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NHPC Ltd.

BSE: 533098 Sector: Infrastructure
NSE: NHPC ISIN Code: INE848E01016
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VOLUME 632483
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NHPC Ltd. (NHPC) - Director Report

Company director report

Dear Members

The Board of Directors of your Company are pleased to present before you the 46thAnnual Report of your Company highlighting the development and progress for the year2021-22 along with audited financial statements Auditors' Report thereon SecretarialAuditor's Report and review of financial statements by the Comptroller and Auditor Generalof India (C&AG).

Major highlights of performance of your Company during the year under review are asunder:

• NHPC has earned highest ever Profit After Tax (PAT) of Rs 3537.71 crore onstandalone basis in the FY 2021-22 compared to Rs 3245.06 crore in the previous FY. Theconsolidated net profit rose to Rs 3774.33 crore in FY 2021-22 from Rs 3599.88 crore inprevious FY.

• Total income and revenue from operations (net) on standalone basis were Rs9379.98 crore and Rs 8353.80 crore respectively during the FY 2021-22. Totalcomprehensive income and other comprehensive income for FY 2021-22 were Rs 3550.47 croreand Rs 12.76 crore respectively.

• Despite enormous challenges posed by 2nd wave of COVID-19 pandemic NHPC PowerStations were able to achieve second highest ever annual generation of 24855 MillionUnits (MUs) during FY 2021-22. Further NHPC power stations recorded highest ever annualPlant Availability Factor (PAF) of 88.19%.

• Cash contribution of Rs 1183.05 crore was made to Government of India'sexchequer through dividend (final dividend for FY 2020-21 of Rs 249.44 crore and interimdividend for FY 2021-22 of Rs 933.61 crore) during the FY 2021-22.

• NHPC has signed Promoters' Agreement with Green Energy Development Corporationof Odisha Ltd. (GEDCOL) on January 4 2022 for "Development of 500 MW Floating SolarProjects on different water bodies in Odisha". The proposed equity participation inthe Joint Venture between NHPC and GEDCOL shall be in proportion of 74:26. On completionthis project is going to be one of the largest Floating Solar project in the world.

• Hon'ble Prime Minister Shri Narendra Modi laid the foundation stones of 850 MWRatle Hydroelectric Power Project (being implemented through Ratle Hydroelectric PowerCorporation Limited subsidiary of NHPC) and 540 MW Kwar Hydroelectric Project (beingimplemented through Chenab Valley Power Projects Private Limited subsidiary of NHPC) inUT of Jammu and Kashmir on April 24 2022.

• NHPC has signed Letter of Intent for "Development of 10000 MW RenewableEnergy Parks/ Projects in Rajasthan with Rajasthan Renewable Energy Corporation Limitedand Rajasthan Urja Vikas Nigam Ltd." on February 8 2022.

• NHPC bagged 1000 MW capacity Solar Power Project at a Viability Gap Funding(VGF) of Rs 44.90 lakh/MW under CPSU Scheme Phase-II Tranche-MI in the e-Reverse auctionconducted by Indian Renewable Energy Development Agency Limited (IREDA).

• The Government of Andhra Pradesh has consented to allot seven pump storageprojects with installed capacity of 6600 MW. These projects will be developed throughJoint Venture between NHPC and the State Government.

• NHPC has formally taken over the 1856 MW Sawalkot HE Project from Jammu &Kashmir State Power Development Corporation Ltd. on December 11 2021.

• NHPC has signed an agreement with HDFC Bank for monetization of future cashflows by way of securitization of Return on Equity (RoE) of its Chamera-I Power Station(540 MW) Himachal Pradesh. The monetization deal has fetched present value of Rs 1016.39crore against the future cash flow of 10 years of Chamera-I Power Station.

• NHPC has signed MOU with NIT Durgapur for availing services of NIT Durgapur forundertaking R&D activities in the field of Science Engineering and Technology.

• The River Diversion works of 1000 MW Pakal Dul HE Project was inaugurated onNovember 1 2021 and River Diversion of 120 MW Rangit IV HE Project has also beensuccessfully completed on November 7 2021.

• NHPC has been featured amongst the top 25 Green Utilities in the "Top 100Green Utilities" published by Energy Intelligence an Independent US consulting firmspecializing in energy market.

• On January 26 2022 District Administration Faridabad Haryana awardedCertificate of Appreciation to NHPC for outstanding work done in the field of'Sanitization'.

1. FINANCIAL PERFORMANCE

The important financial highlights for the FY ended

March 31 2022 are given in table below.

(Rs in crore)

PARTICULARS FY
2021-22 2020-21
Revenue from operations 8353.80 8506.58
Profit before depreciation interest exceptional items rate regulated income and tax 5704.83 5782.30
Depreciation 1126.22 1228.65
Profit after depreciation but before exceptional items rate regulated income interest and tax 4578.61 4553.65
Interest and finance charges 531.75 571.49
Profit after depreciation and interest but before exceptional items rate regulated income and tax 4046.86 3982.16
Exceptional Items 0.00 (185.00)
Rate regulated income (1270.42) 128.03
Tax (761.27) 680.13
Profit after depreciation interest exceptional items rate regulated income and tax 3537.71 3245.06
Other Comprehensive Income (oCi) 12.76 7.20
Total Comprehensive Income (tCi) 3550.47 3252.26
Surplus from statement of profit and loss of earlier years (including Other Comprehensive Income) 7935.70 5954.08
Transfer from bond redemption reserve 275.70 306.43
Sub-total 11761.87 9512.77
Less : Appropriations
Dividend 1667.48 1577.07
Closing Balance of Retained Earnings including Other Comprehensive Income 10094.39 7935.70

1.1 REVENUE

Your Company has generated total income of Rs 9379.98 crore during the FY 2021-22. Thetotal income during the FY 2020-21 was Rs 9662.56 crore.

1.2 EXPENSES

The total expenditure during FY 2021-22 decreased to Rs 5333.12 crore as compared toRs 5680.40 crore in the previous FY.

1.3 TOTAL COMPREHENSIVE INCOME

Total Comprehensive Income of your Company increased to Rs 3550.47 crore during the FY2021-22 as compared to Rs 3252.26 crore in the previous FY.

1.4 NET WORTH

Your Company's net worth as on March 31 2022 was Rs 33486.10 crore as compared to Rs31603.11 crore at the end of previous FY.

1.5 SHARE CAPITAL

Your Company's paid-up share capital as on March 31 2022 was Rs 10045.03 crore. Therewas no change in paid-up share capital of the Company during FY 2021-22.

1.6 TRANSFER TO RESERVES

During the year 2021-22 Company did not transfer any amount to any reserve.

2. DIVIDEND

Your Company has a consistent track record of dividend payment. The Board of Directorshas recommended a final dividend of Rs 0.50 per equity share for the FY 2021-22 amountingto Rs 502.25 crore. The above dividend is in addition to the interim dividend of Rs 1.31per equity share amounting to Rs 1315.90 crore paid in March 2022. Accordingly totaldividend for the FY 2021-22 comes to Rs 1.81 per equity share amounting to Rs 1818.15crore. Your Company has a Dividend Distribution Policy in place since May 2017. As perDividend Distribution Policy of the Company broadly the dividend payment shall be 30% ofPAT or 5% of the Net worth whichever is higher. Accordingly total dividend payout for FY2021-22 (subject to approval of final dividend by members of the Company) @ Rs 1.81 pershare will be Rs 1818.15 crore representing 51% of PAT for FY 2021-22 and 5.43% of Networth as on March 31 2022 as against total dividend pay-out of Rs 1607.21 crorerepresenting 50% of the PAT for FY 2020-21 and 5.08% of Net Worth as on March 31 2021.The Dividend Distribution Policy of the Company is available on website of the Company athttp://www. nhpcindia.com/writereaddata/Images/pdf/Dividend-PoLicy-21062017%20-NHPC%20website.pdf

3. OPERATIONAL PERFORMANCE

Your Company has achieved generation of 24855 MUs (including infirm generation of 361MUs from Parbati-II) of electricity during the FY 2021-22 as against generation of 24471MUs in the previous FY. NHPC achieved highest ever overall PAF of 88.19% during FY 2021-22as against 84.87% PAF of previous year. Your Directors are pleased to inform that NHPCpower stations performed remarkably well and remained operational even during lockdownperiod due to COVID-19 pandemic. ALL NHPC power stations were operated as per COVID-19guidelines issued by CentraL/State Government. NHPC has also earned highest ever deviationcharges of Rs 189.75 crore with efficient operation and timeLy response to change in thegrid frequency. The power station wise generation and PAF are given in table below:

S. No. NAME OF POWER STATION GENERATION TARGET* (MU) ACTUAL GENERATION (MU) ACTUAL PAF (%)
1. Loktak 510 401 97.42
2. Chamera - I 2447 1899 89.80
3. Rangit 340 338 95.82
4. Chamera - II 1517 1359 96.22
5. DhauLiganga 1179 1213 99.56
6. DuLhasti 2257 2216 100.55
7. Teesta - V 2771 2672 98.03
8. Sewa - II1 504 63 6.66
9. Chamera - III 1108 1005 99.40
10. TLDP - III 594 601 93.36
11. TLDP - IV 734 737 95.61
12. BairasiuL2 709 587 80.62
13. SaLaL 3722 3485 89.77
14. Tanakpur 484 540 81.21
15. Uri 2950 3038 95.17
16. Chutak 213 171 57.71
17. Nimoo Bazgo 239 235 87.38
18. Uri - II 1656 1650 95.49
19. Parbati - III 744 613 59.73
20. Kishanganga 1713 1506 86.39
21. Parbati - II3 395 361 -
TOTAL (HYDRO) 26786 24690 88.19
22. Wind Power Project JaisaLmer 104 76 -
23. SoLar Power Project TamiL Nadu 106 89 -
TOTAL (WIND & SOLAR) 210 165 -
TOTAL (NHPC) 26996 24855 88.19

* As per MoU FY 2021-22 Consolidated Generation Target is 29646 MUs i.e. includingGeneration Target of NHPC Ltd. & NHDC Ltd.

Note:

1 Less generation & PAF is due to complete shutdown of Power Station due to damageof HRT w.e.f 25-Sep-2020 to 21-Feb-2022.

2 Unit#3 of Bairasiul Power Station was under outage for R&M works w.e.f27-Nov-2020 to 30-Aug-2021.

3 Actual Generation shown is infirm power.

During the FY 2021-22:

• Four (4) power stations viz. Chutak Nimoo Bazgo TLDP-III & Kishangangahave achieved highest annual generation since their commissioning.

• Ten (10) power stations of your company viz. Salal Tanakpur Chamera-I UriDulhasti Dhauliganga Teesta-V Uri-II TLDP-III & TLDP- IV have achieved theirrespective annual design energy.

• Six (6) power stations viz. Uri Dhauliganga Chamera-III TLDP-IV Nimoo Bazgo& Kishanganga have achieved highest ever PAF since their commissioning.

NHPC has completed the Renovation & Modernization for Life Extension (R&M &LE) of Bairasiul Power Station during FY 2021-22. Bairasiul Power Station (3x60 MW)commissioned in the year 1981 had completed its 35 years of commercial operation in FY2016-17. The R&M & LE of all 03 units have been completed and are under operationsince August 30 2021. NHPC is also undertaking the R&M & LE of Loktak PowerStation (3x35 MW) which has completed its 35 years of commercial operation in FY 2018-19.NHPC has successfully carried out major repair of HRT of Chamera-I Power Station (540 MW)during FY 2021-22.

4. COMMERCIAL PERFORMANCE

4.1 SALES AND REALIZATION

During the year under report your Company's sales from operations stood at Rs 8353.80crore. We are pleased to inform that your Company has been able to realize an amount of Rs9387.68 crore including surcharge of Rs 271.95 crore during the FY 2021-22.

As on 31st March 2022 the total outstanding dues of Rs 1134.23 crore (includingsurcharge of Rs 78.71 crore) were pending for more than 45 days which is the all-timelowest at the closing of a FY since inception of all the power stations. Your Company ismaking all out efforts to liquidate the outstanding dues by continuous follow-up.

4.2 SIGNING OF POWER PURCHASE AGREEMENTS (PPAs):

Availability of long term PPAs for our Power Stations is key to survival oforganisation as this gives revenue visibility for the organisation and assured rate ofreturn which can be utilised for business expansion. This was critical in the light of thefact that Power Stations with cheap tariff had PPAs for 35 years while PPAs validinitially for 5 year period for significant number of Power Stations with costly tariffhad expired/ were about to expire. Although power was being supplied to DISCOMs from suchstation but NHPC was in a vulnerable position without a legal document like PPA.Therefore a conscious decision has been taken to focus on this area. During the FY NHPChas signed PPA in respect of following power stations:

S. No. Beneficiary DISCOMs Power Station Date of Signing of PPA Validity of PPA
1 PSPCL Punjab Bairasiul 22.03.2022 30.08.2046 (25 years from Renovation and Modernization of last unit)
2 HPPC Haryana 03.08.2021
3 PSPCL Punjab Sewa-II 22.03.2022 23-07-2050 (40 years from COD)
Chamera-III 03-07-2052 (40 years from COD)
Uri-II 28-02-2054 (40 years from COD)
Parbati-III 05-06-2054 (40 years from COD)
4 Manipur Loktak 17.01.2022 Signed for period upto 25 years from Renovation and Modernization of last unit
5 Nagaland 26.07.2021
6 Assam 18.02.2022
7 Tripura 22.07.2021
8 Mizoram 12.08.2021
9 Arunachal Pradesh 13.01.2022
10 West Bengal TLDP-IV 02.09.2021 31.03.2031

5. STATUS OF HYDROELECTRIC PROJECTS UNDER CONSTRUCTION

At present your Company is actively engaged in the construction of 08 Hydro PowerProjects of 6434 MW Capacity (including JV & Subsidiaries). The detail is given intable below:

S. No. PROJECT STATE/ UNION TERRITORY INSTALLED CAPACITY (MW)
A. STANDALONE BASIS
1. Parbati-II HE Project Himachal Pradesh 800
2. Subansiri Lower HE Project Assam/Arunachal Pradesh 2000
Sub-total (A) 2800
B. THROUGH SUBSIDIARIES/ JOINT VENTURES
1. Teesta Stage-VI HE Project under Lanco Teesta Hydro Power Limited (LTHPL) (A wholly owned subsidiary of NHPC) Sikkim 500
2. Rangit-IV HE Project under Jalpower Corporation Limited (JPCL) (A wholly owned subsidiary of NHPC) Sikkim 120
3. PakalDul HE Project under CVPPPL (A Joint Venture with JKSPDC) Jammu & Kashmir 1000
4. Kiru HE Project under CVPPPL 624
5. Kwar HE Project under CVPPPL 540
6. Ratle HE Project under Ratle Hydroelectric Power Corporation Limited (RHPCL) (A Joint Venture with JKSPDC) 850
Sub-total (B) 3634
Total (A+B) 6434

5.1 NHPC STANDALONE PROJECTS

5.1.1 PARBATI-II H.E. PROJECT - 800 MW (4 X 200 MW) HIMACHAL PRADESH:

Parbati-II HE project is being constructed by NHPC as a run-of-the-river scheme toharness the hydropotential of the lower reaches of Parbati River. The project is locatedin Kullu District of Himachal Pradesh. The estimated annual energy generation from theproject is 3124 MUs in a 90% dependable year.

SALIENT FEATURES

Location of Dam Parbati River in Kullu District of Himachal Pradesh
Dam Concrete Gravity Dam 83.7 m high and 110m long
Spillway Radial Gate 3 nos. 6.0m x 9.0m
De-silting Chamber 3 nos. Dufour type 15 m x 16 m x 170 m
Head Race Tunnel (HRT) 31.5 Km long (24.3 Km Horse Shoe Shape by DBM and 7.2 Km Circular shape by TBM)
Surge Shaft 17 m dia. 130 m high underground orifice type.
Pressure Shaft 2nos. 3.50m dia Underground Inclined pressure shafts of length 2121.5 m (Right) & 2149.5 m (Left)
Power House Surface Powerhouse with 4 units (Pelton) of 200 MW each
Generation 3124.60 MUs
Discharge per unit 29 cumecs
Reservoir Capacity Gross Storage : 6.83 Mcum
Diurnal Storage : 3.09 Mcum

Concrete Gravity Dam of 83.7 m height has been constructed at Village Pulga in Parbativalley to divert the river water through a 31.5 Km long Head Race Tunnel (HRT). Anunderground Power House of 800 MW (4 x 200 MW) capacity has been constructed at VillageSuind in Sainj valley utilizing gross head of 863 m. The diverted discharge of the ParbatiRiver is to be further augmented by diverting the discharge of various nallahs viz. JiwaHurla Pancha and Manihar falling along the HRT alignment.

Major civil works of Dam intake structure desilting chamber pressure shafts surgeshaft power house all nallahs viz. Jiwa Hurla Pancha and Manihar have been completed.At present HRT excavation from two faces (face-3 and face-4) is being carried out usingDrill and Blast Method (DBM) and Tunnel Boring Machine (TBM) respectively. 97% HRTexcavation has been completed till March 2022.

Major HM Works have been completed. ElectroMechanical (E&M) works of the projecthave also been completed and all units have been synchronized with grid at part load. Atpresent generation of electricity (infirm power) is being made as per availability ofwater from Jiwa Manihar Pancha and Hurla Nallah. 829 MUs energy have been generated tillMarch 2022 from Parbati-II in the form of infirm power.

The project has suffered various adverse conditions such as very poor/weak geologyconditions heavy ingress of water with silt in HRT resulting in burial of TBM and otherdrilling equipments and flooding of tunnel from time to time encountering of extraordinary geological occurrences failure of Back hill slope of Power Housenon-performance of HRT works contractors protest by labour unions Law and orderproblems etc.

Surpassing all odds your Company's management has taken various initiatives toexpedite the progress. Some of them are as under:

• Constituted various high level committees ED's committee Task force Panel ofExperts (POE) etc.

• Several Contracts of executing agencies were terminated due to non-performanceand re-awarded to new agencies.

• Real Time Analysis of Cycle Time - Regular improvement in Cycle time by properanalysis and resource planning.

• Adoption of improvised support system i.e. Mc NaLLy support system resulted inadvancement of TBM in poor geology.

• Deployment of continuous gantry shutter 48 m (4x12 m) - to achieve 2500 m HRTLining in 5 months.

• Additional resources and efforts made for channelizing ingress of water.

5.1.2 SUBANSIRI LOWER H.E. PROJECT - 2000 MW (8 X 250 MW) ARUNACHAL PRADESH:

Subansiri Lower HE Project is the biggest hydroelectric project under construction inIndia so far and is a run- of-the-river scheme on Subansiri River a tributary ofBrahmaputra. The project is Located at Gerukamukh (Dhemaji District)/ KoLaptukar (KamLeDistrict) on the border of Assam and ArunachaL Pradesh. The right bank of river Subansiriis situated in ArunachaL Pradesh and Left bank is in Assam. At the right bank of riverSubansiri aLL the major project component viz. Intake HRT Power House & TRC etc aresituated and on the Left bank Diversion TunneLs are Located.

The CCEA sanction to the project was accorded in September 2003 and NHPC startedconstruction works in January 2005 after Final Forest Clearance on 12.10.2004. Theconstruction work was halted in December 2011 due to various agitation & protestsraising downstream impact and safety related issues and also petitions were filed inNational Green Tribunal (NGT) subsequently. Hon'ble NGT dismissed all the petitions andcleared the project vide order dated 31.07.2019 and the construction work of the Projectresumed w.e.f. 15th October 2019. Meanwhile Memorandum of Agreement (MoA) with Govt. ofAssam and PPA with Govt. of Arunachal Pradesh were signed in August 2019. PPAs with otherbeneficiary states are already in place except Delhi which is being pursued.

SALIENT FEATURES

Dam Concrete Gravity Dam (116m high 271m wide 284m long)
HRT 8 Nos. 9.5m dia horse shoe shaped 7102m total length
Power House Surface 285m x 61m x 64m housing 8 units of 250MW
Spillway radial Gates 9 Nos. 11.5m x 14.0m
Pressure Shaft 8 Nos. Vertical 48m deep. (Circular Dia varying from 9.5 to 7m and length 209m to 231m)
Gross Head 91m
Annual generation 7422 MUs in a 90% dependable year

Following are the unique features of Subansiri Lower

HE Project:

• The project involves 1200 TPH aggregate processing plant which is the largestsuch plant commissioned in India so far in a hydroelectric project. Also it has a 300 mspan conveyor bridge over river Subansiri which is longest span conveyor bridge in India.

• The concrete batching and mixing plant consists of 880 cum capacity plants atwin shaft mixing plant and a chilling and ice plant from KTI Germany. This is the singlelargest batching and mixing plant for Dam construction in India.

• Rotec's Tower belt System used first time in India for concreting of Dam ofSubansiri Lower HE Project.

• Biggest Radial gates in terms of size and head combination (11.5m x 14.0m) andeffective head of 64m.

• Unique feature of 8 lanes of pressure shafts each having 8m dia 10 numbersDiversion Tunnel gates and 24 numbers draft tube gates.

• The Generator of Subansiri Project is the largest capacity hydro generator ofthe country with its MVA rating of 306 MVA.

• The Rotor is the biggest equipment ever handled in a hydro power plant with itsweight of 620 ton and diameter of approx. 11.45 m.

• The Stator of the Project is the largest in the country in term of its weight of395 ton and bore dia. of 11.5 m.

• The runner of the project is the heaviest Francis Turbine runner of the countryin its category with its weight of approx. 105 ton.

• The main inlet valve with its weight of about 355 ton and dia of 7 m is thebiggest main inlet valve in the country.

• The 420 KV GIS with total 22 no. of bays shall be the biggest GIS of the countryin any of the hydro projects in the country.

The power allocation from the project is as tabulated below:

Assam (25*+508) 533 MW
Arunachal Pradesh (240* + 34) 274 MW
Other North Eastern States
Manipur Meghalaya Nagaland Tripura & Mizoram 198MW
Northern States
Haryana Punjab Rajasthan U.P Chandigarh & Delhi 500 MW
Western States
Gujarat M.P. Chattisgarh Maharashtra & Goa 500 MW
TOTAL 2000 MW

* Free Power. 0.25% (5 MW) free power to Assam to be absorbed by NHPC from its ownresources

The major works of Subansiri Lower HE Project are being carried out by four Agencies ofInternational repute selected through International Competitive Bidding (ICB) viz. Dam& Diversion Tunnel Works: M/s BGS-SGS-SOMA JV (JV with Russian Company) which includesCutoff wall works completed by Soletanchy Bachy a renowned French Company Power House& Underground Structure: M/s Patel Engineering Ltd. in September 2020 (M/s L&T wasengaged earlier till foreclosure in 2015) Hydro mechanical works: M/s Texmaco Rail &Engineering Ltd. Kolkata and Electromechanical work: M/s Consortium for GE Hydro Franceand GE Power India Limited.

The works at different work packages are going on full swing since resumption of workin October 2019 despite various hindrances faced from time to time. More than 7000labours have been engaged in the project on daily basis to carry out the construction/erection works. About 83% of Dam concreting has been achieved so far. Further HRTexcavation has been almost completed and lining has also been achieved about 90%. PowerHouse concreting of 60% has been achieved which includes completion of civil work of Unit# 1&2. Major supplies of HM and E&M equipment have been completed and erectionactivities are at advanced stages. Boxing of Unit

# 1 has been completed on 13.06.2022 and for Unit

# 2 60% work has been completed. HRT Intake Gates have been installed and erection ofRadial gates and Draft tube gates including Pressure shaft liner works are progressingexpeditiously. The overall progress of works of project at present is approx. 80%.Component wise progress of the project as on 19.06.2022 is as under:

S. No. Activities Unit Total Cumm Progress Progress %
1 Dam Concreting Cum 2057392 1714798 83%
2 Intake Concreting Cum 279454 274582 98%
3 HRT Excavation (Heading) M 7102 7102 100%
4 HRT Excavation (Benching) M 7102 6995 98%
5 HRT Overt lining M 7102 6407 90%
6 HRT Invert lining M 7102 4415 62%
7 Surge Tunnel heading excavation M 3545 3300 93%
8 Surge Tunnel benching excavation M 3545 2257 63%
9 Powerhouse concreting Cum 512000 307468 60%
10 Cut off Wall works Completed (100%)
11 HM Works Supply: 90% Erection: DT-97.5% Intake gate-80% PS Liner-53%
12 E&M Works Supply: 97% Erection: Unit #1 - 90 % Unit #2 - 60 % Unit#3 - 5.4% Unit#4 - 3.75% Unit# 5 - 5.35 % Unit# 6- 2.65 %

Since resumption of works in October 2019 till date the project has faced numerousmajor challenges which have adversely affected the progress of work in different workpackages. Immediately after resumption the progress of works suffered for more than sixmonths due to COVID-19 pandemic i.e. on account of Lock down and various restrictionsissued by State Govt./ Central Govt. Local Administrations from time to time since March2020. Others hindrances/ challenges faced are slope failure at left bank near DT outlet inMay 2020 cutting the approach to dam Breach of Power House coffer wall in July 2020Intermittent forcible stoppages/bandhs due to Labour unrest and unprecedented rainfall inthe region since last week of March 2022 till now which have recorded around 2800 mmduring this season.

Despite the above hindrances all out efforts have been made to improve the progress ofwork and completion of balance works at the earliest possible time. In this regard numberof major decisions have been taken by the management to improvise the progress such asinstallation of 5 numbers extra Tower Cranes to facilitate reinforcement and shutteringworks for Dam as well as extended Dam portions Construction of Road Tunnel at Left bankas an alternative access to Dam keeping in view the vulnerable Deonallah slope Dedicatedtruss supported shuttering for trunnion beam to keep spillway free provision of CrossGirder at EL 168.0 m of spillway bays to facilitate simultaneous working of HM works withdam concreting works and Construction of Dyke upstream of dam to accelerate the concretingof Dam as well as to facilitate Radial gate erection works. With these efforts concretingto the tune of more than 9.0 Lakh cum has been done in last two & half years despitenumerous major challenges faced. All the civil works as well as E&M andHydro-mechanical works are at advance stages of completion. All attempts and necessarymeasures are being taken to complete the balance work and commissioning of project at theearliest.

In addition to implementation of major works of project Subansiri Lower HE Project isalso implementing downstream protection works upto 30 km downstream of dam and downstreamdevelopmental works for safety and uplifting the living status of local people indownstream of dam through various livelihood intervention engaging Institute of RuralManagement Anand Gujarat. Further various Corporate Social Responsibility andSustainable Development programs have been implemented for welfare of the local populaceof Assam/ Arunachal Pradesh. The Project would provide a great relief from the flooddevastation being faced by the region every year since time immemorial by controlling theflood through regulated discharge of water in river. During flood period (i.e. June Julyand August) the reservoir will be operated 15 m below the Full Reservoir Level (FRL)providing a flood cushion of 442 Million Cubic meter i.e. during flood period one third ofthe reservoir will remain emptied to absorb the flood water. This project has broughtprosperity for local people and well as the region boosting local economy and generalimprovement in living standard of masses providing employment to the local youths(approx. 90% of 7000 people engaged in construction works are local) Indirect employmentgenerated in various forms like deployment of inspection vehicles contractorsub-contractors petty contractors R&M works and other works.

All seven North-Eastern states (Assam Manipur Meghalaya Nagaland Tripura ArunachalPradesh Mizoram) six northern states/ UTs (Haryana Punjab Rajasthan Uttar PradeshChandigarh Delhi) and five western states (Gujarat Madhya Pradesh ChhattisgarhMaharashtra Goa) will be benefitted from the power generated from Subansiri Lower H.E.Project.

5.2 UNDER WHOLLY OWNED SUBSIDIARIES:

5.2.1 Teesta Stage-VI HE Project: 500 MW (4x125MW) Sikkim under Lanco Teesta HydroPower Limited (LTHPL) :

LTHPL was acquired by NHPC through Corporate Insolvency Resolution Process (CIRP) inOctober 2019 and is a wholly owned subsidiary of NHPC which is developing 500 MW TeestaVI HE Project in Sikkim. The project is a Run of River (RoR) Scheme in Sirwani Village ofSikkim to utilize the power potential of Teesta River Basin in a cascade manner. Majorcomponents of the project include 26.5m high barrage and underground Power house having 4units of 125 MW each. The project is having an estimated annual energy generation of 2400MUs in a 90% dependable year.

SALIENT FEATURES:

Location River Teesta Barrage at Sirwani Power House at Tarkhola Sikkim.
Barrage 26.5m high 105m long 5 No. Radial Gates 15m(W) x 17.5m(H)
HRT 2nos. HRT D-Shape 8m dia. Length 71m & 92.6m Modified Horse Shoe-Shape 9.8 m dia. Length 13712m & 13815m.
Pressure Shafts 4nos. Pressure Shafts 5.4m dia. (steellined) length varying from 151m to 198m
Surge Shaft 2no 16m dia. 89.30m depth
Power House Underground 142.75m(L) x 18.5m(W) x 52.44m(H) 4 units of 125MW each
TRT 04Nos (8.5mX7.5m) D Shaped each 247m length.
Gross Head/ Annual Generation 116m/2400MUs.

All contract packages of Civil HM and E&M works have been awarded. Constructionworks of Barrage Excavation of HRT Power House works are in progress. DetailedEngineering of HM and E&M component is in progress. E&M and HM works at variousfronts are in process.

5.2.2 Rangit-IV HE Project: 120 MW (3x40MW) under Jalpower Corporation Limited (JPCL):

JPCL was acquired by NHPC through CIRP in March 2021 and is a wholly owned subsidiaryof NHPC which is developing Rangit-IV HE Project in Sikkim. The project is located onRangit River near Rishi village West Sikkim and is a run of the river scheme envisagesconstruction of a 44m high concrete gravity dam to generate 120 MW (3x40MW) of power. Theestimated design energy of the project is 507.88 MU in a 90% dependable year.

SALIENT FEATURES:

Location Rishi village West Sikkim
Dam 44 m high concrete gravity dam.
Head Race Tunnel 1 no. 6.4 m dia. 6488 m length horse shoe shaped
Surge Shaft 1 nos. restricted orifice type semi-underground 18 m dia.
Pressure Shaft 01 no. 5.5 m dia. Circular Steel lined Underground
Power house Surface 3 units of 40 MW each Francis Turbine
Net Head 103.67 m
Annual Generation 507.88 MUs.

Civil HM and E&M work packages of the project have been awarded. 1st stage riverdiversion successfully achieved in November 2021. Cumulative physical progress of 38.88%has been achieved till March 2022.

5.3 UNDER JOINT VENTURE COMPANIES

5.3.1 Pakal Dul HE Project: 1000 MW (4x250MW) J&K under Chenab Valley PowerProjects Private Limited (CVPPPL):

The project is being developed on Marusudar River a tributary of Chenab in KishtwarDistrict UT of Jammu & Kashmir. The project has been planned as a storage scheme andshall utilise the permissible storage under Indus Water Treaty with storage of 0.1 MillionAcre Feet (MAF). The scheme envisages construction of a 167m high Concrete-Face Rockfill(CFRD) Dam (highest in India) to store and carry water through two HRTs of 9.6 Km lengtheach to an underground power house thereby utilizing a net rated head of 397.30 m togenerate 3230 MUs energy annually through 4 units of 250 MW each.

SALIENT FEATURES:

Dam Concrete Face Rock Fill Dam (167m high 305 m long)
HRT 2 Nos. 7.2 m dia Horse shoe shaped/Circular HRT-1 - 9612 m HRT-2- 9619 m length
Surge Shaft 2 nos. 13 m dia and 200 m height
Power House Underground 166 m x 20.20 m x 50.5 m housing 4 units
Rated Head 397.30 m
Annual generation 3230.18 MU in a 90% dependable year
CCEA Approval 28.10.2014

STATUS OF MAJOR WORKS:

Excavation of Power House Cavern MIV cavern Transformer Hall cavern completed andexcavation of valve House cavern Pressure Shafts Surge Shafts Tail Race Tunnel andPothead yard is in progress. Subsequent to construction of Diversion Tunnel (DT) and riverdiversion excavation of HRTs through DBM Surface excavation works of Surface SpillwayTunnel Spillway and power Intakes Filling & Grouting works of Upstream (U/s) &Downstream (D/s) coffer dam and Rock filling of CFRD is in progress.

Detailed Engineering manufacturing inspection & supply of E&M and HMcomponents are in progress. Various Erection work of E&M and HM are in process.

5.3.2 Kiru HE Project (624 MW) under Chenab Valley Power Projects Private Limited(CVPPPL):

Kiru HE Project is located at 25km upstream of dam site of Dulhasti H.E. Project inKishtwar District of J&K. The project has been planned as run-of-river scheme on riverChenab and is located at Village Kiru/ Pathrnakki in Kishtwar District of UT of Jammu& Kashmir. Major components of project includes 135 m high concrete gravity dam 4numbers (5.5 m dia) pressure shafts/ penstocks and an underground Power House having 4units of 156 MW each. The project is having estimated annual energy generation of 2272MUs in a 90% dependable year.

SALIENT FEATURES:

Dam Concrete gravity dam (135 m high 193 m Long)
Pressure Shaft/ Penstock 4 Nos. 5.5 m dia Underground Circular steel Lined 316 m to 322 m Length
TaiL Race TunneL 4 nos. 7 m dia Horse Shoe shaped Length varies from 165 m to 190 m
Power House Underground size 182 m x 23.6 m x 51.2 m 4 Units of 156 MW each
Rated Head 117.98 m
AnnuaL generation 2272.02 MUs in a 90% dependabLe year
CCEA ApprovaL 08.03.2019

ALL contracts packages have been awarded. Construction of Coffer Dam U/s and D/s hasbeen completed. River diversion achieved in December 2021. Excavation work of Power HouseCavern & Transformer Cavern in progress. Pressure shaft Dam and diversion tunnelworks have been started and are in progress.

Detailed engineering/ manufacturing/ inspection of E&M and HM equipment's is inprogress. Model testing of turbine compLeted. Procurement and manufacturing of turbineMIV and generator has been commenced.

5.3.3 Kwar HE Project (540 MW) under Chenab Valley Power Projects Private Limited(CVPPPL):

The Project is a run-of-river type development scheme pLanned across Chenab Rivernear Padyarna viLLage in Kishtwar District of Jammu region. The nearest Rail head to theproject is Udhampur and nearest Airport is Jammu.

SALIENT FEATURES:

Dam Concrete gravity dam (109 m high 195 m long)
Pressure Shaft/ Penstock 4 Nos. 5.65 m dia Underground Circular steel lined.
Tail Race Tunnel 2 nos. 9.5m dia horse shoe shaped concrete line TRT's of lengths 2786m and 2963m.
Power House Underground size 140 m x 23.3 m x 50 m 4 Units of 135 MW each
Rated Head 102.5 m
Annual generation 1975.54 MUs in a 90% dependable year
CCEA Approval 10.05.2022

Civil works Package (Lot-I) awarded Tendering of E&M and HM Packages is inprocess. Approach road to project has been constructed and other infrastructure works arein progress.

First blast for Diversion Tunnel Portal Excavation was successfully taken at project on20.06.2022.

5.3.4 Ratle HE Project (850 MW) under Ratle Hydroelectric Power Corporation Limited(RHPCL):

The project is a run-of-river scheme on Chenab River and is located at KishtwarDistrict of UT of Jammu & Kashmir. Major components of the project include 133m highconcrete gravity dam and an underground power house having 4 units of 205 MW each. Inaddition a unit of 30 MW is envisaged to utilize the stipulated continuous release ofenvironmental flows. The project is having estimated annual energy generation of 3137 MUsin a 90% dependable year.

SALIENT FEATURES:

Dam Concrete gravity dam (133 m high 194.8 m long)
Pressure Shaft/ Penstock Main: 4 Nos. 6.6 m dia Circular steel lined of length 172 to 211 m Auxiliary: 1 no. Circular steel lined of length 162 m
Tail Race Tunnel Main: 4 nos. 8.7m dia Circular lengths 314.4 m to 378.6 m. Auxiliary: 1 no. 4.7 m dia circular length 290 m
Power House Underground 168 m x 24.5 m x 49 m housing 4 units (205 MW) + 1 unit (30 MW)
Net Head Main: 97.37 m Auxiliary: 98.9 m
Annual generation 3137 MUs in a 90% dependable year
CCEA Approval 11.02.2021

The excavation of Diversion Tunnels (DT) and repairing of roads and infrastructuralworks are in progress. EPC contract for the project was awarded in January 2022 andconstruction works are under progress.

Diversion Tunnel-1 has been day-lighted on 11.06.2022.

6. HYDROPOWER PROJECTS UNDER CLEARANCE/APPROVAL

The status of hydro projects including of subsidiaries/joint ventures under variousstages of clearance/approval are given in table below:

S. No. PROJECT STATE/ UNION TERRITORY INSTALLED CAPACITY (MW)
A. STANDALONE BASIS
1. Dibang Arunachal Pradesh 2880
2. Sawalkot Jammu & Kashmir 1856
3. Dugar Himachal Pradesh 500
4. Teesta-IV Sikkim 520
Sub-total (A) 5756
B. THROUGH SUBSIDIARIES/ JOINT VENTURES
1. Kirthai-II through Chenab Valley Power Projects Private Limited (A Joint Venture with JKSPDCL) Jammu & Kashmir 930
2. Loktak Downstream H.E. Project through Loktak Downstream Hydroelectric Corporation Limited (A Joint Venture with Govt. of Manipur) Manipur 66
Sub-total (B) 996
Total (A+B) 6752

6.1 NHPC STANDALONE

6.1.1 DIBANG MULTIPURPOSE PROJECT - 2880 MW (12X240 MW) ARUNACHAL PRADESH

Dibang Multipurpose Project one of the largest project in the country is a hydropowercum flood moderation scheme. The Project envisages utilization of gross head of 230 m byconstruction of a 278m high concrete dam across river Dibang. The estimated energygeneration with an installed capacity of 2880 MW works out to be 11223 MUs for the 90%dependable year. In addition the reservoir created behind the dam will provide floodmoderation benefit in the downstream for which reservoir will be kept 40.10 m below FRLin monsoon period. The back water in the reservoir will travel up to a length of 41 km inDibang River and its tributaries. The flood moderation will save erosion of agriculturalland damage to crops and further save crores of rupees being spent on flood controlmeasures by the Govt.

SALIENT FEATURES:

Location/ District Village Munli (Dist. Lower Dibang Valley) Arunachal Pradesh
Dam 278 m high 798 m long concrete gravity
Power House Underground of size 24.5 m (W) x 56.3 m (H) x 419.0 m (L) housing 12 units of 240 MW each Francis Turbine
Diversion Tunnel 5nos. 12m dia Horse Shoe Shape (Length: 1175 m to 1325 m)
Head Race Tunnel 6nos 9m dia Horse Shoe Shaped Concrete Lined (Length: 300 m to 600 m Total 2700m)
Pressure Shaft 6nos. Steel lined7.5m dia Circular shaped Inclined (Length: 231 m each)
Penstock 12nos. Steel lined 5.2 to 4.0 m dia Circular shape
Annual Energy 11223 MUs.

Part CCEA approval for Pre-investment activities of Dibang Multipurpose Project (2880MW) amounting to Rs 1600 crore was accorded on 02nd August 2019. Accordingly paymenttowards NPV compensatory afforestation CAT Plan and wild life sanctuary released toCAMPA Fund and Forest Clearance (FC-II) was accorded on 12th March 2020 for diversion of4577.84 Ha land by MoEF. Possession of 1412 Ha Community Land in Lower Dibang Valley and1689 Ha Community Land in Dibang Valley District have been acquired by Project for ProjectConstruction Components.

6.1.2 SAWALKOT H.E. PROJECT: 1856 MW J&K

Subsequent to signing of MoU with JKSPDC NHPC has taken over Sawalkot HE Project. Theproject a run of the river scheme envisages harnessing hydropower potential of RiverChenab and is located in the Ramban and Udhampur Districts of Jammu & Kashmir in theUT of J&K.

SALIENT FEATURES:

Dam 192.5 m high & 240 m long RCC gravity dam
Power House Underground vertical Francis Turbine • 6x 225 MW+1 x 56 MW capacity (1406 MW for Stage-I) • 2 x 225 MW (450 MW for Stage- II Total 1856 MW)
Annual Energy 8196.10 MU
Diversion 13.5m X 19m 3 nos Horse shoe
Tunnel Shaped (965m 1130m 1280m)
Head Race Tunnel Two 12.8 m dia for Stage-I & one 10.8 m dia for Stage-II (Circular type) (Length: about 200 m each)
Pressure Shaft/ Penstock 6 No. for Stage - I & 2 no. for Stage -II • PS-1 to PS-5:- 6 m dia. each • PS-6:- 6.7 m dia. • 2.75 m dia penstock for 56 MW Length : 130m -140m for inclined and 50m -115m for Horizontal
Net Rated head • 155.7 m for Unit-1 2 3 4 7 and 8 • 153.5m for Unit 5 6 and Environmental Unit

Status:

• MoU signed on 03.01.2021 between NHPC and JKSPDC for execution of Sawalkot (1856MW) Hydroelectric Project and other Projects by NHPC.

• Agreement for handing over/ taking over of Sawalkot HE Project (1856 MW) signedbetween NHPC and JKSPDC on 11.12.2021.

• Forest clearance (FC-1) - Proposal uploaded by NHPC on Parivesh Portal on31.12.2021.

• PIB meeting for approval of Pre-investment activities was held on 06.05.2022.Minutes of meeting issued on 27.05.22 wherein approval of the pre-investment activitiesof Rs 973 Cr. is recommended.

• EIA and EMP study work awarded on 25.05.22.

6.1.3 DUGAR HE PROJECT: 500 MW HIMACHAL PRADESH:

Dugar HE Project has been allotted to NHPC by State Govt. of Himachal Pradesh onBuild-Own-Operate and Transfer basis (BOOT) for a period of 70 years. The project is arun-of-river scheme that envisages harnessing hydropower potential of River Chenab and islocated in Pangi valley in Chamba District of Himachal Pradesh.

SALIENT FEATURES:

Dam Concrete gravity dam of 128 m height and 210.65 m length at the top of dam
Power House Underground 164.5 m (L) x 22 m (W) x 46.7 m (H) 4 x 103 MW (Main units) & 2 x 44 MW (Auxiliary units)
Annual Energy 1758.40 MUs
Diversion Tunnel 11.5 m dia 2 nos Horse shoe Shaped (463 m 577m)
Pressure Shaft 2 no. 7.25 m diameter and 312.4 m & 272.7m length for main units and 1 no. 5.10 m dia and 251.7 m length for aux. unit. (Circular Steel-lined)
Penstock 4 no. 4.85 m diameter and 37.2 m length for main units and 2 no. 3.7 m dia and 29.2 m length for aux. unit.
Net Rated head 89.92

Status:

• CEA accorded the Concurrence on 26.04.2022. The completion cost of the projectis Rs 4250.20 crore at April 2021 PL.

• Public Hearing was conducted on 20.04.2022 at Killar and Proceedings of publichearing was issued by HPSPCB Shimla on 06.05.2022.

• Draft EIA&EMP report is being finalized for its submission to MOEF&CCfor Environment Clearance.

• Proposal for Forest clearance has been processed by State Forest Department.

6.2 UNDER JOINT VENTURE COMPANIES

6.2.1 KIRTHAI-II HE PROJECT (930 MW)

Kirthai-II HE Project is a run-of- river project located in Kishtwar district J&Kat about 25Kms upstream of Kiru H.E. Project on river Chenab.

SALIENT FEATURES:

Dam Concrete gravity dam (121 m high 219.8 m long)
HRT Horse shoe 10.5m dia. 4.29 Km long
Desilting Chamber 4 nos. 440m x19mx 24.87m
Power House Underground 187.5x22x49.7m housing 4 units Surface (2x10+2x35= 90 MW)
Net Head 220.62 m
Completion Time 5 years

Status:

• MOU for implementation of Kirthai-II HEP (930 MW) through CVPPPL has been signedbetween JKSPDC and NHPC on 03.01.2021.

• Agreement has been signed between NHPC and CVPPPL on 19.03.2021 to provideconsultancy services to CVPPPL for the project.

• Obtaining of requisite clearances of the project is under progress. ConditionalTEC accorded by CEA on 14.06.2019.

• Necessary Investigation works for submission of revised DPR is in progress.

7. PROJECTS UNDER SURVEY AND INVESTIGATION (S&I)

NHPC is at present engaged in survey and investigation of Garba Tawaghat Project (630MW) in Uttarakhand Uri-I Stage-II (240 MW) and Dulhasti Stage-II (260 MW) Projects in UTof Jammu & Kashmir with aggregate installed capacity of 1130 MW.

8. NEW HYDRO PROJECTS INDICATED BY MINISTRY OF POWER FOR ALLOTMENT BY STATE GOVERNMENTTO NHPC

Ministry of Power has identified three Hydro Power Projects viz. Subansiri Upper(2000MW) Subansiri Middle (1800MW) Siang Lower (2700MW) in Arunachal Pradesh forpossible allotment to NHPC and the process of due diligence and valuation of theseprojects through a professional consultant for submission to MoP has been taken up toarrive at a decision to take over the project from Government of Arunachal Pradesh.

8.1. SUBANSIRI MIDDLE (KAMALA) H.E. PROJECT - 1800 MW:

Subansiri Middle (Kamala) HE project is a flood moderation cum power generation schemeto harness the hydro-potential of Kamala River (a tributary of river Subansiri). Theproject is located in Kamle District of Arunachal Pradesh.

The project was earlier transferred to NHPC from Brahmaputra Board by MOWR GOI inMarch 2000 when NHPC took up S&I works and prepared the DPR. But before submissionof DPR for concurrence to CEA the Project was allotted to IPP by Government of ArunachalPradesh in August 2009. The DPR was updated by the IPP and submitted for concurrence toCEA in 2013. Clearances on 17 out of 24 aspects were obtained by the IPP. However the DPRwas returned by CEA in January 2018 rescinding all part clearances issued and since thenIPP has made no progress.

As per above DPR the estimated annual energy generation from the project is 7338 MUsin a 90% dependable year. The scheme features 216 m high concrete gravity dam and anunderground power house of 1728 MW capacity with auxiliary Dam toe power House of 72 MW.

8.2. SUBANSIRI UPPER H.E. PROJECT - 2000 MW ARUNACHAL PRADESH:

Subansiri Upper HE project is a flood moderation cum power generation scheme to harnessthe hydropotential of river Subansiri. The project is located in Upper Subansiri Districtof Arunachal Pradesh.

The project was earlier transferred to NHPC from Brahmaputra Board by MOWR GOI inMarch 2000 when NHPC took up S&I works and prepared the DPR. But before submissionof DPR for concurrence to CEA the project was allotted to IPP by Government of ArunachalPradesh in March 2010. The IPP did not carry out any noticeable work and did not preparethe DPR.

As per NHPC DPR the estimated annual energy generation from the project is 6768.5 MUsin a 90% dependable year. The scheme features 237 m high concrete gravity dam and anunderground power house of 2000 MW capacity.

8.3. SIANG LOWER PROJECT - 2700 MW:

Siang Lower HE project is a power generation scheme to harness the hydro-potential ofSiang River. The project is located in East Siang District of Arunachal Pradesh.

The project was transferred to NHPC from Brahmaputra Board by MOWR GOI in March 2000when NHPC took up S&I works and prepared the DPR with 2000 MW capacity. But beforesubmission of DPR for concurrence to CEA the Project was allotted to IPP by GoAP inFebruary 2006. The DPR was updated by IPP for 2700 MW and concurrence was obtained inFebruary 2010. However the validity of same has expired in February 2019 since thenthe IPP has made no progress.

As per above DPR the estimated annual energy generation from the project is 13236.47MUs in a 90% dependable year. The scheme features 111 m high concrete gravity dam and asurface power house of 2700 MW capacity.

The due diligence and valuation of this project is dependent upon finalization of site/technical parameters of Siang Upper Multipurpose Storage Project located at Upper Siangdistrict for which NHPC has been entrusted for preparation of PFR/DPR by MoJS.

9 RENEWABLE ENERGY PROJECTS

Your Company is diversifying its business and making efforts to develop renewableenergy projects and intends to be part of the renewable energy growth story of India bycontributing to the target of 500 GW installed electricity capacity from non-fossil fuelsources by 2030 set by the Government of India. World over various new and advancedtechnologies are being explored in the transition to a net-zero carbon future and yourCompany is aggressively looking forward in this direction. NHPC in line with the latesttechnological developments and advancements is now exploring road maps and strategies toscale up its renewable energy projects. NHPC has also incorporated a wholly ownedsubsidiary company i.e. NHPC Renewable Energy Limited (NHPC REL) in February 2022 as aseparate vertical for developing renewable energy projects.

Your Company has identified mega scale solar projects under different schemes ofMinistry of New and Renewable Energy (MNRE) such as CPSU scheme solar park scheme etc. inthe states of Rajasthan Gujarat Andhra Pradesh Odisha Uttar Pradesh Kerala TamilNadu etc. which are under various stages of planning and development. Your Company isactively working for increasing its renewable energy portfolio by making efforts forcapacity addition through different sources of renewable energy. The efforts of theCompany for establishment of such projects are as under:

9.1 SOLAR POWER PROJECTS

9.1.1 Solar Projects under construction stage are given in table below:

S. PROJECT No. STATE INSTALLED CAPACITY (MW)
A. STANDALONE BASIS
(i) 40 MW Solar Power Project Ganjam Odisha 40
(ii) 600 MW Solar Power Project under CPSU scheme Gujarat 600
(iii) 300 MW Solar Power Project under CPSU scheme Rajasthan 300
(iv) 100 MW Solar Power Project under CPSU scheme Andhra Pradesh 100
Sub-total (A) 1040
B. THROUGH JOINT VENTURES
(i) 65 MW Solar Power Project Kalpi Under BSUL Uttar Pradesh 65
Sub-total (B) 65
TOTAL 1105

(i) 40 MW Solar Power Project Ganjam:

MNRE has conveyed its in-principle approval to NHPC for development of 40 MW Project inGanjam District. Approval of State Technical Committee for the project has been obtainedand necessary lands for development of the project has been identified. 175 Acre ofidentified land has been allocated to NHPC by The Odisha Industrial InfrastructureDevelopment Corporation (IDCO). EPC contract for 40 MW project along with 10 yearscomprehensive O&M has been issued to M/s Tata Power Solar System Limited Mumbai onMay 24 2021. The project is expected to be commissioned in FY 2022-23

(ii) Projects awarded under CPSU Scheme Phase-II Tranche-III of MNRE/ IREDA:

Your Company has been selected for setting up 1000 MW Grid Connected Solar PowerProjects under CPSU Scheme Phase-II Tranche-III vide IREDA LOA dated 04/10/2021 afterVGF based competitive bidding followed by e-RA. The scheme mandates the use ofdomestically manufactured Modules and Cells for the setting up of solar power plants. EPCContracts for the complete allocated capacity of 1000 MW have been awarded on 12/05/2022as under:

i) M/s Adani Infra (India) Limited for 600 MW capacity in the State of Gujarat

ii) M/s Tata Power Solar System Limited for 300 MW capacity in the State of Rajasthan

iii) M/s SSEL-ASR JV for 100 MW capacity in the State of Andhra Pradesh

Above projects have scheduled completion period of 18 months.

(iii) 65 MW Solar Power Project Kalpi:

The project is being developed by Bundelkhand Saur Urja Limited (a Joint VentureCompany with Uttar Pradesh New & Renewable Energy Development Agency). EPC contractfor the project has been awarded on March 17 2021 along with comprehensive O&M for 10years. The project is expected to be commissioned in 2nd quarter of FY 2022-23.

9.1.2 Projects envisaged under Ultra Mega Renewable Energy Power Parks Scheme (UMREPPS)of MNRE

Your Company is exploring possibilities for development of UMREPPS in various Statessuch as Odisha Kerala Rajasthan Uttar Pradesh etc. The status of development of UMREPPSprojects are as under:

(i) 500 MW Floating Solar Project in Odisha

Your Company has signed a Memorandum of Understanding (MoU) with Green EnergyDevelopment Corporation of Odisha Limited (GEDCOL) in July 2020 for setting up of a JointVenture Company (JVC) for exploring and developing 500 MW Floating Solar and other suchpower projects in the State of Odisha.

The projects will be developed in a phased manner by the JVC. Approval process forformation of JVC has been obtained. MNRE has already given in-principle approval fordevelopment of 300 MW Floating Solar Power Projects under UMREPPS mode of Solar ParkScheme through the proposed JVC. Detailed Project Report (DPR) of 100MW project has beenapproved by MNRE while Detailed Project Report (DPR) of 200MW project is under approvalprocess. Matter is being taken up with GRIDCO Govt of Odisha for PPA for 300MW capacityfollowing which JVC incorporation & project development activities shall be taken up.

(ii) 50 MW Floating Solar Project in Kerala

MNRE has accorded in-principle approval for development of 50 MW Floating Solar PowerProject at West Kallada Kerala by NHPC under UMREPPS mode of Solar Park Scheme. DPR ofthe project has been submitted to MNRE. Transfer of water body/ land to NHPC signing ofPPA and other activities for the development of project are in progress.

(iii) Explorations at other locations

Development of UMREPPS in other States such as Uttar Pradesh Bihar Jharkhand etc. arealso being explored.

9.1.3 Development of Solar Projects in Developer Mode (As an Intermediary Procurer)

NHPC has awarded an aggregate capacity of 2000 MW ISTS connected Solar Power projectsto the selected five developers as an 'Intermediary Procurer'. Power Sale Agreements(PSAs) with State Discoms and Power Purchase Agreements (PPAs) with selected developershave been signed for 25 years project life period. The developmental activities are inprogress by the selected developers. The awarded projects are expected to be commissionedin FY 2022-23.

9.1.4 Development of Solar Power Projects for sale of energy through Power Exchange

NHPC is also exploring the option of development of Solar Power Projects for sale ofenergy through Power Exchange. In the 1st phase of this mode EPC Bids have been invitedfor 75 MW Grid Connected Solar Power Project.

9.1.5 Development of Solar Power Projects after getting allocation through tariff basedcompetitive bidding

In order to gain business in Renewable Energy Sector with secured Power PurchaseAgreement NHPC and its subsidiaries are participating in various tariff based competitivebids being invited by different agencies like SECI/ NTPC/ State Discoms/ Other agencies inRE Sector. In this mode NHDC has been selected for setting up 88 MW Floating Solar PowerProject in Omkareshwar Reservoir during auction conducted by RUMSL in May 2022. Fordevelopment of the project EPC Bids have been invited.

9.2 GREEN HYDROGEN TECHNOLOGY

Green Hydrogen Technology is at nascent stage and emerging as the future source ofenergy in zero carbon emission scenario. NHPC is willing to leverage the emergingopportunities of green hydrogen in power sector to fulfil the grid balancing services andalso explore the end demand of hydrogen in other sectors. Accordingly as an R&Dinitiative the company has initially planned following 3 Green Hydrogen Based Pilotprojects:

i Pilot Green Hydrogen Based Fuel-Cell Microgrid (25 kWe) at NBPS Guest House Leh

ii Pilot Green Hydrogen Mobility Station at Kargil UT of Ladakh (for running of 2Green Hydrogen Based Buses)

iii Pilot Green Hydrogen Mobility Station at Chamba Himachal Pradesh (for running of 1Green Hydrogen Based Bus)

With the data and experience obtained from above Pilot Projects NHPC proposes toventure suitably in the Green Hydrogen business in emerging hydrogen economy in future.

10 POWER TRADING BUSINESS AND POWER TRADING LICENSE

Your Company had ventured into power trading business as part of its business expansionand diversification program and had already obtained category-I license from CERC forinterstate trading of electricity in whole of India in the year 2018. NHPC is registeredat DEEP (Discovery of Efficient Electricity Price) e-bidding portal and had obtainedtrader membership in Indian Energy Exchange (IEX) & Power Exchange of India Limited(PXIL). As part of power trading Company is providing efficient and smart businesssolutions to its various clients viz. buyers/Distribution Companies (DISCOMs) sellers/Generating Companies (GENCOMs) state utilities etc. During the FY 2021-22 Company hadtraded energy of 133.36 MUs with turnover of Rs 44.84 crore.

NHPC was appointed as intermediary procurer/nodal agency for implementing 2000 MWsolar power from ISTS grid connected solar photo voltaic projects scheme under tariffbased competitive bidding in FY 2020-21. NHPC had already signed Power Sale Agreement(PSA) for 2000 MW with the following utilities:

(i) M. P. Power Management Company Limited Madhya Pradesh for 1000 MW

(ii) Jammu & Kashmir Power Corporation Limited Jammu & Kashmir for 300 MW

(iii) Chhattisgarh State Power Distribution Company Limited Chhattisgarh for 400 MWand

(iv) Punjab State Power Corporation Limited Punjab for 300 MW.

NHPC had also signed Power Purchase Agreement (PPAs) on back to back basis with SolarPower Developer (SPD) for purchase of power.

11 DETAILS OF SUBSIDIARIES AND ASSOCIATE / JOINT VENTURE COMPANIES

During the FY 2021-22 RHPCL & NHPC REL were incorporated as subsidiary companiesof NHPC Limited. Besides above no other subsidiary/joint venture company was incorporatedor ceased during the year under review.

A statement containing the salient features of the financial statements of subsidiariesand associate/ joint venture companies in AOC-I as per Section 129(3) of the CompaniesAct 2013 and details of individual contribution of these companies in the overallperformance of the Company during the FY 2021-22 is given under Consolidated FinancialStatements.

The audited financial statements of subsidiary companies are not being attached to theaudited annual financial statements of the Company. In terms of Section 136 of theCompanies Act 2013 any shareholder who desires to have information on aforesaidfinancial statements may visit website of the Company i.e. www.nhpcindia.com.

Your Company has following subsidiaries and associate/joint venture companies as onMarch 31 2022:

11.1 Subsidiary Companies:

i) NHDC Limited (NHDC):

NHDC was incorporated as a joint venture of NHPC and Government of Madhya Pradesh inAugust 2000. The shareholding pattern of NHDC as on March 31 2022 was NHPC (51.08%)GoMP (26%) and Narmada Basin Projects Company Limited (Wholly owned by GoMP) (22.92%)respectively.

NHDC has two operating power stations viz. Indira Sagar (1000 MW) and Omkareshwar (520MW) in Madhya Pradesh. During the FY 2021-22 NHDC generated 2645.34 MUs from its powerstations i.e. 1717.14 MUs from Indira Sagar Power Station and 928.2 MUs from OmkareshwarPower Station.

ii) Loktak Downstream Hydroelectric Corporation Limited (LDHCL):

LDHCL is subsidiary of NHPC with 74.83% shareholding of NHPC and 25.17% shareholding ofGovernment of Manipur as on March 31 2022. LDHCL was incorporated in October 2009 toexecute Loktak Downstream Hydro-electric Project (66 MW) in Noney District of Manipur. ALLstatutory clearances for the project have been received and PPA had already been signedwith Govt. of Manipur. However Public Investment Board (PIB) approval for the project isawaited.

iii) Bundelkhand Saur Urja Limited (BSUL):

BSUL is a joint venture between NHPC and Uttar Pradesh New & Renewable EnergyDevelopment Agency (UPNEDA). As on March 31 2022 shareholding of NHPC and UPNEDA was86.67% and 13.33% respectively.

BSUL was incorporated in February 2015 for development of Solar Power Project inTehsiL KaLpi District JaLaun Uttar Pradesh and other conventional & non-conventionaLpower projects entrusted by the Govt. of Uttar Pradesh. At present BSUL is deveLoping 65MW soLar project in TehsiL KaLpi District JaLaun. The detaiLs of the project is giveneLsewhere in the report.

BSUL is in the process of deveLopment of 1500 MW (approx.) SoLar Power Projects inUttar Pradesh through various modes of impLementation i.e. in EPC mode and deveLopment ofSoLar Park foLLowed by pLant instaLLation in deveLoper mode. DetaiLed Project Reports(DPRs) of two projects viz. Mirzapur SPP (100 MW) and Madhogarh SPP (45 MW) had aLreadybeen approved. DPR for Mirzapur SoLar Park has been approved by MNRE in December 2021.DPR for 1200 MW SoLar Park under UMREPPS is under consideration of UPNEDA.

iv) Lanco Teesta Hydro Power Limited (LTHPL):

LTHPL was acquired by NHPC through Corporate InsoLvency ResoLution Process (CIRP) inOctober 2019 and equity of Rs 897.50 crore was infused as consideration amount pursuantto approved resoLution pLan. LTHPL is a whoLLy owned subsidiary of NHPC. LTHPL isexecuting 500 MW Teesta VI HE Project in Sikkim and construction works are at fuLL swing.The status of Teesta VI HE Project has been provided eLsewhere in the report. The mergerof LTHPL with NHPC is under process. ApprovaL of Ministry of Power has been obtained formerger of LTHPL with NHPC Limited.

v) Jalpower Corporation Limited (JPCL):

JPCL was acquired by NHPC through CIRP in March 2021 and equity of Rs 165 crore wasinfused as consideration amount pursuant to approved resoLution pLan. JPCL is a whoLLyowned subsidiary of NHPC. JPCL is deveLoping Rangit-IV HE Project in Sikkim andconstruction works are at fuLL swing.The status of Rangit-IV HE Project has been providedeLsewhere in the report. The merger of JPCL with NHPC is under process.

vi) Chenab Valley Power Projects Private Limited (CVPPPL):

CVPPPL is a joint venture of NHPC and Jammu & Kashmir State Power DeveLopmentCorporation Limited with sharehoLding of 55.13% and 44.87% respectiveLy as on March 312022. CVPPPL was incorporated in June 2011.

CVPPPL is deveLoping four hydro-eLectric projects in UT of Jammu & Kashmir i.e.PakaL DuL HE Project (1000 MW) Kiru HE Project (624 MW) Kwar HE Project (540 MW) andKirthai-II HE Project (930 MW). The status of PakaL DuL HE Project Kiru HE Project KwarHE Project and Kirthai-II HE Project is provided eLsewhere in the report.

vii) Ratle Hydroelectric Power Corporation Limited (RHPCL):

RHPCL was incorporated in June 2021 as joint venture of NHPC and Jammu & KashmirState Power DeveLopment Corporation Limited (JKSPDCL). As on March 31 2022 sharehoLdingof NHPC and JKSPDCL was 73.53% and 26.47% respectiveLy. RHPCL is deveLoping RatLeHydroeLectric Project (850 MW) in UT of Jammu & Kashmir. The status of RatLeHydroeLectric Project has been provided eLsewhere in the report.

viii) NHPC Renewable Energy Limited (NHPC REL):

NHPC REL was incorporated in February 2022 as wholly owned subsidiary of NHPC fortaking up Solar Wind Small Hydro and Green Hydrogen ventures. NHPC REL is exploringvarious renewable energy projects for expansion of its activities.

11.2 Associate/Joint Venture Company:

National High Power Test Laboratory Private Limited (NHPTL):

NHPTL incorporated in May 2009 is a joint venture between five (5) entities viz.NHPC Limited NTPC Limited Power Grid Corporation of India Limited Damodar ValleyCorporation and Central Power Research Institute (each having shareholding of 20%).

NHPTL was established to set up an online high power test laboratory for short-circuittest facility in the country.The laboratory for High Voltage Transformer (HVTR) at 400 kVlevel and 765 kV level is already operational at Bina Madhya Pradesh. Laboratory forMedium Voltage Transformer (MVTR) has not been commissioned till date.

12 GLOBAL INITIATIVES

Your Company is venturing across borders of nation for seeking hydropower business withthe desire to increase geographic footprint in the neighbouring countries of India andefforts are being made to transform into globally respected multinational company in thelong run and be able to generate substantial revenues from foreign operations. Company hasalready marked its footprints in countries like Nepal Bhutan Myanmar TajikistanNigeria and Ethiopia and is looking further to expand its business in various othercountries. During the year senior level business delegations from NHPC visited Nepal andheld discussions with the highest functionaries of Government of Nepal for extendingsupport to NHPC initiatives for development of hydropower schemes in Nepal. Talks are atan advanced stage with Government of Nepal/ its agencies for allocation of hydropowerschemes totaling ~ 3000 MW in Nepal to NHPC Limited on standalone or JV basis.

During the year NHPC has also submitted a detailed proposal to Ministry of ExternalAffairs GOI for development of Sankosh HE Project (2585 MW) in Nepal.

13 HEALTH SAFETY & ENVIRONMENT (HSE)

NHPC is committed to conduct its business with a strong environment conscienceensuring sustainable development safe workplaces and enrichment of quality of life of itsemployees customers and the community. It is well aware of its obligation to conserve andprotect environment. During the investigation stage probable impact on environment whileexecuting the projects are assessed and identified. Environmental Management Plans (EMPs)are proposed and implemented to compensate the adverse impacts of the project by takingnecessary measures. In addition to above construction of buildings is designed to makethem environment friendly.

Most of the power stations of your company are ISO 9001:2015 (Quality ManagementSystem) ISO 14001:2015 (Environmental Management System) and 0HSAS-18001:2007/IS045001:2018 (Occupational Health and Safety Management System) certified thus ensuringsustainable development and enrichment of quality of life of its stakeholders. Complianceto safety systems & procedures and environmental laws is regularly monitored.

14 CONSULTANCY SERVICES

Your Company takes up consultancy assignments in the country and in its neighboringcountries. The main aim is to share its best practices with fellow organizations and otherstakeholders in the hydropower sector in construction of hydro-electric projects in thegeologically fragile Himalayan Region. The best O&M practices which have allowed NHPCto achieve best plant availability increased efficiency and increased plant/equipmentlife across its various power stations are also shared through consultancy.

During the FY 2021-22 a payment of Rs 54.37 crore have been received by NHPC forconsultancy services rendered to its different clients.

15 FINANCING OF NEW PROJECTS

Internal accruals of the Company are sufficient to finance the equity component for thenew/upcoming projects. NHPC is well positioned to raise the borrowings as per CERC normsgiven its low geared capital structure and strong credit ratings. NHPC is exploringdomestic as well as international borrowing options including overseas developmentassistance provided by multilateral/bilateral agencies to mobilize the debt required forthe planned capacity addition programmes. During the FY 2021-22 your Company has raisedRs 2500 crore through Long Term Loan from Banks and Rs 1016.39 crore against monetizationof future cash flow by way of securitization of Return on Equity (RoE) of Chamera-I PowerStation for next 10 years under the ambit of Assets Monetisation Plan.

16 CREDIT RATINGS

Domestic Rating

NHPC has highest domestic credit rating of 'AAA' with stable outlook assigned bydomestic credit rating agencies i.e. ICRA CARE and India Ratings for its listed bondswhich indicates lower credit risk for the investors.

International Rating

NHPC has International Credit Rating of BBB(-) with negative outlook rated by theS&P Global Rating.

17 INFORMATION TECHNOLOGY AND COMMUNICATION

NHPC considers Information Technology as a strategic tool for the attainment ofsustainable growth in business and to improve overall productivity and efficiency. ALLlocations of the Company including remotely Located Power Stations/ Projects are connectedto Corporate Office/ Regional offices through muLtimode communication Links usingMPLS-VPN/ ILL/ VSAT-Ku band/ VSAT Phones. These multimode Links have been integratedthrough SDWAN (Software Defined Wide Area Network) technology to function in a fail-safemode. IP Telephony has been recentLy depLoyed between corporate office/ Regional Officesand Power Stations/ Projects. VMS (Video Management System) has been recently madeoperational for better monitoring/ management and surveillance of projects/ powerstations.

NHPC has implemented Enterprise Resource Planning (ERP) appLication across aLL itsLocations integrating its various business processes. NHPC has appointed PMCA (ProjectManagement Consulting Agency) for implementation of New Age ERP in the organization tofurther strengthen business processes and incorporate business inteLLigence. Apart fromERP NHPC has implemented a host of other software applications/ mobile apps to take careof day-today business requirements. NHPC's bilingual website and integrated intranet arefunctioning as powerfuL information dissemination systems to take care of externaL/internaL information requirements. As per Government of India directives e-procurementGovernment e-Market (GeM) Vendor payment portaL and e-Reverse auction system areoperationaL in the Company.

During the FY 2021-22 office functioning remained uninterrupted amid Covid-19Lockdowns through the efficient functioning of various software appLications/ tooLs i.e.e-office e-IOM ERP/ ESS video conferencing e-maiLs etc.

CriticaL IT Infrastructure incLuding servers data storage communication equipmentetc. have been instaLLed at safe Locations and are being managed through internaLresources. IT & Cyber Security poLicy is in pLace to ensure optimum and secureutiLization of the assets owned by the company. NHPC has been certified with ISMS ISO27001:2013 certification in Corporate Office which assures confidentiaLity integrity andavaiLabiLity of information assets. ISMS ISO 27001:2013 certification is in process ofimpLementation at aLL NHPC's power stations and certification for 5 nos. power stationshave aLready been obtained. VAPT Audit has been carried out at aLL generating powerstations to secure vaLuabLe information and vitaL infrastructure. A centraLised End PointSecurity Software soLution has aLso been impLemented to protect Servers/ Desktops againstCyber threats. Revised IT and Cyber Security PoLicy of NHPC has been recentLy approved byNHPC management and same has been impLemented.

NHPC has been nominated as nodaL agency for SectoriaL CERT i.e. CERT-Hydro to guide andmonitor the Cyber security reLated activities in the constituent member organizations.

18 HUMAN RESOURCES

Your company has a strong and dedicated workforce of 5092 empLoyees consisting of3166 executives and 1926 non-executives as on March 31 2022. The above workforceincLudes 545 women empLoyees.

Your Company is strongLy focused towards LifeLong Learning and competency deveLopmentof its empLoyees for their overaLL capacity buiLding by improving their performance andenhancing organizationaL capabiLities. Training programmes to empLoyees are faciLitatedthrough internaL facuLty as weLL as through externaL agencies. NHPC has four regionaLhydro training centers Located at SaLaL Power Station Tanakpur Power Station Chamera-IPower Station and Uri-I Power Station. NHPC has organized various training and deveLopmentprogrammes for its empLoyees through premier management and engineering institutions LikeIIMs IITs etc. to enhance their skiLLs and competencies and to encourage them to utilizetheir full potential in their respective field of operations. Your Company also deputessenior and high potential employees to foreign training programmes to keep them abreastwith the latest know how and to understand the global scenario in the field of hydropower. NHPC also sponsors its executives to acquire higher qualification andspecialization to improve their productivity and effectiveness. During COVID-19 pandemicyour company has organized virtual workshops to fulfill training requirements of itsemployees in addition to knowledge sharing sessions through webinars.

Industrial relations in the Company remained cordial and harmonious during the year.Employees actively contributed in the growth of the Company.

Your company follows the Government of India's guidelines regarding reservation inservices for SC/ ST/ OBC/ PWD (Persons with Disabilities)/ Ex-servicemen/ EconomicallyWeaker Section (EWS) to promote inclusive growth. Necessary concessions/ relaxations inaccordance with the rules are extended to SC/ST and physically challenged persons inrecruitment. Details of representation of SC/ ST/ OBC/ PWD are given in ManagementDiscussion & Analysis.

19 RESETTLEMENT AND REHABILITATION (R&R)

Your company appreciates the difficulties of populace displaced during the execution ofits projects. Resettlement and Rehabilitation plans are formulated for Project AffectedFamilies (PAFs) to provide economic sustenance under the provisions of 'The Right to FairCompensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act2013'. NHPC has formulated a policy for reservation of certain type of works throughcompetitive bidding for PAFs and locals residing near its projects/power stations.

20 VIGILANCE

The objective of the vigilance function is to ensure maintenance of the highest levelof integrity throughout the Company. Your Company has a Vigilance Department headed byChief Vigilance Officer to ensure transparency objectivity and quality of decision makingin its operations.

All the procedures are documented to monitor and handle vigilance complaints anddisciplinary cases. Vigilance Department co-ordinates with Ministry of Power CentralBureau of Investigation (CBI) Central Vigilance Commission (CVC) and other concerneddepartments of the Government. One vigilance case related to misconduct has been disposedoff during FY 2021-22. Two vigilance cases i.e. one related to offence of acceptingillegal gratification and other related to disproportionate assets are under disciplinaryproceedings as on 31st March 2022.

As a part of preventive vigilance circulars and guidelines are being issued regularlybased on various inspections/intensive examinations carried out from time to time.Vigilance awareness week and other vigilance awareness programmes are also being organizedby the Company to promote transparency and ethics in working system.

21 INTERNAL FINANCIAL CONTROLS

Adequate internal financial controls with reference to financial reporting are in placein the Company. During the FY 2021-22 such controls were tested and no reportablematerial weakness in the design or operation was observed.

22 RISK MANAGEMENT

NHPC recognizes that it is exposed to a number of uncertainties which is inherent tothe power sector. The volatility of the power sector affects the financial andnon-financial results of the business. NHPC has well-defined and dynamic Risk ManagementPolicy since 2009 to manage risk associated with the company and enhance company'soperational effectiveness. The policy statement is as under:-

a. To ensure protection of shareholder value through the establishment of an integratedRisk Management Framework for identifying assessing mitigating monitoring evaluatingand reporting of all risks.

b. To provide clear and strong basis for informed decision making at all levels of theorganization.

c. To continually strive towards strengthening the Risk Management System throughcontinuous learning and improvement and to achieve the objectives of this policy throughproper implementation and monitoring.

d. To ensure that new emerging risks are identified and managed effectively.

e. To put in place systems for effective implementation for achievement of policyobjectives through systematic monitoring and effective course corrections from time totime.

At present 67 key risks have been identified which has been broadly classified intofour categories namely Operational Risks Financial Risks Strategic Risks and ComplianceRisks. During the year under report changes in the Risk Management Policy were made whichare briefed as under:

(i) Risk Assessment: A combined rating of likelihood and impact rating has beenassigned on a scale of 1-25.These two measures when plotted on the chart gives a quick andclear view of the priority that needs to be given to each risk.

(ii) Risk Categorization: Risk categorization have been broadly classified into fourCategories namely Operational Risks Financial Risks Strategic Risk and Compliance Risk.Number of risks have been increased from 54 to 67 as per present Scenario.

(iii) Risk Co-ordinators: New Risk Co-ordinators have been assigned to different risksfor better monitoring of risks as per their domain area.

23 PROCUREMENT FROM MICRO & SMALL ENTERPRISES

Government of India has notified Public Procurement Policy for Micro and SmallEnterprises (MSEs) Order 2012 to support marketing of products produced and servicesrendered by them. In compliance to the policy annual procurement plan including items tobe procured from Micro & Small Enterprises (MSEs) are uploaded on NHPC's website(www.nhpcindia. com) for the benefit of MSEs.

The benefits to MSEs like exemption from tender fees and earnest money depositpurchase preference interest on delayed payments and exemption from prior experience -prior turnover criteria subject to meeting of quality and technical specifications arealso extended to encourage these enterprises.

During the FY 2021-22 NHPC has procured products and services from MSEs which hasconstituted 44.0% of the total annual procurement value against the mandate of 25% set byMinistry of Micro Small and Medium Enterprises Govt. of India. During the year 2302MSEs were benefited out of which 94 MSEs and 213 MSEs were owned by SC/ST and Womenentrepreneurs respectively.

Trade Receivables Discounting System (TReDS) platform facilitates the discounting ofinvoices of MSMEs facilitating generation of working capital for their regular businessoperations. NHPC is also registered on the platform for the benefit of MSMEs.

24 IMPLEMENTATION OF OFFICIAL LANGUAGE

During the year your Company had dedicatedly and with great enthusiasm complied withprovisions of the Official Languages Act 1963 and rules made thereunder. At all timesefforts were made to increase the use of Official Language in accordance with the policyof Government of India. During the period under review quarterly meetings of theCommittee constituted for implementation of Official Language were conducted through videoconferencing following the Covid-19 pandemic guidelines. During these e-meetingsprogressive use of Official Language across the Company was reviewed by the management.

Various programmes like Hindi Pakhwara Hindi Competitions including 'Online Hindi QuizCompetition' distribution of Rajbhasha Shield Hindi Kavi Sammelan Akhil BhartiyaRajbhasha Sammelan e-Workshops were organised during the year for promoting the use ofOfficial Language - Hindi in the Company.

Attractive incentive schemes for employees such as contributing for articles/ write-upsin Hindi Hindi books reading Noting & Drafting in Hindi etc. were implemented inthe Company.

25 SPORTS AND OTHER ACTIVITIES

NHPC has always encouraged sports culture in the organization. NHPC employees haveparticipated in various sports tournaments in individual and team events. NHPC SportsScholarship holders have given stellar performances in many tournaments. NHPC hosted the25th Inter CPSU Bridge Tournament under the aegis of Power Sports Control Board (PSCB)Ministry of Power Govt. of India from 21st to 23rd October 2021 at Chandigarh. NHPCachieved podium finish positions in Inter CPSU Athletics Carrom and BadmintonTournaments.

Under the aegis of Bureau of Energy Efficiency (BEE) Ministry of Power Govt. ofIndia NHPC organized State Level Painting Competition in six States/UTs (J&K LadakhArunachal Pradesh Sikkim Manipur & Madhya Pradesh) in the month of November/December 2021. It is notable to mention that one participant from Ladakh won 2nd Prize and2 participants from J&K won consolation prizes at the National Level for which prizeswere distributed on 14th December 2021.

Your company has organized Vasant Utsav 2022 with great fervour and enthusiasm at NHPCResidential Complex Faridabad on March 13 2022. Stalls promoting local handicraftsdress materials food delicacies etc. from various states/ union territories such asJ&K Himachal Pradesh Sikkim West Bengal Manipur Uttarakhand Assam etc. were setup.

During the year NHPC has been actively contributing towards the celebration of Azadika Amrit Mahotsav across all its locations spread across the country. These programmeshave witnessed enthusiastic participation from NHPC employees as well as the local people.The events organized were of varied nature but with a common theme of National pride andcelebrating the idea of INDIA through educational trips competitions awarenesscampaigns cultural events patriotic programmes sports health and medical initiatives.

26 AWARDS & RECOGNITIONS

NHPC has been proud recipient of following awards for excellence in different areas:-

• NHPC has won the Gold Shield for 'Excellence in Financial Reporting' awarded bythe Institute of Chartered Accountants of India (ICAI) for FY 2020-21 in the category"Infrastructure & Construction Sector- Turnover equal to or more than Rs 500Crore". The Company has also won the Certificate of Merit for the 'Best PresentedAnnual Report' from the South Asian Federation of Accountants (SAFA) in the Category"Public Sector Entities".

• NHPC's Rajbhasha journal 'Rajbasha Jyoti' has been awarded 'First Prize' under'Rajbhasha Kirti Puruskar (Griha Patrika)Rs in Region 'A' by Ministry of Home AffairsGovt. of India for the year 2019-20 under 'Rajbhasha Kirti Puruskar' scheme. NHPC has alsobeen awarded Second Prize for commendable work in implementation of Rajbhasha underRajbasha Kirti Puruskar scheme.

• NHPC was conferred with "PSU developer of the year" Award in GoldCategory by EQ international during EQ's PV Invest Tech India Conference & Awards atNew Delhi.

• NHPC was honoured as 'WinnerRs in category of 'Best Implementation of DamRehabilitation Project' at the Water Digest Water Awards 20212022.

• NHPC has been conferred with 'AEOHD Occupational Health Excellence Award -Public SectorRs in recognition of its exemplary contribution in the field of Environmental& Occupational Health (ENOCH) by AEOHD (Association of Environmental &Occupational Health Delhi).

27 RIGHT TO INFORMATION ACT

The Right to Information Act 2005 has been implemented in NHPC to provide informationto citizens and to maintain accountability and transparency. The Company has placedvarious documents/records on its website i.e. www.nhpcindia. com for access to all. NHPChas designated Appellate Authority Transparency Officer and Central Public InformationOfficer (CPIO) at Corporate Office and Assistant Public Information Officers (APIOs) atall Power Stations/ Projects / Regional Offices/ Units.

During the FY 2021-22 588 applications and 70 first stage appeals were received out ofwhich 581 (99%) applications and 69 (99%) first stage appeals were replied/disposed-off. 5second stage appeals were filed by the applicants before the Central InformationCommissioner (CIC) which were also disposed-off in favour of NHPC.

28 CORPORATE SOCIAL RESPONSIBILITY

Your company is playing a vital role for the greater welfare of the society since yearsthrough its various CSR initiatives. The positive impacts of CSR initiatives of yourcompany have penetrated deeply amongst the needy sections of the society by addressing thesocial economic environmental and welfare concerns of the stakeholders. The CSRinitiatives of the Company includes programs on promoting Education & SkillDevelopment Healthcare & Sanitation Rural Development Women Empowerment Sportspromoting & conserving Art & Culture etc. in accordance with Schedule VII of theCompanies Act 2013. While selecting & implementing the CSR & Sustainabilityprojects your Company strives hard to ensure that the maximum benefit percolates down theline to the underprivileged sections of the society.

Your company is committed to support the State Governments in setting up newEngineering Colleges smart classes in Schools infrastructural facilities improvement inITIs employment oriented skill development for livelihood enhancement of unemployed youth& divyangjans augmentation of health care facilities by way of providing ambulanceshearse van state of the art medical equipment in Primary/ Community/ District Hospitalsinstallation of oxygen plants aids and assistive devices such as wheel chairs etc. todifferently abled persons in different corners of the country. As a responsible corporateentity your Company has also contributed Rs 30 crores in PM CARES under its CSRinitiatives to support the Government to fight in emergency situations.

Your Company's focused approach to work in the areas aligning its CSR target tonational priorities and optimal utilization of resources has maximized the socio-economicimpact on the society. Over the passage of time the footprints of your company's CSRinitiatives have reached its intended area of coverage to manifold.

Your Company has adopted the Policy on CSR in line with applicable provisions of theCompanies Act 2013 and the Companies (Corporate Social Responsibility Policy) AmendmentRules 2021. The major highlights of the CSR Policy of your company are as under:

• Preference to the Local area around NHPC's Projects is being given by allocatingat-least 80% of the CSR Budget amount. However other locations are also being selectedbased on the needs and as per the direction of Government of India on national schemes andcampaign wherein about 20% amount of the CSR Budget may be spent for the larger benefitof society / environment.

• The CSR initiatives includes programs on promoting education vocational skillshealth sanitation rural development women empowerment environmental up-gradation etc.in accordance with Schedule VII of the Companies Act 2013. Expenditure on any otheractivity not in conformity with Schedule VII is not accounted towards CSR expenditure.

• Selection of CSR & Sustainability schemes is made so as to ensure maximumbenefits reach the poor/ backward and needy sections of the society and contribute toimprove the quality of environment.

• NHPC is open to join hands with other CPSEs in planning implementing andmonitoring of Mega-Projects for optimal use of resources synergy of expertise andcapabilities for maximizing socio-economic or environmental impact.

• The policy has defined roles & responsibilities at various levels for properselection planning execution & monitoring of CSR activities.

During the FY 2021-22 the CSR Policy was revised to include provisions with respect tofollowing:

a. Formulation & recommendation of Annual Action Plan by the CSR Committee

b. Engagement of international organizations for designing monitoring and evaluationof the CSR Projects or programs

c. Collaboration with other companies on joint CSR projects

d. Treatment of unspent CSR amount for ongoing & other CSR activities

e. Chief Financial Officer (CFO) Certification for the utilization of CSR funds

f. Creation or acquisition of capital assets from CSR expenditure

g. Provision for setting off excess expenditure

h. Eligibility criteria provision for Impact Assessment

The CSR Policy is available on website of the Company athttp://www.nhpcindia.com/csr-poiicy.htm A report on CSR activities undertaken by yourcompany during the FY 2021-22 is given as Annexure-I to this report.

29 CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

Your company has not entered into any material transaction with any of its relatedparties during the FY 2021-22. Company's major related party transactions are generallywith its subsidiary and associate companies for providing consultancy services leasingout of properties manpower services etc. Aii the contracts/ arrangements/ transactionsentered into with reiatedparties wereon arm's length basis intended to further thecompany's interest. Accordingly the disclosure of Related Party Transactions as requiredunder Section 134(3)(h) of the Companies Act 2013 in Form AOC-2 is not applicable.

Attention of the members is also drawn to notes of the standalone financial statementswhich sets out related party disclosures as per Ind AS-24.

30 VIGIL MECHANISM - POLICY ON WHISTLE BLOWER AND FRAUD PREVENTION

Your Company has framed a 'Whistle Biower Policy' wherein Directors empioyeescontractors and vendors of the Company are free to report any unethicai practicevioiation of appiicabie iaws ruies reguiations or Company's code of conduct that couidadverseiy impact Company's operations business performance and/or reputation. The poiicyaiso aiiows direct access to the Chairperson of the Audit Committee. During the year noperson was denied access to the Audit Committee.

The identity of the whistie biower is kept confidentiai so that he/she shaii not besubjected to any discriminatory practice. A senior ievei officer has been nominated asCoordinator for effective impiementation of the poiicy and to deai with compiaintsreported under the poiicy. During the FY 2021-22 no compiaint was received under WhistieBiower Poiicy. Your Company has aiso framed a Fraud Prevention & Detection Poiicy toprevent detect and aiiow speedy disposai of fraud or suspected fraud. Mechanism under thepoiicy is appropriateiy communicated within the organization across aii ieveis and hasbeen dispiayed on company's intranet. The Whistie Biower Poiicy is avaiiabie at website ofthe Company at http://www.nhpcindia. com/writereaddata/images/pdf/wbp.pdf

31 PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Your Company beiieves that diversity at workpiace creates an environment conducive toengagement alignment innovation and high performance. Every empioyee in the company istreated with dignity respect and afforded equai treatment.

A poiicy on Prevention Prohibition and Redressai of Sexuai Harassment of Women atWorkpiace in iine with the provisions of the Sexuai Harassment of Women at Workpiace(Prevention Prohibition & Redressai) Act 2013 is in piace. 'Internai CompiaintsCommittees' have been constituted at aii iocations of the company for the redressai ofcompiaints against sexuai harassment of women at workpiace. The committee at CorporateOffice Faridabad is headed by a senior woman officer and inciudes representative from anNGO as one of its members. Your Company has aiso prohibited sexuai harassment of women byincorporating it as misconduct under "NHPC Conduct Discipline and AppeaiRuies".

Disciosure in respect of Sexuai Harassment of Women at Workpiace (PreventionProhibition and Redressai) Act 2013 for the FY 2021-22 is as under:

A Number of compiaints pending at the beginning of the FY 1
B Number of compiaints fiied during the FY NIL
C Number of compiaints disposed off during the FY NIL
D Number of compiaints pending at the end of the FY 1*

* compiaint is under investigation by the Internai Compiaints Committee.

32 DEBENTURE TRUSTEES

In compliance to the requirements of Securities and Exchange Board of India (ListingObligations and Disciosure Requirement) Reguiations 2015 (SEBI LODR) the detaiis ofDebenture Trustees appointed by the Company for different series of Bonds is provided atreference information of this Annuai Report.

33 COVID 19

NHPC continues its endeavors to fight COVID-19 pandemic in its varying magnitude whiieits top priority remains safety & weii-being of empioyees aiong with businesscontinuity for ciients. NHPC acts in accordance with the guidelines issued by Ministry ofHome Affairs Ministry of Health & Family Welfare and Ministry of Power from time totime and implemented elaborate support measures to sensitize employees their dependentand other stakeholders about safety measures for COVID-19 pandemic. Your Company has takenall necessary measures for mitigating impact of challenges being faced due to COVID-19pandemic by setting up of COVID-19 care centers with oxygen support facilities at variousNHPC locations augmenting supply side logistics related to availability of Medical oxygenby funding the setting up of oxygen plants at various Govt. hospitals besides providingsupport for purchase of oxygen concentrators. NHPC also facilitated vaccination drivesincluding booster doses for employees of various organizations and PSUs under Ministry ofPower/ MNRE and their dependents. NHPC has ensured 100% Covid-19 vaccination of all theregular employees their dependents as well as contract employees. Various RT-PCR testingcamps and COVID-19 vaccination camps for the benefit of the employees/ retired employeesand their dependents were organized throughout the year.

Your Company had also established 24x7 helpdesk coordinated support measures such astie- ups with testing labs video consultation with doctors COVID leave provisionmedicines and counselling support. Amid these transitions and pandemic-relateduncertainties the well-being of our employees has become a critical focal point. Throughconcentrated efforts over the last 24 months NHPC had implemented several well-beinginitiatives for its employees including sessions with experts on mental health self-carewomen's health work-life balance etc.

34 MANAGEMENT DISCUSSION & ANALYSIS

34.1 INDUSTRY STRUCTURE AND DEVELOPMENT

Electricity is one of the most critical components for the infrastructure developmentof a country affecting economic growth and well-being of the people at large. Power Sectoris a key enabler for India's economic growth. The sector consists of generationtransmission and distribution utilities and is a crucial component of India'sinfrastructure. The total installed capacity of all the power stations of India as onMarch 31 2022 was 399497 MW with contribution of 236109 MW 6780 MW and 156608 MWfrom Thermal Nuclear and Renewable power respectively wherein contribution of Hydro was46723 MW.1

The total electricity generation from conventional sources in the Country during the FY2021-22 was 1320.88 billion units as compared to 1234.61 billion units during last yearregistering an increase of 6.99%2.

India has gradually shifted from a country with a shortage of energy to a state closeto an energy surplus. During the FY 2021-22 peak power demand witnessed a historic paceof growth of 6.73% owing to multitude of factors boosting industrial and residentialload. According to the International Energy Agency (IEA) power demand in India is likelyto grow at an annual rate of 6.5% between 2022 and 2024.

India is a resource-rich and diverse country. With abundance of Renewable EnergySource Indian renewable energy sector is one of the most attractive renewable energymarket in the world. At the 26th session of the Conference of Parties to UNFCCC (COP-26summit) conference in Glasgow India has committed to an ambitious five-part"Panchamrit" pledge which included targets:

a. To achieve non-fossil energy capacity to 500 GW by 2030.

b. To meet 50 percent of energy requirements from renewable energy by 2030.

c. To reduce the total projected carbon emissions by one billion tonnes from now till2030.

d. To reduce the carbon intensity of its economy by less than 45 percent by 2030.

e. To achieve the target of Net Zero by the year 2070.

The government is providing all incentives to the power sector to ensure sustainableproduction through one or another scheme such as Ujwal DISCOM Assurance Yojana (UDAY)scheme Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) etc.Further continued promotion of schemes like 'Make in India' will increase power demand inthe industrial sector by promotion of local manufacturing. Faster adoption andmanufacturing of Electric Vehicles in the counrty will expand development of charginginfrastructure and increase in power demand.

Hydropower assumes greater importance to provide stability to the electric grid due tothe intermittent availability of solar and wind to produce power. In addition to reducingcarbon emissions hydropower energy enables to take electricity to new remote locationshelp increase security over energy generation and reduce impact of geopolitical issues.Hydropower is highly relevant for grid integration of renewable energy and for balancinginfirmities.

India is moving towards becoming the fastest growing green economy of the world and theoutlook of the sector looks positive. The coming decade is set to witness a profoundtransformation in the Indian power system with respect to demand growth energy mix andmarket operations.

34.2 HYDROPOWER POTENTIAL IN INDIA

Our country is endowed with an enormous hydro power potential and ranks amongst topcountries worldwide for possessing feasible hydropower capacity much of which remainsunutilized. As per the re-assessment studies of hydro electric potential of the Countrycompleted in 1987 by Central Electricity Authority the hydro power potential in terms ofinstalled capacity is estimated at 148701 MW out of which 145320 MW of the potentialconsists of hydroelectric schemes having installed capacity above 25 MW.

34.3 MEASURES TAKEN BY GOVERNMENT OF INDIA TO PROMOTE HYDRO POWER SECTOR

The Government of India in past had taken several policy initiatives for hydro powerdevelopment in the country viz. National Electricity Policy 2005 National TariffPolicy 2016 National Rehabilitation & Resettlement Policy 2007 and Right to FairCompensation & Transparency in Land Acquisition Rehabilitation and Resettlement Act2013. Over the period of last two years the Government had also issued measures topromote Hydro Power Sector which included:-

> Declaration of Large Hydro power Projects (LHPs i.e. > 25 MW Projects) asrenewable energy source.

> Notification of Hydro power Purchase Obligation (HPO) as a separate entity withinNon-solar Renewable Purchase Obligation (RPO). As per the notification the HPO shallcover all LHPs commissioned after 08.03.2019 (i.e. date of issuance of Office Memorandumby Ministry of Power) as well as untied capacity (i.e. without long term PPA) of thecommissioned Power Station.

> HPO trajectory for the period 2021-22 to 202930 has also been notified by theGovernment on 29.01.2021.

> Flexibility to the developers to determine tariff by back loading of tariff afterincreasing project life to 40 years increasing debt-repayment period to 18 years andintroducing escalating tariff to rationalize hydro power tariff.

> Extension of Budgetary Support for Flood Moderation/Storage Hydro-electricProjects (HEPs).

> Extension of Budgetary Support for the Cost of Enabling Infrastructure i.e. roads/bridges @ Rs 1.50 crore/MW for project upto 200 MW and Rs 1.00 crore/MW for project above200 MW.

> Notification of final guidelines for Budgetary Support for Flood Moderation/Storage Hydroelectric Projects (HEPs) and Budgetary Support towards Cost of EnablingInfrastructure i.e. roads/ bridges on September 28 2021 by Ministry of Power.

Central Electricity Regulatory Commission (CERC) has notified draft CERC (Terms andConditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations2022 wherein hydro power has been considered for Renewable Energy Certificates with amultiplier of 1.5. On finalization the said draft regulations shall play a vital role insale of power from upcoming hydro power stations.

34.4 GOVERNMENT INITIATIVES FOR RENEWABLE ENERGY SECTOR

At the COP-26 conference in Glasgow Scotland Hon'ble Prime Minister of Indiapresented the agenda for the country to combat climate change which inter-alia includedthe target to achieve 500 GW of installed electricity capacity from non-fossil fuelsources. Amid various challenges meeting the target of 500 GW of renewables by 2030 willrequire a dramatic acceleration in installed capacity. The Government of India has takenmajor steps to reform the energy sector and usher in a climate-friendly energy transitionthat will deliver energy security affordability and sustainability thereby achievinginclusive growth in Power Sector. The steps include proposing the Electricity (Amendment)Bill 2020 PM-KUSUM and Roof Top Solar scheme various schemes to promote large scaleSolar Power Development such as CPSU Scheme Solar Park Scheme Production linkedincentive schemes etc. proposing amendments to Energy Conservation Act 2001 PradhanMantri Ujjwala Yojana and so on.

The initiatives of Govt. of India in the Renewable Energy Sector in conjunction withtechnological advancements have made the investment in solar power business highlyattractive. NHPC is also making its efforts to explore new opportunities for thegeneration of power through development of solar parks/Floating solar projects and solarpower projects under CPSU Scheme in various potential rich states across the country.

The Ministry of Power Government of India on February 17 2022 had notified the greenhydrogen policy aimed at boosting the domestic production of green hydrogen and makingIndia an export hub for the clean fuel. The new policy offers the following:

a. 25 years of free power transmission for any new renewable energy plants set up tosupply power for green hydrogen production before July 2025.

b. Single portal for all clearances required for setting up green hydrogen productionas well as a facility for producers to bank any surplus renewable energy generated withdiscoms for up to 30 days and use it as required. The requirement of time bound clearancesfor these projects would spur investment while grid connectivity on priority will easeoperational processes.

c. Energy plants set up to produce green hydrogen/ ammonia would be given connectivityto the grid on a priority basis.

d. Power distribution companies may also procure renewable energy to supply to greenhydrogen producers but will be required to do so at a concessional rate which will onlyinclude the cost of procurement wheeling charges and a small margin as determined by thestate commission under the new policy. Such procurement would also count towards astate's Renewable Purchase Obligation (RPO) under which it is required to procure acertain proportion of its requirements from renewable energy sources.

Subsequent to the announcement of Green Hydrogen Policy by Govt. of India NHPC hasstarted taking up preliminary actions to set up Pilot Green Hydrogen Mobility Station asR&D Project in Himachal Pradesh and UT of Ladakh. Further the Ministry of Power hasissued Guidelines for Procurement and Utilization of Battery Energy Storage Systems aspart of Generation Transmission and Distribution Assets along with ancillary services onMarch 11 2022. NHPC being a Category-I Trading License holder is also exploring to act asa Designated Intermediary Procurer to facilitate development of such storage projects.

34.5 MEASURES TAKEN BY MINISTRY OF POWER GOVERNMENT OF INDIA TO ENSURE PAYMENTSECURITY MECHANISM TO INTERSTATE GENERATORS SUPPLYING POWER TO DISCOMS:

As a measure of Payment Security Mechanism all PPAs have provision regarding Letter ofCredit (LC). However LCs were not provided by DISCOMs resulting in large outstandingdues. To restrain such practice MOP vide their order dated June 28 2019 hadre-emphasized the need of maintenance of adequate Letter of Credit (LC) as PaymentSecurity Mechanism. Further National Load Dispatch Center (NLDC)/ Regional Load DispatchCenter (RLDC) were directed to schedule power to DISCOMs only after intimation byGenerating Companies (GENCOs) that LCs for desired quantum of power has been opened byDISCOMs. Further MOP had also permitted LC for shorter duration of one week/ fortnightand payment of advance through electronic mode for one day purchase of electricity.

Ministry of Power had issued further directions for strict compliance to PaymentSecurity Mechanism and directed that DISCOMs have to liquidate current dues after February01 2021 in time and if DISCOMs are unable to pay their current dues within specifiedperiod then LC has to be encashed invariably by GENCOs. In case of accumulated dues ofperiod before February 01 2021 an installment plan to liquidate the dues has to beworked out by the DISCOMs and GENCOs. Any failure on part of DISCOMs will result inregulation of power supply and/or invocation of Tripartite Agreement.

Consequent to aforesaid measures DISCOMs have become vigilant in releasing thepayments for electricity drawn from 01.02.2021 onwards. In view of low interest regimeprevalent and raising of the issue of high surcharge rate by DISCOMs Ministry of Powervide Gazette notification dated Febrauary 22 2021 has reduced the surcharge from 18% perannum to SBI MCLR (1 Year) as on 1st April of the FY plus 5% which results in tosurcharge of 12.75% per annum for balance period of FY 2020-21 from the date of issue oforder. Simultaneously it has been directed that all payments from DISCOMs shall be firstadjusted towards surcharge and thereafter towards Principal amount starting from thelongest overdue bill.

34.6 CERC REGULATIONS:

a. CERC Tariff Regulations 2019 and its amendments:

CERC has issued CERC (Terms and Conditions of Tariff) Regulations 2019 in March 2019and its Second Amendment on February 19 2021. The Regulations are applicable for theperiod from April 1 2019 to March 31 2024. Some of the major highlights of the aboveregulations (including amendments) are as under:

> Cut-off date now to be considered as 36 months from the end of calendar month ofCommercial Date of Operation (COD).

> Delay in obtaining statutory approval for the project (except where the delay isattributable to the project developer) included under 'Force Majeure' event.

> Variation in additional capitalization increased from 5% to 10% for levy of penalinterest (i.e. 1.2 times bank rate for reimbursement of additional AFC to beneficiaries& 1 times the bank rate for recovery of AFC from beneficiaries).

> Land acquisition (except where the delay is attributable to the generatingcompany) to be considered as 'un-controllable factor' for analysis of time & costoverrun.

> O&M expenses for older plants - the normative O&M expenses allowed forolder power stations does not include the impact of wage revision minimum wages & GSTwhich will be allowed separately. Further security expenses shall be separatelyreimbursed.

> The charges payable by beneficiary DISCOMs shall be first adjusted towards latepayment surcharge on the outstanding charges and thereafter towards monthly chargesbilled by the generating company starting from the longest overdue bill.

b. CERC Ancillary Services Regulations 2022:

CERC has issued Central Electricity Regulatory Commission (Ancillary Services)Regulations 2022 which has came into force from January 31 2022. Some of the majorhighlights of the regulations are as under:

> "Ancillary Service" or "AS" in relation to power systemoperation means the service necessary to support the grid operation in maintaining powerquality reliability and security of the grid and includes Primary Reserve AncillaryService Secondary Reserve Ancillary Service Tertiary Reserve Ancillary Service activepower support for load following reactive power support black start and such otherservices as defined in the Grid Code.

> Regulatory mechanism has been provided for ancillary services in the interest ofreliability safety and security of the grid.

> Mechanisms for procurement through administered as well as market basedmechanisms deployment and payment of Ancillary Services at the regional and nationallevel has been provided for maintaining the grid frequency close to 50 Hz and restoringthe grid frequency within the allowable band as specified in the Grid Code for relievingcongestion in the transmission network to ensure smooth operation of the power systemand safety and security of the grid.

> Measures were provided for maintaining grid frequency within allowable band andfor relieving transmission congestion to support reliable and stable operation of thegrid besides procurement and commercial mechanism for Secondary Reserve AncillaryServices (SRAS) and Tertiary Reserve Ancillary Services (TRAS).

> The regulations are applicable to regional entities including entities havingenergy storage resources and entities capable of providing demand response qualified toprovide Ancillary Services and other entities as provided in these regulations.

> The mechanism of procurement deployment and payment of SRAS and TRAS has beenspecified.

c. CERC Deviation Settlement Mechanism Regulations 2022:

CERC has notified the Deviation Settlement Mechanism and Related Matters Regulations2022. The regulations seek to ensure through a commercial mechanism that users of thegrid do not deviate from and adhere to their schedule of drawal and injection ofelectricity in the interest of security and stability of the grid. The date of operationis yet to be notified by CERC. Some of the major highlights of the regulations are asunder:

> For a secure and stable operation of the grid every grid connected regionalentity shall adhere to its schedule as per the Grid Code and shall not deviate from itsschedule.

> Any deviation shall be managed by the Load Despatch Centre as per the AncillaryServices Regulations and the computation charges and related matters in respect of suchdeviation shall be dealt with as per provisions of the regulations.

> A Run-of-River (ROR) plant with pondage a generating station shall be paid backfor over injection upto 2% at reference rate (energy charge rate) and for over injectionbeyond 2% the seller shall pay @10% of normal rate to Deviation and Ancillary Servicepool account. In case of under injection upto 2% the seller shall pay @ reference ratefor under injection between 2% and 10% the seller shall pay @120% of normal rate and forunder injection beyond 10% the seller shall pay @150% of normal rate to Deviation andAncillary Service pool account.

> For a ROR plant a generating station shall be paid back for over injection upto2% at reference rate. In case of under injection upto 2% the seller shall pay @ referencerate for under injection between 2% and 10% the seller shall pay @ normal rate and forunder injection beyond 10% the seller shall pay @110% of normal rate to Deviation andAncillary Service pool account

34.7 SWOT ANALYSIS

(i) STRENGTHS

Established track record in developing hydroelectric projects &experienced manpower

NHPC possesses rich experience and expertise in developing hydro-electric projectsacross the Country. NHPC has a competent and committed workforce which has extensiveexperience in the industry with capabilities and expertise in conceptualizationconstruction commissioning and operation of hydro-electric projects. Their skillsindustry knowledge and experience provide significant competitive advantage to theCompany.

Capabilities from concept to commissioning including in-house Design &Engineering

NHPC has a full-fledged Design division dedicated to cater the design and engineeringrequirements of its projects. The in-house design team with extensive experience in hydropower sector gives NHPC an edge over other hydro power companies. NHPC is using the latestgeo-physical exploration techniques on site for data interpretation and preparation ofin-house reports. NHPC is the only hydro utility in India having expertise in techniqueslike tunnel seismic prediction tomography and resistivity imaging which providesub-surface information in an effective and economic way. It has also developed in-houserock mechanics testing laboratory with high end testing instruments and a sophisticatedremote sensing lab. Its engineering capabilities ranges right from the stage ofconceptualization till the commissioning of projects.

Extensive experience in construction and operation

NHPC has extensive experience & expertise in developing hydro-electric projects incomplex geological regions by overcoming number of geo technical challenges using in-housestate- of-art technology. It has successfully completed construction of some of thechallenging hydroelectric projects in India situated in remote hilly areas with variouschallenges like inaccessibility poor logistic adverse climate and technologicalhindrances. With its strong team of competent efficient and experienced professionals itis capable of executing all types and sizes of hydroelectric projects by overcoming suchobstacles.

Strong financial position

NHPC has paid-up share capital of Rs 10045.03 crore and an investment base of over Rs70299 crore as on March 31 2022. NHPC has credit rating of 'AAA' with stable outlookassigned by domestic credit rating agencies for its listed bonds. S&P Global Ratinghas maintained international rating BBB(-) with negative outlook. The strong financialposition of the Company makes it competent enough to execute capital intensive largehydro-electric projects.

Strong operating performance

NHPC has successfully managed to develop and implement twenty-two hydro-electricprojects (including two through its subsidiary company i.e. NHDC Limited) one solar powerproject and one wind power project with an aggregate installed capacity of 7071 MW. NHPCwith its fleet of power stations is a flagship company in hydro power sector in India.

Seismic safety assessment

NHPC is totally committed to seismic safety of its power stations. It has developed oneof its kind state-of-art centralized real time seismic data centre at its Corporate Officefor online seismic monitoring of all its power stations. The data centre records andprovides quick assessment of any earthquake event within the vicinity of respective powerstations. This is a big step towards risk assessment measures and enables dam safetyreviews for each of its power stations.

(ii) OPPORTUNITIES

Untapped hydro potential

The deteriorating hydro-thermal mix peaking shortages and frequency variations haveforced policy makers to turn their attention towards development of hydro power. India'shuge untapped hydro potential especially in the north-eastern region providesopportunity for hydro power development. NHPC has an opportunity for adding to itscapacity the untapped hydro potential in coming years in India and neighbouring countries.

NHPC's continued ability to complete the hydro projects

The strength shown by NHPC over the years in its ability to complete the projects wheremost of other Companies have been generally failing is a beacon of hope in the hydrosector. As a result NHPC's forte in hydro projects construction is creating new space forits growth in the future.

Renewable Energy

Government of India has targeted to achieve 175 GW capacity by 2022 comprising of 100GW Solar 60 GW Wind 5 GW of Small hydro and 10 GW of biomass and others. Further as apart of agenda for the country to combat climate change Govt. of India has set upambitious target to achieve 500 GW of installed electricity capacity from non-fossil fuelsources by 2030. Generation of electricity using solar PV is picking up in India withGovt. initiatives and policy supports. The abundance of natural resources and variousinitiatives and schemes taken up by the Govt. of India for harnessing the renewable energypotential has made the sector very attractive for investment. NHPC is making its effortsto explore new opportunities for the generation of power through renewable energyprojects. NHPC is exploring all possible opportunities to develop solar parks/Floatingsolar projects and to develop solar power projects under CPSU Scheme and pilot GreenHydrogen Projects in various potential rich states across the country. Recently NHPC hasformed a wholly owned subsidiary company namely NHPC Renewable Energy Limited (NREL) fortaking up Renewable Energy Small Hydro Projects and Hydrogen Technology based projects.

Grid Balancing Requirement

In view of Government of India's present initiative for extensive renewable energydevelopment particularly large scale development of solar power hydro power would berequired for grid balancing/stability. The present scenario would create opportunities forNHPC to develop hydro power due to its inherent qualities of fast ramping up and down andflexibility imparted to the system.

(iii) THREATS/ WEAKNESSES/ CHALLENGES/ CONCERNS

Geological uncertainties:

Inaccessible terrain and constraints of logistic and limits of investigation posesserious consequences for execution of projects. Excavation of tunnels under highsuperincumbent cover also poses serious problems in timely completion of projects due tosevere stress related problems and heavy ingress of water.

Time and cost overruns

Most hydro-electric projects are generally located in hilly terrain which are at thereceiving end of devastating natural calamities like landslides hill slope collapses& roadblocks flood cloud burst etc. These calamities cause severe setbacks inconstruction schedule. Further in-spite of extensive survey and investigation geologicaluncertainties may have to be tackled especially in long tunnels such as Head Race Tunnel.NHPC with its rich experience and expertise coupled with state-of-the art technology hasovercome such surprises many a times in the past. However these uncommon andunpredictable geological uncertainties may result in time and cost over run.

Time consuming clearance process:

Before any hydro-electric project is implemented it needs to be cleared by variousagencies by obtaining various statutory as well as nonstatutory clearances. Often projectsget bogged down with the lengthy clearance procedures involving multiple agencies/organizations states etc. Obtaining the requisite clearances is a complex tedious andtime-consuming process which sometimes leads to abnormal delay ultimately affecting theproject implementation.

Difficulties in entering into Power Purchase Agreements (PPAs)

Sale of energy from projects having higher tariff is getting difficult in present day'spower trading scenario. Beneficiaries prefer to purchase their additional powerrequirement on short term basis through power exchange or e-procurement rather than optingfor long term/medium term PPAs. As hydro-electric projects are site specific and itstariff depends on location/design parameters and high initial investment the tariff fornew hydro-electric projects is relatively higher. Due to above reasons NHPC is facingdifficulties in dispatch of power from new projects through long term PPA's.

High initial cost/ tariff

The development of hydro-electric projects involves long gestation period and requirelarge initial investment which results into high initial tariff. Cash flow and results ofoperations of hydro-electric projects are also subject to variations as per tariffregulations notified by CERC from time to time. High initial costs and tariffs sometimesprove detrimental in obtaining investment sanction and require extensive financialre-engineering and different waivers from various stakeholders to bring the project on theanvil.

Law & order

NHPC is witnessing law & order problem at some of its projects/power stations asthey are located near sensitive border areas and at remote locations. Officials posted atthose projects/ power stations are prone to security threats.

Opposition to hydro-electric projects:

Hydro-electric projects in India are also facing opposition by certain pressure groups.This has created an apprehension amongst the hydroelectric project developers as some oftheir projects are getting stalled.

State hydro policies restricting entry of PSUs

Several state hydro policies favours for payment of upfront premium free power over& above the required free power etc. for allocation of hydro-electric projects to thedevelopers. CPSEs are facing difficulties in getting these hydroelectric projects as theyhave to follow the norms of Government of India.

Dependence on few contractors

Construction of hydro-electric projects requires manpower machinery and substantialinvestment of money. There are very few contractors in India who can deliver especially inremote and difficult locations where accessibility is a major issue. The limited range ofcontractors who are able to perform in the sector increases our dependence on fewavailable contractors in the Country.

34.8 RISKS AND CONCERNS

NHPC has a well-defined and dynamic Risk Management Policy since 2009 to provideoverall framework for the risk management in the company. The policy is modified andupdated from time- to-time. The present policy was approved for implementation afterrevision in 2022. At present 67 key risks which may have detrimental effect on thebusiness of the Company have been identified alongwith their mitigation measures andrecorded in the risk register. To ensure effective implementation of the Risk ManagementPolicy two committees have been constituted:

i. A Board level Risk Management Committee comprising of Directors to assist the Boardin management of key risks. The Committee inter- alia ensure that appropriate methodologyprocesses and systems are in place to monitor and evaluate risks associated with thebusiness of the Company.

ii. Risk Assessment Committee comprising of Chief Risk Officer and RiskCoordinators-HOD(s) of various divisions responsible for risk mitigation pertaining totheir division as well as for Power Station/Projects/Divisions of Corporate office. Theheads of Departments/ Regions /Projects/ Power Stations implement and review thedirections issued by Risk Assessment Committee on the identified risks and theirmitigation measures.

34.9 OUTLOOK

Outlook of India's hydropower generation looks promising with expected increase inindustrial production and Government of India's mission to provide 24x7 electricity toall. NHPC has prominent role to play in tapping the hydro power potential of the Countryand has already developed twenty-two power stations (including one solar project and onewind project) across the country. The standalone installed capacity of the Company as onMarch 31 2022 stood at 5551.20 MW. NHPC is diversifying its portfolio by takingdifferent renewable energy projects details of which are mentioned elsewhere in thisreport. Subsequent to the announcement of Green Hydrogen Policy by Govt. of India NHPChas also started taking up preliminary actions to set up Pilot Green Hydrogen MobilityStation as R&D Project in Himachal Pradesh and UT of Ladakh.

Your Company has taken some very effective initiatives and successfully streamlined theprocesses for sustainable growth and consistent performance in the electricity business.It has adopted new and relevant technologies in the areas of electro-mechanical civil andhydro-mechanical engineering. NHPC has applied contemporary practices to reduceconstruction time delays as well as cost overrun. The power stations of your Company arerun in an optimized way to reduce silting problem of its reservoir. Constructionsupervision post-commissioning monitoring and hurdle free operation are ensured andaugmented by use of information technology. Presently operations of all power stations ofthe Company are either semi or fully automated. Many power stations are equipped withadvanced distributed control systems along with SCADA systems. NHPC is also lookingforward for remote operation of some of its power stations.

34.10 SEGMENT-WISE OR PRODUCT WISE PERFORMANCE

Generation of electricity is the principal business activity of the Company. Otheroperations viz. power trading contracts project management and consultancy works do notform a reportable segment as per the Ind AS - 108 on "Operating Segment". Thecompany has a single geographical segment as all its power stations are located withinthe Country.

34.11 INTERNAL CONTROL SYSTEMS AND ITS ADEQUACY

The Company has sound internal control systems and processes in place for smooth andefficient conduct of business and ensure compliance to relevant laws and regulations. NHPChas clearly defined organizational structure manual and standard operating procedures toensure orderly ethical and efficient conduct of its business. A comprehensive delegationof power from Chairman and Managing Director to down below is in place to assist in smoothdecision making which is periodically reviewed to align it with changing businessenvironment and for speedier decision making.

The Company has an in-house internal audit department headed by a senior officer. Incompliance to Section 138 of the Companies Act 2013 the Board has appointed a GeneralManager (Finance) as Chief Internal Auditor of the Company. The department has qualifiedand experienced workforce to carry out periodical as well as special audits.

The Internal Audit department submits their audit observations and action taken reportsto Audit Committee. The recommendations of the committee are duly complied with. Incompliance to Section 134 of the Companies Act 2013 M/s Arora & ChoudharyAssociates Chartered Accountants New Delhi was appointed to provide independentassurance on implementation of Internal Financial Controls in the Company during the FY2021-22. The firm in its report acknowledged the effectiveness of prevailing internalfinancial control systems in the Company.

34.12 FINANCIAL DISCUSSION AND ANALYSIS

PROFIT & LOSS ITEMS

A detailed analysis of the Audited Financial Results of the Company for the Fiscal 2022vis-a-vis Fiscal 2021 is as under: -

Income

(Rs in crore)

Particulars Fiscal 2022 Fiscal 2021
Units of electricity generated (in million units) 24494 24235
Income
(i) Sales of Energy 7451.55 7010.44
(ii) Income from Finance Lease 344.95 371.62
(iii) Income from Operating Lease 384.07 712.00
(iv) Revenue from Contracts Project Management and Consultancy Works 46.16 38.52
(v) Revenue from Power - Trading 44.85 216.48
(vi) Other Operating Income 82.22 157.52
Revenue from operations [sum of (i) to (vi)] 8353.80 8506.58
Add: Other Income 1026.18 1155.98
Total Income 9379.98 9662.56

Total income in Fiscal 2022 decreased by 2.92% to Rs 9379.98 crore from Rs 9662.56crore in Fiscal 2021 primarily due to decrease in Other Income decrease in Revenue fromPower - Trading decrease in Lease Income partially offset by increase in Revenue fromProject Management and Consultancy works and increase in generation in Fiscal 2022.

Sale of Energy

The principal source of income of the company is from sale of power to bulk customerscomprising mainly of electricity utilities owned by State Governments/ PrivateDistribution Companies pursuant to long-term Power Purchase Agreements. The rate ofelectricity are determined Power Station wise by the Central Electricity RegulatoryCommission (CERC). The CERC vide its notification no. L-1/236/2018/CERC dated March 072019 has issued Tariff Regulations for the tariff period 2019-24 and subsequent amendmentsfrom time to time. Pending approval of tariff for the period 2019-24 by CERC sales inrespect of the Power Stations have been recognized provisionally as per ibid tariffnotification and taking into account provision towards truing up of capital cost of thePower Stations in line with CERC Tariff Regulations 2019-24.

The said regulations inter-alia provides that for the purpose of filing of tariffpetitions the Return on Equity (ROE) a component of tariff is to be grossed- up usingeffective tax rate of the respective Financial Year For the purpose of recognizing SalesROE has been grossed up using effective tax rate for FY 2021-22.

The Tariff Regulations also provide for incentives which comprise of incentives onachieving plant availability factor greater than Normative Annual Plant AvailabilityFactor (NAPAF) incentive for generation of energy in excess of the design energy of theplant (Secondary Energy) as well as incentive by way of deviation charges where the PowerStation of the Company contribute towards maintaining grid stability.

Sale includes reimbursement on account of Water Cess in respect of power stationssituated in UT of Jammu & Kashmir.

In Fiscal 2022 24494 MUs of electricity (excluding infirm power of 361 MUs generatedby Parbati-II HE Project during FY 2021-22) was generated from installed capacity of5551MW as against 24235 MUs (excluding infirm power of 236 MUs generated by Parbati-IIHE Project during FY 2020-21) from installed capacity of 5551MW in Fiscal 2021.Accordingly there was an increase of 1.07% in the number of units generated. The averageselling price (after adjustment of components of earlier year sales and free power to homestate) was Rs 3.66 per unit for 21536 million units sold in Fiscal 2022 as against Rs3.67 per unit for 21272 million units sold in Fiscal 2021. During Fiscal 2022 theCompany has earned Rs 750.28 crore towards incentives against Rs 762.90 crore in Fiscal2021.

Sale of energy increased by 6.29% to Rs 7451.55 crore in Fiscal 2022 from Rs 7010.44crore in Fiscal 2021 primarily due to higher generation in Power Stations. Company's PlantAvailability Factor (PAF) in Fiscal 2022 was 88.19% as compared to 85.76% in Fiscal 2021.

Adjusted Sales of Energy

The revenue from sale of energy includes sales pertaining to earlier years butrecognised in current year and excludes the sale of energy through five number of PowerStations whose sale is now considered as Operating/Finance Lease in terms of Ind-ASProvisions.

As per CERC Tariff Regulations Exchange Rate Variation on interest payments and Loanrepayments corresponding to the normative loans considered for tariff of stations/units ispayabLe/recoverabLe to/ from the beneficiaries on repayment of the loans and interestthereon. Pursuant to the opinion of Expert Advisory Committee of the ICAI ForeignExchange Rate Variation on restatement of foreign currency loans as at the Balance Sheetdate payable/ recoverable to/from customers later-on on actual settlement is accountedfor by creating a deferred LiabiLity/asset in the accounts instead of adjusting the samein the statement of Profit & Loss.

For the purpose of year to year comparison the impact of earlier year sales has beenexcluded from saLes of energy in order to arrive at the adjusted saLes of energy.

The revenue from sales of energy after such adjustments is as under:

(Rs in crore)

Particulars Fiscal 2022 Fiscal 2021
Net Sales (including Lease income) 8180.57 8094.06
Less: EarLier year saLes 288.68 290.99
Adjusted Sales of Energy 7891.89 7803.07

Revenue from Contracts Project Management and Consultancy Works

The revenue under this head includes revenue from assignments pertaining toConstruction Contracts Project Management & Consultancy Contracts. These assignmentsprimariLy incLude consuLtancy assignments in respect of Chenab VaLLey Power ProjectsPrivate Limited and Lanco Teesta Hydro Power Limited. The income from contracts projectmanagement and consultancy works increased by 19.83% from Rs 38.52 crore in Fiscal 2021 toRs 46.16 crore in Fiscal 2022 due to increase in assignments in FiscaL 2022.

Revenue from Power - Trading

The revenue under this head includes revenue from Power Trading activity which theCompany ventured into during Fiscal 2019. The revenue from PowerTrading decreased from Rs216.48 crore in Fiscal 2021 to Rs 44.85 crore in Fiscal 2022 due to decreased PowerTrading activities in Fiscal 2022.

Other Operating Income

Other operating income in Fiscal 2022 was Rs 82.22 crore i.e. a decrease of 47.80% asagainst Rs 157.52 crore in Fiscal 2021. Components of other operating income are pLacedhereunder:

(Rs in crore)

Other Operating Income Fiscal 2022 Fiscal 2021
Income From SaLe of SeLfGenerated VERs/REC 52.70 1.92
Income on account of generation based incentive (GBI) 3.61 2.96
Interest from beneficiary states 25.91 152.64
Total 82.22 157.52

Other Income

Other income in Fiscal 2022 was Rs 1026.18 crore i.e. a decrease of 11.23% as againstRs 1155.98 crore in Fiscal 2021. Major components of Other Income are pLaced anddiscussed hereunder:

(Rs in crore)

Other Income Fiscal 2022 Fiscal 2021
Interest on Loan to Govt. of ArunachaL Pradesh 66.30 60.82
Interest on Term Deposits/ Investments 59.85 53.36
Dividend (mainLy from NHDC-a Subsidiary Co.) 301.71 292.68
Late Payment Surcharge 229.00 532.81
Realisation of Loss due to Business Interruption 161.86 0.00
Liability/ Provisions not required written back 28.13 21.64
Income from Insurance CLaim 21.34 65.05
Exchange Rate Variation 49.28 34.21
Other misceLLaneous income 108.71 95.41
Total 1026.18 1155.98

During Fiscal 2022 Rs 229.00 crore was earned as Late Payment Surcharge frombeneficiaries as against Rs 532.81 crore during Fiscal 2021.

During Fiscal 2022 Rs 301.71 crore was earned as Dividend from investments mainlyfrom subsidiary company (NHDC Ltd) as against Rs 292.68 crore during Fiscal 2021.

Expenditure

(Rs in crore)

Expenditure Fiscal 2022 Fiscal 2021
Purchase of Power - Trading 44.58 212.37
Generation Expenses 841.24 854.37
Employee Benefits Expense 1440.78 1393.91
Finance Costs 531.75 571.49
Depreciation & Amortization Expense 1126.22 1228.65
Other Expenses 1348.55 1419.61
Total Expenditure 5333.12 5680.40

Total expenditure decreased by 6.11% to Rs 5333.12 crore in Fiscal 2022 from Rs5680.40 crore in Fiscal 2021 mainly due to decrease in Purchase of PowerTrading by Rs167.79 crore decrease in Generation Expenses by Rs 13.13 crore decrease in OtherExpenses by Rs 71.06 crore decrease in Finance Cost by Rs 39.74 crore decrease inDepreciation & Amortization Expense by Rs 102.43 crore partially offset by increase inEmployee Benefits Expense by Rs 46.87 crore. Our total expenditure as a percentage oftotal income was 56.86% in Fiscal 2022 as compared to 58.79% in Fiscal 2021.

Purchase of Power -Trading

Purchase of Power - Trading consists of expenses on purchase of power for Trading.These expenses represent approximately 0.84% of the total expenditure in Fiscal 2022.

Generation Expenses

Generation expenses consist of Water Cess and Consumption of stores and spare parts.These expenses represent approximately 15.77% of the total expenditure in Fiscal 2022compared to 15.04% of the total expenditure in Fiscal 2021. In absolute terms theseexpenses were Rs 841.24 crore in Fiscal 2022 as against Rs 854.37 crore in Fiscal 2021.The decrease of Rs 13.13 crore in generation expenses is primarily on account of decreasedwater cess due to lower power generation at some of the J&K based Power Stations.

Employee Benefits Expense

Employee benefits expense include Salaries and Wages Allowances IncentivesContribution to Provident Fund Contribution to Employees Defined ContributionSuperannuation Scheme and expenses related to other employee welfare funds. These expensesrepresent 27.02% of our total expenditure in Fiscal 2022 as against 24.54% in Fiscal 2021.Employee costs has increased from Rs 1393.91 crore in Fiscal 2021 to Rs 1440.78 crore inFiscal 2022 i.e. an increase of Rs 46.87 crore in Fiscal 2022. The addition is mainly dueto expenditure recognised on account of impairment of certain investments made by theProvident Fund Trust during Fiscal 2022.

There were 5092 employees on the payroll as of March 31 2022 compared to 5569employees as of March 31 2021. Out of this 2694 and 3108 employees were engaged inOperation & Maintenance areas of our business during Fiscal 2022 & 2021respectively.

Finance Costs

'Finance costs' consist of interest expense on bonds and term loans. In books ofaccounts borrowings are denominated in Indian Rupees including amount raised in foreigncurrencies (Japanese Yen). Finance Cost also includes expenses on account of GuaranteeFees in connection with loans raised from Foreign Market.

Finance Cost represent 9.97% of the total expenditure in Fiscal 2022 compared to 10.06%of the total expenditure in Fiscal 2021. Finance Cost decreased by 6.95% to Rs 531.75crore in Fiscal 2022 from Rs 571.49 crore in Fiscal 2021. The decrease in Finance Cost ismainly due to repayment of loans and change in weighted average rate of interest in Fiscal2022.

Depreciation & Amortization Expense

As per accounting policy of the Company Depreciation is charged to the extent of 90%of the cost of assets following the rates and methodology notified by CERC videnotification dated 07.03.2019 on straight line method except for some items on whichdepreciation is charged to the extent of 95% of the costs of the assets at the ratesprescribed in the Companies Act 2013 or as per rates assessed by Management.

Depreciation cost decreased by 8.34% to Rs 1126.22 crore in Fiscal 2022 from Rs1228.65 crore in Fiscal 2021. The decrease in depreciation expenses is primarily due tocompletion of 12 years of life of Teesta-V Power Station in Fiscal 2021.

As a percentage of total expenditure depreciation & amortization expense decreasedto 21.12% in Fiscal 2022 from 21.63% in Fiscal 2021.

Other Expenses

Other expenses consist primarily of Repair & Maintenance of Buildings and Plant& Machinery Security Expenses Insurance Expenses Electricity Charges CSR OtherAdministrative Overheads Provisions etc.Theseexpensesrepresentapproximately 25.29% of thetotal expenditure in Fiscal 2022 as against 24.99% in Fiscal 2021. In absolute termsthese expenses decreased approximately by 5.01% to Rs 1348.55 crore in Fiscal 2022 fromRs 1419.61 crore in Fiscal 2021. The decrease of Rs 71.06 crore in other expenses isprimarily due to decrease in provision against S&I Expenses and Current Assets losseson insured assets partially offset by increase in CSR Expenses Interest to Beneficiarystates Travelling & Conveyance Expenses Security Expenses Insurance Expenses etc.which are higher in Fiscal 2022.

Exceptional Item

During Fiscal 2021 in line with the directions of the Ministry of Power dated May 15& 16 2020 the Company had given a one-time rebate of Rs 185 crore to DISCOMs andPower Departments of States/ Union territories for passing on to ultimate consumers onaccount of COVID-19 pandemic. The said rebate had been presented as an "Exceptionalitem" in the Financial Statements in Fiscal 2021.

Movements in Regulatory Deferral Account Balances (Regulatory Income)

In line with the Guidance Note on "Accounting for Rate Regulated Activities"issued by the Institute of Chartered Accountants of India (ICAI) as well as keeping inview the provision of Ind AS 114 - Regulatory Deferral Accounts 'Regulatory Assets' hasbeen created and corresponding 'Regulatory Income' has been recognized for Rs (-)1270.42crore. This includes Depreciation due to moderation of Tariff in respect of KishangangaPower Station Rs 198.35 crore Exchange Differences against monetary Items Rs (-)0.17crore Adjustment against Deferred Tax Recoverable for tariff period up to 2009 Rs(-)49.52 crore Adjustment against Deferred Tax Liabilities for tariff period 2014-19 Rs10.72 crore Provision created wage revision of employees Rs (-)116.53 crore RegulatoryLiability recognised against MAT Credit to be passed to beneficiaries amounting to Rs1313.27 crore which have been charged to the Statement of Profit & Loss as per therelevant Accounting Standard. Rate regulated income is recognised in the books of accountsfor Fiscal 2022 on account of below mentioned five factors:

(i) Regulatory Deferral Account balances due to moderation of tariff of KishangangaPower Station

The Company has carried out moderation of depreciation as a component of tariff ofKishanganga Power Station to make the tariff saleable which has been allowed by the CERC.This entitles the Company to recover the lower depreciation considered in tariff duringthe first ten years of operation over the balance useful life of the Power Station.Accordingly the right to recover the difference between the depreciation charged in thebooks as per CERC Tariff Regulations 2019-24 and that recoverable through tariffamounting to Rs 198.35 Crore during Fiscal 2022 (Fiscal 2021 Rs 195.51 Crore) has beenrecognised as Regulatory Income.

(ii) Regulatory Deferral Account balances in respect of exchange differences on ForeignCurrency Monetary items

Exchange differences arising on translation/ settlement of foreign currency monetaryitems to the extent charged to the Statement of Profit & Loss and further recoverablefrom or payable to the beneficiaries in subsequent periods as per CERC Tariff Regulationsare being recognized as 'Regulatory Deferral Account balances' w.e.f. April 01 2016.These balances are adjusted from the year in which the same become recoverable from orpayable to the beneficiaries after Date of Commercial Operation (COD) of the Project.

Accordingly the Company has created Regulatory Assets and recognised correspondingRegulatory Income of Rs (-)0.17 crore during Fiscal 2022 (Fiscal 2021 Rs 1.70 Crore)which is recoverable from beneficiaries in future periods.

(iii) Regulatory Deferral Account balances due to reclassification of deferred taxrecoverable/ deferred tax adjustment against deferred tax liabilities

As per CERC Tariff Regulations deferred tax arising out of generating income for thetariff period 2004-09 is recoverable from beneficiaries in the year the same materializesas current tax. For the tariff periods 2014-19 and 2019-24 deferred tax is recoverable byway of grossing up the Return on Equity by the effective tax rate based on actual taxpaid. Till 31st March 2018 the deferred tax recoverable from beneficiaries in futureyears was presented as an adjustment to deferred tax liability.

The practice was reviewed in FY 2018-19 based on an opinion of the Expert AdvisoryCommittee of the Institute of Chartered Accountants of India (EAC of the ICAI) obtainedduring that year. As per opinion of the EAC of ICAI adjustment against Deferred TaxLiability is not a deductible temporary difference resulting into deferred tax asset underInd AS 12-Income Taxes but rather fulfils the definition of regulatory deferral accountbalance in terms of Ind AS 114 - Regulatory Deferral Accounts.

The regulated assets (+)/liabUity (-) recognized in the books during Fiscal 2022 are asfollows:

In respect of deferred tax recoverable for tariff period upto 2009 Rs 49.52 Crore hasbeen utilized during Fiscal 2022 (Fiscal 2021 Rs 75.46 Crore) and in respect of deferredtax adjustment against deferred tax Liabilities (pertaining to tariff period 2014-19) Rs10.72 Crore has been recognised as Regulatory Income during Fiscal 2022 (Fiscal 2021'6.28Crore).

(iv) Creation of Regulatory Deferral Account balances in respect of expenditurerecognised due to recommendations of 3rd PRC for Pay Revision of CPSUs

Rate Regulated Income has also been created in respect of the items of expenditurearising due to pay revision w.e.f. January 01 2017 in respect of Power Stations to theextent allowable as per Ind AS 114 read with Guidance Note of ICAI on Rate RegulatedActivities and CERC Tariff Regulations 2014-19.

Keeping in view the significant impact of above on the profitability of the Company andas allowed by the CERC in past the company has created regulatory assets towards expensespertaining to wage revision up to the period ended 31.03.2019. These balances are to beadjusted from the year in which they become recoverable from the beneficiaries as perapproval of the CERC.

In FY 2021-22 Petition Order of Truing up of Tariff for the period 2014-19 in respectof two Power Stations has received. Accordingly RDA Balances amounting to Rs 116.53 croreshas been adjusted in Fiscal 2022.

(v) Recognition of Minimum Alternative Tax (MAT) Credit and Regulatory Deferral Account(Credit) balances thereon

NHPC is currently paying its income tax liability under MAT mainly due to availment ofdeduction claim u/s 80-IA of the Income Tax Act 1961 in respect of its Power Stationscommissioned before 31.03.2017.

During FY 2021-22 out of the available MAT Credit of Rs 2424.58 crore the Companyhas recognised Rs 1478.62 crore as MAT Credit out of which Rs 1313.27 crore is to bepassed on to the beneficiaries. Accordingly the MAT Credit to be passed on to thebeneficiaries has further been recognised as Regulatory Deferral Account (Credit) balance.

Profit before Tax (including Rate Regulated Income and impact of MAT credit)

Due to the reasons outlined above our profit before tax increased by 8.40% to Rs4255.06 crore in Fiscal 2022 from Rs 3925.19 crore in Fiscal 2021.

Tax Expenses

In Fiscal 2022 we provided Rs (-) 761.27 crore for tax expenses as compared to Rs680.13 crore in Fiscal 2021. The decrease in tax expenses in Fiscal 2022 is on account ofdecrease in deferred tax expenses by Rs 1453.46 crore which is partially offset byincrease in current year taxes by Rs 9.06 crore and earlier year tax by Rs 3.00 crore.

Other Comprehensive Income (OCI)

Other Comprehensive Income (OCI) which comprises re-measurements of defined benefitplan and Fair value gain/loss in Equity & Debt Instruments in Fiscal 2022 was Rs 12.76crore against Rs 7.20 crore in Fiscal 2021.

Total Comprehensive Income (TCI)

Total Comprehensive Income (TCI) i.e. total profit inclusive of OCI in Fiscal 2022 wasRs 3550.47 crore i.e. an increase of 9.17% as against Rs 3252.26 crore in Fiscal 2021.

LIQUIDITY AND CAPITAL RESOURCES

Both internal and external sources of liquidity are utilized for Working Capitalrequirement and funding of capital expenditure requirements. Generally long termborrowings are raised through term loans from banks/ financial institutions or issue ofbonds either in Indian Rupees or foreign currencies. Cash and cash equivalents were Rs937.78 crore and Rs 145.57 crore as of March 31 2022 and 2021 respectively.

Cash Flows

(Rs in crore)

Fiscal 2022 Fiscal 2021
Net cash inflow/(outflow) from operating activities 6140.79 4526.91
Net cash inflow/(outflow) from investing activities (4872.34) (1605.14)
Net cash inflow/(outflow) from financing activities (476.24) (2785.07)

Net Cash from operating activities

In Fiscal 2022 the 'Net cash from operating activities' was Rs 6140.79 crore and'Profit before Tax and Regulated Income but after exceptional items' was Rs 4046.86crore. Net cash from operating activities has been arrived at after adjusting non-cashitems mainly depreciation of Rs 1126.22 crore interest expenses of Rs 531.75 crore Rs42.54 crore towards provisions Rs 34.70 crore towards tariff adjustment (loss) Rs 44.02crore towards sales adjustment on a/c of FERV Rs 12.55 crore loss on sale ofassets/claims written off Rs 48.25 crore for deferred revenue on account of advanceagainst depreciation Rs 28.13 crore on account of provisions/liabilities not requiredwritten back Rs 301.71 crore on account of dividend income Rs 384.34 crore towardsinterest earned on Deposits/ Investments & Late Payment Surcharge and othernonoperating items Rs 49.28 crore towards exchange rate variation (gain) Rs 33.20 croretowards amortization of government grants Rs 2.04 crore towards adjustment againstconsultancy charges from subsidiary companies. Changes in Operating Assets &Liabilities had impact of cash inflow by Rs 1880.19 crore which was due to the neteffect of change in Inventories Trade Receivables Other Financial Assets Loans &Advances Other Financial Liabilities & Provisions and Regulatory Deferral AccountCredit Balances.

In Fiscal 2021 the 'Net cash from operating activities' was Rs 4526.91 crore and'Profit before Tax and Regulated Income but after exceptional items' was Rs 3797.16crore. Net cash from operating activities has been arrived at after adjusting non-cashitems mainly depreciation of Rs 1228.65 crore interest expenses of Rs 571.49 crore Rs220.40 crore towards provisions Rs 50.03 crore towards sales adjustment on account ofFERV Rs 8.69 crore loss on sale of assets/ claims written off Rs 48.38 crore fordeferred revenue on account of advance against depreciation Rs 21.82 crore on account ofprovisions/liabilities not required written back Rs 292.68 crore on account of dividendincome Rs 680.14 crore towards interest earned on Deposits/Investments & Late PaymentSurcharge and other non-operating items Rs 34.21 Crore towards exchange rate variation(gain) Rs 32.26 Crore towards amortization of government grants Rs 2.63 crore towardsadjustment against consultancy charges from subsidiary companies. Changes in OperatingAssets & Liabilities had impact of cash inflow by Rs 343.25 crore which was due tothe net effect of change in Inventories Trade Receivables Other Financial Assets Loans& Advances and Other Financial Liabilities & Provisions.

Net Cash from Investing Activities

Our net cash used in investing activities was Rs 4872.34 crore in Fiscal 2022. Thismainly reflected expenditure on Fixed Assets i.e. Property Plant & Equipment OtherIntangible Assets & Expenditure on construction projects of Rs 4311.03 crore Rs451.56 crore towards Investment in Joint Venture and Rs 744.18 crore towards Investment inSubsidiaries partly offset by interest income on Deposits/Investments & Late PaymentSurcharge by Rs 329.94 crore an amount of Rs 301.71 crore towards dividend income and Rs2.78 crore towards sale of assets.

Our net cash used in investing activities was Rs 1605.14 crore in Fiscal 2021. Thismainly reflected expenditure on Fixed Assets i.e. Property Plant & Equipment OtherIntangible Assets & Expenditure on construction projects of Rs 1861.69 crore Rs500.00 crore towards Investment in Joint Venture and Rs 280.41 crore towards Investment inSubsidiaries partly offset by interest income on Deposits/Investments & Late PaymentSurcharge by Rs 743.63 crore an amount of Rs 292.68 crore towards dividend income and Rs0.25 crore towards sale of assets.

Net Cash from Financing Activities

In Fiscal 2022 our net cash outflow from financing activities was Rs 476.24 crore. Weraised Rs 4114.26 crore from domestic banks. Borrowings to the tune of Rs 1398.18 crorewere repaid. Our cash outflow on account of repayment of lease liability includinginterest thereon was to the tune of Rs 3.80 crore. The amount related to interestservicing was Rs 1521.05 crore. In Fiscal 2022 total dividend amounting to Rs 1667.48crore was paid.

In Fiscal 2021 our net cash outflow from financing activities was Rs 2785.05 crore.We raised Rs 2327.03 crore from issue of bonds and domestic banks. Borrowings to the tuneof Rs 2116.14 crore were repaid. Our cash outflow on account of repayment of leaseliability including interest thereon was to the tune of Rs 4.96 crore. The amount relatedto interest servicing was Rs 1413.93 crore. In Fiscal 2021 Total dividend amounting toRs 1577.07 crore was paid.

BALANCE SHEET ITEMS

Balance Sheet Highlights Assets

(Rs in crore)

Particulars As of March 31
2022 2021
Non-Current Assets
Property Plant and Equipment Capital Work in Progress Right of Use Assets Investment Property Intangible Assets 41389.11 38788.09
Non-Current Investments 5414.34 3921.68
Long Term Loans and Advances 1017.59 920.27
Other Financial Assets 4502.78 4940.27
Non-Current Tax Assets (Net) 9.52 0.00
Other Non-Current Assets 3753.96 3560.71
Total Non-Current Assets 56087.30 52131.02
Current Assets
Inventories 130.30 124.42
Trade Receivables 4621.48 4532.49
Cash & Bank Balances 1160.71 913.96
Short Term Loans 55.68 48.08
Other Financial Assets 731.73 1067.12
Current Tax Assets (Net) 123.17 165.73
Other Current Assets 441.14 372.08
Total Current Assets 7264.21 7223.88
Regulatory Deferral Account Debit Balances 6948.11 6902.93
Total Assets and Regulatory Deferral Account Debit Balances 70299.62 66257.83

Equity and Liabilities

(Rs in crore)

Particulars As of March 31
2022 2021
Equity
Equity Share Capital 10045.03 10045.03
Other Equity 23441.07 21558.08
Net Worth 33486.10 31603.11
Non-Current Liabilities
Long Term Borrowings 23179.49 21241.22
Other Financial Liabilities 2088.04 2054.34
Long Term Provisions 48.05 28.38
Deferred Tax Liabilities (Net) 2100.74 3589.36
Other Non-Current Liabilities 2026.16 2034.79
Total Non-Current Liabilities 29442.48 28948.09
Current Liabilities
Short Term Borrowings 2851.03 2121.56
Trade Payables 189.57 198.27
Other Financial Liabilities 1370.72 1532.97
Other Current Liabilities 510.70 565.85
Short Term Provisions 1135.75 1252.98
Current Tax Liabilities (Net) 0.00 35.00
Total Current Liabilities 6057.77 5706.63
Regulatory Deferral Account Credit Balances 1313.27 0.00
Total Equity Liabilities and Regulatory Deferral Account Credit Balances 70299.62 66257.83

Financial Condition

Property Plant and Equipment (PPE) Capital Work in Progress (CWIP) Right of UseAssets (ROU) Investment Property Intangible Assets

Our PPE consisting of Land Dams Tunnels Buildings including Power House BuildingsConstruction Equipment Plant & Machinery Office Equipment Computers afterDepreciation were Rs 19024.55 crore and Rs 19174.60 crore as of March 31 2022 andMarch 31 2021 respectively.

Capital Work in Progress which includes Hydraulic Works Buildings including PowerHouse Buildings Construction Equipment Plant & Machinery and S&I works at ourpower projects were Rs 20573.84 crore and Rs 17852.56 crore as of March 31 2022 andMarch 31 2021 respectively.

Right of Use Assets (ROU) including forest land under right of use and other leasedassets were Rs 1783.12 crore and Rs 1752.92 crore as of March 31 2022 and March 312021 respectively.

Investment Property consists of one piece of land at Bangalore amounting to Rs 4.49crore.

Intangible Assets comprising of computer software were Rs 3.11 crore and Rs 3.52 croreas of March 31 2022 and March 31 2021 respectively.

Investments

Investments are intended for long term and carried at cost which consist of Equityinvestments in Subsidiaries/Joint Venture Companies Govt. Securities & Bonds. Ourtotal investment was Rs 5414.34 crore and Rs 3921.68 crore as of March 31 2022 andMarch 31 2021 respectively.

The increase in Investment is the net effect of increase in investment in subsidiarycompanies investment in one of our Joint Venture Company and increase in fair value ofinvestment in equity instruments.

During FY 2021-22 the Company has made fresh investment in subsidiary/Joint VentureCompanies amounting to Rs 1511.74 crore. The Company has also made impairment provisionof Rs 14.07 crore in respect of investment made in National High Power Test LaboratoryPrivate Limited (a Joint Venture Company) against the original investment of Rs 30.40crore.

Loans (Current & Non-Current)

Loans include loans to our employees loan including interest to Govt. of ArunachalPradesh and National High Power Test Laboratory Limited (NHPTL). Loans as of March 312022 and of March 31 2021 were Rs 1073.27 crore and Rs 968.35 crore respectively i.e.there is an increase of 10.83 % over figures of previous Fiscal mainly due to increase inloan including interest to Govt. of Arunachal Pradesh and increase in employee loansduring Fiscal 2022.

Other Financial Assets (Current & Non-Current)

The other financial assets as at March 31 2022 stood at Rs 5234.51 crore against Rs6007.39 crore for the previous fiscal i.e. there is a decrease of 12.87% over figures ofprevious Fiscal. Other Financial Assets include amount recoverable on account of Bondsfully serviced by Govt. of India Lease rent receivable Interest income accrued on BankDeposits claim recoverable from different agencies Share Application Money pendingallotment and Receivable from Subsidiaries/JVs etc.

The decrease of 12.87% in Fiscal 2022 as compared to the figures in Fiscal 2021 ismainly due to decrease in Share Application Money pending allotment claim recoverablefrom different agencies Interest recoverable from beneficiary decrease in Receivable onaccount of late payment surcharge partially offset by increase in Lease rent receivable.

Tax Assets (Current & Non-Current)

Tax assets as of March 31 2022 and 2021 were Rs 132.69 crore and Rs 165.73 crorerespectively i.e. there is a decrease of 19.94% over figures of previous Fiscal. TaxAssets include Advance Income Tax & Tax Deducted at Source over and above provisionfor current tax upto FY 2020-21.

Other Non-Current Assets

Other non-current assets mainly comprise deferred foreign currency fluctuation assetsadvances (Capital as well as Other than Capital) and advance to contractor againstarbitration awards. Our other non-current assets as of March 31 2022 and 2021 were Rs3753.96 crore and Rs 3560.71 crore respectively. The increase of 5.43% in Fiscal 2022 ascompared to the figures in Fiscal 2021 is mainly due to increase in advance to contractoragainst arbitration awards increase in capital advances partially offset by decrease indeferred foreign currency fluctuation assets.

Inventories

Inventories are valued at cost or Net Realisable Value whichever is lower. Ourinventories were valued at Rs 130.30 crore and Rs 124.42 crore as of March 31 2022 and2021 respectively.

Trade Receivables

These consist primarily of receivables against the sale of electricity includingunbilled revenue. The Trade receivables (net of provision for doubtful debts) as of March31 2022 and 2021 were Rs 4621.48 crore and Rs 4532.49 crore respectively. Increase of1.96% in trade receivables in Fiscal 2022 as compared to Fiscal 2021 is due to increase inReceivable on account of unbilled revenue partially offset by increase in realisation ofoutstanding dues from the beneficiaries.

Cash and Bank Balances

Cash and Bank balances as of the Balance Sheet date consist of cash surplus in ourcurrent account and Short Term deposits and the unspent advances received from Governmententities in respect of costs associated with the Pradhan Mantri Grameen Sadak Yojna Schemein connection with the development of rural roads and the Rajiv Gandhi GrameenVidyutikaran Yojana scheme relating to the establishment of Rural ElectrificationInfrastructure.

Cash and Cash equivalents as of March 31 2022 and 2021 respectively were Rs 937.78crore and Rs 145.57 crore. The increase of Rs 792.21 crore during Fiscal 2022 is netresult of cash inflow from operating activities of Rs 6140.79 crore offset by cashoutflow on investing activities by Rs 4872.34 crore & Rs 476.24 crore on account offinancing activities respectively.

Bank balances other than Cash and Cash Equivalents as of March 31 2022 and 2021respectively were Rs 222.93 crore and Rs 768.39 crore.

Our bank balances other than Cash and Cash Equivalents included Rs 86.76 crore(Previous Year Rs 155.81 crore) held for Rural Road and Rural Electrification works beingexecuted by Company on behalf of other agencies and also included unpaid dividend unpaidinterest & other earmarked balances of Rs 136.17 crore (previous year Rs 112.58 Crore)which were not freely available for the business of the Company.

Other Current Assets

Other Current Assets mainly comprises Advances to contractors and suppliers PrepaidExpenditure and Deferred Foreign Currency Fluctuation Assets. Our other Current Assets asof March 31 2022 and 2021 respectively were Rs 441.14 crore and Rs 372.08 crore anincrease of 18.56% in Fiscal 2022 as compared to the figures in Fiscal 2021 is mainly dueto increase in Receivable on account of material issue to contractors.

Regulatory Deferral Account Debit Balances

In line with the Guidance Note on "Accounting for Rate Regulated Activities"issued by the Institute of Chartered Accountants of India as well as keeping in view theprovisions of Ind-AS 114-Regulatory Deferral Accounts 'Regulatory Assets' has beencreated and corresponding 'Regulatory Income' has been recognized.

Regulatory Deferral Account Debit balances as on March 31 2022 and March 31 2021 wereas under:

(Rs in crore)

Particulars March 31 2022 March 31 2021
Regulatory Deferral Account balances in respect of Subansiri Lower Project 3470.59 3470.59
Wage Revision as per 3rd Pay Revision committee 456.38 570.58
Differential depreciation due to Moderation of Tariff in respect of Kishanganga Power Station 761.46 563.11
Exchange differences on Foreign Currency Monetary items 1.55 1.72
Adjustment against Deferred Tax Recoverable for tariff period upto 2009 1404.04 1453.56
Adjustment against Deferred Tax Liabilities for tariff period 2014-2019 854.09 843.37
Total 6948.11 6902.93

Net worth

The net worth of the Company at the end of Fiscal 2022 increased to Rs 33486.10 crorefrom Rs 31603.11 crore in the previous Fiscal registering an increase of 5.96% mainly dueto increase in Profit after tax and increase in retained earnings.

Long Term Borrowings

Long Term Borrowings mainly comprised of Bonds Secured Term Loans & UnsecuredLoans including Foreign Currency Loans amounting to Rs 14517.90 crore Rs 2658.00 croreand Rs 5990.71 crore in Fiscal 2022 as against Rs 15679.99 crore Rs 316.00 crore and Rs5235.00 crore respectively in Fiscal 2021. The Secured loans include borrowings fromdomestic banks and financial institutions along with corporate bonds raised in the capitalmarkets that are secured against assets of the company.

The increase in Long Term Borrowings to the extent of 9.13% over previous fiscal ismainly on account of borrowings from domestic banks including securitization of return onequity of one of the power station partly offset by redemption of bonds and repayment ofborrowings.

Other Financial Liabilities (Current & Non-Current)

Other Financial Liabilities include amount payable towards Bonds fully serviced byGovt. of India interest accrued but not due on borrowings Liability against capitalworks/supplies EMD/ Retention Money etc. The other financial liabilities as at March 312022 stood at Rs 3458.76 crore against Rs 3587.31 crore for the previous fiscal i.e.there is a decrease of 3.58% over figures of previous fiscal.

Provisions (Current & Non-Current)

Provisions include provision for Performance Related Pay Superannuation/Pension fundProvision towards employee benefits (actuarial valuation) Provision for TariffAdjustment Provision for Wage Revision - 3rd Pay Revision Committee Provision forCommitted Capital Expenditure and Other Provisions etc. Total provisions stood at Rs1183.80 crore as at March 31 2022 as against Rs 1281.36 crore for previous fiscal i.e.there is a decrease of 7.61 % over figures of previous fiscal.

Deferred Tax Liabilities

The Deferred Tax Liabilities as at March 31 2022 stood at Rs 2100.74 crore against Rs3589.36 crore for the previous fiscal.

Other Non-Current Liabilities

The Other Non-Current Liabilities as at March 31 2022 stood at Rs 2026.16 croreagainst Rs 2034.79 crore for the previous fiscal. Other Non-Current Liabilities includeIncome received in advance (Advance against Depreciation) and Grants in aid-fromGovernment.

Short Term Borrowings

The Short term borrowings as at March 31 2022 stood at Rs 2851.03 crore against Rs2121.56 crore for the previous fiscal. Short term borrowings consist of amount payable tothe banks by the beneficiaries on account of bills discounted against trade receivablesand current maturities of long term borrowings.

Trade Payables

The Trade payables as at March 31 2022 stood at Rs 189.57 crore against Rs 198.27crore for the previous fiscal i.e. there is a decrease of 4.39% over figures of previousfiscal.

Other Current Liabilities

The other current liabilities as at March 31 2022 stood at Rs 510.70 crore against Rs565.85 crore for the previous fiscal i.e. there is a decrease of 9.75% over figures ofprevious fiscal.

Current Tax Liabilities

The current tax liabilities as at March 31 2022 stood at Rs NIL against Rs 35.00 crorefor the previous fiscal. This represents excess provision of current tax over and aboveAdvance Income Tax & TDS for FY 2020-21.

Off-Balance Sheet Items

Contingent Liabilities

The following table sets forth the components of our contingent liabilities as ofFiscal 2022 and 2021.

(Rs in crore)

Particulars Fiscal 2022 Fiscal 2021
Claims against the Company not acknowledged as debts in respect of:
Capital Works 9546.17 9480.36
Land Compensation Cases 217.01 235.04
Disputed Tax matters and Other Items 1357.74 1325.22
Total 11120.92 11040.62

Contingent liabilities increased by 0.73% from Rs 11040.62 crore as of March 31 2021to Rs 11120.92 crore as of March 31 2022.

BUSINESS AND FINANCIAL REVIEW OF SUBSIDIARIES/JOINT VENTURE COMPANIES

Highlights of the subsidiaries and joint venture companies of NHPC are as under:-

NHDC Limited

NHDC Ltd. was incorporated on 01.08.2000 as a Joint Venture of NHPC Ltd. (51.08%) andGovernment of Madhya Pradesh (48.92%) having authorised share capital of Rs 3000 crore.NHDC has commissioned Indira Sagar Power Project (1000 MW) and Omkareshwar Power Project(520 MW). The Total Income of NHDC Ltd. for the financial year ended March 31 2022 and2021 respectively was Rs 1085.29 crore and Rs 1349.06 crore. The Profit After Tax ofNHDC Ltd. for the financial year ended March 31 2022 and 2021 respectively was Rs 512.96crore and Rs 670.70 crore. Paid up share capital of the company is Rs 1962.58 crore ofwhich NHPC's contribution is Rs 1002.42 crore.

Loktak Downstream Hydroelectric Corporation Limited

Loktak Downstream Hydroelectric Corporation Limited was incorporated on 23.10.2009 as aJoint Venture of NHPC Ltd. (74%) and Government of Manipur (26%) having authorized sharecapital of Rs 230 Crore. Paid up share capital of the company is Rs 138.09 crore of whichNHPC's contribution is Rs 103.34 crore. The Company is yet to start operations.

Bundelkhand Saur Urja Limited

Bundelkhand Saur Urja Limited was incorporated on 02.02.2015 as a Joint Venture ofNHPC Ltd. and Government of Uttar Pradesh (UPNEDA) with NHPC's share not less than 74%.The authorized share capital of the company is Rs 450.00 crore. Paid up share capital ofthe company is Rs 97.17 crore of which NHPC's contribution is Rs 84.22 crore (86.67%). TheCompany is yet to start operations.

Lanco Teesta Hydro Power Limited

During the FY 2019-20 NHPC has acquired Lanco Teesta Hydro Power Limited as its whollyowned subsidiary under CIRP. The acquisition was made as per the resolution plan submittedby NHPC and approved by the Hon'ble National Company Law Tribunal (NCLT). The authorizedshare capital of the company is Rs 2500.00 crore. Paid up share capital of the company isRs 1440.50 crore in which 100% contribution has been made by NHPC. The Company isinvolved in construction of Teesta-VI hydro power project.

Jalpower Corporation Limited

On 31.03.2021 NHPC has acquired Jalpower Corporation Limited under CIRP for aconsideration of Rs 165.00 crore and the Company has become a wholly owned subsidiary ofNHPC from that date. The acquisition was made as per the resolution plan submitted by NHPCand approved by the Hon'ble National Company Law Tribunal (NCLT). The authorized sharecapital of the company is Rs 350.00 crore. Paid up share capital of the company is Rs281.49 crore in which 100% contribution has been made by NHPC. The Company is involved inconstruction of 120MW Rangit-IV Hydroelectric Project.

Ratle Hydroelectric Power Corporation Limited

Ratle Hydroelectric Power Corporation Limited was incorporated on 01.06.2021 as aJoint Venture of NHPC Ltd. and Jammu and Kashmir State Power Development CorporationLimited (JKSPDCL) with equity participation of 51:49 respectively. The authorized sharecapital of the company is Rs 1600.00 crore. Paid up share capital of the company is Rs185.14 crore of which NHPC's contribution is Rs 136.14 crore (73.53%). The Company is yetto start operations.

Chenab Valley Power Projects Private Limited

Chenab Valley Power Projects Private Limited was incorporated on 13.06.2011 as a JointVenture of NHPC Ltd. (49%) Jammu & Kashmir State Power Development Corporation(JKSPDC) (49%) & PTC India Ltd. (2%) having authorized share capital of Rs 5200 crorefor execution of PakalDul Kiru&Kwar H.E. Projects in Chenab River Basin. Paid upshare capital of the company is Rs 3336.45 crore of which NHPC's contribution is Rs1839.56 crore. During the year NHPC Limited has acquired the equity of PTC India Limitedin CVPPPL for an amount of Rs 4.19 crore. The company's shareholding in CVPPPL due toacquisition of shares and additional equity infusion is 55.13% as on 31st March 2022. TheCompany is yet to start operations.

National High Power Test Laboratory Private Limited (NHPTL)

NHPTL was incorporated on 22.05.2009 as a Joint Venture Company of NHPC Ltd. NTPCLtd. Power Grid Corporation of India Limited (Power Grid) and Damodar Valley Corporation(DVC) each having 25% of equity participation. During the Fiscal 2013 Central PowerResearch Institute also entered into the Joint Venture thereby revising the equityparticipation to 20% of each Joint Venture partner. The Company has been incorporated toset up an Online High Power Test Laboratory for short-circuit test facility in the Countryhaving Authorised Share Capital of Rs 153 crore. As on March 31 2022 paid up sharecapital of the company is Rs 152 crore of which NHPC's contribution is Rs 30.40 crore. Thecompany has started commercial operation during Fiscal 2018. For the financial year endedMarch 31 2022 the Company incurred a loss of Rs 20.03 crore while loss for the financialyear ended March 31 2021 was Rs 19.08 crore.

Consolidated Financial Statements of NHPC Ltd its Subsidiaries and Joint VentureCompanies

The Consolidated Financial Statements have been prepared in accordance with Ind-AS110-'Consoiidated Financial Statements' and Ind-AS 28-'Investment in Associates &Joint Ventures' which are included in this Annual Report.

A brief summary of the results on a consolidated basis is given below:

(Rs in crore)

Particulars Fiscal 2022 Fiscal 2021
Total Income 10152.84 10710.86
Total Expenses 5724.01 6137.80
Profit after Tax (after adjustment of NonControlling Interest) 3523.57 3271.78

HIGHLIGHTS OF CONSOLIDATED BALANCE SHEET

(Rs in crore)

Particulars Fiscal 2022 Fiscal 2021
Non-Current Assets 61189.62 56533.55
Current Assets 8846.15 9389.89
Regulatory Deferral Account Debit Balances 7248.73 7203.55
Total 77284.50 73126.99
Total Equity 37783.85 35888.62
Non-Current Liabilities 30877.62 30271.56
Current Liabilities 6606.31 6203.03
Regulatory Deferral Account Credit Balances 2016.72 763.78
Total 77284.50 73126.99

Key Financial Ratios (Standalone basis)

S. No. Ratios Fiscal 2022 Fiscal 2021 % Change
1 Debtors Turnover Ratio (Revenue from Operations/Average Debtors) 1.81 1.65 9.70%
2 Inventory Turnover Ratio (Revenue from Operations/Average Inventory) 62.59 65.71 (-) 4.75%
3 Interest Service Coverage Ratio (ISCR) # (Profit after Tax but before Interest and Depreciation/ Interest) 7.18 6.60 8.79%
4 Debt Service Coverage Ratio (DSCR) # (Profit after Tax but before Interest and Depreciation/ Principal repayment excluding payment under put option and Interest) 3.62 3.03 19.47%
5 Current Ratio (Current Assets/Current Liabilities) 1.20 1.27 (-) 5.51%
6 Debt Equity Ratio (Paid up Debt Capital/ Shareholder's Equity) 0.84 0.80 5.00%
7 Operating Profit Margin (Operating Profit/ Revenue from Operations) 43.50% 42.24% 2.98%
8 Net Profit Margin (Net Profit/ Revenue from Operations) 42.35% 38.15% 11.01%
9 PE Ratio (Market Price Per Share*/ Earning Per Share) 7.90 7.57 4.36%
10 EBITDA (Rs in crore) 5704.66 5599.00 1.89%
11 EBITDA Margin (EBITDA/ Revenue from Operations) 68.29% 65.82% 3.75%

# For the calculation of ISCR and DSCR amount of interest and Principal repaymentsagainst the borrowings of the operational projects have been considered.

* Closing Price as on 31st March of respective Fiscal has been considered for MarketPrice per Share.

Return on Net worth (PAT/Average Shareholder's Equity)

Return on Net worth of the company at the end of Fiscal 2022 increased to 10.87% from10.55% in the previous Fiscal 2021 registering an increase of 3.03% mainly due to increasein Profit after tax partially compensated by increase in retained earnings.

34.13 MATERIAL DEVELOPMENT IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS FRONT

Your Company has a highly talented team of committed professionals and has been able toinduct develop and retain the best talent. NHPC endeavors to acquire the best talent inthe Country from leading educational institutions and universities. It has been workingtowards nurturing and retaining talent by providing opportunities to improve theirknowledge and skills. Job rotation and inter-location transfer throughout the organizationfacilitate planned development of careers and broaden the outlook of employees. Employees'participation has been ensured through information sharing with employees seeking theirsupport suggestions and co-operation.

(i) TRAINING OF EMPLOYEES

NHPC organizes various developmental programmes for its employees in the areas ofbehavioural managerial skills and core competencies. These programmes organized by theCompany are either in-house or through premier management & engineering institutionswhich helps employees to keep them abreast with the latest developments and changes takingplace in the area of their operation. In addition to above NHPC also sponsors itsexecutives on regular basis to acquire higher qualification and specialization to enhancetheir productivity and effectiveness.

(ii) EMPLOYEE STRENGTH

The employee strength of the company as on March 31 2022 was 5092 (3166 executives173 supervisors & 1753 workmen).

(iii) WELFARE MEASURES FOR WOMEN EMPLOYEES

The number and percentage of women employees as on March 31 2022 is given in the tablebelow:

Total no. of employees No. of women employees % of overall employee strength
5092 545 10.70

Steps taken for the welfare of women employees

• Women employees are regularly nominated to various programmes/seminars on womenempowerment and other issues related to women.

• Women employees are entitled for child care leave with pay up to 730 days fortaking care of two children up to the age of 18 years (no age limit in respect of childwith minimum disability of 40%).

• Women employees have option to declare parents/parents-in-law as theirdependents under medical rules.

• Internal Complaints Committees (ICCs) have been constituted at all locations ofthe Company to examine the grievances/complaints relating to sexual harassment of womenemployees.

• Women representatives are nominated on selection board/committee constituted forpromotion/recruitment of employees.

• Women employees may avail maternity leave as per service rules.

• NHPC Corporate Office Faridabad has Creche facility for infants of theemployees.

• Relaxations in attendance timings are given to women employees posted atCorporate Office.

• WIPS (Women in Public Sector Forum) Cell has been constituted in CorporateOffice.

(iv) WELFARE MEASURES AND RESERVATION FOR SCHEDULED CASTE (SC) SCHEDULED TRIBE (ST)AND OTHER BACKWARD CLASSES (OBC)

Your Company is providing reservation and relaxation to SC/ST and OBC candidates indirect recruitment as per guidelines issued by DoPT from time to time. The relaxedstandard and reservation is also applicable to SC/ST employees while considering them forpromotion. The management holds periodical meetings with SC/ST/OBC employees fordiscussing various issues related to them. SC/ST & OBC Cells headed by separateLiaison Officers have been set up for the welfare of SC/ST and OBC employees.Representation of SC/ST/OBC employees as on 31.03.2022 is given in table below:

Total no. of employees REPRESENTATION
SC % age ST % age OBC % age
5092 781 15.34 345 6.78 838 16.46

(v) WELFARE MEASURES FOR DIFFERENTLY ABLED EMPLOYEES:

Representation of differently abled employees as on 31.03.2022 is given in table below:

Total No of employees Differently abled employees % of differently abled employees
VH HH OH TOTAL %AGE
5092 12 3 99 114 2.24

VH=Visual Handicap

HH = Hearing Handicap

OH=Orthopaedic Handicap

Steps taken for the welfare of differently abled employees:

Reservation and relaxation are provided to differently abled candidates/employees indirect recruitment and promotion as per guidelines issued by DoPT / Ministry of SocialJustice & Empowerment from time to time. In addition to above following welfareschemes have also been extended to differently abled employees:-

• Differently abled employees as well as employees who are care giver to dependentphysically/mentally disabled child are exempted from rotational transfer. These employeesare given option about their preference in place of posting at the time oftransfer/promotion.

• Financial assistance is provided to employees (who get physically handicappedwhile in service) for vocational training.

• Reimbursement of expenses for purchase of hearing aid is given to hearingimpaired employees/their dependents.

• Reimbursement of the cost of artificial limbs and interest free loan are beinggiven to employees/ their dependents.

• Restriction of age is not applicable in respect of physically/mentally retardedchildren for considering them as dependents for medical and other benefits.

• Lifetime medical facility to the dependent mentally or physically disabledchildren having 40% or more of one or more disabilities in respect of retired/deceasedemployees is being provided under NHPC Retired Employees' Health Scheme.

34.14 ENVIRONMENTAL PROTECTION AND CONSERVATION TECHNOLOGICAL ABSORPTIONRENEWABLE ENERGY DEVELOPMENTS & FOREIGN EXCHANGE CONSERVATION

(i) Environment Protection and Conservation:

Your Company has a "Corporate Environment Policy" (CEP) which aims to addressthe environmental and social concerns for the sustainable development of conventional& non-conventional sources of energy. Major highlights of CEP are to integrateenvironmental considerations into planning execution and operation of projects toundertake the postconstruction impact assessment studies and to undertake unique voluntaryinitiatives beyond statutory obligations. NHPC also makes efforts to create conditions sothat economic growth and environmental preservation become compatible in the long run.Environmental Impact Assessment (EIA) for NHPC projects is undertaken during investigationstage to identify probable impacts on environment. Based on the findings of EIA studiesEnvironmental Management Plans (EMPs) are proposed and implemented to compensate theadverse impacts of the project by taking necessary measures like compensatoryafforestation catchment area treatment biodiversity conservation green beltdevelopment fishery management rejuvenation of dumping and quarry sites includingresettlement & rehabilitation etc. Environment and Diversity Management Division hasbeen established at the Corporate Office to monitor and facilitate implementation aspectsof environmental safeguard measures at all the projects.

Compliance under Corporate Environmental Policy:

Environment Management Cells have been constituted at all projects/ power stations ofyour company for effective implementation of EMPs and voluntary initiatives. Variousvoluntary initiatives have been taken up at many NHPC Projects/ Power Stations for WasteManagement Water Conservation and Energy Conservation. Six monthly progress reports forvarious Projects/ Power Stations for period ended March 2021 and September 2021 weresubmitted to Ministry of Environment Forest and Climate Change (MoEF&CC) and itsconcerned Regional offices. These reports were also uploaded on the website of the Companyi.e. www.nhpcindia.com.

The company also conducts post-construction Environment Impact Assessment (EIA) Studiesto evaluate the effectiveness of the management plans implemented during the course ofconstruction of the project.

Your Company has conducted Post construction EIA studies in respect of various PowerStations viz. Uri (UT of J&K) Rangit (Sikkim) Dhauliganga (Uttarakhand) and Teesta-V(Sikkim) both through in-house and external agencies. Post construction EIA Study ofLoktak Power Station (Manipur) and Uri-II Power Station (UT of J&K) through externalagency are currently in progress. NHPC also conducted sustainability assessment ofTeesta-V Power Station Sikkim through Sustainability Assessment Protocol of InternationalHydropower Association (IHA) for operational projects. As per the findings of theassessment out of 20 parameters on which the Teesta-V Power Station was assessed itmeets basic good practice on all parameters meets proven best practice on 6 parametersand exceeds basic Good Practice on 9 parameters.

(ii) Renewable Energy Developments:

Your company is diversifying its activities to explore renewable energy projects suchas solar and wind power projects. The details of renewable energy projects are given elsewhere in this report.

(iii) Foreign Exchange Conservation:

In accordance with "Make in India" policy of Government of India yourcompany is making efforts to encourage the participation of local firms in the biddingprocess. The participation of local firms as well as Micro & Small Enterprises helpsin conservation of foreign exchange and growth of Indian industry at large.

(iv) Technological Absorption:

Information regarding technology absorption has been included elsewhere in this report.

34.15 CORPORATE SOCIAL RESPONSIBILITY

Information regarding Corporate Social Responsibility has been included elsewhere inthis Report.

34.16 CAUTIONARY STATEMENT

The views and forward-looking statements contained in this report are based onreasonable assumptions and subject to certain risks and uncertainties that could causeactual results to differ from those reflected in such statements.

Readers are requested to review and confirm with other information in this report andin the company's periodic reports. The company undertakes no obligation to publicly updateor revise any of these forward-looking statements whether as a result of new informationfuture events or otherwise. The financial figures shown above are based on the auditedresults of the Company.

35 CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS &OUTGO

The particulars as required under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of Companies (Accounts) Rules 2014 in respect of Conservation of EnergyTechnology Absorption and Foreign Exchange Earnings & Outgo are as under:

A. CONSERVATION OF ENERGY

(i) Steps taken or impact on conservation of energy

• Energy Conservation Task Force has been constituted at Corporate office forcreating awareness amongst users monitor effectiveness of measures adopted for energyconservation and provide vertical and horizontal feedback to the Management/ users. EnergyConservation Task force suggests time to time measures for the Energy Saving at CorporateOffice.

• The Energy Audit of the NHPC Office Complex at Faridabad was conducted throughExternal Agencies certified from BEE. The recommendations of the Energy Audit are beingimplemented.

• Neer Shakti Sadan and Jyoti Sadan of Corporate Office has been rated as FourStar Rated Building and Three Star Rated Building respectively by Bureau of EnergyEfficiency Ministry of Power Government of India.

• Monthly maintenance of 900TR and 1200TR HVAC system/equipments is being taken upto guarantee efficient operation throughout the year. HVAC filters are regularly changedor cleaned every month during peak cooling or heating season as dirty filters cost more touse overwork the equipments and result in low indoor air quality.

• As an Energy Conservation measure movement detectors have been installed in thetoilets of Jyoti Sadan which are renovated from time to time as per requirement.

(ii) Steps taken by the company for utilizing alternate sources of energy

Grid Solar Power Plant Energy of capacity of 80 KWp and 150 KWp has been installed atthe roof top of the buildings of Corporate Office. The cleaning of the plant is beingtaken up on regular basis (after sun set and before sun rise) for obtaining maximumoutput. Preventive Maintenance is being done on regular basis for obtaining maximumuptime.

(iii) Capital investment on energy conservation equipments

Capital investment on energy conservation equipments has been around Rs 52.48 lakh.

B. TECHNOLOGY ABSORPTION

(i) Efforts made towards technology absorption

a) R&D projects completed in FY 2021-22:

Development of Erosion Resistant Steel to ward off underwater corrosion: Effectof Silt on underwater components of turbine is an important issue in the Himalayas. NHPCundertook a study on "Composition for Erosion Resistance Steel and a Process for thePreparation Thereof" in collaboration with CSIR SJVNL & CPRI. NHPC has also beengranted Intellectual Property Right for this invention. The use of this newly developedalloy reduces the corrosion effects due to siltation which in turn reduces expense ofmaintenance of underwater parts.

Study for evaluation of abrasion resistance of repair mortars as per EN1504-3(R4): The abrasion resistance and bonding strength of cementitious repair product(having CE marks) has been identified in the R&D project. This shows abrasionresistance (underwater method) of cementitious repair mortar is capable enough to protectdamages in concrete caused due to erosion. This product is suitable to structural repairof pier face slab of CFRD freezing & thawing related damages silt flushing tunnelsetc. where erosion/damages occurred mainly due to abrasive forces.

Performance evaluation of concrete spillway glacis rehabilitated with steelliner at Dhauliganga Power Station: For effective protection of severely erodedspillway glacis of Dhauliganga dam steel liner was installed at downstream of radial gatesill beam and has been performing satisfactorily against erosion.

The success of steel liner at Dhauliganga Dam can be used as reference case forinstallation of steel liner using anchor for rehabilitation of already constructedspillways.

Hydraulic studies related to cavitation in high head spillway by FLOW3D forSubansiri Lower HE Project: NHPC conducted studies jointly with CWPRS forunderstanding the flow characteristics and cavitation profiles for minimum damage tospillway profiles.

b) On Going R&D Projects:

• NHPC has installed the Online Cavitation Monitoring System at Teesta-V PowerStation in collaboration with M/s GE Power India Limited for monitoring of cavitation inunderwater component of hydro turbine. This study will be helpful to understand the effectof cavitation on turbine and operation of machines.

• NHPC is conducting study on "Numerical and physical model studies forelimination of desilting basins in hydroelectric projects by sediment management throughreservoir operation techniques" in association with CWPRS Pune (MH).

• Geological surprises during construction are a major cause of time and costoverrun for a hydro project. To minimize these surprises and to undertake constructionactivities in a cost effective manner Geophysical techniques like Resistivity Imaging fordesign of safe economic and effective earthmat Ground Penetration Radar SeismicTomography to optimize geological uncertainties etc. are innovatively applied fordifferent NHPC projects. At present three R&D projects are running in the department.

• Application of Remote sensing and GIS Technology for issues like Post ProjectEnvironmental Evaluation Assessment on socioeconomics etc. is taken up for projects likeRangit HE Project Sikkim and Sewa-II HE Project UT of J&K.

• Study on "Monitoring Hydro abrasive erosion and suspended sediment foroptimal operation of hydro power plant" is being conducted jointly through IITRoorkee in Bairasiul Power Station. Pre & Post monsoon 3D scanning is being carriedout for Runner & Guide Plumes.

• To tackle seismicity related issues NHPC has set up a centralized online RealTime Seismic Data Center connecting all SMA's installed at power stations of NHPC and itsJVs. Analysis of the seismic data from this network is being done for development ofHimalayan specific site specific peak ground acceleration attenuation relationship. Thiswork is taken up jointly with IIT Roorkee and results will help in optimizing the designparameters of our projects.

• Measurement of Green House Gas (GHG) emissions from Reservoir of Chamera-I PowerStation on Ravi River in Himachal Pradesh is being carried out. First & second seasonsamplings have been completed.

• Development of inflow forecasting system for Chamera-III Power Station inconsultation with IIT Roorkee.

Development of Design Guidelines/Charts for quick estimation of Cavernsbehaviour & support layout including openings based on 3D FEM Analysis (IIT Kanpur): Theobjective of this Project is safe and economic design of underground caverns of variousupcoming projects. The aims is to develop easy-to-use design charts/guidelines based onadvanced 3D numerical analysis for direct estimation of optimal cavern dimensionalparameters and external support requirements without undergoing detailed computationalanalysis.

• Development of Partial Discharge Monitoring Solutions for High VoltageElectrical Apparatus is under process which will help NHPC to move towards a"Predictive Maintenance Practice" from its current Preventive MaintenancePractice. This will improve the system reliability and minimize the breakdown period.

• Study of Landslides in the vicinity of nine commissioned/under constructionhydroelectric projects of NHPC utilizing Remote Sensing & GIS Technology has beentaken up jointly with Indian Institute of Remote Sensing Dehradun. Preparation oftemporal landslide inventory and changes during the period of observation from satellitedata are the main criteria of the study. The main objective is to analyze whetherconstruction of the project has any impact on landslides in the project area.

Collaborative research related to growth of power sector: As per Ministryof Power recommendations for support and growth of power sector studies/research relatedto policy initiative reforms restructuring will provide crucial inputs for policyformulation. For this a corpus for funding these studies has been setup jointly with MoPand CPSUs like NHPC NTPC PGCIL PFC & REC. NHPC has been undertaking collaborativeresearch for overall growth of power sector.

(ii) Benefits derived like product improvement cost reduction product development orimport substitution:

a. Development of erosion resistant steel helps in reducing corrosion effects due tosiltation which in turn helps in reduction of expenses of maintenance of underwater parts.

b. Installation of steel liner using anchor for rehabilitation of already constructedspillways has helped against erosion problem at Dhauliganga Dam.

Further other efforts made towards technology absorption are in initial stagesbenefits are expected to be derived after completion of studies and actual implementation.

(iii) Particulars of technology imported during the current year and last three years

NIL

(iv) Expenditure incurred on Research and Development:-

Expenditure incurred on Research and Development during the FY 2021-22 was Rs 10.07crore.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(Rs in Crore)

S. No. Particulars For the year ended 31.03.2022 For the year ended 31.03.2021
a) Expenditure in Foreign Currency:
i) Interest 23.47 26.50
ii) Other Misc. Matters 6.43 5.26
b) Value of spare parts and Components consumed in operating units:
i) Imported - -
ii) Indigenous 18.18 19.78

36 AUDIT AND AUDITORS'REPORT

36.1 SECRETARIAL AUDIT

M/s Agarwal S. & Associates Company Secretaries Delhi has been appointed by theBoard to conduct Secretarial Audit of the Company for the FY 2021-22. The SecretarialAuditor in its report has given certain observations. The Secretarial Auditor's Reportis given as Annexure-II to this Report. The management replies against observationsraised by Secretarial Auditor are as under:

Qualification / Observation Management Reply
1. Regulation 17(1)(a) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and as per the second proviso of Section 149(1) of the Companies Act 2013 the Board of Directors did not consist of an Independent Women Director during the period from 01.04.2021 to 29.11.2021 and the number of Non-executive Directors on the Board was less than fifty percent during the period from 01.04.2021 to 30.11.2021. As per Article 34 of the Articles of Association of the Company read with Ministry of Corporate Affairs notification dated 05th June 2015 the Directors including Independent Directors (IDs) on the Board of the Company are appointed by the President of India through Administrative Ministry i.e. Ministry of Power (MoP). Consequent upon orders of MoP four independent directors including one-woman independent director were appointed on the Board of NHPC in the month of November/ December 2021.
2. Regulation 17(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 the number of Independent Directors on the Board As on 31.03.2022 Board of Directors of the Company comprised of 9 Directors including 1 CMD 3 Whole Time Directors 1 Part Time Government Nominee Director and 4 Independent Directors.
is less than fifty percent during the FY and as per clause 3.1.2 of DPE Guidelines the number of Functional Directors exceeded 50% of the actual strength of the Board during the period from 01.04.2021 to 30.11.2021. More than 50% of the Board comprised of NonExecutive Directors including one-woman Independent Director w.e.f. 01.12.2021 after the appointment of 4 Independent Directors. Further the matter regarding appointment of requisite number of Independent Directors is being regularly pursued with the Administrative Ministry i.e. Ministry of Power.
3. The Company did not have Nomination and Remuneration Committee during the period from 01.04.2021 to 06.12.2021 and the composition of Audit Committee Stakeholder's Relationship Committee and Committee on Corporate Social Responsibility & Sustainability during the period 01.04.2021 to 06.12.2021 and Risk Management Committee from 05.08.2021 to 06.12.2021 was not in accordance with Section 135 177 & 178 of the Companies Act 2013 Regulations 18 19 20 & 21 of SEBI (LODR) 2015 and chapter 4 & 5 of DPE Guidelines. It was not possible to have a Nomination and Remuneration Committee during the period from 08.09.2020 to 06.12.2021 and the composition of the Audit Committee Stakeholders' Relationship Committee and Committee on Corporate Social Responsibility & Sustainability from 21.03.2021 to 06.12.2021 and Risk Management Committee from 05.08.2021 to 06.12.2021 could not be in terms of SEBI (LODR) Regulations 2015 due to non-appointment of Independent Directors by Administrative Ministry i.e. Ministry of Power (MoP).
Consequent upon appointment of four independent directors including one woman independent director the Mandatory Committees were reconstituted in compliance with SEBI LODR the Companies Act 2013 and DPE Guidelines on Corporate Governance w.e.f. 07.12.2021.

In compliance to Regulation 24A of SEBI LODR Secretarial Audit Report of NHDC Limitedwhich is a material unlisted subsidiary of NHPC is also given elsewhere in the AnnualReport.

36.2 STATUTORY AUDIT

In line with provisions of the Companies Act 2013 the Statutory Auditors of yourCompany are appointed by the Comptroller & Auditor General of India (C&AG).C&AG had appointed following Joint Statutory Auditors for the FY 2021-22:

1. M/s P. C. Bindal & Co. Srinagar

2. M/s K.G. Somani & Co. LLP New Delhi

3. M/s Chaturvedi & Co. Kolkata

The Joint Statutory Auditors have given un-modified opinion in their report on thestandalone and consolidated financial statements of the Company for the FY 2021-22.Further no instance of fraud by any officer or employee of the Company has been reportedby the Auditors under Section 143(12) of the Companies Act 2013.

36.3 REVIEW OF ACCOUNTS BY C&AG

The C&AG has given its comments on the standalone and consolidated financialstatements of your Company for the year ended March 31 2022 after conductingsupplementary audit under Section 143(6)(a) of the Companies Act 2013. There are nocomments of C&AG for both the standalone and consolidated financial statements of yourCompany for the year ended March 31 2022. The comments of C&AG are appearingelsewhere in the Annual Report.

36.4 COST AUDIT

The Company maintains necessary cost records as specified by Central Government underSection 148(1) of the Companies Act 2013 read with the Companies (Cost Records and Audit)Rules 2014. As recommended by the Audit Committee your Board has appointed the followingfirms of Cost Accountants to conduct audit of cost accounting records of power stationsfor the FY 2021-22 under Section 148 of the Companies Act 2013:

Name of the Firm Power Stations
M/s Dhananjay V. Joshi & Associates Delhi (Lead Cost Auditor) Tanakpur and Dhauliganga
M/s ABK & Associates Gurgaon Uri-I Uri-II and Kishanganga
M/s Narasimha Murthy & Co. Delhi Chamera-I Sewa-II and Parbati-III
M/s R. M. Bansal & Co. Delhi Dulhasti Salal and Wind Power Project Jaisalmer
M/s K. G. Goyal & Co. Jaipur Bairasiul Chamera-II and Chamera-III
M/s AJS and Associates Dehradun Chutak & Nimoo Bazgo
M/s Bandyopadhyaya Bhaumik & Co. Kolkata Loktak TLDP-III and TLDP-IV
M/s Y. S. Thakar & Co. Asansol West Bengal Rangit Teesta-V and Solar Power Project Tamil Nadu

The consolidated Cost Audit Report in XBRL format for the year ended March 31 2021 wasfiled with the Ministry of Corporate Affairs on September 3 2021. The Cost Audit Reportfor the year ended March 31 2022 shall be endeavoured to be filed within the prescribedtime period.

37 ANNUAL RETURN

Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act 2013 the AnnualReturn of the Company as on March 31 2022 is available on the Company's website athttp://www.nhpcindia.com/ NHPC-annual-reports.htm

38 PARTICULARS OF LOANS INVESTMENTS AND CORPORATE GUARANTEES

Section 186 of the Companies Act 2013 (except subsection 1) regarding loans madeguarantees given or securities provided is not applicable to NHPC being engaged in thebusiness of providing infrastructure facilities.

39 PARTICULARS OF EMPLOYEES

In accordance to notification dated June 5 2015 issued by the Ministry of CorporateAffairs Government Companies are exempted from the disclosure requirements of Section 197of the Companies Act 2013. Therefore such particulars have not been included as part ofDirectors' Report.

The policy on remuneration pay structure allowances and other benefits of employeesof the Company are governed by relevant DPE Guidelines. Pay structure and allowances ofthe Company are also available on the website at http://www.nhpcindia.com/writereaddata/images/pdf/RTI%20Corner%20 Wages%20UpdationENG_CAA_201905_1.pdf

40 BOARD AND COMMITTEES OF THE BOARD

The Board of Directors met ten (10) times during the FY 2021-22. The details ofmeetings of Board of Directors and attendance of Directors therein are given in the Reporton Corporate Governance which forms part of the Annual Report. The details of variouscommittees of the Board along with their meetings and composition are given in CorporateGovernance Report.

41 PERFORMANCE EVALUATION OF BOARD BOARD LEVEL COMMITTEES AND DIRECTORS

Your Company has framed a policy on Performance Evaluation of Board Board levelCommittees and Directors in line with provisions of Companies Act 2013 and SEBI-LODR.There was no Independent Director on Board of the Company for the period from September 82020 to November 14 2021. Accordingly the annual performance evaluation of Board Boardlevel Committees and Independent Directors of the Company for the FY 2020-21 was notcarried out as there was no Independent Director on Board of the Company as on March 312021. The Board of Directors has approved the revised Policy on 'Performance Evaluation ofBoard Board level Committees and Directors' on recommendation of Nomination &Remuneration Committee. The Performance Evaluation of Board Board Level Committees andDirectors for the FY 2021-22 has been undertaken. As per the policy following evaluationprocess has been followed by the Company:

1. Every Director of the Company rate performance of the Board Board level Committeesand the Individual Directors on pre-determined criteria.

2. The Nomination & Remuneration Committee reviews the performance of IndependentDirectors & the Board of Directors and determines whether to extend the term of theIndependent Director.

3. Independent Directors review the performance of Non-Independent DirectorsChairperson of the Company and the Board as a whole.

4. Board evaluates the performance of Independent Directors excluding the Directorbeing evaluated.

42 DIRECTORS' RESPONSIBILITY STATEMENT

In line with requirement of Section 134(3)(c) read with Section 134(5) of the CompaniesAct 2013 with respect to the Directors' Responsibility Statement it is confirmed that:

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

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

(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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

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

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

43 SECRETARIAL STANDARDS

Your Company has followed in true spirit the applicable Secretarial Standards relatingto 'Meetings of the Board of Directors' and 'General Meetings' issued by Institute ofCompany Secretaries of India (ICSI).

44 GENERAL

No disclosure or reporting in respect of the following items is required as there wasno transaction on these items during the year under report:

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

2. Issue of shares (including sweat equity shares) to employees of the Company underany scheme.

3. Significant and material orders passed by regulators or courts or tribunals whichimpact the going concern status or company's operations in future.

4. Occurrence of any material changes and commitments after the close of the FY tillthe date of this report which affect the financial position of the Company.

5. Details related to public deposits as required under Chapter V of the Act.

6. Details of difference between amount of the valuation done at the time of one timesettlement and the valuation done while taking loan from the banks or financialinstitutions along with the reasons thereof.

7. Application made or proceeding pending under Insolvency & Bankruptcy Code 2016.

45 BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

The following changes in composition of Board of Directors and Key Managerial Personneltook place during the year 2021-22:

1. Shri Tanmay Kumar (DIN: 02574098) Government Nominee Director ceased to be Directoron Board of the Company w.e.f. September 13 2021.

2. Shri Raghuraj Madhav Rajendran (DIN: 07772370) Joint Secretary (Hydro) Ministry ofPower was appointed as Government Nominee Director on Board of the Company w.e.f.September 16 2021.

3. Dr. Uday Sakharam Nirgudkar (DIN: 07592413) was appointed as Independent Director onBoard of the Company w.e.f. November 15 2021.

4. Dr. Amit Kansal (DIN: 07722428) was appointed as Independent Director on Board ofthe Company w.e.f. November 21 2021.

5. Dr. Rashmi Sharma Rawal (DIN: 09410683) was appointed as Independent Director onBoard of the Company w.e.f. November 30 2021.

6. Shri Jiji Joseph (DIN: 09415941) was appointed as Independent Director on Board ofthe Company w.e.f. December 1 2021.

7. Shri Nikhil Kumar Jain (DIN: 05332456) ceased to be Director (Personnel) of theCompany w.e.f. December 2 2021.

8. Shri Saurabh Chakravorty ceased to be Company Secretary of the Company w.e.f.September 24 2021 consequent upon appointment of Smt. Rupa Deb as Company Secretary ofthe Company w.e.f. September 24 2021.

Details of remuneration and sitting fee paid to directors during the FY 2021-22 aregiven in the Report on Corporate Governance.

All Independent Directors of the Company as on March 31 2022 have declared that theymeet the criteria of independence as laid down under Section 149(6) of the Companies Act2013 and Regulation 16(1)(b) of SEBI LODR. They have further declared that they are notaware of any circumstance or situation which exist or may be reasonably anticipated thatcould impair or impact their ability to discharge their duties with an objectiveindependent judgment and without any external influence. Independent Directors have alsodeclared that they have complied with Rule 6(1) & 6(2) of the Companies (Appointmentand Qualification of Directors) Fifth Amendment Rules 2019 regarding inclusion of theirname in the data bank of Independent Directors maintained by Indian Institute of CorporateAffairs (IICA).

As the Independent Directors were appointed by Board of Directors as AdditionalDirectors their appointment is proposed in the forthcoming Annual General Meeting (AGM).Brief profile of the Independent Directors is given in the Notice of AGM. Shri RajendraPrasad Goyal Director (Finance) is liable to retire by rotation and being eligible hasproposed himself to be re-appointed at the forthcoming AGM. Brief profile of Shri Goyalproposed to be appointed/ re-appointed at the forthcoming AGM is given in the Notice ofAGM.

46 ACKNOWLEDGEMENT

The Board of Directors wish to place on record their sincere appreciation to all theemployees for their dedication and commitment. Their hard work and unstinted effortsenabled the Company to sustain its excellent performance and consolidate its sectoralleadership. The commitment displayed by the employees at all levels particularly duringthe ongoing pandemic situation is exemplary and praise worthy. NHPC is proud ofcontinuous untiring efforts of its employees especially posted at power stations &projects of the Company.

The Board of Directors would like to express their gratitude for the guidance andco-operation received from Govt. of India particularly the Ministry of Power Departmentof Public Enterprises Office of the Comptroller and Auditor General of India and otherconcerned Govt. departments/agencies at the Central and State level.

The Board is also thankful to all its stakeholders valued customers contractorsvendors and consultants for their continued support and confidence reposed in the company.

The Board also acknowledges invaluable guidance and inputs received from StatutoryAuditors Secretarial Auditor and Cost Auditor of the Company. The Board also conveys itssincere thanks to the national and international financial institutions multilateralfinancial institutions domestic and international credit rating agencies for theirvaluable support and continued trust in the company.

For and on behalf of the Board of Directors
(Abhay Kumar Singh)
Chairman and Managing Director
DIN 08646003
Date: July 02 2022
Place: Kumarakom Kerala

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