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IMPORTANT NOTICE NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE U.S. IMPORTANT: You must read the following before continuing. The following applies to the admission particulars dated 25 April 2017 (the Admission Particulars and, together with the offering circular dated 10 November 2016, the Final Admission Particulars) following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the Final Admission Particulars. In accessing the Final Admission Particulars, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from us as a result of such access. NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR THE SECURITIES LAWS OF ANY STATE OF THE U.S. OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE U.S., EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THE FOLLOWING FINAL ADMISSION PARTICULARS MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY U.S. ADDRESS. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. ANY INVESTMENT DECISION SHOULD BE MADE ON THE BASIS OF THE TERMS AND CONDITIONS OF THE SECURITIES AND THE INFORMATION CONTAINED IN THE FINAL ADMISSION PARTICULARS. IF YOU HAVE GAINED ACCESS TO THIS TRANSMISSION CONTRARY TO ANY OF THE FOREGOING RESTRICTIONS, YOU ARE NOT AUTHORISED AND WILL NOT BE ABLE TO PURCHASE ANY OF THE SECURITIES DESCRIBED THEREIN. Confirmation of your Representation: This Final Admission Particulars is being sent at your request and by accepting the e-mail and accessing this Final Admission Particulars, you shall be deemed to have represented to us that the electronic mail address that you gave us and to which this email has been delivered is not located in the U.S. and that you consent to delivery of such Final Admission Particulars by electronic transmission. You are reminded that this Final Admission Particulars has been delivered to you on the basis that you are a person into whose possession this Final Admission Particulars may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver this Final Admission Particulars to any other person. The materials relating to any offering of securities described in the Final Admission Particulars do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the underwriters or any affiliate of the underwriters is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the underwriters or such affiliate on behalf of the Issuer in such jurisdiction.

0012018-0003181 HK:22219973.12

This Final Admission Particulars has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently neither Axis Bank, Singapore Branch, Barclays Bank PLC, ICICI Bank Limited (Singapore Branch), MUFG Securities EMEA plc and Standard Chartered Bank nor any person who controls each of them nor any director, officer, employee nor agent of each of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Final Admission Particulars distributed to you in electronic format and the hard copy version available to you on request from Axis Bank, Singapore Branch, Barclays Bank PLC, ICICI Bank Limited (Singapore Branch), MUFG Securities EMEA plc and Standard Chartered Bank. You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature. To the fullest extent permitted by law, neither Axis Bank, Singapore Branch, Barclays Bank PLC, ICICI Bank Limited (Singapore Branch), MUFG Securities EMEA plc and Standard Chartered Bank nor any person who controls each of them nor any director, officer, employee nor agent of each of them or affiliate of any such person accept any responsibility for the contents of this Final Admission Particulars or for any other statement, made or purported to be made by Axis Bank, Singapore Branch, Barclays Bank PLC, ICICI Bank Limited (Singapore Branch), MUFG Securities EMEA plc and Standard Chartered Bank or by any person who controls each of them, or by any director, officer, employee or agent of each of them or affiliate of any such person in connection with the Issuer, or the Offering. Axis Bank, Singapore Branch, Barclays Bank PLC, ICICI Bank Limited (Singapore Branch), MUFG Securities EMEA plc and Standard Chartered Bank accordingly disclaims all and any liability whether arising in tort or contract or otherwise which it might otherwise have in respect of this Final Admission Particulars or any such statement. The Final Admission Particulars has not been and will not be registered, produced or made available to all as an offer document (whether a prospectus in respect of a public offer or an information memorandum or private placement offer letter or other offering material in respect of any private placement under the Companies Act, 2013 or any other applicable Indian laws) with the Registrar of Companies of India (RoC) or the SEBI or any other statutory or regulatory body of like nature in India,  In addition, holders and beneficial owners shall be responsible for compliance with restrictions on the ownership of the Rupee Denominated Notes imposed from time to time by applicable laws or by any regulatory authority or otherwise. In this context, holders and beneficial owners of Rupee Denominated Notes shall be deemed to have acknowledged, represented and agreed that such holders and beneficial owners are eligible to purchase the Rupee Denominated Notes under applicable laws and regulations and are not prohibited under any applicable law or regulation from acquiring, owning or selling the Rupee Denominated Notes. Potential investors should seek independent advice and verify compliance with FATF Requirements prior to any purchase of the Rupee Denominated Notes. The holders and beneficial owners of Rupee Denominated Notes shall be deemed to confirm that for so long as they hold any Rupee Denominated Notes, they will meet the FATF Requirements and will not be an overseas branch or subsidiary of an Indian bank (except as permitted under the ECB Guidelines). Further, all Noteholders represent and agree that the Rupee Denominated Notes will not be offered or sold on the secondary market to any person who does not comply with the FATF Requirements or which is an overseas branch or subsidiary of an Indian bank (except as permitted under the ECB Guidelines).

0012018-0003181 HK:22219973.12

ADMISSION PARTICULARS

(incorporated with limited liability in the Republic of India)

Issue of INR denominated 20,000,000,000 7.25 per cent. Notes due 2022 payable in U.S. Dollars issued pursuant to the U.S.$4,000,000,000 Medium Term Note Programme The INR denominated 20,000,000,000 7.25 per cent. Notes due 2022 payable in U.S. Dollars (the Notes) will be issued by NTPC Limited (the Issuer or NTPC), pursuant to its U.S.$4,000,000,000 Medium Term Note Programme (the Programme). The Notes will bear interest at the rate of 7.25 per cent. per annum from and including 3 May 2017 to but excluding 3 May 2022 and interest will be payable annually on 3 May of each year, commencing on 3 May 2018 (the Offering). The Notes will mature on 2022. All payments of principal and interest on the Notes will be made in U.S. Dollars. Prior to maturity, the Notes will be redeemable by the Issuer, in whole but not in part, in the event of certain changes in Indian tax law. See "Terms and Conditions of the Notes". The Notes will constitute the direct, unconditional, unsubordinated and (subject to Condition 4) unsecured obligations of the Issuer and will rank pari passu among themselves and (save for certain obligations required to be preferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any) of the Issuer, from time to time outstanding. Application has been made to the London Stock Exchange for the Notes to be admitted to the London Stock Exchange’s International Securities Market (ISM). The ISM is not a regulated market for the purposes of Directive 2004/39/EC. The ISM is a market designated for investors who are particularly knowledgeable in investment matters. Notes admitted to trading on the ISM are not admitted to the Official List of the UKLA. The London Stock Exchange has not approved or verified the contents of the Final Admission Particulars (as defined herein). Application will also be made to the Singapore Exchange Securities Trading Limited (the SGX-ST). Final permission to list the Notes will be granted when the Notes have been admitted to the Official List of the SGX-ST (the SGX Official List). The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained herein. Admission to the SGX Official List of the SGX-ST and quotation of the Notes on the SGX-ST are not to be taken as an indication of the merits of the Issuer or the Notes. For so long as any Notes are listed on the SGX-ST and the rules of the SGX-ST so require, such Notes will be traded on the SGX-ST in a minimum board lot size of S$200,000 or its equivalent in other currencies. Investing in the Notes involves risks. See "Investment Considerations" in the Original Offering Circular (as defined herein) for a discussion of certain factors to be considered in connection with an investment in the Notes. The Notes will be rated BBB- by Fitch Ratings Limited and BBB- by S&P Global Ratings, a division of the McGraw-Hill Companies, Inc. Such ratings of the Notes do not constitute a recommendation to buy, sell or hold the Notes and may be subject to revision or withdrawal at any time by either such rating organisation. Each such rating should be evaluated independently of any other rating of the Notes, of the Issuer's other securities or of the Issuer. The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act) and may not be offered or sold in the United States unless the Notes are registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available. The Notes will not be transferable except in accordance with the restrictions described under "Transfer Restrictions" in the Original Offering Circular. The Notes offered outside the United States in reliance on Regulation S (the Regulation S Notes) will be evidenced by a Regulation S Global Note (as defined in the Original Offering Circular) deposited with a common depositary for Euroclear Bank SA/NV (Euroclear) and Clearstream Banking S.A. (Clearstream, Luxembourg), and registered in the name of a nominee of such common depositary. It is expected that delivery of the Regulation S Global Note will be made on 3 May 2017 or such later date as may be agreed (the Closing Date) by the Issuer and the Joint Lead Managers. For the purposes of the Notes only, this offering circular (the Admission Particulars) is supplemental to, and should be read in conjunction with, the offering circular dated 10 November 2016 (the Original Offering Circular) (the Original Offering Circular together with this Admissions Particulars, the Final Admission Particulars). Words and expressions defined in the Final Admission Particulars shall have the same meanings where used in this Admission Particulars unless the context otherwise requires or unless otherwise stated herein.

Barclays Axis Bank, Singapore Branch

Joint Lead Managers ICICI Bank Limited (Singapore Branch)

MUFG

The date of this Admission Particulars is 25 April 2017.

0012018-0003181 HK:22219973.12

Standard Chartered Bank

TABLE OF CONTENTS PAGE ABOUT THIS DOCUMENT ................................................................................................................. S-1  USE OF PROCEEDS ............................................................................................................................. S-2  FORM OF PRICING SUPPLEMENT FOR MASALA BONDS .......................................................... S-3  REVIEWED FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31 DECEMBER 2016 ................................................................................................................................ S-13 

0012018-0003181 HK:22219973.12

ABOUT THIS DOCUMENT

In the event of any conflict between the description of the Notes in this Admission Particulars and the description of the Notes in the Original Offering Circular, the description of the Notes in this Admission Particulars shall prevail. The Issuer accepts responsibility for the information contained in the Final Admission Particulars. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in the Final Admission Particulars is in accordance with the facts and does not omit anything likely to affect the import of such information. The reference to the specified office of the Paying Agent being “in London” appearing on page 219 of the Original Offering Circular shall be deemed to be deleted and replaced “in Dublin”. There has been no significant change in the financial or trading position of NTPC since the date of the last published reviewed financial information for the nine month period ended 31 December 2016.

S-1

USE OF PROCEEDS The net proceeds from each issue of Notes will be applied by the Issuer to finance capital expenditure of ongoing and/or new power projects and renovation and modernisation of power stations of the Issuer in accordance with the ECB Guidelines, and will not be used, directly or indirectly, for projects outside India including, but not limited to, the proposed project for the construction of the 1,320 MW Rampal power station, located at Khulna, Bangladesh.

S-2

PRICING SUPPLEMENT FOR MASALA BONDS

25 April 2017 NTPC Limited Issue of INR denominated 20,000,000,000 7.25 per cent. Notes due 2022 payable in U.S. Dollars (the Notes) under the U.S.$4,000,000,000 Medium Term Note Programme This document constitutes the Pricing Supplement relating to the issue of Notes described herein. Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Original Offering Circular dated 10 November 2016 as supplemented by the Admission Particulars dated 25 April 2017 (together, the Final Admission Particulars). This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with the Final Admission Particulars.

1.

Issuer:

NTPC Limited

2.

(a)

Series Number:

08

(b)

Tranche Number:

01

(c)

Date on which the Notes will be consolidated and form a single Series:

Not Applicable

3.

Specified Currency or Currencies:

4.

Aggregate Nominal Amount:

5.

The lawful currency of India (Indian Rupees or INR), provided that all payments in respect of the Notes will be made in United States Dollars (USD).

(a)

Series:

INR20,000,000,000

(b)

Tranche:

INR20,000,000,000

(a)

Issue Price:

99.878 per cent. of the Aggregate Nominal Amount The Issue Price will be payable in USD and will be based on the Aggregate Nominal Amount (in INR) divided by the conversion rate reported by the RBI and displayed on Reuters page “RBIB” at approximately 1:30 p.m., Mumbai, on 26 April 2017.

6.

(b)

Net proceeds:

INR19,975,600,000

(a)

Specified Denominations:

INR10,000,000 and integral multiples thereof

S-3

7.

(b)

Calculation Amount:

INR10,000,000

(a)

Issue Date:

3 May 2017

(b)

Interest Commencement Date:

Issue Date

8.

Maturity Date:

3 May 2022 (subject to adjustment in accordance with item 22 below)

9.

Interest Basis:

7.25 per cent. Fixed Rate (further particulars specified below)

10.

Redemption/Payment Basis:

Redemption at par

11.

Change of Interest Basis or Redemption/Payment Basis:

Not Applicable

12.

(a)

(b)

Date of board approval for issuance of Notes obtained:

19 April 2017

Date of regulatory approval/consent for issuance of Notes obtained:

Not Applicable

13.

Listing:

Singapore and London

14.

Method of distribution:

Syndicated

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 15.

Fixed Rate Note Provisions:

Applicable

(a)

Rate(s) of Interest:

7.25 per cent. per annum payable annually in arrear on each Interest Payment Date

(b)

Interest Payment Date(s):

3 May in each year from and including 3 May 2018 and up to and including the Maturity Date (each as may be subject to adjustment in accordance with item 22 below).

(c)

Fixed Coupon Amount(s):

INR725,000 per Calculation Amount, payable in USD by applying the following formula: INR725,000 divided by the Reference Rate (as defined in item 22 below)

(d)

Broken Amount(s):

Not Applicable

(e)

Day Count Fraction:

30/360

(f)

Determination Date(s):

Not Applicable

(g)

Other terms relating to the method of calculating interest for Fixed Rate Notes:

None

S-4

16.

Floating Rate Note Provisions

Not Applicable

17.

Zero Coupon Note Provisions

Not Applicable

18.

Index Linked Interest Note Provisions

Not Applicable

19.

Dual Currency Interest Note Provisions

Not Applicable

PROVISIONS RELATING TO REDEMPTION 20.

Issuer Call:

Not Applicable

21.

Investor Put:

Not Applicable

22.

Final Redemption Amount:

The Final Redemption Amount per Calculation Amount will be payable in USD and determined by the Calculation Agent, on the Rate Fixing Date in respect of the Maturity Date, as follows: Calculation Amount Reference Rate

divided

by

the

Where: Calculation Agent means Citibank N.A., London Branch. Reference Rate means the rate used on each Rate Fixing Date which will be the USD/INR spot rate, expressed as the amount of Indian Rupees per one United States Dollar, for settlement in two Fixing Business Days, reported by the Reserve Bank of India, which is displayed on Reuters page RBIB (or any successor page) at approximately 1:30 pm, Mumbai time, on each Rate Fixing Date. If a Price Source Disruption Event occurs on the Scheduled Rate Fixing Date, then the Reference Rate for such Rate Fixing Date shall be determined by the Calculation Agent in accordance with the Fallback Provisions set out below. Rate Fixing Date means the Scheduled Rate Fixing Date, subject to Valuation Postponement. Scheduled Rate Fixing Date means the date which is two Fixing Business Days prior to the Interest Payment Date or the Maturity Date or such other date on which an amount in respect of the Notes is due and payable. If the Scheduled Rate Fixing Date is an Unscheduled

S-5

Holiday, the Rate Fixing Date shall be the next following relevant Fixing Business Day, subject to the Deferral Period for Unscheduled Holiday set out below. Unscheduled Holiday means a day that is not a Fixing Business Day and the market was not aware of such fact (by means of a public announcement or by reference to other publicly available information) until a time later than 9:00 a.m. local time in Mumbai, two Fixing Business Days prior to the relevant Rate Fixing Date. Adjustments to Interest Payment Date and Maturity Date: If a Scheduled Rate Fixing Date is adjusted for an Unscheduled Holiday or if Valuation Postponement applies, then the Interest Payment Date or Maturity Date relating to such Scheduled Rate Fixing Date shall be two (2) Payment Business Day(s) after the date on which the Reference Rate for such Interest Payment Date or Maturity Date is determined. If any Interest Payment Date or Maturity Date is adjusted in accordance with the preceding sentence, then such adjustment (and the corresponding payment obligations to be made on such dates) shall apply only to such Interest Payment Date or the Maturity Date, as applicable, and no further adjustment shall apply to the amount of interest payable. Fallback Provisions: Price Source Disruption Event means it becomes impossible to obtain the Reference Rate on a Rate Fixing Date. Applicable Fallbacks:

Price

Source

Disruption

In the event of a Price Source Disruption Event, the Calculation Agent shall apply each of the following Price Source Disruption Fallbacks for the determination of the Reference Rate, in the following order, until the Reference Rate can be determined.

1.

S-6

Valuation

(As defined below)

Postponement 2.

Fallback Reference Price

SFEMC INR Indicative Survey Rate (INR02)

3.

Fallback Survey Valuation Postponement

(As defined below)

4.

Calculation Agent Determination of Reference Rate

Cumulative Events has the following meaning: Notwithstanding anything to the contrary, in no event shall the total number of consecutive calendar days during which either (i) valuation is deferred due to an Unscheduled Holiday, or (ii) a Valuation Postponement shall occur (or any combination of (i) and (ii)), exceed 14 consecutive calendar days in the aggregate. Accordingly, (x) if, upon the lapse of any such 14 calendar day period, an Unscheduled Holiday shall have occurred or be continuing on the day following such period that otherwise would have been a Fixing Business Day, then such day shall be deemed to be a Rate Fixing Date, and (y) if, upon the lapse of any such 14 calendar day period, a Price Source Disruption Event shall have occurred or be continuing on the day following such period on which the Reference Rate otherwise would be determined, then Valuation Postponement shall not apply and the Reference Rate shall be determined in accordance with the next Price Source Disruption Fallback. Valuation Postponement means that the Reference Rate will be determined on the Fixing Business Day first succeeding the day on which the Price Source Disruption Event ceases to exist, unless the Price Source Disruption Event continues to exist (measured from the date that, but for the occurrence of the Price Source Disruption Event, would have been the Rate Fixing Date) for a consecutive number of calendar days equal to the Maximum Days of Postponement. In such

S-7

event, the Reference Rate will be determined on the next Fixing Business Day after the Maximum Days of Postponement (which will, subject to the provisions relating to Fallback Survey Valuation Postponement, be deemed to be the applicable Rate Fixing Date) in accordance with the next applicable Price Source Disruption Fallback. Maximum Days calendar days.

of

Postponement:

14

SFEMC INR Indicative Survey Rate (INR02) means that the Reference Rate for a given Rate Fixing Date will be the Indian Rupee/U.S. Dollar Specified Rate for U.S. Dollars, expressed as the amount of Indian Rupees per one U.S. Dollar, for settlement in two Fixing Business Days, as published on the web site of Singapore Foreign Exchange Market Committee (SFEMC) at approximately 3:30 p.m. (Singapore time), or as soon thereafter as practicable, on such date. The Reference Rate shall be calculated by SFEMC (or a service provider SFEMC may select in its sole discretion) pursuant to the SFEMC INR Indicative Survey (as defined below) for the purpose of determining the SFEMC INR Indicative Survey Rate. SFEMC INR Indicative Survey means a methodology, dated as of 1 December 2004 as amended from time to time, for a centralised industry-wide survey of financial institutions that are active participants in the Indian Rupee/U.S. Dollar markets for the purpose of determining the SFEMC INR Indicative Survey Rate (INR02). Fallback Survey Valuation Postponement means that, in the event that the Fallback Reference Price is not available on or before the third Fixing Business Day (or day that would have been a Fixing Business Day but for an Unscheduled Holiday) succeeding the end of either (i) Valuation Postponement for Price Source Disruption Event, (ii) Deferral Period for Unscheduled Holiday, or (iii) Cumulative Events, as applicable, then the Reference Rate will be determined in accordance with the next Applicable Price Source Disruption Fallback on such day (which will be deemed to be the applicable Rate Fixing Date). For the avoidance of doubt, Cumulative Events, if applicable, does not

S-8

preclude postponement of valuation accordance with this provision.

in

Payment Business Day means any day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in London, New York and Mumbai. Fixing Business Day means any day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in Mumbai. Deferral Period for Unscheduled Holiday: In the event the Scheduled Rate Fixing Date is postponed due to the occurrence of an Unscheduled Holiday, and if the Rate Fixing Date has not occurred on or before the 14th calendar day after the Scheduled Rate Fixing Date (any such period being a Deferral Period), then the next day after the Deferral Period that would have been a Fixing Business Day but for the Unscheduled Holiday, shall be deemed to be the Rate Fixing Date. 23.

Early Redemption Amount payable on redemption for taxation reasons or on event of default:

The Final Redemption Amount as determined in accordance with item 22 above; provided that, for purposes of such determination, the Scheduled Rate Fixing Date shall be the date that is two Fixing Business Days prior to the date upon which the Notes become due and payable.

GENERAL PROVISIONS APPLICABLE TO THE NOTES 24.

Form of Notes:

Registered Notes: Registered Global Note (INR20,000,000,000 nominal amount) registered in the name of a nominee for a common depositary for Euroclear and Clearstream, Luxembourg

25.

Financial Centre(s):

New York, London and Mumbai

26.

Talons for future Coupons to be attached to Definitive Notes in bearer form (and dates on which such Talons mature):

No

27.

Details relating to Partly Paid Notes: amount of each payment comprising the Issue Price

Not Applicable

S-9

and date on which each payment is to be made and consequences of failure to pay, including any right of the Issuer to forfeit the Notes and interest due on late payment: 28.

Details relating to Instalment Notes:

Not Applicable

29.

Redenomination applicable:

Redenomination not applicable

30.

Permitted Security Interest Date:

25 April 2017

31.

Other terms or special conditions:

Not Applicable

DISTRIBUTION 32.

33.

(a)

If syndicated, names of Managers:

Axis Bank, Singapore Branch, Barclays Bank PLC, ICICI Bank Limited (Singapore Branch), MUFG Securities EMEA plc and Standard Chartered Bank

(b)

Stabilising Manager(s) (if any):

Barclays Bank PLC

Commissions The Issuer has agreed to pay the Managers a management fee and a discretionary incentive fee based on the yield of the Notes and total principal amount of the Notes

34.

If non-syndicated, name of relevant Dealer:

Not Applicable.

35.

Whether TEFRA D or TEFRA C rules applicable or TEFRA rules not applicable:

TEFRA not applicable

36.

Whether Category 1 or Category 2 applicable in respect of the Notes offered and sold in reliance on Regulation S:

Category 1

37.

Additional selling restrictions:

Not Applicable

OPERATIONAL INFORMATION 38.

Any clearing system(s) other than Euroclear and Clearstream, Luxembourg and the relevant identification number(s):

Not Applicable

39.

Delivery:

Delivery against payment

S-10

40.

Additional Paying Agent(s) (if any):

Not Applicable

ISIN

XS1604199114

Common Code:

160419911

S-11

LISTING APPLICATION This Pricing Supplement comprises the final terms required to list the issue of Notes described herein pursuant to the U.S.$4,000,000,000 Medium Term Note Programme of NTPC Limited. RESPONSIBILITY The Issuer accepts responsibility for the information contained in this Pricing Supplement. Signed on behalf of the Issuer: By: _____________________________ Duly authorised

S-12

REVIEWED FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31 DECEMBER 2016 INDEPENDENT AUDITORS’ REVIEW REPORT To The Board of Directors, NTPC Limited, New Delhi. We have reviewed the accompanying statement of Standalone Unaudited Financial Results of NTPC Limited for the quarter and nine-months ended 31st December 2016 prepared by the Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as modified by the Circular No. CIR/CFD/FAC/62/2016 dated 5th July 2016. This statement is the responsibility of the Company’s Management and has been approved by the Board of Directors. Our responsibility is to issue a report on these financial statements based on our review. We have conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”, issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion. Without modifying our report, attention is invited to Note 5 (a) & 5 (b) to the statement of standalone unaudited financial results referred to above regarding accounting of sales on provisional basis. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying statement of Standalone Unaudited Financial Results read with notes thereon, prepared in accordance with applicable Indian Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and other recognised accounting practices and policies thereon has not disclosed the information required to be disclosed in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as modified by the Circular No. CIR/CFD/FAC/62/2016 dated 5th July 2016 including the manner in which it is to be disclosed, or that it contains any material misstatement. For T.R. Chadha & Co. LLP Chartered Accountants FRN 006711N/N500028

For PSD & Associates Chartered Accountants FRN 004501C

For Sagar & Associates Chartered Accountants FRN 003510S

( Neena Goel ) Partner M. No.057986

( Prakash Sharma ) Partner M. No.072332

( V. Vidyasagar Babu ) Partner M. No.027357

S-13

For Kalani & Co. Chartered Accountants FRN 000722C

For P. A. & Associates Chartered Accountants FRN 313085E

For S.K. Kapoor & Co. Chartered Accountants FRN 000745C

( Vikas Gupta ) Partner M. No.077076

( S. S. Poddar ) Partner M. No.051113

( V.B. Singh ) Partner M. No.073124

For B. M. Chatrath & Co. Chartered Accountants FRN 301011E

( P R Paul ) Partner M. No.051675 Place : New Delhi Dated: 8th February 2017

S-14

STATEMENT OF STANDALONE UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND NINEMONTHS ENDED 31ST DECEMBER 2016

(₹ in Crore) SI. No.

Particulars

2 Income from operations (a) Gross sales (b) Other operating income Total income from operations (a+b) 2 Expenses (a) Fuel cost (b) Employee benefits expense (c) Depreciation and amortisation expense (d) Other expenses Total expenses (a+b+c+d) 3 Profit from operations before other income, finance costs and exceptional items (1-2) 4 Other income 5 Profit from ordinary activities before finance costs and exceptional items (3+4) 6 Finance costs 7 Profit from ordinary activities after finance costs but before exceptional items (5-6) 8 Exceptional items 9 Profit from ordinary activities before tax (7+8) 10 Regulatory income/(expense) 11 Profit from ordinary activities before tax (9+10) 12 Tax expense: (a) Current tax (refer note 6) (b) Tax expense/(saving) pertaining to rate regulated activities (c) Deferred tax (d) Less: Deferred asset for deferred tax liability Total tax expense (a+b+c-d) 13 Net profit from ordinary activities after tax (11-12) 14 Extraordinary items (net of tax) 15 Net profit for the period (13-14) 16 Other comprehensive income (net of tax) 17 Total comprehensive income (15+16) 18 Paid-up equity share capital (Face value of share ₹ 10/each) 19(i) Earnings per share (before extraordinary items) - (of ₹ 10/- each) (not annualised) (in ₹): (a) Basic (b) Diluted 19(ii) Earnings per share (after extraordinary items) - (of ₹ 10/- each) (not annualised) (in ₹): (a) Basic (b) Diluted 19(iii Earnings per share (for continuing operations) - (of ₹ ) 10/- each) (not annualised) (in ₹): (a) Basic (b) Diluted

Quarter ended 31.12.2016 (Unaudited)

Quarter ended 30.09.2016 (Unaudited)

Quarter ended 31.12.2015 (Unaudited)

3

4

5

1 1

Nine months Nine months ended ended 31.12.2016 31.12.2015 (Unaudited) (Unaudited)

6

7

19287.47 108.45 19395.92

19241.47 156.47 19397.94

17358.98 126.74 17485.72

57468.75 388.02 57856.77

52117.56 401.10 52518.66

12080.43 843.68 1485.31 1220.58 15630.00 3765.92

11912.97 848.31 1434.15 1240.85 15436.28 3961.66

10580.28 868.42 1371.63 1233.38 14053.71 3432.01

35625.77 2690.16 4314.65 3722.57 46353.15 11503.62

33630.25 2668.66 3846.65 3779.32 43924.88 8593.78

250.17 4016.09

190.62 4152.28

238.96 3670.97

598.68 12102.30

758.09 9351.87

909.03 3107.06

889.83 3262.45

842.43 2828.54

2699.28 9403.02

2420.44 6931.43

3107.06 (25.20) 3081.86

3262.45 (4.43) 3258.02

2828.54 (38.43) 2790.11

9403.02 (26.32) 9376.70

6931.43 16.03 6947.46

557.37 (5.38)

686.51 (0.94)

85.20 (15.43)

1891.20 (5.62)

(1083.18) 3.42

649.15 588.00 613.14 2468.72 2468.72 (91.62) 2377.10 8245.46

395.59 319.11 762.05 2495.97 2495.97 (26.50) 2469.47 8245.46

485.30 433.73 121.34 2668.77 2668.77 (3.33) 2665.44 8245.46

1395.60 1207.78 2073.40 7303.30 7303.30 (116.74) 7186.56 8245.46

593.27 542.96 (1029.45) 7976.91 7976.91 (52.33) 7924.58 8245.46

3.00 3.00

3.03 3.03

3.23 3.23

8.86 8.86

9.67 9.67

3.00 3.00

3.03 3.03

3.23 3.23

8.86 8.86

9.67 9.67

3.00 3.00

3.03 3.03

3.23 3.23

8.86 8.86

9.67 9.67

S-15

(₹ in Crore) SI. No.

Particulars

1 1

2

3

4

2 Segment revenue - Generation - Others - Un-allocated - Total

Quarter ended 31.12.2016 (Unaudited)

Quarter ended 30.09.2016 (Unaudited)

Quarter ended 31.12.2015 (Unaudited)

Nine months ended 31.12.2016 (Unaudited)

Nine months ended 31.12.2015 (Unaudited)

3

4

5

6

7

19555.62 48.08 42.39 19646.09

19491.54 43.55 53.47 19588.56

17523.56 27.33 173.79 17724.68

58163.36 126.30 165.79 58455.45

52643.87 78.07 554.81 53276.75

4235.64 20.52 4256.16

4411.73 (82.29) 4329.44

3778.52 0.98 3779.50

12810.58 (53.10) 12757.48

9688.50 (27.61) 9660.89

909.03 265.27

889.83 181.59

842.43 146.96

2699.28 681.50

2420.44 292.99

Profit before tax

3081.86

3258.02

2790.11

9376.70

6947.46

Segment assets - Generation - Others - Un-allocated - Total

122990.13 3090.76 107368.64 233449.53

122594.24 3050.85 99146.89 224791.98

111348.43 2019.72 96440.19 209808.34

122990.13 3090.76 107368.64 233449.53

111348.43 2019.72 96440.19 209808.34

Segment liabilities - Generation - Others - Un-allocated - Total

14133.16 1735.89 120720.35 136589.40

13549.16 1701.17 115072.48 130322.81

13933.10 1272.79 104482.54 119688.43

14133.16 1735.89 120720.35 136589.40

13933.10 1272.79 104482.54 119688.43

Segment results (Profit before tax and interest) - Generation - Others - Total Less (i) Unallocated finance costs (ii) Other unallocable expenditure net of unallocable income

The operations of the Company are mainly carried out within the country and therefore, geographical segments are not applicable.

Notes: 1

The above results have been reviewed by the Audit Committee of the Board of Directors in the meeting held on 8th February 2017 and approved by the Board of Directors in the meeting held on the same day.

2

The statutory auditors of the Company have carried out the limited review of the financial results as required under Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

3

The unaudited standalone financial statements do not include figures for the previous year ended 31st March 2016 as per the option given in SEBI’s Circular No. CIR/CFD/FAC/2016 dated 5th July 2016.

4

The Company adopted Ind AS from 1st April 2016 and accordingly the financial results are prepared in compliance with Ind AS pursuant to the Notification of Ministry of Corporate Affairs (MCA) dated 16th February 2016. The comparative figures for the quarter and nine-months ended 31st December 2015 have been restated as per Ind AS. Reconciliation of net profit as reported in previous GAAP to Ind AS:

Particulars

Profit after tax as reported under previous GAAP Add/(less) adjustments for Ind AS: Actuarial loss on defined benefit plans recognised in Other comprehensive income (net of tax) Capitalisation of major overhaul & spares Depreciation and amortization Recognition of financial assets/liabilities at amortised cost Impact of embedded leases Provision of rebate to customers Net Profit as per Ind AS

S-16

(₹ in Crore) Nine-months Quarter ended ended 31.12.2015 31.12.2015 2,492.87 7,526.50 12.09 155.92 21.50 (16.63) (6.28) 9.30 2,668.77

35.47 404.66 109.84 (46 87) (16.05) (36.64) 7,976.91

Other Comprehensive Income (net of tax): Actuarial loss on defined benefit plans Fair valuation of investments Total comprehensive income as reported under Ind AS

(12.09) 8.76 2,665.44

(35.47) (16.86) 7,924.58

5 (a) The CERC notified the Tariff Regulations, 2014 in February 2014 (Regulations, 2014). The CERC has issued tariff orders for thirteen stations for the period 2014-19 under Regulations, 2014 and beneficiaries are billed based on tariff orders issued by the CERC. Pending issue of provisional/final tariff orders w.e.f. 1st April 2014 for balance stations, beneficiaries are billed in accordance with the tariff approved and applicable as on 31st March 2014 and as provided in the Regulations 2014. The energy charges in respect of the coal based stations are provisionally billed based on the GCV ‘as received’ measured after the secondary crusher till 30th September 2016 and GCV measured on wagon top w.e.f. 1st October 2016. The amount provisionally billed for the quarter and nine-months ended 31st December 2016 is ₹ 18,457.79 crore and ₹ 55,595.31 crore respectively (previous quarter and nine-months ₹ 16,492.62 crore and ₹ 52,798.23 crore). (b) The Company has filed a writ petition before the Hon’ble Delhi High Court contesting certain provisions of the Tariff Regulations, 2014. As per directions from the Hon’ble High Court on the issue of point of sampling for measurement of GCV of coal ‘as received’, CERC has issued an order dated 25th January 2016 (subject to final decision of the Hon’ble High Court) that samples for measurement of coal on ‘as received’ basis should be collected from wagon top at the generating stations. The Company’s review petition before the CERC in respect of the above order has been dismissed vide their order dated 30th June 2016. Pending final decision of the Hon’ble Delhi High Court, in line with the CERC order, measurement of GCV from wagon top samples at the unloading end has been started w.e.f 1st October 2016. Vide order dated 10th November 2016, the Hon’ble Delhi High Court has permitted the Company to approach the CERC with the difficulties being faced in implementing wagon top sampling. Sales for the quarter and nine-months ended 31st December 2016 have been provisionally recognized at ₹ 18,739.00 crore and ₹ 56,483.22 crore respectively (previous quarter and nine-months ₹ 17,228.07 crore and ₹ 53,201.24 crore) on the basis of said Regulations 2014, wherein energy charges included in sales, in respect of the coal based stations have been recognized based on the GCV ‘as received’ measured after secondary crusher till 30th September 2016 and GCV measured on wagon top w.e.f. 1st October 2016. (c) Sales for the quarter and nine-months ended 31st December 2016 include ₹ 374.05 crore and ₹ 471.84 crore respectively (previous quarter and nine-months (-) ₹ 24.11 crore and ₹ 207.34 crore) pertaining to previous years recognized based on the orders issued by the CERC/Appellate Tribunal for Electricity (APTEL). (d) Sales for the quarter and nine-months ended 31st December 2016 includes ₹ Nil (previous quarter and nine-months ₹ Nil and (-) ₹ 1,693.65 crore) on account of income-tax payable to the beneficiaries as per Regulations, 2004. Sales for the quarter and nine-months ended 31st December 2016 also include ₹ 12.31 crore and ₹ 36.94 crore respectively (previous quarter and nine-months (-) ₹ 5.89 crore and ₹ 19.60 crore) on account of deferred tax materialized which is recoverable from beneficiaries as per Regulations, 2014. 6

Provision for current tax for the quarter and nine-months ended 31st December 2016 includes (-) ₹ 107.56 crore, being tax related to earlier years (previous quarter and nine-months (-) ₹ 414.46 crore and (-) ₹ 2,453.48 crore).

7

The Board of Directors has recommended interim dividend of ₹ 2 61 per equity share (face value of ₹ 10/- each) for the financial year 2016-17 in their meeting held on 8th February 2017.

8

For all secured bonds issued by the Company, 100% security cover is maintained for outstanding bonds. The security has been created on fixed assets through English/Equitable mortgage as well as hypothecation of movable assets of the Company.

9

Figures for the previous periods have been regrouped/reclassified wherever necessary, to conform to current period’s classification. For and on behalf of Board of Directors

(K.BISWAL) DIRECTOR (FINANCE) Place: New Delhi Date : 8th February 2017

S-17

THE ISSUER NTPC Limited NTPC Bhawan SCOPE Complex 7, Institutional Area Lodi Road New Delhi 110 003 India TRUSTEE Citicorp Trustee Company Limited Citigroup Centre Canada Square Canary Wharf London E14 5LB PAYING AGENT AND TRANSFER AGENT

REGISTRAR

Citibank, N.A. 1 North Wall Quay Dublin 1 Ireland

Citigroup Global Markets Deutschland AG Reuterweg 16 60323 Frankfurt Germany LEGAL ADVISERS

To the Dealers and the Trustee as to English law Allen & Overy 9th Floor Three Exchange Square Central Hong Kong

To the Issuer as to Indian law Cyril Amarchand Mangaldas Peninsula Chambers Peninsula Corporate Park Ganpatrao Kadam Marg Lower Parel Mumbai 400 013 India

JOINT LEAD MANAGERS Axis Bank Limited, Singapore Branch 9 Raffles Place Republic Plaza #48-01/02 Singapore 048619

Barclays Bank PLC 5 The North Colonnade Canary Wharf London E14 4BB United Kingdom

MUFG Securities EMEA plc Ropemaker Place 25 Ropemaker Street London EC2Y 9AJ United Kingdom

ICICI Bank Limited (Singapore Branch) 9 Raffles Place #50-01 Republic Plaza Singapore- 048619

Standard Chartered Bank 8 Marina Boulevard, Level 20 Marina Bay Financial Centre, Tower 1 Singapore 018981

S-18

AUDITORS T.R. Chadha & Co. LLP B-30, Connaught Place Kuthalia Building New Delhi 110 001 India

PSD & Associates H-197, Arjun Nagar S J Enclave New Delhi 110 029 India

Sagar & Associates H.No.:6-3-244/5 Sarada Devi Street Banjara Hills Premnagar, Khaitrabad Hyderabad 500 004 India

Kalani & Co 703, VII Floor Milestone Building Gandhi Nagar Crossing Tonk Road Jaipur 302 015 India

P. A. & Associates 20, Gobind Vihar Bhamikhal Bhubaneshwar 751 010 India

S.K. Kapoor & Co 16/98, LIC Building The Mall Kanpur 208 001 India

B. M. Chatrath & Co. Centre Point, 4th Floor, Room No 440 21, Hemanta Basu Sarani Kolkata 700 001 India

S-19

NTPC LIMITED

S-20

IMPORTANT NOTICE NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE UNITED STATES IMPORTANT: You must read the following before continuing. The following applies to the offering circular (the offering circular) following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the offering circular. In accessing the offering circular, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from us as a result of such access. NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR THE SECURITIES LAWS OF ANY STATE OF THE U.S. OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE U.S. OR, IN CERTAIN CIRCUMSTANCES, TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THE OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY U.S. ADDRESS OR, IN CERTAIN CIRCUMSTANCES, TO ANY U.S. PERSON. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. Confirmation of your Representation: The offering circular is being sent at your request and by accepting the e-mail and accessing the offering circular, you shall be deemed to have represented to us that the electronic mail address that you gave us and to which this e-mail has been delivered is not located in the United States and that you consent to delivery of such offering circular by electronic transmission. You are reminded that the offering circular has been delivered to you on the basis that you are a person into whose possession the offering circular may be lawfully delivered in accordance with the laws of jurisdiction in which you are located and you may not, nor are you authorised to, deliver the offering circular to any other person. The materials relating to any offering of securities under the Programme described in the offering circular do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that such offering be made by a licensed broker or dealer and the underwriters or any affiliate of the underwriters is a licensed broker or dealer in that jurisdiction, then such offering shall be deemed to be made by the underwriters or such affiliate on behalf of the Issuer in such jurisdiction. The offering circular has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of the Dealers (as defined in the offering circular) nor any person who controls each of them nor any director, officer, employee nor agent of each of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the offering circular distributed to you in electronic format and the hard copy version available to you on request from the Dealers. You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature. In addition, holders and beneficial owners shall be responsible for compliance with restrictions on the ownership of the Rupee-denominated Notes imposed from time to time by applicable laws or by any regulatory authority or otherwise. In this context, holders and beneficial owners of Rupee denominated Notes shall be deemed to have acknowledged, represented and agreed that such holders and beneficial owners are eligible to purchase the Rupee denominated Notes under applicable laws and regulations and are not prohibited under any applicable law or regulation from acquiring, owning or selling the Rupee denominated Notes. Potential investors should seek independent advice and verify compliance with the Financial Action Task Force (FATF) Requirements (as further set out under “Subscription, Sale, Transfer and Selling Restrictions”) prior to any purchase of the Rupee denominated Notes. The holders and beneficial owners of Rupee denominated Notes shall be deemed to confirm that, for so long as they hold any Rupee denominated Notes, they will meet the FATF Requirements (as further set out under “Subscription and Sale”) and will not be an offshore branch of an Indian bank. Further, all holders and beneficial owners of Rupee denominated Notes represent and agree that the Rupee denominated Notes will not be offered or sold on the secondary market to any person who does not comply with the FATF Requirements (as further set out under “Subscription and Sale”) or is an offshore branch of an Indian bank.

OFFERING CIRCULAR

NTPC LIMITED (incorporated with limited liability in the Republic of India)

U.S.$4,000,000,000 Medium Term Note Programme On 14 February 2006, NTPC Limited (the Issuer or NTPC) established a U.S.$1,000,000,000 Medium Term Note Programme (the Programme, as amended, supplemented or restated) and prepared an offering circular dated 14 February 2006. On 10 August 2012, the size of the Programme was increased from U.S.$1,000,000,000 to U.S.$2,000,000,000 in accordance with the terms of the Programme. On 29 May 2015, the size of the Programme was further increased from U.S.$2,000,000,000 to U.S.$4,000,000,000. This Offering Circular updates the Programme and supersedes any previous offering circular describing the Programme. Any Notes (as defined below) issued under the Programme on or after the date of this Offering Circular are issued subject to the provisions described herein. This does not affect any Notes issued before the date of this Offering Circular. Under the Programme, the Issuer may from time to time issue notes (the Notes) denominated in any currency agreed between the Issuer and the relevant Dealer (as defined below). Notes may be issued in bearer or registered form (respectively, Bearer Notes and Registered Notes) The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme will not exceed U.S.$4,000,000,000 (or its equivalent in other currencies calculated as described herein), subject to increase as described herein. The Notes may be issued on a continuing basis to one or more of the Dealers specified under “Summary of the Programme” and any additional Dealer appointed under the Programme from time to time by the Issuer (each a Dealer and together the Dealers), which appointment may be for a specific issue or on an ongoing basis. References in this Offering Circular to the relevant Dealer shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing to subscribe to such Notes. Approval-in-principle has been granted for the listing and quotation of Notes that may be issued pursuant to the Programme and which are agreed at or prior to the time of issue thereof to be so listed on the Singapore Exchange Securities Trading Limited (the SGX-ST). Such permission will be granted when such Notes have been admitted to the Official List of the SGX-ST (the Official List). The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained herein. Approval-in-principle for the listing of Notes on the SGX-ST is not to be taken as an indication of the merits of the Issuer, the Programme or the Notes. Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price of Notes and any other terms and conditions not contained herein which are applicable to each Tranche (as defined under “Terms and Conditions of the Notes”) of Notes will be set out in a pricing supplement (the Pricing Supplement) which, with respect to Notes to be listed on the SGX-ST, will be delivered to the SGX-ST on or before the date of listing of the Notes of such Tranche. It is possible for the Notes to be listed after the issue date. The Programme provides that Notes may be listed on such other or further stock exchange(s) as may be agreed between the Issuer and the relevant Dealer. The Issuer may also issue unlisted Notes. The Issuer may agree with any Dealer and the Trustee (as defined herein) that Notes may be issued in a form not contemplated by the Terms and Conditions of the Notes herein, in which event (in the case of Notes intended to be listed on the SGX-ST) a supplementary Offering Circular, if appropriate, will be made available which will describe the effect of the agreement reached in relation to such Notes. See “Investment Considerations” for a discussion of certain factors to be considered in connection with an investment in the Notes. Notes to be listed on the SGX-ST will be accepted for clearance through Euroclear Bank S.A./N.V. (Euroclear) and Clearstream Banking, S.A. (Clearstream). Each Tranche of Bearer Notes of each series (as defined in “Form of the Notes”) will initially be represented by either a temporary bearer global note (a Temporary Bearer Global Note) or a permanent bearer global note (a Permanent Bearer Global Note and, together with a Temporary Bearer Global Note, the Bearer Global Notes, and each a Bearer Global Note) as indicated in the applicable Pricing Supplement, which, in either case, will be delivered on or prior to the original issue date of the Tranche to a common depositary (the Common Depositary) for Euroclear and Clearstream. On and after the date (the Exchange Date) which, for each Tranche in respect of which a Temporary Bearer Global Note is issued, is 40 days after the Temporary Bearer Global Note is issued, interests in such Temporary Bearer Global Note will be exchangeable (free of charge) upon a request as described therein either for (i) interests in a Permanent Bearer Global Note of the same Series or (ii) definitive Bearer Notes of the same Series. Registered Notes sold in an “offshore transaction” within the meaning of Regulation S (Regulation S) under the U.S. Securities Act of 1933, as amended (the Securities Act), which will be sold outside the United States (U.S.) and, in certain circumstances, only to non-U.S. persons (as defined in Regulation S), will initially be represented by a global note in registered form, without receipts or coupons, (a Registered Global Note) deposited with a common depositary for Euroclear and Clearstream, and registered in the name of a nominee of such common depositary. Prior to expiry of the distribution compliance period (as defined in Regulation S) (the Distribution Compliance Period) (if any) applicable to each Tranche of Notes, beneficial interests in a Registered Global Note may not be offered or sold to, or for the account or benefit of, a U.S. person, save as otherwise provided in the Terms and Conditions of the Notes and may not be held otherwise than through Euroclear or Clearstream. The applicable Pricing Supplement will specify that a Permanent Bearer Global Note will be exchangeable for definitive Bearer Notes in certain limited circumstances. This Offering Circular has not been and will not be registered as a prospectus or a statement in lieu of a prospectus in respect of a public offer, information memorandum or private placement offer letter or any other offering material with the Registrar of Companies in India in accordance with the Companies Act, 1956, as amended and replaced from time to time, the Companies Act, 2013, as amended and other applicable Indian laws for the time being in force. This Offering Circular has not been and will not be reviewed or approved by any regulatory authority in India, including, but not limited to, the Securities and Exchange Board of India, any Registrar of Companies or any stock exchange in India. This Offering Circular and the Notes are not and should not be construed as an advertisement, invitation, offer or sale of any securities whether to the public or by way of private placement to any person resident in India. The Notes have not been and will not be, offered or sold to any person resident in India. If you purchase any of the Notes, you will be deemed to have acknowledged, represented and agreed that you are eligible to purchase the Notes under applicable laws and regulations and that you are not prohibited under any applicable law or regulation from acquiring, owning or selling the Notes. See “Subscription and Sale”. The Notes have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and Notes in bearer form are subject to U.S. tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United States or, in certain circumstances, to U.S. persons (as defined in Regulation S). See “Subscription and Sale”.

Arrangers

Barclays

Citigroup

Deutsche Bank

Dealers

Barclays

Citigroup

Deutsche Bank

The date of this Offering Circular is 10 November 2016.

The Issuer accepts responsibility for the information contained in this Offering Circular. To the best of the knowledge and belief of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this Offering Circular is in accordance with the facts and does not omit anything that would make the statements therein, in light of the circumstances under which they were made, misleading. The Issuer, having made all reasonable enquiries, confirms that this Offering Circular contains or incorporates all information which is material in the context of the Programme and the Notes, that the information contained or incorporated in this Offering Circular is true and accurate in all material respects and is not misleading, that the opinions and intentions expressed in this Offering Circular are honestly held and that there are no other facts the omission of which would make this Offering Circular or any of such information or the expression of any such opinions or intentions misleading. The Issuer accepts responsibility accordingly. No person is or has been authorised by the Issuer to give any information or to make any representation other than those contained in this Offering Circular or any other information supplied in connection with the Programme or the Notes and, if given or made by any other person, such information or representations must not be relied upon as having been authorised by the Issuer, any of the Arrangers or the Dealers or the Trustee. Neither the Arrangers, the Dealers nor the Trustee (as defined herein) has independently verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by any of the Arrangers or the Dealers, the Trustee or any of them as to the accuracy or completeness of the information contained in or incorporated into this Offering Circular or any other information provided by the Issuer in connection with the Programme. Neither this Offering Circular nor any other information supplied in connection with the Programme or any Notes (i) is intended to provide the basis of any credit or other evaluation or (ii) should be considered as a recommendation by the Issuer, any of the Arrangers or the Dealers or the Trustee that any recipient of this Offering Circular or any other information supplied in connection with the Programme or any Notes should purchase any of the Notes. Each investor contemplating purchasing Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. Neither this Offering Circular nor any other information supplied in connection with the Programme or the issue of any Notes constitutes an offer or invitation by or on behalf of the Issuer, any of the Arrangers or the Dealers or the Trustee to any person to subscribe for or to purchase any Notes. Neither the delivery of this Offering Circular nor the offering, sale or delivery of any Notes shall in any circumstances imply that the information contained herein concerning the Issuer is correct at any time subsequent to the date hereof or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date indicated in the document containing the same. The Arrangers, the Dealers and the Trustee expressly do not undertake to review the financial condition or affairs of the Issuer during the life of the Programme or to advise any investor in the Notes of any information coming to their attention. Investors should review, inter alia, the most recently published documents incorporated by reference into this Offering Circular when deciding whether or not to purchase any Notes. This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy any Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Offering Circular and the offer or sale of Notes may be restricted by law in certain jurisdictions. The Issuer, the Arrangers, the Dealers and the Trustee do not represent that this Offering Circular may be lawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Issuer, any of the Arrangers or the Dealers or the Trustee which would permit a public offering of any Notes or distribution of this Offering Circular in any

2

jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Offering Circular nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Offering Circular or any Notes may come must inform themselves about, and observe, any such restrictions on the distribution of this Offering Circular and the offering and sale of Notes. In particular, there are restrictions on the distribution of this Offering Circular and the offer or sale of Notes in the United States, the European Economic Area (including the United Kingdom, Italy and the Netherlands), India, Singapore, Japan and Hong Kong, see “Subscription and Sale”. In making an investment decision, investors must rely on their own examination of the Issuer and the terms of the Notes being offered, including the merits and risks involved. None of the Issuer, the Arrangers, the Dealers and the Trustee makes any representation to any investor in the Notes regarding the legality of its investment under any applicable laws. Any investor in the Notes should be able to bear the economic risk of an investment in the Notes for an indefinite period of time. There are restrictions on the offer and sale of the Notes in the United Kingdom. All applicable provisions of the Financial Services and Market Act 2000 (FSMA) with respect to anything done by any person in relation to the Notes in, from or otherwise involving the United Kingdom must be complied with. See “Subscription and Sale”. In connection with the offering of any series of Notes, each Dealer is acting or will act for the Issuer in connection with the offering and no-one else and will not be responsible to anyone other than the Issuer for providing the protections afforded to clients of that Dealer nor for providing advice in relation to any such offering. For a description of other restrictions, see “Subscription and Sale”.

3

PRESENTATION OF FINANCIAL AND OTHER INFORMATION The Issuer maintains its financial books and records and prepares its financial statements in Indian Rupees in accordance with generally accepted accounting principles in the Republic of India (Indian GAAP) and Indian Accounting Standards (IND-AS) which differ in certain important respects from International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS). For a discussion of the principal differences between Indian GAAP, IFRS and IND-AS as they relate to the Issuer, see “Summary of Significant Differences Between Indian GAAP, IFRS and IND-AS”. Unless otherwise stated, all financial data contained herein is that of the Issuer, its subsidiaries and joint venture companies on a consolidated basis. The financial statements for the years ended 31 March 2015 and 31 March 2016 included in this Offering Circular have been audited by the auditors as set out in paragraph 7 of the section entitled “General Information”. Please see the auditors’ report for fiscal 2016 on pages F-15 to F-110 and the auditors’ report for fiscal 2015 on pages F-111 to F-199, which clarify that: (i) the financial statements of the subsidiaries and joint venture companies have not been audited by the Issuer’s auditors and (ii) the financial statements of certain joint venture companies are unaudited and the figures included in the audited financial statements for such joint venture companies are based solely on the financial statements certified by the management of such joint venture companies. The unaudited, standalone financial results of the Issuer for the six months ended 30 September 2016 and 30 September 2015 have been reviewed by the auditors as set out in paragraph 7 of the section entitled “General Information”, and, together with the auditors’ review report, are set out on pages F-3 to F-8 and F-9 to F-14, respectively. CERTAIN DEFINITIONS Capitalised terms which are used but not defined in any particular section of this Offering Circular will have the meaning attributed to them in the “Terms and Conditions of the Notes” or any other section of the Offering Circular. In this Offering Circular, unless otherwise specified, references to India are to the Republic of India, references to the Government are to the Government of India and references to the RBI are to the Reserve Bank of India. References to specific data applicable to particular subsidiaries or other consolidated entities are made by reference to the name of that particular entity. References to fiscal or fiscal year are to the year ended 31 March. Unless the context otherwise indicates, all references to NTPC or the Issuer are to NTPC Limited and its subsidiaries and joint venture companies on a consolidated basis. Industry and market share data in this Offering Circular is derived from data prepared by the Central Electricity Authority (the CEA) which is the nodal government agency for planning, advising and monitoring the Indian power sector, the Ministry of Power, Government of India (the MoP), the former Planning Commission of India and from industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although the Issuer believes that the industry data used in this Offering Circular is reliable and takes responsibility for the accurate extraction of such data from publicly available sources, it has not been independently verified by the Issuer, the Arrangers, the Dealers or the Trustee. As used in this Offering Circular, the terms Tenth Plan, Eleventh Plan, Twelfth Plan and Thirteenth Plan refer to the five-year plans of the Government, and mean the Tenth Five-Year Plan covering the fiscal period 2002-2007, the Eleventh Five-Year Plan covering the fiscal period 2007-2012, the Twelfth Five-Year Plan covering the period 2012-2017 and the Thirteenth Five-Year Plan covering the period 2017-2022, respectively.

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All references in this document to U.S. dollars, U.S.$ and $ refer to United States dollars, to Rupee, Rupees, INR, Rs. and ` refer to Indian Rupees and to SGD refer to Singapore dollars. In addition, references to Sterling, GBP and £ refer to pounds sterling and to euro, EUR and =C refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty on the Functioning of the European Community, as amended. For convenience only, certain Rupee amounts in this Offering Circular have been translated into U.S. dollars. Unless otherwise specified, all such conversions were made at the exchange rate based on market rates prevailing at the relevant dates. No representation is made that the Rupee or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or Rupee, as the case may be, at any particular rate, or at all. References to crores, lac and lakhs in the Issuer’s financial statements are to the following: One lac or lakh . . . One crore. . . . . . . . Ten crores . . . . . . . One hundred crores

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

100,000 10,000,000 100,000,000 1,000,000,000

(one hundred thousand) (ten million) (one hundred million) (one thousand million or one billion)

In this Offering Circular, where information has been presented in millions or billions of units, amounts may have been rounded, in the case of information presented in millions, to the nearest ten thousand or one hundred thousand units or, in the case of information presented in billions, one, ten or one hundred million units. Accordingly, the totals of columns or rows of numbers in tables may not be equal to the apparent total of the individual items and actual numbers may differ from those contained herein due to rounding. Furthermore, certain figures and percentages included in this Offering Circular have been subject to rounding adjustments; accordingly, figures shown in the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. FORWARD-LOOKING STATEMENTS The Issuer has included statements in this Offering Circular which contain words or phrases such as “will”, “would”, “aimed”, “is likely”, “are likely”, “believe”, “expect”, “expected to”, “will continue”, “will achieve”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “seeking to”, “target”, “propose to”, “future”, “objective”, “goal”, “projected”, “should”, “can”, “could”, “may” and similar expressions or variations of such expressions, that are “forward-looking statements”. Actual results may differ materially from those suggested by the forward-looking statements due to certain risks or uncertainties associated with the expectations of the Issuer with respect to, but not limited to, regulatory changes relating to the power sector in India and the Issuer’s ability to respond to them, the Issuer’s ability to successfully implement its strategy, the Issuer’s growth and expansion, including the Issuer’s ability to complete its capacity expansion plans, technological changes, the Issuer’s exposure to market risks, general economic and political conditions in India which have an impact on the Issuer’s business activities or investments, the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in the Issuer’s industry. For a further discussion on the factors that could cause actual results to differ, see the discussion under “Investment Considerations” contained in this Offering Circular.

5

ENFORCEMENT OF FOREIGN JUDGMENTS IN INDIA The Issuer is a limited liability public company incorporated under the laws of India. All of the Issuer’s directors and executive officers named herein are residents of India and all or a substantial portion of the assets of the Issuer and such persons are located in India. As a result, it may not be possible for investors to effect service of process on the Issuer or such persons in jurisdictions outside of India, or to enforce against them judgments obtained in courts outside of India predicated upon civil liabilities of the Issuer or such directors and executive officers under laws other than Indian law, including any judgment predicated upon United States federal securities laws. There is doubt as to the enforceability in India in original actions or in actions for enforcement of judgments of United States courts of civil liabilities predicated solely upon the federal securities laws of the United States. India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. The Issuer understands that the statutory basis for recognition and enforcement of foreign judgments is provided for under section 13 and section 44A of the Indian Code of Civil Procedure, 1908 (the Civil Code). Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superior court in any country or territory outside India which the Government has by notification declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, section 44A of the Civil Code is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty and is not applicable to arbitration awards, even if such awards are enforceable as a decree or judgment. The United States has not been declared by the Government to be a reciprocating territory for the purposes of section 44A of the Civil Code. However, the United Kingdom has been declared by the Government to be a reciprocating territory and the High Courts in England as the relevant superior courts. Accordingly, a judgment of a court in the United States may be enforced only by a fresh suit upon the judgment and not by proceedings in execution, whereas a judgment of a superior court in the United Kingdom may be enforceable by proceedings in execution, and a judgment not of a superior court, by a fresh suit resulting in a judgment or order. A judgment of a court in a jurisdiction which is not a reciprocating territory may be enforced only by a new suit upon the judgment and not by proceedings in execution. Section 13 of the Civil Code provides that a foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon except: (i) where it has not been pronounced by a court of competent jurisdiction; (ii) where it has not been given on the merits of the case; (iii) where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of India in cases where such law is applicable; (iv) where the proceedings in which the judgment was obtained were opposed to natural justice; (v) where it has been obtained by fraud; or (vi) where it sustains a claim founded on a breach of any law in force in India. The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce a foreign judgment if it viewed the amount of damages awarded as excessive or inconsistent with Indian practice. A party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI under the Foreign Exchange Management Act, 1999 to repatriate outside India any amount recovered pursuant to execution. Any judgment in a foreign currency would be converted into Rupees on the date of the judgment and not on the date of the payment. Also, a party may file a suit in India against the Issuer, its directors or its executive officers as an original action.

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GLOSSARY OF TERMS USED IN THIS OFFERING CIRCULAR Below are certain terms relating to the power sector used in this Offering Circular. 2009-14 Regulations . . . . . . . . . .

the tariff regulations issued by the CERC for the period from 1 April 2009 to 31 March 2014

AD Bank . . . . . . . . . . . . . . . . . . .

a designated authorised dealer category I bank appointed in accordance with the ECB Guidelines

APDRP . . . . . . . . . . . . . . . . . . . .

Accelerated Power Development and Reforms Programme

availability factor. . . . . . . . . . . . .

a measure of how often a power station is available to generate power

CEA. . . . . . . . . . . . . . . . . . . . . . .

Central Electricity Authority

CERC . . . . . . . . . . . . . . . . . . . . .

Central Electricity Regulatory Commission

Central Sector . . . . . . . . . . . . . . .

central sector which comprises Central Government-owned power utilities

Companies Act . . . . . . . . . . . . . . .

the Companies Act, 1956, as amended or replaced from time to time

CIL . . . . . . . . . . . . . . . . . . . . . . .

Coal India Limited

CPSUs . . . . . . . . . . . . . . . . . . . . .

external commercial borrowing raised in accordance with the ECB Guidelines

ECB Guidelines . . . . . . . . . . . . . .

Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, Master Directions on External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers dated January 1, 2016, as amended from time to time and the Master Direction on Reporting under Foreign Exchange Management Act, 1999 dated January 1, 2016, as amended

EDs . . . . . . . . . . . . . . . . . . . . . . .

Electricity Departments

Electricity Act . . . . . . . . . . . . . . .

Electricity Act, 2003, as amended from time to time

GAIL . . . . . . . . . . . . . . . . . . . . . .

GAIL (India) Limited

grid . . . . . . . . . . . . . . . . . . . . . . .

a national or regional high voltage transmission network

IPP . . . . . . . . . . . . . . . . . . . . . . .

an independent power producer

kWh . . . . . . . . . . . . . . . . . . . . . . .

a kilowatt hour

MoC . . . . . . . . . . . . . . . . . . . . . .

the Ministry of Coal

MUs. . . . . . . . . . . . . . . . . . . . . . .

millions of Units

MW . . . . . . . . . . . . . . . . . . . . . . .

a megawatt

NEP . . . . . . . . . . . . . . . . . . . . . . .

National Electricity Policy

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New Companies Act . . . . . . . . . . .

the Companies Act, 2013/as amended from time to time

NPCIL . . . . . . . . . . . . . . . . . . . . .

Nuclear Power Corporation of India Limited

OTSS . . . . . . . . . . . . . . . . . . . . . .

Scheme for One Time Settlement of Outstanding Dues

PLF . . . . . . . . . . . . . . . . . . . . . . .

plant load factor, a measure equal to the percentage of capacity actually utilised

PPA . . . . . . . . . . . . . . . . . . . . . . .

power purchase agreement

PV . . . . . . . . . . . . . . . . . . . . . . . .

photovoltaic

RBI . . . . . . . . . . . . . . . . . . . . . . .

Reserve Bank of India

Regulations . . . . . . . . . . . . . . . . .

the tariff regulations issued by the CERC for the period from 1 April 2014 to 31 March 2019

Rupee Denominated Notes . . . . . .

Notes which are denominated in INR and payable in foreign currency pursuant to the ECB Guidelines

SCCL . . . . . . . . . . . . . . . . . . . . .

Singareni Collieries Company Limited

SEB . . . . . . . . . . . . . . . . . . . . . . .

State Electricity Board

SEUs . . . . . . . . . . . . . . . . . . . . . .

State Electricity Utilities, comprising SEBs, unbundled entities of SEBs and EDs

Tariff Policy . . . . . . . . . . . . . . . .

Tariff Policy issued by the Government in January 2006

UMPP . . . . . . . . . . . . . . . . . . . . .

ultra mega power projects

Unit . . . . . . . . . . . . . . . . . . . . . . .

one kWh; that is, the energy contained in a current of one thousand amperes flowing under an electromotive force of one volt during one hour

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CONTENTS Page DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10

GENERAL DESCRIPTION OF THE PROGRAMME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11

SUMMARY OF THE PROGRAMME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

FORM OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17

FORM OF PRICING SUPPLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21

TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31

USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

63

CAPITALISATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

64

INVESTMENT CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

65

DESCRIPTION OF THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

99

THE POWER INDUSTRY IN INDIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 REGULATIONS AND POLICIES IN INDIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 TAXATION

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable Pricing Supplement may over-allot or effect transactions with a view to supporting the market price of the Notes of the Series (as defined below) of which such Tranche forms part at a level higher than that which might otherwise prevail. However, stabilisation may not necessarily occur. Any stabilisation action or over-allotment may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may cease at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in accordance with all applicable laws and rules.

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DOCUMENTS INCORPORATED BY REFERENCE The following documents published or issued from time to time after the date hereof shall be deemed to be incorporated in, and to form part of, this Offering Circular: (a)

the most recently published, audited, consolidated and non-consolidated annual financial statements and, if published later, the most recently published audited or reviewed, as the case may be, interim non-consolidated financial results of the Issuer, (see “General Information” for a description of the financial statements currently published by the Issuer); and

(b)

all supplements or amendments to this Offering Circular circulated by the Issuer from time to time.

Any statement contained herein or in a document which is deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Offering Circular to the extent that a statement contained in any such subsequent document which is deemed to be incorporated by reference herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Offering Circular. The Issuer will provide, without charge, to each person to whom a copy of this Offering Circular has been delivered, upon the request of such person, a copy of any or all of the documents deemed to be incorporated herein by reference unless such documents have been modified or superseded as specified above. Requests for such documents should be directed to the Issuer at its office set out at the end of this Offering Circular. In addition, such documents will be available free of charge from the principal office of the principal paying agent in London (which for the time being is Citibank, N.A.) (the Principal Paying Agent) for the Notes listed on the SGX-ST. If the terms of the Programme are modified or amended in a manner which would make this Offering Circular, as so modified or amended, inaccurate or misleading, to an extent which is material in the context of the Programme, a new offering circular will be prepared.

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GENERAL DESCRIPTION OF THE PROGRAMME Under the Programme, the Issuer may from time to time issue Notes denominated in any currency, subject as set out herein. A summary of the terms and conditions of the Programme and the Notes appears below. The applicable terms of any Notes will be agreed between the Issuer and the relevant Dealer prior to the issue of the Notes and will be set out in the Terms and Conditions of the Notes endorsed on, attached to, or incorporated by reference into, the Notes, as modified and supplemented by the applicable Pricing Supplement attached to, or endorsed on, such Notes, as more fully described under “Form of the Notes”. This Offering Circular and any supplement will only be valid for listing Notes on the SGX-ST in an aggregate nominal amount which, when added to the aggregate nominal amount then outstanding of all Notes previously or simultaneously issued under the Programme, does not exceed U.S.$4,000,000,000 or its equivalent in other currencies. For the purpose of calculating the U.S. dollar equivalent of the aggregate nominal amount of Notes issued under the Programme from time to time: (a)

the U.S. dollar equivalent of Notes denominated in another Specified Currency (as specified in the applicable Pricing Supplement in relation to the relevant Notes, described under “Form of the Notes”) shall be determined, at the discretion of the Issuer, either as of the date on which agreement is reached for the issue of Notes or on the preceding day on which commercial banks and foreign exchange markets are open for business in London, in each case on the basis of the spot rate for the sale of the U.S. dollar against the purchase of such Specified Currency in the London foreign exchange market quoted by any leading international bank selected by the Issuer on the relevant day of calculation;

(b)

the U.S. dollar equivalent of Dual Currency Notes, Index Linked Notes and Partly Paid Notes (each as specified in the applicable Pricing Supplement in relation to the relevant Notes, described under “Form of the Notes”) shall be calculated in the manner specified above by reference to the original nominal amount on issue of such Notes (in the case of Partly Paid Notes regardless of the subscription price paid); and

(c)

the U.S. dollar equivalent of Zero Coupon Notes (as specified in the applicable Pricing Supplement in relation to the relevant Notes, described under “Form of the Notes”) and other Notes issued at a discount or a premium shall be calculated in the manner specified above by reference to the net proceeds received by the Issuer for the relevant issue.

The offering of the Notes will be made entirely outside India. This Offering Circular may not be distributed directly or indirectly in India or to residents of India and the Notes are not being offered or sold and may not be offered or sold directly or indirectly in India or to, or for the account or benefit of, any resident of India. Each purchaser of Notes will be deemed to represent that it is neither located in India nor a resident of India and that it is not purchasing for, or for the account or benefit of, any such person, and understands that the Notes may not be offered, sold, pledged or otherwise transferred to any person located in India, to any resident of India or to, or for the account of, such persons, unless determined otherwise in compliance with applicable law. The Issuer will issue Notes under the Programme in accordance with the ECB Guidelines. The Government does not provide any guarantee or financial support in relation to any payment or obligation in respect of the Notes and has no commitment or obligation whatsoever in relation to any payment or obligation in respect of the Notes.

11

SUMMARY OF THE PROGRAMME The following summary does not purport to be complete and is taken from, and is qualified in its entirety by, the remainder of this Offering Circular and, in relation to the terms and conditions of any particular Tranche of Notes, the applicable Pricing Supplement. Words and expressions defined in “Form of the Notes” and “Terms and Conditions of the Notes” shall have the same meanings in this summary. Issuer: . . . . . . . . . . . . . . . . . . . . .

NTPC Limited

Investment Considerations: . . . . .

There are certain factors that may affect the Issuer’s ability to fulfil its obligations under Notes issued under the Programme. These are set out under “Investment Considerations” below. In addition, there are certain factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme. These are set out under “Investment Considerations” and include certain risks relating to the structure of particular Series of Notes and certain market risks.

Description: . . . . . . . . . . . . . . . . .

Medium Term Note Programme

Arrangers: . . . . . . . . . . . . . . . . . .

Barclays Bank PLC Citigroup Global Markets Limited Deutsche Bank AG, Singapore Branch

Dealers: . . . . . . . . . . . . . . . . . . . .

Barclays Bank PLC Citigroup Global Markets Limited Deutsche Bank AG, Singapore Branch and any other Dealers appointed in accordance with the Programme Agreement (as defined under “Subscription and Sale”).

Certain Restrictions: . . . . . . . . . .

Each issue of Notes in respect of which particular laws, guidelines, regulations, restrictions or reporting requirements apply will only be issued in circumstances which comply with such laws, guidelines, regulations, restrictions or reporting requirements from time to time (see “Subscription and Sale”) including the following restrictions applicable at the date of this Offering Circular.

Trustee: . . . . . . . . . . . . . . . . . . . .

Citicorp Trustee Company Limited

Principal Paying Agent: . . . . . . . .

Citibank, N.A.

Transfer Agent: . . . . . . . . . . . . . .

Citibank, N.A.

Registrar: . . . . . . . . . . . . . . . . . . .

Citigroup Global Markets Deutschland AG

Programme Size: . . . . . . . . . . . . .

U.S.$4,000,000,000 (or its equivalent in other currencies calculated as described under “General Description of the Programme”) in an aggregate nominal amount of Notes outstanding at any time. The Issuer may increase the amount of the Programme in accordance with the terms of the Programme Agreement.

12

Distribution: . . . . . . . . . . . . . . . .

Notes may be distributed by way of private or public placement and in each case on a syndicated or non-syndicated basis.

Currencies: . . . . . . . . . . . . . . . . .

Subject to any applicable legal or regulatory restrictions, any currency agreed between the Issuer and the relevant Dealer.

Redenomination: . . . . . . . . . . . . .

The applicable Pricing Supplement may provide that certain Notes may be redenominated in euro. The relevant provisions applicable to any such redenomination are contained in Condition 5.

Maturities: . . . . . . . . . . . . . . . . . .

Such maturities as may be agreed between the Issuer and the relevant Dealer, subject to such minimum or maximum maturities as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the Issuer including but not limited to the minimum maturity period specified under the ECB Guidelines or the relevant Specified Currency.

Issue Price: . . . . . . . . . . . . . . . . .

Notes may be issued on a fully-paid or a partly-paid basis and at an issue price which is at par or at a discount to, or premium over, par.

Form of Notes: . . . . . . . . . . . . . .

The Notes will be issued in bearer and/or registered form as described in “Form of the Notes”.

Fixed Rate Notes: . . . . . . . . . . . .

Fixed interest will be payable at such rate or rates in arrear and on such date or dates as may be agreed between the Issuer and the relevant Dealer, subject to any regulatory requirement (including but not limited to the ECB Guidelines) and on redemption and will be calculated on the basis of such Day Count Fraction as may be agreed between the Issuer and the relevant Dealer, subject to any regulatory requirement (including but not limited to the ECB Guidelines).

Floating Rate Notes: . . . . . . . . . .

Floating Rate Notes will bear interest at a rate, subject to any regulatory requirement including but not limited to the ECB Guidelines, determined: (i)

on the same basis as the floating rate under a notional interest rate swap transaction in the relevant Specified Currency governed by an agreement incorporating the 2006 ISDA Definitions (as published by the International Swaps and Derivatives Association, Inc., and as amended and updated as of the Issue Date of the first Tranche of the Notes of the relevant Series);

(ii)

on the basis of a reference rate appearing on the agreed screen page of a commercial quotation service; or

(iii) on such other basis as may be agreed between the Issuer and the relevant Dealer.

13

The margin (if any) relating to such floating rate will be agreed between the Issuer and the relevant Dealer for each Series of Floating Rate Notes, subject to any regulatory requirement (including but not limited to the ECB Guidelines). Floating Rate Notes may also have a maximum interest rate, a minimum interest rate or both. Index Linked Notes:. . . . . . . . . . .

Payments of principal in respect of Index Linked Redemption Notes or of interest in respect of Index Linked Interest Notes will be calculated by reference to such index and/or formula or to changes in the prices of securities or commodities or to such other factors as the Issuer and the relevant Dealer may agree, subject to any regulatory requirement (including, but not limited to, the ECB Guidelines).

Other provisions in Floating Rate Notes and Index Linked Interest Notes: . . . . . . . . . . . . .

Floating Rate Notes and Index Linked Interest Notes may also have a relation to maximum interest rate, a minimum interest rate or both, subject to any regulatory requirement including, but not limited to, the ECB Guidelines. Interest on Floating Rate Notes and Index Linked Interest Notes in respect of each Interest Period, as agreed prior to issue by the Issuer and the relevant Dealer, will be payable on such Interest Payment Dates, and will be calculated on the basis of such Day Count Fraction, as may be agreed between the Issuer and the relevant Dealer.

Dual Currency Notes:. . . . . . . . . .

Payments (whether in respect of principal or interest and whether at maturity or otherwise) in respect of Dual Currency Notes will be made in such currencies, and based on such rates of exchange, as the Issuer and the relevant Dealer may agree, subject to any regulatory requirement (including, but not limited to, the ECB Guidelines).

Partly Paid Notes: . . . . . . . . . . . .

The Issuer may issue Notes in respect of which the issue price is paid in separate instalments in such amounts and on such dates as the Issuer and the relevant Dealer may agree.

Zero Coupon Notes: . . . . . . . . . . .

Zero Coupon Notes will be offered and sold at a discount to their nominal amount and will not bear interest.

Other Notes: . . . . . . . . . . . . . . . .

The Issuer may agree with any Dealer and the Trustee that Notes may be issued in a form not contemplated by the Terms and Conditions of the Notes, in which event the relevant provisions will be included in the applicable Pricing Supplement.

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Redemption:. . . . . . . . . . . . . . . . .

Unless otherwise indicated in the applicable Pricing Supplement, the relevant Notes cannot be redeemed prior to their stated maturity other than (i) in specified instalments, if applicable, (ii) for taxation reasons, (iii) following a Change in Control (as defined in Condition 8), or (iv) following an Event of Default (as defined in Condition 11). Please note that any redemption of the Notes prior to their average stated maturity or in the case of Rupee Denominated Notes prior to the stated maturity will require the prior approval of the RBI or the AD Bank, as the case may be under the ECB Guidelines. The applicable Pricing Supplement may provide that Notes may be redeemable in separate instalments in such amounts and on such dates as are indicated in the applicable Pricing Supplement, subject to any regulatory requirement including, but not limited to, the ECB Guidelines.

Denomination of Notes: . . . . . . . .

Notes will be issued in such denominations as may be agreed between the Issuer and the relevant Dealer, save that the minimum denomination of each Note will be such as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant Specified Currency.

Taxation: . . . . . . . . . . . . . . . . . . .

All payments in respect of the Notes will be made without deduction for or on account of withholding taxes imposed by any Tax Jurisdiction (as defined in Condition 9), subject to the provisions of Condition 9. In the event that any such deduction is made, the Issuer will, save in certain limited circumstances provided in Condition 9, be required to pay additional amounts to cover the amounts so deducted. Without prejudice to the Issuer’s obligation to pay additional amounts as described above, all payments in respect of the Notes will be made subject to any withholding or deduction required pursuant to fiscal and other laws, as provided in Condition 7.8.

Negative Pledge: . . . . . . . . . . . . .

The terms of the Notes will contain a negative pledge provision as further described in Condition 4.

Cross Default: . . . . . . . . . . . . . . .

The terms of the Notes will contain a cross default provision as further described in Condition 11.

Status of the Notes: . . . . . . . . . . .

The Notes will constitute direct, unconditional, unsubordinated and, subject to the provisions of Condition 4, unsecured obligations of the Issuer and will rank pari passu among themselves and (save for certain obligations required to be preferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any) of the Issuer, from time to time outstanding.

15

Listing: . . . . . . . . . . . . . . . . . . . .

Approval-in-principle has been granted for the listing and quotation of Notes that may be issued pursuant to the Programme and which are agreed at or prior to the time of issue thereof to be so listed on the SGX-ST. Such permission will be granted when such Notes have been admitted to the Official List. The Notes may also be listed on such other or further stock exchange(s) as may be agreed between the Issuer and the relevant Dealer in relation to each Series. If the application to the SGX-ST to list a particular series of Notes is approved, such Notes listed on the SGX-ST will be traded on the SGX-ST in a minimum board lot size of at least SGD200,000 (or its equivalent in foreign currencies). Unlisted Notes may also be issued. The applicable Pricing Supplement will state whether or not the relevant Notes are to be listed and, if so, on which stock exchange(s).

Governing Law: . . . . . . . . . . . . . .

The Notes and any non-contractual obligations arising out of or in connection with the Notes will be governed by, and construed in accordance with, English law.

Clearing System: . . . . . . . . . . . . .

The Euroclear or Clearstream (each as defined in Condition 1) and/or any other clearing system, as specified in the applicable Pricing Supplement (see “Form of Notes”).

Selling Restrictions: . . . . . . . . . . .

There are restrictions on the offer, sale and transfer of the Notes under the Prospectus Directive and in the United States, the United Kingdom, Italy, the Netherlands, Japan, India, Hong Kong and Singapore and such other restrictions as may be required in connection with the offering and sale of a particular Tranche of Notes (see “Subscription and Sale”).

United States Selling Restrictions: . . . . . . . . . . . . . . .

Regulation S, Category 1 or 2, TEFRA C or D, or TEFRA not applicable, as specified in the applicable Pricing Supplement.

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FORM OF THE NOTES The Notes of each Series will either be in bearer form, with or without interest coupons (Coupons) attached (Bearer Notes), or registered form, without interest coupons attached (Registered Notes). The Notes will be issued outside the United States and, in certain instances, only to non-U.S. persons, in reliance on Regulation S. Notes to be listed on the SGX-ST will be accepted for clearance through Euroclear as operator of the Euroclear System and Clearstream. Bearer Notes Each Tranche of Bearer Notes will initially be represented by either a temporary bearer global note (a Temporary Bearer Global Note) or a permanent bearer global note (a Permanent Bearer Global Note and, together with a Temporary Bearer Global Note, the Bearer Global Notes, and each a Bearer Global Note) as indicated in the applicable Pricing Supplement, which, in either case, will be delivered on or prior to the original issue date of the Tranche to a common depositary (the Common Depositary) for Euroclear and Clearstream. Whilst any Note is represented by a Temporary Bearer Global Note, payments of principal, interest (if any) and any other amount payable in respect of the Notes due prior to the Exchange Date (as defined below) will be made against presentation of the Temporary Bearer Global Note only to the extent that certification (in a form to be provided) to the effect that the beneficial owners of interests in such Note are not U.S. persons or persons who have purchased for resale to any U.S. person, as required by U.S. Treasury regulations, has been received by Euroclear and/or Clearstream, as applicable, has given a like certification (based on the certifications it has received) to the Principal Paying Agent. On and after the date (the Exchange Date) which, for each Tranche in respect of which a Temporary Bearer Global Note is issued, is 40 days after the Temporary Bearer Global Note is issued, interests in such Temporary Bearer Global Note will be exchangeable (free of charge) upon a request as described therein either for (i) interests in a Permanent Bearer Global Note of the same Series or (ii) definitive Bearer Notes (Definitive Bearer Notes) of the same Series with, where applicable, receipts, interest coupons and talons attached (as indicated in the applicable Pricing Supplement and subject, in the case of Definitive Bearer Notes, to such notice period as is specified in the applicable Pricing Supplement), in each case against certification of beneficial ownership as described above, unless such certification has already been given. The holder of a Temporary Bearer Global Note will not be entitled to collect any payment of interest, principal or other amount due on or after the Exchange Date unless, upon due certification, exchange of the Temporary Bearer Global Note for an interest in a Permanent Global Note or for Definitive Bearer Notes is improperly withheld or refused. The Bearer Notes will be subject to certain restrictions on transfer set forth therein or will bear a legend regarding such restrictions. Payments of principal, interest (if any) or any other amounts on a Permanent Bearer Global Note will be made through Euroclear and/or Clearstream against presentation or surrender (as the case may be) of the Permanent Bearer Global Note without any requirement for certification. The applicable Pricing Supplement will specify that a Permanent Bearer Global Note will be exchangeable (free of charge), in whole but not in part, for Definitive Bearer Notes with, where applicable, receipts, interest coupons and talons attached upon either (i) not less than 60 days’ written notice given at any time from Euroclear and/or Clearstream (acting on the instructions of any holder of an interest in such Permanent Bearer Global Note) to the Principal Paying Agent as described therein or (ii) only upon the occurrence of an Exchange Event. For these purposes, Exchange Event means that (i) an Event of Default has occurred and is continuing, (ii) the Issuer has been notified that both Euroclear and Clearstream have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and no successor

17

or alternative clearing system satisfactory to the Trustee is available or (iii) the Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by the Permanent Bearer Global Note in definitive form and a certificate to such effect from an authorised officer of the Issuer has been given to the Trustee. The Issuer will promptly give notice to the Noteholders in accordance with Condition 15 if an Exchange Event occurs. In the event of the occurrence of an Exchange Event, Euroclear and/or Clearstream (acting on the instructions of any holder of an interest in such Permanent Bearer Global Note) or, the Trustee may give notice to the Principal Paying Agent requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iii) above, the Issuer may also give notice to the Principal Paying Agent requesting exchange. Any such exchange shall occur not later than 45 days after the date of receipt of the first relevant notice by the Principal Paying Agent. The following legend will appear on all Notes (other than Temporary Global Notes), receipts and interest coupons relating to such Notes where TEFRA D is specified in the applicable Pricing Supplement: “ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.” The sections referred to provide that United States holders, with certain exceptions, will not be entitled to deduct any loss on Notes, receipts or interest coupons and will not be entitled to capital gains treatment of any gain on any sale, disposition, redemption or payment of principal in respect of such Notes, receipts or interest coupons. Notes which are represented by a Global Note will only be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream, as the case may be. Registered Notes The Registered Notes of each Tranche will initially be represented by a global note in registered form (a Registered Global Note). Registered Global Notes will be deposited with, and registered in the name of a nominee of, a common depositary for Euroclear and Clearstream, as specified in the applicable Pricing Supplement. Persons holding beneficial interests in Registered Global Notes will be entitled or required, as the case may be, under the circumstances described below, to receive physical delivery of definitive Notes in fully registered form (Definitive Registered Notes). Payments of principal, interest and any other amount in respect of the Registered Global Notes will, in the absence of provision to the contrary, be made to the person shown on the Register (as defined in Condition 7.4) as the registered holder of the Registered Global Notes. None of the Issuer, any Paying Agent or the Registrar (each as defined under “Terms and Conditions of the Notes”) will have any responsibility or liability for any aspect of the records relating to or payments or deliveries made on account of beneficial ownership interests in the Registered Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Payments of principal, interest or any other amount in respect of the Definitive Registered Notes will, in the absence of provision to the contrary, be made to the persons shown on the Register on the relevant Record Date (as defined in Condition 7.4) immediately preceding the due date for payment in the manner provided in that Condition. Interests in a Registered Global Note will be exchangeable (free of charge), in whole but not in part, for Definitive Registered Notes without receipts, interest coupons or talons attached only upon the occurrence of an Exchange Event (as defined under “Form of the Notes — Bearer Notes”).

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The Issuer will promptly give notice to the Noteholders and the Trustee in accordance with Condition 15 if an Exchange Event occurs. In the event of the occurrence of an Exchange Event, Euroclear and/or Clearstream (acting on the instructions of any holder of an interest in such Registered Global Note) or the Trustee may give notice to the Registrar requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iii) of the definition of Exchange Event under “Form of the Notes — Bearer Notes”, the Issuer may also give notice to the Registrar requesting exchange. Any such exchange shall occur not later than ten days after the date of receipt of the first relevant notice by the Registrar. Transfer of Interests Interests in a Registered Global Note may, subject to compliance with all applicable restrictions, be transferred to a person who wishes to hold such interest in another Registered Global Note. No beneficial owner of an interest in a Registered Global Note will be able to transfer such interest, except in accordance with the applicable procedures of Euroclear and Clearstream, in each case to the extent applicable. General Pursuant to the Agency Agreement (as defined under “Terms and Conditions of the Notes”), the Principal Paying Agent shall arrange that, where a further Tranche of Notes is issued which is intended to form a single Series with an existing Tranche of Notes at a point after the Issue Date of the further Tranche, the Notes of such further Tranche shall be assigned a common code and ISIN number which are different from the common code and ISIN assigned to Notes of any other Tranche of the same Series until such time as the Tranches are consolidated and form a single Series, which shall not be prior to the expiry of the Distribution Compliance Period applicable to the Notes of such Tranche. For so long as any of the Notes is represented by a Bearer Global Note or a Registered Global Note (each a Global Note) held on behalf of Euroclear and/or Clearstream, each person (other than Euroclear and/or Clearstream) who is for the time being shown in the records of Euroclear or Clearstream as the holder of a particular nominal amount of such Notes (in which regard any certificate or other document issued by Euroclear or Clearstream as to the nominal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Trustee, the Issuer and their agents as the holder of such nominal amount of such Notes for all purposes other than with respect to the payment of principal or interest on such nominal amount of such Notes, for which purpose the bearer of the relevant Bearer Global Note or the registered holder of the relevant Registered Global Note shall be treated by the Trustee, the Issuer and their agents as the holder of such nominal amount of such Notes in accordance with and subject to the terms of the relevant Global Note and the Trust Deed, and the expressions Noteholder and holder of Notes and related expressions shall be construed accordingly. Any reference herein to Euroclear and/or Clearstream shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system specified in the applicable Pricing Supplement or otherwise approved by the Issuer, the Trustee and the Principal Paying Agent. No Noteholder, Receiptholder (as defined below) or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails so to do within a reasonable period and the failure shall be continuing. The Issuer may agree with any Dealer that Notes may be issued in a form not contemplated by the Terms and Conditions of the Notes herein, in which event a new Offering Circular or a supplement to the Offering Circular, if appropriate, will be made available and shall describe the effect of the agreement reached in relation to such Notes.

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If the applicable Pricing Supplement specifies any modification to the Terms and Conditions of the Notes as described herein, it is envisaged that, to the extent that such modification relates only to Conditions 1, 5, 6, 7, 8 (except Condition 8.2), 12, 13, 14, 15 (insofar as such Notes are not listed or admitted to trade on any stock exchange) or 17, they will not necessitate the preparation of a supplement to this Offering Circular. If the Terms and Conditions of the Notes of any Series are to be modified in any other respect, a supplement to this Offering Circular will be prepared, if appropriate. So long as any Notes are listed on the SGX-ST and the rules of the SGX-ST so require, the Issuer shall appoint and maintain a paying agent in Singapore, where such Notes may be presented or surrendered for payment or redemption, in the event that the Global Note representing such Notes is exchanged for definitive Notes. In addition, an announcement of such exchange will be made through the SGX-ST. Such announcement will include all material information with respect to the delivery of the definitive Notes, including details of the paying agent in Singapore.

20

FORM OF PRICING SUPPLEMENT Set out below is the form of Pricing Supplement which will be completed for each Tranche of Notes issued under the Programme. [Date] NTPC Limited Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] under the U.S.$4,000,000,000 Medium Term Note Programme This document constitutes the Pricing Supplement relating to the issue of Notes described herein. Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Offering Circular dated 10 November 2016 [and the supplement[s] to it dated [ ] and [ ]] (the Offering Circular). This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with such Offering Circular. [The following alternative language applies if the first tranche of an issue which is being increased was issued under an Offering Circular with an earlier date. Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the Conditions) set forth in the Offering Circular dated [original date] [and the supplement to it dated [date]] which are incorporated by reference into the Offering Circular. This document constitutes the final terms of the Notes and must be read in conjunction with the Offering Circular dated [current date], save in respect of the Conditions which are extracted from the Offering Circular dated [original date] and are attached hereto.] [Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numbering should remain as set out below, even if “Not Applicable” is indicated for individual paragraphs or subparagraphs. Italics denote directions for completing the Pricing Supplement] 1.

Issuer:

NTPC Limited

2.

(a) (b)

Series Number: Tranche Number:

(c)

Date on which the Notes will be consolidated and form a single Series:

[ ] [ ] (If fungible with an existing Series, details of that Series, including the date on which the Notes become fungible) The Notes will be consolidated and form a single Series with [identify earlier Tranches] on [the Issue Date/exchange of the Temporary Global Note for interests in the Permanent Global Note, as referred to in paragraph [ ] below, which is expected to occur on or about [date]][Not Applicable]

3.

Specified Currency or Currencies:

[

]

4.

Aggregate Nominal Amount: (a) Series: (b) Tranche:

[ [

] ]

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5.

Issue Price: (a) Issue Price:

(b)

Tranche:

(a)

Specified Denominations:

(b)

Calculation Amount (in relation to calculation of interest in global form, see Conditions):

7.

(a) (b)

Issue Date: Interest Commencement Date:

8.

Maturity Date:

6.

[ ] per cent. of the Aggregate Nominal Amount [plus accrued interest from [insert date] (in the case of fungible issues only, if applicable)] [ ] [ ] (N.B. Notes must have a minimum denomination of = C 100,000 or equivalent) (Note — where Bearer Notes with multiple denominations above [= C 100,000] or equivalent are being used with respect to Bearer Notes, the following sample wording should be followed: “[ = C 100,000] and integral multiples of [ = C 1,000] in = excess thereof up to and including [ C 199,000]. No Notes in definitive form will be issued with a denomination above [ = C 199,000].”) (N.B. If an issue of Notes is (i) NOT admitted to trading on a European Economic Area exchange; and (ii) only offered in the European Economic Area in circumstances where a prospectus is not required to be published under the Prospectus Directive, the = C 100,000 minimum denomination is not required.) (In the case of Registered Notes, this means the minimum integral amount in which transfers can be made.) (In the case of Registered Notes, this means the minimum integral amount in which transfers can be made.) [ ] (If only one Specified Denomination, insert the Specified Denomination. If more than one Specified Denomination, insert the highest common factor. Note: There must be a common factor in the case of two or more Specified Denominations.) [ ] [Specify/Issue Date/Not Applicable] (N.B. An Interest Commencement Date will not be relevant for certain Notes, for example Zero Coupon Notes.) [Fixed rate — Specify date or — for Floating Rate Notes — Interest Payment Date falling in or nearest to [specify month and year]]

22

9.

Interest Basis:

[[ ] per cent. Fixed Rate] [[Specify Reference Rate][+/- [ ] per cent.]] [[LIBOR/EURIBOR] +/- [ ] per cent. Floating Rate] [Zero Coupon] [Index Linked Interest] [Dual Currency Interest] [specify other] (further particulars specified below)

10.

Redemption/Payment Basis:

[Redemption at par] [Index Linked Redemption] [Dual Currency Redemption] [Partly Paid] [Instalment] [specify other]

11.

Change of Interest Basis or Redemption/Payment Basis:

[Applicable/Not Applicable] (If applicable, specify details of any provision for change of Notes into another Interest Basis or Redemption/Payment Basis.)

12.

(a)

Date of board approval for issuance of Notes obtained:

(b)

Date of regulatory approval/consent for issuance of Notes obtained:

[ ] [and [ ], respectively]]/[None required] (N.B. Only relevant where board (or similar) authorisation is required for the particular tranche of Notes.) [ ]/[None required] (N.B. Only relevant where regulatory (or similar) approval or consent is required for the particular tranche of Notes.)

13.

Listing:

[Singapore/specify other/None] (N.B. Consider disclosure requirements under the EU Prospectus Directive applicable to securities admitted to an EU regulated market)

14.

Method of distribution:

[Syndicated/Non-syndicated]

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 15.

Fixed Rate Note Provisions:

(a)

Rate(s) of Interest:

(b)

Interest Payment Date(s):

(c)

Fixed Coupon Amount(s) for Notes in definitive form (and in relation to Notes in global form, see Conditions):

[Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph.) [ ] per cent. per annum payable in arrear on each Interest Payment Date [ ] in each year up to and including the Maturity Date (Amend appropriately in the case of irregular coupons) [ ] per Calculation Amount

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(d)

16.

(e)

Broken Amount(s) for Notes in definitive form (and in relation to Notes in global form, see Conditions): Day Count Fraction:

(f)

Determination Date(s):

(g)

Other terms relating to the method of calculating interest for Fixed Rate Notes:

Floating Rate Note Provisions

(a) (b)

(c) (d)

(e)

(f)

Specified Period(s)/Specified Interest Payment Dates: Business Day Convention:

Additional Business Centre(s): Manner in which the Rate of Interest and Interest Amount is to be determined: Party responsible for calculating the Rate of Interest and Interest Amount (if not the Principal Paying Agent): Screen Rate Determination: • Reference Rate:



Interest Determination Date(s):

[ ] per Calculation Amount, payable on the Interest Payment Date falling [in/on] [ ]] [Not Applicable] [Actual/Actual (ICMA)] [30/360] [Actual/365 (Fixed)] or [specify other] [[ ] in each year][Not Applicable]] (Only relevant where Day Count Fraction is Actual/Actual (ICMA). In such a case, insert regular interest payment dates, ignoring issue date or maturity date in the case of a long or short first or last coupon.) (N.B. This will need to be amended in the case of regular interest payment dates which are not of equal duration.) (N.B. Only relevant where Day Count Fraction is Actual/Actual (ICMA).) [None/Give details]

[Applicable/Not Applicable] (If not applicable, delete the subparagraphs of this paragraph.) [ ]

remaining

[Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/[specify other]] [Not Applicable] [ ] [Screen Rate Determination/ISDA Determination]/ [specify other] [

]

[ ] Reference Rate: [ ] month [LIBOR/EURIBOR/specify other Reference Rate] Either LIBOR, EURIBOR or other, although additional information is required if other, including fallback provisions in the Agency Agreement [ ] (Second London business day prior to the start of each Interest Period if LIBOR (other than Sterling or euro LIBOR), first day of each Interest Period if Sterling LIBOR and the second day on which the TARGET2 System is open prior to the start of each Interest Period if EURIBOR or euro LIBOR)

24



(g)

(h) (i) (j) (k)

17.

ISDA Determination: • Floating Rate Option: • Designated Maturity: • Reset Date:

Margin(s): Minimum Rate of Interest: Maximum Rate of Interest: Day Count Fraction:

Zero Coupon Note Provisions

(a) (b) (c) (d)

18.

Relevant Screen Page:

Accrual Yield: Reference Price: Any other formula/basis of determining amount payable: Day Count Fraction in relation to Early Redemption Amounts

Index Linked Interest Note Provisions

(a) (b) (c) (d)

Index/Formula: Calculation Agent: Calculation Agent responsible for calculating the interest due: Provisions for determining Coupon where calculation by reference to Index and/or Formula is impossible or impracticable:

[ ] (In the case of EURIBOR, if not Reuters EURIBOR 01 ensure it is a page which shows a composite rate or amend the fallback provisions appropriately.) [ ] [ ] [ ] (in the case of a LIBOR or EURIBOR-based option, the first day of the Interest Period.) [+/-] [ ] per cent. per annum [ ] per cent. per annum [ ] per cent. per annum [Actual/Actual (ISDA)] [Actual/Actual] [Actual/365 (Fixed)] [Actual/365 (Sterling)] [Actual/360] [30/360] [360/360] [Bond Basis] [30E/360] [Eurobond Basis] [30E/360 (ISDA)] [Bond Basis] [Other] (See Condition 6 for alternatives) [Applicable/Not Applicable] (If not applicable, delete the subparagraphs of this paragraph.) [ ] per cent. per annum [ ] [ ]

remaining

[30/360] [Actual/360] [Actual/365] [specify other] [Applicable/Not Applicable] (If not applicable, delete the subparagraphs of this paragraph.) [give or annex details] [give name] [ ]

remaining

[ ] (Need to include a description of market disruption or settlement disruption events and adjustment provisions.)

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(e)

19.

(f)

Specified Period(s)/Specified Interest Payment Dates: Business Day Convention:

(g) (h) (i) (j)

Additional Business Centre(s): Minimum Rate of Interest: Maximum Rate of Interest: Day Count Fraction:

Dual Currency Interest Note Provisions

(a) (b)

(c)

(d)

Rate of Exchange/method of calculating Rate of Exchange: Party responsible for calculating the Rate of Interest (if not the Calculation Agent) and Interest Amount (if not the Principal Paying Agent): Provisions for determining Coupon where calculation by reference to Index and/or Formula is impossible or impracticable: Person at whose option Specified Currency(ies) is/are payable:

[

]

[Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/specify other] [Not Applicable] [ ] [ ] per cent. per annum [ ] per cent. per annum [ ] [Applicable/Not Applicable] (If not applicable, delete the subparagraphs of this paragraph.) [give or annex details] [

remaining

]

[need to include a description of market disruption or settlement disruption events and adjustment provisions] [

]

PROVISIONS RELATING TO REDEMPTION 20.

Notice periods for condition [Redemption and Purchase-Redemption for tax reasons]:

Minimum period: 30 days Maximum period: 60 days

21.

Issuer Call:

[Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph.) [ ] [[ ] per Calculation Amount/specify other/see Appendix]

(a) (b)

(c)

Optional Redemption Date(s): Optional Redemption Amount and method, if any, of calculation of such amount(s): If redeemable in part: (i) Minimum Redemption Amount: (ii) Maximum Redemption Amount:

[

]

[

]

26

(d)

22.

Notice period (if other than as set out in the Conditions):

Investor Put:

(a) (b)

(c)

Optional Redemption Date(s): Optional Redemption Amount of each Note and method, if any, of calculation of such amount(s): Notice period (if other than as set out in the Conditions):

Minimum period: [15] days Maximum period: [30] days (N.B. If setting notice periods which are different to those provided in the Conditions, the Issuer is advised to consider the practicalities of distribution of the information through intermediaries, for example, clearing systems (which require a minimum of five clearing system business days’ notice for a call) and custodians, as well as any other notice requirements which may apply, for example, as between the Issuer and the Principal Paying Agent or the Trustee) [Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph) [ ] [[ ] per Calculation Amount/specify other/see Appendix] [ ] (N.B. If setting notice periods which are different to those provided in the Conditions, the Issuer is advised to consider the practicalities of the distribution of information through intermediaries, for example, clearing systems (which require a minimum of 15 clearing system business days’ notice for a put) and custodians, as well as any other notice requirements which may apply, for example, as between the Issuer and the Principal Paying Agent or the Trustee)

23.

Final Redemption Amount:

[

24.

Early Redemption Amount payable on redemption for taxation reasons or on event of default:

[[ ] per Calculation Amount/specify other/see Appendix] (N.B. If the Final Redemption Amount is 100 per cent. of the nominal value (i.e. par), the Early Redemption Amount is likely to be par (but consider). If, however, the Final Redemption Amount is other than 100 per cent. of the nominal value, consideration should be given as to what the Early Redemption Amount should be)

27

] per Calculation Amount

GENERAL PROVISIONS APPLICABLE TO THE NOTES 25.

Form of Notes:

Bearer Notes: [Temporary Bearer Global Note exchangeable for a Permanent Bearer Global Note which is exchangeable for Definitive Bearer Notes [on 60 days’ notice given at any time/only upon an Exchange Event]] [Temporary Bearer Global Note exchangeable for Definitive Bearer Notes on and after the Exchange Date] [Permanent Bearer Global Note exchangeable for Definitive Bearer Notes [on 60 days’ notice given at any time/only upon an Exchange Event]] (Ensure that this is consistent with the wording in the “Form of the Notes” section in the Offering Circular and the Notes themselves. N.B. The exchange upon notice option should not be expressed to be applicable if the Specified Denomination of the Notes in paragraph 6 includes language substantially to the following effect: “[ = C 100,000] and integral multiples of [ = C 1,000] in excess thereof up to and including [ = C 199,000]. No Notes in definitive form will be issued with a denomination above [ = C 199,000]”. Furthermore, such Specified Denomination construction is not permitted in relation to any issue of Notes which is to be represented on issue by a Temporary Bearer Global Note exchangeable for Definitive Bearer Notes.) [Registered Notes: Registered Global Note ([ ] nominal amount) registered in the name of a nominee for a common depositary for Euroclear and Clearstream (specify nominal amounts).]

26.

Additional Financial Centre(s):

[Not Applicable/give details] (Note that this item relates to the date of payment and not the end dates of the Interest Period for the purpose of calculating the amounts of interest to which items 16(c) and 18(g) relate)

27.

Talons for future Coupons or Receipts to be attached to Definitive Notes in bearer form (and dates on which such Talons mature):

[Yes, as the Notes have more than 27 coupon payments, Talons may be required if, on exchange into definitive form, more than 27 coupon payments are still to be made/No]

28

28.

Details relating to Partly Paid Notes: amount of each payment comprising the Issue Price and date on which each payment is to be made and consequences (if any) of failure to pay, including any right of the Issuer to forfeit the Notes and interest due on late payment:

[Not Applicable/give details. N.B. a new form of Temporary Bearer Global Note and/or Permanent Bearer Global Note may be required for Partly Paid issues]

29.

Details relating to Instalment Notes:

[Applicable/Not Applicable] (If not applicable delete the sub-paragraph of the paragraph)] [give details]] [give details]]

(a) [Instalment Amount(s): (b) [Instalment Date(s):

remaining

30.

Redenomination applicable:

Redenomination [not] applicable (If Redenomination is applicable, specify the applicable Day Count Fraction and any provisions necessary to deal with floating rate interest calculations (including alternative reference rates))

31.

Permitted Security Interest Date:

[

32.

[HIRE Act Withholding:

The Notes shall be treated as Specified Notes (as defined in the Offering Circular) for the purpose of Section 871(m) of the U.S. Internal Revenue Code of 1986.] (To be deleted if the Notes do not reference underlying U.S. securities. If the Notes reference underlying U.S. securities, this language should only be included if it is determined that withholding under Section 871(m) will be applicable to the Notes.)

33.

Other terms or special conditions:

[Not Applicable/give details]

]

DISTRIBUTION 34.

(a) (b)

If syndicated, names of Managers: Stabilising Manager(s) (if any):

[Not Applicable/give name(s)] [Not Applicable/give name(s)]

35.

If non-syndicated, name of relevant Dealer:

[

36.

Whether TEFRA D or TEFRA C rules applicable or TEFRA rules not applicable:

[TEFRA D/TEFRA C/TEFRA not applicable]

37.

Whether Category 1 or Category 2 applicable in respect of the Notes offered and sold in reliance on Regulation S:

[Category 1/Category 2] [(Notes offered in reliance on Category 1 must be in registered form)]

29

]

38.

Additional selling restrictions:

[Not Applicable/give details]

OPERATIONAL INFORMATION 39.

Any clearing system(s) other than Euroclear and Clearstream and the relevant identification number(s):

[Not Applicable/give name(s) and number(s)]

40.

Delivery:

Delivery [against/free of] payment

41.

Additional Paying Agent(s) (if any):

[

]

[ [

] ]

ISIN: Common Code:

(insert here any other codes such as CUSIP and CINS Codes) [LISTING APPLICATION This Pricing Supplement comprises the final terms required to list the issue of Notes described herein pursuant to the U.S.$4,000,000,000 Medium Term Note Programme of NTPC Limited.] RESPONSIBILITY The Issuer accepts responsibility for the information contained in this Pricing Supplement. Signed on behalf of the Issuer:

By: Duly authorised

30

TERMS AND CONDITIONS OF THE NOTES The following, subject to alteration and except for the paragraphs in italics, are the Terms and Conditions of the Notes which will be incorporated by reference into each Global Note (as defined below) and each definitive Note, in the latter case only if permitted by the relevant stock exchange or other relevant authority (if any) and agreed by the Issuer and the relevant Dealer at the time of issue but, if not so permitted and agreed, such definitive Note will have endorsed thereon or attached thereto such Terms and Conditions. The applicable Pricing Supplement in relation to any Tranche of Notes may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with the following Terms and Conditions, replace or modify the following Terms and Conditions for the purpose of such Notes. The applicable Pricing Supplement (or the relevant provisions thereof) will be endorsed upon, or attached to, each Global Note and definitive Note. Reference should be made to “Form of the Notes” for a description of the content of Pricing Supplements which will specify which of such terms are to apply in relation to the relevant Notes. This Note is one of a Series (as defined below) of Notes issued by NTPC Limited (the Issuer) and constituted by a Trust Deed dated 14 February 2006 (as modified and/or supplemented and/or restated from time to time, the Trust Deed) made between the Issuer and Citicorp Trustee Company Limited (the Trustee which expression shall include any successor as Trustee) as amended by the amended and restated Trust Deed dated 25 May 2011 (as modified and/or supplemented and/or restated from time to time, the Amended and Restated Trust Deed) between the Issuer and the Trustee. References herein to the Notes shall be references to the Notes of this Series and shall mean: (i)

in relation to any Notes represented by a global Note (a Global Note), units of the lowest Specified Denomination in the Specified Currency;

(ii)

any Global Note in bearer form (a Bearer Global Note);

(iii) any Global Note in registered form (a Registered Global Note); (iv) definitive Notes in bearer form (Definitive Bearer Notes, and together with Bearer Global Notes, the Bearer Notes) issued in exchange for a Bearer Global Note; and (v)

definitive Notes in registered form (Definitive Registered Notes, and together with Registered Global Notes, the Registered Notes), whether or not issued in exchange for a Registered Global Note.

The Notes, the Receipts (as defined below) and the Coupons (as defined below) have the benefit of an amended and restated Agency Agreement dated 25 May 2011 (such Agency Agreement as amended and/or supplemented and/or restated from time to time, the Agency Agreement) and made between the Issuer, the Trustee, Citibank, N.A. as principal paying agent and agent bank (the Principal Paying Agent, which expression shall include any additional or successor principal paying agent) and the other paying agents named therein (together with the Principal Paying Agent, the Paying Agents, which expression shall include any additional or successor paying agents) and as transfer agent (the Transfer Agent, which expression shall include any substitute or any additional transfer agents appointed in accordance with the Agency Agreement) and Citigroup Global Markets Deutschland AG as registrar (the Registrar, which expression shall include any successor registrar and together with the Paying Agents and Transfer Agents, the Agents). The Principal Paying Agent and the Paying Agents, together referred to as the Agents. Interest bearing definitive Bearer Notes have interest coupons (Coupons) and, in the case of Notes which, when issued in definitive form, have more than 27 interest payments remaining, talons for further Coupons (Talons) attached on issue. Any reference herein to Coupons shall, unless the

31

context otherwise requires, be deemed to include a reference to Talons. Definitive Bearer Notes repayable in instalments have receipts (Receipts) for the payment of the instalments of principal (other than the final instalment) attached on issue. Registered Notes and Global Notes do not have Receipts, Coupons or Talons attached on issue. The Pricing Supplement for this Note (or the relevant provisions thereof) is attached to or endorsed on this Note and supplements these Terms and Conditions (Conditions) and may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with these Conditions, replace or modify these Conditions for the purposes of this Note. References to the applicable Pricing Supplement are to the Pricing Supplement (or the relevant provisions thereof) attached to or endorsed on this Note. Any reference to Noteholders or holders in relation to any Notes shall mean the holders of the Notes and shall, in relation to any Notes represented by a Global Note, be construed as provided below. Any reference herein to Receiptholders shall mean the holders of the Receipts and any reference herein to Couponholders shall mean the holders of the Coupons and shall, unless the context otherwise requires, include the holders of the Talons. The Trustee acts for the benefit of the Noteholders, the Receiptholders and the Couponholders, in accordance with the provisions of the Trust Deed. As used herein, Tranche means Notes which are identical in all respects (including as to listing) and Series means a Tranche of Notes together with any further Tranche or Tranches of Notes which are (i) expressed to be consolidated and form a single series and (ii) have the same terms and conditions or terms and conditions which are the same in all respects save for the amount and the date of the first payment of interest thereon and the date from which interest starts to accrue. Copies of the Trust Deed and the Agency Agreement are available for inspection during normal business hours at the registered office for the time being of the Trustee (being, at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, United Kingdom) and at the specified office of each of the Principal Paying Agent and the other Paying Agents. Copies of the applicable Pricing Supplement are obtainable during normal business hours at the specified office of each of the Paying Agents save that, if this Note is an unlisted Note of any Series, the applicable Pricing Supplement will only be obtainable by a Noteholder holding one or more unlisted Notes of that Series and such Noteholder must produce evidence satisfactory to the Issuer and the relevant Agent as to its holding of such Notes and identity. The Noteholders, the Receiptholders and the Couponholders are deemed to have notice of, and are entitled to the benefit of, and are bound by, all the provisions of the Trust Deed, the Agency Agreement and the applicable Pricing Supplement which are applicable to them. The statements in these Conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed and the Agency Agreement. Words and expressions defined in the Trust Deed and the Agency Agreement or used in the applicable Pricing Supplement shall have the same meanings where used in these Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Trust Deed and the Agency Agreement, the Trust Deed will prevail and, in the event of inconsistency between the Trust Deed or the Agency Agreement and the applicable Pricing Supplement, the applicable Pricing Supplement will prevail. 1.

FORM, DENOMINATION AND TITLE

The Notes may be in bearer form (Bearer Notes) and/or in registered form (Registered Notes) and, in the case of definitive Notes, will be serially numbered, in the currency (the Specified Currency) and the denominations (the Specified Denomination(s)) specified in the applicable Pricing Supplement. Save as provided in Condition 2, Notes of one Specified Denomination may not be exchanged for Notes of another Specified Denomination.

32

This Note may be a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Index Linked Interest Note, a Dual Currency Interest Note or a combination of any of the foregoing, depending upon the Interest Basis shown in the applicable Pricing Supplement, which Interest Basis shall be as per the applicable laws including but not limited to the ECB Guidelines. This Note may also be an Index Linked Redemption Note, an Instalment Note, a Dual Currency Redemption Note, a Partly Paid Note or a combination of any of the foregoing, depending upon the Redemption/Payment Basis shown in the applicable Pricing Supplement. Definitive Bearer Notes are issued with Coupons attached, unless they are Zero Coupon Notes in which case references to Coupons and Couponholders in these Conditions are not applicable. Subject as set out below, title to the Bearer Notes, Receipts and Coupons will pass by delivery. Title to Registered Notes will pass upon registration of transfers in the books of the Registrar in accordance with the provisions of the Agency Agreement. The Issuer, the Trustee, the Principal Paying Agent, any Paying Agent, the Registrar and the Transfer Agent will (except as otherwise ordered by a court of competent jurisdiction or required by law) deem and treat the bearer of any Bearer Note, Receipt or Coupon and any person in whose name a Registered Note is registered as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes but, in the case of any Global Note, without prejudice to the provisions set out in the next succeeding paragraph. For so long as any of the Notes is represented by a Global Note held on behalf of Euroclear Bank S.A./N.V. (Euroclear) and/or Clearstream Banking, S.A. (Clearstream), each person (other than Euroclear or Clearstream) who is for the time being shown in the records of Euroclear or Clearstream, as the holder of a particular nominal amount of such Notes (in which regard any certificate or other document issued by Euroclear or Clearstream as to the nominal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Issuer, the Trustee, any Paying Agents, the Registrar and the Transfer Agent as the holder of such nominal amount of such Notes for all purposes other than with respect to the payment of principal or interest on such nominal amount of such Notes, for which purpose the bearer or registered holder of the relevant Global Note shall be treated by the Issuer, the Trustee, any Paying Agent, the Registrar and the Transfer Agent as the holder of such nominal amount of such Notes in accordance with and subject to the terms of the relevant Global Note and the expressions Noteholder and holder of Notes and related expressions shall be construed accordingly. In determining whether a particular person is entitled to a particular nominal amount of Notes, as aforesaid, the Trustee may rely on such evidence and/or information and/or certification as it shall, in its absolute discretion, think fit and, if it does so rely, such evidence and/or information and/or certification shall, in the absence of manifest error, be conclusive and binding on all concerned. Notes which are represented by a Global Note will be transferable only in accordance with the rules and procedures for the time being of Euroclear and Clearstream, as the case may be. References to Euroclear and/or Clearstream shall, whenever the context so permits, be deemed to include a reference to any additional or alternative clearing system specified in the applicable Pricing Supplement or as may otherwise be approved by the Issuer, the Trustee and the Principal Paying Agent. 2.

TRANSFERS OF REGISTERED NOTES

2.1

Transfers of Interests in Registered Global Notes

Transfers of beneficial interests in Registered Global Notes will be effected by Euroclear or Clearstream, as the case may be, and, in turn, by other participants and, if appropriate, indirect participants in such clearing systems acting on behalf of beneficial transferors and transferees of such interests. A beneficial interest in a Registered Global Note will, subject to compliance with all applicable legal and regulatory restrictions, be exchangeable for Registered Notes in definitive form

33

or for a beneficial interest in another Registered Global Note only in the authorised denominations set out in the applicable Pricing Supplement and only in accordance with the rules and operating procedures for the time being of Euroclear or Clearstream, as the case may be, and in accordance with the terms and conditions specified in the Trust Deed and the Agency Agreement. 2.2

Transfers of Registered Notes Generally Registered Notes may not be exchanged for Bearer Notes and vice versa.

Holders of Definitive Registered Notes may exchange such Definitive Registered Notes for interests in a Registered Global Note of the same type at any time. Upon the terms and subject to the conditions set forth in the Trust Deed and the Agency Agreement, a Definitive Registered Note may be transferred in whole or in part (in the authorised denominations set out in the applicable Pricing Supplement). In order to effect any such transfer: (i) the holder or holders must (a) surrender the Definitive Registered Note for registration of the transfer of the Definitive Registered Note (or the relevant part of the Definitive Registered Note) at the specified office of the Registrar or any Transfer Agent, with the form of transfer thereon duly executed by the holder or holders thereof or his or their attorney or attorneys duly authorised in writing and (b) complete and deposit such other certifications as may be required by the relevant Transfer Agent and (ii) the Registrar or, as the case may be, the relevant Transfer Agent must, after due and careful enquiry, being satisfied with the documents of title and the identity of the person making the request and subject to such reasonable regulations as the Issuer, the Trustee, the Registrar, or as the case may be, the relevant Transfer Agent may prescribe (such initial regulations being set out in Schedule 4 to the Agency Agreement). Subject as provided above, the Registrar or, as the case may be, the relevant Transfer Agent will, within three business days (being for this purpose a day on which banks are open for business in the city where the specified office of the Registrar or, as the case may be, the relevant Transfer Agent is located) of the request (or such longer period as may be required to comply with any applicable fiscal or other laws or regulations) authenticate and deliver, or procure the authentication and delivery of, at its specified office to the transferee or (at the risk of the transferee) send by mail to such address as the transferee may request, a new Definitive Registered Note of a like aggregate nominal amount to the Definitive Registered Note (or the relevant part of the Definitive Registered Note) transferred. In the case of the transfer of part only of a Definitive Registered Note, a new Definitive Registered Note in respect of the balance of the Definitive Registered Note not transferred will be so authenticated and delivered or (at the risk of the transferor) sent to the transferor. 2.3

Costs of Registration

Registration of transfers will be effected without charge by or on behalf of the Issuer, the Registrar or the relevant Transfer Agent, but upon payment (or the giving of such indemnity as the Registrar or the relevant Transfer Agent may reasonably require) in respect of any tax or other governmental charges which may be imposed in relation to it provided that the Issuer shall not be responsible for any documentary stamp tax payable on the transfer of Notes effected in the Republic of India (India) unless the Issuer is the counterparty directly liable for that documentary stamp tax. 3.

STATUS

The Notes and any relative Receipts and Coupons are direct, unconditional and (subject to the provisions of Condition 4) unsecured obligations of the Issuer and (subject as provided above) rank and will rank pari passu, without any preference among themselves, with all other outstanding unsecured and unsubordinated obligations of the Issuer, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors’ rights.

34

4.

NEGATIVE PLEDGE

So long as any of the Notes remains outstanding (as defined in the Trust Deed), the Issuer will not itself, and will not permit any of its Principal Subsidiaries to, without the approval of an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders, create or permit to be outstanding any Security Interest over all or any part of its or of any of its Principal Subsidiaries’ present or future revenues or assets except for any Permitted Security Interest. Indebtedness means any obligation (whether present or future, actual or contingent, secured or unsecured, as principal or surety or otherwise) for the payment or repayment of money. Permitted Security Interest means: (a)

any Security Interest existing as at the permitted security interest date (the Permitted Security Interest Date) specified in the applicable Pricing Supplement and disclosed in writing in a letter dated on or before the Permitted Security Interest Date from the Issuer to the Trustee and which secures only Indebtedness outstanding as at the Permitted Security Interest Date;

(b)

any Security Interest securing any Indebtedness denominated in Rupees and obtained in the domestic markets in India;

(c)

any Security Interest securing any Indebtedness denominated in a currency other than Rupees and obtained from any multilateral funding agency;

(d)

any Security Interest securing any Indebtedness denominated in any currency and due for repayment within 12 months from the date of incurring such Indebtedness, and in respect of which no commitment, obligations or arrangement exists to renew, rollover, refinance or otherwise extend the term of such Indebtedness; and

(e)

any lien arising by operation of law in the ordinary course of business and securing amounts not more than 30 days overdue.

Principal Subsidiary means at any time a Subsidiary of the Issuer: (i)

whose net profit before tax and extraordinary items (consolidated in the case of a Subsidiary which itself has Subsidiaries) or whose total assets (consolidated in the case of a Subsidiary which itself has Subsidiaries) represent in each case (or, in the case of a Subsidiary acquired after the end of the financial period to which the then latest audited consolidated accounts of the Issuer and its Subsidiaries relate, are equal to) not less than 5 per cent. of the consolidated net profit before tax and extraordinary items of the Issuer, or, as the case may be, consolidated total assets, of the Issuer and its Subsidiaries taken as a whole, all as calculated respectively by reference to the then latest audited accounts (consolidated or, as the case may be, unconsolidated) of such Subsidiary and the then latest audited consolidated accounts of the Issuer and its Subsidiaries, provided that: (A) if the then latest audited consolidated accounts of the Issuer and its Subsidiaries show a net loss before tax and extraordinary items for the relevant financial period then there shall be substituted for the words “net profit before tax and extraordinary items” the words “total income” for the purposes of this definition; and (B) in the case of a Subsidiary of the Issuer acquired after the end of the financial period to which the then latest audited consolidated accounts of the Issuer and its Subsidiaries relate, the reference to the then latest audited consolidated accounts of the Issuer and its Subsidiaries for the purposes of the calculation above shall, until consolidated accounts for the financial period in which the acquisition is made have

35

been prepared and audited as aforesaid, be deemed to be a reference to such first-mentioned accounts as if such Subsidiary had been shown in such accounts by reference to its then latest relevant audited accounts, adjusted as deemed appropriate by the Issuer; (ii)

to which is transferred the whole or substantially the whole of the undertaking and assets of a Subsidiary of the Issuer which immediately prior to such transfer is a Principal Subsidiary, provided that the transferor Subsidiary shall upon such transfer forthwith cease to be a Principal Subsidiary and the transferee Subsidiary shall cease to be a Principal Subsidiary pursuant to this subparagraph (ii) on the date on which the consolidated accounts of the Issuer and its Subsidiaries for the financial period current at the date of such transfer have been prepared and audited as aforesaid but so that such transferor Subsidiary or such transferee Subsidiary may be a Principal Subsidiary on or at any time after the date on which such consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (i) above or, prior to or after such date, by virtue of any other applicable provision of this definition; or

(iii) to which is transferred an undertaking or assets which, taken together with the undertaking or assets of the transferee Subsidiary, generated (or, in the case of the transferee Subsidiary being acquired after the end of the financial period to which the then latest audited consolidated accounts of the Issuer and its Subsidiaries relate, generate net profit before tax and extraordinary items equal to) not less than 5 per cent. of the consolidated net profit before tax and extraordinary items of the Issuer, or represent (or, in the case aforesaid, are equal to) not less than 5 per cent. of the consolidated total assets of the Issuer and its Subsidiaries taken as a whole, all as calculated as referred to in subparagraph (i) above, provided that the transferor Subsidiary (if a Principal Subsidiary) shall upon such transfer forthwith cease to be a Principal Subsidiary unless immediately following such transfer its undertaking and assets generate (or, in the case aforesaid, generate net profit before tax and extraordinary items equal to) not less than 5 per cent. of the consolidated net profit before tax and extraordinary items of the Issuer, or its assets represent (or, in the case aforesaid, are equal to) not less than 5 per cent. of the consolidated total assets of the Issuer and its Subsidiaries taken as a whole, all as calculated as referred to in subparagraph (i) above, and the transferee Subsidiary shall cease to be a Principal Subsidiary pursuant to this subparagraph (iii) on the date on which the consolidated accounts of the Issuer and its Subsidiaries for the financial period current at the date of such transfer have been prepared and audited but so that such transferor Subsidiary or such transferee Subsidiary may be a Principal Subsidiary on or at any time after the date on which such consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (i) above or, prior to or after such date, by virtue of any other applicable provision of this definition. A certificate (given at the request of the Trustee) by the Director (Finance) of the Issuer whether or not addressed to the Trustee that in their opinion a Subsidiary of the Issuer is or is not or was or was not at any particular time or throughout any specified period a Principal Subsidiary may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence of manifest or proven error, be conclusive and binding on all parties. Security Interest means any mortgage, charge, lien, pledge or other security interest including, without limitation, anything analogous to any of the foregoing. Subsidiary means any company (i) in which the Issuer holds a majority of the voting rights or (ii) of which the Issuer is a member and has the right to appoint or remove a majority of the board of directors or (iii) of which the Issuer is a member and controls a majority of the voting rights, and includes any company which is a Subsidiary of a Subsidiary of the Issuer.

36

5.

REDENOMINATION

5.1

Redenomination

Where redenomination is specified in the applicable Pricing Supplement as being applicable, the Issuer may, without the consent of the Noteholders, the Receiptholders or the Couponholders, on giving 30 days’ prior notice to the Trustee, the Principal Paying Agent, Euroclear and/or Clearstream as applicable, and at least 30 days’ prior notice to the Noteholders in accordance with Condition 15, elect that, with effect from the Redenomination Date specified in the notice, the Notes shall be redenominated in euro. The election will have effect as follows: (a)

the Notes and the Receipts shall be deemed to be redenominated into euro in the denomination of 0.01 with a nominal amount in euro for each Note and Receipt equal to the nominal amount of that Note or Receipt in the Specified Currency, converted into euro at the Established Rate, provided that, if the Issuer determines, with the agreement of the Principal Paying Agent and the Trustee, that the then market practice in respect of the redenomination into euro of internationally offered securities is different from the provisions specified above, such provisions shall be deemed to be amended so as to comply with such market practice and the Issuer shall promptly notify the Noteholders, the stock exchange (if any) on which the Notes are for the time being listed and the Paying Agents of such deemed amendments;

(b)

save to the extent that an Exchange Notice has been given in accordance with paragraph (d) below, the amount of interest due in respect of the Notes will be calculated by reference to the aggregate nominal amount of Notes presented (or, as the case may be, in respect of which Coupons are presented) for payment by the relevant holder and the amount of such payment shall be rounded down to the nearest euro 0.01;

(c)

if definitive Notes are required to be issued after the Redenomination Date, they shall be issued at the expense of the Issuer in the denominations of euro 1,000, euro 10,000, euro 100,000 and (but only to the extent of any remaining amounts of less than euro 1,000 or such smaller denominations as the Issuer in conjunction with the Principal Paying Agent may determine) euro 0.01 and such other denominations as the Issuer shall determine and notify to the Noteholders;

(d)

if issued prior to the Redenomination Date, all unmatured Coupons denominated in the Specified Currency (whether or not attached to the Notes) will become void with effect from the date on which the Issuer gives notice (the Exchange Notice) that replacement euro-denominated Notes, Receipts and Coupons are available for exchange (provided that such securities are so available) and no payments will be made in respect of them. The payment obligations contained in any Notes and Receipts so issued will also become void on that date although those Notes and Receipts will continue to constitute valid exchange obligations of the Issuer. New euro-denominated Notes, Receipts and Coupons will be issued in exchange for Notes, Receipts and Coupons denominated in the Specified Currency in such manner as the Principal Paying Agent may specify and as shall be notified to the Noteholders in the Exchange Notice. No Exchange Notice may be given less than 15 days prior to any date for payment of principal or interest on the Notes;

(e)

after the Redenomination Date, all payments in respect of the Notes, the Receipts and the Coupons, other than payments of interest in respect of periods commencing before the Redenomination Date, will be made solely in euro as though references in the Notes to the Specified Currency were to euro. Payments will be made in euro by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by a euro cheque;

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(f)

if the Notes are Fixed Rate Notes and interest for any period ending on or after the Redenomination Date is required to be calculated for a period ending other than on an Interest Payment Date, it will be calculated: (i)

in the case of the Notes represented by a Global Note, by applying the Rate of Interest to the aggregate outstanding nominal amount of the Notes represented by such Global Note (or, if they are Partly Paid Notes, the aggregate amount paid up); and

(ii)

in the case of definitive Notes, by applying the Rate of Interest to the Calculation Amount;

and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Fixed Rate Note in definitive form is a multiple of the Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding;

5.2

(g)

if the Notes are Floating Rate Notes, the applicable Pricing Supplement will specify any relevant changes to the provisions relating to interest; and

(h)

such other changes shall be made to these Conditions as the Issuer may decide, after consultation with the Trustee and the Principal Paying Agent, and as may be specified in the notice, to conform them to conventions then applicable to instruments denominated in euro.

Definitions In these Conditions, the following expressions have the following meanings:

Established Rate means the rate for the conversion of the Specified Currency (including compliance with rules relating to roundings in accordance with applicable European Union regulations) into euro established by the Council of the European Union pursuant to Article 140 of the Treaty; euro and =C means the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty; Redenomination Date means (in the case of interest bearing Notes) any date for payment of interest under the Notes or (in the case of Zero Coupon Notes) any date, in each case specified by the Issuer in the notice given to the Noteholders pursuant to paragraph 5.1 (a) above and which falls on or after the date on which the country of the Specified Currency first participates in the third stage of European economic and monetary union; and Treaty means the Treaty on the Functioning of the European Union, as amended. 6.

INTEREST

All interest payable on the Notes shall be subject to applicable laws including but not limited to the ECB Guidelines and in accordance with any specific approval received by the Issuer from the RBI or any other regulatory authority.

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6.1

Interest on Fixed Rate Notes

Each Fixed Rate Note bears interest on its outstanding nominal amount (or, if it is a Partly Paid Note, the nominal amount paid up) from (and including) the Interest Commencement Date at the rate(s) per annum equal to the Rate(s) of Interest. Interest will be payable in arrear on the Interest Payment Date(s) in each year up to (and including) the Maturity Date. If the Notes are in definitive form, except as provided in the applicable Pricing Supplement, the amount of interest payable on each Interest Payment Date in respect of the Fixed Interest Period ending on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest on any Interest Payment Date will, if so specified in the applicable Pricing Supplement, amount to the Broken Amount so specified. As used in these Conditions, Fixed Interest Period means the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date. Except in the case of Notes in definitive form where an applicable Fixed Coupon Amount or Broken Amount is specified in the applicable Pricing Supplement, interest is required to be calculated in respect of any period by applying the Rate of Interest to: (A) in the case of Fixed Rate Notes which are represented by a Global Note, the aggregate outstanding nominal amount of the Fixed Rate Notes represented by such Global Note (or, if they are Partly Paid Notes, the aggregate amount paid up); or (B) in the case of Fixed Rate Notes in definitive form, the Calculation Amount; and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Fixed Rate Note in definitive form comprises more than one Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding. Each Fixed Rate Note shall have an interest rate which shall be in accordance with Indian regulatory requirements (including but not limited to the ECB Guidelines) or any specific approval received by the Issuer from the RBI or any other regulatory authority. Day Count Fraction means, in respect of the calculation of an amount of interest in accordance with this Condition 6.1: (a)

if Actual/Actual (ICMA) is specified in the applicable Pricing Supplement: (i)

in the case of Notes where the number of days in the relevant period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (the Accrual Period) is equal to or shorter than the Determination Period during which the Accrual Period ends, the number of days in such Accrual Period divided by the product of (I) the number of days in such Determination Period and (II) the number of Determination Dates (as specified in the applicable Pricing Supplement) that would occur in one calendar year; or

39

(ii)

in the case of Notes where the Accrual Period is longer than the Determination Period during which the Accrual Period ends, the sum of: (A) the number of days in such Accrual Period falling in the Determination Period in which the Accrual Period begins divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year; and (B) the number of days in such Accrual Period falling in the next Determination Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year;

(b)

if 30/360 is specified in the applicable Pricing Supplement, the number of days in the period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (such number of days being calculated on the basis of a year of 360 days with 12 30-day months) divided by 360; or

(c)

if Actual/365 (Fixed) is specified in the applicable Pricing Supplement, the actual number of days in the Accrual Period divided by 365.

In these Conditions: Determination Period means each period from (and including) a Determination Date to (but excluding) the next Determination Date (including, where either the Interest Commencement Date or the final Interest Payment Date is not a Determination Date, the period commencing on the first Determination Date prior to, and ending on the first Determination Date falling after, such date); and sub-unit means, with respect to any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, with respect to euro, one cent. 6.2

Interest on Floating Rate Notes and Index Linked Interest Notes

(a)

Interest Payment Dates

Each Floating Rate Note and Index Linked Interest Note bears interest on its outstanding nominal amount (or, if it is a Partly Paid Note, the amount paid up) from (and including) the Interest Commencement Date and such interest will be payable in arrear on either: (i)

the Specified Interest Payment Date(s) in each year specified in the applicable Pricing Supplement; or

(ii)

if no Specified Interest Payment Date(s) is/are specified in the applicable Pricing Supplement, each date (each such date, together with each Specified Interest Payment Date, an Interest Payment Date) which falls the number of months or other period specified as the Specified Period in the applicable Pricing Supplement after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date.

Such interest will be payable in respect of each Interest Period. In these Conditions, Interest Period means the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date.

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(b)

Rate of Interest

The Rate of Interest payable from time to time in respect of Floating Rate Notes and Index Linked Interest Notes will be determined in the manner specified in the applicable Pricing Supplement. The Rate of Interest shall be in accordance with Indian regulatory requirements (including the ECB Guidelines, if applicable) or any specific approval received by the Issuer from the RBI or any other regulatory authority. (i)

ISDA Determination for Floating Rate Notes

Where ISDA Determination is specified in the applicable Pricing Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the applicable Pricing Supplement) the Margin (if any). For the purposes of this sub-paragraph (A), ISDA Rate for an Interest Period means a rate equal to the Floating Rate that would be determined by the Principal Paying Agent under an interest rate swap transaction if the Principal Paying Agent were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc. and as amended and updated as of the Issue Date of the first Tranche of the Notes (the ISDA Definitions) and under which: (A) the Floating Rate Option is as specified in the applicable Pricing Supplement; (B) the Designated Maturity is a period specified in the applicable Pricing Supplement; and (C) the relevant Reset Date is the day specified in the applicable Pricing Supplement. For the purposes of this sub-paragraph (i), Floating Rate, Calculation Agent, Floating Rate Option, Designated Maturity and Reset Date have the meanings given to those terms in the ISDA Definitions. Unless otherwise stated in the applicable Pricing Supplement the Minimum Rate of Interest shall be deemed to be zero. (ii)

Screen Rate Determination for Floating Rate Notes

Where Screen Rate Determination is specified in the applicable Pricing Supplement as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will, subject as provided below, be either: (A) the offered quotation; or (B) the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the offered quotations, (expressed as a percentage rate per annum) for the Reference Rate (being either LIBOR or EURIBOR as specified in the applicable Pricing Supplement) which appears or appear, as the case may be, on the Relevant Screen Page (or such replacement page on that service which displays the information) as at 11.00 a.m. (London time, in the case of LIBOR, or Brussels time, in the case of EURIBOR) on the Interest Determination Date in question plus or minus (as indicated in the applicable Pricing Supplement) the Margin (if any), all as determined by the Principal Paying Agent or such other party specified in the applicable Pricing Supplement. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Principal Paying Agent or such other party for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.

41

The Agency Agreement contains provisions for determining the Rate of Interest in the event that the Relevant Screen Page is not available or if, in the case of (A) above, no such offered quotation appears or, in the case of (B) above, fewer than three such offered quotations appear, in each case as at the time specified in the preceding paragraph. If the Reference Rate from time to time in respect of Floating Rate Notes is specified in the applicable Pricing Supplement as being other than LIBOR or EURIBOR, the Rate of Interest in respect of such Notes will be determined as provided in the applicable Pricing Supplement. (c)

Minimum and/or maximum Rate of Interest

If the applicable Pricing Supplement specifies a Minimum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of paragraph (b) above is less than such Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be such Minimum Rate of Interest. If the applicable Pricing Supplement specifies a Maximum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of paragraph (b) above is greater than such Maximum Rate of Interest, the Rate of Interest for such Interest Period shall be such Maximum Rate of Interest. The Rate of Interest shall not exceed the rate of interest as specified under the ECB Guidelines or any specific approval received by the Issuer from the RBI or any other regulatory authority. (d)

Determination of Rate of Interest and calculation of Interest Amounts

The Principal Paying Agent, in the case of Floating Rate Notes, and the Calculation Agent, in the case of Index Linked Interest Notes, will at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest for the relevant Interest Period. In the case of Index Linked Interest Notes, the Calculation Agent will notify the Principal Paying Agent of the Rate of Interest for the relevant Interest Period as soon as practicable after calculating the same. If required to be calculated by it, the Principal Paying Agent or, as the case may be, the Calculation Agent shall cause the Final Redemption Amount, the Early Redemption Amount, the Optional Redemption Amount or any Instalment Amount to be notified to the Trustee, the Issuer, each of the Paying Agents, the Noteholders and, if the Notes are listed on a stock exchange and the rules of such stock exchange or other relevant authority so require, such stock exchange or other relevant authority as soon as practicable after calculating the same. The Principal Paying Agent will calculate the amount of interest (the Interest Amount) payable on the Floating Rate Notes or Index Linked Interest Notes for the relevant Interest Period by applying the Rate of Interest to: (A) in the case of Floating Rate Notes or Index Linked Interest Notes which are represented by a Global Note, the aggregate outstanding nominal amount of the Notes represented by such Global Note (or, if they are Partly Paid Notes, the aggregate amount paid up); or (B) in the case of Floating Rate Notes or Index Linked Interest Notes in definitive form, the Calculation Amount; and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Floating Rate Note or an Index Linked Interest Note in definitive form

42

comprises more than one Calculation Amount, the Interest Amount payable in respect of such Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination, without any further rounding. Each Floating Rate Note or Index Linked Interest Note shall have an interest rate which shall be in accordance with Indian regulatory requirements (including but not limited to the ECB Guidelines, if applicable) or any specific approval received by the Issuer from the RBI or any other regulatory authority. Day Count Fraction means, in respect of the calculation of an amount of interest in accordance with this Condition 6.2: (i)

if Actual/Actual (ISDA) or Actual/Actual is specified in the applicable Pricing Supplement, the actual number of days in the Interest Period divided by 365 (or, if any portion of that Interest Period falls in a leap year, the sum of (I) the actual number of days in that portion of the Interest Period falling in a leap year divided by 366 and (II) the actual number of days in that portion of the Interest Period falling in a non-leap year divided by 365);

(ii)

if Actual/365 (Fixed) is specified in the applicable Pricing Supplement, the actual number of days in the Interest Period divided by 365;

(iii) if Actual/365 (Sterling) is specified in the applicable Pricing Supplement, the actual number of days in the Interest Period divided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366; (iv) if Actual/360 is specified in the applicable Pricing Supplement, the actual number of days in the Interest Period divided by 360; (v)

if 30/360, 360/360 or Bond Basis is specified in the applicable Pricing Supplement, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows: [360 x (Y2 - Y1)] + [30 x (M2 - M1)] + (D2 - D1) Day Count Fraction

= 360

where: Y1 is the year, expressed as a number, in which the first day of the Interest Period falls; Y2 is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls; M1 is the calendar month, expressed as a number, in which the first day of the Interest Period falls; M2 is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls; D1 is the first calendar day, expressed as a number, of the Interest Period, unless such number is 31, in which case D1 will be 30; and D2 is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30;

43

(vi) if 30E/360 or Eurobond Basis is specified in the applicable Pricing Supplement, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows: [360 x (Y2 - Y1)] + [30 x (M2 - M1)] + (D2 - D1) Day Count Fraction

= 360

where: Y1 is the year, expressed as a number, in which the first day of the Interest Period falls; Y2 is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls; M1 is the calendar month, expressed as a number, in which the first day of the Interest Period falls; M2 is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls; D1 is the first calendar day, expressed as a number, of the Interest Period, unless such number would be 31, in which case D1 will be 30; and D2 is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless such number would be 31, in which case D2 will be 30; and (vii) if 30E/360 (ISDA) is specified in the applicable Pricing Supplement, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows: [360 x (Y2 - Y1)] + [30 x (M2 - M1)] + (D2 - D1) Day Count Fraction

= 360

where: Y1 is the year, expressed as a number, in which the first day of the Interest Period falls; Y2 is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls; M1 is the calendar month, expressed as a number, in which the first day of the Interest Period falls; M2 is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls; D1 is the first calendar day, expressed as a number, of the Interest Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and D2 is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30.

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(e)

Notification of Rate of Interest and Interest Amounts

The Principal Paying Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Issuer, the Trustee and any stock exchange on which the relevant Floating Rate Notes or Index Linked Interest Notes are for the time being listed and notice thereof to be published in accordance with Condition 15 as soon as possible after their determination but in no event later than the fourth London Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening of the Interest Period. Any such amendment will be promptly notified to each stock exchange on which the relevant Floating Rate Notes or Index Linked Interest Notes are for the time being listed and to the Noteholders in accordance with Condition 15. For the purposes of this paragraph, the expression London Business Day means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in London. (f)

Determination or Calculation by Trustee

If for any reason at any relevant time the Principal Paying Agent or, as the case may be, the Calculation Agent defaults in its obligation to determine the Rate of Interest or the Agent defaults in its obligation to calculate any Interest Amount in accordance with sub-paragraph (b)(i) or subparagraph (b)(ii) above or as otherwise specified in the applicable Pricing Supplement, as the case may be, and in each case in accordance with paragraph (d) above, the Trustee shall determine the Rate of Interest at such rate as, in its absolute discretion (having such regard as it shall think fit to the foregoing provisions of this Condition, but subject always to any Minimum Rate of Interest or Maximum Rate of Interest specified in the applicable Pricing Supplement), it shall deem fair and reasonable in all the circumstances or, as the case may be, the Trustee shall calculate the Interest Amount(s) in such manner as it shall deem fair and reasonable in all the circumstances and each such determination or calculation shall be deemed to have been made by the Principal Paying Agent or the Calculation Agent, as applicable. (g)

Certificates to be final

All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 6, whether by the Principal Paying Agent or, if applicable, the Calculation Agent or the Trustee, shall (in the absence of wilful default, bad faith, manifest error or proven error) be binding on the Issuer, the Trustee, the Principal Paying Agent, the Registrar, the Calculation Agent (if applicable), the other Paying Agents and all Noteholders, Receiptholders and Couponholders and (in the absence as aforesaid) no liability to the Issuer, the Noteholders, the Receiptholders or the Couponholders shall attach to the Principal Paying Agent or, if applicable, the Calculation Agent or the Trustee in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions. 6.3

Interest on Dual Currency Interest Notes

The rate or amount of interest payable in respect of Dual Currency Interest Notes shall be determined in the manner specified in the applicable Pricing Supplement. Each Dual Currency Interest Note shall have an interest rate which shall be in accordance with Indian regulatory requirements (including but not limited to the ECB Guidelines) or any specific approval received by the Issuer from the RBI or any other regulatory authority.

45

6.4

Interest on Partly Paid Notes

In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes), interest will accrue as aforesaid on the paid-up nominal amount of such Notes and otherwise as specified in the applicable Pricing Supplement. Each Partly Paid Note shall have an interest rate which shall be in accordance with Indian regulatory requirements (including but not limited to the ECB Guidelines) or any specific approval received by the Issuer from the RBI or any other regulatory authority. 6.5

Accrual of interest

Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from and including the date for its redemption unless, upon due presentation thereof, payment of principal is improperly withheld or refused. In such event, interest will continue to accrue until whichever is the earlier of:

6.6

(a)

the date on which all amounts due in respect of such Note have been paid; and

(b)

as provided in the Trust Deed.

Definitions

In these Conditions, if a Business Day Convention is specified in the applicable Pricing Supplement and (x) if there is no numerically corresponding day on the calendar month in which an Interest Payment Date should occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day, then, if the Business Day Convention specified is: (A) in any case where Specified Periods are specified in accordance with Condition 6.2(a)(ii) above, the Floating Rate Convention, such Interest Payment Date (a) in the case of (x) above, shall be the last day that is a Business Day in the relevant month and the provisions of (ii) below shall apply mutatis mutandis or (b) in the case of (y) above, shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event (i) such Interest Payment Date shall be brought forward to the immediately preceding Business Day and (ii) each subsequent Interest Payment Date shall be the last Business Day in the month which falls the Specified Period after the preceding applicable Interest Payment Date occurred; or (B) the Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day; or (C) the Modified Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date shall be brought forward to the immediately preceding Business Day; or (D) the Preceding Business Day Convention, such Interest Payment Date shall be brought forward to the immediately preceding Business Day. In these Conditions, Business Day means a day which is: (a)

a day on open for deposits) specified

which commercial banks and foreign exchange markets settle payments and are general business (including dealing in foreign exchange and foreign currency in London and any Additional Business Centre (other than TARGET2 System) in the applicable Pricing Supplement;

46

(b)

if TARGET2 System is specified as an Additional Business Centre in the applicable Pricing Supplement, a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET2) System (the TARGET2 System) or any successor system is open; and

(c)

either (i) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (if other than London and any Additional Business Centre and which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney and Auckland, respectively) or (ii) in relation to any sum payable in euro, a day on which the TARGET2 System or any successor system is open.

7.

PAYMENTS

7.1

Method of payment Subject as provided below: (a)

payments in a Specified Currency other than euro will be made by credit or transfer to an account in the relevant Specified Currency maintained by the payee with, or, at the option of the payee, by a cheque in such Specified Currency drawn on, a bank in the principal financial centre of the country of such Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney and Auckland); and

(b)

payments in euro will be made by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by a euro cheque.

Payments will be subject in all cases to (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 9 and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the Code) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or (without prejudice to the provisions of Condition 9) any law implementing an intergovernmental approach thereto. 7.2

Presentation of definitive Bearer Notes, Receipts and Coupons

Payments of principal in respect of Definitive Bearer Notes will (subject as provided below) be made in the manner provided in Condition 6.1 above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Definitive Bearer Notes, and payments of interest in respect of Definitive Bearer Notes will (subject as provided below) be made as aforesaid only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Coupons, in each case at the specified office of any Paying Agent outside the United States (which expression, as used herein, means the United States of America and its possessions). Payments of Instalment Amounts (if any) in respect of Definitive Bearer Notes, other than the final instalment, will (subject as provided below) be made in the manner provided in Condition 6.1 above against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the relevant Receipt in accordance with the preceding paragraph. Payment of the final instalment will be made in the manner provided in Condition 6.1 above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the relevant Bearer Note in accordance with the preceding paragraph. Each Receipt must be presented for payment of the relevant instalment together with the Definitive Bearer Note to which it appertains. Receipts presented

47

without the Definitive Bearer Note to which they appertain do not constitute valid obligations of the Issuer. Upon the date on which any Definitive Bearer Note becomes due and repayable, unmatured Receipts (if any) relating thereto (whether or not attached) shall become void and no payment shall be made in respect thereof. Fixed Rate Notes in definitive bearer form (other than Dual Currency Notes, Index Linked Notes or Long Maturity Notes (as defined below)) should be presented for payment together with all unmatured Coupons appertaining thereto (which expression shall for this purpose include Coupons falling to be issued on exchange of matured Talons), failing which the amount of any missing unmatured Coupon (or, in the case of payment not being made in full, the same proportion of the amount of such missing unmatured Coupon as the sum so paid bears to the sum due) will be deducted from the sum due for payment. Each amount of principal so deducted will be paid in the manner mentioned above against surrender of the relative missing Coupon at any time before the expiry of 10 years after the Relevant Date (as defined in Condition 9) in respect of such principal (whether or not such Coupon would otherwise have become void under Condition 10) or, if later, five years from the date on which such Coupon would otherwise have become due, but in no event thereafter. Upon any Fixed Rate Note in definitive bearer form becoming due and repayable prior to its Maturity Date, all unmatured Talons (if any) appertaining thereto will become void and no further Coupons will be issued in respect thereof. Upon the date on which any Floating Rate Note, Dual Currency Note, Index Linked Note or Long Maturity Note in definitive form becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further Coupons shall be made in respect thereof. A Long Maturity Note is a Fixed Rate Note (other than a Fixed Rate Note which on issue had a Talon attached) whose nominal amount on issue is less than the aggregate interest payable thereon provided that such Note shall cease to be a Long Maturity Note on the Interest Payment Date on which the aggregate amount of interest remaining to be paid after that date is less than the nominal amount of such Note. If the due date for redemption of any Definitive Bearer Note is not an Interest Payment Date, interest (if any) accrued in respect of such Note from (and including) the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date shall be payable only against surrender of the relevant Definitive Bearer Note. 7.3

Payments in respect of Bearer Global Notes

Payments of principal and interest (if any) in respect of Bearer Notes represented by any Bearer Global Note will (subject as provided below) be made in the manner specified above in relation to Definitive Bearer Notes and otherwise in the manner specified in the relevant Bearer Global Note against presentation or surrender of such Bearer Global Note at the specified office of any Paying Agent outside the United States. A record of each payment made against presentation or surrender of any Bearer Global Note, distinguishing between any payment of principal and any payment of interest, will be made on such Bearer Global Note by the Paying Agent to which it was presented and such record shall be prima facie evidence that the payment in question has been made. 7.4

Payments in respect of Registered Notes

Payments of principal (other than instalments of principal prior to the final instalment) in respect of each Registered Note (whether or not in global form) will be made against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the Registered Note at the specified office of the Registrar or any of the Paying Agents. Such payments will be made by transfer to the Designated Account (as defined below) of the holder (or the first named of joint holders) of the Registered Note appearing in the register of holders of the Registered Notes maintained by the Registrar (the Register) (i) where in global form, at the close of the business day (being for this purpose a day on which Euroclear and Clearstream are open for business) before the relevant due date,

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and (ii) where in definitive form, at the close of business on the third business day (being for this purpose a day on which banks are open for business in the city where the specified office of the Registrar is located) before the relevant due date. Notwithstanding the previous sentence, if (i) a holder does not have a Designated Account or (ii) the principal amount of the Notes held by a holder is less than U.S.$250,000 (or its approximate equivalent in any other Specified Currency), payment will instead be made by a cheque in the Specified Currency drawn on a Designated Bank (as defined below). For these purposes, Designated Account means the account (which, in the case of a payment in Japanese yen to a non resident of Japan, shall be a non resident account) maintained by a holder with a Designated Bank and identified as such in the Register and Designated Bank means (in the case of payment in a Specified Currency other than euro) a bank in the principal financial centre of the country of such Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney and Auckland, respectively) and (in the case of a payment in euro) any bank which processes payments in euro. Payments of interest and payments of instalments of principal (other than the final instalment) in respect of each Registered Note (whether or not in global form) will be made by a cheque in the Specified Currency drawn on a Designated Bank and mailed by uninsured mail on the Business Day in the city where the specified office of the Registrar is located immediately preceding the relevant due date to the holder (or the first named of joint holders) of the Registered Note appearing in the Register (i) where in global form, at the close of the business day (being for this purpose a day on which Euroclear and Clearstream are open for business) before the relevant due date, and (ii) where in definitive form, at the close of business on the fifteenth day (whether or not such fifteenth day is a Business Day) before the relevant due date (the Record Date) at his address shown in the Register on the Record Date and at his risk. Upon application of the holder to the specified office of the Registrar not less than three business days in the city where the specified office of the Registrar is located before the due date for any payment of interest in respect of a Registered Note, the payment may be made by transfer on the due date in the manner provided in the preceding paragraph. Any such application for transfer shall be deemed to relate to all future payments of interest (other than interest due on redemption) and instalments of principal (other than the final instalment) in respect of the Registered Notes which become payable to the holder who has made the initial application until such time as the Registrar is notified in writing to the contrary by such holder. Payment of the interest due in respect of each Registered Note on redemption and the final instalment of principal will be made in the same manner as payment of the principal amount of such Registered Note. Holders of Registered Notes will not be entitled to any interest or other payment for any delay in receiving any amount due in respect of any Registered Note as a result of a cheque posted in accordance with this Condition arriving after the due date for payment or being lost in the post. No commissions or expenses shall be charged to such holders by the Registrar in respect of any payments of principal or interest in respect of the Registered Notes. None of the Issuer, the Trustee, the Registrar or any Paying Agent will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Registered Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. 7.5

General provisions applicable to payments

The holder of a Global Note shall be the only person entitled to receive payments in respect of Notes represented by such Global Note and the Issuer will be discharged by payment to, or to the order of, the holder of such Global Note in respect of each amount so paid. Each of the persons shown in the records of Euroclear or Clearstream as the beneficial holder of a particular nominal amount of Notes represented by such Global Note must look solely to Euroclear or Clearstream, as the case may be, for his share of each payment so made by the Issuer in respect of such Global Note to, or to the order of, the holder of such Global Note.

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Notwithstanding the foregoing provisions of this Condition, if any amount of principal and/or interest in respect of Bearer Notes is payable in U.S. dollars, such U.S. dollar payments of principal and/or interest in respect of such Notes will be made at the specified office of a Paying Agent in the United States only if:

7.6

(a)

the Issuer has appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment in U.S. dollars at such specified offices outside the United States of the full amount of principal and interest on the Bearer Notes in the manner provided above when due;

(b)

payment of the full amount of such principal and interest at all such specified offices outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions on the full payment or receipt of principal and interest in U.S. dollars; and

(c)

such payment is then permitted under United States law without involving, in the opinion of the Issuer, adverse tax consequences to the Issuer.

Payment Day

If the date for payment of any amount in respect of any Note, Receipt or Coupon is not a Payment Day, the holder thereof shall not be entitled to payment until the next following Payment Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay. For these purposes, Payment Day means any day which (subject to Condition 11) is: (a)

7.7

a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in: (i)

in the case of Notes in definitive form only, the relevant place of presentation;

(ii)

each Additional Financial Centre (other than TARGET2 System) specified in the applicable Pricing Supplement; and

(b)

if TARGET2 System is specified as an Additional Financial Centre in the applicable Pricing Supplement, a day on which the TARGET2 System or any successor system is open; and

(c)

either (A) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney and Auckland respectively) or (B) in relation to any sum payable in euro, a day on which the TARGET2 System or any successor system is open.

Interpretation of principal and interest

Any reference in these Conditions to principal in respect of the Notes shall be deemed to include, as applicable: (a)

any additional amounts which may be payable with respect to principal under Condition 9 or under any undertaking or covenant given in addition thereto, or in substitution therefor, pursuant to the Trust Deed;

(b)

the Final Redemption Amount of the Notes;

(c)

the Early Redemption Amount of the Notes;

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(d)

the Optional Redemption Amount(s) (if any) of the Notes;

(e)

in relation to Notes redeemable in instalments, the Instalment Amounts;

(f)

in relation to Zero Coupon Notes, the Amortised Face Amount (as defined in Condition 8.4); and

(g)

any premium and any other amounts (other than interest) which may be payable by the Issuer under or in respect of the Notes.

Any reference in these Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any additional amounts which may be payable with respect to interest under Condition 9 or under any undertaking or covenant given in addition thereto, or in substitution therefor, pursuant to the Trust Deed. 7.8

Payments Subject to Fiscal and Other Laws

Payments will be subject in all cases, to (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 9; (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986, as amended (the Code) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretation thereof, or (without prejudice to the provisions of Condition 9) any laws implementing an intergovernmental approach thereto; and (iii) any withholding or deduction imposed pursuant to Section 87(m) of the Code. 8.

REDEMPTION AND PURCHASE

8.1

Redemption at maturity

Unless previously redeemed or purchased and cancelled as specified below, each Note (including each Index Linked Redemption Note and Dual Currency Redemption Note) will be redeemed by the Issuer at its Final Redemption Amount specified in, or determined in the manner specified in, the applicable Pricing Supplement in the relevant Specified Currency on the Maturity Date. 8.2

Redemption for tax reasons

The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time (if the Notes are neither a floating Rate Note, an Index Linked Interest Note, nor a Dual Currency Note) or on any Interest Payment Date (if the Notes are either a Floating Rate Note, an Index Linked Interest Note or a Dual Currency Interest Note), on giving not less than 30 nor more than 60 days’ notice to the Trustee and the Principal Paying Agent and, in accordance with Condition 15, the Noteholders (which notice shall be irrevocable), if the Issuer satisfies the Trustee immediately before the giving of such notice that: (a)

on the occasion of the next payment due under the Notes, the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 9 as a result of any change in, or amendment to, the laws or regulations of a Tax Jurisdiction (as defined in Condition 9) or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Notes; and

(b)

such obligation cannot be avoided by the Issuer taking reasonable measures available to it,

provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the Notes then due.

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Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall deliver to the Trustee to make available at its specified office to the Noteholders (1) a certificate signed by an authorised officer of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and (2) an opinion of independent legal advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such additional amounts as a result of such change or amendment and the Trustee shall be entitled to accept the certificate as sufficient evidence of the satisfaction of the conditions precedent set out above, in which event it shall be conclusive and binding on the Noteholders, the Receiptholders and the Couponholders. Notes redeemed pursuant to this Condition 8.2 will be redeemed at their Early Redemption Amount referred to in Condition 8.4 below together (if appropriate) with interest accrued to (but excluding) the date of redemption. ECB Guidelines may require the Issuer to obtain the prior approval of the RBI or designated authorised dealer category I bank appointed in accordance with the ECB Guidelines (AD Bank) as the case may be, before providing notice for or effecting such a redemption prior to the Maturity Date and such approval may not be forthcoming. 8.3

Redemption upon Change of Control

Within 15 days following any Change in Control, the Issuer will give notice to the Noteholders, the Trustee and the Principal Paying Agent in accordance with Condition 15 stating that a Change in Control has occurred. Following the occurrence of a Change in Control, each Noteholder will have the right to require the Issuer to redeem any of the Notes held by such Noteholder at their principal amount outstanding together with interest (including additional amounts pursuant to Condition 9 if any) accrued to (but excluding) the date of redemption. To exercise the right to require redemption of any Notes, the holder of the Notes must deliver such Notes at the specified office of any Paying Agent, in the case of Bearer Notes, or of any Transfer Agent or the Registrar, in the case of Registered Notes, on any business day (being, in relation to any place, a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in that place) at the place of such specified office falling within the notice period, accompanied by a duly signed and completed notice of exercise in the form (for the time being current and which may, if this Note is held in a clearing system, be any form acceptable to the clearing system delivered in a manner acceptable to the clearing system) obtainable from any specified office of any Paying Agent, Transfer Agent or the Registrar (a Put Notice) and in which the holder must specify a bank account (or, if payment is to be made by cheque, an address) to which payment is to be made under this paragraph accompanied by such Notes or evidence satisfactory to the relevant Paying Agent, Transfer Agent or the Registrar, as the case may be, that such Notes will, following the delivery of the Put Notice, be held to its order or under its control. Subject to the receipt of RBI or AD Bank approval, as the case may be, the Issuer is obliged to redeem any such Notes on the first business day in the place where such redemption notice is deposited falling 30 days after such deposit. A Put Notice given by a holder of any Note shall be irrevocable and no Note deposited with a Paying Agent, Transfer Agent or the Registrar pursuant to this Condition 8.3 may be withdrawn without the prior written consent of the Issuer. The right of any Noteholder to require the Issuer to redeem any Note upon a Change in Control is not conditional upon a Change in Control notice having been given by the Issuer, but will, if such notice is given by the Issuer, be exercised by such Noteholder within 45 days of the giving of such notice.

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A Change in Control will have occurred if the Government will at any time cease to own, directly or indirectly, more than 50 per cent. of the voting securities of the Issuer. In this Condition 8.3, voting securities means stock (or equivalent interests) having voting power for the election of directors, commissioners, managers or trustees of a company (or otherwise the power to control the management and policies of such corporation or other entity). ECB Guidelines require the Issuer to obtain the prior approval of the RBI or the AD Bank, as the case may be, before providing notice for or effecting such a redemption prior to the Maturity Date and such approval may not be forthcoming. 8.4

Early Redemption Amounts

For the purpose of Conditions 8.2 and 8.3 above and Condition 11, each Note will be redeemed at its Early Redemption Amount calculated as follows: (a)

each Note (other than a Zero Coupon Note) will be redeemed at its Early Redemption Amount; and

(b)

each Zero Coupon Note will be redeemed at an amount (the Amortised Face Amount) calculated in accordance with the following formula: Early Redemption Amount = RP x (1 + AY) y where: RP means the Reference Price; AY means the Accrual Yield expressed as a decimal; and y is the Day Count Fraction specified in the applicable Pricing Supplement which will be either (i) 30/360 (in which case the numerator will be equal to the number of days (calculated on the basis of a 360-day year consisting of 12 months of 30 days each) from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator will be 360) or (ii) Actual/360 (in which case the numerator will be equal to the actual number of days from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator will be 360) or (iii) Actual/365 (in which case the numerator will be equal to the actual number of days from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator will be 365), or on such other calculation basis as may be specified in the applicable Pricing Supplement.

8.5

Instalments

Instalment Notes will be redeemed in the Instalment Amounts and on the Instalment Dates. In the case of early redemption, the Early Redemption Amount will be determined pursuant to Condition 8.4 above. 8.6

Partly Paid Notes

Partly Paid Notes will be redeemed, whether at maturity, early redemption or otherwise, in accordance with the provisions of this Condition and the applicable Pricing Supplement.

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8.7

Purchases

The Issuer or any Subsidiary may at any time purchase Notes (provided that, in the case of definitive Bearer Notes, all unmatured Receipts, Coupons and Talons appertaining thereto are purchased therewith) at any price in the open market or otherwise. Such Notes may be held, reissued, resold or, at the option of the Issuer surrendered to any Paying Agent and/or the Registrar for cancellation. 8.8

Cancellation

All Notes which are redeemed will forthwith be cancelled (together with all unmatured Receipts, Coupons and Talons attached thereto or surrendered therewith at the time of redemption). All Notes so cancelled and any Notes purchased and cancelled pursuant to Condition 8.7 above (together with all unmatured Receipts, Coupons and Talons cancelled therewith) shall be forwarded to the Principal Paying Agent (which shall notify the Registrar of such cancelled Notes in the case of Registered Notes) and may not be reissued or resold. 8.9

Late payment on Zero Coupon Notes

If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to Conditions 8.1, 8.2 or 8.3 above or upon its becoming due and repayable as provided in Condition 11 is improperly withheld or refused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in Condition 8.4(c) above as though the references therein to the date fixed for the redemption or the date upon which such Zero Coupon Note becomes due and payable were replaced by references to the date which is the earlier of: (i)

the date on which all amounts due in respect of such Zero Coupon Note have been paid; and

(ii)

five days after the date on which the full amount of the moneys payable in respect of such Zero Coupon Note has been received by the Trustee or the Principal Paying Agent and notice to that effect has been given to the Noteholders in accordance with Condition 15.

9.

TAXATION

9.1

Payment without Withholding

All payments of principal and interest in respect of the Notes, Receipts and Coupons by or on behalf of the Issuer will be made without withholding or deduction for or on account of any present or future taxes or duties of whatever nature imposed or levied by or on behalf of any Tax Jurisdiction unless such withholding or deduction is required by law. In such event, the Issuer will pay such additional amounts as shall be necessary in order that the net amounts received by the holders of the Notes, Receipts or Coupons after such withholding or deduction shall equal the respective amounts of principal and interest which would otherwise have been receivable in respect of the Notes, Receipts or Coupons, as the case may be, in the absence of such withholding or deduction (the Additional Am ounts); except that no such Additional Amounts shall be payable with respect to any Note, Receipt or Coupon: (a)

where the holder of which is liable for such taxes or duties in respect of such Note, Receipt or Coupon by reason of his having some connection with a Tax Jurisdiction other than the mere holding of such Note, Receipt or Coupon; or

(b)

presented for payment more than 30 days after the Relevant Date (as defined below) except to the extent that the holder thereof would have been entitled to an Additional Amount on presenting the same for payment on such thirtieth day assuming that day to have been a Payment Day (as defined in Condition 7.6); or

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9.2

(c)

presented for payment by or on behalf of a holder of such Note, Receipt or Coupon who, at the time of such presentation, is able to avoid such withholding or deduction by making a declaration of non-residence or other similar claim for exemption and does not make such declaration or claim; or

(d)

with respect to any withholding or deduction (i) required pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code and any regulations or agreements thereunder or any official interpretations thereof or law implementing an intergovernmental approach thereto, or (ii) imposed pursuant to Section 871(m) of the Code.

Interpretation As used herein: (i)

Relevant Date means the date on which such payment first becomes due, except that, if the full amount of the moneys payable has not been duly received by the Trustee or the Principal Paying Agent or, as the case may be, the Registrar on or prior to such due date, it means the date on which, the full amount of such moneys having been so received, notice to that effect is duly given to the Noteholders in accordance with Condition 15; and

(ii)

Tax Jurisdiction means India or any political subdivision or any authority thereof or therein having power to tax or any other jurisdiction or any political subdivision or any authority thereof or therein having power to tax to which the Issuer becomes subject in respect of payments made by it of principal and interest in respect of the Notes, Receipts and Coupons.

Any payments made by the Issuer are required to be within the all-in-cost ceilings prescribed under the ECB Guidelines and in accordance with any specific approvals from the RBI obtained by the Issuer in this regard. 9.3

Transfers or Sales

The Issuer has agreed to indemnify any transferor or transferee of a Note (or any beneficial interest therein), other than a transferor or transferee who is liable to Indian tax by reason of his having a connection with India apart from the mere holding of a Note, against any loss resulting from the imposition of Indian income, capital gains or gift tax on the transfer or sale of a Note outside India. The foregoing indemnity will terminate upon the Trustee certifying, such certification not to be unreasonably withheld, that it is satisfied, on the basis of an appropriate amendment of the Income Tax Act, 1961 of India and/or a reasoned legal opinion in writing of a practising eminent Indian taxation lawyer acceptable to the Trustee and the Issuer in form and content satisfactory to the Trustee, that the Notes are not and are not deemed to be situated in India. The Issuer will first obtain approval from the RBI prior to making any payments under such indemnity, if required. 10.

PRESCRIPTION

The Notes (whether bearer or registered form), Receipts and Coupons will become void unless presented for payment within a period of 10 years (in the case of principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 9) therefor. There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim for payment in respect of which would be void pursuant to this Condition or Condition 7.2 or any Talon which would be void pursuant to Condition 7.2.

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11.

EVENTS OF DEFAULT AND ENFORCEMENT

11.1 Events of Default The Trustee at its discretion may, and if so requested in writing by the holders of at least 25 per cent. in nominal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of the Noteholders shall (subject in each case to being indemnified and/or secured and/or prefunded to its satisfaction), (but, in the case of the happening of any of the events described in paragraphs (b) to (e) inclusive and (h) to (i) inclusive, only if the Trustee shall have certified in writing to the Issuer that such event is, in its opinion, materially prejudicial to the interests of the holders of the Notes), give notice in writing to the Issuer that each Note is, and each Note shall thereupon, subject to receipt of prior RBI approval or AD Bank approval pursuant to the ECB Guidelines, as the case may be, immediately become, due and repayable at its Early Redemption Amount together with accrued interest as provided in the Trust Deed if any of the following events (each an Event of Default) shall occur: (a)

Non-payment

the Issuer fails to pay the principal or interest on, any of the Notes when due and the failure continues for a period of seven business days (each being a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in London and Delhi) in the case of principal, or 14 days, in the case of interest, from the due date for such payment; or (b)

Breach of Other Obligations

the Issuer defaults in the performance or observance of or compliance with any of its other obligations set out in the Notes or the Trust Deed which default is, in the opinion of the Trustee, incapable of remedy or, if in the opinion of the Trustee it is capable of remedy, is not, in the opinion of the Trustee, remedied within 30 days after notice requiring such default to be remedied shall have been given to the Issuer by the Trustee; or (c)

Cross-Default (i)

any present or future indebtedness for borrowed money of the Issuer becomes due and payable prior to its stated maturity by reason of an event of default; or

(ii)

any such indebtedness for borrowed money is not paid when due as extended by any applicable grace period originally provided for; or

(iii) the Issuer fails to pay when due (or within any applicable grace period originally provided for) any amount payable by it under any present or future guarantee or indemnity in respect of indebtedness for borrowed money, provided that no event described in this subparagraph 11.1(c) shall constitute an Event of Default unless the relevant amount of indebtedness or other relative liability due and unpaid, either alone or when aggregated (without duplication) with other amounts of indebtedness and/or other liabilities due and relative to all (if any) other events specified in (i) to (iii) above which have occurred and are continuing, amounts to at least U.S.$20,000,000 (or its equivalent in any other currency); or (d)

Enforcement Proceedings

a distress, attachment, execution or other legal process is levied, enforced or sued upon or against any material part of the property, undertaking, assets or revenues of the Issuer and is not either discharged or stayed within 45 days; or

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(e)

Security Enforced

an encumbrancer takes possession or an administrative or other receiver, manager or other similar person is appointed over, or an attachment order is issued in respect of, the whole or any material part of the undertaking, property, assets or revenues of the Issuer and in any such case such possession, appointment or attachment is not stayed or terminated or the debt on account of which such possession was taken or appointment or attachment was made is not discharged or satisfied within 45 days of such possession, appointment or the issue of such order; or (f)

Insolvency

the Issuer is declared by a court of competent jurisdiction insolvent or bankrupt or is unable to pay its debts, or stops, suspends or threatens to stop or suspend payment of all or, a material part of (or of a particular type of) its debts as they mature, commences negotiations with any one or more of its creditors with a view to the general readjustment or rescheduling at its indebtedness or makes a general assignment for the benefit of or a composition with its creditors or applies for or consents to or suffers its re-organisation, the appointment of an administrator, liquidator, administrative or other receiver, manager or other similar person in respect of the Issuer or over the whole or any material part of the undertaking, property, assets or revenues of the Issuer and such appointment is not discharged or stayed within 60 days of its taking effect except, in any such case, for the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation on terms approved in writing by the Trustee or by an Extraordinary Resolution of the Noteholders; or (g)

Winding-up and Disposals

an order of a court of competent jurisdiction is made or an effective resolution passed for the winding-up or dissolution of the Issuer, or the Issuer sells or disposes of all or substantially all of its assets or business whether as a single transaction or a number of transactions, related or not; except, in any such case, for the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation on terms approved in writing by the Trustee or by an Extraordinary Resolution of the Noteholders; or (h)

Expropriation

any governmental authority or agency condemns, seizes, compulsorily purchases or expropriates all or any material part of the assets or shares of the Issuer without fair compensation; or (i)

Cessation of Business

the Issuer ceases or threatens to cease to carry on its business or operations, except for the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation on terms previously approved in writing by the Trustee or by an Extraordinary Resolution of the Noteholders; or (j)

Analogous Events

any events occur which under the laws of India have an analogous effect to any of the events referred to in paragraphs (d) to (h) above. In this Condition, indebtedness for borrowed money means any present or future indebtedness (whether being principal, premium, interest or other amounts) for or in respect of (i) money borrowed, (ii) liabilities under or in respect of any acceptance or acceptance credit or (iii) any notes, bonds, debentures, debenture stock, loan stock or other securities, issued or distributed whether by way of public offer, private placing, acquisition consideration or otherwise and whether issued for cash or in whole or in part for a consideration other than cash.

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Upon any such notice being given to the Issuer, the Notes will immediately become due and repayable at their outstanding principal amount together with accrued interest as provided in the Trust Deed. 11.2 Enforcement The Trustee may at any time, at its discretion and without notice, take such proceedings against the Issuer as it may think fit to enforce the provisions of the Trust Deed, the Notes, the Receipts and the Coupons, but it shall not be bound to take any such proceedings or any other action in relation to the Trust Deed, the Notes, the Receipts or the Coupons unless (i) it shall have been so directed by an Extraordinary Resolution of the Noteholders or so requested in writing by the holders of at least 25 per cent. in nominal amount of the Notes then outstanding and (ii) it shall have been indemnified to its satisfaction. No Noteholder, Receiptholder or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails so to do within a reasonable period and the failure shall be continuing. 12.

REPLACEMENT OF NOTES, RECEIPTS, COUPONS AND TALONS

Should any Note, Receipt, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be replaced subject to applicable laws, regulations and relevant stock exchange regulations at the specified office of the Principal Paying Agent or the Registrar (in the case of Registered Notes) upon payment by the claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer and the Principal Paying Agent may reasonably require. Mutilated or defaced Notes, Receipts, Coupons or Talons must be surrendered before replacements will be issued. 13.

PAYING AGENTS, REGISTRAR AND TRANSFER AGENTS

The names of the initial Paying Agents, the initial Registrar and the other initial Transfer Agents and their initial specified offices are set out below. The Issuer is entitled, after consultation with the Trustee, to vary or terminate the appointment of the Principal Paying Agent, Paying Agent, Registrar or Transfer Agent and/or appoint additional or other Paying Agents, Registrar or Transfer Agents and/or approve any change in the specified office through which any Agent acts, provided that: (a)

there will at all times be the Principal Paying Agent and a Registrar;

(b)

so long as the Notes are listed on any stock exchange, there will at all times be a Paying Agent, which may be the Principal Paying Agent, and Transfer Agent with a specified office in such place as may be required by the rules and regulations of the relevant stock exchange (or any other relevant authority); and

(c)

so long as the Notes are listed on the SGX-ST, if the Notes are issued in definitive form, there will at all times be a Paying Agent in Singapore unless the Issuer obtains an exemption from the SGX-ST.

In addition, the Issuer shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances described in Condition 7.5. Notice of any variation, termination, appointment or change in Paying Agents will be given promptly to the Noteholders in accordance with Condition 15.

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In acting under the Agency Agreement, the Paying Agents, Registrar and the Transfer Agents act solely as agents of the Issuer and, in certain circumstances specified therein, of the Trustee and do not assume any obligation to, or relationship of agency or trust with, any Noteholders, Receiptholders or Couponholders. The Agency Agreement contains provisions permitting any entity into which any Agent is merged or converted or with which it is consolidated or to which it transfers all or substantially all of its assets to become the successor agent. 14.

EXCHANGE OF TALONS

On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Principal Paying Agent or any other Paying Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to (and including) the final date for the payment of interest due in respect of the Note to which it appertains) a further Talon, subject to the provisions of Condition 10. 15.

NOTICES

Notices to holders of Registered Notes will be deemed to be validly given if sent by first class mail or (if posted to an overseas address) by air mail to them at their respective addresses as recorded in the Register and will be deemed to have been validly given on the fourth day after the date of such mailing and, in addition, for so long as any Registered Notes are listed on a stock exchange or are admitted to trading by another relevant authority and the rules of that stock exchange or relevant authority so require, such notice will be published in a daily newspaper of general circulation in the place or places required by those rules. All notices regarding the Bearer Notes will be deemed to be validly given if published in a leading daily newspaper of general circulation in Asia or such other English language daily newspaper with general circulation in Asia as the Trustee may approve. It is expected that such publication will be made in the Asian Wall Street Journal. The Issuer shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange (or any other relevant authority) on which the Notes are for the time being listed. Any such notice will be deemed to have been given on the date of the first publication or, where required to be published in more than one newspaper, on the date of the first publication in all required newspapers. If, in the opinion of the Trustee, publication as provided above is not practicable, a notice will be given in such other manner, and will be deemed to have been given on such date, as the Trustee shall approve. Until such time as any definitive Notes are issued, there may, so long as any Global Notes representing the Notes are held in their entirety on behalf of Euroclear and/or Clearstream, be substituted for such publication in such newspaper(s) or such mailing the delivery by mail of the relevant notice to Euroclear and/or Clearstream for communication by them to the holders of the Notes and, in addition, for so long as any Notes are listed on a stock exchange and the rules of that stock exchange (or any other relevant authority) so require, such notice will be published in a daily newspaper of general circulation in the place or places required by the rules of that stock exchange (or any other relevant authority). Any such notice shall be deemed to have been given to the holders of the Notes on the first day after the day on which the said notice was given to Euroclear and/or Clearstream. Notices to be given by any Noteholder shall be in writing and given by lodging the same, together (in the case of any Note in definitive form) with the relative Note or Notes, with the Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes). Whilst any of the Notes are represented by a Global Note, such notice may be given by any holder of a Note to the Principal Paying Agent or the Registrar through Euroclear and/or Clearstream, as the case may be, in such manner as the Principal Paying Agent, the Registrar and Euroclear and/or Clearstream, as the case may be, may approve for this purpose.

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Receiptholders and Couponholders will be deemed for all purposes to have notice of the contents of any notice given to Noteholders in accordance with this Condition 15. 16.

MEETINGS OF NOTEHOLDERS, MODIFICATION, WAIVER AND SUBSTITUTION

The Trust Deed contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of the Notes, the Receipts, the Coupons or any of the provisions of the Trust Deed. Such a meeting may be convened by the Issuer or the Trustee and shall be convened by the Issuer if required in writing by Noteholders holding not less than ten per cent. in nominal amount of the Notes for the time being remaining outstanding. The quorum at any such meeting for passing an Extraordinary Resolution is one or more persons holding or representing not less than 50 per cent. in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons being or representing Noteholders whatever the nominal amount of the Notes so held or represented, except that at any meeting the business of which includes the modification of certain provisions of the Notes, the Receipts, the Coupons or the Trust Deed (including, inter alia, modifying the date of maturity of the Notes or any date for payment of interest thereon, reducing or cancelling the amount of principal or the rate of interest payable in respect of the Notes or altering the currency of payment of the Notes, the Receipts or the Coupons), the quorum shall be one or more persons holding or representing not less than two-thirds in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting, such meeting comprising one or more persons holding or representing not less than one-third in nominal amount of the Notes for the time being outstanding. The Trust Deed provides that (i) a resolution passed at a meeting duly convened and held in accordance with the Trust Deed by a majority consisting of not less than three-fourths of the votes cast on such resolution, (ii) a resolution in writing signed by or on behalf of the holders of not less than three-fourths in outstanding nominal amount of the Notes for the time being outstanding or (iii) consent given by way of electronic consents through the relevant clearing system(s) (in a form satisfactory to the Trustee) by or on behalf of the holders of not less than three-fourths in nominal amount of the Notes for the time being outstanding, shall, in each case, be effective as an Extraordinary Resolution of the Noteholders. An Extraordinary Resolution passed by the Noteholders will be binding on all the Noteholders, whether or not they are present at any meeting and whether or not they voted on the resolution, and on all Receiptholders and Couponholders. The Trustee may agree, without the consent of the Noteholders, Receiptholders or Couponholders, to any modification (except such modifications in respect of which an increased quorum is required as mentioned above) of, or to the waiver or authorisation of any breach or proposed breach of, any of the provisions of the Notes or the Trust Deed, or determine, without any such consent as aforesaid, that any Event of Default or potential Event of Default shall not be treated as such, where, in any such case, it is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders to do so or may agree, without any such consent as aforesaid, to any modification which is of a formal, minor or technical nature or to correct a manifest or proven error. Any such modification shall be binding on the Noteholders, the Receiptholders and the Couponholders and any such modification shall be notified to the Noteholders in accordance with Condition 15 as soon as practicable thereafter. In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation, determination or substitution), the Trustee shall have regard to the general interests of the Noteholders as a class but shall not have regard to any interests arising from circumstances particular to individual Noteholders, Receiptholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders, Receiptholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder, Receiptholder or Couponholder be entitled to claim, from the Issuer, the Trustee or any

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other person any indemnification or payment in respect of any tax consequences of any such exercise upon individual Noteholders, Receiptholders or Couponholders except to the extent already provided for in Condition 9 and/or any undertaking or covenant given in addition to, or in substitution for, Condition 9 pursuant to the Trust Deed. The Trustee may, without the consent of the Noteholders, agree with the Issuer to the substitution in place of the Issuer (or of any previous substitute under this Condition) as the principal debtor under the Notes, the Receipts, the Coupons and the Trust Deed of any Subsidiary, subject to (a) the Notes being unconditionally and irrevocably guaranteed by the Issuer, (b) the Trustee being satisfied that the interests of the Noteholders will not be materially prejudiced by the substitution and (c) certain other conditions set out in the Trust Deed being complied with. Any such modification, waiver, authorisation, determination or substitution shall be binding on the Noteholders, the Receiptholders and the Couponholders and, unless the Trustee otherwise agrees, any such modification or substitution shall be promptly notified to Noteholders by the Issuer in accordance with Condition 15. 17.

INDEMNIFICATION OF THE TRUSTEE AND TRUSTEE CONTRACTING WITH THE ISSUER

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking action unless indemnified to its satisfaction. The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (a) to enter into business transactions with the Issuer and to act as trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer, (b) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders, Receiptholders or Couponholders and (c) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith. Repatriation of proceeds outside India by the Issuer under an indemnity clause may require the prior approval of the RBI. 18.

FURTHER ISSUES

The Issuer shall be at liberty from time to time without the consent of the Noteholders, the Receiptholders or the Couponholders to create and issue further notes having terms and conditions the same as the Notes or the same in all respects save for the amount and date of the first payment of interest thereon and the date from which interest starts to accrue and so that the same shall be consolidated and form a single Series with the outstanding Notes. 19.

CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Note, but this does not affect any right or remedy of any person which exists or is available apart from that Act. 20.

GOVERNING LAW AND SUBMISSION TO JURISDICTION

20.1 Governing law The Trust Deed, the Agency Agreement, the Notes, the Receipts, the Coupons and any non-contractual obligations arising out of or in connection with the Trust Deed, the Agency Agreement, the Notes, the Receipts and the Coupons are governed by, and shall be construed in accordance with, English law.

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20.2 Submission to jurisdiction (a)

Subject to Condition 20.2(c) below, the English courts have exclusive jurisdiction to settle any dispute arising out of or in connection with the Trust Deed, the Notes, the Receipts and/or the Coupons, including any dispute as to their existence, validity, interpretation, performance, breach or termination or the consequences of their nullity and any dispute relating to any non-contractual obligations arising out of or in connection with the Trust Deed, the Notes, the Receipts and/or the Coupons (a Dispute) and accordingly each of the Issuer and the Trustee and any Noteholders, Receiptholders or Couponholders in relation to any Dispute submits to the exclusive jurisdiction of the English courts.

(b)

For the purposes of this Condition 20.2, the Issuer waives any objection to the English courts on the grounds that they are an inconvenient or inappropriate forum to settle any Dispute.

(c)

To the extent allowed by law, the Trustee, the Noteholders, the Receiptholders and the Couponholders may, in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction; and (ii) concurrent proceedings in any number of jurisdictions.

20.3 Appointment of Process Agent The Issuer irrevocably appoints State Bank of India, London Branch at 15, King Street, London EC2V 8EA, United Kingdom as its agent for service of process in any proceedings before the English courts in relation to any Dispute, and agrees that, in the event of State Bank of India, London Branch being unable or unwilling for any reason so to act, it will immediately appoint another person approved by the Trustee as its agent for service of process in England in respect of any Dispute. The Issuer agrees that failure by a process agent to notify it of any process will not invalidate service. Nothing herein shall affect the right to serve process in any other manner permitted by law. 20.4 Waiver of immunity To the fullest extent permitted by law, the Issuer irrevocably and unconditionally: (a)

submits to the jurisdiction of the English courts in relation to any Dispute and waives and agrees not to claim any sovereign or other immunity from the jurisdiction of the English courts in relation to any Dispute (including to the extent that such immunity may be attributed to it), and agrees to ensure that no such claim is made on its behalf;

(b)

submits to the jurisdiction of the English courts and the courts of any other jurisdiction in relation to the recognition of any judgment or order of the English courts or the courts of any other jurisdiction in relation to any Dispute and waives and agrees not to claim any sovereign or other immunity from the jurisdiction of the English courts or the courts of any other jurisdiction in relation to the recognition of any such judgment or court order and agrees to ensure that no such claim is made on its behalf; and

(c)

consents to the enforcement of any order or judgment made or given in connection with any Dispute and the giving of any relief in the English courts and the courts of any other jurisdiction whether before or after final judgment including, without limitation: (i) relief by way of interim or final injunction or order for specific performance or recovery of any property; (ii) attachment of its assets; and (iii) enforcement or execution against any property, revenues or other assets whatsoever (irrespective of their use or intended use) and waives and agrees not to claim any sovereign or other immunity from the jurisdiction of the English courts or the courts of any other jurisdiction in relation to such enforcement and the giving of such relief (including to the extent that such immunity may be attributed to it), and agrees to ensure that no such claim is made on its behalf.

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USE OF PROCEEDS The net proceeds from each issue of Notes will be applied by the Issuer to finance capital expenditure of ongoing and/or new power projects, coal mining projects, and renovation and modernisation of power stations of the Issuer in accordance with the ECB Guidelines.

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CAPITALISATION The following table sets forth the consolidated indebtedness and capitalisation of the Issuer as of 31 March 2016. This table should be read in conjunction with the Issuer’s audited consolidated financial statements as of 31 March 2016 and notes presented elsewhere herein. As of 31 March 2016 (Rs. in millions)

(U.S.$ in millions) (2)

(audited)

Debt: Short-term (1) - Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term - Secured . . . . . . . . . - Unsecured . . . . . . . Total long-term debt Total debt . . . . . . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

23,894 74,030 97,924

360 1,116 1,476

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

419,184 603,199 1,022,383 1,120,307

6,319 9,094 15,413 16,889

Shareholders’ funds: Issued and fully paid up capital (3) Reserves & surplus . . . . . . . . . . . Total capital and reserves. . . . . . . Total capitalisation (4) . . . . . . . . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

82,455 809,511 891,966 2,012,273

1,243 12,204 13,447 30,336

Consolidated contingent liabilities of the Issuer as of 31 March 2016 amounted to Rs.216,697 million.

Notes: (1)

Short-term debt is debt maturing within the 12 months following 31 March 2016.

(2)

U.S. dollar translations have been made using the exchange rate of U.S.$1.00 = Rs.66.3329 as of 31 March 2016, based on the reference rate of the RBI prevailing at that date.

(3)

As of 31 March 2016, the Issuer’s authorised capital was Rs.100,000 million comprising 10,000 million ordinary shares of Rs.10 each, of which 8,245.5 million were in issue.

(4)

There has been no material change in the consolidated indebtedness or capitalisation of the Issuer since 31 March 2016.

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INVESTMENT CONSIDERATIONS Investors should carefully consider the following investment considerations as well as the other information contained in this Offering Circular prior to making an investment in the Notes. In making an investment decision, each investor must rely on its own examination of the Issuer and the terms of the offering of the Notes. The risks described below are not the only ones that may affect the Notes. Additional risks not currently known to the Issuer or that the Issuer, based on the information currently available to it, currently deems immaterial may also impair the Issuer’s business operations. All of these risks are contingencies which may or may not occur and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring. If any of the following or any other risks actually occur, the Issuer’s business, prospects, results and financial condition could be adversely affected and the price of and the value of investment in the Notes could decline and all or part of the investments may be lost. Risks Relating to the Issuer’s Business The Issuer’s operations and the Issuer’s expansion plans have significant fuel requirements and the Issuer may not be able to ensure the availability of fuel at competitive prices. The success of the Issuer’s operations and the proposed expansion of its generation capacity will be dependent on, among other things, the Issuer’s ability to ensure unconstrained availability of fuels at competitive prices during the life cycle of its existing and planned thermal power stations. The Issuer’s primary fuels are coal, gas and naphtha, with approximately 87.0 per cent. of its directly owned installed generating capacity as of 30 September 2016 being coal-fired and approximately 10.0 per cent. being gas or naphtha-fired. Fuel costs represent the Issuer’s largest operating expense, constituting 78 per cent. of total operating expenses on a stand-alone basis. The Issuer purchases substantially all of its coal from subsidiaries of Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL). The Issuer had signed long-term coal supply agreements (CSAs) covering units commissioned as of 31 March 2009 for 23,895 MW at its 15 directly owned coal-fired power stations and covering units with a total capacity of 9,620 MW commissioned after 31 March 2009 or currently under construction. The Issuer has entered into long-term gas supply agreements with GAIL (India) Limited (GAIL) for the supply of gas to its directly owned gas-fired power stations. However, no assurance can be given that the Issuer’s suppliers will be able to satisfy its contractual commitments and that alternative sources of supply would be available on reasonable terms. If the Issuer is unable to obtain supplies from these suppliers on acceptable terms and conditions, no assurance can be given that it will be able to obtain supplies from alternative suppliers. Further, coal and gas allocations and gas prices are currently determined by the Government, whilst coal prices are set by CIL or SCCL, as the case may be. In the event that coal and gas supplies or gas prices were to be deregulated, no assurance can be given that the Issuer will be able to obtain supplies of coal and gas at competitive prices and in the required quantities. As of the date of this Offering Circular, the Issuer has planned to source coal for some of the power projects under construction from the coal mines allotted to it and is working towards starting coal production from these mines commensurate with the start of power generation from the linked end-use power projects. In order to meet the coal requirement in case of any delay in the start of coal production from the captive mines, the Issuer has already approached the Government for allocation of tapering coal linkages from the coal mines of CIL. Subsequently the Standing Linkages Committee (Long Term) of the Ministry of Coal in its meeting of 18 March 2016 granted bridge linkages under the new policy, in place of the earlier tapering coal linkages for these projects. If the Issuer is unable to timely produce coal from these mines or as per the requirement of the related projects and does not

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obtain adequate supply under the bridge coal linkages, no assurance can be given that the Issuer will be able to obtain supplies from alternative sources. Though transportation of coal from two captive mines to its linked end-use power projects shall be through the Issuer’s own system, the transportation of coal from other mines to the linked power projects will be made through the Indian railways network (some of which network, as of the date of this Offering Circular, requires further strengthening). Any delays in development of the related infrastructure by the railways could constrain the fuel supplies to the Issuer’s projects and no assurance can be given that the Issuer will be able to transport the coal through alternative means. Any such constraints on sourcing of coal could have a negative impact on the Issuer’s business, prospects and financial condition as well as on current and future capacity addition plans. With respect to coal, while India has substantial proven reserves, significant investments would be required to exploit and mine these reserves. No assurance can be given that such investments will be made. The domestic demand for coal is expected to increase significantly in the future, driven by significant capacity addition in the Indian power sector. High dependence on domestic coal could therefore expose the Issuer to potential price and availability risks. In the event of a shortage of coal, not only will the productivity of the Issuer’s coal-fired power stations be reduced but it will also hinder the Issuer’s expansion plans. The Issuer also sources coal through bilateral short term memoranda of understanding (MoUs) with SCCL or subsidiaries of CIL, through imports and through e-auctions conducted by the subsidiaries of CIL. However, there is no assurance that such sources of coal will continue to be available to the Issuer in the future at reasonable prices or terms or at all. With respect to gas, the Issuer’s use has been limited in the past due to inadequate supply of domestic gas. The Issuer has arranged for the supply of RLNG through short-term contracts to meet part of its requirements. The short-term RLNG contracts are agreed on a “reasonable endeavours” basis with no obligation on the part of the Issuer such as “ship-or-pay” or, “take-or-pay” and no supply or pay obligation on the part of the suppliers. However, due to high RLNG prices, the offtake of power by distribution companies and beneficiaries and, consequently, RLNG consumption have been low. The Issuer estimates that it will require 17.35 million metric standard cubic metres of gas per day in fiscal 2017 to operate its directly owned gas-fired power stations at a plant load factor (which is a measure equal to the percentage of capacity actually utilised) (PLF) of 90.0 per cent. If the Issuer experiences a shortage in the supply of gas to its gas-fired power stations, the productivity of those power stations would be reduced. Although the Issuer is in the process of securing a supply of gas for the Issuer’s projects at Kawas and Gandhar, there is no assurance that it will be able to secure an adequate supply of gas for its current gas-fired power stations or future gas-fired projects. The Issuer’s ability to secure adequate fuel supply for its Kawas and Gandhar projects may also be affected by its dispute with Reliance Industries Limited (RIL) on the sale and purchase agreement for gas supply for those projects. See “The Issuer has executed a letter of intent with RIL for the purchase of gas, which, if not declared as a valid and binding contract between the Issuer and RIL, may negatively impact the Issuer’s financial condition and results of operation.” Any such constraints on sourcing gas would have a negative impact on the Issuer’s business, prospects and financial condition as well as current and future capacity addition plans. The State Electricity Boards (SEBs) and state owned distribution companies account for more than 89 per cent. of the Issuer’s sales of electricity generated from its directly owned power stations and any change that adversely affects the Issuer’s ability to recover dues from them would adversely affect its financial position. The SEBs and the state owned distribution companies are the largest purchasers of power from the Issuer and accounted for more than 89.0 per cent. of the Issuer’s sales of electricity generated from its directly owned power stations in fiscal 2016. The Issuer is obligated to supply power to them in accordance with the terms of the allocation letters issued by the Government for each of the Issuer’s power stations. Historically, the Issuer has had significant problems recovering payments from the SEBs. The Scheme for One Time Settlement of Outstanding Dues (the OTSS) introduced several measures to address these problems. Tripartite agreements (the Tripartite Agreements) were signed under which the receivables for past due amounts from the SEBs were securitised, resulting in the

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issue to the Issuer of 8.5 per cent. tax free state government special bonds issued under the OTSS (the Tax Free Bonds). The Tax Free Bonds mature in various stages from 1 October 2006 until 1 April 2016. These agreements, inter-alia, provide that in case of any default in payment of current dues by any state utility, the outstanding dues can be deducted from the state’s RBI account and paid to the Issuer. In addition, the Tripartite Agreements require the SEBs to establish letters of credit (LCs) to cover 105 per cent. of current payments for the sale of electricity generated from the Issuer’s directly owned power stations. As of the date of this Offering Circular, these Tripartite Agreements are being actively considered for further extension beyond the period of October 2016. Furthermore, to provide for a situation where the Tripartite Agreements are not extended beyond October 2016, the Issuer’s sales to the SEBs from its directly owned power stations after 31 October 2016 are secured through supplementary agreements with the SEBs under which the SEBs have agreed to create a charge over their own receivables in favour of the Issuer, and in the event of a payment default, to assign their receivables into an escrow account. If receivables of these SEBs are not received into such escrow accounts for any reason whatsoever or if the security over such receivables is flawed, payments to the Issuer would not be secured. Any change that adversely affects the Issuer’s ability to recover its dues from the SEBs will adversely affect its financial position. In fiscal 2014, the SEBs incurred losses of approximately Rs.985,950.0 million without accounting for subsidy and Rs.624,620 million after accounting for subsidy received. (Source: Power Finance Corporation Limited report on the performance of state power utilities: July 2015.) In addition, there have also been instances of state governments promising free power to certain sections of society, such as farmers. The adoption of such policies by state governments would adversely affect the financial health of the SEBs, which would in turn adversely affect their ability to make payments to the Issuer. See “The unbundling of the SEBs pursuant to the Electricity Act could have an adverse impact on the Issuer’s revenues.” below and the section entitled “The Power Industry in India.” The unbundling of the SEBs pursuant to the Electricity Act could have an adverse impact on the Issuer’s revenues. Under the Electricity Act, 2003 (the Electricity Act), the SEBs are required to unbundle their operations into separate generation, transmission and distribution companies. Following unbundling, the Issuer’s power purchase agreements (PPAs) with the SEBs will be assigned to one or more of the unbundled entities. These unbundled entities, particularly distribution companies, may have lower creditworthiness than the original SEBs. This could adversely affect the ability of such unbundled entities to make payments to the Issuer. Further, upon divestment of ownership or control of a SEB or any of the unbundled entities, as applicable, in favour of any entity not owned or controlled, directly or indirectly, by the applicable, state government, the Tripartite Agreement relating to the SEB or the unbundled entity, as applicable, will expire. In such an event, the SEB or the unbundled entity, as applicable, may no longer establish LCs in favour of the Issuer, which could have an adverse impact on realisation of dues from the SEB or the unbundled entity, as applicable, by the Issuer. The Issuer faces competition as a result of deregulation in the Indian power sector. The Electricity Act, which came into force in June 2003, removed licensing requirements for thermal generators, provided for open access to transmission and distribution networks and removed restrictions on the right to build captive generation plants. These reforms increased opportunities for the private sector to enter into the power generation business. Specifically, the non-discriminatory open access regulations of state regulatory commissions, by which generators are permitted to sell directly to bulk consumers, increased the financial viability of private investment in power generation. Large Indian business houses with established commercial power generation companies, significant resources and many years of experience in the commercial power generation business now compete with the Issuer. The Issuer may also face competition from Indian and international companies seeking to set up or expand their power generation business and to obtain the land, coal, water and other resources required for power projects, in addition to competition from the established central and state power utilities. Competitive bidding for power procurement further increases the competition among

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power generators. The Issuer’s competitors may have greater resources, better flexibility and lesser controls on their systems and procedures than the Issuer and may be able to achieve better economies of scale or to access cheaper sources of fuel than the Issuer, allowing them to bid at more competitive rates. The Issuer may face decreased margins and other unfavourable terms and conditions for the sale of power generated by it due to such competition. Further, as a result of the measures introduced under the Electricity Act, the OTSS (a scheme for the financial restructuring of state-owned distribution companies dated 12 October 2012) and such other schemes as the Ujjwal Discom Assurance Yojana (UDAY) scheme, the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) scheme and the Integrated Power Development (IPDS) scheme, (see “The Power Industry in India”), SEBs may experience improvements in their financial position and may seek to expand their own installed capacity. There can be no assurance that the Issuer will be able to compete effectively given such increased competition. The Issuer’s failure to do so could result in an adverse effect on its business prospects, financial condition and results of operations. There may be other changes to the regulatory framework that could adversely affect the Issuer. The statutory and regulatory framework for the Indian power sector has changed significantly in recent years and the full impact of these changes is unclear. There are likely to be more changes in the next few years. The Electricity Act has put in place a framework for reforms in the sector, but in many areas the details and timing of reforms are yet to be determined. It is expected that many of these reforms will take time to be implemented. Furthermore, there could be additional changes in tariff policy, requirements for unbundling of the SEBs, restructuring of companies in the power sector, open access and parallel distribution and licensing requirements for, and tax incentives applicable to, companies in the power sector. Such additional changes which includes the Electricity (Amendment) Bill, 2014 could adversely affect the Issuer’s business prospects, financial condition and results of operations. For a discussion on the regulatory framework of the electricity industry in India, see “Regulations and Policies in India”. The adoption of IND-AS, which began for the Issuer from 1 April 2016, could have a material adverse effect on the presentation of the Issuer’s financial statements and the Issuer’s financial statements prepared under IND-AS may not be directly comparable to financial statements prepared under Indian GAAP. The Issuer has historically prepared its annual and interim financial statements under Indian GAAP. However, moving forward, public companies in India will be required to prepare annual and interim financial statements under IND-AS in accordance with the roadmap announced on 2 January 2015 by the Ministry of Corporate Affairs, Government of India (the MCA), in consultation with the National Advisory Committee on Accounting Standards (the MCA Press Release) for the Conversion of IND-AS with IFRS. On 16 February 2015, the MCA notified the public of the Companies (Indian Accounting Standards) Rules, 2015, which have come into effect from 1 April 2016. As such, the Issuer announced its financial results under IND-AS for the first time for the quarter ended 30 June 2016. The Issuer was not required to prepare, and did not prepare, financial statements under Indian GAAP for the first quarter ended 30 June 2016 or the first half ended 30 September 2016. During this ongoing transition to IND-AS reporting, the Issuer could encounter difficulties in the continuing process of implementing and enhancing management information systems. Moreover, there is increasing competition for the small number of IND-AS-experienced accounting personnel available as more Indian companies begin to prepare IND-AS financial statements. Furthermore, there is no significant body of established practice on which to draw upon in forming judgments regarding the new system’s implementation and application. Therefore, there can be no assurance that the Issuer’s adoption of IND-AS has not or will not adversely affect the Issuer’s reported results of operations or financial condition. The Issuer began adoption of IND-AS from 1 April 2016 and therefore it announced its financial results under IND-AS for the first time for the quarter ended 30 June 2016 and subsequently also under IND-AS for the first half ended 30 September 2016. Prior to the first quarter ended 30 June 2016, the Issuer had prepared its annual and interim financial statements under Indian GAAP. Due to the

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differences in accounting standards, there can be no assurance that the Issuer’s financial condition, results of operations, cash flows or changes in shareholders’ equity do not appear materially different under IND-AS than under Indian GAAP. Therefore, the Issuer’s financial statements prepared under IND-AS may not be directly comparable to financial statements prepared under Indian GAAP. For example, the Issuer’s net profit for the first half ended 30 September 2015 was Rs.52,591.4 million under IND-AS, whereas net profit for the same periods under Indian GAAP was Rs.50,336.3 million. See Notes page F-7 for a reconciliation between the two accounting standards for net profit . As a further illustration, the Issuer’s financial statements for the first half ended 30 September 2015 prepared pursuant to Indian GAAP are incorporated by reference into this Offering Circular and a comparison of those Indian GAAP financial statements versus the IND-AS financial statements included in this Offering Circular, and each for the same period, the first half ended 30 September 2015, will provide further insight into the resulting differences due to the change in accounting standards. Finally, for a qualitative description of the differences in accounting standards, see “Summary of Significant Differences Between Indian GAAP, IFRS and IND-AS”. As a result of the foregoing, the Issuer’s IND-AS financial statements and its Indian GAAP financial statements may not be directly comparable. The Issuer’s financial results for the first half ended 30 September 2015 prepared under IND-AS have not been subject to a review by the Issuer’s auditors and that may make evaluating the Issuer’s financial performance difficult. Included in this Offering Circular are the Issuer’s financial statements for the first half ended 30 September 2015 and 2016, with the September 2015 figures serving as a comparative period to indicate, among other things, trends from period to period in certain line-items. These interim financial statements included in this Offering Circular are prepared pursuant to IND-AS. While the Issuer’s financial statements for the first half ended 30 September 2016 have been subject to a limited review by its auditors, the figures for the first half ended 30 September 2015 have not been the subject of a review and instead are based on management accounts. Management of the Issuer has stated that these management account figures for the first half ended 30 September 2015 were prepared by them with the necessary due diligence to ensure that that they give a true and fair view of the financial condition of the Issuer as at the dates as at which they were prepared and all reasonable enquiries have been made to verify the accuracy of such information. However, there can be no assurance that if these management account figures for the first half ended 30 September 2015 were subject to a review by auditors, those reviewed figures would not differ, perhaps substantially, from the corresponding figures included in this Offering Circular. Therefore, since the Issuer’s financial results for the first half ended 30 September 2015 prepared under IND-AS have not been subject to a review by the Issuer’s auditors, it may make evaluating the Issuer’s financial performance difficult. The tariff regulations pursuant to the Central Electricity Regulatory Commission (CERC) Tariff Regulations 2014-19 and the Tariff Policy 2006, respectively, may adversely affect the Issuer’s results of operations, its cash flow from operations and could result in an increase in future competition for the Issuer. The CERC has issued the tariff regulations applicable for the period from 1 April 2014 to 31 March 2019 (the 2014-19 Regulations) under which it has introduced some changes to the tariff principles and has tightened the operational norms applicable for this period. Under the 2014-19 Regulations, the return on equity is calculated on a pre-tax basis at a base rate of 15.50 per cent., to be grossed up by the effective tax rate as applicable for the respective year. For projects commissioned on or after 1 April 2014 there is an additional return of 0.50 per cent. on a post tax basis if the new projects are completed within the timeline specified in the 2014-19 Regulations. In addition, under the 2014-19 Regulations, the Issuer can recover deferred tax liability on the Issuer’s power generation business before 1 April 2009 when the tax liability becomes payable. The recovery of interest cost on debt and return on equity for all power stations declared in commercial operation on or after 1 April 2009 will be based on a prescribed 70/30 debt to equity ratio. Where the equity employed is greater than 30 per cent., the amount of equity for determination of the tariff will be limited to 30 per cent. The return on the excess equity can be recovered on the same basis as the recovery on the debt component. Where the equity employed is less than 30 per cent., the actual amounts of equity will be

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used for purposes of determination of the tariff. In the case of existing power stations, the recovery of interest costs on debt will be based on the debt to equity ratio previously allowed by the CERC for the determination of the tariff for the period ending 31 March 2014. With respect to energy charge rate, which shall cover the primary and secondary fuel cost, the 2014-19 Regulations changed the basis of measurement of gross calorific value (GCV) of fuel from an “as fired” to an “as received” basis. Under the 2014-19 Regulations, incentive payments are based on normative annual plant load factor instead of plant availability and the rate of incentive has also been revised to 50 paise per kWh. The Issuer believes that the various changes in the 2014-19 Regulations may have an adverse effect on the Issuer’s results of operations and cash flow from operations. In addition, the CERC is progressively tightening the operating norms, which will also have an adverse effect on the Issuer’s results of operations and cash flow from operations. While the Issuer has approached the High Court of Delhi against some of the provisions of the 2014-19 Regulations, an unfavourable decision of the High Court of Delhi will have an adverse effect on the Issuer’s results of operations and cash flow from operations. In addition, the Government tariff policy issued in January 2006 and revised in January 2016 (the Tariff Policy) provides that all future requirements for power should be procured through tariff based competitive bidding by distribution licensees except in cases of expansion of existing projects or where there is a state controlled/owned company as an identified developer and where regulators will need to resort to tariff determination based on norms provided that expansion of generating capacity by private developers for this purpose would be restricted to one time addition of not more than 100 per cent. of the existing capacity. For the public sector projects, capacity addition of all new generation and transmission projects shall be decided on the basis of competitive bidding except for expansion projects, provided that a developer of a hydroelectric project would have the option of getting the tariff determined by the appropriate commission subject to award of work and finalisation of the power purchase agreement by 15 August 2022. Exemptions from the competitive bidding route may be adopted in certain transmission projects. For more details see “Modes of participation in power projects — Bid Route” in the “Regulations and Policies in India” section of the Offering Circular. The Government has also issued competitive bidding guidelines. Both central power sector utilities (CPSUs) and private sector developers are participating in the tariff based bidding process for securing power projects including coal-fired ultra mega power projects (UMPPs). Competition in hydroelectric power is also likely to increase in the future due to increased opportunities for private investment in the market as described above and the hydroelectric potential in India. These changes are likely to further increase future competition for the Issuer and could have a material adverse effect on the Issuer’s business, financial condition and results of operation. Cancellation of the allocation of coal mines to the Issuer could adversely affect the Issuer’s business, financial condition and results of operation. The Issuer entered into the business of coal mining to ensure better control, greater reliability of production and lower cost of its coal supply. Coal mining is integral to its strategy of achieving fuel security. The MoC allotted 10 coal blocks to the Issuer, including coal blocks Pakri-Barwadih, Chatti-Bariatu, Kerandari, Dulanga, Talaipalli, Chatti-Bariatu (South ), Banai, Bhalumuda, Chandrabila and Kudanali-Luburi. These coal blocks are situated in the states of Jharkhand, Chhattisgarh and Odisha. The Issuer expects that coal from these coal blocks will help in meeting its coal demand for its upcoming coal-fired projects in the current 12th five-year plan period and beyond. The Supreme Court in September 2014 held that allocation of coal blocks (Coal Blocks) by the Government based on the recommendations made in the 36 screening committee meetings between July 1993 and July 2008 and through the government dispensation route was illegal. The Supreme Court held that only an undertaking which has a unit engaged in the production of iron and steel, generation of power, washing of coal obtained from the mines or production of cement is entitled to allocation, in addition to such entities as the Government, a Government company or a Government corporation. Therefore the Supreme Court ordered the cancellation of the allocation of these Coal

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Blocks, except for a few blocks including the Issuer’s Pakri Barawadih coal block, as this was allotted to the Issuer which is a Government company. In accordance with the Supreme Court order, the allocation of five coal blocks to the Issuer, namely Chatti-Bariatu, Talaipalli, Dulanga, Kerandari and Chatti Bariatu (South), was cancelled. However, these coal blocks were reallocated to the Issuer in March 2015 and a formal allocation letter was issued by the Ministry of Coal for the coal blocks at Chatt-Bariatu and Chatt-Bariatu (South), Kerandari and Talaipalli on 8 November 2015. Furthermore, although three coal blocks, namely Banai, Bhalumuda and Chandrabila, were allotted to the Issuer in 2013, the Government modified its decision and allotted the Chandrabila coal block to a different entity in April 2015. There is no assurance that the allotment of the remaining coal blocks will not be further cancelled or amended. Such adverse decisions may have a significant adverse effect on the Issuer’s business and results of operations. Furthermore, the allocation of mines is subject to certain other additional conditions, including a scheduled period of development stipulated in the block allocation letters, the non-fulfilment of which could result in de-allocation by the MoC. For example, in June 2011 the MoC de-allocated the Chatti-Bariatu, Kerandari and Chatti-Bariatu (South) coal blocks, which were allocated to the Issuer, and the Brahmini and Chichro-Patsimal coal blocks, which were allotted to the joint venture between the Issuer and CIL, citing lack of sufficient progress as per the requirements of the block allocation letters. On review of the justification proposal for the delays in development of these blocks and the progress already achieved by the Issuer by the review committee, the MoC withdrew the de-allocation of the Chatti-Bariatu, Kerandari and Chatti-Bariatu (South) coal blocks in January 2013. The MoC, based on the recommendation of an inter-ministerial group, citing delay in meeting various milestones for the development of coal blocks at Pakri-Barwadih, required bank guarantees of Rs.1,386 million in February 2014. In accordance with the allotment agreement dated 30 March 2015 signed by the Issuer with the MoC, the Issuer submitted bank guarantees for an amount of Rs.8,220 million as performance security for the Chatti-Bariatu, Chatti-Bariatu (South), Kerandari, Dulanga and Talaipalli coal blocks. These bank guarantees are linked with the achievement of stipulated milestones and compliance with various allotment conditions. There can be no assurance that the Issuer will be successful in mining coal from the coal blocks that have been allotted to the Issuer or that these coal blocks will not be cancelled. In case the allocation of one or more of the blocks is cancelled in the future, the availability of fuel for the power projects of the Issuer would be negatively impacted and would adversely affect its business, financial condition and results of operation. The Issuer’s expansion plans and diversification plans require significant capital expenditure and if the Issuer is unable to obtain the necessary funds for expansion, its business plans and prospects may be adversely affected. The Issuer will need significant additional capital to finance its business plan and in particular, its plan for capacity expansion. As of the date of this Offering Circular, the Issuer was engaged in construction activities for projects representing 24,009 MW, including 4,300 MW undertaken by its joint venture companies and subsidiaries, which are in different stages of progress. The Issuer is also pursuing a number of additional projects, representing a further increase of more than 21,740 MW of capacity, which are in various stages, including projects for which tenders have been invited or a feasibility report has been or is being prepared. The scheduled completion dates of the Issuer’s expansion plans and budgets with respect to its expansion plans are management estimates only and there is no assurance that such proposed expansion will be completed or, if completed, that there will not be cost or time overruns. The Issuer expects approximately 30 per cent. of its proposed capital expenditure to be funded by internal accruals and/or through the issue of equity shares and the remaining approximately 70 per cent. to be funded by debt financing. The Issuer’s ability to finance its planned capital expenditure is subject to a number of risks, contingencies and other factors, some of which are beyond its control, including the Issuer’s results of operations generally, tariff regulations, interest rates, borrowing or

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lending restrictions, if any, changes to applicable laws and regulation, the amount of dividend required to be paid to the Issuer’s shareholders and other costs and the Issuer’s ability to obtain financing on acceptable terms. In addition, as of the date of this Offering Circular, there were a number of large-scale infrastructure projects under development in India which may impair the Issuer’s ability to obtain additional funding and it may not be able to receive adequate debt funding on commercially reasonable terms in India. In such event, the Issuer may be required to seek funding internationally, which would result in exposure to foreign exchange risks and which may require approvals under, or be restricted by, laws and regulations in India. For further details, see also the section entitled “Regulations and Policies in India — Foreign Exchange Laws”. If the Issuer is unable to raise required funds for expansion, its business plans and prospects may be adversely affected. See also the section entitled “Description of the Issuer — Business — Capacity Expansion”. The Issuer is also in the process of progressively diversifying the fuel mix of its power stations. In addition, the Issuer plans to invest in power trading, electricity distribution, coal mining and oil exploration. These diversification efforts will also require significant additional capital. There can be no assurance that the Issuer will be able to raise the required capital to implement its diversification plans on acceptable terms or at all. In the event that the Issuer cannot raise the funds to diversify its business, its business, financial condition, prospects and results of operation may be materially and adversely affected. The Issuer’s expansion plans are subject to a number of risks and uncertainties. The Issuer’s expansion plans are subject to a number of factors, including laws and regulations, governmental action, delays in obtaining permits or approvals, global prices of crude oil and other fuels for transportation, prices of fuel supplies required for power station operations, accidents, natural calamities, and other factors beyond its control. Power projects generally have long gestation periods due to the process involved in their commissioning. Contracts for construction and other activities relating to the projects are awarded at different times during the course of the projects. In addition, the Issuer’s projects are dependent on external contractors for construction, installation, delivery and commissioning, as well as the supply and testing of key plant and equipment. The Issuer may only have limited control over the timing, quality of services, equipment or supplies provided by these contractors. The Issuer is highly dependent on some of the external contractors who supply specialised services and sophisticated and complex machinery. There can be no assurance that the performance of the external contractors will meet the Issuer’s specifications or performance parameters or that they will remain financially sound. The failure or delay of the external contractors to perform in a timely manner, could result in incremental cost or time overruns, or the termination of a power project development. For example, the work at the Issuer’s Barh project has been delayed by the non-performance of the contractor’s work in relation to constructing a steam generator, pursuant to which the contractor’s contract with the Issuer has been terminated. There can be no assurance that the Issuer would be able to complete its expansion plans in the time expected, or at all, or that their gestation period would not be affected by any or all of these factors. Furthermore, the Issuer’s ability to acquire sites for its expansion plans depends on many factors, including whether the land is private or state-owned, whether the land is classified in a manner that allows it to be used as contemplated by the Issuer’s projects, and the willingness of the owners to sell or lease their land. In many cases, the area identified as a suitable site is owned by numerous small landowners. Acquisition of private land in India can involve many difficulties, including litigation relating to ownership, liens on the land, inaccurate title records, negotiations with numerous land owners and obtaining Government approvals. Acquisition of Government land may also involve a number of difficulties relating to rehabilitation and resettlement where people’s livelihood is dependent on the land. Further, in instances where forest land is required to set up a project, as of the date of this Offering Circular, Government clearance for diversion of forest land for non-forest purposes is mandatory for a power project as well as its connected mines, and project development could be severely affected in case of any delay in obtaining such clearances.

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The Issuer may also face competing interests with respect to usage of land, as in the case of the Issuer’s North Karanpura Thermal Power Project where work was put on hold for several years due to objections that the proposed location of the project is on coal-bearing land. Work on the project has since been re-started. The power industry in which the Issuer operates is highly regulated. For example, with respect to the power business, several licences are required under the Electricity Act, including a transmission licence, a distribution licence and an electricity trading licence. There is no assurance that the Issuer or the concerned agency will be able to obtain all the necessary approvals or clearances with respect to its expansion plans. Any of these factors could have a material adverse effect on the Issuer’s business, financial condition and results of operation. The Issuer may be adversely affected by changes in the Government’s policy relating to the Issuer. The Government owns 69.74 per cent. of the Issuer’s paid-up capital. To date, the Government’s ownership has been an important factor in some aspects of the Issuer’s business, including the settlement of electricity dues payable by the SEBs to the Issuer. Any significant changes in the Government’s shareholding in the Issuer, and/or pursuit by the Government of policies that are not in the interests of the Issuer, could adversely affect the Issuer’s business. The Issuer generally manages its business on a day to day basis independently from the Government. The Government has named the Issuer as a “Maharatna” company as a consequence of which the Issuer enjoys enhanced autonomy in making financial and other decisions. Adverse changes in the terms of, or the loss of, “Maharatna” status may decrease the Issuer’s autonomy and the Issuer’s ability to compete with other participants in the Indian power sector. The Issuer’s operations create difficult environmental challenges, and changes in environmental laws and regulations may expose the Issuer to liability and result in increased costs. The Issuer’s power stations and power generation projects are subject to environmental laws and regulations promulgated by the Ministry of Environment and Forests (MoEF) and the pollution control boards of the relevant states. These include laws and regulations that limit the discharge of pollutants into the air, land and water and establish standards for the treatment, storage and disposal of hazardous waste materials. The Issuer expects that environmental laws and compliance requirements will continue to become stricter. Compliance with current and future environmental regulations, particularly by the Issuer’s older power stations, may require substantial capital expenditure and, in certain cases, may require the closing down of non-complying power stations. In particular, the Issuer generates high levels of ash in its operations. There are limited uses for ash and therefore demand for ash is low. While the Issuer continues to explore methods to utilise or dispose of ash, its ash utilisation activities are insufficient to dispose of the ash it generates. Furthermore, the Issuer is required to achieve 100 per cent. ash utilisation on a progressive basis under the MoEF notification dated 3 November 2009. Compliance with this requirement, as well as any future norms with respect to ash utilisation, may add to the Issuer’s capital expenditures and operating expenses. In certain cases where it may not be possible to increase the Issuer’s utilisation of ash to comply with this requirement, the Issuer may need to reduce the generation of ash through a partial or full shutdown of its operating power stations, thereby reducing its average PLF which could have a material adverse effect on the Issuer’s business, financial condition and results of operation. The Issuer could be subject to substantial civil and criminal liability and other regulatory consequences in the event that an environmental hazard was to be found at the site of any of its power stations or if the operation of any of the Issuer’s power stations results in material contamination of the environment. For instance, in 2006, the Chattisgarh Environment Conservation Board through its

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regional officer filed a criminal complaint against the Issuer’s Korba unit alleging air and water pollution. Financial losses and liabilities as a result of increased compliance costs or due to environmental damage or criminal liability due to such environmental breaches may affect the Issuer’s reputation and financial condition. Furthermore, there is a possibility that environmental compliance norms may be drastically altered, resulting in substantial capital and operating expenditure to the Issuer, which may have an adverse impact on the Issuer’s financial condition. To note an example, in December 2015, the Government put forth the Environment (Protection) Amendment Rules, 2015, stipulating strict requirements regarding water consumption and emissions of particulate matter, sulphur dioxide, oxides of nitrogen and mercury for thermal power plants. The standards have been revised under three categories in terms of thermal power plants brought online before 31 December 2003, between 1 January 2004 and 31 December 2016 and after 1 January 2017. The notice provides that thermal power stations brought online before 31 December 2016 shall meet the revised limits prior to 7 December 2017. The Issuer has written to the Government for certain amendments to the notification citing difficulties in its implementation and for extending the timeline. There is no assurance that the Issuer can complete the required modifications to the plants to ensure compliance to the revised regulations before the stipulated date or at all and this can have adverse implications for the Group. The Issuer may be adversely affected by restrictive covenants in certain joint venture agreements to which it is a party. The Issuer has entered into various agreements for the establishment of joint ventures with different parties, some of which prohibit the Issuer from, among other things, disposing of its shareholding in the joint ventures. Most of the joint venture agreements to which the Issuer is a party contain clauses pursuant to which the Issuer has undertaken not to encumber or alienate its shareholding in the joint ventures for specified periods ranging from 3 to 15 years. Further, in several joint venture agreements, the Issuer has agreed that it will not transfer its shareholding to any party nor will the Issuer have the right to acquire additional shares in the open market without the prior written consent of the other party. These covenants limit the Issuer’s ability to make optimum use of its investments or exit these joint venture companies at its discretion, which may have an adverse impact on the Issuer’s financial condition. Activities in the power generation business can be dangerous and can cause injury to people or property in certain circumstances. The Issuer’s business is subject to risks generally associated with power generation, capacity addition and the related receipt, distribution, storage and transportation of fuel, equipment, materials, products and waste. These hazards include explosions, fires, earthquakes and other natural disasters, mechanical failures, accidents, acts of terrorism, operational problems, delay in development by third-parties of, or congestion in, transmission lines, transportation interruptions, chemical or oil spills, discharges of toxic or hazardous substances or gases and other environmental risks. These hazards can cause personal injury and loss of life, environmental damage and severe damage to or destruction of property and equipment, and may result in the limitation or interruption of the Issuer’s business operations and the imposition of civil or criminal liabilities. The Issuer is also subject to risks such as operational failure due to faulty equipment and business interruption due to strikes and work stoppages. Any of these factors could have a material adverse effect on the Issuer’s business, financial condition and results of operations.

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The Issuer’s business involves numerous risks that may not be covered by insurance. While the Issuer maintains insurance of its operating plants with ranges of coverage that the Issuer believes to be consistent with industry practice, the Issuer is not fully insured against all potential hazards and events incidental to its business and there is no assurance that the Issuer’s insurance coverage will be adequate and available to cover any loss incurred in relation to such types of incidents. The Issuer is not covered for certain risks such as war, damage or destruction of data or records or damage or loss due to pollution or contamination. Further, notwithstanding the Group’s insurance coverage, any damage to the Group’s buildings, facilities, equipment, or other properties as a result of occurrences such as fires, floods, water damage, explosions, power losses, typhoons and other natural disasters may have an adverse effect on the Group’s business, financial condition, results of operations and growth prospects. The occurrence of any such events not covered by insurance may have a material adverse effect on the Issuer’s business, financial condition and results of operations and the trading price of the Notes. If the Issuer is unable to adapt to technological changes, its business could suffer. The Issuer’s future success will depend in part on its ability to respond to technological advances and emerging power generation industry standards and practices on a cost-effective and timely basis. Changes in technology and high fuel costs of thermal power projects may make newer generation power projects or equipment more competitive than those of the Issuer or may require the Issuer to make additional capital expenditures to upgrade its facilities. In addition, there are other technologies that can produce electricity, most notably oil, nuclear, hydroelectric, fuel cells, micro turbines, wind-mills, solar thermal and photovoltaic (solar) cells. The Issuer continues to invest in new and more advanced technologies and equipment to enable it to respond to emerging power generation industry standards and practices in a cost-effective and timely manner in order to remain competitive with other thermal power projects and other methods of power generation. The development and implementation of such technology entails significant technical and business risks. There is no assurance that the Issuer will successfully identify and implement new technologies or adapt its processing systems to customer requirements or emerging industry standards. If the Issuer is unable, for technical, legal, financial or other reasons, to identify and adapt in a timely and cost effective manner to changing market conditions, customer requirements or technological changes, its business, financial performance and the trading price of the Notes could be adversely affected. Any disruptions to the Issuer’s Enterprise Resource Planning (ERP) and disaster recovery platforms or to the Issuer’s business systems or to the Issuer’s communication systems could materially and adversely affect its ability to carry on its business efficiently. The Issuer has invested heavily in information technologies designed to help it to better monitor and operate its business. The Issuer’s ERP platform covers almost all business processes and provides a real time view of the performance of the Issuer’s power stations. The Issuer has a centralised deployment of ERP through the data centre located at its office in Noida, Uttar Pradesh, which captures data that can be accessed by users throughout the Issuer’s network. ERP is implemented at all of the Issuer’s business locations, including projects and subsidiaries. The Issuer’s ability to engage in critical business tasks depends on the efficient and uninterrupted operation of the ERP platform and communication network. The Issuer’s ERP servers, data centre facilities and communication networks are vulnerable to damage, power loss, third party disruptions, security breaches, natural calamities, fire and similar events. Any significant disruption to these servers or other computer or communication systems would damage the Issuer’s ability to carry on its business efficiently. Moreover, the Issuer’s disaster recovery site at Hyderabad is vulnerable to similar events as the Issuer’s ERP servers at Noida. In the event of any calamity, when the main data centre and the disaster recovery platforms are disrupted at the same

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time, this would affect the Issuer’s ability to carry on its business efficiently and may require capital expenditure to restore. In addition, as the Issuer sources its hardware and software from third parties, there is no guarantee that there will not be any defects in these products, which may affect or disrupt the Issuer’s business. The Issuer’s operations and expansion plans have significant water requirements and it may not be able to ensure regular and adequate availability of water. Water is a key input for hydroelectric and thermal power generation. The Issuer’s operations and the proposed expansion of generation capacity will be dependent on, among other things, its ability to ensure unconstrained and undiminished availability of water during the life cycle of the existing and planned power stations. Changing weather patterns and inconsistent rainfall can hamper water supply at the Issuer’s power stations. Although the Issuer creates reservoirs to hold water to cover any temporary shortfall, these reservoirs do not have sufficient capacity to sustain supply to the power stations for extended periods of time. The Issuer relies on water supply arrangements with certain state governments and state government bodies. Such water sources may run through several states and may be the subject of interstate water disputes. In addition, with the creation of new states in India, the probability of such interstate water disputes may increase. Any interstate water disputes may affect the ability of these state governments to supply water to the Issuer. Water is a limited and politically sensitive resource, and is carefully allocated by the state governments for use between several groups of users. Accordingly, due to political pressures, state governments may not fulfil their contractual obligations to the Issuer under these water supply agreements. In the event of water shortages, the Issuer’s power projects may be required to reduce their water consumption, which would reduce their power generation capability, thereby adversely affecting its average PLF. Expansion of the Issuer’s generation capacity and the development of new power stations cannot be initiated unless the Issuer has regular and adequate availability of water and/or confirmation of water availability for these projects. There is no assurance that the Issuer will receive regular and adequate quantities of water for the construction and/or operation of these power stations. The Issuer may be unable to effectively execute its power projects and manage its growth or to successfully implement its business plan and growth strategy. The Issuer expects that the execution of its growth strategy and new power projects will place significant strains on its management, financial and other resources. Continued expansion increases the challenges involved in financial and technical management, recruitment, training and retaining sufficient skilled technical and management personnel, and developing and improving its internal administrative infrastructure. The Issuer may consider expansion in the future to pursue existing and potential market opportunities. The Issuer’s inability to manage its business plan effectively and execute its growth strategy could have an adverse effect on its operations, results, financial condition and cash flows. In addition, if it is unable to manage such challenges, the Issuer may also be unable to meet the annual performance targets set by the Government pursuant to the annual Memorandum of Understanding (MoU) which it enters into with the Government. If the Issuer is unable to successfully implement its business plan and growth strategy, its business, results of operations and financial condition would be materially and adversely affected. In order to manage the execution of new power projects and growth effectively, the Issuer must implement and improve operational systems, procedures and internal controls on a timely basis. If the Issuer fails to implement and improve these systems, procedures and controls on a timely basis, or if there are weaknesses in the Issuer’s internal controls that would result in inconsistent internal standard operating procedures, the Issuer may not be able to meet its expected schedule of project

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implementation, hire or retain employees, pursue new business, complete future strategic agreements or operate its business effectively. There can be no assurance that the Issuer’s existing or future management, operational and financial systems, procedures and controls will be adequate to support future operations or establish or develop business relationships beneficial to its future operations. Power projects generally have long gestation periods and subject us to various operational risks, which may result in an adverse effect on the Issuer’s business, financial condition and prospects. Power projects generally have long gestation periods, which may entail a significant period of time before the economic viability of a given project can be established and there may be substantial capital outflow before the Issuer is able to realise expected benefits or returns on its investment. Moreover, the construction, development or operation of the Issuer’s power projects, coal mines or other facilities may be disrupted or affected by various factors that may be beyond its control. In particular, many of the Issuer’s power stations are ageing and may become subject to additional risks to the extent that the Issuer may be required to undertake renovation and modernisation schemes involving significant capital expenditure. Any of these factors could have a material adverse effect on the Issuer’s business, financial condition and results of operations. Renewable projects generally are subject to higher tariff rates and other risks, which may result in an adverse effect on the Issuer’s business, financial condition and prospects. In future, the Issuer intends to add 10,000 MW to its capacity by way of renewable energy based power projects. In this regard, the Issuer signed a MoU with the Andhra Pradesh government for developing a 1,000 MW solar photovoltaic project in a phased manner. For this purpose, the Andhra Pradesh government also identified 7,554.53 acres of land in the Anantpur district of Andhra Pradesh, for the Issuer to undertake this proposed activity. In the first phase of the solar photovoltaic power projects, the Issuer is required to build a capacity of 250 MW within a period of one to two years, in the Anantpur district of Andhra Pradesh (Anantpur Project) and in relation to which the Andhra Pradesh government will provide the transmission and evacuation infrastructure. Any delay in completion of the Anantpur Project and readiness of associated power evacuation infrastructure is likely to result in an adverse impact on the Issuer’s operations, business prospects and profitability. Furthermore, the solar projects are subject to other risks, including without limitation, higher tariff rates (as compared to conventional coal-based plants) and associated off-take risks, various technology risks and risks associated with sub-optimal performance. Also there are additional risks arising out of transmission systems which are required to be developed by state agencies and central transmission utilities that may not be established by the targeted time due to slowdown in investment or otherwise, grid instability and regulations mandating forecasting and scheduling of solar power and non-availability of tax benefits. Any of these factors could have a material adverse effect on the Issuer’s business, financial condition and results of operations. Default by the state distribution companies in payment of dues on account of solar power generated or traded by the Issuer under the National Solar Mission may result in an adverse effect on the Issuer’s business, financial condition and prospects. The Government has designated the Issuer as the nodal agency for selection of solar power developers for the 15,000 MW grid-connected solar photo voltaic power plants to be developed under the National Solar Mission for 2014 to 2019. The Issuer is also required to purchase solar power from these plants for further sale to state distribution companies.

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Any default by the state distribution companies in payment of dues on account of solar power generated or traded by the Issuer and foreign currency exchange rate variations or refusal to off-take solar power is likely to have an adverse impact on the balance sheet of the Issuer affecting the overall credit-risk, thereby having a material adverse effect on the Issuer’s business, financial condition and results of operations. The Issuer has entered into certain transactions with related parties which may involve conflicts of interest. The Issuer has entered into transactions with several related parties. The Issuer can give no assurance that it could not have achieved more favourable terms had such transactions not been entered into with related parties or that such transactions do not involve any conflict of interest. Furthermore, it is likely that the Issuer in the future also may enter into related party transactions. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on the Issuer’s financial condition and results of operations. For details regarding the Issuer’s related party transactions as of 31 March 2016, please see section titled “Financial Information” of this Offering Circular. The Issuer is entering into new businesses that may not be successful. The Issuer seeks to diversify its operations by taking advantage of opportunities created by regulatory and economic reforms. The Issuer has entered into the power trading business and is considering downstream integration into the electricity distribution business. The Issuer is undertaking development activities at Pakri-Barwadih coal mining project and other coal mining blocks allotted to it. The Issuer has also formed a joint venture company with Nuclear Power Corporation of India Limited (NPCIL) and plans to undertake projects in the nuclear power sector. The Issuer has also formed joint ventures for the manufacture of equipment used in the power business. These new businesses are subject to regulation, which may change. Any such changes to the regulatory environment may pose significant challenges to the Issuer’s administrative, financial and operational resources. The early stage of the Issuer’s new businesses and any changes to the nature of the relevant regulations may make it difficult to predict the economic viability of these new businesses. The Issuer does not have operating history or significant experience in these new businesses and they may involve risks and difficulties with which the Issuer may not be familiar. They may require capital and other resources, as well as management attention, which could place a burden on the Issuer’s resources and abilities. In addition, the Issuer’s exploration business also runs the risk of non-discovery. The Issuer’s activities in the nuclear power sector may also be subject to a number of safety concerns. The Issuer may not be successful in these businesses and there can be no assurance as to the timing and amount of any returns or benefits that the Issuer may receive from these new businesses or any other new businesses the Issuer may enter into. The Issuer’s success will depend on its ability to attract and retain its key personnel. The Issuer’s future success depends substantially on the continued service and performance of its senior management team and other key personnel to ensure the continuance of project implementation, the management and running of its daily operations and the planning and execution of its business strategy. There is intense competition for experienced senior management and other key personnel with technical and industry expertise in the power business and if the Issuer loses the services of any of these or other key individuals and is unable to find suitable replacements in a timely manner, its ability to realise its strategic objectives could be impaired. The Issuer faces specific disadvantages in its efforts to attract and retain its management. As a public sector undertaking, the Government policies regulate and control the emoluments and benefits that the Issuer pays to its employees, including its key managerial and technical personnel, and these policies may

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not permit the Issuer to pay at market rates. Consequently, private sector market participants in power generation, coal mining, oil exploration and production and other related activities that are able to pay at market rates have been attracting qualified personnel and diluting the talent pool available to public sector undertakings. Also, since most of the Issuer’s operational activities lie in the remote regions of India, the Issuer faces competitive disadvantages in attracting and retaining key personnel. Additionally, the Issuer may not have in place the necessary training, systems and processes to develop key personnel internally. The loss of key members of the Issuer’s senior management or other key team members, particularly to competitors, could have an adverse effect on its business and results of operations. The Issuer’s performance also depends on its ability to attract and train highly skilled personnel. If the Issuer is unable to do so, it would materially and adversely affect its business, prospects and results of operations. Geological difficulties during project execution may negatively impact the Issuer’s time and cost. The Issuer may experience geological difficulties during the execution of construction projects, especially during the development of hydroelectric power, oil and gas and coal mining projects. The Issuer’s construction projects are designed based on certain assumptions made about the locations of such projects after studies have been made. However, the Issuer cannot guarantee that such assumptions are accurate. For example, during the execution of the Issuer’s construction projects, the Issuer may discover adverse rock strata or terrain, or trapped gases or trapped water and its plant designs may be unsuitable for dealing with such geology. These geological factors may result in costs and/or time overruns or the project may have to be abandoned due to impossibility or because the project is no longer economically feasible. Estimates of coal reserves are subject to assumptions, and if the actual amounts of such reserves are less than estimated, or if the quality of the coal reserves is lower than estimated, the Issuer’s results of operations and financial condition may be adversely affected. Actual reserves and production levels in coal mines or any future coal blocks that the Issuer has been allotted, may differ significantly from estimates, as such estimates are subject to various assumptions such as interpretations of geological data obtained from sampling techniques and projected rates of production in the future. Additionally, there is no assurance that the mines from which CIL or SCCL intend to source the Issuer’s coal requirements for its power projects, or that supplies awarded to the Issuer, would be able to meet all its coal requirements. If the quantity or quality of the Issuer’s coal reserves has been overestimated, the Issuer would deplete its coal reserves more quickly than anticipated or incur increased costs to process relatively lower levels of coal if the quality of coal is inferior than anticipated and in such event, the Issuer may have to source the required coal in the open market. Prices for coal in the open market may exceed the cost at which the Issuer might otherwise be able to extract coal or obtain from subsidiaries of CIL or SCCL and may involve substantial transportation costs, which would increase the Issuer’s operating costs and adversely affect its business, financial condition and results of operations. In addition, there can be no assurance that the Issuer will be successful in mining coal from the coal blocks that have been allotted to the Issuer at a cost which is economically attractive or that the coal mined will meet the coal specifications required for use in its power stations. See also — “Investment Considerations — Cancellation of the allocation of coal mines to the Issuer could adversely affect the Issuer’s business, financial condition and results of operation”. The Issuer’s involvement in oil and natural gas exploration involves significant costs and numerous risks, including dependence on third parties. The Issuer has begun oil exploration activity since 2005. As of the date of this Offering Circular, the Issuer has two exploration blocks, one in consortium with strategic partners and one independently, in which it acts in the role of operator. Oil exploration is typically capital intensive, comprising the cost of survey and drilling of exploratory wells. There is no certainty that after such substantial expenditures, the Issuer will encounter oil or natural gas reservoirs that may be

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commercially viable for production. In addition, the Issuer does not have experience in oil exploration and is therefore dependent on its strategic partners. In the event that the Issuer does not encounter oil or natural gas reservoirs that are commercially viable or if its strategic partners cease to provide assistance to the Issuer and the Issuer is unable to replace these strategic partners with other appropriate partners, this would have an adverse effect on its business prospects and financial condition. Certain contractors with whom the Issuer operates are subject to U.S. and international trade restrictions, economic embargoes and sanctions. In response to the recent actions and policies of the Government of the Russian Federation, including recent actions in Ukraine and the purported annexation of Ukraine, the United States and the EU have recently initiated sanctions relating to Russia and Ukraine. Specifically, the U.S. has authorised sanctions against: (i) individuals and entities determined to be contributing to the on-going situation in Ukraine (U.S. Executive Order 13660); (ii) officials of the Russian Government and any individual or entity that is owned or controlled by, that has acted for or on behalf of, or that has provided material or other support to, a senior Russian government official (U.S. Executive Order 13661); and (iii) persons and entities operating in key Russian business sectors, including financial services, energy, metals and mining, engineering, and defence and related materials (U.S. Executive Order 13662). The U.S. has also authorised so-called “sectoral sanctions” against various Russian entities pursuant to U.S. Executive Order 13662 in the form of four Directives which embody specific prohibitions on dealings with these entities. These “sectoral sanctions” are incorporated into the Sectoral Sanctions Identification List. Numerous individuals and some entities have been sanctioned pursuant to these measures. The Issuer is currently working on the construction of a thermal power plant in India called the Barh Stage-I project (the Project). Also involved in the Project is a contractor called Power Machines OJSC, which is a Russian entity that provides power generation equipment and with whom the Issuer entered into contractual arrangements in 2005 before the implementation of the current set of Russia and Ukraine related sanctions. There can be no assurance that further or expanded sanctions with respect to Russia or Ukraine will not affect the Issuer’s operations that involve the use of Russian contractors. There can be no assurance that other persons and entities that the Issuer, now or in the future, engages in transactions and employment will not be subject to U.S. and international sanctions, which could have a negative impact on its ability to raise funds in international capital markets and on the marketability of its securities. Furthermore, as a result of its business activities with entities that are subject to sanctions, the Issuer may be subject to negative media or investor attention, which may affect certain investors’ perceptions of the Issuer. The Issuer has executed a letter of intent with RIL for the purchase of gas, which, if not declared as a valid and binding contract between the Issuer and RIL, may negatively impact the Issuer’s financial condition and results of operation. As of 30 September 2016, the Issuer has seven gas-fired power stations in India, which accounted for 10.0 per cent. of the Issuer’s directly owned power generation capacity. Further, the Issuer intends to increase the installed power generation capacity of its gas-fired power stations located at Kawas and Gandhar. In order to secure gas for these power stations, the Issuer has invited bids for the procurement of gas to obtain 132 trillion British tonnes per unit per annum for a period of 17 years. Short-listed bidders then submitted their technical and financial proposals and, after evaluating these proposals, the Issuer issued a letter of intent to RIL pursuant to which, the terms and conditions were to be governed by the provisions of a gas sale and purchase agreement. However, RIL refused to execute a gas sale and purchase agreement with the Issuer. The Issuer filed a civil suit against RIL

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for declaration and specific performance before the High Court of Bombay on 20 December 2005. As of the date of this Offering Circular, the case is pending. Any adverse decision or order against the Issuer could adversely affect the development plans of the Issuer. In such event, the Issuer may have to pay higher prices for its gas or may not be able to obtain gas in the required quantity at all. This will negatively impact the Issuer’s financial condition and results of operations. The Issuer is involved in a number of legal proceedings that may be determined against the Issuer. The Issuer is party to various legal proceedings and claims relating to its business and operations in India. These legal proceedings are pending at different levels of adjudication before various courts, tribunals and forums. These legal proceedings include civil suits, arbitration claims, proceedings relating to taxation, environmental proceedings and other statutory levies initiated against the Issuer, criminal proceedings involving the Issuer and its employees, employment related disputes pertaining to various labour legislations, public interest litigation against the Issuer pertaining to its operations and business and proceedings involving the acquisition of land by the Issuer for its operations. Various regulatory authorities may initiate, and have initiated in the past, legal proceedings against the Issuer in relation to non-compliance of certain regulatory provisions under various labour and environmental statutes. No assurance can be given that these legal proceedings will be decided in the Issuer’s favour. Any adverse decision may have a significant adverse effect on the Issuer’s, business and results of operations. There is also no assurance that similar proceedings will not be initiated against the Issuer in future. Further, should any new developments arise, such as a change in Indian law or rulings against the Issuer by appellate courts or tribunals, the Issuer may need to make provisions in its financial statements, which could increase its expenses and its liabilities. Further litigation by employees and power sector related litigation initiated or ongoing against the Issuer are mentioned in the other investment considerations set out in this section. See also “Description of the Issuer — Legal and Regulatory Proceedings” and “Investment Considerations — Cancellation of the allocation of coal mines to the Issuer could adversely affect the Issuer’s business, financial condition and results of operation.” The Issuer’s business has risks relating to fraud, bribery and corruption. While the Issuer maintains anti-corruption training programmes, codes of conduct and other safeguards designed to prevent the occurrence of fraud, bribery and corruption, it may not be possible for the Issuer to detect or prevent every instance of fraud, bribery and corruption by its employees, agents, sub-contractors or joint venture partners. The Issuer or its employees may therefore be subject to legal proceedings and to reputational damage which could have a material adverse effect on the Issuer’s business. The Issuer may encounter problems relating to the operations of its joint ventures. As of the date of this Offering Circular, the Issuer has formed 22 joint venture companies with various third parties for undertaking specific business activities. The Issuer’s joint venture partners may, be unable or unwilling to fulfil their obligations, whether of a financial nature or otherwise, have economic or business interests or goals that are inconsistent with the Issuer’s, take actions contrary to the Issuer’s instructions or requests or contrary to the Issuer’s policies and objectives, take actions that are not acceptable to regulatory authorities, become involved in litigation, have financial difficulties, or have disputes with the Issuer. Any of the foregoing may have an adverse effect on the business, prospects, financial condition and results of operations of the Issuer.

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The Issuer has incurred significant indebtedness and intends to incur additional substantial borrowings in connection with the development of its power projects and other investments. As of 31 March 2016, the Issuer had total outstanding indebtedness of Rs.1,120.30 billion on a consolidated basis, including Rs.677.23 billion of unsecured loans. For further details regarding the Issuer’s indebtedness, see the section entitled “Capitalisation”. The indebtedness incurred and the restrictions imposed on the Issuer by its current or future loan arrangements could adversely impact its ability to conduct its business operations and result in other significant adverse consequences, including, but not limited to, the following: •

the Issuer may be required to dedicate a significant portion of its cash flow towards repayment of its debt, which will reduce the availability of cash flow to fund working capital, capital expenditures, acquisitions and other general corporate requirements;



the Issuer is, and may in future be, required to maintain certain financial ratios and satisfy certain financial or other covenants. If the Issuer breaches any financial or other covenants contained in any of its financing arrangements, the Issuer may be required to immediately repay its borrowings either in whole or in part, together with any related costs. Furthermore, certain of the Issuer’s financing arrangements contain cross default provisions, which could be automatically triggered by defaults under other financing arrangements. Additionally, because some of the Issuer’s borrowings are secured against its assets, lenders may sell those assets to enforce their claims against the debt;



the Issuer’s ability to obtain additional financing through debt or equity instruments in the future may be impaired;



if the Issuer is unable to service its indebtedness, it could cause the lenders to declare an event of default under the relevant agreements and the Issuer will be required to immediately repay its borrowings either in whole or in part together with related costs;



the Issuer may be required to obtain approval from its lenders, regarding, among other things, its reorganisation, amalgamation or merger, its incurrence of additional indebtedness, the disposition of assets and the expansion of its business and no assurance can be given that the Issuer will receive such approvals in a timely manner or at all;



it could limit the Issuer’s flexibility in planning for, or reacting to, changes in its business and the industry; and



the Issuer’s project costs may increase since the Issuer capitalises its interest during the construction of its facilities.

The Issuer’s ability to meet its debt service obligations and to repay its outstanding borrowings will depend primarily upon the cash flow generated by its business over time, as well as its ability to tap the capital markets as a source of capital. No assurance can be given that the Issuer will generate sufficient cash to enable it to service its existing or future borrowings, comply with covenants or fund other liquidity needs. If the Issuer fails to meet its debt service obligations or financial or other covenants required under the financing documents, the relevant lenders could declare the Issuer’s default under the terms of its borrowings and cancel unutilised facilities, accelerate the maturity of its obligations or enforce against its security, which may include taking over the power project. No assurance can be given that, in the event of any such acceleration, the Issuer will have sufficient resources to repay these borrowings. Failure to meet the Issuer’s obligations under the debt financing arrangements could have a material adverse effect on its cash flows, business and results of operations.

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Future debt financing, if available, may result in increased finance charges, increased financial leverage, decreased income available to fund further acquisitions and expansions, decreased working capital and the imposition of restrictive covenants on the Issuer’s business and operations. The Issuer’s planned and any proposed future expansions and projects may be materially and adversely affected if the Issuer is unable to obtain funding for such capital expenditures on satisfactory terms, or at all, including as a result of any of its existing facilities becoming repayable before its due date. Further, any downgrade in the Issuer’s credit rating may affect its ability to acquire debt financing at current interest rates, and, may adversely affect its business prospect, result of operation and financial condition. India has experienced high levels of inflation in previous years. The average annual inflation rates in India from 2008 to 2012 was approximately 7.6 per cent. The average headline wholesale price index inflation after remaining around 8 to 9 per cent. between the years 2010 and 2012 moderated to 7.35 per cent. in fiscal 2013 (Source: Mid-Year Economic Analysis 2013-2014 issued by Department of Economic Affairs, Finance Ministry). According to the RBI, the headline inflation rate reached to (-)2.8 per cent. in fiscal 2016 from 2.0 per cent. in fiscal 2015 and 6.0 per cent. in fiscal 2014. In an effort to combat inflation, the RBI has raised interest rates numerous times since 2010. In the event that inflation remains high or increases, or if global inflation increases, certain of the Issuer’s costs may increase. Increases in interest rates will adversely affect the cost of the Issuer’s borrowings. Increases in interest rates will adversely affect the cost of the Issuer’s borrowings. As of the date of this Offering Circular, the Issuer has not entered into any material interest rate hedging or swap transactions in connection with its borrowings. There can be no assurance that the Issuer will be able to enter into interest hedging contracts or other financial arrangements on commercially reasonable terms, or that any of such agreements will protect the Issuer fully against its interest rate risk. Any increase in interest expense may have an adverse effect on its business, prospects, financial condition and results of operations. The Issuer’s ability to raise foreign capital is constrained by global economic conditions and conditions in foreign financial markets. The Issuer has raised and expects to continue to raise capital in foreign markets. The Issuer’s ability to raise foreign capital is constrained by the conditions of these markets. The global capital and credit markets have recently been experiencing periods of extreme volatility and disruption. The global financial crisis, including the continuing sovereign debt crisis in Europe, concerns over recession, inflation or deflation, energy costs, geopolitical issues, commodity prices and the availability and cost of credit, have contributed to unprecedented levels of market volatility and diminished expectations for the global economy and the capital and credit markets. On 23 June 2016, the United Kingdom held a referendum on its membership of the European Union and voted to leave (Brexit). There is significant uncertainty at this stage as to the impact Brexit will have on general economic conditions in the United Kingdom and the European Union, and any consequential impact on global financial markets. For example, Brexit could give rise to increased volatility in foreign exchange rate movements and the value of equity and debt investments. A lack of clarity over the process for managing the exit and uncertainties surrounding the economic impact could lead to a further slowdown and instability in the financial markets. These factors, combined with others, may impact the Issuer’s ability to raise capital in foreign markets. An inability to raise foreign capital or access foreign credit markets would have a material adverse effect on its business and financial condition. The Issuer’s business, financial condition and results of operations may be materially and adversely affected if the Issuer is unable to take advantage of certain tax benefits or if there are any adverse changes to the tax regime in the future. Section 80-IA of the Income Tax Act, 1961 (the Income Tax Act) provides that, subject to certain conditions being fulfilled, 100 per cent. of the profits derived from the projects for the generation,

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distribution or transmission of power would be entitled for deduction from total income for 10 consecutive assessment years out of 15 years, beginning from the year in which the project commences power generation, transmission or distribution of power, if the activity is commenced on or before 31 March 2017. If such or other tax benefits become unavailable, the Issuer’s financial condition, results of operations and business could be materially and adversely affected. The Goods and Services (GST) Act has been passed by parliament and has also received the President’s assent. However, as the detailed rules thereunder, including the applicable GST rates, are yet to be notified, the Issuer is unable to ascertain the full impact of the proposed tax changes on its revenues. See the investment consideration “The new taxation system could adversely affect the Issuer’s business and the trading price of the Notes.” Some of the Issuer’s immovable properties have certain irregularities in title, as a result of which the Issuer’s operations may be impaired. The majority of the Issuer’s land acquired for power stations and projects was acquired through the legal procedure prescribed under the Land Acquisition Act, 1894. The land acquisition procedure prescribed under the Land Acquisition Act, 1894 is yet to be completed and, accordingly, the Issuer does not yet have clear and absolute title to some of these immovable properties. Further, in respect of some of these immovable properties, certain litigation and objections have been initiated by the affected persons and are pending before various forums and courts in India. There are also cases relating to the acquisition of land for a number of the Issuer’s projects and power stations. These cases involve claims for additional compensation by claimants and/or disputes relating to the title to the property. As of 31 March 2016, the contingent liabilities appearing in the Issuer’s consolidated financial statements with respect to land compensation cases were Rs.3,347.80 million. In addition, several of the Issuer’s immoveable properties for its projects or power stations, offices and residences, which are either owned by the Issuer or leased, have one or more of the following irregularities of title: •

the conveyance deeds for transfer of property have not been executed;



the agreements to sell or conveyance deeds have not been registered in the land records maintained by the concerned Sub-Registrar of Assurances;



lease deeds have not been executed;



the agreements to lease or lease deeds have not been registered in the land records maintained by the concerned Sub-Registrar of Assurances; or



lease agreements have expired and have not yet been renewed.



Further, a portion of the land acquired for the Issuer’s projects is subject to adverse possession.

Though efforts are being made to obtain possession of such land, failure to repossess such land may affect the Issuer’s operations, financial condition, prospects and expansion plans adversely. The Issuer’s success depends on stable and reliable transportation infrastructure and any disruption of transportation services could affect its operations. The Issuer depends on various forms of transport, such as roadways, railways, airways, sea, inland waterways, canals and pipelines to receive fuel, raw materials, equipment and water during construction of its power projects and during their operation. The building of transportation infrastructure entails obtaining approvals, rights of way and development by the Government or the state governments and their nominated agencies. As a result, the Issuer does not have total control over

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the construction, operation and maintenance of the transportation infrastructure. Undertaking such development will require significant capital expenditure and active engagement with the Government or state government and its agencies responsible for organising transport infrastructure. Such transportation infrastructure may not be constructed in a timely manner, operated on a cost effective basis and maintained at adequate levels, which may affect the estimated commissioning dates for its power projects under construction. Further, disruptions of transportation services because of weather-related problems, strikes, inadequacies in the road, rail or marine infrastructure, or other events could impair delivery of fuel and raw materials and may have an adverse impact on its operations. The Issuer’s results of operations could be adversely affected by strikes, work stoppages or increased wage demands by its or its contractors’ work force or any other kind of disputes involving its work force. The Issuer employs a significant number of employees and engages various contractors in relation to its power projects. Most of its power stations have unions that are registered under the Trade Unions Act, 1926. The majority of these unions are affiliated with major central employee federations, namely the All India Trade Union Congress, Bharatiya Mazdoor Sangh, Centre of Indian Trade Unions, the Indian National Trade Union Congress and the Hind Mazdoor Sabha. However, some of the workers’ unions functioning at the Issuer’s power stations are unaffiliated. There has not been any major instance of unrest and there has been no loss of generation on this account. However, there can be no assurance that the Issuer will not experience disruptions to its operations due to disputes or other problems with its work force in the future. Any such disruptions may adversely affect the Issuer’s business and results of operations. Any shortage of skilled personnel or work stoppages caused by disagreements with the Issuer’s work force and the unions could have an adverse effect on its business, and results of operations. The Issuer has entered into contracts with independent contractors to complete specified assignments and these contractors may be required to engage the workers necessary to complete such assignments. Although the Issuer does not engage these workers directly, it is possible under Indian law that it may be held responsible for wage payments, or benefits and amenities to workers engaged by its independent contractors, should such contractors default on wage payments or in providing benefits and amenities. Any requirement imposed upon the Issuer to fund such payments may adversely affect its business, financial condition and results of operations. Furthermore, under Indian law, the Issuer may be required to absorb a portion of such contract workers as its employees. Any such order from a court or any other regulatory authority or any change in laws may adversely affect its business and results of its operations. Announcements by the Government relating to increased wages for government and public sector employees will increase the Issuer’s expenses. The Issuer, being a public sector undertaking, will be affected financially in the event that there is an increase in the pay and benefits of its employees on account of any relevant announcement by the Government. The next revision of wage and benefits is due in 2017. However, there have been persistent demands from employees from many sectors for an increase in pay. In the event that the Government agrees to such an increase, this may place an additional financial burden on the Issuer, which may adversely affect its business and results of operations. The interests of the Issuer’s directors may cause conflicts of interest in the ordinary course of its business. Conflicts of interest may arise in the ordinary course of decision making for the Issuer. Some of its non-executive directors are also on the board of directors of certain companies which are engaged in businesses similar to the business of the Issuer. There is no assurance that the Issuer’s directors will not provide competitive services or compete with the Issuer’s business in which it is already present or will enter into in future.

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The Issuer is yet to receive renewal of certain statutory approvals required in the ordinary course of its business. The Issuer has certain pending applications for licences/clearances/approvals for its projects, which had expired or were yet to be granted. It also has various pending patent applications for various technologies/processes developed by it before the Controller of Patents in New Delhi and Kolkata. Failure to obtain any of the foregoing approvals or renewals may adversely affect the operations and business of the Issuer. The development or operations at one or more units of the Issuer’s power stations or its coal mines could be disrupted. The development or operation of the Issuer’s power projects or coal mines may be disrupted for reasons that are beyond its control, including explosions, fires, natural disasters such as cyclones and earthquakes, breakdown, failure or substandard performance of equipment, non-availability of fuel of desired quantity and quality, improper installation or operation of equipment, accidents, transmission or transportation interruptions, environmental disasters, significant social or political disruptions including terrorism and labour disputes. The occurrence of any of the foregoing may result in developmental and operational difficulties or interruptions, which may have a material adverse effect on its business, results of operations and prospects. On 30 and 31 July 2012, a transmission interruption beyond the Issuer’s control occurred which caused the power supply from several of the Issuer’s power plants to be disrupted. There can be no assurance that such transmission interruption will not occur in the future. In June 2013, heavy rainfall and flash floods in Uttarakhand led to substantial disruption of work at two of the Issuer’s hydro electric power projects under construction and landslides damaged various national highways at several locations causing disruption in transportation of goods and movement of persons for several weeks. Power generation facilities are also subject to mechanical failure and equipment shutdowns. In such situations, undamaged units may be dependent on or interact with damaged sections or units and, accordingly, may also be rendered inoperative. Although in certain cases manufacturers are required to compensate the Issuer for certain equipment failures and defects, such arrangements may not fully compensate it for the damage that it suffers as a result of equipment failures and defects or the penalties under its agreements with its customers. Further, such arrangements do not generally cover indirect losses such as loss of profits or business interruption. If such operational difficulties occur in the future, the ability of the Issuer’s power stations to supply electricity to its customers may be adversely affected. In the event any power generation facility is significantly damaged or forced to shut down for a significant period of time, this would have an adverse effect on its business, financial condition and results of operation. The Issuer’s ability to raise foreign capital may be constrained by Indian law. As an Indian company, the Issuer is subject to exchange controls that regulate borrowing in foreign currencies. Such regulatory restrictions limit the Issuer’s financing sources for power projects under development and future investment plans and could constrain its ability to obtain financings on competitive terms and refinance existing indebtedness. In addition, no assurance can be given that the required approvals will be granted to the Issuer without onerous conditions, or at all. The limitations on foreign debt may have an adverse effect on the business growth, financial condition and results of operations of the Issuer. The Issuer intends to establish business operations in several countries and global political and other conditions may adversely affect its operations and financial performance. The Issuer intends to establish business operations including sourcing of fuel, joint ventures and consultancy services in several countries. Some of the countries in which the Issuer intends to do

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business are subject to considerable political and social volatility. Any significant deterioration in world geopolitical, economic or other conditions in general and in the countries with which the Issuer conducts business in particular may have a material adverse affect on its business and financial performance. There can be no assurance that the Issuer will be able to sell its power outside the long term PPAs and this could have an adverse impact on its revenues. As provided by the National Electricity Policy 2005 (NEP), up to 15 per cent. of the Issuer’s new generating capacities may be sold outside long-term PPAs. As of the date of this Offering Circular, 15 per cent. of the power from Korba III (500 MW) and FSTPS III (500 MW) has been earmarked for sale outside long-term PPAs. This means it will not be able to guarantee the same revenues made under these mandated sales as it can under sales made pursuant to the long-term PPAs due to the risk that the Issuer may not be able to sell the entire 15 per cent. of its new generating capacities as well as market price risks. The Issuer may enter into short-term off-take agreements or sell power on a merchant basis to entities, including entities affiliated with it. Such agreements may create additional variability in the Issuer’s revenues and could expose its business to risks of market fluctuations in demand and price for power. If the Issuer is unable to adapt its business model to sell power from its power stations outside long-term PPAs or sell the power generated by its merchant power stations, its business, financial results and prospects could be materially and adversely affected. The Issuer’s PPAs may expose it to certain risks that may affect its future results of operations. The Issuer’s profitability is largely a function of its ability to operate its power projects at optimal levels in accordance with minimum performance standards that may be determined from time to time by national bodies and its ability to manage its costs. Any failure to meet such minimum performance standard or manage its costs may have an adverse affect on its business and results of operation. Further, the Issuer has entered into long-term PPAs for each power station. Such long-term arrangements have inherent risks which may not be within the control of the Issuer as they restrict its operational and financial flexibility. For example, the Issuer’s long-term PPAs provide for the sale of power to the customers at tariffs and terms determined by the regulator. Accordingly, if there is an industry wide increase in tariffs, the Issuer will not be able to take advantage of the increased tariffs or negotiate satisfactory alternative off take arrangements. These limitations affect the ability of the Issuer to enjoy the benefits of an increased tariff rate that its competitors selling power outside long-term PPAs may otherwise enjoy. In addition, the Issuer derives more than 89 per cent. of its sales of electricity generated from its directly owned power stations from SEBs and state owned distribution companies through long-term PPAs. These PPAs are typically renewed or extended after the initial term expires by mutual agreement. However, in the event that such PPAs are terminated prematurely, or not renewed or extended after the initial term expires, and if the Issuer is unable to enter into purchase agreements with other customers, this may have an adverse effect on its business, financial condition and results of operation. The Issuer has awarded a majority of procurement contracts to one supplier who may not be able to keep up with the Issuer’s expansion plans. The Issuer has awarded a majority of its procurement contracts to one supplier for the supply, erection, testing and commissioning of equipment and machinery for various power projects which are under construction. These contracts constitute between 40 per cent. to 60 per cent. of power station costs. Although there are other suppliers, this supplier, as of the date of this Offering Circular, is one of the Issuer’s largest suppliers, having won several bids in the international competitive bidding due to its competitive pricing. In addition, other than its procurement contracts entered into with the Issuer, the supplier may also enter into additional procurement contracts with its other customers. If

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such supplier is unable to keep up with the Issuer’s expansion plans coupled with the additional procurement contracts that it may enter into, the Issuer may need to seek other suppliers, which could be time consuming and expensive, and other suppliers may not be able to offer as competitive a pricing. Any delays or increased costs that may result from such supplier’s failure or delay in performing would have an adverse effect on the Issuer’s business, financial results and prospects. Opposition from local communities and other parties may adversely affect the Issuer’s results of operations and financial condition. The construction and operation of the Issuer’s current or future power projects, or fuel diversification plans (including coal mining, hydroelectric, renewable or nuclear power projects) may face opposition from the local communities where these projects are located and from special interest groups such as environmental groups. In particular, local communities, individuals, the forest authorities and other authorities may oppose the Issuer’s mining operations, construction of hydroelectric power stations, land acquisitions and power projects due to various reasons including the perceived negative impact such activities may have on the environment and increased demand on resources such as water from the rivers and reservoirs which may negatively impact or restrict such local communities access to resources. Significant opposition by local communities, non-governmental organisations and other parties to the land acquisition process and construction of the Issuer’s power projects and mining operations may delay project implementation and adversely affect the Issuer’s prospects, results of operations and financial condition. For example, construction at the Issuer’s Loharinag-Pala Hydroelectric Power Project has been discontinued at the direction of the Government due to an objection concerning the impact of diverting the river. Furthermore all construction activity at the Lata Tapovan hydroelectric power project was stopped in May 2014 in accordance with a Supreme Court order dated 7 May 2014 concerning the biodiversity of the Alaknanda and Bhagirathi river basin. In the future, as the Issuer’s mining activity increases, it may have to resettle the local inhabitants. The Issuer may have to incur significant expenditure on any such resettlement, which may adversely affect its financial condition and result of operations. In addition, it may also face rehabilitation and resettlement claims from local inhabitants, which may prove to be time-consuming, requiring it to incur additional costs which may exceed provisions made in its financial statements with respect to claims, and could involve a significant amount of attention and effort from its management. The Issuer has not appointed the requisite number of independent directors to its Board. The Issuer is a Government company and the power of appointment of its Board is vested with the President of India, acting through the administrative ministry. As of the date of this Offering Circular, the requisite number of independent directors, as required under the provisions of the New Companies Act, have not been appointed to the Board. If, due to this non-compliance, the Indian stock exchanges decide to undertake any action against the Issuer including levying of penalties or if there is any communication with the regulatory agencies in that regard, it may have a material adverse effect on the Issuer’s reputation, materially and adversely affecting the Issuer’s business, prospects and results of operations.

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The Issuer has contingent liabilities under Indian Accounting Standards, which may adversely affect its financial condition. As of 31 March 2016, the contingent liabilities appearing in the Issuer’s consolidated financial statements were as follows: Category

Amount (Rs. in million)

Claims against the Company not acknowledged Capital works. . . . . . . . . . . . . . . . . . . . . . . . . . Land compensation cases . . . . . . . . . . . . . . . . Fuel claims . . . . . . . . . . . . . . . . . . . . . . . . . . . Statutory claims . . . . . . . . . . . . . . . . . . . . . . . Disputed income tax/sales tax/excise demand . Other contingent liabilities . . . . . . . . . . . . . . .

as debts in ......... ......... ......... ......... ......... .........

respect ...... ...... ...... ...... ...... ......

of: ... ... ... ... ... ...

. . . . . .

94,923.0 3,348.0 22,052.0 3,129.0 87,470.0 5,775.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

216,697.0

Some of the beneficiaries have filed appeals against the tariff orders of the CERC. The amount of contingent liability relating to these appeals is not ascertainable. Risks Relating to India Natural calamities could have a negative effect on the Indian economy and cause the Issuer business to suffer. India has experienced natural calamities such as earthquakes, floods, droughts including the flash flood that affected the state of Uttarakhand in June 2013 and the cyclone which affected various parts of Odisha in October 2013. In fiscal 2015, the agricultural sector was adversely affected by unseasonal rains and hailstorms in northern India in March 2015. As a result, the gross value added, which is the value of output less the value of intermediate consumption, in the agricultural sector decreased by 0.2 per cent. in fiscal 2015 as compared to 4.2 per cent. growth in fiscal 2014. In addition, in July 2012, three of India’s inter-connected northern power grids collapsed for several hours, resulting in widespread power outages across the country. Prolonged power outages, spells of below normal rainfall in the country or other natural calamities could have a negative impact on the Indian economy, affecting the Issuer’s business and potentially causing the trading price of the Notes to decrease. Political, economic and social developments in India could adversely affect the Issuer’s business. The Issuer derives virtually all of its revenues and resources such as fuel, equipment and materials from India. All of the Issuer’s electricity generating facilities and other assets are located in India and all of the Issuer’s officers and directors are resident in India. The Issuer’s operations and financial results and the market price and liquidity of the Notes may be affected by changes in Government policy or taxation or social, ethnic, political, economic or other developments in or affecting India. Since achieving independence in 1947, India has had a mixed economy with a large public sector and an extensively regulated private sector. The Government and the state governments have in the past, among other things, imposed controls on the prices of a broad range of goods and services, restricted the ability of businesses to expand existing capacity and reduce the number of employees, and determined the allocation to businesses of raw materials and foreign exchange. Since 1991, the Government has significantly relaxed most of these restrictions. Nonetheless, the role of the Government and state governments in the Indian economy as producers, consumers and regulators, remains significant in ways that directly affect the Issuer and the electricity industry in India. The current government has continued India’s economic liberalisation and deregulation programmes, there can be no assurances that these will continue in the future. The rate of economic liberalisation is

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subject to change and specific laws and policies affecting banking and finance companies, foreign investment, currency exchange and other matters affecting investment in the Issuer’s securities are continuously evolving as well. Other major reforms that have been proposed are the goods and services tax, the direct tax code and the general anti-avoidance rules. Any significant change in India’s economic liberalisation, deregulation policies or other major economic reforms could adversely affect business and economic conditions in India generally and the Issuer’s business in particular. India has also witnessed civil disturbances in the past. While these civil disturbances did not directly affect the Issuer’s operations, it is possible that future civil unrest as well as other adverse social, economic and political events in India could have an adverse impact on the Issuer. A slowdown in economic growth in India could cause the Issuer’s business to suffer. The Indian economy slowed in fiscals 2013, 2014, 2015, 2016 with real gross domestic product (GDP) growing at 5.6 per cent., 6.6 per cent., 7.2 per cent., and 7.6 per cent. respectively. The Indian economy had previously grown at high rates with GDP growth being 8.9 per cent. in fiscal 2011, 8.6 per cent. in fiscal 2010, 6.7 per cent. in fiscal 2009 and 9.3 per cent. in fiscal 2008. The index of industrial production (IIP) increased to 3.1 per cent. in fiscal 2016, increased to 2.8 per cent. in fiscal 2015 and declined by 0.1 per cent. in fiscal 2014 after growing at 1.1 per cent. in fiscal 2013. Any slowdown in the Indian economy or future volatility of global commodity prices, in particular fuel prices, could adversely affect the Issuer’s business, including its ability to expand, its financial performance and the trading price of the Notes. Demand for power in India may not increase as the Issuer anticipates. It is generally believed that demand for power in India will increase in connection with expected increases in India’s GDP. However, there can be no assurance that demand for power in India will increase to the extent the Issuer expects, or at all. In the event, the demand for power in India does not increase as per the Issuer’s expectations, its results of operations and expansion strategy may be materially and adversely affected. Trade deficits could have a negative effect on the Issuer’s business and the trading price of the Notes. India’s trade relationships with other countries can influence Indian economic conditions. In fiscal 2016, the merchandise trade deficit was estimated at U.S.$118.5 billion compared with U.S.$137.7 billion in fiscal 2015 and U.S.$135.8 billion in fiscal 2014. This large merchandise trade deficit neutralises the surpluses in India’s invisibles, which are comprised of international trade in services, income from financial assets, labour and property and cross-border transfers of mainly workers’ remittances in the current account, resulting in a current account deficit. If India’s trade deficits increase or become unmanageable, the Indian economy, and therefore the Issuer’s business, future financial performance and the trading price of the Notes could be adversely affected. If regional hostilities, terrorist attacks or social unrest in India increases, the Issuer’s business could be adversely affected and the trading price of the Notes could decrease. India has from time to time experienced social and civil unrest and hostilities, both internally and with neighbouring countries. Present relations between India and Pakistan continue to be fragile on issues of terrorism, armament and Kashmir. In November 2008, several coordinated shooting and bombing attacks occurred across Mumbai, India’s financial capital, which resulted in the loss of life, property and business. India has also experienced terrorist attacks in other parts of the country. These hostilities and tensions could lead to political or economic instability in India and possible adverse effects on the Issuer’s business, its future financial performance and the trading price of the Notes. Further, India has also experienced social unrest in some parts of the country. For example, in

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September 2016, there were terrorist attacks in the Poonch and Uri areas of Kashmir. If such tensions occur in other parts of the country, leading to overall political and economic instability, it could have an adverse effect on the Issuer’s business, future financial performance and the trading price of the Notes. Any downgrading of India’s debt rating by an international rating agency could have a negative impact on the Issuer’s business. On 25 April 2012, Standard and Poor’s Ratings Services, a Division of the McGraw Hill Companies Inc. (S&P) revised the outlook on the long-term ratings on India from “stable” to “negative” citing the slowdown in India’s investment and economic growth and the widened current account deficit, resulting in a weaker medium term credit. On 18 June 2012, Fitch Ratings Ltd. (Fitch) scaled down India’s sovereign credit rating outlook from “stable” to “negative,” citing structural challenges such as corruption, inadequate economic reforms, and slow economic growth combined with elevated inflation. On 25 April 2012 and 18 June 2012, respectively, as a result of their downgrading of India’s outlook, both S&P and Fitch downgraded the outlook on the Issuer’s rating from “stable” to “negative”. In June 2012 and January 2013, S&P and Fitch, respectively, announced that they may lower India’s sovereign credit rating below investment grade, citing slowing GDP growth, setbacks or reversals in India’s economic policy, a widening fiscal deficit and/or increasing spreads of credit default swaps for Indian banks. S&P reiterated in May 2013 that, although there had been some easing of pressure towards a downgrade of the rating, there is still a likelihood of such a downgrade unless significant improvements are seen in factors such as a high fiscal deficit and levels of government borrowing. However, on 12 June 2013 Fitch revised the outlook on India’s sovereign credit rating from “negative” to “stable” and consequently the outlook of the Issuer’s rating has been revised from “negative” to “stable”. Subsequently, in August 2013 Fitch warned that India’s sovereign rating may be lowered if the India is unable to meet its fiscal deficit target. In September 2013, Moody’s Investors Service Inc. (Moody’s) put India’s sovereign credit rating on notice, warning that any changes Moody’s makes to India’s sovereign rating outlook will depend on the depth and extent of the current economic downturn and the trends in the balance of payments situation. S&P continued to have a negative outlook on India’s sovereign credit rating. In January 2014, Fitch stated that it will assess the next government’s policy strategies to determine any change in the country’s future sovereign ratings. In 2014, S&P revised the outlook of the Issuer’s ratings from “negative” to “stable”. There can be no assurance that these ratings will not be further revised, suspended or withdrawn by S&P, Moody’s or Fitch or that any other global rating agency will not also downgrade the Issuer’s or India’s sovereign credit ratings. Any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies may adversely impact the Issuer’s ability to raise additional financing, and the interest rates and other commercial terms at which such additional financing is available. This could have a material adverse effect on the Issuer’s business and future financial performance, the Issuer’s ability to obtain financing for capital expenditures, and the trading price of the Notes. Depreciation of the Rupee against foreign currencies may have an adverse effect on the Issuer’s results of operations and financial conditions. As of 31 March 2016, the Issuer’s consolidated foreign currency borrowings of approximately Rs.287,615.0 billion were denominated in U.S. dollars, Japanese yen and euros, while substantially all of the Issuer’s revenues are denominated in Rupees. The Rupee has been quite volatile during fiscal 2014 and 2015 when compared against the U.S. dollar. First, it depreciated by 26.7 per cent. from 54.28 per U.S.$1.00 as at 31 March 2013 to an all-time low of 68.82 per U.S.$1.00 as at 28 August 2013 and then appreciated by 12.9 per cent. to close the fiscal 2014 at 59.89 per U.S.$1.00. In fiscal 2015, the Rupee depreciated by 4.4 per cent. to close the year at 62.50 per U.S.$1.00 and in fiscal 2016, the Rupee depreciated by 6.0 per cent., to close the year at 66.25 per U.S.$1.00. Overall, the

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Rupee depreciated by 10.6 per cent. over the course of fiscal 2014 through to 2016. Volatility in India’s currency and the possibility of slower growth pose significant risks for the financial prospects of companies in India, as well as a greater default risk for Indian companies with foreign-denominated debt. Depreciation of the Rupee against foreign currencies will increase the Rupee cost to the Issuer of servicing and repaying the Issuer’s foreign currency borrowing. In addition, in fiscal 2016, imported coal accounted for 5.9 per cent. of the total coal purchased by the Issuer for its directly owned power stations. A depreciation of the Rupee would also increase the costs of coal imports by the Issuer. If as a result of future changes in tariff regulations the Issuer is unable to recover the costs of foreign exchange variations through its tariffs, the Issuer may be required to use hedging arrangements, which may not fully protect the Issuer from foreign exchange fluctuations. Indian accounting principles and audit standards differ from those which prospective investors may be familiar with in other countries. As stated in the report of the Issuer’s independent auditors included in this Offering Circular, the Issuer’s financial statements are in conformity with Indian GAAP or IND-AS, as applicable, consistently applied during the periods stated, except as provided in such report, and no attempt has been made to reconcile any of the information given in this Offering Circular to any other principles or to base it on any other standards. Indian GAAP and IND-AS differ from accounting principles and auditing standards with which prospective investors may be familiar in other countries. See “Summary of Significant Differences between Indian GAAP, IFRS and IND-AS”. The insolvency laws of India may differ from other jurisdictions with which holders of the Notes are familiar. As the Issuer is incorporated under the laws of India, an insolvency proceeding relating to the Issuer, even if brought in another jurisdiction, would likely involve Indian insolvency laws, the procedural and substantive provisions of which may differ from comparable provisions of another jurisdiction. There may be less company information available in the Indian securities markets than securities markets in developed countries. There may be differences between the level of regulation and monitoring of the Indian securities markets and the activities of investors, brokers and other participants and that of the markets in the United States, the European Union and other developed countries. The Securities and Exchange Board of India (SEBI) is responsible for approving and improving disclosure and other regulatory standards for the Indian securities markets. SEBI has issued regulations and guidelines on disclosure requirements, insider trading and other matters. There may, however, be less publicly available information about Indian companies than is regularly made available by public companies in developed countries. An outbreak of avian or swine influenza or other contagious diseases may adversely affect the Indian economy and the Issuer’s business. A number of countries in Asia, including India, as well as countries in other parts of the world, have had confirmed cases of the highly pathogenic H5N1 strain of avian influenza in birds. Certain countries in Southeast Asia have reported cases of bird to human transmission of avian influenza resulting in numerous human deaths. In 2009, there was a global outbreak of a new strain of influenza virus commonly known as swine flu. Since 2012, an outbreak of the Middle East Respiratory Syndrome corona virus (MERS) has affected several countries, primarily in the Middle East. Future

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outbreaks of avian influenza, swine flu, MERS or a similar contagious disease could adversely affect the Indian economy and economic activity in the region. As a result, any present or future outbreak of avian influenza, swine flu or other contagious diseases could have a material adverse effect on the Issuer’s business. The new taxation system could adversely affect the Issuer’s business and the trading price of the Notes. The Government has proposed a major reform in the Indian tax laws, namely the provisions relating to general anti-avoidance rules (GAAR). As regards GAAR, the provisions have been introduced by the Finance Act, 2012, scheduled to come into effect from 1 April 2017. The GAAR provisions are intended to catch arrangements declared as “impermissible avoidance arrangements”, which is defined in the Finance Act, 2012 as any arrangement, the main purpose of which is to obtain a tax benefit and which satisfy at least one of the following tests: (i) creates rights, or obligations, which are not ordinarily created between persons dealing at arm’s length; (ii) results, directly or indirectly, in misuse, or abuse, of the provisions of the Income Tax Act, 1961; (iii) lacks commercial substance or is deemed to lack commercial substance, in whole or in part; or (iv) is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bona fide purposes. The onus to prove that the transaction is not an “impermissible avoidance agreement” is on the assessee. If GAAR provisions are invoked, then the tax authorities have wide powers, including the denial of tax benefit or the denial of a benefit under a tax treaty. As the taxation system is intended to undergo a significant overhaul, the consequential effects on the Issuer cannot be determined as of now and there can be no assurance that such effects would not adversely affect the Issuer’s business, future financial performance and the trading price of the Notes. Risks Relating to an Investment in the Notes Notes may not be a suitable investment for all investors. Each potential investor in any Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: •

have sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes, the merits and risks of investing in the relevant Notes and the information contained or incorporated by reference in this Offering Circular or any applicable supplement;



have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the relevant Notes and the impact such investment will have on its overall investment portfolio;



have sufficient financial resources and liquidity to bear all of the risks of an investment in the relevant Notes, including where principal or interest is payable in one or more currencies, or where the currency for principal or interest payments is different from the potential investor’s currency;



understand thoroughly the terms of the relevant Notes and be familiar with the behaviour of any relevant indices and financial markets; and



be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

Some Notes are complex financial instruments and such instruments may be purchased as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their

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overall portfolios. A potential investor should not invest in Notes which are complex financial instruments unless it has the expertise (either alone or with the help of a financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of such Notes and the impact this investment will have on the potential investor’s overall investment portfolio. The Notes are not guaranteed by the Republic of India. The Notes are not the obligations of, or guaranteed by, the Republic of India. Although the Government owned 69.74 per cent. of the Issuer’s issued and paid up share capital as of 30 September 2016, the Government is not providing a guarantee in respect of the Notes. In addition, the Government is under no obligation to maintain the solvency of the Issuer. Therefore, investors should not rely on the Government ensuring that the Issuer fulfils its obligations under the Notes. The Notes may have limited liquidity. The Notes constitute a new issue of securities for which there is no existing market. Approval-in-principle has been granted for the listing and quotation of the Notes that may be issued pursuant to the Programme and which are agreed at or prior to the time of issue thereof to be so listed on the SGX-ST. The offer and sale of the Notes is not conditioned on obtaining a listing of the Notes on the SGX-ST or any other exchange. Although the Dealers have advised the Issuer that as of the date of this Offering Circular, they intend to make a market in the Notes, they are not obligated to do so, and any market-making activity with respect to the Notes, if commenced, may be discontinued at any time without notice in their sole discretion. No assurance can be given as to the liquidity of, or the development and continuation of an active trading market for, the Notes. If an active trading market for the Notes does not develop or is not maintained, the market price and liquidity of the Notes may be adversely affected. If such a market were to develop, the Notes could trade at prices that may be higher or lower than the price at which the Notes are issued depending on many factors, including: •

prevailing interest rates;



the Issuer’s results of operations and financial condition;



political and economic developments in and affecting India;



the market conditions for similar securities; and



the financial condition and stability of the Indian power sector.

Definitive Notes may not be available in certain denominations and investors who hold less than the minimum Specified Denomination may be unable to sell their Notes and may be adversely affected if Definitive Notes are subsequently required to be issued. In relation to any issue of Notes which have denominations consisting of a minimum Specified Denomination plus one or more higher integral multiples of another smaller amount, it is possible that such Notes may be traded in amounts in excess of the minimum Specified Denomination that are not integral multiples of such minimum Specified Denomination. In such a case a holder who, as a result of trading such amounts, holds an amount which is less than the minimum Specified Denomination in his account with the relevant clearing system would not be able to sell the remainder of such holding without first purchasing a principal amount of Notes at or in excess of the minimum Specified Denomination such that its holding amounts to a Specified Denomination. Further, a holder who, as a result of trading such amounts, holds an amount which is less than the minimum Specified

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Denomination in his account with the relevant clearing system at the relevant time may not receive a definitive Note in respect of such holding (should definitive Notes be printed) and would need to purchase a principal amount of Notes at or in excess of the minimum Specified Denomination such that its holding amounts to a Specified Denomination. If such Notes in definitive form are issued, holders should be aware that definitive Notes which have a denomination that is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult to trade. Notes which are issued at a substantial discount or premium may experience price volatility in response to changes in market interest rates. The market values of securities issued at a substantial discount (such as Zero Coupon Notes) or premium to their principal amount tend to fluctuate more in relation to general changes in interest rates than do prices for more conventional interest-bearing securities. Generally, the longer the remaining term of such securities, the greater the price volatility as compared to more conventional interest-bearing securities with comparable maturities. Noteholders are required to rely on the procedures of the relevant clearing system and its participants while the Notes are cleared through the relevant clearing system. Notes issued under the Programme will be represented on issue by one or more Global Notes that may be deposited with a common depositary for Euroclear and Clearstream. Except in the circumstances described in each Global Note, investors will not be entitled to receive Notes in definitive form. Each of Euroclear and Clearstream and their respective direct and indirect participants will maintain records of the beneficial interests in each Global Note held through it. While the Notes are represented by a Global Note, investors will be able to trade their beneficial interests only through the relevant clearing systems and their respective participants. While the Notes are represented by Global Notes, the Issuer will discharge its payment obligation under the Notes by making payments through the relevant clearing systems. A holder of a beneficial interest in a Global Note must rely on the procedures of the relevant clearing system and its participants to receive payments under the Notes. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in any Global Note. Holders of beneficial interests in a Global Note will not have a direct right to vote in respect of the Notes so represented. Instead, such holders will be permitted to act only to the extent that they are enabled by the relevant clearing system and its participants to appoint appropriate proxies. Legal investment considerations may restrict certain investments. The investment activities of certain investors are subject to investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) the Notes are legal investments for it, (2) the Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of the Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Notes under any applicable risk-based capital or similar rules. Noteholders’ right to receive payments is junior to certain tax and other liabilities preferred by law. The Notes are unsecured obligations of the Issuer and will rank subordinated to certain liabilities preferred by law such as to claims of the Government on account of taxes, and certain liabilities incurred in the ordinary course of the Issuer’s business as well as all present and future secured indebtedness of the Issuer. In particular, in the event of bankruptcy, liquidation or winding-up, the

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Issuer’s assets will be available to pay obligations on the Notes only after all of the above liabilities that rank senior to these Notes have been paid. In the event of bankruptcy, liquidation or winding-up, there may not be sufficient assets remaining, after paying amounts relating to these proceedings, to pay amounts due on the Notes. Further, there is no restriction on the amount of Indebtedness that the Issuer may obtain or Permitted Security Interest that the Issuer may create for any Indebtedness, each as defined under Condition 4, which will rank above the Notes. Any such Indebtedness of the Issuer may reduce the amount recoverable by investors in the Notes upon the Issuer’s bankruptcy, winding up or liquidation. The Notes are governed by English law. The terms and conditions of the Notes are governed by English law. No assurance can be given as to the impact of any possible judicial decision or change in English law or administrative practice after the date of this Offering Circular and any such change could materially adversely impact the value of any Notes impacted by it. Decisions may be made on behalf of all Noteholders that may be adverse to the interests of individual Noteholders. The terms and conditions contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders, including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority. The conditions of the Notes also provide that the Trustee may, without the consent of Noteholders, and without regard to the interests of particular Noteholders, Couponholders or Receiptholders agree to (i) any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of the provisions of Notes or (ii) determine without the consent of the Noteholders that any Event of Default or potential Event of Default shall not be treated as such, in the circumstances described in the “Terms and Conditions of the Notes”. Early redemption of the Notes prior to its stated average maturity or its stated maturity for Rupee Denominated Notes requires the prior approval of the RBI or the AD Bank, as the case may be. Any early redemption of the Notes (whether due to certain tax events described in Condition 8.2 or due to change of control events described in Condition 8.3 or due to an Event of Default as specified in Condition 11 or otherwise) may require the prior approval of the RBI or the AD Bank. Compliance with any conditions specified in any such RBI or AD Bank approval will be required. There can be no assurance that the RBI or the AD Bank will provide such approval in a timely manner or at all. U.S. Foreign Account Tax Compliance Act Withholding. Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986 (or FATCA) impose a new reporting regime and, potentially, a 30 per cent. withholding tax with respect to (i) certain payments from sources within the United States, (ii) “foreign passthru payments” made to certain non-U.S. financial institutions that do not comply with this new reporting regime, and (iii) payments to certain investors that do not provide identification information with respect to interests issued by a participating non-U.S. financial institution. Whilst the Notes are in global form and held within Euroclear or Clearstream (together the ICSDs), in all but the most remote circumstances, it is not expected under the new reporting regime and potential withholding tax imposed by sections 1471 to 1474 of the U.S. Internal Revenue Code of 1986 that FATCA will affect the amount of any payment received by the ICSDs (see “Taxation-Foreign Account Tax Compliance Act”). However, FATCA may affect payments made to custodians or intermediaries in the subsequent payment chain leading to the ultimate investor if any

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such custodian or intermediary generally is unable to receive payments free of FATCA withholding. It also may affect payment to any ultimate investor that is a financial institution that is not entitled to receive payments free of withholding under FATCA, or an ultimate investor that fails to provide its broker (or other custodian or intermediary from which it receives payment) with any information, forms, other documentation or consents that may be necessary for the payments to be made free of FATCA withholding. Investors should choose the custodians or intermediaries with care (to ensure each is compliant with FATCA or other laws or agreements related to FATCA) and provide each custodian or intermediary with any information, forms, other documentation or consents that may be necessary for such custodian or intermediary to make a payment free of FATCA withholding. Investors should consult their own tax advisers to obtain a more detailed explanation of FATCA and how FATCA may affect them. The Issuer’s obligations under the Notes are discharged once it has made payment to, or to the order of, the common depositary for the ICSDs (as bearer or registered holder of the Notes) and the Issuer has therefore no responsibility for any amount thereafter transmitted through the ICSDs and custodians or intermediaries. Further, foreign financial institutions in a jurisdiction which has entered into an intergovernmental agreement with the United States (an IGA) are generally not expected to be required to withhold under FATCA or an IGA (or any law implementing an IGA) from payments they make. Hiring Incentives to Restore Employment Act Withholding may affect payments on the Notes. The U.S. Hiring Incentives to Restore Employment Act (the HIRE Act) imposes a 30 per cent. withholding tax on amounts attributable to U.S. source dividends that are paid or “deemed paid” under certain financial instruments if certain conditions are met. If the Issuer or any withholding agent determines that withholding is required, neither the Issuer nor any withholding agent will be required to pay any additional amounts with respect to amounts so withheld. Prospective investors should refer to the section “Taxation — Hiring Incentives to Restore Employment Act”. Risks Relating to an Investment in Rupee Denominated Notes Rupee denominated Notes are subject to selling restrictions and may be transferred only to a limited pool of investors. Rupee denominated Notes can only be issued to and held by investors resident in jurisdictions which are a member of the Financial Action Task Force (FATF) or a member of a FATF-Style Regional Body and whose securities market regulator is a signatory to the International Organisation of Securities Commission’s (IOSCO’s) multilateral MoU (Appendix A Signatories) or a signatory to a bilateral Memorandum of Understanding with the Securities and Exchange Board of India (SEBI) for information sharing arrangements. Additionally, investors should not be residents of a country identified in the public statement of the FATF as: (i) a jurisdiction having strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which countermeasures apply; or (ii) a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the FATF to address the deficiencies. Rupee Denominated Notes are subject to exchange rate risks and exchange controls. India maintains a managed floating exchange rate system under which market forces determine the exchange rate for the INR. Under RBI’s policies, the RBI may, however, intervene in the market to maintain orderly market conditions and limit sharp fluctuations in the exchange rate. Interventions by the RBI have taken the form of transparent measures and have included clearly delineated periods and amounts involved, as well as the explanations for these actions. RBI’s foreign exchange policy objectives include maintaining price stability, promoting and maintaining monetary stability and the convertibility of the INR, protecting its international reserves during times of impending or on-going exchange crises or national emergencies.

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Rupee Denominated Notes are denominated in INR and payable in foreign currency. This entails risks which are not associated with a similar investment in a foreign currency denominated security. Such risks include, without limitation, the possibility of significant changes in the exchange rate between INR and the relevant foreign currency if such currency risk is unhedged by an investor or the possibility of imposition or modification of exchange controls by the RBI. Such risks are usually dependent on various economic and political events over which the Issuer does not have any control. Recently, exchange rates have been volatile and such volatility is expected in the near future as well, so the risk pertaining to exchange rate fluctuation persists. However, the recent fluctuations in exchange rates are not indicative in nature. If INR depreciates against the relevant foreign currency the effective yield on the Rupee Denominated Notes will decrease below the interest rate on the global bonds, and the amount payable on maturity may be less than the investment made by the investors. This could result in a total or substantial loss of the investment made by the investor towards the Rupee Denominated Notes. Rates of exchange between the foreign currency and INR may be significantly varied over time. However, historical trends do not necessarily indicate future fluctuations in rates, and should not be relied upon as indicative of future trends. Political, economic or stock exchange developments in India or elsewhere could lead to significant and sudden changes in the exchange rate between INR and the relevant foreign currency. Furthermore, the overseas investor are eligible to hedge the above mentioned exchange rate risk only by way of permitted derivative products with (i) AD Category — I banks in India; (ii) the offshore branches or subsidiaries of Indian Banks; or (iii) branches of foreign banks having a presence in India. INR “Non-convertibility”. The convertibility of a currency is dependent, inter alia, on international and domestic political and economic factors, and on measures taken by governments and central banks. Such measures include, without limitation, imposition of regulatory controls or taxes, issuance of a new currency to replace an existing currency, alteration of the exchange rate or exchange characteristics by revaluation or revaluation of a currency, or imposition of exchange controls with respect to the exchange or transfer of a specified currency that would affect exchange rates and the availability of a specified currency. The taking of any one or more of such measures could adversely affect the value of the Notes as well as any amount which may be payable upon redemption of the Notes. The Rupee Denominated Notes are subject to selling restrictions and may be transferred only to a limited pool of investors. The Rupee Denominated Notes can only be issued to and held by investors resident in jurisdictions which comply with FATF Requirements (as further set out in the section headed “Subscription, Sale, Transfer and Selling Restrictions”) or other applicable Indian laws and regulations on FATF in relation to Rupee denominated Notes from time to time. In addition, foreign branches of Indian banks cannot subscribe or hold the Notes. Therefore, the bonds can only be transferred to a limited group of investors resulting in restricted liquidity of the Notes. For further information relating to the selling restrictions, see “Subscription, Sale, Transfer and Selling Restrictions” on page 196 of this Offering Circular.

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DESCRIPTION OF THE ISSUER Overview The Issuer is a Government-owned entity with 69.74 per cent. of its paid-up capital contributed by the Government and the remaining 30.26 per cent. being held with financial institutions, banks, foreign financial institutions and the general public. As of 31 March 2016, the Issuer was the largest power-generating company in India, both in terms of installed capacity and generated output (Source: CEA). The Issuer’s aggregate installed capacity as of 31 March 2016 was 46,653 MW, which represented approximately 15 per cent. of India’s total installed capacity. In fiscal 2016, the Issuer along with its joint venture companies and subsidiaries generated around 263.42 billion units of power, which was approximately 24 per cent. of the total power generation of India (Source: CEA). As of 30 September 2016, the Issuer’s total installed power-generation capacity was 47,228 MW, of which 40,262 MW of capacity is owned by the Issuer directly and 6,966 MW of capacity is owned through its seven subsidiaries and joint venture companies. As of 30 September 2016, 87 per cent. of its directly owned capacity was operated through 18 coal-fired power stations, 10 per cent. was operated through seven gas-fired power stations (including one naphtha-fired power station), 2 per cent. was operated through its hydro power project and 1 per cent. was operated through nine solar energy power plants. The Issuer operates its power stations at a level of efficiency that exceeds the average Plant Load Factor (PLF) in India. PLF is a measure of the total energy generated by a generator which is then expressed as a percentage of the overall energy that can be generated corresponding to the installed capacity in that period. In fiscal 2016, the Issuer’s directly owned coal-fired power stations operated at an average PLF of 78.61 per cent., compared to the all-India average PLF for coal-fired power stations of 62.29 per cent. (Source: CEA). In addition, the average availability factor (which is a measure of the capability to deliver electricity declared by a generating station) of the Issuer’s directly owned coal-fired power stations in fiscal 2016, was 88.06 per cent. In fiscal 2016, the Issuer’s directly owned gas-fired power stations operated at an average PLF of 25.14 per cent., compared to the all-India average PLF for gas-fired power stations of 22.54 per cent. (Source: CEA). In fiscal 2016, the Issuer’s gas-fired power stations operated at an average availability factor of 97.30 per cent. For the six months ended 30 September 2016, the average availability factor of the Issuer’s directly owned coal-fired power stations was 92.56 per cent. and these stations operated at an average PLF of 77.98 per cent. The average availability factor of the Issuer’s directly owned gas-fired power stations was 97.92 per cent. during the six months ended 30 September 2016 and these stations operated at an average PLF of 24.93 per cent. As of the date of this Offering Circular, the Issuer engaged in construction activities for projects representing 24,009 MW of capacity (including 4,300 MW undertaken by its joint venture companies and subsidiaries). The Issuer has continued to progressively diversify its fuel mix and during fiscal 2016 the Issuer commissioned hydro projects having a capacity of 400 MW leading to a total hydro capacity of 800 MW. The Issuer has also commissioned solar based projects having a capacity of 250 MW in fiscal 2017. As of 30 September 2016, hydroelectric power projects with an aggregate capacity of 819 MW were under construction. The Issuer is also developing other renewable energy projects such as wind, and other non-renewable and non-conventional projects such as nuclear power projects. The Issuer formed a joint venture company, Anushakti Vidhyut Nigam Limited (ASHVINI), in January 2011 with the Nuclear Power Corporation of India Ltd. (NPCIL) with the objective of setting up nuclear power projects in the country.

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As of 30 September 2016, substantially all of the Issuer’s total sales of electricity are made pursuant to long-term PPAs. More than 89 per cent. of the Issuer’s sales of electricity generated from its directly owned power stations are to SEBs and state-owned distribution companies, for which payments are secured through LCs and the tripartite agreements entered into between the Government, the RBI and the relevant state to effectuate a settlement of overdue payments owed to the Issuer by the SEBs and to create incentives for future timely payments. For private distribution company customers, payments are secured through LCs backed by a first charge created on their receivables in the Issuer’s favour. The Issuer has signed various long-term coal supply agreements (CSAs) for a capacity of 23,895 MW covering units commissioned as of 31 March 2009 at its 15 coal-fired power stations and for a total capacity of 9,620 MW commissioned after 31 March 2009 or under construction at its 11 coal-fired power stations. It has also executed long-term gas supply agreements with GAIL for the supply of gas for its gas-fired power stations. In order to secure its fuel supply, the Issuer has diversified into coal mining. As of the date of this Offering Circular, the Issuer has been allocated ten coal mining blocks by the Government. In 2002, it incorporated its power trading subsidiary, NTPC Vidyut Vyapar Nigam Limited (NVVN) (Source: CERC). In addition, the Issuer has developed a consulting business through its consultancy division to leverage its technical and operational skills and knowledge base domestically and internationally. The Issuer’s consolidated revenue was Rs.799,396 million in fiscal 2016 and Rs.826,754 million in fiscal 2015. The Issuer’s consolidated profit after tax was Rs.101,828 million in fiscal 2016 and Rs.99,863 million in fiscal 2015. Competitive Strengths The Issuer believes that the following are its primary competitive strengths: Leadership position in the Indian power sector The Issuer is India’s largest power-generating company both in terms of installed capacity and generated output (Source: CEA). As of 31 March 2016, the Issuer’s aggregate, installed capacity was 46,653 MW, including 40,012 MW of directly owned units and 6,641 MW through subsidiary and joint venture companies, representing 15 per cent. of India’s total installed capacity (Source: CEA). As of 30 September 2016, the Issuer’s owned, installed capacity was 47,228 MW, including 40,262 MW of directly owned units and 6,966 MW owned through subsidiary and joint venture companies, representing 15 per cent. of India’s total installed capacity (Source: CEA). In fiscal 2016, the Issuer (including its joint ventures and subsidiaries) generated 263.42 billion units of electricity, which represented 24 per cent. of India’s total electricity output (Source: CEA). In calendar year 2016, according to a study conducted by Platts, a division of the McGraw-Hill Companies, the Issuer was ranked as the number two independent power producer (IPP) in the world, on the basis of asset worth, revenues, profits and returns on invested capital. Sound customer relations and commercial performance The Issuer realised 100 per cent. payment of current bills for the sale of electricity generated from its directly owned power stations from its customers for the thirteenth year in succession, indicating strong commercial performance and customer relations. The Issuer has implemented a customer relationship management (CRM) programme. As a part of the CRM initiative, the Issuer provides

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support services to its customers, and technical and managerial training to its employees for skill enhancement, as well as efficiency and performance improvement in the area of customer relations. In order to receive feedback from its customers, the Issuer has also implemented a customer satisfaction index model. High operational efficiency of coal-fired power stations The Issuer’s coal-fired power stations run at high rates of efficiency. In fiscal 2016, its directly owned coal-fired power stations achieved an average PLF of 78.61 per cent., which compares favourably to the national average of 62.29 per cent. (Source: CEA). In fiscal 2016, the Issuer’s directly owned coal-fired power stations also achieved an average availability factor of 88.06 per cent. The Issuer monitors its power stations through real-time monitoring systems and systematically maintains its power stations to ensure high availability. The Issuer believes that its monitoring and maintenance techniques offer it a competitive advantage in an industry where reliability and maintenance costs are a significant determinant of profitability. Long-term agreements for coal and gas supply The Issuer believes that its long-term fuel supply contracts help it to generate power at competitive prices by allowing it to have greater predictability and better planning of fuel supplies. The Issuer has signed various long-term CSAs with a number of coal companies covering units with a total capacity of 23,895 MW commissioned as of 31 March 2009 at its 15 coal-fired power stations and covering units with a total capacity of 9,620 MW commissioned after 31 March 2009 or under construction at 12 of its coal-fired power stations. The Issuer has also entered into various long-term agreements for the committed supply of gas and liquid fuel for its six gas-fired power stations and one liquid fuel power station. Effective project implementation The Issuer relies on a three-tiered project management system known as the Integrated Project Management Control System (IPMCS), which integrates its engineering management, contract management and construction management control centres. The IPMCS addresses all stages of project implementation from concept to commissioning. Through effective resource utilisation and close monitoring of time and cost, the Issuer has substantially reduced its average implementation time, which is the period between the award of the boiler, turbine and generator contracts and commissioning of the unit. Since 2000, the implementation time for the majority of the Issuer’s 500 MW units has been between 37 and 50 months. Ability to turn around underperforming power stations The Issuer has a strong track- record in being able to turn around inefficient power stations and significantly enhance their efficiency levels. The PLF of the four underperforming power stations the Issuer acquired, namely, the Unchahar Thermal Power Station, the Talcher Thermal Power Station, the Tanda Thermal Power Station and the Badarpur Thermal Power Station, ranged from 36 per cent. to 93 per cent. in fiscal 2016. The average PLF of these power stations as of the date the Issuer acquired them was 21 per cent. For example, the Talcher Thermal Power Station (with an installed capacity of 460 MW), having an average life of over 39 years, achieved a PLF of 93 per cent. in fiscal 2016 as compared to a PLF of 18.7 per cent. at the time of the acquisition in June 1995. Strong balance sheet The Issuer has a strong balance sheet, which it believes will help it to make investments required for its growth plan, including borrowings for capital expenditures and investments in research and development and business diversification. As of 31 March 2016, the Issuer, on a consolidated basis, had a debt-to-equity ratio of 1.23, a debt service coverage ratio of 1.66, and interest service coverage ratio of 4.96. The Issuer generated on a consolidated basis net cash of Rs.154,106 million in fiscal

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2016 from its operating activities, which provides it with flexibility to implement its plans. In addition, its strong financial ratios and credit ratings enable it to have ready access to domestic and international credit markets. The Issuer’s weighted average rate of interest was 7.67 per cent. per annum in fiscal 2016, on a non-consolidated basis. Government support The Issuer believes that it derives a strategic advantage from its strong relationship with the Government. The Government is the promoter of the Issuer, and in each year the Issuer enters into an MoU with the Government providing for its annual performance targets. The Government’s support was critical in securing the settlement of outstanding dues owed to the Issuer by the SEBs. The grant of the “Maharatna” status by the Government provides the Issuer with strategic and operational autonomy and enhanced financial powers to take investment decisions without Government approval. Competent and committed workforce The Issuer believes that its employees possess a level of competence and commitment that provides it with a key differentiator from the competition. Its senior executives have extensive experience in the Issuer’s industry and many of them have been with the Issuer for a significant portion of their careers. The Issuer invests significant resources in employee training and development, and it seeks to recruit elite college graduates to join at entry-level positions. The Issuer believes that it will benefit from a workforce that consists of young as well as experienced employees. The Issuer has been consistently rated as one of the best employers/best companies to work for in various surveys, such as the study conducted by The Economic Times and the Great Place to Work Institute, India in 2015 in which the Issuer was ranked first in the public sector and first in the energy, oil and gas sectors. The Issuer (including its subsidiaries and joint venture companies) has a low attrition rate in its executive workforce, which was about 1.05 per cent. in fiscal 2016. Emphasis on corporate governance The Issuer believes that corporate governance is a key element in improving efficiency and that it is critical that its business be transparent to its stakeholders. The Issuer seeks to engrain corporate governance in its culture. The Issuer’s operations are subject to three separate audits. The Issuer adopted an enterprise-wide risk management framework and committed valuable resources to continuously evaluate its risks and improve its corporate governance framework. The Issuer also signed an “Integrity Pact” with Transparency International to bring more transparency to its public procurement process. Furthermore, the Issuer has, on a regular basis, continued to comply with the corporate governance provisions in the listing agreement it has signed with the Indian stock exchanges. Strategy The Issuer’s corporate vision is “To be the world’s leading power company, energising India’s growth”. The Issuer believes that the following strategies will enable it to achieve this vision: Maintain market leadership The Issuer intends to rapidly increase its generating capacity, maintain and grow its leadership position and remain the largest Indian power-generating company. The Issuer has prepared a long-term corporate plan with a target to have an installed capacity of 130 GW by 2032. As of the date of this Offering Circular, the Issuer is constructing additional capacity aggregating 24,009 MW, consisting of 23,499 MW thermal and hydro units at 21 locations and a solar plant of 510 MW at two locations. The Issuer is also pursuing other projects that would add more than 30,000 MW of capacity, which are in various stages, including projects for which a tender has been invited or in respect of which a feasibility report has been or is being prepared.

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Pursue fuel security The Issuer believes that fuel security is critical to a power-generating company and it intends to continue pursuing its fuel requirements by following a multi-pronged strategy of procuring fuel through long-term contracts, short-term or spot purchases, developing domestic coal mines and forming partnerships for the development of fuel transportation infrastructure. The Issuer is pursuing oil and gas exploration to ensure better control, greater security and reliability of fuel supply. Diversify fuel mix The Issuer intends to diversify its generation capacity. The Issuer has commissioned a total solar capacity of 360 MW at nine locations and total hydro capacity of 800 MW at its first hydro project at Koldam. As of the date of this Offering Circular, the Issuer was in the process of implementing various hydroelectric projects of 819 MW, and a 510 MW solar photovoltaic based project in addition to developing various wind and nuclear power projects. Going forward, the Issuer intends to gradually increase its reliance on non-fossil fuel sources of generation and by the calendar year 2032, 30 per cent. of the Issuer’s installed capacity would be based on non-fossil fuel sources. The Issuer formed a joint venture company, ASHVINI, in January 2011 with NPCIL with the objective of setting up nuclear power projects in the country. Adopt advanced technologies The Issuer has developed a long-term technology roadmap for the introduction of highly efficient and clean technologies, including supercritical and ultra-supercritical machines at its new power stations. Its technological roadmap is intended to help it keep pace with global technological advances in power generation and sustain its operational efficiency levels. For its new coal-fired power stations, the Issuer has adopted supercritical steam parameters to increase efficiency and reduce carbon dioxide emissions. On 26 August 2010, the Issuer entered into an MoU with Bharat Heavy Electricals Limited (BHEL) and Indira Gandhi Centre for Atomic Research (IGCAR) to develop advanced ultra-supercritical technology. Furthermore, pre-project research and development of materials for high-temperature application, appropriate welding technology and manufacturing technology has also been initiated by this consortium. Invest in employee development The Issuer believes that its employees are its most important assets and has therefore adopted a “people first” approach towards its employees. The Issuer intends to continue developing the capabilities of its employees through an objective and open performance management system. The Issuer also intends to continue to provide comprehensive training to its employees at various stages of their careers to familiarise them with technological advances and keep them updated on operational and management practices in the Issuer’s industry. The Issuer believes that its continuing initiatives will strengthen its identity as a preferred employer. History Prior to the establishment of the Issuer, power generation and capacity augmentation in India was largely the responsibility of SEBs. The gap between the demand for electricity and the ability of the SEBs to supply it was perceived by the Government as a significant factor affecting the economic development of India. To address this under-supply, the Government established hydroelectric and thermal generation companies in the central sector which comprised Central Government-owned

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power utilities (the Central Sector). The Issuer was incorporated as a Government company under the Companies Act on 7 November 1975 as the National Thermal Power Corporation Private Limited. On 30 September 1985 the Issuer was converted from a private limited company into a public limited company. In December 1976, the Government gave approval for the Issuer to construct its first “super thermal” (greater than 1,000 MW) power project at Singrauli. The first unit at Singrauli with an installed capacity of 200 MW was successfully commissioned on 13 February 1982. Since 1982, through the expansion of existing power stations, the construction of new power stations and the takeover of power stations from State Electricity Utilities (SEUs), the installed capacity of the Issuer exceeded 5,000 MW in 1987, 10,000 MW in 1990, 15,000 MW in 1994, 20,000 MW in 2002, 25,000 MW in 2006, 30,000 MW in 2009, 35,000 MW in 2011, 40,000 MW in 2013 and 45,000 MW in 2015. As of 31 March 2016, the Issuer has grown to become the largest generation utility in India (Source: CEA) with a total installed capacity of 46,653 MW, including 6,641 MW secured through its subsidiaries and joint venture companies. Furthermore, as of 30 September 2016, the Issuer’s total installed capacity was 47,228 MW including 6,966 MW through its subsidiaries and joint venture companies. In 2004, the Issuer’s shares were listed on the BSE Limited and the National Stock Exchange of India Limited. In the same year, the Issuer was allocated its first coal mining block by the MoC. On 28 October 2005, in order to give the Issuer a new corporate identity, the name of the Issuer was changed from the “National Thermal Power Corporation Limited” to “NTPC Limited” to reflect the diversification of its business operations beyond thermal power generation to include, among others, the generation of power from hydro, nuclear and renewable energy sources and the undertaking of coal mining and oil exploration activities. In 2005, one oil block was allocated under the fifth round of bidding under the New Exploration Licensing Policy (NELP) to a consortium including the Issuer, Geopetrol International Inc. and Canaro Resources Limited. In 2011, the Issuer was ranked as the number one IPP in the world, on the basis of asset worth, revenues, profits and returns on invested capital, according to a study conducted by Platts, a division of the McGraw-Hill Companies. In January 2011, the Issuer formed a joint venture company, ASHVINI, with NPCIL to develop nuclear power projects in India. In 2016, the Issuer started the commercial operation of its first hydro project with a capacity of 800 MW. The Issuer was conferred the status of a “Navratna” by the Government in 1997, which granted it operational and financial autonomy. In May 2010 the Issuer was further upgraded to the “Maharatna” status and was granted enhanced autonomy and recognition. As of the date of this Offering Circular, the Issuer is developing a coal-based power generating project with a capacity of 1,320 MW, in Bangladesh. The name of the joint venture company that has been entered into with the Bangladesh Power Development Board, is Bangladesh India Friendship Power Company Pvt. Ltd. See “Investment in projects”.

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Corporate Structure The following chart provides an overview of the Issuer’s ownership structure and its subsidiaries and joint venture companies as of the date of this Offering Circular. NTPC GROUP NTPC LIMITED

Subsidiaries

100%

Joint Ventures

NTPC Electric Supply Company Ltd.

100%

NTPC Vidyut Vyapar Nigam Ltd.

65%

Kanti Bijlee Utpadan

50%

Utility Powertech Limited

50%

NTPC SAIL Power Company Pvt. Ltd.

50%

Nigam Ltd.

74%

Bhartiya Rail Bijlee Company Ltd.

50%

74%

Patratu Vidyut Utpadan Nigam Limited

50%

NTPC ALSTOM Power Services Pvt. Ltd.

NTPC Tamilnadu Energy Co. Ltd. Aravali Power Company Pvt. Ltd.

50%

NTPC-SCCL Global Ventures*

50%

Meja Urja Nigam Pvt. Ltd.

50%

NTPC BHEL Power Projects Pvt. Ltd.

50%

Nabinagar Power Generating Co. Pvt. Ltd.

49% BF-NTPC Energy Systems Limited

44.6%

Transformers and Electricals Kerala Ltd.

25.51%

Ratnagiri Gas & Power Pvt. Ltd.

21.63%

National High Power Test Laboratory Pvt. Ltd.

16.67%

National Power Exchange Ltd.*

0.13%

International Coal Ventures Pvt. Ltd.*

31.7%

Energy Efficiency Services Ltd.

50%

49%

50%

CIL NTPC Urja Pvt. Ltd.

Anushakti Vidhyut Nigam Ltd.

Trincomalee Power Company Limited

50% Pan-Asian Renewables Pvt. Ltd.*

50%

29.67%

Bangladesh India Friendship Power Company Private Limited

Hindustan Urvarak & Rasayan Limited

*

The company is under voluntary winding up.

**

The Issuer has decided to exit from International Coal Ventures Pvt. Ltd. and is currently awaiting Government approval for exit from this company.

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For additional details on the Issuer’s subsidiary and joint venture companies, see “Subsidiaries” and “Joint Venture Companies”. The Issuer’s Relationship with the Government As of the date of this Offering Circular, 69.74 per cent. of the Issuer is owned by the Government, and the remaining 30.26 per cent. is owned by foreign institutional investors, financial institutions, banks and the general public. The President of India is the beneficial owner of the Government’s shareholding. Under the Issuer’s articles of association, the Chairman and Managing Director (the CMD) is appointed by the President of India. The remainder of the Issuer’s board of directors (the Board) is appointed by the President of India in consultation with the CMD, other than the Government’s nominee directors and independent directors. Independent directors as well as Government-nominated directors are appointed by the President of India. At present, the Board comprises six full-time directors, including the CMD, two part-time directors nominated by the Government, and three independent directors who are non-official part-time directors. The Issuer’s articles of association vest management power of the Issuer in the Board. However, certain matters are reserved for the decision of the President of India, including matters relating to the budget of the Issuer (if any deficit is to be met by obtaining funds from the Government). The President of India also has the power to issue directives and instructions to the Issuer which must be put into effect by the directors. The Issuer was conferred “Navratna” status by the Government in 1997 which granted it operational and financial autonomy. In May 2010, the Issuer was conferred “Maharatna” status with enhanced autonomy in respect of investments in joint ventures and the creation of positions to facilitate expansion of its operations, both in domestic as well as global markets. As a Maharatna, the Issuer is permitted to make capital investment decisions without obtaining prior approval from the Government. It is generally permitted to form joint ventures and subsidiaries up to specified limits, subscribe to equity in these entities, and purchase and receive new technology and know-how. Furthermore, the Issuer can generally borrow from both the domestic and international markets. However, in the case of borrowing from the international market, the Issuer is subject to guidelines issued by the Ministry of Finance and/or the RBI. Under the existing ECB Guidelines, the Issuer can borrow up to U.S.$750 million per year from recognised lenders in the international market through the “automatic route” for permitted end uses without seeking any approvals. The Issuer pays annual dividends to the Government and its other shareholders. Interim dividend paid and final dividend recommended by the Board for fiscal 2016 amounted to Rs.27,622 million, or 27 per cent. of the Issuer’s stand-alone profits after tax, or interim dividend of Rs.1.6 per share on the face value of paid-up equity shares of Rs.10.00 each and final dividend of Rs.1.75 per equity share in addition to the interim dividend. The Issuer’s dividend policy takes into account the Issuer’s requirements for internal resources to fund its capacity expansion programme and the guidelines issued by the Ministry of Finance. The declaration and payment of a dividend is recommended by the Board and approved by the shareholders of the Issuer. The Issuer enters into an annual MoU with the Government. The MoU sets annual performance targets. The Government evaluates the Issuer’s actual performance against these targets at the end of each fiscal. The Issuer received an “excellent” rating (the highest rating) in 24 of the 27 years since the MoU rating system was introduced by the Government.

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Business Power Generation The Issuer’s core business is the generation and sale of electricity. It has installed substantial generation capacities in various locations across India. As of 30 September 2016, its directly owned total installed capacity was 40,262 MW consisting 146 units, including 18 coal-fired power stations (of 35,085 MW capacity) comprising 100 units, seven gas-fired power stations (of 4,017 MW capacity) comprising 32 units (including one naphtha-fired power station), one hydro-fired power station (of 800 MW capacity) comprising 4 units and 9 solar power stations (of 360 MW capacity). The Issuer also participates in and manages nine subsidiaries and joint venture companies of an aggregate capacity of 6,966 MW through eight coal-fired power stations (of 4,999 MW capacity) comprising 23 units and one gas-fired power station (of 1,967 MW capacity) comprising 9 units. The following table sets out information regarding power stations wholly owned or jointly owned by the Issuer, or owned through its subsidiaries as of 30 September 2016.

NTPC-Owned — Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — Gas/Liquid Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — Solar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — Hydro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sub-Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Owned through subsidiary and joint venture companies — Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sub-Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

No. of Power Stations

Installed Capacity (MW)

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

18 7 9 1 35

35,085 4,017 360 800 40,262

. . . .

. . . .

. . . .

. . . .

. . . .

8 1 9 44

4,999 1,967 6,966 47,228

In fiscal 2016, the Issuer generated 263.42 billion units of electricity, including 241.98 billion units from its directly owned power stations and 21.44 billion units from the power stations owned through its joint ventures and subsidiaries. Out of the generation from the Issuer’s directly owned power stations, 230.64 billion units, or 95.31 per cent., were generated through its coal-fired power stations and 8.87 billion units, or 3.67 per cent., were generated through its gas-fired power stations. The balance of 2.47 billion units, or 1.02 per cent., was through the Issuer’s solar and hydro power stations. The operating efficiency of the Issuer’s power stations has improved over the years. The average availability factor of its directly owned coal-fired power stations has increased from 86.50 per cent. in fiscal 1994 to 88.06 per cent. in fiscal 2016. The average availability factor of its directly owned gas-fired power stations has increased from 60.20 per cent. in fiscal 1994 to 97.30 per cent. in fiscal 2016. The average PLF of its directly owned coal-fired power stations has increased from 78.10 per cent. in fiscal 1994 to 78.61 per cent. in fiscal 2016. In fiscal 2016, the average PLF for coal-fired power stations in India was 62.29 per cent. (Source: CEA).

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The map below describes the locations of the Issuer’s existing facilities as of the date of this Offering Circular, as well as those currently under construction. There can be no assurances that the facilities under construction will be completed.

Koldam (800MW) Dadri (817MW) Dadri SolarPV (5MW) Faridabad (430MW +5MW Solar) Lata Tapovan (171MW) Tapovan Vishnugad (520MW) Badarpur (705MW) NCTPP (1,820MW) Jhajjar (1,500MW) Unchahar (1,550MW) &(10 MW Solar) Rammam (120MW) Auraiya (652MW) Tanda (1760 MW) Kanti (610MW) Anta (413MW)

Bongaigaon (750MW)

Nabinagar(750MW + 1980 MW)

Kahalgaon (2,340MW) Barh 3,300MW Meja (1,320MW) BRBCL250MW Singrauli (2,023MW) Farakka 2,100MW Gandhar Rihand 3,000MW Vindhyachal (4,760MW) Rourkela NKP 1980MW (648MW) Rajgarh Solar PV Durgapur 50 MW Korba(2,600MW)(120MW) Daralipali (120MW) PVUNL(325MW) Gadarwara (1600 MW) (1600MW) Bhilai Talcher Kaniha Mouda (2,320MW) 574MW Kawas (3,000MW) + 10MW Solar Sipat 2,980MW (645MW) Lara 1,600MW Khargone Talcher Thermal 1320 MW (460MW) Solapur Rourkela Exp. (250MW) Ramagundam (1,320MW) (2,600MW) + (10MW solar) Ratnagiri (1,940MW) Kudgi (2,400MW)

Simhadri (2,000MW)

Telengana (1,600MW)

•Anantpur Solar (250MW) A&N Solar PV (5MW) Vallur (1,500MW) Kayamkulam (350MW)

Map not to scale. Includes capacity of under construction plants Coal Power Station

Ongoing Hydro Power Projects

Gas Power Stations

Ongoing Thermal Projects

Solar PV

Hydro Power Stations

The Issuer’s coal-fired power stations run at high rates of efficiency, enabling it to sell power at competitive prices and achieve savings. In fiscal 2016, of its 18 coal-fired power stations, 8 operated at a PLF of greater than 80 per cent. The Issuer monitors its power stations and projects through its real-time monitoring system and systematically maintains its power stations to ensure high availability. The Issuer believes that its monitoring and maintenance techniques offer it a competitive advantage in an industry where reliability and maintenance costs are a significant determinant of profitability.

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Power Stations As of 30 September 2016, the Issuer directly owned the following power stations across India, with an aggregate installed capacity of 40,262 MW: NTPC-Owned Power Stations

Power Station

Northern Region Singrauli . . . . . . . . . . . . . . . Singrauli Solar . . . . . . . . . . . Rihand . . . . . . . . . . . . . . . . . Tanda . . . . . . . . . . . . . . . . . . Unchahar . . . . . . . . . . . . . . . Unchahar Solar . . . . . . . . . . Badarpur . . . . . . . . . . . . . . . Dadri Thermal (NCTPP). . . . Dadri Gas . . . . . . . . . . . . . . Anta. . . . . . . . . . . . . . . . . . . Auraiya . . . . . . . . . . . . . . . . Faridabad . . . . . . . . . . . . . . . Dadri Solar . . . . . . . . . . . . . Faridabad, Solar . . . . . . . . . . Total Northern Region . . . . Western Region Korba. . . . . . . . . . . . . . . . . . Vindhyachal . . . . . . . . . . . . . Sipat . . . . . . . . . . . . . . . . . . Kawas . . . . . . . . . . . . . . . . . Jhanor Gandhar . . . . . . . . . . Mouda . . . . . . . . . . . . . . . . . Rajgarh Solar . . . . . . . . . . . . Total Western Region . . . . . Southern Region Ramagundam . . . . . . . . . . . . Simhadri . . . . . . . . . . . . . . . Kayamkulam . . . . . . . . . . . . Andaman and Nicobar Solar. Ramagundam (Solar) . . . . . . Ananthapuram (Solar) . . . . . Total Southern Region . . . . Eastern Region Farakka . . . . . . . . . . . . . . . . Kahalgaon . . . . . . . . . . . . . . Barh. . . . . . . . . . . . . . . . . . . Talcher STPS . . . . . . . . . . . . Talcher TPS . . . . . . . . . . . . . Bongaigaon . . . . . . . . . . . . . Talcher Solar . . . . . . . . . . . . Total Eastern Region . . . . . Hydro Region Koldam . . . . . . . . . . . . . . . . Grand Total . . . . . . . . . . . .

Location

Installed Capacity (MW)

Fuel Type

. . . . . . . . . . . . . . .

. . . . . . . . . . . . . . .

. . . . . . . . . . . . . . .

Sonebhadra, Uttar Pradesh Sonebhadra, Uttar Pradesh Sonebhadra, Uttar Pradesh Ambedekar Nagar, Uttar Pradesh Rae Bareli, Uttar Pradesh Rae Bareli, Uttar Pradesh Badarpur, New Delhi Gautam Budh Nagar, Uttar Pradesh Gautam Budh Nagar, Uttar Pradesh Baran, Rajasthan Auraiya, Uttar Pradesh Faridabad, Haryana Gautam Budh Nagar, Uttar Pradesh Faridabad, Haryana

2,000 15 3,000 440 1,050 10 705 1,820 830 419 663 432 5 5 11,394

Coal Solar (PV) Coal Coal Coal Solar (PV) Coal Coal Gas Gas Gas Gas Solar (PV) Solar (PV)

. . . . . . . .

. . . . . . . .

. . . . . . . .

Korba, Chhattisgarh Sidhi, Madhya Pradesh Bilaspur, Chhatisgarh Surat, Gujarat Bharuch, Gujarat Nagpur, Maharashtra Rajgarh, Madhya Pradesh

2,600 4,760 2,980 656 657 1,660 50 13,363

Coal Coal Coal Gas Gas Coal Solar (PV)

. . . . . . .

. . . . . . .

. . . . . . .

Karimnagar, Telangana Vishakhapatnam, Andhra Pradesh Allappuzha, Kerala Andaman and Nicobar Islands Karimnagar, Telangana Andhra Pradesh

2,600 2,000 360 5 10 250 5,225

Coal Coal Naphtha Solar (PV) Solar (PV) Solar (PV)

. . . . . . . .

. . . . . . . .

. . . . . . . .

Murshidabad, West Bengal Bhagalpur, Bihar Barh, Bihar Angul, Odisha Angul, Odisha Assam Angul, Odisha

2,100 2,340 1,320 3,000 460 250 10 9,480

Coal Coal Coal Coal Coal Coal Solar (PV)

800 40,262

Hydro

. . . Bilaspur, Himachal Pradesh ...

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The following table set outs the PLF of certain power stations acquired by the Issuer as of the date of acquisition and 31 March 2016: Plant Load Factor (%)

Power Station

Unchahar Talcher. . Tanda . . . Badarpur

*

. . . .

. . . .

Date of Acquisition

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

13 February 1992 3 June 1995 14 January 2000 12 April 1978*

As of the date of acquisition

During fiscal 2016

18 19 15 32

76.04 93.15 80.98 36.19

Date of takeover of management

As of 30 September 2016, the Issuer owned the following power stations with an aggregate installed capacity of 6,966 MW through its subsidiary and joint venture companies:

Name of the Company

Location

NTPC-SAIL Power Company Private Ltd . . . . . . Durgapur, West Bengal Rourkela, Odisha Bhilai, Chhattisgarh Ratnagiri Gas and Power Private Limited . . . . . . Ratnagiri, Maharashtra Aravali Power Company Private Limited . . . . . . Jhajjar, Haryana Kanti Bijlee Utpadan Nigam Limited . . . . . . . . . Kanti, Bihar NTPC-Tamilnadu Energy Company Limited . . . . Vallur, Tamil Nadu NTPC-Bhartiya Rail Bijlee Company Limited . . Aurangabad, Bihar PUVNL (Patratu) . . . . . . . . . . . . . . . . . . . . . . . . Jharkhand Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Installed Capacity (MW)

120 120 574 1,967 1,500 610 1,500 250 325 6,966

Fuel Type

Coal Coal Coal Gas Coal Coal Coal Coal Coal

Power Purchase Agreements (PPAs) The capacity of each unit at each power station owned by the Issuer is contracted to various customers under the PPAs. For the Issuer’s coal-fired power stations, the term of the PPAs for most power stations is 25 years, while for its gas-fired power stations, the term of the PPAs for most power stations is 15 years. The term of the PPA for the Issuer’s hydroelectric projects is 35 years. The PPAs generally provide for the extension of the term subject to mutually agreed conditions. As part of its investment approval procedure, the Issuer requires PPAs to be in place for all new power stations before an investment approval is provided. All the existing facilities have contracted 100 per cent. of their capacity. More than 89 per cent. of the Issuer’s sales of electricity generated from its directly owned power stations are to SEBs and state-owned distribution companies for which payments are secured through LCs and various Tripartite Agreements. For private distribution company customers, payments are secured through LCs backed by a first charge created on their receivables in the Issuer’s favour.

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As of 31 March 2016, the Issuer’s top ten customers and their respective percentage share in the Issuer’s revenue from the sale of electricity generated from its directly owned power stations were as follows: Customer

Percentage Share (%)

Uttar Pradesh Power Corporation Ltd. . . . . . . . . . . . . . . . . . . Maharashtra State Electricity Distribution Company Ltd . . . . Gujarat Urja Vikash Nigam Ltd . . . . . . . . . . . . . . . . . . . . . . . Madhya Pradesh Power Trading Corporation Limited . . . . . . . South Bihar Power Distribution Company Limited . . . . . . . . . BSES Rajdhani Power Limited . . . . . . . . . . . . . . . . . . . . . . . . Tamil Nadu Generation and Distribution Corporation Limited Gridco (Odisha) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . North Bihar Power Distribution Company Limited . . . . . . . . . Southern Power Distribution Company of Telangana Limited . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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11.98 9.45 7.32 6.68 4.62 4.33 4.21 3.93 3.28 3.02 58.82

Historically, the Issuer has had significant problems recovering payments from the SEBs. However, the introduction of the OTSS in 2002 significantly improved the recovery of payments under the PPAs with the SEBs. The LC coverage provided by the SEBs has been adequate to cover monthly billings. From fiscal 2004 to 2016, for 13 successive years, recoveries of dues from SEBs have been 100 per cent., as opposed to 76.7 per cent. in fiscal 2002 and 92.3 per cent. in fiscal 2003 in respect of the sale of electricity generated from its directly owned power stations. The OTSS, effected by individual Tripartite Agreements between the Government, the RBI and each state, allows the Issuer to take certain actions in the case of failure of the SEBs to open or maintain LCs or, in the case of default, in making payment of current dues within the stipulated period. These actions include the recovery of payments from the RBI directly, which payments are then debited from the applicable state’s account with the RBI. These Tripartite Agreements are valid until 31 October 2016. As of the date of this Offering Circular, supplementary agreements for the extension of the Tripartite Agreements are proposed to be signed soon. However, to provide for any possibility of the Tripartite Agreements not being extended beyond October 2016, the Issuer’s sales are secured through supplementary agreements with its customers under which the customers have agreed to create a first charge on their own receivables in the Issuer’s favour and, in the event of a payment default, assign such receivables into an escrow account. Investment in projects The Issuer undertakes a detailed assessment before investing in a new project. Investment decisions are taken by the Issuer only after establishing the economic viability of the proposed project. Financial appraisals of projects are also conducted by independent institutions. The Issuer takes the decision to proceed with a new project only once it is satisfied on the availability of land, water, fuel, off-take arrangements and environmental clearances. Since May 2010, as a Maharatna, the Government has granted a very high level of autonomy to the Issuer, which includes delegating investment decisions to the Board. The Issuer is empowered to take all investment decisions, including the power to make equity investments in joint ventures, and wholly owned subsidiaries, and to undertake mergers and acquisitions on its own, subject to a ceiling of the lower of 15 per cent. of the Issuer’s net worth and Rs.50,000 million for any one project, and subject to an overall ceiling of 30 per cent. of its net worth for all such projects. Previously as a Navratna, the applicable ceiling was the lower of 15 per cent. of the Issuer’s net worth and Rs.10,000 million for any one project, and subject to an overall ceiling of 30 per cent. of its net worth for all such projects. The Issuer’s internal investment decision process involves financial due diligence, assessment by a project sub-committee of the Board, with final investment approval being made by the Board itself. The CERC finalises the tariff for all of the Issuer’s power stations. During the tariff-setting process, the CERC scrutinises the investments made by the Issuer in the establishing of any power station.

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Capacity Expansion Power demand in India is expected to grow significantly as a result of India’s growing economy. The Issuer expects that an energy deficit will exist as has occurred in the past. It has embarked on an aggressive capacity addition programme, in line with the Government’s policy of adding capacity to meet the demands for energy in India. The Issuer has adopted a multi-pronged strategy that includes capacity addition through green-field projects, brown-field expansions, joint ventures and acquisitions. The Issuer first identifies new potential sites or existing sites that could potentially be expanded. It then seeks to establish project viability through the preparation of feasibility reports. The Issuer classifies the projects it is pursuing in the following categories: •

projects under construction;



projects for which it has invited bids from vendors;



projects for which the feasibility reports have been approved; and



projects for which feasibility reports are under preparation.

The current projects which the Issuer is pursuing are described below. Projects under construction As of the date of this Offering Circular, the Issuer is engaged in construction activities for projects representing a capacity of 24,009 MW, including projects representing a capacity of 4,300 MW undertaken by its subsidiaries and joint venture companies, which are in different stages of completion, as set out below: Owned projects under construction

Name of Project

Bongaigaon . . . . . . . . . . Barh-I * . . . . . . . . . . . . . Lara-I * . . . . . . . . . . . . . Kudgi-I * . . . . . . . . . . . . Gadarwara-I * . . . . . . . . . Mouda-II * . . . . . . . . . . . Solapur * . . . . . . . . . . . . Khargaon * . . . . . . . . . . . Unchahar-IV . . . . . . . . . Darlipalli * . . . . . . . . . . . North Karanpura * . . . . . Tanda-II * . . . . . . . . . . . . Telangana * . . . . . . . . . . . Tapovan Vishnugad . . . . Lata Tapovan # . . . . . . . . Rammam-III. . . . . . . . . . Singrauli Small HEPP . . Mandsaur . . . . . . . . . . . . Jodhpur . . . . . . . . . . . . . Sub-Total — owned (A) * #

State/Union Territory

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Assam Bihar Chhattisgarh Karnataka Madhya Pradesh Maharashtra Maharashtra Madhya Pradesh Uttar Pradesh Odisha Jharkhand Uttar Pradesh Telangana Uttarakhand Uttarakhand West Bengal Uttar Pradesh Madhya Pradesh Rajasthan

Capacity (MW)

500 1,980 1,600 2,400 1,600 660 1,320 1,320 500 1,600 1,980 1,320 1,600 520 171 120 8 250 260 19,709

Indicates projects using sophisticated critical technology. Construction work currently put on hold in accordance with the order of the Indian Supreme Court.

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Fuel Type

Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Hydro Hydro Hydro Hydro Solar Solar

Joint venture and subsidiary projects under construction State/Union Territory

Name of Project

Projects under construction — Joint Venture Projects Nabinagar, Joint Venture with the Indian Railways. . . . . . Nabinagar, Nabinagar Power Generating Company Ltd. (NPGCPL) * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Meja, Joint Venture with Uttar Pradesh Rajya Vidyut Uttpadan Nigam Ltd. (UPRVUNL) * . . . . . . . . . . . . . . . . . Rourkela-III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sub-Total — Joint Venture Projects (B) . . . . . . . . . . . . Grand Total (A+B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

*

Capacity (MW)

Fuel Type

Bihar

750

Coal

Bihar

1,980

Coal

1,320 250 4,300 24,009

Coal Coal

Uttar Pradesh Odisha

Indicates projects using sophisticated critical technology

Projects for which the Issuer has invited bids from vendors

Name of Project *

Khulna . . . . . . . . . . Pudimadaka * . . . . . . Barethi * . . . . . . . . . . Durgapur PP . . . . . . Salem Solar . . . . . . . Ananthapuram . . . . . Pavagada . . . . . . . . . Andaman & Nicobar Total . . . . . . . . . . . .

*

State/Union Territory

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Bangladesh Andhra Pradesh Madhya Pradesh West Bengal Tamilnadu (NSPCL Solar) Andhra Pradesh Karnataka Andaman & Nicobar

Installed Capacity (MW)

1,320 4,000 2,640 40 40 750 250 25 9,065

Fuel Type

Coal Coal Coal Coal Solar Solar Solar Solar

Indicates projects using sophisticated critical technology

PPAs have been signed with the beneficiaries for all of the above projects for which bids have been invited. Long-term power off-take agreements are in place for all projects under construction that have been mentioned above. Other Projects Besides projects under construction as of the date of this Offering Circular, the Issuer has a number of projects with an aggregate capacity of approximately 21,740 MW for which feasibility reports have been approved or are under preparation.

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Tariffs The tariff for electricity supplied from the Issuer’s power stations are determined based on tariff regulations notified by the CERC from time to time. On 21 February 2014 the CERC notified the regulations applicable for the period from 1 April 2014 to 31 March 2019 (the 2014-2019 Regulations). The tariff for the thermal and hydro power stations of the Issuer for this period is determined as per these regulations. The components of the tariff of the Issuer’s power stations as per the 2014-19 Regulations are as follows: •



the Issuer is allowed to recover the capacity charge in full if the relevant power station’s availability factor is at least 83 per cent. (which is to be reviewed after the first three years of the tariff period). If the availability factor of the power station is lower than 83 per cent., a capacity charge is recoverable on a pro rata basis. The capacity charge consists of a number of components, including: o

a return on equity on a pre-tax basis at a base rate of 15.5 per cent., to be grossed up by the effective tax rate as applicable to the Issuer for the relevant year. For projects commissioned on or after 1 April 2014, there is an additional return of 0.5 per cent. if the new projects are completed within the timeline specified in the 2014-19 Regulations;

o

the recovery of interest cost on debt and return on equity for all power stations declared in commercial operation on or after 1 April 2014, to be based on a prescribed 70/30 debt-to-equity ratio. Where the equity employed is greater than 30 per cent., the amount of equity for determination of the tariff will be limited to 30 per cent. The return on the excess equity can be recovered on the same basis as the recovery on the debt component. Where the equity employed is less than 30 per cent., the actual amounts of debt and equity will be considered for purposes of determination of the tariff. In case of generating power stations existing as of 1 April 2014, recovery of interest costs on the debt will be based on the debt-to-equity ratio allowed for the determination of the tariff in the previous tariff period ended 31 March 2014;

o

interest on working capital to be determined as per the State Bank of India’s norms on the base rate as of 1 April of the year plus 3.5 per cent.;

o

recovery of depreciation up to 90 per cent. of capital costs, excluding the cost of land, to be based upon the rates of depreciation prescribed in the regulation, for a 12-year period from the commercial operation date. The remaining depreciable value thereafter is to be spread over the remaining useful life of the assets;

o

recovery of operation and maintenance costs to be determined based on the size of the power station on a per MW basis;

o

a special allowance per annum per MW for power stations in operation beyond their useful life in lieu of recovery for capital expenditures on renovation and modernisation; and

o

compensation allowances on a per annum per MW basis to meet expenses on new capital assets, including minor capital assets, after ten years of commercial operation.

Energy charges for recovery of primary and secondary fuel cost are allowed on the basis of norms for heat rate, specific oil consumption and auxiliary consumption on scheduled energy.

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Other elements of the 2014-19 Regulations include: o

an incentive linked to the PLF of the station at the rate of Rs.0.50 per kWh above specified norms;

o

recovery of the cost of hedging of exchange rate risk on the interest on and repayment of foreign currency loans and exchange rate fluctuations for unhedged interest on and repayment of foreign currency loans corresponding to the debt component of capital cost admitted by the CERC; and

o

a deviation settlement charge receivable or payable for the supply or off-take of electricity at variance with the schedule given by the relevant load dispatch centre. The charge varies depending upon system frequency and is receivable or payable at rates notified by the CERC from time to time.

The Issuer has filed tariff petitions for the period from 1 April 2014 to 31 March 2019 for each power station in accordance with the terms and conditions laid down by the CERC. On the basis of the CERC tariff orders and principles enunciated in the Tariff Regulations, the average selling price per unit of electricity for the Issuer’s directly owned power stations was Rs.3.11 in fiscal 2016, Rs.3.28 in fiscal 2015 and Rs.3.30 in fiscal 2014. Other Activities Consultancy The Issuer’s consultancy division provides various services to state generating companies, SEBs and other private power companies, including engineering, procurement, quality assurance and inspection, construction supervision, project management, commissioning, operation and maintenance, renovation and modernisation, gap analysis and performance improvement plans. In fiscal 2016, its consultancy division earned a total revenue of Rs.1,005 million. Power Trading The Issuer believes the existence of a gap between power supply and demand provides opportunities for power trading. The Issuer is engaged in power trading through its wholly owned subsidiary, NVVN. As of 30 September 2016, NVVN traded 7,725 million units of electricity and transacted business with more than 100 customers, including various state government utilities, private power utilities and captive power generators in each of the five regions of India. The Government has designated NVVN as the nodal agency for Phase-I of the Jawaharlal Nehru National Solar Mission for the purchase of up to 1,000 MW solar power from grid-connected solar power developers and the sale after bundling of an equivalent MW capacity from the Issuer’s power stations at rates notified by the CERC. As of 31 March 2016, total solar capacity of 733 MW has been commissioned, and a corresponding capacity allocation from the Issuer’s coal power stations has been made, by the MoP. As of 30 September 2016, NVVN sold 2,926 MUs of bundled solar power to various state utilities. The Government has also designated NVVN as the nodal agency for cross-border trading of power from Bangladesh, Bhutan and Nepal. In accordance with the terms of the PPA, which is for a period of 25 years and is signed between NVVN and the Bangladesh Power Development Board (BPDB) for the supply of 250 MW of power from the Issuer’s stations, the supply of power to Bangladesh commenced on 5 October 2013. Furthermore, NVVN has signed another PPA with BPDB, for a period of five years, as well as a power sale agreement with the Tripura State Electricity Corporation Limited (TSECL), for supply of up to 100 MW of power from TSECL to BPDB. Under this agreement power has been supplied by NVVN to BPDB with effect from 17 March 2016.

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Separately, NVVN has signed another PPA with the Nepal Electricity Authority (NEA) for the supply of up to 80 MW of power through its newly commissioned 400 KV Muzaffarpur-Dhalkebar unit. The power supply under this PPA with NEA commenced on 18 February 2016. As of 30 September 2016, NVVN has supplied 1,507 MUs of electricity to Bangladesh and Nepal. In addition, the Issuer is a promoter of, and as of the date of this Offering Circular, owns 4.1 per cent. of the paid-up capital of PTC, which was the first power-trading company in India. Electricity Distribution During the financial year 2015-16, NESCL withdrew from its joint venture company with KINFRA. The Issuer’s subsidiary, NTPC Electric Supply Company Limited (NESCL), is pursuing an electricity distribution business. As of the date of this Offering Circular, NESCL was involved in consultancy services for the implementation of turnkey projects under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), a flagship programme of the Government for the electrification of rural villages and households, which involves setting up sub-stations for utilities, constructing distribution networks and project management. NESCL is also participating in programmes for the distribution of infrastructural development. On 24 March 2015, the shareholders of NESCL approved the transfer of NESCL’S existing business of work under the RGGVY and other consultancy projects to the Issuer. Furthermore, NESCL formed a joint venture with the Kerala Industrial Infrastructure Development Corporation (KINFRA), a statutory body of the government of Kerala, to pursue the retail distribution of power in various industrial parks developed by KINFRA in Kerala, special economic zones (SEZs) and industrial areas. As of the date of this Offering Circular, NESCL has disassociated itself from KINFRA. Coal Mining and Oil Exploration The Issuer entered into the coal mining business to ensure better control and greater reliability on coal production. Coal mining is integral to the Issuer’s fuel security strategy. The MoC had allotted six coal blocks to the Issuer, namely Pakri-Barwadih, Chatti-Bariatu, Kerandari, Dulanga, Talaipalli and Chatti-Bariatu (South), in the period from 2004 until 2007. In 2013, the MOC granted an in-principle approval allocating four coal blocks to the Issuer, namely Banai, Bhalumuda, Chandrabila and Kundanali-Luburi. These coal blocks are located in the states of Jharkhand, Chhattisgarh and Odisha. Out of these coal blocks allotted to the Issuer, the allocation of five coal blocks (namely Chatti-Bariatu, Chatti-Bariatu (South), Kerandari, Dulanga, and Talaipalli) (Coal Blocks) was cancelled by the Supreme Court’s order dated 24 September 2014. Subsequently, the MoC on 24 March 2015 reallocated these coal blocks to the Issuer and formal allocation letters were issued by the MoC to the Issuer for the coal blocks at Chatti-Bariatu and Chatti-Bariatu (South), Kerandari, Talaipalli and Dulanga on 8 August 2015. The Government issued formal allotment letters to the Issuer in relation to the Banai and Bhalumuda coal blocks on 31 March 2015 but in April 2015 the Government modified its decision and allotted the Chandrabila coal block to a different entity. Furthermore, the Kundanali-Luburi coal block has been allotted jointly to the Issuer and the Jammu and Kashmir State Power Development Company Limited (J&KSPDCL). As of the date of this Offering Circular, a joint venture company between the Issuer and J&KSPDCL is under incorporation for development of the Kundanali-Luburi coal block. Additionally, on 8 August 2016 the MoC allocated the Mandakini-B coal block in Odisha to the Issuer for its Telangana Power Project of 4,000 MW capacity. Similarly on 11 September 2015, the MoC intimated a change of allocation of the Banhardih coal block, allocated earlier to M/s Jharkhand Urja Utpadan Nigam Ltd. to the joint venture company between NTPC and the state of Jharkhand, called the Patratu Vidyut Utpadan Nigam Ltd.

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Out of these ten coal blocks, with an estimated geological reserve of 7.3 billion tonnes, it is estimated that the Issuer will be able to reach a peak coal-production capacity of approximately 107 million tonnes per annum, which will be supplied to its power stations. For the Pakri-Barwadih coal block, all statutory clearances and permissions, including mine-opening permission from the coal controller, DGMS, and others have been obtained. On 30 September 2016, M/s Sainik Thriveni was appointed as the mine development operator in relation to this coal block and thereafter mining operations were commenced from 17 May 2016 onwards. As of the date of this Offering Circular, coal block development activities at Chatti-Bariatu and Chatti-Bariatu (South), Kerandari, Dulanga and Talaipalli are in progress. The MoC approved the mining plans for the Chatti-Bariatu, Kerandari, Dulanga and Talaipalli projects and the Issuer has obtained environmental clearance for each of these coal blocks from the MoEF. The Issuer has also obtained both Stage-I and Stage-II forest clearance for the Chatti-Bariatu and Talaipalli and Dulanga blocks from the MoEF, as well as Stage-I forest clearance for the Kerandari block. Furthermore, it has obtained mine-opening permission from the DGMS for the Chatti-Bariatu coal block and the process of appointing mine development operators is under way for all these coal blocks. As of the date of this Offering Circular, exploration activities at the Banai coal block have been completed and a geological report has been received from the Central Mine Planning and Design Institute (CMPDI). In addition, the MoC has given its approval to the Issuer for other developmental activities in this block and the Issuer has awarded a contract to the CMPDI, for preparation of a mining plan and feasibility report. Exploration activities have been completed in the Bhalumuda coal block and a detailed geological report is under finalisation, while exploration activities are under progress in relation to the Mandakini-B coal block. An agency has been appointed to undertake a study to determine the feasibility of coal evacuation from this coal block. In the eighth round of bidding under NELP, the Government awarded the Issuer one oil exploration block with 100.0 per cent. interest along with three other oil exploration blocks in each of which the Issuer held a 10.0 per cent. interest. Subsequent to exploration activities, two blocks where the Issuer held a 10.0 per cent. interest were relinquished to the Government. As of the date of this Offering Circular, exploration activities are in progress in the remaining two blocks. Diversified Businesses through Joint Ventures The Issuer has formed various joint venture companies for providing an array of services to various entities in the power sector. Utility Powertech Limited (UPL) is a joint venture with Reliance Infrastructure Limited, which provides power station maintenance services. NTPC Alstom Power Service Private Limited (NASL) is a joint venture with Alstom Deutschland AG, Germany. NASL undertakes renovation and modernisation of old and under-performing power stations both in India and other countries of the South Asian Association of Regional Co-operation (SAARC). National High Power Test Laboratory Private Limited is a joint venture with the NHPC, Powergrid Corporation of India Limited (PGCIL), Damodar Valley Corporation and the Central Power Research Institute to develop a short-circuit test facility which will provide testing services to power equipment manufacturers in India, allowing for cost and time saving. In 2009, the Issuer formed a joint venture, Energy Efficiency Services Limited (EESL), with PFC, PGCIL and the Rural Electrification Corporation Limited (REC) for carrying out and promoting the business of energy efficiency, energy conservation and climate change, including the manufacture and supply of energy efficiency services and products.

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Equipment Manufacturing through Joint Ventures The Issuer also formed joint venture companies for the manufacture of equipment used in the power business. The details of the companies are as follows: •

NTPC BHEL Power Projects Pvt. Ltd., a joint venture company formed by the Issuer with BHEL in fiscal 2008 for carrying out engineering, procurement and construction (EPC) activities in the power sector, and to engage in the manufacture and supply of equipment for power stations and other infrastructure projects in India and abroad. As of the date of this Offering Circular, the Issuer awaits the approval of the MoP for exit from this joint venture company.



BF-NTPC Energy Systems Limited, a joint venture company formed with Bharat Forge Limited in June 2008 to establish a facility to take up the manufacturing of castings, forgings, fittings and high-pressure piping required for power projects and other industries, and balance of plant (BOP) equipment for the power sector. As of the date of this Offering Circular, the Issuer awaits the approval of the MoP for exit from this joint venture company.



Transformers & Electricals Kerala Limited (TELK), a joint venture company in which the Issuer acquired a 44.6 per cent. stake in 2007, manufactures and repairs high-voltage transformers and associated equipment. As of the date of this Offering Circular, the Issuer awaits the approval of the MoP for exit from this joint venture company.

Fuel Supply Fuel represents the Issuer’s largest expense. Its primary fuels are coal, gas and naphtha. As of 30 September 2016, approximately 87 per cent. of its directly owned or installed capacity is coal-fired and 10 per cent. is gas- or naphtha-fired. Coal The Issuer purchases substantially all of its coal requirements from subsidiaries of CIL and from SCCL. The price of coal is set by the CIL or SCCL, as the case may be. The Issuer had signed long-term CSAs covering units commissioned as of 31 March 2009 at its 15 coal-fired power stations for a capacity of 23,895 MW. In respect of units commissioned after 31 March 2009 or under construction, the Issuer signed CSAs for a total capacity of 9,620 MW. The CSAs remain in force for a period of 20 years from the effective date except for power stations with a remaining life of less than 20 years, in which case the agreement is limited to the life of the power station. The CSAs have a provision for a review at the end of every five years in respect of annual contracted quantities (ACQ) and all other related provisions. Each CSA addresses the quality and quantity of coal supply required for sustained generation. Under all fuel supply agreements, there is a provision to pay a performance incentive to the coal supplier for delivery in excess of 90.0 per cent. of ACQ. In respect of CSAs signed for units commissioned before 31 March 2009, there is a penalty for short supply of levels below 90 per cent. and for units commissioned after 31 March 2009. The Issuer also sources imported coal to meet the domestic coal shortfall. During fiscal 2016, imported coal from previously awarded contracts comprised 5.9 per cent. of the total amount of coal it received for its directly owned power stations. The pricing of coal for these imports is linked to global indices. As of the date of this Offering Circular, the Issuer was also sourcing coal by way of short-term bilateral MoUs with coal companies and through e-auctions conducted by the coal companies.

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Many of the Issuer’s power stations are located in proximity to fuel sources. As of 30 September 2016, 10 out of 18 of its coal-fired power stations, representing around 73.6 per cent. of its directly owned coal-fired capacity, were located in the range of seven to 80 kilometres from the linked coal mines that supply them. The Issuer has its own merry-go-round (MGR) rail system, or belt conveyor system, for transporting coal from the coal mines to the generating power stations. The strategic locations of its coal-fired power stations and its MGR rail system, or belt conveyor system, enables it to reduce supply interruptions and lower transportation cost. Supplies to the other eight power stations are provided through the national railway system for which it received the railway’s consent at the time a linkage was allocated to it. Gas The Issuer mainly sources gas domestically, as per the allocation given to it by the Government. The long-term gas supply agreements with GAIL for the supply of gas for its directly owned gas-fired power stations have all been signed or (as the case maybe) renewed. As per the terms of these agreements, the gas price is regulated under pricing orders issued by the Government from time to time. The remaining requirement of RLNG is sourced from short-term agreements for “spot” RLNG and liquid fuel agreements after obtaining the prior consent of its customers for the off-take of energy generated based on such fuel. The Issuer’s directly owned gas-fired power stations are located along major gas pipelines. Furthermore, the Issuer won the allocation of imported spot RLNG under the Government’s scheme for the utilisation of gas based operation capacity for its Dadri and Auraiya gas stations from October 2015 until March 2016, which in turn will help increase the PLF of these stations. Hydropower The Government has developed a policy to increase hydroelectric capacity to deal with the urgent need for additional peak load capacity, as well as the shortage of domestic fuels and concern for environmental pollution. In line with such policy, the Issuer is setting up hydroelectric power stations. In fiscal 2015, the Issuer commissioned its first hydroelectric power station, with an installed capacity of 800 MW, at Koldam, in Himachal Pradesh. Furthermore, three hydroelectric power projects with an aggregate capacity of 811 MW are under construction. Additionally as of the date of this Offering Circular a small hydroelectric power project of 8 MW is under construction. Furthermore for details on the Lata Tapovan power project please see “Owned projects under construction” section of this Offering Circular. Renewables Solar Energy: In order to ensure long-term competitiveness, mitigation of fuel risks and promotion of sustainable power development, the Issuer is augmenting its capacity, through renewable sources of energy. As of the date of this Offering Circular, a total solar capacity of 360 MW has been installed and put into commercial operation. The Issuer has set a target to achieve an additional capacity of 10,000 MW by way of renewable energy by 2022. Various initiatives, as regards solar energy, include: •

signing an MoU with the government of Andhra Pradesh for a 1,000 MW solar PV project at Andhra Pradesh;

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signing of an MoU with the government of Madhya Pradesh for developing solar PV projects in a phased manner in the state of Madhya Pradesh;



signing of an MoU with the government of Karnataka for setting up of a 1,000 MW capacity solar PV project in a phased manner in the state of Karnataka; and



signing of an MoU with the administration of Andaman & Nicobar Islands for setting up of a 50 MW solar power project with battery energy storage systems at various locations in the Andaman & Nicobar Islands.

Furthermore, in relation to the engineering, procurement and construction mode of contract, the Issuer has published a notice inviting tenders for a total solar capacity of 2,518 MW. In addition, solar projects of a total capacity of 760 MW (as detailed below) have been awarded in the states of Rajasthan, Madhya Pradesh and Andhra Pradesh and solar projects with a total capacity of 1,025 MW are at various stages of tendering by the Issuer. Sl. No.

Name of Project

1 . . . . Ananthapuramu Ultra Mega Solar Park, Andhra Pradesh 2 . . . . Bhadla Solar Park, Phase-II, Jodhpur, Rajasthan 3 . . . . Mandsaur Solar Power Project, Madhya Pradesh

*

Entire 250 MW capacity got commissioned and commercialised.

**

Under various stages of execution.

Capacity (MWp)

250* 260** 250**

Additionally, the Issuer has commissioned a roof-top solar PV project with a total capacity of 450 kWp at its Vindhyachal STPP at Vindhyanagar in Madhya Pradesh. Furthermore, under the National Solar Mission Phase-II, the Government through its Ministry of New and Renewable Energy (MNRE) has designated the Issuer as the implementing agency for selection of project developers for a solar PV project with a total capacity of 15,000 MW that is to be completed in a phased manner in three tranches for a period of five years between 2014 and 2019. As of the date of this Offering Circular, only the guidelines for tranche-I, for a capacity of 3,000 MW, have been issued by the MNRE and the Issuer has published notices inviting tenders for the entire capacity of 3,000 MW. Furthermore, letters of intent for a total solar capacity of 2,650 MW have been issued, which are at various stages of execution, whilst for the remaining capacity of 350 MW, only the tendering process has been initiated. Wind Energy: Various initiatives as regards wind energy include: •

signing of an MoU in October 2014 with MNRE, the National Institute of Wind Energy, the Powergrid, PFC, the IREDA, PTC and GPCL for formation of a joint venture company for the purposes of undertaking the first offshore wind power project in the country along the Gujarat coast; and



publishing of the notices inviting tenders, in September 2016, for selection of wind energy projects in the state of Gujarat for a total capacity of 100 MW.

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Geo-thermal: Initiative as regards geo-thermal energy include: •

signing of an MoU with the Chhattisgarh Renewable Energy Development Agency for the development of the Tattapan Geothermal project in Chhattisgarh.

Nuclear Power The Issuer in January 2011 formed a joint venture company with the Nuclear Power Corporation of India Limited (NPCIL) named “Anushakti Vidyut Nigam Limited” (ASHVINI), in the equity shareholding ratio of 51:49 with an objective of setting up nuclear power projects in India. As of the date of this Offering Circular, the Issuer is awaiting the approval of NPCIL for allotment of work in relation to the development of a 2 x 700 MW pressurised heavy water reactor nuclear power project at Hissar in Haryana. Competition Due to the historical imbalance between demand and supply in the Indian power sector, there has generally been a stable market for power-generation companies in India. As of 31 March 2016, the Issuer was the largest power-generation company in India, with around 61.1 per cent. of the generating capacity in the Central Sector, which itself comprises around 25.6 per cent. of the total Indian generating capacity (Source: CEA). Although no single SEU has more installed capacity than the Issuer, the SEUs and the other state-owned generation companies combined have 34.14 per cent. of the total installed capacity, whereas private power producers account for 40.26 per cent. (Source: CEA). The Issuer is the largest power-generating company in the country with a market share of approximately 15.65 per cent. as of 31 March 2016, in terms of installed capacity and approximately 23.78 per cent. in terms of national generation (Source: CEA). The Maharashtra State Power Generation Company Ltd. (Mahagenco), with an installed capacity of 14,048 MW and a market share of 4.71 per cent., is the second largest entity as of 31 March 2016 (Source: Mahagenco website). As of 31 March 2016, private sector capacity of 120,003 MW comprised 79,995 MW of thermal capacity, 36,888 MW of renewable energy capacity and 3,120 MW of hydroelectric capacity (Source: CEA). Total power generation by private sector thermal power stations for fiscal 2016 was 336.57 billion units (Source: CEA). The total generation of the Issuer’s power stations including the stations operating under its subsidiaries and joint venture companies during the same period, was 263.42 billion units.

Category of Generator

SEBs/Union Territories . . . . . . . . . . . . . . . . . . . . . . . . . . Private Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Central Sector (excluding the Issuer) . . . . . . . . . . . . . . . . Issuer (including subsidiary and joint venture companies) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(Source: CEA)

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. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

Installed Capacity (MW) as of 31 March 2016

% of Total Installed Capacity

101,760 120,003 29,644 46,653 298,060

34.14 40.26 9.95 15.65 100.00

The Electricity Act removed licensing requirements for thermal generators, provided for open access to transmission and distribution networks and removed restrictions on the right to build captive generation power stations. These reforms provide opportunities for increased private sector involvement in power generation. Specifically, non-discriminatory open access regulations of state regulatory commissions, which enable generators to sell directly to bulk consumers, has increased the financial viability of investment in power generation. Competitive Bidding As per the Tariff Policy, with effect from 6 January 2011, all future procurement of generation and transmission services shall be only through tariff-based competitive bidding, except for expansion of existing projects of public sector undertakings (PSUs) and developers of hydroelectric projects which will be subject to conditions specified in the Tariff Policy. Exemptions from the competitive bidding route may be adopted in certain transmission projects. For more details, see “Modes of participation in power projects — Bid Route” in the “Regulations and Policies in India” section of the Offering Circular. Projects with PPAs entered before this date shall have tariffs fixed by the CERC. The Government has also issued the competitive bidding guidelines. Both CPSUs and private sector developers are participating in the tariff-based bidding process for securing power projects, including coal-fired ultra mega power projects (UMPPs). Such competition is likely to further increase in the future. The MoP has issued Standard Bidding Guidelines which envisage two types of bids, i.e. Case-I bids where the location, technology and fuel is not specified by the procurers and the generating company has the freedom to choose the site, technology and fuel for the power plant, and Case-II bids where the projects are location specific and fuel specific. The MoP had issued the revised the Standard Bidding Documents (SBDs) for procurement of power through the competitive bidding route in 2013. The SBDs for long-term power procurement under the design, build, finance, operate and transfer (DBFOT) mode (earlier Case-II mode) were issued in September 2013. The SBDs for power procurement under the design, build, finance, own and operate (DBFOO) mode (earlier Case-I mode) were issued in November 2013. Based on the revised SBDs, various states have initiated bidding processes under the DBFOT as well as the DBFOO mode. In December 2014, the state of Kerala concluded a long procurement of power using the DBFOO mode. Under the DBFOT mode, a two-stage bidding process for two UMPPs, each with a capacity of 4,000 MW (namely Cheyyur UMPP in the state of Tamil Nadu and Odisha UMPP in the state of Odisha) was started in December 2013; however, this was terminated during the second stage of bidding in December 2014. As of the date of this Offering Circular, the Case-II/DBFOT bidding documents are being considered for revision. Competition in hydroelectric power is also likely to increase due to increased opportunities for private investment in the market described above, combined with available hydroelectric potential in India. Funding The Issuer’s funding operations are designed to ensure the Issuer, at all times, has available the financial resources necessary to fund the current and proposed expansion of its generation capacity at the lowest possible funding cost. The Issuer funded its capital expenditures with equity contributions by the Government, debt financing, internally generating funds and equity raised from the public. The Issuer relies on both Rupee and foreign currency-denominated borrowings. These include domestic borrowings in Rupee in the form of loans and bonds and foreign currency-denominated borrowings by way of loans from multilateral and bilateral agencies, export credit for imported equipment, foreign currency bonds and syndicated loans. The Issuer has both secured and unsecured borrowings with secured borrowings being generally Rupee-denominated bonds.

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The Issuer’s joint ventures and subsidiaries raise debt financing for the projects executed by them, without recourse to the Issuer, from domestic financial institutions and banks and these debts are usually secured over the related project assets. The following table sets out the secured loans on a consolidated basis as of the dates indicated: As of 31 March 2016 Amount (Rs. in millions)

Bonds (1) . . . . . . . . . . . . . . . . . . . . . . Loans and Advances from Banks and Financial Institutions . . . . . . . . . . . . Denominated in Foreign Currency (1) . Denominated in Rupees . . . . . . . . . . Other Loans and Advances (2) . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . .

(1)

(%)

As of 31 March 2015 Amount (Rs. in millions)

(%)

....

254,728

57.49

236,178

59.30

. . . . .

3,417 184,913 19 443,077

0.77 41.73 0.01 100.00

2,160 159,900 0 398,238

0.55 40.15 0.00 100.00

. . . . .

. . . . .

. . . . .

Domestic bonds are secured (usually over the assets of a particular power station) in order to comply with the requirements of Indian law.

(2)

Assets taken on lease.

The following table sets out the unsecured loans on a consolidated basis as of the dates indicated: As of 31 March 2016 Amount (Rs. in millions)

Fixed Deposits . . . . . . . . . . . . . . . . . . . Foreign Currency Notes . . . . . . . . . . . . Other Loans and Advances from Banks and Financial Institutions . . . . . . . . . . Denominated in Foreign Currency (1) . . . Denominated in Rupees . . . . . . . . . . . . Other Loans and Advances . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . .

(1)

(%)

As of 31 March 201 5 Amount (Rs. in millions)

(%)

.. ..

0 133,800

0.00 19.76

0 113,742

0.00 18.22

. . . . .

150,398 392,120 911 677,229

22.21 57.90 0.13 100.00

140,778 369,081 681 624,282

22.55 59.12 0.11 100.00

. . . . .

Includes loans guaranteed by the Government of Rs.23,710 million as of 31 March 2016 and Rs.22,118 million as of 31 March 2015.

Risk Management Risk Management Policy To effectively manage the risks associated with its business, the Issuer has taken measures to institutionalise its risk management process by implementing an elaborate enterprise risk management (ERM) framework. As part of the implementation of the ERM framework, a Risk Management Committee (RMC) has been constituted. The RMC, as owner of the ERM framework, has been entrusted with the responsibility of identifying and reviewing risks, and formulating action plans and strategies for risk mitigation on both a short-term and long-term basis. The areas identified by the RMC are regularly monitored through the reporting of key performance indicators of identified risks, and exceptions with respect to risk assessment criteria are reported to the top management. The RMC meets quarterly to deliberate on risk-mitigating strategies.

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Insurance All the directly owned coal-fired and gas-fired power stations of the Issuer are covered by a “Mega Risk” policy, which covers all fire risks together with boiler explosion and machinery breakdown for all plant and machinery, as well as terrorism cover. This “Mega Risk” policy is based on international reinsurance and is distributed among four nationalised insurance companies. The Issuer also maintains a package policy for construction plant and machinery, locomotives and wagons, including terrorism cover. The total coverage under these policies was Rs.2,857,605 million and the present “Mega Risk” policy for the operating power stations is valid up to 31 December 2016. For projects under construction, separate insurance cover is taken by the relevant contractors in line with the conditions specified in the construction contracts. In addition, the Issuer also maintains marine insurance for transit materials. Foreign Exchange While the Issuer’s principal revenues are in Rupees, it has borrowed funds from outside India in foreign currencies, primarily U.S. dollars, Japanese yen and Euros. Principal and interest payments on these borrowings are denominated in the respective foreign currencies. As of 31 March 2016, the Issuer had Rs.287,615 million equivalent of outstanding foreign currency borrowings. Under the 2014-19 Regulations, the Issuer can recover the cost of hedging of foreign currency loans, and exchange rate fluctuations for unhedged interest payment and the repayment of foreign currency loans corresponding to the debt component of capital cost admitted by the CERC. See “Investment Considerations — Risks Relating to India — Depreciation of the Rupee against foreign currencies may have an adverse effect on the Issuer’s results of operations.” Interest Rates Under the current tariff regulations, interest costs are recoverable through the Issuer’s tariffs corresponding to the debt component of capital cost admitted by the CERC. However, the Issuer is subject to risks arising from a variable interest rate on working capital being payable at a higher interest rate than is factored into the tariff. Recovery of interest on working capital is based on norms fixed by the CERC. If interest rates on working capital loans were to rise, the Issuer may be unable to recover a portion of the interest through its tariffs. Work Force As of 31 March 2016, the Issuer had approximately 23,133 employees, comprising 21,633 employees on a standalone basis (including 12,001 executives and 9,632 non-executives) and an additional 1,500 employees at subsidiaries and joint ventures. The Issuer outsources some of its peripheral activities as per the requirements of the plant from time to time by awarding job contracts to various agencies. In fiscal 2016, the Issuer had a low attrition rate in its executive workforce, being approximately 1.05 per cent. on a consolidated basis. Most of the Issuer’s non-executive workforce is unionised. The unions are registered under the Trade Unions Act, 1926 and function at the various projects and power stations. Most of these unions are affiliated with major central trade union federations, namely the All India Trade Union Congress, the Bhartiya Mazdoor Sangh, the Centre of Indian Trade Unions, the Indian National Trade Union Congress and the Hind Mazdoor Sabha. The Issuer considers its relations with its employees to be good. The Issuer has never had any major work stoppage. The Issuer has been consistently rated as one of the best employers or best companies to work for in various surveys. In 2016, the Issuer was ranked first in the “best companies to work for” category in the Indian public sector and the energy, oil and gas sectors, as per a study conducted by the Great Place to Work Institute, India and The Economic Times.

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Wages Pay-scales for all categories of employees were last revised with effect from 1 January 2007, while most allowances were revised with effect from 26 November 2008. In the case of the employees in the workman category, pay and allowances were revised as per government guidelines after arriving at a negotiated settlement with the recognised representative unions of the different projects and power stations. Some employee benefits are linked to a percentage of basic salary. Therefore, any rise in basic salary would increase the amount of employee benefits. The dearness allowance, which is a compensation for increases in the cost of living, is based on the All India Consumer Price Index for Industrial Workers notified by the Government. The dearness allowance was reduced to zero in the revised pay structure on 1 January 2007. As of the date of this Offering Circular, the rate of the dearness allowance was 120.30 per cent. of basic pay, which became effective on 1 October 2016. Benefits Scheme Employees of the Issuer are eligible to choose from a set of perks and allowances within a ceiling of 47.0 per cent. of basic pay. In addition, employees also receive various benefits such as company accommodation, company-leased accommodation or housing rent allowance, access to a medical facility for self and dependants, access to a post-retirement medical facility for self and spouse, access to recreational facilities in company townships, and loans and advances at favourable terms for the purchase of items such as a house, a computer, furnishings, household items and for higher education of children. Employees are entitled to performance-related payments based on the performance of the Issuer. In the case of employees in the executive category, individual performance as assessed through a performance management system is also taken into account. The revision that became effective on 1 January 2007 introduced a pension sum based on a defined contribution pattern. Accordingly, the Issuer contributes 30.0 per cent. of basic pay plus dearness allowance towards superannuation benefits comprising a contributory provident fund, gratuity, post-retirement medical facility and a defined contribution pension. Employees are also entitled to statutory pension benefit under the Employees Pension Scheme 1995 of the Government and a self-contributory pension scheme of the employees. Legal and Regulatory Proceedings The Issuer is involved in a number of legal proceedings in the ordinary course of its business. However, excluding the legal proceedings discussed below, the Issuer is not a party to any proceedings and no proceedings are known by the Issuer to be contemplated by governmental authorities or third parties which, if adversely determined, would have a material adverse effect on the Issuer’s financial condition or results of operations. •

The Issuer has filed a petition before the Delhi High Court contesting certain provisions of the CERC Tariff Regulations. Pending issue of provisional/final tariff orders under the 2014-19 Regulations by the CERC and disposal of the petition, sales figures in the amount of Rs.769,529 million have been provisionally recognised in relation to fiscal 2015 (as compared to Rs.687,040 million for fiscal 2014).



In respect of power stations where the CERC had issued tariff orders applicable from 1 April 2004 to 31 March 2009, the Issuer filed appeals with the Appellate Tribunal for Electricity (APTEL) over some issues on the tariff orders. The APTEL ruled in the Issuer’s favour, directing the CERC to revise the tariff orders. The CERC filed appeals with the Supreme Court on some of the issues decided in favour of the Issuer. The decision of the Supreme Court is pending. Subsequently, the CERC issued revised tariff orders for all the

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stations except one, for the period from 2004 until 2009, considering the judgment of APTEL and subject to the disposal of appeals pending before the Supreme Court. As the appeal of CERC is pending before the Supreme Court, as of 31 March 2015, the Issuer has made provisions for a tariff adjustment of Rs.1,502 million in this regard. Some of the beneficiaries have filed appeals against the tariff orders of the CERC. The amount of contingent liability in this regard is unascertainable. •

The Issuer is defending a number of claims in the Indian courts as a co-defendant of various state governments brought by persons who have had their land compulsorily acquired by the state governments for use by the Issuer. The claimants are disputing the adequacy of the compensation paid in respect of the land acquisitions. The contingent liabilities as of 31 March 2016 in respect of such claims were Rs.3,347.8 million.



The Issuer is defending a number of claims in the certain courts or tribunals brought by contractors hired by the Issuer in respect of capital works. The contingent liabilities as of 31 March 2016 in respect of such claims were Rs.94,922.8 million.



The Issuer is contesting several disputed tax, sales and excise matters before various appellate authorities. The contingent liabilities as of 31 March 2016 in respect of such matters were Rs.87,470.4 million.



The Issuer is contesting a number of claims made by fuel suppliers, various state and central departments, agencies and authorities in respect of various payments such as the price of coal, fees, taxes, water royalties and other matters. The contingent liabilities as of 31 March 2016 in respect of such claims were Rs.30,955.7 million.



The Issuer has commenced legal proceedings against RIL in the High Court for failing to honour a sale and purchase agreement relating to gas supply for the Kawas and Gandhar projects. The Issuer has requested RIL to execute the agreement in accordance with the bid conditions and has sought to restrain RIL from selling gas to any other customer while the matter is pending. As of the date of this Offering Circular, the case is pending.

Intellectual Property NTPC Energy Technology Research Alliance (NETRA) has been granted six patents in the field of fly ash-based detergent and in relation to a novel methodology to determine colloidal silica in raw and demineralised water. NETRA has also filed 20 patent applications in the field of monitoring and diagnostics, carbon adsorptions and fly ash-based products, among others. NETRA has been accorded three copyrights, one for an artificial intelligence-based plant data validation system for plant process improvement, another for transformer insulation analysis software and another for real time calculation of the gross calorific value of coal. Furthermore, as of the date of this Offering Circular, four additional software copyright applications have been filed. Environmental Overview Environment initiatives and regulations in India are governed by the National Environment Policy (NEP) and the Environment Protection Act 1986 (EPA). The Central Pollution Control Board (CPCB) and various State Pollution Control Boards have been entrusted with the responsibility of enforcing the EPA. A well defined procedure has been laid down for the purpose of issuing environment clearance in order to set up a new project with the due involvement of stakeholders as well as for overseeing the environmental performance of operating plants.

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The Issuer adopted a comprehensive written environmental policy and environment management system in 1995. The policy adopts the following principles: •

achieving and maintaining a leading role in the area of environment management in the power sector;



taking environmental requirements into consideration in all business decisions;



continuous adoption of ways and means for environment protection and environment improvement in its business units;



adoption of sound environment management practices; and



compliance with all statutory norms and requirements.

All directly owned operating stations of the Issuer are ISO-14001 EMS (Environmental Management Systems) certified and/or IMS certified (an amalgamation of ISO-9001, ISO 14001 and ISO-18001). Before the expiration of the validity period of certification, a re-certification process must be undertaken to renew the same. As part of the ISO 14001 procedure, the certifying agencies and internal auditors conduct surveillance audits and initiate prompt actions to address audit observations or recommendations. As of the date of this Offering Circular, no major audit observations or recommendations were pending for action. All operating power stations generally comply with environmental norms and, in the event of any deviation, appropriate measures are taken. Most of the operating power stations had valid water and air consent orders as of 30 September 2016 and the consent orders for the remaining operating power stations are at the renewal stage and are expected shortly. Furthermore, the Issuer is required to apply for environmental clearances for the setting up of any power project. All projects under construction have valid environmental clearance from the MoEF and “No Objection Certificates” from the relevant State Pollution Control Boards. Environment Management and Sustainable Development Prior to the commencement of any power project, the Issuer undertakes EIA studies and, based on the various findings, it develops an environment management plan based on its environmental policy. The Issuer has a dedicated environmental engineering and environment management group at its corporate office and environment management group at each power station. The Issuer is committed to complying with all statutory requirements, environmental regulations and quality standards as per the guidelines published by the MoEF and the Government from time to time. Its power stations use boilers and burners designed for better efficiency, and the Issuer uses high efficiency electro-static precipitators in all its power stations to keep suspended particulate matter below the prescribed limits. For monitoring the quality of ambient air on a real-time basis, the advanced Ambient Air Quality Monitoring System has been installed at 22 of the Issuer’s directly owned power stations. The Issuer has developed a long-term plan to reduce its usage of agricultural and homestead lands, and has put in place a rehabilitation and resettlement policy. Under this policy, the Issuer seeks to minimise its land requirements for new power stations. The Issuer also implements policies for affected communities to advance sustainable income, health, education, sanitation and communication.

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The Issuer has adopted a Sustainability Development Policy and a committee of the Board of Directors has been constituted to implement sustainable development activities in relation to the Issuer’s core business. The sustainability development projects of the Issuer cover areas such as energy management and the promotion of renewable energy, waste management, water management, bio-diversity conservation, reduction in air emissions and life cycle environmental impact assessment. Energy Efficiency The Issuer set up the Centre for Power Efficiency and Environmental Protection (CenPEEP), with technical assistance from the United States Agency of International Development and the United States Department of Energy for greenhouse gas reduction. Through the CenPEEP, the Issuer has demonstrated various state-of-the-art technologies and practices for improving efficiency and reliability in local conditions, which it has disseminated at power stations through hands-on training, guidelines and workshops. Approximately 43.60 million tonnes of carbon dioxide emissions are estimated to have been avoided by the NTPC in the last 20 years. CenPEEP has also supported some of the state generating companies by demonstrating best practices and training under the Indo-US bilateral Greenhouse Gas Pollution Prevention Project (GEP Project), the multilateral Asia Pacific Partnership on clean development and climate (APP Programme) and has in the past supported some state utilities under the Indo-US bilateral Partnership to Advance Clean Energy — Deployment (PACE-D) Programme. CenPEEP has been conferred with many international and national awards for its efforts in propagating climate-friendly technologies and commitment to quality and excellence, and received the CTI Technology Award (2002) by CTI-Paris, the US EPA Environmental Projection Award (2003), the India Power Award 2008 by CPU-India and the International Gold Star Quality Award 2009 by BID International, Madrid. CenPEEP has also been conferred with the Times of India Earth Care Award 2012 for climate change initiatives in SAARC countries. Ash Utilisation The Issuer’s coal-based power stations in operation as of 3 November 2009 are required to achieve 100 per cent. ash utilisation progressively as per the provisions of the MoEF’s notification dated 3 November 2009. New power stations and units commissioned after 3 November 2009 must utilise the entire quantity of ash they produce within four years from the date of commissioning. The Government also has interim ash utilisation requirements. Actual ash utilisation has increased from 0.3 million tonnes in fiscal 1992 to 24.3 million tonnes in fiscal 2016 (or 41.35 per cent. of total ash production from the Issuer’s directly owned power stations). The Issuer’s fly ash is utilised for the manufacturing of cement, asbestos products and ready-mix concrete, road embankment construction, ash dyke raising, mine filling, bricks, blocks, tile manufacturing, landfills, etc. The Issuer has also commissioned a mega fly ash brick manufacturing plant with a capacity to produce 100,000 bricks per day at two of its plants. In order to provide dry fly ash to various users, dry ash extraction facilities have been provided at all of the Issuer’s power stations. The Issuer generally supplies ash on a free-of-cost basis to consumers of ash, who use it in the cement, asbestos and ready-mix concrete industry, building products including brick making, land developments, road construction and mine filling, among others. At some stations, the Issuer also provides dry fly ash to users of ash at a price dependent on the market conditions. The Government allows the sale of fly ash to users other than brick manufacturers. However, the proceeds from the sale of fly ash are to be utilised only for the development of infrastructure and promotional activities for ash utilisation. The Government has given directions to mining companies and the construction industry for mandatory use of ash. The Issuer believes that these directions may further increase ash utilisation.

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Afforestation The Issuer undertakes an extensive afforestation initiative, although as of the date of this Offering Circular, it is under no licensing or other regulatory obligation to do so. The Issuer has planted more than 23 million trees in and around its projects. It is also attempting to convert abandoned ash ponds and ash mounds into green areas. The Issuer is the single largest corporate owner of tree wealth in India. Project Management The Issuer has adopted an integrated system for the planning, scheduling, monitoring and control of approved projects under implementation. To co-ordinate and synchronise all the support functions of project management, the Issuer relies on a three-tiered project management system known as the Integrated Project Management Control System (IPMCS), which integrates its engineering management, contract management and construction management control centres. The IPMCS addresses all stages of project implementation, from concept to commissioning. The Issuer has reduced the average implementation time, defined as the period between the award of the boiler, turbine and generator contract and unit commissioning. The Issuer has established a state-of-the-art IT-enabled Project Monitoring Centre (PMC) for the facilitation of fast-track project implementation and the monitoring of key project milestones. It also acts as a decision support system for the Issuer’s management. PMC is integrated across the Issuer’s network as a web-based collaborative system, used to facilitate the consolidation of project-related issues and their resolution. The Issuer has established an integrated Enterprise Resource Planning (ERP) platform to monitor and control critical project activities spread across various functions, such as engineering, contracts, finance and execution. This will help in decision-making support through the timely identification of critical inputs and provide a holistic approach towards project implementation. The ERP platform is expected to deliver certain benefits, such as the focused monitoring of various inputs including drawings, materials and execution with respect to major project milestones. The Issuer has also successfully effected standardisation and bulk ordering in relation to capacities of 660 MW and 800 MW in order to reduce engineering time and thereby reduce project execution time. The Issuer has, as of the date of this Offering Circular, awarded (i) three projects firstly of 1,980 MW units at North Karanpura, secondly of 1,320 MW units at Khargone and thirdly of 1,600 MW units at Telangana, (ii) nine 660 MW units at Solapur and Mouda in Maharashtra, Meja in Uttar Pradesh (a joint venture with UPRVNL) and Nabinagar in Bihar (a joint venture with BSEB) and (iii) nine 800 MW units at Kudgi in Karnataka, Lara in Chhattisgarh, Darlipalli in Odisha and Gadarwara in Madhya Pradesh. Engineering and Technology Energy Technologies The Issuer’s engineering division has been accredited with ISO-9001 certification by the United Kingdom Accreditation Service and the National Accreditation Board of Classification Bodies. It has pioneered the adoption of several new technologies including combined cycle gas-fired power stations, a distributed digital control and management information system (DDCMIS), high-voltage direct current (HVDC) transmissions, sliding pressure operation of steam generators, dry ash extraction and disposal, 765 kV switchyards, performance analysis and diagnostic optimisation (PADO), ash water recirculation, liquid waste management systems and supercritical technology. These technologies have contributed to increased efficiency and greater environmental protection in the Issuer’s operations and have been adopted more widely in the Indian power industry.

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As of the date of this Offering Circular, some of the new technologies that the Issuer was adopting include: •

ultra supercritical parameters with further improved steam parameters for the fleet of 660 MW/800 MW units designed to increase efficiency and lower emissions compared to conventional units;



solar thermal hybrid installation, integrating solar heat into the convention coal-based cycle, at one of the power stations;



high concentration ash slurry disposal and the use of high concentration ash slurry as lining in ash dyke;



wet lime stone-based flue gas de-sulphurisation for its Bongaigaon project and for Stage-V of the Vindyachal Super Thermal Power project (STPP), to contain the emission of sulphur oxide gases;



energy efficient technologies such as high efficiency motors, VFD drives and an energy management system; and



DDCMIS-based plant offsite controls and numerical relays.

The Issuer is also working towards building an indigenous advanced ultra-super technology (310 kg/cm2, 710˚C/720˚C being the steam parameter) under the proposed national mission on clean coal (carbon) technologies through an MoU entered between the Issuer, BHEL and IGCAR. Information Technology The Issuer has invested heavily in information technology designed to help it to better monitor and run its business. It has deployed an ERP system across its organisation to carry out business transactions and to integrate various business processes. The ERP platform also provides a real-time and close view of the performance of the Issuer’s power stations. The ERP system is deployed through a centralised data centre located at Noida with a full disaster recovery centre in Hyderabad. The Issuer also maintains a robust communication network between its sites and corporate office to enable smooth conduct of its business transactions and management of information systems. Research and development The Issuer intends to continue with its applied research to improve the performance of its power stations. It intends to invest up to 1.0 per cent. of its annual profit after tax in research and development initiatives including an investment of 0.5 per cent. in research related to “clean coal” and climate change related research. These research initiatives are outlined further below. NTPC Energy Technology Research Alliance (NETRA) In fiscal 2009, the Issuer established NETRA, a state-of-the-art centre set up to develop technologies in the power sector and provide scientific support to its generating power stations. NETRA’s work is focused in the areas of climate change, waste management, waste heat recovery, new and renewable energies, economical power generation designed to improve efficiency and networked research, all of which are designed to provide a complete spectrum of scientific services to enable the Issuer’s power stations to retain their technological edge. NETRA also provides scientific services to other national and international utilities, and to power stations in the field of condition monitoring, power station health assessment, corrosion control and specialised analysis.

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NETRA is also working on developing technologies for artificial intelligence-based plant performance advisory systems and an expert system for real-time monitoring of steam cycle chemistry, a radio frequency identification (RFID) based fish plate removal detection system, carbon dioxide fixation and utilisation, solar thermal for power and air-conditioning, solar photovoltaic, integrated biodiesel plant, conversion of municipal solid waste to energy, liquid ammonia binary cycle, robotic-based automatic devices for speedier inspections of power station equipment, computational fluid dynamic modelling to improve plant efficiency and reduce auxiliary power consumption and a polarisation-depolarisation current-recovery voltage measurement-based expert system for transformer condition monitoring. NETRA has taken up initiatives for setting up pilot plants such as the 40 TR solar thermal platforms, fixation of carbon dioxide through micro algae and ash mineralisation, the 100 TR FGHR plant through low-grade heat recovery, heat pipe based air pre-heater (APH), pressure swing adsorption (PSA) based CO2 capture technology, etc. NETRA’s laboratories are ISO 17025 accredited and provide high-end scientific services to all the Issuer’s stations as well as many outside stations resulting in improved availability and reliability of stations by providing condition assessment, failure analysis, corrosion control and problem solving. NETRA has been granted two patents in the field of fly ash-based detergent and a novel methodology to determine colloidal silica in raw and demineralised water. NETRA has filed 20 patent applications in the fields of monitoring and diagnostics, carbon adsorptions, fly ash-based products, robotics, variable frequency drive, solar air-conditioning and air-pollution control, among others. Furthermore, NETRA has been accorded two copyrights, one for an artificial intelligence-based plant performance improvement system and the other for transformer insulation analysis software. Corporate Social Responsibility The Issuer follows the global practice of addressing corporate social responsibility (CSR) issues in an integrated multi-stakeholder approach, covering the environmental and social aspects. It is a member of the Global Compact, a United Nations initiative and is committed to following its ten principles in the areas of human rights, labour standards, the environment and anti-corruption. It also submits communications on progress to Global Compact on an annual basis. Corporate social responsibility and sustainability programmes undertaken by the Issuer include activities specified in Schedule VII of the Companies Act 2013 and rules made thereunder and any other activity for the benefit of the community at large. Focus areas of the Issuer’s corporate social responsibility and sustainability activities include health, sanitation, drinking water, education, capacity building, empowerment of women, social infrastructure development, support to physically challenged persons, and activities contributing towards environmental sustainability. The Issuer is committed to contributing to society and discharging its corporate social responsibilities through initiatives that have a positive impact on the society at large, especially in the neighbourhood of its operation, by improving the quality of life of the people, promoting inclusive growth and ensuring environmental sustainability.

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Preference for corporate social responsibility and sustainability activities is given to local areas surrounding the Issuer’s operations. Therefore, the Issuer ensures that the majority of the CSR funds is spent on activities in local areas. However, considering inclusive growth and environmental sustainability and to supplement Governmental efforts, the Issuer’s CSR activities can be taken up anywhere in the country. During fiscals 2015 and 2016, special impetus was applied to the “Swachh Vidyalaya Abhiyan” for the construction of 29,000 toilets in 15,200 Government schools in 17 states and 83 districts across the country. In line with its CSR community development policy, the Issuer has taken up various activities addressing the socio-economic concerns at a national level as well as in the neighbourhood areas of operating power stations. As of the date of this Offering Circular, the Issuer worked in the areas of education, community health, drinking water, sanitation, social infrastructure, empowerment of women, vocational training, environment sustainability, etc. for underprivileged sections of Indian society in underdeveloped areas of the country. It also facilitates distributed generation, which involves the use of non-conventional energy sources to provide electricity to remote and rural areas. In the area of education, the Issuer has provided support for the establishment of engineering colleges and polytechnics. Furthermore, in the area of health, the Issuer has provided support for the improvement in the available infrastructure for hospitals at various locations. The Issuer provides financial support to preserve sites of historical heritage and helps in the construction of community centres, rural roads, culverts, bus stands and lakes in the areas surrounding the location of its plants in addition to providing vocational training to local youths. The Issuer has also set up the NTPC Foundation to help those who are disabled and other marginalised communities. This foundation has set up information and communication technology centres for the disabled, provided management services to a disability rehabilitation centre, and is running directly observable treatment (DOT) centres for tuberculosis patients. Sectoral Support The Issuer has participated in a variety of programmes to further develop and support the power sector in India. It has participated in the MoP’s “Partnership in Excellence Programme” under which it partners with a local state utility to assist in turnaround efforts of under-performing power stations. ITI adoption to improve the quality of India’s skilled workforce The Industrial Training Institutes (ITIs) provide vocational education in India. The Issuer is participating in an initiative of the MoP to upgrade the ITIs. Under this programme, it has “adopted” 18 ITIs and plans to set up eight new ITIs near its project locations. Subsidiaries The Issuer has five subsidiaries, two of which are wholly owned and, in the remaining three, the Issuer has a majority shareholding. Although the current level of activity of the subsidiaries is relatively small in comparison with the operations of the Issuer, they form part of the Issuer’s diversification plans. NTPC Electric Supply Company Limited (NESCL) The Issuer incorporated NESCL, a wholly owned subsidiary, on 21 August 2002 with an objective to make a foray into the business of distribution and supply of electrical energy as a sequel to reforms initiated in the power sector. NESCL’s primary goal was to provide consultancy services for the implementation of turnkey projects under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY Programme), the supply of electricity in a 5km area around some of the Issuer’s power stations, the turnkey execution of power supply arrangements for the coal mining projects of the

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Issuer, the turnkey execution of sub-stations for utilities and project management consultancy projects. On 24 March 2015 the shareholders of NESCL approved the transfer of its existing business of work under the RGGVY and other consultancy works to the Issuer. NESCL’s joint venture company with KINFRA, called KINESCO Power and Utilities Pvt. Ltd., is engaged in the retail distribution of power in industrial parks developed by KINFRA, in SEZs and in other industrial areas. As of the date of this Offering Circular, NESCL has disassociated itself from KINFRA. During fiscal 2016, NESCL posted a profit after tax of Rs.9.05 million on a gross income of Rs.14.04 million. NTPC Vidyut Vyapar Nigam Limited (NVVN) The Issuer’s wholly owned subsidiary NVVN was incorporated on 1 November 2002 to undertake power trading. Its main objective was to develop a wholesale power market by providing fair, transparent, secure and reliable systems for power trading. Since its incorporation, it has traded with major state distribution utilities all over the country and, as of 30 September 2016, NVVN traded 7,725 MUs and transacted business with more than 100 customers, including many state government utilities, private power utilities and captive power generators across the country. NVVN was designated as the “Nodal Agency” for the first phase of the National Solar Mission for 2010-13 for 1,000 MW and for the sale of such power to the distribution utilities after bundling with equivalent power at the disposal of the Government from the Issuer’s coal power stations. As of 30 September 2016, NVVN also traded 2,926 MUs of bundled power under the National Solar Mission. Power purchase agreements with 78 projects for 1,000 MW capacity have been entered into, of which 733 MW of solar PV and thermal capacity has been commissioned by 70 solar power developers (being 533 MW of solar PV and 200 MW of solar thermal capacity) NVVN has also been designated as the nodal agency for cross-border trading with Bangladesh, Bhutan and Nepal. As of 30 September 2016, NVVN traded 1,507 MUs with Bangladesh and Nepal. The business of fly ash and ash products disposal through sales has been transferred to the Issuer with effect from 1 January 2015 in order to enhance better coordination with potential fly ash users. In fiscal 2016, NVVN earned a gross income of Rs.41,226 million and a profit after tax of Rs.503 million. In fiscal 2016, the Issuer received a dividend of Rs.200 million from NVVN. Kanti Bijlee Utpadan Nigam Limited Vaishali Power Generating Company Ltd. was incorporated on 6 September 2006 as a subsidiary of the Issuer, with the Bihar State Power Generation Company Limited (BSPGCL) (the former Bihar State Electricity Board (BSEB) holding a minority share), to acquire and revive the Muzaffarpur Thermal Power Station (2 x 110 MW). The company was renamed “Kanti Bijlee Utpadan Nigam Limited” (KBUNL) on 10 April 2008. The Issuer presently holds 65 per cent. of the equity in KBUNL and the remaining 35 per cent. is held by BSPGCL. The two 110 MW units have been declared commercially operational and, on 31 March 2016, unit four was synchronised. The commercial operation date of the units is expected to be declared in fiscal 2017. During fiscal 2016, KBUNL earned a gross income of Rs.3,776.3 million and incurred a loss of Rs.582.0 million. Bhartiya Rail Bijlee Company Limited (BRBCL) BRBCL was incorporated on 22 November 2007 as a majority-owned subsidiary of the Issuer to engage in the business of the planning, promotion and organisation of the integrated and efficient development of electric power to meet the electric power requirements of the Indian railways. The

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Issuer holds 74 per cent. of the equity of BRBCL and the Ministry of Railways (MoR) holds the remaining 26 per cent. As of the date of this Offering Circular, BRBCL was constructing a coal-fired power station with an installed capacity of 1,000 MW at Nabinagar in the state of Bihar. Power from the project will be supplied to the Indian railways and the state of Bihar. The first unit of a capacity of 250 MW was commissioned on 20 March 2016 and the second unit was commissioned on 2 October 2016. Patratu Vidyut Utpadan Nigam Limited (PVUNL) PVUNL was incorporated on 15 October 2015 and is a 74:26 joint venture of the Issuer and the Jharkhand Bijli Vitran Nigam Limited (JBVNL). The objective of PVUNL is to acquire, establish, operate, maintain, revive, refurbish, renovate and modernise the performance of existing units and further expand the capacity of the Patratu Thermal Power Station, in the Ramgarh district of Jharkhand. By notification dated 1 April 2016, the government of Jharkhand transferred the assets of Patratu Thermal Power Station to Patratu Vidyut Utpadan Nigam Limited. PVUNL has an authorised capital of Rs.5,000 million. Joint Venture Companies As of the date of this Offering Circular, the Issuer had 22 joint venture companies, nine of which are in commercial operation. None are material in the context of the Issuer’s current operations. Utility Powertech Limited (UPL) UPL is a joint venture company incorporated on 23 November 1995 and is a 50:50 joint venture of the Issuer and Reliance Infrastructure Limited. The objective of UPL is to provide basic and value-added services for the sustained growth of power and other infrastructural sector. The gross income and profit after tax of UPL for fiscal 2016 was Rs.6,557.4 million and Rs.202 million, respectively. The Issuer received a dividend of Rs.50 million during fiscal 2016 from UPL. NTPC-SAIL Power Company Private Limited (NSPCL) NSPCL, a 50:50 joint venture company of the Issuer and SAIL, was incorporated on 8 February 1999 for running the captive power stations of SAIL at Durgapur and Rourkela. NSPCL became a joint venture company with effect from 22 March 2001 with the transfer of 50 per cent. of shares in the company to the Issuer. In 2006, Bhilai Electric Supply Company Private Limited (BESCL), another joint venture of the Issuer and SAIL, merged with NSPCL. NSPCL owns and operates the power stations that have a combined installed capacity of 814 MW, of which 314 MW is allocated towards captive use by SAIL’s steel manufacturing facilities located at Durgapur, Rourkela and Bhilai and the remaining 500 MW is allocated to four beneficiaries, namely the Bhilai steel plant, Daman and Diu, Dadra Nagar state utilities, and Chattisgarh State Electricity Board. As of the date of this Offering Circular, NSPCL was processing the addition of new coal-based capacity at Rourkela and Durgapur. In fiscal 2016, NSPCL posted a profit after tax of Rs.2,468.4 million and gross income of Rs.17,158 million. In fiscal 2016, the Issuer received a dividend of Rs.600 million from NSPCL. NTPC Alstom Power Services Private Limited (NASL) NASL is a 50:50 joint venture company between the Issuer and Alstom Power Generation AG. NASL was formed on 27 September 1999 for the purposes of renovating and modernising power stations in India and SAARC countries. NASL is authorised to engage in the business of renovation, modernisation, operations, maintenance and management of power stations and related equipment. On 2 November 2015, General Electric Company acquired the thermal power, renewable power and grid business of NASL. During fiscal 2016, NASL earned a profit after tax of Rs.123.6 million on a gross income of Rs.1,207.4 million. In fiscal 2016, the Issuer received a dividend of Rs.6 million from NASL.

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Ratnagiri Gas and Power Private Limited (RGPPL) As a part of the revival and restructuring of assets of Dabhol Power Company Limited (DPCL), the Issuer, GAIL, various Indian financial institutions and MSEB Holding Co. Ltd. formed a joint venture company named RGPPL on 8 July 2005. As of the date of this Offering Circular, the Issuer had a 25.51 per cent. share in the equity of RGPPL. Projects then engaged in by DPCL were in different stages of completion when the construction works were stopped abruptly due to disputes with the sole off-taker and the projects were abandoned by the owners in June 2001. On 6 October 2005, RGPPL took over the assets of DPCL free of past liabilities and encumbrances through a consent route, under an order of the Bombay High Court. RGPPL’s assets consist of a 1,967 MW combined cycle power station along with an integrated five million-tonne-per-annum liquefied natural gas (LNG) regasification terminal located at Anjanwel, which is located approximately 340 kilometres south of Mumbai. Since 12 September 2014, the plant has been shut down due to a lack of funds. In accordance with the shareholder agreement dated 28 September 2005, due to non-payment of loans and interest, a loan of Rs.8,553.7 million that was due on 30 June 2015 was converted into equity. After conversion, the paid-up share capital of the company as of 30 June 2015 increased to Rs.38,202.7 million and the Issuer’s stake was reduced to 25.51 per cent. Based on the Government scheme for utilisation of gas based operation capacity for fiscals 2016 and 2017, the MoP allocated 570 MW of power from the project to the Indian railways for fiscals 2016 and 2017. As on the date of this Offering Circular, the railways have started power offtake from the projects. Furthermore the project lenders have proposed the demerger of the LNG terminal and power block to improve the financial viability of the company and additional borrowings are required for construction purposes to enable full potential utilisation of the LNG terminal. As per unaudited financials for fiscal 2016, RGPPL earned a gross income of Rs.11,378.1 million and incurred a loss of Rs.10,828.3 million. Transformers & Electricals Kerala Limited (TELK) TELK was incorporated on 19 December 1963 under the Companies Act. TELK is authorised to engage in the manufacture of heavy electrical equipment, such as power transformers of capacity ratings of up to 315 MVA and other electrical and allied activities. In line with the business collaboration and shareholders’ agreement executed on 23 June 2007 between the Issuer, the government of Kerala and TELK, the Issuer acquired 44.6 per cent. of the paid-up capital of TELK from the government of Kerala during the period of 2009 to 2010. In fiscal 2016, TELK earned a gross income of Rs.1,546.4 million and incurred a loss of Rs.100 million. As of the date of this Offering Circular, the Issuer is awaiting the approval of the MoP to dissociate from TELK. Aravali Power Company Private Limited (APCPL) APCPL was incorporated on 21 December 2006 as a 50:25:25 joint venture company between the Issuer, Haryana Power Generation Corporation Limited and Indraprastha Power Generation Company Limited. APCPL is engaged in the operation of 3 x 500 MW Indira Gandhi Super Thermal Power Project (IGSTPP) in the state of Haryana. APCPL has also been granted a transmission licence for the operation of the 400 kV DC Jhajjar-Mundka transmission line. In fiscal 2016, APCPL achieved a gross income of Rs.42,887.4 million and earned profit after tax of Rs.7,010.7 million. NTPC BHEL Power Projects Private Limited (NTPC-BHEL) NTPC-BHEL was incorporated on 28 April 2008 in which the Issuer and BHEL each hold a 50 per cent. interest. NTPC-BHEL is formed to explore, secure and execute EPC contracts for power plants and other infrastructure projects in India and abroad, including plant engineering, project management, quality assurance, quality control, procurement, logistics, site management, erection and commissioning services. In fiscal 2016, NTPC-BHEL achieved a gross income of Rs.8,027.1 million and incurred a loss of Rs.458.6 million. As of the date of this Offering Circular, the Issuer is awaiting the approval of the MoP to disassociate from NTPC-BHEL.

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Energy Efficiency Services Limited (EESL) The joint venture company EESL was formed on 10 December 2009 in which each of the Issuer, PFC and REC holds 31.7 per cent. and PGCIL holds 4.9 per cent equity, respectively. EESL is authorised to engage amongst in the business of carrying on and promoting business of energy efficiency and climate change, including the manufacture and supply of energy efficiency services and products and the provision consultancy services in relation to the same. In fiscal 2016, EESL generated a gross income of Rs.7,156 million and a profit of Rs.356 million. NTPC Tamil Nadu Energy Company Ltd. (NTECL) NTECL is a joint venture between the Issuer and the Tamil Nadu Electricity Board (TNEB) with a 50:50 shareholding. NTECL was incorporated in 2003 for the development and operation of a 1,500 MW power project at Vallur, Tamil Nadu. In fiscal 2016, NTECL earned a total revenue of Rs.26,583.4 million and incurred a loss of Rs.2,748.3 million. Hindustan Urvarak & Rasayan Limited (HURL) The joint venture agreement with CIL to incorporate a joint venture company by the name of “Hindustan Urvarak and Rasayan Limited” was signed on 16 May 2016. The objective of the joint venture company was to undertake a revival of the plants at Gorakhpur and Sindri by setting up urea plants at each of these locations. The equity shareholding in the joint venture company was in the ratio of 50:50 and the joint venture company was incorporated on 15 June 2016. As of the date of this Offering Circular, a supplementary joint venture agreement for the induction of three additional joint venture partners, namely the Indian Oil Corporation Ltd. (IOCL), the Fertiliser Corporation of India Ltd., and Hindustan Fertiliser Corporation Ltd. (HFCL) is currently under consideration. After induction of IOCL, the joint venture company will also undertake a revival of the fertiliser plant of HFCL at Barauni by setting up a urea plant. The table below sets out certain information on the Issuer’s other joint venture companies, each of which is yet to commence commercial operation. See also “Investment Considerations — Cancellation of the allocation of coal mines of the Issuer could adversely affect the Issuer’s business, financial condition and results of operation”.

Name

Date of Incorporation

Nature of Business

Interest held by the Issuer as of 31 March 2016

Meja Urja Nigam 2 April 2008 Private Limited . . . . . . .

Setting up of a power station with an installed capacity of 1,320 MW at Meja, Uttar Pradesh. All significant clearances including MoEF clearance for the project have been obtained and land for the power station has been acquired. Award of main plant equipment has been made and major BoP packages have been placed. Construction work is in progress.

50 per cent.

BF-NTPC Energy 19 June 2008 Systems Limited . . . . . .

Establishment of a facility to take up the manufacturing of castings, forgings, fittings and high-pressure piping required for power projects and other industries, including BoP equipment for the power. The Board has approved the winding up of the joint venture company and the Issuer has sought the approval of the MoP for initiating the winding up process.

49 per cent.

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Name

Date of Incorporation

Nature of Business

Interest held by the Issuer as of 31 March 2016

Nabinagar Power 9 September 2008 Generating Company Private Limited . . . . . . .

Establishment of a power project at New Nabinagar, Bihar with a capacity of 1,980 MW (3 x 660 MW). Construction work is in progress at the site.

National Power 11 December 2008 Exchange Limited . . . . .

Establishment and operation of a 16.67 per cent. national power exchange. In view of the recent changes in market conditions, and the fact that the Issuer’s objective of forming a joint venture has not been met as of the date of this Offering Circular, the Issuer has decided to exit National Power Exchange Ltd. The management of the joint venture company has decided on the voluntary winding-up of the company on the recommendation of the promoters and winding up proceedings are currently in progress.

NTPC-SCCL Global 31 July 2007 Venture Private Limited.

Mining activities of all forms for the supply of fuels to the Issuer and other purchasers. The Issuer has decided to exit from the company and winding up proceedings are currently in progress.

50 per cent.

International Coal 20 May 2009 Ventures Private Limited* . . . . . . . . . . . .

Overseas acquisition and/or operation of coal mines or blocks/companies for securing coking and thermal coal supplies. The Issuer has decided to exit International Coal Ventures Pvt. Ltd. The Issuer received approval to opt out of the joint venture from the MoP on 11 November 2011. International Coal Ventures Pvt. Ltd. is taking action to obtain the requisite approvals.

0.13 per cent.

National High Power 22 May 2009 Test Laboratory Private Limited . . . . . . . . . . . . .

Planning, promoting, organising 21.63 per cent. establishing, constructing, integrating and developing an online high-power test laboratory facility in India and/or abroad for the testing and certification of short circuits and other testing of electrical equipment. The project implementation work is in progress. CPRI has been inducted as the fifth equity partner. The site for setting up the laboratory is located at Bina, Madhya Pradesh. The project implementation work is currently in progress and the project is expected to be commissioned in fiscal 2017.

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50 per cent.

Name

Date of Incorporation

Nature of Business

Interest held by the Issuer as of 31 March 2016

CIL NTPC Urja Private 27 April 2010 Limited . . . . . . . . . . . . .

Development and operation of the Brahmini and Chichro-Patsimal coal blocks with geological reserves of around 2 billion tonnes to meet the requirements of the Issuer’s Farakka and Kahalgaon expansion projects and thereafter, if found feasible, power production will be considered. These blocks have since been unallocated by the Government and assigned to CIL which has been asked to submit the timeframe in which these blocks are expected to start production. As of the date of this Offering Circular, the Issuer is following up with the MoP for the reallocation of these coal blocks to the joint venture company or to the Issuer itself.

50 per cent.

Anushakti Vidhyut 27 January 2011 Nigam Limited . . . . . . .

Setting up nuclear power projects in India. The project site has been finalised and physical possession of land has been completed, a topographical survey has been completed and geotechnical investigation is in progress. As of the date of this Offering Circular, the project location is yet to be finalised. NPCIL’S proposal for allocation of the project to the joint venture company is pending with the Department of Atomic Energy.

49 per cent.

Trincomalee Power 26 September 2011 Company Limited . . . . .

Setting up a 2 x 250 MW coal-based power project at Sampur, in the Trincomalee region of Sri Lanka. The government of Sri Lanka by a letter dated 7 June 2016 has requested the Government to form a joint working group on certain power sector issues and discuss the possibility of changing fuel sources to liquefied natural gas. The government of Sri Lanka has further requested to change the location of the project to Kerawalapitiya (near Colombo). The MoP has nominated members for the joint working group from the Indian side. The first meeting of the joint working group is expected to be held in the second week of November 2016.

50 per cent.

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Name

Date of Incorporation

Nature of Business

Interest held by the Issuer as of 31 March 2016

Pan-Asian Renewables 14 October 2011 Private Limited . . . . . . .

Development of renewable energy projects and establishment of a portfolio of about 500 MW of renewable power generation resources in India over an initial period of three years. The Issuer has decided to exit from the company. The management of the joint venture company has decided on the voluntary winding-up of the company on the recommendation of the promoters and winding up proceedings are currently in progress.

50 per cent.

Bangladesh India 31 October 2012 Friendship Power Company Pvt. Ltd. . . . .

A joint venture company between the Issuer and Bangladesh Power Development Board, which has been incorporated for the purposes of the development, implementation, operation and maintenance of the project in Bangladesh on a build, own and operate basis. As of the date of this Offering Circular, the company was developing a 2 x 660 MW coal-based power project at Khulna, Bangladesh. In relation to this, a contract has been signed with BHEL on 12 July 2016.

50 per cent.

Management The Board In accordance with its articles of association, the Issuer is managed by the Board. The articles of association require the Issuer to have not fewer than four and not more than 20 directors. As of the date of this Offering Circular, the Board comprises 11 directors. Out of these, six are full-time functional directors, including the CMD, two are part-time directors nominated by the Government and three are non-official part-time directors (Independent Directors) appointed by the Government. In accordance with its articles of association, the Issuer is managed by the Board. The articles of association require the Issuer to have not fewer than four and not more than 20 directors. Functional Directors (1)

Mr. Gurdeep Singh

Mr. Gurdeep Singh (51 years) was appointed the Chairman and Managing Director on 4 February 2016.

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Mr. Singh started his career in 1987 as a trainee engineer and has nearly three decades of experience in the power sector. Prior to joining the Issuer, he was the Managing Director of the Gujarat State Electricity Company. In addition, he has worked, among others, for companies like Power-Gen, China Light and Power group, Infrastructure Development Finance Company and Calcutta Electric Supply Corporation. Mr. Singh graduated in Mechanical Engineering from the National Institute of Technology at Kurukshetra and also completed a management education program at the Indian Institute of Management at Ahmedabad, and has also received management and leadership training from various global institutions like the Saïd Business School (Oxford), Darden School of Management (Virginia) USA, Singapore Civil Services College (Singapore) and Indian School of Business (Hyderabad) India. (2)

Mr. A.K. Jha

Mr. A.K. Jha (59 years), Director (Technical) having additional responsibility as Director (Commercial), is a graduate in Mechanical Engineering from the Birsa Institute of Technology Sindri, Ranchi University (1977) and has an LLB degree from Delhi University (1996). He joined NTPC in 1977 as a second batch executive trainee. He was directly associated with NTPC’s flagship project, Singrauli (5 x 200 MW), as part of the construction team. He has rich and varied experience with more than 38 years in NTPC in all areas of power projects, including design and engineering, project planning and monitoring and project construction and management. He has served as the Regional Executive Director (North), where he was responsible for managing the entire portfolio for the northern region, including four generating stations (5,490 MW), two ongoing projects (1,008 MW) and four upcoming new projects (4,460 MW). As Executive Director (Project Planning and Monitoring), he has overseen the planning and monitoring of the entire portfolio of NTPC’s capacity addition programme. He joined the Board of NTPC in July 2012 as a Director (Technical). He is responsible for the concept-to-investment approval of projects, the completion of engineering during the development of a project, engineering support during the operations and maintenance phase of a station and for engineering with regard to the renovation and modernisation of NTPC’s aged power stations, and enhancing the life and efficiency of power plants, in respect of the entire NTPC portfolio, namely thermal, hydro and renewables. With reference to the renewables portfolio, he oversees areas of policy advocacy, business development, project contracting, engineering and commissioning. He is also responsible for research and development through NTPC’s Energy Technology and Research Alliance (NETRA), the induction of environment-friendly technologies like the ultra-sophisticated and advanced sophisticated technologies and undertaking information technology initiatives including enterprise resource planning and environmental engineering. (3)

Mr. Saptarshi Roy

Mr. Saptarshi Roy (56 years), was appointed as Director (Human Resources), on 1 November 2016. He holds a bachelor’s degree in Electrical Engineering and has more than 36 years of experience. He has previously held several different positions at the Issuer, including that of Regional Executive Director (north) and Eastern Regions-I, Executive Director (Corporate Planning) and Head of Human Resources at the Issuer’s project and corporate office. He has the overall responsibility for the activities relating to Human Resource Management of the Issuer.

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(4)

Mr. S. C. Pandey

Mr. S.C. Pandey (59 years), Director (Projects) is a graduate in Engineering in the area of instrumentation from Pune University. He joined NTPC in November 1978 as a third batch executive trainee. He has over 36 years of comprehensive experience in the management of large power projects, including in the areas of engineering, project construction and power plant operation and maintenance. He has a strong background in managing, operating and maintaining some of the largest stations in the country and also has experience of setting up greenfield projects. He was associated with the erection, commissioning and operation of NTPC’s first thermal power project at Singrauli and the first hydro project of the Issuer at Koldam. Mr. Pandey’s experience in the power sector includes ten years of senior management level experience as the ‘Business Unit Head’ for India’s largest project, Vindhyachal, Ramagundam and Simhadri STPP, as the Engineering Head and as a Regional Head of NTPC projects for Eastern Region-II and the Western Region. Mr. Pandey has attended several overseas managerial and leadership programmes and technical training programmes to enhance his strategic leadership qualities, broaden his vision and to gain an insight into the complex national and global business environment. He joined the Board of NTPC on 1 October 2013 as Director (Projects). As Director (Projects), he is responsible for the project planning, execution and implementation of over 24,000 MW projects under construction at 22 different locations across the country, and for the strategic planning of projects involving a capacity of 40,000 MW as well as new projects at various stages. (5)

Mr. Kulamani Biswal

Mr. Kulamani Biswal (55 years), Director (Finance), is a Commerce graduate and a fellow member of the Institute of Cost Accountants of India. He also has a master’s degree in business administration from the New Port University of California, USA, a bachelor’s degree in law and a diploma in financial management. Mr. Biswal has vast experience in finance and over 31 years of experience in the coal and power sectors and in regulatory affairs. Prior to joining NTPC, he was the Director (Finance) at Mahanadi Coalfields Limited (MCL) between October 2010 and December 2013 and has long experience in the areas of supply, distribution, generation and regulatory affairs. He took over the post of Director (Finance) at NTPC on 9 December 2013. Mr. Biswal is responsible for the financial management of the organisation, including financial resource mobilisation from domestic and global sources, ensuring the optimum utilisation of funds, budgetary controls, investment decisions, and the compilation of accounts and audits by statutory and Government auditors. As the Chief Financial Officer, he is also responsible for the establishment of internal control systems and compliance and he plays an active role in the strategic decisions of the Issuer. During his stint as the Chief Financial Officer of the Issuer and as a member of the Board, his major achievements included raising funds from domestic and international markets on competitive terms, rewarding shareholders by issuing bonus debentures (being a first of its kind in India by any public sector undertaking). Under his leadership, the Issuer has embarked upon various other areas of business, including business in relation to solar, coal mining and distribution. He has been appointed the “Nominated Owner” under the provisions of the Mines Act, 1952 for the development, operation and management of coal mines allocated to the Issuer. Mr. Biswal’s leadership has brought the Issuer various plaudits and awards, some of which include: ‘The Best CMA-CFO’ in the public sector undertaking (manufacturing) category by The Institute of Cost Accountants of India; the ‘CFO of the Year’ Award by EPC World, with Ernst & Young as the knowledge partner; the GSBA-Top Rankers Excellence Award 2015; the ‘Financial Pride of India’; and the BT-STAR PSU ‘Director Finance of the Year’ Award (Maharatna and Navratna), among others.

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During his tenure, the Institute of Chartered Accounts of India conferred on the Issuer the award for ‘Excellence in Financial Reporting’ for the year 2013-14 in the infrastructure and construction category for turnover equal to or more than Rs.5,000 million) and the ‘Golden Peacock Global Award’ for excellence in corporate governance in the year 2014 in London. (6)

Mr. Kaushal Kishore Sharma

Mr. Kaushal Kishore Sharma (59 years), Director (Operations), is a graduate in Mechanical Engineering and has a master’s degree in business administration in finance. He has had a career spanning over 40 years providing a significant contribution to the areas of mega-budgets for thermal, hydro power and coal mining projects as a professional manager and as a strategic planner and business leader. He has led several strategic initiatives in the execution of projects which have led to the achievement of operational excellence. Mr. Sharma was the Business Unit Head of NSPCL’s Durgapur station, General Manager of the Farakka Super Thermal Power Station and General Manager of the Koldam Hydro Electric Power Project of the Issuer. He was also the Regional Executive Director (Hydro Region), Executive Director (Coal Mining/Coal Washeries), Regional Executive Director (East Region-II), and Executive Director (Project Planning and Monitoring) of the Issuer, and the Chief Executive Officer of NSPCL. Mr. Sharma, through his multi-disciplinary approach to engineering, operations, management and finance, has brought about a turnaround in NSPCL’s Durgapur station by ramping up the pay load factor from 63 per cent. to 81 per cent. and in respect of the Farakka Super Thermal Power Station from 69 per cent. to 81 per cent. He has played a pivotal role in resolving resettlement and rehabilitation issues in Koldam, getting forest and environmental clearances for the captive mines of the Issuer, evolving business processes for mining development, constructing green field projects, implementing the systems applications and products in data processing software and introducing the enterprise resource planning modules for the online monitoring of projects Mr. Sharma is also an active member of various professional bodies including the Indian Institute of Professional Engineers, All India Management Association, Institution of Engineers, Indo German Energy Forum and CIGRE India. As Director (Operations), Mr. Sharma is responsible for all activities relating to sustained operations, including fuel management, of the Issuer’s thermal, hydro and solar power stations. Part-Time Directors (Government Nominees) (1)

Dr. Pradeep Kumar

Dr. Pradeep Kumar (55 years), an Indian Administrative Service (IAS) Officer of the Kerala cadre, has a bachelor of technology degree in electronics, and holds a master’s degree in business administration and a master’s diploma in public administration and governance and a doctorate in the area of integrated freight transport planning. During a career spanning 29 years as an IAS officer, Mr. Kumar held various administrative positions in the areas of revenue, finance, transport, shipping, inland-water transportation, water resources, irrigation, food and civil supplies, consumer affairs and environment and forests. Prior to joining as the Joint Secretary and Financial Adviser, MoP, he was the Principal Secretary at the Environment and Forest Department of the government of Kerala. (2)

Mr. Aniruddha Kumar

Mr. Aniruddha Kumar (55 years), is a 1987 batch, Indian Revenue Services (IRS) Officer. He completed his graduation in Electrical Engineering with honours from the Aligarh Muslim University in 1984 and secured a bachelor’s degree in law from the Delhi University in 1995.

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He started his career with the Issuer where he worked at the Singrauli Thermal Power Station from 1984 to 1987. Thereafter, he joined the IRS in 1987 and during his career of more than 30 years he has served in various key departments such as the Tax Policy Department of the Ministry of Finance and held various positions in the Income Tax Department of the Ministry of Urban Development between 2005 until 2009. He has also worked at the Ministry of Science and Technology between the years 2009 to 2010 and held the position of Principal Commissioner of Income Tax in Agra. Prior to taking over as Joint Secretary (Thermal), he was the Joint Secretary (Hydro) in the Ministry of Power. Non-Official Part-Time Directors (Independent Directors) (1)

Mr. Rajesh Jain

Mr. Rajesh Jain (49 years), is an Electrical Engineer from the Indian Institute of Technology, Mumbai and holds a master of science degree in electrical engineering from Columbia University, New York. He worked as a technical staff member at NYNEX Corporation, USA for two years before returning to India in 1992. He is the Founder and Managing Director of netCore Solutions Private Limited, one of India’s leading providers of digital real-time communication and marketing solutions to enterprises by way of email and mobile. One of his early ventures, India World Communications, launched in 1995 and was acquired by Satyam Inforway in November 1999 for U.S.$115 million, which was one of Asia’s largest internet deals. He is also the founder and chairman of Emergic Venture Capital. Mr. Rajesh Jain is a well-known figure in the technology industry and is often invited as a speaker at various national and international forums. He has also been featured in cover stories of both TIME and Newsweek magazines. (2)

Dr. Gauri Trivedi

Dr. Gauri Trivedi (56 years), holds a postgraduate degree in political science and an M.Phil degree in Soviet studies from the Jawaharlal Nehru University, in New Delhi. Dr. Trivedi also holds a doctorate in philosophy from the Institute of Social and Economic Change, Bangalore and the Institute of Development Studies, Mysore. Furthermore, she has completed a postgraduate programme in public policy from the Indian Institute of Management, Bangalore. During her career, she has held a number of administrative posts in Karnataka including that of Assistant Commissioner, Joint Director (Commerce and Industry), Chief Secretary/Director (Rural Development and Panchayati Raj), Deputy Commissioner (Excise) and Joint Registrar of Cooperative Societies. She has also, among others, been the General Manager (Handloom and Handicrafts Export Corporation), Managing Director at the Hubli Electricity Supply Company Limited, Managing Director at the Karnataka State Food and Civil Supplies Corporation, Secretary to the Government at the revenue department of the government of Karnataka and Secretary to the Governor of Karnataka. In August 2007, Dr. Gauri Trivedi opted for voluntary retirement from her Government of India post as Vice President at Reliance Retail Ltd. and Director at the Strategic Information and Research Development. She has also been a guest lecturer in a number of reputed institutes in India, teaching subjects on governance, public policy, rural planning and management. Dr. Trivedi is currently a guest lecturer at the Indian Institute of Management, the Sardar Patel Institute of Public Administration and the Centre for Environment Planning and Technology

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University at Ahmedabad. Furthermore she is also a consultant at the All India Institute of Local Self-Government and has previously helped on a project for the World Bank in relation to the subject of street vendors and is currently working on a project for the government of Madhya Pradesh on the subject of beneficial programmes for women. (3)

Mr. Seethapathy Chander

Mr. Seethapathy Chander (62 years), holds a bachelor’s degree in electronics from the Indian Institute of Technology, New Delhi and in addition holds a specialist diploma in the subject of business management in human resources. He started his career as an executive trainee at the Issuer in February 1977 and was responsible for the commissioning of NTPC’s first 400kV installation and for the introduction of new high voltage direct current transmission technology in India. Mr. Chander also previously worked at the Asian Development Bank for nearly 23 years and in this role provided advice among others in the areas of energy policy, planning, portfolio management, investments, information and communication technology, infrastructure development, long-term strategy, private sector operations and public-private partnerships. He has published 63 papers. As of the date of this Offering Circular, he is a senior advisor to the President of the Asian Infrastructure Investment Bank, and an independent director on the boards of Tata Power Solar Company Limited and Tata Power Trading Company Limited. He is also an honorary senior advisor to the Secretary General of the World Energy Council. Sub-Committees of the Board: As of the date of this Offering Circular, the Board has the following sub-committees: a.

Audit Committee;

b.

Stakeholders’ Relationship Committee;

c.

Remuneration Committee for Performance-Related Pay;

d.

Nomination and Remuneration Committee;

e.

Committee on Management Controls;

f.

Project Sub-Committee;

g.

Investment/Contribution Sub-Committee;

h.

Contracts Sub-Committee;

i.

Committee of Functional Directors for Contracts;

j.

Committee for Allotment and Post-Allotment Activities of NTPC’s Securities;

k.

Corporate Social Responsibility and Sustainability Committee;

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l.

Committee for Vigilance Matters;

m.

Exchange Risk Management Committee; and

n.

Risk Management Committee.

As of the date of this Offering Circular, the compositions of the sub-committees of the Board are as below: Audit Committee (i)

Mr. Rajesh Jain, Independent Director;

(ii)

Dr. Pradeep Kumar, Director (Human Resources);

(iii) Dr. (Mrs.) Gauri Trivedi (Independent Director); and (iv) Mr. Seethpathy Chander (Independent Director). The Director (Finance) is a permanent invitee to the audit committee meetings. The constitution, quorum and scope of the Audit Committee is in line with the New Companies Act, the provisions of the SEBI Listing Obligations and Disclosure Requirements of 2015 and the guidelines on corporate governance as issued by the Department of Public Enterprises. Stakeholders’ Relationship Committee (i)

Dr. (Mrs.) Gauri Trivedi (Independent Director);

(ii)

Mr. Saptarshi Roy (Director, Human Resources);

(iii) Mr. K. Biswal (Director, Finance); and (iv) Mr. Rajesh Jain (Independent Director). This committee considers and attempts to mitigate the grievances of the various security holders of the Issuer, including complaints, among others, in relation to the transfer of shares, the non-receipt of balance sheets and the non-receipt of declared dividends etc. Remuneration Committee for Performance-Related Pay (i)

Dr. Pradeep Kumar, Non-Executive Director (Government Nominee);

(ii)

Mr. Seethpathy Chander (Independent Director);

(iii) Dr. (Mrs.) Gauri Trivedi (Independent Director); and (iv) Mr. Rajesh Jain (Independent Director). Director (Human Resources) and Director (Finance) are the permanent invitees to the Meetings of the Remuneration Committee. As the Issuer is a CPSU, the appointment, tenure and remuneration of its directors are decided by the President of India. However, as per the provisions of the guidelines from the Department of Public Enterprises (DPE), a remuneration committee was set up to decide upon the annual bonus, variable pay pool and the Issuer’s policy for the payment of a bonus and its distribution within the prescribed limits of the DPE guidelines.

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Nomination and Remuneration Committee (i)

Mr. Gurdeep Singh, CMD;

(ii)

Mr. Seethpathy Chander (Independent Director);

(iii) Dr. (Mrs.) Gauri Trivedi (Independent Director); and (iv) Mr. Rajesh Jain (Independent Director). This committee identifies persons who are qualified to become Directors and who may be appointed to senior management in accordance with the criteria laid down by the Issuer; recommends to the Board their appointment and removal; undertakes an evaluation of every Director’s performance; formulates criteria for determining the qualifications, positive attributes and level of independence of a Director; recommends policy relating to the remuneration of Directors, key managerial personnel and other employees; and devises a policy for ensuring Board diversity. As the Issuer is a Government company, its Directors (whether Executive or Non-Executive) are appointed by the President of India as per the Articles of Association of the Issuer. The appointment of the functional and Independent Directors is made on the basis of approval by the Appointment Committee of the Cabinet. The remuneration of employees of Central Public Sector Enterprises is decided by the Department of Public Enterprises, and an evaluation of the performance of functional Directors is made by the CMD and Secretary of the relevant administrative ministry as per the Department of Public Enterprises (DPE) Guidelines and that of the Chairman by the Secretary of the administrative ministry and the relevant Minister. An evaluation of the performance of the Board is carried out annually by the MoU Task Force of the DPE, as part of an evaluation of the performance of the Issuer vis-à-vis the targets set out before the commencement of the relevant year. Thus, there may be practical difficulties in implementing the scope of this committee. Committee on Management Controls (i)

Mr. K. Biswal, Director (Director, Finance);

(ii)

Mr. K.K. Sharma (Director, Operations);

(iii) Dr. Pradeep Kumar (Government Nominee Director); and (iv) Mr. Seethpathy Chander (Independent Director). Upon the Issuer being granted enhanced autonomy by the Government under the ‘Maharatna Guidelines’, the committee was constituted to establish a transparent and effective system of internal monitoring. Among other duties, the committee reviews management control systems, any significant deviations in project implementation and construction, and operation and maintenance budgets etc. It also reviews and approves the manuals and the various criteria for the organisation’s various systems from time to time. Project Sub-Committee (i)

Mr. Gurdeep Singh, CMD;

(ii)

Mr. A.K. Jha (Director, Technical);

(iii) Mr. S.C. Pandey (Director, Projects); (iv) Mr. K. Biswal (Director, Finance); (v)

Mr. K.K. Sharma (Director, Operations);

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(vi) Dr. Pradeep Kumar (Government Nominee); (vii) Mr. Aniruddha Kumar (Government Nominee); and (viii) Mr. Rajeh Jain (Independent Director). This committee examines and makes recommendations to the Board on proposals for investment in new or expanding projects and approves the feasibility reports for such new projects. Investment/Contribution Sub-Committee (i)

Mr. Gurdeep Singh, CMD;

(ii)

Mr. K. Biswal (Director, Finance); and

(iii) Mr. K.K. Sharma (Director, Operations). In case of investment of funds and contribution matters, the Director (HR), and, in the case of commercial matters the Director (Commercial), are co-opted to the meetings. This committee approves the deployment of surplus funds as per Government guidelines issued from time to time. It also approves contributions and donations for national, public, benevolent and charitable causes. Contracts Sub-Committee (i)

Mr. Gurdeep Singh, CMD;

(ii)

Mr. A.K. Jha (Director, Technical);

(iii) Mr. S.C. Pandey (Director, Projects); (iv) Mr. K. Biswal (Director, Finance); (v)

Dr. Pradeep Kumar (Government Nominee); and

(vi) Mr. Aniruddha Kumar (Government Nominee). Furthermore, the Director (Operations) is co-opted as an additional member for all matters relating to award of contracts for import of coal. This Committee approves the award of works or purchase contracts and the incurring of commitments of value exceeding Rs.2,500million but not exceeding Rs.5,000 million, consultancy assignments including foreign consultancy assignments exceeding Rs.50 million each, and appointment of sponsor and agents for overseas consultancy assignments involving sponsorship/agency commission exceeding Rs.50 million each. Committee of Functional Directors for Contracts (i)

Mr. Gurdeep Singh (CMD);

(ii)

Mr. A.K. Jha (Director, Technical);

(iii) Mr. Saptarshi Roy (Director, Human Resources); (iv) Mr. S.C. Pandey (Director, Projects);

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(v)

Mr. K. Biswal (Director, Finance); and

(vi) Mr. K.K. Sharma (Director, Operations). The CMD, Director (Finance), Director (Technical) and Director (Projects) for contracts relating to construction projects, and the Director (Operations) for contracts relating to the operation of power stations, as the case may be, constitute the quorum for meetings of this committee. This committee has been constituted for the awarding of works and purchase contracts with a value of at least Rs.1.5 billion, but no more than Rs.2.5 billion. As of the date of this Offering Circular, a position for Director (Commercial) is vacant on the committee. Committee for Allotment and Post-Allotment Activities of NTPC’s Securities (i)

Mr. K. Biswal, Director (Finance)/Mr.K.K. Sharma, Director (Operations);

(ii)

Mr. A.K. Jha, Director (Technical)/Mr. S.C. Pandey, Director (Projects); and

(iii) Mr. Saptarshi Roy (Director, Human Resources). This committee has been constituted to consider and examine the allotment and post-allotment activities of the Issuer’s securities including the allotment and issue of certificates or letters of allotment, the transfer, transmission, re-materialisation and issue of duplicate certificates and the consolidation or splitting of the Issuer’s domestic and foreign securities. Corporate Social Responsibility and Sustainability Committee: (i)

Mr. Gurdeep Singh (CMD);

(ii)

Mr. Saptarshi Roy (Director, Human Resources);

(iii) Mr. K. Biswal (Director, Finance); (iv) Dr. Pradeep Kumar (Government Nominee); and (v)

Dr. (Mrs.) Gauri Trivedi (Independent Director).

This committee is constituted, amongst others, to formulate and recommend to the Board a CSR policy as per Schedule VII of the New Companies Act (as amended from time to time), to recommend the expenditure amount in relation to activities specified in the CSR policy, to monitor the CSR policy of the Issuer from time to time and to deal with any other matter as the Board may delegate from time to time. Committee for Vigilance Matters (i)

Mr. Saptarshi Roy (Director, Human Resources);

(ii)

Dr. (Mrs.) Gauri Trivedi (Independent Director);

(iii) Mr. Rajesh Jain (Independent Director); and (iv) Mr. V. K. Saxena (Chief Vigilance Officer).

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This committee has been constituted to examine all the petitions which are submitted to the Board as an appellate or reviewing authority in terms of the Conduct Discipline and Appeal rules. It also reviews other major complaints as are referred to it from time to time other than complaints registered under the whistleblower mechanism, which is under the purview of the Chief Vigilance Officer. Where the Director (HR) has acted as a disciplinary authority, any other full-time Director, as may be decided by the Chairman and Managing Director on a case-by-case basis, replaces the Director (HR). Exchange Risk Management Committee (i)

Mr. Gurdeep Singh (CMD);

(ii)

Mr. K. Biswal (Director, Finance);

(iii) Dr. Pradeep Kumar, Non-Executive Director (Government Nominee); (iv) Mr. Seethpathy Chander (Independent Director); and (v)

Dr. (Mrs.) Gauri Trivedi (Independent Director).

This committee reviews the Issuer’s foreign currency loan portfolio, approves proposals for hedging, approves amendments or modifications to the exchange risk management policy (including operational procedures), approves new derivative instruments and amends the authorisations given to officers of the Issuer to undertake derivative transactions. As of the date of this Offering Circular, a position for Director (Commercial) is vacant on the committee. Risk Management Committee (i)

Mr. A.K. Jha (Director, Technical);

(ii)

Mr. S.C. Pandey (Director, Projects);

(iii) Mr. K.K. Sharma (Director, Operations); and (iv) Mr. Sharad Anand (Regional Executive Director, Coal Mining). This committee finalises the risk assessment under the Risk Management Framework; monitors and reviews the risk management plan and framework as approved by the Board; informs the Board about the assessed risks and the action required to be or already undertaken for mitigating the risks on a quarterly basis by the Chief Risk Officer; and undertakes any other matter as directed by the Board from time to time. As of the date of this Offering Circular, a position for Executive Director (Corporate Planning) is vacant on the committee.

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THE POWER INDUSTRY IN INDIA Unless otherwise indicated, all financial and statistical data relating to the power industry in India in the following discussion is derived from the MoP’s Annual Report ( 2015-2016), the Central Electricity Authority’s Executive Summary March 2016 & April 2016, the Central Electricity Authority’s Monthly Generation Report March 2016, the Central Electricity Authority’s Monthly All India Generation Capacity Report of March 2016, the Twelfth Plan published by the Planning Commission or other publicly available documents prepared by various sources including the RBI and has not been prepared or independently verified by the Issuer, the Arranger, the Dealers or the Trustee. The data may have been reclassified by the Issuer for the purpose of presentation. Unless otherwise indicated, the data presented excludes captive capacity and generation. The term “units” as used herein refers to kilowatt hours Overview of the Indian Economy India is the third largest economy in the world after the United States of America and China in purchasing power parity terms (Source: IMF, World Economic Outlook April 2015). The Indian economy grew at a rate of 8.6 per cent. and 8.9 per cent., respectively, during fiscal 2010 and fiscal 2011 , but the growth rate has slowed during fiscal 2012, 2013, 2014, 2015 and 2016 to 6.7 per cent., 5.6 per cent., 6.6 per cent. 7.2 per cent., and 7.3 per cent. respectively. (Source: Economic Survey 2015-16, Government of India). However, India was one of the fastest growing economies globally during the last decade, with an average growth rate estimated at 7.4 per cent. per annum (Source: Economic Survey 2014-15, Government of India). The Indian economy is likely to grow in excess of 7.0 per cent. in fiscal 2017 (Source: Economic Survey 2015-16, Government of India). The Government has identified infrastructure inadequacy as a significant constraint in realising India’s economic growth objectives. In particular, the power sector has been recognised by the Government as a key infrastructure to sustain economic growth. Under the Twelfth Plan, the financing requirements of the power sector is estimated at U.S.$290.83 billion. Of the total expected investment of Rs.18,203 billion in the power sector, Rs.4,738 billion (26.03 per cent.) is expected to be invested for the central sector, Rs.3,525 billion (19.36 per cent.) for the state sector and Rs.9,940 billion (54.61 per cent.) for the private sector. This includes a Rs.3,186 billion investment in renewable energy. As per the Twelfth Plan, the estimated funding requirements for the power sector are as follows:

Segment

Central sector State sector . . Private sector . Total . . . . . . .

. . . .

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Funds Required (Rs. Billion)

Funds Required (U.S.$ Billion)*

4,738 3,525 9,940 18,203

71.43 53.14 149.85 274.42

Source: Twelfth Plan published by the Planning Commission. *

U.S. dollar conversions have been made using the exchange rate of U.S.$1.00 = Rs.66.3329 as of 31 March 2016, based on the reference rate of the RBI prevailing at that date.

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Organisation of the Power Industry The following diagram depicts, in schematic form, the structure of the Indian power industry:

Power Trading Companies / Power Exchange

Keys to the diagram CPSUs IPPs CTU

Central Public Sector Undertakings Independent Power Producers Central Transmission Utility

Overview of the Power Industry India has total power generation of 306,358 MW as of 30 September 2016. The power industry in India has been characterised by energy shortages in the past which is now reducing. It is estimated that in fiscal 2016 there was a shortage of 2.16 per cent. in terms of total energy requirements and 3.24 per cent. in terms of peak demand requirements. The total energy shortage during this period was 23,557.0 million units. The low per capita consumption of electric power in India compared to the world average presents a significant potential for sustainable growth in the demand for electric power in India. Although power generation capacity has increased substantially in recent years, it has not kept pace with the continued growth of the Indian economy, despite very low per capita electricity consumption. India has one of the lowest electricity consumption levels in the world, at 1,075 units per capita in 2015-16 (provisional), due in part to unreliable supply and inadequate distribution networks and poor financial health of the discoms.

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To address the persistent shortages, the Government has taken significant action to restructure the industry, attract investment and plan for fast track capacity addition through enabling policy initiatives. These included measures such as restructuring the SEBs to improve their financial condition, and regulatory and policy intervention such as the Electricity Act, the National Electricity Policy, the Tariff Policy, the Tariff Based Bidding Guidelines 2005 and the New Hydro Policy 2008, among others. The Government has also liberalised policies relating to the transmission and distribution sectors and introduced various schemes including but not limited to like that of UDAY. History At the time of independence in 1947, India had a meagre power generating capacity of 1,362 MW which has since increased to 306,358 MW as of 30 September 2016. After independence, electricity was made subject to the concurrent jurisdiction of the state and central governments, although Parliament was given the ability to exercise pre-emptive power. The Electricity (Supply) Act 1948 led to the creation of the SEBs. The SEBs were state government agencies with sole responsibility for the generation, transmission and distribution of electricity within each state. Many of the SEBs have since been unbundled into state utilities for generation, transmission and distribution. As of 30 September 2016, the SEBs and the state utilities own or control approximately 33 per cent. of India’s total generating capacity and have substantial control of most of the distribution assets. The MoP is primarily responsible for the development of the power sector in the country. The Government has made a series of investments to develop the power sector in India, to supplement the efforts of the states. In 1975, the Government created the Issuer (known then as National Thermal Power Corporation Ltd.) and NHPC Ltd. (known then as National Hydro Electric Power Corporation Ltd) to establish thermal and hydro generating plants respectively and to install associated inter-regional transmission systems. In the same year, the Government established the CEA in its present form to develop a uniform national power policy. Later, North Eastern Electric Power Corporation, Satluj Jal Vidyut Nigam Limited (formerly Nathpa Jhakri Power Corporation Limited) and THDC Limited (formerly known as Tehri Hydro Development Corporation Limited) were incorporated as hydro power generating companies in the central sector. In 1992, the Government established the central entity known today as PGCIL to construct, operate and maintain inter-state and inter-regional transmission systems. These entities are collectively referred to as the CPSUs and are directly accountable to the MoP. The MoP also controls Power Finance Corporation Ltd. and Rural Electrification Corporation Ltd., both of which are intended to help channel investment into the power sector. PGCIL, NTPC and PFC promoted India’s first power trading company, Power Trading Corporation Ltd., in 1999, to allow surplus power supplies to be efficiently traded to utilities with deficit power supplies. To supplement public sector investment, the Government took steps in 1991 to attract private investment to the power industry. The Government permitted 100 per cent. foreign ownership of power generating assets and provided for assured returns, a five-year tax holiday and low equity requirements. Some private generators were also furnished with counter-guarantees against non-payment of dues by SEBs. Through successive five year plans, the Government implemented a major expansion of generating assets. From 1982, when the Issuer’s first project was commissioned, to March 2016, India’s total installed capacity increased from 35,781 MW to 302,088 MW, representing a compound annual growth rate of 6.28 per cent. In addition, captive generation capacity at the end of fiscal 2016 was approximately 40,726 MW. The transmission and distribution network has been expanded so as to keep pace with the capacity expansion plans.

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Industry Developments In recent years, the Government has taken significant steps to restructure the industry, attract investment and plan for fast track capacity addition through new policy initiatives. These actions have included the restructuring of the SEBs referred to above, and liberalisation of policies relating to the transmission and distribution sectors. The power sector of India is governed by the Electricity Act 2003. The Electricity Act 2003 consolidated all the existing laws governing the industry at that time and introduced several initiatives in this sector. Among other things, it created a programme for restructuring the SEBs, provided provisions for the introduction of open access and greater competition, encouraged the growth of the renewable energy sector and aimed to protect the interests of the consumers. Apart from the Electricity Act 2003, several new Policies and Reform programmes have been introduced in the sector by the Government with the objectives of addressing the long-pending issues of the sector and creating an enabling environment for growth in the sector. Some of the important measures have been described in brief below: In order to incentivise the states to take concrete measures to restructure their power operations, the Government introduced the Accelerated Power Development and Reforms Programme (APDRP). APDRP was launched in fiscal 2003 to be implemented in the Tenth Plan as additional central assistance to the states for strengthening and upgrading sub-transmission and distribution systems of high-density load centres such as towns and industrial areas. The main objectives of the programme were to reduce aggregate technical and commercial loss and to improve quality and reliability of supply. The Government subsequently introduced the “Restructured APDRP” which requires actual, demonstrable performance in terms of sustained loss reduction, establishment of reliable and automated systems for sustained collection of accurate base line data, and the adoption of information technology in the areas of energy accounting before taking up the regular distribution strengthening projects. The Government also implemented the OTSS, which settled the outstanding dues of the SEBs payable to the CPSUs, and set up a system to facilitate the full payment of subsequent billings. The OTSS had the provision of a Tripartite Agreement, under which outstanding payables to the CPSUs, including the Issuer, were securitised in the form of tax-free bonds issued by the RBI on behalf of the state governments. In addition, the Tripartite Agreement provided for the establishment of LCs by SEBs equal to 105 per cent. of average monthly billing for ensuring prompt payment of energy bills. These agreements also provide that in case of any default in payment of current dues by any state utility, the outstanding dues can be deducted from the state’s RBI account and paid to the Issuer. In October 2012, a scheme for the restructuring of state-owned distribution companies called the “Financial Restructuring of State Distribution Companies” was introduced by the MoP. The scheme was applicable to all state-owned distribution companies which had accumulated losses and which were facing difficulty in financing operational losses. The objective of the proposed scheme was to enable the state governments and the distribution companies to implement a strategy for the financial rehabilitation of the distribution companies in the state power sector which will be enabled by the lenders agreeing to restructure or reschedule the existing short-term debt. The main features of the scheme were set out below: •

50 per cent. of the outstanding short-term liabilities (STL) up to 31 March 2012 was to be taken over by the state government in the next two to five years and to be converted into bonds to be issued by distribution companies to participating lenders, backed by a state government guarantee. The remaining 50 per cent. of STL was to be restructured by rescheduling loans and imposing a moratorium on the repayment of principal, with the application of the most reasonable terms for the restructuring to ensure its viability.

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The restructuring or rescheduling of a loan was to be accompanied by measurable action by the distribution companies and the state government to improve the operational performance of the distribution utilities. These measures included financial restructuring, tariff setting and revenue realisation, subsidy, metering, audit and accounts and monitoring.



The Government was to provide an incentive through a grant equal to the value of the additional energy saved by way of accelerated aggregate technical and commercial loss reduction beyond the loss trajectory specified under the “Restructured Accelerated Power Development and Reform Programme”, and capital reimbursement support of 25 per cent. of the principal repayment by the state government on the liability assumed by the state government under the scheme.

The scheme was made optional and expected to improve financial discipline in the distribution sector in the states, provide a commercial orientation to the functioning of the distribution companies and place responsibility on state governments to ensure a steady flow of revenue to the distribution companies by improving their operating efficiency. Additionally, the Government introduced the UDAY scheme on 1 November 2015. In December 2014, the Government launched the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) scheme to promote rural electrification. The DDUGJY consolidates the existing provisions of the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) and the scheme for providing electricity distribution infrastructure in the rural areas. The scheme covers works relating to feeder separation, strengthening of sub-transmission and distribution systems including metering of distribution transformers, feeders, consumers and rural electrification. All discoms, including private sector discoms and state power departments, are eligible for financial assistance under the scheme. As of the date of this Offering Circular, under the DDUGJY scheme, the Government has sanctioned 5,236 projects for electrification of 128,432 un-electrified villages, has provided intensive electrification to 655,247 partially electrified villages and arranged for free electricity connections for 42.0 million people living below the poverty line, in various rural villages in India. Furthermore, in November, 2015, in order to facilitate the revival of power distribution companies (which have been struggling with losses and mounting debt), the Government launched the Ujwal Discom Assurance Yojana (UDAY), a comprehensive power sector reform scheme which aims to provide financial assistance and various solutions for the revival of power distribution companies. UDAY empowers power distribution companies with the opportunity to break even in the next two to three years by way of the following four initiatives: (i)

improving operational efficiencies of power distribution companies;

(ii)

reduction of the cost of power;

(iii) reduction in interest cost of the power distribution companies; and (iv) enforcing financial discipline on the power distribution companies by reducing the financial burden on such companies. Some of the key features of the scheme are as follows: •

the state governments shall take more than 75 per cent. of the debt, as was incurred by the power distribution companies as of 30 September 2015, over a period of two years. The first 50 per cent. of debt shall be taken over by the state government in fiscal 2016 and the remaining 25 per cent. of the debt would be taken over in fiscal 2017;



the Government will not take into account the debt taken over by the state government in accordance with the above provision while calculating the fiscal deficit of the respective state in fiscals 2016 and 2017;

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the states will issue non-statutory liquidity ratio including state development loan bonds into the market or directly to the respective banks and financial institutions holding the debt of the power distribution companies, as may be appropriate;



the debt that is not taken over by the state government shall be converted by the banks and financial institutions into loans or bonds with an interest rate of not more than the bank’s base rate plus 0.1 per cent. Alternately, this debt may be fully or partly issued by the power distribution companies as state guaranteed power distribution bonds at the prevailing market rates which shall be equal to or less than the bank base rate plus 0.1 per cent.; and



the state government shall take over the future losses of the power distribution companies in a graded manner and shall fund them.

UDAY provides an opportunity to power distribution companies to break-even in two to three years through a reduction in interest burden, a reduction in the cost of power, cutting down on aggregate technical and commercial losses and by enhancing operational efficiency. This scheme has the potential to save the Government Rs.1,807 billion to by fiscal 2019, by way of efficiency improvements. Furthermore, the power distribution companies would benefit from improving their credit ratings as a result of financial and operational efficiencies which, in turn, would help to raise cheaper funds for future capital investments. As of October 2016, 16 states namely the states of Jammu and Kashmir, Punjab, Haryana, Uttarakhand, Uttar Pradesh, Rajasthan, Madhya Pradesh, Chhattisgarh, Gujarat, Bihar, Jharkhand, Karnataka, Goa, Manipur, Andhra Pradesh and Pondicherry have already signed an MoU with the Government for participation in this scheme. As of the date of this Offering Circular, six more states including the states of Maharashtra, Kerala, Himachal Pradesh, Telengana, Odisha and Assam have given their in-principle approval for participation in the scheme. Furthermore, bonds amounting to Rs.1.68 lakh crore have already been issued and successfully subscribed to, resulting in substantial savings in interest costs. (Source: Ministry of Power) In January 2016, the provisions of the Tariff Policy 2006 (Tariff Policy) were amended to align it with the current situation of the power sector and for introducing some critical reform initiatives. Some of the important provisions of the revised Tariff Policy are as follows: •

It has mandated that all future procurement of power by distribution companies will be through the process of competitive bidding, except for the expansion of projects. The limit of expansion capacity has been restricted to a single time addition of 100 per cent. capacity for private developers. However, states have been allowed to set up plants on a regulated tariff with up to 35 per cent. of power procured by distribution companies. Hydro projects have been exempted from competitive bidding until the year 2022. For the transmission sector, it has been decided that all transmission projects are to be developed through the process of competitive bidding, except for situations where certain exemptions would be allowed based on a case-by-case analysis of the particular situation.



To encourage the growth of the renewable energy sector, several provisions have been introduced. It has been mandated that 8 per cent. of the electricity consumption excluding hydro power shall be from solar energy by the year 2022. Generating companies setting up new coal-based stations after a certain date are required to establish an equivalent renewable energy-based capacity. Existing generators are also allowed to set up renewable projects and combine them with conventional capacity. It has also been provided that power

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from plants completing useful life or where power purchase agreements have expired can be combined with renewable generating plants. Furthermore, there will be no inter-state transmission charges and losses until such time as may be notified by the Government for solar and wind projects. •

With an objective to allow for the utilisation of the efficient generation capacity in the country, the sale of un-requisitioned power has been allowed with the sharing of benefits with the original beneficiaries in the ratio of 50:50;



The Central Electricity Regulatory Commission (CERC) has been given the power to introduce norms for ancillary services necessary for maintaining power quality, reliability and security of the grid, including the method of sharing charges. In light of this, the CERC has issued ancillary services regulations and the implementation of same began in April 2016; and



Production of a mandate for thermal power plants to use water from sewage treatment plants located within a radius of 50 km.

The Government, in June 2016, began a policy for introducing flexibility in the utilisation of domestic coal among the coal-generating stations of the country with the objective of reducing the cost of power. As per this policy, all the coal linkages for individual thermal stations of a specific state will be assigned to the name of the state, and all the coal linkages for the central generating stations will be assigned to the company owning these stations to enable the efficient utilisation of coal among the stations. The annual contracted quantity (ACQ) of the individual linkages will be aggregated as a single ACQ for each state or the company owning the central generating stations. The policy also provides that there shall be flexibility in the use of coal among the generating stations of state-owned utilities, plants of other state utilities, plants of the central generating companies and independent private producers. Demand and Supply Demand for energy grows in tandem with the growth of the economy. This can be seen from the following table, which shows the growth in real GDP from fiscal 2013 through fiscal 2016 and the growth in demand for energy in the same period. Real GDP Growth and Growth in Demand for Energy

Fiscal Year

2013 2014 2015 2016

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GDP Growth

Growth in Demand for Energy

5.6% 6.6% 7.2% 7.6%

6.5% 0.4% 6.5% 4.4%

Source: CEA, Executive Summary and Economics Survey 2015-2016, Base Year 2011-2012, MOSP. CEA, Power Sector Executive Summaries.

Demand-Supply Overview The Indian power sector has historically been characterised by energy shortages , as the demand for electricity has consistently exceeded the supply. However, the demand-supply gap has reduced in

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the last three years, as may be seen from the table below. In fiscal 2016, the peak deficit was estimated to be 3.2 per cent. and the total energy requirement deficit was estimated to be 2.1 per cent. The following table sets forth the peak and total shortages of power in India from fiscal 2013 to fiscal 2016: Peak Demand Fiscal Year

2013 . 2014 . 2015 . 2016 .

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Sources:

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Energy Requirement

Demand

Availability

Deficit

Requirement Availability

(MW)

(MW)

(MW)

%

135,453 135,918 148,166 153,366

123,294 129,815 141,160 148,463

12,159 6,103 7,006 4,903

9.0 4.5 4.7 3.2

(MU)

(MU)

998,114 911,209 1,002,257 959,829 1,068,943 1,030,800 1,114,408 1,090,850

Deficit (MU)

%

86,905 42,428 38,143 23,558

8.7 4.2 3.6 2.1

CEA Executive Summary April 2013, 2014, 2015 and 2016.

Demand is expected to continue to rise in future years, with a significant demand-supply gap continuing to exist. Consumption The end users of electricity power can be broadly classified into industrial, agricultural, domestic consumers, commercial consumers, traction and railway among others. These consumers represented approximately 44.11 per cent., 17.81 per cent., 22.93 per cent. and 8.72 per cent., 1.71 per cent. and 5.18 per cent., respectively, of power consumption measured by sales in fiscal 2015 (Source: Ministry of Statistics and Programme Implementation Energy Statistics 2016). India has historically had very low per capita power consumption. The per capita consumption of power in India has increased from 592 units in fiscal 2006 to 1,075 units in fiscal 2016, at a compounded annual growth rate of 6.15 per cent., but India still has one of the lowest per capita power consumptions compared to the major world economies. Per Capita Electricity Consumption in Selected Countries and World Average Per Capita Electricity Consumption 2014 (kWh)

Country

India . . . . . . . China . . . . . . Egypt . . . . . . Brazil . . . . . . U.K . . . . . . . Australia . . . . U.S.A. . . . . . World average

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Source: IEA Key World Energy Statistics 2015/CEA Executive Summary. *

Fiscal 2016 (Provisional).

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1,075* 3,798 1,812 2,583 5,409 10,067 12,987 3,026

Demand Projections of Energy and Peak Power As per the Government’s Integrated Energy Policy Report of the Expert Committee (August 2006), India will have a total energy requirement of 1,980 billion units (at 8.0 per cent. GDP growth) and, to meet the energy demand, the corresponding installed generating capacity required would be about 425,000 MW in fiscal 2022. Please refer to the table below for details on the total projected energy, peak power requirement and the installed capacity required.

Year

Projected Peak Demand (GW)

Installed Capacity Required (GW)

@ GDP Growth Rate

GDP Growth Rate

Billion kWh Total Energy Requirement @ GDP Growth Rate 8%

Energy Required at Bus Bar @ GDP Growth Rate

9%

8%

9%

8%

9%

2016-17 . . . 1,524 1,687 1,425 1,577 226 250 2021-22 . . . 2,118 2,438 1,980 2,280 323 372 2026-27 . . . 2,866 3,423 2,680 3,201 437 522 2031-32 . . . 3,880 4,806 3,628 4,493 592 733 Energy demand at bus bar is estimated at 6.5 per cent. auxiliary consumption.

Source:

8%

9%

306 425 575 778

337 488 685 960

Government of India Integrated Energy Policy, Report of the Expert Committee (August 2006).

Installed Capacity As of 31 March 2016, India’s power system had an installed generation capacity of approximately 298,056 MW. Generation capacity is divided into the state sector, the central sector and the private sector. The private sector represents the largest share of power generation capacity. Distribution of Generation Capacity by Sector as of March 2016 Total Installed Capacity:

State sector . . Central sector Private sector Total . . . . . .

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MW

%

101,761 76,297 120,002 298,060

34.1 25.6 40.3 100

Source: CEA Monthly All India Generation Capacity Report — March 2016.

In addition, captive generation capacity was approximately 40,726 MW as of March 2016. Thermal power plants account for most of India’s current installed generation capacity. Thermal plants are powered by coal, gas, naphtha or oil. These plants accounted for 70.68 per cent. of the total power capacity in India as of March 2016. Hydroelectric stations accounted for 14.35 per cent. and others (including nuclear stations and renewable energy) accounted for 14.96 per cent.

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Installed Generation Capacity in MW by Sector and Fuel Type as of 31 March 2015 Type/Sector

Thermal . . Hydro . . . . Nuclear . . . Renewables Total . . . .

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Central

State

Private

Total

58,946 11,571 5,780 0 76,297

71,735 28,092 0 1,934 1,01,761

79,995 3,120 0 36,887 1,20,002

2,10,676 42,783 5,780 38,821 2,98,060

Source: CEA Monthly All India Generation Capacity Report — March 2016.

Capacity Utilisation Capacity utilisation in the Indian power sector is measured by the PLF of generating plants. The following table shows PLF data in the sectors listed, as of the dates indicated: Average PLF for Coal-Fired Plants in India Fiscal Year

2011 2012 2013 2014 2015 2016

Source:

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Central

State

Private

Overall

85.1 82.1 79.2 75.6 73.5 72.3

66.7 68.0 65.6 59.4 60.1 55.58

76.7 76.2 64.1 61.7 65.1 60.05

75.1 73.3 69.9 65.5 64.1 62.01

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CEA Monthly Generation Report, March 2016.

PLF varies significantly across ownership segments. Coal-fired generating plants owned by the SEBs operated at an average PLF of around 55.58 per cent. in fiscal 2016, while those owned by private utility companies operated at an average PLF of 60.05 per cent. However, the average PLF of CPSUs including the Issuer was 72.30 per cent. during fiscal 2016. Future Capacity Additions As per the Twelfth Plan published by the formerly known as Planning Commission, India aims to add more than 118,537 MW of generation capacity, including a capacity addition of 30,000 MW of renewable energy by 2017. A sector-wise break-up of the capacity addition programme for non-renewable energy is described below: Capacity Addition Programme by Type and Sector, Twelfth Plan (in MW) Type/Sector

Thermal Hydro . . Nuclear . Total . .

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Central

State

Private

Total

14,878 6,004 5,300 26,182

13,922 1,608 0 15,530

43,540 3,285 0 46,825

72,340 10,897 5,300 88,537

Twelfth Plan published by the Planning Commission, India

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Development of a Renewable Energy Generation Capacity It is expected that renewable energy capacity will increase in India over the next several years. The aggregate generation capacity from renewable energy sources as of 31 March 2016 is approximately 42,849 MW, or 14.1 per cent. of India’s total installed capacity. According to the MNRE, Government of India is aiming to achieve renewable energy capacity additions by 2022 of approximately 175,000 MW comprising of 100,000 MW solar, 60,000 MW wind, 10,000 MW biomass power and 5,000 MW small hydro. To achieve this target, the Government introduced several policy initiatives. As part of the National Solar Mission, the Issuer has been given the responsibility of developing solar projects for a total capacity of 15,000 MW. The revised Tariff Policy, encourages usage of renewable energy by mandating, among others, that 8 per cent. of the total power procurement by distribution companies is to be sourced from solar sources by the year 2022. Transmission and Distribution In India, the transmission and distribution is a three-tier structure comprising regional grids, state grids and distribution networks. The distribution networks and the state grids are owned and operated by distribution licensees, SEBs or state governments through SEBs. Most of the inter-state transmission links are owned and operated by PGCIL. In order to facilitate the transfer of power between neighbouring states, state grids are interconnected to form regional grids. The regional grids facilitate transfers of power from power surplus states to power deficit states. The Government gradually integrated the regional grids into a national grid to enable inter-regional power transfers, to optimise the country’s national generating capacity. Inter-regional power transmission capacity at the end of the Thirteenth Plan is expected to be 91,250 MW. The Government has permitted private investment in the transmission sector, and it has encouraged foreign direct investment in this sector. Power Trading The Electricity Act recognised power trading as a distinct activity from generation, transmission and distribution. Power trading involves the exchange of power from utilities with surpluses to utilities with deficits. Seasonal diversity in generation and demand, as well as the concentration of power generation facilities in the fuel-rich eastern region of India, has created ample opportunities for the trading of power. The regulatory developments include the announcement of rules and provisions for open access and licensing related to inter-state trading in electricity. Several entities have started trading operations or have trading licences. Current participants in the power trading business include PTC, the Issuer ’s subsidiary NVVN, Tata Power Trading Company Limited and GMR Energy Limited, among others. The following table shows the volume and prices of power traded in India for the periods indicated: Volume of Electricity Transacted through Trading Licensees and Power Exchanges Particulars

Power traded (in billion units) . . Electricity traded as % to total generation. . . . . . . . . . . . . . . . . Weighted average tariff of power traded Rs. . . . . . . . . . . . . . . . . . .

Source:

Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016

43.22

51.38

59.66

65.78

63.96

70.43

5.34%

5.88%

6.57%

6.83%

6.12%

6.35%

4.32

3.99

4.07

3.64

3.92

3.42

Report on Short-term Power Market in India: 2015-16, CERC.

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Power Exchanges The CERC has issued guidelines for setting up power exchanges. Three power exchanges, the Indian Energy Exchange, Power Exchange India Ltd. and the National Power Exchange Limited, have been promoted in India, of which the first two are functioning. The power exchanges are designed to provide a fair and transparent mechanism for efficient price discovery of power that is traded, and the exchanges are intended to stabilise the market rate of surplus power. The trading system is based on an auction mechanism. According to the CERC, as of March 2016, only 35.01 BU of surplus power (representing 3.16 per cent. of the total power generated in India) was transacted through short term power transactions, which were traded through exchanges.

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REGULATIONS AND POLICIES IN INDIA The following description is a summary of the relevant regulations and policies prescribed by the Government and other regulatory bodies that are applicable to the Issuer’s business. The information detailed below has been obtained from various legislations available in the public domain, and may not be exhaustive. It is merely intended to provide general information and is neither designed nor intended to be a substitute for professional legal advice. The statements below are based on the current provisions of Indian law, and the judicial and administrative interpretations thereof, which are subject to change or modification by subsequent legislative, regulatory, administrative or judicial decisions. Investors should carefully consider the information described below, together with the other information set out in other sections of the Offering Circular, including the financial statements, before making an investment decision relating to the Notes, as any changes in the regulations and policies could have a material adverse effect on the Issuer’s business. Power Generation Background Under the Constitution of India, both the state and central governments have the power to regulate the electricity industry. The MoP is the administrative ministry of the Government governing the central power sector in the country and oversees the operation of the CPSUs. The CEA advises the MoP on electricity policy and technical matters, among others. The development of the electricity industry in India was guided by the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948. The Indian Electricity Act, 1910 introduced a licensing system for the electricity industry and the Electricity (Supply) Act, 1948 introduced greater state involvement in the industry, facilitating regional coordination through state-owned, vertically integrated units called SEBs to develop a “Grid System”. The SEBs were responsible for the generation, transmission and distribution of electricity within each state of the Indian Union. In the early 1990s, the power sector was liberalised by permitting private participation in the generation and transmission sectors and establishing regional load dispatch centres (RLDCs). In 1998, the Electricity Regulatory Commissions Act, 1998 (the ERC Act) established independent electricity regulatory commissions (ERC) at the central and state levels, with the objective of rationalising the electricity tariff regime and promoting and regulating the electricity industry. The ERC Act, which has been replaced by the Electricity Act, 2003, as amended (the Electricity Act), provided for the formation of state electricity regulatory commissions (SERCs) in the respective states for the rationalisation of energy tariffs. As of 31 March 2013, all states in India have set up their own regulatory commissions and two Joint Electricity Regulatory Commissions for: (i) the states of Manipur and Mizoram; and (ii) Goa and the Union Territories, respectively. Electricity Act, 2003 The Electricity Act, 2003 is a central legislation relating to the generation, transmission, distribution, trading and use of electricity that replaced the multiple legislations that previously governed the Indian power sector. The most significant reform initiative under the Electricity Act was the move towards a multi-buyer, multi-seller system as opposed to the then-existing structure which permitted only a single buyer to purchase power from power generators. In addition, the Electricity Act grants the ERCs freedom in determining tariffs. Under the Electricity Act, no licence is required for the generation of electricity if the generating station complies with the technical standards relating to connectivity with the grid. The Electricity Act was amended in 2007 to exempt captive power

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generation plants from licensing requirements for supply to any licensee or consumer. The Electricity Act was further amended in 2010 by the notification dated 3 March 2010 to provide that any developer of an SEZ notified under the Special Economic Zones Act, 2005 shall be deemed to be a licensee under the Electricity Act. Licensing The Electricity Act stipulates that no person can transmit, distribute or undertake trading in electricity, unless such person is authorised to do so by a licence issued by the appropriate CERC or SERC under, or is exempt under, the Electricity Act. The Electricity Act provides for transmission licensees, distribution licensees and licensees for electricity trading. There can be a private distribution licensee as well. Generation As of the date of this Offering Circular, any generating company can establish, operate and maintain a generating station if it complies with the technical standards relating to connectivity with the grid. Approvals from the Government, the state government and techno-economic clearance from the CEA are no longer required, except for hydroelectric projects. Power generating companies are now permitted to sell electricity to any licensees and, where permitted by SERCs, to consumers. In addition, no restriction is placed on the setting-up of captive power plants by any consumer or group of consumers for their own consumption. Under the Electricity Act, no surcharge is required to be paid on wheeling of power from the captive plant to the destination of use by its owner. This provides financial incentive to large consumers to set up their own captive plants. In 2007, Section 9 of the Electricity Act was amended to state that no separate licence is required for the supply of electricity generated from the captive power plant to any licensee or the consumer. The ERCs determine the tariff for the supply of electricity from a generating company to any distribution licensee, transmission of electricity, wheeling of electricity and retail of electricity. The CERC has jurisdiction over generating companies owned or controlled by the Government and those generating companies who have entered into or otherwise have a composite scheme for generation and sale in more than one state. SERCs have jurisdiction over generating stations within the state boundaries, except those under the CERC’s jurisdiction. Transmission Transmission, being a regulated activity, involves the intervention of various players. The Government is responsible for facilitating the transmission and supply of electricity, particularly inter-state, regional and inter-regional transmission. The Electricity Act vests the responsibility of efficient, economical and integrated transmission and supply of electricity with the Government and empowers it to make regional demarcations of the country for the same. In addition, the Government will facilitate voluntary inter-connections and coordination of facilities for the inter-state, regional and inter-regional generation and transmission of electricity. The CEA is required to prescribe certain grid standards under the Electricity Act and every transmission licensee must comply with such technical standards of operation and maintenance of transmission lines. In addition, every transmission licensee is required to obtain a licence from the CERC and the SERCs, as the case may be. The Electricity Act requires the Government to designate one government company as the central transmission utility (CTU), which would be deemed as a transmission licensee. Similarly, each state government is required to designate one government company as state transmission utility (STU), which would also be deemed as a transmission licensee. The CTU and STUs are responsible for the transmission of electricity, planning and coordination of the transmission system, providing non-discriminatory open access to any users and developing a coordinated, efficient and integrated

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inter-state and intra-state transmission system respectively. The Electricity Act prohibits the CTU and STUs from engaging in the business of generation of or trading in electricity. Under the Electricity Act, a transmission licensee may with prior intimation to the appropriate ERC engage in any business for the optimum utilisation of its assets. Under the Electricity Act, the Government was empowered to establish the national load despatch centre (the NLDC) and RLDCs. The primary responsibility of the NLDC is to ensure the optimum scheduling and despatch of electricity among the RLDCs. The RLDCs are responsible for: (i) optimum scheduling and despatch of electricity within the region, in accordance with the contracts entered into with the licensees or the generating companies operating in the region; (ii) monitoring grid operations; (iii) keeping accounts of the quantity of electricity transmitted through the regional grid; (iv) exercising supervision and control over the inter-state transmission system; and (v) carrying out real time operations for grid control and despatch of electricity within the region through secure and economic operation of the regional grid in accordance with the grid standards and grid code. The transmission licensee is required to comply with the technical standards of operation and maintenance of transmission lines specified by the CEA. The Electricity Act allows open access to transmission lines. The provision of open access is subject to the availability of adequate transmission capacity as determined by the CTU or STU. The Electricity Act also lays down provisions for intra-state transmission where the state commission facilitates and promotes transmission, wheeling and inter-connection arrangements within its territorial jurisdiction for the transmission and supply of electricity by economical and efficient utilisation of the electricity. Trading The Electricity Act specifies trading in electricity as a licensed activity. Trading has been defined as the purchase of electricity for resale. This may involve wholesale supply (i.e. purchasing power from the generators and selling to the distribution licensees) or retail supply (i.e. purchasing from generators or distribution licensees for sale to end consumers). The licence to engage in electricity trading is required to be obtained from the appropriate ERC. The CERC, by a notification dated 16 February 2009, issued the CERC (Procedure, Terms and Conditions for Grant of Trading Licence and Other Related Matters) Regulations, 2009, as amended from time to time (the Trading Licence Regulations) to regulate the inter-state trading of electricity. The Trading Licence Regulations define inter-state trading as the transfer of electricity from the territory of one state for resale to the territory of another state, and includes electricity imported from any other country for resale in any state of India or exported to any other country subject to compliance with applicable laws and clearance by appropriate authorities. Under the Trading Licence Regulations, any person desirous of undertaking inter-state trading in electricity shall apply to the CERC for the granting of a licence. Depending upon the volume of the electricity proposed to be traded and the minimum net worth of the licensee, four different categories of trading licence are available. The Trading Licence Regulations set out various qualifications for the grant of a licence for undertaking electricity trading, including certain technical and professional qualifications, and net worth requirements. An applicant is required to publish notice of his application in daily newspapers to receive objections, if any, to be filed before the CERC. Further, a licensee is subject to certain conditions, including the extent of trading margin, maintenance of records and submission of an auditors’ report. The existing licensees are required to meet the net worth, current ratio and liquidity ratio criteria and are required to pay the licence fee as specified by the CERC, from time to time. The licensees need to submit monthly reports and annual returns on over-the-counter contracts and transaction volumes on a weekly basis. The eligibility criteria include norms relating to capital adequacy and technical parameters. However, the NLDC and RLDCs, CTUs, STUs and other transmission licensees are not allowed to trade in power, to prevent unfair competition. Further, in case of non-compliance with any provision of the Electricity Act or the rules thereunder, the applicant can be debarred from making an application for up to three years. The relevant ERCs also have the right to fix a ceiling on trading margins in intra-state trading.

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Distribution and Retail Supply The Electricity Act does not make any distinction between distribution and retail supply of electricity. Distribution is a licensed activity and distribution licensees are allowed to undertake trading without any separate licence. Under the Electricity Act, no licence is required for the purposes of the supply of electricity. Thus, a distribution licensee can undertake three activities: trading, distribution and supply, through one licence. The distribution licensee with prior permission from the appropriate commission may engage itself in any other activities for the optimal utilisation of its assets. In December 2014, the Government mooted a proposal to amend the Electricity Act, 2003 through the Electricity (Amendment) Bill, 2014 to segregate the distribution and supply of electricity as distinct licensed activities. As of the date of this offering circular, the bill is pending for the approval of the Lok Sabha (the lower house of parliament). This will effectively separate the network business and the electricity supply businesses at the retail level, which is expected to facilitate open access at the retail supply level. Unregulated Rural Markets The licensing requirement does not apply in cases where a person intends to generate and distribute electricity in rural areas as notified by a state government. However, the supplier is required to comply with the requirements specified by the CEA such as protecting the public from dangers involved, eliminating or reducing the risks of injury and providing notifications of accidents and failures of transmission and supply of electricity. It shall also be required to comply with system specifications for the supply and transmission of electricity. The Electricity Act mandates formulation of national policies governing rural electrification and local distribution and rural off-grid supply, including those based on renewable and other non-conventional energy sources. This policy initiative is expected to give impetus to rural electrification and also conceptualise rural power as a business opportunity. Tariff Principles The Electricity Act has introduced significant changes in terms of tariff principles applicable to the electricity industry. Under the Electricity Act, the appropriate ERCs are empowered to determine the tariff for the: •

supply of electricity by a generating company to a distribution licensee, provided that the appropriate commission may, in the case of a shortage of supply of electricity, fix the minimum and maximum ceiling of tariff for sale or purchase of electricity in pursuance of an agreement, entered into between a generating company and a licensee or between licensees, for a period not exceeding one year, to ensure reasonable prices of electricity;



transmission of electricity;



wheeling of electricity; and



retail of electricity, provided that in the case of distribution of electricity in the same area by two or more distribution licensees, the appropriate commission may, for promoting competition among distribution licensees, fix only the maximum ceiling of tariff for retail electricity.

The appropriate ERC is required to be guided by the following while determining the tariff: •

the principles and methodologies specified by the CERC for the determination of the tariff applicable to generating companies and licensees;

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that the generation, transmission, distribution and supply of electricity are conducted on commercial principles;



the factors which would encourage competition, efficiency, economical use of the resources, good performance and optimum investments;



safeguarding consumer interest and also ensuring recovery of the cost of electricity in a reasonable manner;



the principles rewarding efficiency in performance;



multi-year tariff principles;



that the tariff progressively reflects the cost of supply of electricity, at an adequate and improving level of efficiency;



that the tariff progressively reduces and eliminates cross-subsidies in the manner to be specified by the CERC;



the promotion of co-generation and generation of electricity from renewable sources of energy; and



the NEP and the Tariff Policy.

The Electricity Act provides that the ERC shall adopt such tariff as has been determined through a transparent process of bidding in accordance with the guidelines issued by the Government. The MoP has issued detailed guidelines for competitive bidding as well as standard bidding documents for competitive bid projects. The determination of the tariff for a particular power project would depend on the mode of participation in the project. Broadly, tariffs can be determined in two ways: (i) based on the tariff principles prescribed by the CERC (cost-plus basis consisting of a capacity charge, an energy charge, an unscheduled interchange charge and incentive payments); or (ii) a competitive bidding route where the tariff is purely market-based. CERC (Terms and Conditions of Tariff) Regulations, 2014 The CERC (Terms and Conditions of Tariff) Regulations, 2014 (the CERC Tariff Regulations) are applicable for the determination of the tariff between 1 April 2014 and 31 March 2019 for a generating station and a transmission system or its elements, including communication systems used for the inter-state transmission of electricity. They are not applicable to generating stations or inter-state transmission systems, where tariffs have been discovered through competitive bidding or determined in accordance with the Central Electricity Regulatory Commission (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2012. The tariff for the supply of electricity from a thermal generating station shall comprise two parts, namely a capacity charge (for recovery of annual fixed cost) and an energy charge (for recovery of fuel cost and limestone cost (where applicable)). Tariffs for the supply of electricity from a hydro generating station shall comprise a capacity charge and an energy charge, for the recovery of annual fixed costs through the two charges. The tariff for the transmission of electricity on the inter-state transmission system shall comprise a transmission charge for the recovery of annual fixed costs. The capacity charges shall be derived on the basis of annual fixed costs and shall consist of the following components: (i) return on equity; (ii) interest on loan capital; (iii) depreciation; (iv) interest on working capital; and (v) operation and maintenance expenses. Energy charges shall be derived on the basis of the landed fuel cost of a generating station (excluding the hydro generation station) and shall comprise the following costs: (i) landed fuel cost of primary fuel; and (ii) cost of secondary fuel oil consumption.

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Return on equity shall be computed at the base rate of 15.50 per cent. for thermal generating stations, transmission systems, including communications system, and the run of the river hydro generating stations. The base rate of return on equity shall be grossed up with the effective tax rate of the respective financial year. For this purpose, the effective tax rate shall be considered on the basis of actual tax paid in respect of the financial year. Incentive to a generating station or unit thereof shall be payable at a flat rate of Rs. 0.5/kWh for ex-bus scheduled energy corresponding to scheduled generation in excess of ex-bus energy corresponding to the normative annual plant load factor. A tariff in respect of a generating station may be determined for the whole generating station or a stage, unit or block of the generating station, and a tariff for the transmission system may be determined for the whole of the transmission system or the transmission line or sub-station. For the determination of a tariff, the capital cost of the project may be broken into stages and distinct units or blocks, transmission lines and sub-systems forming part of the project, if required, provided that where break-up of the capital cost of the project for different stages, units or blocks and transmission lines or sub-stations is not available and in case of ongoing projects, the common facilities shall be apportioned on the basis of the installed capacity of the units, line length and number of bays and that, in relation to multi-purpose hydro schemes with irrigation, flood control and power components, the capital cost chargeable to the power component of the scheme only shall be considered for the determination of a tariff. The CERC Tariff Regulations provide that the generating company or the transmission licensee, as the case may be, may apply for the determination of a tariff in respect of a new generating station or units thereof or a transmission system including a communication system or element thereof completed or projected to be completed within 180 days from the date of the anticipated commercial operation or from the date of filing of the petition, as the case may be. The generating company or the transmission licensee, as the case may be, shall make an application based on capital expenditure incurred, duly certified by the auditors, or projected to be incurred up to the date of commercial operation and additional capital expenditure incurred, duly certified by the auditors, or projected to be incurred during the tariff period of the generating station or the transmission system, as the case may be. However, until such time as the tariff for the generating stations is determined by the CERC in accordance with the CERC Tariff Regulations 2014, the generating company or the transmission licensee, as the case may be, shall continue to provisionally bill the beneficiaries or long-term customers with the tariff approved by the CERC and applicable as of 31 March 2014 for the period starting from 1 April 2014. On approval of the tariff by the CERC in accordance with the CERC Tariff Regulations 2014, adjustment shall be made on a retroactive basis. Where the capital cost considered in-tariff by the CERC on the basis of projected capital cost or the projected additional capital expenditure submitted by the generating company or the transmission licensee, as the case may be, falls short of the actual capital cost incurred on a year-to-year basis by more than 5 per cent., the generating company or the transmission licensee shall be entitled to recover from the beneficiaries or the long-term transmission customers, as the case may be, the shortfall in tariff corresponding to reduction in capital cost, as approved by the CERC, along with interest at 0.80 times the bank rate as prevalent on 1 April of the respective year. Bid Route Bidding essentially is based on a bulk power tariff structure. The Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees, 2005 (the Bidding Guidelines) recommended bid evaluation on the basis of a levelised tariff. The Bidding Guidelines envisaged two types of bids: (i) Case I bids, where the location, technology and fuel is not specified by the procurers, i.e. the generating company has the freedom to choose the site and the technology for the power plant; and (ii) Case II bids, where the projects are location-specific and fuel-specific. The Bidding Guidelines have been repealed by way of resolutions passed by the MoP to the extent of: (i) long-term procurement of electricity through location-specific, coal-based power projects referred to as Case II projects; (ii) long-term procurement of electricity where the location, technology or fuel is not specified by the procurer referred to as Case I projects; (iii) procurement of electricity for the medium term; and (iv) procurement of peaking power for the medium term.

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The MoP has issued the following guidelines (the Revised Bidding Guidelines) by way of resolutions: (i)

Guidelines for procurement of electricity from thermal power stations set up on a design, build, finance, operate and transfer (DBFOT) basis dated 21 September 2013. The application of these guidelines is restricted to projects constructed and operated in accordance with a power purchase agreement for a period of 20 years or more.

(ii)

Guidelines for procurement of electricity from thermal power stations set up on a DBFOO mode basis dated 9 November 2013. The application of these guidelines is restricted to projects constructed and operated in accordance with a power supply agreement for a period of about 25 years including construction period, with a provision for an extension of five years.

(iii) Guidelines for procurement of electricity for the medium term from power stations set up on a finance, own and operate (FOO) basis dated 10 February 2014. The application of these guidelines shall be restricted to projects constructed or operated in accordance with an agreement for procurement of power for a period of one to five years, with a provision for extension of this period for the lower of 25 per cent. of the initial contract period and one year, with mutual consent. (iv) Guidelines for procurement of peaking power for the medium term dated 24 February 2014. The application of these guidelines shall be restricted to projects constructed or operated in accordance with an agreement for procurement of peaking power for a period of between one to five years, with a provision for extension of this period for the lower of 25 per cent. of the initial contract period and one year, with mutual consent. All utilities intending to invite prospective power producers to construct and operate power generating stations are required to determine tariff through the competitive bidding process based on the Revised Bidding Guidelines, as may be applicable, comprising the model or standard bidding documents (including the model request for qualification (MRFQ), model request for proposals (MRFP), model power supply agreement (MPSA), model power purchase agreement (MPPA) and model agreement for procurement of power (MAPP), as the case may be). The Revised Bidding Guidelines envisage a two-step process for the selection of a bidder. The first stage, i.e. the qualification stage of the process, involves the qualification of interested parties or consortia that make an application in accordance with the provisions of the MRFQ. At the end of this stage, it shall be announced which of the shortlisted suitable pre-qualified applicants will be eligible for participation in the second stage of the bidding process, i.e. the bid stage, in accordance with the provisions of the MRFP. Generally, the lowest bidder shall be the selected bidder. The remaining bidders shall be kept in reserve and may, in accordance with the process specified in the MRFP, be invited to match the bid submitted by the lowest bidder in case such lowest bidder withdraws or is not selected for any reason. In the event that none of the other bidders match the bid of the lowest bidder, the utility may, in its discretion, invite fresh bids from the remaining bidders or annul the bidding process, as the case may be. Bids will be invited for the project on the basis of a tariff to be offered by a bidder for the production and supply of electricity in accordance with the terms of the MPPA, MPSA or MAPP, as the case may be. For the purposes of bidding, the fixed charge and variable charge (including fuel charge, transportation expenses and transmission losses) would be taken into consideration. The MoP has also issued guidelines for the short-term procurement of power by distribution licensees through a tariff-based bidding process (i.e. for a period of less than or equal to one year) on 15 May 2012. The said guidelines prescribe that bids shall be invited on a round-the-clock basis

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through a single-stage bidding process whereby a request for proposal shall be published and the entire process shall be conducted necessarily by way of competitive bidding. To ensure competitiveness, the minimum number of bidders should be at least two, other than the generating companies owned by the state government procuring such bid. Tariff Policy for Bid Route The Tariff Policy requires that all procurement of power after 6 January 2006 (except PPAs approved or submitted for approval before 6 January 2006 or projects whose financing has been arranged prior to 6 January 2006) by distribution licensees has to be through competitive bidding. There was a special dispensation of five years for CPSUs from the date of issue of the Tariff Policy for capacity addition through the MoU route. The tariff for all new generation and transmission projects shall be decided on the basis of competitive bidding from 6 January 2011, provided that a developer of a hydroelectric project would have the option of having the tariff determined by the appropriate commission on the basis of performance-based cost-of-service regulations, subject to the satisfaction of conditions specified in the Tariff Policy. The expansion of existing projects of PSUs is also exempted from the tariff-based bidding. Exemptions from the competitive bidding route may be adopted in: (i) the first two experimental works for the 1,200kV HVDC line; (ii) urgent work by CTU/STUs as decided by central government; and (iii) intra-state transmission projects by STUs for two years beyond 6 January 2011. The Tariff Policy 2016 (the Tariff Policy) In 2016, the Government of India, under the Electricity Act, notified the revised tariff policy that would replace the existing tariff policy from 2006. The goals of the Tariff Policy are to ensure availability of electricity to consumers at reasonable and competitive rates, ensure the financial viability of the power sector, attract investment to the power sector, promote regulatory transparency, consistency and predictability across jurisdictions, minimise perceptions of regulatory risks, promote competition, ensure operational efficiency, improve the quality of the power supply and guide the CERC and the SERCs in discharging their functions. The Tariff Policy is structured so that the benefits of improved efficiency and new technology are passed on to consumers through reduced tariffs. It also emphasises the need for the appropriate regulator to ensure the recovery of all prudent costs when approving the financial restructuring of a transmission company. The CERC and the SERCs may choose to appoint an independent expert to examine and verify claimed costs, to ensure they are prudent. The Tariff Policy stipulates that all future inter-state transmission projects are ordinarily required to be developed through a competitive bidding process. However, the Government of India may exempt certain projects of strategic importance from competitive bidding, such as technical up-gradation or works required to be done in response to an urgent situation, on a case-by-case basis. Competitive bidding is also required to be used to set tariffs for intra-state transmission projects that cost above a threshold decided by the relevant SERC. In addition, power that is generated by Government of India generating stations is allocated to the states under a formula set by the Government of India; 15 per cent. of the total share that a state is entitled to is unallocated, and is reserved for emergency situations. Consumers in states have access to this pool of power through Short-Term, Medium-Term and Long-Term Access agreements. The Tariff Policy states that in extraordinary circumstances, such as a threat to the security of the state or public order, or a natural calamity, priority is given for the allocation of power out of the unallocated share of power for that state, rather than in accordance with the relevant access agreement. The Tariff Policy allows the CERC to set the rules and regulations for ancillary services. Ancillary services are essential support services that are required to maintain a continuous balance between generation and load-in power systems. Such services include frequency control, voltage maintenance, reactive power support and the maintenance of generation and transmission reserves.

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The policy sets out the method of sharing the charges necessary to support the power system or grid operations needed to maintain power quality, reliability and grid security. However, the CERC is required to consult with the CEA, the SERCs, the JERCs, the CTU, the STUs, the NLDC, the RLDCs and the SLDCs when setting the rules and regulations for ancillary services. The SERCs are required to adopt the rules and regulations for ancillary services as specified by the CERC. Ministry of New and Renewable Energy bidding guidelines for setting up 1,000MW Wind Power Projects connected to the inter-state transmission system, 2016 The Ministry of New and Renewable Energy on 3 November 2016 issued guidelines for transparent bidding processes for the implementation of a scheme for setting up a 1,000MW wind power project connected to inter-state transmission system. The guidelines are intended to encourage competition and introduce efficient and transparent e-bidding and e-auctioning processes. They will also facilitate the fulfilment of non-solar renewable purchase obligations required by certain states. Furthermore, they appoint the Solar Energy Corporation of India as the implementation agency for the scheme and the terms of the power purchase agreement and power supply agreement will be for a period of 25 years from the commercial operation date. Central Electricity Regulatory Commission (Open Access in Inter-State Transmission) Regulations, 2008 The Central Electricity Regulatory Commission (Open Access in Inter-State Transmission) Regulations, 2008 apply to applications made for grants of open access for energy transfer schedules commencing on or after 1 April 2008 for use of the transmission lines or associated facilities with such lines on the inter-state transmission system. The regulations have gone through amendments in the years 2009, 2013, 2015 and 2016. Central Electricity Regulatory Commission (Grant of Connectivity, Long-Term Access and Medium-Term Open Access in Inter-State Transmission and Related Matters) Regulations, 2009 The Central Electricity Regulatory Commission (Grant of Connectivity, Long-Term Access and Medium-Term Open Access in Inter-State Transmission and Related Matters) Regulations, 2009 (the CERC Regulations) provide various transmission products, standardise procedures, define timelines and ensure a level playing field between market players. They provide the procedures and requirements for obtaining connectivity to inter-state transmission systems, obtaining medium-term open access and obtaining long-term access. There have been amendments to the CERC Regulations in relation to the appointment of a principal generator on behalf of the renewable energy generating stations. Central Electricity Regulatory Commission (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010 The Central Electricity Regulatory Commission (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010 implement a point of connection method of sharing the transmission charges of inter-state transmission systems in India for a five-year period, replacing the earlier system of regional postage stamps. These regulations provide that the yearly transmission charges, revenue requirements on account of foreign exchange rate variations, changes in interest rates, and losses will be shared among the users. All the users will be default signatories to the transmission service agreement, which also requires these users to pay the point-of-connection charge, which covers the revenue of transmission licensees. The point of connection tariffs are based on load flow analysis and capture the utilisation of each network element by the users.

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Central Electricity Regulatory Commission (Standards of Performance of Inter-State Transmission Licensees) Regulations, 2012 The Central Electricity Regulatory Commission (Standards of Performance of Inter-State Transmission Licensees) Regulations, 2012 (the Standard of Performance Regulations) apply to all the inter-state transmission licensees to ensure compliance with performance standards and to provide for an efficient, reliable, coordinated and economic system of electricity transmission. The Standard of Performance Regulations also covers the methodology for calculating compensation in the case of loss on account of non-adherence. Draft CERC (Prevention of Adverse Effect on Competition) Regulations, 2012 CERC released the draft CERC (Prevention of Adverse Effect on Competition) Regulations, 2012 (the Competition Regulations) which will be applicable to licensees or generating companies with respect to investigation and enforcement pursuant to sections 60 and 66 of the Electricity Act. Under the Competition Regulations, the Central Commission may issue appropriate directions to any licensee or generating company for entering into an agreement or combination which causes or is likely to cause an adverse effect on competition in the electricity industry and for abusing its dominant position in the electricity industry. As of the date of this Offering Circular, the date for the release of the final version of the Competition Regulations has not been confirmed. National Electricity Policy, 2005 In compliance with Section 3 of the Electricity Act, the Government announced the NEP in February 2005. The NEP aims at achieving the following objectives: •

availability of electricity for all households;



availability of power on demand;



overcoming the energy and peaking shortages and to make available adequate spinning reserve;



supply of reliable and quality power of specified standards in an efficient manner and at reasonable rates;



per capita availability of electricity to be increased;



minimum lifeline consumption of one unit per household per day;



financial turnaround and commercial viability of electricity sector; and



protection of consumers’ interests.

National Electricity Plan, 2012 The Electricity Act requires the CEA to frame a national electricity plan once every five years and revise the same from time to time in accordance with the NEP. The CEA has released a National Electricity Plan in January 2012 (the National Electricity Plan 2012) which covers the period from 2012 to 2017. The National Electricity Plan is for a short-term framework of five years and provides a 15-year perspective on the following: •

short-term and long-term demand forecast for different regions;

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suggested areas/locations for capacity additions in generation and transmission, the economics of generation and transmission, losses in the system, load centre requirements, grid stability, security of supply, quality of power including voltage profile, and environmental considerations, including rehabilitation and resettlement;



integration of such possible locations with transmission systems and development of the national grid, including the type of transmission systems and the requirement of redundancies;



different technologies available for efficient generation, transmission and distribution; and



fuel choices based on economy, energy security and environmental considerations.

The following recommendations have been proposed in the National Electricity Plan 2012: •

80,000MW and 79,200MW of capacity needs to be added in the country during the 12th plan and 13th plan and issues relating to capacity addition need to be addressed expeditiously, bearing in mind a low-carbon growth strategy;



initiatives need to be taken to address issues related to coal and gas availability and gasbased generation and capacity in India;



adoption of greenhouse gas mitigation strategy is required in order to meet the emission standards;



development of renewable energy sources;



energy efficiency, conservation of energy and demand-side management need to be actively explored;



plan for at least 2,000MW gas-based peaking power plants during 2012 to 2017, through 400MW plants in each of the five major Indian metro cities with proper regulatory support; and



need for a task force under the CERC to consider issues relating to the setting-up of peaking plants and the creation of adequate reserves.

Mining Laws The Mines and Minerals (Development and Regulations) Act, 1957, as amended from time to time (the MMDR Act), the Mines Act, 1952, as amended from time to time (the Mines Act), the Mineral Concession Rules, 1960 (the MC Rules) and the Mineral Conservation and Development Rules, 1988 (the MCD Rules) govern mining rights and the operation of mines in India. The Mines Act and the MMDR Act provide for the development and regulation of mines and minerals in India and regulate the granting, renewal and termination of reconnaissance permits, mining leases and prospecting licences. The Indian Bureau of Mines (the IBM), established in March 1948, is a subordinate office under the Ministry of Mines (the MoM) and the principal Government agency for compiling exploration data and mineral maps, and performs regulatory functions, including the enforcement of the MMDR Act, the MC Rules and the MCD Rules. The Government announced the National Mineral Policy in March 2008 (for non-fuel and non-coal minerals) to sustain and develop mineral resources so as to ensure their adequate supply for the present needs and future requirements of India in a manner which ensures sustainable development, takes account of bio-diversity issues and provides measures for restoration of the ecological balance.

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Grant of a Mining Lease The MMDR Act empowers state governments to develop and regulate mines and minerals, including in relation to the granting of reconnaissance permits (for preliminary prospecting of a mineral through regional, aerial, geophysical or geochemical surveys and geological mapping), prospecting licences (for undertaking operations for exploring, locating or proving mineral deposits) and mining leases (for undertaking operations for mining any mineral). The mining lease governs the terms on which a lessee may use the land for mining operations. If land on which mines are located belongs to private parties, the lessee must acquire surface rights relating to the land from such private parties. If such land belongs to the Government or a state government, such government may grant surface rights on application. If mining operations result in displacement of persons, the consent of affected persons, their resettlement and rehabilitation, and payment of benefits in accordance with guidelines of the applicable state government, including payment for land acquired from displaced persons, need to be settled before the commencement of mining. In respect of minerals listed in the first schedule to the MMDR Act, the Government’s prior approval is required to be obtained by the state government for entering into the mining lease. Government approval is granted on the basis of recommendations of the state governments, although the Government has the discretion to overlook recommendations of the state governments. On receiving Government clearance, the state government grants the mining lease or prospecting licence. The lease can be executed only after obtaining mine plan approval from the IBM, which is valid for five years. No person can acquire one or more mining leases for any mineral or prescribed group of associated minerals in a state covering a total area of more than ten square kilometres. However, the Government may relax this requirement if necessary in the interest of development of any mineral. The maximum term of a mining lease is 30 years and the minimum term is 20 years. A mining lease may be renewed for further periods of up to 20 years at the option of the lessee. Renewals are subject to the lessee not being in default of applicable laws. The MC Rules provide that if a lessee uses the minerals for its own industry, such lessee is generally entitled to renewal of its mining lease for 20 years except in cases of illegal mining or unless the lessee applies for a shorter period. The lessee is required to apply to the relevant state government for renewal of the mining lease at least one year prior to its expiration. Delay in applying for a renewal of a mining lease may be waived by the state government if the application for renewal is made prior to expiry of the mining lease. If the state government does not make orders relating to an application for renewal prior to the expiration of the mining lease, the mining lease is deemed extended until such time that the state government makes the order on the application for renewal. In case the lessee is convicted of illegal mining, the state government may determine the mining lease, cancel such prospecting licence and/or forfeit all or part of the security deposit. Protection of the Environment The MMDR Act also deals with the measures required to be taken by the lessee for the protection and conservation of the environment from adverse effects of mining. The MCD Rules require every lessee to take all possible precautions for the protection of the environment and control of pollution while conducting mining operations. The required environmental protection measures include prevention of water pollution, measures in respect of surface water, total suspended solids, ground water pH, chemicals and suspended particulate matter in respect of air pollution, noise levels, slope stability and impact on flora, fauna and local habitation. The National Mining Policy emphasises that no mining lease would be granted to any party without a proper mining plan, including an environmental plan approved and enforced by statutory authorities and which provides for controlling environmental damage and restoration of mined areas and for planting trees according to prescribed norms.

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Labour Conditions Working conditions of mine labourers are regulated by the Mines Act, which sets out standards of work, including the number of hours of work, leave requirements, medical examinations, weekly days of rest, night shift requirements and other requirements to ensure the health and safety of workers employed in mines. Royalties Royalties on minerals extracted or a dead rent component, whichever is higher, are payable to the relevant state government in India by the lessee, in accordance with the MMDR Act. The mineral royalty is payable in respect of an operating mine from which minerals are removed or consumed and is computed by a prescribed formula. The Government has broad powers to modify the royalty scheme under the MMDR Act, but may not do so more than once every three years. In addition, the lessee must pay the occupier of the surface land over the mining lease an annual compensation amount determined by the state government. The amount depends on whether the land is agricultural or non-agricultural. Laws relating to Coal Mines The Coal Mines (Nationalisation) Act, 1973, as amended from time to time (the Coal Nationalisation Act), Coking Coal Mines (Nationalisation) Act, 1972, as amended from time to time, Coal Mines (Taking Over of Management) Act, 1973, as amended from time to time, Coking Coal Mines (Emergency Provision) Act, 1971, as amended from time to time, Coal Bearing Areas (Acquisition and Development) Act, 1957, as amended from time to time, and Coal Mines (Conservation and Development) Act, 1974, as amended from time to time, govern the mining rights of coal mines and coal mining operations in India. Under the Coal Nationalisation Act, on and from 1 May 1973, the right, title and interest of the owners of coal mines were transferred to the Government and the Government is required to pay a specified amount for such transfer to the owner. The Coal Nationalisation Act prohibits any person from carrying on coal mining operations in India, except for: (i) the Government or a Government company including corporations owned, managed or controlled by the Government; (ii) a person to whom a sub-lease has been granted by the Government or such company or corporation mentioned in (i) above; or (iii) a company which is engaged in the production of iron and steel, generation of power, washing of coal obtained from a mine, or such other end-use as the Government may notify. Coal Distribution Policy, 2007 The New Coal Distribution Policy, 2007 (the NCD Policy) was issued by the MoC to regulate the distribution of coal. The NCD Policy removes the classification of consumers into core and non-core sectors, and requires verification of consumers of the former non-core sector and cancellation of allocation to such consumers not found to be bona fide. The NCD Policy also deals with distribution and pricing of coal to different consumers or sectors such as the defence sector, railways, power utilities, and integrated steel plants, provides for an exclusive distribution policy for consumers in the small and medium sector, replacement of the linkage system with enforceable fuel supply agreements, and policies for new consumers and a fresh scheme for e-auction of coal. The NCD Policy was partially modified in 2013, approving a revised arrangement for the supply of coal to identified thermal power stations during the period from 1 April 2009 to 31 March 2015 and extending the validity of letter of assurance issued to new consumers beyond 12 and 24 years, as applicable. The Mines (Amendment) Bill, 2011 The Mines (Amendment) Bill, 2011 (the Mines Bill) was introduced in the upper house of the Indian Parliament and proposes several amendments to the Mines Act. The Mines Bill provides a mechanism for the supervision and safety of the workforce labouring in the mines. The Mines Bill amends the definition of “owner” of a mine from immediate occupier of

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the mine to a person having “ultimate control” over the affairs of the mine and also includes as “owner” the managing or whole-time director, in the case of an Indian company, and the principal officer, in the case of a foreign company. The Mines Bill also makes it mandatory for the owner to appoint a prescribed number of qualified officials to supervise the operation of the mines. The penalty payable by the owner in case of loss of life resulting from a contravention of an inspector’s orders is proposed to be increased from Rs.5,000 to Rs.500,000, for serious bodily injury the penalty is proposed to be increased from Rs.3,000 to Rs.300,000 and the term of imprisonment is also proposed to be increased from two years to five years. Development of hydropower projects and power-sharing formula The MoP, by a notification dated 8 June 2001, prescribed a three-stage procedure regarding the development of hydropower projects. The notification prescribes the key activities required to be performed at each stage and the time period for the completion of such key activities. Details of the activities to be undertaken during the three stages are set forth below: (i)

Stage-I: Any hydropower generation company proposing to set up a hydropower station is required to approach the MoP for sanction of the proposed project. The MoP shall sanction expenditure of up to Rs.100 million on survey, investigation and preparation of the detailed project report (DPR), subject to the same appearing in the five-year plan. If the expenditure for the proposed project exceeds Rs.100 million, it requires sanction by the Public Investment Board.

(ii)

Stage-II: This stage involves the preparation of the DPR, pre-construction works, development of infrastructure and land acquisition. In the event that the estimated cumulative expenditure for Stages I and II exceeds Rs.100 million, the same shall be considered by the Public Investment Board. Proposals of over Rs.200 million will be considered by the Ministry of Finance and those involving over Rs.500 million require the approval of the Cabinet Committee on Economic Affairs of the Government.

(iii) Stage-III: The approval of the Public Investment Board/CCEA would be required in respect of the construction of the project. These approvals would be sought after the environment and forest clearances have been obtained from MoEF and TEC from the CEA. In addition, the MoP, by its notification dated 1 November 1990, prescribed the formula for the sharing of power and benefits from all Central Sector hydroelectric projects commissioned after 7 September 1990. The salient features of the notification are set forth below: (a)

15 per cent. of the generation capacity will be kept as “unallocated” with the Government for distribution within the region or outside, depending on overall requirements;

(b)

12 per cent. of the energy generated will be supplied free of cost to the concerned state where distress is caused by the setting up of the project; and

(c)

the remaining 73 per cent. is distributed between the states in the region on the basis of central plan assistance given to various states in the region during the last five years and on the basis of consumption of electricity in the states in the region in the last five years, the two factors being given equal weightage.

Tariff Setting Tariff Setting for Generators The Electricity Act empowers the CERC to regulate the tariff of generating companies owned or controlled by the Government, other generating companies having a composite scheme for the

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generation and sale of electricity in more than one state and other entities involved in inter-state transmission operations. Tariffs for state sector generators are regulated by the respective SERCs. The Electricity Act also provides for the Government to promulgate the NEP and the Tariff Policy. The CERC and the SERCs are to be guided by these policies while framing tariff regulations. The tariff for electricity supplied from CPSUs and other entities with inter-state generation is based on a cost-plus approach with operating and financial parameters on a normative basis. The tariff is designed to provide a reasonable return to the generating company and an incentive for efficient operation through industry norms. The CERC has issued tariff regulations applicable for the tariff period from 1 April 2014 for a period of five years. These regulations provide for tariffs consisting of a capacity charge, a variable charge and deviation settlement charges. For further discussion on tariffs and their impact on the Issuer’s results of operations, see “Investment Considerations — The tariff regulations pursuant to the Central Electricity Regulatory Commission (CERC), Tariff Regulation 2014-19 and the Tariff Policy 2006, respectively, may adversely affect the Issuer’s results of operations, its cash flow from operations and could result in an increase in future competition for the Issuer”. The Government is also contemplating introducing a mechanism for the dollarisation of tariffs for the power generating companies in the solar power sector. This is being contemplated to hedge the currency exchange related risk underlying the ECBs raised by companies in the solar power sector. Tariff Setting for End Consumers Under the Electricity Act, the retail tariff or tariffs for end customers is set by the respective SERCs based on a process of public hearings. The Electricity Act allows state governments to provide power at subsidised rates, but requires them to fund the subsidy out of their respective state government budgets. While setting the tariff for end consumers, some states have attempted to cross-subsidise tariffs by charging lower rates for agricultural and domestic consumers, and charging higher rates for industrial and commercial consumers. Tariffs, even with cross-subsidisation, have not kept pace with the cost of supply. The cost of supply averaged Rs.4.39 per kWh in fiscal 2012, which was an increase from Rs.3.97 per kWh in fiscal 2011. The average tariff has not increased proportionately with the increase in the cost of supply. The average revenue (without subsidy) was Rs.3.31 per kWh in fiscal 2012, as compared to Rs.3.03 per kWh in fiscal 2011. The aggregate book losses of all the utilities for fiscal 2013 totalled approximately Rs.1,050,700 million without accounting for subsidy and Rs.689,640 million after accounting for subsidy received. (Source: PFC Report on “The Performance of State Power Utilities” September 2013) Ultra Mega Power Projects The Government has announced a policy of encouraging the development of thermal power projects with a capacity of approximately 4,000 MW and utilising “supercritical technology,” known as UMPPs. The development of UMPPs is a component of the Government’s “Power to All” plan. UMPPs are to be developed under the supervision of PFC, utilising tariff-based competitive bidding. As of now, 16 UMPP projects have been identified to be taken up, 13 special-purpose vehicles have been incorporated and four UMPPs have been awarded. The four UMPPs awarded include Sasan Power Limited in Madhya Pradesh, Mundra in Gujarat, Kishnapattnam in Andhra Pradesh and Tilaiya in Jharkhand. Furthermore, the bidding process for two UMPPs, each of 4,000 MW capacity, namely the Cheyyur UMPP in the state of Tamil Nadu and the Odisha UMPP in the state of Odisha, was started in December 2013. However, the same was terminated during the second stage in December 2014. As of the date of this Offering Circular, the bidding documents were under revision and the following UMPPs had been identified for implementation: •

the Chhattisgarh Surguja Power Ltd., the Chhattisgarh UMPP, in the Surguja district;

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the Tatiya Andhra Mega Power Ltd., the second Andhra Pradesh UMPP, in the Prakasam district;



the Deoghar Mega Power Ltd., the second Jharkhand UMPP, in the Deoghar district;



the Sakhigopal Integrated Power Co. Ltd., the first Orissa additional UMPP, in the Bhadrak district;



the Ghogarpalli Integrated Power Co. Ltd., the second additional Odisha UMPP, in the Kalahandi district;



the Coastal Maharashtra Mega Power Ltd., the Maharashtra UMPP, in the Sindhudurg district;



the Coastal Karnataka Power Ltd., the Karnataka UMPP;



the Bihar UMPP;



the second Tamil Nadu UMPP; and



the second Gujarat UMPP.

In the union budget of fiscal 2016, the Government proposed to set up five new UMPPs, each of 4,000 MW capacity in the “plug-and-play mode”. The “plug-and-play mode” projects will be different from existing UMPPs as all clearances and linkages will be in place before they are put up for auction. The estimated investment for these “plug-and-play mode” UMPPs has been projected to be Rs.1,000 billion and all clearances and linkages will be in place before the projects are awarded. Rural Electrification Policy, 2006 Under the Common Minimum Programme, the Government and the state governments shall jointly create rural electricity infrastructure to provide access to electricity for all rural areas including electrification of households, the agriculture sector, healthcare and small and medium-scale industries. To achieve this objective, the Government formed the Rajiv Gandhi Grameen Vidyutikaran Yojana. As of 31 March 2014, electrification has been completed in 571,155 villages and as of 31 May 2014, there are 25,982 villages which are unelectrified. Unelectrified villages are villages which do not have basic infrastructure such as distribution transformers and distribution lines in inhabited localities and public places. De-electrified villages are villages which were electrified in the past, but have not been able to retain the status of electrified village. REC, a Government enterprise under the MoP, is the nodal agency of the Government to implement the rural electrification programme by providing loan assistance and coordinating with state governments, state utilities and other concerned agencies for effective implementation of the schemes. New Hydro Power Policy, 2008 The New Hydro Power Policy was notified by the Government, setting out the following objectives: (i) inducing private investment in hydropower development; (ii) harnessing the balance of hydroelectric potential; (iii) improving resettlement and rehabilitation; and (iv) facilitating financial viability. The salient features of this policy are set forth below: (a)

The existing dispensation available to the public sector regarding exemption from tariff-based bidding up to January 2011 was extended to private sector hydroelectric projects.

(b)

State governments would be required to follow a transparent procedure for awarding potential sites to the private sector.

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(c)

The concerned private developer would be required to follow the existing procedure, including getting the DPR prepared, obtaining concurrence of the CEA/state government, obtaining environment, forest and other statutory clearance and approaching the appropriate regulator. It would be obligatory for the developers to go through an international competitive bidding process for award of contract for supply of equipment and construction of the project either through a turnkey contract or through a few well-defined packages.

(d)

Tariff of the project would be decided by the appropriate commission.

(e)

Special incentive by way of merchant sales of up to 40 per cent. of the saleable energy is envisaged for the project(s) meeting the timelines.

(f)

An additional 1 per cent. free power from the project would be provided and earmarked for a local area development fund, aimed at providing a regular stream of revenue for income generation and welfare schemes, creation of additional infrastructure and common facilities on a sustained and continued basis over the life of the project. It is further recommended that the host state government would also provide a matching 1 per cent. from their share of 12 per cent. free power towards this corpus fund. This fund could be operated by a standing committee headed by an officer of the state government not lower than a district magistrate.

(g)

For ten years from the date of commissioning of the project, 100 units of electricity per month would be provided by the project developer to each project-affected family through the relevant distribution company.

(h)

In the interest of speedy implementation of hydroelectric projects, it is proposed that the resettlement and rehabilitation package be more liberal than the National Resettlement and Rehabilitation Policy, 2007.

The National Water Resources Council adopted the National Water Policy 2012 (the NWP 2012) with the objective of assessing the existing situation and to form a plan of action with a unified national perspective. The NWP 2012 includes discussion of the following: •

the need for a national water framework law, comprehensive legislation for optimum development of inter-state rivers and river valleys and the amendment of relevant existing laws;



the need to optimise water usage, raise awareness of water as a scarce resource and increase water availability;



the consideration of climate change scenarios when planning and implementing water resource projects;



the management of demand and increase in water use efficiency, to evolve benchmarks for water uses for different purposes and incentivising the efficient use of water;



the principle of differential pricing of water to be retained for ensuring food security and supporting livelihood for the poor; a planned and scientific conservation of river corridors, water bodies and infrastructure;



the setting-up of appropriate national and state-level institutions to deliberate issues relating to water and obtain consensus, cooperation and reconciliation;



the aversion of water-related disasters;

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the evolution of a dispute-resolution mechanism between states;



the maintenance of a database and information system with water-related data; and



the preparation of a plan of action to implement the NWP 2012.

Jawaharlal Nehru National Solar Mission The MNRE has approved a new policy on development of solar energy in India through Jawaharlal Nehru National Solar Mission (the Mission). The Mission recommends the implementation of an installed capacity of 20,000 MW in three stages by the end of the Thirteenth Plan in 2022. It proposes to establish a single window investor-friendly mechanism, which reduces risk and at the same time provides an attractive, predictable and sufficiently adequate tariff for the purchase of solar power for the grid. The key driver for promoting solar power would be through a Renewable Purchase Obligation (RPO) mandated for power utilities, with a specific solar component. The Mission will adopt a three-phase approach. The remaining period of the National Electricity Plan 2007 and the first year of the National Electricity Plan 2012 (up to fiscal 2013) will constitute Phase 1, the subsequent four years (2013 to 2017) of the National Electric Plan will constitute Phase 2 and the National Electricity Plan 2017 (2017 to 2022) will constitute Phase 3. At the end of each, and at the mid-point of the National Electricity Plan 2012 and the National Electricity Plan 2017, there will be an evaluation of progress, a review of capacity and targets set for subsequent phases, based on emerging cost and technology trends, both domestic and global. The immediate aim of the Mission is to focus on setting up an enabling environment for solar technology penetration in the country, both at a centralised and decentralised level. The Issuer’s power-trading subsidiary, NVVN, has been designated by the Government as the nodal agency for entering into PPAs with solar power developers who will be setting up solar projects in the first phase of the Mission, i.e. up to March 2013. The MoP will provide the equivalent MW of power from the unallocated quota of the Issuer’s stations for bundling with solar power. NVVN will bundle this power and sell this bundled power at a rate fixed as per CERC regulations for a period of 25 years. The Government will review significant price movements in the market rate. NVVN will supply the bundled power to distribution utilities, and these distribution utilities will be entitled to use part of the bundled power to meet their RPO, as determined by the CERC. NVVN has successfully conducted and implemented the process of selection of the solar power developers based on the guidelines issued by the Ministry of New and Renewable Energy under the Migration Projects Scheme of 2010 and New Projects Schemes of 2010 and 2011. As of 31 March 2015, a total solar capacity of 718 MW has been commissioned and the corresponding allocation of NTPC coal power has been made by the MoP. Oil and Gas related Laws In keeping with the liberalised policy of the Government for attracting private investments in the oil and gas sector, the Government formulated the New Exploration and Licensing Policy (NELP), which came into effect in February 1999. The Directorate General of Hydrocarbons (DGH) is the nodal agency for the implementation of NELP. The key features of NELP are that there would be no mandatory state participation, and exploration acreages and mining blocks would be awarded on a competitive basis instead of by the earlier system of nomination, there would be freedom to contractors for marketing of crude oil and gas in the domestic market, companies would be exempt from payment of import duty on the goods imported for petroleum operations, a seven-year tax holiday from the date of commencement of commercial production would be available, and contractors would be allowed full cost recovery with unlimited carry forward on a contract area basis, unlike the previous

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regime in which exploration cost was recovered on a contract area basis and development and production cost on a field basis. Under NELP, the first round of offer for the exploration of oil and natural gas was in 1999 and the second to ninth rounds were in 2000, 2002, 2003, 2005, 2006, 2008, 2009 and 2011, respectively. According to the report of the DGH on Hydrocarbon Exploration and Production Activities, 2009-2010, the intention of the Government is to move from NELP to an open acreage licencing policy (OALP). Under OALP, companies can choose any block for offer at any time without waiting for bid rounds under NELP. The blocks will be awarded to the party giving the best bid at any time of the year. DGH is taking steps to implement OALP and it has been suggested that the tenth round of NELP allocation will have been the last round of allocation through NELP. The Oilfields (Regulation and Development) Act, 1948, as amended from time to time (the Oilfields Act) empowers the Government to make rules for the granting of mining leases in respect of any mineral oil. The holder of a mining lease is required to pay royalty in respect of any mineral oil mined, excavated or collected. The Oil Industry (Development) Act, 1974 provides for establishment of the Oil Industry Development Board (the OID Board) for the development of the oil industry and to levy excise duty on crude oil and natural gas, including through financial and other assistance. The OID Board may apply to courts for relief, including transfer of the management of the oil industrial concern to the OID Board, in case an oil industrial concern or other persons default on repayments of loans or violate the terms of the assistance agreement. The Oil Mines Regulations, 1984, as amended from time to time (the Oil Mines Regulations), prescribe the duties of persons employed in oil mines, such as workers, managers, installation managers, safety officers and fire officers, including with respect to the examination of equipment, usage of safeguards, safety devices and other appliances. The Oil Mines Regulations regulate production activities in oil mines, transportation of oil through pipelines, machinery, plant and equipment, apart from laying down requirements for protection measures against gases and fires, and general safety provisions. The Petroleum and Natural Gas (Safety in Offshore Operations) Rules, 2008 (the SOO Rules) require operators of offshore installations to obtain consent from the competent authority and to intimate the competent authority within 30 days of commencement or cessation of operations. The operator is also responsible for providing health-related resources, establishing a strategy for environmental preparedness and a safety management system, carrying out risk assessment, maintaining information and records for petroleum activities, accidental pollution, recovery, rescue and remedial actions taken, and environment reporting. The Petroleum Act, 1934, as amended from time to time (the Petroleum Act), and Petroleum Rules, 2002 (the Petroleum Rules) regulate import, transport, storage, production, refining and blending of petroleum. Only the holder of a storage licence issued under the Petroleum Rules or his authorised agent or a port authority or railway administration or a person authorised under the Petroleum Act to store petroleum without a licence may deliver or dispatch petroleum in India. The Petroleum Mineral Pipelines (Acquisition of Right of User in Land) Act, 1962 provides for the acquisition of a user’s right in land for the laying of pipelines for the transport of petroleum and minerals. The Petroleum and Natural Gas Rules, 1959, as amended from time to time (the PNG Rules) regulate the prospecting and mining of petroleum and natural gas. Prospecting for petroleum is permitted only on receiving a petroleum exploration licence (PEL) under the PNG Rules, and mining petroleum is permitted only on receiving a petroleum mining lease (PML) granted under the PNG Rules. A PEL or a PML in respect of any land or mineral underlying the ocean within the territorial waters or continental shelf of India is granted by the Government. In respect of any land vested in a state government, a PEL or a PML is granted by the state government with previous approval of the Government. The PNG Rules require the payment of royalty on petroleum in case PML is granted. The PEL and PML may be cancelled by the Government or the state government, if the licensee or lessee fails to fulfil, or contravenes, any terms, covenants and conditions contained therein, or fails to use the land covered by it for the purposes for which it has been granted, or uses such land for a purpose other than that for which it has been granted.

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The Petroleum and Natural Gas Regulatory Board Act, 2006, as amended from time to time (the PNGRB Act) provides for the establishment of the Petroleum and Natural Gas Regulatory Board (the PNGR Board) to regulate refining, processing, storage, transportation, distribution, marketing, import, export and sale of petroleum, petroleum products and natural gas, excluding production of crude oil and natural gas. Every entity desirous of marketing any notified petroleum or petroleum products or natural gas, or establishing or operating a liquefied natural gas terminal, or establishing storage facilities for petroleum, petroleum products or natural gas exceeding such capacity as may be specified by regulations and fulfilling eligibility conditions, is required to apply to the PNGR Board for its registration. The functions of the PNGR Board include registration of entities in accordance with the PNGRB Act, declaring pipelines as common or contract carriers, receiving complaints, adjudicating certain disputes, and such other functions as entrusted to it by the Government to implement the PNGRB Act. The PNGR Board may notify regulations consistent with the PNGRB Act and rules thereunder to implement the PNGRB Act. The PNGR Board (Codes of Practices for Emergency Response and Disaster Management Plan) Regulations, 2010 (the ERDMP Regulations) cover the identification and classification of emergencies, pre-emergency planning and preparedness to develop plans for actions when disaster or emergencies occur, responses that mobilise necessary emergency services and post-disaster recovery, mitigation measures and implementation schedules to reduce or eliminate risk or disaster. The ERDMP Regulations apply to hydrocarbon processing installations, natural gas pipelines, commercial petroleum storage facilities and any other installation notified by the PNGR Board. In June 2008, the MoPNG issued guidelines for sale of natural gas by NELP contractors (the Gas Sale Guidelines). The Gas Sale Guidelines apply for an initial period of five years. Contractors are permitted to sell to consumers in accordance with marketing priorities determined by the Government on the basis of an approved pricing formula. If consumers in a particular higher priority sector are not in a position to take gas when it becomes available, it would go to the sector next in the order of priority. The priority for supply of gas from a particular source would apply only among customers not connected to an existing and available pipeline network connected to a source. In February 2012, the MoPNG issued guidelines for the selection of customers for domestic gas available from small or isolated new or pre-existing fields. These guidelines have been issued so that small discoveries in places where production levels are low and fields are isolated can be allocated to customers expeditiously without referring each case to the MoPNG. Based on issues raised by stakeholders and in line with the aim of continuing to achieve the early monetisation of gas, these guidelines have been superseded by new guidelines, where small and isolated fields are fields whose peak production is less than 0.1 million standard cubic metres per day and are: (i) situated more than ten kilometres away from the gas grid; or (ii) have a gas pressure which is less than the grid pressure. In March 2012, the MoPNG issued guidelines on the swapping of natural gas (the Swapping Guidelines). The Swapping Guidelines apply to the “swapping” of natural gas transactions whereby a party (the first party) supplies gas to a second party, at a location specified by the second party, in exchange for the second party supplying the energy equivalent quantity of gas to the first party or first party’s representative at another location (along with an appropriate indemnity for so doing). The Swapping Guidelines require that all parties involved be revenue-neutral over the entire length of the pipeline and any swapping of gas would need to conform to the tariff and applicable PNGRB Act and any dispute regarding the same would need to be heard before the PNGR Board. Environmental Laws Environment Protection Act, 1986 (EPA) The EPA, as amended from time to time, is an umbrella legislation in respect of the various environment protection laws in India. The EPA vests in the Government the power to take any measures it deems necessary or expedient for protecting and improving the quality of the environment and preventing and controlling environmental pollution. Penalties for violation of the EPA include

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fines or imprisonment of up to five years, or both. The MoEF, in exercise of powers conferred under the EPA, issued a notification on 6 January 2011 declaring coastal stretches as coastal regulation zones and thereby imposing restrictions on industries, operations and processes in a coastal regulation zone. The MoEF issued a notification dated 2 January 2014 for amending the Environment (Protection) Rules, 1986, laying down that the following coal-based thermal power plants shall be supplied with, and shall use, raw or blended or beneficiated coal with ash content not exceeding 34 per cent. on a quarterly average basis; namely: (i)

a stand-alone thermal power plant (of any capacity), or a captive thermal power plant of installed capacity of 100 MW or above, located beyond 1,000 kilometres from the pit-head or, in an urban area or an ecologically sensitive area or a critically polluted industrial area, irrespective of its distance from the pit-head, except a pit-head power plant, with immediate effect;

(ii)

a stand-alone thermal power plant (of any capacity), or a captive thermal power plant of installed capacity of 100 MW or above, located between 750 kilometres to 1,000 kilometres from the pit-head, with effect from 1 January 2015; and

(iii) a stand-alone thermal power plant (of any capacity), or a captive thermal power plant of installed capacity of 100 MW or above, located between 500 kilometres to 749 kilometres from the pit-head, with effect from 5 June 2016. However, for a thermal power plant using circulating fluidised bed combustion or atmosphere fluidised bed combustion or pressurised fluidised bed combustion or integrated gasification combined cycle technologies or any other clean technologies, the provisions of paragraphs (i), (ii) and (iii) set out above shall not be applicable. The EIA Notification (as defined below) issued under the EPA and the Environment (Protection) Rules, 1986 requires prior MoEF approval if any new project in certain specified areas is proposed to be undertaken. To obtain environmental clearance, a no-objection certificate must first be obtained from the applicable regulatory authority. This is granted after a notified public hearing, the submission and approval of an EIA report that sets out the operating parameters such as the permissible pollution load and any mitigating measures for the mine or production facility and an environmental management plan. Under the EPA and the Environment (Protection) Rules, 1986, as amended from time to time, the Government has issued a notification dated 14 September 2006 (the EIA Notification), which requires that prior approval of the MoEF or the State Environment Impact Assessment Authority (SEIAA), as the case may be, be obtained for the establishment of any new project and for expansion or modernisation of existing projects specified in the EIA Notification (including power projects). An application for environment clearance is made after identification of the prospective site for the project or activity to which the application relates, but prior to commencing construction activity or preparation of land at the site. Certain projects which require approval from an SEIAA may not require an EIA report. For projects that require preparation of an EIA report, public consultation involving public hearing and written responses is conducted by the state PCB, prior to submission of a final EIA report. The environment clearance (for commencement of the project) is valid for up to 30 years for mining projects and five years for all other projects and activities. This period of validity may be extended by the concerned regulator for up to five years. The EIA Notification states that obtaining of prior environment clearance includes four stages, i.e. screening, scoping, public consultation and appraisal. The MoEF has, by circular dated 1 November 2010 (the November 2010 Circular), decided that proposals for obtaining environment clearance for projects that rely on the availability of coal as a raw material, including thermal power projects, will be considered only after the availability of firm coal linkage and the status of environment and forestry clearances of the source of the coal, i.e. the linked coal mine or block, are known. If a project is dependent on coal sourced from outside India, a copy of a signed MoU between the foreign coal supplier and project proponent is required to be submitted

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to the MoEF prior to environment clearance being granted. The MoEF clarified, on 19 April 2012, that coal linkages could either be in the form of a linkage through a specific mine, or a basket of mines, or through a dedicated coal block, or a fuel supply agreement. The linkage or fuel supply agreement must provide the details of the coal quality parameters, such as calorific value, mine location, sulphur content, ash content and such other parameters prescribed by MoEF. Any change to the coal parameters requires the project to be referred back to the MoEF to allow it to revisit the environment clearance granted to assess the adequacy of the conditions already stipulated and to incorporate any additional condition in the interests of environment protection. The case of thermal power projects would be processed simultaneously with the granting of environment clearances for such projects and environment clearance would be issued only after stage-1 forestry clearance for linked mines is obtained. As of the date of this Offering Circular, all proposals for environment clearance that are pending either before the MoEF or SEIAA will be deferred and delisted until the conditions of the November 2010 Circular are complied with by the project proponents. The MoEF has, by office memorandum dated 12 December 2012, as amended, set out the procedure to be followed in cases involving violation of the EPA and the rules and regulations made thereunder. The concerned entity would be required to mandatorily highlight the violation before its board of directors for consideration of its environmental policy or plan of action, and provide written commitment in the form of a formal resolution, to the MoEF or the SEIAA within 60 days. If the project proponent does not file a response with the MoEF within 60 days, it will be assumed that the project proponent is no longer interested in pursuing the project and the project file will be closed, after which the procedure for obtaining environment clearance will be required to be initiated afresh if the project proponents are desirous of pursuing the project. Additionally, the state government and the MoEF will take action under the EPA against such violations which can lead to: (i) construction activity stopping until environment clearance has been obtained; and/or (ii) production capacity being restricted to the capacity mentioned in the previous clearance. Forest (Conservation) Act, 1980 and Forest Conservation Rules, 2003 The Forest (Conservation) Act, 1980, as amended from time to time (the Forest Act), requires consent from the relevant authorities prior to clearing forests by felling trees. Final clearance in respect of both forests and the environment is given by the Government through the MoEF. However, all applications must be made through the state governments who recommend the application to the Government. Penalties for non-compliance may include closure of the mine or prohibition of mining activity, stoppage of supply of energy, water or other services and monetary penalties on and imprisonment of persons in charge of the conduct of the business of the company. Water (Prevention and Control of Pollution) Act, 1974 The Water (Prevention and Control of Pollution) Act, 1974, as amended from time to time (the Water Act), aims to prevent and control water pollution and to maintain or restore wholesomeness of water. The Water Act provides for a Central and various State Pollution Control Boards to be constituted to implement its provisions. The Water Act debars any person from establishing any industry, operation or process or any treatment and disposal system likely to discharge sewage or trade effluents into a water body, without prior consent of the State Pollution Control Board. Air (Prevention and Control of Pollution) Act, 1981 The Air (Prevention and Control of Pollution) Act, 1981, as amended from time to time (the Air Act), aims to prevent, control and abate air pollution, and stipulates that no person shall, without prior consent of the State Pollution Control Board, establish or operate any industrial plant which emits air pollutants in an air pollution control area. The Central Pollution Control Board and State Pollution Control Board constituted under the Water Act perform similar functions under the Air Act as well. The provisions of the Air Act do not automatically apply to all parts of India, and the State Pollution Control Board must notify an area as an “air pollution control area” before the restrictions under the Air Act apply.

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Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008 The Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008, as amended from time to time (the Hazardous Waste Rules), regulate the collection, reception, treatment, storage and disposal of hazardous waste by imposing an obligation on every occupier and operator of a facility generating hazardous waste to dispose of such waste without adverse effect on the environment. Every occupier and operator of a facility generating hazardous waste must obtain approval from the applicable State Pollution Control Board. The occupier is liable for damages caused to the environment resulting from the improper handling and disposal of hazardous waste, and any fine that may be levied by the State Pollution Control Board. Hazardous Substances (Classification, Packaging and Labelling) Rules, 2011 The MoEF issued the draft Hazardous Substances (Classification, Packaging and Labelling) Rules, 2011 (the Draft Rules) on 8 July 2011 with respect to hazardous substances, hazardous chemicals and dangerous goods. The occupier and consigner of a facility generating hazardous waste are required to assign hazard classes, use proper shipping names, suitable packaging and labelling, requisite labels and marking and use updated safety data sheets for transportation. The Draft Rules require the training of personnel engaged in the handling, storage and transportation of dangerous goods. The assignment of a United Nations number and proper shipping names has been prescribed in accordance with its hazard classification and composition. Water (Prevention and Control of Pollution) Cess Act, 1977 Under the Water (Prevention and Control of Pollution) Cess Act, 1977, as amended from time to time (the Water Cess Act), a lessee carrying on any industry specified under the Water Cess Act is required to pay a surcharge calculated on the amount of water consumed and purpose for which the water is used. Penalties for non-compliance include a penalty not exceeding the cess in arrears, imprisonment up to six months or a fine, or both. Employment and Labour Laws Factories Act, 1948 The Factories Act, 1948, as amended from time to time (the Factories Act), regulates occupational safety, health and welfare of workers of industries in which ten or more workers are employed in a manufacturing process being carried out with the aid of power. The Factories Act includes provisions as to the approval of factory building plans before construction or extension, investigation of complaints, maintenance of registers and the submission of yearly and half-yearly returns. Penalties for non-compliance include imprisonment of the occupier and manager for up to two years or a fine, or both, and a further fine for each day of continued contravention. Industrial Disputes Act, 1947 The Industrial Disputes Act, 1947 (the ID Act) sets out the procedure for the investigation and settlement of industrial disputes. When a dispute exists or is apprehended, the appropriate government may refer the dispute to a labour court, tribunal or arbitrator, to prevent the occurrence or continuance of the dispute, or to prevent a strike or lock-out while a proceeding is pending. The labour courts and tribunals may grant appropriate relief including ordering the modification of contracts of employment or the reinstatement of workmen. Contract Labour (Regulation and Abolition) Act, 1970 The Contract Labour (Regulation and Abolition) Act, 1970, as amended from time to time (the CLRA), regulates the employment of workers hired on the basis of individual contracts in certain establishments. The CLRA applies to every establishment in which 20 or more workmen are employed

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or were employed on any day of the preceding 12 months as contract labour. The CLRA vests the responsibility with the principal employer of an establishment to register as an establishment that engages contract labour. Likewise, every contractor to whom the CLRA applies must obtain a licence and may not undertake or execute any work through contract labour except in accordance with the licence issued. Penalties, including both fines and imprisonment, may be levied for contravention of the CLRA. Penalties for non-compliance include imprisonment up to three months or a fine, or both. Minimum Wages Act, 1948 The Minimum Wages Act, 1948, as amended from time to time (the MWA), provides for a minimum wage payable by employers to employees. Under the MWA, every employer is required to pay the minimum wage to all employees, whether for skilled, unskilled, manual or clerical work, in accordance with the minimum rates of wages that have been fixed and revised under the MWA. Workmen are to be paid for overtime at overtime rates stipulated by the appropriate state government. Contravention may result in imprisonment for up to six months or a fine, or both. State governments may stipulate a higher penalty for contravention, if it is deemed fit to do so. Payment of Wages Act, 1936 The Payment of Wages Act, 1936, as amended from time to time (the PWA), regulates payment of wages to certain classes of employees and makes every employer responsible for payment of wages to persons employed by such employer. No deductions are permitted from, nor is any fine permitted to be levied on, wages earned by a person employed except as provided under the PWA. Penalties under the PWA include a fine. Employee’s Compensation Act, 1923 The Employee’s Compensation Act, 1923, as amended from time to time (the ECA), makes every employer liable to pay compensation if injury, disability or death is caused to an employee (including those employed through a contractor) due to an accident arising out of or in the course of employment. If the employer fails to pay the compensation due under the ECA within one month from the date it falls due, the commissioner shall direct the employer to pay the compensation along with interest and may impose a penalty for non-payment. Employee State Insurance Act, 1948 The Employee State Insurance Act, 1948, as amended from time to time (the ESIA), requires the provision of certain benefits to employees or their beneficiaries in the event of sickness, maternity, disability or employment injury. The ESIA contemplates payment of a contribution by the principal employer and each employee to the Employee State Insurance Corporation of India. Penalties for failure to make contributions under the ESIA include imprisonment for a term which may extend to three years (which shall not be less than: (i) one year in the case of failure to pay the employee’s contribution which has been deducted by him from the employee’s wages or a fine; or (ii) six months in any other case) and a fine. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, as amended from time to time (the EPFA), institutes provident funds for the benefit of employees in factories, industrial undertakings, and other establishments notified by the Government from time to time. Contributions are required to be made by employers and employees to a provident fund and pension fund established and maintained by the Government.

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Payment of Gratuity Act, 1972 Under the Payment of Gratuity Act, 1972, as amended from time to time (the PGA), an employee who has been in continuous service for five years is eligible for gratuity on retirement, resignation, death or disablement due to accident or disease. Entitlement to gratuity in the event of superannuation or death or disablement due to accident or disease is not contingent on an employee having completed five years of continuous service. Payment of Bonus Act, 1965 The Payment of Bonus Act, 1965, as amended from time to time (the PBA), provides for payment of a minimum annual bonus to all employees regardless of whether the employer has made a profit or a loss in the accounting year in which the bonus is payable. Contravention of the PBA by a company is punishable by imprisonment up to six months or a fine, or both, against persons in charge of, and responsible to the company for, the conduct of the business of the company at the time of contravention. Foreign Exchange Laws The current laws relating to ECBs are embodied in the ECB Guidelines. ECBs can be accessed under two routes: (i) the automatic route; and (ii) the approval route. The automatic route does not require a borrower to obtain any RBI approvals, whereas the approval route requires a prior RBI approval. The ECB Guidelines classify ECBs under the categories of: a)

medium term foreign currency denominated ECBs with a minimum average maturity of three to five years (Track I ECBs);

b)

long term foreign currency denominated ECBs with a minimum average maturity of ten years (Track II ECBs); and

c)

Indian Rupee denominated ECBs with a minimum average maturity of three to five years (Track III ECBs).

Automatic Route Under the automatic route, the following entities have been classified as recognised borrowers for raising Track I ECBs: (i) companies in the manufacturing and software development sectors; (ii) shipping and airlines companies; (iii) Small Industries Development Bank of India; and (iv) units in special economic zones in India. For Track II ECBs, all entities eligible under Track I ECBs can raise ECBs in addition to (i) companies in the infrastructure sector; (ii) holding companies; (iii) core investment companies; and (iv) real estate investment trusts and infrastructure investment trusts coming under the regulatory framework of SEBI. In case of Track III ECBs, all entities eligible under Track III ECBs can raise ECBs in addition to (i) all NBFCs; (ii) NBFCs-micro finance institutions, not for profit companies, societies, trusts and co-operatives, non-government organisations engaged in micro-finance activities; (iii) companies engaged in miscellaneous services such as research and development, companies supporting infrastructure and companies providing logistics services; and (iv) developers of special economic zones and national manufacturing and investment zones. The foreign lenders eligible to provide all three categories of ECBs include, inter alia: (i) international banks; (ii) international capital markets; (iii) multilateral financial institutions or regional financial institutions and government-owned development financial institutions; (iv) export credit agencies; (v) suppliers of equipment; and (vi) foreign equity holders.

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ECB proceeds under Track I can be utilised for, inter alia (i) capital expenditure in the form of import and local sourcing of capital goods, new projects and modernisation or expansion of existing production units; (ii) overseas direct investment; (iii) acquisition of shares in the government’s disinvestment programme of public sector units; and (iv) refinancing of existing ECBs, provided the residual maturity is not reduced. The proceeds of Track II ECBs and Track III ECBs can be used for all purposes, excluding (i) real estate activities; (ii) investing in capital markets or equity in the domestic market; (iii) on-lending to other entities for the above mentioned objectives; and (iv) purchase of land. NBFCs, under Track III ECBs, can use ECB proceeds only for (i) on-lending to the infrastructure sector; (ii) providing hypothecated loans to domestic entities for acquisition of capital goods and equipment; and (iii) providing capital goods and equipment to domestic entities by way of lease and hire-purchases. Further, the maximum amount which can be raised every financial year under the automatic route is U.S.$750 million or its equivalent for companies in the infrastructure and manufacturing sector, NBFC-infrastructure finance companies, NBFC-asset finance companies, holding companies and core investment companies, U.S.$200 million or its equivalent for companies in the software development sector, U.S.$100 million or its equivalent for entities engaged in micro-finance activities and U.S.$500 million or its equivalent for remaining entities. The all-in cost (which includes rate of interest, other fees and expenses in foreign currency or Indian Rupees, but does not include the rate of commitment fees, prepayment fees, payments for withholding tax in Rupees) ceilings for (i) Track I ECBs is 300 basis points per annum over six month LIBOR for ECBs with minimum average maturity between three and five years and 450 basis points per annum over six month LIBOR for ECBs with minimum average maturity of more than five years; (ii) Track II ECBs is 500 basis points per annum over the benchmark; and (iii) Track III ECBs will be in compliance with market conditions. Approval Route All ECBs falling outside the automatic route limits are considered by the RBI under the approval route. ECBs which can be obtained with prior RBI approval include, inter alia: (i) import of second hand goods under the Director General of Foreign Trade guidelines for Track I ECBs; and (ii) on-lending by the Export-Import Bank of India under Track I ECBs. Filing and Regulatory Requirements in relation to Issuance of Notes An ECB borrower is required to obtain a loan registration number (LRN) from the RBI before an issuance of Notes is effected. To obtain this, ECB borrowers are required to submit a completed Form 83 certified by a company secretary or a chartered accountant to the AD Bank of the ECB borrower. The AD Bank is then required to forward the completed Form 83 to the RBI. Any ECB borrower is required to submit an ECB-2 Return on a monthly basis via its AD Bank to the RBI. Procedure in relation to any change to the Terms and Conditions of the Notes Any change in the terms and conditions of the Notes after obtaining the LRN requires the prior approval of the RBI or AD Bank, as the case may be. Certain changes (such as amendments to the repayment date, currency, the name of the borrower, recognised lender, the purpose for which the ECB is utilised, all-in costs, cancellation of LRN, reduction in amount of the ECB or any change to the AD Bank) may be approved by the AD Bank under a delegated authority from the RBI subject to certain conditions being complied with. Any redemption of the Notes prior to their stated maturity, including on occurrence of an Event of Default or for taxation reasons (as further described in the Conditions) will require the prior approval of the RBI or the AD Bank, as the case may be.

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Issuance of Overseas Rupee-Denominated Bonds Pursuant to the ECB Guidelines, any company or body corporate (including NBFCs), as well as real estate investment trusts and infrastructure investment trusts, can issue plain vanilla RupeeDenominated overseas bonds with a three-year minimum maturity period. The Notes can only be subscribed or purchased by a resident of a country that is a member of the FATF or member of a FATF Style Regional Body and whose securities market regulator is a signatory to the International Organisation of Securities Commission’s multilateral MoU (Appendix A Signatories), or a signatory to a bilateral MoU with the Securities and Exchange Board of India for information sharing arrangements. Additionally, investors should not be resident of a country identified in the public statement of the FATF as: (i) a jurisdiction having a strategic anti-money laundering or combating the financing of terrorism deficiencies to which counter measures apply; or (ii) a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the FATF to address the deficiencies. Banks incorporated in India cannot subscribe to such Rupee-denominated bonds; however, they can act as arrangers and underwriters for such issuances. There is no all-in cost ceiling for Rupee-Denominated bond issuances and pricing is in accordance with market conditions. Issuers can raise up to U.S.$50 billion or its equivalent per financial year under the automatic route beyond which an RBI approval would be required. The proceeds of such issuance can be used for all purposes except for: (i) real estate projects other than the development of integrated township and affordable housing projects; (ii) investment in capital markets and domestic equity investments; (iii) prohibited activities under the foreign direct investment guidelines; (iv) land acquisition; and (v) on-lending to other entities for any of the above objectives. The foreign currency to Rupee conversion will be at the market rate on the settlement date. Furthermore, investors are allowed to hedge their Rupee exposure through permitted derivative products with: (a) an AD Bank in India; or (b) the offshore branches or subsidiaries of Indian banks on a back to back basis; or (c) branches of foreign banks with a presence in India on a back to back basis. Issuers issuing Rupee-Denominated bonds offshore are required to comply with provisions of the ECB Guidelines in relation to reporting requirements, security creation and parking of proceeds offshore. The issuance of Notes is being made under the automatic route under the ECB Guidelines. In relation to Rupee-Denominated Notes, the Issuer is required to provide the list of primary Noteholders procured from the Dealer to the relevant regulatory authorities in India as and when required. Corporate Laws The Issuer is a company incorporated and registered under the Companies Act and hence governed by its provisions and the rules made thereunder. In 2013, the Indian Parliament enacted the New Companies Act, which was notified in the official gazette on 30 August 2013. The New Companies Act will replace the Companies Act entirely as and when fully notified. The New Companies Act seeks to overhaul the Companies Act so as to make it more adaptable to the changing circumstances and make it comprehensive. The Ministry of Corporate Affairs (MCA) has to date notified: (i) 98 sections of the New Companies Act which were made effective from 12 September 2013; (ii) Section 135 and Schedule VII of the New Companies Act in relation to corporate social responsibility on 27 February 2014, which was made effective from 1 April 2014; (iii) 183 sections and Schedule I to XI which were notified on 26 March 2014 and made effective from 1 April 2014; (iv) 29 sections in relation to the National Company Law Tribunal and National Company Law Appellate Tribunal which were notified on 1 June 2016 and made effective on 1 June 2016; and (v) nine sections in relation to winding up and the National Company Law Tribunal and National Company Law Appellate Tribunal which were notified and made effective on 9 September 2016. The substantial operative part of the legislation is in the rules, and the rules for implementation of majority of the chapters of New Companies Act have also been notified and were made effective from 1 April 2014.

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The New Companies Act strengthens corporate regulation by increasing the robustness of the existing provisions and introducing new measures, such as by: (a) increasing accountability of management by making independent directors more accountable; (b) improving corporate governance practices; (c) enhancing disclosure norms in relation to capital raising; (d) enhancing audit procedures and audit accountability including establishment of the National Financial Reporting Authority for dealing with matters relating to accounting and auditing policies and standards; (e) increasing investor protection and activism by way of provisions relating to class action suits; (f) ensuring protection of minority rights including exit options; (g) promoting e-governance initiatives; (h) ensuring stricter enforcement standards including establishment of Serious Fraud Investigation Office for investigation of frauds relating to companies and special courts for summary trial of offences under the New Companies Act; (i) providing for better framework for insolvency regulation; (j) making CSR mandatory for every company having net worth of Rs.5,000 million or more, or turnover of Rs.10,000 million or more or a net profit of Rs.50 million or more during any financial year; (k) introducing the National Company Law Tribunal and its appellate authority which is the National Company Law Appellate Tribunal and replaces the Company Law Board, the Board for Industrial and Financial Reconstruction and its appellate authority with the intention that all lawsuits relating to companies are made to one body; (l) providing rules on insider dealing, forward contracts, related party transactions and acceptance of deposits; and (m) implementing a fixed and variable legislation model with various provisions of the New Companies Act delegating rule making power to Central Government. The New Companies Act has introduced various sections which significantly and substantially modify, repeal and replace the entire framework of law governing Indian companies including the Issuer.

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TAXATION The information provided below does not purport to be a comprehensive description of all tax considerations which may be relevant to a decision to purchase Notes. In particular, the information does not consider any specific facts or circumstances that may apply to a particular purchaser. Neither these statements nor any other statements in this Offering Circular are to be regarded as advice on the tax position of any holder of the Notes or of any person acquiring, selling or otherwise dealing with the Notes or on any tax implications arising from the acquisition, sale or other dealings in respect of the Notes. The statements do not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of the Notes and do not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities) may be subject to special rules. Prospective purchasers of Notes are advised to consult their own tax advisers as to the tax consequences of the purchase, ownership and disposal of the Notes, including the effect of any state or local taxes, under the tax laws applicable in India and each country of which they are residents or countries of purchase, holding or disposal of the Notes. Additionally, in view of the number of different jurisdictions where local laws may apply, this Offering Circular does not discuss the local tax consequences applicable to a potential holder, purchaser or seller arising from the acquisition, holding or disposal of the Notes. Prospective investors must therefore inform themselves as to any tax, exchange control legislation or other laws and regulations in force relating to the subscription, holding or disposal of the Notes at their place of residence, and in the countries of which they are citizens or the countries of purchase, holding or disposal of the Notes. Indian Taxation The following is a summary of the existing principal Indian tax consequences for non-resident investors subscribing to the Notes issued by the Issuer. The summary is based on existing Indian taxation law and practice in force at the date of this Offering Circular and is subject to change, possibly with retroactive effect. The summary does not constitute legal or tax advice and is not intended to represent a complete analysis of the tax consequences under Indian law of the acquisition, ownership or disposal of the Notes. Prospective investors should, therefore, consult their own tax advisers regarding the Indian tax consequences, as well as the tax consequences under any other applicable taxing jurisdiction, of acquiring, owning and disposing of the Notes. Payments through India Any payments the Issuer makes on the Notes, including additional amounts, made through India will be subject to the regulations of RBI. Taxation of interest and Withholding Tax Interest on the Notes may not be subject to taxes in India if the proceeds of the issuance of the Notes are used for the purposes of business carried on by the Issuer outside India. If, however, the proceeds are used for the purposes of the Issuer’s business in India, non-resident investors will be liable to pay tax on the interest paid on the Notes. As of the date of this Offering Circular, the rate of tax for Notes under the Income Tax Act, 1961 (the Income Tax Act) is 5.0 per cent. (plus applicable surcharge, education cess and secondary and higher education cess), for any long term bond, including infrastructure bond borrowings in foreign currency, issued between 1 October 2014 and 30 June 2017. Since the interest payable on the Notes is subject to taxation in India, there is a requirement to withhold tax at the applicable rate for Notes, subject to any lower rate of tax provided by an applicable Tax Treaty (as defined later), depending on the legal status of the non-resident investor and its taxable income in India.

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The rates of tax will stand reduced if the beneficial recipient is a resident of a country with which the Government has entered into an agreement for granting relief of tax or for avoidance of double taxation (a Tax Treaty) and the provisions of such treaty, which provide for the taxation in India of income by way of interest at a rate lower than that stated above, and of the Income Tax Act, are fulfilled. The interest payable will be subject to withholding tax in India, subject to conditions as detailed below. A non-resident investor will be obligated to pay such income tax in an amount equal to, or will be entitled to a refund of, as the case may be, any difference between amounts withheld in respect of interest paid on the Notes through India and its ultimate Indian tax liability for such interest, subject to and in accordance with the provisions of the Income Tax Act. The non-resident Noteholders shall be obliged to provide all necessary information and documents, as may be required by the Issuer. Pursuant to the Terms and Conditions of the Notes, all payments of, or in respect of, principal and interest on the Notes, will be made free and clear of and without withholding or deduction on account of any present or future taxes within India unless it is required by law, in which case, pursuant to Condition 9.1, the Issuer will pay additional amounts as may be necessary in order that the net amounts received by the Noteholders after the withholding or deduction shall equal the respective amounts which would have been receivable in respect of the Notes in the absence of the withholding or deduction, subject to certain exceptions. With respect to interest on the Notes that is not subject to taxes in India (where the proceeds of the issuance of the Notes are used for the purposes of business carried on by the Issuer outside India or otherwise), the Issuer may be required to apply annually for an exemption from withholding tax under section 195(2) of the Income Tax Act. Taxation of gains arising on disposal Any gains arising to a non-resident investor from disposal of the Notes held (or deemed to be held) as a capital asset will generally be chargeable for income tax in India if the Notes are regarded as property situated in India. A non-resident investor generally will not be chargeable for income tax in India upon disposal of the Notes held as a capital asset provided the Notes are regarded as being situated outside India. The issue as to where the Notes should properly be regarded as being situated is not free from doubt. The ultimate decision, however, will depend on the view taken by Indian tax authorities on the position with respect to the situs of the rights being offered in respect of the Notes. There is a possibility that the Indian tax authorities may treat the Notes as being located in India as the Issuer is incorporated in and resident in India. If the Notes are regarded as situated in India by the Indian tax authorities, upon disposition of a Note: (i)

a non-resident investor, who has held the Notes for a period of more than 36 months immediately preceding the date of their dispositions, will be liable to pay long term capital gains tax at rate of 10.0 per cent. of the capital gains (plus applicable surcharge, education cess and secondary and higher education cess) in accordance with the provisions of the Income Tax Act. These rates are subject to any lower rate provided for by an applicable tax treaty;

(ii)

a non-resident investor who has held the Notes for 36 months or less will be liable to pay short term capital gains tax at a rate of up to 40.0 per cent. of capital gains (plus applicable surcharge, education cess and secondary and higher education cess), depending on the legal status of the non-resident investor, and his or her taxable income in India, subject to any lower rate provided for by an applicable Tax Treaty; and

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(iii) in the case of a non-resident investor, the Finance Act, 2016 provides that any gains arising on account of appreciation of the Rupee against a foreign currency at the time of redemption of Rupee Denominated Bonds of an Indian company subscribed to by such non-resident investor, shall be ignored for the computation of full value of consideration. Accordingly, such gains arising to the original non-resident investor on account of the appreciation of the Rupee against a foreign currency at the time of redemption of the Notes subscribed to by such non-resident investor, shall not be taxable as capital gains. It does not, however, deal with capital gains tax treatment in respect of: (a)

the gains arising to investors prior to redemption during the life of the Notes; and

(b)

gains of the Notes acquired through secondary purchases.

(iv) any income arising to a non-resident investor from a transfer of the Notes held as stock-in-trade will be considered as business income. Business income will be subject to income tax in India only to the extent, it is attributable to a “business connection in India” or, where a Tax Treaty applies, to a “permanent establishment” of the non-resident investor in India. A non-resident investor will be liable to pay Indian tax on such income at a rate of up to 40.0 per cent. (plus applicable surcharge, education cess and secondary and higher education cess), depending on the legal status of the non-resident investor and his or her taxable income in India, subject to any lower rate provided for by a Tax Treaty. If applicable, under the tax law, tax shall be withheld by the person making any payment to a non-resident on long-term capital gains at 10.0 per cent. (plus applicable surcharge, education cess and secondary and higher education cess) and short-term capital gains at 30.0 per cent. or 40 per cent. (plus applicable surcharge, education cess and secondary and higher education cess), depending on the legal status of the recipient of income, subject to any lower rate provided for by a tax treaty. Tax payable shall be computed in such manner as prescribed in this regard under the Income Tax Act. For the purpose of tax withholding, the non-resident Noteholders shall be obliged to provide permanent account number allotted by the tax authorities and all prescribed information/documents, including a tax residency certificate (issued by the tax authorities of the country in which the investor is resident) for claiming the tax treaty benefits. Potential investors should, in any event, consult their own tax advisers on the tax consequences of transfer of the Notes. Wealth Tax No wealth tax is payable in relation to the Notes. Estate Duty No estate duty is payable at present in India in relation to the Notes. Gift Tax There is no gift tax payable at present in India in relation to the Notes.

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Stamp Duty A transfer of the Notes outside India will not give rise to any Indian stamp duty liability unless brought into India. Stamp duty will be payable if the Notes are brought into India for enforcement or for any other purpose. The amount of stamp duty payable will depend on the applicable State Stamp Act and the duty will have to be paid within a period of three months from the date the Notes are first received in India. The proposed financial transactions tax (FTT) On 14 February 2013, the European Commission published a proposal (the Commission’s Proposal) for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the participating Member States). However, Estonia has since stated that it will not participate. The Commission’s Proposal has very broad scope and could, if introduced, apply to certain dealings in the Notes (including secondary market transactions) in certain circumstances. The issuance and subscription of Notes should, however, be exempt. Under the Commission’s Proposal the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, “established” in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a participating Member State. However, the FTT proposal remains subject to negotiation between participating Member States. It may therefore be altered prior to any implementation, the timing of which remains unclear. Additional EU Member States may decide to participate. Prospective holders of the Notes are advised to seek their own professional advice in relation to the FTT. Foreign Account Tax Compliance Act Sections 1471 to 1474 of the U.S. Internal Revenue Code of 1986 (FATCA) impose a new reporting regime and potentially a 30 per cent. withholding tax with respect to certain payments to: (i) any non-U.S. financial institution (a “foreign financial institution”, or FFI (as defined by FATCA) that does not become a “Participating FFI” by entering into an agreement with the U.S. Internal Revenue Service (the IRS) to provide the IRS with certain information in respect of its account holders and investors or is not otherwise exempt from or in deemed compliance with FATCA. The Issuer does not expect to be classified as an FFI. The new withholding regime is now in effect for payments from sources within the United States and will apply to “foreign passthru payments” (a term not yet defined) no earlier than 1 January 2019. This withholding would potentially apply to payments in respect of: (i) any Notes characterised as debt (or which are not otherwise characterised as equity and have a fixed term) for U.S. federal tax purposes that are issued after the “grandfathering date”, which (a) with respect to Notes that give rise solely to foreign passthru payments, is the date that is six months after the date on which final U.S. Treasury regulations defining the term foreign passthru payment are filed with the Federal Register; and (b) with respect to Notes that give rise to a dividend equivalent pursuant to section 871(m) of the U.S. Internal Revenue Code of 1986, is 1 July 2017, or (in each case) which are materially modified after the grandfathering date; and (ii) any Notes characterised as equity or which

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do not have a fixed term for U.S. federal tax purposes, whenever issued. If Notes are issued on or before the grandfathering date, and additional Notes of the same series are issued after that date, the additional Notes may not be treated as grandfathered, which may have negative consequences for the existing Notes, including a negative impact on market price. The United States and a number of other jurisdictions have entered into intergovernmental agreements to facilitate the implementation of FATCA (each, an IGA). Pursuant to FATCA and the “Model 1” and “Model 2” IGAs released by the United States, an FFI in an IGA signatory country could be treated as a “Reporting FI” not subject to withholding under FATCA on any payments it receives. Further, an FFI in an IGA jurisdiction would not be required to withhold under FATCA or an IGA (or any law implementing an IGA) (any such withholding being FATCA Withholding) from payments it makes. Under each Model IGA, a Reporting FI would still be required to report certain information in respect of its account holders and investors to its home government or to the IRS. The United States and India have entered into an agreement the U.S. - India IGA based largely on the Model 1 IGA. If the Issuer is treated as a Reporting FI pursuant to the U.S.-India IGA, it does not anticipate that it will be obliged to deduct any FATCA Withholding on payments it makes. There can be no assurance, however, that the Issuer will be treated as a Reporting FI, or that it would in the future not be required to deduct FATCA Withholding from payments it makes. Accordingly, the Issuer and financial institutions through which payments on the Notes are made may be required to withhold FATCA Withholding if any FFI through or to which payment on such Notes is made is not a Participating FFI, a Reporting FI, or otherwise exempt from or in deemed compliance with FATCA. While the Notes are in global form and held within the ICSDs, it is expected that FATCA will not affect the amount of any payments made under, or in respect of, the Notes by the Issuer, any paying agent and the common depositary, given that each of the entities in the payment chain between the Issuer and the participants in the ICSDs is a major financial institution whose business is dependent on compliance with FATCA and that any alternative approach introduced under an IGA will be unlikely to affect the Notes. The documentation expressly contemplates the possibility that the Notes may go into definitive form and therefore that they may be taken out of the ICSDs. If this were to happen, then a non-FATCA-compliant holder could be subject to FATCA Withholding. However, definitive Notes will only be printed in remote circumstances. FATCA is particularly complex and its application is uncertain at this time. The above description is based in part on regulations, official guidance and model IGAs, all of which are subject to change or may be implemented in a materially different form. Prospective investors should consult their tax advisers on how these rules may apply to the Issuer and to payments they may receive in connection with the Notes. Hiring Incentives to Restore Employment Act The U.S. Hiring Incentives to Restore Employment Act introduced Section 871(m) of the U.S. Internal Revenue Code of 1986 which treats a “dividend equivalent” payment as a dividend from sources within the United States. Under Section 871(m), such payments generally would be subject to a 30 per cent. U.S. withholding tax that may be reduced by an applicable tax treaty, eligible for credit against other U.S. tax liabilities or refunded, provided that the beneficial owner timely claims a credit or refund from the IRS. A “dividend equivalent” payment is (i) a substitute dividend payment made pursuant to a securities lending or a sale-repurchase transaction that (directly or indirectly) is contingent upon, or determined by reference to, the payment of a dividend from sources within the United States, (ii) a payment made pursuant to a “specified notional principal contract” that (directly or indirectly) is contingent upon, or determined by reference to, the payment of a dividend from sources within the United States, and (iii) any other payment determined by the IRS to be substantially similar to a payment described in (i) and (ii). Recently published final U.S. Treasury regulations issued under Section 871(m) (the Section 871(m) Regulations) will, when effective, require withholding on certain non-U.S. holders of the Notes with respect to amounts treated as attributable

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to dividends from certain U.S. securities. Under the Section 871(m) Regulations, only a Note that has an expected economic return sufficiently similar to that of the underlying U.S. security, as determined on the Note’s issue date based on tests set forth in the Section 871(m) Regulations, will be subject to the Section 871(m) withholding regime (making such Note a Specified Note). The Section 871(m) Regulations provide certain exceptions to this withholding requirement, in particular for instruments linked to certain broad-based indices. Withholding in respect of dividend equivalents will generally be required when cash payments are made on a Specified Note or upon the date of maturity, lapse or other disposition by the non-U.S. holder of the Specified Note. If the underlying U.S. security or securities are expected to pay dividends during the term of the Specified Note, withholding generally will still be required even if the Specified Note does not provide for payments explicitly linked to dividends. If the Issuer or any withholding agent determines that withholding is required, neither the Issuer nor any withholding agent will be required to pay any additional amounts with respect to amounts so withheld. The Section 871(m) Regulations generally apply to Specified Notes issued beginning 1 January 2017, for all dividend equivalent payments. If the terms of a Note are subject to a “significant modification” such that the Note is treated as retired and reissued, it could lose its “grandfathered” status and might become a Specified Note based on economic conditions in effect at that time. Upon the issuance of a series of Notes, the Issuer will state in the applicable Pricing Supplement if it has determined that they are Specified Notes, in which case a non-U.S. holder of the Notes should expect to be subject to withholding in respect of any dividend-paying U.S. securities underlying those Notes. The Issuer’s determination is binding on non-U.S. holders of the Notes, but it is not binding on the IRS. The Section 871(m) Regulations require complex calculations to be made with respect to Notes linked to U.S. securities and their application to a specific issue of Notes may be uncertain. Prospective investors should consult their tax advisers regarding the potential application of Section 871(m) to the Notes.

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SUBSCRIPTION AND SALE The Dealers have, in an amended and restated programme agreement (amended and restated) dated 25 May 2011 as amended and/or supplemented from time to time (the Programme Agreement), agreed with the Issuer a basis upon which they or any of them may from time to time agree to purchase Notes. Any such agreement will extend to those matters stated under “Form of the Notes” and “Terms and Conditions of the Notes”. In the Programme Agreement, the Issuer has agreed to reimburse the Dealers for certain of their expenses in connection with the establishment of the Programme and the issue of Notes under the Programme and to indemnify the Dealers against certain liabilities incurred by them in connection therewith. The Programme Agreement entitles the Dealers to terminate any agreement that they make to subscribe Notes in certain circumstances prior to payment for such Notes being made to the Issuer. In order to facilitate the offering of any Tranche of the Notes, a nominated Dealer participating in the offering of the Tranche may engage in transactions that stabilise, maintain or otherwise affect, which support the market price of the relevant Notes during and after the offering of the Tranche. Specifically, such persons may over-allot or create a short position in the Notes for their own account by selling more Notes than have been sold to them by the Issuer. Such persons may also elect to cover any such short position by purchasing Notes in the open market. In addition, such persons may stabilise or maintain the price of the Notes by bidding for or purchasing Notes in the open market and may impose penalty bids, under which selling concessions allowed to syndicate members or other broker-dealers participating in the offering of the Notes are reclaimed if Notes previously distributed in the offering are repurchased in connection with stabilisation transactions or otherwise. The effect of these transactions may be to stabilise or maintain the market price of the Notes at a level higher than that which might otherwise prevail in the open market. The imposition of a penalty bid may also affect the price of the Notes to the extent that it discourages resales thereof. No representation is made as to the magnitude or effect of any such stabilising or other transactions. Such transactions, if commenced, may be discontinued at any time, and must be brought to an end after a limited period. Under U.K. laws and regulations, stabilising activities may only be carried on by the Stabilising Manager (or any person acting for the Stabilising Manager) named in the applicable Pricing Supplement and only for a period of 30 days following the Issue Date of the relevant Tranche of Notes. United States Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that: (i)

the Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States (or, in certain circumstances, to, or for the account or benefit of, U.S. persons) except in certain transactions exempt from the registration requirements of the Securities Act;

(ii)

the Notes in bearer form are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. tax regulations. Notes in bearer form for U.S. federal income tax purposes will be issued in accordance with the provisions of U.S. Treasury Regulation §1.163-5(c)(2)(i)(D) (or any successor United States Treasury regulation section, including, without limitation, successor regulations issued in accordance with Internal Revenue Service Notice 2012-20 or otherwise in connection with the United States Hiring Incentives to Restore Employment Act of 2010), unless the relevant Pricing Supplement specifies that Notes will be issued in accordance with the provision of U.S. Treasury Regulation §1.163-5(c)(2)(i)(C) (or any successor United States Treasury regulation section, including, without limitation, successor regulations issued in

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accordance with Internal Revenue Service Notice 2012-20 or otherwise in connection with the United States Hiring Incentives to Restore Employment Act of 2010) or that TEFRA is not applicable. Terms used in this paragraph have the meanings given to them by the U.S. Revenue Code of 1986 and regulations promulgated thereunder; (iii) in connection with any Notes which are offered or sold outside the United States in reliance on an exemption from the registration requirements of the Securities Act provided under Category 2 of Regulation S (Category 2 Notes), each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it will not offer, sell or deliver such Category 2 Notes: (i) as part of their distribution at any time; or (ii) otherwise until 40 days after the completion of the distribution, as determined and certified by the relevant Dealer or, in the case of an issue of Notes on a syndicated basis, the relevant lead manager, of all Notes of the Tranche of which such Category 2 Notes are a part, within the United States or to, or for the account or benefit of, U.S. persons. Each Dealer has further agreed, and each further Dealer appointed under the Programme will be required to agree, that it will send to each dealer to which it sells any Category 2 Notes during the Distribution Compliance Period a confirmation or other notice setting forth the restrictions on offers and sales of the Category 2 Notes within the United States or to, or for the account or benefit of, U.S. persons; (iv) until 40 days after the commencement of the offering of any Series of Notes, an offer or sale of such Notes within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with an available exemption from registration under the Securities Act; and (v)

each issuance of Index Linked Notes or Dual Currency Notes shall be subject to such additional U.S. selling restrictions as the Issuer and the relevant Dealer may agree as a term of the issuance and purchase of such Notes, which additional selling restrictions shall be set out in the applicable Pricing Supplement.

European Economic Area Public Offer Selling Restriction under the Prospectus Directive In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Offering Circular as completed by the pricing supplement in relation thereto to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of such Notes to the public in that Relevant Member State: (a)

at any time to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(b)

at any time to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or

(c)

at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive,

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provided that no such offer of Notes referred to in (a) to (c) above shall require the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive, or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. For the purposes of this provision, the expression an offer of Notes to the public in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC (as amended including by Directive 2010/73/EU), and includes any relevant implementing measure in the Relevant Member State. United Kingdom Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that: (a)

in relation to any Notes which have a maturity of less than one year: (i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business; and (ii) it has not offered or sold and will not offer or sell any Notes other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Notes would otherwise constitute a contravention of Section 19 of the Financial Services and Markets Act 2000 (FSMA) by the Issuer;

(b)

it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and

(c)

it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom.

Italy Each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that the offering of the Notes has not been registered pursuant to Italian securities legislation and, accordingly no Notes may be offered, sold or delivered, nor may copies of the Offering Circular or of any other document relating to the Notes be distributed in the Republic of Italy, except: (i)

to qualified investors (investitori qualificati), as defined pursuant to Article 100 of Legislative Decree No. 58 of 24 February 1998, as amended (the Financial Services Act) and Article 34-ter, first paragraph, letter (b) of CONSOB Regulation No. 11971 of 14 May 1999, as amended from time to time (Regulation No. 11971); or

(ii)

in other circumstances which are exempted from the rules on public offerings pursuant to Article 100 of the Financial Services Act and Article 34-ter of Regulation No. 11971.

Any offer, sale or delivery of the Notes or distribution of copies of the Offering Circular or any other document relating to the Notes in the Republic of Italy under (i) or (ii) above must:

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(a)

be made by an investment firm, bank or financial intermediary permitted to conduct such activities in the Republic of Italy in accordance with the Financial Services Act, CONSOB Regulation No. 16190 of 29 October 2007 (as amended from time to time) and Legislative Decree No. 385 of 1 September 1993, as amended (the Banking Act); and

(b)

comply with any other applicable laws and regulations or requirements imposed by CONSOB, the Bank of Italy (including the reporting requirements, where applicable, pursuant to Article 129 of the Banking Act and the implementing guidelines of the Bank of Italy, as amended from time to time ) and/or any other Italian authority.

Please note that in accordance with Article 100-bis of the Financial Services Act, where no exemption from the rules on public offerings applies under (a) and (b) above, the subsequent distribution of the Notes on the secondary market in Italy must be made in compliance with the terms of the public offer and the prospectus requirement rules provided under the Financial Services Act and Regulation No. 11971. Failure to comply with such rules may result in the sale of such Notes being declared null and void and in the liability of the intermediary transferring the financial instruments for any damages suffered by the investors. The Netherlands Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that any Notes will only be offered in the Netherlands to Qualified Investors (as defined in the Prospectus Directive), unless such offer is made in accordance with the Dutch Financial Supervision Act (Wet op het financieel toezicht). India Notes with Minimum Average Maturity of five years Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that (a) this Offering Circular has not been and will not be registered, produced or published as an offer document (whether as a prospectus in respect of a public offer or an information memorandum or private placement offer letter or other offering material in respect of a private placement under the Companies Act, 2013 or any other applicable Indian laws) with the Registrar of Companies, the Securities and Exchange Board of India or any other statutory or regulatory body of like nature in India, except any information from part of the Offering Circular which is mandatorily required to be disclosed or filed in India under any applicable Indian laws; (b) the Notes will not be offered or sold and have not been offered or sold, in India by means of this Offering Circular or any other offering document or material relating to the Notes and will not be circulated or distributed and have not been circulated or distributed, directly or indirectly, to any person or the public in India or otherwise generally distributed or circulated in India which would constitute an advertisement, invitation, offer, sale or solicitation of an offer to subscribe for or purchase any securities in violation of applicable Indian laws. Notes with Average Maturity of 10 years Each Dealer represents and agrees (a) to the restrictions set out in “Notes with Minimum Average Maturity of five years”; and (b) this Offering Circular, any material relating to the Notes and the Notes will not be offered or sold and have not been offered or sold to any overseas branch or subsidiary of an Indian bank. Rupee Denominated Notes Each Dealer represents and agrees that in relation to any issuance of Notes denominated in Rupees and payable in a currency other than Rupees (Rupee Denominated Notes), the Offering Circular or any other material relating to such Notes has not been and will not be circulated or

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distributed to (i) any prospective investor who does not meet the FATF Requirements; or (ii) any overseas branch or subsidiary of an Indian bank (except as permitted under the ECB Guidelines). For the purposes of this section, FATF Requirements pursuant to the RBI regulations mean an investor who is a resident of a country: (a) that is a member of FATF or a member of a FATF style regional body; (b) whose securities market regulator is a signatory to the International Organisation of Securities Commission’s multilateral MoU (Appendix A Signatories) or a signatory to a bilateral MoU with the Securities and Exchange Board of India for information sharing arrangements; (c) should not be a country identified in the public statement of the FATF as: (i) a jurisdiction having a strategic anti-money laundering or combating the financing of terrorism deficiencies to which counter measures apply; or (ii) a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the FATF to address the deficiencies; and (d) other requirements as specified by the RBI from time to time in relation to the above. Eligibility of holders of the Notes Holders and beneficial owners of the Notes shall be responsible for compliance with restrictions on the ownership of the Notes imposed from time to time by applicable laws or by any regulatory authority or otherwise. In this context, holders and beneficial owners of Notes shall be deemed to have acknowledged, represented and agreed that such holders and beneficial owners are eligible to purchase the Notes under applicable laws and regulations and are not prohibited under any applicable law or regulation from acquiring, owning or selling the Notes. Disclosure of information relating to holders of Rupee Denominated Notes The holders and beneficial owners of Rupee Denominated Notes shall be deemed to confirm that for so long as they hold any Rupee Denominated Notes, they will meet the FATF Requirements and the ECB Guidelines. Further, all Noteholders represent and agree that the Rupee Denominated Notes will not be offered or sold on the secondary market to any person who does not meet the FATF Requirements and comply with the ECB Guidelines. In relation to any issuance of Rupee Denominated Notes, the holders and beneficial owners represent and agree that they will provide all information and details about itself to the Issuer, to enable the Issuer to provide such information to the RBI or any other statutory or regulatory authority in India as and when such information is required. The holders and beneficial owners will provide all information and details that they have or can procure about any subsequent transferee Noteholders (and shall provide all assistance in relation thereto) to the Issuer so as to enable the Issuer to obtain the details of the transferee Noteholders or any other information pertaining to such transferee Noteholders to enable the Issuer to provide such information to the RBI or any other statutory or regulatory authority in India as and when such information is required. To comply with applicable laws and regulations, the Issuer or its duly appointed agent may from time to time to request Euroclear and Clearstream to provide them with details of the accountholders within Euroclear and Clearstream, as maybe appropriate, that hold the Rupee Denominated Notes and the number of Rupee Denominated Notes held by each such accountholder. Euroclear and Clearstream, Luxembourg participants which are holders of the Rupee Denominated Notes or intermediaries acting on behalf of such Noteholders would be deemed to have hereby authorised Euroclear and Clearstream, Luxembourg, as may be appropriate, to disclose such information to the Issuer or its duly appointed agent. Singapore This Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore, and the Notes will be offered pursuant to the exemptions under the Securities and Futures Act, Chapter 289 of Singapore, as amended (the Securities and Futures Act). Accordingly, each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree that the Notes may not be offered or sold or made the

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subject of an invitation for subscription or purchase nor may this Offering Circular or any other document or material in connection with the offer or sale or invitation for subscription or purchase of any Notes be circulated or distributed, whether directly or indirectly, to any person in Singapore other than: (i) to an institutional investor pursuant to Section 274 of the Securities and Futures Act; (ii) to a relevant person under Section 275(1) of the Securities and Futures Act, or to any person pursuant to Section 275(1A) of the Securities and Futures Act, and in accordance with the conditions specified in Section 275 of the Securities and Futures Act; or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act. Where the Notes are subscribed or purchased under Section 275 of the Securities and Futures Act by a relevant person which is: (a)

a corporation (which is not an accredited investor (as defined in Section 4A of the Securities and Futures Act)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b)

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

securities (as defined in Section 239(1) of the Securities and Futures Act) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferable for six months after that corporation or that trust has acquired the Notes pursuant to an offer under Section 275 of the Securities and Futures Act except: (i)

to an institutional investor or to a relevant person defined in Section 275(2) of the Securities and Futures Act or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the Securities and Futures Act; or

(ii)

where no consideration is or will be given for the transfer; or

(iii) where the transfer is by operation of law; or (iv) pursuant to Section 276(7) of the Securities and Futures Act or Regulation 32 of the Securities and Futures (Offers of Investment) (Shares and Debentures) Regulations 2005 of Singapore. Hong Kong Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree that: (a)

it has not offered or sold, and will not offer or sell, in Hong Kong, by means of any document, any Notes (except for Notes which are a “structured product” as defined in the Securities and Futures Ordinance (Cap.571) of Hong Kong) other than (i) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance, or (ii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and

(b)

it has not issued, or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Notes, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong

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Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder. Japan The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Law No. 25 of 1948, as amended, the FIEA) and each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it will not offer or sell any Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (as defined under Item 5, Paragraph 1, Article 6 of the Foreign Exchange and Foreign Trade Act (Act No. 228 of 1949, as amended)), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEA and any other applicable laws, regulations and ministerial guidelines of Japan. General Each Dealer has represented, warranted and undertaken and each further Dealer appointed under the Programme will be required to represent, warrant and undertake that it will (to the best of its knowledge and belief) comply with all applicable securities laws and regulations in force in any jurisdiction in which it purchases, offers, sells or delivers Notes or possesses or distributes this Offering Circular and will obtain any consent, approval or permission required by it for the purchase, offer, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers, sales or deliveries and neither the Issuer, the Trustee nor any of the other Dealers shall have any responsibility therefor. None of the Issuer, the Trustee, the Arrangers and the Dealers represents that Notes may at any time lawfully be sold in compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to any exemption available thereunder, or assumes any responsibility for facilitating such sale. With regard to each Tranche, the relevant Dealer will be required to comply with such other restrictions as the Issuer and the relevant Dealer shall agree and as shall be set out in the applicable Pricing Supplement. Certain Relationships The Dealers and certain of their affiliates may have performed certain investment banking and advisory services for the Issuer and its affiliates from time to time for which they have received customary fees and expenses and may, from time to time, engage in transactions with and perform services for the Issuer and its affiliates in the ordinary course of their business. The Dealers or certain of their affiliates may purchase Notes and be allocated Notes for asset management and/or proprietary purposes but not with a view to distribution. Each of the Dealers and its affiliates may engage in investment or commercial banking and other dealings in the ordinary course of business with the Issuer or its affiliates from time to time and may receive fees and commissions for these transactions. In addition to the transactions noted above, each Dealer and its affiliates may, from time to time after completion of the offering of the Notes under the Programme, engage in other transactions with, and perform services for, the Issuer or its affiliates in the ordinary course of their business. Each Dealer or its affiliates may also purchase Notes for asset management and/or proprietary purposes but not with a view to distribution or may hold the Notes on behalf of clients or in the capacity of investment advisers. While each Dealer and its affiliates has policies and procedures to deal with conflicts of interests, any such transactions may cause a Dealer or its affiliates or its clients or counterparties to have economic interests and incentives which may conflict with those of an investor in the Notes. Each Dealer may receive returns on such transactions

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and has no obligation to take, refrain from taking or cease taking any action with respect to any such transactions based on the potential effect on a prospective investor in the Notes. Further, each of the Dealers and their affiliates are full service financial institutions engaged in various activities which may include securities trading, commercial and investment banking, financial advice, investment management, principal investment, hedging, financing and brokerage activities. Each of the Dealers may have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with the Issuer or its subsidiaries, jointly controlled entities or associated companies from time to time. In the ordinary course of their various business activities, the Dealers and their affiliates may make or hold (on their own account, on behalf of clients or in their capacity as investment advisers) a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments and enter into other transactions, including credit derivatives (such as asset swaps, repackaging and credit default swaps) in relation thereto. Such transactions, investments and securities activities may involve securities and instruments of the Issuer or its subsidiaries, jointly controlled entities or associated companies, including Notes issued under the Programme, may be entered into at the same time or proximate to offers and sales of Notes or at other times in the secondary market and be carried out with counterparties that are also purchasers, holders or sellers of Notes. Notes issued under the Programme may be purchased by or be allocated to any Dealer or an affiliate for asset management and/or proprietary purposes but not with a view to distribution. The Dealers or their respective affiliates may purchase Notes for their own account and enter into transactions, including credit derivatives, such as asset swaps, repackaging and credit default swaps relating to Notes and/or other securities of the Issuer or its subsidiaries or associates, at the same time as the offer and sale of Notes or in secondary market transactions. Such transactions would be carried out as bilateral trades with selected counterparties and separately from any existing sale or resale of Notes to which this Offering Circular relates (notwithstanding that such selected counterparties may also be purchasers of Notes).

203

SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN IFRS, INDIAN GAAP AND IND-AS The Issuer’s financial statements included in this Offering Circular have been prepared in accordance with accounting policies followed by the Issuer which conform to the Indian GAAP as applicable to the Issuer for the respective years (hereinafter referred to as Indian GAAP). Indian GAAP differs in certain significant respects from IFRS. Such differences involve methods for measuring amounts in the financial statements as well as in disclosures. The Ministry of Corporate Affairs, by its notification dated 16 February 2015, provided notification of the Companies (Indian Accounting Standards) Rules, 2015 commonly referred to as IND-AS. The provisions of IND-AS have been implemented by the Issuer with effect from fiscal 2017. The standalone unaudited financial results for the quarter and half-year ended 30 September 2016 have been prepared as per the provisions of IND-AS. The provisions of IND-AS are mostly similar to the requirements of IFRS. The following table summarises certain general differences between IFRS, Indian GAAP and IND-AS that could have a significant impact on the financial position and operations of the Issuer if its financial statements were prepared under IFRS. The summary below should not be considered exhaustive and no attempt has been made to identify possible future differences between Indian GAAP and IFRS as a result of prescribed changes in accounting standards nor to identify future differences that may affect the Issuer’s financial statements as a result of transactions or events that may occur in the future. No attempt has been made by the Issuer to quantify the effects of those differences, nor has a reconciliation of Indian GAAP to IFRS been undertaken by the Issuer . Had any such quantification or reconciliation been undertaken, other potential significant accounting and disclosure differences may have come to its attention, which are not identified below. Prospective investors should consult their own professional advisers for an understanding of the principal differences between IFRS, Indian GAAP and IND-AS and how these differences might affect the financial statements of the Issuer presented in this Offering Circular. Summary of Certain Differences Topic

IFRS

Indian GAAP

IND-AS

Presentation of Financial Statements — Components of financial statements

The requirements for the presentation of financial statements, and the guidelines for their structure and content are set out in IAS 1. A complete set of financial statements under IFRS comprises: (a) a statement of financial position; (b) a statement of profit or loss and other comprehensive income (presented as a single statement or by presenting the profit and loss section in a separate statement of profit or loss, immediately followed by a statement presenting comprehensive income beginning with profit or loss; (c) statement of cash flow; (d) statement of changes in equity; and (e) notes comprising a summary of significant accounting policies and explanatory notes.

The requirements for the presentation of financial statements are set out in Schedule III to the Companies Act, 2013 and the accounting standards notified thereunder are applicable to the preparation of financial statements of respective years.

Similar to IFRS.

The disclosure of reclassification of comparative amounts includes the nature, amount and reason for reclassification.

A disclosure is made in financial statements that comparative amounts have been reclassified to conform to the presentation in the current period without additional disclosure for the nature, amount and reason for reclassification.

Presentation of Financial Statements — Disclosure of Reclassification

The components of financial statements are: (a) balance sheet; (b) statement of profit and loss; (c) cash flow statement; (d) a statement of changes in equity; and (e) explanatory notes and a summary of accounting policies.

204

Further, Schedule III to the Companies Act, 2013 sets out the requirements for the presentation of financial statements which are in conformity with IND-AS 1.

Similar to IFRS

Topic

IFRS

Indian GAAP

IND-AS

Presentation of Financial Statements — Balance sheet/statement of financial position

An entity is required to present current and non-current assets, and current and non-current liabilities, as separate classifications on the cover of the statement of financial position except when a presentation based on liquidity provides information that is more reliable and more relevant. Minimum line item requirements are set out in IAS 1.

All items of assets and liabilities are to be bifurcated between current and non-current portions and presented separately on the cover of the balance sheet. Schedule III of the Companies Act, 2013 sets out the minimum requirements for disclosure required in the balance sheet and statement of profit and loss account and notes.

Similar to IFRS. Minimum line item requirements are set out in Schedule III to the Companies Act, 2013.

Presentation of Financial Statements — Presentation of income statement

An analysis of expenses is presented using a classification based on either the nature of those expenses or their function or by whichever method that provides information that is reliable and more relevant.

Schedule III to the Companies Act, 2013 only permits an analysis of expense by nature.

Entities should present an analysis of expenses recognised in profit or loss using a classification based only on the nature of the expense.

Similar to IFRS

If presented by function, specific disclosures by nature are provided in the notes. Profit or loss attributable to non-controlling interests and equity holders of the parent are disclosed in the statement of comprehensive income/income statement (if presented separately) as allocations of profit or loss for the period. Presentation of Financial Statements — Statement of changes in equity

A statement of changes in equity is presented showing: (a) total comprehensive income for the period, separately showing the total amounts attributable to owners of the parent and to NCI; (b) for each component of equity, the effects of retrospective application or retrospective restatement recognised in accordance with IAS 8; and (c) for each component of equity, a reconciliation between the carrying amount at the beginning and at the end of the period, separately disclosing changes resulting from: Profit or loss; OCI; and transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners and changes in ownership interests in subsidiaries that do not result in a loss of control.

Statement of changes in equity is not presented.

Presentation of Financial Statements — Critical Judgments

The critical judgements made by the management in applying accounting policies are to be disclosed separately.

The disclosure of critical judgments made by the management is not specifically required.

Similar to IFRS

Presentation of Financial Statements — Disclosure of Capital

The disclosure of information about management of capital and compliance with externally imposed capital requirements, if any, is required.

The information regarding management of capital is not required to be disclosed.

Similar to IFRS

Movements in share capital, retained earnings and other reserves are presented in the notes to financial statements.

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Topic

IFRS

Indian GAAP

IND-AS

Presentation of Financial Statements — Extraordinary items

Presentation of any items of income or expense as extraordinary is prohibited. However, it requires that when some items of income or expense are material, an entity shall disclose their nature and amount separately.

Extraordinary items are disclosed separately in the statement of profit and loss and are included in determination of net profit or loss. Items of income or expense to be disclosed as extraordinary should be distinct from the ordinary activities and are determined by the nature of the event or transaction in relation to the business ordinarily carried out by an entity.

Similar to IFRS

Inventories — Net realisable value and reversal of write-down of inventory

A new assessment of net realisable value is required to be made in each subsequent period. Write-down of inventory is reversed if circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in the net realisable value because of changes in economic circumstances.

No specific guidance in AS 2 for reversal of write-down of inventories. However, reversals may be permitted as AS 5, Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies requires this to be disclosed as a separate line item in the statement of profit or loss.

Similar to IFRS

Cash Flow Statement — Bank overdrafts

Included in cash & cash equivalents if they form an integral part of an entity’s cash management. Usually, these bank balances often fluctuate between being positive and being overdrawn.

Bank overdrafts are considered to be financing activities.

Similar to IFRS

Cash Flow Statement — Cash flows from extraordinary items

As presentation of items as extraordinary is not permitted in accordance with IAS 1, a cash flow statement does not reflect any items of cash flow as extraordinary.

Cash flows from items disclosed as extraordinary are classified as arising from operating, investing or financing activities and are disclosed separately.

Similar to IFRS

Cash Flow Statement — Interest and dividend

May be classified as operating, investing or financing activities in a manner consistent from period to period.

Interest and dividends received are required to be classified as investing activities. Interest and dividends paid are required to be classified as financing activities other than for financial enterprises.

Similar to Indian GAAP

Changes in Accounting Policies and Errors

Retrospective application of changes in accounting policies is made by adjusting the opening balance of the affected component of equity for the earliest prior period presented and the other comparative amounts for each period presented as if the new accounting policy were always applied. If retrospective application is impracticable for a particular prior period, or for a period before those presented, the circumstances that led to the existence of that condition and a description of how and from when the change in accounting policy has been applied needs to be stated. Material prior year errors are corrected retrospectively by restating the comparative amounts for prior periods presented in which the error occurred , or if the error occurred before the earliest period presented, by restating the opening statement of financial position.

Changes in accounting policies are not applied retrospectively. The cumulative impact arising from such change is made in the financial statements in the period of change. If the impact of the change is not ascertainable, this should be disclosed.

Similar to IFRS

Material prior year errors are included in determination of profit or loss in the period in which the error is discovered and are separately presented in the profit and loss, so that the impact on current profit or loss can be perceived.

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Topic

IFRS

Indian GAAP

IND-AS

New accounting pronouncements

New accounting pronouncements that have been issued but which are not effective on the date of the statement of financial position are disclosed. Known or reasonably estimable information relevant to assessing the possible impact of the new accounting pronouncements on initial application on the financial statements is disclosed.

Not required to be disclosed

Similar to IFRS

Events after balance sheet date/reporting period — Dividends

Liability for dividends declared to holders of equity instruments are recognised in the period when declared.

Dividends are recognised as an appropriation from profits and are recorded as provisional at the balance sheet date, if proposed or declared subsequent to the reporting period but before approval of the financial statements.

Similar to IFRS

Income Taxes — Recognition of deferred liabilities

Deferred tax liability shall be recognised for all taxable temporary differences except to the extent they arise from initial recognition of: (a) goodwill; or (b) an asset or liability in a transaction which is not a business combination, and, at the time of the transaction, affects neither the accounting nor the tax profit.

Deferred tax liabilities are recognised for all timing differences in respect of recognition of items of profit or loss for the purposes of financial reporting and for income taxes.

Similar to IFRS

Income Taxes — Recognition of deferred tax assets

Deferred tax assets are recognised for carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and tax credits can be utilised.

Deferred tax assets, where an enterprise has unabsorbed depreciation or carry forward of losses under tax laws, are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Similar to IFRS

Deferred tax assets in other situations are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Income Taxes — Recognition of taxes on items recognised in other comprehensive income or directly in equity

Current tax and deferred tax is recognised outside profit or loss if the tax relates to items that are recognised in the same or a different period, outside profit or loss. Therefore the tax on items recognised in other comprehensive income, or directly in equity, is also recorded in other comprehensive income or in equity, as appropriate.

No specific guidance in AS 22. However, an announcement made by the Institute of Chartered Accountants of India (the “ICAI”) requires any expense charged directly to reserves and/or securities premium accounts to be net of tax benefits expected to arise from the admissibility of such expenses for tax purposes. Similarly, any income credited directly to a reserve account or a similar account should be net of its tax effect.

Similar to IFRS

Income Taxes — Investments in subsidiaries, branches and associates, and interests in joint ventures

Deferred tax should not be recognised for temporary differences in respect of investment in subsidiaries, branches, associates and interest in joint ventures if certain conditions are satisfied.

No deferred tax is recognised.

Similar to IFRS

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Topic

IFRS

Indian GAAP

IND-AS

Income Taxes — Deferred tax on unrealised intra-group profits

Deferred tax on unrealised intra-group profits is recognised at the buyer’s rate.

Deferred tax expense is an aggregation from separate financial statements of each group entity and no adjustment is made on consolidation.

Similar to IFRS

Property, Plant and Equipment — Cost of major inspection

Costs of major inspections and overhauls are recognised as a separate component of property, plant and equipment.

Costs of major inspections are expensed when incurred.

Similar to IFRS

Property, Plant and Equipment — Spare parts

Spare parts are recognised in accordance with IAS 16 when they meet the definition of property, plant and equipment. Otherwise such items are classified as inventory.

Machinery spares are usually charged to the profit and loss statement as and when consumed. However, if such spares can be used only in connection with a fixed asset and their use is expected to be irregular, it may be appropriate to allocate the total cost on a systematic basis over a period not exceeding the useful life of the principal item.

Similar to IFRS

Property, Plant and Equipment — Revaluation

If an entity adopts the revaluation model, revaluations are required to be made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the date of the statement of financial position.

No specific requirement on frequency of revaluation.

Similar to IFRS

Property, Plant and Equipment — Change in Method of Depreciation

A change in depreciation method is considered to be a change in the accounting estimate and accounted for prospectively.

A change in depreciation method is treated as a change in the accounting policy and requires retrospective re-computation of depreciation and any excess or deficit arising on such re-computation is required to be adjusted in the period in which such change is effected.

Similar to IFRS

Property, Plant and Equipment — Changes in existing, decommissioning, restoration and similar liabilities

Provisions for decommissioning, restoration and similar liabilities that have previously been recognised as part of the cost of an item of property, plant and equipment are adjusted for changes in the amount or timing of future costs and for changes in market-based discount rates.

No specific guidance in this regard.

Similar to IFRS

Leases — Interest in leasehold land

Recognised as an operating/finance lease unless the leasehold interest is accounted for as investment property in accordance with IAS 40 and the fair value model is adopted.

Recognised as tangible fixed assets regardless of whether title is expected to pass to the lessee by the end of the lease term. Assets under lease are separately classified under each class of asset.

Similar to IFRS, except that a property interest in an operating lease cannot be accounted for as investment property as the fair value model, is not permissible under IND-AS 40.

Determining whether an arrangement contains a lease

An arrangement that does not take the legal form of a lease, but the fulfilment of which is dependent on the use of specific assets and which conveys the right to use the assets, is accounted for as a lease in accordance with IAS 17.

There is no such requirement.

Similar to IFRS

208

Topic

IFRS

Indian GAAP

IND-AS

Operating Leases — Incentives

The lessor and lessee recognise lease incentives as an increase or reduction of rental expense over the lease term, on a straight line basis, unless another systematic basis is representative of the time pattern of the lessee’s benefit from use of the leased asset.

There is no specific guidance.

Similar to IFRS

Revenues — Definition

Revenue is the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an entity when those inflows result in increases in equity, other than increases relating to contributions from equity participants. Amounts collected on behalf of third parties such as sales and service taxes and value added taxes are excluded from revenues.

Revenue is the gross inflow of cash, receivables or other consideration arising in the course of the ordinary activities. Revenue is measured by the charges made to customers for goods supplied and services rendered to them and by the charges and rewards arising from the use of resources by them. Revenue is presented below:

Similar to IFRS

Turnover Less: Excise Duty Turnover (Net)

Rs.100 Rs.15 Rs.85

Revenues — Measurement

Fair value of revenue from the sale of goods and services when the inflow of cash and cash equivalents are deferred is determined by discounting all future receipts using an imputed rate of interest. The difference between the fair value and the nominal amount of consideration is recognised as interest revenue using the effective interest method.

Revenue is recognised as the nominal amount of consideration receivable.

Similar to IFRS

Revenues — Interest

Interest income is recognised using the effective interest method.

Interest is recognised on a time proportion basis, taking into account the amount outstanding and the rate applicable.

Similar to IFRS

Employee benefits — Actuarial gains and losses

Actuarial gains and losses arising on post retirement defined benefit obligations shall be recognised immediately in other comprehensive income and not reclassified to profit or loss in a subsequent period.

Actuarial gains and losses should be recognised immediately in the statement of profit and loss as income or expense.

Similar to IFRS

Employee benefits — Discount rate

Market yields at the date of the statement of financial position on high-quality corporate bonds are used as discount rates. In countries where there are no deep markets for such bonds, market yields on government bonds are used.

Market yields at the balance sheet date on government bonds are used as discount rates.

The rate used to discount shall be determined by reference to market yields at the end of the reporting period on government bonds.

Government Grants — Non-monetary assets

The asset and the grant may be accounted for at fair value. Alternatively, these can be accounted for at nominal value.

If the asset is given by the government at a discounted price, the asset and the grant are accounted for at the discounted purchase price. All other non-monetary grants are accounted for at nominal values.

The asset and the grant should be accounted for at fair value.

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Topic

IFRS

Indian GAAP

IND-AS

Government Grants — Repayment

If repayment of a government grant relating to an asset is recorded by increasing the carrying amount of the asset or reducing the deferred income by the amount repayable, the cumulative additional depreciation that would have been recognised in the absence of the grant is immediately recognised as an expense. It is prohibited from being disclosed as an extraordinary item.

If repayment of a government grant relating to an asset is recorded by increasing the carrying amount of the asset, the cumulative additional depreciation that would have been recognised in the absence of the grant is recognised over the remaining useful life of the asset. It is then disclosed as an extraordinary item.

Recognised by reducing the deferred income balance by the amount repayable. It is prohibited from being disclosed as an extraordinary item.

Effects of Changes in Foreign Exchange Rates — Functional and presentation currency

Functional currency is the currency of the primary economic environment in which the entity operates. Foreign currency is a currency other than functional currency. Presentation currency is the currency in which the financial statements are presented.

Foreign currency is a currency other than the reporting currency, which is the currency in which financial statements are presented. An enterprise normally uses the currency of the country in which it is domiciled to present its financial statements. If it uses a different currency, disclosure of the reason for using that currency is required. There is no concept of functional currency.

Similar to IFRS

Effects of Changes in Foreign Exchange Rates — Exchange differences

Exchange differences arising on translation or settlement of foreign currency monetary items are recognised in profit or loss in the period in which they arise.

Similar to IFRS. However, as per Accounting Standard 11 (AS-11), exchange differences arising on reporting of long-term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, can be added to or deducted from the cost of the asset and shall be depreciated over the balance life of the asset and, in other cases, can be accumulated in a “Foreign Currency Monetary Item Translation Difference Account” and amortised over the balance period of such long-term asset/liability by recognition as income or expense in each of such periods.

Similar to IFRS.

Effects of Changes in Foreign Exchange Rates — Translation in consolidated financial statements

Assets and liabilities should be translated from functional to presentation currency at the closing rate at the date of the statement of financial position; income and expenses at the actual/average rate for the period; exchange differences are recognised as a separate component of equity and recycled to income statement on the disposal of the investment/operation.

Translation of financial statements to the reporting currency of the parent depends on the classification of that operation as integral or non-integral. Integral Operation: monetary assets are translated at the closing rate; non-monetary items are translated at the historical rate if they are valued at cost and at the closing rate if they are valued on another valuation basis. Income and expense items are translated at the historical/average rate. Exchange differences are incorporated in the statement of Profit and Loss.

Similar to IFRS.

For non-integral operations, the closing rate method should be followed, i.e. assets and liabilities are translated at the closing rate while Profit and Loss items are translated at actual/average rates. The resulting exchange difference is taken to reserve and is recycled to Profit and Loss on the disposal of the non-integral foreign operation.

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Topic

IFRS

Indian GAAP

IND-AS

Borrowing cost — Recognition

Capitalised if these costs are attributable to the acquisition, construction or production of a qualifying asset.

Borrowing costs are required to be capitalised if these costs are attributable to the acquisition, construction or production of a qualifying asset.

Similar to IFRS.

Interest expense included in borrowing costs is calculated using the effective interest method as described in IFRS 9: Financial Instruments. It is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. Transaction costs are taken into account when determining the initial net carrying amount and their recognition in profit or loss is effectively spread over the life of the instrument.

Interest is calculated on the amount of the loan outstanding at the applicable rates.

Related Party Disclosures — Identification

Related party includes post employment benefit plans for the benefit of employees of the reporting entity or any entity that is a related party of the reporting entity.

Post-employment benefit plans are not included as related parties.

Similar to IFRS.

Related Party Disclosures — Key management personnel

Key management personnel include both executive and non-executive directors.

Key management personnel do not include non-executive directors.

Similar to IFRS.

Related Party Disclosures — Government related entities

Government related disclosure of:

No disclosure is required in the financial statements of state-controlled enterprises as regards related party relationships with other state-controlled enterprises and transactions with such enterprises.

Similar to IFRS.

Control is:

Similar to IFRS.

Consolidated Financial Statements — Definition of control of investee

Consolidated Financial Statements — Potential voting rights

entities

require

(a)

The name of the government and its relationship with the reporting entity.

(b)

The nature and amount of each significant transaction and a qualitative or quantitative indication of other transactions which are significant collectively.

An investor controls an investee when the investor is exposed, or has the right, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Potential voting rights are considered only if they are substantive. For a right to be substantive it must give the holder the current ability to direct the relevant activities of an investee when necessary and the holder must have the practical ability to exercise that right.

(a)

The ownership, directly or indirectly through a subsidiary (or subsidiaries), of more than one-half of the voting power of an enterprise; or

(b)

control of the composition of the board of directors in the case of a company or of the composition of the corresponding governing body in the case of any other enterprise so as to obtain economic benefits from its activities.

Potential voting rights are not considered when assessing control.

211

Similar to IFRS.

Topic

IFRS

Indian GAAP

IND-AS

Consolidated Financial Statements — Exclusion of subsidiaries

If the acquisition of a subsidiary meets the criteria to be classified as held for sale in accordance with IFRS 5, it is included in the consolidation but is accounted for under that standard.

Excluded from consolidation if the subsidiary was acquired with intent to dispose of it within 12 months or if it operates under severe long-term restrictions which significantly impair its ability to transfer funds to the parent.

Similar to IFRS.

Consolidated Financial Statements — Reporting dates

The difference between the reporting date of the subsidiary and that of the parent shall be no more than three months.

The difference between the reporting date of the subsidiary and that of the parent shall be no more than six months.

Similar to IFRS.

Consolidated Financial Statements — Uniform Accounting policies

Consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.

Similar to IFRS except if it is impracticable to use uniform accounting policies, which fact should be disclosed together with the proportions of the items in the consolidated financial statements to which different policies have been applied.

Similar to IFRS.

Consolidated Financial Statements — Disposals

Partial disposal of a subsidiary where control is retained is accounted for as an equity transaction, and gain or loss is not recognised. Partial disposal of a subsidiary resulting in loss of control triggers re-measurement of the residual holding to fair value. Any difference between the fair value and the carrying value is recognised as gain or loss in profit or loss.

No specific guidance.

Similar to IFRS.

Separate Financial Statements — Accounting for investments in subsidiaries in separate financial statements of the parent

Accounted for either at cost less impairment loss or as available for sale in accordance with IFRS 9.

Accounted at cost less impairment loss.

Similar to IFRS. However, Equity method is not permitted in separate financial statements.

Investments in Associates and Joint Ventures — Significant influence

The existence and effect of potential voting rights that are currently exercisable or convertible, including potential voting rights held by another entity, are considered when assessing significant influence.

Potential voting rights are not considered when assessing significant influence.

Similar to IFRS.

Investments in Associates and Joint Ventures — Capital Reserve/Negative Goodwill

Any excess of the entity’s share of the net fair value of the investee’s identifiable assets and liabilities over the cost of the investment is included as income in the determination of the entity’s share of the associate or joint venture’s profit or loss in the period in which the investment is acquired.

Capital reserve is included in the carrying amount of investment in the associate but is disclosed separately.

Any excess of the entity’s share of the net fair value of the investee’s identifiable assets and liabilities over the cost of the investment is recognised directly in equity as capital reserve in the period in which the investment is acquired.

Investments in Associates and Joint Ventures — Reporting date

The difference between the reporting date of the associate and that of the parent shall be no more than three months.

The maximum difference between the reporting date of the associate and that of the parent is not specified.

Similar to IFRS.

Investments in Associates and Joint Ventures — Method of Accounting

Investments in associates or joint ventures are to be accounted for using the equity method in consolidated financial statements.

Investments in associates are accounted for using the equity method whereas investments in joint ventures are accounted for using the proportionate consolidation method.

Similar to IFRS.

212

Topic

IFRS

Indian GAAP

IND-AS

Financial Instruments: Presentation — Classification of convertible debts

Split the instrument into its liability and equity components at issuance.

Classified as debt based on its legal form and any interest expense is recognised based on the coupon rate.

Similar to IFRS, except for conversion option embedded in a foreign currency convertible bond under certain circumstances.

Financial Instruments: Presentation — Treasury shares

If an entity reacquires its own shares (treasury shares), these are shown as a deduction from equity.

Acquiring own shares is permitted only in limited circumstances. Shares repurchased should be cancelled immediately and cannot be held as treasury shares.

Similar to IFRS.

Earnings per share — Extraordinary items

Since IAS 1 prohibits disclosure of extraordinary items, no separate consideration is given to such items while calculating Earnings Per Share (EPS).

EPS with and without extraordinary items is to be presented.

Similar to IFRS.

Earnings per share — Disclosure

IAS 33 requires separate disclosures for EPS from continuing and discontinued operations.

No such disclosure is required.

Similar to IFRS.

Disclosure is also required for instruments (including contingently issuable shares) that could potentially dilute basic earnings per share in the future, but were not included in the calculation of diluted earnings per share because they are anti-dilutive for the periods presented. Impairment of Assets — Reversal of impairment loss for goodwill

Impairment loss recognised for goodwill is prohibited from reversal in a subsequent period.

Impairment loss for goodwill is reversed if the impairment loss was caused by a specific external event of an exceptional nature that is not expected to recur and subsequent external events have occurred that reverse the effect of that event.

Similar to IFRS.

Provisions, Contingent Liabilities and Contingent Assets — Discounting

Where the effect of time value of money is material, the amount of provision is the present value of the expenditure expected to be required to settle the obligation. The discount rate is a pre-tax rate that reflects the current market assessment of the time value of money and risks specific to the liability. The discount rate does not reflect risk for which future cash flow estimates have been adjusted.

Discounting of liabilities is not permitted and provisions are carried at their full values.

Similar to IFRS.

Provisions, Contingent Liabilities and Contingent Assets — Contingent assets

Contingent assets are disclosed in the financial statements where an inflow of economic benefits is probable.

Contingent assets are not disclosed in the financial statements.

Similar to IFRS.

Intangible assets — Measurement

Intangible assets can be measured at either cost or revalued amount.

Measured only at cost.

Similar to IFRS.

Intangible assets — Useful life

Useful life may be either finite or indefinite.

Useful life may not be indefinite. There is a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use.

Similar to IFRS.

213

Topic

IFRS

Indian GAAP

IND-AS

Financial Instruments: Recognition and Measurement — Investments, loans and receivables

Financial assets are classified as at fair value through profit and loss, fair value through OCI, and amortised cost. Financial assets are classified as fair value through profit and loss if they are acquired principally for the purpose of selling and are part of a portfolio that is managed together and for which there is evidence of a recent actual pattern of short-term profit taking.

Investments are classified as long-term or current. Long-term investments are carried at cost less provision for diminution in value which is other than temporary. Current investments are carried at the lower of cost and fair value. Loans and receivables are measured at cost less valuation allowance.

Similar to IFRS.

Investments are classified as fair value through OCI when an entity’s business model’s objective is achieved both by collecting cash flows and by selling financial assets. Investments at amortised cost are investments which meet the SPPI criteria. These investments are measured at amortised cost using the effective interest method. Financial Instruments: Recognition and Measurement — Impairment

Impairment losses recognised in profit or loss for equity investments cannot be reversed through profit or loss.

Impairment losses recognised in profit or loss for equity investments are reversed through profit or loss.

Similar to IFRS.

Financial Instruments: Recognition and Measurement — Foreign currency contracts

A forward exchange contract is measured at fair value as at the statement of financial position date. If the forward exchange contract meets the criteria of an effective hedge in accordance with IFRS 9: Financial Instruments, the gain or loss arising on fair valuation is recognised in the statement of changes in equity. If the hedge is ineffective, the gain or loss is recognised in the determination of net income.

Premium or discount on forward exchange contracts is amortised and recognised in the statement of profit and loss over the period of such contracts. Exchange differences on such a contract should be recognised in the statement of profit and loss in the reporting period in which the exchange rates change.

Similar to IFRS.

Financial Instruments: Recognition and Measurement — Derivatives and embedded derivatives

Measured at fair values.

There is no equivalent standard on derivatives except for certain forward exchange contracts within the scope of AS 11.

Similar to IFRS.

214

Topic

IFRS

Indian GAAP

IND-AS

Financial Instruments: Recognition and Measurement — Derivatives and hedge accounting

Hedge accounting (recognising the offsetting effects of fair value changes of both the hedging instrument and the hedged item in the same period’s profit or loss) is permitted in certain circumstances, provided that the hedging relationship is clearly defined, measurable and actually effective. IFRS 9 provides for three types of hedges:

There is no equivalent standard on derivatives. Forward contracts (including those intended for speculative/trading purposes) are covered by AS 11. An announcement made by the ICAI on 29 March 2008 and applicable to financial statements for the period ending 31 March 2008 or thereafter requires an entity to provide for losses in respect of all outstanding derivative contracts not covered by AS 11 by marking them to market at the balance sheet date.

Similar to IFRS.



fair value hedge: if an entity hedges a change in fair value of a recognised asset or liability or firm commitment, the change in fair values of both the hedging instrument and the hedged item are recognised in profit or loss when they occur;



cash flow hedge: if an entity hedges changes in the future cash flows relating to a recognised asset or liability or a highly probable forecast transaction, then the change in fair value of the hedging instrument is recognised in other comprehensive income until such time as those future cash flows occur. The ineffective portion of the gain or loss on the hedging instrument is recognised in profit or loss in the period of such change; and



hedge of a net investment in a foreign entity: this is treated as a cash flow hedge.

A hedge of foreign currency risk in a firm commitment may be accounted for as a fair value hedge or as a cash flow hedge. Non-current assets held for sale — Recognition and measurement

Non-current assets to be disposed of are classified as held for sale when the asset is available for immediate sale and the sale is highly probable. Depreciation ceases on the date when the assets are classified as held for sale. Non-current assets classified as held for sale are measured at the lower of their carrying value and fair value less costs to sell.

There is no standard dealing with non-current assets held for sale, though AS 10 deals with assets held for disposal. Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value and are shown separately in the financial statements. Any expected loss is recognised immediately in the statement of profit and loss.

Similar to IFRS.

Non-current assets held for sale and discontinued operations — Classification

An operation is classified as discontinued when it has either been disposed of or is classified as held for sale.

An operation is classified as discontinued at the earlier of: (a) a binding sale agreement for sale of the operation; and (b) on approval by the board of directors of a detailed formal plan and announcement of the plan.

Similar to IFRS.

215

Topic

IFRS

Indian GAAP

IND-AS

Exploration for and evaluation of mineral resources — General

Exploration and evaluation assets are measured at cost or revaluation less accumulated amortisation and impairment loss. An entity determines the policy specifying which expenditures are recognised as exploration and evaluation assets.

There is no equivalent standard. However, there is a Guidance Note on Accounting for Oil and Gas Producing Activities. As per this guidance note, there are two alternative methods for acquisition, exploration and development costs, viz. the Successful Efforts Method or the Full Cost Method. The Guidance Note recommends the former one. AS 28; Impairment of Assets is applicable irrespective of the method of accounting used.

Similar to IFRS.

Operating Segments — Determination of segments

Operating segments are identified based on the financial information that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

AS 17 requires an enterprise to identify two sets of segments (business and geographical), using a risks and rewards approach.

Similar to IFRS.

Operating Segments — Measurement

Segment profit or loss is reported on the same measurement basis as that used by the chief operating decision maker. There is no definition of segment revenue, segment expense, segment result, segment asset or segment liability. Requires reconciliation of segment performance measures, and segment assets and liabilities with the corresponding amounts reported in the financial statements.

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the enterprise as a whole. Segment revenue, segment expense, segment result, segment asset and segment liability have been defined. A reconciliation is presented between the information disclosed for reportable segments and the aggregated information in the enterprise’s financial statements.

Similar to IFRS.

Operating Segments — Entity-wide disclosures

Requires disclosure of: (a) external revenues from each product or service; (b) revenues from customers in the country of domicile and from foreign countries; and (c) geographical information on non-current assets located in the country of domicile and foreign countries. Information on major customers including total revenues from each major customer is disclosed if revenues from each customer are 10 per cent. or more of total segment revenues.

Disclosures are required based on the classification of segments as primary or secondary. Disclosure requirements for secondary reporting formats are less detailed than those required for primary reporting formats.

Similar to IFRS.

IFRS 1 defines previous GAAP as the basis of accounting that a first-time adopter used immediately before adopting IFRS.

No specific guidance.

IND-AS 101 defines previous GAAP as the basis of accounting that a first-time adopter used for its reporting requirement in India immediately before adopting IND-AS.

First Time Adoption Previous GAAP

216

Topic

IFRS

Indian GAAP

IND-AS

Treatment of Changes in Retained Earnings

The first-time adopter shall account for the resulting change in the retained earnings as at the transition date except in specific instances to make adjustment with goodwill.

No specific guidance.

The first-time adopter shall account for the resulting change in the retained earnings as at the transition date. In specific instances, IND-AS allowed adjustment to be made with capital reserve to the extent such adjustment amount does not exceed the balance available in capital reserve.

Additional Exemptions

No such exemptions provided in IFRS.

No specific guidance.

IND-AS 101 provides certain optional exemptions relating to the long-term foreign currency monetary items and service concession arrangements relating to toll roads. An entity may continue the policy adopted for accounting for exchange differences arising from the translation of long term foreign currency monetary items recognised in the financial statements for the period ending immediately after the beginning of the first IND-AS financial reporting period as per previous GAAP.

Transitional Relief — Property, Plant and Equipment

No such option provided in IFRS.

No specific guidance.

Paragraph D7AA provides the option to use carrying values of all of its property, plant and equipment as at the date of transition to IND-AS, measured as per previous GAAP and to use them at its deemed cost as at the date of transition.

Transitional Relief — Lease

No such option provided in IFRS.

No specific guidance.

When the lease includes land and building elements, an entity may assess the classification as a finance or operating lease as at the date of transition to IND-AS based on the facts and circumstances existing at that date.

217

GENERAL INFORMATION Authorisation 1.

The establishment and update of the Programme and the issue of Notes have been duly authorised by resolutions of the Board of Directors of the Issuer dated 7 December 2005, 28 December 2011, 21 January 2013, 19 June 2014, 28 April 2015 and 28 April 2016.

Consent from Trustee 2.

Citicorp Trustee Company Limited has given its consent to act as the Trustee and for its name to be included in all subsequent periodical communication to be sent to the Noteholders.

Listing 3.

Approval-in-principle has been granted for the listing and quotation of Notes that may be issued pursuant to the Programme and which are agreed at or prior to the time of issue thereof to be so listed on the SGX-ST. Such permission will be granted when such Notes have been admitted to the Official List. Admission to the Official List and quotation of any Notes on the SGX-ST are not to be taken as an indication of the merits of the Issuer, the Programme or the Notes. So long as the Notes are listed on the SGX-ST and the rules of the SGX-ST so require, the Issuer shall appoint and maintain a paying agent in Singapore, where the Notes may be presented or surrendered for payment or redemption, in the event that the Global Notes is exchanged for definitive Notes. In addition, in the event that the Global Notes is exchanged for definitive Notes, announcement of such exchange shall be made through the SGX-ST and such announcement will include all material information with respect to the delivery of the definitive Notes, including details of the paying agent in Singapore.

Clearing systems 4.

The Notes to be issued under the Programme have been accepted for clearance through Euroclear and Clearstream. The appropriate common code and ISIN for each Tranche of Notes allocated by Euroclear and Clearstream will be specified in the applicable Pricing Supplement. If the Notes are to clear through an additional or alternative clearing system, the appropriate information will be specified in the applicable Pricing Supplement.

No significant change 5.

Save as disclosed in this Offering Circular, there has been no significant or material adverse change in the financial or trading position of the Issuer since 30 September 2016.

Litigation 6.

The Issuer is not involved in any legal or arbitration proceedings (including any proceedings which are pending or threatened of which the Issuer is aware) which may have or have had in the 12 months preceding the date of this document a significant effect on the financial position of the Issuer.

218

Accounts 7.

The auditors of the Issuer in respect of the financial statements for the year ended 31 March 2016 and for the six months as of and for the period ended 30 September 2016, were as follows: T.R. Chadha & Co.; PSD & Associates; Sagar & Associates; Kalani & Co.; P A & Associates; S.K. Kapoor & Co.; and B. M. Chatrath & Co Such auditors have audited the Issuer’s consolidated financial statements for the year ended 31 March 2016, without any qualification in accordance with generally accepted auditing standards in India, and have reviewed the unconsolidated financial results for the six months ended 30 September 2016 without any qualification in accordance with IND-AS. The auditors of the Issuer in respect of the financial statements for the year ended 31 March 2015 and for the six months as of and for the period ended 30 September 2015 were as follows: O.P. Bagla & Co.; PSD & Associates.; PKF Sridhar & Santhanam LLP; V. Sankar Aiyar & Co.; Ramesh C Agrawal & Co.; and A.R. & Co. Such auditors have audited the Issuer’s consolidated financial statements for the year ended 31 March 2015 and have reviewed the unconsolidated financial results for the six months ended 30 September 2015 without qualification, in accordance with generally accepted auditing standards in India.

Trust Deed 8.

The Trust Deed provides that the Trustee may rely on certificates or reports from the Auditors (as defined in the Trust Deed) or any other person in accordance with the provisions of the Trust Deed as conclusive evidence of the facts stated therein whether or not called for by or addressed to the Trustee and whether or not any such certificate or report or engagement letter or other document entered into by the Trustee and the Auditors or such other person in connection therewith contains a monetary or other limit on the liability of the Auditors or such other person. However, the Trustee will have no recourse to the Auditors or such other person in respect of such certificates or reports unless the Auditors or such other person have agreed to address such certificates or reports to the Trustee.

Documents Available 9.

So long as Notes are capable of being issued under the Programme, copies of the following documents will, when published, be available from the corporate office of the Issuer and from the specified office of the Paying Agent in London: (a)

the audited consolidated and non-consolidated financial statements of the Issuer in respect of the financial years ended 31 March 2015 and 2016;

219

(b)

the most recently published audited consolidated and non-consolidated annual financial statements of the Issuer and the most recently published audited or reviewed, as the case may be, non-consolidated interim financial results of the Issuer;

(c)

the Programme Agreement, the Trust Deed, the Agency Agreement and the forms of the Global Notes, the Notes in definitive form, the Receipts, the Coupons and the Talons;

(d)

a copy of this Offering Circular;

(e)

any future offering circulars, prospectuses, information memoranda and supplements including Pricing Supplements (save that a Pricing Supplement relating to an unlisted Note will only be available for inspection by a holder of such Note and such holder must produce evidence satisfactory to the Issuer and the Paying Agent as to its holding of Notes and identity) to this Offering Circular and any other documents incorporated herein or therein by reference; and

(f)

in the case of each issue of listed Notes subscribed pursuant to a subscription agreement, the subscription agreement (or equivalent document).

220

INDEX TO FINANCIAL STATEMENTS Important information relating to the financial information presented . . . . . . . . . . . . . . . F-2 Unaudited, standalone financial results of NTPC for the six months ended 30 September 2016 Auditors’ limited review report on the unaudited, standalone financial results . . . . . . . . . . . . F-3 Unaudited, standalone financial results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4 Unaudited, standalone financial results of NTPC for the six months ended 30 September 2015 Auditors’ limited review report on the unaudited, standalone financial results

. . . . . . . . . . . . F-9

Unaudited, standalone financial results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10 Financial statements of NTPC for the year ended 31 March 2016 Independent Auditors’ report on the consolidated financial statements . . . . . . . . . . . . . . . . . . F-15 Consolidated balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-25 Consolidated statement of profit and loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-27 Cash flow statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-29 Accounting policies and notes forming part of consolidated financial statements . . . . . . . . . . F-31 Financial statements of NTPC for the year ended 31 March 2015 Auditors’ report on the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-111 Consolidated balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F -112 Consolidated statement of profit and loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F -124 Cash flow statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F -126 Accounting policies and notes forming part of consolidated financial statements . . . . . . . . . .F -128

F-1

Important Information Relating to the Financial Information Presented The financial information included on pages F-15 to F-199 has been extracted without material adjustment from the Issuer’s audited consolidated financial statements for the years ended 31 March 2015 and 2016. The financial statements presented have been prepared in accordance Indian GAAP, which differs in certain material respects to IFRS. For a description of certain differences between Indian GAAP and IFRS, see “Summary of Significant Differences Between Indian GAAP and IFRS” above. The Issuer’s auditors are appointed each year by the Comptroller and Auditor General of India (the C&AG), which is the authority for appointment of auditors of Government companies in terms of Section 143(5) of the New Companies Act, as amended or replaced from time to time. As of the date of this Offering Circular, international accounting firms are not permitted to practice in India. Therefore, local firms of Chartered Accountants appointed by the C&AG undertake the audit of the Issuer’s financial statements. It is not unusual for large public sector companies in India with widespread operations to have more than one firm appointed to audit the company’s financial statements, with each firm given a particular region to audit. The auditors of the Issuer’s financial statements are set out in paragraph 7 under “General Information” above.

F-2

INDEPENDENT AUDITORS’ REVIEW REPORT To The Board of Directors, NTPC Limited, New Delhi. We have reviewed the accompanying statement of Standalone Unaudited Financial Results of NTPC Limited for the quarter and half-year ended 30th September 2016 prepared by the Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as modified by the Circular No. CIR/CFD/FAC/62/2016 dated 5th July 2016. This statement is the responsibility of the Company’s Management and has been approved by the Board of Directors. Our responsibility is to issue a report on these financial statements based on our review. We have conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”, issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion. Without modifying our report, attention is invited to Note 3, 6(a), 6(b) & 8 to the statement of standalone unaudited financial results referred to above regarding non review of the comparative figures for the quarter and half-year ended 30th September 2016 by us, accounting of sales on provisional basis, measurement of GCV of coal and an ongoing project where the order of NGT has been stayed by the Hon’ble Supreme Court of India and the matter is sub-judice. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying statement of Standalone Unaudited Financial Results read with notes thereon, prepared in accordance with applicable Indian Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and other recognised accounting practices and policies thereon has not disclosed the information required to be disclosed in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as modified by the Circular No. CIR/CFD/FAC/62/2016 dated 5th July 2016 including the manner in which it is to be disclosed, or that it contains any material misstatement. For T.R. Chadha & Co. LLP Chartered Accountants FRN 006711N/N500028

For PSD & Associates Chartered Accountants FRN 004501C

For Sagar & Associates Chartered Accountants FRN 003510S

( Neena Goel ) Partner M. No.057986

( Prakash Sharma ) Partner M. No.072332

(V. Vidyasagar Babu) Partner M. No.027357

For Kalani & Co. Chartered Accountants FRN 000722C

For P. A. & Associates Chartered Accountants FRN 313085E

For S. K. Kapoor & Co. Chartered Accountants FRN 000745C

( Vikas Gupta ) Partner M. No.077076

( P. S. Panda ) Partner M. No.051092

( V.B. Singh ) Partner M. No.073124

For B. M. Chatrath & Co. Chartered Accountants FRN 301011E ( P R Paul) Partner M. No.051675 Place : New Delhi Dated: 28th October 2016 F-3

NTPC LIMITED STATEMENT OF STANDALONE UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND HALF-YEAR ENDED 30 TH SEPTEMBER 2016 ( in Crore) Sl. No.

Particulars

2 Income from operations (a) Gross sales (b) Other operating income Total income from operations (a+b) 2 Expenses (a) Fuel cost (b) Employee benefits expense (c) Depreciation and amortisation expense (d) Other expenses Total expenses (a+b+c+d) 3 Profit from operations before other income, finance costs and exceptional items (1-2) 4 Other income 5 Profit from ordinary activities before finance costs and exceptional items (3+4) 6 Finance costs 7 Profit from ordinary activities after finance costs but before exceptional items (5-6) 8 Exceptional items 9 Profit from ordinary activities before tax (7+8) 10 Regulatory income/(expense) 11 Profit from ordinary activities before tax (9+10) 12 Tax expense: (a) Current tax (refer note 7) (b) Tax expense/(saving) pertaining to rate regulated activities (c) Deferred tax (d) Less: Deferred asset for deferred tax liability Total tax expense (a+b+c-d) 13 Net profit from ordinary activities after tax (11-12) 14 Extraordinary items (net of tax) 15 Net profit for the period (13-14) 16 Other comprehensive income (net of tax) 17 Total comprehensive income (15+16) 18 Paid-up equity share capital (Face value of share  10/each) 19 Paid-up debt capital * 20 Debenture redemption reserve 21(i) Earnings per share (before extraordinary items) - (of  10/each) (not annualised) (in ): (a) Basic (b) Diluted 21(ii) Earnings per share (after extraordinary items) - (of  10/each) (not annualised) (in ): 1 1

Quarter ended 30.09.2016 (Unaudited)

Quarter ended 30.06.2016 (Unaudited)

3

4

19241.47 156.47 19397.94

18939.81 123.10 19062.91

17748.23 191.73 17939.96

38181.28 279.57 38460.85

34758.58 274.36 35032.94

11912.97 848.31 1434.15 1240.85 15436.28 3961.66

11632.37 998.17 1395.19 1261.14 15286.87 3776.04

11540.83 899.18 1288.72 1384.57 15113.30 2826.66

23545.34 1846.48 2829.34 2501.99 30723.15 7737.70

23049.97 1800.24 2475.02 2545.94 29871.17 5161.77

190.62 4152.28

157.89 3933.93

278.20 3104.86

348.51 8086.21

519.13 5680.90

889.83 3262.45

900.42 3033.51

826.52 2278.34

1790.25 6295.96

1578.01 4102.89

3262.45 (4.43) 3258.02

3033.51 3.31 3036.82

2278.34 34.34 2312.68

6295.96 (1.12) 6294.84

4102.89 54.46 4157.35

686.51 (0.94)

647.32 0.70

(736.36) 11.89

1333.83 (0.24)

(1168.38) 18.85

395.59 319.11 762.05 2495.97 2495.97 (26.50) 2469.47 8245.46

350.86 300.67 698.21 2338.61 2338.61 1.38 2339.99 8245.46

18.94 21.02 (726.55) 3039.23 3039.23 (22.88) 3016.35 8245.46

746.45 619.78 1460.26 4834.58 4834.58 (25.12) 4809.46 8245.46

107.97 109.23 (1150.79) 5308.14 5308.14 (49.00) 5259.14 8245.46

97290.38

86790.87

4413.98

3438.85

(a) Basic (b) Diluted 21(iii) Earnings per share (for continuing operations) - (of  10/each) (not annualised) (in ): (a) Basic (b) Diluted 22 Debt equity ratio 23 Debt service coverage ratio (DSCR) 24 Interest service coverage ratio (ISCR) * Comprises long term debts See accompanying notes to the financial results.

F-4

Quarter ended 30.09.2015 (Unaudited & not subjected to review) (refer note 3) 5

Half year ended Half year ended 30.09.2016 30.09.2015 (Unaudited) (Unaudited & not subjected to review) (refer note 3) 6 7

3.03 3.03

2.83 2.83

3.69 3.69

5.86 5.86

6.44 6.44

3.03 3.03

2.83 2.83

3.69 3.69

5.86 5.86

6.44 6.44

3.03 3.03

2.83 2.83

3.69 3.69

5.86 5.86 1.03 2.10 6.16

6.44 6.44 0.99 1.85 5.27

STANDALONE STATEMENT OF ASSETS AND LIABILITIES ( in Crore) As at 30.09.2016 (Unaudited)

Sl. Particulars No. A

ASSETS

1

Non-current assets (a) Property, plant & equipment (b) Capital work-in-progress (c) Intangible assets (d) Intangible assets under development (e) Financial assets - Investments - Trade receivables - Loans - Other financial assets (f) Other non-current assets

94682.88 72037.93 294.44 164.83

Sub-total - Non-current assets 2

Current assets (a) Inventories (b) Financial assets - Trade receivables - Cash and cash equivalents - Other bank balances - Loans - Other financial assets (c) Other current assets

B

EQUITY AND LIABILITIES

1

Equity (a) Equity share capital (b) Other equity

5677.49

Sub-total - Current assets

9990.98 876.77 2593.81 236.91 5446.07 3991.65 28813.68

TOTAL - ASSETS

224791.98

Sub-total - Equity

8245.46 86223.71 94469.17

Sub-total - Non-current liabilities

90215.88 10.82 2348.96 447.75 1278.88 49.68 94351.97

2 Liabilities (i) Non-current liabilities (a) Financial liabilities - Borrowings - Trade payables - Other financial liabilities (b) Provisions (c) Deferred tax liabilities (net) (d) Other non-current liabilities (ii) Current liabilities (a) Financial liabilities - Borrowings - Trade payables - Other financial liabilities (b) Other current liabilities (c) Provisions (d) Current tax liabilities (net) Sub-total - Current liabilities 3 4

8682.29 53.39 399.27 1143.30 18519.97 195978.30

Deferred Revenue Regulatory deferral account credit balances TOTAL - EQUITY AND LIABILITIES

F-5

1250.78 4121.04 19515.65 1003.66 7131.59 151.30 33174.02 2498.88 297.94 224791.98

SEGMENT-WISE REVENUE, RESULTS, ASSETS AND LIABILITIES FOR THE QUARTER AND HALF-YEAR ENDED 30TH SEPTEMBER 2016 ( in Crore) Sl. No.

2

2

3

4

Half year ended 30.09.2016 (Unaudited)

Half year ended 30.09.2015 (Unaudited & not subjected to review) (refer note 3)

3

4

5

6

7

19491.54 43.55 53.47 19588.56

19116.20 34.67 69.93 19220.80

17993.50 26.99 197.67 18218.16

38607.74 78.22 123.40 38809.36

35120.31 50.74 381.02 35552.07

4411.73 (82.29) 4329.44

4163.21 8.67 4171.88

3242.76 (26.89) 3215.87

8574.94 (73.62) 8501.32

5909.98 (28.59) 5881.39

889.83 181.59

900.42 234.64

826.52 76.67

1790.25 416.23

1578.01 146.03

Profit before tax

3258.02

3036.82

2312.68

6294.84

4157.35

Segment assets - Generation - Others - Un-allocated - Total

122594.24 3050.85 99146.89 224791.98

122778.97 2587.01 93852.44 219218.42

108000.62 1920.92 93379.26 203300.80

122594.24 3050.85 99146.89 224791.98

108000.62 1920.92 93379.26 203300.80

Segment liabilities - Generation - Others - Un-allocated - Total

13549.16 1701.17 115072.48 130322.81

14467.33 1790.08 109255.95 125513.36

13587.10 1322.16 100953.48 115862.74

13549.16 1701.17 115072.48 130322.81

13587.10 1322.16 100953.48 115862.74

1 1

Quarter ended Quarter ended Quarter ended 30.09.2015 30.06.2016 30.09.2016 (Unaudited & (Unaudited) (Unaudited) not subjected to review) (refer note 3)

Particulars

Segment revenue - Generation - Others - Un-allocated - Total Segment results (Profit before tax and interest) - Generation - Others - Total Less (i) Unallocated finance costs (ii) Other unallocable expenditure net of unallocable income

The operations of the company are mainly carried out within the country and therefore, geographical segments are not applicable.

F-6

Notes: 1 The above results have been reviewed by the Audit Committee of the Board of Directors in the meeting held on 28th October 2016 and approved by the Board of Directors in the meeting held on the same day. 2 The statutory auditors of the Company have carried out the limited review of the financial results for the quarter and half year ended 30th September 2016 as required under Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. 3 The Company adopted Ind AS from 1st April 2016 and accordingly the financial results are prepared in compliance with Ind AS pursuant to the Notification of Ministry of Corporate Affairs (MCA) dated 16th February 2016. The comparative figures for the quarter and half-year ended 30th September 2015 have been restated by the Management as per Ind AS but have not been subject to limited review or audit. However, the Management has exercised necessary due diligence to ensure that the financial results provide a true and fair view of the Company’s affairs. 4 5

The unaudited standalone financial statements do not include figures for the previous year ended 31st March 2016 as per SEBI’s Circular No. CIR/CFD/FAC/2016 dated 5 th July 2016. Reconciliation of net profit as reported in previous GAAP to Ind AS: Particulars

Profit after tax as reported under previous GAAP Add/(less) adjustments for Ind AS: Actuarial loss on defined benefit plans recognised in Other comprehensive income Capitalisation of major overhaul & spares Depreciation and amortization Recognition of financial assets/liabilities at amortised cost Impact of embedded leases Provision of rebate to customers Net Profit as per Ind AS Other Comprehensive Income (net of tax): Actuarial loss on defined benefit plans Fair valuation of investments Total comprehensive income as reported under Ind AS

( in Crore) Quarter Half-Year ended ended 30.09.2015 30.09.2015 2898.28 5,033.63 11.91 119.25 36.33 (11.12) (4.68) (10.74) 3,039.23

23.39 248.73 88.34 (30.24) (9.77) (45.94) 5,308.14

(11.91) (10.97) 3,016.35

(23.39) (25.61) 5,259.14

6 (a) The CERC notified the Tariff Regulations, 2014 in February 2014 (Regulations, 2014). The CERC has issued tariff orders for ten stations for the period 2014-19, and accordingly beneficiaries are billed based on tariff orders. Pending issue of provisional/final tariff orders w.e.f. 1st April 2014 for balance stations, beneficiaries are billed in accordance with the tariff approved and applicable as on 31st March 2014 and as provided in the Regulations 2014. The energy charges in respect of the coal based stations are provisionally billed based on the GCV ’as received’ measured after the secondary crusher. The amount provisionally billed for the quarter and half-year ended 30th September 2016 is  18,769.66 crore and  37,137.52 crore respectively (previous quarter and half-year  18,592.13 crore and  36,305.61 crore). (b) The Company has filed a writ petition before the Hon’ble Delhi High Court contesting certain provisions of the Tariff Regulations, 2014. As per directions from the Hon’ble High Court on the issue of point of sampling for measurement of GCV of coal ‘as received’, CERC has issued an order dated 25th January 2016 (subject to final decision of the Hon’ble High Court) that samples for measurement of coal on ‘as received’ basis should be collected from loaded wagons at the generating stations. The Company’s review petition before the CERC in respect of the above order has been dismissed vide their order dated 30th June 2016. Pending final decision of the Hon’ble Delhi High Court, in line with the CERC order, necessary arrangements have been made for the measurement of GCV from wagon top samples at the unloading end w.e.f 1st October 2016 at all coal based stations. Sales for the quarter and half-year ended 30th September 2016 have been provisionally recognized at  18,957.46 crore and  37,744.22 crore respectively (previous quarter and half-year  18,233.53 crore and  35,973.17 crore) on the basis of said Regulations 2014, wherein energy charges included in sales, in respect of the coal based stations have been recognized based on the GCV ‘as received’ measured after secondary crusher. In the absence of suitable measurement mechanism of comparable GCV, the financial impact, if any, of the difference between the GCV ‘as received’ measured after collection of samples from loaded wagons at the generating stations and that of GCV ‘as received’ measured after secondary crusher, cannot be quantified. Considering the distance between both the measuring points, which are generally within the station and are at a distance less than one KM from the unloading point of the wagons, the above difference will not be material. (c) Sales for the quarter and half-year ended 30th September 2016 include  132.97 crore and  97.79 crore respectively (previous quarter and half-year  274.47 crore and  231.45 crore) pertaining to previous years recognized based on the orders issued by the CERC/Appellate Tribunal for Electricity (APTEL). (d) Sales for the quarter and half-year ended 30th September 2016 includes  Nil (previous quarter and half-year (-)  901.68 crore and (-)  1,693.65 crore) on account of income-tax payable to the beneficiaries as per Regulations, 2004. Sales for the quarter and half-year ended 30th September 2016 also include  12.32 crore and  24.63 crore respectively (previous quarter and halfyear  12.75 crore and  25.49 crore) on account of deferred tax materialized which is recoverable from beneficiaries as per Regulations, 2014.

F-7

7

Provision for current tax for the quarter and half-year ended 30th September 2016 includes  Nil, being tax related to earlier years (previous quarter and half-year (-)  1,197.20 crore and (-)  2,039.02 crore).

8

The environmental clearance (“clearance”) granted by the Ministry of Environment and Forest, Government of India (MoEF) for one of the Company’s ongoing project was challenged before the National Green Tribunal (NGT). The NGT disposed the appeal, inter alia, directing that the order of clearance be remanded to the MoEF to pass an order granting or declining clearance to the project proponent afresh in accordance with the law and the judgment of the NGT and for referring the matter to the Expert Appraisal Committee ("Committee") for its re-scrutiny, which shall complete the process within six months from the date of NGT order. NGT also directed that the environmental clearance shall be kept in abeyance and the Company shall maintain status quo in relation to the project during the period of review by the Committee or till fresh order is passed by the MoEF, whichever is earlier. The Company filed an appeal challenging the NGT order before the Hon’ble Supreme Court of India which stayed the order of the NGT and the matter is sub-judice. Aggregate cost incurred on the project upto 30th September 2016 is  13,170.32 crore ( 11,774.77 crore as at 31st March 2016). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary.

9

The Company is executing a hydro power project in the state of Uttarakhand, where all the clearances were accorded. A case was filed in Hon’ble Supreme Court of India after the natural disaster in Uttarakhand in June 2013 to review whether the various existing and ongoing hydro projects have contributed to environmental degradation. Hon’ble Supreme Court of India on 7th May 2014, ordered that no further construction shall be undertaken in the projects under consideration until further orders, which included the said hydro project of the Company. In the proceedings, Hon’ble Supreme Court is examining to allow few projects which have all clearances which includes the project of the Company where the work has been stopped. Aggregate cost incurred on the project up to 30th September 2016 is  158.99 crore ( 157.31 crore as at 31st March 2016). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary.

10

Other financial assets - Non current as at 30th September 2016 include claims recoverable of  611.42 crore ( 469.73 crore as at 31st March 2016) towards the cost incurred in respect of one of the hydro power projects, the construction of which has been discontinued on the advice of the Ministry of Power (MOP), GOI which includes  325.98 crore ( 185.41 crore as at 31st March 2016) in respect of arbitration awards challenged/being challenged by the Company before the Hon’ble High Court. In the event the Hon’ble High Court grants relief to the Company, the amount would be adjusted against provisions. Management expects that the total cost incurred, anticipated expenditure on the safety and stabilisation measures, other recurring site expenses and interest costs as well as claims of contractors/vendors for various packages for this project will be compensated in full by the GOI. Hence, no provision is considered necessary.

11

During the quarter, solar units of 50 MW at NP Kunta Ultra Mega Solar Power Project at Anantapuram have been declared commercial w.e.f. 10th August 2016.

12

During the quarter, the Company has paid final dividend of  1.75 per share (face value of  10/- each) for the financial year 2015-16.

13

Formula used for computation of coverage ratios - DSCR = Earning before Interest, Depreciation, Tax and Exceptional Items/(Interest net of transferred to expenditure during construction + Principal repayment) and ISCR = Earning before Interest, Depreciation, Tax and Exceptional Items/(Interest net of transferred to expenditure during construction).

14

For all secured bonds issued by the Company, 100% security cover is maintained for outstanding bonds. The security has been created on fixed assets through English/Equitable mortgage as well as hypothecation of movable assets of the Company.

15

Figures for the previous periods have been regrouped/reclassified wherever necessary, to conform to current period’s classification. For and on behalf of Board of Directors

(K.BISWAL) DIRECTOR (FINANCE) Place: New Delhi Date : 28th October 2016

F-8

INDEPENDENT AUDITORS’ REVIEW REPORT To The Board of Directors, NTPC Limited, New Delhi. We have reviewed the accompanying statement of standalone unaudited financial results of NTPC Limited for the quarter and half-year ended 30th September 2015 except for the disclosures regarding ‘Public Shareholding’ and ‘Promoter and Promoter Group Shareholding’ which have been traced from disclosures made by the management and have not been audited by us. This statement is the responsibility of the Company’s Management and has been approved by the Board of Directors. Our responsibility is to issue a report on these financial statements based on our review. We have conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion. Without modifying our report, attention is invited to Note 2 (b) and 4 to the statement of standalone unaudited financial results referred to above regarding accounting of sales on provisional basis and in respect of a project where the matter is pending before the Hon’ble Supreme Court of India. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying statement of standalone unaudited financial results read with notes thereon, prepared in accordance with applicable accounting standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and other recognised accounting practices and policies thereon has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement with Stock Exchanges including the manner in which it is to be disclosed, or that it contains any material misstatement. For T.R. Chadha & Co. Chartered Accountants FRN 006711N

For PSD & Associates Chartered Accountants FRN 004501C

For Sagar & Associates Chartered Accountants FRN 003510S

( Neena Goel ) Partner M. No.057986

( Thalendra Sharma ) Partner M. No.079236

(V. Vidyasagar Babu) Partner M. No.027357

For Kalani & Co. Chartered Accountants FRN 000722C

For P. A. & Associates Chartered Accountants FRN 313085E

For S. K. Kapoor & Co. Chartered Accountants FRN 000745C

( Vikas Gupta ) Partner M. No.077076

( P. S. Panda ) Partner M. No.051092

( V.B. Singh ) Partner M. No.073124

For B. M. Chatrath & Co. Chartered Accountants FRN 301011E ( P. R. Paul) Partner M. No.051675

Place : New Delhi Dated : 29th October 2015 F-9

NTPC LIMITED PART I : Statement of Standalone Unaudited Financial Results for the Quarter and Half-Year ended 30th September 2015 Sl. No.

1 1

2

3 4 5 6 7 8 9 10

11 12 13

Particulars

2 Income from operations (a) Net sales (net of electricity duty) (b) Other operating income Total income from operations (net) Expenses (a) Fuel cost (b) Employee benefits expense (c) Depreciation and amortisation expense (d) Other expenses Total expenses Profit from operations before other income, finance costs and exceptional items (1-2) Other income

Quarter ended 30.09.2015 (Unaudited) 3

Quarter ended 30.06.2015 (Unaudited) 4

Quarter ended 30.09.2014 (Unaudited) 5

Half-Year ended 30.09.2015 (Unaudited) 6

( in Lakhs) Half-Year ended Year ended 30.09.2014 31.03.2015 (Unaudited) (Audited) 7 8

1772290 17561 1789851

1701869 6589 1708458

1658236 15427 1673663

3474159 24150 3498309

3466883 40455 3507338

7263775 60830 7324605

1154083 92168 132291 140535 1519077 270774

1150914 92276 123795 121501 1488486 219972

1143933 91801 115158 113696 1464588 209075

2304997 184444 256086 262036 3007563 490746

2420446 183642 226705 225571 3056364 450974

4884519 366978 491165 464548 6207210 1117395

27539

23872

53069

51411

106325

211632

Profit from ordinary activities before finance costs and exceptional items (3+4) Finance costs

298313

243844

262144

542157

557299

1329027

81453

73088

66741

154541

133532

274362

Profit from ordinary activities after finance costs but before exceptional items (5-6) Exceptional items Profit from ordinary activities before tax (7+8) Tax expense: (a) Current tax (refer note 3) (b) Deferred tax (c) Less: Deferred asset for deferred tax liability Total tax expense (a+b-c) Net profit from ordinary activities after tax (9-10) Extraordinary items (net of tax expense) Net profit for the period (11-12)

216860

170756

195403

387616

423767

1054665

14 Paid-up equity share capital (Face value of share  10/- each)

-

-

-

-

-

170756

195403

387616

423767

1054665

(72760) 1894 2102 (72968) 289828

(42861) 8903 8821 (42779) 213535

(2188) 9446 19018 (11760) 207163

(115621) 10797 10923 (115747) 503363

(3516) 19018 19018 (3516) 427283

32644 88875 95940 25579 1029086

-

-

-

-

-

-

289828

213535

207163

503363

427283

1029086

824546

824546

824546

824546

824546

824546

8679087

6956529

8599534

343885

257916

7341189 362460

15 Paid-up debt capital 16 Reserves excluding revaluation reserve as per balance sheet 17 Debenture redemption reserve 18(i) Earnings per share (before extraordinary items) - (of  10/each)(not annualised) (in ): (a) Basic

-

216860

3.51

2.59

2.51

6.10

5.18

12.48

3.51

2.59

2.51

6.10

5.18

12.48

3.51 3.51

2.59 2.59

2.51 2.51

6.10 6.10

5.18 5.18

12.48 12.48

19 Debt equity ratio

1.00

0.77

1.05

20 Debt service coverage ratio (DSCR) 21 Interest service coverage ratio (ISCR)

1.81 5.22

2.05 5.95

2.44 6.72

(b) Diluted 18(ii) Earnings per share (after extraordinary items) - (of  10/each) (not annualised) (in ): (a) Basic (b) Diluted

See accompanying notes to the financial results.

F-10

NTPC LIMITED PART II : Select Information for the Quarter and Half-Year ended 30th September 2015 Sl. No. Particulars

1 A

2 PARTICULARS OF SHAREHOLDING

1

Public shareholding - Number of shares - Percentage of shareholding

2

Promoters and promoter group shareholding a) Pledged/encumbered - Number of shares - Percentage of shares (as a % of the total shareholding of promoter and promoter group) - Percentage of shares (as a % of the total share capital of the company) b) Non-encumbered - Number of shares - Percentage of shares (as a % of the total shareholding of promoter and promoter group) - Percentage of shares (as a % of the total share capital of the company)

Particulars B

Quarter ended 30.09.2015 (Unaudited) 3

Quarter ended 30.06.2015 (Unaudited) 4

2064849420 25.04

2064849420 25.04

Half-Year ended 30.09.2015 (Unaudited) 6

2064849420 25.04

Half-Year ended Year ended 30.09.2014 31.03.2015 (Unaudited) (Audited) 7 8

2064849420 25.04

2064849420 25.04

-

-

-

-

-

-

-

-

-

-

-

-

6180614980

6180614980

6180614980

6180614980

6180614980

6180614980

100.00

100.00

100.00

100.00

100.00

100.00

74.96

74.96

74.96

74.96

74.96

74.96

Quarter ended 30.09.2015

INVESTOR COMPLAINTS Pending at the beginning of the quarter Received during the quarter Disposed of during the quarter Remaining unresolved at the end of the quarter

2064849420 25.04

Quarter ended 30.09.2014 (Unaudited) 5

1 926 927 -

F-11

NTPC LIMITED Standalone Statement of Assets and Liabilities

Sl. Particulars No. A

EQUITY AND LIABILITIES

1

Shareholders' funds (a) Share capital (b) Reserves and surplus

As at 30.09.2015 (Unaudited)

824546 7848692 8673238

824546 7341189 8165735

183299

139415

Sub-total - Non-current liabilities

7873094 97780 266887 119990 8357751

7853233 97907 288659 111571 8351370

Sub-total - Current liabilities

519335 1905219 655065 3079619

595315 1680762 775875 3051952

TOTAL - EQUITY AND LIABILITIES

20293907

19708472

14465526 753731 1805533 218410 17243200

13534256 715407 1552789 169677 15972129

228839 650920 768188 642441 245837 514482 3050707

187806 745300 760437 1287881 240759 514160 3736343

20293907

19708472

Sub-total - Shareholders' funds 2 3

4

Deferred revenue Non-current liabilities (a) Long-term borrowings (b) Deferred tax liabilities (net) (c) Other long-term liabilities (d) Long-term provisions Current liabilities (a) Trade payables (b) Other current liabilities (c) Short-term provisions

B

ASSETS

1

Non-current assets (a) Fixed assets (including capital work-in-progress) (b) Non-current investments (c) Long-term loans and advances (d) Other non-current assets Sub-total - Non-current assets Current assets (a) Current investments (b) Inventories (c) Trade receivables (d) Cash and bank balances (e) Short-term loans and advances (f) Other current assets Sub-total - Current assets

2

 in Lakhs As at 31.03.2015 (Audited)

TOTAL - ASSETS

F-12

NTPC LIMITED Segment-wise Revenue, Results and Capital Employed for the Quarter and Half-Year ended 30 th September 2015

Sl. No. Particulars

2

1 1

2

Segment revenue - Generation - Others Total

Segment results (Profit before tax and interest) - Generation - Others Total Less : (i) Unallocated finance costs (ii) Other unallocable expenditure net of unallocable income Profit before tax

3

Capital employed (Segment assets - Segment liabilities) - Generation - Others - Un-allocated Total

Quarter ended 30.09.2015 (Unaudited) 3

( in Lakhs) Quarter Quarter Half-Year Half-Year ended ended ended ended Year ended 30.06.2015 30.09.2014 30.09.2015 30.09.2014 31.03.2015 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) 4 5 6 7 8

1795028 2701 1797729

1711731 2371 1714102

1678287 2286 1680573

3506759 5072 3511831

3514384 4985 3519369

7343010 11289 7354299

310930 (2702) 308228

252496 (207) 252289

242405 367 242772

563426 (2909) 560517

511943 250 512193

1255439 (445) 1254994

81453 9915

73088 8445

66741 (19372)

154541 18360

133532 (45106)

274362 (74033)

216860

170756

195403

387616

423767

1054665

9376801 59848 (763411) 8673238

8908908 38867 (566277) 8381498

7861889 47072 1099305 9008266

9376801 59848 (763411) 8673238

7861889 47072 1099305 9008266

8914847 82008 (831120) 8165735

The operations of the company are mainly carried out within the country and therefore, geographical segments are not applicable.

F-13

Notes: 1

The above results have been reviewed by the Audit Committee and approved by the Board of Directors in their respective meetings held on 29th October 2015.

2 a) The Central Electricity Regulatory Commission (CERC) notified the Tariff Regulations, 2014 in February 2014 (Regulations, 2014). Pending issue of provisional/final tariff orders w.e.f. 1st April 2014 for all the stations, beneficiaries are billed in accordance with the tariff approved and applicable as on 31st March 2014 as provided in the Regulations 2014. The amount provisionally billed for the quarter and half-year ended 30th September 2015 is 18,59,213 lakh and 36,30,561 lakh respectively (corresponding previous quarter and half-year 17,06,905 lakh and 35,98,039 lakh). b) The Company has filed a petition before the Hon’ble High Court of Delhi contesting certain provisions of the Regulations, 2014. Pending issue of provisional/final tariff orders under Regulations, 2014 by the CERC and disposal of the petition, sales have been provisionally recognised at 18,31,134 lakh for the quarter and  36,12,952 lakh for the half-year ended 30th September 2015 (corresponding previous quarter and half-year 17,04,549 lakh and 35,63,035 lakh) on the basis of said Regulations. Pending disposal of the petition, energy charges included in sales, in respect of the coal based stations for the quarter and half year have been recognized based on the GCV ‘as received at the secondary crusher’. c) Sales include 27,447 lakh for the quarter and 23,145 lakh for the half-year ended 30th September 2015 (corresponding previous quarter and half-year  9,010 lakh and 32,017 lakh) pertaining to previous years recognized based on the orders issued by the CERC/Appellate Tribunal for Electricity. Sales also include (-) 90,168 lakh for the quarter and (-) 1,69,365 lakh for the half-year ended 30th September 2015 (corresponding previous quarter and half-year (-)  60,502 lakh and 1,38,923 lakh) on account of income tax refundable to/recoverable from the beneficiaries as per Regulations, 2004. Sales also include 1,275 lakh for the quarter and 2,549 lakh for the half-year ended 30th September 2015 (corresponding previous quarter and half-year 2,952 lakh and 5,904 lakh) on account of deferred tax materialized which is recoverable from beneficiaries as per Regulations, 2014. 3

4

5

Provision for current tax for the quarter and half year ended 30th September 2015 includes tax related to earlier years amounting to (-)  1,19,720 lakh and (-)  2,03,902 lakh respectively (corresponding previous quarter (-)  56,330 lakh and half-year (-)  1,28,893 lakh). The environmental clearance (“clearance”) granted by the Ministry of Environment and Forest, Government of India (MoEF) for one of the Company’s project was challenged before the National Green Tribunal (NGT). The NGT disposed the appeal, inter alia, directing that the order of clearance be remanded to the MOEF to pass an order granting or declining clearance to the project proponent afresh in accordance with the law and the judgment of the NGT and for referring the matter to the Expert Appraisal Committee ("Committee") for its re-scrutiny, which shall complete the process within six months from the date of NGT order. NGT also directed that the environmental clearance shall be kept in abeyance and the Company shall maintain status quo in relation to the project during the period of review by the Committee or till fresh order is passed by the MoEF, whichever is earlier. The Company filed an appeal challenging the NGT order before the Hon’ble Supreme Court of India which stayed the order of the NGT and the matter is sub-judice. Aggregate cost incurred on the project upto 30th September 2015 is 10,36,609 lakh (8,73,244 lakh as at 31st March 2015). Management is confident that the approval for proceeding with the project shall be granted, hence no provision is considered necessary. Other non current assets as at 30th September 2015 include 47,334 lakh (46,628 lakh as at 31st March 2015) recoverable from Government of India (GOI) towards the cost incurred in respect of one of the hydro power projects, the construction of which has been discontinued on the advice of the Ministry of Power, GOI. Management expects that the total cost incurred, anticipated expenditure on safety and stabilization measures, other recurring site expenses and interest costs as well as claims of various contractors/vendors for this project, will be compensated in full by the GOI. Hence no provision is considered necessary.

6

Formula used for computation of coverage ratios - DSCR = Earning before Interest, Depreciation, Tax and Exceptional Items/(Interest net of transferred to expenditure during construction + Principal repayment) and ISCR = Earning before Interest, Depreciation, Tax and Exceptional Items/Interest net of transferred to expenditure during construction.

7

During the quarter, four units of 200 MW each at Koldam Hydro Power Project have been declared commercial w.e.f 18

8

During the quarter, the Company has paid final dividend of  1.75 per share (face value of  10/- each) for the financial year 201415.

9

The above financial results have been reviewed by the Statutory Auditors as required under Clause 41 of the Listing Agreements.

10

Figures for the previous periods/year have been regrouped/rearranged wherever necessary. For and on behalf of Board of Directors

(K. Biswal) Director (Finance)

Place : New Delhi Date : 29 th October 2015

F-14

th

July 2015.

AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2016 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NTPC LIMITED Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of NTPC Limited (hereinafter referred to as “the Holding Company”) and its subsidiaries (the Holding Company and its subsidiaries together referred to as “the Group”) and its jointly controlled entities, comprising of the Consolidated Balance Sheet as at 31st March, 2016, the Consolidated Statement of Profit and Loss, the Consolidated Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the consolidated financial statements”). Management’s Responsibility for the Consolidated Financial Statements The Holding Company’s Board of Directors is responsible for the preparation of these consolidated financial statements in terms of the requirements of the Companies Act, 2013 (hereinafter referred to as “the Act”) that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group including its Jointly controlled entities in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. The respective Board of Directors of the companies included in the Group and of its jointly controlled entities are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company’s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the

F-15

circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Holding Company’s Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in sub-paragraph (a) of the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements. Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group and its jointly controlled entities as at 31 st March, 2016, and their consolidated profit and their consolidated cash flows for the year ended on that date. Emphasis of Matter We draw attention to the following matters in the Notes to the consolidated financial statements: (a)

Note No. 12 (i) & 37 (a) in respect of change in accounting of capital expenditure on assets not owned by the Company with retrospective effect taking guidance available in AS 10 notified by MCA on 30th March 2016 effective from the financial year 2016-17.

(b)

Note No. 22 (a) & (b) regarding billing & recognition of sales on provisional basis and measurement of GCV of coal on ‘as received’ basis after secondary crusher pending disposal of the matter by CERC/Hon’ble Delhi High Court and related matters as mentioned in said note;

(c)

Note No. 34 in respect of a Company’s ongoing project where the order of NGT has been stayed by the Hon’ble Supreme Court of India and the matter is sub-judice.

Our opinion is not modified in respect of these matters. Other Matters (a)

We did not audit the financial statements / financial information of the following subsidiaries and jointly controlled entities whose financial statements / financial information reflect the details given below of assets as at 31st March 2016, total revenues and net cash flows for the year ended on that date to the extent to which they are reflected in the Consolidated Financial Statements:

Name of the Companies

Assets

Subsidiaries: 1) NTPC Electric Supply Company Ltd 2) NTPC Vidyut Vyapar Nigam Ltd. 3) Kanti Bijlee Utpadan Nigam Ltd. 4) Bhartiya Rail Bijlee Company Ltd. 5) Patratu Vidyut Utpadan Nigam Ltd. Total

77.69 1,256.01 4,241.85 6,265.75 6.78 11,848.08

F-16

Total Revenues 1.40 4,122.62 377.62 4,501.64

(൘in crore) Net Cash Flows (501.93) (13.71) (39.96) 28.31 2.09 (525.20)

Name of the Companies

Assets

Joint Ventures: 1) Utility Powertech Ltd. 2) NTPC-Alstom Power Services Pvt. Ltd. 3) NTPC-SAIL Power Company Pvt. Ltd. 4) NTPC Tamilnadu Energy Company Ltd. 5) Aravali Power Company Pvt. Ltd. 6) Meja Urja Nigam Pvt. Ltd. 7) BF-NTPC Energy Systems Ltd. 8) Nabinagar Power Generating Company Pvt. Ltd. 9) National High Power Test Laboratory Pvt. Ltd Total

Total Revenues

(൘in crore) Net Cash Flows

143.64 66.54 1,560.14 4,770.32 5,206.37 2,948.57 2.94

327.87 60.37 857.90 1,329.17 2,144.37 0.02

6.04 (3.57) 62.45 9.76 7.26 (20.92) -

3,753.94 58.56 18,511.02

4,719.70

29.69 (2.72) 87.99

These financial statements / financial information have been audited by other auditors whose reports have been furnished to us by the Management upto 25 th May 2016 and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and jointly controlled entities, and our report in terms of sub-sections (3) and (11) of Section 143 of the Act, insofar as it relates to the aforesaid subsidiaries and jointly controlled entities is based solely on the reports of the other auditors. (b)

We did not audit the financial statements / financial information of the following jointly controlled entities whose financial statements / financial information reflect the details given below of assets as at 31st March 2016, total revenues and net cash flows for the year ended on that date to the extent to which they are reflected in the Consolidated Financial Statements: (൘in Crore)

Name of the Companies

Assets

Joint Ventures: 1) Ratnagiri Gas & Power Pvt. Ltd. 2) NTPC-BHEL Power Project Pvt. Ltd 3) Transformers and Electricals Kerala Ltd. 4) Energy Efficiency Services Ltd. 5) Anushakti Vidyut Nigam Ltd. 6) CIL NTPC Urja Pvt. Ltd. 7) Trincomalee Power Company Ltd. 8) Bangladesh India Friendship Power Company Pvt. Ltd. Total

2,540.51 412.24 58.20 427.77 0.01 0.03 14.56 94.95 3,548.27

Total Revenues 290.25 401.36 68.90 206.27 0.45 967.23

Net Cash Flows 1.41 (12.02) (1.71) 43.75 0.02 3.16 21.58 56.19

These financial statements / financial information are unaudited and have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these jointly controlled entities, and our report in terms of sub-section (3) of Section 143 of the Act in so far as it relates to the aforesaid jointly controlled entities, is based solely on such unaudited financial statements / financial information. In our opinion and according to the information and explanations given to us by the Management, these financial statements / financial information are not material to the Group. Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial statements / financial information certified by the Management.

F-17

Report on Other Legal and Regulatory Requirements 1.

As required by Section 143(3) of the Act, we report, to the extent applicable, that: (a)

We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements.

(b)

In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors.

(c)

The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss, and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements.

(d)

In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e)

Being a Government Company, pursuant to the Notification No. GSR 463(E) dated 5th June 2015 issued by Ministry of Corporate Affairs, Government of India, provisions of sub-section (2) of Section 164 of the Companies Act, 2013, are not applicable to the Holding Company. Further, on the basis of the reports of the statutory auditors of its subsidiary companies, and jointly controlled companies incorporated in India, none of the directors of the Group companies, and its jointly controlled companies incorporated in India is disqualified as on 31 st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.

(f)

With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure 1.

(g)

With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditor’s) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: (i)

The consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Group and its jointly controlled entities. Refer Note 34, 35 and 52 to the consolidated financial statements.

(ii)

Provision has been made in the consolidated financial statements, as required under the applicable law or accounting standards, for material foreseeable losses, on long- term contracts including derivative contracts.

(iii)

There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Holding Company, its subsidiary and jointly controlled companies incorporated in India, in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and Rules made thereunder.

F-18

For T.R. Chadha & Co LLP Chartered Accountants FRN 006711N/N500028

For PSD & Associates Chartered Accountants FRN 004501C

For Sagar & Associates Chartered Accountants FRN 003510S

(CA. Neena Goel) Partner M No.057986

(CA. Thalendra Sharma) Partner M No.079236

(CA. V.Vidyasagar Babu) Partner M No.027357

For Kalani & Co. Chartered Accountants FRN 000722C

For P. A. & Associates Chartered Accountants FRN 313085E

For S.K. Kapoor & Co. Chartered Accountants FRN 000745C

For B. M. Chatrath & Co. Chartered Accountants FRN 301011E

(CA. P.C.Parwal) Partner M No. 071411

(CA. S.S.Poddar) Partner M No.051113

(CA. V.B.Singh) Partner M.No.073124

(CA. P.R.Paul) Partner M.No.051675

Place : New Delhi Dated : 30th May 2016

F-19

Annexure 1 ANNEXURE TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE CONSOLIDATED FINANCIAL STATEMENTS OF ABC COMPANY LIMITED Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”) In conjunction with our audit of the consolidated financial statements of the Company as of and for the year ended 31st March 2016, We have audited the internal financial controls over financial reporting of NTPC Limited (hereinafter referred to as “the Holding Company”) and its subsidiary companies, its associate companies and jointly controlled companies, which are companies incorporated in India, as of that date. Management’s Responsibility for Internal Financial Controls The respective Board of Directors of the Holding company, its subsidiary companies, its associate companies and jointly controlled companies, which are companies incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company and the components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013. Auditors’ Responsibility Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) issued by the ICAI and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

F-20

Meaning of Internal Financial Controls Over Financial Reporting A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial Controls Over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion In our opinion, the Holding Company, its subsidiary companies, its associate companies and jointly controlled companies, which are companies incorporated in India, have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2016, based on the internal control over financial reporting criteria established by the Company and the components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. Other Matters Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting insofar as it relates to five subsidiary companies and nine jointly controlled companies, which are companies incorporated in India, is based on the corresponding reports of the auditors of such companies incorporated in India. As regard the financial statements of other six jointly controlled companies incorporated in India, which are un-audited, their impact on the Internal Financial Control on Financial Reporting of the Group is not material.

F-21

For T.R. Chadha & Co LLP Chartered Accountants FRN 006711N/N500028

For PSD & Associates Chartered Accountants FRN 004501C

For Sagar & Associates Chartered Accountants FRN 003510S

(CA. Neena Goel) Partner M No.057986

(CA. Thalendra Sharma) Partner M No.079236

(CA. V.Vidyasagar Babu) Partner M No.027357

For Kalani & Co. Chartered Accountants FRN 000722C

For P. A. & Associates Chartered Accountants FRN 313085E

For S.K. Kapoor & Co. Chartered Accountants FRN 000745C

For B. M. Chatrath & Co. Chartered Accountants FRN 301011E

(CA. P.C.Parwal) Partner M No. 071411

(CA. S.S.Poddar) Partner M No.051113

(CA. V.B.Singh) Partner M.No.073124

(CA. P.R.Paul) Partner M.No.051675

Place : New Delhi Dated : 30th May 2016

F-22

TO THE MEMBERS OF NTPC LIMITED Corrigendum to the Independent Auditor’s Report dated 30 th May 2016 on the Consolidated Financial Statements of NTPC Ltd. for the year ended 31st March 2016 For the year under audit, we have already issued our Independent Auditors’ Report dated 30 th May 2016 on the above referred consolidated financial statements of NTPC Ltd. In the said report, the financial statements of one of the Joint Venture Companies, M/s NTPC Alstom Power Services Pvt. Ltd., having assets of Rs.66.54 crore, Total Revenue of Rs. 60.37 crore and Net cash flows of Rs. (-) 3.57 crore, were un-audited as on the date of finalization of consolidated financial statements of NTPC Ltd whereas the same has been inadvertently disclosed as audited. Accordingly, the relevant portions in the Independent Auditors’ Report may be read as under: 1. In paragraph (a) titled ‘Other Matters’ in the main report, the table in respect of Subsidiaries and Jointly Controlled Entities whose accounts were audited may be read as under:

Name of the Companies

Assets

Subsidiaries: 1) NTPC Electric Supply Company Ltd. 2) NTPC Vidyut Vyapar Nigam Ltd. 3) Kanti Bijlee Utpadan Nigam Ltd. 4) Bhartiya Rail Bijlee Company Ltd. 5) Patratu Vidyut Utpadan Nigam Ltd. Total Joint Ventures: 1) Utility Powertech Ltd. 2) NTPC-SAIL Power Company Pvt. Ltd. 3) NTPC Tamilnadu Energy Company Ltd. 4) Aravali Power Company Pvt. Ltd. 5) Meja Urja Nigam Pvt. Ltd. 6) BF-NTPC Energy Systems Ltd. 7) Nabinagar Power Generating Company Pvt. Ltd. 8) National High Power Test Laboratory Pvt. Ltd. Total

Total Revenue

(൘ in crore) Net Cash Flows

77.69 1,256.01 4,241.85 6,265.75 6.78 11,848.08

1.40 4,122.62 377.62 4,501.64

(501.93) (13.71) (39.96) 28.31 2.09 (525.20)

143.64 1,560.14 4,770.32 5,206.37 2,948.57 2.94 3,753.94 58.56 18,444.48

327.87 857.90 1,329.17 2,144.37 0.02 4,659.33

6.04 62.45 9.76 7.26 (20.92) 29.69 (2.72) 91.56

2. In the paragraph (b) titled ‘Other Matters’ in the main report, the table in respect of Subsidiaries and Jointly Controlled Entities whose accounts were un-audited, may be read as under:

Name of the Companies

Assets

Joint Ventures: 1) NTPC-Alstom Power Services Pvt. Ltd. 2) Ratnagiri Gas & Power Pvt. Ltd. 3) NTPC-BHEL Power Project Pvt. Ltd 4) Transformers and Electricals Kerala Ltd. 5) Energy Efficiency Services Ltd. 6) Anushakti Vidyut Nigam Ltd. 7) CIL NTPC Urja Pvt. Ltd. 8) Trincomalee Power Company Ltd.

66.54 2,540.51 412.24 58.20 427.77 0.01 0.03 14.56

F-23

Total Revenue

( in crore) Net Cash Flows

60.37 290.25 401.36 68.90 206.27 0.45

(3.57) 1.41 (12.02) (1.71) 43.75 0.02 3.16

9) Bangladesh India Friendship Power Company Pvt. Ltd. Total

94.95 3,614.81

1,027.60

21.58 52.62

3. Para titled ‘Other matters’ in Annexure - I i.e. Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”) to the Independent Auditors’ Report may be read as under: “Other Matters Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting insofar as it relates to five subsidiary companies and eight jointly controlled companies, which are companies incorporated in India, is based on the corresponding reports of the auditors of such companies incorporated in India. As regard the financial statements of other seven jointly controlled companies incorporated in India, which are un-audited, their impact on the Internal Financial Control on Financial Reporting of the Group is not material.”

For T.R. Chadha & Co LLP Chartered Accountants FRN 006711N/N500028

For PSD & Associates Chartered Accountants FRN 004501C

For Sagar & Associates Chartered Accountants FRN 003510S

(CA. Neena Goel) Partner M No.057986

(CA. Darshit Gupta) Partner M No.415120

(CA. V.Vidyasagar Babu) Partner M No.027357

For Kalani & Co. Chartered Accountants FRN 000722C

For P. A. & Associates Chartered Accountants FRN 313085E

(CA. Vikas Gupta) Partner M No. 077076

(CA. S.S.Poddar) Partner M No.051113

Place : Dated :

For S.K. Kapoor & Co. For B. M. Chatrath & Co. Chartered Accountants Chartered Accountants FRN 000745C FRN 301011E (CA. V.B.Singh) Partner M.No.073124

New Delhi 29th June 2016

F-24

(CA. P.R.Paul) Partner M.No.051675

NTPC LIMITED CONSOLIDATED BALANCE SHEET AS AT 31 ST MARCH 2016 ൘ Crore Particulars EQUITY AND LIABILITIES Shareholders' funds Share capital Reserves and surplus

Note no.

As at 31.03.2016

As at 31.03.2015

2 3

8,245.46 80,951.05 89,196.51 1,946.62 892.79

8,245.46 73,848.52 82,093.98 1,394.15 887.94

4

Deferred revenue Minority interest Non-current liabilities Long-term borrowings Deferred tax liabilities (net) Other long-term liabilities Long-term provisions Regulatory liabilities

5 6 7 8 8A

1,02,238.28 1,409.40 3,908.30 469.42 297.56 1,08,322.96

93,362.92 1,265.61 3,221.95 1,143.37 308.55 99,302.40

Current liabilities Short-term borrowings Trade payables Other current liabilities Short-term provisions

5A 9 10 11

2,141.39 6,826.55 22,189.00 8,933.23 40,090.17 2,40,449.05

640.15 7,107.63 20,202.14 7,996.41 35,946.33 2,19,624.80

-

0.62

1,04,211.88 284.06 81,331.66 218.03 14.80 17,885.60 1,946.45 2,05,892.48

91,579.48 272.92 67,524.31 30.38 14.12 16,631.62 1,779.73 1,77,833.18

343.63 7,959.16 10,173.98 5,393.32 2,231.89 8,364.59 34,556.57

1,887.39 7,972.46 9,249.92 14,251.61 2,456.70 5,973.54 41,791.62

2,40,449.05

2,19,624.80

TOTAL ASSETS Non-current assets Goodwill on consolidation Fixed assets Tangible assets Intangible assets Capital work-in-progress Intangible assets under development Non-current investments Long-term loans and advances Other non-current assets

12 12 13 13A 14 15 15A

Current assets Current investments Inventories Trade receivables Cash and bank balances Short-term loans and advances Other current assets

16 17 18 19 20 21

TOTAL Significant accounting policies

1

F-25

The accompanying notes 1 to 55 form an integral part of these financial statements. For and on behalf of the Board of Directors (A.K.Rastogi) Company Secretary

(K.Biswal) Director (Finance)

(Gurdeep Singh) Chairman & Managing Director

This is the Consolidated Balance Sheet referred to in our report of even date For T.R. Chadha & Co LLP Chartered Accountants Firm Reg. No.006711N/N500028

For PSD & Associates Chartered Accountants Firm Reg. No. 004501C

For Sagar & Associates Chartered Accountants Firm Reg. No. 003510S

(Neena Goel) Partner M No.057986

(Thalendra Sharma) Partner M No.079236

(V. Vidyasagar Babu) Partner M No.027357

For Kalani & Co. For P. A. & Associates For S. K.Kapoor & Co For B. M. Chatrath & Co. Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants Firm Reg. No. 000722C Firm Reg. No. 313085E Firm Reg. No. 000745C Firm Reg. No. 301011E (P.C.Parwal) Partner M No. 071411

(S.S.Poddar) Partner M No.051113

(V.B. Singh) Partner M.No.073124

Place : New Delhi Dated : 30th May 2016

F-26

(P.R.Paul) Partner M.No.051675

NTPC LIMITED CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH 2016

൘ Crore Particulars

Note no.

Revenue Revenue from operations (gross) Less: Electricity duty / Excise duty Revenue from operations (net) Other income Total revenue

22

23

Expenses Fuel Electricity purchased Employee benefits expense Cost of material and services Changes in inventories of finished goods,work-in-progress Finance costs Depreciation, amortisation and impairment expense Generation, administration & other expenses Prior period items (net) Total expenses

24

25 12 26 27

For the year ended 31.03.2016

For the year ended 31.03.2015

79,545.42 839.92 78,705.50 1,234.06 79,939.56

81,356.92 744.98 80,611.94 2,063.46 82,675.40

46,496.08 2,174.90 3,836.43 1,005.87 (41.47) 4,151.26 6,153.41 6,279.21 (208.68) 69,847.01

51,449.50 2,082.64 3,840.62 631.02 4.64 3,570.37 5,564.61 5,282.57 (318.22) 72,107.75

Profit before tax and Rate Regulated Activities (RRA) Add: Regulatory Income / (Expense) (refer Note 49) Profit before tax Tax expense Current tax Current year Earlier years Tax expense/(saving) pertaining to RRA Deferred tax Less :Deferred asset for deferred tax liability MAT credit recoverable Total tax expense

10,092.55 10.99 10,103.54

10,567.65 (111.44) 10,456.21

2,263.57 (2,453.03) 2.57 242.57 94.47 20.10 (58.89)

2,430.54 (1,952.99) (35.25) 1023.87 994.66 7.67 463.84

Profit after tax

10,162.43

9,992.37

(20.38)

6.03

10,182.81

9,986.34

12.35

12.11

Less: Share of Profit /(loss)-Minority interest Group profit after tax Significant accounting policies Expenditure during construction period (net)

1 28

Earnings per equity share (Par value of ൘10/- each) Basic & Diluted (൘)

45

F-27

The accompanying notes 1 to 55 form an integral part of these financial statements. There are no exceptional or extraordinary items in the above periods. Total revenue, total expenses and profit after tax includes ൘5,686.93 crore (previous year ൘4,779.76 crore), ൘5,522.48 crore (previous year ൘4,867.10 crore) and ൘52.02 crore (previous year (-) ൘244.16 crore) respectively towards share of jointly controlled entities. For and on behalf of the Board of Directors (A.K.Rastogi) Company Secretary

(K.Biswal) Director (Finance)

(Gurdeep Singh) Chairman & Managing Director

This is the Consolidated Statement of Profit & Loss referred to in our report of even date For T.R. Chadha & Co LLP Chartered Accountants Firm Reg. No.006711N/N500028

For PSD & Associates Chartered Accountants Firm Reg. No. 004501C

For Sagar & Associates Chartered Accountants Firm Reg. No. 003510S

(Neena Goel) Partner M No.057986

(Thalendra Sharma) Partner M No.079236

(V. Vidyasagar Babu) Partner M No.027357

For Kalani & Co. For P. A. & Associates For S. K.Kapoor & Co For B. M. Chatrath & Co. Chartered Accountants Chartered Accountants Chartered Accountants Chartered Accountants Firm Reg. No. 000722C Firm Reg. No. 313085E Firm Reg. No. 000745C Firm Reg. No. 301011E (P.C.Parwal) Partner M No. 071411

(S.S.Poddar) Partner M No.051113

(V.B. Singh) Partner M.No.073124

Place : New Delhi Dated : 30th May 2016

F-28

(P.R.Paul) Partner M.No.051675

NTPC LIMITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2016  Crore Particulars A. CASH FLOW FROM OPERATING ACTIVITIES Profit before tax Adjustment for: Depreciation, amortisation & impairment expense Prior period depreciation/amortisation Provisions Deferred revenue on account of advance against depreciation Deferred foreign currency fluctuation asset Deferred income from foreign currency fluctuation Regulatory Liability Fly ash utilisation reserve fund Exchange differences on translation of foreign currency cash and cash equivalents Interest charges Guarantee fee & other finance charges Interest/income on term deposits/bonds/investment Dividend income Provisions written back Profit on disposal of fixed assets Loss on disposal of fixed assets

For the year ended 31.03.2015

10,103.54

10,456.21

10,407.64

5,564.61 15.62 231.84 (283.35) 136.48 (22.50) 107.91 76.74 (0.02) 3,528.57 41.80 (1,581.36) (160.22) (187.14) (4.54) 147.22 7,611.66

20,511.18

18,067.87

6,153.41 (67.34) 201.83 (129.26) (88.30) 801.84 (10.99) 87.67 (0.08) 4,109.03 42.23 (605.30) (52.97) (179.15) (1.67) 146.69

Operating profit before working capital changes Adjustment for: Trade receivables Inventories Trade payables, provisions and other liabilities Loans & advances and other assets

For the year ended 31.03.2016

(3,642.16)

(2,976.09) (1,677.83) 1,019.90 2,464.63 (1,169.39)

Cash generated from operations Direct taxes paid

16,869.02 (1,458.41)

16,898.48 (2,009.95)

Net cash from operating activities - A

15,410.61

14,888.53

(924.06) 361.98 (307.07) (2,773.01)

B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets Purchase of investments Sale of investments Interest/income on term deposits/bonds/investments received Income tax paid on interest income Dividend received

(19,319.92) 2.12 1,636.96 1,847.03 (303.59) 160.22

(23,246.98) 1,653.58 1,037.06 (137.28) 52.97

Net cash used in investing activities - B

(20,640.65)

C. CASH FLOW FROM FINANCING ACTIVITIES Proceeds from long term borrowings Repayment of long term borrowings Proceeds from short term borrowings Grant received Security premium received Interest paid Guarantee fee & other finance charges paid Dividend paid (including bonus debentures) Tax on dividend (including tax on bonus debentures)

(15,977.18)

25,450.85 (5,076.24) 206.51 20.00 (7,124.72) (112.36) (12,388.20) (2,450.34)

14,689.80 (8,138.26) 1,501.24 125.07 0.12 (8,285.41) (61.93) (2,762.24) (589.02) (3,520.63)

(1,474.50)

0.08

0.02

Net increase/(decrease) in cash and cash equivalents (A+B+C+D)

(8,750.59)

(2,563.13)

Cash and cash equivalents at the beginning of the year (see Note 1 & 2 below) Cash and cash equivalents at the end of the year (see Note 1 & 2 below)

14,487.54 5,736.95

17,050.67 14,487.54

Net cash used in financing activities - C D. Exchange differences on translation of foreign currency cash and cash equivalents

F-29

Particulars

For the year ended 31.03.2016

For the year ended 31.03.2015

1,844.50 2,729.56 1,162.89

659.22 12,830.09 9.33 988.90

5,736.95

14,487.54

100.00 146.66 521.78 15.07 25.89 2.15 0.03 0.01 7.67 343.63

100.00 193.77 419.86 0.08 14.97 24.64 0.30 0.03 0.02 8.63 226.60

1,162.89

988.90

5,393.32 343.63

14,251.61 235.93

5,736.95

14,487.54

NOTES: 1 Cash and cash equivalents consist of cheques, drafts, stamps in hand, balances with banks and investments in liquid mutual funds. Cash and cash equivalents included in the cash flow statement comprise of following balance sheet amounts as per Note-16 and Note-19: Cash and cash equivalents Deposits included in other bank balances Investments in liquid mutual funds Earmarked balances* Cash and cash equivalents as restated * Earmarked balances consist of: (a) Towards redemption of bonds due for repayment within one year (b) Fly ash utilisation reserve fund (c) DDUGJY scheme of GOI (d) Towards public deposit repayment reserve (e) Unpaid dividend account balance (f) Amount deposited as per court orders (g) Unpaid interest/refund account balance - bonds (h) Towards unpaid interest on public deposit (i) Security with governement authorities (j) Margin money with banks (k) Investments in liquid mutual funds earmarked for fly ash utilisation reserve fund 2

3

Reconciliation of cash and cash equivalents as restated (a) Cash and bank balances-Note-19 (b) Current investments (investments in liquid mutual funds)-Note-16 Previous year figures have been regrouped/rearranged wherever considered necessary.

For and on behalf of the Board of Directors

(K.Biswal) Director (Finance)

(A.K.Rastogi) Company Secretary

(Gurdeep Singh) Chairman & Managing Director

This is the Consolidated Cash Flow Statement referred to in our report of even date

For T.R. Chadha & Co LLP Chartered Accountants Firm Reg. No.006711N/N500028

For PSD & Associates Chartered Accountants Firm Reg. No. 004501C

For Sagar & Associates Chartered Accountants Firm Reg. No. 003510S

(Neena Goel) Partner M No.057986

(Thalendra Sharma) Partner M No.079236

(V. Vidyasagar Babu) Partner M No.027357

For Kalani & Co. Chartered Accountants Firm Reg. No. 000722C

For P. A. & Associates Chartered Accountants Firm Reg. No. 313085E

For S. K.Kapoor & Co Chartered Accountants Firm Reg. No. 000745C

For B. M. Chatrath & Co. Chartered Accountants Firm Reg. No. 301011E

(P.C.Parwal) Partner M No. 071411

(S.S.Poddar) Partner M No.051113

(V.B. Singh) Partner M.No.073124

(P.R.Paul) Partner M.No.051675

Place : New Delhi Dated : 30th May 2016

F-30

NTPC LIMITED Notes forming part of Consolidated Financial Statements Summary of significant accounting policies and other explanatory information Note 1. Significant accounting policies A. 1. Basis of preparation These financial statements are prepared on accrual basis of accounting under historical cost convention in accordance with the generally accepted accounting principles in India, accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014, the Companies Act, 2013 (to the extent notified and applicable), applicable provisions of the Companies Act, 1956, and the provisions of the Electricity Act, 2003 to the extent applicable. 2. Basis of consolidation The consolidated financial statements relate to NTPC Ltd. (the Company), its Subsidiaries and interest in Joint Ventures, together referred to as 'Group'. a) Basis of Accounting: i)

The financial statements of the Subsidiary Companies and Joint Ventures in the consolidation are drawn up to the same reporting date as of the Company for the purpose of consolidation.

ii) The consolidated financial statements have been prepared in accordance with Accounting Standard (AS) 21 - ‘Consolidated Financial Statements’ and Accounting Standard (AS) 27 – ‘Financial Reporting of Interest in Joint Ventures’ as specified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules,2014 and generally accepted accounting principles. b) Principles of consolidation: The consolidated financial statements have been prepared as per the following principles: i)

The financial statements of the Company and its subsidiaries are combined on a line by line basis by adding together the like items of assets, liabilities, income and expenses after eliminating intra-group balances, intra-group transactions, unrealised profits or losses. Minority interest has been separately disclosed.

ii) The consolidated financial statements include the interest of the Company in joint ventures, which has been accounted for using the proportionate consolidation method of accounting and reporting whereby the Company’s share of each asset, liability, income and expense of a jointly controlled entity is considered as a separate line item. iii) The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the Company’s separate financial statements except as otherwise stated in the significant accounting policies.

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iv) The difference between the cost of investment and the share of net assets at the time of acquisition of shares in the subsidiaries and joint ventures is identified in the financial statements as goodwill or capital reserve, as the case may be. v) Minority interest in the net assets of consolidated subsidiaries consist of the amount of equity attributable to the minority shareholders. B. Use of estimates The preparation of financial statements require estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses during the reporting period. Although such estimates and assumptions are made on a reasonable and prudent basis taking into account all available information, actual results could differ from these estimates & assumptions and such differences are recognized in the period in which the results are crystallized. C. Grants-in-aid 1. Grants-in-aid received from the Central Government or other authorities towards capital expenditure as well as consumers’ contribution to capital works are treated initially as capital reserve and subsequently adjusted as income in the same proportion as the depreciation written off on the assets acquired out of the grants. 2. Where the ownership of the assets acquired out of the grants vests with the government, the grants are adjusted in the carrying cost of such assets. 3. Grants from Government and other agencies towards revenue expenditure are recognized over the period in which the related costs are incurred and are deducted from the related expenses. D. 1. Fly ash utilisation reserve fund Proceeds from sale of ash/ash products along-with income on investment of such proceeds are transferred to ‘Fly ash utilisation reserve fund’ in terms of provisions of gazette notification dated 3rd November 2009 issued by Ministry of Environment and Forests, Government of India. The fund is utilized towards expenditure on development of infrastructure/facilities, promotion & facilitation activities for use of fly ash. 2. Self Insurance Reserve In case of Ratnagiri Gas & Power Private Ltd. (25.51% JV), Self Insurance Reserve of ൘50 crore is created as at the end of the year by appropriating current year profit towards future losses which may arise from un-insured risks till the amount of Self Insurance Reserve becomes ൘200 crore. Self Insurance Reserve will be written back on getting Insurance cover for Machinery breakdown. E. Fixed assets 1. Tangible assets are carried at historical cost less accumulated depreciation/amortisation and impairment losses, if any. 2. Expenditure on renovation and modernisation of tangible assets resulting in increased life and/or efficiency of an existing asset is added to the cost of related assets. 3. Intangible assets are stated at their cost of acquisition less accumulated amortisation. 4. Deposits, payments/liabilities made provisionally towards compensation, rehabilitation and other expenses relatable to land in possession are treated as cost of land.

F-32

5. In the case of assets put to use, where final settlement of bills with contractors is yet to be effected, capitalisation is done on provisional basis subject to necessary adjustment in the year of final settlement. 6. Assets and systems common to more than one generating unit are capitalised on the basis of engineering estimates/assessments. F. Capital work-in-progress 1. Administration and general overhead expenses attributable to construction of fixed assets incurred till they are ready for their intended use are identified and allocated on a systematic basis to the cost of the related assets. 2. Deposit works/cost plus contracts are accounted for on the basis of statements of account received from the contractors. 3. Unsettled liabilities for price variation/exchange rate variation in case of contracts are accounted for on estimated basis as per terms of the contracts. G. Rate Regulated Activities 1. Expense/income recognized in the Statement of Profit & Loss to the extent recoverable from or payable to the beneficiaries in subsequent periods as per Central Electricity Regulatory Commission (the CERC) Tariff Regulations are recognized as ‘Regulatory asset/liability’. 2. Regulatory asset/liability is adjusted from the year in which the same becomes recoverable from or payable to the beneficiaries. H. Oil and gas exploration costs 1. Oil & gas exploration activities are accounted for on ‘Successful Efforts Method’. 2. Cost of surveys and prospecting activities conducted in search of oil and gas is expensed off in the year in which it is incurred. 3. Acquisition and exploration costs are initially capitalized as ‘Exploratory wells-in-progress’ under Capital work-in-progress. Such exploratory wells in progress are capitalised in the year in which the producing property is created or written off in the year when determined to be dry/abandoned. I. Development of coal mines Expenditure on exploration and development of new coal deposits is capitalized as ‘Development of coal mines’ under capital work-in-progress till the mines project is brought to revenue account. J. Foreign currency transactions 1. Foreign currency transactions are initially recorded at the rates of exchange at the date of transaction. 2. At the balance sheet date, foreign currency monetary items are reported using the closing rate. Non- monetary items denominated in foreign currency are reported at the exchange rate at the date of transaction. 3. Exchange differences arising from settlement/translation of foreign currency loans, deposits/liabilities relating to fixed assets/capital work-in-progress in respect of transactions

F-33

entered into prior to 01.04.2004, are adjusted in the carrying cost of related assets. Such exchange differences arising from settlement/translation of long term foreign currency monetary items in respect of transactions entered on or after 01.04.2004 are adjusted in the carrying cost of related assets. 4. Other exchange differences are recognized as income or expense in the period in which they arise. 5. Derivative contracts in the nature of forward contracts, options and swaps are entered into to hedge the currency and interest rate risk of foreign currency loans. Premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contracts. Exchange differences on such contracts, which relate to long-term foreign currency monetary items referred to in Policy J.3 are adjusted in the carrying cost of related assets. Other derivative contracts are marked-to- market at the Balance Sheet date and losses are recognised in the Statement of Profit and Loss. Gains arising on such contracts are not recognised, until realised, on grounds of prudence. K. Borrowing costs Borrowing costs attributable to the qualifying fixed assets during construction/exploration, renovation and modernisation are capitalised. Such borrowing costs are apportioned on the average balance of capital work-in progress for the year. Other borrowing costs are recognised as an expense in the period in which they are incurred. L. Investments 1. Current investments are valued at lower of cost and fair value determined on an individual investment basis. 2. Long term investments are carried at cost. Provision is made for diminution, other than temporary, in the value of such investments. 3. Premium paid on long term investments is amortised over the period remaining to maturity. M. Inventories 1. Inventories are valued at the lower of, cost determined on weighted average basis and net realizable value. 2. The diminution in the value of obsolete, unserviceable and surplus stores & spares is ascertained on review and provided for. N. Income recognition 1. Sales 1.1 Sale of energy is accounted for based on tariff rates approved by the CERC as modified by the orders of Appellate Tribunal for Electricity to the extent applicable. In case of power stations where the tariff rates are yet to be approved, provisional rates are adopted considering the applicable CERC tariff regulations. 1.2 In the case of NTPC Vidyut Vyapar Nigam Ltd. (a wholly owned subsidiary) which is in the energy trading business, sale of energy and commission on trading through exchange is accounted for based on the rates agreed with the customers.

F-34

1.3 In the case of NTPC SAIL Power Company Pvt.Ltd. (50% JV), sale of energy in case of Captive Power Plants (CPP-II), which are not governed by the CERC, is accounted for based on the rates provided in the Power Purchase Agreement with SAIL. 1.4 In case of Ratnagiri Gas & Power Private Ltd.(25.51% JV), sale of energy under Power System Development Fund support scheme for stranded gas based power plants introduced by GOI, is accounted for based on the tariff rates as decided under the scheme. Further, revenue from regassification services is recognized when services are rendered. Revenue from regassification services is net of service tax. 1.5 In the case of NTPC BHEL Power Projects Pvt. Ltd. (50% JV), sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment. For construction contracts, revenue is recognized on percentage completion method based on the percentage of actual cost incurred up to the reporting date to the total estimated cost of contract. Further, if it is expected that a contract will make a loss, the estimated loss is provided for in the books of account, based on technical assessments. 1.6 In the case of Utility Powertech Ltd.(50% JV), income in respect of service contracts is recognized proportionate to value of work done / services rendered. 1.7 In the case of NTPC Alstom Power Services Pvt.Ltd. (50% JV), revenues are recognised on a percentage completion method measured by segmented portions of the contract achieved which coincides with the billing schedules agreed with the customers. The relevant cost is recognised in the financial statements in the year of recognition of revenues. Recognition of profit is adjusted to ensure that it does not exceed the estimated overall contract margin. Further, if it is expected that a contract will make a loss, the estimated loss is provided for in the books of account, based on technical assessments. 1.8 In the case of Transformers and Electricals Kerala Ltd. (44.60% JV), revenue in respect of sale of products is recognized when the goods are dispatched to the customers or when the invoices are raised but the goods are retained at own premises at the request of the customers to get their site ready for installation. 2. Advance against depreciation considered as deferred revenue in earlier years is included in sales, to the extent depreciation recovered in tariff during the year is lower than the corresponding depreciation charged. 3. Exchange differences on account of translation of foreign currency borrowings recoverable from or payable to the beneficiaries in subsequent periods as per the CERC Tariff Regulations are accounted as ‘Deferred foreign currency fluctuation asset/liability’. The increase or decrease in depreciation for the year due to the accounting of such exchange differences as per accounting policy no. J is adjusted in depreciation. 4. Exchange differences arising from settlement/translation of monetary items denominated in foreign currency (other than long term) to the extent recoverable from or payable to the beneficiaries in subsequent periods as per the CERC Tariff Regulations are accounted as ‘Regulatory asset/liability’ during construction period and adjusted from the year in which the same becomes recoverable/payable. 5. Premium, discount and exchange differences in respect of forward exchange contracts and mark to market losses in respect of other derivative contracts referred to in accounting policy no. J.5 recoverable from/payable to the beneficiaries as per the CERC Tariff Regulations, are recognised in sales.

F-35

6. Interest/surcharge on late payment/overdue sundry debtors for sale of energy is recognized when no significant uncertainty as to measurability or collectability exists. 7. Interest/surcharge recoverable on advances to suppliers as well as warranty claims/liquidated damages wherever there is uncertainty of realisation/acceptance are not treated as accrued and are therefore, accounted for on receipt/acceptance. 8. Income from consultancy services is accounted for on the basis of actual progress/technical assessment of work executed, in line with the terms of respective consultancy contracts. Claims for reimbursement of expenditure are recognized as other income, as per the terms of consultancy service contracts. 9. Scrap other than steel scrap is accounted for as and when sold. 10. Insurance claims for loss of profit are accounted for in the year of acceptance. Other insurance claims are accounted for based on certainty of realisation. O. Expenditure 1.

Depreciation/amortisation

1.1 Depreciation on the assets of the generation of electricity business is charged on straight line method following the rates and methodology notified by the CERC Tariff Regulations in accordance with Schedule II of the Companies Act, 2013. In case of the Captive Power Plant–II (CPP-II) assets of NTPC SAIL Power Company Pvt.Ltd. (50% JV), which are not governed by CERC, depreciation is provided at a rate such that 95% of the gross block is depreciated over the residual life of those assets. 1.2 Depreciation on the assets of the coal mining, oil & gas exploration, consultancy and other business is charged on straight line method following the useful life specified in Schedule II of the Companies Act, 2013. 1.3 Depreciation on the following assets is provided on their estimated useful life ascertained on technical evaluation: a) Kutcha Roads b) Enabling works  residential buildings  internal electrification of residential buildings  non-residential buildings including their internal electrification, water supply, sewerage & drainage works, railway sidings, aerodromes, helipads and airstrips. c) Personal computers & laptops including peripherals d) Photocopiers, fax machines, water coolers and refrigerators e) Temporary erections including wooden structures f) Telephone exchange g) Wireless systems, VSAT equipments, display devices viz. projectors, screens, CCTV, audio video conferencing systems and other communication equipments

2 years 15 years 10 years 5 years

3 years 5 years 1 year 15 years 6 years

1.4 Assets costing up to ൘5,000/- are fully depreciated in the year of acquisition. 1.5 Cost of software recognized as intangible asset, is amortised on straight line method over a period of legal right to use or 3 years, whichever is less. Other intangible assets

F-36

are amortized on straight line method over the period of legal right to use or life of the related plant, whichever is less. In case of NTPC BHEL Power Projects Pvt.Ltd (50% JV), intangible assets are amortised over their estimated useful lives not exceeding three years in case of software and not exceeding ten years in case of others on a straight line pro-rata monthly basis. 1.6 Depreciation on additions to/deductions from fixed assets during the year is charged on pro-rata basis from/up to the month in which the asset is available for use/disposed. 1.7 Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liabilities on account of exchange fluctuation, price adjustment, change in duties or similar factors, the unamortised balance of such asset is charged off prospectively over the remaining useful life determined following the applicable accounting policies relating to depreciation/amortisation. 1.8 Where the life and/or efficiency of an asset is increased due to renovation a nd modernization, the expenditure thereon along-with its unamortized depreciable amount is charged off prospectively over the revised useful life determined by technical assessment. 1.9 Machinery spares which can be used only in connection with an item of plant and machinery and their use is expected to be irregular, are capitalised and fully depreciated over the residual useful life of the related plant and machinery, in accordance with Policy no. O.1.1 stated above. 1.10 Leasehold land and buildings relating to generation of electricity business are fully amortised over lease period or life of the related plant whichever is lower following the rates and methodology notified by the CERC Tariff Regulations. Leasehold land acquired on perpetual lease is not amortised. In case of the Captive Power Plant –II (CPP-II) assets of NTPC SAIL Power Company Pvt.Ltd. (50% JV), which are not governed by CERC, leasehold lands other than acquired on perpetual lease are amortized over the lease period. Leasehold buildings are amortized over the lease period or 30 years, whichever is lower. Leasehold land and buildings, whose lease period is yet to be finalized, are amortized over a period of 30 years. 1.11 Land acquired for mining business under Coal Bearing Areas (Acquisition & Development) Act, 1957 is amortised on the basis of balance useful life of the project. Other leasehold land acquired for mining business is amortised over the lease period or balance life of the project whichever is less. 2.

Other expenditure

2.1 Expenses on ex-gratia payments under voluntary retirement scheme, training & recruitment and research & development are charged to revenue in the year incurred. 2.2 Preliminary expenses on account of new projects incurred prior to approval of feasibility report/techno economic clearance are charged to revenue. 2.3 Net pre-commissioning income/expenditure is adjusted directly in the cost of related assets and systems.

F-37

2.4 Prepaid expenses and prior period expenses/income of items of 500,000/- and below are charged to natural heads of accounts. 2.5 Transit and handling losses of coal as per Company's norms are included in cost of coal. P. Employee benefits Employee benefits, inter-alia include provident fund, pension, gratuity, post retirement medical facilities, compensated absences, long service award, economic rehabilitation scheme and other terminal benefits. 1. Company’s contributions paid/payable during the year to provident fund and pension fund is recognised in the Statement of Profit and Loss. The same is paid to funds administered through separate trusts / paid to fund administered by GOI. 2. Company’s liability towards gratuity, leave benefits (including compensated absences), post retirement medical facility and other terminal benefits is determined by independent actuary, at year end using the projected unit credit method. Past service costs are recognised on a straight line basis over the average period until the benefits become vested. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. Liability for gratuity & post retirement medical facility as per actuarial valuation is paid to funds administered through separate trusts. 3. Short term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related services are rendered. Q. Leases 1. Finance lease 1.1 Assets taken on finance lease are capitalized at fair value or net present value of the minimum lease payments, whichever is less. 1.2 Depreciation on the assets taken on finance lease is charged at the rate applicable to similar type of fixed assets as per accounting policy no. O.1.1 or O.1.2. If the leased assets are returnable to the lessor on the expiry of the lease period, depreciation is charged over its useful life or lease period, whichever is less. 1.3 Lease payments are apportioned between the finance charges and outstanding liability in respect of assets taken on lease 2. Operating lease Assets acquired on lease where a significant portion of the risk and rewards of the ownership is retained by the lessor are classified as operating leases. Lease rentals are charged to revenue. R. Impairment The carrying amount of cash generating units is reviewed at each Balance Sheet date where there is any indication of impairment based on internal/external indicators. An impairment loss is recognised in the Statement of Profit and Loss where the carrying amount exceeds the recoverable amount of the cash generating units. The impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

F-38

S. Provisions and contingent liabilities 1. A provision is recognised when the company has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on management estimate required to settle the obligation at the balance sheet date and are not discounted to present value. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate. 2. In case of NTPC BHEL Power Projects Pvt.Ltd (50% JV), a) For construction contracts, the company provides warranty cost at 2.5% of the revenue progressively as and when it recognizes the revenue and maintain the same through warranty period. b) For other than construction contracts, provision for contractual obligations in respect of contracts under warranty at the year end is maintained at 2.5% of the value of contract. In the case of contracts for supply of more than a single product, 2.5% of the value of each completed product is provided. c) Warranty claims/expenses on rectification work are accounted for against natural heads as and when incurred and charged to provisions in the year end. T. Segment reporting The policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities are identified to segments on the basis of their relationship to the operating activities of the segment. Revenue, expenses, assets and liabilities which relate to the Company as a whole and not allocable to segments on reasonable basis are included under unallocated revenue/expenses/assets/liabilities. U. Cash flow statement Cash flow statement is prepared in accordance with the indirect method prescribed in Accounting Standard (AS) 3 on ‘Cash Flow Statements’. V. Taxes on income Current tax is determined on the basis of taxable income in accordance with the provisions of the Income Tax Act, 1961. Deferred tax liability/asset resulting from 'timing difference' between accounting income and taxable income is accounted for considering the tax rate & tax laws that have been enacted or substantively enacted as on the reporting date. Deferred tax asset is recognized and carried forward only to the extent that there is reasonable certainty that the asset will be realized in future. Deferred tax assets are reviewed at each reporting date for their realisability.

F-39

NTPC LIMITED Notes forming part of Consolidated Financial Statements 2. Share capital

As at 31.03.2016

൘ Crore As at 31.03.2015

Equity share capital Authorised 10,00,00,00,000 shares of par value ൘10/- each (previous year 10,00,00,00,000 shares of par value ൘10/- each)

10,000.00

10,000.00

Issued, subscribed and fully paid-up 8,24,54,64,400 shares of par value ൘10/- each (previous year 8,24,54,64,400 shares of par value ൘10/- each)

8,245.46

8,245.46

Particulars

a) b)

c) d)

During the year, the Company has neither issued nor bought back any shares. The Company has only one class of equity shares having a par value ൘10/- per share. The holders of the equity shares are entitled to receive dividends as declared from time to time and are entitled to voting rights proportionate to their share holding at the meetings of shareholders. During the year ended 31st March 2016, the amount of per share dividend recognised as distribution to equity share holders is ൘3.35 (previous year ൘2.50). Details of shareholders holding more than 5% shares in the Company: Particulars

As at 31.03.2016 No. of shares

- President of India - Life Insurance Corporation of India (including shares held in various Funds/Schemes)

F-40

5,76,83,41,760 1,07,05,30,189

%age holding 69.96 12.98

As at 31.03.2015 No. of shares 6,18,06,14,980 81,75,85,952

%age holding 74.96 9.92

NTPC LIMITED Notes forming part of Consolidated Financial Statements 3. Reserves and surplus Particulars Capital reserve As per last financial statements Add : Transfer from surplus Grants received during the year Less : Adjustments during the year Securities premium account As per last financial statements Add : Received during the year Foreign currency translation reserve Debt service reserve As per last financial statements Add : Transfer from surplus Less : Transfer to surplus Self insurance reserve As per last financial statements Less : Adjustments during the year Bonds/Debentures redemption reserve As per last financial statements Add : Transfer from surplus Less : Transfer to surplus Fly ash utilisation reserve fund As per last financial statements Add: Transfer from -Revenue from operations -Other income Less: Utilised during the year -Capital expenditure -Employee benefits expense -Other administration expenses Corporate social responsibility (CSR) reserve As per last financial statements Add : Transfer from surplus Less : Transfer to surplus General reserve As per last financial statements Add : Transfer from surplus Less: Issue of bonus debentures Dividend distribution tax on bonus debentures Adjustments during the year Surplus As per last financial statements

F-41

As at 31.03.2016

൘ Crore As at 31.03.2015

397.60 0.11 125.07 26.11 496.67

400.97 0.12 20.00 23.49 397.60

2,228.34 0.12 2,228.46 4.02

2,228.34 2,228.34 0.76

247.42 5.64 241.78

244.01 3.41 247.42

43.37 5.10 38.27

21.80 (21.57) 43.37

3,624.60 1,284.13 300.00 4,608.73

2,764.91 1,156.19 296.50 3,624.60

403.00

326.23

125.41 26.79

115.11 21.08

5.26 17.45 41.82 490.67

12.72 20.33 26.37 403.00

78.92 5.83 78.92 5.83

78.92 78.92

66,162.83 6,277.01 (85.54) 72,525.38

71,965.83 7,020.16 10,306.83 2,060.76 455.57 66,162.83

661.68

1,132.02

NTPC LIMITED Notes forming part of Consolidated Financial Statements 3. Reserves and surplus

൘ Crore As at Particulars As at 31.03.2015 31.03.2016 Add: Profit for the year as per Statement of Profit and Loss 9,986.34 10,182.81 Transfer from bonds/debentures redemption reserve 296.50 300.00 Transfer from debt service reserve 5.64 Transfer from CSR reserve 78.92 Less: Transfer to bonds/debentures redemption reserve 1,156.19 1,284.13 Transfer to capital reserve 0.12 0.11 Transfer to CSR reserve 78.92 5.83 Transfer to debt service reserve 3.41 Transfer to general reserve 7,020.16 6,277.01 Dividend paid 618.42 1,319.28 Tax on dividend paid 136.17 292.19 Proposed dividend 1,442.96 1,442.96 Tax on proposed dividend 296.83 296.30 Net surplus 661.68 311.24 Total # 73,848.52 80,951.05 # Includes (-) ൘ 45.99 crore (previous year ൘ 69.73 crore) share of jointly controlled entities. a) Addition to securities premium account represents premium received on issue of tax free bonds through private placement. b) Grant received during the year includes ൘125.00 crore (previous year Nil) from Solar Energy Corporation of India under MNRE Scheme for setting up 1,000 MW of grid connected solar PV power projects. c) In accordance with applicable provisions of the Companies Act, 2013 read with Rules and as per decision of Board of Directors, the Company has created Debenture Redemption Reserve (DRR) out of profits of the Company @ 50% of the value of debentures on a prudent basis, every year in equal installments till the year prior to the year of redemption of debentures/bonds. d) Pursuant to gazette notification dated 3rd November 2009, issued by the Ministry of Environment and Forest (MOEF), Government of India (GOI), the amount collected from sale of fly ash and fly ash based products should be kept in a separate account head and shall be utilized only for the development of infrastructure or facility, promotion & facilitation activities for use of fly ash until 100 percent fly ash utilization level is achieved. During the year, proceeds of ൘125.41 crore (previous year ൘115.11 crore) from sale of ash/ash products, ൘26.79 crore (previous year 21.08 crore) towards income on investment have been transferred to fly ash utilisation reserve fund. An amount of ൘64.53 crore (previous year 59.42 crore) has been utilized from the fly ash utilisation reserve fund on expenses incurred for activities as specified in the aforesaid notification of MOEF. Out of fund balance of ൘490.67 crore, ൘343.63 crore is invested in mutual funds (Note 16). The balance amount has been kept in cash and bank balances (Note 19). e) In terms of Section 135 of the Companies Act, 2013 read with guidelines on corporate social responsibility issued by Department of Public Enterprises (DPE), GOI, the Company is required to spend, in every financial year, at least two per cent of the average net profits of the Company made during the three immediately preceding financial years in accordance with its CSR Policy. The Group has spent an amount of ൘498.19 crore during the year. The amount equivalent to unspent CSR expenditure of ൘78.92 crore transferred in earlier year to CSR reserve from surplus has been transferred to surplus during the year on actual expenditure. Further, an amount of ൘5.83 crore has been appropriated to reserve from surplus, during the year. f) Capital reserve includes an amount of ൘211.78 crore (previous year ൘237.86 crore) relating to grant received from GOI through Government of Bihar for renovation and modernisation of Kanti Bijlee Utpadan Nigam Ltd.

F-42

NTPC LIMITED Notes forming part of Consolidated Financial Statements 3. Reserves and surplus

൘ Crore As at Particulars As at 31.03.2015 31.03.2016 g) Debt service reserve has been created as per the loan agreement equivalent to two quarters' interest and principal repayment in respect of Aravali Power Company Pvt. Ltd.. h) Self insurance reserve has been created by Ratnagiri Gas & Power Private Ltd. to cover machinery break-down for which no insurance cover agreement has been entered. i) During the year, the Company has paid interim dividend of ൘1.60 (previous year ൘0.75) per equity share of par value ൘10/- each for the year 2015-16. Further, the Company has proposed final dividend of ൘1.75 (previous year ൘1.75) per equity share of par value ൘10/- each for the year 201516. Thus, the total dividend (including interim dividend) for the financial year 2015-16 is ൘3.35 (previous year ൘2.50) per equity share of par value ൘10/- each.

F-43

NTPC LIMITED Notes forming part of Consolidated Financial Statements 4. Deferred revenue

Particulars On account of advance against depreciation On account of income from foreign currency fluctuation Total #

As at 31.03.2016 279.94 1,666.68 1,946.62

൘ Crore As at 31.03.2015 409.20 984.95 1,394.15

Includes ൘Nil (previous year ൘Nil) share of jointly controlled entities. Advance against depreciation (AAD) was an element of tariff provided under the Tariff (a) Regulations for 2001-04 and 2004-09 to facilitate debt servicing by the generators since it was considered that depreciation recovered in the tariff considering a useful life of 25 years is not adequate for debt servicing. Though this amount is not repayable to the beneficiaries, keeping in view the matching principle, and in line with the opinion of the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India (ICAI), this was treated as deferred revenue to the extent depreciation chargeable in the accounts is considered to be higher than the depreciation recoverable in tariff in future years. Since AAD is in the nature of deferred revenue and does not constitute a liability, it has been disclosed in this note separately from shareholders' funds and liabilities. (b) In line with significant accounting policy no. N.2 (Note 1), an amount of ൘129.26 crore (previous year ൘75.03 crore) has been recognized during the year from the AAD and included in energy sales (Note 22). (c) Foreign exchange rate variation (FERV) on foreign currency loans and interest thereon is recoverable from/payable to the customers in line with the Tariff Regulations. Keeping in view the opinion of the EAC of ICAI, the Company is recognizing deferred foreign currency fluctuation asset by corresponding credit to deferred income from foreign currency fluctuation in respect of the FERV on foreign currency loans adjusted in the cost of fixed assets, which is recoverable from the customers in future years as provided in accounting policy no. N.3 (Note 1). This amount will be recognized as revenue corresponding to the depreciation charge in future years. The amount does not constitute a liability to be discharged in future periods and hence, it has been disclosed separately from shareholder’s funds and liabilities. #

F-44

NTPC LIMITED Notes forming part of Consolidated Financial Statements

5. Long-term borrowings As at 31.03.2016

൘ Crore As at 31.03.2015

7.37% Tax free secured non-cumulative non-convertible redeemable bonds - 2015 of ൘1,000/- each redeemable at par in full on 5th October 2035 (Fifty Sixth Issue – Public Issue Series 3A)XI

182.58

-

7.62% Tax free secured non-cumulative non-convertible redeemable bonds - 2015 of ൘1,000/- each redeemable at par in full on 5th October 2035 (Fifty Sixth Issue – Public Issue Series 3B)XI

165.74

--

8.61% Tax free secured non-cumulative non-convertible redeemable bonds of ൘10,00,000/- each redeemable at par in full on 4th March 2034 (Fifty First Issue C - Private Placement)

320.00

320.00

8.66% Tax free secured non-cumulative non-convertible redeemable bonds - 2013 of ൘1,000/- each redeemable at par in full on 16th December 2033 (Fiftieth Issue – Public Issue Series 3A)VII

312.03

312.03

8.91% Tax free secured non-cumulative non-convertible redeemable bonds - 2013 of ൘1,000/- each redeemable at par in full on 16th December 2033 (Fiftieth Issue – Public Issue Series 3B)VII

399.97

399.97

7.28% Tax free secured non-cumulative non-convertible redeemable bonds - 2015 of ൘1,000/- each redeemable at par in full on 5th October 2030 (Fifty Sixth Issue – Public Issue Series 2A)XI

129.05

-

7.53% Tax free secured non-cumulative non-convertible redeemable bonds - 2015 of ൘1,000/- each redeemable at par in full on 5th October 2030 (Fifty Sixth Issue – Public Issue Series 2B)XI

48.29

-

8.63% Tax free secured non-cumulative non-convertible redeemable bonds of ൘10,00,000/- each redeemable at par in full on 4th March 2029 (Fifty First Issue B - Private Placement)

105.00

105.00

8.48% Tax free secured non-cumulative non-convertible redeemable bonds - 2013 of ൘1,000/- each redeemable at par in full on 16th December 2028 (Fiftieth Issue – Public Issue Series 2A)VII

249.95

249.95

8.73% Tax free secured non-cumulative non-convertible redeemable bonds - 2013 of ൘1,000/- each redeemable at par in full on 16th December 2028 (Fiftieth Issue – Public Issue Series 2B)VII

91.39

91.39

Particulars Bonds / Debentures Secured

III

III

F-45

NTPC LIMITED Notes forming part of Consolidated Financial Statements 5. Long-term borrowings As at 31.03.2016

൘ Crore As at 31.03.2015

8.19% Secured non-cumulative non-convertible redeemable taxable bonds of Rs. 10,00,000/- each redeemable at par in full on 15th December 2025 (Fifty Seventh Issue - Private Placement)XII

500.00

-

7.11% Tax free secured non-cumulative non-convertible redeemable bonds - 2015 of ൘1,000/- each redeemable at par in full on 5th October 2025 (Fifty Sixth Issue – Public Issue Series 1A)XI

108.38

-

7.36% Tax free secured non-cumulative non-convertible redeemable bonds - 2015 of ൘1,000/- each redeemable at par in full on 5th October 2025 (Fifty Sixth Issue – Public Issue Series 1B)XI

65.96

-

7.15% Tax free secured non-cumulative non-convertible redeemable bonds - 2015 of ൘10,00,000/- each redeemable at par in full on 21st August 2025 (Fifty Fifth Issue - Private Placement)IX

300.00

-

9.17% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 22nd September 2024 (Fifty Third Issue - Private Placement)IX

1,000.00

1,000.00

9.34% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 24th March 2024 (Fifty Second Issue - Private Placement)III

750.00

750.00

8.19% Tax free secured non-cumulative non-convertible redeemable bonds - 2013 of ൘10,00,000/- each redeemable at par in full on 4th March 2024 (Fifty First Issue A - Private Placement)III

75.00

75.00

8.41% Tax free secured non-cumulative non-convertible redeemable bonds - 2013 of ൘1,000/- each redeemable at par in full on 16th December 2023 (Fiftieth Issue – Public Issue Series 1A)VII

488.02

488.02

8.66% Tax free secured non-cumulative non-convertible redeemable bonds - 2013 of ൘1,000/- each redeemable at par in full on 16th December 2023 (Fiftieth Issue – Public Issue Series 1B)VII

208.64

208.64

9.25% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each with five equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of 11th year and in annual installments thereafter upto the end of 15th year respectively commencing from 04th May 2023 and ending on 04th May 2027 (Forty Fourth Issue Private Placement)VII

500.00

500.00

8.48% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 1st May 2023 (Seventeenth Issue - Private Placement)I

50.00

50.00

Particulars

F-46

NTPC LIMITED Notes forming part of Consolidated Financial Statements 5. Long-term borrowings As at 31.03.2016

൘ Crore As at 31.03.2015

8.80% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 4th April 2023 (Forty Ninth Issue - Private Placement)VII

200.00

200.00

8.49% Secured non-cumulative non-convertible redeemable taxable fully paid-up bonus debentures of ൘12.50 each redeemable at par in three annual installments of ൘2.50, ൘5.00 and ൘5.00 at the end of 8th year, 9th year and 10th year on 25th March 2023, 25th March 2024 and 25th March 2025 respectively (Fifty Fourth Issue –Bonus Debentures)X

10,306.83

10,306.83

8.73% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 7th March 2023 (Forty Eighth Issue - Private Placement)VII

300.00

300.00

9.00% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each with five equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of 11th year and in annual installments thereafter upto the end of 15th year respectively commencing from 25th January 2023 and ending on 25th January 2027 (Forty Second Issue - Private Placement)III

500.00

500.00

8.84% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 4th October 2022 (Forty Seventh Issue - Private Placement)VII

390.00

390.00

8.33% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 24th February 2021 (Fifty Ninth Issue - Private Placement)XII - Securitized in April 2016.

655.00

-

8.93% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 19th January 2021 (Thirty Seventh Issue - Private placement)III

300.00

300.00

8.73% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 31st March 2020 (Thirty Third Issue - Private Placement)III

195.00

195.00

8.78% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 9th March 2020 (Thirty First Issue - Private Placement)III

500.00

500.00

11.25% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in five equal annual installments commencing from 6th November 2019 and ending on 6th November 2023 (Twenty Seventh Issue - Private Placement)III

350.00

350.00

8.18% Secured non-cumulative non-convertible redeemable

300.00

-

Particulars

F-47

NTPC LIMITED Notes forming part of Consolidated Financial Statements 5. Long-term borrowings As at 31.03.2016

൘ Crore As at 31.03.2015

7.89% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 5th May 2019 (Thirtieth Issue – Private Placement)III

700.00

700.00

8.65% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 4th February 2019 (Twenty Ninth Issue - Private Placement)III

550.00

550.00

7.50% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 12th January 2019 (Nineteenth Issue - Private Placement)II

50.00

50.00

11.00% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 21st November 2018 (Twenty Eighth Issue - Private Placement)III

1,000.00

1,000.00

9.3473% Secured non-cumulative non-convertible redeemable taxable bonds of ൘15,00,000/- each with fifteen equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of 6th year and in annual installments thereafter upto the end of 20th year respectively commencing from 20th July 2018 and ending on 20th July 2032 (Forty Sixth Issue - Private Placement)VII

75.00

75.00

9.4376% Secured non-cumulative non-convertible redeemable taxable bonds of ൘15,00,000/- each with fifteen equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of 6th year and in annual installments thereafter upto the end of 20th year respectively commencing from 16th May 2018 and ending on 16th May 2032 (Forty Fifth Issue - Private Placement)VII

75.00

75.00

8.00% Secured non-cumulative non-convertible redeemable taxable bonds of ൘10,00,000/- each redeemable at par in full on 10th April 2018 (Sixteenth Issue - Private Placement)I

100.00

100.00

9.2573% Secured non-cumulative non-convertible redeemable taxable bonds of ൘15,00,000/- each with fifteen equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of 6th year and in annual installments thereafter upto the end of 20th year respectively commencing from 2nd March 2018 and ending on 2 nd March 2032 (Forty Third Issue - Private Placement)III

75.00

75.00

9.6713% Secured non-cumulative non-convertible redeemable taxable bonds of ൘15,00,000/- each with fifteen equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of 6th year and in annual installments thereafter upto the end of 20th year respectively

75.00

75.00

Particulars taxable bonds of ൘10,00,000/- each redeemable at par in full on 31st December 2020 (Fifty Eight Issue - Private Placement)XII

F-48

NTPC LIMITED Notes forming part of Consolidated Financial Statements 5. Long-term borrowings As at 31.03.2016

൘ Crore As at 31.03.2015

9.558% Secured non-cumulative non-convertible redeemable taxable bonds of ൘15,00,000/- each with fifteen equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of 6th year and in annual installments thereafter upto the end of 20th year respectively commencing from 29th July 2017 and ending on 29th July 2031 (Fortieth Issue - Private Placement)III

75.00

75.00

9.3896% Secured non-cumulative non-convertible redeemable taxable bonds of ൘15,00,000/- each with fifteen equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of 6th year and in annual installments thereafter upto the end of 20th year respectively commencing from 9th June 2017 and ending on 9th June 2031 (Thirty Ninth Issue - Private Placement)III

105.00

105.00

9.17% Secured non-cumulative non-convertible redeemable taxable bonds of ൘15,00,000/- each with fifteen equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of 6th year and in annual installments thereafter upto the end of 20th year respectively commencing from 22nd March 2017 and ending on 22nd March 2031 (Thirty Eighth Issue - Private Placement)III

70.00

75.00

8.8086% Secured non-cumulative non-convertible redeemable taxable bonds of ൘15,00,000/- each with fifteen equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of 6th year and in annual installments thereafter upto the end of 20th year respectively commencing from 15th December 2016 and ending on 15th December 2030 (Thirty Sixth Issue - Private Placement)III

70.00

75.00

8.785% Secured non-cumulative non-convertible redeemable taxable bonds of ൘15,00,000/- each with fifteen equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of 6th year and in annual installments thereafter upto the end of 20th year respectively commencing from 15th September 2016 and ending on 15th September 2030 (Thirty Fifth Issue - Private Placement)III

112.00

120.00

8.71% Secured non-cumulative non-convertible redeemable taxable bonds of ൘15,00,000/- each with fifteen equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of 6th year and in annual installments thereafter upto the end of 20th year respectively commencing from 10th June 2016 and ending on 10th June 2030 (Thirty Fourth Issue - Private Placement)III

140.00

150.00

8.8493% Secured non-cumulative non-convertible redeemable taxable bonds of ൘15,00,000/- each with fifteen equal separately transferable redeemable principal parts (STRPP)

91.00

98.00

Particulars commencing from 23rd December 2017 and ending on 23rd December 2031 (Forty First Issue - Private Placement)III

F-49

NTPC LIMITED Notes forming part of Consolidated Financial Statements 5. Long-term borrowings As at 31.03.2016

൘ Crore As at 31.03.2015

9.37% Secured non-cumulative non-convertible redeemable taxable bonds of ൘70,00,000/- each with fourteen separately transferable redeemable principal parts (STRPP) redeemable at par semi-annually commencing from 4th June 2012 and ending on 4th December 2018 (Twenty Fifth Issue - Private Placement)III

142.50

214.00

9.06% Secured non-cumulative non-convertible redeemable taxable bonds of ൘70,00,000/- each with fourteen separately transferable redeemable principal parts (STRPP) redeemable at par semi-annually commencing from 4th June 2012 and ending on 4th December 2018 (Twenty Sixth Issue - Private Placement)III

142.50

214.00

8.6077% Secured non-cumulative non-convertible redeemable taxable bonds of ൘20,00,000/- each with twenty equal separately transferable redeemable principal parts (STRPP) redeemable at par semi-annually commencing from 9th September 2011 and ending on 9th March 2021 (Twenty Fourth Issue - Private Placement)IV

200.00

250.00

8.3796% Secured non-cumulative non-convertible redeemable taxable bonds of ൘20,00,000/- each with twenty equal separately transferable redeemable principal parts (STRPP) redeemable at par semi-annually commencing from 5th August 2011 and ending on 5th February 2021 (Twenty Third Issue Private Placement)IV

200.00

250.00

8.1771% Secured non-cumulative non-convertible redeemable taxable bonds of ൘20,00,000/- each with twenty equal separately transferable redeemable principal parts (STRPP) redeemable at par semi-annually commencing from 2nd July 2011 and ending on 2nd January 2021 (Twenty Second Issue Private Placement)IV

200.00

250.00

7.7125% Secured non-cumulative non-convertible redeemable taxable bonds of ൘20,00,000/- each with twenty equal separately transferable redeemable principal parts (STRPP) redeemable at par semi-annually commencing from 2nd August 2010 and ending on 2nd February 2020 (Twenty First Issue Private Placement)V

300.00

400.00

7.552% Secured non-cumulative non-convertible redeemable taxable bonds of ൘20,00,000/- each with twenty equal separately transferable redeemable principal parts (STRPP) redeemable at par semi-annually commencing from 23 rd September 2009 and ending on 23rd March 2019 (Twentieth Issue - Private Placement)VI

100.00

150.00

Particulars redeemable at par at the end of 6th year and in annual installments thereafter upto the end of 20th year respectively commencing from 25th March 2016 and ending on 25th March 2030 (Thirty Second Issue - Private Placement)III

F-50

NTPC LIMITED Notes forming part of Consolidated Financial Statements 5. Long-term borrowings As at 31.03.2016

൘ Crore As at 31.03.2015

9.55% Secured non-cumulative non-convertible taxable redeemable bonds of ൘10,00,000/- each with ten equal separately transferable redeemable principal parts (STRPP) redeemable at par at the end of the 6th year and in annual installments thereafter upto the end of 15th year respectively from 30th April 2002 (Thirteenth Issue - Part B - Private Placement)VIII

75.00

150.00

9.55% Secured non-cumulative non-convertible taxable redeemable bonds of൘10,00,000/- each redeemable at par in ten equal annual installments commencing from the end of 6th year and upto the end of 15th year respectively from 18th April 2002 (Thirteenth Issue -Part A - Private Placement)VIII

75.00

150.00

24,844.83

23,017.83

3,345.00

-

3,345.00

3,159.50

3,345.00

3,159.50

3,345.00

3,159.50

4220.23 341.68

6,863.13 215.98

7,692.59 25,707.12

8,362.55 20,859.10

12,510.17

7,706.28

2,195.80 3,172.33 8,091.78

2,057.20 2,815.56 11,918.65

1.45 80.30 1,02,238.28

68.14 93,362.92

Particulars

Foreign currency notes Unsecured 4.25 % Fixed rate notes due for repayment on 26th February 2026 4.375 % Fixed rate notes due for repayment on 26th November 2024 4.750 % Fixed rate notes due for repayment on 3 rd October 2022 5.625 % Fixed rate notes due for repayment on 14 th July 2021 Term loans From Banks Secured Rupee loansXIII Foreign currency loans XIII Unsecured Foreign currency loans Rupee loans From Others Secured Rupee loansXIII Unsecured Foreign currency loans (guaranteed by GOI) Other foreign currency loans Rupee loans Long term maturities of finance lease obligations Secured Unsecured Total# #

Includes ൘11,046.47 crore (previous year ൘9,937.76 crore) share of jointly controlled entities.

F-51

NTPC LIMITED Notes forming part of Consolidated Financial Statements 5. Long-term borrowings a)

Details of terms of repayment and rate of interest

Particulars

Term loans Secured Rupee loans Banks Rupee loans Others Foreign currency loans - Banks Unsecured Foreign currency loans (guaranteed by GOI) – Others Foreign currency loans – Banks Other foreign currency loans Others Rupee loans - Banks Rupee loans Other

i)

ii)

iii)

iv) v)

vi)

vii)

Non current portion As at As at 31.03.2015 31.03.2016

Current portion As at As at 31.03.2015 31.03.2016

൘ Crore Total As at As at 31.03.2015 31.03.2016

4,220.23

6,863.13

376.09

308.83

4,596.32

7,171.96

12,510.17

7,706.28

542.93

471.59

13,053.10

8,177.87

341.68

215.98

-

-

341.68

215.98

17,072.08

14,785.39

919.02

780.42

17,991.10

15,565.81

2,195.80

2,057.20

175.16

154.61

2,370.96

2,211.81

7,692.59

8,362.55

1,328.91

281.82

9,021.50

8,644.37

3,172.33

2,815.56

474.99

406.02

3,647.32

3,221.58

25,707.12

20,859.10

2,579.25

2,545.98

28,286.37

23,405.08

8,091.78

11,918.65

1,534.38

1,584.38

9,626.16

13,503.03

46,859.62

46,013.06

6,092.69

4,972.81

52,952.31

50,985.87

Secured rupee term loan from banks carry interest linked to SBI base rate or fixed interest rate ranging from 8.00% to 11.035% p.a. These loans are repayable in installments as per the terms of the respective loan agreements. The repayment period extends from a period of five to fifteen years after a moratorium period of four to six years from the date of the loan agreement. Secured rupee term loan from others carry interest linked to SBI base rate, SBI advance rate, rate notified by the lender for category 'A' public sector undertaking, AAA bond yield rates plus agreed margin or fixed interest rate ranging from 8.00% to 13.00% p.a. These loans are repayable in installments as per the terms of the respective loan agreements. The repayment period extends from a period of three to fifteen years after a moratorium period of six months from the COD or two years from commissioning or four to five years from the date of the loan agreement. Secured foreign currency term loan facility has been tied up with SBI,Tokyo by one of the joint venture companies which carries interest rate ranging from 3.00% to 5.17% linked to LIBOR with half yearly rests. The loan is repayble in twenty four half-yearly installments commencing from 28th September 2017. Unsecured foreign currency loans (guaranteed by GOI) - Others carry fixed rate of interest ranging from 1.80% p.a. to 2.30% p.a. and are repayable in 17 to 30 semi-annual installments as of 31st March 2016. Unsecured foreign currency loans – Banks include loans of ൘586.98 crore (previous year ൘642.54 crore) which carry fixed rate of interest of 1.88% p.a. to 4.31% p.a. and loans of ൘8,434.52 crore (previous year ൘8,001.83 crore) which carry floating rate of interest linked to 6M LIBOR. These loans are repayable in 2 to 24 semi annual installments as of 31st March 2016, commencing after moratorium period if any, as per the terms of the respective loan agreements. Unsecured foreign currency loans – Others include loans of ൘3,153.09 crore (previous year ൘2,516.58 crore) which carry fixed rate of interest ranging from 1.88% p.a. to 4.31% p.a and loans of ൘494.23 crore (previous year ൘705.00 crore) which carry floating rate of interest linked to 6M LIBOR/6M EURIBOR. These loans are repayable in 2 to 24 semi annual installments as of 31st March 2016, commencing after moratorium period if any, as per the terms of the respective loan agreements. Unsecured rupee term loans carry interest rate ranging from 6.571% p.a. to 11.00% p.a. with monthly/half-yearly rests. These loans are repayable in quarterly/half-yearly/yearly installments as per the terms of the respective loan agreements. The repayment period extends from a period of six years to sixteen years after a moratorium period of six months to six years.

F-52

NTPC LIMITED Notes forming part of Consolidated Financial Statements 5. Long-term borrowings a) The finance lease obligations are repayable in installments as per the terms of the respective lease agreements generally over a period of four to seven years. b) There has been no default in repayment of any of the loans or interest thereon as at the end of the year except that M/s Ratnagiri Gas & Power Pvt. Ltd, a Joint Venture Companies in which the Company has 25.51% share, has defaulted in payment of principal and interest amounting to 792.24 crore and 1,158.10 crore respectively as at the end of the year for a period varying from 31 to 899 days. Details of securities I.

Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of title deeds of the immovable properties pertaining to National Capital Power Station.

II.

Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Hypothecation of all the present and future movable assets (excluding receivables) of Singrauli Super Thermal Power Station, Anta Gas Power Station, Auraiya Gas Power Station, Barh Super Thermal Power Project, Farakka Super Thermal Power Station, Kahalgaon Super Thermal Power Station, Koldam Hydel Power Project, Simhadri Super Thermal Power Project, Sipat Super Thermal Power Project, Talcher Thermal Power Station, Talcher Super Thermal Power Project, Tanda Thermal Power Station, Vindhyachal Super Thermal Power Station, National Capital Power Station, Dadri Gas Power Station, Feroze Gandhi Unchahar Power Station and Tapovan-Vishnugad Hydro Power Project as first charge, ranking pari-passu with charge, if any, already created in favour of the Company's Bankers on such movable assets hypothecated to them for working capital requirement.

III.

Secured by (I) English mortgage, on first pari passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage of the immovable properties, on first paripassu charge basis, pertaining to Sipat Super Thermal Power Project by extension of charge already created.

IV.

Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of the title deeds of the immovable properties pertaining to Sipat Super Thermal Power Project.

V.

Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai, (II) Hypothecation of all the present and future movable assets (excluding receivables) of Barh Super Thermal Power Project on first pari-passu charge basis, ranking pari passu with charge already created in favour of Trustee for other Series of Bonds and (III) Equitable mortgage of the immovable properties, on first pari-passu charge basis, pertaining to Ramagundam Super Thermal Power Station by extension of charge already created.

VI.

Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai and (II) Equitable mortgage, by way of first charge, by deposit of title deeds of the immovable properties pertaining to Ramagundam Super Thermal Power Station.

VII.

Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai, (II) Equitable mortgage of the immovable properties, on first pari-passu charge basis, pertaining to National Capital Power Station by extension of charge already created.

F-53

NTPC LIMITED Notes forming part of Consolidated Financial Statements VIII.

Secured by (I) English mortgage, on first pari-passu charge basis, of the office premises of the Company at Mumbai, (II) Hypothecation of all the present and future movable assets (excluding receivables) of Singrauli Super Thermal Power Station, Anta Gas Power Station, Auraiya Gas Power Station, Barh Super Thermal Power Project, Farakka Super Thermal Power Station, Kahalgaon Super Thermal Power Station, Koldam Hydel Power Project, Simhadri Super Thermal Power Project, Sipat Super Thermal Power Project, Talcher Thermal Power Station, Talcher Super Thermal Power Project, Tanda Thermal Power Station, Vindhyachal Super Thermal Power Station, National Capital Power Station, Dadri Gas Power Station, Feroze Gandhi Unchahar Power Station and Tapovan-Vishnugad Hydro Power Project as first charge, ranking pari-passu with charge, if any, already created in favour of the Company's Bankers on such movable assets hypothecated to them for working capital requirement and (III) Equitable mortgage of the immovable properties, on first pari-passu charge basis, pertaining to Singrauli Super Thermal Power Station by extension of charge already created.

IX.

Secured by English mortgage of the immovable properties pertaining to Solapur Super Thermal Power Project on first charge basis.

X.

Secured by Equitable mortgage of the immovable properties pertaining to Barh Super Thermal Power Project on first charge basis.

XI.

Secured by English mortgage, on pari-passu charge basis, of the immovable properties pertaining to Solapur Super Thermal Power Project.

XII.

Secured by Equitable mortgage, on pari-passu charge basis, of the immovable properties pertaining to Barh Super Thermal Power Project.

XIII.

(i)

Secured by equitable mortgage of present and future immoveable property and hypothecation of moveable fixed assets of Bhilai Expansion Project (CPP-III) belonging to M/s NTPC SAIL Power Company Pvt. Ltd.

(ii)

Secured by equitable mortagage of present and future immoveable property and hypothecation of moveable fixed assets of CPP-II at Rourkela, Durgapur and Bhilai belonging to M/s NTPC SAIL Power Company Pvt.Ltd.

(iii)

Secured by first charge by way of hypothecation of all moveable assets of Indira Gandhi Super Thermal Power Project (3 X 500 MW) Coal Based Thermal Power Project at Jhajjar Distt. in state of Haryana belonging to M/s Aravali Power Company Pvt.Ltd. (APCPL), comprising its movable plant and machinery, machinery spares, tools and accessories, furniture & fixture, vehicles and all other movable assets, present and future, including intangible assets, goodwill, uncalled capital, revenue and receivable of the project except for specified receivables on which first charge would be ceded to working capital lenders present and future; and Secured by first charge by way of mortgage by deposit of title deed of lands (approx 2049.11 acres) and other immovable properties of Indira Gandhi Super Thermal Power Project (3 x 500 MW) coal based thermal power project at jhajjar district in State of Haryana together with buildings and structure erected/ constructed/ standing thereon and all plant and machinery, and equipment attached to the earth or permanently fastened to the earth comprised therein, in respect of which M/s APCPL, as a owner seized and possessed of and otherwise well and fully entitled to, both present and future assets; and First charge by way of assignment or creation of charge on all rights, title, interest, benefit, claim and demand whatsoever of M/s APCPL regarding project

F-54

NTPC LIMITED Notes forming part of Consolidated Financial Statements document,letter of credit, guarantees, performance bond and all insurance contracts / proceeds duly consented by the relevant counter parties; and Power Finance Corporation Ltd. has ceded first paripassu charge to the extent of ൘1,325.00 crore on the moveable assets,revenue and receivables in favour of the working capital lenders.

XIV.

(iv)

Secured by equitable mortgage/ hypothecation of all present and future fixed and movable assets of Nabinagar TPP (4*250) MW of Bhartiya Rail Bijlee Company Ltd., a subsidiary company, as first charge, ranking pari passu with charge already created with PFC for 60% of total debts and balance 40% with REC.

(v)

Secured by equitable mortgage/hypothecation of all the present and future fixed assets and moveable assets of power plant and associated LNG facilities at village Anjanwel, Guhagar, Distt. Ratnagiri of M/s Ratnagiri Gas & Power Pvt.Ltd.

(vi)

Secured by a first priority charge on all assets of the Project, present & future, movable & immovable and land of 987.9293 acres, in respect of loan from consortium led by SBI for Kanti Bijlee Utpadan Nigam Ltd. expansion project. The security will rank pari-pasu with all term lenders of the project. The charge has been created in favor of Security trustee i.e. SBI Cap Trustee Co. Ltd. Legal mortgage of land in favor of security trustee has been executed for 877.18 acres of land.

(vii)

Secured by Equitable mortgage, by way of first charge, by deposit of the title deeds of the immovable properties pertaining to Meja Thermal Power Project. Deed of Hypothecation for all present and future movable assets of Meja Urja Nigam Private Limited has also been executed with the Security Trustee and the Indenture of Mortgage with the Security Trustee has been registered with appropriate authority.

(viii)

Secured by a first priority charge on all assets of the Nabinagar Power Generating Company Pvt.Ltd., present and future, movable and immovable through a deed of hypothecation and simple mortgage of 2,500 acres of land.

(ix)

Secured by first charge on all movable and immovable, present and future assets of the NTPC Tamilnadu Energy Company Ltd.

(x)

Secured by first charge by way of hypothecation in favour of the Power Finance Corporation Ltd. of all the moveable assets of the project (save and except book debts) including moveable property, machinery spares, tools and accessories, fuel stock, spares and material at project both present and future of M/s National High Power Test Laboratory Pvt. Ltd.

Security cover mentioned at sl. no. I to XIII is above 100% of the debt securities outstanding.

F-55

NTPC LIMITED Notes forming part of Consolidated Financial Statements 5A. Short-term borrowings ൘ Crore

Particulars Loans repayable on demand From Banks Secured Cash Credit Unsecured Cash Credit Total #

#

As at 31.03.2016

As at 31.03.2015

841.89

640.15

1,299.50

-

2,141.39

640.15

Includes ൘654.12 crore (previous year ൘491.63 crore) share of jointly controlled entities.

a) Secured cash credit includes: (i)

Cash credit secured by hypothecation of stock in trade, book debts of Stage-I of M/s Kanti Bijlee Utpadan Nigam Ltd. with floating rate of interest linked to the bank's base rate.

(ii)

Borrowings secured by way of first pari-passu charge along with Power Finance Corporation Ltd. on the fixed assets, revenue and receivables of M/s Aravali Power Company Pvt. Ltd.. Rate of interest is applicable at the base rate of the respective banks.

(iii) Cash credit secured by paripassu charge on spares, present and future stock of coal and fuel at various places of M/s NTPC Tamilnadu Energy Company Limited and Debtors with floating rate of interest linked to bank's base rate. (iv) Cash credit secured by way of charge on the assets of M/s Transformers and Electricals Kerala Ltd. (v)

Cash credit secured by way of hypothecation of stock and book debts of M/s NTPC BHEL Power Projects Pvt. Ltd.

b) There has been no default in servicing of loan as at the end of the year.

F-56

NTPC LIMITED Notes forming part of Consolidated Financial Statements 6. Deferred tax liabilities (net)  Crore As at 01.04.2015

Additions/ (Adjustments) during the year

As at 31.03.2016

8,097.63

411.09

8,508.72

712.99 464.00

124.72 58.22

837.71 522.22

Less: Deferred asset for deferred tax liability

6,920.64 5,655.03

228.15 84.36

7,148.79 5,739.39

Total #

1,265.61

143.79

1,409.40

Particulars

Deferred tax liability Difference in book depreciation and tax depreciation Less: Deferred tax assets Provisions & other disallowances for tax purposes Disallowances u/s 43B of the Income Tax Act, 1961

#

Includes 257.19 crore (previous year 268.68 crore) share of jointly controlled entities.

a) b) c)

The net increase during the year in the deferred tax liability of 143.79 crore (previous year increase of 29.21 crore) has been debited to Statement of Profit and Loss. Deferred tax assets and deferred tax liabilities have been offset as they relate to the same governing laws. CERC Regulations, 2014 provide for recovery of deferred tax liability as on 31st March 2009 from the beneficiaries. Accordingly, deferred tax liability as on 31 st March 2009 is recoverable on materialisation from the beneficiaries. For the period commencing from 1st April 2014, Regulations, 2014 provide for grossing up of the return on equity based on effective tax rate for the financial year based on the actual tax paid during the year on the generation income. Deferred asset for deferred tax liability for the year will be reversed in future years when the related deferred tax liability forms part of current tax.

F-57

NTPC LIMITED Notes forming part of Consolidated Financial Statements 7. Other long-term liabilities  Crore Particulars Trade payables Other liabilities Payable for capital expenditure Others Total # #

As at 31.03.2016 9.94

As at 31.03.2015 9.22

3,829.10 69.26

3,179.44 33.29

3,908.30

3,221.95

Includes 392.81 crore (previous year 204.06 crore) share of jointly controlled entities.

a) Other liabilities - Others represent deposits received from contractors, customers and other parties including 49.68 crore (previous year Nil) for Deen Dayal Upadhayay Gram Jyoti Yojna (DDUGJY) Scheme of the GOI. Refer Note 10 d).

8. Long-term provisions  Crore As at 31.03.2016

As at 31.03.2015

Provision for Employee benefits Contractual & other obligations

448.02 21.40

1,131.24 12.13

Total #

469.42

1,143.37

Particulars

#

Includes 33.01 crore (previous year 27.66 crore) share of jointly controlled entities.

a)

Disclosure as per AS 15 on 'Employee Benefits' has been made in Note 40.

b) Disclosure required by AS 29 on 'Provisions, Contingent Liabilities and Contingent Assets' has been made in Note 48.

8A.

Regulatory liabilities  Crore

Particulars Exchange differences#

As at 31.03.2016

As at 31.03.2015

297.56

308.55

#

Includes (-) 3.16 crore (previous year (-) 0.41 crore) share of jointly controlled entities. In line with accounting policy no.G (Note 1), regulatory liability has been accounted. Refer Note 49 for detailed disclosures.

9. Trade payables  Crore Particulars For goods and services# #

As at 31.03.2016

As at 31.03.2015

6,826.55

7,107.63

Includes 595.08 crore (previous year 556.41 crore) share of jointly controlled entities.

F-58

NTPC LIMITED Notes forming part of Consolidated Financial Statements 10. Other current liabilities  Crore Particulars Current maturities of long term borrowings Bonds - Secured 5.875% Foreign currency fixed rates note - Unsecured From Banks Secured Rupee term loans Unsecured Foreign currency loans Rupee term loans From Others Secured Rupee term loans Unsecured Foreign currency loans (guaranteed by GOI) Other foreign currency loans Rupee term loans Current maturities of finance lease obligations - Secured Current maturities of finance lease obligations - Unsecured Interest accrued but not due on borrowings Interest accrued and due on borrowings Unpaid dividends Unpaid matured deposits and interest accrued thereon Unpaid matured bonds and interest accrued thereon Unpaid bond refund money-Tax free bonds Book overdraft Advances from customers and others Payable for capital expenditure Derivative MTM Liability Other payables Tax deducted at source and other statutory dues Deposits from contractors and others Gratuity obligations Payable to employees Others Total # #

As at 31.03.2016

As at 31.03.2015

628.00 -

600.00 1,895.70

376.09

308.83

1,328.91 2,579.25

281.82 2,545.98

542.93

471.59

175.16 474.99 1534.38 7,639.71 0.48 10.84 886.01 295.43 15.07 0.19 2.28 0.45 400.00 1,312.69 9,558.99 0.04

154.61 406.02 1584.38 8,248.93 835.80 167.59 14.97 0.21 0.72 0.16 546.01 600.51 7,581.86 4.59

328.56 266.28 283.52 1,188.46

320.98 764.01 0.32 331.54 783.94

22,189.00

20,202.14

Includes ൘2,918.80 crore (previous year ൘2,151.13 crore) share of jointly controlled entities.

a)

Details in respect of rate of interest and terms of repayment of current maturities of secured and unsecured long term borrowings indicated above are disclosed in Note 5.

b)

Interest accrued and due on borrowings pertains to M/s Ratnagiri Gas & Power Private Limited, a joint Venture of the Company.

c)

Unpaid dividends, matured deposits, bonds and interest include the amounts which have either not been claimed by the investors/holders of the equity shares/bonds/fixed deposits or are on hold pending legal formalities etc. Out of the above, the amount required to be transferred to Investor Education and Protection Fund has been transferred.

F-59

NTPC LIMITED Notes forming part of Consolidated Financial Statements 10. Other current liabilities d)

Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), previously Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) Scheme of the GOI is being implemented by the Company (till the end of previous year, the work was assigned to NESCL, a subsidiary of the company). The funds for the implementation of these schemes are provided by the agencies nominated by the GOI in this regard. Advance received for the DDUGJY (including interest thereon) of 388.87 crore (previous year 531.55 crore) is included in ‘Advance from customers and others’.

e)

Payable for capital expenditure includes liabilities of 109.92 crore (previous year 142.92 crore) towards an equipment supplier pending evaluation of performance and guarantee test results of steam/turbine generators at some of the stations. Pending settlement, liquidated damages recoverable for shortfall in performance of these equipments, if any, have not been recognised.

f)

The Company had obtained exemption from Ministry of Corporate Affairs (MCA), GOI in respect of applicability of Section 58A from the erstwhile Companies Act, 1956 in respect of deposits held from the dependants of employees who die or suffer permanent total disability under the ‘Employees Rehabilation Scheme’ (said amount is included in Other payable- Others). Consequent upon enactment of the Companies Act, 2013 the company has written to the MCA for Clarification on continuation of above exemption granted earlier, which is still awaited. The Company has been advised that the amount accepted under the Scheme is not a deposit under the Companies Act, 2013.

g)

Other payables - Others include amount payable to hospitals, retired employees, parties for stale cheques, etc.

F-60

NTPC LIMITED Notes forming part of Consolidated Financial Statements 11. Short-term provisions  Crore Particulars

As at 31.03.2016

As at 31.03.2015

1,255.80 1,442.96 296.30 200.54 3,886.67 1,239.97 610.99 8,933.23

1,186.50 1,442.96 300.83 24.01 3,244.70 1,263.75 533.66 7,996.41

Provision for Employee benefits Proposed dividend Tax on proposed dividend Current tax Obligations incidental to land acquisition Tariff adjustment Others Total # #

Includes ൘133.29 crore (previous year ൘92.98 crore) share of jointly controlled entities.

a)

Disclosure as per AS 15 on 'Employee Benefits' has been made in Note 40.

b)

Disclosure required by AS 29 on 'Provisions, Contingent Liabilities and Contingent Assets' has been made in Note 48.

c)

Provision for tax for the year represents liability after adjustment of advance tax.

d)

The Company aggrieved over many of the issues considered by the CERC in the tariff orders for its stations for the period 2004-09 had filed appeals with the Appellate Tribunal for Electricity (APTEL). The APTEL disposed off the appeals favourably directing the CERC to revise the tariff orders as per directions and methodology given. Some of the issues decided in favour of the Company by the APTEL were challenged by the CERC in the Hon’ble Supreme Court of India. Subsequently, the CERC has issued revised tariff orders for all the stations except one for the period 2004-09, considering the judgment of APTEL subject to disposal of appeals pending before the Hon’ble Supreme Court of India. Towards the above and other anticipated tariff adjustments, provision of ൘146.57 crore (previous year ൘150.22 crore) has been made during the year and in respect of some of the stations, an amount of ൘157.09 crore (previous year ൘180.16 crore) has been written back.

e)

Provision for others comprise ൘65.35 crore (previous year ൘58.64 crore) towards cost of unfinished minimum work programme demanded by the Ministry of Petroleum and Natural Gas (MoP&NG) including interest thereon in relation to block AA-ONN-2003/2 [Refer Note 31 C.(ii))], ൘514.08 crore (previous year ൘440.83 crore) towards provision for cases under litigation and ൘1.92 crore (previous year ൘6.06 crore) towards provision for shortage in fixed assets on physical verification pending investigation.

F-61

F-62

Tangible assets

As at

340.91

Earth dam reservoir

14.04 -

Owned

Leased

Vehicles including speedboats

518.56

60.00

Leased

Furniture and fixtures

1,16,518.56

Owned

Plant and equipment

815.06

1,578.84

-

Railway siding

MGR track and signalling system

Hydraulic works, barrages, dams, tunnels and power

45.30 778.73

51.60

Leasehold

Water supply, drainage & sewerage system

3,496.63

Others

Temporary erection

5,811.86

922.60

Main plant

Freehold

Buildings

Roads,bridges, culverts & helipads

-

3,239.95

Leasehold

Under submergence (refer footnote f)

7,719.44

01.04.2015

Freehold

(including development expenses)

Land

Particulars

12.

NTPC LIMITED

2.13

1.05

61.57

30.00

8,013.15

10.41

110.78

75.18

4,104.35

23.89

7.64

-

445.98

438.33

127.49

-

1,645.01

663.63

Additions

(0.06)

0.69

(1.61)

-

(2,014.13)

(0.26)

(26.68)

(52.57)

(17.48)

(2.05)

4.17

0.73

(68.53)

(140.28)

(34.79)

(958.99)

103.77

(72.22)

Adjustments

Deductions/

Gross Block

2.19

14.40

581.74

90.00

1,26,545.84

351.58

952.52

1,706.59

4,121.83

804.67

48.77

50.87

4,011.14

6,390.47

1,084.88

958.99

4,781.19

8,455.29

31.03.2016

As at

Upto

-

6.41

289.89

4.23

45,682.23

145.45

244.58

733.01

-

368.73

42.61

31.50

1,253.90

1,683.94

265.71

-

517.27

-

0.33

1.07

24.32

4.61

5,749.10

13.19

39.10

60.82

163.22

26.72

5.30

1.89

141.96

187.89

36.40

25.09

67.26

-

For the year

-

0.40

1.11

-

267.95

0.01

-

-

-

0.58

1.98

0.15

(2.14)

(13.43)

(0.83)

(239.30)

239.38

-

Adjustments

Deductions/ Upto

0.33

7.08

313.10

8.84

51,163.38

158.63

283.68

793.83

163.22

394.87

45.93

33.24

1,398.00

1,885.26

302.94

264.39

345.15

-

31.03.2016

Depreciation/Amortisation and Impairment

01.04.2015

Notes forming part of Consolidated Financial Statements

1.86

7.32

268.64

81.16

75,382.46

192.95

668.84

912.76

3,958.61

409.80

2.84

17.63

2,613.14

4,505.21

781.94

694.60

4,436.04

8,455.29

31.03.2016

As at

As at

-

7.63

228.67

55.77

70,836.33

195.46

570.48

845.83

-

410.00

2.69

20.10

2,242.73

4,127.92

656.89

-

2,722.68

7,719.44

31.03.2015

Net Block

൘ Crore

F-63

110.74 39.92 77.65 116.87 278.16

Communication equipments

Hospital equipments

Laboratory and workshop equipments

Assets under 5 KM scheme of the GOI

Capital expenditure on assets not owned by the Company

9,889.84

15,969.39

5.26

4.29

1,43,928.57

1,62,749.15

22.56

22.56

2.81

2.81

-

-

98.24

42.41

123.65

599.33

241.92

450.89

239.75

47,046.08

52,349.09

-

-

-

-

188.77

46.11

21.67

18.63

62.40

203.16

111.56

325.51

101.82

5,848.21

6,715.89

-

-

-

-

-

-

4.18

1.54

17.26

24.00

14.48

80.52

25.64

545.20

527.71

-

-

-

-

188.77

46.11

0.01

0.76

0.69

(0.23)

0.69

32.68

2.37

52,349.09

58,537.27

-

-

-

-

-

-

25.84

19.41

78.97

227.39

125.35

373.35

125.09

91,579.48

1,04,211.88

22.56

22.56

2.81

2.81

-

-

72.40

23.00

44.68

371.94

116.57

77.54

114.66

83,957.77

91,579.48

17.30

17.30

2.81

2.81

89.39

70.76

55.98

21.29

48.34

319.88

107.22

118.76

105.24

Land includes 1,306 acres of value ൘234.94 crore (previous year 1,302 acres of value ൘72.55 crore) not in possession of the Company. The Company is taking appropriate steps for repossession of the same.

Land includes an amount of ൘262.91 crore (previous year ൘179.65 crore) deposited with various authorities in respect of land in possession which is subject to adjustment on final determination of price.

Gross block of land under submergence include ൘496.37 crore (previous year ൘Nil) of freehold land and ൘462.62 crore (previous year ൘Nil) of leasehold land. The land has been amortised considering the rate of depreciation provided by the

d)

e)

f)

h)

Ministry of Power, Government of India vide its notification no. 2/38/99-BTPS (Volume VII) dated 22 nd September 2006 transferred land of a power station to the Company on operating lease of 50 years. Lease rent for the year amounting to

Company. The consideration received from erstwhile UPSEB is disclosed under Note -10 - ‘Other Current Liabilities' -as other liabilities.

transferred to Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd. (erstwhile UPSEB) for a consideration of ൘0.21 crore. Pending approval for transfer of the said land, the area and value of this land has been included in the total land of the

Possession of land measuring 98 acres (previous year 98 acres) consisting of 79 acres of freehold land (previous year 79 acres) and 19 acres of lease hold land (previous year 19 acres) of value ൘0.21 crore (previous year ൘0.21 crore) was

CERC in the tariff regulations and the fact that it will not have any economic value due to deposit of silt and other foreign materials.

Land does not include value of 33 acres (previous year 33 acres) of land in possession of the Company. This will be accounted for on settlement of the price thereof by the State Government Authorities.

c)

g)

Leasehold land includes 3,044 acres valuing ൘751.08 crore (previous year 2,748 acres valuing ൘606.83 crore) acquired on perpetual lease and accordingly not amortised.

lease agreements for 16,085 acres of land of value ൘3,182.81 crore (previous year 13,844 acres, value ൘1,729.49 crore) in favour of the Company are awaiting completion of legal formalities.

The conveyancing of the title to 10,958 acres of freehold land of value ൘2,277.97 crore (previous year 10,059 acres of value ൘2,006.16 crore), buildings & structures of value ൘50.43 crore (previous year ൘50.43 crore) and also execution of

(3,034.88)

(2,851.19)

-

(0.97)

-

-

278.16

116.87

0.11

0.88

0.19

(14.07)

8.80

34.07

3.12

b)

a)

-

-

-

-

20.70

3.37

13.10

62.22

31.94

40.69

35.81

Net block includes ൘11,700.52 crore (previous year ൘11,911.66 crore) share of jointly controlled entities.

1,31,003.85

Previous year

#

1,43,928.57

17.30

Less: Adjusted from fly ash utilisation reserve fund

Total#

17.30

Assets for ash utilisation

2.81

523.04

Electrical installations

Les