Dear Members,

The Board of Directors of your Company are pleased to present before you the 47^th Annual Report of your Company, highlighting the development and progress for the financial year 2022-23 along with audited financial statements, Auditors' Report thereon, Secretarial Auditor's Report and review of financial statements by the Comptroller and Auditor General of India (C&AG).

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

• NHPC has earned highest ever annual Profit After Tax (PAT) of ` 3,833.79 crore on standalone basis in the financial year 2022-23 compared to ` 3,537.71 crore in the previous financial year. The consolidated net profit rose to ` 4,234.74 crore in FY 2022-23 from ` 3,774.33 crore in previous financial year.

• Highest ever Total income and Revenue from operations were ` 10,150.90 crore and ` 9,316.34 crore respectively during the FY 2022-23. Total comprehensive income and other comprehensive income for FY 2022-23 were ` 3,830.42 crore and ` (3.37) crore respectively.

• NHPC power stations recorded highest ever overall Plant Availability Factor (PAF) of 88.75% and generated 24,907 Million Units (MUs) during the year.

• Cash contribution of ` 1,354.09 crore was made to Government of India's exchequer through dividend (final dividend for FY 2021-22 of ` 356.34 crore and interim dividend for FY 2022-23 of ` 997.75 crore) during the FY 2022-23.

• NHPC is moving ahead for development of India's largest Hydropower Project i.e. 2880 MW Dibang Multi Purpose Project.

• NHPC has been accorded investment approval of ` 973 Crore by Government of India for pre-construction activities of Sawalkot HEP.

• NHPC has extended its international footprints and signed a Memorandum of Understanding (MOU) with the Investment Board of Nepal (IBN) at Kathmandu, Nepal for development of 750 MW West Seti and 450 MW SR-6 hydroelectric projects in August, 2022. Further, IBN has issued Survey License to NHPC for 450 MW Seti River-6 Project in March, 2023.

• NHPC Limited has entered into a Memorandum of Understanding (MoU) with Vidhyut Utpadan Company Limited (VUCL), Nepal for joint development of Phukot Karnali HE Project (480 MW), which is a run-of-the-river hydropower project situated in Kalikot district of Karnali Province, Nepal. The MoU was exchanged in the august presence of Hon'ble Prime Minister of India and Hon'ble Prime Minister of Nepal in June, 2023.

• NHPC has bagged 200 MW Grid Connected Solar Photovoltaic Power projects located in 600 MW Solar Park at Khavda (GSECL STAGE 1).

• NHPC has signed MOU for development of Pilot Green Hydrogen Technologies in District Leh and District Kargil of UT of Ladakh in July, 2022. These two pilot projects will create roadmap for future development of green hydrogen and subsequent reduction of the carbon emission in transportation/ heating sector.

• NHPC Renewable Energy Limited (a wholly owned subsidiary of NHPC Limited) has signed MOU with Govt. of Rajasthan in August, 2022 at New Delhi for "Development of 10,000 MW Ultra Mega Renewable Energy Power Park" in the state of Rajasthan. NHPC has signed Memorandum of Agreement (MOA) with IIT Jammu in September, 2022 to promote R&D activities in the field of Science, Engineering and Technology.

1. FINANCIAL PERFORMANCE

The important financial highlights are given in table below:

(` in crore)

1.1 REVENUE

Your Company has generated total income of ` 10,150.90 crore during the financial year 2022-23. The total income during the financial year 2021-22 was ` 9,335.40 crore.

1.2 EXPENSES

The total expenditure during financial year 2022-23 increased to ` 5,567.30 crore as compared to ` 5,288.54 crore in the previous financial year.

1.3 TOTAL COMPREHENSIVE INCOME

Total Comprehensive Income of your Company increased to ` 3,830.42 crore during the financial year 2022-23 as compared to ` 3,550.47 crore in the previous financial year.

1.4 NET WORTH

Your Company's net worth as on March 31, 2023 was ` 35,407.96 crore as compared to ` 33,486.10 crore at the end of previous financial year.

1.5 SHARE CAPITAL

Your Company's paid-up share capital as on March 31, 2023 was ` 10,045.03 crore which remained unchanged during the financial year 2022-23.

1.6 TRANSFER TO RESERVES

During the year 2022-23, Company did not transfer any amount to any reserve.

2 DIVIDEND

Your Company has a consistent track record of dividend payment. The Board of Directors has recommended a final dividend of ` 0.45 per equity share for the financial year 2022-23 amounting to ` 452.03 crore. The above dividend is in addition to the interim dividend of ` 1.40 per equity share amounting to ` 1,406.30 crore paid in March, 2023. Accordingly, total dividend for the financial year 2022-23 comes to ` 1.85 per equity share amounting to ` 1,858.33 crore. Your Company has a Dividend Distribution Policy in place since May, 2017. As per Dividend Distribution Policy of the Company, broadly the dividend payment shall be 30% of PAT or 5% of the Net worth, whichever is higher. Accordingly, total dividend payout for financial year 2022-23 (subject to approval of final dividend by the members of the Company) @ ` 1.85 per share will be ` 1,858.33 crore i.e. 48.47% of PAT for financial year 2022-23 & 5.25% of Net worth as on March 31, 2023 as against total dividend pay-out of ` 1818.15 crore i.e. 51.39% of the PAT for financial year 2021-22 & 5.43% of Net worth as on March 31, 2022 in the previous year. The Dividend Distribution Policy of the Company is available on website of the Company at https://www.nhpcindia. com/assests/pzi_public/gallery/1672828855.pdf

3 OPERATIONAL PERFORMANCE

Your Company's power stations have achieved second-highest generation of 24,907 MUs during the year 2022-23 against generation of 24,855 MUs during the previous year. The highest ever generation of 26,121 MUs was achieved during the year 2019-20.

Your Company has also achieved highest ever overall Plant Availability Factor (PAF) of 88.75% during the year against overall PAF of 88.19% during the previous year. The power station wise generation and PAF during the year 2022-23 are given in table below:

Note:

*As per MoU FY 2022-23, Consolidated Generation Target is 32,611 MUs i.e. including Generation Target of NHPC Limited & NHDC Limited. Actual generation for FY 2022-23 including generation of NHPC Limited & NHDC Limited is 30350 MUs.

** Actual Generation shown is infirm power.

During the financial year 2022-23:

Three (3) power stations viz. Teesta-V, Nimoo Bazgo & Wind Power, Jaisalmer have achieved highest annual generation since their commissioning.

Eleven (11) power stations viz. Dhauliganga, Uri-II, Chamera-I, Tanakpur, Dulhasti, Teesta-V, Loktak, Salal, Uri, TLDP-III & TLDP-IV have achieved their respective annual design energy.

Three (3) power stations viz. Teesta-V, Tanakpur & Chutak have achieved highest PAF since their commissioning.

Out of twenty (20) hydro power stations, eighteen (18) power stations have achieved their respective NAPAF (Normative PAF).

Renovation & Modernization of Loktak Power Station

Loktak Power Station was commissioned in Apr-May, 1983 and has completed its useful life of 35 years in May, 2018 as per CERC Regulation, 2014. CERC accorded in-principle approval for Renovation & Modernization work for life extension of power station with financial implication of ` 273.59 Crore (including IDC & FC) as per Sep, 2017. The design energy of Power Station shall be 562.73 MUs against existing design energy of 448 MUs after completion of R&M work.

The scope of works is as under:

Activities covering main equipment i.e Generator, Generator Transformers, Turbine & other plant equipment essential for life extension of unit as well as station.

Activities required for ensuring efficient and sustained performance of unit as well as station. Implementation of Control, Monitoring & Protection system of power plant such as Electronic Governors, Static Excitation system, Numerical relays, SCADA etc.

Refurbishment of Water Conductor System and associated Civil/HM works including Infrastructure works.

4 COMMERCIAL PERFORMANCE

4.1 SALES AND REALIZATION

During the year under report, your Company's sales from operations stood at ` 9316.34 crore. We are pleased to inform that your Company has been able to realize an amount of ` 7762.60 crore including surcharge of ` 76.73 crore during the financial year 2022-23. During the year under report, your Company's collection was ` 7542.95 crore against billing of principal amount of ` 8094.55 crore. The total collection during the year including collection from Power Trading business was ` 7547.55 crore.

As on March 31, 2023, the total outstanding dues of ` 55 crore (including surcharge of ` 0.88 crore) were pending for more than 45 days, which is the all-time lowest at the closing of a financial year since inception of all the power stations. The outstanding amount mainly pertains to PSPCL, Punjab (` 25.26 Crore), JKPCL, J&K (` 19.93 Crore), JVVNL, Rajasthan (` 7.73 Crore) & MeECL, Meghalaya, (` 1.20 Crore). Your Company is making all out efforts to liquidate the outstanding dues by continuous follow-up.

4.2 SIGNING OF POWER PURCHASE AGREEMENTS (PPA):

Availability of long term PPA for Power Stations is key to survival of organization as this gives revenue visibility for the organization and assured rate of return which can be utilized for business expansion. This was critical in the light of the fact that Power Stations with cheap tariff had PPA for 40/35 years, while PPA valid initially for 5 year period for significant numbers of Power Stations with costly tariff had expired/ were about to expire. Therefore, a conscious decision has been taken to focus on this area. During the year, NHPC has signed PPA in respect of following Power Stations/upcoming Projects:

With sanction of number of new Hydro projects/Solar projects under CPSU scheme, NHPC has been pursuing states/ DISCOMs to tie-up the capacity of these new projects. PPA for following projects has been signed:

5 STATUS OF HYDROELECTRIC PROJECTS UNDER CONSTRUCTION

At present, your Company is actively engaged in the construction of 09 Hydro Power Projects of 9314 MW Capacity (including JV & Subsidiaries). The detail is given in table below:

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 to harness the hydro-potential of the lower reaches of Parbati River. The project is located in Kullu District of Himachal Pradesh. The estimated annual energy generation from the project is 3,124 MUs in a 90% dependable year.

SALIENT FEATURES

Concrete Gravity Dam of 83.7 m height has been constructed at Village Pulga in Parbati valley to divert the river water through a 31,545 m long Head Race Tunnel (HRT). A Power House of 800 MW (4 x 200 MW) capacity has been constructed at Village Suind in Sainj valley utilizing gross head of 863 m. The diverted discharge of the Parbati River is to be further augmented by diverting the discharge of various nallahs viz. Jiwa, Hurla, Pancha and Manihar falling along the HRT alignment.

Major civil works of Dam, intake structure, desilting chamber, pressure shafts, surge shaft, power house, all nallahs viz. Jiwa, Hurla, Pancha and Manihar have been completed. Presently, HRT excavation from both the faces (face-3 and face-4) is being carried out using Drill and Blast Method (DBM) and Tunnel Boring Machine (TBM) respectively. 99.15% HRT excavation has been completed till March, 2023.

Major HM Works have been completed. ElectroMechanical (E&M) works of the project have also been completed and all units have been synchronized with grid at part load. At present, generation of electricity (infirm power) is being made as per availability of water from Jiwa, Manihar, Pancha and Hurla Nallah. 1,117 MUs Energy have been generated till March, 2023 from Parbati-II in the form of infirm power.

The project has suffered various adverse conditions such as very poor/weak Geology Conditions, heavy ingress of water with silt in HRT resulting in burial of TBM and other drilling equipments and flooding of tunnel from time to time, encountering of extra ordinary geological occurrences, failure of Back hill slope of Power House, non-performance of HRT works contractors, protest by labour unions, Law and order problems, etc. Surpassing all odds, your Company's Management has taken various initiatives to expedite the progress. Some of them are as under: Real Time Analysis of Cycle Time – Regular improvement in Cycle time by proper analysis and resource planning. Adoption of improvised support system i.e. McNally support system resulted in advancement of TBM in poor geology.

Deployment of continuous gantry shutter 48 m (4x12 m) – to achieve 2500 m overt concrete lining in 5 months.

Additional resources and efforts made for channelizing ingress of water.

Subansiri Lower HE Project is the biggest hydroelectric project under construction in India so far and is a run-of-the-river scheme on Subansiri River, a tributary of Brahmaputra. The project is located at Gerukamukh (Dhemaji District)/ Kolaptukar (Kamle District) on the border of Assam and Arunachal Pradesh. The right bank of river Subansiri is situated in Arunachal Pradesh and left bank is in Assam. At the right bank of river Subansiri all the major project component viz. Intake, HRT, Power House & TRC etc. are situated and on the left bank Diversion Tunnels are located.

The CCEA sanction to the project was accorded in September, 2003 and NHPC started construction works in January, 2005 after Final Forest Clearance on October 12, 2004. The construction work was halted in December, 2011 due to various agitation & protests, raising downstream impact and safety related issues and also, petitions were filed in National Green Tribunal (NGT) subsequently. Hon'ble NGT dismissed all the petitions and cleared the project vide order dated July 31, 2019 and the construction work of the Project resumed w.e.f. October 15, 2019. Meanwhile, Memorandum of Agreement (MoA) with Govt. of Assam and PPA with Govt. of Arunachal Pradesh were signed in August, 2019. PPA with other beneficiary states are already in place.

SALIENT FEATURES:

Following are the unique features of Subansiri Lower HE Project: The project involves 1200 TPH aggregate processing plant which is the largest such plant commissioned in India so far in a hydroelectric project. Also, it has a 300 m span conveyor bridge over river Subansiri which is longest span conveyor bridge in India.

• The concrete batching and mixing plant consist of 880 cum capacity plants, a twin shaft mixing plant, and a chilling and ice plant from KTI Germany. This is the single largest batching and mixing plant for Dam construction in India.

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

Project.

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

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

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

• The Rotor is the biggest equipment ever handled in a hydro power plant with its weight 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 of 395 ton and bore dia. of 11.5 m The runner of the project is the heaviest Francis Turbine runner of the Country in its category with its weight of approx. 105 ton The Main Inlet Valve with its weight of about 355 ton and dia of 7m is the biggest main inlet valve in the Country The 420 KV GIS with total 22 number of bays shall be the biggest GIS of the Country in any of the hydro projects in the Country. The power allocation from the project is as tabulated below:

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

STATUS OF MAJOR WORKS:

The major works of Subansiri Lower HE Project are being carried out by four Agencies of International repute selected through International Competitive Bidding (ICB) viz. Dam & Diversion Tunnel Works: M/s BGS-SGS-SOMA JV (JV with Russian Company) which includes Cutoff wall works completed by Soletanchy Bachy, a renowned French Company,

Power House & Underground Structure: M/s Patel Engineering Ltd. since September, 2020 (M/s L&T was engaged earlier till foreclosure in 2015),

Hydro Mechanical Works: M/s Texmaco Rail & Engineering Ltd., Kolkata and

Electromechanical Works: Consortium of GE Hydro France and GE Power India Limited.

The works at different work packages are going on full swing since resumption of work in October, 2019 despite various hindrances faced from time to time. More than 5000 labours have been engaged in the project on daily basis to carry out the construction / erection works. As on June 26, 2023, about 99.80% of Dam concreting has been achieved. Further, HRT excavation has been completed and Overt lining has also been completed. Power House concreting of 90.55% 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 erection activities are at advanced stages. Boxing of Unit # 1 has been completed on June 13, 2022 and for Unit # 2, 86% work has been completed. HRT Intake Gates have been installed and erection of Radial gates and Draft tube gates including Pressure shaft liner works are progressing expeditiously. The overall progress of all project works at present is approx. 90%. Component wise progress of the project as on March 31, 2023 is as under:

HRT & ST Status as on 31.03.23

Since resumption of works in Oct, 2019, the project has faced numerous major challenges including unprecedented rainfall in the region during last week of March, 2022 to Sep-Oct, 22, which have adversely affected the progress of work in different work packages. Project progress severely disrupted due to Heavy rains and flood during Sep-Oct-2022 on the upstream side which caused overtopping of the Dam and causing cavity formation at Diversion Tunnels inlet area as well as collapse of access road to upstream of Dam. Coffer wall of Power House also got severely damaged resulting in partial flooding of Power House.

All the civil works as well as E&M and Hydro-mechanical works are at advance stages of completion. All attempts and necessary measures are being taken to complete the balance works and commissioning of the project at the earliest. In addition to implementation of major works of project, Subansiri Lower Project is also implementing downstream protection works upto 30 km downstream of dam and downstream developmental works for safety and uplifting the living status of local people in downstream of dam through various livelihood intervention engaging Institute of Rural Management, Anand, Gujarat. Further, various Corporate Social Responsibility and Sustainable Development programs have been implemented for welfare of the local populace of Assam / Arunachal Pradesh. The Project would provide a great relief from flood devastation being faced by the region every year since time immemorial by controlling the flood through regulated discharge of water in river. During flood period (i.e. June, July and 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 of the reservoir will remain emptied to absorb the flood water. This project has brought prosperity for local people as well as the region boosting local economy and general improvement in living standard of masses, providing employment to the local youths (approx. 90% of 5,000 people engaged in construction works are local), Indirect employment generated in various forms like deployment of inspection vehicles, contractor, sub-contractors, petty contractors, R&M works and other works.

All seven North-Eastern states (Assam, Manipur, Meghalaya, Nagaland, Tripura, Arunachal Pradesh & Mizoram), five northern states / UTs (Haryana, Punjab, Rajasthan, Uttar Pradesh and Chandigarh) and five western states (Gujarat, Madhya Pradesh, Chhattisgarh, Maharashtra and Goa) will be benefitted from the power generated from Subansiri Lower H.E. Project.

Dibang Multipurpose Project, one of the largest project in the Country, is a hydropower cum flood moderation scheme. The Project envisages utilization of gross head of 230 m by construction of a 278 m high concrete dam across river Dibang. The estimated energy generation with an installed capacity of 2880 MW works out to be 11,223 MUs for the 90% dependable year. In addition, the reservoir created behind the dam will provide flood moderation benefit in the downstream, for which reservoir will be kept 40.10 m below FRL in monsoon period. The back water in the reservoir will travel up to a length of 41 km in Dibang River and its tributaries. The flood moderation will save erosion of agricultural land, damage to crops and further save crores of rupees being spent on flood control measures by the Govt.

SALIENT FEATURES:

• As on date Possession Certificate of land received is 1519.59 ha (99.91%) in Lower Dibang Valley and 1701.23 ha (98%) in Dibang Valley District by the Project for Project Construction Components.

• One number of Civil Package i.e. Lot II (Construction of Access Roads to Projects Dam Site, Left Bank Road Network, Dibang Bridges, Dam Site Right Bank Road Network and Temporary Haulage Road to Pathar Camp from ADC Morh including all Civil And HM Works of Diversion Tunnel ) has been awarded on the day of CCEA approval i.e February 27, 2023. Other Civil, HM, E&M packages are in different stages of tendering.

5.2.1 Teesta Stage-VI HE Project: 500 MW (4 x 125 MW) Sikkim under Lanco Teesta Hydro Power Limited (LTHPL):

LTHPL was acquired by NHPC through Corporate Insolvency Resolution Process (CIRP) in October, 2019 and is a wholly owned subsidiary of NHPC developing 500 MW Teesta VI HE Project in Sikkim. The project is a Run of River (RoR) Scheme in Sirwani Village of Sikkim to utilize the power potential of Teesta River Basin in a cascade manner. Major components of the project include 26.5 m high barrage and underground Power house having 4 units of 125 MW each. The project is having an estimated annual energy generation of 2,400 MUs in a 90% dependable year.

SALIENT FEATURES:

STATUS OF MAJOR WORKS:

The Construction works of Barrage, Excavation of HRT and Power House works are in full swing, despite various hindrances faced from time to time. As on March 31, 2023 the overall progress of the project is 50.68%.

5.2.2 Rangit-IV HE Project: 120 MW (3 x 40 MW) under Jalpower Corporation Limited (JPCL):

JPCL was acquired by NHPC through CIRP in March, 2021 and is a wholly owned subsidiary of NHPC developing Rangit-IV HE Project in Sikkim. The project is located on Rangit River near Rishi village, West Sikkim and is a run of the river scheme envisages construction of a 44 m high concrete gravity dam to generate 120 MW (3 x 40 MW) of power. The estimated design energy of the project is 507.88 MUs in a 90% dependable year.

SALIENT FEATURES:

STATUS OF MAJOR WORKS:

The Construction works of Barrage, Excavation of HRT and Power House works are in full swing, despite various hindrances faced from time to time. As on March 31, 2023 the overall progress of the project is 63.47%.

5.3.1 Pakal Dul HE Project: 1000 MW (4 x 250 MW), Jammu & Kashmir under Chenab Valley Power Projects Private Limited (CVPPPL):

The project is being developed on Marusudar River, a tributary of Chenab in Kishtwar District, UT of Jammu & Kashmir. The project has been planned as a storage scheme and shall utilize the permissible storage under Indus Water Treaty with storage of 0.1 Million Acre Feet (MAF). The scheme envisages construction of a 167 m high Concrete–Face Rockfill (CFRD) Dam (highest in India) to store and carry water through two HRTs of 9.6 Km length each to an underground power house, thereby utilizing a net rated head of 397.30 m to generate 3,230.18 MUs energy annually through 4 units of 250 MW each.

SALIENT FEATURES:

PROJECT LAYOUT STATUS OF MAJOR WORKS:

Excavation of Power House Cavern, MIV cavern, Transformer Hall cavern completed and excavation of valve House cavern, Pressure Shafts, Surge Shafts, Tail Race Tunnel and Pothead yard is in progress. Subsequent to construction of Diversion Tunnel (DT) and river diversion, excavation of HRTs through DBM, Surface excavation works of Surface Spillway, Tunnel Spillway, and Power Intakes, Filling & Grouting works of upstream and downstream coffer dam and Rock filling of CFRD is in progress.

Detailed Engineering, manufacturing, inspection, supply & erection of E&M and HM components are in progress. The assembly of TBM-1 completed and assembly of TBM-2, segment casting for lining and HRT Adit excavation are in progress.

Status of Major ongoing works:

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

Kiru HE Project is located at 25 Km upstream of dam site of Dulhasti H.E. Project in Kishtwar District of Jammu & Kashmir. The project has been planned as run-of-river scheme on river Chenab and located at Village Kiru / Pathrnakki in Kishtwar District of UT of Jammu & Kashmir. Major components of project includes 135 m high concrete gravity dam, 4 numbers (5.5 m dia.) pressure shafts/ penstocks and an underground Power House having 4 units of 156 MW each. The project is having estimated annual energy generation of 2,272 MUs in a 90% dependable year.

SALIENT FEATURES:

PROJECT LAYOUT STATUS OF MAJOR WORKS:

The construction of coffer dams, River bed excavation and Dam foundation concreting completed after River diversion in December, 2021. The block wise concreting of dam is in progress.

The excavation of Power House Cavern upto service bay completed and further excavation upto power house bottom is in progress. The excavation of Transformer Cavern completed and excavation of Pressure shafts are in progress. Detailed Engineering, manufacturing, inspection, supply & erection of E&M and HM components are in progress. Status of Major ongoing works:

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

The project has been planned as run-of-river scheme on river Chenab near Padyarna village in Kishtwar District of Jammu region. The nearest Rail head to the project is Udhampur and nearest Airport is Jammu. The major components of project includes 109 m high concrete gravity dam, 4 numbers (5.65 m dia.) pressure shafts/ penstocks and an underground Power House having 4 units of 135 MW each. The project is having estimated annual energy generation of 1975.54 MUs in a 90% dependable year.

SALIENT FEATURES:

PROJECT LAYOUT STATUS OF MAJOR WORKS:

Civil works were awarded on May 11, 2022. Excavations of Diversion Tunnel, MAT, Pothead yard, CVT and Dam abutment stripping are in progress.

The tendering for E&M and HM packages are in progress. Status of Major ongoing works:

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

The project has been planned as run-of-river scheme on river Chenab located at Kishtwar District of UT of Jammu & Kashmir near Drabshalla.

Major components of the project include 133 m high concrete gravity dam and an underground power house having 4 units of 205 MW each. In addition, a unit of 30 MW is envisaged to utilize the stipulated continuous release of environmental flows. The project is having estimated annual energy generation of 3,137 MUs in 90% dependable year.

SALIENT FEATURES:

STATUS OF MAJOR WORKS:

EPC contract for the project was awarded in January, 2022 and Excavation of Diversion Tunnels (DT) has been completed and lining works is in progress. Excavation of Powerhouse Cavern, Transformer Cavern, access tunnels and dam abutment striping is in progress.

Status of Major ongoing works:

6 HYDROPOWER PROJECTS UNDER CLEARANCE/APPROVAL

The status of hydro projects including of subsidiaries/joint ventures under various stages of clearance/approval are given in below Table.

B. THROUGH SUBSIDIARIES/JOINT VENTURES

6.1.1 TEESTA-IV H.E. PROJECT (520 MW), SIKKIM

All the clearances for the project have been accorded except Forest Clearance (FC-II) which is pending on account of compliance under the Forest Rights Act, 2006. The same is being pursued by NHPC.

6.1.2 SAWALKOT H.E. PROJECT(1856 MW), UT OF JAMMU & KASHMIR

The project has been planned as run-of-river scheme on river Chenab located at Ramban and Udhampur District of UT of Jammu & Kashmir near Tanger. Major components of the project include 192.5 m high RCC gravity dam and an underground power house having 6 units of 225 MW each. In addition, a unit of 56 MW is envisaged to utilize the stipulated continuous release of environmental flows. The project is having estimated annual energy generation of 7,994.73 MUs in 90% dependable year.

SALIENT FEATURES:

• MoU signed on January 03, 2021 between NHPC and JKSPDC for execution of Sawalkot (1856 MW) Hydroelectric Project by NHPC. Project handed over to NHPC on December 11, 2021.

• Forest clearance (FC-1) - Proposal uploaded by NHPC on Parivesh Portal on December 31, 2021 and necessary approvals are in progress.

• TEA appraisal by CEA, Indus Water Treaty, and Investment approval for Pre-Construction Activities & FRA Certificate obtained.

• The investment approval for pre-investment activities of ` 973 Crore was accorded on July 12, 2022. CEA vetted project cost of ` 22,704.80 crores including IDC & infrastructure cost at completion. Pre-construction activities including infrastructure works are in progress.

Lining of Access Road Tunnel to Dam site in progress

6.1.3 DUGAR HE PROJECT (500 MW), HIMACHAL PRADESH

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

SALIENT FEATURES:

• CEA accorded the Concurrence on April 26, 2022. The completion cost of the project is ` 4250.20 crore at April, 2021 PL.

• The proposal for Environment Clearance was discussed by EAC in its meeting on August 29, 2022 and was recommended for Environment Clearance subject to accord of FC-I.

• State Govt. had forwarded proposal to MoEF&CC, New Delhi on July 04, 2022 for approval of FC-I. MoEF&CC, GOI forwarded the proposal to Integrated Regional Office (IRO), MoEF&CC, Shimla on November 03, 2022 for Site Inspection. The site inspection has been completed.

6.1.4 URI-I, STAGE-II (240 MW), UT OF JAMMU & KASHMIR

Memorandum of Understanding was signed between NHPC Limited and JKSPDC in January, 2021. Detailed Project Report of Uri-I, Stage-II was concurred by Central Electricity Authority on March 07, 2023 amounting to ` 2,526.79 crore at completion level including ` 249.45 crore for IDC and ` 26.20 crore for enabling infrastructure. Forest Clearances (FC-I & II), Environment Clearance, PIB approval & CCEA approval for the project is pending.

6.2 UNDER JOINT VENTURE COMPANIES 6.2.1 KIRTHAI-II HE PROJECT (930 MW)

The project has been planned as run-of-river scheme on river Chenab located at Kishtwar district, J&K at about 25 Kms upstream of Kiru H.E. Project on river Chenab near village Paddar. Major components of the project include 121 m high concrete gravity dam and an underground power house having 6 units of 140 MW each. In addition, 90 MW is envisaged to utilize the stipulated continuous release of environmental flows. The project is having estimated annual energy generation of 3,329.52 MUs in 90% dependable year.

SALIENT FEATURES:

Project Layout STATUS OF MAJOR WORKS:

• MOU for implementation of Kirthai-II HEP (930 MW) through CVPPPL has been signed between JKSPDC and NHPC on January 03, 2021 and an agreement has been signed between NHPC and CVPPPL on March 19, 2021 to provide consultancy services to CVPPPL for the project.

• Obtaining of requisite clearances of the project is under progress. Conditional TEC accorded by CEA on June 14, 2019.

• Application for Forest Clearance-I submitted on Parivesh Portal on October 19, 2022.

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

7 PROJECTS UNDER SURVEY AND INVESTIGATION (S&I)

Your Company is engaged in survey and investigation of Goriganga-IIIA HE Project (150 MW) in Uttarakhand, Bursar Project (800 MW) and Dulhasti Stage-II (260 MW) Projects in UT of Jammu & Kashmir with aggregate installed capacity of 1210 MW.

8 NEW HYDRO PROJECTS INDICATED BY MINISTRY OF POWER FOR ALLOTMENT BY STATE GOVERNMENT TO NHPC

Ministry of Power (MoP) in December, 2021 has identified and indicated the four stalled Hydro Projects viz. Subansiri Upper (2000 MW) - Standalone by NHPC; Subansiri Middle (Kamala) (1800 MW) - Standalone by NHPC; Siang Lower (2700 MW) - NHPC, JV with NEEPCO; Upper Siang (10000 MW) - NHPC, JV with NEEPCO in the State of Arunachal Pradesh, for possible allocation to NHPC.

8.1. SUBANSIRI MIDDLE HEP (SMP) AND SUBANSIRI UPPER HEP (SUP):

NHPC constituted Task Force for evaluation of indicated projects and engaged professional consultant M/s Ernst & Young LLP (EY) to carry out technical & legal due diligence. Upon perusal of previous DPRs and techno-commercial due diligence, the Capacity & Design Energy works out as under: Subansiri Middle : 1720 MW / 6832.2 MU Subansiri Upper : 1500 MW / 5914.63 MU The valuation reports in respect of Subansiri Middle and Subansiri Upper HEPs were submitted by NHPC to Evaluation Committee of MoP in July, 2022 and September, 2022 respectively. The Board of Directors in March, 2023 has approved the acquisition of Subansiri Middle (Kamala) HE Project and Subansiri Upper HE Project from respective IPPs for an acquisition cost of ` 202.94 Crore and ` 100 crore respectively subject to approval of MoP. MoP in April, 2023 has conveyed ‘No Objection' to the acquisition of the Subansiri Middle (Kamala) and Subansiri Upper HEP by NHPC Limited. Govt. of Arunachal Pradesh has provided draft quadripartite/ penta partite agreement and draft Memorandum of Agreement for Subansiri Middle and Subansiri Upper HEPs. To make the projects commercially viable, Govt. of Arunachal Pradesh has conveyed its commitment to consider the concessions required for both the projects on case-to-case basis once the DPR is ready. NOC for Subansiri Upper HEP was issued by Govt. of Arunachal Pradesh in May, 2023. Post signing of the agreement and transfer of projects to NHPC, the DPR of the projects shall be prepared /updated by NHPC.

8.2. SIANG LOWER PROJECT - 2700 MW:

Siang Lower HE project is a flood moderation cum power generation scheme to harness the hydro-potential of Siang River. The project is located in East Siang District of Arunachal Pradesh. As per the updated DPR, the estimated annual energy generation from the project is 13236.47 MUs in a 90% dependable year. The scheme features 111 m high concrete gravity dam and a surface power house of 2700 MW capacity. Professional Consultant M/s Ernst & Young LLP (EY) engaged by NHPC has submitted the preliminary due diligence report of Siang Lower H.E. Project. Techno-commercial aspects of the Project can only be firmed up once the parameters of Siang Upper Multipurpose Project (SUMP) are finalised.

8.3. SIANG UPPER MULTIPURPOSE PROJECT-10000 MW:

Ministry of Jal Shakti in April, 2022 has entrusted the task for preparation of Pre Feasibility Report(PFR) of Upper Siang Multipurpose Storage Project (USMSP) to NHPC. The PFR of the project considering following 3 alternatives at Uggeng (11,600 MW), Ditte Dimme (11200 MW) & Parong (11,200 MW) Sites has been prepared by NHPC and submitted to Ministry of Jal Shakti, Govt. of India in December, 2022. Technical Committee constituted by Govt. of India has suggested that further geological investigations are required to concur the project site amongst the alternative project locations submitted in PFR for DPR preparation. It recommended that drilling works need to be undertaken at all the three sites as suggested by Geological Survey of India (GSI). NHPC proposal of Drilling Cost Estimate for 3 alternative sites of SUMP, has been approved by Ministry of Jal Shakti vide Office Order May 09, 2023 for an amount of ` 401.08 Lakhs. Letter of Award for Drilling work at Parong and Ditte Dimme site was issued on May 05, 2023 and for Uggeng site was issued on May 04, 2023.

9 RENEWABLE ENERGY PROJECTS

Your Company intends to be part of the renewable energy growth story of India by contributing to the Govt. of India's ambitious target of development of 50% power from non-fossil fuel sources by 2030. World over, various new and advanced technologies are being explored in the transition to a net-zero carbon future and your Company is aggressively looking forward in this direction. NHPC, in line with the latest technological developments and advancements, is now exploring road maps and strategies to scale up its renewable energy projects.

NHPC has also incorporated a wholly owned subsidiary Company i.e. NHPC Renewable Energy Limited (NHPC REL) in February, 2022 as a separate vertical for developing renewable energy projects.

9.1.1 Ongoing Solar Projects are given in table below:

* 26 MW capacity out of 65 MW was partially commissioned in July, 2022.

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

Your Company is implementing total 1000 MW Solar Power Projects under Tranche-III of CPSU Scheme (Phase-II) which includes 300 MW Project at Bikaner, Rajasthan, 600 MW Project at Kutch, Gujarat and 100 MW Project at N.P. Kunta, Andhra Pradesh. EPC Contracts for the respective projects have been awarded. The projects are under implementation at various stages and are likely to be commissioned in phases in F.Y. 2023-24 and 2024-25 based on the availability of domestically manufactured Solar PV Modules and commissioning of respective ISTS substations for power evacuation.

(ii) 65 MW Solar Power Project, Kalpi:

The project is being developed by Bundelkhand Saur Urja Limited (a Joint Venture Company with Uttar Pradesh New & Renewable Energy Development Agency). Out of total 65 MW, 26 MW capacity was partially commissioned in July, 2022. The supply of SPV module of about 56 MW (DC Capacity) is affected due to supply chain disruption and imposition of BCD w.e.f. April 01, 2022. Efforts are underway to resolve the issue for which matter has been taken up with MNRE for grandfathering of BCD. Subject to exemption from BCD, the project is likely to be completed within three months from exemption, as most of the activities are completed except major pending supply of 56 MW SPV modules.

(iii) 88 MW Floating Solar at Omkareshwar reservoir and 8 MW Ground Mounted Solar at Sanchi, Madhya Pradesh :

These projects are being developed by NHDC Limited (a Joint Venture of NHPC and Govt. of Madhya Pradesh). EPC Contracts for above projects have been awarded by NHDC Limited and projects are likely to be commissioned by 2023-24.

(iv) Projects under development through selected developers "as an Intermediary Procurer":

Your Company has awarded aggregate 2000 MW solar power projects to five numbers of selected developers as an "Intermediary Procurer". Out of total 2000 MW, 320 MW Project has been commissioned on December, 2022. Commissioning of balance 1680 MW Projects got delayed due to Great Indian Bustard (GIB) issue and delay in commissioning of respective ISTS sub-stations. Developers have applied to Committee appointed by Hon'ble Supreme Court seeking approval for laying of overhead transmission line. Approval of Committee obtained for 380 MW in Feb, 2023 and for 600 MW in January, 2023. Subject to commissioning of ISTS/ LTA Operationalization by CTU and the approval of Committee for 300 MW and 400 MW Projects, above 1680 MW Projects are aligned to be commissioned within one month of respective ISTS Commissioning during F.Y. 2024-25.

9.1.2 Renewable Energy projects under clearance/ new projects

Your Company, in line with the latest technological developments and advancements, is now exploring road maps and strategies to scale up projects in the field of Renewable Energy.

Your Company is actively exploring development of various sources of renewable energy on pan India basis and has identified projects in the potential rich states such as Rajasthan, Odisha, Uttar Pradesh, Kerala, etc. Efforts are underway to take up implementation of these projects under different schemes of MNRE so as to avail benefits/incentives available to CPSUs under different schemes.

9.1.3 Projects envisaged under Ultra Mega Renewable Energy Power Parks (UMREPP- Mode 8 of Solar park scheme)

Your Company is exploring possibilities for development of UMREPP in various potential rich States across the Country. The status of development of UMREPP projects are as under:

(i) 500 MW Floating Solar Project in Odisha:

Your Company has signed a Promoter's Agreement with Green Energy Development Corporation of Odisha Limited (GEDCOL) for formation of JV Company for development of 500 MW Floating Solar Power Projects in various water reservoirs & other solar projects in Odisha. 300 MW Floating Solar project at Rengali Reservoir, Odisha has been identified for implementation in 1^st Phase and EPC Contract for the same is under tender process. Proposed JV Company between NHPC and GEDCOL shall be incorporated after finalization of tender and firming up of PPA for the derived tariff based on discovered EPC price.

(ii) 10000 MW Renewable Energy Parks/Projects in Rajasthan:

MoU for development of 10,000 MW Renewable Energy Projects in Rajasthan has been signed between NHPC Renewable Energy Limited (NHPC REL) (A wholly owned subsidiary Company of NHPC limited) and Govt. of Rajasthan on August 24, 2022. Under the purview of said MOU, development of 10000 MW renewable energy parks/projects under UMREPP are to be taken up by NHPC REL in the state of Rajasthan with facilitation from Govt. of Rajasthan regarding land, connectivity and other necessary clearances. Identification of land for 1^st phase i.e. 100 MW is under process.

(iii) 50 MW Floating Solar Project in Kerala:

Your Company has invited tender for EPC Contract for setting up of 50 MW Floating Solar Project at West Kallada, Kerala after getting the consent from Kerala State Electricity Board (KSEB).

(iv) Setting up of Solar Power & Green Hydrogen Projects in Uttar Pradesh:

An MoU has been signed between NHPC REL and Govt. of Uttar Pradesh on January 19, 2023 for setting up of Solar Power & Green Hydrogen Projects in Uttar Pradesh with total investment proposal of `10,000 Crores. Further, an MoU has been signed between NHPC REL and Govt. of Uttar Pradesh on January 31, 2023 for setting up of 100 MW Floating Solar Power Projects in Uttar Pradesh.

(v) 1200 MW Jalaun Solar Park

The Solar Park shall be developed by Bundelkhand Saur Urja Limited (BSUL), a Joint Venture between NHPC Ltd. and UPNEDA, Govt. of Uttar Pradesh, set up with the purpose of developing Solar Power Projects in Uttar Pradesh.

9.1.4 Development of 75 MW capacity ISTS connected Solar Power Project for sale of power through Power Exchange:

Your Company is also exploring the option of development of Solar Power Projects for sale of energy through Power Exchange. In the 1^st phase of this mode, EPC Bids have been invited for 75 MW Grid Connected Solar Power Project on any-where India basis.

9.2 SETTING UP OF GIGA WATT SCALE VERTICALLY INTEGRATED SOLAR MANUFACTURING UNIT

Your Company has signed an MoU with Bharat Electronics Limited (BEL) on August 23, 2022 for Setting up of Giga Watt Scale Vertically Integrated Solar Manufacturing Unit at Bengaluru or any suitable location in the nearby vicinity jointly by NHPC and BEL. Formulation of action plan on modalities for way ahead is under process in consultation with BEL.

9.3 GREEN HYDROGEN TECHNOLOGY

The National Green Hydrogen Mission launched by Ministry of New and Renewable Energy in January, 2023 aims to make India a ‘global hub' for using, producing and exporting green hydrogen. Green Hydrogen Technology is at nascent stage and emerging as the future source of energy in zero carbon emission scenario. NHPC is willing to leverage the emerging opportunities of green hydrogen in power sector to fulfil the grid balancing services and also explore the end demand of hydrogen in other sectors. In order to avail the opportunities and gain business in Green Hydrogen sector, your Company has planned to enter and explore the production of Green Hydrogen with the use of various Renewable Energy Sources which are planned to be developed in potential rich States across the Country. To start with, your Company has initiated actions for development of Green Hydrogen Technology on pilot basis as below:

a) Pilot Green Hydrogen Based Fuel-Cell Microgrid (25 kWe) at Nimoo Bazgo Power Station (NBPS) Guest House, Leh.

b) Pilot Green Hydrogen Mobility Station at Kargil, UT of Ladakh.

c) Pilot Green Hydrogen Mobility Station at Chamba, Himachal. Letter of Award for 25 kWe Green Hydrogen based fuel cell Microgrid pilot project at NBPS Guest House, Leh has been issued on April 20, 2023. Other two pilot projects are also in tender stages. Based on the experiences obtained from above Pilot Projects, NHPC proposes to venture suitably in the Green Hydrogen business on larger scale in emerging hydrogen economy in future.

10 DIVERSIFICATION

Your Company has diversified in the field of renewable energy and green hydrogen energy development with an objective to strengthen its core vision of sustainable development of clean power. Further, in line with the paradigm shift towards clean energy transition and trajectory of energy market in the Country, NHPC as a business growth plan is diversifying its business portfolio towards development of Pumped Storage Projects (PSPs) in the Country.

NHPC is perusing for development of 16,045 MW PSPs capacities across different states viz. Maharashtra, Madhya Pradesh, Odisha & Andhra Pradesh and Damodar Valley Corporation (DVC).

NHPC is under discussion with Govt. of Maharashtra for development of 04 numbers PSPs viz. Kalu-1150 MW, Savitri-2250 MW, Kengadi-1550 MW & Jalond-2400 MW aggregating to 7350 MW and is also under discussion with GRIDCO Limited, Govt. of Odisha for development of 03 numbers PSPs viz. Upper Indravati-600 MW, Upper Kolab-320 MW, & Balimela – 500 MW aggregating to 1420 MW. NHPC has prepared the Pre-Feasibility Report in respect of 03 Pumped Storage Projects viz. Indirasagar-Omkareshwar PSP (525 MW), Tekwa-2 PSP (800 MW) & Satpura-2 PSP (1500 MW) aggregating to 2825 MW in the State of Madhya Pradesh. Govt. of Madhya Pradesh has conveyed the in-principle consent for carrying out Survey & Investigation, Preparation of PFR/ DPR and implementation in respect of Indirasagar- Omkareshwar PSP (525 MW) & Tekwa-2 PSP (800 MW). NHPC is under discussion with Govt. of Madhya Pradesh for allotment / signing of MoU in respect of above said three projects.

NHPC has signed MOU with DVC in July, 2022 to explore formation of a Joint Venture Company (JVC) for exploring and setting up hydropower and Pumped Storage Project(s). Under this MoU, two Pumped Storage has been identified for joint development namely Panchet Hill PSP (1000 MW) & Lugupahar PSP (1500 MW). NHPC has prepared the Pre-Feasibilty Report in respect of Panchet Hill PSP (1000 MW), and the DPR of Lugupahar is being prepared by DVC. NHPC has signed MoU with Govt. of Andhra Pradesh in March, 2023 for development of PSP in the State of Andhra Pradesh with installed capacity as 2000 MW, either on Standalone mode or Joint Venture mode with Government of Andhra Pradesh. Matter with APGENCO for development of PSPs totaling 1950 MW is under active consideration.

11 POWER TRADING BUSINESS AND POWER TRADING LICENSE

As part of business expansion and diversification program, your Company has ventured into Power Trading Business and obtained Category-I license from CERC for interstate trading of electricity in whole of India in 2018. NHPC is registered at DEEP (Discovery of Efficient Electricity Price) e-bidding portal and has obtained trader membership in Indian Energy Exchange (IEX) & Power Exchange of India Limited (PXIL). Endeavour of Power Trading business of the Company is to provide efficient and smart business solutions to its clients viz. Buyers/ DISCOMs, Generators/Sellers, Utilities etc. NHPC Limited is intermediary procurer/nodal agency for implementing 2000 MW Solar Power from ISTS Grid Connected Solar Photo Voltaic Projects Scheme under Tariff based Competitive bidding. Annual earnings from Trading Margin would be around ` 35 Crore for 25 years from Commercial Date of Operation (CoD). NHPC has signed Power Sale Agreement (PSA) for 2000 MW power with MP Power Management Company Limited (MPPMCL), Madhya Pradesh-1000 MW, Jammu & Kashmir Power Corporation Limited (JKPCL), Jammu & Kashmir-300 MW, Chhattisgarh State Power Distribution Company Limited (CSPDCL), Chhattisgarh-400 MW & Punjab State Power Corporation Limited (PSPCL), Punjab- 300 MW. NHPC has also signed Power Purchase Agreement (PPA) on back-to-back basis with Solar Power Developer (SPD) for purchase of Power. In FY 2022-23, 320 MW Solar Project has been commissioned by Solar Power Developer out of 2000 MW and commissioning of balance capacity is under process. During FY 2022-2023, NHPC has traded 693 MUs with turnover of ` 261 crore as against trading of 133.36 MUs with turnover of ` 44.48 crore during the previous year.

12 DETAILS OF SUBSIDIARIES AND ASSOCIATE COMPANIES

No subsidiary/joint venture/associate Company was incorporated or ceased during FY 2022-23.

A statement containing the salient features of the financial statements of subsidiaries and associate/ joint venture companies in AOC-I as per Section 129(3) of the Companies Act, 2013 and details of individual contribution of these companies in the overall performance of the Company during the FY 2022-23 is given under Consolidated Financial Statements.

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

Your Company has following subsidiaries and associate/joint venture companies as on March 31, 2023:

i) NHDC Limited (NHDC):

NHDC was incorporated as a joint venture of NHPC and Government of Madhya Pradesh in August, 2000. The shareholding pattern of NHDC as on March 31, 2023 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 (520 MW) in Madhya Pradesh.

During the FY 2022-23, NHDC generated 5443.69 MUs from its power stations i.e. 3661.09 MUs from Indira Sagar Power Station and 1782.60 MUs from Omkareshwar Power Station.

Further, NHDC is engaged in the development of 88 MW Floating Solar Project at Omkareshwar reservoir and 8 MW ground mounted solar project at Sanchi. NHDC Limited has also been allotted a Pump Hydro Storage site in Village Narmada Nagar, Punasa, Dist. Khandwa, Madhya Pradesh with estimated storage capacity of 525 MW x 6 hours, by New and Renewable Energy Department, Govt. of Madhya Pradesh.

ii) Loktak Downstream Hydroelectric Corporation Limited (LDHCL):

LDHCL is subsidiary of NHPC with 74.82% shareholding of NHPC and 25.18% shareholding of Government of Manipur as on March 31, 2023. LDHCL was incorporated in October, 2009 to execute Loktak Downstream Hydroelectric Project (66 MW) in Noney District of Manipur. All statutory clearances for the project have been received and PPA had already been signed with Govt. of Manipur. However, Public Investment Board (PIB) approval for the project is awaited.

iii) Bundelkhand Saur Urja Limited (BSUL):

BSUL is a joint venture between NHPC and Uttar Pradesh New & Renewable Energy Development Agency (UPNEDA). As on March 31, 2023, shareholding of NHPC and UPNEDA was 86.94% and 13.06% respectively. BSUL was incorporated in February, 2015 for development of Solar Power Project in Tehsil Kalpi, District Jalaun, Uttar Pradesh and other conventional & non-conventional power projects entrusted by the Govt. of Uttar Pradesh. During the year, BSUL has commissioned 26 MW capacity out of total 65 MW Kalpi solar project in Tehsil Kalpi, District Jalaun. The status of solar projects developed by BSUL is given elsewhere in the report. BSUL is in the process of development of 1400 MW (approx.) Solar Power Projects in Uttar Pradesh through various modes of implementation i.e. in EPC mode and development of Solar Park followed by plant installation in developer mode. Preparation of Public Investment Board (PIB) proposals for investment in the projects viz. Mirzapur SPP (100 MW), Madhogarh SPP (45 MW) and Jalaun Solar Park (1200 MW) are in progress.

iv) Lanco Teesta Hydro Power Limited (LTHPL):

LTHPL was acquired by NHPC through Corporate Insolvency Resolution Process (CIRP) in October, 2019 and equity of ` 897.50 crore was infused as consideration amount pursuant to approved resolution plan. LTHPL is a wholly owned subsidiary of NHPC. LTHPL is executing 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. Approval of Ministry of Power has been obtained for merger of LTHPL with NHPC Limited. The Ministry of Corporate Affairs vide order dated February 23, 2023 has already issued directions for convening meeting of equity shareholders and creditors of transferee Company i.e. NHPC Limited for consideration and approval of scheme of amalgamation between LTHPL and NHPC. The merger of LTHPL with NHPC is underway.

v) Jalpower Corporation Limited (JPCL):

JPCL was acquired by NHPC through Corporate Insolvency Resolution Process (CIRP) in March, 2021 and equity of ` 165 crore was infused as consideration amount pursuant to approved resolution plan. JPCL is a wholly owned subsidiary of NHPC. JPCL is developing Rangit-IV HE Project in Sikkim and construction works are at full swing. The status of Rangit-IV HE Project has been provided elsewhere 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 Development Corporation Limited with shareholding of 52.74% and 47.26% respectively as on March 31, 2023. NHPC and JKSPDC have signed the Supplementary Promoters' Agreement of CVPPPL in November, 2022. As per the agreement, shareholding of NHPC & JKSPDC in CVPPPL should be 51% & 49% respectively. CVPPPL was incorporated in June, 2011. CVPPPL is developing four hydroelectric projects in UT of Jammu & Kashmir i.e. Pakal Dul HE Project (1000 MW), Kiru HE Project (624 MW), Kwar HE Project (540 MW) and Kirthai-II HE Project (930 MW). The status of Pakal Dul HE, Kiru HE, Kwar HE and Kirthai-II HE Projects 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 & Kashmir State Power Development Corporation Limited (JKSPDC). As on March 31, 2023, shareholding of NHPC and JKSPDC was 51% and 49% respectively. RHPCL is developing Ratle Hydroelectric Project (850 MW) in UT of Jammu & Kashmir. The status of Ratle Hydroelectric 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 for taking up Solar, Wind, Small Hydro and Green Hydrogen ventures. NHPC REL is exploring various renewable energy projects for expansion of its activities

(i) 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 Valley Corporation and Central Power Research Institute (each having shareholding of 20%). NHPTL was established to set up an online high power test laboratory for short-circuit test facility in the country. The laboratory for High Voltage Transformer (HVTR) at 400 kV level and 765 kV level is already operational at Bina, Madhya Pradesh. Laboratory for Medium Voltage Transformer (MVTR) has not been commissioned till date.

13 GLOBAL INITIATIVES

Your Company has ventured into Nepal seeking to expand its footprint in the hydropower business in line with GOI direction that CPSEs act in a way to increase their geographic footprint in the neighbouring countries of India and that CPSEs should transform to globally respected multinational companies in the long run and be able to generate substantial revenues from their foreign operations. Accordingly, during the year, NHPC has taken major strides in establishing its business footprint in Nepal. During the year, NHPC signed MOU with Investment Board Nepal (IBN) for taking up the development of West Seti (750 MW) and SR6 (450 MW) HEPs in Nepal. As per terms of the MOU, NHPC will review the prior studies / details undertaken in respect of the two schemes and prepare the DPR for the schemes to confirm the techno economic feasibility. Thereafter, Project Development Agreement is proposed to be signed for implementation of the schemes. In this regard, subsequent to grant of Survey License, the Inception Report for West Seti Scheme has already been submitted and IBN has given go ahead for preparation of DPR. In case of SR6 HEP, Survey License has been granted and Inception Report is under formulation. Senior level business delegations from NHPC visited Nepal and held discussions with the highest functionaries in Government of Nepal for extending support to NHPC initiatives in taking up the development of hydropower schemes in Nepal. NHPC has set-up its offices in Nepal i.e. Kathmandu and Dipayal and manpower had also been posted. NHPC has entered into a Memorandum of Understanding (MoU) with Vidhyut Utpadan Company Limited (VUCL), Nepal for joint development of Phukot Karnali HE Project (480 MW), which is a run-of-the-river hydropower project situated in Kalikot district of Karnali Province, Nepal. The MoU was exchanged in the august presence of Hon'ble Prime Minister of India and Hon'ble Prime Minister of Nepal on June 01, 2023.

Your Company has commissioned 14.1 MW Devighat Hydropower project in Nepal and 60 MW Kurichu Hydropower project in Bhutan on deposit basis. Company has already marked its footprints in Countries like Nepal, Bhutan, Myanmar, Tajikistan, Nigeria and Ethiopia and is looking further to expand its business in various other countries.

14 HEALTH, SAFETY & ENVIRONMENT (HSE)

NHPC is committed to conduct its business with a strong environment conscience. NHPC is committed to protect the environment during the construction and operation phases of its hydroelectric projects. NHPC conducts its business with a strong environmental conscience and socially responsible manner, ensuring sustainable development, safe workplaces, and enrichment of the quality of life of its employees, customers, and the community. It is well aware of its obligation to conserve and protect the environment. During the investigation stage, probable impacts on the environment while executing the projects, are assessed and identified. Environmental Management Plans (EMPs) are proposed and implemented to compensate for the adverse impacts of the project by taking necessary measures. Compliance with safety systems & procedures and environmental laws is regularly monitored.

In NHPC Limited, Safety Manual & Safety Policy has been prepared which provides the detail of Scope, Applicability of Laws, Standard Operating Procedures (SOPs), Operations Control Procedures, Roles & responsibilities etc. for effective safety Management. All Power Stations/Projects have prepared their Crisis & Disaster Management Plan. Safety Policy & Safety Manual has been implemented at all Power Stations/Projects of NHPC Limited with a target of Zero hazard potential at workplace. In addition of the above, Occupational Safety, Health and Working Conditions Code, 2020/Factories Act, 1948, Building and Other Construction Workers Act 1996, Disaster Management Act, 2005, the Environment Protection Act, 1986, Hazardous Waste Rules, 2008, National Building Code and other applicable, Acts, rules & standards are being followed at all Power Stations/Projects.

Annual Internal & External Safety Audits are being conducted at Power Stations/Projects to identify, assess and control of hazards. Various type of Mock drills/trainings/awareness camps are being organised for awareness & also preparing the employees/stakeholders for any probable threat, disaster and risk.

Early warning system is installed/under progress at all Power Stations/Projects to receive the early warnings from upstream of the river. Hooters are installed in Dam & Power House to sensitize public in the vicinity areas/downstream before release of water from Dam.

Most of the power stations of your Company are ISO 9001:2015 (Quality Management System), ISO 14001:2015 (Environmental Management System) and ISO 45001:2018 (Occupational Health and Safety Management System) certified, thus ensuring sustainable development and enrichment of quality of life of its stakeholders. Compliance to safety systems & procedures and environmental laws is regularly monitored.

15 CONSULTANCY SERVICES

NHPC, a multi-disciplinary Organization, has sufficient in-house expertise and state-of-art technology for planning and executing large and small size Hydro Power Projects. The technical "know-why and know-how", proficiency and experience of NHPC places it in a leading position to offer a wide range of "World Class" consultancy services from "Concept to Commissioning along with operation and maintenance" in the field of hydro power and related works. NHPC provides consultancy services to clients in public sector as well as private sector with the support of highly qualified and experienced professionals in the field of Design and Engineering, Geotechnical Engineering, Survey and Investigations, Construction Management, Operation & Maintenance, Contract Management etc. by using latest range of test equipment and construction technologies.

Till date NHPC successfully completed 13 International consultancy assignments and more than 100 Domestic consultancy assignments for different Govt. / Public Sector / Private Sector Clients with revenues of over ` 400 Crores since formation of Consultancy Division. In the last five years Average Annual Turnover from the consultancy services has been ` 40 Crores. During the financial year 2022-23, a payment of ` 75.57 Crores has been received by NHPC Limited for consultancy services rendered to its different clients.

At present, more than 20 consultancy assignments for different Clients are under progress, which includes NHPC's JV/Subsidiaries also. Your Company takes up consultancy assignments within India and in its neighboring countries. The main aim is to share its best practices with fellow organizations and other stakeholders in the hydropower sector in construction of hydroelectric projects in the geologically fragile Himalayan Region. The best O&M practices, which have allowed NHPC to achieve best plant availability, increased efficiency and increased plant/equipment life across its various power stations are also shared through consultancy.

16 FINANCING OF NEW PROJECTS

Internal accruals of the Company are sufficient to finance the equity component for the new/ upcoming projects. NHPC is well positioned to raise the borrowings as per CERC norms given its low geared capital structure and strong credit ratings. NHPC is exploring domestic as well as international borrowing options including overseas development assistance provided by multilateral/ bilateral agencies to mobilize the debt required for the planned capacity addition programmes. During the FY 2022-23, your Company has raised ` 1100 crore through Long Term Loan from Banks, ` 996 crore through issue of Unsecured non-cumulative non-convertible redeemable taxable bonds (AD Series) in the nature of debentures and `1876.37 crore against monetization of free cash (consisting Return on Equity, revenue from Secondary Energy and Capacity incentive) of Uri-I Power Station for 10 years during FY 2022-23 under the ambit of Assets Monetization Plan.

17 CREDIT RATINGS

• Domestic Rating

NHPC has highest domestic credit rating of ‘AAA' with stable outlook assigned by domestic credit rating agencies i.e. ICRA, CARE and India Ratings & Research for its listed bonds which indicates lower credit risk for the investors.

• International Rating

NHPC has International Credit Rating of BBB(–) with stable outlook rated by the S&P Global Ratings.

18 INFORMATION TECHNOLOGY AND COMMUNICATION

NHPC considers Information Technology as astrategic tool for the attainment of sustainable growth in business and to improve overall productivity and efficiency. All locations of the Company including remotely located Power Stations / Projects are connected to Corporate Office / Regional offices through multimode communication links using MPLS-VPN / ILL / VSAT-Ku band / VSAT Phones. These multimode links have been integrated through SDWAN (Software Defined Wide Area Network) technology to function in a fail-safe mode. IP Telephony has been deployed between corporate office / Regional Offices and Power Stations / Projects. VMS (Video Management System) has been recently made operational for better monitoring/ management and surveillance of projects / power stations. Two-Factor Authentication (2FA) has also been implemented for the users connecting NHPC network through SSL-VPN in a secured manner. NHPC has implemented Enterprise Resource Planning (ERP) application across all its locations integrating its various business processes. NHPC has appointed PMCA (Project Management Consulting Agency) for implementation of New Age ERP in the organization to further strengthen business processes and incorporate business intelligence. Apart from ERP, NHPC has implemented a host of other software applications / mobile apps to take care of day-to-day business requirements. NHPC's bilingual website and integrated intranet are functioning as powerful information dissemination systems to take care of external / internal information requirements. As per Government of India directives, e-procurement, Government e-Market (GeM), Vendor payment portal and e-Reverse auction system are operational in the Company.

During the year 2022-23, NHPC launched "Early Warning System (EWS)-AABHAS" an Internet Cloud based Software Application for monitoring of water level/discharge of rivers so as to raise alarms with sufficient lead time to handle disastrous situation at Projects/Power Stations sites. A Master Control Room facility has also been set up in NHPC Corporate Office for monitoring of vulnerable hydroelectric projects in the Country.

IT & Cyber Security Policy and Cyber-Crisis Management Plan are in place to strengthen Cyber Security Posture of the Organization. Critical IT Infrastructure including servers, data storage, communication equipment etc. have been installed at safe locations and are being managed through internal resources. NHPC has been certified with ISMS ISO 27001:2013 certification in Corporate Office which assures confidentiality, integrity and availability of information assets. ISMS ISO 27001:2013 certification is in process of implementation at all NHPC's power stations. VAPT Audit has been carried out at all generating power stations to secure valuable information and vital infrastructure. A centralised End Point Security Software solution has also been implemented to protect Servers / Desktops against Cyber threats. NHPC has been nominated as nodal agency for Sectorial CERT i.e. CERT-Hydro to guide and monitor the Cyber security related activities in the constituent member organizations.

19 HUMAN RESOURCES

Your Company has a strong and dedicated workforce of 4,776 employees, consisting of 3,084 executives and 1,692 non-executives as on March 31, 2023. The above workforce includes 502 women employees.

Your Company is strongly focused towards lifelong learning and competency development of its employees for their overall capacity building by improving their performance and enhancing organizational capabilities. Training programmes to employees are facilitated through internal faculty as well as through external agencies. NHPC's vision towards human resource development is to develop & nurture its employees to leverage their fullest potential to make NHPC an employer of choice in the talent market. NHPC has established infrastructure for effective training programs in all categories viz. induction level training for new recruits, refresher/advanced training to existing employees and management training to the managers through in-house experts and in collaboration with various renowned institutes like IITs, IIMs etc. Your Company also deputes senior and high potential employees to foreign training programmes to keep them abreast with the latest know how and to understand the global scenario in the field of hydro power. NHPC also sponsors its executives to acquire higher qualification and specialization to improve their productivity and effectiveness. During COVID-19 pandemic, your Company has organized virtual workshops to fulfill training requirements of its employees in addition to knowledge sharing sessions through webinars. Considering the future training needs due to advancing technologies, NHPC recognizes the need to adopt modern and scientific training methodologies and to create an infrastructure accordingly. Further, specialized training in the field of project planning, execution & management, O&M, R&D, etc. will be met either by establishing JVs or in collaboration with the expert institutions in the concerned field in India & abroad. 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 in services for SC/ ST/ OBC/ PWD (Persons with Disabilities)/ Ex-servicemen/EWS to promote inclusive growth. Necessary concessions/ relaxations in accordance with the rules are extended to SC/ST and physically challenged persons in recruitment. Details of representation of SC/ ST/ OBC/ PWD are given in Management Discussion & Analysis.

20 REHABILITATION AND RESETTLEMENT (R&R)

Your Company appreciates the difficulties of populace displaced during the execution of its projects. Rehabilitation & Resettlement Plans are formulated for Project Affected Families (PAFs) to provide economic sustenance under the provisions of ‘The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013'. NHPC has formulated a Policy for reservation of certain type of works through competitive bidding for PAFs and locals residing near its projects/power stations.

21 VIGILANCE

The objective of the vigilance function is to increase the productivity and efficiency of the Company by bringing about an improvement in system and encouraging transparency. Your Company has a Vigilance Department headed by Chief Vigilance Officer to ensure transparency, objectivity and quality of decision making in its operations. All the procedures are documented to monitor and handle vigilance complaints and disciplinary cases. Vigilance Department also co-ordinates with Ministry of Power, Central Bureau of Investigation (CBI), Central Vigilance Commission (CVC), Department of Personnel and Training (DoPT) and other concerned departments of the Government. One vigilance case related to misconduct has been disposed-o_during FY 2022-23. One vigilance case related to disproportionate assets is under disciplinary proceedings as on March 31, 2023. As a part of preventive vigilance, circulars and guidelines are being issued regularly based on various inspections/ intensive examinations carried out from time to time. Vigilance Awareness Week and other vigilance awareness programmes are also being organized by the Company to promote transparency and ethics in working system.

22 INTERNAL FINANCIAL CONTROLS

The Company has adequate internal financial control system in place with reference to the Financial Statements and such internal financial controls were operating effectively as at March 31, 2023. The Statutory Auditors of the Company have certified that the Company has an adequate internal financial control system with reference to the Standalone and Consolidated Financial Statements and such controls were operating effectively as at March 31, 2023 based on the internal control criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by ICAI.

23 RISK MANAGEMENT

NHPC recognizes that it is exposed to a number of uncertainties, which is inherent to the power sector. The volatility of the power sector affects the financial and non-financial results of the business.

To increase confidence in the achievement of organization's objectives, NHPC has developed Risk Management Policy to remain a competitive and sustainable organization and enhance its operational effectiveness. The Policy statement is as under:-

a. To ensure protection of shareholder value through the establishment of an integrated Risk Management framework for identifying, assessing, mitigating, monitoring, evaluating and reporting of all risks.

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

c. To continually strive towards strengthening the Risk Management System through continuous learning and improvement and to achieve the objectives of this Policy through proper 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 Policy objectives through systematic monitoring and effective course corrections from time to time.

24 PROCUREMENT FROM MICRO & SMALL ENTERPRISES

Government of India has notified Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 to support marketing of products produced and services rendered by them. In compliance to the Policy, annual procurement plan including items to be 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 deposit, purchase preference, interest on delayed payments and exemption from prior experience – prior turnover criteria subject to meeting of quality and technical specifications are also extended to encourage these enterprises. During financial year 2022-23, NHPC has procured 50.16% of the total annual procurement of products produced and services rendered by Micro and Small Enterprises (MSEs) against the mandate of 25% set by Ministry of Micro, Small and Medium Enterprises, Govt. of India. Procurement also includes 4.54% from SC/ST MSEs and 4.15% from women MSEs against the sub-target of 4% and 3% respectively. During this period, 2,663 MSEs were benefited out of which 133 MSEs and 342 MSEs were owned by SC/ST and women entrepreneurs respectively.

25 IMPLEMENTATION OF OFFICIAL LANGUAGE

Your Company is committed to implement Official Language Hindi in day-to-day working in various offices/locations/units in accordance with the provisions of Official Languages Act, 1963 and Official Languages Rules, 1976. During the year 2022-23, quarterly meetings of Official Language Implementation Committee of the Company and Town Official Language Implementation Committee (Office), Faridabad were organized regularly to review the status of Official Language Implementation. In addition to above, Official language inspection of Regional Office, Chandigarh was carried out by the second sub-Committee of Parliamentary Committee on Official Language and Official language implementation was speeded up in view of inspection of offcial language in various offices/locations/units by senior offcials of Company from time to time.

During the year, NHPC organized various events like NHPC Official Language Conference, Hindi Kavi Sammelan, Hindi Pakhwada, Hindi Poetry Seminar etc. for its employees to encourage the use of Hindi. In addition to the above, Hindi Typing Training Programme, Hindi Workshops and Departmental Computer Workshops were also conducted regularly. Apart from this, to increase the interest of employees to work in Hindi, an ‘Online Hindi Quiz Competition' was also conducted at Corporate office, Faridabad. To promote the use of Hindi, Official Language magazines named ‘Rajbhasha Jyoti' and ‘Nagar Saurabh' were also published regularly. In order to encourage and participate actively to promote Hindi, attractive incentive schemes have been implemented for employees to contribute articles/papers for in-house journals, to read Hindi books and to do offcial work by writing, noting and drafting etc. in Hindi.

Your Company's website i.e. www.nhpcindia.com has been developed and updated continuously in bilingual operation mode i.e. Hindi & English.

26 SPORTS AND OTHER ACTIVITIES

NHPC has always encouraged sports culture in the organization. NHPC employees have participated in various sports tournaments in individual and team events. NHPC Sports Scholarship holders have participated in many tournaments giving stellar performances. NHPC hosted 12^th Inter CPSU Athletics Tournament under the aegis of Power Sports Control Board (PSCB), Ministry of Power, Govt. of India in December, 2022 at Faridabad. Seven power sector CPSUs/organizations viz. Ministry of Power, NHPC,

DVC, PGCIL, CEA, BBMB and REC participated in above tournament. NHPC's teams participated in all Inter CPSU Tournaments organized under the aegis of PSCB. NHPC's team achieved podium positions in Inter CPSU Athletics, Carrom, Badminton and Cricket Tournaments. NHPC organized State Level Painting Competition in six States/UTs (J&K, Ladakh, Arunachal Pradesh, Sikkim, Manipur & Madhya Pradesh) under the aegis of Bureau of Energy Efficiency (BEE), Ministry of Power, Govt. of India in the month of November, 2022. The winners of the State Level Painting Competition participated in the National Level Painting Competition held in Noida & Gurugram on December 11, 2022. NHPC celebrated its 48^th Raising Day with Shri R. K. Singh, Hon'ble Cabinet Minister of Power and New & Renewable Energy gracing the occasion as Chief Guest. Cultural teams from various NHPC locations showcased dance forms pertaining to their States/ UTs and enthralled the audience during the celebration.

Your Company has organized Vasant Utsav, 2023 under "Azadi Ka Amrit Mahotsav" with great festive spirit at the NHPC Residential Complex, Faridabad on March 04, 2023 to welcome the arrival of spring and to showcase the rich and diverse Indian culture. During the year, NHPC has been actively contributing towards the celebration of Azadi Ka Amrit Mahotsav across all its locations spread across the Country. These programmes have 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 and celebrating the idea of INDIA through educational trips, competitions, awareness campaigns, cultural events, patriotic programmes, sports health and medical initiatives. ‘Har Ghar Tiranga Abhiyan' was celebrated with full enthusiasm in NHPC Corporate Office, Regional Offices, Projects, Power Stations, units from 13^th to 15^th August, 2022. Similarly, NHPC was allocated 75 districts by Ministry of Power across the Nation to organise Ujjwal Bharat, Ujjwal Bhavishya- Power @2047 programme. Various activities were organized successfully by NHPC across the allocated districts to celebrate the achievements of Power sector towards Nation building. NHPC has a strong presence on various social media platforms. As on March 31, 2023, NHPC has 21,000 followers on Twitter, 79,600 followers on Instagram, 1,00,000 followers on Facebook and 2400 subscribers on YouTube. Information on important activities related to the Company is regularly posted on these social media platforms so that information can be widely disseminated among the public. Apart from this, tweets of joint ventures, subsidiary companies like NHDC, CVPPPL and Ministry of Power etc. are also liked and re-tweeted.

27 AWARDS & RECOGNITIONS

NHPC has been proud recipient of following awards for excellence in different areas during the financial year 2022-23:-

• NHPC was conferred with "PSU developer of the Year" award in Gold Category on April 13, 2022 by EQ International during EQ's PV Invest Tech India Conference & Awards at New Delhi.

• NHPC was conferred with First Prize for the year 2020-21 for excellent implementation of Rajbhasha by Shri R.K. Singh, Hon'ble Union Minister of Power and New and Renewable Energy and Shri Krishna Pal Gurjar, Hon'ble Minister of State for Power and Heavy Industries during the meeting of Hindi Salahkar Samiti at New Delhi in May 2022. NHPC was also conferred the second prize for the year 2018-19 for excellent implementation of Rajbhasha during the meeting.

• NHPC was conferred with Certificate of Appreciation and Special Commendation award for ‘Innovative Training Practices: 2020-21' by Indian Society for Training & Development on June 25, 2022.

• NHPC bagged Gold Medal for best presented annual report for FY 2020-21 (Infrastructure & Construction Sector category) at South Asian Federation of Accountants Awards, 2021 at Kathmandu, Nepal on December 18, 2022.

• NHPC was awarded Winner of ‘Best Globally Competitive Power Company of India – Hydropower and Renewable Energy Sector' at PRAKASHmay ‘15^th Enertia Awards 2022', held at New Delhi on December 22, 2022.

• NHPC was conferred ‘Second Best Enterprise award' for Mini-Ratna Category from Director General, SCOPE at WIPS (Women in Public Sector) 33^rd National meet at Kolkata on February 10, 2023.

• NHPC secured the "Use of Emerging Technologies Data Centre" Award at Governance Now- 9^th PSU Awards & Conference at New Delhi on February 16, 2023. The award was conferred to NHPC in recognition of its efforts towards building a strong Digital India and vibrant Data Center Ecosystem.

• NHPC has been awarded with "Data Centre Champion-2022" by Express Computer (IT business publication of Indian Express Group) in recognition of NHPC's efforts towards building a strong Digital India & vibrant Data Center Ecosystem.

• NHPC has been awarded ‘Second Prize' under ‘Rajbhasha Kirti Puruskar' in Region ‘A' by Ministry of Home Affairs, Govt. of India, for the year 2021-22 under ‘Rajbhasha Kirti Puruskar' scheme.

28 RIGHT TO INFORMATION ACT

The Right to Information Act, 2005 has been implemented in NHPC to provide information to citizens and to maintain accountability and transparency. NHPC has placed various documents/ records on its website i.e. www.nhpcindia.com for access to all citizens of India. NHPC has designated Appellate Authority, Transparency Officer and Central Public Information Officer (CPIO) at Corporate Office and Assistant Public Information Officers (APIOs) at all Power Stations/ Projects / Regional Offices / Units. During the financial year 2022-23, 719 applications and 70 first stage appeals were received under RTI Act. Out of above, 702 (98%) applications and 69 (99%) first stage appeals were replied / disposed. Further, 12 second stage appeals were filed by the applicants before the Central Information Commissioner (CIC), which were also disposed-off in favour of NHPC.

29 CORPORATE SOCIAL RESPONSIBILITY

Your Company is playing a vital role for the greater welfare of the society since years through its various CSR initiatives. The positive impacts of CSR initiatives of your Company have penetrated deeply amongst the needy sections of the society by addressing the social, economic, environmental and welfare concerns of the stakeholders. The CSR initiatives of the Company includes programs on promoting Education & Skill Development, Healthcare & Sanitation, Rural Development, Women Empowerment, Sports, promoting & conserving Art & Culture etc. in accordance with Schedule VII of the Companies Act, 2013. While selecting & implementing the CSR & Sustainability projects, your Company strives hard to ensure that the maximum benefit percolates down the line to the underprivileged sections of the society. Your Company is committed to support the State Governments in setting up new Engineering Colleges, smart classes in Schools, infrastructural facilities, improvement in ITIs, employment oriented skill development for livelihood enhancement of unemployed youth & divyangjans, augmentation of health care facilities by way of providing ambulances, state of the art medical equipment in Primary/ Community/ District Hospitals in different corners of the country. As a responsible corporate entity, your Company has also contributed ` 30 crores in PM CARES under its CSR initiatives to support the Government to fight in emergency situations. Your Company's focused approach to work in the areas aligning its CSR target to national priorities and optimal utilization of resources has maximized the socio-economic impact on the society. Over the passage of time, the footprints of your Company's CSR initiatives have reached its intended area of coverage to manifold. Your Company has adopted a Corporate Social Responsibility (CSR) Policy in compliance with the Companies Act, 2013, as well as the Companies (Corporate Social Responsibility Policy) Amendment Rules of 2021 and 2022. 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 allocating atleast 80% of the CSR Budget amount. However, other locations are also being selected based on the needs and as per the direction of Government of India on national schemes and campaign, wherein about 20% amount of the CSR Budget may be spent, for the larger benefit of society / environment.

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

• Selection of CSR & Sustainability schemes is made so as to ensure maximum benefits reach the poor/ backward and needy sections of the society and contribute to improve the quality of environment. NHPC is open to join hands with other CPSEs in planning, implementing and monitoring of Mega-Projects for optimal use of resources, synergy of expertise and capabilities for maximizing socioeconomic or environmental impact.

• The Policy has defined roles & responsibilities at various levels for proper selection, planning, execution & monitoring of CSR activities.

During the FY 2022-23, the CSR Policy was revised to include provisions with respect to following: a. Engagement of implementing agency for the CSR Projects or programs, b. Expenditure on undertaking the Impact Assessment The CSR Policy is available on website of the Company at https://www.nhpcindia.com/assests/ pzi_public/gallery/1681895733.pdf. A report on CSR activities undertaken by your Company during the FY 2022-23 is given as Annexure-I to this report.

30 CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

Your Company has not entered into any material transaction with any of its related parties during the FY 2022-23. Company's major related party transactions are generally with its subsidiary and associate companies for providing consultancy services, leasing out of properties, manpower services, inter-corporate loan, corporate guarantee etc. All the contracts / arrangements / transactions entered into with related parties were on arm's length basis, intended to further the Company's interest. Accordingly, the disclosure of Related Party Transactions as required under 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 statements, which sets out related party disclosures as per Ind AS-24.

31 VIGIL MECHANISM - POLICY ON WHISTLE BLOWER AND FRAUD PREVENTION

Your Company has framed a ‘Whistle Blower Policy' wherein Directors, employees, contractors and vendors of the Company are free to report any unethical practice, violation of applicable laws, rules, regulations or Company's Code of conduct, that could adversely impact Company's operations, business performance and/or reputation. The Policy also allows direct access to the Chairperson of the Audit Committee. During the year, no person was denied access to the Audit Committee on issues relating to Whistle Blower Policy. The identity of the whistle blower is kept confidential so that he/ she shall not be subjected to any discriminatory practice. A senior level officer has been nominated as coordinator for effective implementation of the Policy and to deal with complaints reported under the Policy. During the year 2022-23, no complaint was received under Whistle Blower Policy. Your Company has also framed a Fraud Prevention & Detection Policy to prevent, detect and allow speedy disposal of fraud or suspected fraud. Mechanism under the Policy is appropriately communicated within the organization across all levels and has been displayed on Company's intranet.

The Whistle Blower Policy is available at website of the Company at https://www.nhpcindia.com/ assests/pzi_public/gallery/1683188102.pdf

32 PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Your Company believes that diversity at workplace creates an environment conducive to engagement, alignment, innovation and high performance. Every employee in the Company is treated with dignity, respect and afforded equal treatment. A Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 is in place. ‘Internal Complaints Committees' have been constituted at all locations of the Company for the redressal of complaints against sexual harassment of women at workplace. The Committee at Corporate Office, Faridabad is headed by a senior woman officer and includes representative from an NGO, as one of its members. Your Company has also prohibited sexual harassment of women by incorporating it as misconduct under "NHPC Conduct, Discipline and Appeal Rules". Disclosure in respect of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 for the financial year 2022-23 is as under:

*complaint is under investigation by the Internal Complaints Committee.

33 DEBENTURE TRUSTEES

In compliance to the requirements of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR), the details of Debenture Trustees appointed by the Company for different series of Bonds is provided at reference information of this Annual Report.

34 COVID 19

NHPC continues its endeavors to fight COVID-19 pandemic in its varying magnitude while, its top priority remains safety & well-being of employees along with business continuity for clients. NHPC acts in accordance with the guidelines issued by Ministry of Home Affairs, Ministry of Health & Family Welfare and Ministry of Power from time to time and implemented elaborate support measures to sensitize employees, their dependent and other stakeholders about safety measures for COVID-19 pandemic.

Oxygen support facilities are also present at various NHPC locations like oxygen concentrator and oxygen cylinder etc Company had also established 24x7 help-desk, coordinated support measures such as tie-ups with testing labs, video consultation with doctors, COVID leave provision, medicines and counselling support. Amid these transitions and pandemic-related uncertainties, the well-being of our employees has become a critical focal point. Through concentrated efforts over the last 24 months, NHPC had implemented several well-being initiatives for its employees including sessions with experts on mental health, self-care, women's health, work-life balance, and various chronic ailment etc.

35 MANAGEMENT DISCUSSION & ANALYSIS 35.1 INDUSTRY STRUCTURE AND DEVELOPMENT

India is a resource-rich and diverse Country having abundance of renewable energy source. Indian renewable energy sector is one of the most attractive renewable energy markets in the World.

India has emerged as a leader in commitment to sustainability and has taken progressive actions under its Nationally Determined Contributions (NDCs). Government of India (GoI) has set up a target of 500 GW capacity from non-fossil fuels by 2030. Besides above, GoI commitment also include reduction of India's total projected carbon emission by 1 billion tonnes by 2030, reducing the carbon intensity of the Nation's economy by less than 45% by the end of the decade and achieving net-zero carbon emissions by 2070 . Renewable energy sector has become attractive from investors perspective with the increased support of Government and improved economics. The Indian power sector has come a long way in the past decade, transforming from a power-deficit to a power-surplus nation. A series of concerted measures led to a 49.8% increase in generation capacity – from 275 GW in March, 2015 to ~416 GW in March, 2023. Electricity generation has also increased in tandem at a CAGR of ~4%, enabling India to reduce its energy and peak deficit from 4.2% and 4.5% in 2014 to 0.4% and ~1% in 2022 respectively¹. The Installed Generation Capacity as on March, 2023 was 416.06 GW comprising of 237.27 GW thermal, 6.78 GW Nuclear, 172.01 GW Renewables including large hydro of 46.85 GW¹.

Source: Central Electricity Authority

A generation capacity addition totaling to 177,783.21 MW from various sources has been achieved from the year 2014-15 till October, 2022 comprising of 87,509.61 MW from conventional sources (Coal, Gas and Nuclear) and 90,273.6 MW from RE sources. The conventional capacity addition of 87,509.61 MW comprises of 85509.61 MW of Coal and Gas, and 2000

MW of Nuclear. RE capacity addition of 90273.6 MW includes 6169 MW of Large Hydro, 58,992.35 MW of Solar, 20,801.4 MW of Wind, 3191.03 MW of Biomass and 1119.82 MW of Small Hydro has been achieved since the year 2014-15¹. The generation installed capacity achieved has grown at a CAGR of 5.97 % since 2014-15¹.

Source: Central Electricity Authority

35.2 STRATEGIC DIVERSIFICATION

NHPC is one of the India's leading hydro power generation Company and considering upcoming huge opportunities in Renewable Energy and Green Hydrogen sector, NHPC plans to strategically divert itself in these sectors. Various Solar Power projects and pilot Green Hydrogen projects are being taken up, which are under different stages of development. Further, NHPC is also exploring to enter into manufacturing of Giga Watt Scale Vertically Integrated Solar PV Modules and cells and a Memorandum of Understanding (MoU) has been entered with Bharat Electronics Limited in this regard. Headquarters of Renewable Energy & Green Hydrogen Division of NHPC Limited has been shifted to Ahmedabad with the long-term vision of availing the huge opportunities available in the Western region & the State of Gujarat having potential for Solar, Wind, Green Hydrogen, and other Renewable projects and ample potential for export of Green Hydrogen and its derivatives through various ports. While NHPC will continue development of Hydro Power Projects as its core business, it would make all endeavors to expand its business in Renewable Energy development coupled with storage solutions such as Green Hydrogen and Pumped Storage Projects.

35.3 HYDROPOWER POTENTIAL IN INDIA

The re-assessment studies of hydroelectric potential of the Country were completed by the Central Electricity Authority in 1987. According to the study, the Hydro power potential in terms of installed capacity is estimated at 1,48,701 MW out of which 1,46,401 MW of the potential consists of hydroelectric schemes having installed capacity above 25 MW.

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

The Government of India in past had taken several Policy initiatives for hydro power development in the Country viz. National Electricity Policy, 2005, National Tariff Policy, 2016, National Rehabilitation

& Resettlement Policy, 2007 and Right to Fair Compensation & Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Over the period of past few years, the Government had also issued measures to promote Hydro Power Sector, which included: Large Hydro-power Projects (LHPs, i.e. > 25 MW Projects) have been declared as renewable energy source. However, LHPs would not be automatically eligible for any differential treatment for statutory clearances such as forest clearance, environmental clearances, National Board for Wildlife (NBWL) clearance, etc. as available to Small Hydro-power Projects (i.e. < 25 MW Projects). Ministry of Power shall continue to be administrative ministry for LHPs. Hydropower Purchase Obligation (HPO) is notified as a separate entity within Non–solar Renewable Purchase Obligation (RPO). The HPO shall cover all LHPs commissioned after March 08, 2019 (i.e. date of issuance of Office Memorandum by Ministry of Power) as well as untied capacity (i.e. without long term PPA) of the commissioned Power Station. New Projects commissioned after March 08, 2019 are covered under HPO provided tariff (LT) is not above

` 5.50/kWh for Projects commissioned till March 31, 2021. 5% increment in tariffshall be permitted for subsequent financial years. Ministry of Power vide order dated July 25, 2022 has revised the trajectory of HPO along with notification of trajectory of Energy Storage Obligation (ESO).

Flexibility to the developers to determine tariff by back loading of tariff after increasing project life to 40 years, increasing debt-repayment period to 18 years and introducing escalating tarifito rationalize hydro power tariff .

Extension of Budgetary Support for Flood Moderation/Storage Hydro-Electric Projects (HEPs). Budgetary Support shall also be extended to Cost of Enabling Infrastructure i.e. roads/ bridges @ ` 1.5 crore/MW for project upto 200 MW and ` 1 crore/ MW for project above 200 MW. Draft guidelines for budgetary support for Cost of Enabling Infrastructure i.e. roads/ bridges has been issued by CEA.

Ministry of Power has also notified final guidelines for a Budgetary Support for Flood Moderation/ Storage Hydroelectric Projects (HEPs) and Budgetary Support towards Cost of Enabling Infrastructure i.e. roads/ bridges in September, 2021. CERC has notified draft Central Electricity Regulatory Commission (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations, 2022, wherein hydropower has been considered for Renewable Energy Certificates with a multiplier of 1.5. If the said draft regulations are finalized, the same shall play a vital role in sale of power from upcoming hydro power stations. MoP vide PIB release dated December 02, 2022 has extended the waiver of ISTS charges on the transmission of power from new hydro power projects, for which construction work is awarded and PPA is signed on or before June 30, 2025. Further, the trajectory of waiver of ISTS charges from June 30, 2025 to June 30, 2028 has also been laid down by MoP.

35.5 GOVERNMENT INITIATIVES FOR RENEWABLE ENERGY SECTOR

India has set a target to achieve net zero by 2070, in addition to achieving aggressive near term targets such as 500 GW of renewables capacity, 50% of requirements to be met with renewables, one billion tonne reduction in cumulative emissions by 2030, and 45% lower emissions intensity of gross domestic product (GDP) by 2030. Having the unique ecosystem advantages in India, the stage is set for the Country to become a global champion in green hydrogen and efforts are underway to achieve the world's largest electrolysis (green hydrogen generation) capacity of over 60 GW/5 million tonnes by 2030 for domestic consumption. This will help India meet the 500 GW renewable energy target. Further, about $1 billion investment is targeted into hydrogen research and development to enable breakthrough technologies for the world at scale and the speed that is required¹.

Amid various challenges, meeting the target of 500 GW of renewables by 2030 will require a dramatic acceleration in installed capacity. Govt. of India has taken major steps to reform the energy sector and usher in a climate-friendly energy transition that will deliver energy security, affordability, and sustainability. The steps include proposing the Electricity (Amendment) Bill, 2020, PMKUSUM and Roof Top Solar scheme, various schemes to promote large scale Solar Power Development such as CPSU Scheme, Solar Park Scheme, Production linked incentive schemes etc., proposing amendments to Energy Conservation Act (2001), Pradhan Mantri Ujjwala Yojana, National Green Hydrogen Mission, Guidelines to promote Pump Storage Hydro Power Plants and so on. The Union Budget 2022-23 has provided a budgetary allocation of ` 3365 crore for the solar power sector, including both grid-interactive and off-grid projects. The budget has given a major push to the solar energy sector under renewable energy with an additional allocation of ` 19,500 crore for production linked incentives for manufacturing of high efficiency solar photo voltaic modules.

The aforesaid initiatives in the Renewable Energy Sector in conjunction with technological advancements have made the investment in solar power business highly attractive. NHPC is making its efforts to explore opportunities for development of renewable energy and green hydrogen projects as well to enter in to the business of manufacturing of Gigawatt scale solar PV Modules.

35.6 ELECTRICITY (LATE PAYMENT SURCHARGE AND RELATED MATTERS) RULES, 2022

Ministry of Power in February, 2021 had first notified the Electricity (Late Payment Surcharge) Rules, 2021 (LPSC). In the LPSC, MoP had kept the base LPSC rate with MCLR rate plus 5%, which shall be increased by 0.5% every successive month till 6 months. It was also notified to adjust the payment received first towards the late payment surcharge and then towards the monthly charges starting from the longest overdue bill.

Now, MoP has notified Electricity (Late Payment Surcharge and Related Matters) Rules, 2022. With other rules kept as same regarding rate of LPSC and adjustment of payment received, MoP has incorporated the following clauses, under these rules:

a. Liquidation of arrears:

MoP has allowed the DISCOMs to liquidate their old outstanding dues accumulated till date of notification of these rules in equal monthly installments (ranging from 12 to 48 EMIs depending on amount of outstanding) and has to submit a plan to Generating Company or transmission licensee within a month of notification of these rules. Further, if the DISCOMs agree to liquidate their outstanding dues in equal monthly instalments and makes timely payment, then LPSC shall not be payable on outstanding dues from the date of notification of these rules. If the DISCOMs do not choose to reschedule their old outstanding dues then the payment received shall be first adjusted towards these arrear payments.

b. Operationalization of Payment Security Mechanism and its consequences:

MoP has brought the provisions of maintaining unconditional, irrevocable and adequate Payment Security Mechanism (PSM) under the ambit of these rules. A DISCOM has to maintain unconditional, irrevocable and adequate payment security mechanism and in case of non-maintenance of PSM, generating companies, electricity trading licensee and transmission licensee shall regulate power supply to the DISCOMs. Supply of power shall be made only if adequate PSM is maintained or an advance payment is made. If the generator supplies power to the DISCOMs without adequate PSM, it shall lose the right to collect LPSC from DISCOMs.

Regulation of Power:

In case of non-payment of outstanding dues by default trigger date (45 days plus 30 days from bill date) the generator can regulate 25% of contracted power and can sell in exchange. Further, if the DISCOMs do not establish PSM or continue the default for 30 days, generator can regulate 100% of contracted power and can sell in exchange.

During the period of default, the liability of capacity charges is with DISCOMs and the gains from sale of such power in exchange shall be adjusted first towards fixed charges, then old outstanding dues and the balance to be shared in 75:25 ratio with DISCOMs.

c. Regulation of access to defaulting entity:

In case of non-payment of dues for two and half month from date of presentation of bill, the supply shall be regulated as follows:

1. Short-term access, for sale and purchase of electricity including in the power exchange shall be regulated entirely including already approved short term access.

2. After one month of regulation of STA, if dues are unpaid, then apart from regulation of STA, LTA and MTA shall be regulated by 10% and the regulation shall be increased by 10% every successive month. On payment of dues, the regulation shall be restored to normal within 2 days.

3. The liability of payment of Capacity charges shall remain with the regulated entity for such reduction of drawl.

d. Supply Obligation of Generating Company:

If a generating Company fails to offer the contracted capacity to DISCOMs and sell the contracted power without the consent of DISCOM to any other party, the generating Company shall be debarred from participating in power exchange and on DEEP portal for period of 3 months which shall be increased to 6 months for second default and one year for successive default.

e. Power not requisitioned by a distribution licensee

Distribution licensee shall intimate its schedule for requisition of power to generating Company 2 hours before DAM, failing which the GENCO may sell un-requisitioned power in Power exchange. The gain (Selling price in exchange minus energy charge, transmission charge and other incidental charges) from sale of power shall be adjusted in following order:

(i) Payment to generating Company of upto 3 paise per unit;

(ii) Recovery of fixed charges;

(iii) Liquidation of overdue amount;

(iv) The balance shall be shared in the ratio of 50:50 between the distribution licensee and the generating Company.

The liability of fixed charges shall be with the distribution licensee. In case of must run, the compensation shall be at the rate specified in the agreement or as specified in Electricity (Promotion of Generation of Electricity from Must-Run Power Plant) Rules, 2021.

35.7 CERC REGULATIONS: a. CERC Tariff Regulations, 2019 and its amendments:

CERC has issued CERC (Terms and Conditions of Tariff) Regulations, 2019 in March, 2019 which will be applicable for the period April 01, 2019-March 31, 2024.

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.

CERC has notified the Deviation Settlement Mechanism and Related Matters Regulations, 2022. The regulations seek to ensure, through a commercial mechanism that users of the grid do not deviate from and adhere to their schedule of drawal and injection of electricity in the interest of security and stability of the grid. The regulations have been effective from December 02, 2022, however, due to difficulty in operationalization of notified regulation, various provisions have been relaxed by the Hon'ble Commission vide various Sou-moto order and presently CERC order dated February 06, 2023 in 1/ SM/2023 effective from February 08, 2023 read with CERC order dated April 09, 2023 in 5/SM/2023 is in force.

• Any deviation shall be managed by the Load Dispatch Centre as per the Ancillary Services Regulations, and the computation, charges and related matters in respect of such deviation shall be dealt with as per the following provisions of these regulations.

• The normal rate of charges for deviation for a time block shall be equal to the highest of :

I. The weighted average Area Clearing Price (ACP) of the Day Ahead Market segments of all the Power Exchanges; or

II. The weighted average ACP of the Real Time Market segments of all the Power Exchanges; The regulations specify the rates at which the generator shall be paid back for over injection from Deviation and Ancillary Services Pool Account and the rates at which the generator shall pay to the Deviation and Ancillary Service Pool Account for various frequency ranges.

• The charges of deviation for injection of infirm power shall be zero and if infirm power is scheduled, the charges for deviation for such power shall be as applicable for a general seller.

• The charges for deviation for drawal of start-up power before COD of a generating unit or for drawal of power to run the auxiliaries during shut–down of a generating station shall be payable at the reference charge rate or contract rate or in the absence of reference charge rate of contract rate, the weighted average ACP of the Day Ahead Market segments of all Power Exchanges for the respective time block, as the case may be.

• For forced outage, the charges for deviation shall be restricted to reference rate for 8 times blocks or till revision of schedule, whichever is earlier.

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

NHPC has a full-edged Design division dedicated to cater the design and engineering requirements of its projects. The in-house design team with extensive experience in hydro power sector gives NHPC an edge over other hydro power companies. NHPC is using the latest geo-physical exploration techniques on site for data interpretation and preparation of in-house reports. NHPC is the only hydro utility in India having expertise in techniques like tunnel seismic prediction, tomography and resistivity imaging which provide sub-surface information in an effective and economic way. It has also developed in-house rock mechanics testing laboratory with high end testing instruments and a sophisticated remote sensing lab. Its engineering capabilities ranges right from the stage of conceptualization till the commissioning of projects.

Established track record in developing hydroelectric projects & experienced manpower

NHPC possesses rich experience and expertise in developing hydroelectric projects across the Country. NHPC has a competent and committed workforce which has extensive experience in the industry with capabilities and expertise in conceptualization, construction, commissioning and operation of hydroelectric projects. Their skills, industry knowledge and experience provide significant competitive advantage to the Company.

Strong financial position

NHPC has paid-up share capital of ` 10,045.03 crore and an investment base of over ` 74,715 crore as on March 31, 2023. NHPC has credit rating ‘AAA' with stable outlook assigned by domestic credit rating agencies for its listed bonds. NHPC has international Credit Rating of BBB(-) with stable outlook rated by S&P Global Ratings. The strong financial position of the Company makes it competent enough to execute capital intensive large hydroelectric projects.

Strong operating performance

NHPC has successfully managed to develop and implement twenty-two hydroelectric projects (including two through its subsidiary Company i.e. NHDC Limited), one solar power project and one wind power project with an aggregate installed capacity of 7,071 MW. NHPC with its fleet of power stations is a flagship Company in hydro power sector in India.

Extensive experience in construction and operation

NHPC has extensive experience & expertise in developing hydroelectric projects in complex geological regions by overcoming number of geo-technical challenges using in-house state-of-art technology. It has successfully completed construction of some of the challenging hydro electric projects in India situated in remote hilly areas with various challenges like inaccessibility, poor logistics, adverse climate and technological hindrances. With its strong team of competent, efficient and experienced professionals, it is capable of executing all types and sizes of hydroelectric projects by overcoming such obstacles.

Seismic safety assessment

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

Untapped hydro potential

The deteriorating hydro-thermal mix, peaking shortages and frequency variations have forced Policy makers to turn their attention towards development of hydropower. India's huge untapped hydro potential, especially in the north-eastern region, provides opportunity for hydropower development. NHPC has an opportunity for adding to its capacity the untapped hydro potential in coming years in India and neighboring countries. NHPC may also tap opportunities in execution of pump storage projects, river linking projects and providing consultancy services for road, rail and infrastructure tunnels etc.

NHPC's continued ability to complete the hydro projects

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

Renewable Energy

Govt. of India has set an ambitious target of development of 50% power from non-fossil fuel sources by 2030. Generation of electricity using solar PV is picking up in India with Govt. initiatives and Policy supports. Achievement of the ambitious COP26 targets set by the GoI, i.e., net zero carbon emissions by 2070, will require the Country to shift to cleaner sources of generation. One of the key medium-term targets to achieve this is to add 500 GW of non-fossil electricity capacity by 2030, and, simultaneously, facilitate integration of solar and wind generation into the grid. CEA Report on Optimal Generation Capacity Mix for 2029-30 indicates that out of total 500 GW RE requirements, 280 GW capacity addition has to be done through Solar Power. With thermal /coal-based generation to be phased out gradually, the power sector needs to support the variability and intermittency of RE through peaking support and other balancing/ancillary services. As more variable RE is added to the system, the magnitude and frequency of changes in residual load increases. The system needs to have sufficient flexible resource in place to match these variations. This requires development of Solar/Wind Power Projects with a combination of Storage alternatives such as Pump Storage/Battery Energy Storage System and Green Hydrogen so as to provide a sustainable market solution with Round the Clock/ peaking power requirements. The National Green Hydrogen Mission launched by Ministry of New and Renewable Energy in January, 2023 aims to make India a ‘global hub' for using, producing and exporting green hydrogen through creation of demand and incentivizing manufacturing of electrolyzers. Thus, there exists immense opportunities for development of renewable energy and green hydrogen projects in coming years. NHPC is exploring all possible opportunities to develop Renewable Energy and Green Hydrogen projects ensuring various incentives being provided by Govt. of India to give impetus to these sectors.

Grid Balancing Requirement

In view of Government of India's present initiative for extensive renewable energy development particularly large-scale development of solar power, hydro power would be required for grid balancing/ stability. The present scenario would create opportunities for NHPC to develop hydro power due to its inherent qualities of fast ramping up and down and flexibility imparted to the system.

Geological uncertainties:

New challenges appearing due to ageing of various mega-structures of existing power stations, inaccessible terrain and constraints of logistic and limits of investigation, poses serious consequences for execution of projects. Excavation of tunnels under high superincumbent cover also poses serious problems in timely completion of projects due to severe stress related problems and heavy ingress of water. Problems associated with catastrophic events like, unprecedented natural events poses serious challenges.

Time and cost overruns

Most hydroelectric projects are generally located in hilly terrain, which are at the receiving end of devastating natural calamities like landslides, hill slope collapses & roadblocks, flood, cloud burst etc. These calamities cause severe setbacks in construction schedule. Further, in-spite of extensive survey and investigation, geological uncertainties 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 has overcome such surprises many a times in the past. However, these uncommon and unpredictable geological uncertainties may result in time and cost overrun. Many a times, law and order problem in the states result in time overrun and subsequent cost overruns.

Time consuming clearance process:

Before any hydroelectric project is implemented, it needs to be cleared by various agencies by obtaining various statutory as well as non-statutory clearances. Often projects get bogged down with the lengthy clearance procedures involving multiple agencies/ organizations, states etc. Obtaining the requisite clearances is a complex, tedious and time-consuming process which sometimes leads to abnormal delay, ultimately affecting the project implementation.

Difficulties in entering into Power Purchase Agreements (PPAs)

Sale of energy from projects having higher tariff is getting difficult in present day's power trading scenario. Beneficiaries prefer to purchase their additional power requirement on short-term basis through power exchange or e-procurement rather than opting for long term/medium term PPAs. As hydroelectric projects are site specific and its tariff depends on location/design parameters and high initial investment, the tariff for new hydroelectric projects is relatively higher. Due to above reasons, NHPC is facing difficulties in dispatch of power from new projects through long term PPAs.

High initial cost/ tariff

The development of hydroelectric projects involves long gestation period and require large initial investment, which results into high initial tariff. Cash flow and results of operations of hydroelectric projects are also subject to variations as per tarifiregulations notified by CERC from time to time. High initial costs and tariffs sometimes prove detrimental in obtaining investment sanction and require extensive financial re-engineering and different waivers from various stakeholders to bring the project on the anvil.

Law & order

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

Opposition to hydroelectric 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 of their projects are getting stalled.

State hydro policies restricting entry of PSUs

Several state hydro policies favors for payment of upfront premium, free power over & above the required free power etc. for allocation of hydroelectric projects to the developers. CPSEs are facing difficulties in getting these hydroelectric projects, as they have to follow the norms of Government of India.

Dependence on few contractors

Construction of hydroelectric projects requires manpower, machinery and substantial investment of money. There are very few contractors in India who can deliver especially in remote and difficult locations where accessibility is a major issue. The limited range of contractors who are able to perform in the sector increases our dependence on few available contractors in the Country.

35.9 RISK AND CONCERNS:

NHPC has a well-defined and dynamic Risk Management Policy since 2009 to provide overall framework for the risk management in the Company. The Policy is modified and updated from time-to-time. The present Policy was approved for implementation after revision in 2022. At present, 67 key risks which may have detrimental effect on the business of the Company have been identified alongwith their mitigation measures and recorded in the risk register. To ensure effective implementation of the Risk Management Policy, two Committees have been constituted:

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

ii. Risk Assessment Committee comprising of Chief Risk Officer and Risk Coordinators-HOD(s) of various divisions responsible for risk mitigation pertaining to their division as well as for Power Stations/ Projects/Divisions of Corporate office. The Heads of Departments / Regions /Projects/ Power Stations implement and review the directions issued by Risk Assessment Committee on the identified risks and their mitigation measures.

35.10 OUTLOOK:

Your Company has taken some very effective initiatives and successfully streamlined the processes for sustainable growth and consistent performance in the electricity business. It has adopted new and relevant technologies in the areas of electromechanical, civil and hydro-mechanical engineering. NHPC has applied contemporary practices to reduce construction time delays as well as cost overrun. Its power stations are run in an optimized way to reduce silting problem of its reservoir. Construction supervision, post-commissioning monitoring and hurdle free operation are ensured and augmented by use of information technology. Presently, operations of all power stations of the Company are either semi or fully automated. Many power stations are equipped with advanced distributed control systems along with SCADA systems. NHPC is also looking forward for remote operation of some of its power stations.

NHPC Limited, at present, has an installation base of 7097.2 MW from 25 power stations including three projects in JV mode and is looking for expansion through diversification.

35.11 SEGMENT-WISE OR PRODUCTWISE PERFORMANCE:

Generation of electricity is the principal business activity of the Company. Other operations viz. power trading, contracts, project management and consultancy works do not form a reportable segment as per the Ind AS – 108 on "operating segments". The Company has a single geographical segment, as all its power stations are located within the Country.

35.12 INTERNAL CONTROL SYSTEMS AND ADEQUACY:

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

The Company has an in-house internal audit department headed by a senior officer. In compliance to Section 138 of the Companies Act, 2013, the Board has appointed a General Manager (Finance) as Internal Auditor of the Company. The department has qualified and experienced workforce to carry out periodical as well as special audits.

The Internal Audit department submits their audit observations and action taken reports to Audit Committee. The recommendations of the Committee are duly complied with. In compliance to Section 134 of the Companies Act, 2013, M/s A.M.A.A & Associates, Chartered Accountants, New Delhi was appointed to provide independent assurance on implementation of Internal Financial Controls in the Company during the FY 2022-23. The firm, in its report, acknowledged the effectiveness of prevailing internal financial control systems in the Company.

35.13 FINANCIAL DISCUSSION AND ANALYSIS PROFIT & LOSS ITEMS

A detailed analysis of the Audited Financial Results of the Company for the Fiscal 2023 vis-?-vis Fiscal 2022 is as under: -

Income

(` in crore)

Total income in Fiscal 2023 increased by 8.74% to

` 10,150.90 crore from ` 9,335.40 crore in Fiscal 2022, primarily due to increase in generation, increase in Revenue from Project Management and Consultancy works, increase in Other Operating Income partially offset by decrease in Other Income in Fiscal 2023.

Sale of Energy

The principal source of income of the Company is from sale of power to bulk customers comprising, mainly of electricity utilities owned by State Governments/ Private Distribution Companies pursuant to long-term Power Purchase Agreements. The rate of electricity are determined Power Station wise by the CERC. The CERC vide its notification no. L-1/236/2018/CERC dated March 07, 2019 has issued Tariff Regulations for the tariff period 2019-24 and subsequent amendments from time to time. Pending approval of tariff for the period 2019-24 by CERC, sales in respect of some of the Power Stations have been recognized provisionally as per ibid tariff notification and taking into account provision towards truing up of capital cost of the Power Stations in line with CERC Tariff Regulations 2019-24. The said regulations inter-alia provides that, for the purpose of filing of tariff petitions, the Return on Equity (ROE), a component of tariff, is to be grossed-up using effective tax rate of the respective Financial Year. For the purpose of recognizing Sales, ROE has been grossed up using effective tax rate for FY 2022-23.

The Tariff Regulations also provide for incentives which comprise of incentives on achieving plant availability factor greater than Normative Annual Plant Availability Factor (NAPAF), incentive for generation of energy in excess of the design energy of the plant (Secondary Energy) as well as incentive by way of Unscheduled Interchange charges where the Power Station of the Company contribute towards maintaining grid stability. Sale includes reimbursement on account of Water Cess in respect of power stations situated in state of Jammu & Kashmir, Uttarakhand, Sikkim and Himachal Pradesh. In Fiscal 2023, 24619 MUs of electricity (excluding infirm power of 288 MUs generated by Parbati-II HE Project during FY 2022-23) was generated from installed capacity of 5551MW as against 24494 MUs (excluding infirm power of 361 MUs generated by Parbati-II HE Project during FY 2021-22) from installed capacity of 5551MW in Fiscal 2022. Accordingly, there was an increase of 0.51% in the number of units generated. The average selling price (after adjustment of components of earlier year sales and free power to home state) was ` 3.97 per unit for 21,654 million units sold in Fiscal 2023 as against ` 3.67 per unit for 21,516 million units sold in Fiscal 2022. During Fiscal 2023, the Company has earned ` 675.68 crore towards incentives against ` 750.28 crore in Fiscal 2022.

Sale of energy increased by 12.79% to ` 8,404.65 crore in Fiscal 2023 from ` 7,451.55 crore in Fiscal 2022 primarily due to higher generation in Power Stations, increase in effective tax rate and sales pertaining to earlier years. Company's Plant Availability Factor (PAF) in Fiscal 2023 was 88.75% as compared to 88.19% in Fiscal 2022. Plant Availability Factor for Fiscal 2023 was higher by 14.74% as compared to Normative Annual PAF of 77.35%.

Adjusted Sale of Energy

The revenue from sale of energy includes sales pertaining to earlier years but recognised in current year and excludes the sale of energy of five Power Stations, whose sale of energy is accounted for as Operating/Finance Lease in terms of Ind AS 116 - Leases.

As per CERC Tariff Regulations, Exchange Rate Variation on interest payments and loan repayments corresponding to the normative loans considered for tariff of stations/ units is payable/ recoverable to/from the beneficiaries on repayment of the loans and interest thereon. Pursuant to the opinion of Expert Advisory Committee of the ICAI, Foreign Exchange Rate Variation on restatement of foreign currency loans as at the Balance Sheet date, payable/recoverable to/from customers later-on on actual settlement, is accounted for by creating a deferred liability/asset in the accounts instead of adjusting the same in the Statement of Profit & Loss. For the purpose of year to year comparison, the impact of earlier year sales has been excluded 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:

(` in crore)

Revenue from Contracts, Project Management and Consultancy Works

The revenue under this head includes revenue from assignments pertaining to Construction Contracts, Project Management & Consultancy Contracts. These assignments primarily include consultancy assignments in respect of Chenab Valley Power Projects Private Limited, Lanco Teesta Hydro Power Limited, Jalpower Corporation Limited and Ratle Hydroelectric Power Corporation Limited. The income from contracts, project management and consultancy works increased by 32.02% from ` 46.16 crore in Fiscal 2022 to ` 60.94 crore in Fiscal 2023 due to increase in consultancy assignments in Fiscal 2023.

Revenue from Power – Trading

The revenue under this head includes revenue from Power Trading activity which the Company ventured into during Fiscal 2019. The revenue from Power - Trading increased from ` 0.27 crore in Fiscal 2022 to ` 4.60 crore in Fiscal 2023 due to increased Power Trading activities in Fiscal 2023. The income under this activity was booked on net Trading Margin Basis. In Fiscal 2023, the Company made a review of the principal-agent relationship in power trading contracts entered into/ being entered into by the Company with DISCOMs. Based on such assessment as well as based on opinion from external consultant, it had been assessed that in the case of Contracts for trading of power being executed in Fiscal 2023 and Fiscal 2022, the Company actedin the capacity of anagent and accordingly, revenue from trading of power was recognized as the net consideration retained by the Company after paying the supplier for electricity provided to the customer.

Other Operating Income

Other operating income in Fiscal 2023 was ` 125.95 crore i.e. an increase of 53.19% as against ` 82.22 crore in Fiscal 2022. Components of Other operating income are as under:

(` in crore)

($) No sale of Carbon Credits was carried out during Fiscal 2023.

Other Income

Other income in Fiscal 2023 was ` 834.56 crore i.e. a decrease of 18.67% as against ` 1026.18 crore in Fiscal 2022. Major components of Other Income are placed and discussed hereunder:

(` in crore)

During Fiscal 2023, ` 53.41 crore was earned as Late Payment Surcharge (LPS) from beneficiaries, as against ` 229 crore during Fiscal 2022. Lower income on account of LPS is due to better realisation of Trade Receivables during the current fiscal. During Fiscal 2023, ` 376.85 crore was earned as Dividend from investments, mainly from subsidiary Company (NHDC Ltd), as against ` 301.71 crore during Fiscal 2022.

Expenditure

(` in crore)

Total expenditure increased by 5.27% to ` 5,567.30 crore in Fiscal 2023 from ` 5,288.54 crore in Fiscal 2022 mainly due to increase in Generation Expenses by ` 95.22 crore, increase in Depreciation & Amortization Expense by ` 19.22 crore, increase in Other Expenses by ` 359.34 crore partially offset by decrease in Finance Cost by ` 55.59 crore and decrease in Employee Benefits Expense by ` 139.43 crore. Our total expenditure as a percentage of total income was 54.85% in Fiscal 2023 as compared to 56.65% in Fiscal 2022.

Generation Expenses

Generation expenses consist of Water Cess and Consumption of stores and spare parts. These expenses represent approximately 16.82% of the total expenditure in Fiscal 2023 compared to 15.91% of the total expenditure in Fiscal 2022. In absolute terms, these expenses were ` 936.46 crore in Fiscal 2023 as against ` 841.24 crore in Fiscal 2022. The increase of ` 95.22 crore in generation expenses is primarily on account of water cess imposed at Power Stations situated in the state of Uttarakhand, Sikkim and Himachal Pradesh during Fiscal 2023.

Employee Benefits Expense

Employee benefits expense include Salaries and Wages, Allowances, Incentives, Contribution to Provident Fund, Contribution to Employees Defined Contribution Superannuation Scheme and expenses related to other employee welfare funds. These expenses represent 23.37% of our total expenditure in Fiscal 2023 as against 27.24% in Fiscal 2022. Employee costs has decreased from ` 1,440.78 crore in Fiscal 2022 to ` 1,301.35 crore in Fiscal 2023 i.e. a decrease of ` 139.43 crore in Fiscal 2023. The reduction is mainly due to expenditure recognised on account of impairment of certain investments made by the Provident Fund Trust during Fiscal 2022 and effect of retirement of employees during Fiscal 2023.

There were 4776 employees on the payroll as of March 31, 2023 compared to 5092 employees as of March 31, 2022. Out of this 2428 and 2694 employees were engaged in Operation & Maintenance of Power Stations during Fiscal 2023 & 2022 respectively.

Finance Costs

‘Finance costs' consist of interest expense on bonds and term loans. In books of accounts, borrowings are denominated in Indian Rupees, including amounts raised in foreign currencies (Japanese Yen). Finance Cost also includes expenses on account of Guarantee Fees to the Government of India in connection with loans raised from Foreign Market. Finance Costs represent 8.55% of the total expenditure in Fiscal 2023 compared to 10.05% of the total expenditure in Fiscal 2022. Finance Cost decreased by 10.45% to ` 476.16 crore in Fiscal 2023 from ` 531.75 crore in Fiscal 2022. The decrease in Finance Cost is mainly due to Repayment of loans and change in weighted average rate of interest in Fiscal 2023.

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 vide notification dated 07.03.2019 on straight line method, except for some items on which depreciation is charged to the extent of 95% of the costs of the assets at the rates prescribed in the Companies Act, 2013 or as per rates assessed by Management.

Depreciation cost increased by 1.71% to ` 1,145.44 crore in Fiscal 2023 from ` 1,126.22 crore in Fiscal 2022. The increase in depreciation expenses is primarily due to additional capitalisation in Power Stations.

As a percentage of total expenditure, depreciation & amortization expense decreased to 20.57% in Fiscal 2023 from 21.30% in Fiscal 2022.

Other Expenses

Other expenses consist primarily of Repair & Maintenance of Buildings and Plant & Machinery, Security Expenses, Insurance Expenses, Electricity Charges, CSR, Other Administrative Overheads, Provisions etc. These expenses represent approximately 30.68% of the total expenditure in Fiscal 2023 as against 25.50% in Fiscal 2022. In absolute terms, these expenses increased by 26.65% to ` 1,707.89 crore in Fiscal 2023 from ` 1,348.55 crore in Fiscal 2022. The increase of ` 359.34 crore in other expenses is primarily due to increase in provision against impairment of investment in Subsidiary & Joint Venture Companies, Fair Value Loss on Financial Assets, losses on insured assets, CSR Expenses, Interest to Beneficiary states, Travelling & Conveyance Expenses, Security Expenses partially offset by decrease in Insurance Expenses, etc.

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 in view the provision of Ind AS 114 – Regulatory Deferral Accounts, ‘Regulatory Assets' has been created and corresponding ‘Regulatory Income' has been recognized for ` (-)144.41 crore. This includes Depreciation due to moderation of Tariff in respect of Kishanganga Power Station ` 199.36 crore, Exchange Differences against monetary Items ` 1.10 crore, Adjustment against Deferred Tax Recoverable for tariff period up to 2009 ` (-)56.09 crore, Adjustment against Deferred Tax Liabilities for tariff period 2014-19 ` (-)215.98 crore, Wage Revision as per 3<sup>rd</sup> Pay Revision Committee (PRC) ` (-) 462.87 crore, Regulatory Liability recognised against MAT Credit reversed in respect of Power Stations where tariff has been fixed on negotiated basis with the beneficiaries amounting to ` 390.07 crore. Rate regulated income is recognised in the books of accounts for Fiscal 2023 on account of below mentioned five factors:

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

The Company has carried out moderation of depreciation as a component of tariff of Kishanganga Power Station to make the tariffsaleable which has been allowed by the CERC. This entitles the Company to recover the lower depreciation considered in tariff during the 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 the books as per CERC Tariff Regulations, 2019-24 and that recoverable through tariff amounting to ` 199.36 Crore during Fiscal 2023 (Fiscal 2022 ` 198.35 Crore) has been recognised as Regulatory Income.

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

Exchange differences arising on translation/ settlement of foreign currency monetary items to the extent charged to the Statement of Profit & Loss and further recoverable from or payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations are 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 or payable to the beneficiaries after Date of Commercial Operation (COD) of the Project.

Accordingly the Company has created Regulatory Assets and recognised corresponding Regulatory Income of ` 1.10 crore during Fiscal 2023 (Fiscal 2022 ` (-)0.17 Crore), which is recoverable from beneficiaries in future periods.

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

As per CERC Tariff Regulations, deferred tax arising out of generating income for the tariff period 2004-09 is recoverable from beneficiaries in the year the same materializes as current tax. For the tariff periods 2014-19 and 2019-24, deferred tax is recoverable by way of grossing up the Return on Equity by the effective tax rate based on actual tax paid. Till 31^st March, 2018 the deferred tax recoverable from beneficiaries in future years was presented as an adjustment to deferred tax liability. The practice was reviewed in FY 2018-19 based on an opinion of the Expert Advisory Committee of the Institute of Chartered Accountants of India (EAC of the ICAI) obtained during that year. As per opinion of the EAC of ICAI, adjustment against Deferred Tax Liability is not a deductible temporary difference resulting into deferred tax asset under Ind AS 12- Income Taxes, but rather fulfils the definition of regulatory deferral account balance in terms of Ind AS 114 - Regulatory Deferral Accounts.

The regulated assets (+)/liability (-) recognized in the books during Fiscal 2023 are as follows: In respect of deferred tax recoverable for tariff period upto 2009, ` 56.09 Crore has been utilized during Fiscal 2023 (Fiscal 2022 ` 49.52 Crore) and in respect of deferred tax adjustment against deferred tax liabilities (pertaining to tariff period 2014-19), ` (-)215.98 Crore has been adjusted from Regulatory Income in respect of Power Stations where tariff has been fixed on negotiated basis with the beneficiaries during Fiscal 2023 (Fiscal 2022 ` 10.72 Crore).

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

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

Keeping in view the significant impact of above on the profitability of the Company and as allowed by the CERC in past, the Company has created regulatory assets towards expenses pertaining to wage revision up to the period ended 31.03.2019. These balances are to be adjusted from the year in which they become recoverable from the beneficiaries as per approval of the CERC.

In FY 2021-22, Petition Order of Truing up of Tariff for the period 2014-19 in respect of two Power Stations was received. Accordingly RDA Balances amounting to ` 116.53 crores had been adjusted through P&L in Fiscal 2022.

In FY 2022-23, Petition Order of Truing up of Tariff for the period 2014-19 in respect of remaining Power Stations has been received. Accordingly RDA Balances amounting to ` 462.87 crores has been adjusted through P&L in Fiscal 2023.

(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 of deduction claim u/s 80-IA of the Income Tax Act, 1961 in respect of its Power Stations commissioned before 31.03.2017.

During Fiscal 2022, out of the available MAT Credit of ` 2424.58 crore, the Company had recognised ` 1478.62 crore as MAT Credit out of which ` 1313.27 crore was to be passed on to the beneficiaries. Accordingly the MAT Credit to be passed on to the beneficiaries had further been recognised as Regulatory Deferral Account (Credit) balance. During Fiscal 2023, MAT Credit of ` 417.30 Crore has been recognised and ` 328.93 Crore has been utilised. Simultaneously, Regulatory Deferral Account (Credit) balances of ` 125.59 Crore has been recognised and the same has been utilised during the year. Further, ` 390.07 Crore has been adjusted being regulatory liability recognized in respect of Power Stations where tariff has been fixed on negotiated basis with the beneficiaries.

Profit before Tax and Rate Regulated Income

Due to the reasons outlined above, our profit before tax increased by 13.26% to ` 4,583.60 crore in Fiscal 2023 from ` 4,046.86 crore in Fiscal 2022.

Tax Expenses

In Fiscal 2023, we provided ` 605.40 crore for tax expenses as compared to ` (-) 761.27 crore in Fiscal 2022. The increase in tax expenses in Fiscal 2023 is on account of increase in deferred tax expenses by ` 1,332.18 crore and increase in current year taxes by ` 34.49 crore.

Profit after Tax including Rate Regulated Income

Our profit after tax increased by 8.37% to ` 3,833.79 crore in Fiscal 2023 from ` 3,537.71 crore in Fiscal 2022.

Other Comprehensive Income (OCI)

OCI comprises of actuarial gain/loss of re-measurements of post retirement Defined Benefit Plans and fair value gain/loss on instruments in Equity & Debt Instruments in Fiscal 2023 was ` (-)3.37 crore against ` 12.76 crore in Fiscal 2022.

Total Comprehensive Income (TCI)

TCI i.e. total profit inclusive of OCI in Fiscal 2023 was ` 3,830.42 crore i.e. an increase of 7.88% as against ` 3,550.47 crore in Fiscal 2022.

LIQUIDITY AND CAPITAL RESOURCES

Both internal and external sources of liquidity are utilized for Working Capital requirement and funding of capital expenditure requirements. Generally long term borrowings are raised through term loans from banks/ financial institutions or issue of bonds either in Indian Rupees or foreign currencies. Cash and cash equivalents were ` 382.67 crore and ` 937.78 crore as of March 31, 2023 and 2022 respectively.

Cash Flows

( ` in crore)

Net Cash from Operating Activities

In Fiscal 2023, the net cash from operating activities was ` 3,893.85 crore and Profit before Tax and Regulated Income was ` 4,583.60 crore. Net cash from operating activities has been arrived at after adjusting non-cash items mainly depreciation of ` 1,145.44 crore, interest expenses of ` 476.16 crore, ` 148.52 crore towards provisions, ` 32.47 crore towards sales adjustment on a/c of FERV, ` 1.36 crore loss on sale of assets/claims written off, ` 93.45 crore towards fair value adjustments, ` 50.42 crore for deferred revenue on account of advance against depreciation, ` 31.06 crore on account of provisions/ liabilities not required written back, ` 376.85 crore on account of dividend income, ` 233.65 crore towards interest income & guarantee fees including late payment surcharge, ` 0.50 crore towards exchange rate variation (gain), ` 33.20 crore towards amortization of government grants. Changes in Operating Assets & Liabilities had impact of cash outflow by ` 1070.33 crore, which was due to the net effect of change in Inventories, Trade Receivables, Other Financial Assets, Loans & Advances, Other Financial Liabilities & Provisions and Regulatory Deferral Account Balances.

In Fiscal 2022, the net cash from operating activities was ` 4,258.62 crore and Profit before Tax and Regulated Income was ` 4,046.86 crore. Net cash from operating activities has been arrived at after adjusting non-cash items mainly depreciation of ` 1,126.22 crore, interest expenses of ` 531.75 crore, ` 42.54 crore towards provisions, ` 34.70 crore towards tariff adjustment (loss), ` 44.02 crore towards sales adjustment on a/c of FERV, ` 12.55 crore loss on sale of assets/claims written off, ` 48.25 crore for deferred revenue on account of advance against depreciation, ` 28.13 crore on account of provisions/liabilities not required written back, ` 301.71 crore on account of dividend income, ` 384.37 crore towards interest income & Guarantee Fees including Late Payment Surcharge, ` 49.28 crore towards exchange rate variation (gain), ` 0.40 crore towards fair value adjustments, ` 33.20 crore towards amortization of government grants, ` 2.04 crore towards adjustment against consultancy charges from subsidiary companies. Changes in Operating Assets & Liabilities had impact of cash outflow by ` 1.95 crore, which was due to the net effect of change in Inventories, Trade Receivables, Other Financial Assets, Loans & Advances, Other Financial Liabilities & Provisions and Regulatory Deferral Account Balances.

Net Cash from Investing Activities

Net cash used in investing activities was ` 2,929.30 crore in Fiscal 2023. This mainly reflected expenditure on Fixed Assets i.e. Property, Plant & Equipment, Other Intangible Assets, CWIP and Movement in Regulatory Deferral Account Balances forming part of project cost of ` 2,763.81 crore, ` 107.94 crore towards Investment in Joint Venture, ` 530.60 crore towards Investment in Subsidiaries, ` 14.28 crore towards investment in term deposits and ` 60.00 crore towards loan to subsidiaries partly offset by interest income & Guarantee Fees including Late Payment Surcharge by ` 166.27 crore, an amount of ` 376.85 crore towards dividend income, ` 2.82 crore towards interest on loan to Subsidiaries/ Joint Ventures and ` 1.39 crore towards sale of assets.

Net cash used in investing activities was ` 2,990.17 crore in Fiscal 2022. This mainly reflected expenditure on Fixed Assets i.e. Property, Plant & Equipment, Other Intangible Assets, CWIP and Movement in Regulatory Deferral Account Balances forming part of project cost of ` 2,997.93 crore, ` 451.56 crore towards Investment in Joint Venture and ` 744.18 crore towards Investment in Subsidiaries partly offset by interest income & Guarantee Fees including Late Payment Surcharge by ` 329.78 crore, an amount of ` 301.71 crore towards dividend income, ` 569.04 crore towards proceeds from term deposits, ` 0.19 crore towards interest on loan to Subsidiaries/ Joint Ventures and ` 2.78 crore towards sale of assets.

Net Cash from Financing Activities

In Fiscal 2023, our net cash outflow from financing activities was ` 1,519.66 crore. Fund of ` 3,972.37 crore has been raised through issue of bonds and loan from banks. Borrowings to the tune of ` 1,898.66 crore were repaid. Our cash outflow on account of repayment of lease liability including interest thereon was to the tune of ` 3.29 crore. The amount related to interest servicing was ` 1,681.52 crore. In Fiscal 2023, Total dividend amounting to ` 1,908.56 crore was paid.

In Fiscal 2022, our net cash outflow from financing activities was ` 476.24 crore. Fund of ` 4,114.26 crore has been raised through issue of bonds and loan from banks. Borrowings to the tune of ` 1,398.18 crore were repaid. Our cash outflow on account of repayment of lease liability including interest thereon was to the tune of ` 3.80 crore. The amount related to interest servicing was ` 1,521.05 crore. In Fiscal 2022, Total dividend amounting to ` 1,667.48 crore was paid.

Balance Sheet Highlights Assets

(` in crore)

Equity and Liabilities

(` in crore)

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

Our PPE consisting of Land, Dams, Tunnels, Buildings including Power House Buildings, Construction Equipment, Plant & Machinery, Office Equipment, Computers, etc. after provision for depreciation & amortisation were ` 17,435.03 crore and ` 19,024.55 crore as of March 31, 2023 and March 31, 2022 respectively. Capital Work in Progress which includes Hydraulic Works, Buildings including Power House Buildings, Construction Equipment, Plant & Machinery and S&I works at our power projects were ` 25,315.01 crore and ` 20,573.84 crore as of March 31, 2023 and March 31, 2022 respectively. ROU including forest land under right of use and other leased assets were ` 2,625.70 crore and ` 1,783.12 crore as of March 31, 2023 and March 31, 2022 respectively. Investment Property consists of one piece of land at Bangalore amounting to ` 4.49 crore.

Intangible Assets comprising of computer software were ` 3.08 crore and ` 3.11 crore as of March 31, 2023 and March 31, 2022 respectively.

Investments (Current & Non-Current)

Investments are intended for long term and carried at cost which consists of Equity investments in Subsidiaries/Joint Venture Companies, Govt. Securities & Bonds. Our total investment was ` 5,698.31 crore and ` 5,414.34 crore as of March 31, 2023 and March 31, 2022 respectively. The increase in Investment is the net effect of increase in investment in subsidiary companies and increase in fair value of investment in equity instruments.

During FY 2022-23, the Company has made fresh investment in subsidiary Companies amounting to ` 417.63 crore. The Company has also made full impairment provision of ` 105.56 crore in respect of investment made in Loktak Downstream Hydroelectric Corporation Limited (a subsidiary Company) and ` 30.40 crore in respect of investment made in National High Power Test Laboratory Private Limited (a Joint Venture Company).

Loans (Current & Non-Current)

Loans include loans to our employees, loan including interest to Govt. of Arunachal Pradesh, Lanco Teesta Hydro Power Limited (LTHPL) and National High Power Test Laboratory Private Limited (NHPTL). Loans as of March 31, 2023 and of March 31, 2022 were ` 1,204.39 crore and ` 1,073.27 crore respectively i.e. there is an increase of 12.22% over figures of previous Fiscal mainly due to increase in loan including interest to Govt. of Arunachal Pradesh, loan to LTHPL and increase in employee loans during Fiscal 2023.

Other Financial Assets (Current & Non-Current)

The other financial assets as at March 31, 2023 stood at ` 5,161.41 crore against ` 5,234.51 crore for the previous fiscal. i.e. there is a decrease of 1.40% over figures of previous Fiscal. Other Financial Assets include Amount recoverable on account of Bonds fully serviced by Govt. of India, Lease rent receivable, Interest income accrued on Bank Deposits, claim recoverable from different agencies, Share Application Money pending allotment and Receivable from Subsidiaries/JVs, etc.

Tax Assets (Current & Non-Current)

Tax assets as of March 31, 2023 and 2022 were ` 163.10 crore and ` 132.69 crore respectively i.e. there is an increase of 22.92% over figures of previous Fiscal. Tax Assets include Advance Income Tax & Tax Deducted at Source over and above provision for current tax upto FY 2022-23.

Other Non-Current Assets

Other non-current assets mainly comprise deferred foreign currency fluctuation assets, advances (Capital as well as Other than Capital) and advance to contractor against arbitration awards. Our other non-current assets as of March 31, 2023 and 2022 were ` 3,602.77 crore and ` 3,753.96 crore respectively. The decrease of 4.03% in Fiscal 2023 as compared to the figures in Fiscal 2022 is mainly due to decrease in capital advances and decrease in deferred foreign currency fluctuation assets partially offset by increase in advance to contractor against arbitration awards.

Inventories

Inventories are valued at cost or Net Realisable Value whichever is lower. Our inventories were valued at ` 150.48 crore and ` 130.30 crore as of March 31, 2023 and 2022 respectively.

Trade Receivables (Current & Non-Current)

These consist primarily of receivables against the sale of electricity including unbilled revenue. The Trade receivables (net of provision for doubtful debts) as of March 31, 2023 and 2022 were ` 5,887.04 crore and ` 4,621.48 crore respectively. Increase of 27.38% in trade receivables in Fiscal 2023 as compared to Fiscal 2022 is due to increase in Receivable on account of unbilled revenue and Receivables not yet due.

Cash and Bank Balances

Cash and Bank balances as of the Balance Sheet date consist of cash surplus in our current account, Short Term deposits, the unspent advances received from Government entities in respect of costs associated with the Pradhan Mantri Grameen Sadak Yojana Scheme in connection with the development of rural roads and the Rajiv Gandhi Grameen Vidyutikaran Yojana Scheme relating to the establishment of Rural Electrification Infrastructure and amount held as Payment Security Fund received under 2000 MW Scheme. Cash and Cash equivalents as of March 31, 2023 and 2022, respectively were ` 382.67 crore and ` 937.78 crore. The decrease of ` 555.11 crore during Fiscal 2023 is net result of cash inflow from operating activities of ` 3,893.85 crore offset by cash outflow on investing activities by ` 2,929.30 crore & ` 1,519.66 crore on account of financing activities respectively.

Bank balances other than Cash and Cash Equivalents as of March 31, 2023 and 2022, respectively were ` 255.55 crore and ` 222.93 crore.

Our bank balances other than Cash and Cash Equivalents included ` 84.74 crore (Previous Year ` 86.76 crore) held for Rural Road and Rural Electrification works being executed by Company on behalf of other agencies, ` 16.30 crore (Previous Year ` Nil) held as Payment Security Fund received under 2000 MW Scheme and also included unpaid dividend, unpaid interest & other earmarked balances of ` 154.51 crore (Previous Year ` 136.17 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, Prepaid Expenditure and Deferred Foreign Currency Fluctuation Assets. Our other Current Assets, as of March 31, 2023 and 2022 respectively were ` 405.97 crore and ` 441.14 crore, a decrease of 7.97% in Fiscal 2023 as compared to the figures in Fiscal 2022 is mainly due to decrease in Receivable on account of material issue to contractors and GST Input Credit Receivable.

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 the provisions of Ind-AS 114-Regulatory Deferral Accounts, ‘Regulatory Assets' has been created and corresponding ‘Regulatory Income' has been recognized.

Regulatory Deferral Account Debit balances as on March 31, 2023 and March 31, 2022 were as under:

(` in crore)

Net Worth

The net worth of the Company at the end of Fiscal 2023 increased to ` 35,407.96 crore from ` 33,486.10 crore in the previous Fiscal registering an increase of 5.74% mainly due to increase in Profit after tax and increase in retained earnings.

Long Term Borrowings

Long Term Borrowings mainly comprised of Bonds, Secured Term Loans & Unsecured Loans (Bonds, Term Loans and Foreign Currency Loans) amounting to ` 13,099.23 crore, ` 5,313.60 crore and ` 6841.86 crore in Fiscal 2023 as against ` 14,517.90 crore, ` 2,658.00 crore and ` 5,990.71 crore respectively in Fiscal 2022. The Secured loans include borrowings from domestic banks and financial institutions along with corporate bonds raised in the capital markets that are secured against assets of the Company. The increase in Long Term Borrowings to the extent of 9.00% over previous fiscal is mainly on account of issue of unsecured bonds, borrowings from domestic banks including securitization of return on equity of one of the power station partly offset by redemption of secured bonds and repayment of borrowings.

Lease Liabilities (Current & Non-Current)

Lease Liabilities as at March 31, 2023 stood at ` 14.09 crore against ` 15.15 crore for the previous fiscal.

Other Financial Liabilities (Current & Non-Current)

Other Financial Liabilities include Amount payable towards Bonds fully serviced by Govt. of India, interest accrued but not due on borrowings, Liability against capital works/supplies, EMD/ Retention Money, etc. The other financial liabilities as at March 31, 2023 stood at ` 3,684.12 crore against ` 3,458.76 crore for the previous fiscal i.e. there is an increase of 6.52% over figures of previous fiscal mainly due to increase in Liability against capital works/supplies.

Provisions (Current & Non-Current)

Provisions include provision for Performance Related Pay, Superannuation/Pension fund, Provision towards employee benefits (actuarial valuation), Provision for Tariff Adjustment, Provision for Committed Capital Expenditure, Provision in respect of arbitration award/ court cases and Other Provisions, etc. Total provisions stood at ` 1,713.15 crore as at March 31, 2023 as against ` 1,183.80 crore for previous fiscal i.e. there is an increase of 44.72% over figures of previous fiscal mainly due to increase in Provision in respect of arbitration award/court cases, Provision for Committed Capital Expenditure partly offset by decrease in Provision for Tariff Adjustment and other provisions.

Deferred Tax Liabilities

The Deferred Tax Liabilities as at March 31, 2023 stood at ` 1,937.34 crore against ` 2,100.74 crore for the previous fiscal.

Other Non-Current Liabilities

The Other Non-Current Liabilities as at March 31, 2023 stood at ` 1,944.56 crore against ` 2,026.16 crore for the previous fiscal. Other Non-Current Liabilities include Income received in advance (Advance against Depreciation) and Grants in aid-from Government.

Short Term Borrowings

The Short term borrowings as at March 31, 2023 stood at ` 2,885.65 crore against ` 2,848.76 crore for the previous fiscal. Short term borrowings consist of amount payable to the banks by the beneficiaries on account of bills discounted against trade receivables and current maturities of long term borrowings.

Trade Payables

The Trade payables as at March 31, 2023 stood at ` 215.45 crore against ` 189.57 crore for the previous fiscal i.e. there is an increase of 13.65% over figures of previous fiscal.

Other Current Liabilities

The other current liabilities as at March 31, 2023 stood at ` 734.91 crore against ` 510.70 crore for the previous fiscal i.e. there is an increase of 43.90% over figures of previous fiscal mainly due to increase in Water usage charges payable, Statutory dues payable and Liabilities against deposit works.

Regulatory Deferral Account Credit 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 the provisions of Ind-AS 114-Regulatory Deferral Accounts, ‘Regulatory Deferral Account Credit Balances' has been created and corresponding ‘Movement in Regulatory Deferral Account Balances' has been recognized in respect of MAT Credit to be passed on the beneficiaries. Regulatory Deferral Account Credit Balances as at March 31, 2023 stood at ` 923.20 crore against ` 1,313.27 crore for the previous fiscal.

Off-Balance Sheet Items Contingent Liabilities

The following table sets forth the components of our contingent liabilities as of Fiscal 2023 and 2022.

(` in crore)

Contingent liabilities decreased by 8.53% from ` 11,120.92 crore as of March 31, 2022 to ` 10,172.34 crore as of March 31, 2023 mainly due to Provision created against capital works.

Key Financial Ratios (Standalone basis)

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

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

PE Ratio (Market Price Per Share/ Earning Per Share)

PE Ratio of the Company at the end of Fiscal 2023 increased to 10.52 from 7.90 in the previous Fiscal 2022 registering an increase of 33.16% mainly due to increase in Market Price Per Share of the Company in Fiscal 2023.

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

Return on Net worth of the Company at the end of Fiscal 2023 increased to 11.13% from 10.87% in the previous Fiscal 2022 registering an increase of 2.39% mainly due to increase in Profit after tax partially offset by increase in retained earnings.

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 August 01, 2000 as a Joint Venture of NHPC Ltd. and Government of Madhya Pradesh.

At present, the authorised share capital of NHDC Ltd. is ` 3,000 crore. NHDC has commissioned Indira Sagar Power Project (1,000 MW) and Omkareshwar Power Project (520 MW). The Total Income of NHDC Ltd. for the financial year ended March 31, 2023 and 2022, respectively was ` 1,509.35 crore and ` 1,085.29 crore. The Profit After Tax of NHDC Ltd. for the financial year ended March 31, 2023 and 2022, respectively was ` 774.43 crore and ` 512.96 crore. Paid up share capital of the Company is ` 1,962.58 crore of which NHPC's contribution is ` 1,002.42 crore.

Loktak Downstream Hydroelectric Corporation Limited (LDHCL)

LDHCL was incorporated on October 23, 2009 as a Joint Venture of NHPC Ltd. and Government of Manipur having authorized share capital of ` 230 Crore. Paid up share capital of the Company is ` 141.09 crore of which NHPC's contribution is ` 105.56 crore (74.82%) and full impairment provision has been recognized in the books of the NHPC Limited during the FY 2022-23 considering the delay in investment sanction (PIB & CCEA) and high projected tariff . The Company is yet to start operations.

Bundelkhand Saur Urja Limited (BSUL)

BSUL was incorporated on February 02, 2015, as a Joint Venture of NHPC Ltd. and Government of Uttar Pradesh (UPNEDA), with NHPC's share not less than 74%. The authorized share capital of the Company is ` 450.00 crore. Paid up share capital of the Company is ` 99.17 crore of which NHPC's contribution is ` 86.22 crore (86.94%). During the FY 2022-23, Company has commissioned 26 MW out of 65 MW Kalpi Solar PV Power Generation Project, Uttar Pradesh.

Lanco Teesta Hydro Power Limited (LTHPL)

During the FY 2019-20, NHPC had acquired LTHPL as its wholly owned subsidiary under insolvency resolution process. The acquisition was made as per the resolution plan submitted by NHPC and approved by the National Company Law Tribunal (NCLT). The authorized share capital of the Company is ` 2,500.00 crore. Paid up share capital of the Company is ` 1,724.41 crore in which 100% contribution has been made by NHPC. The Company is involved in construction of Teesta-VI Hydro Power Project.

Jalpower Corporation Limited (JPCL)

On March 31, 2021, NHPC had acquired JPCL under insolvency resolution process and the Company had become a wholly owned subsidiary of NHPC from that date. The acquisition was made as per the resolution plan submitted by NHPC and approved by NCLT. The authorized share capital of the Company is ` 350.00 crore. Paid up share capital of the Company is ` 281.49 crore in which 100% contribution has been made by NHPC. The Company is involved in construction of 120 MW Rangit-IV Hydroelectric Project.

Ratle Hydroelectric Power Corporation Limited (RHPCL)

RHPCL was incorporated on June 01, 2021, as a Joint Venture of NHPC Ltd. and Jammu and Kashmir State Power Development Corporation Limited (JKSPDC), with equity participation of 51:49 respectively. The authorized share capital of the Company is ` 1,600.00 crore. Paid up share capital of the Company is ` 270.00 crore of which NHPC's contribution is ` 137.70 crore (51.00%). The Company is involved in construction of 850 MW Ratle Hydroelectric Power Project.

Chenab Valley Power Projects Private Limited (CVPPPL)

CVPPPL was incorporated on June 13, 2011 as a Joint Venture of NHPC Ltd., JKSPDC & PTC India Ltd. having authorized share capital of ` 5,200 crore for execution of Pakal Dul, Kiru & Kwar H.E. Projects in Chenab River Basin. Paid up share capital of the Company is ` 3,692.39 crore of which NHPC's contribution is ` 1,947.50 crore. The Company's shareholding in CVPPPL due to additional equity infusion is 52.74% as on March 31, 2023. During the FY 2021-22, NHPC Limited had acquired 2% equity of PTC India Limited in CVPPPL for an amount of ` 4.19 crore. Further, during FY 2022-23, pursuant to signing of Supplementary Promoters' Agreement of CVPPPL between NHPC Limited and JKSPDC on November 21, 2022, NHPC Limited has obtained majority representation on the Board of CVPPPL and has gained control over CVPPPL from that date. Accordingly, CVPPPL has been accounted for as a Subsidiary Company from ibid date. The Company is involved in construction of Hydroelectric Power Projects in UT of J&K.

NHPC Renewable Energy Limited (NHPC REL)

NHPC REL was incorporated on 16.02.2022 as a wholly owned subsidiary of NHPC Ltd. The authorized share capital and paid up share capital of the Company is ` 499.00 crore and ` 20.00 crore respectively. The Company is exploring options for setting up non-conventional/ renewable energy projects.

National High Power Test Laboratory Private Limited (NHPTL)

NHPTL was incorporated on May 22, 2009 as a Joint Venture Company of NHPC Ltd., NTPC Ltd., Power Grid Corporation of India Limited (Power Grid) and Damodar Valley Corporation (DVC) each having 25% of equity participation. During the Fiscal 2013, Central Power Research Institute also entered into the Joint Venture thereby revising the equity participation to 20% of each Joint Venture partner. The Company has been incorporated to set up an Online High Power Test Laboratory for short-circuit test facility in the Country having Authorised Share Capital of ` 153 crore. As on March 31, 2023 paid up share capital of the Company is ` 152 crore of which NHPC's contribution is ` 30.40 crore. The Company has started commercial operation during Fiscal 2018. For the financial year ended March 31, 2023, the Company incurred a loss of ` 111.29 crore (includes write offprovision of CWIP) while loss for the financial year ended March 31, 2022 was ` 20.00 crore. Accordingly Net Worth of the Company as at March 31, 2023 stood negative at ` (-) 40.10 crore against ` 71.19 crore for the previous fiscal.

Consolidated Financial Statements of NHPC Ltd, its Subsidiaries and Joint Venture Companies

The Consolidated Financial Statements have been prepared in accordance with Ind-AS 110-‘Consolidated 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:

( ` in crore)

SUMMARY OF CONSOLIDATED BALANCE SHEET

(` in crore)

35.14 MATERIAL DEVELOPMENT IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS FRONT

Your Company has a highly talented team of committed professionals and has been able to induct, develop and retain the best talent. NHPC endeavors to acquire the best talent in the Country from leading educational institutions and universities. It has been working towards nurturing and retaining talent by providing opportunities to improve their knowledge and skills. Job rotation and inter-location transfer through-out the organization, facilitate planned development of careers and broaden the outlook of employees. Employees' participation has been ensured through information sharing with employees, seeking their support, suggestions and co-operation.

(i) TRAINING OF EMPLOYEES

NHPC organizes various developmental programmes for its employees in the areas of behavioral, managerial skills and core competencies. These programmes organized by the Company are either-in-house or through premier management & engineering institutions which helps employees to keep them abreast with the latest developments and changes taking place in the area of their operation. In addition to above, NHPC also sponsors its executives on regular basis to acquire higher qualification and specialization to enhance their productivity and effectiveness.

(ii) EMPLOYEE STRENGTH

The employee strength of the Company as on March 31, 2023 was 4776 (3,084 executives, 293 supervisors & 1,399 workmen).

(iii) WELFARE MEASURES FOR WOMEN EMPLOYEES

The number and percentage of women employees as on March 31, 2023 is given in the table below:

Women employees are regularly nominated to various programmes/seminars on women empowerment and other issues related to women. Women employees are eligible for child care leave with pay up to 730 days for taking care of two children up to the age of 18 years (no age limit in respect of child with minimum disability of 40%). Women employees have option to declare parents/ parents-in-law as their dependents under medical rules. Internal Complaints Committees (ICCs) have been constituted at all locations of the Company to examine the grievances/complaints relating to sexual harassment of women employees. Women representatives are nominated on selection Board/Committee constituted for promotion/ recruitment of employees.

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

• NHPC Corporate Office, Faridabad has Cr?che facility for infants of the employees.

• Relaxations in attendance timings are given to women employees posted at Corporate Office. WIPS (Women in Public Sector Forum) Cell has been constituted in Corporate Office.

• International Women's Day 2023 was celebrated on March 14, 2023 in order to commemorate the occasion and celebrate the progress made towards achieving gender equity and women's empowerment and also to critically reflect on accomplishments & significant contributions of our outstanding women employees. During the program, eminent female speakers delivered their talks on Women Empowerment and Gender Equality and women employees excelling in sports, leadership and social activities were felicitated.

(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 in direct recruitment as per guidelines issued by DoPT from time to time. The relaxed standard and reservation is also applicable to SC/ST employees, while considering them for promotion. The management holds periodical meetings with SC/ST/OBC employees for discussing various issues related to them. SC/ST & OBC Cells headed by separate Liaison Officers have been set up for the welfare of SC/ST and OBC employees. Representation of SC/ST/OBC employees is given in table below:

(v) WELFARE MEASURES FOR DIFFERENTLY ABLED EMPLOYEES:

Representation of differently abled employees as on March 31, 2023 is given in table below:

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 in direct recruitment and promotion as per guidelines issued by DoPT / Ministry of Social Justice & Empowerment from time to time. In addition to above, following welfare schemes have also been extended to differently abled employees:- Differently abled employees as well as employees who are care giver to dependent physically/mentally disabled child are exempted from rotational transfer. These employees are given option about their preference in place of posting at the time of transfer/promotion.

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

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

• Reimbursement of the cost of artificial limbs and for the same an interest free loan is being given to employees/their dependents.

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

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

(i) Environment Protection and Conservation:

Environmental Impact Assessment (EIA) for NHPC projects is undertaken during investigation stage to identify probable impacts on environment. Based on the findings of EIA studies, mitigatory Environmental Management Plans (EMPs) are proposed and implemented to ameliorate the adverse impacts of the project by taking necessary measures like; compensatory a_orestation, catchment area treatment, biodiversity conservation, green belt development, _shery management, rejuvenation of dumping and quarry sites including rehabilitation & resettlement amongst others. Environment and Diversity Management Division has been established at the Corporate Office to monitor and facilitate implementation of environmental safeguard measures at all the Projects/Power Stations and Regional Offices.

Compliance under Corporate Environment Policy:

Your Company has also formulated Corporate Environment Policy, 2022, Biodiversity Policy, 2023, Waste Management Policy, 2023 and Water Conservation Policy, 2023 to institutionalize environmental protection measures in its quest for sustainable development of clean power. Six monthly compliance reports on environmental aspects of Projects/ Power Stations for the periods ending March, 2022 and September, 2022 were submitted to Ministry of Environment, Forest and Climate Change (MoEF&CC), Government of India and its concerned Integrated Regional Offices. These reports were also uploaded on the website of the Company i.e. www.nhpcindia.com. The Company has evaluated the effectiveness of the management plans implemented during the course of construction of a project through post construction Environment Impact Assessment (EIA) studies of Uri (UT of J&K), Rangit (Sikkim), Dhauliganga (Uttarakhand) and Teesta-V (Sikkim) Power Stations. Post construction EIA Studies of Loktak Power Station (Manipur) and Uri-II Power Station (UT of J&K) are currently in progress. NHPC has also conducted sustainability assessment of Teesta-V Power Station (Sikkim) through Sustainability Assessment Protocol of International Hydropower Association (IHA) for operational projects. As per the findings of the assessment, out of 20 parameters on which the Teesta-V Power Station was assessed, it meets basic good practices on all parameters, meets proven best practice on 6 parameters and exceeds basic Good Practice on 9 parameters.

(ii) Renewable Energy Developments:

Your Company is diversifying its activities to explore renewable energy 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, your Company is making efforts to encourage the participation of local firms in the bidding process. The participation of local firms as well as Micro & Small Enterprises helps in 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.

35.16 CORPORATE SOCIAL RESPONSIBILITY

Information regarding Corporate Social Responsibility has been included elsewhere in this Report.

35.17 CAUTIONARY STATEMENT

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

Readers are requested to review and confirm with other information in this Report and in the Company's periodic reports. The Company undertakes no obligation to publicly update or revise any of these forward-looking statements whether as a result of new information, future events or otherwise. The financial figures shown above are based on the audited results of the Company.

36 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

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

Energy Conservation Task Force has been constituted at Corporate office for creating awareness amongst users, monitor effectiveness of measures adopted for energy conservation and provide vertical and horizontal feedback to the Management / users. Energy Conservation Task force suggests time to time measures for the Energy Saving at Corporate Office.

Energy Audits are being carried out in our power stations to assess the efficiency of electrical equipments like generators, transformers etc. and to recommend the energy saving measures. The recommendations arising out of Energy Audits are implemented on a regular basis.

Neer Shakti Sadan has been rated as Four Star Rated Building and Jyoti Sadan as Three Star Rated Building by Bureau of Energy Efficiency, Ministry of Power, Government of India. Energy Efficiency in Street Lighting is being achieved by replacing old in-efficient street lights with energy efficient LED street lights. Astronomical timer switch for Street light are being used. Solar Street light are also installed. As an Energy Conservation measures, different types of conventional light fittings CFL, FTL, conventional Outdoor as well as indoor lights are being replaced with high efficacy / lumen level and less wattage consumption LED Light fittings.

• Electric Vehicle (EV) charging points has been established in the Neer Shakti Sadan Office Complex, promoting use of EV. The old and non-star rated, uneconomical repairable Air Conditioners have been replaced with high Star rated Energy Efficient Air Conditioners in phased manner.

• The maximum available star rating Energy Efficient appliances are purchased for replacing old appliances. 400 numbers five star rated BLDC Ceiling Fans has been procured and installed replacing non-star rating fans.

• Monthly maintenance of 900 TR and 1200 TR HVAC system/equipment is being taken up to guarantee efficient operation throughout the year. HVAC filters are regularly changed or cleaned every month during peak cooling or heating season as dirty filters cost more to use, overwork the equipment and result in low indoor air quality. The operation of the HVAC system for building space cooling is being regulated by BEE recommended optimum temperature setting i.e. 24-25 degree Celsius.

• As an Energy Conservation measure, Movement detectors have been installed in the toilets of Jyoti Sadan during renovation. Painting competitions in surrounding area schools are being organized by NHPC for awareness of Energy Conservation and energy efficiency.

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

Grid Solar Power Plant of 80 kWp and 150 kWp capacity has been installed at the roof top of the building of Corporate Office, Sector-33, Faridabad. 1000 kWp grid connected Roof top Solar PV Plant has been installed at Residential Complex, Sector-41, Faridabad. The system is being maintained in excellent condition so that maximum output can be achieved. The cleaning of the plant is being taken up on regular basis (after sun set and before sun rise) for obtaining maximum output. Preventive Maintenance is being done on regular basis for obtaining maximum uptime. Further, roof-top solar power panels of cumulative capacity of 3362.16 kWp have been installed at various locations of the Company. Further, installations of 722.48 kWp roof top solar power projects at various locations of the Company are in progress.

(iii) Capital investment on energy conservation equipments

Capital investment on energy conservation equipments has been around ` 37.86 lakh.

a) R&D projects completed in FY 2022-23: Measurement of Green House Gas (GHG) emissions from Reservoir of Chamera-I Power Station on Ravi River in Himachal Pradesh in association with IIT Roorkee:

CO2, CH4 and N2O are three predominant GHGs emitted naturally by aquatic systems, the first two being the most important. The study on emission of CO2, CH4 & N2O from Chamera- I reservoir was conducted. Emission of CO2 & CH4 was found to be within the permissible limit based on the range of average Carbon Dioxide & Methane gases emission from fresh water reservoir. N2O Emission is higher in the summer season. In Chamera-I reservoir, there is more TN (Total Nitrogen) in Sediments and water column in summer season as compared to other seasons, thus creating favourable conditions for Microbial decay of organic matter to release N2O.

Post Project Environmental Evaluation of Rangit HE Project Sikkim using Remote sensing and GIS Technology:

The post project evaluation of environmental aspects using temporal Remote Sensing data was done to find out the efficacy of implemented measures in due course of time. The study was focused on the evaluation of efficacy of environmental management plans viz, Compensatory A_orestation Scheme, Catchment Area Treatment Plan, Reservoir Rim Treatment, Restoration plan, Shifting of religious monument, Free Fuel Provision, and Resettlement & Rehabilitation plan. The conclusion and recommendations are as under:

i) Normal Variation in Snow cover was found.

ii) The in-depth analysis of each sub-watersheds (SWS) treated under Catchment Area Treatment gives overall efficacy of management plan implemented for the project. All the SWS have slight variations in land use categories but it is evident from the findings that the CAT plan undertaken in the area has been beneficial.

iii) When comparing with the current status with the situation prevailing during year 1994, it was found that the land-slides have not only reduced in numbers but also the active slides are showing reducing trend with respect to its area.

iv) Six SWS were treated under CAT plan (Composite area of 12,775 ha); Erosion analysis of all the treated SWS shows that only 2.15% area is showing negative changes which is nominal in the time frame of ten years (2010 to 2020). The areas showing positive change is about 5.33% and the area under no change is about 92.52%.

Study of Landslides in the vicinity of nine commissioned/under construction hydroelectric projects of NHPC utilizing Remote Sensing & GIS Technology in association with IIRS, Deptt. of Space, GoI, Dehradun:

The study has been taken at 09 numbers Power Stations of NHPC jointly with IIRS Dehradun. The main objective was to analyze whether construction of the project has any impact on landslides in the project area. The report of the study, prepared by IIRS, Dehradun indicates that the construction of the project has no impact on landslide activities in the study area.

Targeted Solutions through emerging Geophysical Technology in Resistivity Imaging & Ground Penetration Radar for optimization of Geological uncertainties in Hydro Power Projects:

In hydroelectric projects, investigation plays a very vital role and is of great importance for construction of project in optimum time and cost effective manner. The project concluded that Resistivity Imaging can be utilized effectively over tunnel alignments wherever feasible, in order to minimize geological uncertainties / surprises. This will further help in better assessment of geological conditions along the tunnel.

Introduction of Hydraulic Motor operated Rope Drum Hoisting System for one surge shaft gate of Dhauliganga Power Station under technology up gradation / R&D intervention

Introduction of Hydraulic motor drive, as a technology up gradation / intervention would offer enhanced safety and improved performance of the gate hoist. Its successful demonstration at Dhauliganga Power Station would pave the way for similar intervention/applications in other NHPC power stations.

Numerical and physical model studies for elimination of de-silting basins in hydroelectric projects by sediment management through reservoir operation techniques

This study has been taken up at Teesta-VI Project in association with CWPRS Pune. From the analysis it can be concluded that desilting basin is necessary in Teesta-VI reservoir as more than 90% of suspended sediment load enters intake for grain diameter 0.25 mm and above.

b) On Going R&D Projects:

Geological surprises during construction are a major cause of time and cost overrun for a hydro project. To minimize these surprises and undertake construction activities in a cost effective manner, Geophysical techniques like Resistivity Imaging for design of safe, economic and effective earthmat and Ground Penetration Radar, Seismic Tomography to optimize geological uncertainities etc. are innovatively applied for different NHPC projects.

At present, two R&D projects are in progress:

i) "Targeted solution through emerging geophysical technology in Seismic Tomography for optimization of geological uncertainties in Hydropower Projects"-

This is an in-house R&D project. Field survey at projects viz: Subansiri Lower Project, Teesta-VI H.E. Project, Dulhasti Stage-II has been carried out. These technologies can provide more precise details of subsurface rock mass which can minimize uncertainties during construction stage for its timely completion.

ii) "Analysis of Strong Motion Accelerograph Data recorded at NHPC Power Station for development of site specific Peak Ground Acceleration Attenuation Relationship for Himalayan Region"

In consultation with Department of Earthquake Engineering, IIT Roorkee for development of Himalayan specific attenuation relationships which can be further utilized for optimizing the seismic design of our structures.

Application of Remote sensing and GIS Technology are being taken up for Assessment on socioeconomics at Sewa-II Power Station J&K. This R&D Project is being carried out by Environment & Diversity Management Division.

Projects taken up in collaboration with IIT Roorkee:

i) Monitoring Hydro abrasive erosion and suspended sediment for optimal operation of hydro power plant is being conducted jointly through IIT Roorkee in Baira Siul Power Station. Pre & Post monsoon 3D scanning have been carried out for Runner & Guide Vanes.

ii) Development of inflow forecasting system for Chamera-III Power Station. Inflow Forecasting is important for Dam safety, better planning for operation of machine, generation of schedule on day to day basis. The information shall be useful for downstream projects. The hydro-metrological data in catchment and the climate changes in the catchment will be better known. Purchase of equipments for this work is under process.

Project taken up in collaboration with IIT Kanpur: Development of Design Guidelines/Charts for quick estimation of Caverns behaviour & support layout including openings based on 3D FEM Analysis:

The objectives of this Project is safe and economic design of underground caverns of various upcoming projects having underground caverns. This aims to develop easy-to-use design charts/guidelines based on advanced 3D numerical analysis for direct estimation of optimal cavern dimensional parameters and external support requirements, without undergoing detailed computational analysis.

Project taken up in collaboration with NIT Durgapur:

Development of Partial Discharge Monitoring Solutions for High Voltage Electrical Apparatus can help NHPC to move towards a "Predictive Maintenance Practice" from its current Preventive Maintenance Practice. This will improve the system reliability and minimize the breakdown period.

c) Collaborative research related to growth of power sector

As per Ministry of Power recommendations for support and growth of power sector, Studies/ research related to Policy initiative, reforms, restructuring will provide crucial inputs for Policy formulation. For this, a corpus for funding these studies has been setup jointly with MoP and CPSUs like NHPC, NTPC, PGCIL, PFC & REC. NHPC has been undertaking collaborative research for overall growth of power sector.

d) MoA signed with IIT Delhi & IIT Jammu

NHPC has signed MOA with IIT Delhi & IIT Jammu on November 21, 2022 and September 26, 2022 respectively under which both IITs shall provide training, research and development and advisory session services to NHPC in the broad area of its various expertise, hydro, hydrology, water resources, geology, earthquake, renewable energy and environmental management.

(ii) Benefits derived like product improvement, cost reduction, product development or import substitution:

a) Post Project Environmental Evaluation of Rangit HE Project in Sikkim using Remote sensing and GIS Technology indicated that the CAT plan undertaken in the project area has been beneficial.

b) Study of Landslides in the vicinity of nine commissioned/under construction hydroelectric projects of NHPC utilizing Remote Sensing & GIS Technology indicated that construction of the project has no impact on landslide activities in study area.

c) Targeted solution through emerging geophysical technology in resistivity imaging & ground penetration radar for optimization of geological uncertainties in Hydropower Projects indicated that Resistivity Imaging can be utilized effectively over tunnel alignments wherever feasible, in order to minimize geological uncertainties / surprises. This will further help in better assessment of geological conditions along the tunnel.

d) Introduction of Hydraulic Motor operated Rope Drum Hoisting System for one surge shaft gate of Dhauliganga Power Station under technology up gradation / R&D intervention would pave the way for similar intervention/ applications in other NHPC Power Stations. Further, other efforts made towards technology absorption are in initial stages, benefits 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 financial year 2022-23 was ` 11.30 crore including ` 9.37 crore towards establishment expenses.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(` in Crore)

There were no foreign exchange earnings during the FY 2022-23.

37 AUDIT AND AUDITORS'REPORT

37.1 SECRETARIAL AUDIT

M/s Agarwal S. & Associates, Company Secretaries, Delhi has been appointed by the Board to conduct Secretarial Audit of the Company for the FY 2022-23. The Secretarial Auditor, in its report, has given certain observation. The Secretarial Auditor's Report is given as Annexure-II to this Report. The management reply against observation raised by Secretarial Auditor is as under:

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

37.2 STATUTORY AUDIT

In line with provisions of the Companies Act, 2013, the Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). C&AG had appointed following Joint Statutory Auditors for the FY 2022-23:

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

2. M/s Chaturvedi & Co., Kolkata

3. M/s P. C. Bindal & Co, Srinagar

The Joint Statutory Auditors have given un-modified opinion in their report on the standalone and consolidated financial statements of the Company for the FY 2022-23. Further, no instance of fraud by any officer or employee of the Company has been reported by the Auditors under Section 143(12) of the Companies Act, 2013.

37.3 REVIEW OF ACCOUNTS BY C&AG

The C&AG has given its comments on the standalone and consolidated financial statements of your Company for the FY ended March 31, 2023 after conducting supplementary audit under Section 143(6)(a) of the Companies Act, 2013. There are no comments of C&AG for both the standalone and consolidated financial statements of your Company for the FY ended March 31, 2023.The comments of C&AG are appearing elsewhere in the Annual Report.

37.4 COST AUDIT

The Company maintains necessary cost records as specified by Central Government under Section 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 following firms of Cost Accountants to conduct audit of cost accounting records of power stations for the FY 2022-23 under Section 148 of the Companies Act, 2013:

The consolidated Cost Audit Report in XBRL format for the year ended March 31, 2022 was filed with the Ministry of Corporate Affairs on September 7, 2022. The Cost Audit Report for the year ended March 31, 2023 shall be endeavoured to be filed within the prescribed time period.

38 ANNUAL RETURN

Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act, 2013, the Annual Return of the Company as on March 31, 2023 is available on the Company's website at https://www.nhpcindia.com/ assests/pzi_public/gallery/16908019760.pdf

39 PARTICULARS OF LOANS, INVESTMENTS AND CORPORATE GUARANTEES

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

40 PARTICULARS OF EMPLOYEES

In accordance to notification dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from the disclosure requirements of Section 197 of the Companies Act, 2013. Therefore, such particulars have not been included as part of Directors' Report. The Policy on remuneration, pay structure, allowances and other benefits of employees of the Company are governed by relevant DPE Guidelines. Pay structure and allowances of the Company are also available on the website at https://www.nhpcindia. com/assests/pzi_public/gallery/1676010521.pdf

41 BOARD AND COMMITTEES OF THE BOARD

The Board of Directors met eleven (11) times during the FY 2022-23. The details of meetings of Board of Directors and attendance of Directors therein are given in the Report on Corporate Governance, which forms part of the Annual Report. The details of various Committees of the Board along with their meetings and composition are given in Corporate Governance Report.

42 PERFORMANCE EVALUATION OF BOARD, BOARD LEVEL COMMITTEES AND DIRECTORS

NHPC has in place a "Policy on performance evaluation of Board, Board level Committees and Directors". As per the Policy, following evaluation process has been followed by the Company:

1. Every Director of the Company rate performance of the Board, Board level Committees and the individual Directors on pre-determined criteria.

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

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

4. Board evaluates the performance of Independent Directors, excluding the Director being evaluated.

The performance evaluation of all the Board Members, Board as a whole and mandatory Committees of the Board for financial year 2021-22 was carried out during financial year 2022-23. The performance evaluation for financial year 2022-23 has been carried out during financial year 2023-24.

43 DIRECTORS' RESPONSIBILITY STATEMENT

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

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

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

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

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

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

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

44 SECRETARIAL STANDARDS

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

45 GENERAL

No disclosure or reporting in respect of the following items is required, as there was no 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 under any scheme.

3. Significant and material orders passed by regulators or courts or tribunals, which impact the going concern status or Company's operations in future.

4. Occurrence of any material changes and commitments after the close of the financial year till the 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 time settlement and the valuation done while taking loan from the banks or financial institutions along with the reasons thereof.

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

46 BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

The following changes in composition of Board of Directors and Key Managerial Personnel took place during the financial year 2022-23 and afterwards till signing of this report:

1. Shri Abhay Kumar Singh (DIN 08646003) ceased to be Chairman & Managing Director of the Company w.e.f. August 31, 2022 on attaining the age of superannuation.

2. Shri Raghuraj Madhav Rajendran (DIN 07772370), Government Nominee Director ceased to be Director of the Company w.e.f. December 05, 2022 pursuant to orders of Ministry of Power, Govt. of India.

3. Shri Mohammad Afzal (DIN 09762315) was appointed as Government Nominee Director on the Board of the Company w.e.f. December 06, 2022 pursuant to orders of Ministry of Power, Govt. of India.

4. Shri Rajeev Kumar Vishnoi (DIN 08534217) was appointed as Chairman & Managing Director of the Company w.e.f. December 13, 2022 pursuant to orders received from Ministry of Power, Govt. of India. Shri Vishnoi is holding Additional Charge of the post of Chairman & Managing Director of the Company.

5. Shri Premkumar Goverthanan (DIN 10064794) was appointed as Independent Director on the Board of the Company w.e.f. March 10, 2023 pursuant to orders received from Ministry of Power, Govt. of India.

6. Shri Yamuna Kumar Chaubey (DIN 08492346) ceased to be Director (Technical) of the Company w.e.f. May 31, 2023 on attaining the age of superannuation.

7. Shri Uttam Lal (DIN 10194925) was appointed as Director (Personnel) of the Company w.e.f. June 13, 2023 pursuant to orders of Ministry of Power, Govt. of India.

Details of remuneration and sitting fee paid to Directors during the FY 2022-23 are given in the report on Corporate Governance.

All Independent Directors of the Company as on March 31, 2023 have declared that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI LODR. They have further declared that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence. Independent Directors have also declared that they have complied with Rule 6(1) & 6(2) of the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 regarding inclusion of their name in the data bank of Independent Directors maintained by Indian Institute of Corporate Affairs (IICA).

As Shri Premkumar Goverthanan, Independent Director and Shri Uttam Lal, Director (Personnel) were appointed by Board of Directors as Additional Directors, their appointment is proposed in the ensuing Annual General Meeting (AGM). Brief profile of Shri Goverthanan and Shri Uttam Lal are given in the Notice of AGM. Shri Biswajit Basu, Director (Projects) is liable to retire by rotation and being eligible, has proposed himself to be re-appointed at the forthcoming AGM. Brief profile of Shri Basu is given in the Notice of AGM.

47 ACKNOWLEDGEMENT

The Board of Directors wish to place on record their sincere appreciation to all the employees for their dedication and commitment. Their hard work and unstinted efforts enabled the Company to sustain its excellent performance and consolidate its sectoral leadership. The commitment displayed by the employees at all levels is exemplary and praise worthy. NHPC is proud of continuous 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 and co-operation received from Govt. of India, particularly the Ministry of Power, Ministry of New & Renewable Energy, Department of Public Enterprises, Office of the Comptroller and Auditor General of India, Central Electricity Authority, Central Electricity Regulatory Commission, Central Water Commission and other concerned Govt. departments/agencies at the Central and State level.

The Board is also thankful to all its stakeholders, valued customers, contractors, vendors and consultants for their continued support and confidence reposed in the Company.

The Board also acknowledges invaluable guidance and inputs received from Statutory Auditors, Secretarial Auditor and Cost Auditor of the Company. The Board also conveys its sincere thanks to the national and international financial institutions, multilateral financial institutions, domestic and international credit rating agencies for their valuable support and continued trust in the Company.