DIRECTORS' REPORT

Dear Members,

Your Directors are pleased to present the 39th Annual Report on the performance of your Company along with audited financial statements, Auditors' Report, Report of Secretarial Auditor and review of financial statements by the Comptroller and Auditor General of India for the financial year ended 31st March, 2015.

2. DIVIDEND

Your Directors have recommended a final dividend of Rs. 0.60 per equity share (excluding dividend tax) for the financial year 2014-15. The above amount is inclusive of an interim dividend of Rs. 0.20 per equity share paid in February, 2015. The final dividend shall be paid after your approval at the forthcoming Annual General Meeting. On approval, the total dividend payout for the year will be 31.27% of profit after tax. Further, the Board of Directors have transferred Rs. 7,500 crore to general reserve of the Company.

3. POWER GENERATION

With the commercial operation of Unit IV (130 MW) of Parbati-III Power Station on 6th June, 2014, the installed capacity of your Company has increased to 4961.20 MW during the financial year 2014-15.

It is a matter of pleasure to inform that your Company has achieved highest ever annual generation of 22038 MUs with 77.3% Plant Availability Factor (PAF) against the target for excellent MOU of 21800 MUs with 76.4% PAF through its 18 power stations. Salal, Uri-I and Sewa-II Power Stations have generated their individual highest annual generation of 3492 MU, 3077 MU and 594 MU respectively.

Uri-II Power Station (240 MW) was under complete shutdown since 20th November, 2014 due to major fire. All the four units of the power station have now been restored. In-spite of above setback, the power station had achieved its Annual Design Energy (1124 MUs) and Normative Annual Plant Availability Factor (55%) during 2014-15. Further, consequent upon sudden increase in water level on 28.06.2015, Chutak Power Station, 44 MW (4 X 11 MW) was under complete shutdown. Mechanical run of one of the units was successfully carried out on 24th July, 2015. Efforts are being made to restore the unit at earliest.

Baira Siul Power Station (180 MW) is completing 35 years of its commercial operation in 2016-17. DPR for renovation, modernization for extension of the life of the power station has been approved by the Board of Directors. The proposal has been submitted to Central Electricity Authority and Central Electricity Regulatory Commission respectively for their vetting and approval.

4. COMMERCIAL PERFORMANCE

Your Company's commercial performance during the year 2014-15 was as under:

4.1 Billing and Realization

The sales realization during the year was Rs. 5883.32 crore against the billing of Rs. 6676 crore.  As on 31st March, 2015, the outstanding dues pending for more than 60 days were of Rs. 1564 crore. Out of the above, Rs. 1290 crore pertains to PDD, J&K and Rs. 203 crore to BSES Rajdhani Power Limited & BSES Yamuna Power Limited. Your Company has made all out efforts to recover the outstanding dues, including regulation of power supply of defaulting beneficiaries.

Most of the beneficiary states are now liquidating their dues except Power Development Department (J&K), BSES Rajdhani Power Limited and BSES Yamuna Power Limited.

4.2 Tariff Regulation

Central Electricity Regulatory Commission (CERC) has issued new regulation for fixation of tariff viz. CERC (terms & conditions of tariff) Regulation, 2014 on 21.02.2014, applicable for the period 2014-19. NHPC has submitted new tariff petitions for the period 2014-19 (including truing up petitions) for its seventeen power stations within stipulated time period.

Parbati - III Power Station has been commissioned on 06.06.2014. The provisional tariff order for Parbati - III Power Station has been issued by CERC on 25.06.2014.

Tariff orders for the Teesta Low Dam Project - III and Chamera - III Power Stations have also been issued by CERC vide orders dated 22.01.2015 and 24.03.2015 respectively.

5. CAPITAL STRUCTURE AND NET WORTH

Your Company's paid-up capital and net worth as on 31.03.2015 was Rs.11,070.67 crore and Rs. 28,286.39 crore respectively.

6. STATUS OF ONGOING PROJECTS

Your Company is presently engaged in the active construction of the following Hydroelectric Projects:

Notes:

1. Dibang Multipurpose HE Project has been accorded environmental clearance by Ministry of Environment, Forest and Climate Change on 19.05.2015 with reduction in dam height by 10 meter. The installed capacity due to reduction in dam height is likely to be 2880 MW.

2. Bundelkhand Saur Urja Limited was incorporated as a Joint Venture Company between NHPC Limited and UPNEDA (Uttar Pradesh New and Renewable Energy Development Agency) on 2nd February, 2015.

3. Pakal Dul HE Project (1000 MW) has been sanctioned by the Government of India, but major works are yet to be awarded by M/s Chenab Valley Power Projects Pvt. Limited.

4. Earlier capacities of Kiru and Kwar HE Projects were envisaged as 600 MW and 520 MW respectively. Presently, detailed project reports of Kiru and Kwar HE Projects are under appraisal by Central Electricity Authority for 624 MW & 540 MW respectively.

5. Project to be executed through Joint Venture between NHPC and Druk Green Power Corporation (Bhutanese PSU).

Besides the above projects, two projects viz. Kotlibhel Stage-1B (320 MW) and Kotlibhel Stage II (530 MW) in Uttarakhand were under clearance. Environmental clearance of Kotlibhel-1B has been withdrawn by Ministry of Environment, Forest and Climate Change (MoEF&CC). NHPC has filed a civil appeal before Hon'ble Supreme Court. Further, MoEF&CC has also declined permission for diversion of forest land for the construction of KB-1B and KB-II HE Projects. These two projects are also included in the list of 24 projects, which are under review by Hon'ble Supreme Court.

The Board of Directors of your Company has accorded its approval for discussions with North Eastern Electric Power Corporation Limited (NEEPCO) and thereafter jointly by NHPC & NEEPCO with Govt. of Arunachal Pradesh regarding Siang

Upper Stage-I (6000 MW) and Siang Upper Stage-II (3750 MW) Hydro Electric Projects in Arunachal Pradesh. NEEPCO has already signed an agreement for execution of Siang Upper Stage-II HE Project with Government of Arunachal Pradesh.

We are pleased to inform that your Company has signed an agreement with Government of West Bengal and West Bengal State Electricity Distribution Company Ltd. for development of four hydroelectric projects of total estimated capacity of 293 MW in Teesta basin. These four projects are Teesta Low Dam-V, Teesta Low Dam I & II combined, Teesta Intermediate Stage and Rammam Stage-I located in District Darjeeling of West Bengal. These projects shall be developed on Build, Own, Operate and Maintain (BOOM) basis by NHPC Ltd.

DIVERSIFICATION

Your Company is diversifying its activities from hydropower to other non-conventional sources of energy viz. Wind and Solar. The activities of the Company for establishment of such projects are as under:

WIND POWER PROJECTS

Your Company has signed a Memorandum of Understanding with Government of Kerala for the development of 82 MW grid interactive wind energy project in Palakkad District on BOOT (Build, Own, Operate and Transfer) basis.

In addition to above, the Board has approved the proposal for the award of EPC contract for the development of 50 MW wind power project in the Jaisalmer District, Rajasthan along with its comprehensive operation & maintenance for 10 years to M/s Inox Wind Limited.

SOLAR POWER PROJECTS

In pursuit of diversification and in line with the policies of the Government of India, your Company plans to foray into development of solar power. Your Company has signed an agreement with Kerala State Electricity Board for development of solar power projects in the State of Kerala. As per the agreement, Company shall in first phase take up implementation of 50 MW grid linked solar power project at West Kallada Grama Panchayat in Kollam District. Your Company has also incorporated a subsidiary company i.e. Bundelkhand Saur Urja Limited with UPNEDA (Uttar Pradesh New and Renewable Energy Development Agency) to implement a 50 MW solar power project at Village Parason, (Tehsil-Kalpi), District-Jalaun,

Uttar Pradesh.

9. RURAL ELECTRIFICATION PROJECTS UNDER RAJIV GANDHI GRAMIN VIDYUTIKARAN YOJNA (RGGVY)

NHPC is implementing rural electrification projects under Rajiv Gandhi Gramin Vidyutikaran Yojna (RGGVY) in 27 districts spread over 5 States viz. West Bengal, Bihar, Jammu & Kashmir, Chhattisgarh and Odisha at an estimated cost of Rs. 2844 crore. The scope of work includes electrification of 9,310 un-electrified/de-electrified villages, 19,882 partially electrified villages and service connections to 20.74 lakh Below Poverty Line (BPL) households. Out of the above, 9074 un-electrified/de-electrified villages, 18854 partially electrified villages and 16.30 lakh BPL connections are found do-able, as the remaining villages and BPL households are under hindrances due to various reasons which are beyond the control of your Company.

Your Company has completed electrification of 9073 un-electrified/de-electrified villages, 18825 partially electrified villages and provided service connections to 16.30 lakh BPL households till 31st March, 2015 (as per latest closure report submitted  to State Govt.).

10. RURAL ROADS PROJECT

Construction of rural roads in six districts of Bihar under the Pradhan Mantri Gram Sadak Yojna (PMGSY) is being carried out by your Company pursuant to an MOU with the Ministry of Rural Development, Government of India and the Government of Bihar. These roads will also be maintained by NHPC for five years after their construction.

Construction contracts for 758 roads of 3,228.82 Km length having cost of Rs. 1,725.65 crore were awarded to NHPC for execution. 747 roads of 3,208 Km length have been completed till the end of financial year 2014-15.

11. CONSULTANCY SERVICES

NHPC is providing consultancy services in various fields of hydro power viz. river basin studies, survey works, design and engineering, geological studies, geotechnical studies, hydraulic transient studies, hydrological studies, contract management, construction management, equipment planning, underground construction, testing, commissioning, operation & maintenance etc. to leading global organizations. Major consultancy assignments are from Central and State Government agencies in India and other countries viz. Bhutan and Ethiopia.

12. GLOBAL INITIATIVES

Under the action plan on India-Bhutan cooperation for the development of 10,000 MW hydropower by the year 2020, NHPC was entrusted with the work for preparation of DPRs of Chamkharchhu-I H.E. Project (770 MW) and preparation of PFRs of Kuri Gongri Reservoir Projects in Bhutan. The final DPR for Chamkharchhu-I HE Project submitted to Royal Government of Bhutan/Government of India in March, 2015.

Design & engineering consultancy services are also being provided to Mangdechhu Hydroelectric Project Authority (MHPA) for implementation of Mangdechhu Hydroelectric Project (720 MW) in Bhutan.

NHPC is also engaged with Ethiopia Electric Power Company (EEPCO) for a management consultancy assignment in Consortium with Power Grid Corporation of India Limited (lead partner) and BSES Rajdhani Power Limited.

13. FINANCING OF NEW PROJECTS

As per guidelines issued by CERC for the purpose of tariff fixation, the financing of a project is to be considered in 70:30 debt equity ratio.

Your Directors are of the opinion that available internal accruals will be sufficient to finance the equity component for new projects. The Company is exploring domestic as well as international borrowing options including overseas development assistance provided by bilateral agencies, to mobilize required debt for the planned capacity expansion programme.

Your Company is well positioned to raise the required borrowings with its strong credit rating which is at par with sovereign rating.

14. INFORMATION TECHNOLOGY AND COMMUNICATION

NHPC has very elaborated information technology and communication infrastructure. All its sites are now connected with the corporate office through multimode, fail-safe communication links using MPLS-VPN/VSAT-Ku band/broadband technologies. NHPC has presently co-located its key servers at TIER-III data centers of National Informatics Centre Service Incorporated (NICSI) at New Delhi and BSNL at Faridabad. Disaster Recovery (DR) site is also operational at NHPC office at Kolkata. IT & cyber security policy is in place to manage the Information Technology (IT) system to ensure optimum and secure utilization of the assets owned by NHPC.

All key business functions viz. finance, human resource, procurement & contracts, inventory, project management, power plant operation and maintenance, energy sales and accounting, quality assurance etc. have been implemented in the IFS ERP System.

As per Government of India directives, the procurement process through e- procurement (electronic tender) system is operational in the Company.

15. TRAINING AND HUMAN RESOURCE DEVELOPMENT

The fast changing economic scenario and technological innovations are creating an increasingly competitive market environment. Your Company consistently evaluates the training needs of its employees to keep them updated with latest changes, to improve their productivity and work efficiency.

The training programmes are designed to develop and groom internal talent through multi disciplinary programmes. Besides conducting in-house workshops, the Company also organizes training programmes in collaboration with reputed professional / educational institutes like, IIMs /XLRIs / IITs etc. to facilitate advance management and leadership development programmes for its employees.

16. INDUSTRIAL RELATIONS

During the year, industrial relations remained cordial and harmonious at all NHPC projects/power stations/units.

17. RESETTLEMENT AND REHABILITATION

NHPC has its own Resettlement & Rehabilitation (R&R) Policy, 2007 in line with the National Rehabilitation and Resettlement Policy, 2007 (NRRP) and provides certain additional benefits over and above those proposed in NRRP.

The policy aims to address issues like loss of land, houses, other resources and means of livelihood to Project Affected Families (PAFs), who are likely to be affected due to construction of the project. Major emphasis is laid on economic sustenance of PAFs. As per NHPC's R & R Policy, 0.75% of the hard cost of the project is to be earmarked towards Community and Social Development Plan (CSDP) for implementation in the resettlement zone and affected areas.

However, in view of the new legislation i.e. Right to Fair Compensation & Transparency in Land Acquisition, Resettlement & Rehabilitation Act, 2013, which came in force from 1st January, 2014, both R&R and land acquisition for NHPC projects shall be dealt in accordance with the provisions of the new Act and its Ordinance.

18. VIGILANCE ACTIVITIES

In compliance to guidelines issued by Ministry of Power and Central Vigilance Commission, NHPC has opted for e-procurement solution across the organization. The procurement process of supply/works/contracts cases above the value of Rs. 10 lakh (Rs. 5 lakh w.e.f. 01.04.2015) is being done through e-procurement. Circulars and guidelines, based upon inspection/intensive examination are being issued from time to time as part of preventive vigilance.

As per CVC guidelines, integrity pact has been implemented successfully for all the procurement of works of the value of Rs. 15 crore and more, and procurement of goods and services of the value of Rs. 25 lakh and more.

Surprise inspections are being conducted by vigilance department at regular intervals. Actionable points identified by project vigilance officers are intimated to Head of Projects from time to time. Intensive examinations of works, wherever required, are also carried out by Chief Technical Examiner (CTE) of the CVC from time to time. Vigilance awareness week and various vigilance awareness programmes are being organised to promote transparency and ethics in working system.

19. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

20. RISK MANAGEMENT

Risk management policy of the Company was formulated as per the requirement of Clause 49 of the Listing Agreement with stock exchanges. The objective of the policy is to protect stakeholders' value through an integrated risk management policy. Risks identified by the Company are broadly classified into the following categories:

Strategic risk: Risks effected by external factors and trends (like Government policy, competition, court rulings or a change in stakeholder requirements) which can adversely impact the Company's strategic growth trajectory and destroy shareholder value.

Business risk: Risks associated specifically to the Company and having an adverse impact on the Company's capability, to execute activities critical for business growth, thereby affecting its near-term performance e.g. occurrence of a risk event, delaying the timely completion of construction activity of a hydro-electric power project leading to the deferment of revenues expected from the project.

Operational risk: Risks associated with operational uncertainties like unpredictable changes in water levels, force majeure events like floods affecting operations, internal risks like attrition etc.

Due to change in business environment, regulatory provisions and present risks applicable to the Company, the existing Risk Management Policy of the Company is being revised.

21. PROCUREMENT FROM MICRO & SMALL ENTERPRISES

Annual procurement plan including items to be procured from Micro & Small Enterprises (MSEs) have been uploaded on NHPC Website for benefits of MSEs. Nodal officer on behalf of NHPC for co-ordination & implementation of procurement policy has been nominated and conveyed to Ministry of Micro, Small and Medium Enterprises & Ministry of Power.

NHPC has extended benefits under public procurement policy like exemption of tender fee, earnest money deposit, security deposit, purchase preference, interest on delayed payment to MSEs.

Special vendor development program in coordination with Ministry of Micro, Small and Medium Enterprises has also been organized.

22. OFFICIAL LANGUAGE IMPLEMENTATION

Your Company has complied with the provisions of the Official Languages Act and relevant rules during the year 2014-15. Efforts were made to improve the progressive use of official language in accordance with the policy of the Government of India.

Quarterly meetings of the Official Language Implementation Committee (OLIC) are held to review the progress of the use of Hindi at Corporate Office and its units. Many initiatives like organizing Hindi fortnight, all India Rajbhasha Sammelan, Hindi competitions, Hindi pustak pathan saptah, Hindi kavi sammelan etc, were taken to promote official language during the year 2014-15. Hindi workshops and departmental computer workshops were regularly organized in the Corporate Office. Rajbhasha magazines titled, 'Rajbhasha  Jyoti' and 'Nagar Saurabh' were also published to encourage use of Hindi.

The Parliament Committee on Official Language carried out Rajbhasha inspection in Andaman & Nicobar Project office at Port Blair and appreciated the efforts made by this office in the progressive use of Hindi. Further, Rajbhasha inspections were carried out at power stations/projects/regional offices and in various departments of the corporate office by our senior executives.

23. PR INITIATIVES/AWARENESS ACTIVITIES

Your Company's achievements were duly highlighted through print and electronic media from time to time to project the role of NHPC as hydropower developer in the country. Corporate films on NHPC were screened at a number of platforms to highlight the developmental activities of NHPC. NHPC has also participated in number of exhibitions.

NHPC successfully hosted 19th inter CPSU bridge tournament at NHPC corporate office, Faridabad from 10th to 12th February, 2015. Teams of NHPC also participated in various other inter CPSU sports tournaments organized under the aegis of Power Sports Control Board, Ministry of Power in 2014-15.

NHPC has coordinated the painting competitions at schools, state and National level in the states of Jammu and Kashmir, Manipur, Sikkim, Arunachal Pradesh and Madhya Pradesh to encourage and spread message about energy conservation. These events were organized on behalf of the Bureau of Energy Efficiency (BEE) and Ministry of Power.

24. AWARDS AND RECOGNITION

Today, the ambit of business exceeds the mere goal of profit making and embraces the ethos of corporate citizenship in its practice. Operational excellence is lifeless unless a successful story of holistic development is not put forward by the Company. NHPC endeavors for an all-round growth and the same is reflected in the list of awards & achievements.

Awards in Management & Leadership:

• National award for meritorious performance for early completion of Nimoo Bazgo Power Station.

• 'Second prize under Indira Gandhi Rajbhasha award progamme' for the year 2012-13 for commendable work in implementation of Rajbhasha.

• 'CBIP Award for best performing utility in power sector' at CBIP Awards.

• '1 st Pt. Madan Mohan Malaviya Bronze Award' for best CSR Practices in Education.

• 'Most valuable PSU under Mini Ratna category' at India Today Group PSU Awards.

25. CORPORATE GOVERNANCE REPORT

In compliance to Clause 49(X) of Listing Agreement with stock exchanges and DPE Guidelines on Corporate Governance, a separate section is given at Annexure-I. A certificate from Practicing Company Secretary regarding compliance of conditions of Corporate Governance in accordance with Clause 49(XI) of the Listing Agreement with stock exchanges and DPE guidelines on Corporate Governance is given at Annexure-II.

26. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In compliance with Clause 49(VIII)(D) of Listing Agreement with stock exchanges and DPE Guidelines on Corporate Governance, a separate report on Management Discussion and Analysis is given at Annexure-III.

27. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are given at Annexure-IV.

28. BUSINESS RESPONSIBILITY REPORT

In compliance with Clause 55 of the Listing Agreement with stock exchanges, a Business Responsibility Report regarding the disclosures of initiatives taken by the Company on environmental, social and governance issues is given at Annexure-V.

29. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

The Company has entered into contracts/arrangements/transactions with its subsidiary and associates companies during the financial year 2014-15 for providing consultancy services, leasing out of the properties and manpower services. The contracts/ arrangements/transactions were in the ordinary course of business and on an arm's length basis. None of the contract/ arrangement/transaction entered into with related parties could be considered material in accordance with the policy on related party transactions.

The policy on related party transactions as approved by the Board may be accessed on the Company's website at the link: <http://www.nhpcindia.com/writereaddata/Images/pdf/Policy-Related-Party-Transaction.pdf>

Your Directors draw attention of the members to note no. 29 to the financial statement which sets out related party disclosures as per Accounting Standard - 18.

30. REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) & SUSTAINABLE DEVELOPMENT (SD)

Your Company has contributed towards the economic development of the society at large so that the quality of life of internal as well as external stakeholders be improved. The key philosophy of all CSR initiatives of the Company is guided by three core commitments of scale, impact and sustainability.

Your Company has formulated a CSR & Sustainability Policy, which is in line with the provisions of Section 135 of the Companies Act, 2013 read with schedule VII of the Act and guidelines on corporate social responsibility issued by Department of Public Enterprises (DPE), Government of India.

The Corporate Social Responsibility & Sustainability Policy of your Company is available at following link: <http://www.nhpcindia.com/writereaddata/Images/pdf/CSR_Policy_Final.pdf>

As per Section 135 of the Companies Act, 2013 which became applicable from 01.04.2014, 2% of average net profit for the last 3 financial years is to be spent on CSR activities. As per above provision, the amount comes to Rs. 47.64 crore for the financial year 2014-15. The Company has spent Rs. 52.24 crore during the year against the said provision.

As such the spending on CSR activities comes to 2.19% of average net profit of last 3 financial years. Hence, Company fully utilized the budget allocation for financial year 2014-15.

Accordingly, Rs. 4.60 crore has been set-off from unspent fund of Rs. 17.93 crore of previous years created as per DPE guidelines. The major reasons for not utilizing the carried forwarded amount of Rs. 13.33 crore pertaining to previous years are:

1. Most of the works related to construction of toilets under 'Swachh Vidyalaya Abhiyan' were under different stages of tendering and execution and only part payments were released during the financial year 2014-15.

2. Non-finalization of detailed project report for bio diversity park of Subansiri Lower H.E. Project (2000 MW).

3. Funds for construction of Bilaspur Engineering College in Himachal Pradesh could not be released due to non-finalization of construction milestones by the State Government.

A separate report on Corporate Social Responsibility (CSR) & Sustainable Development (SD) activities undertaken by your Company during the financial year 2014-15 is given at Annexure-VI.

31. EXTRACT OF ANNUAL RETURN

Extract of annual return of the Company in accordance to Section 92(3) of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014 is given at Annexure- VII.

32. RIGHT TO INFORMATION

In compliance to the provisions of the Right to Information Act, 2005, NHPC placed various documents/records on its website during the financial year 2014-15. Further, NHPC has designated appellate authority, transparency officer, Central Public Information Officer (CPIO) at Corporate Office and Assistant Public Information Officers (APIOs) at power stations/projects/ regional offices/units to implement the provisions of Right to Information Act, 2005 (RTI). During 2014-15, 509 applications were received under RTI, out of which 505 (99.21%) were replied to.

33. AUDITORS AND AUDITORS' REPORT

SECRETARIAL AUDITOR

The Board has appointed Shri P.S.R. Murthy, Practicing Company Secretary, to conduct Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report is given at Annexure- VIII. The Secretarial Auditor in his report has made certain qualifications/observations. The qualifications/observations and reply thereto are as under:

STATUTORY AUDITORS

The Statutory Auditors of NHPC Limited being a Government Company are appointed by the Comptroller and Auditor General of India.

M/s S.N. Nanda and Co., New Delhi, M/s S.N. Dhawan and Co., New Delhi, M/s Ray and Ray, Kolkata and M/s Gupta Gupta & Associates, Jammu, were appointed as Joint Statutory Auditors for the financial year 2014-15.

The notes on financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. No instance of fraud has been reported by the Auditors under Section 143(12) of the Companies Act, 2013.

The report of the Statutory Auditors is given at Annexure- IX. The comments of the Comptroller and Auditor General of India along with management reply thereon are given at Annexure-X. The consolidated financial statement of the Company along with the Statutory Auditors' Report are given at Annexure-XI.

COST AUDITORS

In accordance with the Companies (Cost Records and Audit) Rules, 2014, notified by Ministry of Corporate Affairs on 30th June, 2014, the cost accounts are being maintained by all power stations of the Company. The following firms of Cost Accountants were appointed to conduct audit of cost accounting records of power stations as indicated against their respective names for the financial year 2014-15 under Section 148 of the Companies Act, 2013:

34. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Companies Act, 2013 and Accounting Standard (AS)-21 on consolidated financial statements read with AS-27 on financial reporting of interest in joint ventures, the audited consolidated financial statements are provided in the Annual Report.

35. PARTICULARS OF LOANS & GUARANTEES GIVEN, INVESTMENTS MADE AND SECURITIES PROVIDED

Particulars of loans & guarantees given, investments made and securities provided are given in the standalone financial statements (please refer to Note No. 12 & 15 to the standalone financial statements).

Further, Section 186 of the Companies Act, 2013 (except sub-section (1)) regarding loans made, guarantees given or securities provided is not applicable to the Companies engaged in the business of providing infrastructure facilities.

36. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Your Company has the following subsidiary/associates/joint venture Companies as on 31st March, 2015: Subsidiary Companies

(i) NHDC Limited

NHDC Limited was promoted as a Joint Venture Company between NHPC Limited and the Government of Madhya Pradesh with equity participation of 51% and 49% respectively. The Company is having two operating power stations i.e. Indira Sagar (1000 MW) and Omkareshwar (520 MW) in Madhya Pradesh. The generation from Indira Sagar Power Station and Omkareshwar Power Station during the financial year 2014-15 was 2561.73 MU and 1128.91 MU respectively against the target of 2731 MU and 1469 MU. The above two power stations have generated a total of 3690.64 MU of energy during financial year 2014-15.

In its diversification of activities, Company is venturing into solar power development in the state of Madhya Pradesh, as state is having abundant solar potential blessed with nearly 300 days sun shine. The Company is participating in the 300 MW solar power tariff based competitive bidding invited by MP Power Management Co. Ltd., Jabalpur for the 70 MW project.

During the financial year 2014-15, the Company has registered revenue (net) of Rs. 1366.59 crore and profit after tax of Rs. 766.46 crore from operations.

(ii) Loktak Downstream Hydroelectric Corporation Limited

Loktak Downstream Hydroelectric Corporation Limited was promoted as a Joint Venture Company between NHPC Limited and the Government of Manipur with equity shareholding of 74% and 26% respectively for the execution of hydroelectric projects in the state of Manipur by taking over Loktak Downstream Hydroelectric Project (66 MW). The project is at present under survey and investigation stage. All statutory clearances for execution of the project have been obtained. Bids for turnkey execution of the project were invited by the Company and are in evaluation stage.

Further, the Government of Manipur has allocated Thoubal Hydroelectric Scheme (7.5 MW) to the Company. The Board of NHPC Limited has accorded its approval for the equity contribution of the project. The formalities in respect of this project are under finalization.

(iii) Bundelkhand Saur Urja Limited

Bundelkhand Saur Urja Limited was promoted as a Joint Venture Company between NHPC Limited and UPNEDA (Uttar Pradesh New and Renewable Energy Development Agency) to implement a 50 MW solar power project at Village Parason, (Tehsil-Kalpi), District-Jalaun, Uttar Pradesh. The Company was incorporated on 2nd February, 2015. As per the promoters' agreement, the equity participation of NHPC shall not be less than 74% and of UPNEDA will not be more than 26% of the total share capital of the Company.

The award of EPC contract for the development of 50 MW solar crystalline photovoltaic grid connected power plant along with associated 132 kV power evacuation equipments is under consideration of the Board of Directors of the Company

Associate/Joint Venture Companies

(i) Chenab Valley Power Projects Private Limited

Chenab Valley Power Projects Private Limited is a Joint Venture Company between NHPC (49%), Jammu & Kashmir State Power Development Corporation (49%) and PTC India Limited (2%), to harness the vast hydro potential of river Chenab. The Company was incorporated on 13th June, 2011 for development of Pakal Dul HE Project (1000 MW), Kiru H E Project (600 MW) and Kwar H E Project (520 MW) in the state of Jammu & Kashmir. The tender evaluation process for turnkey execution of Pakal Dul HE Project (invited through International Competitive Bidding (ICB) basis) has been completed and is under consideration of the Board of the Company.

The Company has not yet started any operations, as the projects are in the initial stage of development.

(ii) National High Power Test Laboratory Private Limited (NHPTL)

NHPTL was incorporated on 22nd May, 2009 as a Joint Venture Company of NHPC Limited, NTPC Limited, Power Grid Corporation of India Limited and Damodar Valley Corporation (DVC) each having 25% of equity participation. Subsequently, Central Power Research Institute joined the Company after execution of supplementary joint venture agreement. Accordingly, the equity participation of each of the joint venture partner is now 20%. The Company was incorporated to set up an online high power test laboratory for short-circuit test facility in the Country. The Company is constructing High Voltage Transformer (HVTR) Lab and Medium Voltage Transformer (MVTR) Lab at Bina in the state of Madhya Pradesh for short circuit testing of transformers upto 765 kV. The laboratory is expected to be commissioned in 2015. Around 80% - 90% works has been completed till date.

(iii) National Power Exchange Limited

National Power Exchange Limited was incorporated on 11th December, 2008 as a Joint Venture Company of NHPC Limited, NTPC Limited, Power Finance Corporation Limited and Tata Consultancy Services Limited to operate a power exchange at National level. The Company is presently under liquidation. The equity participation of NHPC in the Company is 16.67%. Accordingly, a provision amounting to Rs. 1.06 crore has been made in the books of NHPC Limited towards anticipated loss in the investment made in the Company.

No Company has become/ceased to be a joint venture or associate during the financial year 2014-15.

A report on the financial position of each of the subsidiaries, associates and joint venture Companies as per the Companies Act, 2013 is provided as annexure to the consolidated financial statement and hence not repeated here for the sake of brevity.

The documents in respect of subsidiary companies are not being attached to the audited annual financial statements of the Company. In terms of Section 136 of the Companies Act, 2013, any shareholder interested in obtaining a copy of aforesaid documents may write to the Company Secretary, NHPC Limited. This information is also available on the website of the Company i.e. www.nhpcindia.com .

The policy on material subsidiaries as approved by the Board may be accessed on the Company's website at the link: <http://www.nhpcindia.com/writereaddata/Images/pdf/Policy-Material-Subsidiary.pdf>

37. DISCLOSURES:

In terms of the requirements of Section 135 and Section 177 of the Companies Act, 2013, the disclosure regarding composition of Committee on Corporate Social Responsibility (CSR) & Sustainability and Audit Committee is as under:

Committee on Corporate Social Responsibility (CSR) and Sustainability

The Committee on Corporate Social Responsibility (CSR) and Sustainability comprises the following members:

1. Shri Atul Kumar Garg, Independent Director-Chairman,

2. Shri D. P. Bhargava, Director (Technical) and

3. Shri R. S. Mina, Director (Personnel).

Audit Committee

The Audit Committee comprises the following members:

1. Shri Atul Kumar Garg, Independent Director-Chairman,

2. Shri Ashoke Kumar Dutta, Independent Director and

3. Shri D. P. Bhargava, Director (Technical). All the recommendations made by the Audit Committee during the year were accepted by the Board.

Vigil Mechanism

Your Company has a defined and established Whistle Blower Policy (vigil mechanism) for reporting instances of unethical/ improper conduct and taking suitable steps to investigate and correct the same. The Whistle Blower Policy is available on the Company's website at the link: <http://www.nhpcindia.com/writereaddata/images/pdf/wbp.pdf>. The provisions of this policy are in line with the provisions of Section 177(9) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with stock exchanges.

During the year 2014-15, no complaint has been reported under Whistle Blower Policy. Further, no personnel had been denied access to the Audit Committee.

38. DIRECTORS' RESPONSIBILITY STATEMENT

In compliance to Section 134(3)(c)of the Companies Act, 2013, the Directors hereby confirm the following:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis;

(e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

39. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMPs)

The following changes have taken place in the Board of Directors and Key Managerial Personnel of your Company since the last Annual General Meeting:

(i) The Board of Directors has appointed Ms. Krishna Tyagi, Chief Controller of Accounts, Ministry of Power as a Nominee Director w.e.f. 8th July, 2015 consequent upon cessation of Directorship of Shri K. N. Garg, then Member (Hydro), Central Electricity Authority, retired on 30th June, 2015 on attaining the age of superannuation.

(ii) The Board of Directors has appointed Shri Jayant Kumar, Director (Finance) as an Additional Director of the Company w.e.f. 26th May, 2015 pursuant to Ministry of Power's letter no. 9/1/2014-NHPC of even date. Earlier on cessation of Directorship of Shri A. B. L. Srivastava, then Director (Finance) & Chief Financial Officer, the additional charge for the post of Director (Finance) was held by Shri R.S. Mina, Director (Personnel) w.e.f. 15th September, 2014. Shri Mina acted as Chief Financial Officer (CFO) of the Company w.e.f. 26th September, 2014 till the appointment of Shri Jayant Kumar, as CFO of the Company on 29th May, 2015.

(iii) The Board of Directors in its 382nd meeting held on 20th March, 2015 appointed Shri Ashoke Kumar Dutta and Shri Atul Kumar Garg, Independent Directors as Additional Directors of the Company to meet the requirements of the Companies Act, 2013 and Listing Agreement, till the appointment of Independent Directors by the President of India or till the date of next Annual General Meeting, whichever event occurs earlier, as their tenure was completed on 22nd March, 2015, as per respective appointment letters issued by the Ministry of Power.

(iv) Ministry of Power entrusted the additional charge of the post of Director (Projects) to Shri R. S. T. Sai, Chairman & Managing Director w.e.f. 11th March, 2015 on cessation of Directorship of Shri J.K. Sharma, then Director (Projects).

(v) The Board of Directors has appointed Shri Arun Kumar Verma, Joint Secretary (Hydro), Ministry of Power as a Nominee Director on the Board of the Company w.e.f. 17th December, 2014 on cessation of Directorship of Shri Mukesh Jain, then Joint Secretary (Hydro), Ministry of Power w.e.f. 11th November, 2014.

(vi) Shri G.S. Vedi, Shri A.K. Mago and Shri R. Jeyaseelan, Independent Directors ceased to be Directors of the Company w.e.f. 1st November, 2014 on completion of their tenure as per respective appointment orders issued by the Ministry of Power.

(vii) Shri Shantikam Hazarika and Shri A. Gopalakrishnan, Independent Directors ceased to be Directors of the Company w.e.f. 27th September, 2014 due to non-appointment by the shareholders in the last Annual General Meeting of the Company.

All Independent Directors have declared that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Details of board and committee meetings are given in the Corporate Governance Report.

Ministry of Corporate Affairs vide its notification dated 5th June, 2015 exempted/amended certain provisions of the Companies Act, 2013 for Government Companies. As per the above notification, the Nomination & Remuneration Committee is not required to formulate criteria for appointment of Directors, their remuneration policy and carrying out their performance evaluation in certain cases. Further, the Board of Government Companies are not required to evaluate performance of Directors in case they are evaluated by the administrative Ministry.

Particulars of employees and related disclosure have not been provided in the report pursuant to above notification.

As regards policy on remuneration of KMPs (other than Directors) and other employees of the Company, their pay structure, allowances and other benefits are governed by relevant DPE Guidelines. Annual performance evaluation of senior management personnel of the Company is being done as per the "performance appraisal-recording and custody" rules of the Company read with relevant guidelines of Department of Public Enterprises, Govt. of India. An evaluation mechanism for performance evaluation of Board, its Committees and Independent Directors is under consideration of the Board.

The details of familiarisation programme for Directors are put up on the website of the Company at the link: <http://www>. nhpcindia.com/writereaddata/Images/pdf/FamiliarProg-BOD.pdf

The details of remuneration paid to Directors during the Financial Year 2014-15 have been provided in the Corporate Governance Report.

40. MEETINGS OF THE BOARD

Eleven meetings of the Board of Directors were held during the year 2014-15. For further details, please refer Corporate Governance Report of this Annual Report.

41. GENERAL

No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

4. Neither the Chairman & Managing Director nor the Functional Directors of the Company receive any remuneration or commission from any of its subsidiaries.

5. No significant or material orders were passed by the regulators or courts or tribunals which impact the going concern status and Company's operations in future.

6. No material changes and commitments have occurred after the close of the financial year till the date of this report, which affect the financial position of the Company.

7. There were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 during the year under review.

42. ACKNOWLEDGEMENT

The Board of Directors acknowledge with deep appreciation, the cooperation and guidance received from the Government of India specially the Ministry of Power, Ministry of Environment, Forest & Climate Change, Department of Public Enterprises, Central Electricity Authority, Central Electricity Regulatory Commission, State Governments and their Ministries and State Electricity Boards. The Board of Directors also conveys their gratitude to the shareholders, banks and financial institutions for the confidence reposed by them in the Company.

The Board also appreciates the contribution of contractors, vendors and consultants in the implementation of various projects of the Company.

The Board wish to place on record its appreciation for the constructive suggestions received from Statutory Auditors, Cost Auditors and Office of the Comptroller and Auditor General of India. Further, the Board wishes to record its deep gratitude to all the members of NHPC family for their whole hearted support. The Board is confident that employees will continue to contribute their best in the years to come.

For and On behalf of the Board of Directors

(R. S. T. Sai)

Chairman and Managing Director

DIN No.:00171920

Date: 6th August, 2015

Place: Faridabad