDRAR/S

S'CRUZR/S

KALANAGAR R/S

KALINAR/S

CHEMBURR/S

TILAK NGR.R/S

VIKHROLIR/S

AIR PORTR/S

SAKI R/S

KURLA R/S

ANDHERIR/S

VILEPARLER/S

JUHUR/S

DINDOSHIR/S

AAREY R/S

AMBIVLIR/S

BORIVALI R/S

POISARR/S

DAHISARR/S

MIRAR/S

MALADR/S

K.I.E.R/S

Existing Receiving Station fed from TPC and DTPS

MMRDAR/S

POWAILAKE

B A S S E I N C R E E K

A R

A B

I A

NS

E A

T H A N AC R E E K

POWAI

M A H I M

B A Y

GORAI

ERANGAL

MADH

JUHU

DANDA

DHARAVI

AA

REY

COLO

NY

NA

TIO

NA

L PA

RK

UTTAN

AAREYR/S

(220/33KV)

VERSOVAR/S

(220/33KV)

GHODBUNDER R/S(220/33KV)

Existing 220/33 Kv. REL Receiving Station

NANUBHAIS/S

BOMBILWADIR/S

CHUNABHATTIR/S

ANIKR/S

TAGORE NGR.R/S

VIHAR RD.R/S

MIDC R/S

CHAKALA R/S

BOROSILR/S

CAMA R/S

KANDIVLIR/S

SHIMPOLIR/S

CHINCHAVLIR/S

Existing Receiving Station fed from TPC

SHIVAJI NAGARR/S

N.S.E. S/S

24th ROADR/S

CHEDDA NAGARR/S

SEEPZR/S

JUHU NORTHR/S

GOREGAONR/S

MEGHAWADIR/S

GORAIR/S

BHAYANDAR R/S

Existing Receiving Station fed from DTPS

CHINCH BUNDERR/S

ERANGALR/S

BHAYANDAR WEST R/S

G O R

A I

C R

E E K

ERANGAL

MADH

C R E

E K

M A

L A

D

TO V

IRA

R

TO D

ADAR

MAHIM

BANDRA

KHAR

SANTACRUZ

VILEPARLE

ANDHERI

JOGESHWARI

W. R

LY.

GOREGAON

MALAD

KANDIVLI

BORIVALI

DAHISAR

MIRA RD.

BHAYANDAR

TO TH

ANA

SION

KURLA

C. RLY.

GHATKOPAR

VIKHROLI

TO C

.S.T

.

MANKHURD

GOVANDI

CHEMBUR

TO T

HANA

TILAK NGR.

L B S

M A

R G

S T R O A D

R C

M A

R G

L. B

. S.

RD.

POWAIRD.

GHODBUNDER

UTTAN

KASHI - MIRA ROAD

L. T. ROAD

W.E

.HIG

HW

AY

NATIONALPARK

S. V

.RO

AD

KURAR

MARVE ROAD

G. M.

AAREYCOL.

ROAD

LINK

W.E

. HIG

HW

AY

LINK

ROAD

M M

RO

AD

POW

AI R

D.

M. V.

ROAD

S. N.

MARG

S. V

.RO

AD

JUH

U

ROA

D

AIRPORT

GORAI

ROAD

E. E

XP. H

IGH

WAY

J.P. ROAD

7

DISTRIBUTION NETWDISTRIBUTION NETWDISTRIBUTION NETWDISTRIBUTION NETWDISTRIBUTION NETW ORK IN DELHIORK IN DELHIORK IN DELHIORK IN DELHIORK IN DELHI

BYPL : BSES Yamuna Power Limited BRPL : BSES Rajdhani Power Limited

In July 2002, Delhi Vidyut Board was unbundled into six successor entities – the three distribution companies, a

transmission, a generating and a holding company.

Reliance Energy group currently holds an equity stake of 51% in two of the three Distribution Companies of Delhi after

unbundling and privatization of the erstwhile Delhi Vidyut Board. The two distribution companies, BSES Yamuna Power

Limited (BYPL) covering Central and East areas and BSES Rajdhani Power Limited (BRPL) covering South and West regions

provide electricity to around 22 lakh consumers across an approximate area of 900 sq kms.

BSES YBSES YBSES YBSES YBSES Yamuna Pamuna Pamuna Pamuna Pamuna Pooooowwwwwer Limiter Limiter Limiter Limiter Limited ed ed ed ed consists of 14 divisions - Chandni Chowk, Daryaganj, Paharganj, Shanker Road, Patel Nagar,

Karkardooma, G. T. Road, Yamuna Vihar, Karawal Nagar, Nand Nagri, Krishna Nagar, Laxmi Nagar, Mayur Vihar I & II,

Mayur Vihar III.

BSES RBSES RBSES RBSES RBSES Raaaaajdhani Pjdhani Pjdhani Pjdhani Pjdhani Pooooowwwwwer Limiter Limiter Limiter Limiter Limited ed ed ed ed consists of 19 divisions - Saket, Vasant Kunj, R.K. Puram, Hauz khas, Alakhnanda, Khanpur,

Nehru Place, Nizamuddin, Sarita Vihar, Punjabi Bagh, Tagore Garden, Vikaspuri, Janakpuri, Najafgarh, Jaffarpur, Nangloi,

Mundka, Palam, Dwarka.

8

NNNNN OOOOO T I C ET I C ET I C ET I C ET I C E

NNNNN OOOOOTICETICETICETICETICE is hereby given that the Seventy-sixth AnnualGeneral Meeting of the Members of Reliance EnergyLimited will be held on Wednesday, the 8th June, 2005at 11.00 a.m. at Shri Bhaidas Maganlal Sabhagriha,U-1 Juhu Development Scheme, Vile Parle (West), Mumbai400 056 to transact the following business:

OrOrOrOrOrdinardinardinardinardinary Businessy Businessy Businessy Businessy Business

1. To consider and adopt the Audited Profit and LossAccount for the year ended 31st March, 2005, theBalance Sheet as at that date and the Reports of theBoard of Directors and Auditors thereon.

2. To confirm the payment of quarterly interim dividendsdeclared by the Board of Directors and declare a finalDividend on Equity Shares.

3. To appoint a Director in place of Gen. V P Malik, whoretires by rotation and, being eligible, offers himselffor re-appointment.

4. To appoint a Director in place of Shri S L Rao, whoretires by rotation and, being eligible, offers himselffor re-appointment.

5. To appoint a Director in place of Dr. Leena Srivastava,who retires by rotation and, being eligible, offersherself for re-appointment.

6. To appoint M/s. Haribhakti & Company, CharteredAccountants and M/s. Chaturvedi & Shah, CharteredAccountants, the retiring Auditors of the Company, asJoint Auditors, who shall hold office from theconclusion of this Annual General Meeting until theconclusion of the next Annual General Meeting and tofix their remuneration.

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Reliance Energy Centre

Santa Cruz (E) Ramesh ShenoyMumbai 400 055 Company Secretary

14th April, 2005

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2. Members who hold shares in dematerialised form arerequested to write their Client ID and DP IDnumbers and those who hold shares in physical formare requested to write their Folio Number in theattendance slip for attending the meeting to facilitateidentification of membership at the meeting. Membersare requested to bring their copy of the AnnualReport to the Meeting.

3. The Company has already notified closure of Registerof Members and the Share Transfer Books fromWednesday, 1st June, 2005 to Wednesday, 8th June,2005 (both days inclusive), for payment of final dividendon equity shares.

4. Members may please note that the Dividend Warrantsshall be payable at par at the designated branches of

the Bank printed on the reverse of the DividendWarrant for an initial period of 3 months only.Thereafter, the Dividend Warrant on revalidation ispayable only at limited centres/branches. The membersare, therefore, advised to encash Dividend Warrantswithin the initial validity period.

5. The final dividend on Equity Shares, if declared, at theAnnual General Meeting (AGM) will be paid on orafter the AGM on 8th June, 2005.

6. Members are informed that in the case of joint holdersattending the meeting, only such joint holder who is higherin the order of names will be entitled to vote.

7. Corporate Members are requested to send a duly certifiedcopy of the Board Resolution authorising theirrepresentatives to attend and vote at the Annual GeneralMeeting.

8. Non-resident Indian Members are requested to inform M/s Karvy Computershare Private Limited immediately:

a. The change in the Residential status on return to Indiafor permanent settlement.

b. The particulars of the Bank Account maintained in Indiawith complete name, branch, account type, accountnumber and address of the Bank, if not furnished earlier.

9. Re-appointment of Directors : At the ensuing Annual GeneralMeeting, Gen. V P Malik, Shri S L Rao and Dr. LeenaSrivastava, retire by rotation and being eligible offerthemselves for re-appointment. The detailspertaining to these Directors required to be providedpursuant to clause 49 of the Listing Agreement arefurnished in the Statement on Corporate Governancepublished elsewhere in this Report.

10. Appointment of Auditors: The Members of theCompany at the Annual General Meeting held on 9thJune, 2004, had approved the appointment of M/s.Haribhakti & Company, Chartered Accountants, M/s.Price Waterhouse, Chartered Accountants andM/s. Chaturvedi & Shah, Chartered Accountants as theJoint Auditors of the Company to hold office up tothe conclusion of the 76th Annual General Meeting.

The Company has received consent letters from M/s.Haribhakti & Company and M/s. Chaturvedi & Shahfor their appointment as Joint Statutory Auditors ofthe Company for the financial year 2005-06.M/s. Price Waterhouse have communicated that inconformity with their global policies, they wouldonly be in a position to provide their consent andeligibility for being appointed sole statutory auditorsof the Company for the financial year 2005-06.

The Company follows the practice of appointing jointstatutory auditors. It is, therefore, proposed accordinglyto appoint M/s Haribhakti & Company and M/s Chaturvedi& Shah as joint statutory auditors of the Company forthe year 2005-06.

9

MANMANMANMANMAN AAAAA GEMENT DISCUSSION AND ANGEMENT DISCUSSION AND ANGEMENT DISCUSSION AND ANGEMENT DISCUSSION AND ANGEMENT DISCUSSION AND AN A LA LA LA LA LYYYYY S I SS I SS I SS I SS I S

FORWFORWFORWFORWFORWARD-LARD-LARD-LARD-LARD-LOOKINOOKINOOKINOOKINOOKING STG STG STG STG STAAAAATEMENTSTEMENTSTEMENTSTEMENTSTEMENTS

Statements in this Management Discussion and Analysisof Financial Condition and Results of Operation of theCompany describing the Company's objectives,expectations or predictions may be forward lookingwithin the meaning of applicable securities, laws andregulations. Forward-looking statements are based oncertain assumptions and expectations of future events.The Company cannot guarantee that these assumptionsand expectations are accurate or will be realised. TheCompany assumes no responsibility to publicly amend,modify or revise forward-looking statements, on thebasis of any subsequent developments, information orevents. Actual results may differ materially from thoseexpressed in the statement. Important factors that couldinfluence the Company's operations include cost offuel, determination of tariff and such other changesand levies by regulatory authority, changes in governmentregulations, tax laws, economic developments withinthe country and such other factors.

The financial statements have been prepared incompliance with the requirements of the electricitylaws to the extent applicable, the Companies Act, 1956and Generally Accepted Accounting Principles (GAAP) inIndia. The management of Reliance Energy acceptsresponsibility for the integrity and objectivity of thesefinancial statements, as well as for various estimatesand judgments used therein. These estimates andjudgments relating to the financial statements havebeen made on a prudent and reasonable basis, inorder that the financial statements reflect in a trueand fair manner the state of affairs and profits for theyear.

OOOOOVERVERVERVERVERALL REVIEWALL REVIEWALL REVIEWALL REVIEWALL REVIEW

Reliance Energy is India's leading private sector utilityCompany, with aggregate estimated group revenues ofRs 9,500 crore (US$ 2.2 billion), and gross fixedassets of Rs 10,700 crore (US$ 2.4 billion).

Reliance Energy Limited is ranked amongst India's top20 listed private companies in terms of all majorfinancial parameters, including assets, sales, profits andmarket capitalisation.

Reliance Energy is India's most valuable private sectorpower company with market capitalisation of over Rs9,870 crore (US$ 2.3 billion).

The highlights of performance of the Company for theyear 2004-05 are:

• Total Income of Rs 4,593 crore (US$ 1.05billion), against Rs 3,583 crore (US$ 821 million)in the corresponding previous financial year, anincrease of 28 per cent

• Cash Profit of Rs 970 crore (US$ 222 million),against Rs 686 crore (US$ 157 million) in thecorresponding previous financial year, anincrease of 41 per cent

• Net Profit of Rs. 520 crore (US$ 119 million),against Rs 367 crore (US$ 84 million) in thecorresponding previous financial year, an increaseof 42 per cent

• Cash Earnings Per Share for the year of Rs 52(US$ 1.2), an increase of 33 per cent

• Earnings Per Share (EPS) for the year of Rs 28(US$ 0.6), an increase of 33 per cent

On the operational front, the Dahanu Thermal PowerStation (DTPS) achieved a record plant load factor of101.4 per cent, compared to 100.3 per cent last year.

DTPS was named as one of the world's top 12 powerplants of 2004 by Platts Power magazine, in its July/August 2004 edition based on several selection criteriasuch as operational efficiency, minimal environmentalimpact, technology use, financing structure, etc.

The Chairman and Managing Director, ShriAnil D. Ambani was adjudged 'CEO of t'CEO of t'CEO of t'CEO of t'CEO of the Yhe Yhe Yhe Yhe Year'ear'ear'ear'ear' at theprestigious Platts Global Energy Awards for 2004.

During the year, Reliance Energy was presented theprestigious "QIMPRO Benchmark 2004" award by theQIMPRO Foundation in the "Service category" on thebasis of its performance in 15 parameters includingattributes such as Leadership, Strategic Planning,Communication, Quality Management Systems, andCustomer Interaction Management, among others.

The management has decided to focus on theconsiderable in-house opportunities, and selective largeprojects for its EPC and Contracts division, in order tooptimise shareholder value. The EPC division has anorder book position of Rs 3,500 crore (US$ 800 million).

The Delhi distribution companies showed sharpimprovement in their performance during the year underreview. The companies registered an aggregate netprofit of Rs 45 crore (US$ 103 million), as againstaggregate loss of Rs 89 crore in the previous year. Thecompanies registered an aggregate cash profit of Rs352 crore (US$ 80 million), as against Rs 296 crore inthe previous year, an increase of 19 per cent.

The companies are implementing a series of measuresfor modernisation and upgradation of existing distributioninfrastructure, and reduction of aggregate technical andcommercial (AT&C) losses.

The enactment of the Electricity Act, 2003 has openedup new opportunities in the Indian power sector.Reliance Energy has undertaken various initiatives during

10

the year as part of its 'Well Head to Wall Socket'growth strategy, with high levels of integration.

Reliance Energy is committed to expanding customerbase in its distribution business through new licenses,through open access on existing networks, and/or throughparticipation in the privatisation process of state owneddistribution assets. The Company plans to set up gas,wind, hydro and coal based power generationprojects. The Company is also exploring growthopportunities in transmission of power.

Reliance Energy through Reliance Energy GenerationLimited (REGL) is setting up a 3,740 MW gas basedmega power project at Dhirubhai Ambani Energy City,near Dadri in the state of Uttar Pradesh. With aninitial investment outlay of about Rs 11,000 crore (US$2.5 billion), the power project, to be developed inphases, will be the world's largest gas based powergenerating plant at a single location.

REGL has signed a memorandum of understanding on4th April 2005 with the Government of Maharashtra toexamine the feasibility of setting up a Gas basedCombined Cycle Power Plant of up to 4,000 MWcapacity at a suitable location in the state of Maharashtra.

The Electricity Act, 2003 has provided opportunities forprivate sector participation in the power transmissionbusiness. The Company proposes to leverage itscapabilities and invest in transmission business throughits special purpose company viz. Reliance EnergyTransmission Limited (RETL), which would undertake thebusiness of establishing, commissioning, setting up,and operation and maintenance of electric powertransmission systems/networks.

RETL would undertake development of transmission systembroadly in the following areas: (i) associated with theCompany's own generation facilities to mitigate any riskin evacuation of power from the Company's own plants,(ii) participate in transmission projects associated withdevelopment of the national grid and state grids (iii)participate in the projects associated with systemstrengthening of the Western and Northern Regiongrids, (iv) participate in joint ventures including thosewith Powergrid Corporation of India Limited and (v)associated with other generation facilities.

Reliance Energy aims at a leadership role in creatingworld-class power infrastructure in the country in pacewith regulatory changes and reforms in the domesticpower sector. The proven management skills andestablished project execution capabilities of Reliancewill create value for millions of consumers by providingreliable and good quality power at competitive pricesand achieving best-practice international standards ofservice, quality, safety and customer service.

FINFINFINFINFINANANANANANCIAL REVIEWCIAL REVIEWCIAL REVIEWCIAL REVIEWCIAL REVIEW

Reliance Energy's total income for the year ended 31stMarch, 2005 increased to Rs 4,593 crore (US$ 1.05billion), compared to Rs 3,583 crore in the correspondingprevious year, registering a growth of 28 per cent.

The total income includes earnings from sale of electricalenergy at Rs 2,896 crore (US$ 662 million) as comparedto Rs 2,821 crore recorded last year. The sale ofelectrical energy includes income of Rs 266 crore (US$61 million) and Rs 167 crore (US$ 38 million) fromSamalkot Power Station and Goa Power Station respectively.

Turnover of the EPC, Contracts and Elastimold divisionincreased to Rs 1,244 crore (US$ 284 million), againstRs 586 crore in the previous year, a growth of 112per cent.

Other income for the year stood at Rs 453 crore (US$104 million), mainly representing interest income.

Operating profit (PBDIT) increased 30 per cent toRs 1,051 crore (US$ 240 million) during the year, upfrom Rs 806 crore in the previous year.

The cost of electrical energy purchased decreased by 3per cent from Rs 1,034 crore in the previous year toRs 1,004 crore (US$ 229 million) during the currentyear, owing to lower per unit cost.

During the year, interest expenditure increased to Rs135 crore (US$ 31 million) as compared to Rs 70crore in the previous year, owing to higher level ofdebt for the period.

Since Notification under the Electricity Act, 2003 hasnot been issued, the financial statements are preparedunder historical cost convention, on accrual basis ofaccounting, and in accordance with the Sixth Scheduleto the Repealed Electricity (Supply) Act, 1948, whereverapplicable, as well as those of the Companies Act,1956 to the extent not inconsistent with the SixthSchedule to the Repealed Electricity (Supply) Act, 1948and comply with the Accounting Standards issued bythe Institute of Chartered Accountants of India to theextent applicable. To reflect true value of its primeassets, the Company has revalued assets of its DahanuGenerating Station by Rs 752 crore (US$ 172 million).In view of this, the depreciation on such revaluedasset is higher by Rs 133 crore (US$ 30 million), andthe same has been adjusted by withdrawing equivalentamount from general reserve, which is credited toProfit & Loss account.

The generation undertakings - Dahanu Thermal PowerStation, Samalkot Power Station and Goa Power Stationare eligible for the tax holiday under Section 80IA ofthe Income-tax Act, 1961 for a total period of 10consecutive years out of 15 years and hence theeffective tax rate for the Company as a whole isgoverned by Section 115 JB of the Income-tax Act,1961.

11

The corporate tax liability for the year was Rs 26crore (US$ 6 million), compared to Rs 29 crore in theprevious year. There was a deferred tax liability of Rs24 crore (US$ 5 million) for the year.

Cash profits increased 41 per cent to Rs 970 crore(US$ 222 million) from Rs. 686 crore (US$119 million)in the previous year.

Net profit for the year recorded an increase of 42 percent to Rs 520 crore (US$ 119 million), against Rs 367crore in the previous financial year.

The net profit of Rs 520 crore (US$ 119 million) hasbeen arrived at after taking into consideration thefollowing higher expenses aggregating Rs 180 crore(US$ 41 million) for the year:

• Rs 70 crore (US$ 16 million), towards diminutionin the value of investments

• Rs 48 crore (US$ 11 million), towards increasedliability for standby charges payable to The TataPower Company Limited at Rs 7.5 crore permonth pursuant to MERC order, against theearlier Rs 3.5 crore per month

• Rs 28 crore (US$ 6 million), towards increasedstaff costs, primarily on account of wage revisionagreement signed last year, and provision forgratuity

• Rs 34 crore (US$ 8 million), towards provisionfor irrecoverable dues from consumers

Excluding the above, the net profit would have beenhigher at Rs 700 crore (US$ 160 million), an increaseof 91 per cent.

During the period under review, the equity capital ofthe Company increased by Rs 10.4 crore to Rs 185.6crore (US$ 42 million), consequent, inter alia, uponpreferential allotment of equity shares to the RelianceGroup, and part conversion of outstanding foreign currencyconvertible bonds.

The total dividend payout for the year at 47 per centdividend rate is Rs 99 crore (US$ 23 million) includingdividend tax.

Capital expenditure during the year was Rs 270 crore(US$ 62 million), primarily on account of expenditureincurred on modernizing and strengthening of thedistribution network.

Total gross assets increased during the year to Rs5,173 crore (US$ 1.2 billion).

The Company ranks third among Indian private sectorcompanies in terms of net worth. As on 31st March,2005, the net worth of the Company stood at Rs.6,339 crore (US$ 1.5 billion).

RESOURRESOURRESOURRESOURRESOURCES & LIQUIDITCES & LIQUIDITCES & LIQUIDITCES & LIQUIDITCES & LIQUIDITYYYYY

Reliance Energy continues to maintain its conservativefinancial profile, as reflected in its top-end credit ratings.

Reliance Energy's long-term debt is rated 'AAA' fromCRISIL, the highest rating awarded by the agency.FITCH Ratings India has also awarded 'Ind AAA' debtrating for the Company, indicating the highest creditquality. The Company's debt is rated 'MAAA' from ICRA,reflecting inherent financial strength.

The Company's gross debt as at the end of thefinancial year stood at Rs 3,739 crore (US$ 855 million).Of this debt, nearly 77 per cent represented foreigncurrency denominated debt.

The average final maturity of the Company's long-termdebt is about 5 years. The average interest cost isabout 3.4 per cent per annum.

Reliance Energy's current cash flow levels, for less thanfour years, are adequate to extinguish its entire grossdebt, reflecting its inherent financial strengthand conservatism. At net level, the Company is currentlydebt free.

The Company funds its long-term and project relatedfinancing requirements from a combination of internallygenerated cash flows and external sources. Theworking capital requirements are met through commercialrupee credit lines provided by a consortium of Indianand foreign banks.

The Company also undertakes liability managementtransactions and enters into other structured derivativesarrangements such as interest rate and currency swaps.This is practiced on an ongoing basis to reduce overallcost of debt and diversify liability mix.

INDUSTRINDUSTRINDUSTRINDUSTRINDUSTRY STRUCTURE AND DEVELY STRUCTURE AND DEVELY STRUCTURE AND DEVELY STRUCTURE AND DEVELY STRUCTURE AND DEVELOPMENTSOPMENTSOPMENTSOPMENTSOPMENTS

Electricity is a significant driver of economic growth.Creation of world-class power infrastructure is a pre-requisite for sustained development of the economy.The availability of reliable and quality power at competitivecosts acts as a catalyst for rapid economic growth,spurring the creation of millions of jobs in agriculture,industry, trade and services.

The domestic power sector is adversely affected byhuge capacity shortages, high level of transmission,distribution and commercial losses, lack of grid discipline,excessive workforce, ageing networks, and lack ofcommercial orientation.

It is against this backdrop that the Electricity Act,2003, the single most important piece of legislationfor the domestic power sector, came in to force inJune 2003.

The Act aims at liberalizing the power sector, bycreating a vibrant and progressive legislative framework

12

to facilitate India's economic growth. The Act providesa comprehensive and flexible legislative framework forthe development of the sector, and envisages a gradualshift towards a competitive market in the power sector.

The Central Government has followed the enactment ofthe Electricity Act with other major reform initiativesduring the period under review, which include:

• Thrust on capacity creation in generation(100,000 MW thermal and 50,000 MW hydroinitiatives)

• Notification of National Electricity Policy

• Issue of Guidelines for Determination of Tariffby Bidding Process for Procurement of Power bydistribution licensees

• Notification of Constitution and Functions ofNational Load Dispatch Centre

• Notification of rules regarding credit worthiness,capital adequacy and code of conduct fordistribution licensees

• Launch of nation-wide Rural Electricity Infrastructureand Household Electrification Programme- RajivGandhi Gramin Vidyutikaran Yojana

The Government has also formulated a roadmap forincreased participation by the private sector in thepower industry leading to the development of thenational power sector. The objective of Government ofIndia's Vision 2012 is 'Quality and affordable power forall by 2012'.

BUSINESS REVIEWBUSINESS REVIEWBUSINESS REVIEWBUSINESS REVIEWBUSINESS REVIEW

DISTRIBUTION BUSINESSDISTRIBUTION BUSINESSDISTRIBUTION BUSINESSDISTRIBUTION BUSINESSDISTRIBUTION BUSINESS

Mumbai Distribution BusinessMumbai Distribution BusinessMumbai Distribution BusinessMumbai Distribution BusinessMumbai Distribution Business

The Company has been in the field of Powerdistribution for over seven decades and with its emphasison continuous improvements, has achieved the distinctionof consistently operating its distribution network with99.9 per cent online reliability.

Consumers:

The number of consumers at the end of the year was23.8 lakhs.

Consumer Profile and Units Sold:

Revenue collection:

The Company's efficient revenue collection drive continuedduring the year resulting into a recovery of 101.6 percent of the current year's billing, inclusive of recoveriesrelated to prior period. This has resulted in a reductionof Rs 27 crore (US$ 62 million) of outstanding receivablescompared to last year, a decline of 8.5 per cent.

System Loss:

The Company continued its efforts on various frontsincluding conducting energy audits, detection of thefts,replacement of defective/stopped meters, replacementof meters by static meters, and strengthening ofdistribution network to improve system performance.The Company has completed installation of energymeters on Distribution Transformers and mappingconsumers to their respective Distribution Transformer.This facilitates energy accounting and helps in detectionof thefts and other irregularities. The vigilance drivehas been continued extensively during the year. Theschemes for augmentation of distribution network, relievingloaded cables and transformers, installation of capacitorshave been carried out to contain the technical losses.

Meter Modernisation:

The Company continued with the change over toelectronic meters during the year under review. 1,97,715single phase and 14,019 poly phase electromechanicalmeters were replaced by electronic meters. This hasresulted in greater accuracy in consumption recording.

System Network:

The maximum demand registered in the Company'ssystem during the year was 1,320 MVA against 1,274MVA during the previous year, marking an increase of3.6 per cent. The utilisation factor was 66.94 per cent(previous year 68.14 per cent) with installed capacityof 1,882 MVA (previous year 1,812 MVA).

At the close of the year, there were 3,012 kms ofHigh Tension (HT) and 3,039 kms of Low Tension (LT)Mains on the Company's system, with the addition of97 kms of HT and 37 kms of LT lines during the year.

During the year, the installed capacity of PowerTransformers increased by 70 MVA to 1,882 MVA andinstalled capacity of Distribution Transformers increasedby 214 MVA to 2,672 MVA. Also, with the addition of113 new substations, there were 3,846 sub-stations atthe end of the year.

Consumer ServiceConsumer ServiceConsumer ServiceConsumer ServiceConsumer Service

The Company's distribution efficiency is supported bydynamic and constantly evolving standards ofCustomer Service.

The year 2004-05 witnessed numerous steps andinitiatives to meet Reliance Energy's commitment to

99-00 00-01 01-02 02-03 03-04 04-05 99-00 00-01 01-02 02-03 03-04 04-05

85.68% 13.05% 1.27% 54.66% 29.05% 16.29%

Number of Consumers Units sold to different classes of Consumers

Industrial Commercial ResidentialIndustrial Commercial Residential

1059

1889

3554

1127

1180

1200

1196

1213

1758

3232

3283

1417

1344

3132

2990

1229

1121

2834

0.0

3

0.0

5

0.0

5

0.0

5

0.0

5

0.0

4

0.3

1

0.3

0

0.2

9

0.2

7

0.2

6

0.2

6

2.0

4

1.9

7

1.8

8

1.8

2

1.7

6

1.6

8

13

international standards of customer service. The stresswas on consumer interface initiatives with the aim ofachieving world-class standards.

Multilingual Bill: After transforming the electricity billto a coloured, customer friendly and informative format,Reliance Energy took another first-in-world pioneeringinitiative by making the bill available in the languageof customer's choice. While a total of 19 languagechoices were offered, the initiative kicked off with 4languages initially being offered.

Braille Bill: Taking forward the philosophy of offeringthe customer the bill in his language, Reliance Energyintroduced another path breaking initiative by launchingbill for the blind in Braille. As a conscientious andresponsible corporate citizen, Reliance Energy believesthat it is its duty to provide the right of equalopportunity to all its consumers. And the only way tomake this possible is by adopting an approach of'inclusiveness' towards such special customers.

Payment: Various payment modes have been madeavailable to customers for their convenience. The easypayment facility to the consumer includes options likeECS (Electronic Clearing Service), on-line payments,payments at authorised bank branches andVoluntary Deposit Scheme in addition to Company'scash collection centres.

To ensure that the customer has adequate locations tomake his payment, Reliance Energy now providesclose to 1,000 payment locations to suit the customer'sconvenience. These include drop boxes at housing societies,railway stations, etc.

Call Centre: A single window, state-of-the-art 24X7 callcentre with multi skilled agents, and having an easy toremember number 3030 3030 has been established tohandle all customer complaints, queries and otherinformation needs. Keeping in mind the language diversityof the consumer base, the Call Centre has been staffedwith multilingual professionally trained agents who offerservices in English, Hindi, Marathi and Gujarati.

New Customer Care Centres: Reliance Energy in itsendeavor to provide its customers a world class experienceat all its touch points, has in addition to its state ofthe art call centre, consumer care centres that comparewith the best in the world. Reliance Energy is in theprocess of redesigning all its 53 customer careand cash collection centres, with this service objectivein mind.

Website: Reliance Energy's website www.rel.co.in wasredesigned to make it more customer friendly withenhanced features like new connection status enquiry,planned outage, etc.

Surveys: Reliance Energy is able to keep its servicecommitment dynamic by benchmarking with the bestin the world as well as by understanding customerneeds by proactively listening to them and seekingtheir inputs. This is enabled through various ongoingsurveys and research, which make the service offeringsrelevant and contemporary.

AAAAAutututututomation and Infomation and Infomation and Infomation and Infomation and Infororororormation Tmation Tmation Tmation Tmation Tececececechnologyhnologyhnologyhnologyhnology

The Company, as per its initial planning of utilising ITto elevate the levels of energy planning, managementand distribution and also consumer service to internationalstandards, is now strategically poised to implementthe same.

Using Geographical Information System (GIS), specifictools have been developed for streetlight maintenance,zonal Engineering and Energy Audit. GIS is beingintegrated with other IT systems like Supervisory Controland Data Acquisition (SCADA), Network Analysis, SAP(PM, MM), Outage Management Systems (OMS) andCustomer Information Systems (ISU-CCS). This integratedapproach would yield substantial benefits in terms ofquicker customer response, efficient maintenancemanagement and improvement in system control.

The Telecom network was upgraded last year whereinall receiving stations, HT grid substations as well aszonal and other offices were connected through fiberoptic cables.

As part of the knowledge upgradation process, bothVersova Technical Training Centre (VTTC) and RelianceEnergy Management Institute (REMI) organise intensiveIT training programs through a planned annual calendar.Need based training programs are also run from timeto time.

Electronic Document Management Systems (EDMS), WorkFlow and Knowledge Management systems are in theprocess of being implemented. Currently Lotus NotesMessaging is the heart of communication systems withinReliance Energy.

World class IT systems would ensure that internationalcustomer service standards are met with and will increasethe overall efficiency and productivity of the individualleading to an improvement in overall performance ofthe organisation.

Delhi Distribution BusinessDelhi Distribution BusinessDelhi Distribution BusinessDelhi Distribution BusinessDelhi Distribution Business

The two Delhi distribution companies, viz. BSES RajdhaniPower Limited (BRPL) and BSES Yamuna Power Limited(BYPL) are implementing a series of measures formodernisation and upgradation of existing distributioninfrastructure, and reduction of aggregate technical andcommercial (AT&C) losses.

The privatisation scheme for Delhi distribution circlesenvisages a 16 per cent post-tax return on equity, with

14

an incentive based mechanism for higher returnslinked to overachievement of loss reduction targets.The Delhi distribution companies are taking all necessarysteps to garner this upside potential.

The Delhi Distribution Companies registered an aggregateincome of Rs 3,248 crore (US$ 742 million) during theyear, against Rs 2,587 crore in the previous year, anincrease of nearly 26 per cent.

The AT&C losses in BRPL and BYPL have declined from45.1 per cent and 54.3 per cent to 40.9 percent and50.2 per cent respectively, during the year.

The Delhi distribution companies showed sharpimprovement in their performance during the year underreview. The companies registered an aggregate cashprofit of Rs 347 crore (US$ 79 million), as againstRs 296 crore in the previous year, an increase of 17per cent.

The aggregate net profit of the two companies amountsto Rs 67 crore during the current year as compared toaggregate loss of Rs 87 crore during the previous year.

During the year under review, the Delhi Distributionbusiness transformed itself into a professional, processdriven organisation, committed to deliver betterservices both in terms of quality of supply, and enhancedcustomer satisfaction.

The aggregate consumer base grew by 10 per cent toreach 2.2 million. The peak load increased by 0.5 percent over the last year. The units billed were higherby 10.5 per cent, and the revenue collected increasedby 25.8 per cent on an annualised basis. This wasmade possible by a concerted effort at recovery ofcurrent demand charges and past arrears. There wasalso marked improvement in the technical parameters -load shedding declined by 70 per cent and the numberof distribution transformer failures came down by 98per cent.

OrOrOrOrOrggggganisation Ranisation Ranisation Ranisation Ranisation Restrestrestrestrestructuringucturingucturingucturingucturing

The Delhi distribution companies undertook a majorrestructuring exercise during the year by moving fromthe prevalent circle concept to the de-centralised platform,comprising 33 divisions from the earlier 21 districtstructure and treating each individual division as aprofit centre with budgeted targets for profit maximizationand overall loss reduction.

Three lines of verticals namely, Business, Operationsand Maintenance (O&M) and Projects were defined withclear interfaces amongst themselves and with the sharedservices organization (CSO - Central Services Organisation).

CommerCommerCommerCommerCommercial Initiativcial Initiativcial Initiativcial Initiativcial Initiativeseseseses

The key challenges on the commercial front were toimprove the quality of billing, enhance billing base,control theft, improve collection efficiency / enforcement

measures and give value added attention to keyconsumers. The re-organisation of the commercialoperations has evolved through identification of keyfocus areas, uniting the processes and reducing manualinterventions. Outsourcing of key revenue cycle functionslike meter reading and bill distribution was discontinued,and these was handled with in-house personnel.

A special drive was initiated to focus on TemporaryDisconnection / Permanent Disconnection (TD / PD)cases and a parallel recovery thrust to recover receivables.District level settlement committees were set up as astep towards out of court settlement of pending billingdisputes in various Delhi courts, paving the way foramicable resolution of disputes, and recovery of dueslocked up in litigation for years. In addition, theDiscoms are also looking to out of court settlementsof enforcement cases. A total of 86 cases have beenfiled before special court, which solely tries casesbooked under section 135 of the Electricity Act, 2003pertaining to theft of electricity.

CustCustCustCustCustomer Caromer Caromer Caromer Caromer Care Initiative Initiative Initiative Initiative Initiativeseseseses

During the year, the Discoms opened completelynetworked 143 additional customer interface points across33 divisions, equipped with single software to cater toconsumer complaint registration/ resolution/ escalation.

This was supported by a fully automated 'No Supply'call centre linked with all the divisional maintenanceoffices to ensure seamless flow of information betweenthe affected customers and the O&M personnel. Suchcall centre functions on 24x7 basis.

Additionally two Consumer Grievance Redressal Forums(CGRF) were set up in Kakardooma and Pushp Vihar forredressal of complaints pertaining to BYPL and BRPLrespectively.

A dedicated Key Consumer Cell (KCC) for consumershaving a load of 45 kW and above was established toclosely monitor and improve customer interface, and toreduce any AT&C losses relating to such large consumers.Automatic Meter Reading (AMR), IVRS (Interactive voiceresponse system) and SMS alerts were introduced asvalue added services to KCC consumers.

TTTTTececececechnical Initiativhnical Initiativhnical Initiativhnical Initiativhnical Initiativeseseseses

Electronic outage management system was launched fortimely redressal of complaints by way of on-line trackingof faults and streetlight management system was launchedto ensure maintenance of illumination levels as perstandards.

High Voltage Distribution System (HVDS):

During the year, electrification of 122 unauthorisedcolonies was carried out. This resulted in addition ofover 43,000 consumers with energy collection of overRs 2 crore (US$ 0.45 million).

15

Augmentation / Maintenance:

Nearly 8,500 LT distribution transformers are beingrevamped in order to enhance reliability and to bringdown technical losses. To further improve reliability andavailability of supply, 12 new grid stations are beingadded enhancing EHV level capacity by 983 MVA.Additionally, to improve voltage profile and mitigatelow voltage/ fluctuation complaints, 1,800 MVAR shuntcapacitors have already been installed and additional200 MVAR are being installed before the ensuing summer.

Meter Modernisation Project:

A total of approximately 1.5 million meters are plannedto be replaced by the end of December, 2005. CentralPower Research Institute (CPRI), Bangalore, has beentied up for independent meter testing and certificationbefore installation.

Orissa Distribution BusinessOrissa Distribution BusinessOrissa Distribution BusinessOrissa Distribution BusinessOrissa Distribution Business

Due to various reasons mainly attributable to thetransfer process adopted by the Government of Orissaat the time of corporatisation and privatisation of itsgeneration, transmission and distribution businesses, andthe initial tariff orders, the three Orissa Discoms namely,Western Electricity Supply Company of Orissa Limited/North Eastern Electricity Supply Company of Orissa Limited/Southern Electricity Supply Company of OrissaLimited, accumulated huge liabilities and incurredsubstantial losses.

In spite of financial and commercial constraints, andlack of adequate administrative support, the three Discomshave been able to reduce AT & C losses by around 5to 6 per cent during the year. The Discoms have alsoinitiated various measures such as establishment ofletter of credit for payment of bulk supply energybills, streamlining of billing function, introduction ofspot billing, appointment of techno-commercial personnelat various levels, restructuring and reorganization ofcircles/divisions/sub-divisions/sections for effective monitoringand for better consumer services, enhanced vigilanceactivities and installation of cubicles to controltheft, etc.

The Discoms had submitted a Business Plan suggestinga methodology for restructuring of past dues andliabilities, and a progressive approach to make thepower sector reforms successful and viable in the stateof Orissa.

The Orissa Electricity Regulatory Commission (OERC) hasrecently issued orders on the Business Plan of theDiscoms, and on retail supply tariff and bulk supplytariff proposals for 2004-05 and 2005-06. The OERChas disallowed the petitions filed by the Discoms forthe recognition and acceptance of the Regulatory Assets,and its amortisation through recovery of tariff at afuture date. In addition to this, the Commission hasissued various directives, which have an adverse impacton the financials of the Discoms and no returns areexpected on this investment. The Discoms are in theprocess of filing the review petition against the ordersof the Commission.

GENERGENERGENERGENERGENERAAAAATION BUSINESSTION BUSINESSTION BUSINESSTION BUSINESSTION BUSINESS

Dahanu PDahanu PDahanu PDahanu PDahanu Pooooowwwwwer Ser Ser Ser Ser Stationtationtationtationtation

During the year, the Dahanu Thermal Power Station(DTPS) generated 4,439 million units at an averagePlant Load Factor (PLF) of 101.4 per cent, against4,407 million units generated at a PLF of 100.3 percent in the corresponding previous year - an increaseof one per cent in the units generated. The Stationachieved a plant availability of nearly 97 per centduring the year.

During the year, the Company purchased 3,352 millionunits of electrical energy from external sources, whichwas higher by 9 per cent compared to the off-take inthe corresponding previous year.

DTPS is the country's best thermal power plant onvarious parameters such as PLF, availability andheat rate. The above record performance was achieveddespite an overhaul of one of the units at Dahanu for15 days during the year.

DTPS was named as one of the world's top 12 plantsof 2004 by Platts Power magazine, in its July/August2004 edition based on several selection criteria such asoperational efficiency, minimal environmental impact,technology use, financing structure, etc.

DTPS also emerged as the top performing coal basedplant in the country for the year.

A Fly ash plant was commissioned during the year atDTPS to reduce the impact of pollution, and movetowards higher standards of environmental protection.

SamalkSamalkSamalkSamalkSamalkot Pot Pot Pot Pot Pooooowwwwwer Ser Ser Ser Ser Stationtationtationtationtation

During the year, the 220 MW Combined Cycle PowerStation recorded a PLF of 61 per cent, against a PLFof 66 per cent in the previous year. The power stationgenerated 1,178 million units, against 1,283 millionunits in the previous year.

The plant availability factor improved from 94 per centto 98 per cent during the year. The average gasavailability to the power station decreased from 0.75million metric standard cubic meters per day(mmscmd) to 0.68 mmscmd during the year, resultingin lower PLF.

A petition made in the Andhra Pradesh High Courtagainst the reduced gas availability, is pendingfor orders.

Goa PGoa PGoa PGoa PGoa Pooooowwwwwer Ser Ser Ser Ser Stationtationtationtationtation

During the year under review, the 48 MW CombinedCycle Power Station generated 382 million units, including46 million units as Deemed Generation, at an averagePLF of over 91 per cent. The station achieved plantavailability of over 97 per cent.

16

A major milestone of increasing the direct sale ofpower to the industries and reducing the contractedcapacity with the Government of Goa to 19.8 MW asper the Third Supplementary Agreement (TSA) wasachieved by December 2004, as per the agreedSchedule in the TSA.

The major consumers added during the year wereWyeth, Kodak India, Aventis, Ratiopharma and EsselPropack, amongst others. During this process, the powerevacuation and distribution network backbone in thestate was further strengthened with the completion ofRing Main System for the power supplied to KundaimIndustrial Estate and new Verna Industrial Estate, withfacilities for online changeover providing greater flexibilityand higher reliability to the system.

KKKKKerererererala Operala Operala Operala Operala Operationsationsationsationsations

BSES Kerala Power Limited (BKPL), a joint venture withKerala State Industrial Development Corporation Limited(KSIDC) operates a naphtha based 165 MW power plantin the state of Kerala.

During the year under review, the plant achieved a PLFof 8.2 per cent as against 72 per cent achievedduring the corresponding previous period. The reductionin PLF was mainly on account of no-dispatch instructionfrom the Kerala State Electricity Board (KSEB) as permerit order dispatch, due to steep increase in naphthaprices. However, the availability of the plant was asper the Power Purchase Agreement.

During the year, the District Court of Trivandrum dismissedthe petition made by KSEB on the arbitration award toBKPL on settlement of outstanding dues. KSEB filed anappeal in the Kerala High Court against the DistrictCourt judgment. BKPL has filed a caveat before theHigh court of Kerala.

Wind FWind FWind FWind FWind Farararararm Prm Prm Prm Prm Projectojectojectojectoject

During the year, the Company's Wind farm projectconsisting of 33 windmills with an aggregate capacityof 7.59 MW at Chitradurga in Karnataka, generatedover 24 million units. The PLF of the wind farmimproved from 35.6 per cent to 36.3 per cent duringthe year under review.

EPC BUSINESSEPC BUSINESSEPC BUSINESSEPC BUSINESSEPC BUSINESS

During the year, the EPC and Contracts division recordeda turnover of Rs. 1,244 crore (US$ 284 million), ascompared to Rs 586 crore in the previous year.

The division has about Rs 3,500 crore (US$ 800million) worth of orders on hand which are undervarious stages of execution. The present manpower ofEPC Division is around 430, and the division is lookingto reinforce its manpower strength for execution of itsvarious ongoing projects.

The division is engaged in the various fields of EPCbusiness in the power sector such as generation,transmission and distribution. The EPC division is focusingto undertake in-house assignments as well as selectivelarge external projects going forward. Past experiencein EPC projects and Reliance Group's project managementskills will enable the division to emerge stronger andcapture new opportunities that may arise in the future.

NEW INITIANEW INITIANEW INITIANEW INITIANEW INITIATIVES AND BUSINESS DEVELTIVES AND BUSINESS DEVELTIVES AND BUSINESS DEVELTIVES AND BUSINESS DEVELTIVES AND BUSINESS DEVELOPMENTOPMENTOPMENTOPMENTOPMENT

The enactment of the Electricity Act, 2003 has openedup new opportunities in the Indian power sector. RelianceEnergy has made presentations to the stakeholders invarious states on the road map to develop and shapethe power markets so as to make them competitiveand efficient. Further, the Company has undertakenvarious initiatives during the year as part of its growthplans as discussed below:

Distribution:Distribution:Distribution:Distribution:Distribution:

Reliance Energy has became the first company toobtain in-principle approval under the Electricity Act,2003 for a distribution license using its own networkin New Delhi Municipal Corporation's (NDMC) areaof supply.

Reliance Energy has participated in the competitivebidding process invited by Uttar Pradesh PowerCorporation Limited (UPPCL), an undertaking of theUttar Pradesh State Government for acquisition of amajority stake in the five distribution companies inUttar Pradesh. At present, pre-qualification bids havebeen invited and thereafter the pre-qualified bidderswould be invited for due-diligence and final bidding.

The Company had also applied to the Uttar PradeshElectricity Regulatory Commission (UPERC) for grant ofdistribution licenses using own distribution system inMeerut, Ghaziabad and Noida. UPERC has initiated theprocess for grant of licenses and has permitted RELto publish public notice as required under theElectricity Act, 2003.

The Company is closely following the progress of powersector reforms in various states so as to participate inthe privatisation of state owned utilities as and whenthey are put up for privatisation/ stake sale.

Generation:Generation:Generation:Generation:Generation:

Reliance Energy is exploring various opportunities toset up gas, coal, wind and hydro based power generationprojects. The projects currently at an advanced stageof development include the following:

• 3,73,73,73,73,740 MW Pr40 MW Pr40 MW Pr40 MW Pr40 MW Project at Dhiroject at Dhiroject at Dhiroject at Dhiroject at Dhirubhai Ambani Enerubhai Ambani Enerubhai Ambani Enerubhai Ambani Enerubhai Ambani EnergygygygygyCity:City:City:City:City: Reliance Energy has sponsored Reliance EnergyGeneration Limited, a special purpose vehicle (SPV)

17

to develop, construct and operate a 3,740 MW gasbased power generation project at Dhirubhai AmbaniEnergy City, near Dadri, in Ghaziabad District ofWestern Uttar Pradesh.

With an initial investment outlay of Rs 11,000 crore(US$ 2.4 billion), the power project, to be developedin phases, will be the world's largest gas basedpower generation plant at a single location.

The project has achieved a major milestone, withthe signing of the State Support Agreement for theproject between the UP State Government and Reliance.

The project has also been granted 'Mega PowerProject' status by the Government of India.

REGL has acquired 881 hectares of land from theGovernment of Uttar Pradesh for the project as on9th March, 2005 and the balance acquisition andtransfer of land is in advanced stage of completion.REGL has also constructed a site office for furtherimplementation work on the project.

The following clearances from concerned authoritieshave already been obtained - (i) Civil Aviationclearance for the tallest structure, (ii) No-Objectioncertification from the UP State Pollution ControlBoard, and (iii) Clearance for usage of water fromthe UP Irrigation department.

• 11111,000 MW An,000 MW An,000 MW An,000 MW An,000 MW Anparparparparpara C Pa C Pa C Pa C Pa C Pooooowwwwwer Prer Prer Prer Prer Project:oject:oject:oject:oject: Reliance EnergyGeneration Limited (REGL) had participated in theinternational competitive bidding process for the1,000 MW Anpara 'C' power project in Uttar Pradesh.The bid was invited by the Government of UttarPradesh owned UPRVUNL (Uttar Pradesh Rajya VidyutUtpadan Nigam Ltd). REGL has been shortlisted as apre-qualified bidder for further stages of bidding.

• 4,000 MW Gas Based P4,000 MW Gas Based P4,000 MW Gas Based P4,000 MW Gas Based P4,000 MW Gas Based Pooooowwwwwer Plant in Maharer Plant in Maharer Plant in Maharer Plant in Maharer Plant in Maharashtrashtrashtrashtrashtra:a:a:a:a:Following notification of a Power Generation Policyby Government of Maharashtra to promote investmentin generation sector, REGL has signed an MOU on4th April, 2005 with the Government of Maharashtrato examine the feasibility of setting up a Gasbased Combined Cycle Power Plant of up to 4,000MW at a suitable location in the state of Maharashtra.

• Wind PWind PWind PWind PWind Pooooo wwwwwer Generer Generer Generer Generer Generation:ation:ation:ation:ation: It is expected that thecurrent evolving regulatory and legal framework forthe domestic power sector may stipulate a minimumlevel of sourcing from non-conventional sources. Asa result, in order to develop benign and environmentfriendly power sources, Reliance Energy intends toimplement up to 500 MW of wind based powerprojects in phases spread across various states inIndia such as Maharashtra, Gujarat, Rajasthan, Karnataka,Tamil Nadu and Andhra Pradesh.

The current total installed capacity of wind energyin the country is in the region of 2,800 MW.

Reliance's proposed capacity will therefore constitutemore than 15 per cent of the country's total windenergy capacity, and contribute significantly towardsGovernment of India's goal of developing greenpower capacity.

• HydrHydrHydrHydrHydro Po Po Po Po Pooooowwwwwer Generer Generer Generer Generer Generation:ation:ation:ation:ation: Reliance Energy is exploringhydro based power generation projects in the statesof Himachal Pradesh, Uttaranchal, Arunachal Pradeshand other states having hydro potential.

Reliance Energy has successfully bagged the 280MW Urthing Sobla hydro power project onthe Dhauliganga river in Pithorgarh district ofUttaranchal State.

TTTTTrrrrransmissionansmissionansmissionansmissionansmission

Reliance Energy had participated in the internationalcompetitive bidding process invited by the Power GridCorporation of India Limited (PGCIL), for selection of ajoint venture partner for setting up of the transmissionlines for Parbati and Koldam hydro-electric projects inHimachal Pradesh, on Build-Own-Operate-Transfer (BOOT)basis. Reliance Energy was selected as the preferredbidder and the finalised transaction documents havebeen initialled on 17th January, 2005.

Reliance Energy has also applied to CERC for obtainingtransmission licenses to undertake a number of schemesfor strengthening of the transmission system in theWestern region.

The Company is also conducting studies for setting upof transmission system to evacuate power from theproposed gas based 3,740 MW mega power project atDadri, in UP.

IntIntIntIntIntererererernational Businessnational Businessnational Businessnational Businessnational Business

Reliance Energy is exploring opportunities in theinternational markets especially in the Middle- East,wherein some projects in generation and transmissionsectors are expected to be set up through privatesector participation. The Company has undertaken astudy of the power sectors in various counties inSouth Asia, Eurasia and Middle East, to closely examinethe potential of existing and future opportunities.

OUTLOUTLOUTLOUTLOUTLOOKOOKOOKOOKOOK

The Central and State Governments have taken severalfollow-up policy measures after the enactment of theElectricity Act, 2003 viz. National Electricity Policy,Competitive bidding guidelines for procurement of power,rules laying down additional requirements for grant ofsecond distribution license, etc. The regulatorycommissions are in the process of creating transparentand progressive regulatory framework that is conducivefor the creation of a robust industry structure withadequate private sector participation.

18

The structure and dynamics of Indian power marketsare expected to undergo a radical change - from arigid and highly regulated industry to a flexible, efficientand consumer centric industry. Introduction of competitionin the wholesale and retail ends of the value-chain isexpected to result in a more efficient and maturepower market. Reliance Energy firmly believes that theIndian power sector is set for a quantum jump forward.

In the coming years, the generation sector is set towitness a gradual emergence of a competitive wholesalemarket, which is an essential pre-requisite for emergenceof competitive and efficient tariffs. A draft NationalTariff policy has been put forth for discussions. Thehistorically prevalent cost-plus tariff setting approachis likely to make way for more efficient ways oftariff setting.

The open access on transmission is also likely to gainmore ground. The Government's thrust on creation of anational grid is a welcome move, and may see significantprivate sector participation going forward.

Efficient distribution and retail supply with reducedlosses hold the key to the turnaround of the powersector and the creation of a conducive environment forthe development of generation sector. Various CentralGovernment initiatives like Accelerated PowerDevelopment and Reform Programme (APDRP) combinedwith several State Government initiatives to unbundletheir SEBs and run the successor functional units onmore commercial lines are showing positive results.

During the year, Uttar Pradesh became the first Indianstate after the Electricity Act, 2003 to initiateprivatisation plan of its distribution circles. It is believedthat the success of the distribution privatisation modelimplemented in Delhi will spur similar such initiativesin other states too in the coming years.

Overall, the outlook for the domestic power industry ingeneral, and for Reliance Energy in particular, appearbright with the process of transformation that hasbegun with the advent of the Electricity Act, 2003.

REGULREGULREGULREGULREGULAAAAATTTTTORORORORORY INITIAY INITIAY INITIAY INITIAY INITIATIVES/ ISSUESTIVES/ ISSUESTIVES/ ISSUESTIVES/ ISSUESTIVES/ ISSUES

The regulatory initiatives taken by the Company andstatus of pending regulatory cases in various states inthe country are as follows:

MaharMaharMaharMaharMaharashtrashtrashtrashtrashtra - Ra - Ra - Ra - Ra - Regulategulategulategulategulatororororory Initiativy Initiativy Initiativy Initiativy Initiativeseseseses

Tariff Revision: The Maharashtra Electricity RegulatoryCommission (MERC) passed a Tariff Order in July 2004rationalising the consumer categories and tariffs chargedby the Company. Though the average tariff was reducedby 8.5 per cent, it did not have any significant impacton the profitability of the Company as the same waseffected due to reduction of 16 per cent in tariff forpurchase of bulk power by the Company. The Companyhas submitted its Tariff proposal to MERC to considerTariff Revision for the Year 2005 - 06.

Standby Charges: In the matter of standby chargespayable by the Company to The Tata Power CompanyLimited (TPC), the MERC on the directions of theHon'ble Supreme Court, had directed TPC and theCompany to share the Standby Charges in the ratio of77:23 (being the ratio in which peak demand is metby the generating stations of the two companies) andfurther directed TPC to refund Rs.322 crore being theexcess amount paid/deposited by the Company againstwhich an amount of Rs 1.17 crore being interestpayable by REL would be adjusted as per MERC order.TPC contested the Order in the High Court. The HighCourt has directed TPC to furnish BankGuarantee for the refundable amount and furtherdirected to take the issue before Appellate Tribunal.The Company has filed an SLP (Special Leave Petition)in the Supreme Court.

Poaching on Consumers: MERC has restrained TPC fromgiving supply to new consumers whose maximumdemand is below 1000 KVA till a level playing field iscreated. Both the Company and TPC have approachedthe High Court on the matter.

Transmission Open Access: Subsequent to the Companyhaving obtained an Order from MERC for Open Accesson MSEB's and TPC's transmission lines and associatedfacilities, the Company has taken various initiatives tosort out the transmission line capacity relatedchallenges. This would allow the company to sourcepower from other suppliers, thereby optimising the costof procurement of power and would benefit the Company's2.3 million consumers in Mumbai.

Delhi - RDelhi - RDelhi - RDelhi - RDelhi - Regulategulategulategulategulatororororory Initiativy Initiativy Initiativy Initiativy Initiativeseseseses

Regulatory Asset: The Delhi discoms have filed a writin the Delhi High Court against the DERC Tariff Ordercreating a Regulatory Asset with regard to the twoDiscoms operated by the Company's associate companiesin Delhi.

Parallel License: The Company has received "in principle"clearance for a parallel license in the NDMC Supplyarea in New Delhi. This makes the Company the firstin India to have received such a clearance after thecoming into effect of Electricity Act, 2003. The NDMChas approached the Delhi Electricity Regulatory Commission(DERC) challenging the grant of license.

Tariff Revision: The two discoms have submitted TariffPetitions to Delhi Electricity Regulatory commission (DERC)to consider Tariff Revision for the year 2005 - 06.

Uttar PrUttar PrUttar PrUttar PrUttar Pradesh - Radesh - Radesh - Radesh - Radesh - Regulategulategulategulategulatororororory Initiativy Initiativy Initiativy Initiativy Initiativeseseseses

Distribution Licenses: The Company has submitted anapplication for licenses to the Uttar Pradesh ElectricityRegulatory Commission (UPERC) for grant of seconddistribution licenses in Noida, Ghaziabad and MeerutCircles.

19

Orissa - ROrissa - ROrissa - ROrissa - ROrissa - Regulategulategulategulategulatororororory Initiativy Initiativy Initiativy Initiativy Initiativeseseseses

Tariff Revision: The Orissa Electricity Regulatory Commission(OERC) has passed Orders on the Retail Supply Tarifffor 2005-06 on the application filed by the WesternElectricity Supply Company of Orissa Limited (WESCO),North-Eastern Electricity Supply Company of Orissa Limited(NESCO) and Southern Electricity Supply Company ofOrissa Limited (SOUTHCO). The OERC retained the existinglevel of tariff for most of the categories of consumersand for domestic categories of consumers reduced thetariff by 10 paise per unit. The OERC withdrew/reducedthe Delayed Payment Surcharge for Residential/Commercialrespectively, reduced monthly minimum fixed charges inrespect of some consumers and introduced TOD tariff.The OERC also passed order on the Bulk Supply tariffApplication filed by Gridco and increased the BST tariffof WESCO by 2.32 paise per unit and reduced the BSTtariff of SOUTHCO by 9 paise per unit.

Regulatory Asset: The OERC has disallowed the petitionfiled by three Discoms for the recognition andacceptance of the Regulatory Assets and its amortizationthrough recovery of tariff at a future date. The threeDiscoms are in the process of filing review petitionswith the OERC.

Business Plan: The OERC has issued the order on theBusiness Plan submitted by three Discoms. Through theBusiness Plan order, the OERC set the future distributionloss level and the collection efficiency target fordistribution companies upto 2007-08. The Commissionhas set 3 per cent distribution loss reduction targetfor each year upto FY 2007-08. The Commission hasagreed to three Discoms proposal to restructure andsecuritised outstanding BST dues and Gridco loan at 0per cent rate of interest and NTPC dues at theinterest rate of 8.5 per cent per annum.

OtOtOtOtOther Rher Rher Rher Rher Regulategulategulategulategulatororororory Initiativy Initiativy Initiativy Initiativy Initiativeseseseses

To pursue opportunities offered in the energyTransmission business by the Electricity Act, 2003, theCompany has applied for a Transmission License for theWestern Region with the Central Electricity RegulatoryCommission (CERC).

RISKS AND CRISKS AND CRISKS AND CRISKS AND CRISKS AND CONONONONONCERNSCERNSCERNSCERNSCERNS

Reliance Energy is dependent on the domestic market.The Company's power generating and distributionfacilities are located in India, and virtually all of theCompany's revenues including those from the EPCdivision, are derived from the domestic market. TheCompany is also making significant investments in variousnew businesses in the country. These factors potentiallyexpose the Company to any risk of a significant shockto the national economy, and any adverse changes inthe policies and regulations related to the power sector.

However, the Government of India has been pursuingprogressive policies on economic liberalization, and reformsin the power sector including considerable reduction ingovernment interference. In addition, the Companyclosely monitors the Government policy measures toidentify and mitigate any possible business risks.

Generation of power at the Company's Power Stationscan be affected due to various factors including non-availability of fuel, grid disturbances and such otherfactors in load management in the grid. The Companyhas entered into agreements with the fuel suppliers forthe adequate supply of fuel, thus mitigating the fuelavailability risk. To remain unaffected by the griddifferences, the Company has developed systems toisland its power stations from the grid.

The consumer tariffs are regulated by the RegulatoryCommissions. Any adverse changes in the tariff structurecould have a material impact on the profitability.However, the Company endeavours to achieve the highestefficiency in its operations, and has been implementingcost reduction measures in order to enhance itscompetitiveness, and maintain profitability.

Pursuant to the Electricity Act, 2003, there is risk ofrising competition in the supply of electricity in thelicensed area of the Company. The Company has builta large and established distribution network that isdifficult to replicate by potential competitors, and willendeavor to provide reliable power at competitive costs,with the highest standards of customer care, to meetthe threat of competition.

Power projects are highly capital intensive. The highlyintensive capital projects run the risks of (i) longerdevelopment period due to statutory clearances, financialand infrastructural requirements (ii) delay in completionof project, (iii) performance risk and (iv) cost over-run.Reliance Energy is currently sponsoring a 3,740 MW gasbased power project. The past experience of RelianceGroup in implementing mega projects without any time/cost overruns provides confidence on the timelycompletion of the power project.

Any adverse movement in the value of the domesticcurrency may increase the Company's liability on accountof its foreign currency denominated external commercialborrowings in rupee terms. However, Reliance Energyhas adopted conservative foreign exchange riskmanagement policies in this regard. The Companyundertakes liability management transactions and otherstructured derivatives on an ongoing basis to manageits foreign exchange rate risks.

The Company manages other potential operational risksby adopting suitable human resource development policies,and appropriate health, safety and environment framework.

20

ADEQUADEQUADEQUADEQUADEQUAAAAACY OF INTERNCY OF INTERNCY OF INTERNCY OF INTERNCY OF INTERNAL CAL CAL CAL CAL CONTRONTRONTRONTRONTROLOLOLOLOLSSSSS

The Company has an adequate system of internalcontrol implemented by the management towards achievingefficiency in operations, optimum utilisation of resources,and effective monitoring thereof and compliance withall applicable laws.

The internal control mechanism comprises a well-definedorganisation structure, pre-determined authority levels,and documented policy guidelines for appropriatedelegation of authority.

The procurement and operational maintenance activitiesare planned well in advance to avoid any possible riskof late delivery of materials, delay in attending tomaintenance needs, etc.

The Company, on a regular basis, stores and maintainsall the relevant data and information as a back-up, toavoid any possible risk of losing important businessdata.

The management audit cell undertakes extensive checksand reviews through external firms of charteredaccountants, who provide independent and professionalobservations, and the said cell co-ordinates and followsup for corrective and preventive action.

A qualified and independent audit committee of theBoard, comprising of all independent Directors of theCompany, reviews the internal audit reports, and theadequacy of internal controls.

SSSSSAFETAFETAFETAFETAFETYYYYY

Reliance Energy attaches utmost importance to safetystandards at all the installations of the Company. Atall the power stations of the Company, necessary stepsare regularly undertaken to ensure the safety of personneland equipment. Both external and internal safetyaudits are conducted regularly. Mock drills are conductedto gauge emergency/ disaster managementpreparedness. The Joint Safety Committee at the SupplyDivision identifies safety measures to be adopted tocontinually improve safe working procedures. The electricityaccident rate has declined significantly over the years,as a result of various safety measures undertaken.

During the period under review, the Dahanu PowerStation received the Maharashtra Safety Award - 2003by Maharashtra Chapter of National Safety Council forhaving the lowest accident frequency rate in the year,and running uninterruptedly for over one millionman-hours.

It was also awarded the prestigious National SafetyAward - 2003 by the Ministry Of Labour, Governmentof India for its longest period of accident-free operation.

The power station also achieved 4 Star Rating by theBritish Safety Council for its overall performance inOccupational Health and Safety.

ENVIRENVIRENVIRENVIRENVIRONMENTONMENTONMENTONMENTONMENT

At Reliance Energy Limited, preservation and promotionof environment is of fundamental concern in all itsbusiness activities. Reliance Energy having a leading rolein delivering reliable and quality products and servicesto all consumers at competitive costs, is conscious of itsresponsibility towards creating, conserving and ascertainingsafe and clean environment for sustainable development.

The Dahanu Power Station continues to perform wellbeyond the stringent operational norms prescribed bythe Maharashtra Pollution Control Board, and has receivedprestigious awards for its achievements.

The power station continued its afforestration drive withplantation work in the neighborhood village.

Emission PEmission PEmission PEmission PEmission Parararararametametametametameters at Dahanu Pers at Dahanu Pers at Dahanu Pers at Dahanu Pers at Dahanu Pooooowwwwwer Ser Ser Ser Ser Stationtationtationtationtation

Sr. Parameters MPCB* World 00-01 01-02 02-03 03-04 04-05

No Limits Bank

Limit

1. STACK

Total Particulate 150 NA 90 92 73 51.3 29

Matter (T.P.M.)mg/Nm3

Sulphur Dioxide 80.4 100 47 53 57 56.2 55.7(SO2 ) TPD

NOx (ppm at 15% 150 NA 86 92 89 88.5 88.5excess oxygen v/v)

2. AMBIENT AIR OUTSIDE PLANTPREMISES

Suspended 100 100 36 38 48 50.8 49.8Particulate Matter(S.P.M.) µg/M3

Sulphur Dioxide 30 100 6 6 6 4.9 4.2(SO2 ) µg/M3

Oxides of Nitrogen 30 100 7 6 9 10.4 8.9(NOx ) µg/M3

*MPCB = Maharashtra Pollution Control Board

The Dahanu Taluka Environmental Protection Authority(DTEPA) had directed the Company to install a FlueDesulphurisation (FGD) Plant at the Company’s power stationat Dahanu as a preventive measure. The Company hadsubmitted a schedule to DTEPA on completion of installationof FGD plant by October 2007. Meanwhile, DTPEA has,by its order dated 19th March 2005, directed the Companyto furnish a Bank Guarantee for Rs. 300 crore (i.e. amountequivalent to the approximate cost of FGD Plant) to showits bonafides in installing the FGD plant. The Companyhas filed a Writ Petition in the Bombay High Court on11th April 2005 challenging the said order of DTEPA.

The Samalkot Power Station uses natural gas, an

environment friendly fuel as the primary fuel.

21

The Samalkot Power Station has received a SilverAward for 'Environment Management' in November2004, from the GreenTech Foundation.

A dedicated 'Environment, Health and Safety' (EHS)Manager is posted who supervises, monitors andensures all necessary actions with regard toenvironmental issues, at the power station. Theaverage levels of emission recorded at the powerstation during the year 2004 were much below thelimits stipulated for the environmental parameters bythe Andhra Pradesh Pollution Control Board (APPCB).

Emission PEmission PEmission PEmission PEmission Parararararametametametametameters at Samalkers at Samalkers at Samalkers at Samalkers at Samalkot Pot Pot Pot Pot Pooooowwwwwer Ser Ser Ser Ser Stationtationtationtationtation

Emission PEmission PEmission PEmission PEmission Parararararametametametametametersersersersers APPCBAPPCBAPPCBAPPCBAPPCB***** LimitsLimitsLimitsLimitsLimits AAAAActualEmissionctualEmissionctualEmissionctualEmissionctualEmissionlelelelelevvvvvels Yels Yels Yels Yels Yearearearearear2004-20052004-20052004-20052004-20052004-2005

Particulate Matter in 0.50 0.11ambient air (mg/m3)

Sulphur Dioxide in 0.12 Nilambient air (mg/m3)

Nitrogen Oxide - 75 17.00

stack emission (ppm)

*APPCB = Andhra Pradesh Pollution Control Board

As a result of continuous review and adjustment ofplant process parameters, the Samalkot Power Stationhas achieved a near 'Zero Discharge' of effluentwater from the power station.

During the year, the Goa Power Station successfullycompleted the re-certification of ISO 14001 forEnvironment Management System by BVQI.

ENERENERENERENERENERGY CGY CGY CGY CGY CONSERVONSERVONSERVONSERVONSERVAAAAATIONTIONTIONTIONTION

At Dahanu, the average heat rate declined by 7Kcal/Kwh to 2,261Kcal/Kwh during the year. Thisreduction in heat rate contributed to savings in coalconsumption by over 7,000 MT during the year.The heat rate achieved by the station is the bestamong coal based thermal power stations inthe country.

Apart from several measures to conserve energy,32 projects were also taken up under ISO system'scontinual Quality Improvement Programmes (QIP) towardsenergy conservation, reliability, availability and safetyimprovement.

At Dahanu, four senior managers have qualifiedas Energy Manager and Energy Auditor certification.

An Energy Management Cell is also formed atDahanu Thermal Power Station to carry out energyconservation activities. Energy policy, procedures andwork instructions are under preparation and will bereleased shortly.

The Samalkot Power Station is adopting appropriateOperation and Maintenance strategies, and is undertakingall possible efforts towards energy conservation.

The power station achieved a gross heat rate of2,078Kcal/ Kwh against the design value of 2,144Kcal/Kwh.

The streetlights are provided with Automatic Switching-off systems. About 2,000 units of energy is savedeach day by these measures, which signifies commitmenttowards energy conservation.

At the Goa Power Station, online water wash systemfor Gas Turbine compressor was successfully installedduring the year resulting in improvement in heatrate and power generation output.

HR AND INDUSTRIAL RELHR AND INDUSTRIAL RELHR AND INDUSTRIAL RELHR AND INDUSTRIAL RELHR AND INDUSTRIAL RELAAAAATIONSTIONSTIONSTIONSTIONS

Reliance Energy firmly believes that "People" and"people driven strategies" are the pivotal forcebehind success of its growth. Coping with thetremendous changes shaping up in the power sectoris possible only by unleashing the latent capabilitiesof the people.

The HR Philosophy is communicated to the employeesthrough various group interactions with the TopManagement and through various media such as theIntranet, e-mails, Company's newsletter / In-housemagazines, training forums, etc.

In order to ensure that its HR philosophy istranslated into demonstrated action, the Company hassound, pro-active and progressive HR strategy andpractices.

Reliance Energy believes in high performance-orientationand the same is percolated down to each andevery employee of the organisation. REL has highcaliber, multifunctional team of about 1,100 engineers/professionals, who are well equipped to handle anyassignment in the power sector. The average age ofthe employees is 40 years.

We are proud of having established over a periodof time a proactive response based (rather thanreaction based) Industrial Relation scenario, whichcaters through a solution finding approach ofdialogue in a spirit of collective and participativedecision-making process across all gamut of ouractivities. This has resulted in a peaceful, cordialand healthy relationship between the Union and theManagement.

Reliance Energy has a standardised manpower planningprocess, which covers all functions across theCompany. The compensation is fairly well alignedto the market. Performance on the job andcontribution to the overall performance of theCompany are strong drivers for deriving the

compensation.

22

The Training and Development process of theCompany is based on the following philosophy:

• Vision and Mission of the Company

• Transparent performance assessment, which highlightsthe training needs both on a systematic andindividual basis

• HR strategy, which in turn is aligned with theoverall business strategy

Apart from the normal training programmes for theemployees, the Company has carried out variousorganisational development processes, primarily tobring about transformation process within theorganisation.

The Company uses HR Information and Administrationsystems. All the employee related systems areintegrated though SAP applications. Work-flow applicationsfor all employee services are being activated on thesystem.

CCCCCOMMUNITOMMUNITOMMUNITOMMUNITOMMUNITY DEVELY DEVELY DEVELY DEVELY DEVELOPMENTOPMENTOPMENTOPMENTOPMENT

Reliance Energy exhibits a high level of concern forsociety in order to be a good corporate citizen.The Company places high importance to thedevelopment of the community around its area ofbusiness.

The Company regularly undertakes various communitywelfare measures and environment-friendly initiatives.The primary focus of social welfare and communitydevelopment measures of the Company is on healthcare and education.

Healthcare:

Dahanu Power Station undertakes various communitydevelopment programmes in association with localGovernment bodies and Non-Governmental Organisations(NGOs) like Rotary Club of Dahanu and Lions Clubof Dahanu in the field of healthcare.

During the year, medical camp for rural communitywas conducted at village Dehane Pale, Boardi nearthe power station, in which 837 patients wereexamined and supplied with the free medicine. Aneye camp was organised at Dahanu in associationwith the Lions Club and Cottage Hospital, Dahanu,which was attended by 686 needy patients. Out ofthese, 485 patients were provided with free spectaclesand 32 patients were operated for cataract.

Education:

Distribution of educational material for the schoolchildren has been a regular feature of theCompany's initiatives in the education area.861 students benefited from this initiative duringthis year.

To give a boost to the morale of the teachers,'Best Teachers Award' has been instituted since 1995,and these awards are presented to the five teacherschosen from the Dahanu Taluka.

During the year, ten Engineering and Medicalstudents were awarded DTPS Merit scholarships.

As a part of its efforts in the direction ofimproving the educational facilities in and aroundDahanu power station, the Company started JuniorCollege of Science in Dahanu town in 1997. TheCompany has constructed a building for the JuniorCollege of Arts of Dahanu Education Trust, whereabout 600 students are presently studying.

Drinking Water:

The Company has provided 75 tube wells in 33villages surrounding its Dahanu Power Station. Thesetube wells help a great deal in alleviating waterproblems in the water deficient area, especiallyduring summer.

Agriculture Development:

During the year, the Company undertook waterconservation programme in rural areas by way ofrepair of old / damaged water dams.

Apart from this activity, considering the needs ofthe local community, the Company, in consultationwith the district administration has adopted waterconservation programs like construction of temporary‘Vanarai Bandhara’ and permanent water check dams.This year, the Company has participated in theconstruction of 'Vaanarai Bandhara' in ten villages,and is in the process of construction of permanentwater check dam at Saravali.

Under the Dahanu Beautification Program of theDahanu Municipal Council, Reliance Energy has takenup a project of providing 'Central Street Lights' tothe main road from the Railway Station to SagarNaka. The Company has also provided additionallighting arrangement near Dahanu beach at 'ParNaka' and 'Agar'.

Nearly 250 tree guards were donated to theNational Highway Authority of India for treeplantation on both sides of the National HighwayNo.8.

The Company has constructed the 6 storey, 100-bedsuperspeciality BSES Municipal Hospital, in associationwith the Municipal Corporation of Greater Mumbai.The hospital, which has been operational for overthree years, is being managed by the BrahmaKumaris, and is rendering valuable service to thecitizens of Mumbai.

The Company also maintains 9 public gardens in its

area of distribution operations in Mumbai.

23

The Company is committed to improving the qualityof life in the communities in which it operates, andto contribute to the overall development of society.

In recognition of the Company's various communitydevelopment initiatives, The Energy and ResourcesInstitute (TERI) has shortlisted Reliance Energy amongstthe finalists for TERI CSR and Environment ManagementAwards 2003-04.

AWAWAWAWAWARDS AND RECARDS AND RECARDS AND RECARDS AND RECARDS AND RECOGNITIONOGNITIONOGNITIONOGNITIONOGNITION

Reliance Energy and its management received severalprestigious awards and recognition during the year.

The Chairman and Managing Director, Shri Anil D.Ambani was adjudged 'CEO of the Year' at theprestigious Platts Global Energy Awards for 2004.

The Company’s Dahanu Power Station was named asone of the world's top 12 power plants of 2004by Platts Power magazine, in its July/August 2004edition based on several selection criteria such asoperational efficiency, minimal environmental impact,technology use, financing structure, etc.

During the year, Reliance Energy was presented theprestigious "QIMPRO Benchmark 2004" award by theQIMPRO Foundation in the "Service category" on thebasis of its performance in 15 parameters includingattributes such as Leadership, Strategic Planning,Communication, Quality Management Systems, andCustomer Interaction Management, among others.

During the period under review, the Dahanu Power Stationreceived the Maharashtra Safety Award - 2003 byMaharashtra Chapter of National Safety Council for havingthe lowest accident frequency rate in the year, andrunning uninterruptedly for over one million man-hours.

It was also awarded the prestigious National SafetyAward - 2003 by the Ministry Of Labour, Governmentof India for its longest period of accident-free operation.

The power station also achieved 4 Star Rating by theBritish Safety Council for its overall performance inOccupational Health and Safety.

The Samalkot Power Station received a Silver Awardfor 'Environment Management' in November 2004,from the GreenTech Foundation.

24

CORPORCORPORCORPORCORPORCORPOR AAAAATE GOTE GOTE GOTE GOTE GOVERNVERNVERNVERNVERN A NA NA NA NA N CE REPORCE REPORCE REPORCE REPORCE REPOR TTTTT

CORPORCORPORCORPORCORPORCORPORAAAAATE GOTE GOTE GOTE GOTE GOVERNVERNVERNVERNVERNANANANANANCE REPORCE REPORCE REPORCE REPORCE REPORTTTTT

In no other sector of the economy the need topractice the best governance principles is so relevantand critical than the utility business of distribution ofelectricity to consumers. We are fully conscious thatour business impacts the entire society in which weoperate and hence, every citizen is our customer andimportant stakeholder of our Company.

Reliance Energy's Corporate Governance Principles upholdits global standing at the forefront of corporategovernance best practice. Reliance Energy is committedto introducing corporate governance practices intandem with domestic and international developmentsto position the Company to conform to the bestgovernance practices. The Company takes feedback intoaccount in its periodic reviews of the guidelines toensure their continuing relevance, effectiveness andresponsiveness to the needs of local and internationalinvestors and all other stakeholders.

GoGoGoGoGovvvvvererererernance philosophnance philosophnance philosophnance philosophnance philosophy of Ry of Ry of Ry of Ry of Reliance Enereliance Enereliance Enereliance Enereliance Energygygygygy

In our commitment to practice sound governanceprinciples, we are guided by the following coreprinciples.

11111. T. T. T. T. Trrrrransparansparansparansparansparencyencyencyencyency

To maintain the highest standards of transparencyin all aspects of our interactions and dealings.

2.2.2.2.2. DisclosurDisclosurDisclosurDisclosurDisclosureseseseses

To ensure timely dissemination of all price sensitiveinformation and matters of interest to our stakeholders.

3.3.3.3.3. AAAAAccountabilityccountabilityccountabilityccountabilityccountability

To demonstrate highest levels of personal responsibilityand continually affirm that employees are responsibleto themselves for the pursuit of excellence.

4.4.4.4.4. ComComComComCompliancespliancespliancespliancespliances

To comply with all the laws and regulations asapplicable to the Company.

5.5.5.5.5. EtEtEtEtEthical Conducthical Conducthical Conducthical Conducthical Conduct

To conduct the affairs of the Company in anethical manner.

6.6.6.6.6. SSSSStaktaktaktaktakeholders' Inteholders' Inteholders' Inteholders' Inteholders' Interererererestsestsestsestsests

To promote the interests of all stakeholders includingof customers, shareholders, employees, lenders, vendorsand the community.

GoGoGoGoGovvvvvererererernance prnance prnance prnance prnance practices beactices beactices beactices beactices beyyyyyond rond rond rond rond regulategulategulategulategulatororororory ry ry ry ry reqeqeqeqequiruiruiruiruirementsementsementsementsements

Our governance practices go beyond the statutoryand regulatory requirements. Our endeavour is tofollow the spirit of good governance than merecompliance with the conditions specified by regulatoryauthorities. With this objective, we have formulated,inter alia, the following policy documents :

11111..... Our VOur VOur VOur VOur Values and Commitmentsalues and Commitmentsalues and Commitmentsalues and Commitmentsalues and Commitments

We have set out and adopted policy documents on'values and commitments' of Reliance Energy. Webelieve that any business conduct can be ethicalonly when it rests on the nine core values ofhonesty, integrity, respect, fairness, purposefulness,trust, responsibility, citizenship and caring.

2.2.2.2.2. Our Code of EtOur Code of EtOur Code of EtOur Code of EtOur Code of Ethicshicshicshicshics

Our policy document on 'Code of Ethics', inessence, direct that our employees should conductthe business with integrity by excluding considerationof personal advantage.

3.3.3.3.3. Our Business PoliciesOur Business PoliciesOur Business PoliciesOur Business PoliciesOur Business Policies

Our 'Business Policies' contains the policy on thefollowing :

• Fair Market Practices

• Inside Information

• Financial Records and Accounting Integrity

• External Communication

• Work Ethics

• Personal Conduct

• Policy on prevention of sexual harassment

• Health, Safety and Environment

• Quality

4.4.4.4.4. PrPrPrPrProhibition of Insider Tohibition of Insider Tohibition of Insider Tohibition of Insider Tohibition of Insider Trrrrrading Pading Pading Pading Pading Policyolicyolicyolicyolicy

This document contains the policy on prohibitingtrading in the equity shares of the Company, basedon inside or privileged information.

5.5.5.5.5. PrPrPrPrPreeeeevvvvvention of Sexual Harention of Sexual Harention of Sexual Harention of Sexual Harention of Sexual Harassmentassmentassmentassmentassment

Our policy on Prevention of Sexual Harassment aimsat promoting a productive work environment andprotects individual rights against sexual harassment.

6.6.6.6.6. Whistle BloWhistle BloWhistle BloWhistle BloWhistle Blowwwwwer Per Per Per Per Policyolicyolicyolicyolicy

Our Whistle Blower policy encourages disclosure ingood faith of any wrongful conduct on a matter ofgeneral concern and protects the whistle blowerfrom any adverse personnel action.

77777..... EnvirEnvirEnvirEnvirEnvironment Ponment Ponment Ponment Ponment Policyolicyolicyolicyolicy

The Company is committed to achieving excellencein environmental performance, and preservation andpromotion of environment is of fundamental concernin all our business activities.

8.8.8.8.8. Risk ManagRisk ManagRisk ManagRisk ManagRisk Managementementementementement

Our risk management procedures ensures that themanagement control risks through means of aproperly defined frame work.

ComComComComCompliance witpliance witpliance witpliance witpliance with th th th th the Code and Rules of Lhe Code and Rules of Lhe Code and Rules of Lhe Code and Rules of Lhe Code and Rules of LSE andSE andSE andSE andSE andNYNYNYNYNYSESESESESE

The Global Depositary Receipts (GDRs) issued by theCompany are listed on the London Stock Exchange(LSE). The Company has reviewed the Combined Codeon Corporate Governance of LSE and the CorporateGovernance Rules of the New York Stock Exchange(NYSE), though the same are not applicable to theCompany. The Company's Corporate Governance practicessubstantially conform to these codes and rules.

ComComComComCompliance witpliance witpliance witpliance witpliance with Clause 49 of th Clause 49 of th Clause 49 of th Clause 49 of th Clause 49 of the Listing Ahe Listing Ahe Listing Ahe Listing Ahe Listing Agggggrrrrreementeementeementeementeement

In keeping with its proactive approach to achieve bestgovernance standards, Reliance Energy has reviewed andrevised its governance practices so as to implement therevised provisions of Clause 49 of the Listing Agreement

25

formulated by Securities and Exchange Board of India(SEBI), though its enforcement has been deferred up to31st December, 2005.

We present our report on compliance of governanceconditions specified in Clause 49.

I.I.I.I.I. BoarBoarBoarBoarBoard of Dird of Dird of Dird of Dird of Directectectectectorsorsorsorsors

A.A.A.A.A. BoarBoarBoarBoarBoard Comd Comd Comd Comd Compositionpositionpositionpositionposition

11111..... BoarBoarBoarBoarBoard strd strd strd strd strengtengtengtengtength and rh and rh and rh and rh and repreprepreprepresentationesentationesentationesentationesentation

As at 31st March, 2005, the Board consisted of tenmembers. The composition of and the category ofdirectors on the Board of the Company were asunder:

TTTTTable 1able 1able 1able 1able 1CatCatCatCatCategoregoregoregoregoryyyyy PPPPParararararticulars of tticulars of tticulars of tticulars of tticulars of thehehehehe

DirDirDirDirDirectectectectectorsorsorsorsorsPrPrPrPrPromotomotomotomotomoter Exer Exer Exer Exer ExecutivecutivecutivecutivecutiveeeeeDirDirDirDirDirectectectectectorsorsorsorsors Shri Anil D Ambani,

Chairman & ManagingDirectorShri Satish Seth,Executive Vice ChairmanShri S C Gupta,Director (Operations)Shri J P Chalasani,Director (BusinessDevelopment)

NNNNNon-Pron-Pron-Pron-Pron-PromotomotomotomotomoterererererExExExExExecutivecutivecutivecutivecutiveeeee DirDirDirDirDirectectectectectororororor Shri K H Mankad

Director (Finance)Independent DirIndependent DirIndependent DirIndependent DirIndependent Directectectectectorsorsorsorsors11111 Shri Gautam Doshi,

representative of GeneralInsurance CorporationGen V P MalikShri S L RaoDr. Leena SrivastavaShri V R Galkar,representative of LifeInsurance Corporation of India

Note: Due to resignation of Shri Cyril Shroff at themeeting of the Board held on 9th June, 2004, thenumber of independent directors temporarily reduced toless than half of the total number of Directors. Uponretirement of Director (HRD) Shri K.D. Kulkarni on 19thOctober, 2004, the composition of independent directorson the Board was restored to half of the totalstrength of directors.

2.2.2.2.2. Conduct of BoarConduct of BoarConduct of BoarConduct of BoarConduct of Board Prd Prd Prd Prd Proceedingsoceedingsoceedingsoceedingsoceedings

The day to day business is conducted by theofficers and the managers of Reliance Energy underthe direction of the Chairman and ManagingDirector. The board holds six to eight meetingsevery year to review and discuss the performanceof the Company, its future plans, strategies andother pertinent issues relating to the Company.

The board performs the following specific functions

in addition to the oversight of the business andthe management

• review, monitor and approve major financial &business strategies and corporate actions

• assess critical risks facing the company - reviewoptions for their mitigation

• provide counsel on the selection, evaluation,development and compensation of seniormanagement

• ensure that processes are in place for maintainingthe integrity of

o the Company

o the financial statements

o compliance with law

o relationships with customers, suppliers andother stakeholders

• delegation of appropriate authority to the seniorexecutives of the Company for effectivemanagement of operations

3.3.3.3.3. Independent DirIndependent DirIndependent DirIndependent DirIndependent Directectectectectorsorsorsorsors

(a)(a)(a)(a)(a) TTTTTenurenurenurenurenure of Independent Dire of Independent Dire of Independent Dire of Independent Dire of Independent Directectectectectorsorsorsorsors

Tenure of independent directors on the board ofthe Company shall not exceed nine years inaggregate, subject to their re-appointment on retirementby rotation for a maximum of three terms, as perstatutory provisions.

(b)(b)(b)(b)(b) IntIntIntIntInterererereraction of Naction of Naction of Naction of Naction of Non- Exon- Exon- Exon- Exon- Executivecutivecutivecutivecutive, including Independente, including Independente, including Independente, including Independente, including IndependentDirDirDirDirDirectectectectectors witors witors witors witors with th th th th the Chairhe Chairhe Chairhe Chairhe Chairmanmanmanmanman

The Chairman regularly interacts with non-executivedirectors to enable them to freely express theirviews on various matters concerning the business ofthe Company. A separate meeting between theChairman and the non-executive directors would beprovided so that issue of business and managementcan be discussed freely without encumbrances.

(c)(c)(c)(c)(c) Lead Independent DirLead Independent DirLead Independent DirLead Independent DirLead Independent Directectectectectorsorsorsorsors

Recognising the need for a representative andspokesperson for the independent directors, theBoard has appointed Dr Leena Srivastava as theLead Independent Director. The position of thelead independent director would be rotated on ayearly basis (or based on an appropriate time frameas deemed fit by the board). The Lead IndependentDirector will perform the following roles in additionto the role of a non-executive independent director

• Preside over all executive sessions of the board'sindependent directors;

• Work closely with the Chairman and ManagingDirector (CMD) to finalise the information flow,meeting agendas and meeting schedules;

• Liaise between the CMD and the independentdirectors on the board; and

• Take a lead role along with the CMD, in the

1As per the revised Clause 49, ‘Independent Director’ has been defined as a non-executive director of the company who (a) apart from receiving director's

remuneration, does not have any material pecuniary relationships or transactions with the company, its promoters, its directors, its senior management orits holding company, its subsidiaries and associates which may affect independence of the director; (b) is not related to promoters or persons occupyingmanagement positions at the board level or at one level below the board; (c) has not been an executive of the company in the immediately precedingthree financial years; (d) is not a partner or an executive or was not partner or an executive during the preceding three years, of any of the following:i) the statutory audit firm or the internal audit firm that is associated with the company, and ii) the legal firm(s) and consulting firm(s) that have a materialassociation with the company. (e) is not a material supplier, service provider or customer or a lessor or lessee of the company, which may affect independenceof the director; and (f) is not a substantial shareholder of the company i.e. owning two percent or more of the block of voting shares.

26

board evaluation process.

(((((d)d)d)d)d) Independent DirIndependent DirIndependent DirIndependent DirIndependent Directectectectector's intor's intor's intor's intor's interererereraction witaction witaction witaction witaction with sharh sharh sharh sharh shareholderseholderseholderseholderseholders

Shri Gautam Doshi, a senior independent directorwill interact with shareholders on their suggestionsand queries which may be forwarded to theCompany Secretary at Ramesh.Shenoy@rel.co.in.

(e)(e)(e)(e)(e) Meeting of Independent DirMeeting of Independent DirMeeting of Independent DirMeeting of Independent DirMeeting of Independent Directectectectectors witors witors witors witors without thout thout thout thout theheheheheManagManagManagManagManagementementementementement

The independent directors of the Company willmeet in executive session (with no executive directorsor management present) on a regular basis as theydeem necessary. These executive session discussionsmay include topics such as, performance andcompensation; strategic issues for Board consideration;future Board agendas and the flow of informationto directors; management progression and succession;and the Board's corporate governance guidelinesand others as the independent directors maydetermine. During these executive sessions, theindependent directors will have access to membersof management and other advisors, as the independentdirectors may determine and deem fit. The meetingwill be chaired by the Lead Independent DirectorDr. Leena Srivastava.

(f)(f)(f)(f)(f) Independent DirIndependent DirIndependent DirIndependent DirIndependent Directectectectector on tor on tor on tor on tor on the Risk Managhe Risk Managhe Risk Managhe Risk Managhe Risk ManagementementementementementCommittCommittCommittCommittCommittee:ee:ee:ee:ee:

The Company has set up a Risk ManagementCommittee consisting of Executives and a seniorindependent Director Gen V P Malik is associatedwith the Committee, to review periodically the riskmanagement procedures in order to ensure that theCompany controls risks through means of properlydefined framework.

4.4.4.4.4. Commitment of DirCommitment of DirCommitment of DirCommitment of DirCommitment of Directectectectectorsorsorsorsors

The Board meeting dates for the entire financialyear are fixed in the beginning of the year and anannual calendar of meetings of the board and itscommittees is circulated to the directors. Thisenables the directors to plan their commitmentsand facilitates attendance of all directors at themeetings of the board and its committees.

Such advance planning of meetings enable thedirectors to plan their commitments, particularly inthe context that the meetings of the boardnormally extends over the entire working day.

B.B.B.B.B. BoarBoarBoarBoarBoard Meetingsd Meetingsd Meetingsd Meetingsd Meetings

The Board held six meetings during 2004-05 on16th April, 2004, 9th June, 2004, 21st July, 2004,20th October, 2004, 30th November, 2004 and 19thJanuary, 2005. The maximum time gap betweenany two meetings was 90 days.

The minutes of the Board Meetings disclose thetiming and duration of the meetings.

The Board periodically reviews compliance reports ofall laws applicable to the Company and takes stepsto rectify non-compliances, if any.

SSSSStandartandartandartandartandards issued bds issued bds issued bds issued bds issued by ICSI: y ICSI: y ICSI: y ICSI: y ICSI: The Company is insubstantial compliance with the secretarial standardsgoverning Board Meetings as also General Meetings

as set out in Secretarial Standards 1 and 2 issuedby the Institute of Company Secretaries of India.The Board of Directors of the Company has takennecessary steps in order to ensure compliance withthese standards.

Besides, the Board has constituted various committeesto deal with various specialised issues. While therecommendations of SEBI on the constitution ofAudit Committee, Remuneration Committee andShareholders/Investors' Grievance Committee have comeinto force from 31st March, 2001, Reliance Energyhad set up the Audit Committee in May 1986,Remuneration Committee in March 2001 and ShareCommittee in January 1995.

C.C.C.C.C. AAAAAttttttttttendance of Direndance of Direndance of Direndance of Direndance of Directectectectectorsorsorsorsors

The overall attendance of Directors at Board meetingswas 98.8% and at the AGM 100%. It is proposedto introduce tele-conferencing and video-conferencingfacilities immediately upon amendment to the relevantstatutes.

TTTTTable 2 - Aable 2 - Aable 2 - Aable 2 - Aable 2 - Attttttttttendance of Direndance of Direndance of Direndance of Direndance of Directectectectectors at tors at tors at tors at tors at the Boarhe Boarhe Boarhe Boarhe BoardddddMeetings held during 2004-2005 and tMeetings held during 2004-2005 and tMeetings held during 2004-2005 and tMeetings held during 2004-2005 and tMeetings held during 2004-2005 and the last Annualhe last Annualhe last Annualhe last Annualhe last AnnualGenerGenerGenerGenerGeneral Meeting (Aal Meeting (Aal Meeting (Aal Meeting (Aal Meeting (AGMa)GMa)GMa)GMa)GMa)

Directors Meetings held Meetings Attendanceduring the tenure Attended at the

of Directors last AGM

Shri Anil D Ambani 6 6 PresentShri Satish Seth 6 6 PresentShri Amitabh Jhunjhunwala

16 6 Present

Shri S C Gupta 6 6 PresentShri J P Chalasani 6 6 PresentShri K H Mankad 6 6 PresentShri K D Kulkarni

23 3 Present

Shri Gautam Doshi 6 6 PresentShri Cyril S Shroff

31 1 Not

ApplicableGen. V P Malik 6 6 PresentShri S L Rao 6 6 PresentDr. Leena Srivastava 6 6 PresentProf. J Ramachandran

46 5 Present

Shri V R Galkar 6 6 Present

1. Shri Amitabh Jhunjhunwala resigned with effect from19th January, 2005

2. Shri K D Kulkarni, Director (HRD), retired with effectfrom 19th October, 2004

3. Shri Cyril S Shroff, Director, resigned with effectfrom 28th May, 2004

4. Prof J Ramachandran resigned with effect from 19thJanuary, 2005

NNNNNotototototes:es:es:es:es:a. None of the Directors is related to any other

Director.b. None of the Directors has any business relationship

with the Company.c. None of the Directors received any loans and

advances from the Company during the year.D.D.D.D.D. OtOtOtOtOther Dirher Dirher Dirher Dirher Directectectectectorshipsorshipsorshipsorshipsorships

None of the Directors holds Directorships in morethan 15 public limited companies.

27

TTTTTable 3 - The details of Dirable 3 - The details of Dirable 3 - The details of Dirable 3 - The details of Dirable 3 - The details of Directectectectectorships, Chairorships, Chairorships, Chairorships, Chairorships, Chairmanshipsmanshipsmanshipsmanshipsmanshipsand tand tand tand tand the Committhe Committhe Committhe Committhe Committee Memberships (exee Memberships (exee Memberships (exee Memberships (exee Memberships (excluding Privcluding Privcluding Privcluding Privcluding PrivatatatatateeeeeLimitLimitLimitLimitLimited Comed Comed Comed Comed Companies and section 25 Companies and section 25 Companies and section 25 Companies and section 25 Companies and section 25 Companies) heldpanies) heldpanies) heldpanies) heldpanies) heldbbbbby ty ty ty ty the Dirhe Dirhe Dirhe Dirhe Directectectectectors as on 3ors as on 3ors as on 3ors as on 3ors as on 31st Mar1st Mar1st Mar1st Mar1st Marccccch, 2005.h, 2005.h, 2005.h, 2005.h, 2005.

Name of Directors Number of Committees

other Directorships Membership Chairmanship

Shri Anil D Ambani 3 1 None

Shri Satish Seth 8 2 None

Shri S C Gupta 4 1 1

Shri J P Chalasani 3 2 None

Shri K H Mankad 3 3 1

Shri Gautam Doshi 7 9 5

Gen. V P Malik 1 4 None

Shri S L Rao 5 9 2

Dr. Leena Srivastava None 1 None

Shri V R Galkar 2 3 2

1. The information provided above pertains to thefollowing committees in accordance with the provisionsof Clause 49 of the Listing Agreement:

a. Audit Committee

b. Shareholders/Investors' Grievances Committee

c. Nomination/Remuneration Committee

2. Membership of Committees includes Chairmanshipalso.

E.E.E.E.E. Membership of BoarMembership of BoarMembership of BoarMembership of BoarMembership of Board Committd Committd Committd Committd Committeeseeseeseesees

No Director holds membership of more than 10Committees of Boards nor is any Director Chairmanof more than 5 Committees of Boards.

FFFFF..... Details of DirDetails of DirDetails of DirDetails of DirDetails of Directectectectectorsorsorsorsors

The abbreviated resumes of all Directors are furnishedhereunder:

Shri Anil D. AmbaniShri Anil D. AmbaniShri Anil D. AmbaniShri Anil D. AmbaniShri Anil D. Ambani (46), BSc and MBA from TheWharton School, University of Pennsylvania, USA. Hehas vast experience of nearly 22 years. He is the ViceChairman and Managing Director of Reliance IndustriesLimited, India's largest business house, founded by lateShri Dhirubhai H. Ambani. He joined Reliance in 1983as Co-Chief Executive Officer. He is credited withhaving pioneered many financial innovations in theIndian capital markets. He pioneered India's first foraysinto overseas capital markets with international publicofferings of global depositary receipts, convertibles andbonds. He lead Reliance in its efforts to raise, since1991, around US$ 2 billion from overseas financialmarkets with a 100-years Yankee bond issue in January1997 being the high point. He has steered theReliance Group to its current status as India's leadingtextiles - petroleum - petrochemicals - power -infocomm- telecom player.

After assuming office as Chairman and ManagingDirector of Reliance Energy in April 2003, Shri Anil DAmbani set the vision to make Reliance Energy asIndia's leading integrated energy company. With a viewto further strengthening its financial position and togenerate large scale resources for accelerating its futuregrowth plans, he has successfully raised over US$ 1

billion through preferential offer of equity shares andequity related securities as also through internationalconvertible bond offering. The international bond offeringwas the first ever zero-coupon internationalconvertible bond offering from the country and achievedthe then highest ever conversion premium of 30 percent to the market price. Recognising the performanceand potential of Reliance Energy, its market capitalisationhas surged from about US$ 654 million in April 2003to currently about US$ 2.56 billion, placingReliance Energy among the top 20 private sectorcompanies of India.

He was elected unopposed as an Independent memberof India's Upper House of Parliament - Rajya Sabha. Heis the Director of Indian Petrochemicals CorporationLimited (IPCL), Reliance Europe Limited and severalPrivate Limited Companies. He is a member of WhartonBoard of Overseers, The Wharton School, USA; CentralAdvisory Committee, Central Electricity RegulatoryCommission; Uttar Pradesh Development Council; TheBoard of Governors, Indian Institute of Management,Ahmedabad; and The Board of Governors of IndianInstitute of Technology, Kanpur. He is a member of theShareholders/Investors' Grievances Committee of RelianceIndustries Limited. Shri Ambani joined the Board of theCompany on 18th January, 2003 and was appointed asChairman and Managing Director on 21st April, 2003.

His acHis acHis acHis acHis achiehiehiehiehievvvvvements:ements:ements:ements:ements:

• Conferred 'the CEO of the Year 2004' in the PlattsGlobal Energy Awards.

• Ranked No.1 for the second consecutive year, inThe Power List 2004 published by India Today,March 2004.

• Voted 'MTV Youth Icon of the Year', September2003.

• Rated as one of 'India's Most Admired CEOs' forthe fifth consecutive year in the Business Barons -TNS Mode opinion poll, July 2003.

• Conferred 'The Entrepreneur of the Decade Award'by the Bombay Management Association, October2002.

• Awarded the First Wharton Indian Alumni Award bythe Wharton India Economic Forum (WIEF) inrecognition of his contribution to the establishmentof Reliance as a global leader in many of itsbusiness areas, December 2001.

• Named amongst 'The Power 50 - India's 50 mostpowerful decision-makers in Politics, Business &Finance', Business Barons, August 1999.

• Selected by Asiaweek magazine for its list of'Leaders of the Millennium in Business and Finance'and was introduced as the only 'new hero' inBusiness and Finance from India, June 1999.

• Leading business magazine Business Barons includedhim in its list of 'India's 25 Most InfluentialBusiness and Financial Leaders', June 1998.

• Conferred the 'Businessman of the Year 1997' awardby India's leading business magazine Business India,December 1997.

28

Shri Satish SetShri Satish SetShri Satish SetShri Satish SetShri Satish Seth,h,h,h,h, (49), is a Fellow Chartered Accountantand a law graduate. He has vast experience in theareas of finance, banking, accounts, audit, taxation,legal, project and general management and commercialmatters. In addition to these, he has had a wideexposure in developing, strategising and overseeingbusinesses in petrochemicals, petroleum, telecommunicationand power sectors. He is also a Director of RelianceTelecom Limited, Reliance Entertainment Private Limited,Reliance Patalganga Power Limited, Reliance EnterprisesLimited, Strategic Capital Corporation Private Limited,Rollwell Holdings and Trading Private Limited, InnovativeManagement Services Private Limited, Abhrak Investments& Trading Private Limited, Reliance Industrial Investmentsand Holdings Limited, Reliance Power Ventures Limited,WorldTel Holdings Limited, Appollo Trusteeship PrivateLimited, The Federation of Electricity Undertakings ofIndia, Reliance Energy Trading Limited, WorldTel Limited,BSES Rajdhani Power Limited and BSES Yamuna PowerLimited. Shri Seth was appointed to the Board on 24thNovember, 2000 and was appointed Vice Chairman on18th January, 2003. He was appointed as ExecutiveVice Chairman on 21st April, 2003. He is a member ofthe audit committee of Reliance Industrial Investmentsand Holdings Limited and Reliance Enterprises Limited.

Shri K. H. MankShri K. H. MankShri K. H. MankShri K. H. MankShri K. H. Mankad, ad, ad, ad, ad, (62), B.Com, LLB, ACA, AICWA, ACS,has more than 30 years experience in the fields offinancial management, taxation, internal managementand Management Information Systems. He joined theCompany in 1995, and was appointed Director (Finance)on 22nd December, 1995. Prior to that he held theposition of General Manger (Finance and Taxation) witha leading Company in the steel industry. He holdsdirectorship in the Boards of the following othercompanies viz. Western Electricity Supply Company ofOrissa Limited, North Eastern Electricity Supply Companyof Orissa Limited and Southern Electricity SupplyCompany of Orissa Limited. He is a member of theshareholders/investors' grievances committee of the Company,the member of audit committee of Southern ElectricitySupply Company of Orissa Limited and Chairman of theaudit committee of Western Electricity Supply Companyof Orissa Limited. Shri Mankad was appointed whole-time Director designated as Director (Finance) for afurther period from 22nd December, 2003 to 1stOctober, 2007.

Shri S. C. Gupta,Shri S. C. Gupta,Shri S. C. Gupta,Shri S. C. Gupta,Shri S. C. Gupta, (56), is a graduate in electrical andmechanical engineering and also MSc. (Engineering) inpower systems. He was appointed to the board on18th January, 2003. He was formerly the group seniorvice president in Reliance Power Limited. He wasactively involved in the design and implementation ofcaptive power plants of Reliance Industries Limited atHazira, Patalganga, Naroda and Jamnagar totalling 750MW and development of Independent Power Projects(IPPs) at various locations. He is on the boards ofCreative Energy Optimisations Private Limited, RelianceEnergy Trading Limited, Utility Powertech Limited, BSESKerala Power Limited and Reliance Energy GenerationLimited. He is chairman of the audit committee ofBSES Kerala Power Limited.

Shri J . PShri J . PShri J . PShri J . PShri J . P. Chalasani,. Chalasani,. Chalasani,. Chalasani,. Chalasani, (47), is an engineering graduateand has about 22 years experience in responsiblepositions with National Thermal Power CorporationLimited and Reliance Power Limited. He was appointedon the board of the Company on 18th January, 2003.

He was the Chief Executive of BSES Rajdhani PowerLimited and BSES Yamuna Power Limited which areengaged in distribution of electricity in major part ofNew Delhi. He is also on the boards of Hirma PowerPrivate Limited, Reliance Energy Trading Limited, BSESRajdhani Power Limited, BSES Yamuna Power Limitedand Jayamkondam Power Private Limited. He is amember of audit committee of BSES Rajdhani PowerLimited and BSES Yamuna Power Limited.

Shri Gautam Doshi,Shri Gautam Doshi,Shri Gautam Doshi,Shri Gautam Doshi,Shri Gautam Doshi, (52), Chartered Accountant, wasappointed as an independent Director on the board ofthe Company on 27th March, 2003. He was electedmember of the Central Council of the Institute ofChartered Accountants of India from 1991 to 1998.He presented papers and led discussions on thesubjects of income-tax, accounting and auditing, centralexcise and allied subjects. He was a former Chairmanof the indirect taxation committee of the IndianMerchants Chamber. He is a partner in GautamDoshi & Co. Chartered Accountants and RSM & Co.Chartered Accountants and holds directorships in G.P.Electronics Limited, MIRC Electronics Limited, SterliteIndustries (India) Limited, Kojam Fininvest Limited, MarigoldCapital Management Limited, Reliance Energy InvestmentsLimited, Garware Polyester Limited, Ambit CorporateFinance Private Limited, Hemkoot Trading Private Limited,Interlink Reissuance Consultants Private Limited, RifaPublications Private Limited, RSM Advisory ServicesPrivate Limited, RSM Holdings Private Limited andWelltal Investments Private Limited. He is member ofthe audit committee and nomination/remunerationcommittee of the Board and a member of theshareholders/investors' grievances committee of the Board.

DrDrDrDrDr. Leena Sriv. Leena Sriv. Leena Sriv. Leena Sriv. Leena Srivastaastaastaastaastavvvvva ,a ,a ,a ,a , (44), is currently the ExecutiveDirector, TERI, New Delhi - an independent not-for-profitresearch institution working in the areas of energy,environment and sustainable development. She was theDirector of the Regulatory Studies and GovernanceDivision, TERI from April 1999-March 2003. Dr Srivastavaholds additional charge as Dean, Faculty of Policy andPlanning, TERI School of Advanced Studies since June2000 where she is teaching Doctoral courses on EnergyPolicy and Planning and Infrastructure Economics. Shehas a PhD. in Energy Economics from the IndianInstitute of Science in Bangalore, India. She has anumber of publications to her credit and is on theEditorial Boards of various international journals dealingwith energy and environment issues.

Dr Srivastava is a member of the Expert Committee toformulate Energy Policy set up by the PlanningCommission, Government of India. She also serves onthe Research Advisory Committee of IGES (the Institutefor Global Environmental Strategies, Japan), the InternationalAdvisory Board of the Wuppertal Institute for Climate,Environment and Energy, Germany and is a member ofthe Scientific Steering Committee of the IHDP-IT Programme(International Human Dimensions Programme - IndustrialTransformation). She was a Coordinating Lead Author onWorking Group III of the Third Assessment Report ofthe IPCC (The Intergovernmental Panel on ClimateChange) and is currently the Anchor for SustainableDevelopment and Climate Change for the FourthAssessment Report. She is the lead independentdirector on the board of the Company. She ischairperson of the environment safety committee andmember of the audit committee of the Company.

29

Shri S L RShri S L RShri S L RShri S L RShri S L Raoaoaoaoao (69) is currently Chairman, Board ofGovernors of the Institute for Social and EconomicChange, Bangalore; Distinguished Visiting Fellow at TheEnergy and Resources Institute (TERI); a widely readnewspapers columnist, writer and speaker on management,consumer markets, the economy and energy issues. Heis an economist by training and a professionalmanager with 28 years of experience in largecorporates including in top management positions inmarketing and general management and 5 years inmanagement consultancy. He taught marketing in themost reputed management schools in India as visitingfaculty. He was a Visiting Fellow at the Indian OceanCentre, Australia (1996-98). In 1990, he was appointedDirector General of the National Council of AppliedEconomic Research (NCAER), the premier research institutionin India, which during his tenure, was known theworld over for its data on Indian markets, humandevelopment indicators, social infrastructure and economicforecasting. He was the first Chairman of theCentral Electricity Regulatory Commission (CERC) in1998. He gave CERC a high image for itsindependence, transparency and objectivity. He wasformerly the President of the Madras ManagementAssociation (1983-84) and All India ManagementAssociation (1985-86), a founder and former VicePresident of the People's Union for Civil Liberties inTamil Nadu (1981-84). He was Founder Chairman of theForum of Indian Regulators. He has co-authored oredited several books and articles on the economyand management. His writings and active participationcontributed to the formation of the Indian OceanRegion as a zone for economic cooperation. He wasawarded the Ravi J Mathai Fellowship Award by theAssociation of Indian Management Schools in 2001.Heis a Director in Rane Engine Valves Limited, GlobalTrustcapital Finance Pvt. Limited, Rain Calcining Limited,Honeywell Automation India Limited and KanoriaChemicals & Industries Limited . He is presentlyGoverning Member of the National Institute of Healthand Family Welfare, Chairman of the Board of Governorsof the the Institute for Social & Economic Change,Member of the Madras Craft Foundation, Aga KhanFoundation of India and on the Board of Governors ofRIS (Research and Information Systems for DevelopingEconomies) as also on the Governing Board of theIndian Institute of Management, Lucknow. He is amember of the audit committee, nomination/remunerationcommittee and safety and environment committee ofthe Company, audit committee and remunerationcommittee of Rane Engine Valves Limited, audit committeeof Rain Calcining Limited and Chairman of the auditcommittee of Honeywell Automation India Limited.

Gen. V P Malik,Gen. V P Malik,Gen. V P Malik,Gen. V P Malik,Gen. V P Malik, (65), was Chief of the Army Staff ofthe Indian Army and currently the Chairman, Chiefs ofStaff Committee of India. As Chief of the Army Staff,General Malik had dual responsibility of being an"Advisor" to the Government as well as Commander ofover one million strong Army and managed all itsfunctions to fulfil its national role and assignedmissions. He led a tireless campaign to streamlineprocedures, ensure better coordination and faster decisionmaking in the military and higher defence controlorganizations. He oversaw planning and conduct ofOperation Vijay in Kargil war intensified anti-terrorist

operations in Jammu and Kashmir and North East India.He was awarded the Ati Vishista Seva Medal in 1986and Param Vishista Seva Medal, the highest nationalaward for distinguished services in India in 1996. HisMajesty, the King of Nepal appointed him HonoraryChief of the Royal Nepal Army in 1997. Afterretirement, he keeps himself engaged in spreadingawareness and giving his views on Indian nationalsecurity challenges and international relations. He is aformer member of the National Security AdvisoryBoard and currently, an Honorary Advisor to the Centrefor Policy Research, New Delhi and President of theORF Institute of Security Studies. He is also anindependent director of Hero Honda Motors Ltd. He isalso member of the audit committee of Hero HondaMotors Limited and audit committee, nomination/remuneration and safety & environment of the Company.

Shri V R GalkShri V R GalkShri V R GalkShri V R GalkShri V R Galkararararar,,,,, (61), B.Com, FCA, LLB, is representativeof Life Insurance Corporation of India. He was appointedon the board of Reliance Energy Limited on 9th June,2003. He has vast experience in the field of accountsand finance. He is also a Director on the board ofIDBI Trusteeship Services Limited and Excel IndustriesLimited. He is member of the audit committee of theCompany and chairman of shareholders / investors'grievances committee of the company and chairman ofaudit committee of IDBI Trusteeship Services Limited.

G.G.G.G.G. InsurInsurInsurInsurInsurance coance coance coance coance covvvvverererereragagagagageeeee

The Company had obtained Director's Liability insurancecoverage in respect of any legal action that might beinitiated against directors. The Company will examinethe need to renew the policy for further period.

II. AII. AII. AII. AII. Audit Committudit Committudit Committudit Committudit Committeeeeeeeeee

The Audit Committee of the board of Reliance EnergyLimited was set up way back in May 1986. Currently,the committee consists of all the five independentdirectors of the Company. All the directors have goodknowledge of corporate and project finance, accountsand Company law. The Chairman of the Committee, aChartered Accountant, was member of the CentralCouncil of the Institute of Chartered Accountants ofIndia for 8 years and has accounting and relatedfinancial management expertise. The committee heldseven meetings during the year. The audit committeealso advises the management on the areas whereinternal audit can be improved. The minutes of themeetings of the audit committee are placed before theBoard. The terms of reference of the audit committeeare in accordance with all the items listed in Clause49 (II) (D) of the Listing Agreement as follows:

i Overseeing of the Company's financial reportingprocess and the disclosure of its financial informationto ensure that the financial information is correct,sufficient and credible.

ii Recommending the appointment, reappointment andreplacement/removal of statutory auditor and fixationof audit fee.

iii Approve payment for any other services by statutoryauditors

iv Reviewing with management the annual financialstatements before submission to the board, focusingprimarily on;

30

a. Matters required to be included in the Director'sResponsibility Statement included in the reportof the Board of Directors

b. Any changes in accounting policies and practices

c. Major accounting entries based on exercise ofjudgment by management

d. Qualifications in draft audit report.

e. Significant adjustments arising out of audit.

f. Compliance with listing and other legalrequirements concerning financial statements

g. Any related party transactions

v Reviewing with the management the quarterly financialstatements before submission to the Board forapproval.

vi Reviewing with the management, external and internalauditors, the adequacy of internal control systems.

vii Reviewing the adequacy of internal audit function,including the structure of the internal auditdepartment, staffing and seniority of the officialheading the department, reporting structure coverageand frequency of internal audit.

viii Discussion with internal auditors on any significantfindings and follow up thereon.

xi Reviewing the findings of any internal investigationsby the internal auditors into matters where there issuspected fraud or irregularity or a failure ofinternal control systems of a material nature andreporting the matter to the board.

x Discussion with statutory auditors before the auditcommences about nature and scope of audit aswell as post-audit discussion to ascertain any areaof concern.

xi To look into the reasons for substantial defaults inthe payment to the depositors, debentureholders,shareholders (in case of non-payment of declareddividends) and creditors.

xii To review the functioning of the Whistle Blowermechanism.

xiii Carrying out any other function as is mentioned inthe terms of reference of the Audit committee.

xiv Review the following information:

a Management Discussion and Analysis of FinancialCondition and Results of Operations;

b Internal audit reports relating to internal controlweaknesses;

c Management letters / letters of internal controlweaknesses issued by statutory / internal auditors;

d Statement of significant related party transactions;and

e The appointment, removal and terms ofremuneration of the Chief internal auditor.

The AThe AThe AThe AThe Audit Committudit Committudit Committudit Committudit Committee has tee has tee has tee has tee has the fhe fhe fhe fhe folloolloolloolloollowing powing powing powing powing powwwwwers:ers:ers:ers:ers:

i. to investigate any activity within its terms ofreference.

ii. to seek any information from any employee.

iii. to obtain outside legal and professional advice.

iv. to secure attendance of outsiders with relevantexpertise, if it considers it necessary.

TTTTTable 4 - Aable 4 - Aable 4 - Aable 4 - Aable 4 - Attttttttttendance of Members at tendance of Members at tendance of Members at tendance of Members at tendance of Members at the Meetingshe Meetingshe Meetingshe Meetingshe Meetingsof tof tof tof tof the Ahe Ahe Ahe Ahe Audit Committudit Committudit Committudit Committudit Committee held during 2004-2005ee held during 2004-2005ee held during 2004-2005ee held during 2004-2005ee held during 2004-2005

MembersMembersMembersMembersMembers Meetings heldMeetings heldMeetings heldMeetings heldMeetings held MeetingsMeetingsMeetingsMeetingsMeetingsduring tduring tduring tduring tduring the the the the the tenurenurenurenurenureeeee attattattattattendedendedendedendedended

of Dirof Dirof Dirof Dirof Directectectectectorsorsorsorsors

Shri Gautam Doshi, Chairman 5 5Shri Amitabh Jhunjhunwala

15 5

Shri V R Galkar 5 5Prof. J Ramachandran

25 3

Shri S L Rao3

1 1Gen V P Malik

31 1

Dr. Leena Srivastava3

1 1

Overall attendance:- 91%

The Audit Committee held its meetings on 16th April,2004, 21st July, 2004, 4th October, 2004, 20thOctober, 2004 and 18th January, 2005 and themaximum gap between any two meetings was 96 days.

1. Ceased to be a member from 19th January, 2005.

2. Ceased to be a member from 19th January, 2005.

3. Appointed with effect from 20th October, 2004

The Company Secretary Shri Ramesh Shenoy acts as theSecretary to the Committee.

IIIIIIIIIIIIIII NNNNNomination/Romination/Romination/Romination/Romination/Remuneremuneremuneremuneremuneration Committation Committation Committation Committation Committee: (Nee: (Nee: (Nee: (Nee: (Non-Mandaton-Mandaton-Mandaton-Mandaton-Mandatororororory)y)y)y)y)

The Remuneration Committee of the board is constitutedto formulate and recommend to the Board from timeto time, a compensation structure for whole-timeMembers of the Board. Though the package ofremuneration does not include pension plans, theperquisites of whole-time directors include superannuationbenefit under which these directors are entitled to anannuity from LIC on their retirement. It is proposedto introduce a stock option scheme for the directorsof the Company in accordance with the SEBI (EmployeesStock Option Scheme and Employee Stock PurchaseScheme) Guidelines, 1999 at an appropriate time.

TTTTTable 5 - Aable 5 - Aable 5 - Aable 5 - Aable 5 - Attttttttttendance of Members at tendance of Members at tendance of Members at tendance of Members at tendance of Members at the Meetingshe Meetingshe Meetingshe Meetingshe Meetingsof tof tof tof tof the Rhe Rhe Rhe Rhe Remuneremuneremuneremuneremuneration Committation Committation Committation Committation Committee held during 2004-ee held during 2004-ee held during 2004-ee held during 2004-ee held during 2004-20052005200520052005

MembersMembersMembersMembersMembers Meetings heldMeetings heldMeetings heldMeetings heldMeetings held MeetingsMeetingsMeetingsMeetingsMeetingsduring tduring tduring tduring tduring the the the the the tenurenurenurenurenureeeee attattattattattendedendedendedendedended

of Dirof Dirof Dirof Dirof Directectectectectorsorsorsorsors

Shri Gautam Doshi, Chairman 1 1

Shri Cyril Shroff1

1 1

Prof. J Ramachandran2

1 1

Shri Amitabh Jhunjhunwala3

None Not Applicable

Shri S L Rao4

None Not Applicable

Gen V P Malik4

None Not Applicable

Overall attendance : 100%

The Remuneration Committee held its meeting on 16thApril, 2004

1. Resigned with effect from 28th May, 2004

2. Resigned with effect from 19th January, 2005

3. Appointed on the Committee on 9th June, 2004and resigned from the Board with effect from19th January, 2005

4. Appointed with effect from 19th January, 2005.

31

TTTTTable 6 -able 6 -able 6 -able 6 -able 6 - RRRRRemuneremuneremuneremuneremuneration paid tation paid tation paid tation paid tation paid to Diro Diro Diro Diro Directectectectectors (exors (exors (exors (exors (excluding contribution tcluding contribution tcluding contribution tcluding contribution tcluding contribution to go go go go grrrrratuity fund and pratuity fund and pratuity fund and pratuity fund and pratuity fund and prooooovision fvision fvision fvision fvision for leaor leaor leaor leaor leavvvvveeeee

encashment on rencashment on rencashment on rencashment on rencashment on retiretiretiretiretirement) during 2004-2005ement) during 2004-2005ement) during 2004-2005ement) during 2004-2005ement) during 2004-2005(Rs. In lakhs)

Sr. No. Name Position Sitting Fees Salary & Perquisites Commission TotalRs. Rs. Rs. Rs.

1 Shri Anil D Ambani Chairman Nil 39.38 9.45 49.432 Shri Satish Seth Executive Vice Chairman Nil 42.98 Nil 42.983 Shri Amitabh Jhunjhunwala

1Director 1.30 Nil Nil 1.30

4 Shri S C Gupta Director (Operations) Nil 26.82 Nil 26.825 Shri J P Chalasani Director (Business Development) Nil 23.17 Nil 23.176 Shri K H Mankad Director (Finance) Nil 30.98 Nil 30.987 Shri Gautam Doshi

4Director 1.30 Nil 2.76 4.06

8 Gen V P Malik Director 70 Nil 1.20 1.909 Shri S L Rao Director 80 Nil 1.44 2.2410 Dr. Leena Srivastava Director 80 Nil 1.68 2.4811 Prof. J Ramachandran

2Director 90 Nil 1.68 2.58

12 Shri V R Galkar3

Director 1.60 Nil 2.28 3.8813. Shri Cyril Shroff

5Director 0.20 Nil 1.44 1.64

14. Shri K.D. Kulkarni6

Director Nil 41.49 Nil 41.49

TTTTTotalotalotalotalotal 77777.60.60.60.60.60 205.42205.42205.42205.42205.42 2222211111.93.93.93.93.93 234.95234.95234.95234.95234.95

1. Resigned with effect from 19th January, 2005.Payments towards his sitting fes and commission were paid overto Reliance Power Ventures Limited

2. Resigned with effect 19th January, 2005.

3. Commission was paid over to Life Insurance Corporation of India

4. Commission was paid over to General Insurance Corporation of India.

5. Resigned with effect from 28th May, 2004.

6. Retired with effect from 19th October, 2004.

7. Excludes Commission amounting Rs. 249 lakh accrued for the year and not paid.

NNNNNotototototes:es:es:es:es:

a. The salary and perquisites include all fixed elements of remuneration i.e. salary and other allowances andbenefits.

b. The Company does not pay bonus and any incentives to the executive directors.

c. The Company has not entered in to any pecuniary relationship or transactions with the non-executive directors.The compensation paid to non-executive Directors including independent directors is approved by the shareholdersin the general meetings.

d. The Company has so far not issued any stock options to executive directors.

TTTTTable 7 - Details of Service Contrable 7 - Details of Service Contrable 7 - Details of Service Contrable 7 - Details of Service Contrable 7 - Details of Service Contractactactactact

NNNNNamesamesamesamesames DatDatDatDatDate of initial appointmente of initial appointmente of initial appointmente of initial appointmente of initial appointment CurCurCurCurCurrrrrrent tent tent tent tent tenurenurenurenurenureeeee FFFFFrrrrromomomomom TTTTTooooo

Shri Anil D Ambani 18th

January, 2003 5 years 21st

April, 2003 20th

April, 2008

Shri Satish Seth 24th

November, 2000 5 years 21st

April, 2003 20th

April, 2008

Shri K H Mankad 22nd

December, 1995 till the age ofsuperannuation 22

nd December, 2003 1

st October, 2007

Shri S C Gupta 18th

January, 2003 5 Years 18th

January, 2003 17th

January, 2008

Shri J P Chalasani 18th

January, 2003 5 Years 18th

January, 2003 17th

January, 2008

For any termination of service contract, the Company and the executive director are required to give a notice of 3months or pay three months' salary in lieu thereof.

EqEqEqEqEquity sharuity sharuity sharuity sharuity shares held bes held bes held bes held bes held byyyyy Dir Dir Dir Dir Directectectectectorsorsorsorsors

Except Shri K.H. Mankad who held 300 equity shares asat 31st March, 2005, no other Director of the Companyheld any equity shares of the Company.

DirDirDirDirDirectectectectectors' Rors' Rors' Rors' Rors' Remuneremuneremuneremuneremuneration policyation policyation policyation policyation policy

The Nomination/Remuneration Committee determines andrecommends to the board, the compensation of thedirectors.

The key components of the Company's RemunerationPolicy are :

• Compensation will be a major driver of performance.

• Compensation will be competitive and benchmarkedwith a select group of companies from the utilitysector.

• Compensation will be transparent, fair and simple toadminister.

• Compensation will be fully legal and tax complaint.

32

CritCritCritCritCriteria feria feria feria feria for making paor making paor making paor making paor making payments tyments tyments tyments tyments to non-exo non-exo non-exo non-exo non-executivecutivecutivecutivecutive Dire Dire Dire Dire Directectectectectorsorsorsorsors

The non-executive Directors are paid commission basedon the number of Board membership / committeemembership/chairmanship held by them. They are awardedpre-determined points for every Board membership /committee membership/chairmanship held by them andthe commission amount is apportioned on the basis ofthe points received by each director.

IVIVIVIVIV SharSharSharSharShareholders/Inveholders/Inveholders/Inveholders/Inveholders/Investestestestestors' Grieors' Grieors' Grieors' Grieors' Grievvvvvances Committances Committances Committances Committances Committeeeeeeeeee

The Board of Directors of the Company constitutedshareholders/investors grievances committee in theyear 1995. Currently, the Committee comprises ShriV.R. Galkar as chairman and Shri Gautam Doshi andShri K H Mankad as members. The Company hasappointed Karvy Computershare Private Limited to actas Registrar and Share Transfer Agent of the Company.The committee also monitors redressal of investors'grievances. Particulars of investors grievances receivedand redressed are furnished in the Investor InformationSection of this Report.

The composition of the committee and the numberof meetings held during the year are furnishedhereunder.

Shri Ramesh Shenoy, Company Secretary, is theCompliance Officer.

TTTTTable 8 - Aable 8 - Aable 8 - Aable 8 - Aable 8 - Attttttttttendance of Members at tendance of Members at tendance of Members at tendance of Members at tendance of Members at the Meeting ofhe Meeting ofhe Meeting ofhe Meeting ofhe Meeting ofttttthe Sharhe Sharhe Sharhe Sharhe Shareholders/Inveholders/Inveholders/Inveholders/Inveholders/Investestestestestors' Grieors' Grieors' Grieors' Grieors' Grievvvvvances Committances Committances Committances Committances Committee heldee heldee heldee heldee heldduring 2004-2005during 2004-2005during 2004-2005during 2004-2005during 2004-2005

Members Meetings held Meetings

during the tenure attended

of Directors

Shri V R Galkar, Chairman 5 5

Shri Gautam Doshi1

1 1Shri Amitabh Jhunjhunwala

24 3

Shri K H Mankad 5 5

Overall attendance : 93%

The Shareholders/Investors' Grievances Committee held itsmeetings on 16th April 2004, 21st July, 2004, 20thOctober, 2004, 13th December, 2004 and 19th January,2005

1. Appointed with effect from 19th January, 2005.

2. Resigned with effect from 19th January, 2005

The total number of complaints received and replied tothe satisfaction of shareholders during the year underreview was 43. There were no complaints pending ason 31st March, 2005. The details of period taken ontransfer of shares and nature of complaints are furnishedin the Investor Information Section of this AnnualReport.

V SafV SafV SafV SafV Safety & Envirety & Envirety & Envirety & Envirety & Environment Committonment Committonment Committonment Committonment Committeeeeeeeeee

The Safety & Environment Committee of the Board isconstituted, to monitor compliance as to environment,health and safety issues affecting the Company as also

to promote environment protection. Currently, the committeecomprises Dr. Leena Srivastava (Chairperson), Gen V PMalik, Shri S L Rao and Shri S C Gupta.

The composition of the Committee and the number ofmeetings held during the year are furnished hereunder:

TTTTTable 9 - Aable 9 - Aable 9 - Aable 9 - Aable 9 - Attttttttttendance of Members at tendance of Members at tendance of Members at tendance of Members at tendance of Members at the Meeting ofhe Meeting ofhe Meeting ofhe Meeting ofhe Meeting ofttttthe Envirhe Envirhe Envirhe Envirhe Environment & Safonment & Safonment & Safonment & Safonment & Safety Committety Committety Committety Committety Committee held duringee held duringee held duringee held duringee held during2004-20052004-20052004-20052004-20052004-2005

Members Meetings held Meetingsduring the tenure attended

of Directors

Dr. Leena Srivastava 1 1

Gen V P Malik (See Note) None None

Shri S L Rao 1 1

Shri S C Gupta 1 1

Overall attendance : 100%

The Safety & Environment Committee held its meetingon 19th January, 2005.

Note: Appointed with effect from 19th January, 2005.

VIVIVIVIVI GenerGenerGenerGenerGeneral Body Meetings: al Body Meetings: al Body Meetings: al Body Meetings: al Body Meetings: The Company held its lastthree Annual General Meetings as under:

Year Date Venue Time SpecialResolutions passed

2003- 9th

June, Reliance Energy 11.00 1. Alteration in Articles of2004 2004 Auditorium, Reliance a.m. Association consequent

Energy Centre, to increase inSanta Cruz, (East), Authorised Capital.Mumbai 400 055 2. Alteration in Articles of

shares3. Issue of Preference

shares2002- 9

th June, Shri Bhaidas Maganlal 11.00 1. Delisting of equtiy

2003 2003 Sabhagriha, U-1 Juhu a.m. sharesDevelopmet Scheme, 2. Change in name toVile Parle (West), Reliance Energy LimitedMumbai 400 056

3. Payment of Commissionto non-executiveDirectors

4. Appointment of Auditors2001- 21

st Sept., Shri Bhaidas Maganlal 10.00 1. Appointment of Auditors

2002 2002 Sabhagriha, U-1 Juhu a.m. 2. Re-classification ofDevelopmet Scheme, Authorised CapitalVile Parle (West), 3. Alteration in Articles ofMumbai 400 056 Association consequent

to re-classification inAuthorised Capital.

VII Postal BallotVII Postal BallotVII Postal BallotVII Postal BallotVII Postal Ballot

During the year, Special Resolutions were passed throughtwo Postal Ballots which related to (i) raising of fundsthrough issue of securities in the international marketsand (ii) alteration of Article 131 (a)(i), 131 (a) (ii) and131 (aa) of the Articles of Association. The results wereannounced on 21st May, 2004 and 18th January, 2005respectively. Shri Bhupendra Bangari, chartered accountant,was appointed as the Scrutinizer for overseeing thePostal Ballot process. The above special resolutionshave been passed with the requisite majority as per thefollowing details.

33

TTTTTable 1able 1able 1able 1able 10: P0: P0: P0: P0: Postal Ballot Rostal Ballot Rostal Ballot Rostal Ballot Rostal Ballot ResultsesultsesultsesultsesultsRRRRRaising ofaising ofaising ofaising ofaising of AltAltAltAltAlterererereration ofation ofation ofation ofation of

funds tfunds tfunds tfunds tfunds thrhrhrhrhroughoughoughoughoughArArArArArticle 1ticle 1ticle 1ticle 1ticle 1333331 (a)(i),1 (a)(i),1 (a)(i),1 (a)(i),1 (a)(i),issue ofissue ofissue ofissue ofissue of 11111333331 (a) ( i i )1 (a) ( i i )1 (a) ( i i )1 (a) ( i i )1 (a) ( i i )

securitiessecuritiessecuritiessecuritiessecurities and 1 and 1 and 1 and 1 and 1333331 (aa)1 (aa)1 (aa)1 (aa)1 (aa)Number of valid postalBallot forms received 2,270 3,974

Votes in favour of theResolution 13,62,48,612 12,29,73,820(No. of shares)Votes against theResolution 10,290 34,85,302(No. of shares)Number of invalidpostal ballot forms received 76 245(No. of Shares)

17,979 40,692% of votes in favour 99.99 97.24Result Carried with requisite majorityPostal Ballots passed 21st May, 18th January,

2004 2005

The Company has complied with the procedures forPostal Ballot in terms of the Companies (Passing ofResolution by Postal Ballot) Rules, 2001 and amendmentsthereto. The board does not recommend any specialresolution for approval of the Members at the ensuing76th Annual General Meeting.

VIIIVIIIVIIIVIIIVIII DisclosurDisclosurDisclosurDisclosurDisclosureseseseses

i The Company has not entered into any relatedparty transaction of material nature that mayhave a potential conflict with the interests ofthe Company or its associates, with any of thedirectors or their relatives during the year 2004-05.

ii No penalty or stricture has been imposed on theCompany by the Stock Exchanges or SEBI or anyother statutory authority, on any matter relatedto the capital markets, during the last 3 years.

IXIXIXIXIX ComComComComCompliance witpliance witpliance witpliance witpliance with oth oth oth oth other mandather mandather mandather mandather mandatororororory ry ry ry ry reqeqeqeqequiruiruiruiruirementsementsementsementsements

1 Management Discussion and Analysis

A Management Discussion and Analysis Reportforms part of the Annual Report and includesdiscussions on various matters specified underclause 49(IV)(F) of the Listing Agreement.

22222 FFFFFinancial Pinancial Pinancial Pinancial Pinancial Perererererfffffororororormance of tmance of tmance of tmance of tmance of the Comhe Comhe Comhe Comhe Companpanpanpanpanyyyyy

The Company being a utility in the business ofgeneration and distribution of electricity, its earningsare regulated by the regulatory authorities. Thefinancial performance of the Company is subjectto regulatory approvals and clearances and theCompany is therefore unable to make any earningsprojections or guidance with any reasonable degreeof accuracy.

33333 SubsidiarSubsidiarSubsidiarSubsidiarSubsidiary Comy Comy Comy Comy Companies:panies:panies:panies:panies:

The Company did not have any subsidiary companyduring 2004-05.

44444 DisclosurDisclosurDisclosurDisclosurDisclosureseseseses

4.14.14.14.14.1 RRRRRelatelatelatelatelated Ped Ped Ped Ped Parararararty Tty Tty Tty Tty Trrrrransactionsansactionsansactionsansactionsansactions

The details of all transactions with related partiesare placed before the audit committee on quarterlybasis.

4.24.24.24.24.2 DisclosurDisclosurDisclosurDisclosurDisclosure of Ae of Ae of Ae of Ae of Accounting Tccounting Tccounting Tccounting Tccounting Trrrrreatmenteatmenteatmenteatmenteatment

In the preparation of financial statements, theCompany has followed the Accounting Standardsissued by the Institute of Chartered Accountantsof India to the extent applicable.

4.34.34.34.34.3 DisclosurDisclosurDisclosurDisclosurDisclosures on Risk Manages on Risk Manages on Risk Manages on Risk Manages on Risk Managementementementementement

The Company has laid down procedures to informBoard members about the risk assessment andminimisation procedures. A Risk ManagementCommittee consisting of a senior independentdirector and senior executives of the Companyperiodically reviews these procedures to ensurethat executive management controls risk throughmeans of a properly defined framework. TheCompany has framed the risk assessment andminimisation procedure which is periodically reviewedby the Board.

4.44.44.44.44.4 PrPrPrPrProceeds froceeds froceeds froceeds froceeds from tom tom tom tom the Prhe Prhe Prhe Prhe Prefefefefeferererererential Issue of Wential Issue of Wential Issue of Wential Issue of Wential Issue of Warararararrrrrrantsantsantsantsants

The Company had, during the year 2004-05,issued 98,61,228 warrants of Rs.640 each aggregatingRs.631.12 crore which were subscribed to by apromoter group company viz. Reliance PowerVentures Limited. The details of utilisation ofsuch proceeds are disclosed to the AuditCommittee. The Company has not utilised thesefunds for purposes other than those stated inthe notice convening the general meeting.

5.5.5.5.5. Code of Conduct :Code of Conduct :Code of Conduct :Code of Conduct :Code of Conduct :

The Board has formulated a code of conduct forthe Board members and senior management ofthe Company. The same has also been posted onthe website of the Company. All Board membersand senior management personnel have affirmedtheir compliance with the code. A declaration tothis effect signed by the Chairman and ManagingDirector of the Company is given elsewhere inthe Annual Report.

6.6.6.6.6. CEO/CFO CerCEO/CFO CerCEO/CFO CerCEO/CFO CerCEO/CFO Certiftiftiftiftificationicationicationicationication

A certificate from Chairman and Managing Directorand Director (Finance) on the financial statementsof the Company was placed before the Board.

77777..... RRRRReeeeevievievievieview of Dirw of Dirw of Dirw of Dirw of Directectectectectors' Rors' Rors' Rors' Rors' Responsibility Sesponsibility Sesponsibility Sesponsibility Sesponsibility Stattattattattatementementementementement

The Board in its report have confirmed that theannual accounts for the year ended 31st March,2005 have been prepared as per applicable

34

accounting standards and policies and that sufficientcare has been taken for maintaining adequateaccounting records.

XXXXX ComComComComCompliance witpliance witpliance witpliance witpliance with Nh Nh Nh Nh Non-mandaton-mandaton-mandaton-mandaton-mandatororororory ry ry ry ry reqeqeqeqequiruiruiruiruirementsementsementsementsements

11111 TTTTTenurenurenurenurenure of Indepene of Indepene of Indepene of Indepene of Independent Dirdent Dirdent Dirdent Dirdent Directectectectectors on tors on tors on tors on tors on the Boarhe Boarhe Boarhe Boarhe Boarddddd

The tenure of Independent Directors on theBoard of the Company shall not exceed, in theaggregate, a period of nine years.

22222 RRRRRemuneremuneremuneremuneremuneration Committation Committation Committation Committation Committeeeeeeeeee

The board has set up a Remuneration Committeedetails whereof are furnished at Sr.No.III of thisReport.

33333 SharSharSharSharShareholder Rightseholder Rightseholder Rightseholder Rightseholder Rights

The half-yearly financial results including summaryof significant events of relevant period of sixmonths are sent to each household of shareholders.

44444 AAAAAudit Qualifudit Qualifudit Qualifudit Qualifudit Qualificationsicationsicationsicationsications

Strategic decisions were taken during the yearresulting in unqualified financial statements ofthe Company.

55555 TTTTTrrrrraining of Boaraining of Boaraining of Boaraining of Boaraining of Board Membersd Membersd Membersd Membersd Members

A programme has been devised to train Boardmembers in the business model of the Company,risk profile of the business parameters and theirresponsibilities as directors.

66666 Whistle BloWhistle BloWhistle BloWhistle BloWhistle Blowwwwwer Per Per Per Per Policyolicyolicyolicyolicy

The Company has formulated a policy to prohibitmanagerial personnel from taking adverse personnelaction against employees disclosing in goodfaith alleged wrongful conduct on matters ofpublic concern involving violation of any law,mismanagement, gross waste or misappropriationof public funds, substantial and specific dangerto public health and safety or an abuse ofauthority. The policy also lays down the mechanismfor making enquiry in to whistleblower complaintreceived by the Company.

Employees aware of any alleged wrongful conductare encouraged to make a disclosure to theaudit committee. Employees knowingly makingfalse allegations of alleged wrongful conduct tothe audit committee shall be subject to disciplinaryaction.

XIXIXIXIXI Means of CommunicationMeans of CommunicationMeans of CommunicationMeans of CommunicationMeans of Communication

Information like quarterly financial results and mediareleases on significant developments in the companyas also presentations that have been made fromtime to time to the Press, institutional investors andanalysts are hosted on the Company's web site andhas also been submitted to the stock exchanges onwhich the company's equity shares are listed, toenable them to put them on their own web sites.The Quarterly financial results are published in FinancialExpress and Navshakti.

XIIXIIXIIXIIXII GenerGenerGenerGenerGeneral Sharal Sharal Sharal Sharal Shareholder Infeholder Infeholder Infeholder Infeholder Infororororormationmationmationmationmation

The mandatory as also various additional informationof interest to investors is voluntarily furnished in aseparate section on Investor Information elsewhere inthis Report.

XIIIXIIIXIIIXIIIXIII AAAAAuditudituditudituditor's ceror's ceror's ceror's ceror's certiftiftiftiftificaticaticaticaticate on Corpore on Corpore on Corpore on Corpore on Corporatatatatate Goe Goe Goe Goe Govvvvvererererernancenancenancenancenance

The Auditors Certificate on compliance of Clause 49of the Listing Agreement relating to CorporateGovernance is published as an annexure to theDirectors' Report.

DeclarDeclarDeclarDeclarDeclaration on comation on comation on comation on comation on compliance witpliance witpliance witpliance witpliance with code of conducth code of conducth code of conducth code of conducth code of conduct

The Board has formulated a code of conduct for theBoard members and senior management of the Company,which has been posted on the web site of theCompany.

It is hereby affirmed that all the Directors and Seniormanagement personnel have complied with the code ofconduct framed by the Company and a confirmation tothat effect has been obtained from the directors andsenior management.

RRRRReeeeevievievievieview of Gow of Gow of Gow of Gow of Govvvvvererererernance Prnance Prnance Prnance Prnance Practicesacticesacticesacticesactices

We have in this report attempted to present thegovernance practices and principles being followed atReliance Energy, as evolved over the years, and as bestsuited to the needs of our business and stakeholders.

Our disclosures and governance practices are continuallyrevisited, reviewed and revised to respond to the dynamicneeds of our business and ensure that our standardsare at par with the globally recognised practices ofgovernance, so as to meet the expectations of all ourstakeholders.

For RRRRReliance Enereliance Enereliance Enereliance Enereliance Energy Limitgy Limitgy Limitgy Limitgy Limitededededed

Anil D AmbaniAnil D AmbaniAnil D AmbaniAnil D AmbaniAnil D AmbaniChairman and Managing Director

Mumbai, 14th April, 2005

35

INVESTOR INFORMATION

AnnAnnAnnAnnAnnual General Meetingual General Meetingual General Meetingual General Meetingual General Meeting

The Seventy-sixth Annual General Meeting will beheld on Wednesday, 8th June, 2005 at 11.00 a.m. atShri Bhaidas Maganlal Sabhagriha, U-1 Juhu DevelopmentScheme, Vile Parle (West), Mumbai 400 056.

RRRRRegistregistregistregistregistrar and Sharar and Sharar and Sharar and Sharar and Share Te Te Te Te Trrrrransfansfansfansfansfer Aer Aer Aer Aer AgggggentsentsentsentsentsM/s Karvy Computershare Pvt.Ltd.Unit: Reliance Energy LimitedKarvy House46, Avenue 4, Street No. 1Banjara HillsHyderabad 500 034Telephone: +91 40 2332 0666 / 2330 4703Facsimile: +91 40 2332 3058 / 2331 1968e-mail: rel@karvy.com

Shareholders/Investors are requested to forward sharetransfer documents, dematerialisation requests and otherrelated correspondence directly to Karvy ComputersharePrivate Limited at the above address for speedy response.

WWWWWeb siteb siteb siteb siteb site :e :e :e :e : The web site of the Company www.rel.co.incontains a sub-menu on Investor Relations. It carriescomprehensive database of information of interest toour investors including on the results of the Company,dividends declared by the Company, any price sensitiveinformation disclosed to the regulatory authorities fromtime to time, business activities of the Company andthe services rendered/ facilities extended by the Companyto our investors.

ComComComComCompliance Ofpliance Ofpliance Ofpliance Ofpliance Offfffficer:icer:icer:icer:icer: Shri Ramesh Shenoy, Company Secretaryis the Compliance Officer of the Company.

Dividend AnnouncementsDividend AnnouncementsDividend AnnouncementsDividend AnnouncementsDividend Announcements

(i) QuarQuarQuarQuarQuar ttttterlerlerlerlerly Dividends:y Dividends:y Dividends:y Dividends:y Dividends: The Company is one of theselect few listed companies in India to pay quarterlydividends, in the interest of enhancing overallshareholder value. The details of Quarterly Dividendspaid during 2004-05 are :

Period Rate of Record Date of Payment

Dividend Date

Rs. per

share

Quarter I 1.10 30th July, 2004 4th August, 2004

Quarter II 1.10 29th October, 2004 4th November, 2004

Quarter III 1.10 28th January, 2005 3rd February, 2005

(ii) FFFFF inal Dividend:inal Dividend:inal Dividend:inal Dividend:inal Dividend: In addition to payment of abovequarterly dividends, the Board of Directors of theCompany have proposed a final dividend of Rs. 1.40(14%) per Equity Share of the Company for thefinancial year ended 31st March, 2005, subject tothe approval by Members at the AGM. Thus, thetotal dividend is Rs. 4.70 (47%) per equity share.[Dividend paid in the Previous Year was Rs.4.50(45%) per Equity Share].

Book ClosurBook ClosurBook ClosurBook ClosurBook Closure Date Date Date Date Dates fes fes fes fes for dividend and Aor dividend and Aor dividend and Aor dividend and Aor dividend and AGMGMGMGMGM

To determine the entitlement of shareholders to receivethe final dividend, for the year ended 31st March, 2005,as well as for the purpose of AGM, the Register ofMembers and Share Transfer Books of the Company willremain closed from Wednesday, 1st June, 2005 toWednesday 8th June, 2005 (both days inclusive).

Dividend RDividend RDividend RDividend RDividend Remittanceemittanceemittanceemittanceemittance

Final Dividend on Equity Shares as recommended by theDirectors for the year ended 31st March, 2005, ifdeclared at the Annual General Meeting (AGM), will bepaid, on or after the AGM on 8th June, 2005.

(i) to those members whose names appear on theRegister of Members of the Company, after givingeffect to all valid share transfers in physical formlodged with the Company on or before Tuesday, the31st May, 2005.

(ii) in respect of shares held in electronic form, tothose "deemed members" whose names appear inthe statements of beneficial ownership furnished byNational Securities Depository Limited (NSDL) andCentral Depository Services (India) Limited (CDSL) asat the end of business on Tuesday, the 31st May,2005.

UUUUUnclaimed Dividendsnclaimed Dividendsnclaimed Dividendsnclaimed Dividendsnclaimed Dividends

(i)(i)(i)(i)(i) TTTTTrrrrransfansfansfansfansfer ter ter ter ter to to to to to the Centrhe Centrhe Centrhe Centrhe Central Goal Goal Goal Goal Govvvvvererererernmentnmentnmentnmentnment

Pursuant to Section 205A of the Companies Act,1956, unclaimed dividends up to and including forthe financial year 1993-94 have been transferred tothe General Revenue Account of the Central Government.The Shareholders who have not encashed their dividendwarrants relating to financial year(s) up to 1993-94are requested to claim the amounts from the Registrarof Companies, Maharashtra, CGO Complex, 2nd Floor"A" Wing, CBD - Belapur, Navi Mumbai 400 614Telephone: (022) 2757 6802 in the prescribed formwhich will be furnished by the Company on request.

(ii)(ii)(ii)(ii)(ii) TTTTTrrrrr ansfansfansfansfansfer ter ter ter ter to to to to to the Invhe Invhe Invhe Invhe Investestestestestor Education & Pror Education & Pror Education & Pror Education & Pror Education & Protototototectionectionectionectionection

FFFFFundundundundund

The dividends for the year 1994-95,1995-96 and1996-97 which remained unclaimed for 7 years fromthe date of declaration have been transferred to theInvestor Education and Protection Fund establishedby the Central Government pursuant to Section 205Cof the Companies Act, 1956. Consequently, no claimshall lie against the said Fund or the Company inrespect of any amounts which were unclaimed andunpaid for a period of seven years from the datethey first become due for payment.

36

(iii)(iii)(iii)(iii)(iii) Dividends tDividends tDividends tDividends tDividends to be tro be tro be tro be tro be transfansfansfansfansferererererrrrrred ted ted ted ted to to to to to the Invhe Invhe Invhe Invhe Investestestestestor Educationor Educationor Educationor Educationor Education& Pr& Pr& Pr& Pr& Protototototection Fection Fection Fection Fection Fundundundundund

The dividend for the following years remainingunclaimed for 7 years from the date of declarationare required to be transferred by the Company tothe Investor Education and Protection Fund and thevarious dates for transfer of such amounts are asunder:-

FinancialFinancialFinancialFinancialFinancial DividendDividendDividendDividendDividend DatDatDatDatDate of Due fe of Due fe of Due fe of Due fe of Due forororororYYYYYearearearearear N N N N No.o .o .o .o . DeclarationDeclarationDeclarationDeclarationDeclaration trtrtrtrtransfansfansfansfansfer oner oner oner oner on

1997-98 110th 20th August, 1998 7th October, 20051998-99 111th 28th July, 1999 14th September, 20061999-2000 112th 29th March, 2000 16th May, 20072000-2001 113th 30th August, 2001 5th October, 20082001-2002 114th 21st September, 2002 27th October, 20092002-2003 115th 9th June, 2003 15th July, 20102003-2004(Q1) 116th 28th July, 2003 3rd September, 20102003-2004(Q2) 117th 15th October, 2003 20th November, 20102003-2004(Q3) 118th 21st January, 2004 27th February, 20112003-04 (Final) 119th 9th ,June, 2004 15th July, 20112004-05 (Q1) 120th 21st July, 2004 27th August, 20112004-05 (Q2) 121st 20th October, 2004 26th November, 20112004-05 (Q3) 122nd 19th January, 2005 25th February, 2012

Members who have so far not encashed their dividendwarrants or have not received the dividend warrants arerequested to obtain duplicate warrants. The Companyhas, during the year 2004-05, individually intimated theconcerned Members of non-encashment of their dividendwarrants. Such members may write to Karvy ComputersharePrivate Limited, for payment of unclaimed dividendamounts.

DirDirDirDirDirect Deposit of Dividend (Electrect Deposit of Dividend (Electrect Deposit of Dividend (Electrect Deposit of Dividend (Electrect Deposit of Dividend (Electronic Clearing Service)onic Clearing Service)onic Clearing Service)onic Clearing Service)onic Clearing Service)

Members desirous of receiving dividend by direct electronicdeposit to their Bank accounts may authorise theCompany with their mandate. For details, kindly writeto Karvy Computershare Private Limitd at the addressmentioned above or you may visit the Investor RelationsSection at our web site www.rel.co.in.

Bank Details fBank Details fBank Details fBank Details fBank Details for Phor Phor Phor Phor Phyyyyysical Sharsical Sharsical Sharsical Sharsical Shareholdingseholdingseholdingseholdingseholdings

In order to provide protection against fraudulentencashment of dividend warrants, Members are requestedto provide, if not provided earlier, their Bank Accountnumbers, Bank Account type, names and addresses ofBank branches, quoting Folio numbers, to the Registrarand Share Transfer Agents of the Company to enablethem to incorporate the same on their dividend warrants.This is a mandatory requirement in terms of Securitiesand Exchange Board of India (SEBI) circular No. D&CC/FITTC/CIR-04/2001 dated 13th November, 2001.

Bank Details fBank Details fBank Details fBank Details fBank Details for Electror Electror Electror Electror Electronic Sharonic Sharonic Sharonic Sharonic Shareholdingseholdingseholdingseholdingseholdings

While opening Accounts with Depository Participants(DPs), you may have given your Bank Accounts details,which will be used by the Company for printing on

dividend warrants for remittance of dividend. SEBI videits circular No. DCC/FITTCIR-3/2001 dated 15th October,2001 has advised that all companies should mandatorilyuse Electronic Clearing Service (ECS) facility, whereveravailable. SEBI has also, vide its circular dated 13thNovember, 2001, referred to above, advised companiesto mandatorily print the Bank Account details furnishedby the Depositories, on the dividend warrants. Thisensures that the dividend warrants, even if lost orstolen, cannot be used for any purpose other than fordepositing the monies in the Account specified on thedividend warrants and ensures safety for the investors.However, members who wish to receive dividend in anAccount other than the one specified while opening theDepository Account, may notify their DPs about anychange in Bank Account details. Members are requestedto furnish complete details of their Bank Accountsincluding MICR codes of their Banks to their DPs.

EliminatEliminatEliminatEliminatEliminate Duplicate Duplicate Duplicate Duplicate Duplicate Mailinge Mailinge Mailinge Mailinge Mailing

If you hold the Equity Shares of the Company in morethan one Folio in your name or with the same addressas other shareholders of the Company, you may authorisethe Company to discontinue mailing of multiple AnnualReports.

NNNNNomination Fomination Fomination Fomination Fomination Facilityacilityacilityacilityacility

Individual shareholders of physical shares can nominateany person for the shares held by them. This will savethe nominees from going through the lengthy processof getting the shares later on transmitted to his/hername. For further details, shareholders may write to theRegistrar and Share Transfer Agent of the Company orvisit the Investor Relation Section at our web sitewww.rel.co.in.

SharSharSharSharShare Te Te Te Te Trrrrransfansfansfansfansfer Syer Syer Syer Syer Systststststememememem

Shareholders / Investors are requested to send sharetransfer related documents directly to our Registrar andTransfer Agents whose address is given at the beginningof this section. A Committee of executives of theCompany is authorised to approve transfer of shares. Ifthe transfer documents are in order, the transfer ofshare (s) is registered within 7 days of receipt oftransfer documents by our RTA.

The Company has obtained the half yearly certificatesfrom a Company Secretary in Practice for due complianceof share transfer formalities as per the requirement ofclause 47(c) of the Listing agreement of the stockexchanges.

Odd Lot SharOdd Lot SharOdd Lot SharOdd Lot SharOdd Lot Shares Sces Sces Sces Sces Scheme fheme fheme fheme fheme for small sharor small sharor small sharor small sharor small shareholderseholderseholderseholderseholders

In view of the difficulty experienced by the shareholdersof the Company in selling their odd lot shares in thestock market and to mitigate the hardships caused tothem, the Company has framed a scheme for thepurchase and disposal of odd lot equity shares at the

37

prevailing market price. This scheme is available toshareholders of Reliance Energy Limited, who hold sharesin odd lots. The shareholders who wish to avail of theabove facility can collect the forms from the RegisteredOffice of the Company or can write to the RTA of theCompany or download them from the Investor Relationssection at our web site www.rel.co.in.

BuyBuyBuyBuyBuy-bac-bac-bac-bac-back of Eqk of Eqk of Eqk of Eqk of Equity Sharuity Sharuity Sharuity Sharuity Shareseseseses

The Company has offered to buy-back its equity sharesfrom the existing holders of the Equity Shares from theopen market through stock exchanges using the electronictrading facilities of the Stock Exchange, Mumbai ("BSE")

and the National Stock Exchange of India Limited ("NSE")in accordance with the provisions of Sections 77A, 77AAand 77B of the Companies Act, 1956 and the Securitiesand Exchange Board of India (Buy-back of Securities)Regulations, 1998 at a price not exceeding Rs.525 perequity share ("Maximum Offer Price") payable in cash,for an aggregate amount not exceeding Rs.350 crore("Offer Size").

The offer announced on 9th June, 2004 has beenextended up to 8th June, 2005. Keeping in view themarket conditions and the movement in share prices,the Company has not bought any shares underthe offer.

Shar Shar Shar Shar Shareholding Peholding Peholding Peholding Peholding PattattattattattererererernnnnnAs on 3As on 3As on 3As on 3As on 311111.03.2005.03.2005.03.2005.03.2005.03.2005 As on 3As on 3As on 3As on 3As on 311111.03.2004.03.2004.03.2004.03.2004.03.2004

NNNNNo. of Sharo. of Sharo. of Sharo. of Sharo. of Shareseseseses PPPPPererererercentagcentagcentagcentagcentageeeee NNNNNo. of Sharo. of Sharo. of Sharo. of Sharo. of Shareseseseses PPPPPererererercentagcentagcentagcentagcentageeeeeAAAAA PrPrPrPrPromotomotomotomotomoters Grers Grers Grers Grers Groupoupoupoupoup

Reliance Industries Limited 15,51,649 0.84 15,51,649 0.89Reliance Power Ventures Limited 6,58,89,240 35.51 5,66,93,618 32.37Reliance Industrial Investmentsand Holding Limited 1,36,22,707 7.34 1,36,22,707 7.78Reliance Capital Limited 1,19,95,139 6.46 1,19,95,139 6.85Sub-Sub-Sub-Sub-Sub-TTTTTotalotalotalotalotal 9,30,58,735 50.15 8,38,63,113 47.89

BBBBB NNNNNon-Pron-Pron-Pron-Pron-Promotomotomotomotomoters Holdingsers Holdingsers Holdingsers Holdingsers Holdings1. Institutional InvInstitutional InvInstitutional InvInstitutional InvInstitutional Investestestestestorsorsorsorsors

a. Mutual Funds andUnit Trust of India 10,66,169 0.58 13,65,714 0.78

b. Banks, Financial Institutions,Insurance Companies, etc. 3,99,57,294 21.52 4,00,90,637 22.89

c. Foreign Institutional Investors 3,27,94,494 17.67 2,27,35,153 12.98Sub-Sub-Sub-Sub-Sub-TTTTTotalotalotalotalotal 77777,38,,38,,38,,38,,38,1111177777,957,957,957,957,957 39.7739.7739.7739.7739.77 6,46,46,46,46,411111,9,9,9,9,911111,504,504,504,504,504 36.6536.6536.6536.6536.65

2.2.2.2.2. OtOtOtOtOthershershershershersa. Private Corporate Bodies 10,34,995 0.56 6,86,069 0.39b. Non Resident Indians/

Overseas Corporate Bodies 4,03,697 0.22 4,18,043 0.24c. GDR holders 59,09,945 3.18 1,43,18,216 8.17d. Indian Public/Others 1,13,47,470 6.12 1,16,77,768 6.66

Sub-Sub-Sub-Sub-Sub-TTTTTotalotalotalotalotal 11111,86,96,,86,96,,86,96,,86,96,,86,96,111110707070707 111110.080.080.080.080.08 2,72,72,72,72,711111,00,096,00,096,00,096,00,096,00,096 111115.465.465.465.465.46

GrGrGrGrGrand Tand Tand Tand Tand Totalotalotalotalotal 111118,55,72,7998,55,72,7998,55,72,7998,55,72,7998,55,72,799 1111100.0000.0000.0000.0000.00 1111177777,5,5,5,5,511111,54,7,54,7,54,7,54,7,54,71111133333 1111100.0000.0000.0000.0000.00

Note :

1. Currently, 0.5% Foreign Currency Convertible Bonds (FCCBs) aggregating US$ 11.59 million issued on 25th October,2002 are outstanding which in the event of conversion will result in allotment of further 22,86,230 equityshares.

2. The Company also issued 0% FCCBs amounting to US$ 178.058 million. The holders thereof have an option toconvert the bonds into equity shares of Rs.10 each at a premium of Rs. 996.92 i.e. Rs.1,006.92 per equity share,from 23rd April, 2004 to 24th February, 2009. In the event of conversion of all such bonds, the paid-up equityshare capital of the company will increase by 79,99,984 equity shares.

38

InvInvInvInvInvestestestestestors' gors' gors' gors' gors' grierierierierievvvvvances attances attances attances attances attendedendedendedendedended

Received From Received during Redressed during Pending as on

2004 2003 2004 2003 31.3.2005 31.3.2004

to to to to

2005 2004 2005 2004

Securities and 9 31 9 31 0 0

Exchange Board

of India

Stock Exchanges 6 18 6 18 0 0

Direct from

Investors 28 66 28 66 0 0

TTTTTotalotalotalotalotal 4343434343 111111111155555 4343434343 111111111155555 00000 00000

TTTTTop 1op 1op 1op 1op 10 Shar0 Shar0 Shar0 Shar0 Shareholders as on 3eholders as on 3eholders as on 3eholders as on 3eholders as on 31st Mar1st Mar1st Mar1st Mar1st Marccccch, 2005h, 2005h, 2005h, 2005h, 2005

Sr. No. Names of Shareholders No.of.Shares Per

centage

1 Reliance Power Ventures Limited 6,58, 89,240 35.51

2 Life Insurance Corporation of India 2,38,64,272 12.86

3 Reliance Industrial Investments and

Holdings Limited 1,36,22,707 7.34

4 Reliance Capital Limited 1,19,95,139 6.46

5 Emerging Markets Growth Fund Inc 45,25,300 2.44

6 The New Economy Fund 44,10,003 2.38

7 Citigroup Global Markets Mauritius

Private Limited 42,05,238 2.27

8 The New India Assurance Company Limited 41,63,363 2.24

9 National Insurance Company Limited 35,32,618 1.90

10 The Oriental Insurance Company Limited 34,90,318 1.88

Distribution of SharDistribution of SharDistribution of SharDistribution of SharDistribution of Shareholdingeholdingeholdingeholdingeholding

NNNNNumber ofumber ofumber ofumber ofumber of TTTTTotal Sharotal Sharotal Sharotal Sharotal Shareseseseses NNNNNumber ofumber ofumber ofumber ofumber of TTTTTotal Sharotal Sharotal Sharotal Sharotal SharesesesesesSharSharSharSharShareholderseholderseholderseholderseholders As on 3As on 3As on 3As on 3As on 311111.3.2005.3.2005.3.2005.3.2005.3.2005 SharSharSharSharShareholderseholderseholderseholderseholders As on 3As on 3As on 3As on 3As on 311111.3.2004.3.2004.3.2004.3.2004.3.2004

as on 3as on 3as on 3as on 3as on 311111.3.2005.3.2005.3.2005.3.2005.3.2005 as on 3as on 3as on 3as on 3as on 311111.3.2004.3.2004.3.2004.3.2004.3.2004NNNNNumber of Sharumber of Sharumber of Sharumber of Sharumber of Shareseseseses NNNNNumberumberumberumberumber %%%%% NNNNNumberumberumberumberumber %%%%% NNNNNumberumberumberumberumber %%%%% NNNNNumberumberumberumberumber %%%%%

Up to 100 73,358 73.92 39,58,854 2.13 60,426 71.96 39,76,135 2.27

101 to 500 23,091 23.27 44,52,486 2.40 24,182 25.06 46,11,664 2.64

501 to 5,000 2569 2.59 31,00,820 1.67 17,190 2.75 32,30,529 1.84

5,001 to 1,00,000 164 0.16 31,32,237 1.69 161 0.17 28,24,943 1.61

1,00,000 and above 61 0.06 17,09,28,402 92.11 62 0.06 16,05,11,442 91.64

TTTTTotalotalotalotalotal 99,24399,24399,24399,24399,243 1111100.0000.0000.0000.0000.00 111118,55,72,7998,55,72,7998,55,72,7998,55,72,7998,55,72,799 1111100.0000.0000.0000.0000.00 96,48596,48596,48596,48596,485 1111100.0000.0000.0000.0000.00 1111177777,5,5,5,5,511111,54,7,54,7,54,7,54,7,54,71111133333 1111100.0000.0000.0000.0000.00

AnalAnalAnalAnalAnalyyyyysis of Griesis of Griesis of Griesis of Griesis of Grievvvvvancesancesancesancesances

Number Percentage

2004-2005 2003-2004 2004-2005 2003-2004

Non-receipt of

Annual Report Nil 8 0.00 6.96

Non-receipt of

Dividends (Note 1)

• Non-receipt of

Dividend warrants 14 61 32.56 53.04

• Non-receipt of

dividend through

Electronic Clearing Scheme 4 Nil 9.30 Not applicable

Dematerialisation Nil Nil 0.00 Not applicable

Issue of Duplicate Share

Certificates 8 Nil 18.60 Not applicable

Transfer of Shares 17 40 39.54 34.78

Others Nil 6 0.00 5.22

TTTTTotal :otal :otal :otal :otal : 4343434343 111111111155555 1111100.0000.0000.0000.0000.00 1111100.0000.0000.0000.0000.00

Notes :

1. These complaints relate to all past dividends includingFinal Dividend for 2003-04 and 3 Quarterly Dividendsof 2004-05.

2. Investors queries / grievances are normally attendedwithin a period of 3 days from the date of receiptthereof, except in cases involving external agencies orcompliance with longer procedural requirements specifiedby the authorities concerned.

3. The queries and grievances received correspond to0.04% (2003-2004 0.12%) of the number of Members(99,243 as of 31st March, 2005).

39

LegLegLegLegLegal Pral Pral Pral Pral Proceedings :oceedings :oceedings :oceedings :oceedings :

There are certain pending cases relating to disputes over title to shares, in which the Company is made a party.These cases are however not of material in nature.

DematDematDematDematDematerialisation of Sharerialisation of Sharerialisation of Sharerialisation of Sharerialisation of Shareseseseses

The Company was among the first few companies to admit voluntarily its shares to the depository system of theNational Securities Depository Limited (NSDL) (International Securities Identification Number (ISIN) INE036A01016). TheCompany was the first to admit its shares and go 'live' on the depository system of Central Depository Services(India) Limited (CDSL) for dematerialisation of shares (ISIN-INE036A01016)

With effect from 4th January, 1999, the equity shares of the Company are compulsorily traded in dematerialisedform as mandated by Securities and Exchange Board of India (SEBI).

Status of dematerialisation of shares as of 31st March, 2005 is as under :

Electronic holdings Physical holdings TotalNo. of No. of Per No. of No. of Per No. of No. of PerBeneficial Shares centage Folios Shares centage Shareholders Shares centageOwners

59,284 18,10,66,923 97.57 39,959 45,05,876 2.43 99,243 18,55,72,799 100.00

EqEqEqEqEquity Histuity Histuity Histuity Histuity Historororororyyyyy

Details of issue of Equity Shares in the last two decades

DatDatDatDatDateseseseses PPPPParararararticulars of Issue/ticulars of Issue/ticulars of Issue/ticulars of Issue/ticulars of Issue/ NNNNNo. ofo. ofo. ofo. ofo. of TTTTTotal Notal Notal Notal Notal No.o.o.o.o. NNNNNominalominalominalominalominalFFFFForororororfffffeitureitureitureitureitureeeee sharsharsharsharshareseseseses of sharof sharof sharof sharof shareseseseses vvvvvalue ofalue ofalue ofalue ofalue of

sharsharsharsharshares (Rs.es (Rs.es (Rs.es (Rs.es (Rs.)))))03.10.1989 Sub-division of Equity - 58,51,760 5,85,17,600

Shares of Rs. 100each into EquityShares of Rs. 10 each

01.04.1990 Issue of Bonus +58,51,760 1,17,03,520 11,70,35,200Shares in theratio of 1:1

21.06.1992 Issue of +4,60,00,000 5,77,03,520 57,70,35,200Equity Shares onconversion of 12.5%Fully ConvertibleDebentures (FCDs)

01.03.1995 Issue of Equity Shares +5,40,15,945 11,17,19,465 1,11,71,94,650on conversionof 15% FCDs

08.04.1995 Allotment of Equity + 1,716 11,17,21,181 1,11,72,11,810Shares from 15%FCDs which waskept under abeyance

1

15.11.1995 Allotment of Equity + 1,600 11,17,22,781 1,11,72,27,810Shares from 15%FCDs which waskept under abeyance

1

07.03.1996 Issue of Equity +2,60,41,650 13,77,64,431 1,37,76,44,310Shares underlying theGlobal Depositary Receipts

01.10.1996 Forfeiture of - 7,490 13,77,56,941 1,37,75,69,410Equity Shares(converted from12.5% FCDs)

10.01.1997 Allotment of + 3,945 13,77,60,886 1,37,76,08,86015% Equity Shares fromFCDs which waskept under abeyance

1

02.06.1997 Annulment of Forfeiture + 100 13,77,60,986 1,37,76,09,86007.03.1998 Forfeiture of Equity - 36,470 13,77,24,516 1,37,72,45,160

Shares (converted from15% FCDs)

DatDatDatDatDateseseseses PPPPParararararticulars of Issueticulars of Issueticulars of Issueticulars of Issueticulars of Issue NNNNNo. ofo. ofo. ofo. ofo. of TTTTTotal Notal Notal Notal Notal No.o.o.o.o. NNNNNominalominalominalominalominal/F/F/F/F/Forororororfffffeitureitureitureitureitureeeee sharsharsharsharshareseseseses of sharof sharof sharof sharof shareseseseses vvvvvalue ofalue ofalue ofalue ofalue of

sharsharsharsharshares (Rs.es (Rs.es (Rs.es (Rs.es (Rs.)))))29.01.1999 Allotment of Equity + 300 13,77,24,816 1,37,72,48,160

Shares from 15%FCDs which waskept under abeyance

1

29.01.1999 Annulment of Forfeiture + 850 13,77,25,666 1,37,72,56,66028.07.2003 Allotment of Equity + 49,336 13,77,75,002 1,37,77,50,020

Shares on conversionof FCCBs

07.10.2003 Allotment of Equity + 49,336 13,78,24,338 1,37,82,43,380Shares on conversionof FCCBs

07.11.2003 Allotment of Equity + 1,50,00,399 15,28,24,677 1,52,82,46,770Shares on conversionof FCCBs

2

24.02.2004 Allotment of Equity +51,00,036 15,79,24,713 1,57,92,47,130Shares on conversionof FCCBs

2

23.03.2004 Allotment of Shares + 1,35,80,000 17,15,04,713 1,71,50,47,130under Preferential Issue

24.03.2004 Allotment of Shares + 36,50,000 17,51,54,713 1,75,15,47,130under Preferential Issue

02.04.2004 Allotment of Shares 91,95,622 18,43,50,335 1,84,35,03,350under Preferential Issue

30.04.2004 Allotment of Equity +9,99,009 18,53,49,344 1,85,34,93,440Shares on conversionof FCCBs

2

29.07.2004 Allotment of Equity +1,97,346 18,55,46,690 1,85,54,66,900Shares on conversionof FCCBs

2

13.12.2004 Annulment and re-issue +25,909 18,55,72,599 1,85,57,25,990of Forfeited Shares

13.12.2004 Allotment of Equity +200 18,55,72,799 1,85,57,27,990Shares from 15% FCDswhich was kept underabeyance

1

40

Notes :

1. Allotment of these shares was kept in abeyance tomeet contingencies arising out of shares held bynotified persons, pending court cases, etc. and theallotments were made upon orders passed by courts/ with the approval of Stock Exchanges.

2. Equity Shares were allotted on conversion of 0.5 percent Foreign Currency Convertible Bonds (FCCBs). FCCBsare convertible into Equity Shares at a pre-determinedprice of Rs.245 from 25th September, 2002 to 25thSeptember, 2007, at pre-determined exchange rate ofUS$ 1= Rs. 48.35. Conversion of the entire outstanding0.5 percent FCCBs would result in issue of further22,86,230 equity shares.

3. The Company has also issued Zero Coupon FCCBsaggregating US$ 178.058 million. These FCCBs areconvertible into Equity Shares at a pre-determinedprice of Rs.1,006.92 from 23rd April, 2004 to 24thFebruary, 2009 at a pre-determined exchange rate ofUS$ 1= Rs. 45.24. Conversion of these FCCBs wouldresult in issue of further 79,99,984 equity shares.

SSSSStttttococococock Exk Exk Exk Exk Exccccchanghanghanghanghange Listingse Listingse Listingse Listingse Listings

The Company is an actively traded scrip on the boursesand is included in 'A' Group of Scrips on the StockExchange, Mumbai.

A.A.A.A.A. SSSSStttttococococock Exk Exk Exk Exk Exccccchanghanghanghanghanges on whices on whices on whices on whices on which th th th th the sharhe sharhe sharhe sharhe shares of tes of tes of tes of tes of the Comhe Comhe Comhe Comhe Companpanpanpanpanyyyyyararararare liste liste liste liste listededededed

1. National Stock Exchange of India Ltd.Exchange Plaza, Bandra-Kurla ComplexBandra (East)Mumbai 400 051Telephone : 022-2659 8235/8236/8100-8114/8452Facsimile : 022-2659 8237/38e-mail : cmlist@nse.co.inWeb site : www.nseindia.com

2. The Stock Exchange, Mumbai1st Floor, New Trading RingRotunda Building, P J TowersDalal Street, FortMumbai 400 001

Telephone : 022-22721121/1122/1233/3030Facsimile : 022-2272 2037/2041/3719/

2039/2061/3121e-mail : listing@bseindia.comWeb site : www.bseindia.com

B.B.B.B.B. SSSSStttttococococock Exk Exk Exk Exk Exccccchanghanghanghanghange on whice on whice on whice on whice on which th th th th the GDRs of the GDRs of the GDRs of the GDRs of the GDRs of the Comhe Comhe Comhe Comhe Companpanpanpanpanyyyyyararararare liste liste liste liste listedededededThe London Stock Exchange10 Paternoster Square,London, EC4M 7LSTelephone : 0044-020-7797 1000Facsimile : 0044-020-7334 8954e-mail : irinfo@londonstockexchange.comWeb site : www.londonstockexchange.com

C.C.C.C.C. 0.5 P0.5 P0.5 P0.5 P0.5 Per cent Fer cent Fer cent Fer cent Fer cent Forororororeign Cureign Cureign Cureign Cureign Currrrrrency Convency Convency Convency Convency Convererererer tible Bondstible Bondstible Bondstible Bondstible Bondsararararare liste liste liste liste listed oned oned oned oned onLuxembourg Stock Exchange UndertakingSociete de la Bourse de Luxembourg11 Avenue de la Porte-NeuveL-2227, LuxembourgG.D. LuxembourgTelephone : 00352 477936-1Facsimile : 00352 477936-238, 473298Web site : www.bourse.lu

D.D.D.D.D. ZerZerZerZerZero Po Po Po Po Per cent Fer cent Fer cent Fer cent Fer cent Forororororeign Cureign Cureign Cureign Cureign Currrrrrency Convency Convency Convency Convency Convererererertible Bondstible Bondstible Bondstible Bondstible Bondsararararare liste liste liste liste listed oned oned oned oned onSingapore Exchange Limited2 Shenton Way#19-00 SGX Centre 1Singapore 068804Telephone : (65) 6236 8888Facsimile : (65) 6236 8888Web site : www.sgx.com

Global DepositarGlobal DepositarGlobal DepositarGlobal DepositarGlobal Depositary Ry Ry Ry Ry Receipts (GDRs)eceipts (GDRs)eceipts (GDRs)eceipts (GDRs)eceipts (GDRs)

The Company made an Issue of 8,680,550 GDRs inFebruary, 1996. Each GDR represents 3 Equity Sharesand correspondingly, the Company allotted 2,60,41,650Equity Shares to the Depositary for GDR holders. Sincethen, the two series of FCCBs issued by the Companywere also convertible into GDRs. As at 31st March,2005, 59,09,945 Equity Shares were held by the GDRholders as the underlying shares of such GDRs. TheGDRs are listed on the London Stock Exchange.

0.5 per cent F0.5 per cent F0.5 per cent F0.5 per cent F0.5 per cent Forororororeign Cureign Cureign Cureign Cureign Currrrrrency Convency Convency Convency Convency Convererererertible Bondstible Bondstible Bondstible Bondstible Bonds

The Company made an issue of US $ 120 million 0.5per cent Foreign Currency Convertible Bonds (FCCBs) dueon 25th September, 2007. Each Bondholder has a rightto convert the Bonds at any time after 25th December,2002 into GDRs represented by equity shares to beissued at a pre-determined price of Rs 245 arrived at apre-determined exchange rate of us$1= Rs.48.35. TheGDRs to be issued upon conversion of the Bonds andpursuant to Deposit Agreement are fungible with theExisting GDRs. These FCCBs are listed on the LuxembourgStock Exchange.

ZerZerZerZerZero per cent Fo per cent Fo per cent Fo per cent Fo per cent Forororororeign Cureign Cureign Cureign Cureign Currrrrrency Convency Convency Convency Convency Convererererertible Bondstible Bondstible Bondstible Bondstible Bonds

The Company also made an issue of US$ 178,058,000Zero per cent FCCBs due on 29th March, 2009. EachBondholder has a right to convert Bonds at any timeafter 23rd April, 2004 up to 24th February, 2009 intoEquity Shares or GDRs, represented by equity sharesto be issued at a predetermined price of Rs. 1,006.92at a pre-determined exchange rate of US$ 1=Rs.45.24.TheGDRs to be issued upon conversion of the Bonds andpursuant to Deposit Agreement are fungible with theexisting GDRs. These FCCBs are listed on the SingaporeExchange Limited.

41

DepositarDepositarDepositarDepositarDepositary Bank fy Bank fy Bank fy Bank fy Bank for GDR holdersor GDR holdersor GDR holdersor GDR holdersor GDR holdersThe Bank of New York The Bank of New York101, Barclays Street Express Towers22nd Floor 13th FloorWest New York Nariman PointNY 10286 Mumbai 400 021Telephone: (212) 815 8128 Telephone : (022) 2202 2936Facsimile : (212) 571 3050 Facsimile : (022) 2204 4942

SSSSStttttococococock Price and Vk Price and Vk Price and Vk Price and Vk Price and Volumeolumeolumeolumeolume

Monthly high and low quotations as also the volumeof shares traded on Mumbai and National Stock Exchangeswith monthly high and low quotations of GDRs

Mumbai (BSE)Mumbai (BSE)Mumbai (BSE)Mumbai (BSE)Mumbai (BSE) NSENSENSENSENSE GDRsGDRsGDRsGDRsGDRs

2004-2004-2004-2004-2004- High-High-High-High-High- LoLoLoLoLowwwww----- VVVVVolumeolumeolumeolumeolume High-High-High-High-High- LoLoLoLoLowwwww----- VVVVVolumeolumeolumeolumeolume High- High- High- High- High- LoLoLoLoLowwwww-----20052005200520052005 estestestestest estestestestest NNNNNos.os.os.os.os. estestestestest estestestestest NNNNNos.os.os.os.os. estestestestest estestestestest

Rs.Rs.Rs.Rs.Rs. Rs.Rs.Rs.Rs.Rs. Rs.Rs.Rs.Rs.Rs. Rs.Rs.Rs.Rs.Rs. UUUUUSSSSS $$$$$ UUUUUSSSSS $$$$$

April 816.00 721.00 23,18,165 815.00 714.60 56,44,795 55.01 48.90

May 744.00 426.00 41,61,575 745.00 425.55 93,27,931 49.45 31.48

June 580.85 490.15 54,74,892 625.40 461.00 1,63,90,737 37.38 32.66

July 595.00 524.00 20,17,117 652.00 497.00 52,58,066 38.23 36.64

August 663.00 575.00 9,60,027 665.00 502.30 34,68,337 42.67 37.51

September 655.00 578.00 10,83,707 684.50 550.00 38,01,482 42.36 40.89

October 690.00 601.10 12,48,246 690.00 601.50 43,19,970 44.54 40.52

November 652.45 526.00 35,43,913 653.00 521.20 1,10,52,704 42.89 36.64

December 585.00 489.10 43,75,504 584.85 435.65 1,41,46,027 39.58 34.01

January 571.00 455.55 23,13,868 599.25 483.90 6,790.524 38.82 33.63

February 587.00 525.00 21,08,173 587.90 530.05 38,72,793 40.17 37.84

March 601.00 519.50 18,80,601 601.00 515.50 48,26,310 40.45 36.27

Each GDR represents 3 Equity Shares. 1US$ = Rs.43.75as on 31st March, 2005

GDRs of the Company are traded on the electronicscreen based quotation system, the SEAQ (SecuritiesExchange Automated Quotation) International, on theportal system of the National Association of SecuritiesDealers Associated Quotation, Inc. (NASDAQ) of U.S.A.and also over the Counter at London, New York andHong Kong.

SSSSStttttococococock Codesk Codesk Codesk Codesk Codes Physical Electronic

The Stock Exchange, Mumbai - 390 500390

National Stock Exchange - REL REL

Singapore Stock Exchange - Not Applicable XS0187909550

London Stock Exchange - Not Applicable REYD

Luxembourg - Not Applicable XS0147608060

Reuters Code - RLEN.BO RLEN.BO

International Securities IdentificationNumber (ISIN) for the Company'sshares in dematerialized form - Not Applicable INE 036A01016

An Index Scrip:An Index Scrip:An Index Scrip:An Index Scrip:An Index Scrip: Equity shares of the Company are included

in almost all indices i.e. BSE-30, BSE-100, BSE National, BSE-200,

BSE-500, BSE-Dollar, S&P CNX Nifty Index, S&P CNX Power, ET

Index, FTSE All-World Index.

DepositDepositDepositDepositDepositororororory Servicesy Servicesy Servicesy Servicesy Services

For guidance on depository services, shareholders may write to

the RTA of the Company or National Securities Depository

Limited, Trade World, 5th Floor, Kamala Mills Compound,

Senapati Bapat Marg, Lower Parel, Mumbai 400 013, Telephone

: (022) 24972964-70, Facsimile : (022) 24972993 / 24976351,

e-mail : info@nsdl.co.in, website : www.nsdl.com or Central

Depository Services (India) Limited, Phiroze Jeejeebhoy Towers,

28th Floor, Dalal Street, Mumbai 400 023. Telephone:

022-2272 3333 Facsimile: (022) 2272 3199/2072,

web site: www.cdslindia.com e-mail: investors@cdslindia.com

Communication tCommunication tCommunication tCommunication tCommunication to Memberso Memberso Memberso Memberso Members

The Quarterly Financial Results of the Company are normally

announced within a month of the end of the respective

quarter. The Company's Media Releases and details of significant

developments are also made available on the web site. The

statement of Half Yearly Financial Results of the Company is

mailed to all shareholders of the Company. These are

published in leading newspapers, in addition to hosting them

on the Company's web site: www.rel.co.in.

PPPPP olicy on Insider Tolicy on Insider Tolicy on Insider Tolicy on Insider Tolicy on Insider Trrrrr adingadingadingadingading

The Company has formulated a Code of Conduct for Prevention

of Insider Trading (Reliance Energy Code) in accordance with

the guidelines specified under the Securities and Exchange

Board of India (Prohibition of Insider Trading) Regulations,

1992, as amended on 20th February, 2002. The Board has

appointed Shri Ramesh Shenoy, Company Secretary, as the

Compliance Officer under the Code responsible for complying

with the procedures, monitoring adherence to the rules for the

preservation of price sensitive information, pre-clearance of

trade, monitoring of trades and implementation of the Code of

Conduct under the overall supervision of the Board. The

Reliance Energy code, inter alia, prohibits purchase and/or sale

of shares of the Company by an insider or by any other

Company, while in possession of unpublished price sensitive

information in relation to the Company during certain prohibited

periods. The Reliance Energy Code of Conduct is available on

the Company's web site.

SharSharSharSharShareholder Satisfeholder Satisfeholder Satisfeholder Satisfeholder Satisfaction Survaction Survaction Survaction Survaction Surveeeeeyyyyy

The Company constantly endeavours to extend the best of

facilities and services to shareholders and intends to further

improve the service standards. In response to the Shareholders

satisfaction survey feedback forms mailed to our shareholders

as also to the feedback option facility made available on the

Company's website, the Company received response from 1,779

shareholders.

The results of the survey are summarized hereunder :

Percentage of total response receivedSatisfaction level of services Excellent Good Needs to be Totalin following areas: Improved %1. Overall rating of

investor service 60.07 39.45 0.48 1002. Presentation of information

on the Company's website andits investor relations Section 49.72 47.38 2.90 100

3. Quality and contents ofAnnual Report 2003-04 49.36 43.59 7.05 100

42

REL SharREL SharREL SharREL SharREL Share pere pere pere pere per fffffororororormance agmance agmance agmance agmance against BSE 30 & S & P CNX Nifainst BSE 30 & S & P CNX Nifainst BSE 30 & S & P CNX Nifainst BSE 30 & S & P CNX Nifainst BSE 30 & S & P CNX Nif tytytytyty

AnAnAnAnAny qy qy qy qy queries rueries rueries rueries rueries relating telating telating telating telating to to to to to the fhe fhe fhe fhe f inancial statinancial statinancial statinancial statinancial statements of tements of tements of tements of tements of thehehehehe

ComComComComCompanpanpanpanpany may may may may may be addry be addry be addry be addry be addressed tessed tessed tessed tessed to :o :o :o :o :

Shri Madhukar Moolwaney

Sr.Vice-President (Accounts & Finance)

Reliance Energy Limited

Reliance Energy Centre

Santa Cruz (East)

Mumbai 400 055

Telephone : (022) 2663 9430

Facsimile : (022) 2663 9731

email : madhukar.moolwaney@rel.co.in

InvInvInvInvInvestestestestestors ' corors ' corors ' corors ' corors ' corrrrrr espondence maespondence maespondence maespondence maespondence may be addry be addry be addry be addry be addressed tessed tessed tessed tessed to to to to to thehehehehe

ComComComComCompliance Ofpliance Ofpliance Ofpliance Ofpliance Of fffff icer of ticer of ticer of ticer of ticer of the Comhe Comhe Comhe Comhe Companpanpanpanpany :y :y :y :y :

Shri Ramesh Shenoy

Company Secretary

Reliance Energy Limited

Reliance Energy Centre

Santa Cruz (East)

Mumbai 400 055

Telephone : (022) 2663 9311

Facsimile : (022) 2663 9763

e-mail: ramesh.shenoy@rel.co.in

Plant Locations:Plant Locations:Plant Locations:Plant Locations:Plant Locations:

Dahanu PDahanu PDahanu PDahanu PDahanu Pooooowwwwwer Ser Ser Ser Ser Stationtationtationtationtation SamalkSamalkSamalkSamalkSamalkot Pot Pot Pot Pot Pooooowwwwwer Ser Ser Ser Ser Stationtationtationtationtation

Dahanu Road 401 602 Industrial Development Area

Thane District Peddapuram Mandal

Samalkot 533 440

Andhra Pradesh

Goa PGoa PGoa PGoa PGoa Pooooo wwwwwer Ser Ser Ser Ser Stationtationtationtationtation Wind FWind FWind FWind FWind Farararararmmmmm

Opp. Sancoale Industrial Estate Near Aimangala 577558

Zuarinagar 403 726 Chitradurga District

Sancoale, Mormugao, Goa Karnataka

SecrSecrSecrSecrSecretarial audit fetarial audit fetarial audit fetarial audit fetarial audit for ror ror ror ror reconciliation of Capitaleconciliation of Capitaleconciliation of Capitaleconciliation of Capitaleconciliation of Capital

The Securities and Exchange Board of India has directed vide

Circular No.D&CC/ FITTC/CIR-16/2002 dated 31st December, 2002

that all issuer companies shall submit a certificate of capital

integrity, reconciling the total shares held in both the depositories,

viz. NSDL and CDSL and in physical form with the total issued/

paid-up capital.

The said certificate, duly certified by the our Statutory

Auditor is submitted to the Stock Exchanges where the

securities of the Company are listed within 30 days of the end

of each quarter and the Certificate is also placed before the

Board of Directors of the Company.

KKKKKeeeeey Fy Fy Fy Fy Financial Rinancial Rinancial Rinancial Rinancial Reporeporeporeporeporting Datting Datting Datting Datting Dates fes fes fes fes for tor tor tor tor the Fhe Fhe Fhe Fhe Financial Yinancial Yinancial Yinancial Yinancial Year (Fear (Fear (Fear (Fear (F.Y.Y.Y.Y.Y. ). ). ). ). )

2005-062005-062005-062005-062005-06

Unaudited Results for the First

Quarter ended 30th June, 2005: On or before 31st July, 2005

Unaudited Results for the

Second Quarter / half year

ended 30th September, 2005 : On or before 31st October, 2005

Unaudited Results for the

Third Quarter

ended 31st December, 2005 : On or before 31st January, 2006

Audited Results for the

Financial Year 2005-06 : On or before 30th June, 2006

43

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Sr.No City / Centre STD Code Phone - 0Ff Fax E-mail Id

1 Agra 0562 2526660 To 63 2526663 sandeepagar@karvy.com, ksblagra@karvy.com

2 Ahmedabad 079 26420422 / 26400527 / 28 26565551 ahmedabad@karvy.com

3 Aligarh 0571 2509106 To 08 2429272 aligarh@karvy.com; ksblaligarh@karvy.com

4 Allahabad 0532 2561073 To 74 2561073 pradeept@karvy.com, ksblallahabad@karvy.com

5 Anantapur 08554 249601 / 249607 / 249608 ~ lrajesh@karvy.com, ksblanantpur@karvy.com

6 Ankleshwar 02646 243291 / 243292 / 243392 / 243955 ~ hiren.soni@karvy.com, ksblankleshwar@karvy.com

7 Aurangabad 0240 2363517 / 23 / 24 / 30 ~ shaileshn@karvy.com, ksblabad@karvy.com

8 Bangalore 080 26621192 / 26621193 26621169 ramapriyanpb@karvy.com

9 Bareilly 0581 ~ 2476797 avitabh@karvy.com, ksblbareilly@karvy.com

10 Belgaum 0831 2402544 / 2402722 / 2402880 2402933 ksblbelgaum@karvy.com

11 Bellary 08392 254531, 254532 254533 vijayendra@karvy.com, ksblbellary@karvy.com

12 Bharuch 02642 242082 / 242394 / 241546 ~ hiren.soni@karvy.com, ksblbharuch@karvy.com

13 Bhavnagar 0278 2525005. 2525006 ~ manish.jain@karvy.com, bhavnagar@karvy.com

14 Bhimavaram 08816 231766 / 67 / 68 / 69 ~ ppvarma@karvy.com, ksblbvaram@karvy.com

15 Bhopal 0755 2559332, 2559337, 2574569, 2760890 ashutosh.dwivedi@karvy.com, ksblbhopal@karvy.com

2574589, 2574731

16 Bhubaneswar 0674 2547531 To 34, 2547382 2511012 ksblbbsr@karvy.com

17 Calicut 0495 2760882, 2760884 ~ bijesh@karvy.com, ksblcalicut@karvy.com

18 Chandigarh 0172 5071726, 5071727, 5071728, 5079702 ~ sanjay@karvy.com, chandigarh@karvy.com

19 Chennai 044 28153445, 28151034, 28153658 28153181 sraja@karvy.com, ksblmadras@karvy.com

20 Chilakaluripet 08647 257501 257502 ksblchpet@karvy.com

21 Coimbatore 0422 2237501 To -506, 2231387, 2237990 ~ srn@karvy.com, coimbatore@karvy.com

22 Cuttack 0671 2335187, 3110827, 3109972 ~ debasis@karvy.com, ksblcuttack@karvy.com

23 Dehradun 0135 2713351, 2714046, 2714047 2714047 abhishek@karvy.com, ksbldehradun@karvy.com

24 Dindigul 0451 2436077, 2436177 ~ dindigul@karvy.com

25 Durgapur 0343 2586375 To 77 ~ jagdish@karyv.com, ksbldurgapur@karvy.com

26 Eluru 08812 227851 / 52 / 54 ~ ksbleluru@karvy.com

27 Erode 0424 2225603, 225615, 2225616, ~ erode@karvy.com

2225617, 2225624

28 Ghaziabad 0120 2701886, 2701891 ~ shailendra@karvy.com, ksblghaziabad@karvy.com

29 Gobichettipalayam 04285 226275, 226276 ~ gobi@karvy.com

30 Gorakhpur 0551 2333825, 2333814 2346519 abhinav@karvy.com, ksblgorakhpur@karvy.com

31 Guntur 0863 2326684 / 2326686 2326687 ssrikanth@karvy.com, ksblguntur@karvy.com

32 Haldia 03224 276755 To 57 ~ joshiss@karvy.com, ksblhaldia@karvy.com

33 Hubli 0836 2353962, 2353974, 2353975 2353961 basavarajhirur@karvy.com, hubli@karvy.com

34 Hyderabad 040 23312454 / 23320251 23312946 anitha@karvy.com

35 Indore 0731 5069891, 5069892, 5069893 5069894 pmungre@karvy.com

36 Jaipur 0141 2375099, 2363321, 2375039 2364660 mbmaheshwari@karvy.com, ksbljaipur@karvy.com

37 Jamnagar 0288 2557862 To 65 ~ jamnagar@karvy.com

38 Jamshedpur 0657 2487020, 2487045, 2487048 ~ jamshedpur@karvy.com, ksbljamshedpur@karvy.com

39 Junagadh 0285 2624154 / 2624140 / 2624125 ~ junagadh@karvy.com

40 Kakinada 0884 2387382 / 2387383 2387381 vvrao@karvy.com, ksblkakinada@karvy.com

41 Kanpur 0512 2330127, 2331445, 3092333, 3096000 2558334 prashant@karvy.com, ksblkanpur@karvy.com

42 Karaikudi 04565 237192, 237193 ~ karaikudi@karvy.com

44

43 Karur 04324 241892, 241893, 241894 241891 karur@karvy.com

44 Kochi 0484 2310884, 2322152 2323104 rganesan@karvy.com, ksblcochin@karvy.com

45 Kolkata 033 24634787 To 89, 24647231, 24644866, alokc@karvy.com, ksblcalcutta@karvy.com

24647232, 24644891 24634787

46 Lucknow 0522 2236820 To 26 2236826 nitinsaxena@karvy.com, adminlucknow@karvy.com

47 Madurai 0452 2350855, 2350852 To 854 2350856 madurai@karvy.com, ksblmadurai@karvy.com

48 Mangalore 0824 2492302, 2496332, 2492901 2496352 cshetty@karvy.com, mangalore@karvy.com

49 Mattancherry 0484 2223243 kparthasarathy@karvy.com, ksblmattancherry@karvy.com

50 Mumbai 022 26730799 / 843 / 311 / 867 / 153 /292 26730152 pbamlani@karvy.com, mumbaiandheri@karvy.com

51 Mumbai 022 30325600, 30325624, 30325645 2285731 ~

52 Mysore 0821 2524292, 2524294 2524293 vasanthank@karvy.com, mysore@karvy.com

53 Nadiad 0268 2563210 / 2563245 / 2563248 ~ nadiad@karvy.com

54 Nasik 0253 2577811, 5602542, 5602543, 5602544 ~ nabriyad@karvy.com

55 Nellore 0861 2349935 / 2349936 / 2349937 2349939 chandramohan@karvy.com, ksblnellore@karvy.com

56 New Delhi 011 23324401 / 23353835 / 981 23324621 sakulpuri@karvy.com, ksbldelhi@karvy.com

57 Palghat 0491 2547143 ~ palghat@karvy.com

58 Panjim 0832 2426870, 2426871, 2426872 2426873 rajeshpatki@karvy.com ksblpanajim@karvy.com

59 Patna 0612 2321355 / 56 ~ sanjayn@karvy.com, ksblpatna@karvy.com

60 Pondicherry 0413 2220636, 2220640 2220659 vipul@karvy.com, ksblpondicherry@karvy.com

61 Proddatur 08564 250822 / 250823 / 250824 ~ viswam@karvy.com, ksblproddatur@karvy.com

62 Pune 020 4048790 25456842 anandjaju@karvy.com, pune@karvy.com

63 Rajahmundry 0883 2434468 / 2434469 2434471 gv@karvy.com; ksblrjm@karvy.com

64 Rajkot 0281 2239403 / 2239404 / 2239338 / 2294316 ~ manish.jain@karvy.com, rajkot@karvy.com

65 Ranchi 0651 2330386, 2330394, 2330320 ~ ranchi@karvy.com, ksblranchi@karvy.com

66 Renukoot 05446 254201 ~ renukoot@karvy.com

67 Rourkela 0661 2510771, 2510772 ~ nmohanty@karvy.com, rourkela@karvy.com

68 Salem 0427 2335700 To 704 2335705 salem@karvy.com

69 Shimoga 08182 228795, 228796, 227485 2226747 shimoga@karvy.com, ksblshimoga@karvy.com

70 Surat 0261 8357356 / 8351976 / 8369928 8368693 surat@karvy.com, ksblsurat@karvy.com

71 Tanjore 04362 279407, 279408 ~ tanjore@karvy.com

72 Theni 04546 261285, 261108 ~ jaya@karvy.com, theni@karvy.com

73 Tirupati 0877 2252756 ~ venkatreddy@karvy.com, ksbltirupati@karvy.com

74 Tirupur 0421 2205865, 5330158 ~ tirupur@karvy.com

75 Trichur 0487 2322483, 2322484 ~ josephka@karvy.com

76 Trichy 0431 2798200, 2791000 2794132 trichy@karvy.com

77 Trivandrum 0471 2725987, 2725989 To 991 2725987 csjoy@karvy.com, ksbltvm@karvy.com

78 Tumkur 0816 2261891, 2261892, 2261893 ~ somnath@karvy.com, tumkur@karvy.com

79 Udupi 0820 2530962, 2530963, 2530964 ~ ksbludupi@karvy.com, udupi@karvy.com

80 Vadodara 0265 2225325 / 2225389 2363207 shoban@karvy.com, ksblbaroda@karvy.com

81 Vallabh-Vidhyanagar 02692 248980, 248873 ~ mukesh.patel@karvy.com, vvnagar@karvy.com

82 Varanasi 0542 2225365, 2223814 2223814 ashutosh@karvy.com, ksblvaranasi@karvy.com

83 Vijayawada 0866 2495200 / 400 / 500 / 600 / 700 / 800 2495300 cchrao@karvy.com, vijayawada@karvy.com

84 Vishakapatnam 0891 2752915 To 18 2752915-18 ysrinivas@karvy.com, ksblvizag@karvy.com

85 Vishakapatnam - 0891 2511685, 2511686 ~ prasad@karvy.com, ksblgajuwaka@karvy.com

Gajuwaka

IIIII n vn vn vn vn ve s te s te s te s te s t o r o r o r o r o r SSSSS erv ice e rv ice e rv ice e rv ice e rv ice CCCCC e n t re n t re n t re n t re n t r es o f Kes o f Kes o f Kes o f Kes o f K arvy Comarvy Comarvy Comarvy Comarvy Com p u tp u tp u tp u tp u tersharersharersharersharershar e e e e e PPPPP r i vr i vr i vr i vr i v a ta ta ta ta t e e e e e LLLLL i m i ti m i ti m i ti m i ti m i t e de de de de d

45

Your Directors have pleasure in presenting the 76thAnnual Report and the Audited Accounts for the yearended 31st March, 2005.

FFFFFinancial Rinancial Rinancial Rinancial Rinancial Resultsesultsesultsesultsesults

During the year under review, the Company achieved anaggregate income of Rs.4,592.55 crore.

The highlights of the financial results are as under:(Rs. crore)

2004-20052004-20052004-20052004-20052004-2005 2003-2004Total Income 4,592.554,592.554,592.554,592.554,592.55 3,582.70Gross Profit before Depreciation 99999111116.086.086.086.086.08 736.08Depreciation 346.44346.44346.44346.44346.44 318.72Profit before Tax 569.64569.64569.64569.64569.64 417.36Provision for Taxation(Income-tax and Wealth Tax) 25.5025.5025.5025.5025.50 28.65Provision for Deferred Tax 24.0024.0024.0024.0024.00 21.63Profit after Tax 520.1520.1520.1520.1520.144444 367.08AAAAAdd :dd :dd :dd :dd :Balance of Profit brought forwardfrom previous year 1111122.5522.5522.5522.5522.55 93.77Balance of Profit transferredon amalgamation - 1.85

642.69642.69642.69642.69642.69 462.70Less / ALess / ALess / ALess / ALess / Add :dd :dd :dd :dd :Prior Period Adjustments -Current Tax (Net) (0.48)(0.48)(0.48)(0.48)(0.48) (7.14)Deferred Tax (Net) ----- -Expenses 0.330.330.330.330.33 0.10

642.84642.84642.84642.84642.84 469.74Less: Less: Less: Less: Less: Statutory Reserves 1111177777.2.2.2.2.211111 16.50Amount available forappropriations 625.63625.63625.63625.63625.63 453.24ApprApprApprApprAppropriations :opriations :opriations :opriations :opriations :Dividend on Equity Shares(i) Interim-Quarterly Dividends 6666611111.23.23.23.23.23 42.84(ii) Final Dividend 25.9825.9825.9825.9825.98 27.65(iii) Final Dividend on

Equity Shares for Previous year 0.10.10.10.10.155555 -Corporate Tax on Dividends 1111111111.7.7.7.7.744444 9.03Transfer to DebentureRedemption Reserve 26.2226.2226.2226.2226.22 26.17Transfer to General Reserve 300.00300.00300.00300.00300.00 225.00

Balance carried to Balance Sheet 200.3200.3200.3200.3200.311111 122.55625.63625.63625.63625.63625.63 453.24

DividendDividendDividendDividendDividend

In keeping with the Company's policy to strive towardsenhancing the sharheolders' interest, the Company paysdividend on quarterly basis. During the year, theCompany paid Quarterly Dividends of Re.1.10 (11%)each on Equity Shares for the quarters ended 30thJune, 30th September and 31st December, 2004. Inaddition to three quarterly dividends aggregatingRs. 3.30 per Equity Share paid during the year 2004-05,the Directors recommend a final dividend of Rs. 1.40(14%) per Equity Share making a total dividend of

Rs. 4.70 (4.7%) per Equity Share for the financial yearended 31st March, 2005, which, if approved at theforthcoming 76th Annual General Meeting, will be paidto (i) those Equity Shareholders whose names appear onthe Register of Members of the Company after givingeffect to all valid share transfers in physical formslodged with the Company on or before 31st May, 2005and (ii) to those whose names appear as beneficialowners as at the end of business on 31st May, 2005,as per particulars to be furnished by the Depositories,viz. National Securities Depository Limited and CentralDepository Services (India) Limited, for this purpose.

BuyBuyBuyBuyBuy-bac-bac-bac-bac-back of Eqk of Eqk of Eqk of Eqk of Equity Sharuity Sharuity Sharuity Sharuity Shareseseseses

The Company made an offer on 9th June, 2004, forbuy-back of equity shares in terms of the Securities andExchange Board of India (Buyback of Securities) Regulations1998 ("Buyback Regulations"). The Buy back offer wasat a price not exceeding Rs. 525 per equity share,aggregating up to Rs. 350 crore. The Buy-back offerwas valid for an initial period of 90 days up to 17thSeptember, 2004 and was extended from time to time.The buy-back offer will be completed within the statutoryvalidity period of twelve months from the date of theresolution i.e. on or before 8th June, 2005. Keeping inview the market conditions and the movement in shareprices, the Company has not bought any shares underthe offer.

FFFFFixixixixixed Depositsed Depositsed Depositsed Depositsed Deposits

The Company discontinued accepting Fixed Deposits sinceDecember 1998. Deposits amounting to Rs. 2,67,000 duefor repayment, were unclaimed by 32 depositors as on31st March,2005. Since then, none of the depositorshas claimed the deposits. The Company, during theyear transferred Rs.2,12,440 being the unclaimed depositand interest amount, to the Investor Education andProtection Fund set up by the Government of India.

SSSSStandbtandbtandbtandbtandby Chary Chary Chary Chary Chargggggeseseseses

The Maharashtra Electricity Regulatory Commission (MERC),vide its order dated 31st May 2004 directed The TataPower Company Limited (TPC) and the Company tomake future monthly payments in the ratio of 77:23between TPC and the Company. MERC further directedTPC to refund about Rs 321 crore (US$ 74 million) tothe Company, in respect of excess payments alreadymade towards standby charges, under various interimorders less interest liability on the Company, to theextent of Rs 1.17 crore.

The High Court, however, by its interim order directedTPC to provide a Bank Guarantee to the Company forRs 313.93 crore, in lieu of payment pending disposal ofthe Company's appeal. As a final order, the Hon'bleHigh Court of Bombay has disposed of both thepetitions by holding that the issues should be adjudicatedwithin four months by the Appellate Tribunal, and inthe interregnum the parties to continue to pay in terms

DIRECTDIRECTDIRECTDIRECTDIRECTORS’ REPORORS’ REPORORS’ REPORORS’ REPORORS’ REPOR TTTTT

46

of the interim order subject to adjustments on adjudication.The Company has filed a Special Leave Petition (SLP) inthe Supreme Court against the interim order of theHigh Court, seeking cash refund/adjustment, instead ofthe bank guarantee. The SLP is pending for orders.

ManagManagManagManagManagement Discussion and Analement Discussion and Analement Discussion and Analement Discussion and Analement Discussion and Analyyyyy sis of Fsis of Fsis of Fsis of Fsis of F inancialinancialinancialinancialinancialCondition and RCondition and RCondition and RCondition and RCondition and Results of Operesults of Operesults of Operesults of Operesults of Operationsationsationsationsations

Management Discussion and Analysis of Financial Conditionand Results of Operations of the Company for the yearunder review as required under Clause 49 of theListing Agreement with the Stock Exchanges, is given asa separate statement in the Annual Report

Delisting of sharDelisting of sharDelisting of sharDelisting of sharDelisting of shareseseseses

The Company delisted its shares from the Calcutta StockExchange Association Limited in line with the Resolutionpassed by the Members of the Company at theAnnual General Meeting on 9th June, 2003 and inaccordance with the Securities and Exchange Board ofIndia (Delisting of Securities) Guidelines, 2003. TheCompany's equity shares are currently listed and tradedon the Stock Exchange, Mumbai (BSE) and NationalStock Exchange of India Limited (NSE) in India.

DirDirDirDirDirectectectectectorsorsorsorsors

Shri K D Kulkarni ceased to be Director (HRD) on 19thOctober, 2004 after attaining superannuation. The Boardrecorded with appreciation the contribution made byShri Kulkarni during his tenure as Director (HRD) of theCompany.

During the year, Shri Cyril Shroff resigned from theBoard on 28th May, 2004. Shri Amitabh Jhunjhunwalaand Prof. J Ramachandran resigned from the Board ofthe Company on 19th January, 2005. The Board whileaccepting their resignations recorded with appreciationthe contributions made by Shri Cyril Shroff, Shri AmitabhJhunjhunwala and Prof J Ramachandran during theirtenure on the Board.

Gen V P Malik, Shri S L Rao and Dr. Leena Srivastavaretire by rotation and are eligible for re-appointment.

Brief resumes of Directors, the nature of their expertisein specific functional areas, names of companies inwhich they hold directorships and the memberships ofcommittees of the board, their shareholdings, etc. aregiven in the section on Corporate Governance elsewherein the Annual Report.

DirDirDirDirDirectectectectectors' Rors' Rors' Rors' Rors' Responsibility Sesponsibility Sesponsibility Sesponsibility Sesponsibility Stattattattattatementementementementement

Pursuant to the requirement under Section 217 (2AA) ofthe Companies Act, 1956, with respect to Directors'Responsibility Statement, it is hereby confirmed that: (i)in the preparation of the annual accounts for thefinancial year ended 31st March, 2005, the applicableaccounting standards have been followed along withproper explanations relating to material departures;(ii)the Directors have selected such accounting policies andapplied them consistently, and made judgments andestimates that are reasonable and prudent so as to give

a true and fair view of the state of affairs of theCompany as at 31st March, 2005 and of the profit ofthe Company for the said period; (iii) the Directors havetaken proper and sufficient care for the maintenance ofadequate accounting records in accordance with theprovisions of the Companies Act, 1956, for safeguardingthe assets of the Company and for preventing anddetecting fraud and other irregularities; and (iv) theDirectors have prepared the accounts for the financialyear ended 31st March, 2005, on a 'going concern'basis.

The above statements have been noted by the AuditCommittee at its meeting held on 13th April, 2005.

AAAAAuditudituditudituditorsorsorsorsors

M/s. Haribhakti & Co. Chartered Accountants, and M/sChaturvedi & Shah, the Statutory Auditors, will retire atthe conclusion of the forthcoming Annual General Meetingand are eligible for re-appointment. The Company hasreceived letters from each of them to the effect thattheir appointment, if made, would be within the limitsprescribed under Section 224 (1B) of the CompaniesAct, 1956. M/s.Price Waterhouse, the other retiring jointauditors, conveyed that they were not in a position toaccept any appointment as joint statutory auditors ofthe Company and that they would be in a position toprovide their consent and eligibility for being appointedonly as sole statutory auditors of the Company for thefinancial year 2005-06. The Company follows the practiceof appointing joint statutory auditors. It is accordinglyproposed to appoint M/s. Haribhakti & Company andM/s. Chaturvedi & Shah, as joint statutory auditors ofthe Company for the year 2005-06.

TTTTTececececechnology Ahnology Ahnology Ahnology Ahnology Absorption and Fbsorption and Fbsorption and Fbsorption and Fbsorption and Forororororeign Exeign Exeign Exeign Exeign Exccccchanghanghanghanghange Eare Eare Eare Eare Earningsningsningsningsningsand Outgoand Outgoand Outgoand Outgoand Outgo

The information relating to technology absorption, foreignexchange earnings and outgo required to be disclosedunder Rule 2 of the Companies (Disclosure of Particularsin the Report of Board of Directors) Rules, 1988, isgiven in Annexure I and forms part of this Report.

CorporCorporCorporCorporCorporatatatatate Goe Goe Goe Goe Govvvvvererererernancenancenancenancenance

The Company is one of the pioneers in the country inimplementing the best of international practices ofcorporate governance. A separate section onCorporate Governance forms part of the Annual Report.A certificate from Auditors of the Company regardingcompliance of conditions of Corporate Governance asstipulated under Clause 49 of the Listing Agreement isgiven in Annexure II.

PersonnelPersonnelPersonnelPersonnelPersonnel

In accordance with the provisions of Section 217 (2A) ofthe Companies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975, the names andother particulars of employees are set out in theAnnexure to the Directors' Report. However, as per theprovisions of Section 219 (1) (b) (v) of the CompaniesAct, 1956, the Report and Accounts is being sent to all

47

the shareholders of the Company excluding the aforesaidinformation. Any shareholder interested in obtaining suchparticulars may write to the Company Secretary at theRegistered Office of the Company.

AAAAAcccccknoknoknoknoknowledgwledgwledgwledgwledgementementementementement

The Board of Directors wishes to thank the Governmentof India (including the Ministry of Power), Governmentsof Maharashtra, Andhra Pradesh and Goa (includingEnergy and Environment Departments), Maharashtra PollutionControl Board, Maharashtra State Electricity Board, ElectricityRegulatory Commissions of Maharashtra and Andhra Pradesh,Dahanu Taluka Environment Protection Authority, MunicipalCorporation of Mumbai, financial institutions, bankers,customers, suppliers, shareholders and the employees ofthe Company.

On behalf of the Board of Directors

Mumbai, Anil D AmbaniAnil D AmbaniAnil D AmbaniAnil D AmbaniAnil D Ambani

14th April, 2005 Chairman & Managing Director

48

ANNEXURE I TANNEXURE I TANNEXURE I TANNEXURE I TANNEXURE I TO THE DIRECTO THE DIRECTO THE DIRECTO THE DIRECTO THE DIRECTORS ' REPORORS ' REPORORS ' REPORORS ' REPORORS ' REPOR TTTTT

Disclosure under the Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules, 1988

A. Conservation of Energy: Not Applicable

B. Technology Absorption: Efforts made in technologyabsorption as per Form B given below.

FORM 'B'FORM 'B'FORM 'B'FORM 'B'FORM 'B'

RESEARRESEARRESEARRESEARRESEARCCCCCH AND DEVELH AND DEVELH AND DEVELH AND DEVELH AND DEVELOPMENT (R&D)OPMENT (R&D)OPMENT (R&D)OPMENT (R&D)OPMENT (R&D)

1. Specific areas in which Research and Developmentwas carried out by the company:

AAAAA Electricity SupplElectricity SupplElectricity SupplElectricity SupplElectricity Supply Divisiony Divisiony Divisiony Divisiony Division

a. Use of Polymer for substation kiosks and concretefoundation base for LT Pillars.

b. Refinement and Improvement of Theft DetectionDevice (TDD).

c. Design & Development of Powerline Remote Unitsfor Automatic Meter Reading.

BenefBenefBenefBenefBenefits derivits derivits derivits derivits derived:ed:ed:ed:ed:

a. Reduction in erection time and maintenance cost.Use of polymer-based materials has resulted inlowering the capital cost of the equipment,elimination of periodic maintenance cost (re-painting works) and reduction in cases of theft.

b. Reduction in theft of electricity from Mains.

c. Improvements in process of billing and error freeoperations, theft reduction, energy audit, loadprofile, time of use tariffs (when applicable), andonline availability of consumer data, online realtime payment.

FFFFFuturuturuturuturuture plan of actione plan of actione plan of actione plan of actione plan of action

a. Reinforced hollow polyconcrete poles as an alternateto M.S. galvanized poles for reduction of initialcapital and maintenance cost.

b. Ready to erect base structure for LT pillars onpublic roads for reduction of erection time andlabour cost.

c. Hand held palm top for facilitating substationinspection and load reading.

d. Deployment plan for Theft Detection Device (TDD)in all Divisions.

e. Further to existing AMR pilots, two more pilots are inpipeline to evaluate all available technologies foradoption. Feasibility study for Energy DataManagement System for Enterprise wide meterdata management through AMR.

f. Integrated Supervisory Control and Data Acquisition(SCADA) of the complete REL network at onepoint for better contingency management.

g. Hotline washing of the Transmission towers.

h. Use of unitized substations to meet the challengeof space constraints.

i. Use of vacuum breakers at distribution substation levelfor maintenance free life.

j. Use of fault passage indicator, a simple and effectivetool for identifying faulty cable sections in the field.

k . Chemical treatment of earth pits to achieve lowresistance, even in rocky so

B.B.B.B.B. Goa PGoa PGoa PGoa PGoa Pooooowwwwwer Ser Ser Ser Ser Stationtationtationtationtation

a. Implementation of Triple Modular Redundancy (TMR)concept at device level for Gas Turbine liquidfuel system.

b. Strengthening of online Vibration monitoring systemof Gas Turbine by providing additional sensors.

BenefBenefBenefBenefBenefits derivits derivits derivits derivits derived:ed:ed:ed:ed:

a. Improvement in Reliability of Turbine ProtectionSystem for better Plant availability.

b. Increased Reliability of Turbine Monitoring system.

FFFFFuturuturuturuturuture plan of actione plan of actione plan of actione plan of actione plan of action

a. Reduction of naphtha Emission Losses from floatingroof naphtha storage tanks by installing mechanicalshoe type seals.

b. Aux Power Reduction

Use of Gas Turbine extraction air as plant instrumentair by keeping instrument air compressors in coldstandby mode

C.C.C.C.C. Goa Distribution syGoa Distribution syGoa Distribution syGoa Distribution syGoa Distribution systststststememememem

a. Design of 33kV Outdoor LBS panel with Meteringarrangement and protection in form of HT HRCfuse to be installed at Consumer premises.

b. Installation of kV meter and Definite UV/OV relayat the Substation transformer RTCC for verifyingcorrect recording of voltages and tripping the I/C 11kV CB in case of mal operation of RTCCpanel.

BenefBenefBenefBenefBenefits derivits derivits derivits derivits derivededededed

a. This replaces the conventional outdoor structurewith LBS/CT/PT/LA and fuse. The panel is compactin design, occupies less space, requires less timefor installation and can be moved withoutdismantling. Further, the panel is not exposed to faultsoccurring due to external climatic conditions such aslightning, flashovers etc.

b. This prevents the consumer from being subjected totoo high/low voltage due to fault / mal operation ofthe RTCC panel.

Future plan of actionFuture plan of actionFuture plan of actionFuture plan of actionFuture plan of action

a. Implementation of Automated Remote Metering forselect HT consumers.

b. Fiber based metering boxes for Outdoor Applications.

c. Introducing concept of Self-metering for all HT/LTconsumers for reduction of time for metering.

49

D.D.D.D.D. Dahanu Thermal Power Station:Dahanu Thermal Power Station:Dahanu Thermal Power Station:Dahanu Thermal Power Station:Dahanu Thermal Power Station:

Development of bootable hard disk for PlantManagement team.

BenefBenefBenefBenefBenefits derivits derivits derivits derivits derivededededed

Cost saving and reliability improvement

2.2.2 .2 .2 . Expenditure on R & D :Expenditure on R & D :Expenditure on R & D :Expenditure on R & D :Expenditure on R & D :

Capital Expenditure: Rs. 60.57 lakh

Recurring Expenditure: Rs. 35.17 lakh

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATIONTECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATIONTECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATIONTECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATIONTECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1.01.01.01.01.0 Electricity Supply DivisionElectricity Supply DivisionElectricity Supply DivisionElectricity Supply DivisionElectricity Supply Division

1.11.11.11.11.1 EfEfEfEfEfffffforororororts, in brief, made tts, in brief, made tts, in brief, made tts, in brief, made tts, in brief, made tooooowwwwwararararards tds tds tds tds tececececechnology absorption,hnology absorption,hnology absorption,hnology absorption,hnology absorption,adaptation and innoadaptation and innoadaptation and innoadaptation and innoadaptation and innovvvvvation:ation:ation:ation:ation:

a. Adoption of polymer based materials in distributionsystem for substation kiosks and ready concretefoundation base for LT Pillars erection.

b. Refinement and improvement of Theft DetectionDevice (TDD) and deployment in Mumbai inprogress.

c. Design & Development of Power-line Remote Unitsfor Automatic Meter Reading (AMR). Pilot projectstarted in Mumbai for evaluation of cost-benefit,technology adoption and integration requirements.

d. Procurement of Automatic Meter Reader enabled& Time of Day (TOD) enabled meters. Pilot AMRdeployed in Grid Meters for Availability basedTariff and load dispatch information.

e. Use of bolted links in LT pillars to prevent thetheft of copper removable links.

f. Deployment of GSM based Automatic Meter ReadingSystem for all HT consumers in Mumbai.

g. The real time data acquisition for energy meterswere introduced in the transmission system toeliminate the manual errors and data acquisitionand thereby the correct assessment of thetransmission and transformation losses.

h. Buzzer testing of the insulators were carried outin the transmission line and thereby preventivemaintenance was carried out for the insulatorswhich ultimately results in tripping of thetransmission lines due to tracking in the insulators.

i. Implementation of SAP system.

j. Introduction of Smart Card Attendance.

k. Loss calculation and assessment of network loadingusing SINCAL -load flow software.

11111.2.2.2.2.2 BenefBenefBenefBenefBenefits derivits derivits derivits derivits derived:ed:ed:ed:ed:

a. Reduction in erection time and maintenance cost.Use of polymer-based materials has resulted inlowering the capital cost of the equipment,elimination of periodic maintenance cost (re-painting works) and reduction in cases of theft.

b. Reduction in theft of electricity from Mains.

c. Improvements in process of billing and error free

operations, theft reduction, energy audit, load profile,

time of use tariffs (when applicable), and online

availability of consumer data, online real time payment.

d. Readiness for remote metering & TOD tariff.

e. Use of bolted copper links in place of removable links

resulted in reduction of theft and hence interruption

to consumers.

f. Implementation of AMR for HT consumers contributes

to significant process improvements for load survey,

tamper and theft and billing with online monitoring

and immediate access to data.

g. Adoption of broadband on power-line technology

allows deriving significant value addition and benefits

by using the power infrastructure already in place.

Benefits such as asset monitoring, data communication

for security and AMR for internal process needs. There

also exists significant scope to offer other services

including "Telephony on Power-line" and other value

added services including home automation gateway,

consumer services like medical alerts and security

services including video on power-line.

h. Increased availability of equipment.

i. Eliminating repetitive clerical and routine work thereby

increasing efficiency and productivity.

j. Better monitoring of employee attendance and

removal of manual process.

k . Better identification of loaded network pockets or

sections.

2.02.02.02.02.0 Dahanu Thermal Power Station:Dahanu Thermal Power Station:Dahanu Thermal Power Station:Dahanu Thermal Power Station:Dahanu Thermal Power Station:

2.12.12.12.12.1 EfEfEfEfEfffffforororororts, in brief, made tts, in brief, made tts, in brief, made tts, in brief, made tts, in brief, made tooooowwwwwararararards tds tds tds tds tececececechnology absorption,hnology absorption,hnology absorption,hnology absorption,hnology absorption,

adaptation and innovation:adaptation and innovation:adaptation and innovation:adaptation and innovation:adaptation and innovation:

a. Installation of 6 No SQ-300 state of art Electrostatic

Precipitators (ESP) field controllers.

b. Design and commissioning of state of art Remote

Energy Metering System for grid. All grid meters

commissioned in first phase.

c. Installation of PLC based automation for Cooling Water

Pumps, Air Drier of Compressed Air System and Dry

Ash Evacuation System.

d. Installation of Fire Alarm System for Turbine-Generator

area of Unit No. 2.

e. Installation of Digital Displays for continuous online

Plant performance & Environmental parameters

f. Condition monitoring:

Civil: Structural investigation and stability checks were

carried out for various structures with the objectives:

a. To investigate the health of the main civil structures of

the plant

b. To generate data to predict residual life based on future

studies.

50

c. To define remedial measures for any serious distress inany structure and.

d. To certify the structures for their stability.

Electrical & Other Equipment: Equipment weresubjected to modern diagnostic techniques.

a. Capacitance and Tan delta tests were carried outfor Generator, Generator Transformer, and GeneratorTransformer Bushings, Unit Aux. transformer, 220KV CT and all Unit No. 2 6.6 KV HT motors.

b. Sweep Frequency Response Analysis and Recoveryvoltage measurement was performed for GeneratorTransformer No. 2.

c. Third Harmonic Leakage Current measurement for220 KV Lightening Arrestors were carried out.

d. Peakvue technique was adopted to diagnose theproblems in bearings in the rotating machines inCoal Mill.

2.22.22.22.22.2 BenefBenefBenefBenefBenefits derivits derivits derivits derivits derived as a red as a red as a red as a red as a result of tesult of tesult of tesult of tesult of the abohe abohe abohe abohe abovvvvve efe efe efe efe efffffforororororts:ts:ts:ts:ts:

a. ESP Field Controllers resulted in reduced StackEmission

b. Improved Energy Management using remote EnergyMetering

c. Higher reliability in PLC based operation ofEquipment

d. Fire Safety in Turbo Generator U-2 using newFire Detection System

e. Improved monitoring and higher level of awareness

f. Ensured healthiness of Civil Structures by ConditionMonitoring

g. Ensured healthiness of Electrical Equipment bydiagnostic tests

h. Peakvue used for diagnosing bearing problems inslow speed machines

3.03.03.03.03.0 SamalkSamalkSamalkSamalkSamalkot Pot Pot Pot Pot Pooooowwwwwer Ser Ser Ser Ser Stationtationtationtationtation

3.13.13.13.13.1 EfEfEfEfEfffffforororororts, in brief, made tts, in brief, made tts, in brief, made tts, in brief, made tts, in brief, made tooooowwwwwararararards tds tds tds tds tececececechnology absorption,hnology absorption,hnology absorption,hnology absorption,hnology absorption,adaptation and innoadaptation and innoadaptation and innoadaptation and innoadaptation and innovvvvvation:ation:ation:ation:ation:

a. Equipped with the state-of-the-art technology controlsystems for its Gas Turbine Generator set as well as forits Steam Turbine Generator Set.

b. The equipment in the balance of Plant can be put intoservice from the remote control room with the usageof an advanced version of Functionally DistributedControl System.

c. The switchyard of the power station is provided withthe latest genre of the SCADA System.

3.23.23.23.23.2 BenefBenefBenefBenefBenefits derivits derivits derivits derivits derived as a red as a red as a red as a red as a result of tesult of tesult of tesult of tesult of the abohe abohe abohe abohe abovvvvve efe efe efe efe efffffforororororts:ts:ts:ts:ts:

The application of the above technologies facilitates safe,economic and efficient operations of the plant.

4.04.04.04.04.0 Goa Power StationGoa Power StationGoa Power StationGoa Power StationGoa Power Station

4.14.14.14.14.1 EfEfEfEfEfffffforororororts, in brief, made tts, in brief, made tts, in brief, made tts, in brief, made tts, in brief, made tooooowwwwwararararards tds tds tds tds tececececechnology absorption,hnology absorption,hnology absorption,hnology absorption,hnology absorption,adaptation and innoadaptation and innoadaptation and innoadaptation and innoadaptation and innovvvvvation:ation:ation:ation:ation:

a. Installed Triple Modular Redundancy (TMR) conceptat device level for Gas Turbine liquid fuel system.

b. Installation of additional sensors for Vibrationmonitoring system of Gas Turbine.

c. Installation of On line water wash system for GasTurbine Compressor cleaning

d. Replacement of Naphtha Lubricity additive onFuel Path rotating components

e. Energy saving methods:

i) Installation of electronic ballast and energysaving unit for plant Lighting.

ii) Installation of variable frequency drive forcooling tower make-up pump.

4.24.24.24.24.2 BenefBenefBenefBenefBenefits derivits derivits derivits derivits derived:ed:ed:ed:ed:

a. Improvement in Reliability of Turbine ProtectionSystem and Availability.

b. Increased Reliability of Turbine Monitoring system.

c. Compressor online washing

d. Lowering of Overall rate of de-rating of GasTurbine Output due to Compressor - Fouling.

e. Reduction of Planned Gas Turbine Shutdown forcarrying Off-Line Compressor Wash.

f. 40-45% savings on Lubricity additive with sameReliability.

g. Reduction in Auxiliary Power consumption.

5.05.05.05.05.0 Goa Distribution syGoa Distribution syGoa Distribution syGoa Distribution syGoa Distribution systststststememememem

5.15.15.15.15.1 EfEfEfEfEfffffforororororts, in brief, made tts, in brief, made tts, in brief, made tts, in brief, made tts, in brief, made tooooowwwwwararararards tds tds tds tds tececececechnology absorption,hnology absorption,hnology absorption,hnology absorption,hnology absorption,adaptation and innoadaptation and innoadaptation and innoadaptation and innoadaptation and innovvvvvation:ation:ation:ation:ation:

a. Design of 33kV Outdoor Load Break Switch (LBS)panel with Metering arrangement and protectionin form of HT HRC fuse at Consumer premises.

b. Installation of kV meter and Definite Under Voltage/ Over Voltage (UV/OV) relay at the Substationtransformer Remote Tap Changer Control (RTCC)for verifying correct recording of voltages andtripping the I/C 11kV CB in case of mal-operationof RTCC panel.

c. Power Quality Analysis carried out for all HT/LTconsumers to access the power quality parametersat consumer end

d. Studying the consumer end installation and providingsolutions for effective utilization of power.

e. Fuse failure relays with annunciations for consumerssupplied by Switch Fuse Unit (SFU) units.

f. Successful laying of 33kV Under Water Cables fora distance of 800 Mts across river Zuari. Thecable is laid 2.5 Mts below riverbed and is wellprotected by covering it with sand cement bagsand back filling of dredge earth.

51

5.25.25.25.25.2 Benefits derived:Benefits derived:Benefits derived:Benefits derived:Benefits derived:

a. This replaces the conventional outdoor structure withLBS/CT/PT/LA and fuse. The panel is compact, requiresless time for installation and can be moved withoutdismantling. The panel is not exposed to faultsoccurring due to external climatic conditions such aslightning, flashovers etc.

b. This prevents the consumer from being subjected totoo high/low voltage due to fault / mal-operation ofthe RTCC panel.

c. The quality of power at the consumers end determinesthe quality of power of the entire distribution system.Power quality parameters such as current & voltageharmonics, distortion/unbalanced loading are measuredand report circulated to all consumers. The consumersare advised to take corrective action if the valuesobtained are outside the limits set by IEEE.

d. Effective Utilisation of power is as important as thequality of power. REL provides technical solution toconsumers as such relay settings / settings of machinessuch as Variable Frequency Drives (VFDs), Compressors,Molding / Use of capacitors and its effect on OU,

harmonics / Transformer tap position and voltageregulation within consumer premises. This helps inbetter use of power and improving supplier-consumerrelationship.

e. Detects single phasing with alarm. The consumer canbe immediately isolated. This prevents damage toconsumer end equipments due to single phasing.

f. The cable was laid for completion of ring main and fortapping power to a new load centre. Taking the cableon alternate route would result in substantial increasein the length of the cable.

EXCHANGE EARNINGS AND OUTGO:EXCHANGE EARNINGS AND OUTGO:EXCHANGE EARNINGS AND OUTGO:EXCHANGE EARNINGS AND OUTGO:EXCHANGE EARNINGS AND OUTGO:

The required information in respect of foreign exchangeearnings and outgo is given in Note No 6 of theAccounts.

On behalf of the Board of Directors

Anil D AmbaniAnil D AmbaniAnil D AmbaniAnil D AmbaniAnil D Ambani

Mumbai Chairman & Managing Director

14th April, 2005

52

ANNEXURE I I TANNEXURE I I TANNEXURE I I TANNEXURE I I TANNEXURE I I TO THE DIRECTO THE DIRECTO THE DIRECTO THE DIRECTO THE DIRECTORS’ REPORORS’ REPORORS’ REPORORS’ REPORORS’ REPORTTTTT

To The Members of Reliance Energy Limited.

We have examined the compliance of the conditions ofCorporate Governance by Reliance Energy Limited for theyear ended 31st March 2005 as stipulated in Clause 49of the Listing Agreement of the Company entered intowith the Stock Exchanges in India.

The compliance of conditions of Corporate Governanceis the responsibility of the management. Our examinationwas limited to procedures and implementation thereof,adopted by the Company for ensuring the complianceof the conditions of Corporate Governance. It isneither an audit nor an expression of opinion on thefinancial statements of the Company.

In our opinion and to the best of our information andaccording to the explanations given to us, except forBoard composition as disclosed under Note to Table 1of Corporate Governance Report, we certify that theCompany has complied with the conditions of Corporate

Governance as stipulated in the above mentioned ListingAgreements.

We state that no investor grievances are pending for aperiod exceeding one month against the Company asper the records maintained by the Shareholders/Investors’Grievances Committee.

We further state that such compliance is neither anassurance as to the future viability of the Company northe efficiency or effectiveness with which the managementhas conducted the affairs of the Company.

For HarHarHarHarHaribhakti & Co.ibhakti & Co.ibhakti & Co.ibhakti & Co.ibhakti & Co. For Price WPrice WPrice WPrice WPrice Watatatataterhouseerhouseerhouseerhouseerhouse FFFFFor Chaturvor Chaturvor Chaturvor Chaturvor Chaturvedi & Shahedi & Shahedi & Shahedi & Shahedi & Shah

Chartered Accountants Chartered Accountants Chartered Accountants

Chetan DesaiChetan DesaiChetan DesaiChetan DesaiChetan Desai PPPPPararararar tttttha Ghoshha Ghoshha Ghoshha Ghoshha Ghosh C. D. LalaC. D. LalaC. D. LalaC. D. LalaC. D. Lala

Partner Partner Partner

Membership Membership Membership

No. 17000 No. 55913 No. 35671

Date: April 14, 2005

Place: Mumbai

AAAAAuditudituditudituditors' Cerors' Cerors' Cerors' Cerors' Certiftiftiftiftificaticaticaticaticate on come on come on come on come on compliance witpliance witpliance witpliance witpliance with th th th th the conditions of Corporhe conditions of Corporhe conditions of Corporhe conditions of Corporhe conditions of Corporatatatatate Goe Goe Goe Goe Govvvvvererererernance under Clause 49 of tnance under Clause 49 of tnance under Clause 49 of tnance under Clause 49 of tnance under Clause 49 of theheheheheListing AListing AListing AListing AListing Agggggrrrrreement.eement.eement.eement.eement.

53

TO THE MEMBERS OF RELIANCE ENERGY LIMITED

1. We have audited the attached Balance Sheet ofReliance Energy Limited ("the Company") as at March31, 2005, and the related Profit and Loss Accountfor the year ended on that date annexed theretoand the cash flow statement for the year ended onthat date, which we have signed under reference tothis report. These financial statements are theresponsibility of the Company's management. Ourresponsibility is to express an opinion on thesefinancial statements based on our audit.

2. We conducted our audit in accordance with theauditing standards generally accepted in India. ThoseStandards require that we plan and perform theaudit to obtain reasonable assurance about whetherthe financial statements are free of materialmisstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includesassessing the accounting principles used and significantestimates made by management, as well as evaluatingthe overall financial statement presentation. We believethat our audit provides a reasonable basis for ouropinion.

3. As mentioned in Note 1(a) in Schedule 17 formingpart of the Accounts, as the company is for theyear governed by Sixth Schedule of the RepealedElectricity (Supply) Act, 1948, the provisions of saidAct, have prevailed, wherever the provisions of theCompanies Act, 1956 of India (the 'Act') are inconsistentwith the said Sixth Schedule of Repealed Electricity(Supply) Act, 1948.

4. As required by the Companies (Auditors' Report)Order, 2003, as amended by the Companies (Auditor’sReport) (Amendment) Order 2004 (together the ‘order’),issued by the Central Government of India in termsof Section 227(4A) of the Act, and on the basis ofsuch checks as we considered appropriate, and accordingto the information and explanations given to us, wegive in the Annexure a statement on the mattersspecified in paragraphs 4 and 5 of the said Orderto the extent applicable to the Company.

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

(a) We have obtained all the information andexplanations, which to the best of our knowledgeand belief were necessary for the purposes ofour audit;

(b) In our opinion, proper books of account asrequired by law have been kept by the Companyso far as appears from our examination of thosebooks;

(c) The Balance Sheet, Profit and Loss Account andCash Flow Statement dealt with by this reportare in agreement with the books of account;

(d) In our opinion, the Balance Sheet and Profit andLoss Account and Cash Flow Statement dealtwith by this report comply with the accountingstandards referred to in Section 211 (3C) ofthe Act;

(e) On the basis of written representations receivedfrom the directors, except from one director inrespect of one company, as on March 31, 2005,and taken on record by the Board of Directors,we report that none of the director of theCompany is disqualified as on March 31, 2005from being appointed as a director in terms ofSection 274(1)(g) of the Act;

(f) In our opinion and to the best of our informationand according to the explanations given to us,the said financial statements together with thenotes thereon and attached thereto, read inparticular with Note 10 in Schedule 17 regardingwithdrawal from reserves to adjust standby chargesand Note 12 in Schedule 17 regarding accountingfor depreciation, give the information required bythe Act, and also give, a true and fair view inconformity with the accounting principles generallyaccepted in India;

i) in the case of the Balance Sheet, of thestate of affairs of the Company as at 31stMarch, 2005;

ii) in the case of the Profit and Loss Account,of the profit for the year ended on thatdate; and

iii) in the case of cash flow statement, of thecash flows for the year ended on that date.

For HarHarHarHarHaribhakti & Co.ibhakti & Co.ibhakti & Co.ibhakti & Co.ibhakti & Co. For Price WPrice WPrice WPrice WPrice Watatatataterhouseerhouseerhouseerhouseerhouse FFFFFor Chaturvor Chaturvor Chaturvor Chaturvor Chaturvedi & Shahedi & Shahedi & Shahedi & Shahedi & Shah

Chartered Accountants Chartered Accountants Chartered Accountants

Chetan DesaiChetan DesaiChetan DesaiChetan DesaiChetan Desai PPPPPararararar tttttha Ghoshha Ghoshha Ghoshha Ghoshha Ghosh C. D. LalaC. D. LalaC. D. LalaC. D. LalaC. D. Lala

Partner Partner Partner

Membership Membership Membership

No. 17000 No. 55913 No. 35671

Date: April 14, 2005

Place: Mumbai

AAAAA UDITUDITUDITUDITUDITORS ' REPORORS ' REPORORS ' REPORORS ' REPORORS ' REPOR TTTTT

54

1. The Company has maintained proper records toshow full particulars, including quantitative detailsand situation, of its fixed assets. We have beeninformed that the fixed assets of the Company arephysically verified by the Management according toa phased program designed to cover all the itemsover a period of three years, which in our opinion,is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant tothe program, physical verification was carried outduring the year and no material discrepancies werenoticed. However, we are informed that distributionsystem being underground is not physically verifiable.

2. During the year, substantial part of fixed assets havenot been disposed off by the Company.

3. The inventory of the Company has been physicallyverified by the Management during the year.Confirmations have been obtained with respect toinventories lying with third parties.

4. In our opinion, the procedures of physical verificationof inventory followed by the Management arereasonable and adequate in relation to the size ofthe Company and nature of its business.

5. The Company has maintained proper records ofinventory and the discrepancies between the physicalinventory and the book inventory noticed on physicalverification as mentioned in paragraph 4 above arenot material.

6. (a) The Company has granted unsecured loans tothree companies covered in the register maintainedunder Section 301 of the Act. The maximumamount involved during the year and theyear-end balance of such loans aggregate toRs 2,441.08 crore and Rs 435.84 crorerespectively.

(b) In our opinion, the rate of interest and otherterms and conditions of such loans are notprima facie prejudicial to the interest of thecompany.

(c) In respect of the aforesaid loans, the parties arerepaying the principal amounts as stipulated andare also regular in payment of interest, whereapplicable.

(d) In respect of the aforesaid loans, there is nooverdue amount more than Rupees One Lakh.

7. (a) The Company has taken unsecured loans fromtwo companies covered in the register maintainedunder Section 301 of the Act. The maximumamount involved during the year and the year-end balance of such loan aggregate to Rs. 25crore and Rs Nil respectively.

(b) In our opinion, the rate of interest and otherterms and conditions of such loans are not

prima facie prejudicial to the interest of theCompany.

(c) In respect of the aforesaid loan, the Company isregular in repaying the principal amounts asstipulated and is also regular in payment ofinterest, where applicable.

8. There are adequate internal control systemcommensurate with the size of the Company andthe nature of its business with regard to thepurchase of inventory and fixed assets and for thesale of energy/goods and services. Further, on thebasis of our examination of the books and recordsof the Company, and according to the informationand explanation given to us, we have neither comeacross nor have we been informed of any continuingfailure to correct major weaknesses in the aforesaidinternal control system.

9. In our opinion and according to the information andexplanations given to us, there are no contracts orarrangements referred to in Section 301 of the Actthat need to be entered in the register required tobe maintained under that section.

10. The Company has not accepted any deposits fromthe public within the meaning of Section 58A and58AA of the Act and the rules framed thereunder.

11. In our opinion, the Company's present internal auditsystem is commensurate with its size and nature ofbusiness.

12. On the basis of records produced to us, we are ofthe opinion that, prima facie, the cost recordsprescribed by the Central Government of India underSection 209 (1)(d) of the Act have been maintained.However, we are not required to and have notcarried out any detailed examination of such accountsand records.

13. According to the books and records as producedand examined by us in accordance with generallyaccepted auditing practices in India and also basedon Management representations, undisputed statutorydues in respect of Provident Fund, Employees' StateInsurance dues, Investor Education and ProtectionFund, Income Tax, Wealth Tax, Service Tax, CustomDuty, Excise Duty and Cess and other materialstatutory dues have generally been regularly deposited,by the Company during the year with the appropriateauthorities in India.

14. As at March 31, 2005, there have been no disputeddues which have not been deposited with therespective authorities in respect of Income Tax,Wealth tax, Excise Duty, Service Tax and Cess exceptdisputed sales tax dues for Rs 0.60 crore (under UPSales Tax Act), pending before Appellate Tribunal andRs 0.46 crore (under Andhra Pradesh General Sales

ANNEXURE REFERRED TANNEXURE REFERRED TANNEXURE REFERRED TANNEXURE REFERRED TANNEXURE REFERRED TO I N PO I N PO I N PO I N PO I N PA RA RA RA RA R AAAAA G RG RG RG RG R APH 4 OF AUDITAPH 4 OF AUDITAPH 4 OF AUDITAPH 4 OF AUDITAPH 4 OF AUDITORS ' REPORORS ' REPORORS ' REPORORS ' REPORORS ' REPOR T OF EVENT OF EVENT OF EVENT OF EVENT OF EVENDDDDD AAAAAT E TT E TT E TT E TT E TO THE MEMBERS OF REL IANO THE MEMBERS OF REL IANO THE MEMBERS OF REL IANO THE MEMBERS OF REL IANO THE MEMBERS OF REL IAN CE ENERCE ENERCE ENERCE ENERCE ENERGY L IMITED ON THE F INGY L IMITED ON THE F INGY L IMITED ON THE F INGY L IMITED ON THE F INGY L IMITED ON THE F IN A NA NA NA NA N C I A LC I A LC I A LC I A LC I A LS TS TS TS TS TAAAAATEMENTS FOR THE YEAR ENDED MARTEMENTS FOR THE YEAR ENDED MARTEMENTS FOR THE YEAR ENDED MARTEMENTS FOR THE YEAR ENDED MARTEMENTS FOR THE YEAR ENDED MARCCCCC H 3H 3H 3H 3H 311111, 2 0 0 5, 2005, 2 0 0 5, 2005, 2 0 0 5

55

Tax Act), of which Rs 0.08 crore is pending beforeAppellate Tribunal and Rs 0.38 crore is pendingbefore Additional Commissioner (CT), Rs 0.29 crore(under West Bengal Sales Tax Act, 1994) which ispending before Tribunal Bench (Lucknow), Rs 0.09crore (under Tamil Nadu Sales Tax Act) with ispending before Sales Tax Appellate and Rs 0.47crore (under Karnataka Sales Tax Act) which ispending before Joint Commissioner (Appeals).

15. The Company has neither accumulated losses as at31st March, 2005, nor it has incurred any cashlosses either during the financial year ended on thatdate or in the immediately preceding financial year.

16. According to the records of the Company, it has notdefaulted in repayment of its dues to any financialinstitution or bank or to debenture holders duringthe year.

17. The Company has not granted any loans or advanceson the basis of security by way of pledge of shares,debentures and other securities.

18. In our opinion, considering the nature of activitiescarried on by the Company during the year, theprovisions of any special statute applicable to chitfund/ nidhi/ mutual benefit fund/ societies are notapplicable to it.

19. The Company has not dealt or traded in shares,securities, debentures or other investments duringthe year.

20. In our opinion and according to the information andexplanations given to us, the terms and condition ofthe guarantee given by the Company, for loanstaken by others from banks or financial institutionsduring the year, are not prejudicial to the interestof the Company.

21. On the basis of review of utilisation of fundspertaining to term loans on overall basis and relatedinformation as made available to us, the term loanstaken by the Company have been applied for thepurposes for which they are obtained except forForeign Currency Convertible Bonds of Rs 790 croreand External Commercial Borrowings ofRs 1,110.62 crore which, as explained, pendingutilisation are invested in Fixed Deposit with Bank.

22. On the basis of an overall examination of thebalance sheet of the Company, in our opinion andaccording to the information and explanations givento us, there are no funds raised on short term basiswhich have been used for long term investment.

23. The Company has made preferential allotment ofshares to a company covered in the registermaintained under Section 301 of the Act during theyear. In our opinion and according to the informationand explanations given to us, the price at whichsuch shares have been issued is not prejudicial tothe interest of the Company.

24. The Company has created necessary securities inrespect of debentures issued and outstanding at theyear-end.

25. The Company has not raised any money by publicissue during the year.

26. As per the information and explanations given to usand on the basis of examination of records, nomaterial fraud on or by the Company was noticedor reported during the year except in case of theftof electricity reported by the vigilance departmentof the Company, the amount for which is notascertainable.

For HarHarHarHarHaribhakti & Co.ibhakti & Co.ibhakti & Co.ibhakti & Co.ibhakti & Co. For Price WPrice WPrice WPrice WPrice Watatatataterhouseerhouseerhouseerhouseerhouse FFFFFor Chaturvor Chaturvor Chaturvor Chaturvor Chaturvedi & Shahedi & Shahedi & Shahedi & Shahedi & Shah

Chartered Accountants Chartered Accountants Chartered Accountants

Chetan DesaiChetan DesaiChetan DesaiChetan DesaiChetan Desai PPPPPararararar tttttha Ghoshha Ghoshha Ghoshha Ghoshha Ghosh C. D. LalaC. D. LalaC. D. LalaC. D. LalaC. D. Lala

Partner Partner Partner

Membership Membership Membership

No. 17000 No. 55913 No. 35671

Date: 14th April, 2005

Place: Mumbai

56

BBBBB A LA LA LA LA L A NA NA NA NA NCE SHEET AS ACE SHEET AS ACE SHEET AS ACE SHEET AS ACE SHEET AS AT 3T 3T 3T 3T 31ST MAR1ST MAR1ST MAR1ST MAR1ST MARCCCCC H, 2005H, 2005H, 2005H, 2005H, 2005

As at 3As at 3As at 3As at 3As at 31-3-20051-3-20051-3-20051-3-20051-3-2005 As at 31-3-2004Schedule Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.Crore Rs.Crore

I.I.I.I.I. SOURSOURSOURSOURSOURCES OF FUNDSCES OF FUNDSCES OF FUNDSCES OF FUNDSCES OF FUNDS(1) Shareholders' Funds

(a) Share Capital 1 1111185.685.685.685.685.611111 175.26(b) Equity Warrants Issued and Subscribed 568.0568.0568.0568.0568.011111 -

(Refer Note 16)(c) Reserves and Surplus 2 5,586.275,586.275,586.275,586.275,586.27 4,935.71

6,339.896,339.896,339.896,339.896,339.89 5,110.97

(2) Loan Funds(a) Secured Loans 3 785.00785.00785.00785.00785.00 685.02(b) Unsecured Loans 4 2,953.672,953.672,953.672,953.672,953.67 1,345.81

3,738.673,738.673,738.673,738.673,738.67 2,030.83(3) Deferred Tax Liability (net)

(Refer Note 9) 260.55260.55260.55260.55260.55 236.55(4) Service Line Deposits from Consumers 22.122.122.122.122.111111 17.74

111110,360,360,360,360,3611111.22.22.22.22.22 7,396.09II.II.II.II.II. APPLICAPPLICAPPLICAPPLICAPPLICAAAAATION OF FUNDSTION OF FUNDSTION OF FUNDSTION OF FUNDSTION OF FUNDS

(1) Fixed Assets 5(a) Gross Block 5,5,5,5,5,1111172.9772.9772.9772.9772.97 5,011.22(b) Less: Depreciation 2,452.852,452.852,452.852,452.852,452.85 2,001.80(c) Net Block 2,720.12,720.12,720.12,720.12,720.122222 3,009.42(d) Capital Work-in-Progress 1111192.192.192.192.192.199999 83.79

2,92,92,92,92,9111112.32.32.32.32.311111 3,093.21(2) Investments 6 696.22696.22696.22696.22696.22 2,875.04(3) Current Assets, Loans and Advances 7

(a) Inventories 353.09353.09353.09353.09353.09 104.17(b) Sundry Debtors 930.96930.96930.96930.96930.96 466.10(c) Cash and Bank Balances 6,045.376,045.376,045.376,045.376,045.37 860.16(d) Other Current Assets 1111140.940.940.940.940.911111 220.51(e) Loans and Advances 11111,,,,,1111170.170.170.170.170.111111 1,195.56

8,640.448,640.448,640.448,640.448,640.44 2,846.50Less:Current Liabilities and Provisions 8

(a) Current Liabilities 11111,478.1,478.1,478.1,478.1,478.144444 1,013.35(b) Provisions 409.6409.6409.6409.6409.611111 405.31

11111,887,887,887,887,887.75.75.75.75.75 1,418.66Net Current Assets 6,752.696,752.696,752.696,752.696,752.69 1,427.84

111110,360,360,360,360,3611111.22.22.22.22.22 7,396.09Notes forming part of the accounts 17

As per our attached Report of even date

For Haribhakti & Co.Chartered Accountants

Chetan DesaiPartnerM.No. : 17000

For Price WaterhouseChartered Accountants

Partha GhoshPartnerM.No: 55913

For Chaturvedi & ShahChartered Accountants

C. D. LalaPartnerM.No: 35671

Place: MumbaiDate: 14th April, 2005

For and on behalf of the Board

Anil D. AmbaniChairman and Managing Director

Satish SethExecutive Vice Chairman

K. H. MankadDirector (Finance)

J. P. ChalasaniDirector (Business Development)

Gautam DoshiGen. V. P. MalikS. L. RaoDr. Leena SrivastavaV. R. Galkar

Ramesh ShenoyCompany Secretary

Place: MumbaiDate: 14th April, 2005

Directors}

57

P RP RP RP RP ROFIT AND LOFIT AND LOFIT AND LOFIT AND LOFIT AND L OSS AOSS AOSS AOSS AOSS AC CC CC CC CC C OUNT FOR THE YEAR ENDED 3OUNT FOR THE YEAR ENDED 3OUNT FOR THE YEAR ENDED 3OUNT FOR THE YEAR ENDED 3OUNT FOR THE YEAR ENDED 31ST MAR1ST MAR1ST MAR1ST MAR1ST MARCCCCC H, 2005H, 2005H, 2005H, 2005H, 2005

2004-052004-052004-052004-052004-05 2003-04ScScScScSchedulehedulehedulehedulehedule Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.Crore

INININININCCCCCOMEOMEOMEOMEOMEGross Earnings from sale of Electrical Energy 2,905.832,905.832,905.832,905.832,905.83 2,830.12Less: Discount for prompt payment of bills 9.849.849.849.849.84 9.16

2,895.992,895.992,895.992,895.992,895.99 2,820.96Income of EPC, Contracts and Elastimold Divisions 9 11111,243.82,243.82,243.82,243.82,243.82 585.72Other Income 10 452.7452.7452.7452.7452.744444 176.02

4,592.554,592.554,592.554,592.554,592.55 3,582.70EXPENDITUREEXPENDITUREEXPENDITUREEXPENDITUREEXPENDITURE

Cost of Electrical Energy purchased (Net) 11 11111,004.1,004.1,004.1,004.1,004.100000 1,033.71Cost of Fuel 735.93735.93735.93735.93735.93 673.83Tax on Electricity 99.199.199.199.199.122222 47.43Generation, Distribution, Administration and other Expenses 12 537537537537537.95.95.95.95.95 483.08Expenditure of EPC, Contracts and Elastimold Divisions 13 11111,,,,,1111164.5564.5564.5564.5564.55 538.64Interest and Finance Charges 14 1111134.8234.8234.8234.8234.82 69.93Depreciation 479.26479.26479.26479.26479.26 454.46Less: Transferred from General Reserve (Refer Note 12) 1111132.8232.8232.8232.8232.82 135.74

346.44346.44346.44346.44346.44 318.724,022.94,022.94,022.94,022.94,022.911111 3,165.34

Profit before Taxation 569.64569.64569.64569.64569.64 417.36Less: Provision for Income Tax 25.4825.4825.4825.4825.48 28.61Less: Provision for Wealth Tax 0.020.020.020.020.02 0.04Less: Deferred Tax (net) 24.0024.0024.0024.0024.00 21.63Net Profit for the Year 520.1520.1520.1520.1520.144444 367.08Prior Period Expenses 0.330.330.330.330.33 0.10Taxation in respect of earlier years

- Current Tax (net) (0.48)(0.48)(0.48)(0.48)(0.48) (7.14)Net Profit 520.29520.29520.29520.29520.29 374.12Balance of Profit brought over from previous year 1111122.5522.5522.5522.5522.55 93.77Balance of Profit transferred on Amalgamation - 1.85

642.84642.84642.84642.84642.84 469.74Less: Statutory Reserves and other Appropriations 15 1111177777.2.2.2.2.211111 16.50Amount available for Distribution and Appropriations 625.63625.63625.63625.63625.63 453.24

APPRAPPRAPPRAPPRAPPROPRIAOPRIAOPRIAOPRIAOPRIATIONSTIONSTIONSTIONSTIONSInterim Dividend on Equity Shares 6666611111.23.23.23.23.23 42.84Proposed Final Dividend on Equity Shares 25.9825.9825.9825.9825.98 27.65Final Dividend on Equity Shares for previous year 0.10.10.10.10.155555 -Corporate Tax on dividends 1111111111.7.7.7.7.744444 9.03Transfer to Debenture Redemption Reserve 26.2226.2226.2226.2226.22 26.17Transfer to General Reserve 300.00300.00300.00300.00300.00 225.00Balance carried to Balance Sheet 200.3200.3200.3200.3200.311111 122.55

625.63625.63625.63625.63625.63 453.24

RupeesRupeesRupeesRupeesRupees RupeesEarnings Per Equity Share 16(Face Value of Rs.10 per share)Basic 28.0628.0628.0628.0628.06 25.86Diluted 26.126.126.126.126.199999 24.26

Notes forming part of the accounts 17

As per our attached Report of even date

For Haribhakti & Co.Chartered Accountants

Chetan DesaiPartnerM.No. : 17000

For Price WaterhouseChartered Accountants

Partha GhoshPartnerM.No: 55913

For Chaturvedi & ShahChartered Accountants

C. D. LalaPartnerM.No: 35671

Place: MumbaiDate: 14th April, 2005

For and on behalf of the Board

Anil D. AmbaniChairman and Managing Director

Satish SethExecutive Vice Chairman

K. H. MankadDirector (Finance)

J. P. ChalasaniDirector (Business Development)

Gautam DoshiGen. V. P. MalikS. L. RaoDr. Leena SrivastavaV. R. Galkar

Ramesh ShenoyCompany Secretary

Place: MumbaiDate: 14th April, 2005

Directors}

58

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

As at 3As at 3As at 3As at 3As at 31-3-20051-3-20051-3-20051-3-20051-3-2005 As at 31-3-2004

Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. Crore

SCSCSCSCSCHEDULE 1 - SHARE CHEDULE 1 - SHARE CHEDULE 1 - SHARE CHEDULE 1 - SHARE CHEDULE 1 - SHARE CAPITAPITAPITAPITAPITALALALALAL

(a) A(a) A(a) A(a) A(a) Autututututhorised -horised -horised -horised -horised -

25,00,00,00025,00,00,00025,00,00,00025,00,00,00025,00,00,000 (25,00,00,000) Equity Shares of Rs.10 each 250.00250.00250.00250.00250.00 250.00

80,00,00080,00,00080,00,00080,00,00080,00,000 (80,00,000) Equity Shares of Rs.10 each with differential rights 8.008.008.008.008.00 8.00

1111155,00,00,00055,00,00,00055,00,00,00055,00,00,00055,00,00,000 (5,00,00,000) Cumulative Redeemable

Preference Shares of Rs. 10 each 11111550.00550.00550.00550.00550.00 50.00

4,20,00,0004,20,00,0004,20,00,0004,20,00,0004,20,00,000 (4,20,00,000) Unclassified Shares of Rs.10 each 42.0042.0042.0042.0042.00 42.00

11111850.00850.00850.00850.00850.00 350.00

(b) Issued -(b) Issued -(b) Issued -(b) Issued -(b) Issued -

111115,08,875,08,875,08,875,08,875,08,87,630,630,630,630,630 (14,05,37,812) Equity Shares of Rs.10 each 1111150.8950.8950.8950.8950.89 140.54

4,74,74,74,74,74,374,374,374,374,37,052,052,052,052,052 (4,62,40,697) Equity Shares of Rs.10 each

by way of Global Depository Receipts 4747474747.44.44.44.44.44 46.24

1111198.3398.3398.3398.3398.33 186.78

(c) Subscribed -(c) Subscribed -(c) Subscribed -(c) Subscribed -(c) Subscribed -

111118,55,72,7998,55,72,7998,55,72,7998,55,72,7998,55,72,799 (17,51,54,713) Equity Shares of Rs.10 each fully paid up 1111185.5785.5785.5785.5785.57 175.15

Add: Forfeited Shares - Amounts Originally paid up 0.040.040.040.040.04 0.11

1111185.685.685.685.685.611111 175.26

Of tOf tOf tOf tOf the abohe abohe abohe abohe abovvvvve Eqe Eqe Eqe Eqe Equity Sharuity Sharuity Sharuity Sharuity Shares -es -es -es -es -

(i) 11111,38,400,38,400,38,400,38,400,38,400 Shares were allotted as fully paid up pursuant toa contract without payment being received in cash

(ii) 80,96,07080,96,07080,96,07080,96,07080,96,070 Shares were allotted as fully paid up Bonus Sharesby capitalisation of Rs.1,70,020 from Share PremiumAccount and Rs.8,07,90,680 from General Reserve

(iii) 8,36,7908,36,7908,36,7908,36,7908,36,790 Shares were allotted on conversion of 7% `B' Class

Convertible Debentures

(iv) 56,56,56,56,56,111110000000000 Shares were allotted on conversion of 8.5% `F' Class

Convertible Debentures

(v) 4,59,92,74,59,92,74,59,92,74,59,92,74,59,92,76060606060 Shares were allotted on conversion of 12.5% Fully

Convertible Debentures

(vi) 5,39,875,39,875,39,875,39,875,39,87,736,736,736,736,736 Shares were allotted on conversion of 15% Fully

Convertible Debentures

(vii) 2,60,42,60,42,60,42,60,42,60,411111,650,650,650,650,650 Shares were issued by way of Global Depository

Receipts (GDR) through an international offering in U.S.Dollars.

[Out of which outstanding GDRs as at 31st March,2005 -

8,28,952 (8,28,952)]

(viii) 2,2,2,2,2,111113,95,4023,95,4023,95,4023,95,4023,95,402 Shares were issued by way of GDRs on conversion of Foreign

Currency Convertible Bonds (FCCB) (Refer Note 15)

(ix) 2,64,25,6222,64,25,6222,64,25,6222,64,25,6222,64,25,622 Shares were issued on Preferential allotment

(Refer Note 19)

59

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

As at 3As at 3As at 3As at 3As at 31-3-20051-3-20051-3-20051-3-20051-3-2005 As at 31-3-2004

Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CroreSCHEDULE 2 - RESERVES AND SURPLUSSCHEDULE 2 - RESERVES AND SURPLUSSCHEDULE 2 - RESERVES AND SURPLUSSCHEDULE 2 - RESERVES AND SURPLUSSCHEDULE 2 - RESERVES AND SURPLUS(a)(a)(a)(a)(a) Capital RCapital RCapital RCapital RCapital Reserveserveserveserveserves -es -es -es -es -

1. Capital Redemption Reserve:Balance as per last Balance Sheet 11111111114.344.344.344.344.34 114.34

2. Service Line Contributions:i) Prior to commencement of the repealed

Electricity (Supply) Act,1948 0.050.050.050.050.05 0.05

ii) After the commencement of the repealedElectricity (Supply) Act, 1948Balance as per last Balance Sheet 98.798.798.798.798.711111 94.52Add: Contributions during the year 8.578.578.578.578.57 4.19

111110707070707.28.28.28.28.28 98.71111110707070707.33.33.33.33.33 98.76

3. Sale proceeds of Fractional Equity ShareCertificates and Dividends thereon ----- 0.01

(b)(b)(b)(b)(b) SharSharSharSharShare Pre Pre Pre Pre Premium Aemium Aemium Aemium Aemium Account -ccount -ccount -ccount -ccount -Balance as per last Balance Sheet 2,326.12,326.12,326.12,326.12,326.100000 803.86Add: Premium received on Preferential issue of Equity shares 579.32579.32579.32579.32579.32 1,085.49Add: Premium received on Reissue / Allotment of shares 0.10.10.10.10.133333 -Add: Premium received on conversion of Foreign Currency

Convertible Bonds (FCCB) into GDR 2727272727.96.96.96.96.96 472.122,933.52,933.52,933.52,933.52,933.511111 2,361.47

Less: Global Depositary Receipts (GDR) Issue Expenses ----- 6.50Foreign Currency Convertible Bonds (FCCBs)Issue Expenses ----- 27.03Provision for premium on redemption of FCCBs(Refer Note 15 and 17) (0.53)(0.53)(0.53)(0.53)(0.53) 1.84

2,934.042,934.042,934.042,934.042,934.04 2,326.10(c)(c)(c)(c)(c) RRRRReeeeevvvvvaluation Raluation Raluation Raluation Raluation Reserveserveserveserveserve -e -e -e -e -

On Revaluation of Fixed Assets (Refer Note 12) 752.1752.1752.1752.1752.177777 752.17

(d)(d)(d)(d)(d) SSSSStatuttatuttatuttatuttatutororororory Ry Ry Ry Ry Reserveserveserveserveserves -es -es -es -es -1. Contingencies Reserve:

Balance as per last Balance Sheet 11111111119.099.099.099.099.09 102.59Add: Transfer from Profit and Loss Account 1111177777.2.2.2.2.211111 16.50Less: Transfer to Profit and Loss Account (Refer

Note 10) 79.5779.5779.5779.5779.57 -56.7356.7356.7356.7356.73 119.09

2. Development Reserve Account No.1(Represents Development Rebate Reserve admissibleunder the Income-tax Act) 11111.69.69.69.69.69 1.69

3. Development Reserve Account No.2 (RepresentsInvestment Allowance Reserve admissible under theIncome-tax Act) 111118.978.978.978.978.97 18.97

4. Debt Redemption Reserve:Balance as per last Balance Sheet 111116767676767.38.38.38.38.38 167.38Less: Transfer to Profit and Loss Account 1111165.0865.0865.0865.0865.08 -

(Refer Note 10) 2.302.302.302.302.30 167.38Carried Forward 3,9873,9873,9873,9873,987.57.57.57.57.57 3,598.51

60

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

As at 3As at 3As at 3As at 3As at 31-3-20051-3-20051-3-20051-3-20051-3-2005 As at 31-3-2004

Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. CroreSCHEDULE 2 - RESERVES AND SURPLUS (Contd.)SCHEDULE 2 - RESERVES AND SURPLUS (Contd.)SCHEDULE 2 - RESERVES AND SURPLUS (Contd.)SCHEDULE 2 - RESERVES AND SURPLUS (Contd.)SCHEDULE 2 - RESERVES AND SURPLUS (Contd.)

Brought Forward 3,9873,9873,9873,9873,987.57.57.57.57.57 3,598.51(e)(e)(e)(e)(e) OtOtOtOtOther Rher Rher Rher Rher Reserveserveserveserveserves -es -es -es -es -

1. Debenture Redemption Reserve[Created under the provisions of repealed Electricity(Supply) Act,1948]Balance as per last Balance Sheet 5.75.75.75.75.744444 5.74

Less: Transfer to Profit and Loss Account (Refer Note 10) 5.75.75.75.75.744444 ------ 5.74

2. Debenture Redemption ReserveBalance as per last Balance Sheet 4444411111.1.1.1.1.177777 15.00Add: Transfer from Profit and Loss Account 26.2226.2226.2226.2226.22 26.17

6767676767.39.39.39.39.39 41.17

3. Rural Electrification Scheme Reserve 0.10.10.10.10.111111 0.114. Reserve to augment production facilities 0.040.040.040.040.04 0.045. Deferred Taxation Liability Fund:

[Created under the provisions of repealed Electricity(Supply) Act,1948]Balance as per last Balance Sheet 4.324.324.324.324.32 4.21

Add: Income on earmarked Investments 0.290.290.290.290.29 0.11Less: Transfer to Profit and Loss Account (Refer Note 10) 4.24.24.24.24.211111 -

0.400.400.400.400.40 4.32

6. Reserve for Power Project 1111100.0000.0000.0000.0000.00 100.00

7. Development Reserve Account No. 3 1111140.8840.8840.8840.8840.88 140.88

(f)(f)(f)(f)(f) GenerGenerGenerGenerGeneral Ral Ral Ral Ral Reserveserveserveserveserve -e -e -e -e -Balance as per last Balance Sheet 922.39922.39922.39922.39922.39 791.21Add: Transfer on amalgamation ----- 41.92Add: Transfer from Profit and Loss Account 300.00300.00300.00300.00300.00 225.00

11111,222.39,222.39,222.39,222.39,222.39 1,058.13Less: Transfer to Profit and Loss Account (Refer Note 12) 1111132.8232.8232.8232.8232.82 135.74

11111,089.57,089.57,089.57,089.57,089.57 922.39(g)(g)(g)(g)(g) PrPrPrPrProfofofofofit and Loss Ait and Loss Ait and Loss Ait and Loss Ait and Loss Accountccountccountccountccount 200.3200.3200.3200.3200.311111 122.55

5,586.275,586.275,586.275,586.275,586.27 4,935.71

61

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

As at 3As at 3As at 3As at 3As at 31-3-20051-3-20051-3-20051-3-20051-3-2005 As at 31-3-2004

Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. CroreSCSCSCSCSCHEDULE 3 - SECURED LHEDULE 3 - SECURED LHEDULE 3 - SECURED LHEDULE 3 - SECURED LHEDULE 3 - SECURED LOOOOOANSANSANSANSANS

DebenturDebenturDebenturDebenturDebentures -es -es -es -es -8.34% - 60(60) Non Convertible Debentures of the face value ofRs.1 crore each [Redeemable at par on 13th February 2007 ] 60.0060.0060.0060.0060.00 60.00(Refer Note (a) below)

6.35% - 25,000 (25,000) Non Convertible Debentures ofthe face value of Rs. 1 lakh each [Redeemable at par on 28th July 2013] 250.00250.00250.00250.00250.00 250.00(Refer Note (a) below)

6.70% - 12,500 (12,500) Non Convertible Debentures ofthe face value of Rs. 1 lakh each [Redeemable at par on 19th August 2018] 1111125.0025.0025.0025.0025.00 125.00(Refer Note (a) below)

5.95% - 10,000 (10,000) Non Convertible Debentures ofthe face value of Rs. 1 lakh each [Redeemable at par on 28th July 2013] 1111100.0000.0000.0000.0000.00 100.00(Refer Note (a) below)

5.60% - 15,000 (15,000) Non Convertible Debentures ofthe face value of Rs. 1 lakh each [Redeemable at par on 28th July 2013] 1111150.0050.0050.0050.0050.00 150.00(Refer Note (a) below)

TTTTTerererererm Loan -m Loan -m Loan -m Loan -m Loan -Working Capital Loan from Bank 1111100.0000.0000.0000.0000.00 0.02(Refer Note (b) below)

785.00785.00785.00785.00785.00 685.02

Notes:Security:Security:Security:Security:Security:(a) Non Convertible Debentures are secured on Company's certain fixed assets, present

and future, by way of a first charge, ranking pari passu with the charges createdand / or to be created in favour of the Company's existing and proposed Lenders.

(b) Working capital loan is secured by way of first charge on hypothecated stock intrade, hypothecated book debts and other current assets of Goa Power Station.

As at 3As at 3As at 3As at 3As at 31-3-20051-3-20051-3-20051-3-20051-3-2005 As at 31-3-2004Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. Crore

SCSCSCSCSCHEDULE 4 - UNSECURED LHEDULE 4 - UNSECURED LHEDULE 4 - UNSECURED LHEDULE 4 - UNSECURED LHEDULE 4 - UNSECURED LOOOOOANSANSANSANSANS

Loans -Loans -Loans -Loans -Loans -(i) Working capital facility from a bank in foreign currency * - 1.39(ii) Working capital facility from a bank * 25.0025.0025.0025.0025.00 -(iii) Foreign Currency Convertible Bonds (Refer Note 15 & 17) 855.9855.9855.9855.9855.911111 885.07(iv) External Commercial Borrowing 11111,422.7,422.7,422.7,422.7,422.766666 459.35(v) Commercial Paper * 650.00650.00650.00650.00650.00 -

2,953.672,953.672,953.672,953.672,953.67 1,345.81

* Repayable within next 12 months Rs.675 crore (Rs. 1.39 crore)

62

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63

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

FFFFFace Vace Vace Vace Vace Valuealuealuealuealue As atAs atAs atAs atAs at As atper unitper unitper unitper unitper unit 333331-3-20051-3-20051-3-20051-3-20051-3-2005 31-3-2004

NNNNN o of Uo of Uo of Uo of Uo of Unitsnitsnitsnitsnits Rs.Rs.Rs.Rs.Rs. Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.Crore Rs.CroreSCSCSCSCSCHEDULE 6 - INVESTMENTS (NHEDULE 6 - INVESTMENTS (NHEDULE 6 - INVESTMENTS (NHEDULE 6 - INVESTMENTS (NHEDULE 6 - INVESTMENTS (Non-tron-tron-tron-tron-trade)ade)ade)ade)ade)

A)A)A)A)A) Long TLong TLong TLong TLong Terererererm Invm Invm Invm Invm Investmentsestmentsestmentsestmentsestments

(a)(a)(a)(a)(a) ContingContingContingContingContingencies Rencies Rencies Rencies Rencies Reserveserveserveserveserve Inve Inve Inve Inve Investmentsestmentsestmentsestmentsestments

QUOTED

6.75% Tax Free US -64 Bonds 111119,80,0009,80,0009,80,0009,80,0009,80,000 111110000000000 111119.809.809.809.809.80 43.87

[Market value Rs. 20.73 crore (Rs. 47.61 crore)] (43,87(43,87(43,87(43,87(43,87,639),639),639),639),639)

UTI - Unit Scheme 2002 (Income) ----- 1111100000 ----- 3.03

[Market value Rs.4.65 crore (Rs.4.14 crore)] (49,73,586)(49,73,586)(49,73,586)(49,73,586)(49,73,586)

11% MSEB Tax Free Bonds, 2005* ----- 1111100,00000,00000,00000,00000,000 ----- 5.00

(500)(500)(500)(500)(500)

11.50% Central Government of India, 2011A** 5,32,0005,32,0005,32,0005,32,0005,32,000 111110000000000 6.86.86.86.86.811111 6.815.87% Central Government of India, 2010** 5,00,0005,00,0005,00,0005,00,0005,00,000 111110000000000 5.025.025.025.025.02 5.027.46% Central Government of India, 2017** 5,00,0005,00,0005,00,0005,00,0005,00,000 111110000000000 5.695.695.695.695.69 5.697.40% Central Government of India, 2012** 111116,94,6006,94,6006,94,6006,94,6006,94,600 111110000000000 111119.429.429.429.429.42 19.42* Thinly traded securities

**[Aggregate Market Value Rs. 34.58 crore(Rs.38.03 crore)]

UNQUOTED

13.75% IFCI Regular Income Bonds, 2005 ----- 1111100,00000,00000,00000,00000,000 ----- 2.82(282)(282)(282)(282)(282)

MKVDC Bonds Series 2000/A ----- 1111100,00000,00000,00000,00000,000 ----- 3.00

(300)(300)(300)(300)(300)

UTI - MIP - 1998 (V) ----- 1111100000 ----- 2.00[Repurchase Price Rs. Nil ( Rs.2.00 crore )] (20,00,000)(20,00,000)(20,00,000)(20,00,000)(20,00,000)

56.756.756.756.756.744444 96.66

(b)(b)(b)(b)(b) DefDefDefDefDeferererererrrrrred Ted Ted Ted Ted Taxaxaxaxaxation Liability Fation Liability Fation Liability Fation Liability Fation Liability Fund Invund Invund Invund Invund Investmentsestmentsestmentsestmentsestments

QUOTED

6.75% Tax Free US -64 Bonds ----- 111110000000000 - 3.41

[Market value Rs. Nil (Rs. 3.70 crore)] (3,4(3,4(3,4(3,4(3,411111,,,,,11111111117)7)7)7)7)

Carried Forward 56.756.756.756.756.744444 100.07

64

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

FFFFFace Vace Vace Vace Vace Valuealuealuealuealue As atAs atAs atAs atAs at As atper unitper unitper unitper unitper unit 333331-3-20051-3-20051-3-20051-3-20051-3-2005 31-3-2004

NNNNN o of Uo of Uo of Uo of Uo of Unitsnitsnitsnitsnits Rs.Rs.Rs.Rs.Rs. Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.Crore Rs.CroreSCSCSCSCSCHEDULE 6 - INVESTMENTS (NHEDULE 6 - INVESTMENTS (NHEDULE 6 - INVESTMENTS (NHEDULE 6 - INVESTMENTS (NHEDULE 6 - INVESTMENTS (Non-tron-tron-tron-tron-trade) (Contd.)ade) (Contd.)ade) (Contd.)ade) (Contd.)ade) (Contd.)

Brought Forward 56.756.756.756.756.744444 100.07

(c)(c)(c)(c)(c) OtOtOtOtOthers in Uhers in Uhers in Uhers in Uhers in Unqnqnqnqnquotuotuotuotuoted Eqed Eqed Eqed Eqed Equity Sharuity Sharuity Sharuity Sharuity Shareseseseses

(F(F(F(F(Fullullullullully Py Py Py Py Paid-up, unless otaid-up, unless otaid-up, unless otaid-up, unless otaid-up, unless otherherherherherwise statwise statwise statwise statwise stated)ed)ed)ed)ed)

Reliance Infrastructure Ltd. 11111,02,9,02,9,02,9,02,9,02,911111,700,700,700,700,700 1111100000 111110.290.290.290.290.29 10.29

(Formerly BSES Infrastructure Ltd.)Tamil Nadu Industries CaptivePower Company Ltd. [Rs.5.35 paid up] 2,30,00,0002,30,00,0002,30,00,0002,30,00,0002,30,00,000 1111100000 ----- -

Utility Powertech Ltd. 3,96,0003,96,0003,96,0003,96,0003,96,000 1111100000 0.400.400.400.400.40 0.40

BSES Kerala Power Ltd. 2,42,80,0002,42,80,0002,42,80,0002,42,80,0002,42,80,000 1111100000 24.2824.2824.2824.2824.28 24.28

Western Electricity Supply 53,553,553,553,553,511111,600,600,600,600,600 1111100000 1111111111.77.77.77.77.77 32.75

Company of Orissa Ltd. (WESCO) (1(1(1(1(14,874,874,874,874,87,000),000),000),000),000)

(95,35,400 Equity Shares sold during the year)

North Eastern Electricity Supply 72,50,20072,50,20072,50,20072,50,20072,50,200 1111100000 77777.25.25.25.25.25 20.17

Company of Orissa Ltd. (NESCO) (20(20(20(20(2011111,68,560),68,560),68,560),68,560),68,560)

(1,29,18,360 Equity Shares sold during the year)

Southern Electricity Supply 4444411111,42,700,42,700,42,700,42,700,42,700 1111100000 6.26.26.26.26.211111 17.29

Company of Orissa Ltd. (SOUTHCO) (1(1(1(1(1111115,24,060)5,24,060)5,24,060)5,24,060)5,24,060)

(73,81,360 Equity Shares sold during the year)

BSES Yamuna Power Limited 3,02,60,0003,02,60,0003,02,60,0003,02,60,0003,02,60,000 1111100000 30.2630.2630.2630.2630.26 30.26BSES Rajdhani Power Limited 1111111111,97,97,97,97,97,00,000,00,000,00,000,00,000,00,000 1111100000 11111111119.709.709.709.709.70 119.70Reliance Energy Trading Limited 2,94,5002,94,5002,94,5002,94,5002,94,500 1111100000 0.290.290.290.290.29 0.29(Formerly Reliance Energy Trading Pvt. Limited)

Reliance Energy Transmission Limited 11111,900,900,900,900,900 1111100000 @@@@@ @@ (cost Rs. 19,000/-)

(Formerly Reliance Energy Transmission Pvt. Limited)

Reliance Energy Investments Limited 4,09,7954,09,7954,09,7954,09,7954,09,795 1111100000 0.40.40.40.40.411111 0.41

(Formerly BSES Ventures Pvt. Limited)

Reliance Energy Generation Limited 111113,0003,0003,0003,0003,000 1111100000 0.00.00.00.00.011111 0.01

(8,500)(8,500)(8,500)(8,500)(8,500)

22222111110.870.870.870.870.87 255.85

(d)(d)(d)(d)(d) 2% R2% R2% R2% R2% Redeemable Cumulativedeemable Cumulativedeemable Cumulativedeemable Cumulativedeemable Cumulative Pre Pre Pre Pre Prefefefefeferererererence sharence sharence sharence sharence shareseseseses

Reliance Energy Global Pvt. Limited* 77777,35,000,35,000,35,000,35,000,35,000 1111100000 77777.35.35.35.35.35 -Reliance Energy Management Services Pvt. Limited* 77777,35,000,35,000,35,000,35,000,35,000 1111100000 77777.35.35.35.35.35 -

Powersurfer Interactive (India) Pvt. Limited * 77777,35,000,35,000,35,000,35,000,35,000 1111100000 77777.35.35.35.35.35 -

Reliance Energy Investments Limited * 23,00,00023,00,00023,00,00023,00,00023,00,000 1111100000 23.0023.0023.0023.0023.00 45.0545.0545.0545.0545.05 - -

Carried Forward 33333111112.662.662.662.662.66 355.92

*Registered in the name of the company subsequent to year end

65

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

FFFFFace Vace Vace Vace Vace Valuealuealuealuealue As atAs atAs atAs atAs at As atper unitper unitper unitper unitper unit 333331-3-20051-3-20051-3-20051-3-20051-3-2005 31-3-2004

NNNNN o of Uo of Uo of Uo of Uo of U nitsnitsnitsnitsnits Rs.Rs.Rs.Rs.Rs. Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.Crore Rs.CroreSCSCSCSCSCHEDULE 6 - INVESTMENTS (NHEDULE 6 - INVESTMENTS (NHEDULE 6 - INVESTMENTS (NHEDULE 6 - INVESTMENTS (NHEDULE 6 - INVESTMENTS (Non-tron-tron-tron-tron-trade) ade) ade) ade) ade) (Contd.)Brought Forward 33333111112.662.662.662.662.66 355.92B)B)B)B)B) CurCurCurCurCurrrrrrent Invent Invent Invent Invent Investmentsestmentsestmentsestmentsestments

(Fully paid up,unless otherwise stated)(a)(a)(a)(a)(a) In EqIn EqIn EqIn EqIn Equity Sharuity Sharuity Sharuity Sharuity Shareseseseses

QUOTEDHindustan Lever Ltd. 98,09098,09098,09098,09098,090 11111 11111.30.30.30.30.30 1.51[Cost Rs. 2.29 crore (Rs. 2.29 crore)]

(b)(b)(b)(b)(b) In Assets bacIn Assets bacIn Assets bacIn Assets bacIn Assets backkkkked Ned Ned Ned Ned No to to to to tes - ICICI Bankes - ICICI Bankes - ICICI Bankes - ICICI Bankes - ICICI BankSeries XIII ----- ----- 1,004.00Series XIV ----- ----- 696.60

(c)(c)(c)(c)(c) In NIn NIn NIn NIn Non-Convon-Convon-Convon-Convon-Convererererer tible Debenturtible Debenturtible Debenturtible Debenturtible Debentures -es -es -es -es - UNQUOTED0% Reliance Infrastructure Limited 29,20029,20029,20029,20029,200 1 1 1 1 1,00,000,00,000,00,000,00,000,00,000 292.00292.00292.00292.00292.00 292.00(Formerly BSES Infrastructure Limited)

(d)(d)(d)(d)(d) In NIn NIn NIn NIn Non-Convon-Convon-Convon-Convon-Convererererer tible Debenturtible Debenturtible Debenturtible Debenturtible Debentures -es -es -es -es - QUOTED9% Hindustan Lever Limited (Bonus Debentures) ----- 66666 ----- -[Aggregate Market Value -Rs. Nil (Rs. 0.06 crore)] (98,090)(98,090)(98,090)(98,090)(98,090)

(e)(e)(e)(e)(e) In Mutual FIn Mutual FIn Mutual FIn Mutual FIn Mutual Fund Uund Uund Uund Uund UnitsnitsnitsnitsnitsUNQUOTEDReliance Liquid Fund - Treasury Plan -Retail -Growth Option ----- 1 1 1 1 100000 ----- 1.29(6,28,35,779 units purchased and 6,36,71,205 soldduring the year) (8,35,426)(8,35,426)(8,35,426)(8,35,426)(8,35,426)Reliance Liquid Fund - Treasury Plan -Institutional Option - Growth Option - Growth Plan ----- 1 1 1 1 100000 ----- 120.16(460,69,96,414 units purchased and468,49,81,459 sold during the year) (77777,79,85,045),79,85,045),79,85,045),79,85,045),79,85,045)Reliance Short Term Fund - Retail Plan -Growth Plan ----- 1 1 1 1 100000 ----- 403.45(28,33,67,533 units purchased and65,76,22,035 sold during the year) (37(37(37(37(37,42,54,502),42,54,502),42,54,502),42,54,502),42,54,502)Reliance Liquid Fund - Treasury Plan -Retail Option - Weekly Dividend Option ----- 1111100000 ----- 0.11(3,39,02,565 units purchased and3,40,00,403 sold during the year) (97(97(97(97(97,838),838),838),838),838)Reliance Gilt Securities Fund -Long Term Gilt Plan - Retail Plan -Growth Option 8,75,68,75,68,75,68,75,68,75,611111,07,07,07,07,0744444 1111100000 1111100.0000.0000.0000.0000.00 -(13,63,80,651 units purchased and4,88,19,577sold during the year)Reliance Liquid Fund - Cash Plan -Growth Option - Growth Plan 2,2,2,2,2,111113,54,9273,54,9273,54,9273,54,9273,54,927 1 1 1 1 100000 25.0025.0025.0025.0025.00 -(256,47,96,042 units purchased and254,34,41,113 sold during the year) 1111125.0025.0025.0025.0025.00 525.01

(f)(f)(f)(f)(f) In BondsIn BondsIn BondsIn BondsIn BondsQUOTEDUTI - Unit Scheme 2002 (Income) 49,73,58649,73,58649,73,58649,73,58649,73,586 1111100000 3.033.033.033.033.03 -[Market value Rs.4.65 crore]6.60% Tax free ARS Bonds - UTI 2,04,42,04,42,04,42,04,42,04,41111166666 111110000000000 2.042.042.042.042.04 -[Market value Rs. 2.11 crore]6.75% Tax Free US -64 Bonds 2727272727,48,756,48,756,48,756,48,756,48,756 111110000000000 2727272727.48.48.48.48.48 -[Market value Rs. 28.77 crore]UNQUOTEDMKVDC Bonds Series 2000/A 300300300300300 11111,00,000,00,000,00,000,00,000,00,000 3.003.003.003.003.00 35.5535.5535.5535.5535.55 - -

7777766.566.566.566.566.511111 2,875.04Less: Diminution in the value of Long Term Investment 70.2970.2970.2970.2970.29 -

696.22696.22696.22696.22696.22 2,875.04

MarkMarkMarkMarkMarket Vet Vet Vet Vet Valuealuealuealuealue Book VBook VBook VBook VBook Valuealuealuealuealue Market Value Book ValueAggregate value of Quoted Investments 9797979797.78.78.78.78.78 90.5990.5990.5990.5990.59 95.83 93.76Aggregate value of Unquoted Investments 605.63605.63605.63605.63605.63 2,781.28

696.22696.22696.22696.22696.22 2,875.04

66

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

As atAs atAs atAs atAs at As at333331-3-20051-3-20051-3-20051-3-20051-3-2005 31-3-2004

Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CroreSCSCSCSCSCHEDULE 7 - CURRENT ASSETS, LHEDULE 7 - CURRENT ASSETS, LHEDULE 7 - CURRENT ASSETS, LHEDULE 7 - CURRENT ASSETS, LHEDULE 7 - CURRENT ASSETS, LOOOOOANS AND ADANS AND ADANS AND ADANS AND ADANS AND ADVVVVVANANANANANCESCESCESCESCES(A)(A)(A)(A)(A) CurCurCurCurCurrrrrrent Assetsent Assetsent Assetsent Assetsent Assets

(a) Inventories (as certified by management)Coal and Fuel 95.5995.5995.5995.5995.59 62.93Stores, Spares and Loose Tools 256.1256.1256.1256.1256.188888 39.94Semi-Finished Goods (Elastimold) 11111.32.32.32.32.32 1.30

353.09353.09353.09353.09353.09 104.17(b) Sundry Debtors -

(i) Debts outstanding for a period exceeding six monthsUnsecured -(1) Considered good 53.3553.3553.3553.3553.35 118.57(2) Considered doubtful 34.6434.6434.6434.6434.64 5.97

8787878787.99.99.99.99.99 124.54Less: Provision for Doubtful Debts 34.6434.6434.6434.6434.64 5.97

53.3553.3553.3553.3553.35 118.57(ii) Other Debts-

Unsecured - considered good 877877877877877.6.6.6.6.611111 347.53930.96930.96930.96930.96930.96 466.10

Note:Debtors are net of security deposits of Rs.104.05crore (Rs.110.76 crore) from the relevant parties.Sundry Debtors include Rs. Nil (Rs. 2,852) fromDirectors, since received on due date.[Maximum balance Rs. 2,852 (Rs.33,987)]

(c) Cash and Bank Balances-Cash on hand 11111.43.43.43.43.43 1.80Cheques in hand 111115.555.555.555.555.55 3.66Bank Balances-(i) with Scheduled Banks-

- Current Accounts 3,672.603,672.603,672.603,672.603,672.60 52.75- Deposit Accounts 2,354.482,354.482,354.482,354.482,354.48 800.10

6,0276,0276,0276,0276,027.08.08.08.08.08 852.85(ii) with Other Banks- (Refer Note 25) 11111.3.3.3.3.311111 1.85

6,028.396,028.396,028.396,028.396,028.39 854.706,045.376,045.376,045.376,045.376,045.37 860.16

(d) Other Current AssetsInterest accrued on Investments, Deposits and Loans 24.124.124.124.124.166666 9.68Income-tax Refund Receivable 11111.55.55.55.55.55 41.99Fixed Assets given on lease 0.600.600.600.600.60 22.20Contracts in progress valued at cost plus recognisedprofit less progress billing 36.0536.0536.0536.0536.05 44.59Retentions on contract 78.5578.5578.5578.5578.55 102.05

1111140.940.940.940.940.911111 220.51Carried forward 77777,470.33,470.33,470.33,470.33,470.33 1,650.94

67

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

As atAs atAs atAs atAs at As at333331-3-20051-3-20051-3-20051-3-20051-3-2005 31-3-2004

Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CroreSCSCSCSCSCHEDULE 7 - CURRENT ASSETS, LHEDULE 7 - CURRENT ASSETS, LHEDULE 7 - CURRENT ASSETS, LHEDULE 7 - CURRENT ASSETS, LHEDULE 7 - CURRENT ASSETS, LOOOOOANS AND ADANS AND ADANS AND ADANS AND ADANS AND ADVVVVVANANANANANCES (contd.)CES (contd.)CES (contd.)CES (contd.)CES (contd.)

Brought forward 77777,470.33,470.33,470.33,470.33,470.33 1,650.94(B)(B)(B)(B)(B) Loans and ALoans and ALoans and ALoans and ALoans and Advdvdvdvdvancesancesancesancesances

(Unsecured, considered good, unless otherwise stated)(a) Advances recoverable in cash or in kind or for value

to be received -Considered good 577577577577577.73.73.73.73.73 460.79Considered doubtful 111116.576.576.576.576.57 0.76

594.30594.30594.30594.30594.30 461.55

(b) Loans to Employees 26.2526.2526.2526.2526.25 28.97(c) Advance Tax and Tax deducted at source 11111111118.648.648.648.648.64 100.05(d) Amount receivable from a Non-Banking Finance Company

- Considered doubtful ----- 1.29(e) Deposits -

(i) Inter-Corporate DepositsConsidered good 435.84435.84435.84435.84435.84 291.11Considered doubtful ----- 0.12

435.84435.84435.84435.84435.84 291.23(ii) Deposit with Maharashtra Electricity Regulatory

Commission - (Refer Note 10) ----- 306.00(iii) Other Deposits

Considered good 1111111111.65.65.65.65.65 8.64Considered doubtful 0.280.280.280.280.28 0.43

1111111111.93.93.93.93.93 9.0711111,,,,,1111186.9686.9686.9686.9686.96 1,198.16

Less: Provision for doubtful advances/deposits 111116.856.856.856.856.85 2.6011111,,,,,1111170.170.170.170.170.111111 1,195.56

8,640.448,640.448,640.448,640.448,640.44 2,846.50

68

As atAs atAs atAs atAs at As at333331-3-20051-3-20051-3-20051-3-20051-3-2005 31-3-2004

Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.CrRs.CrRs.CrRs.CrRs.Crorororororeeeee Rs.Crore

SCSCSCSCSCHEDULE 8 - CURRENT LIABILITIES AND PRHEDULE 8 - CURRENT LIABILITIES AND PRHEDULE 8 - CURRENT LIABILITIES AND PRHEDULE 8 - CURRENT LIABILITIES AND PRHEDULE 8 - CURRENT LIABILITIES AND PROOOOOVISIONSVISIONSVISIONSVISIONSVISIONS

(A)(A)(A)(A)(A) CurCurCurCurCurrrrrrent Liabilities:ent Liabilities:ent Liabilities:ent Liabilities:ent Liabilities:

Consumers' Benefit Account 0.270.270.270.270.27 0.27

Sundry Creditors -

Amounts due to Small Scale Industries(Refer Note 14) 8.448.448.448.448.44 0.95

Amounts due to Others 730.65730.65730.65730.65730.65 511.59

739.09739.09739.09739.09739.09 512.54

Security Deposits from Consumers - energy bills 78.8278.8278.8278.8278.82 114.92

- recoverable jobs 8.548.548.548.548.54 6.01

8787878787.36.36.36.36.36 120.93

Deposits and Advances from Consumers - contracts 34.9434.9434.9434.9434.94 95.08

- energy bills 26.126.126.126.126.155555 29.29

6666611111.09.09.09.09.09 124.37

Amount to be deposited with Investor Education and Protection Fund

(to the extent as and when required)

Unclaimed Dividend 2.962.962.962.962.96 2.42

Unclaimed Matured deposits 0.030.030.030.030.03 0.04

2.992.992.992.992.99 2.46

Contracts in progress valued at progress billing less cost plusrecognised profit 464646464611111.1.1.1.1.166666 117.71

Other Liabilities 59.9459.9459.9459.9459.94 100.17

Interest accrued but not due on Loans/Debentures 66.2466.2466.2466.2466.24 34.90

11111,478.1,478.1,478.1,478.1,478.144444 1,013.35

(B)(B)(B)(B)(B) PrPrPrPrProoooovisions:visions:visions:visions:visions:

Provision for Taxation 1111126.2926.2926.2926.2926.29 134.12

Provision for Wealth Tax 0.070.070.070.070.07 0.07

Proposed Final Dividend 25.9825.9825.9825.9825.98 27.65

Corporate Tax on dividends 3,653,653,653,653,65 3.54

Provision for Disputed matters (Refer Note 23) 220.00220.00220.00220.00220.00 220.00

Provision for Leave encashment 33.6233.6233.6233.6233.62 19.93

409.6409.6409.6409.6409.611111 405.31

11111,887,887,887,887,887.75.75.75.75.75 1,418..66

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

69

2004-052004-052004-052004-052004-05 2003-04

Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. CroreSCSCSCSCSCHEDULE 9 - INHEDULE 9 - INHEDULE 9 - INHEDULE 9 - INHEDULE 9 - INCCCCCOME OF EPC, COME OF EPC, COME OF EPC, COME OF EPC, COME OF EPC, CONTRONTRONTRONTRONTR AAAAACTS AND ELCTS AND ELCTS AND ELCTS AND ELCTS AND EL ASTIMOLD DIVISIONSASTIMOLD DIVISIONSASTIMOLD DIVISIONSASTIMOLD DIVISIONSASTIMOLD DIVISIONS

Value of Contracts billed and service charges 11111,243.22,243.22,243.22,243.22,243.22 667.58

Work-in-progress at close 36.0536.0536.0536.0536.05 44.59

Less: Work-in-Progress at commencement 44.6044.6044.6044.6044.60 138.48

Increase/(Decrease) in Work-in-Progress (8.55)(8.55)(8.55)(8.55)(8.55) (93.89)

Net Income from EPC and Contracts 11111,234.67,234.67,234.67,234.67,234.67 573.69

Sale of Elastimold 4.14.14.14.14.166666 8.32

Less: Excise Duty 0.580.580.580.580.58 1.15

3.583.583.583.583.58 7.17

Lease rental 0.10.10.10.10.166666 0.21

Interest on Deposits/Others 0.050.050.050.050.05 0.11

Profit on sale of Assets 0.040.040.040.040.04 0.01

Liabilities no longer payable written back 11111.28.28.28.28.28 1.56

Miscellaneous Income 4.044.044.044.044.04 2.97

11111,243.82,243.82,243.82,243.82,243.82 585.72

SCSCSCSCSCHEDULE 1HEDULE 1HEDULE 1HEDULE 1HEDULE 10 - O0 - O0 - O0 - O0 - OTHER INTHER INTHER INTHER INTHER INCCCCCOMEOMEOMEOMEOME

Meters Rental Income 4.14.14.14.14.100000 6.71

Liabilities no longer payable written back 4.14.14.14.14.188888 13.68

Lease rental 11111.64.64.64.64.64 3.63

Less: Lease Equalisation 0.10.10.10.10.199999 0.15

11111.45.45.45.45.45 3.48

Interest on Income-tax refund 2.422.422.422.422.42 7.52

Insurance Claim received 0.250.250.250.250.25 11.18

Profit on sale of Assets 0.200.200.200.200.20 -

Miscellaneous Income 1111100.2900.2900.2900.2900.29 52.46

[Includes Exchange Fluctuation Gain/ SWAP income

Rs. 74.02 crore (Rs. 26.33 crore)]

Income from Investments

i) Dividends - Current 0.570.570.570.570.57 3.29

ii) Interest - Current 208.79208.79208.79208.79208.79 41.97

iii) Profit on sale of investments (net) 62.4062.4062.4062.4062.40 16.44

272727272711111.7.7.7.7.766666 61.70

Other Income

Interest - On Deposits 62.5262.5262.5262.5262.52 9.88

- Others 5.575.575.575.575.57 9.41

[Tax deducted at Source Rs.14.75 crore(Rs.2.06 crore)] 68.0968.0968.0968.0968.09 19.29

452.7452.7452.7452.7452.744444 176.02

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

70

2004-052004-052004-052004-052004-05 2003-04

Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. Crore

SCSCSCSCSCHEDULE 1HEDULE 1HEDULE 1HEDULE 1HEDULE 11 - 1 - 1 - 1 - 1 - COST OF ELECTRICCOST OF ELECTRICCOST OF ELECTRICCOST OF ELECTRICCOST OF ELECTRICAL ENERAL ENERAL ENERAL ENERAL ENERGY PURGY PURGY PURGY PURGY PURCCCCCHASEDHASEDHASEDHASEDHASED (NET) (NET) (NET) (NET) (NET)

Cost of Electrical Energy purchased 11111,004.1,004.1,004.1,004.1,004.100000 1,033.71

Add: Standby Charges (Refer Note 10) 254.60254.60254.60254.60254.60 -

1 1 1 1 1,258.70,258.70,258.70,258.70,258.70 1,033.71

Less: Transferred from Reserves (As per Schedule 2) 254.60254.60254.60254.60254.60 -

11111,004.1,004.1,004.1,004.1,004.100000 1,033.71

SCSCSCSCSCHEDULE 1HEDULE 1HEDULE 1HEDULE 1HEDULE 12 -2 -2 -2 -2 - GENERGENERGENERGENERGENERAAAAATION, DISTRIBUTION, ADMINISTRTION, DISTRIBUTION, ADMINISTRTION, DISTRIBUTION, ADMINISTRTION, DISTRIBUTION, ADMINISTRTION, DISTRIBUTION, ADMINISTRAAAAATIONTIONTIONTIONTIONAND OAND OAND OAND OAND OTHER EXPENSESTHER EXPENSESTHER EXPENSESTHER EXPENSESTHER EXPENSES

Consumption of Stores and Spares 49.949.949.949.949.911111 19.67

Less: Allocated to Repairs and other Relevant Revenue Accounts 32.5232.5232.5232.5232.52 17.29

1111177777.39.39.39.39.39 2.38

Wind Mill Project Expenses 0.530.530.530.530.53 0.04

Rent 3.593.593.593.593.59 3.51

Repairs and Maintenance:

- Buildings 3.973.973.973.973.97 4.51

- Plant and Machinery and Distribution Systems 111111111111111.92.92.92.92.92 107.97

- Other Assets 4.74.74.74.74.711111 6.35

1111120.6020.6020.6020.6020.60 118.83

Salaries, Wages and Bonus etc. 111116767676767.05.05.05.05.05 145.50

Contribution to Provident Fund and other Funds 111112.52.52.52.52.511111 13.44

1111179.5679.5679.5679.5679.56 158.94

Less: Allocated to Repairs and other Relevant Revenue Accounts 30.8530.8530.8530.8530.85 38.92

1111148.748.748.748.748.711111 120.02

Contribution to Gratuity Fund 2222211111.1.1.1.1.155555 13.80

Workmen and Staff Welfare Expenses 111113.703.703.703.703.70 13.65

Insurance 111110.730.730.730.730.73 9.43

Rates and Taxes 77777.46.46.46.46.46 6.27

Computer and Other Service Charges 0.290.290.290.290.29 0.59

Community Development and Environment Monitoring Expenses 11111.43.43.43.43.43 0.75

Legal Charges 11111.96.96.96.96.96 3.03

Bad Debts [Net of provision written back Rs. Nil (Rs 28.84 crore)] ----- 27.00

Directors' Fees 0.080.080.080.080.08 0.06

Investments written off ----- 12.30

Miscellaneous Expenses 80.5980.5980.5980.5980.59 55.76

[Net of Exchange Fluctuation Profit/(Loss) Rs. Nil (Rs.0.22 crore)]

Remuneration to Auditors (Refer Note 4) 0.520.520.520.520.52 0.50

Loss on Sale/Disposal of Unserviceable Assets (net) 5.15.15.15.15.111111 4.49

Preliminary Expenses written off ----- 0.67

Provision for disputed matters (Refer Note 23) ----- 90.00

Diminution in value of investments 70.570.570.570.570.511111 -

Provision for Doubtful Debts/Advances/Deposits 33.6033.6033.6033.6033.60 -

537537537537537.95.95.95.95.95 483.08

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

71

2004-052004-052004-052004-052004-05 2003-04

Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. Crore

SCSCSCSCSCHEDULE 1HEDULE 1HEDULE 1HEDULE 1HEDULE 13 - EXPENDITURE OF EPC, C3 - EXPENDITURE OF EPC, C3 - EXPENDITURE OF EPC, C3 - EXPENDITURE OF EPC, C3 - EXPENDITURE OF EPC, CONTRONTRONTRONTRONTRAAAAACTS AND ELCTS AND ELCTS AND ELCTS AND ELCTS AND ELASITMOLD DIVISIONSASITMOLD DIVISIONSASITMOLD DIVISIONSASITMOLD DIVISIONSASITMOLD DIVISIONS

(Other than Common Expenditure)

Cost of Materials and Sub Contract Charges 11111,086.28,086.28,086.28,086.28,086.28 467.10

Cost of Elastimold 11111.30.30.30.30.30 3.98

Rent 11111.59.59.59.59.59 1.22

Repairs and Maintenance:

- Buildings 0.540.540.540.540.54 0.24

- Plant and Machinery 11111.1.1.1.1.177777 -

- Other Assets 0.400.400.400.400.40 0.55

Salaries, Wages and Bonus 111112.402.402.402.402.40 14.20

Contribution to Provident Fund and Other Funds 11111.43.43.43.43.43 1.36

Contribution to Gratuity Fund 11111.4.4.4.4.411111 0.83

Workmen and Staff Welfare Expenses 2.882.882.882.882.88 1.82

Insurance 4.084.084.084.084.08 3.08

Rates and Taxes 5.625.625.625.625.62 4.97

Miscellaneous Expenses 32.9032.9032.9032.9032.90 17.24

[Includes Exchange Fluctuation Profit/(Loss) (Rs. 0.22 crore) (Rs.1.05 crore)]

Legal and Professional Charges 0.060.060.060.060.06 0.08

Loss on sale of assets 0.070.070.070.070.07 -

Bad Debts 0.090.090.090.090.09 21.96

Provision for Doubtful Debts 111112.332.332.332.332.33 0.01

11111,,,,,1111164.5564.5564.5564.5564.55 538.64

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

72

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

2004-052004-052004-052004-052004-05 2003-04

Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. Crore

SCSCSCSCSCHEDULE 1HEDULE 1HEDULE 1HEDULE 1HEDULE 14 - INTEREST AND FIN4 - INTEREST AND FIN4 - INTEREST AND FIN4 - INTEREST AND FIN4 - INTEREST AND FINANANANANANCE CCE CCE CCE CCE CHARHARHARHARHARGESGESGESGESGES

Interest and Financing Charges on:

Debentures 43.6043.6043.6043.6043.60 27.67

Term Loans 38.3538.3538.3538.3538.35 17.34

Working capital and other borrowings 2.12.12.12.12.122222 0.29

Security Deposits from Consumers 9.59.59.59.59.511111 10.19

Others 0.10.10.10.10.166666 0.19

Other finance charges 4444411111.08.08.08.08.08 14.25

1111134.8234.8234.8234.8234.82 69.93

SCSCSCSCSCHEDULE 1HEDULE 1HEDULE 1HEDULE 1HEDULE 15 - ST5 - ST5 - ST5 - ST5 - STAAAAATUTTUTTUTTUTTUTORORORORORY RESERVES AND OY RESERVES AND OY RESERVES AND OY RESERVES AND OY RESERVES AND OTHER APPRTHER APPRTHER APPRTHER APPRTHER APPROPRIAOPRIAOPRIAOPRIAOPRIATIONSTIONSTIONSTIONSTIONS

Contingencies Reserve 1111177777.2.2.2.2.211111 16.50

1111177777.2.2.2.2.211111 16.50

SCSCSCSCSCHEDULE 1HEDULE 1HEDULE 1HEDULE 1HEDULE 16 - EARNIN6 - EARNIN6 - EARNIN6 - EARNIN6 - EARNINGS PER EQUITGS PER EQUITGS PER EQUITGS PER EQUITGS PER EQUIT Y SHAREY SHAREY SHAREY SHAREY SHARE

I Profit for Basic and Diluted Earnings Per Share

Net Profit (for Basic) (a) 520.29520.29520.29520.29520.29 374.12

Adjustment

Add: Interest on Foreign Currency Convertible Bonds (FCCB) (net of tax) 0.240.240.240.240.24 16.06

Add: Redemption premium on Foreign Currency Convertible Bonds (FCCB) (net of tax) 111115.435.435.435.435.43 -

Add: Guarantee Charges in respect of Foreign Currency Convertible Bonds (FCCB)(net of tax) ----- 5.67

Net Profit (for Diluted) (b) 535.96535.96535.96535.96535.96 395.85

II Weighted average number of Equity Shares

For Basic Earnings Per Share (c) 111118,53,85,5808,53,85,5808,53,85,5808,53,85,5808,53,85,580 14,46,95,990

Add: Adjustment for conversion / Issue of Shares / Warrants 11111,92,80,7,92,80,7,92,80,7,92,80,7,92,80,71111177777 1,84,44,545

For Diluted Earnings Per Share (d) 20,46,66,29720,46,66,29720,46,66,29720,46,66,29720,46,66,297 16,31,40,535

III Earnings Per Share (Weighted Average) Rs .Rs .Rs .Rs .Rs . Rs.

Basic (a/c) 28.0628.0628.0628.0628.06 25.86

Diluted (b/d) 26.126.126.126.126.199999 24.26

73

SCSCSCSCSCHEDULE 1HEDULE 1HEDULE 1HEDULE 1HEDULE 17 - N7 - N7 - N7 - N7 - NOOOOOTES FORMINTES FORMINTES FORMINTES FORMINTES FORMING PG PG PG PG PARARARARART OF THE AT OF THE AT OF THE AT OF THE AT OF THE ACCCCCCCCCCOUNTSOUNTSOUNTSOUNTSOUNTS

11111..... SignifSignifSignifSignifSignificant Aicant Aicant Aicant Aicant Accounting Pccounting Pccounting Pccounting Pccounting Policies:olicies:olicies:olicies:olicies:

(a) Basis of preparation of financial statements

The financial statements are prepared under historical cost convention, on accrual basis of accounting, and inaccordance with the Sixth Schedule to the Repealed Electricity (Supply) Act, 1948, wherever applicable, as wellas those of Companies Act, 1956 to the extent not inconsistent with the Sixth Schedule to the RepealedElectricity (Supply) Act, 1948 and comply with the Accounting Standards issued by the Institute of CharteredAccountants of India to the extent applicable. The Company has obtained legal opinion in the matter.

Pending notification of Tariff Regulations by the Central Government as well as respective State RegulatoryCommission under the provisions of The Electricity Act, 2003, the provisions of the Sixth Schedule to theRepealed Electricity (Supply) Act, 1948 which is also referred to in tariff approval order for the financial year2004-05 for Mumbai license area, has been applied in preparing accounts of electricity business.

(b) Revenue Recognition Policy:

(i) Sale of Electricity:

Revenue from Power Supply is accounted for on the basis of billing to consumers and is inclusive of FuelAdjustment Charges. Generally all consumers are billed on the basis of recording of consumption of Energyby installed meters. Where meters are stopped or are faulty, supplementary/ad-hoc bills are raised onconsumers, for the period of fault, on the basis of actual average consumption recorded by replaced meters.The amount of such supplementary/ad-hoc bills are treated as revenue in the month in which these bills areraised. Subsequent withdrawals/rectification, if any, of such supplementary/ad-hoc billing, are adjusted againstthe sales.

(ii) EPC and Contracts Activity:In respect of construction contracts, revenue is recognised on the percentage of completion method basedon the stage of completion of a contract upto reporting date.

The stage of completion of a contract is determined on the basis of the proportion that progress billingsraised upto the reporting date bear to the total contract value.

Profit is recognised when more than 30% of the contracted work is completed upto reporting date. Profitproportionate to value of work done is arrived at by deducting cost of work done plus cost estimated bythe Management to complete the work from the agreed contract value, after deducting 15% for contingency.

Contract in progress is valued at cost plus proportionate profit less anticipated loss.

In respect of Operation and Maintenance Contracts, profit proportionate to value of work done or the periodelapsed as the case may be, is recognised.

(iii) Others:Sales of Elastimold are recognised upon despatch to the customer.

Insurance and other claims are recognised as revenue on certainty of receipt on prudent basis.

(iv) Lease Transactions:

(a) For all assets leased up to 31st March, 2001, lease rental income is recognised on the basis of theimplicit rate of return in accordance with the Guidance Note issued by the Institute of CharteredAccountants of India. Income from Lease rentals includes lease equalization adjustment being differencebetween capital recovery included in the lease rentals and the depreciation provided in the books.

(b) Lease transactions in respect of all assets leased after 1st April 2001, are classified as either Finance leaseor Operating lease, as the case may be in accordance with Accounting Standard 19 issued by the Instituteof Chartered Accountants of India and accounting treatment and disclosure given/made as prescribedtherein.

(c) Foreign Currency Transactions:

(i) Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transactions.Gains and losses, if any, at the year-end in respect of monetary assets and monetary liabilities not coveredby the forward contracts are recognised in the Profit and Loss Account. Exchange differences arising onrepayment of liabilities incurred for the purpose of acquiring fixed assets are adjusted with the carryingamount of the respective fixed assets. Premium in respect of forward contracts is accounted over the periodof the contract.

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74

(ii) In respect of Integral Foreign Operations of the Company, its Fixed Assets are translated at the rate on thedate of acquisition, Monetary Assets and Liabilities are translated at the rate on the date of the balancesheet and Income & Expenditure are translated at the average of month-end rates during the year

(iii) Non-Monetary items denominated in foreign currency are stated at the rate prevailing on the date of thetransaction.

(d) Fixed Assets:

(i) The gross block of Fixed Assets is stated at cost of acquisition or construction (except revalued assets),including any cost attributable to bringing the assets to their working condition for their intended use.

(ii) All pre-operative expenditure and trial run expenditure are (net of income) accumulated as capital work-in-progress and is allocated to the relevant fixed assets on a pro-rata basis depending on the prime cost ofthe assets.

(e) Depreciation:

(i) Electricity Business:

Fixed assets are depreciated under the 'Straight line method' upto 95% of the original cost of assets at therates prescribed by the Central Government vide Notification No.S.O.265 (E) dated 27th March, 1994, relatingto License business (which have also been adopted by the MERC in its Tariff approval order for the financialyear 2004-05) and Notification No.S.O.266 (E) dated 29th March, 1994 relating to other electricity businessexcept for Computer, Cable Duct System and Factory Building where the depreciation rates per annum basedon the estimated useful life of the asset are 16.21%, 5.28% and 3.34% respectively.

(ii) Other Activities:

Fixed assets of Other Activities have been depreciated as per 'Reducing Balance Method' at the rates andin the manner prescribed in Schedule XIV of the Companies Act, 1956.

(iii) Leased Assets:

Depreciation on all assets given on lease upto 31st March, 2001 is provided on 'Straight Line method' atthe higher of the rates determined with reference to the primary period of the lease and the rates and inthe manner prescribed in Schedule XIV of the Companies Act 1956 [inserted by the Companies (Amendment)Act, 1988 and Notification GSR No.756E dated 16th December, 1993].

Depreciation on additions/ deletions of assets during the year is provided on pro-rata basis.

(f) Investments:

Long-term investments are stated at cost. In case of long term investments, provision/ write down is madefor permanent diminution in value. Current investments are valued at lower of cost or market value.

(g) Inventories:

Inventories are stated at lower of cost or net realisable value. In case of fuel, stores and spares "cost" meansweighted average cost. Unserviceable/damaged stores and spares are identified and written down based ontechnical evaluation.

(h) Allocation of Indirect Expenses:

(i) Electricity Business:

The allocation to Capital and Revenue is done consistently on the basis of a technical evaluation.

(ii) EPC and Contracts Activities:

Overheads are absorbed by various jobs in proportion to the Prime Cost of each job.

(i) Project and Business Development expenses recoverable/pending adjustment:

Expenditure incurred during development stages of the Company's new projects are carried forward under thehead "Project & Business Development expenses recoverable/pending adjustment" after considering the commercialviability and technical feasibility.

(j) Retirement Benefits:

Company's contribution to provident fund and superannuation fund are charged to the Profit and Loss Account.Gratuity and leave encashment are charged to the Profit and Loss Account on the basis of actuarial valuation.

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

75

(k) Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as partof the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get readyfor intended use. All other borrowing costs are charged to revenue.

(l) Accounting for Taxes on Income:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of theIncome Tax Act, 1961. Deferred tax resulting from "timing differences" between book and taxable profit isaccounted for using the tax rates and laws that have been enacted or substantively enacted as on the balancesheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a virtualcertainty that the assets will be realised in future.

(m) Provisions:

Provisions are recognised when the Company has present legal or constructive obligation, as a result of pastevents, for which it is probable that an outflow of economic benefits will be required to settle the obligationand a reliable estimate can be made for the amount of the obligation.

(n) Impairment of Assets:

If the carrying amount of fixed assets exceeds the recoverable amount on the reporting date, the carryingamount is reduced to the recoverable amount. The recoverable amount is measured as the higher of the netselling price and the value in use determined by the present value of estimated future cash flows.

2.2.2.2.2. (a) Conting(a) Conting(a) Conting(a) Conting(a) Contingent Liabilities:ent Liabilities:ent Liabilities:ent Liabilities:ent Liabilities:

(i) Counter Guarantees given to Banks against guarantees issued by the Banks on behalf of the Companyaggregate to Rs. 428.33 crore (Rs. 383.63 crore).

(ii) Corporate Guarantees are issued in favour of Banks and other parties aggregating Rs. 2.45 crore (Rs.2.45crore) in respect of financing facilities granted to other body corporate.

(iii) Uncalled liability on partly paid shares Rs.10.70 crore (Rs.10.70 crore)

(iv) Claims against the Company not acknowledged as debts and under litigation aggregate Rs. 266.79 crore(Rs.274.18 crore). These include claim from Suppliers aggregating Rs. 251.32 crore, Income tax claimsRs. 10.40 crore and Other claims Rs. 5.07 crore.

(b)(b)(b)(b)(b) Capital CommitmentsCapital CommitmentsCapital CommitmentsCapital CommitmentsCapital Commitments

Estimated amount of contracts remaining unexecuted on Capital Account and not provided for Rs. 313.41crore (Rs.115.68 crore).

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

3.3.3.3.3. Managerial remuneration (excluding contribution to gratuity fund and provision for leave encashment onretirement) paid/payable to directors:

2004-20052004-20052004-20052004-20052004-2005 2003-2004Rs. in CrRs. in CrRs. in CrRs. in CrRs. in Crorororororeeeee Rs.in Crore

Managing / Whole-time dirManaging / Whole-time dirManaging / Whole-time dirManaging / Whole-time dirManaging / Whole-time directectectectectorsorsorsorsors(i) Salary 11111.8.8.8.8.811111 1.47(ii) Perquisites 0.00.00.00.00.011111 0.44(iii) Contribution to Provident and Superannuation Fund 0.240.240.240.240.24 0.19(iv) Commission payable @ 0.35% of Net profit for the year computed below 2.12.12.12.12.199999 0.09

4.254.254.254.254.25 2.19DirDirDirDirDirectectectectectors otors otors otors otors other ther ther ther ther than Managing / Whole time dirhan Managing / Whole time dirhan Managing / Whole time dirhan Managing / Whole time dirhan Managing / Whole time directectectectectorsorsorsorsors(i) Sitting fees and commission payable 0.370.370.370.370.37 0.36

Total: 4.624.624.624.624.62 2.55

76

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

ComComComComComputation of net prputation of net prputation of net prputation of net prputation of net profofofofofit in accorit in accorit in accorit in accorit in accordance witdance witdance witdance witdance with Section 1h Section 1h Section 1h Section 1h Section 198 r98 r98 r98 r98 read witead witead witead witead with section 309(5) of th section 309(5) of th section 309(5) of th section 309(5) of th section 309(5) of the Comhe Comhe Comhe Comhe Companies Apanies Apanies Apanies Apanies Act, 1ct, 1ct, 1ct, 1ct, 19569569569569562004-20052004-20052004-20052004-20052004-2005 2003-2004

Rs. in CrRs. in CrRs. in CrRs. in CrRs. in Crorororororeeeee Rs.in CroreProfit before Taxation 569.64569.64569.64569.64569.64 417.36Add: Provision for Doubtful Debts / Advances (net) 45.9345.9345.9345.9345.93 0.01

Diminution in value of Investments 70.570.570.570.570.511111 -Investments written off ----- 12.30Managerial remuneration 4.624.624.624.624.62 2.55Loss on sale of Fixed Assets 5.15.15.15.15.188888 4.49Amount Written off - Miscellaneous Expenditure / GDR Issue expenses- ----- 0.67

695.88695.88695.88695.88695.88 437.38Less: Profit on sale of Fixed Assets 0.240.240.240.240.24 0.01

Profit on sale of Investments 62.4062.4062.4062.4062.40 16.44Prior period adjustment 0.330.330.330.330.33 0.10Provision for Wealth Tax 0.020.020.020.020.02 0.04Net Profit for the year 632.89632.89632.89632.89632.89 420.79

Note: For the purpose of the above computation, depreciation has been provided in accordance with the policystated in Note 1(e) above.

4. Details of R4. Details of R4. Details of R4. Details of R4. Details of Remuneremuneremuneremuneremuneration tation tation tation tation to Ao Ao Ao Ao Auditudituditudituditors:ors:ors:ors:ors:2004-20052004-20052004-20052004-20052004-2005 2003-2004

Rs. in CrRs. in CrRs. in CrRs. in CrRs. in Crorororororeeeee Rs.in Crore

(a) For Audit Fees 0.20.20.20.20.211111 0.21(b) For Tax Audit 0.050.050.050.050.05 0.05(c) For other Services 0.250.250.250.250.25 0.22(d) For Reimbursement of out-of-pocket expenses 0.00.00.00.00.011111 0.02

0.520.520.520.520.52 0.50

5.5.5.5.5. QuantitativQuantitativQuantitativQuantitativQuantitative Infe Infe Infe Infe Infororororormation:mation:mation:mation:mation:2004-052004-052004-052004-052004-05 2003-04

KWHKWHKWHKWHKWH (million) (million) (million) (million) (million) KWH (million)(a) Generation and Supply of Electricity:

(i) Generation of Energy 59535953595359535953 6027(ii) Purchase of Energy [excluding 4004 (3944) kWh (million)

from Generating Station] 33523352335233523352 3072(iii) Sale of Energy

*(excluding units of Supplementary / ad-hoc bills withdrawn) 7969*7969*7969*7969*7969* 7691

(b) Wind Mill Project:(i) Generation of Energy 2424242424 23(ii) Sale of Energy 2424242424 23

(c) Elastimold Division (In N(In N(In N(In N(In Nos)os)os)os)os)LicensedLicensedLicensedLicensedLicensed InstalledInstalledInstalledInstalledInstalled AAAAActualctualctualctualctualCapacityCapacityCapacityCapacityCapacity CapacityCapacityCapacityCapacityCapacity PrPrPrPrProductionoductionoductionoductionoduction

2004-052004-052004-052004-052004-05 2003-04 2004-052004-052004-052004-052004-05 2003-04 2004-052004-052004-052004-052004-05 2003-04(i) Stress Cones 2500025000250002500025000 25000 1111120002000200020002000 12000 584584584584584 3474(ii) Modules 8000080000800008000080000 80000 3600036000360003600036000 36000 77777495495495495495 9399(iii) Cable head Termination 500500500500500 500 500500500500500 500 252252252252252 233(iv) Terminations and Joints 1111100000000000000000000 10000 1111100000000000000000000 10000 111116565656565 2056

77

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

2004-052004-052004-052004-052004-05 2003-04

Rs. in CrRs. in CrRs. in CrRs. in CrRs. in Crorororororeeeee Rs. in Crore

6. (a) C.I.F. Value of Imports:

(i) Components and Spare parts 11111.35.35.35.35.35 3.53

(ii) Fuel-Coal 89.3689.3689.3689.3689.36 44.40

(iii) Other Materials (including EPC contract materials) 42.9342.9342.9342.9342.93 5.97

(iv) Capital Goods 29.8029.8029.8029.8029.80 2.25

1111163.4463.4463.4463.4463.44 56.15

(b) Expenditure in Foreign Currency:

(i) Professional and Consultation Fees 11111.69.69.69.69.69 4.48

(ii) Interest and Other Charges 111114.784.784.784.784.78 11.80

(iii) Others 2.592.592.592.592.59 17.34

111119.069.069.069.069.06 33.62

(c) Value of components, stores and spare parts consumed:(including fuel consumed)

2004-20052004-20052004-20052004-20052004-2005 2003-2004VVVVValuealuealuealuealue % t% t% t% t% to To To To To Totalotalotalotalotal Value % to Total

Rs.in CrRs.in CrRs.in CrRs.in CrRs.in Crorororororeeeee ConsumConsumConsumConsumConsumptionptionptionptionption Rs.in Crore ConsumptionImported 83.5383.5383.5383.5383.53 111110.850.850.850.850.85 85.58 12.40Indigenous 686.1686.1686.1686.1686.199999 89.189.189.189.189.155555 604.47 87.60

7777769.7269.7269.7269.7269.72 1111100.0000.0000.0000.0000.00 690.05 100.00

(d) The Company has not made any remittance in foreign currency on account of dividends during the year anddoes not have information as to the extent to which remittances in foreign currencies on account of dividendshave been made by or on behalf of non-resident shareholders. The particulars of dividends (after deducting tax)on account of non-resident shareholders are as under:

Final Dividend: 2004-20052004-20052004-20052004-20052004-2005 2003-2004(i) Number of Non-Resident shareholders 2,5342,5342,5342,5342,534 2,869(ii) Number of shares held by them 3,80,573,80,573,80,573,80,573,80,57,463,463,463,463,463 45,99,376(iii) Amount of dividend Rs.5.7Rs.5.7Rs.5.7Rs.5.7Rs.5.71 Cr1 Cr1 Cr1 Cr1 Crorororororeeeee Rs.2.02 Crore

(Dividend f(Dividend f(Dividend f(Dividend f(Dividend for tor tor tor tor thehehehehe (Dividend for theYYYYYear 2003-2004ear 2003-2004ear 2003-2004ear 2003-2004ear 2003-2004 Year 2002-2003

on Eqon Eqon Eqon Eqon Equity Sharuity Sharuity Sharuity Sharuity Shares)es)es)es)es) on Equity Shares)

Interim dividend No. of Non-Resident No. of shares Amount of dividendfor Quarter shareholders held by them (Rs. in Crore)

2004-052004-052004-052004-052004-05 2003-04 2004-052004-052004-052004-052004-05 2003-04 2004-052004-052004-052004-052004-05 2003-041 2,5562,5562,5562,5562,556 2,764 3,873,873,873,873,87,89,20,89,20,89,20,89,20,89,2011111 39,46,730 4.274.274.274.274.27 0.392 2,52,52,52,52,51111100000 2,657 3,873,873,873,873,87,0,0,0,0,011111,042,042,042,042,042 78,34,448 4.264.264.264.264.26 0.783 2,5692,5692,5692,5692,569 2,558 3,88,46,6533,88,46,6533,88,46,6533,88,46,6533,88,46,653 2,53,67,657 4.274.274.274.274.27 2.54

(e) Earnings in Foreign Exchange:2004-052004-052004-052004-052004-05 2003-04

Rs. in CrRs. in CrRs. in CrRs. in CrRs. in Crorororororeeeee Rs. in CroreSale of Material 11111.1.1.1.1.133333 0.64

11111.1.1.1.1.133333 0.64

78

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77777..... RRRRRelatelatelatelatelated Ped Ped Ped Ped Parararararty Disclosurty Disclosurty Disclosurty Disclosurty DisclosureeeeeAs per Accounting Standard-18 issued by the Institute of Chartered Accountants of India, the Company's relatedparties and transactions are disclosed below:(a)(a)(a)(a)(a) PPPPParararararties wherties wherties wherties wherties where contre contre contre contre control exists:ol exists:ol exists:ol exists:ol exists:

(i) Major Shareholders (a) Reliance Industries Ltd (RIL)(b) Reliance Power Ventures Limited (RPVL)(c) Reliance Industrial Investments and Holdings Limited (RIIHL)(d) Reliance Capital Limited (RCL)

(b)(b)(b)(b)(b) OtOtOtOtOther rher rher rher rher relatelatelatelatelated pared pared pared pared parties witties witties witties witties with whom trh whom trh whom trh whom trh whom transactions haansactions haansactions haansactions haansactions havvvvve take take take take taken place during ten place during ten place during ten place during ten place during the yhe yhe yhe yhe yearearearearear

(i) Associates (a) Western Electricity Supply Co. of Orissa Ltd. (WESCO)(upto 18th May 2004)

(b) Southern Electricity Supply Co. of Orissa Ltd. (SOUTHCO)(upto 18th May 2004)

(c) North Eastern Electricity Supply Co. of Orissa Ltd. (NESCO)(upto 18th May 2004)

(d) BSES Yamuna Power Limited (BYPL)(e) BSES Rajdhani Power Limited (BRPL)(f) Tamil Nadu Industries Captive power Company Limited (TICAPCO)(g) Reliance Infrastructure Limited (RINL)(h) Reliance Energy Generation Limited (REGL)

(ii) Key Management Personnel (a) Shri Anil D Ambani(b) Shri Satish Seth(c) Shri K H Mankad(d) Shri K D Kulkarni (up to 19th October 2004)(e) Shri S C Gupta(f) Shri J P Chalasani

(c)(c)(c)(c)(c) Details of trDetails of trDetails of trDetails of trDetails of transactions and closing balance during tansactions and closing balance during tansactions and closing balance during tansactions and closing balance during tansactions and closing balance during the yhe yhe yhe yhe year:ear:ear:ear:ear:

Rs. in CrRs. in CrRs. in CrRs. in CrRs. in CrorororororeeeeeFFFFFor tor tor tor tor the yhe yhe yhe yhe year 2004-2005ear 2004-2005ear 2004-2005ear 2004-2005ear 2004-2005 For the year 2003-2004

MaMaMaMaMajorjorjorjorjor AssociatAssociatAssociatAssociatAssociateseseseses KKKKKeeeeeyyyyy Major Associates KeySharSharSharSharShareholderseholderseholderseholderseholders ManagManagManagManagManagerialerialerialerialerial Shareholders Managerial

PersonnelPersonnelPersonnelPersonnelPersonnel Personnel

Profit & Loss Accoumnt Heads:a) Incomes:

(i) Sale of Electricity 0.00.00.00.00.011111 0.28 0.01(ii) Gross Revenue of EPC,

Contracts and Elastimold 904.59904.59904.59904.59904.59 8.37(iii) Sales of other items on

revenue account 0.80(iv) Rent / Lease Rent earned 0.070.070.070.070.07 1.33(v) Dividend Received 1.28

(vi) Interest earned 3.023.023.023.023.02 1.90(vii) Other Income 13.33

b) Expenses:(i) Purchase of other items on

revenue account 0.00.00.00.00.011111 14.70 11.10(ii) Purchase of other items on

Capital account 0.570.570.570.570.57 0.20(iii) Receiving of Services 111110.680.680.680.680.68 0.880.880.880.880.88 14.08(iv) Rent paid 0.490.490.490.490.49 0.33(v) Interest paid 0.200.200.200.200.20

(vi) Dividend paid 44.6744.6744.6744.6744.67 59.34(vii) Salaries, Commission

& Other benefits 4.254.254.254.254.25 2.19

79

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

Rs. in CrRs. in CrRs. in CrRs. in CrRs. in CrorororororeeeeeFFFFFor tor tor tor tor the yhe yhe yhe yhe year 2004-2005ear 2004-2005ear 2004-2005ear 2004-2005ear 2004-2005 For the year 2003-2004

MaMaMaMaMajorjorjorjorjor AssociatAssociatAssociatAssociatAssociateseseseses KKKKKeeeeeyyyyy Major Associates KeySharSharSharSharShareholderseholderseholderseholderseholders ManagManagManagManagManagerialerialerialerialerial Shareholders Managerial

PersonnelPersonnelPersonnelPersonnelPersonnel Personnel

Balance Sheet Heads: (Closing Balances)

(i) Sundry Creditors / otherliabilities for rendering services 1111111111.97.97.97.97.97 0.680.680.680.680.68 4.53 22.84

(ii) Investment in Equity 1111160.2660.2660.2660.2660.26 230.46

(iii) Investments in Bonds anddebentures 292.00292.00292.00292.00292.00 292.00

(iv) Loans/ICDs Placed (Includingaccrued interest) 11111111110.380.380.380.380.38 183.77

(v) Recoverable Expenses 2.072.072.072.072.07 20.57

(vi) Interest receivable onInvestments and Deposits 0.42

(vii) Sundry debtors 595959595911111.48.48.48.48.48 6.49

Transactions During the Year

(i) Guarantees and Collateralsprovided 11111111113.13.13.13.13.100000 -

(ii) Deposit given to 22222111110.450.450.450.450.45 176.11

(iii) Deposit Returned by 372.1372.1372.1372.1372.100000 17.23

(iv) Recoverable Expenses:-

(i) incurred for related parties 6.246.246.246.246.24 17.93

(ii) incurred by related parties on our behalf 11111.08.08.08.08.08 0.30

(v) Investment in Equity Shares @@@@@(vi) Advance given against Share

Application Money 72.2572.2572.2572.2572.25(vii) Purchase of Investments 11111488.92488.92488.92488.92488.92 45.0545.0545.0545.0545.05

(viii) Sale of Investments 20.2920.2920.2920.2920.29

(ix) Redemption of Investmentsin Debentures 173.45

Amount written back during the year 2.00

@ = Rs. 45,000/-

(d)(d)(d)(d)(d) Details of MatDetails of MatDetails of MatDetails of MatDetails of Material Terial Terial Terial Terial Trrrrransactions witansactions witansactions witansactions witansactions with Rh Rh Rh Rh Relatelatelatelatelated Ped Ped Ped Ped Pararararartytytytyty(a) Guarantees and Collaterals provided to BRPL Rs. 89.60 crore and BYPL Rs. 23.50 crore, Deposit Given to RINL

Rs. 210.45 crore (Rs. 176.11 crore), Deposit Returned by RINL Rs 372.10 crore (Rs. 17.23 crore), RecoverableExpenses Incurred for BRPL Rs. 3.25 crore ( Rs. 5.39 crore), BYPL Rs. 0.89 crore & REGL Rs. 1.77 crore,Recoverable Expenses incurred by REGL Rs. 1.08 crore, Investment in Equity Shares of REGL Rs. @, Advanceagainst Share Application Money paid to REGL Rs. 72.25 crore and Purchase of Investments from RINLRs 45.05 crore, RIL Rs 1,488.92 crore, Sale of Investments RIL Rs 14.99 crore, RCL Rs 5.30 crore.(@ = Rs. 45,000),

(b) Gross Revenue of EPC, Contracts and Elastimold from BRPL Rs. 639.53 crore (Rs. 2.88 crore) and BYPLRs. 264.93 crore, Rent / Lease Rent earned from RINL Rs. 0.05 crore, and Interest earned from RINL Rs. 3.02crore (Rs. 0.18 crore) and WESCO Rs. 0.03 crore (Rs. 0.33 crore)

(c) Purchase of other items on Capital account from RINL Rs. 0.57 crore (Rs. 0.20 crore), Receiving of Servicesfrom RINL Rs. 0.88 crore (Rs. 1.87 crore), RIL Rs 10.68 crore (Rs. 14.70 crore) and Rent paid to RINL Rs. 0.46crore (Rs. 0.33 crore)

(d) Salaries, Commission and Other Benefits paid / payable to Shri Anil D Ambani Rs. 1.97 crore (Rs 0.45 crore),Shri Satish Seth Rs. 1.06 crore (Rs 0.38 crore), Shri K H Mankad Rs. 0.27 crore (Rs 0.32 crore), Shri K DKulkarni Rs. 0.40 crore (Rs. 0.28 crore), Shri S C Gupta Rs. 0.25 crore (Rs. 0.25 crore) and Shri J P ChalasaniRs. 0.25 crore (Rs. 0.28 crore).

(e) Dividend paid to RPVL Rs. 31.63 crore, RIIHL Rs. 6.54 crore and RCL Rs. 5.76 crore, Interest paid to RCLRs. 0.20 crore and Purchase on revenue account from RIL Rs. 0.01 crore (Rs.14.70 crore).

80

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

8.8.8.8.8. Segment wise RSegment wise RSegment wise RSegment wise RSegment wise Reeeeevvvvvenue, Renue, Renue, Renue, Renue, Results and Capital Emesults and Capital Emesults and Capital Emesults and Capital Emesults and Capital EmploploploploployyyyyedededededBasis of Preparation: The Company operates in two Business Segments: Sale of Electrical Energy and EPC &Contracts. Business segments have been identified as reportable Primary Segments in accordance with AccountingStandard-17, issued by the Institute of Chartered Accountants of India, taking into account the organization andinternal reporting structure as well as evaluation of risks and returns from these segments. The inter segmentpricing is effected at cost. Segment Accounting Policies are in line with the accounting policies of the Company.In the case of Electrical Energy, the Company operates a 500 MW Thermal Power Station at Dahanu, a 220 MWcombined cycle power plant at Samalkot, a 48 MW combined cycle power plant at Mormugao, a 7.59 MWWindfarm at Chitradurga and also purchases power from a third party and supplies the power through theCompany's own distribution grid. The Company supplies power to Residential, Industrial, Commercial and OtherConsumers. EPC and Contracts segment render comprehensive value-added services in construction, erection andcommissioning.Geographical Segments: The Company's operations are mainly confined within India. The Company does not havematerial earnings outside India. As such there are no reportable geographical segments.

InfInfInfInfInfororororormation about Business Segments - Primarmation about Business Segments - Primarmation about Business Segments - Primarmation about Business Segments - Primarmation about Business Segments - PrimaryyyyyRs.in crore

PPPPPARARARARARTICULTICULTICULTICULTICUL ARSARSARSARSARS Sale ofSale ofSale ofSale ofSale of EPC andEPC andEPC andEPC andEPC and OtOtOtOtOtherherherherher YYYYYearearearearear Sale of EPC and Other YearElectricalElectricalElectricalElectricalElectrical ContractsContractsContractsContractsContracts OperationsOperationsOperationsOperationsOperations endedendedendedendedended Electrical Contracts Operations ended

EnerEnerEnerEnerEnergygygygygy 333331st1st1st1st1st Energy 31stMarMarMarMarMarccccch 05h 05h 05h 05h 05 March 04

External Sales 2,924.932,924.932,924.932,924.932,924.93 11111,240.25,240.25,240.25,240.25,240.25 3.583.583.583.583.58 4,4,4,4,4,1111168.768.768.768.768.766666 2852.79 577.05 7.14 3,436.98Inter-segment sales 0.00.00.00.00.011111 0.700.700.700.700.70 ----- 0.70.70.70.70.711111 0.01 1.49 0.03 1.53Total Revenue 2,924.942,924.942,924.942,924.942,924.94 11111,240.95,240.95,240.95,240.95,240.95 3.583.583.583.583.58 4,4,4,4,4,1111169.4769.4769.4769.4769.47 2,852.80 578.54 7.17 3,438.51RRRRResultesultesultesultesultSegment Result 279.27279.27279.27279.27279.27 75.8575.8575.8575.8575.85 11111.32.32.32.32.32 356.44356.44356.44356.44356.44 402.30 44.27 1.11 447.68Unallocated Corporate expenses -Directors' Remuneration and sitting fees -4.62 -2.55Provision for disputed matters / Loss onsale of assets / Depreciation / Diminutionin value of investments -7-7-7-7-711111.1.1.1.1.111111 -102.31OperOperOperOperOperating Prating Prating Prating Prating Profofofofofi ti ti ti ti t 280.7280.7280.7280.7280.711111 343.00Interest Income [net of interest Expense] 1111142.9042.9042.9042.9042.90 -3.22Dividend, Profit on Sale / Redemption of Investment 72.072.072.072.072.011111 75.28Exchange Fluctuation 7 7 7 7 74.024.024.024.024.02 2.30Profit before taxation 569.64569.64569.64569.64569.64 417.36OtOtOtOtOther Infher Infher Infher Infher InfororororormationmationmationmationmationSegment Assets 3,695.323,695.323,695.323,695.323,695.32 635.26635.26635.26635.26635.26 3.33.33.33.33.311111 4,333.894,333.894,333.894,333.894,333.89 4,159.17 475.86 3.88 4,638.91Unallocated Corporate Assets 77777,453.92,453.92,453.92,453.92,453.92 4,175.84Total Assets 3,695.323,695.323,695.323,695.323,695.32 635.26635.26635.26635.26635.26 3.33.33.33.33.311111 1111111111,787,787,787,787,787.8.8.8.8.811111 4,159.17 475.86 3.88 8,814.75Segment Liabilities 702.00702.00702.00702.00702.00 436.08436.08436.08436.08436.08 3.003.003.003.003.00 11111,,,,,111114444411111.08.08.08.08.08 467.18 453.87 4.32 925.37Unallocated Corporate Liabilities 4,306.844,306.844,306.844,306.844,306.84 2,778.41

Total Liabilities 702.00702.00702.00702.00702.00 436.08436.08436.08436.08436.08 3.003.003.003.003.00 5,4475,4475,4475,4475,447.92.92.92.92.92 467.18 453.87 4.32 3,703.78Capital Expenditure 111119999911111.89.89.89.89.89 4.864.864.864.864.86 ----- 1111196.7596.7596.7596.7596.75 *161.64 2.21 - 163.85Depreciation 343.72343.72343.72343.72343.72 2.082.082.082.082.08 0.050.050.050.050.05 345.85345.85345.85345.85345.85 317.05 1.60 0.07 318.72Non Cash expenses other than depreciation ----- ----- ----- ----- - - - -

*excludes Rs. 752.17 crore on account of revaluation.

9.9.9.9.9. DefDefDefDefDeferererererrrrrred Ted Ted Ted Ted Taaaaaxxxxxation:ation:ation:ation:ation:Computation of Deferred Tax Asset / Liability: As at 3As at 3As at 3As at 3As at 31-3-20051-3-20051-3-20051-3-20051-3-2005 As at 31-3-2004

Rs. in crRs. in crRs. in crRs. in crRs. in crorororororeeeee Rs. in crore1. Deferred Tax Liability on account of:

Depreciation Difference 288.29288.29288.29288.29288.29 281.20TTTTTotal:otal:otal:otal:otal: 288.29288.29288.29288.29288.29 281.20

2. Deferred tax asset on account of:(i) Unabsorbed Capital Losses 11111.80.80.80.80.80 1.80(ii) Provisions 25.9425.9425.9425.9425.94 42.85

TTTTTotal:otal:otal:otal:otal: 2727272727.7.7.7.7.744444 44.65

NNNNNet Defet Defet Defet Defet Deferererererrrrrred Ted Ted Ted Ted Taaaaax Liabilityx Liabilityx Liabilityx Liabilityx Liability 260.55260.55260.55260.55260.55 236.55

81

111110.0.0.0.0. SSSSStandbtandbtandbtandbtandby Chary Chary Chary Chary Charggggges:es:es:es:es:

a) In the matter of standby charges, MERC had passed an order dated 31st May, 2004 as under:

i) The total liability for the financial years 1998 - 1999 to 2003 - 2004 is determined at Rs. 515.60 crore.Out of Rs. 515.60 crore, an amount of Rs. 261.00 crore had been debited to the Profit & Loss accountup to 31st March, 2004 and balance of Rs. 254.60 crore had been adjusted during the year by drawalfrom the reserves created out of appropriations under The Electricity (Supply) Act, 1948. The Company hasobtained legal opinion in the matter.

ii) The Tata Power Company Limited (TPC) to refund an amount of Rs. 321.13 crore (net of interest payableof Rs. 1.17 crore) to the Company for the said period plus interest at 10% per annum commencing from1st April, 2004 till the date of payment. As an interim order, Hon'ble High Court of Bombay granted stayof payment by TPC, but directed TPC to provide a Bank Guarantee of Rs. 313.93 crore in favour of theHon'ble High Court of Bombay.

b) The Hon'ble High Court of Bombay has disposed off both the petitions, the petition filed by TPC and thepetition filed by the Company, by holding that the issues should be adjudicated within four months of theorder of the Hon'ble High Court of Bombay by the Appellate Tribunal which is likely to be constitutedshortly and in the interregnum, the parties to continue to pay in terms of the interim order subject toadjustments on adjudication.

c) The Company's Special Leave Petitions against the interim and final orders of the Hon'ble High Court ofBombay have been admitted by the Hon'ble Supreme Court.

d) The accounting treatment of drawal of Rs. 254.60 crore, from the reserves created out of the appropriationunder the repealed Electricity (Supply) Act, 1948 to mitigate the financial impact of the additional liability ofstandby charges is in accordance with the directives of MERC order. The Company is governed by sixthschedule of the Repealed Electricity (Supply) Act, 1948 and accordingly provision of the said Act and theOrder have prevailed over the generally accepted accounting practices.

1111111111..... The Company has been legally advised that the Company is considered to be established with the object ofproviding infrastructural facilities and accordingly, Section 372A of the Companies Act, 1956 is not applicable tothe Company.

111112.2.2.2.2. The Company has, based on a valuation made by approved valuers, revalued as at 1st April 2003 the plant andmachinery located at Dahanu. The revaluation of the same has been based on the technological obsolescence,the year of purchase, the maintenance levels and the currency and customs duty variations as applicable. Theresultant appreciation aggregating to Rs. 752.17 crore has been added to the Gross Block of the Fixed Assetsand credited to Revaluation Reserve. Consequent to the revaluation, there is an additional charge for depreciationof Rs.132.82 crore (Rs 135.74 crore) and an equivalent amount has been withdrawn from General Reserve, whichis credited to the Profit and Loss Account based on the legal opinion received by the Company. This has noimpact on the profit for the year.

111113.3.3.3.3. The State Governments approval is awaited for charging off to reserves on account of the diminution in thevalue of Unit Scheme 64 by UTI amounting to Rs. 15.28 crore during the financial year 2002-03 in respect ofContingency Reserve Investment.

111114.4.4.4.4. The names of small-scale industries to which the Company owes sums, which are outstanding for more than 30days at the Balance Sheet date, computed on a division-wise basis, are:

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

82

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

Adrash Cement Products Pvt Ltd Farm Fresh Foods Pvt. Ltd. Mohindra Bedi Electrical Indus.

Anandji Cables G.J.Metal Industries Mukund Industrial Fasteners

Ashoka Udyog Galvano India Pvt. Ltd. Paras Power Engineering Pvt Ltd

Bolton Industries Kapco Electric Pvt. Ltd Polaris Cables& Wires P. Ltd

Chadha Industries Kotsons Private Ltd Polycab Wires Pvt. Ltd

Comet Industries Krishna Electricals Industrial R.M. Industries

Conin Prakriti Instrumentation Kse Electricals Pvt. Ltd Rajindra Concrete Products

Dharam Industries M.K. Engineers & Controls Pvt. Ltd. Rajindra Prestress Concrete

Electrilite Power Pvt. Ltd. Mass Tech Conrols Pvt. Ltd Reliable Electricals

Equip Tech Pvt. Ltd Mohindra Bedi & Sons Pagoda Cables Pvt.Ltd.

Colt Cable Electromech & Transtech Alliance Engg Pvt Ltd

Power & Production Hindustan Vidyut Products Limited Sargir Plastics Pvt Ltd

Shakti Cables Shree Sainath Fibres Pvt Ltd Tilak Raj & Co

Saroj Dhatu Udyog Usha Spun Pipes Vinal Trade Links

Accucel Polytech P. Ltd Mc Machine Anilux Coated Prod.

Shri Ram Industries Press-N.Tech Electricals Voltamp Transformer Pvt Ltd

Ultima Switchgears and Projects Pvt Ltd

The above information and that given in Schedule 8- "Current Liabilities And Provisions" regarding small scaleindustrial undertakings has been determined to the extent such parties have been identified and is based on theinformation available with the Company regarding the status of the Suppliers as defined under the "Interest onDelayed Payment to Small Scale and Ancillary Industrial Undertakings Act 1993". Unpaid interest as on 31stMarch, 2005 Rs. Nil (Rs. Nil). The Terms of credit specify that the payments are due only after 30 days or abovein case of the above mentioned parties.

111115.5.5.5.5. During the year, the Company allotted 11,96,355 (face value Rs.1.20 crore) equity shares underlying the GlobalDepositary Receipts issued upon conversion of Foreign Currency Convertible Bonds (considered as non monetaryliability) of USD 6.06 Million against USD 120 Million (Rs.577.20 crore) 0.5 per cent Credit Enhanced ConvertibleBonds (the 'Bonds') due 2007. The Bonds bear an interest rate of 0.5 per cent per annum and is payable semiannually. The bonds are convertible at any time on or after 25th December 2002 up to 25th December 2007by holders into Global Depositary Receipts each representing three fully paid equity shares with a par value ofRs. 10 each, at an initial conversion price of Rs. 245 per share. The bonds are redeemable, in whole or in part,at the option of the Company at any time on or after 25th October 2005, subject to satisfaction of certainconditions.

111116.6.6.6.6. In terms of the approval of the shareholders obtained at the Extraordinary General Meeting of the Company heldon 22nd March, 2004, the Company has allotted 98,61,228 Warrants (Face value of Rs. 640, paid-up Rs 576) on2nd April 2004, which would give an option to the holders thereof to subscribe for one equity share of theface value of Rs 10 at a price of Rs. 640 (including a premium of Rs.630) per equity share. The holder ofwarrants will be entitled to apply for and be allotted one equity share of the Company per warrant, any timeafter the date of allotment but on or before the expiry of 18 months from the date of allotment.

1111177777..... The Company has issued Senior, unsubordinated and unsecured Zero Coupon Convertible Bonds (considered asnon monetary liability) aggregating USD 178.058 million at par on 23rd March, 2004. The Bonds are redeemableon 24th March, 2009 at a yield to maturity of 2% per annum. These bonds are convertible into GDRs/Shares atthe conversion price of Rs.1,006.92 per share at the option of the bondholders at any time after 23rd April,2004 up to 24th February, 2009. If all the bonds are converted into GDRs/Shares, then the share capital of theCompany will increase by 79,99,984 Equity Shares. The Company has an option to redeem these bonds, in whole,at any time on or after 23rd March, 2007 at its early redemption amount plus accrued premium, provided theshare price at the time of exercise of option by the Company is greater than 130% of the conversion price.

83

111118.8.8.8.8. During the year, the Company annulled the forfeiture of 100 Equity Shares, re-allotted 25,809 forfeited EquityShares and also allotted 200 Equity Shares, allotment of which were kept in abeyance.

111119.9.9.9.9. During the year, the Company allotted 91, 95,622 Equity Shares on a preferential basis to the promoters at aprice of Rs. 640 (including a premium of Rs. 630) per Equity share. Accordingly, the paid-up Equity Share Capitalof the Company stands increased by Rs. 9.20 crore and the Share Premium Account by Rs. 579.32 crore.

20.20.20.20.20. During the year, the Company raised External Commercial Borrowing (ECB) of USD 250 million in two tranchesviz. (i) Tranche I of USD 150 million with a 5 year maturity and (ii) Tranche II of USD 100 million with a 10year maturity and a Put option after five years exercisable by the lenders.

2222211111..... Premium on redemption of Foreign Currency Convertible Bonds, amounting to Rs 16.74 crore is charged to theProfit and Loss Account for the year. The same was adjusted against Share Premium Account up to 31st March,2004. The aggregate amount of such accrual has been included in other liabilities. Had there been no suchchange, the profit for the year would have been higher by Rs 16.74 crore and the balance in the SharePremium Account would have been lower by Rs 16.74 crore.

22.22.22.22.22. During the year, the company has changed the rates of depreciation of Computers, Cable Duct Systems andFactory Building from 12.77%, 3.02% and 3.02% respectively to 16.21%, 5.28% and 3.34% respectively to reflectrealistic economic life of assets. Further the assets have been depreciated upto 95% of the original cost asagainst the earlier practice of depreciating upto 90% of the original cost to reflect realistic assessment ofresidual value. The Company has provided depreciation on additions during the year on pro-rata basis as againstthe earlier policy of providing depreciation only on assets in existence at the beginning of the year to recognizedepreciation from the date of usage. Consequently, the depreciation charged to the profit and loss account ishigher in the current year by Rs 30.35 crore with the corresponding reduction in profit before taxation for theyear.

23.23.23.23.23. Provision for Disputed matters: (a) disputes relating to the rebates and/or tariff matters in respect of electricitybusiness. No further information is given as the matters are sub-judice and may jeopardize the interest of thecompany, and (b) the disputed income tax liability of Rs. 22 crore which may arise on outcome of the appealspreferred by the tax authorities, the quantum whereof will be determined as and when appeals are disposed off.

24.24.24.24.24. DisclosurDisclosurDisclosurDisclosurDisclosure of Loans and Ae of Loans and Ae of Loans and Ae of Loans and Ae of Loans and Advdvdvdvdvances tances tances tances tances to Associato Associato Associato Associato Associates (Pursuant tes (Pursuant tes (Pursuant tes (Pursuant tes (Pursuant to Clause 32 of to Clause 32 of to Clause 32 of to Clause 32 of to Clause 32 of the Listing Ahe Listing Ahe Listing Ahe Listing Ahe Listing Agggggrrrrreement) :eement) :eement) :eement) :eement) :Rs.in crore

SrSrSrSrSr NNNNNamesamesamesamesames AmountAmountAmountAmountAmount Maximum amountMaximum amountMaximum amountMaximum amountMaximum amountNNNNNooooo OutstandingOutstandingOutstandingOutstandingOutstanding OutstandingOutstandingOutstandingOutstandingOutstanding

As atAs atAs atAs atAs at during tduring tduring tduring tduring the yhe yhe yhe yhe yearearearearear3333311111.03.2005.03.2005.03.2005.03.2005.03.2005 31.03.2004 2004-052004-052004-052004-052004-05 2003-04

1. Tamil Nadu Industries Captive PowerCompany Limited 0.620.620.620.620.62 0.52 0.620.620.620.620.62 0.52

2. Western Electricity Supply Co. ofOrissa Ltd. (upto 18th May 2004) ----- 2.43 2.432.432.432.432.43 2.45

3. Southern Electricity Supply Co. ofOrissa Ltd. (upto 18th May 2004) ----- 5.49 5.495.495.495.495.49 7.52

4. North Eastern Electricity Supply Co. ofOrissa Ltd. (upto 18th May 2004) ----- 2.86 2.862.862.862.862.86 4.67

5. BSES Yamuna Power Limited NilNilNilNilNil 2.45 2.532.532.532.532.53 2.456. BSES Rajdhani Power Limited NilNilNilNilNil 6.35 1111111111.37.37.37.37.37 6.357. Reliance Energy Generation Limited 0.350.350.350.350.35 Nil 11111.0.0.0.0.011111 Nil8. Reliance Infrastructure Limited 22.5822.5822.5822.5822.58 183.77 233.3233.3233.3233.3233.311111 183.77

The Company has no subsidiariesAs at the year-end, the Company-(a) has no loans and advances in the nature of loans, wherein there is no repayment schedule or repayment

is beyond seven years and(b) has no loans and advances in the nature of loans to firms/companies in which directors are interested.

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

84

25.25.25.25.25. Balances witBalances witBalances witBalances witBalances with Nh Nh Nh Nh Non-Scon-Scon-Scon-Scon-Scheduled Bankheduled Bankheduled Bankheduled Bankheduled Banks in Curs in Curs in Curs in Curs in Currrrrrent Aent Aent Aent Aent Accounts:ccounts:ccounts:ccounts:ccounts:

Rs. in crore2004-20052004-20052004-20052004-20052004-2005 2003-2004

As atAs atAs atAs atAs at MaximumMaximumMaximumMaximumMaximum As at Maximum31-3-200531-3-200531-3-200531-3-200531-3-2005 BalanceBalanceBalanceBalanceBalance 31-3-2004 Balance

(i) The Air Corporation Employees Co-operative Bank Ltd. 0.020.020.020.020.02 0.290.290.290.290.29 0.04 0.29(ii) The Malad Sahakari Bank Ltd. 0.040.040.040.040.04 0.350.350.350.350.35 0.06 0.44(iii) Hindustan Co-operative Bank Ltd. 0.070.070.070.070.07 0.350.350.350.350.35 0.11 0.41(iv) Chembur Nagrik Sahakari Bank Ltd. 0.090.090.090.090.09 0.790.790.790.790.79 0.15 1.43(v) Veerseva Co-operative Bank Ltd. 0.080.080.080.080.08 0.640.640.640.640.64 0.05 0.89(vi) Shri Arihant Co-operative Bank Ltd. 0.160.160.160.160.16 0.630.630.630.630.63 0.23 1.52(vii) The Sangli Sahakari Bank Ltd. 0.080.080.080.080.08 0.420.420.420.420.42 0.09 0.61(viii) Maratha Sahakari Bank Ltd. 0.10.10.10.10.111111 0.590.590.590.590.59 0.10 0.73(ix) Sahyadri Sahakari Bank Ltd. 0.010.010.010.010.01 0.150.150.150.150.15 0.02 0.17(x) The City Co-operative Bank Ltd. 0.050.050.050.050.05 0.320.320.320.320.32 0.17 0.49(xi) Safe Co-operative Bank Ltd. ----- 0.10.10.10.10.177777 0.17 1.35(xii) Jaoli Sahakari Bank Ltd. 0.140.140.140.140.14 0.440.440.440.440.44 0.14 0.98(xiii) Samasta Nagar Sahakari Bank Ltd. ----- 0.590.590.590.590.59 0.15 0.52(xiv) Konkan Prant Sahakari Bank Ltd. 0.020.020.020.020.02 0.250.250.250.250.25 0.05 0.45(xv) Priyadarshani Mahila Co-Op.Bank Ltd. 0.030.030.030.030.03 0.100.100.100.100.10 - 0.19(xvi) The Vaishya Sahakari Bank Ltd. 0.040.040.040.040.04 0.340.340.340.340.34 0.04 0.71(xvii) The C.K.P.Co-Op.Bank Ltd. 0.010.010.010.010.01 0.080.080.080.080.08 0.02 0.12(xviii) The Satara Sahakari Bank Ltd. 0.030.030.030.030.03 0.380.380.380.380.38 0.07 0.53(xix) Bhutan National Bank 0.10.10.10.10.133333 1.431.431.431.431.43 0.08 0.72(xx) Nepal Bank Ltd. 0.030.030.030.030.03 0.200.200.200.200.20 0.11 0.14(xxi) Excellent (Safe) Co-operative Bank Ltd. 0.10.10.10.10.177777 0.590.590.590.590.59 - -

26.26.26.26.26. Details of movements in Investments:Details of movements in Investments:Details of movements in Investments:Details of movements in Investments:Details of movements in Investments:

NumberNumberNumberNumberNumber NumberNumberNumberNumberNumber

of Unitsof Unitsof Unitsof Unitsof Units of Unitsof Unitsof Unitsof Unitsof Units

Mutual Fund:Mutual Fund:Mutual Fund:Mutual Fund:Mutual Fund: GovernmentGovernmentGovernmentGovernmentGovernment

Securities:Securities:Securities:Securities:Securities:

RMF- Super Cash Plan 2,76,58,66,264.129 Treasury bills 38,85,00,000

RMF- Floating rate fund-growth 1,72,19,81,292.703 10.71% GOI 2016 45,00,000

RMF- Treasury Plan - Institutional - Weekly Dividend 9,16,76,411.450 11.83% GOI 2014 15,00,000

RMF- Cash Plan - Weekly Dividend 9,15,21,036.445 11.99% GOI 2009 45,00,000

RMF- Short Term Fund - Institutional - Growth 60,22,69,107.147 12.29% GOI 2010 10,00,000

RMF- Income fund - Retail - Growth 48,12,944.897 6.05% GOI 2019 11,00,000

RMF- Income fund - Institutional - Growth 19,32,15,246.615 6.17% GOI 2023 30,00,000

RMF- Medium Term Fund - Retail - Growth - Bonus 1,05,85,371.017 6.18% GOI 2005 5,45,35,000

RMF- Monthly Income Plan - Growth 5,25,20,005.347 6.25% GOI 2018 45,00,000

RMF- Monthly Income Plan - Dividend - Reinvestment 1,03,78,623.192 6.30% GOI 2023 20,00,000

RMF - Fixed Term Plan 5,00,00,000.000 6.50% GOI 2004 30,00,000

6.85% GOI 2012 25,00,000

Assets Backed NotesAssets Backed NotesAssets Backed NotesAssets Backed NotesAssets Backed Notes 7.37% GOI 2014 35,00,000

MBLRST: 7.38% GOI 2015 40,00,000

Series XV 1 7.40% GOI 2012 20,00,000

Series XVI 1 8.07% GOI 2017 1,55,00,000

Series XVIII 1 8.35% GOI 2022 45,00,000

Series XIX 1 9.90% GOI 2005 30,00,000

Series XXII 1 FRB 2016 90,00,000

Series XXIII 11111

Series XXIV 11111

85

2727272727..... Assets givAssets givAssets givAssets givAssets given on lease afen on lease afen on lease afen on lease afen on lease af ttttter 1st April, 200er 1st April, 200er 1st April, 200er 1st April, 200er 1st April, 2001:1:1:1:1:

(A)(A)(A)(A)(A) PPPPP ararararar t icularst icularst icularst icularst iculars Rs . in crRs . in crRs . in crRs . in crRs . in crorororororeeeee

TTTTTotalotalotalotalotal NNNNNot latot latot latot latot later ter ter ter ter thanhanhanhanhan LatLatLatLatLater ter ter ter ter than onehan onehan onehan onehan one LatLatLatLatLater ter ter ter ter thanhanhanhanhan

one yone yone yone yone yearearearearear y y y y year but not latear but not latear but not latear but not latear but not latererererer fffff ivivivivive ye ye ye ye yearsearsearsearsearsttttthan fhan fhan fhan fhan fivivivivive ye ye ye ye yearsearsearsearsears

Gross Investment 11111.07.07.07.07.07 ----- ----- -----

Less: Unrealised finance income 0.490.490.490.490.49 ----- ----- -----

Present value of minimum lease rentals 0.580.580.580.580.58 0.220.220.220.220.22 0.360.360.360.360.36 @@@@@

@ = Rs 1,699

(B)(B)(B)(B)(B) GenerGenerGenerGenerGeneral description of lease tal description of lease tal description of lease tal description of lease tal description of lease terererererms:ms:ms:ms:ms:

(i) Lease rentals are charged on the basis of agreed rate of interest.

(ii) Assets are given on lease for seven/ten years.

(iii) Miscellaneous Income includes income from leases of Rs. 1.61 crore.

28.28.28.28.28. In respect of foreign exchange swap / interest transactions, which are linked with LIBOR rates and exchange rateduring the binding period of contract, gain is recognised on accrual basis.

29.29.29.29.29. Figures for the previous year have been regrouped/reclassified wherever necessary to make them comparable tothose for the current year. Figures in bracket indicate Previous Year's figures. '@'- represents figures less thanRs.50,000 which have been shown at actuals in brackets with @.

S CS CS CS CS C HEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED THEDULES ANNEXED TO AND FORMINO AND FORMINO AND FORMINO AND FORMINO AND FORMIN G PG PG PG PG PA RA RA RA RA R T OF THE AT OF THE AT OF THE AT OF THE AT OF THE AC CC CC CC CC COUNTSOUNTSOUNTSOUNTSOUNTS

}

For and on behalf of the Board

Anil D. Ambani Chairman and Managing DirectorSatish Seth Executive Vice ChairmanK. H. Mankad Director (Finance)J. P. Chalasani Director (Business Development)

Gautam DoshiGen. V. P. MalikS. L. Rao DirectorsDr. Leena SrivastavaV. R. Galkar

Ramesh Shenoy Company Secretary

Place : MumbaiDate : 14th April, 2005

86

2004-20052004-20052004-20052004-20052004-2005 2003-2004Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. Crore

A.A.A.A.A. Cash FloCash FloCash FloCash FloCash Flow frw frw frw frw from Operom Operom Operom Operom Operating Aating Aating Aating Aating Activities:ctivities:ctivities:ctivities:ctivities:

Profit before Taxation 569.64569.64569.64569.64569.64 417.36

Adjustments for:

Depreciation (net of transfer from General Reserve) 346.44346.44346.44346.44346.44 318.72

Interest and finance charges 1111134.8234.8234.8234.8234.82 69.93

(Profit)/Loss on sale/disposal of fixed assets (Net) 4.944.944.944.944.94 4.48

Diminution in value of investments 70.570.570.570.570.511111 -

Investment written off ----- 12.30

Provision for doubtful debts/Advances/Deposits 45.9345.9345.9345.9345.93 0.01

Provision for disputed matters ----- 90.00

Provision for leave encashment 111113.693.693.693.693.69 1.60

Preliminary expenses written off/ GDR issue expenses ----- 0.67

Investment income (277 (277 (277 (277 (277.50).50).50).50).50) (64.66)

Exchange fluctuation in respect of financing activities(Net) (27(27(27(27(27.88).88).88).88).88) (1.80)

Swap Income (46.1(46.1(46.1(46.1(46.15)5)5)5)5) -

Profit on sale of investments (62.40) (62.40) (62.40) (62.40) (62.40) (16.44)

Interest on Income tax refund (2.42)(2.42)(2.42)(2.42)(2.42) (7.52)

Lease rentals (1(1(1(1(1.45).45).45).45).45) 1111198.5398.5398.5398.5398.53 (3.48) 403.81

OperOperOperOperOperating Prating Prating Prating Prating Profofofofofit befit befit befit befit befororororore We We We We Working Capital Changorking Capital Changorking Capital Changorking Capital Changorking Capital Changeseseseses 7777768.168.168.168.168.177777 821.17

Adjustments for:

Trade and other receivables (523.1(523.1(523.1(523.1(523.13)3)3)3)3) (11.83)

Inventories (248.92)(248.92)(248.92)(248.92)(248.92) (21.09)

Trade payables 433.68 433.68 433.68 433.68 433.68 (338.37)(338.37)(338.37)(338.37)(338.37) (86.92) (119.84)

429.80429.80429.80429.80429.80 701.33

Income Taxes paid (net of refund) 8.588.588.588.588.58 10.02

Prior period expenses 0.33 0.33 0.33 0.33 0.33 0.10

NNNNNet Cash fret Cash fret Cash fret Cash fret Cash from Operom Operom Operom Operom Operating Aating Aating Aating Aating Activitiesctivitiesctivitiesctivitiesctivities 420.89420.89420.89420.89420.89 691.21

B.B.B.B.B. Cash FloCash FloCash FloCash FloCash Flow frw frw frw frw from Invom Invom Invom Invom Investing Aesting Aesting Aesting Aesting Activities:ctivities:ctivities:ctivities:ctivities:

Purchase/acquisition of fixed assets (305.1(305.1(305.1(305.1(305.13)3)3)3)3) (161.75)

Sale of fixed assets 11111.65.65.65.65.65 4.64

Purchase of investments (1(1(1(1(12727272727.25).25).25).25).25) (2,151.01)

Acquisition of Shares of amalgamated entities ----- (254.17)

Sale/redemption of investments 2,343.00 2,343.00 2,343.00 2,343.00 2,343.00 221.26

Loans and deposits (non-trade) (net) (1(1(1(1(189.66)89.66)89.66)89.66)89.66) (157.55)

Investment income 263.07263.07263.07263.07263.07 61.17

NNNNNet Cash fret Cash fret Cash fret Cash fret Cash from/ (used in) Invom/ (used in) Invom/ (used in) Invom/ (used in) Invom/ (used in) Investing Aesting Aesting Aesting Aesting Activitiesctivitiesctivitiesctivitiesctivities 11111,985.68,985.68,985.68,985.68,985.68 (2,437.41)

CCCCC ASH FLASH FLASH FLASH FLASH FLOOOOO W STW STW STW STW STAAAAATEMENT FOR THE YEAR ENDED 3TEMENT FOR THE YEAR ENDED 3TEMENT FOR THE YEAR ENDED 3TEMENT FOR THE YEAR ENDED 3TEMENT FOR THE YEAR ENDED 31ST MAR1ST MAR1ST MAR1ST MAR1ST MARCCCCC H 2005H 2005H 2005H 2005H 2005

87

2004-20052004-20052004-20052004-20052004-2005 2003-2004Rs. CrRs. CrRs. CrRs. CrRs. Crorororororeeeee Rs. Crore

C.C.C.C.C. Cash FloCash FloCash FloCash FloCash Flow frw frw frw frw from Fom Fom Fom Fom Financing Ainancing Ainancing Ainancing Ainancing Activities:ctivities:ctivities:ctivities:ctivities:

Proceeds of Share Capital including share premium 11111,,,,,1111156.656.656.656.656.611111 1,102.72

Proceeds from borrowings (debentures) - - - - - 625.00

Proceeds from borrowings [secured] 1111100.0000.0000.0000.0000.00 468.53

Repayment of secured loans (0.02)(0.02)(0.02)(0.02)(0.02) (275.66)

Proceeds from borrowings [unsecured] 11111,666.32,666.32,666.32,666.32,666.32 800.19

Repayment of unsecured loans (1(1(1(1(1.39).39).39).39).39) (0.73)

Swap Income 46.146.146.146.146.155555

Repayment of application money on debentures / deposits (0.0 (0.0 (0.0 (0.0 (0.01)1)1)1)1) (0.68)

Deposits and contributions from consumers 111112.942.942.942.942.94 7.49

Interest and finance charges paid including FCCB Issue Expenses (1 (1 (1 (1 (103.47)03.47)03.47)03.47)03.47) (62.25)

Dividends paid on equity shares including tax (1(1(1(1(100.100.100.100.100.13)3)3)3)3) (116.27)

Lease rentals 11111.64.64.64.64.64 3.63

NNNNNet Cash fret Cash fret Cash fret Cash fret Cash from Fom Fom Fom Fom Financing Ainancing Ainancing Ainancing Ainancing Activitiesctivitiesctivitiesctivitiesctivities 2778.64 2778.64 2778.64 2778.64 2778.64 2,551.97

NNNNNet Incret Incret Incret Incret Increase in cash and cash eqease in cash and cash eqease in cash and cash eqease in cash and cash eqease in cash and cash equivuivuivuivuivalents ( A+B+C )alents ( A+B+C )alents ( A+B+C )alents ( A+B+C )alents ( A+B+C ) 5,5,5,5,5,1111185.285.285.285.285.211111 805.77

Cash and cash equivalents as at the commencement of the year 860.1860.1860.1860.1860.166666 51.38

(Opening Balance)

Cash and cash equivalents of the erstwhile BSESAndhra Power Limited and Reliance Salgaocar PowerCompany Limited on amalgamation ----- 3.01

Cash and cash equivalents as at the end of the year 6,045.376,045.376,045.376,045.376,045.37 860.16

(Closing Balance)

NNNNNet ( Decret ( Decret ( Decret ( Decret ( Decrease ) / Increase ) / Increase ) / Increase ) / Increase ) / Increase as disclosed aboease as disclosed aboease as disclosed aboease as disclosed aboease as disclosed abovvvvveeeee 5,5,5,5,5,1111185.285.285.285.285.211111 805.77

CCCCC ASH FLASH FLASH FLASH FLASH FLOOOOO W STW STW STW STW STAAAAATEMENT FOR THE YEAR ENDED 3TEMENT FOR THE YEAR ENDED 3TEMENT FOR THE YEAR ENDED 3TEMENT FOR THE YEAR ENDED 3TEMENT FOR THE YEAR ENDED 31ST MAR1ST MAR1ST MAR1ST MAR1ST MARCCCCC H 2005H 2005H 2005H 2005H 2005

}

For and on behalf of the Board

Anil D. Ambani Chairman and Managing DirectorSatish Seth Executive Vice ChairmanK. H. Mankad Director (Finance)J. P. Chalasani Director (Business Development)

Gautam DoshiGen. V. P. MalikS. L. Rao DirectorsDr. Leena SrivastavaV. R. Galkar

Ramesh Shenoy Company Secretary

Place : MumbaiDate : 14th April, 2005

88

BBBBBALALALALALANANANANANCE SHEET ABSTRCE SHEET ABSTRCE SHEET ABSTRCE SHEET ABSTRCE SHEET ABSTRAAAAACT AND CCT AND CCT AND CCT AND CCT AND COMPOMPOMPOMPOMPANY’S GENERANY’S GENERANY’S GENERANY’S GENERANY’S GENERAL BUSINESS PRAL BUSINESS PRAL BUSINESS PRAL BUSINESS PRAL BUSINESS PROFILEOFILEOFILEOFILEOFILEI.I.I.I.I. RRRRRegistregistregistregistregistration Detailsation Detailsation Detailsation Detailsation Details

Registration No. 0 1 5 3 0 State 0 1 1

Balance Sheet Date 3 1 0 3 2 0 0 5Date Month Year

II.II.II.II.II. Capital rCapital rCapital rCapital rCapital raised during taised during taised during taised during taised during the yhe yhe yhe yhe year ear ear ear ear (Amount in Rs. Thousands)Public Issue Rights Issue

N I L N I L

Bonus Issue Preferential Allotment

N I L 9 1 9 5 6

FCCB Conversion

1 1 9 6 4

III.III.III.III.III. PPPPPosition of Mobilisation and Deploosition of Mobilisation and Deploosition of Mobilisation and Deploosition of Mobilisation and Deploosition of Mobilisation and Deployment of Fyment of Fyment of Fyment of Fyment of Fundsundsundsundsunds (Amounts in Rs. Thousands)

Total Liabilities 1 0 3 6 1 2 2 0 8 Total Assets 1 0 3 6 1 2 2 0 8

SourSourSourSourSources of Fces of Fces of Fces of Fces of Fundsundsundsundsunds Application of FApplication of FApplication of FApplication of FApplication of FundsundsundsundsundsPaid-up Capital 1 8 5 6 0 8 2 Net Fixed Assets 2 9 1 2 3 1 0 4

Share Application Money 5 6 8 0 0 6 7 Investments 6 9 6 2 2 0 2

Reserves & Surplus 5 5 8 6 2 7 4 5 Net Current Assets 6 7 5 2 6 9 0 2

Secured Loans 7 8 5 0 0 0 0 Miscellaneous Expenditure N I L

Unsecured Loans 2 9 5 3 6 6 8 7

Service Line & 2 2 1 1 4 5Security Deposits

Deferred Tax Liability 2 6 0 5 4 8 2

IVIVIVIVIV..... PPPPPerererererfffffororororormance of Commance of Commance of Commance of Commance of Companpanpanpanpany y y y y (Amount in Rs. Thousands)Turnover Total Expenditure

4 5 9 2 5 4 6 1 4 0 2 2 9 0 6 9

Profit Before Tax Profit After Tax

5 6 9 6 3 9 2 5 2 0 1 3 6 2

Earnings Per Share in Rs. Dividend Rate %

2 8 4 7

VVVVV..... Generic NGeneric NGeneric NGeneric NGeneric Names of Thrames of Thrames of Thrames of Thrames of Three Principal Pree Principal Pree Principal Pree Principal Pree Principal Products / Services of Comoducts / Services of Comoducts / Services of Comoducts / Services of Comoducts / Services of Companpanpanpanpanyyyyy(As per monetary terms)

Item Code No. N A

PrPrPrPrProduct Descriptionoduct Descriptionoduct Descriptionoduct Descriptionoduct Description

(i) D I S T R I B U T I O N O F P O W E R

(ii) G E N E R A T I O N O F P O W E R

(iii) C O N T R A C T I N G

S TS TS TS TS TAAAAATEMENT PURSUTEMENT PURSUTEMENT PURSUTEMENT PURSUTEMENT PURSUANT TANT TANT TANT TANT TO PARO PARO PARO PARO PAR T IV OF SCT IV OF SCT IV OF SCT IV OF SCT IV OF SC HEDULE V I THEDULE V I THEDULE V I THEDULE V I THEDULE V I TO THE COMPO THE COMPO THE COMPO THE COMPO THE COMPANIES ACTANIES ACTANIES ACTANIES ACTANIES ACT, 1, 1, 1, 1, 1956956956956956

89

ABT Availability Based Tariff

APDRP Accelerated Power Development and

Reform Programme

AT&C Losses Aggregate Technical & Commercial losses

Bank Rate The rate of interest fixed by RBI for interbanking lending

BRPL BSES Rajdhani Power Limited

BVQI Bureau Veritas Quality International

BYPL BSES Yamuna Power Limited

CAG Comptroller and Auditor General of India

CCPS Combined Cycle Power Station

CDSL Central Depository Services (India) Limited

CEA Central Electricity Authority

CII Confederation of Indian Industry

Ckt Circuit

CPU Council of Power Utilities

Crore 10,000,000

Discoms Distribution Companies

DERC Delhi Electricity Regulatory Commission

DP Depository Participant

DTEPA Dahanu Taluka Environment Protection Authority

DTPS Dahanu Thermal Power Station

DVC Damodar Valley Corporation

ECS Electronic Clearing Service

EHV Extra High Voltage

EPC Engineering, Procurement, Construction

FCCB Foreign Currency Convertible Bonds

FEU Federation of Electricity Undertakings of India

FIIs Foreign Institutional Investors

GDP Gross Domestic Product

GDR Global Depositary Receipt

GI Gas Insulated

GRIDCO Grid Corporation of Orissa Limited

GWhr Giga Watt Hours(= million kilowatt hours)

HR Human Resource

HT High Tension

IBRD International Bank for Reconstruction

& Development

IPP Independent Power Producers

Kcal Kilo Calories

KM Kilometers

KVA Kilovolt

KVA A Kilovolt ampere

KW Kilowatt(==1,000 watts)

KWH A Kilowatt hour

G LG LG LG LG L O S SO S SO S SO S SO S S A RA RA RA RA R YYYYY

Lakh 100,000

LSE London Stock Exchange

LT Low Tension

MBLRST Mortgage Backed Loan Receivables

Securitisation Trust

MERC Maharashtra Electricity Regulatory Commission

MMSCMD Metric Million Standard Cubic Meters per day

MPCB Maharashtra Pollution Control Board

MUs Millions Units

MVA A megavolt ampere

MW A megawatt

NDMC New Delhi Municipal Corporation

NESCO North Eastern Electricity Supply Company

of Orissa Ltd

NRI Non-Resident Indian

NSDL National Securities Depository Limited

NTPC National Thermal Power Corporation Limited

PAT Profit After Tax

PLA Plant Load Availability

PLF Plant Load Factor

PPA Power Purchase Agreement

RIL Reliance Industries Limited

RPVL Reliance Power Ventures Limited

RMF Reliance Mutual Fund

SCADA Supervisory Control and Data Acquisition System

SE Stock Exchange

SEB State Electricity Board

SEBI Securities and Exchange Board of India

SEEPZ Santa Cruz Electronics Export Processing Zone

SOUTHCO Southern Electricity Supply Company

of Orissa Limited

TICAPCO Tamil Nadu Industries Captive Power

Company Limited

Tonnes Metric Tonnes

Unit One kwh; that is, the energy contained in a

current of one thousand amperes flowing under

an electromotiveforce of one volt during

one hour

USAID United States Agency For

International Development

V Volts

WESCO Western Electricity Supply Company

of Orissa Limited

WREB Western Regional Electricity Board

90

This page is intentionally left blank

91

Name and address of equity shareholder {as appearing on the Certificate(s)} Signature (as per specimen with company)

Sole/1st holder(address)

2nd holder

3rd holder

4th holder

Witnesses (two)

Name and Address Signature & Date

1.

2.

NNNNNominee’s nameominee’s nameominee’s nameominee’s nameominee’s name AAAAAgggggeeeee

To be furnished in case the nominee is a minor Date of Birth

Guardian’s Name & Address*

Occupation of 1 Service 2 Business 3 Student 4 Household

Nominee Tick (� ) 5 Professional 6 Farmer 7 Others

Nominee’sAddress

Pin Code

Telephone / Cell No. Fax No.

Email Address STD Code

Specimen signature ofNominee / Guardian(in case nomineeis minor)

NNNNNomination Fomination Fomination Fomination Fomination Fororororormmmmm[To be filled in by individual(s)]

To,Reliance Energy LimitedC/o Karvy Computershare Private Limited46, Avenue 4, Street No.1Banjara HillsHyderabad 500 034

From NNNNName of sharame of sharame of sharame of sharame of shareholder and addreholder and addreholder and addreholder and addreholder and addressessessessess

Folio No.

No. of Shares

I am / wI am / wI am / wI am / wI am / we are are are are are holder(s) of Share holder(s) of Share holder(s) of Share holder(s) of Share holder(s) of Shares of tes of tes of tes of tes of the Comhe Comhe Comhe Comhe Companpanpanpanpany as mentioned aboy as mentioned aboy as mentioned aboy as mentioned aboy as mentioned abovvvvve. I/We. I/We. I/We. I/We. I/We nominate nominate nominate nominate nominate te te te te the fhe fhe fhe fhe folloolloolloolloollowing personwing personwing personwing personwing personin whom all rights of trin whom all rights of trin whom all rights of trin whom all rights of trin whom all rights of transfansfansfansfansfer and/or amount paer and/or amount paer and/or amount paer and/or amount paer and/or amount payyyyyable in rable in rable in rable in rable in respect of Eqespect of Eqespect of Eqespect of Eqespect of Equity Sharuity Sharuity Sharuity Sharuity Shares shall ves shall ves shall ves shall ves shall vest in test in test in test in test in the ehe ehe ehe ehe evvvvvent ofent ofent ofent ofent ofmmmmmy/our deaty/our deaty/our deaty/our deaty/our death.h.h.h.h.

* To be filled in case nominee is a minor

Kindly take the aforesaid details on record.

Thanking you, Date:Yours faithfully,

92

INSTRUCTIONS :INSTRUCTIONS :INSTRUCTIONS :INSTRUCTIONS :INSTRUCTIONS :

1. Please read the instructions given below very carefully and follow the same to the letter. If the form is notfilled as per instructions, the same will be rejected.

2. The nomination can be made by individuals only. This facility is not available to non-individuals including society,trust, body corporate, partnership firm, Karta of Hindu Undivided Family and holders of power of attorney. Ifthe Shares are held jointly all joint holders must sign (as per the specimen registered with the Company) thenomination form.

3. A minor can be nominated by a holder of Shares and in that event the name and address of the Guardianshould be given by the holder.

4. The nominee can not be a trust, society, body corporate, partnership firm, Karta of Hindu Undivided Family, ora power of attorney holder. A non-resident Indian can be a nominee on repatriable basis.

5. Transfer of Shares in favour of a nominee shall be a valid discharge by the Company against the legal heir(s).

6. Only one person can be nominated for a given folio.

7. Details of all holders in a folio need to be filled in, else the request will be rejected.

8. The nomination will be registered only when it is complete in all respects including the signature of (a) allregistered holders (as per specimen lodged with the Company) and (b) the nominee.

9. This nomination will stand rescinded whenever the Shares in the given folio are entirely transferred ordematerialised.

10. Upon receipt of a duly executed nomination form, the Registrar and Transfer Agent of the Company will registerthe form and allot a registration number. The registration number and folio No. should be quoted by thenominee in all future correspondence.

11. The nomination can be varied or cancelled by executing fresh nomination form.

12. The Company will not entertain any claim other than that of a registered nominee, unless so directed by anycompetent court.

13. The intimation regarding nomination / nomination form should be filed in duplicate with the Registrar andTransfer Agents of the Company who will return one copy thereof to the Shareholders.

14. For shares held in dematerialised mode, nomination is required to be filed with the Depository Participant intheir prescribed form.

FOR OFFICE USE ONLY

Nomination Registration Number

Date of Registration

Checked by (Name and Signature)

93

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ATTENDANCE SLIP

Reliance Energy LimitedRegistered Office: Reliance Energy Centre, Santa Cruz (E), Mumbai 400 055.

PLEASE FILL ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING VENUE.Joint Shareholders may obtain additional Attendance Slip on request.

DP. Id* Regd. Folio No.

Client Id*

NAME AND ADDRESS OF THE SHAREHOLDER

No. of Share(s) held:

I hereby record my presence at the 76TH ANNUAL GENERAL MEETING of the Company held on Wednesday, the 8th June,

2005 at 11.00 a.m. at Shri Bhaidas Maganlal Sabhagriha, U-1 Juhu Development Scheme, Vile Parle (West), Mumbai 400 056

Signature of the Shareholder or proxy

* Applicable for investors holding shares in electronic form.

....................................................................................... TEAR HERE.................................................................................................

PROXY FORM

Reliance Energy LimitedRegistered Office: Reliance Energy Centre, Santa Cruz (E), Mumbai 400 055.

DP. Id* Regd. Folio No.

Client Id*

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

............................................................................................................................. being a member/members of Reliance Energy

Limited hereby appoint ...........................................................................................................................................................................

of ........................................................................................................................................................................................ or failing him

............................................................................................................ of .................................................................................................

as my/our proxy to vote for me/us and on my/our behalf at the 76TH ANNUAL GENERAL MEETING to be held on Wednes-

day, the 8th June, 2005 at 11.00 a.m. or at any adjournment thereof.

Signed this ......................................... day of ................................................ 2005.

* Applicable for investors holding shares in electronic form.

Note: The Proxy in order to be effective should be duly stamped, completed and signed and must be deposited at theRegistered Office of the Company not less than 48 hours before the time for holding the aforesaid meeting. The Proxy need notbe a member of the Company.

Affix a 15

paise

Revenue

Stamp

94

95

N ON ON ON ON O T E ST E ST E ST E ST E S

96

N ON ON ON ON O T E ST E ST E ST E ST E S