To The Members,

The Directors are pleased to present the Ninety-Third Annual Report on the business and
operations of your Company and the statements of account for the year ended 31st
March, 2012.


1. Financial Results


  

    

    

    
Figures in Rs. crore 
  
  

    

    
Standalone
    
Consolidated
  
  

    

    
FY12
    
FY11
    
FY12
    
FY11
  
  

    
(a) Net Sales / Income from Other Operations
    
8,495.84
    
6,918.48
    
26,001.40
    
19,450.76
  
  

    
(b) Operating Expenditure
    
6,711.21
    
5,330.30
    
21,101.18
    
14,857.99
  
  

    
(c ) Operating Profit
    
1,784.63
    
1,588.18
    
4,900.22
    
4,592.77
  
  

    
(d) Add: Other Income (including net gain on exchange)
    
983.46
    
493.58
    
268.76
    
410.50
  
  

    
(e) Less: Finance costs
    
514.87
    
459.80
    
1,527.09
    
866.15
  
  

    
(f) Profit before Depreciation and Tax
    
2,253.22
    
1,621.96
    
3,641.89
    
4,137.12
  
  

    
(g) Less: Depreciation / Amortisation / Impairment
    
570.35
    
510.14
    
3,134.64
    
980.24
  
  

    
(h) Profit before Tax
    
1,682.87
    
1,111.82
    
507.25
    
3,156.88
  
  

    
(i) Less: Tax Expenses
    
513.14
    
170.33
    
1,475.54
    
974.97
  
  

    
(j) Net Profit after Tax
    
1,169.73
    
941.49
    
(968.29)
    
2,181.91
  
  

    
(k) Less: Minority Interest
    
-
    
-
    
190.16
    
196.50
  
  

    
(l) Add: Share of Profit of Associates
    
-
    
-
    
70.77
    
74.19
  
  

    
(m) Net Profit after Tax, Minority Interest and Share of Profit of Associates 
    
1,169.73
    
941.49
    
(1,087.68)
    
2,059.60
  



2 . Financial Highlights

2.1 Standalone results

During the year, your Company reported a Profit after Tax (PAT) ofRs. 1,169.73 crore,
as againstRs. 941.49 crore for the previous year. The Operating Revenue was higher atRs.
8,495.84 crore, as againstRs. 6,918.48 crore, an increase of 23%. Operating Revenue was
higher mainly on account of higher fuel cost. The Operating Profit was higher by 12% due
to improved operational performance in Mumbai Operations.

Other Income was higher atRs. 983.46 crore, as againstRs. 493.58 crore in the previous
year, a growth of 99%. This was due to higher dividend income from coal companies, forex
gains (as the Company adopted the option given in para 46A of AS-11 in the notification
issued by Ministry of Company Affairs) and higher treasury income.

Earnings per share (basic) was atRs. 4.53 as againstRs. 4.08 in the previous year.


2.2 Consolidated results

The Consolidated Operating Revenue which stood atRs. 26,001.40 crore grew by 34% as
againstRs. 19,450.76 crore for the previous year. PAT was atRs. (1,087.68) crore as
againstRs. 2,059.60 crore for the previous year. The increase in the Consolidated
Operating Revenue was primarily on account of strong operational performance and higher
coal price realization in Indonesian Coal Companies.

The Consolidated PAT is lower mainly on account of provisions made for impairment of
Mundra project, reversal of forex gains and charge off of deferred stripping costs by the
Indonesian Coal companies.


3. Dividend

The Directors of your Company are pleased to maintain a dividend of 125% (Rs. 1.25 per
share) subject to the approval of the shareholders.


4. Existing Businesses

As of 31st March, 2012, The Tata Power Group of Companies had an installed
generation capacity of 5,297 MW based on various fuel sources: thermal (coal, gas, oil),
hydroelectric power, renewable energy (wind and solar photovoltaic) and waste heat
recovery. The details of the installed capacity are given in Table 1.


Table 1.-Details of installed capacity


  

    
Fuel Source
    
Location
    
State
    
Installed Capacity (MW)
    
Category Total (MW)
  
  

    

    
Trombay
    
Maharashtra
    
1,580
    

  
  

    

    
Maithon
    
Jharkhand
    
1,050
    

  
  

    

    
Mundra
    
Gujarat
    
800
    

  
  

    
Thermal - Coal /
    
Jojobera
    
Jharkhand
    
428
    

  
  

    
Oil / Gas
    
IEL - Jojobera
    
Jharkhand
    
120
    
4,207
  
  

    

    
Rithala
    
New Delhi
    
108
    

  
  

    

    
Belgaum
    
Karnataka
    
81
    

  
  

    

    
Lodhivali
    
Maharashtra
    
40
    

  
  

    
Thermal - Waste
    
IEL - Jojobera
    
Jharkhand
    
120
    

  
  

    
Heat Recovery
    
Haldia
    
West Bengal
    
120
    
240
  
  

    

    
Bhira
    
Maharashtra
    
300
    

  
  

    
Hydro
    
Khopoli
    
Maharashtra
    
72
    
447
  
  

    

    
Bhivpuri
    
Maharashtra
    
75
    

  
  

    

    
Wind farms
    
Maharashtra, Gujarat,
    

    

  
  

    
Renewables
    

    
Karnataka, Tamil Nadu
    
375
    
403
  
  

    

    
Solar Photovoltaic
    
Maharashtra,
    

    

  
  

    

    
(PV)
    
Gujarat
    
28
    

  
  

    
Total
    

    

    

    
5,297
  


Thus, your Company has 20.58% of MW capacity through non-Green House Gas (GHG) based
generating sources.

Your Company also has businesses of Transmission, Power Distribution-cum-Retail in
Mumbai, and other value added businesses.


Table 2: Details of other businesses


  

    
Business
    
Location
    
Key details
  
  

    
Transmission
    
Mumbai
    
Over 1,085 circuit kilometres of Transmission Lines, connecting generating station in
    Mumbai Operations to 18 Receiving Stations in Mumbai.
  
  

    

    
Eastern/North Eastern regions
    
Over 1,166 circuit kilometres of transmission line which transmits surplus power from
    Eastern / North Eastern region (Siliguri) to Uttar Pradesh (Mandula).
  
  

    
Distribution
    
Mumbai
    
Over 2,200 circuit kilometres of distribution network.
  
  

    

    
New Delhi
    
Over 10,500 circuit kilometres of distribution network.
  
  

    
Retail
    
Mumbai
    
Over 2,85,000 customers with sales of over 5,800 MUs in FY12.
  
  

    

    
New Delhi
    
Engaged in serving over 1,300,000 customers with sales of over 7,500 MUs in FY12.
  
  

    
Strategic Electronics
    
Mumbai
    
One of the leading suppliers of defence equipment and solutions amongst Indian Private
    Sector.
  
  

    
Power Services
    
Mumbai
    
One of the leading service providers for Project Management, Operations and
    Maintenance (O&M) and specialized services in the power sector.
  



5 NEW GENERATION PROJECTS

5.1 Projects Under Construction


Table 3:Details of projects under construction


  

    
Fuel Source
    
Location
    
State
    
Capacity (MW)
    
Category Total (MW)
  
  

    
Thermal - Coal / Oil / Gas
    
Mundra
    
Gujarat
    
3,200
    
3,852
  
  

    

    
Kalinganagar
    
Odisha
    
652
    

  
  

    
Hydro
    
Dagachhu
    
Bhutan
    
126
    
126
  
  

    
Renewables
    
Wind farms
    
Maharashtra, Rajasthan
    
150
    
150
  
  

    
Total
    

    

    
4,128
    
4,128
  



5.1.1 Coastal Gujarat Power Limited (CGPL)

CGPL, the Company's wholly owned subsidiary, is implementing the 4,000 MW (800 Rs. 5
units) Ultra Mega Power Project (UMPP) at Mundra in Gujarat. The project, estimated to
cost aboutRs. 18,000 crore, is progressing as per schedule. The cumulative progress till
the end of March 2012 was approximately 95% with total capital commitments of 100% of
total equipment ordering and a total actual expenditure of overRs. 16,000 crore. All major
civil, structural, mechanical, electrical and control & instrumentation work is
complete and about 6,500 direct and indirect workmen are deployed at the site.
Commissioning activities are in full swing in Units 2 to 5, while Unit 1 of 800 MW is in
operation.

The turbine erection for other four units is complete and boiler light-up for Units 2,
3 and 4 has been successfully completed. Unit 2 will be synchronized shortly. Unit 3 steam
blowing is expected to start in May 2012. The last boiler i.e. Unit 5 boiler is expected
to light up in second quarter of FY13. The Power Evacuation System which is being
implemented by Power Grid Corporation of India Limited (PGCIL) is nearing completion with
2 out of 3 double circuit lines commissioned. The third and last evacuation line is
expected to be commissioned during first quarter of FY13.

Your Company has continued its emphasis on safety, through programs, education and
sensitization of workers and supervisors with the help of an NGO.


5.1.2 Kalinganagar, Odisha: 652.5 MW [3 Rs. 67.5 MW (Gas based) + 3 x150 MW (Coal and
gas based)]

Both the projects are being executed through Industrial Energy Limited (IEL), a JV of
the Company (74%) with Tata Steel Limited (26%). This plant is being set up to cater to
the power requirements for a 6 MTPA steel plant for Tata Steel at Kalinganagar in Jajpur
district of Odisha.

CPP1 202.5 MW (3 Rs. 67.5 MW): Order recommendations for Engineering, Procurement &
Commissioning, Steam Generator (SG), Steam Turbine Generator (STG) and General Civil Works
(GCW) packages have been placed on vendors. The project is progressing as per schedule.

CPP2 450 MW (3 Rs. 150 MW): Applications for 'Consent to Establish' and 'Aviation
Clearance' have been submitted. Application for long term linkage for 2.3 MTPA has been
submitted to Ministry of Coal (MoC), Ministry of Power (MoP) and Central Electricity
Authority (CEA). Recommendation from CEA has been sent to MoP and MoC. As an option, use
of middlings, tailings from Tata Steel, e-auctioned coal and imported coal is being worked
out. Signing of MoU between IEL and Tata Steel Limited for supply of coal is being
pursued. The technical specifications for various packages are under finalization.


5.1.3 Dagachhu Hydroelectric Power Project, Bhutan

The 126 MW (2 Rs. 63 MW) Dagachhu project is being implemented by Dagachhu Hydro Power
Corporation Limited (a JV of the Company [26%], Druk Green Power Corporation Limited [59%]
and National Pension and Provident Fund of Bhutan [15%]) in Bhutan. The civil works are
being executed by M/s. Hindustan Construction Company Limited, India. More than 37% of
concreting at weir has been completed and for desilter, more than 62% of concreting has
been completed. The excavation of connection tunnel has been completed and the tunnel
lining is in progress. For head race tunnel, more than 47% of tunnel excavation has been
completed. Cumulatively around 6.2 kilometres tunnelling has been completed and tunnel
lining works have also commenced.


5.1.4 Renewable Energy Projects Wind Power

Your Company is developing wind power projects of over 150 MW in India, of which 80 MW
is proposed to be commissioned during FY13 across Maharashtra (50 MW) and Rajasthan (30
MW). The Company's new JV-Cennergi (Pty) Limited has also been selected as a preferred
bidder for two wind power projects totalling 234 MW in South Africa.


Solar Power

Your Company is in the process of acquiring suitable land parcels in the states of
Maharashtra, Rajasthan, Gujarat and Karnataka to develop solar projects. The Company
through Cennergi, is also evaluating development of solar project in South Africa.

25 MW solar project at Mithapur was successfully commissioned and Commercial Operation
Date (COD) was achieved on 25th January, 2012,


5.2 Projects Under Planning - India

5.2.1 Coastal Maharashtra Project

During the year, your Company has made further progress in the Coastal Maharashtra
project at Dehrand, Maharashtra. Resettlement and Rehabilitation (R&R) agreement has
been signed with Government of Maharashtra (GoM) in July 2011. The project has all the
statutory clearances for its commencement.

Land acquisition by Maharashtra Industrial Development Corporation Limited (MIDC) as
per Maharashtra Industrial Development (MID) Act continued during the year. About 70% (692
out of 993 acres) of private land has been acquired so far. Well structured Community
Relations (CR) activities are in place and are being implemented in the villages covered
for the project.

While your Company is progressing well with the land acquisition, economic options for
coal sourcing and logistics are under evaluation.


5.2.2 Tiruldih Power Project, Jharkhand

The process of land acquisition for the 1,980 MW (3 Rs. 660 MW) project has achieved
significant progress. More than 300 acres of private land has been registered in the name
of your Company. The entire land acquisition process is defined to be completed by March
2013. The Company has successfully extended MoU with the Government of Jharkhand (GoJ)
which is valid for 3 years. Water allocation of 62 cusecs for the project is expected
shortly.


5.2.3 Dugar Hydroelectric JV Project

The consortium of the Company and SN Power Singapore Pte. Limited (SN Power), a
subsidiary of Statkraft, Norway, was awarded the Dugar hydroelectric project through a
competitive bidding process carried out by the Government of Himachal Pradesh (GoHP). The
project is being developed through a Special Purpose Vehicle (SPV), Dugar Hydro Power
Limited (DHPL). DHPL is a JV between the Company (50% + 1 share) and SN Power (50% - 1
share).

Pre-feasibility studies are under progress by the joint project team set up by your
Company and SN Power.


5.2.4 Maithon Expansion : 1320 MW (2 Rs. 660)

Ministry of Environment and Forests (MoEF) has issued Terms of Reference for
environment clearance. Environment Impact Assessment report along with necessary documents
has been submitted for public hearing. Technical presentation at Jharkhand State Pollution
Control Board (JSPCB) took place successfully. Coal linkage application has been filed
with MoC.


5.2.5 Naraj Marthapur Project, Odisha

The major clearances for the 660 MW Naraj Marthapur project have been obtained. The
environmental clearance has been granted by MoEF, subject to clearance from National Board
of Wild Life for which the process is on. Proposal for using clean technology is also
under discussion for Naraj Marthapur project.


5.3 Projects Under Planning - International

In spite of robust growth in domestic power demand, multiple constraints across the
entire value chain have made growth in the country very challenging. Thus, your Company
has decided to venture in international markets that offer a greater potential for growth
with the strategic intent of maximizing returns and minimizing risks.


5.3.1 Sorik Marapi Geothermal Project - Indonesia

The consortium of your Company, Origin Energy Limited (Origin) and PT. Supraco
Indonesia (Supraco) won the Sorik Marapi geothermal concession in a competitive bid
process on 2nd September, 2010.

The project is in the exploration phase. Detailed geosciences studies (geological,
geochemical and geophysical) have been completed. The preliminary resources assessment
report is positive.

Exploratory drilling is expected to commence in Q4 FY13. Sufficient progress is being
made in infrastructure planning and development required to carry out the exploratory
drilling (like issuance of various permits, land lease/acquisition etc). There has been
good engagement with the local community in the Sorik Marapi area through numerous
activities led by SMGP's Community Relations. The exploration phase of the project is
expected to end in September 2013.


5.3.2 African Power Business - Cennergi

Your Company has formed a 50:50 JV with Exxaro Resources Limited, the second largest
coal producer in South Africa. Cennergi, the JV company, would develop power generation
projects in South Africa, Botswana, Namibia and other African countries. This company
plans to initially develop renewable energy projects and thereafter, coal fired and hydro
power plants in the countries of interest. Cennergi was declared successful in two wind
projects which were bid in April 2012, aggregating to 234 MW.

Your Company is actively pursuing business opportunities in other countries as well and
hopes to increase its global footprint in the coming years


6. Key Subsidiaries

6.1 Coastal Gujarat Power Limited

CGPL, the Company's wholly owned subsidiary, is implementing the 4,000 MW (800 Rs. 5
units) UMPP at Mundra in Gujarat. The project, estimated to costRs. 18,000 crore, is
progressing as per schedule. While Unit 1 is under operation, Commissioning activities are
in full swing in Units 2 to 5.

Recent changes in Indonesian coal price regulations have resulted in an increase in
price of Mundra UMPP's coal off-take arrangements with Indonesian coal companies. In
addition to this, there is an unprecedented increase in global coal prices as compared to
the year 2006, when the Company had bid for Mundra UMPP. As per the existing Power
Purchase Agreement (PPA), there is only a partial pass through of increase in coal price,
which is leading to an additional financial burden. Your Company is of the view that this
is an industry wide issue and not specific to Mundra UMPP alone.

The issue is being represented to the government of the procuring states and the
Central Government in different forums and through different industry associations. The
Company is hopeful of fruitful resolution of the issue.

Given the circumstances, as a part of its sponsor support obligation to the project
leaders, Tata Power has offered to transfer 75% of the dividend flow of coal SPV (which
holds the ownership of 30% equity investment in two coal mines in Indonesia) to CGPL or
any other alternate structure/method to support the debt service. Your Company is in
discussions with lenders to formalize a suitable structure as part of sponsor support
obligation.

CGPL, in its endeavour to become 'Neighbour of Choice', continues to take initiatives
for the local community in the area of livelihood and income generation, education and
health as part of its community relationship programme. This is done by continuously
engaging with local communities and by partnering with government agencies.


6.2 Industrial Energy Limited (IEL)

IEL commenced operations in May 2009. The 120 MW coal based Unit 5 was commissioned in
FY11 in Jojobera in the existing location of Units 1 to 4. It is also operating a 120 MW
co-generation plant (Power House 6) in Jamshedpur inside the Tata Steel plant. The Company
is progressing to execute a 652.5 MW thermal project in Kalinganagar, Odisha. This plant
would meet the power requirement for Tata Steel Limited.

During FY12, IEL earned revenue ofRs. 433.7 crore (as against previous year revenue
ofRs. 125.5 crore) and a PAT ofRs. 78.0 crore (as against previous year PAT ofRs. 24.9
crore). The increase in revenue is due to commissioning of 120 MW Unit 6.


Table 4: Details of thermal power generation for FY12 - IEL


  

    

    
Generation (MUs)
    
Generation Availability (%)
    
Plant Load Factor (%)
  
  

    

    
FY12
    
FY11
    
FY12
    
FY11
    
FY12
    
FY11
  
  

    
IEL
    
1,574
    
738
    
94
    
93
    
74.5
    
70
  



6.3 Maithon Power Limited (MPL)

MPL, a JV between your Company (74%) and Damodar Valley Corporation (DVC) (24%), has
set up a 1,050 MW (2 Rs. 525 MW) power plant at Maithon in Jharkhand. Your Company is
rendering project management and O&M services to MPL.

Unit 1 COD was declared on 1 st September, 2011 with power sale commencing
from first day of operation. The power has been tied up in a long term PPA with DVC and a
medium term PPA with Tata Power Trading Company Limited (TPTCL). The provisional tariff
order for its power sale to DVC has been determined by Central Electricity Regulatory
Commission (CERC) in November 2011 till 31st March, 2012. Power sale to TPTCL,
which has back to back PPAs with Tata Power Delhi Distribution Limited (TPDDL) and BSES
Rajdhani Power Limited (BRPL), was guided by the terms of the respective PPAs.

Unit 2 achieved full load on primary fuel on 23rd March, 2012. Final testing
of all the systems is under progress. Unit 2 is planned to be declared commercially
operational in H1 FY13.

MPL has obtained necessary approvals for additional funding requirements for the
increase in project cost. Your Company has infused equity of Rs. 987.84 crore and the debt
drawn by MPL is Rs. 2,998.46 crore. The operational performance for MPL in FY12 is as
follows:


Table 5: Operational performance of MPL for FY12


  

    

    
Generation (MUs)
    
Generation Availability (%)
    
PLF (%)
  
  

    
Unit 1
    
1,225
    
65
    
46
  


Since Unit 2 COD is yet to be declared, the unit performance is not shown in the above
table.

MPL is also planning to expand by adding another 1,320 MW capacity consisting of two
units of 660 MW each, adjacent to the ongoing 1,050 MW (2 Rs. 525 MW) power plant.
Adequate land and water resources are already in place. Application for environment
clearance has been made and coal linkage by way of tie up with DVC is being worked out.


6.4 Powerlinks Transmission Limited (PTL)

PTL is a JV between your Company (51%) and PGCIL (49%). PTL transmits power from the
1,020 MW Tata Hydro Electric Power Project in Bhutan and surplus power from the
Eastern/North-Eastern region of India through its transmission lines between Siliguri
(West Bengal) and Mandaula (Uttar Pradesh), spanning a distance of 1,166 kilometres. The
availability of transmission line was maintained at 99.66% for Eastern Region in FY12
(previous year availability: 98.62%) and 99.85% for Northern Region (previous year
availability: 99.78%), as against the minimum stipulated availability of 98%.

During FY12, PTL has earned revenues of Rs. 281.63 crore (as against previous year
revenues of Rs. 288.41 crore) and a PAT of Rs. 112.35 crore (as against previous year PAT
of Rs. 105.68 crore). PTL has paid interim dividend of Rs. 1.25 per share (previous year
interim dividend was Rs. 1.4 per share) and recommended final dividend of Rs. 0.65 per
share for FY12 (previous year final dividend was Rs. 0.70 per share).


6.5 Tata Power Delhi Distribution Limited (TPDDL)

TPDDL (formerly North Delhi Power Limited) is a subsidiary of your Company (51% share)
with balance shares held by Delhi Power Company Limited, a Government of Delhi
undertaking. TPDDL is engaged in distribution of electricity in North and North-West Delhi
and services around 1.3 million consumers spread over 510 square kilometres. The peak load
in this area is about 1,400 MW, with energy consumption of over 7,500 MUs.

In FY12, TPDDL has earned revenues from operations aggregating to Rs. 5,338.88 crore, a
growth of about 30% over the previous year (X 4,119.02 crore). The Company earned PAT of
Rs. 338.65 crore in FY12 compared to Rs. 258.18 crore in FY11, reflecting an increase of
around 31% over the previous year.

The tariff order for FY12 released by Delhi Electricity Regulatory Commission (DERC) in
August 2011 was made effective from September 2011. However, the tariffs fixed by DERC for
FY12 are not fully cost reflective. In FY12, TPDDL billed its consumers at rates which
factored a power purchase cost ofRs. 4.06 per unit (plus fuel price adjustment surcharge)
against an actual cost ofRs. 5.29 per unit. In FY11, power purchase cost ofRs. 2.63 per
unit was considered as against actual cost ofRs. 4.26 per unit. The gap in cost recovery
in FY11 was because tariff fixed for FY10 continued in FY11. This was due to the stay
order of Delhi High Court for release of tariff order for FY11 on a PIL filed before it.

The DERC, in its last tariff order, has stated that it shall endeavour to recover the
past revenue gaps and unrecovered revenue gap for FY12 in the course of forthcoming Multi
Year Tariff (MYT) Period (FY13-FY15). The DERC has also issued a letter reiterating the
above and confirming that it shall allow carrying cost on the unrecovered revenue gap.
Tariff determination process for FY12-FY13 is presently underway. Therefore, TPDDL's
current year revenues includeRs. 1,781.63 crore (previous yearRs. 1,156.43 crore) as
income recoverable from future tariff.

During FY12, TPDDL was bestowed the 'Asian Power Utility of the Year Award' for 2011,
by Asian Power Awards, Singapore for the fifth year in succession, 'Utility of the Year'
by India Power Awards, 'Best Performing Utility (Urban)' by Enertia Awards and the 'Safety
Innovation Award' by the Institute of Engineers (India).


6.6 Tata Power Trading Company Limited (TPTCL)

TPTCL is in the business of power trading since June 2004 and is the first company in
India to receive a power trading license from CERC.

TPTCL transacted 5,583 MUs during the year as compared to 4,354 MUs in the previous
year and has shown a CAGR of 36% over the past 5 years. It was ranked the third largest
trader with a market share of 10% in FY12. The gross revenue for FY12 wasRs. 1,926.70
crore as compared toRs. 1,932.05 crore in the previous year. The PAT increased by 52.78%
toRs. 14.05 crore, as againstRs. 9.15 crore in the previous year.

Electricity traded in the short term power market has gradually increased to nearly 7%
of the generation, of which close to 5% is via bilateral trading and the balance 2% is
through power exchanges. TPTCL has also diversified its supply sources by entering into
long term power purchase contracts with various power developers for sale of their power
in the long term as well as in the merchant market.


6.7 Trust Energy Resources Pte. Limited (Trust Energy)

Trust Energy, a wholly-owned subsidiary of your Company, was set up in 2008 to manage
overseas fuel logistics and coal sourcing, thereby achieving vertical integration in order
to support the Company's growing power business.

Trust Energy (along with Energy Eastern Pte. Limited [EEPL], a wholly-owned subsidiary
of CGPL) has organized a fleet of five cape size vessels. EEPL has entered into long-term
charters for three cape size vessels. The ships have started their commercial operations
and are expected to be fully deployed to service the needs of Mundra UMPP, after 2013.
Currently, the fleet is chartered out in the open market.

Trust Energy has been awarded the prestigious Approved International Shipping (AIS)
scheme from the Government of Singapore, which provides a zero tax incentive, for its
shipping income.


6.8 Tata Power Renewable Energy Limited (TPREL)

TPREL is in the business of setting up renewable power projects based on hydro power
(< 25 MW), wind, solar and biomass. TPREL has commissioned its first 25 MW Solar Power
Project at Mithapur in January 2012.

TPREL is developing more solar power projects in Maharashtra, Rajasthan, Gujarat and
other states and has placed orders for 150 MW wind projects to be set up in Maharashtra
and Rajasthan.

TPREL is seeking organic and inorganic growth opportunities with the goal of building a
robust portfolio of renewable energy capacity.


6.9 NELCO Limited (NELCO)

NELCO, established in 1940, is listed on Bombay Stock Exchange Limited (BSE) and
National Stock Exchange of India Limited (NSE). Your Company, along with its subsidiary,
holds 50.10% stake in NELCO.

NELCO's Integrated Security & Surveillance Solutions business (ISSS) has been
active in providing integrated security and surveillance solutions in the defence sector,
government bodies (e.g. Indian Railways) and other industries. It also provides solutions
in the field of meteorology and has prestigious contracts from important organizations
like Indian

Air Force (IAF) and Indian Meteorology Department (IMD). NELCO is also a leading VSAT
service provider in the country catering to a large segment of the market. It has a major
presence in the BFSI, Education, Telecom and Oil & Gas sectors due to its innovative
solutions. It offers various solutions on the VSAT network which enables internet access,
bandwidth on demand, IP multicasting and digital streaming. It has the satellite earth
station at Mahape, Navi Mumbai and the same is augmented continuously to keep it current
with the latest technology. It currently has around 25,000 VSATs deployed across the
country.

NELCO has also started offering Managed Services around Managed Data Center Hosting
services, Managed Network services, Remote Infrastructure Monitoring services, Application
Performance Monitoring to add on to its basic services offering of VSAT communication.

Tatanet Services Limited (Tatanet), a subsidiary of NELCO, holds the requisite licenses
for providing the shared hub VSAT services.

During the 12 months period ended 31st March, 2012, NELCO has posted a total
income ofRs. 123.09 crore and net loss ofRs. 12.75 crore.


6.10 Af-Taab Investment Company Limited (Af-Taab)

Af-Taab is a wholly owned investment subsidiary of your Company. During FY12, Af-Taab
earned an operating income ofRs. 8.80 crore and PAT ofRs. 5.07 crore, as againstRs. 206.65
crore andRs. 163.08 crore respectively in FY11.


6.11 Chemical Terminal Trombay Limited (CTTL)

CTTL is a wholly owned subsidiary of your Company offering bulk storage facility of
liquid chemicals and petroleum products. CTTL is also in the business of supplementing
services for coal handling operations and fly ash disposal management at Trombay
generating station. During FY12, CTTL earned an operating income ofRs. 19.15 crore and PAT
ofRs. 5.23 crore, as againstRs. 13.38 crore and PAT ofRs. 3.44 crore respectively in FY11.


6.12 Tata BP Solar India Limited (Tata BP Solar)

Tata BP Solar, a JV between your Company (49%) and BP Alternative Energy Holdings
Limited (BP) (51%), is a manufacturer of solar cells and modules. On 27th
December, 2011, your Company signed Share Purchase Agreement with BP to purchase its 51%
equity in the company, on completion of which, your Company will have full ownership.

In FY12, its production of solar cells was 22,538 KW as against 54,482 KW in FY11 and
the production of solar modules was 55,977 KW as against 75,194 KW in FY11. During the
year, the turnover of the Company was better by 3% toRs. 930.54 crore (FY11Rs. 905.93
crore). Total solar market in FY12 grew to about 700-800 MW from 80-100 MW in the previous
year. The market is currently highly competitive and fragmented among different companies.


7. Investments in Indonesian Coal Companies

Your Company through its subsidiaries Bhira Investments Limited and Khopoli Investments
Limited based in Mauritius and Bhivpuri Investments Limited based in Cyprus has invested
in PT Kaltim Prima Coal, PT Arutmin Indonesia, Indocoal Resources (Cayman) Limited, PT
Indocoal Kaltim Resources and PT Indocoal Kalsel Resources to acquire a stake of 30% in
each of these companies.

The performance of the two Indonesian thermal coal companies, continued to be robust.
The production during calendar year 2011 was 65.63 MT as against 60.13 MT in 2010. Coal
prices showed good recovery in calendar year 2011. Coal price realization for calendar
year 2011 was US$ 93.20/tonne as compared to US$ 70.82/tonne in the previous calendar
year. The high price of coal ensured that the profitability of the coal companies
improved.

The total external outstanding debt in the coal SPVs stands at US$ 790 million as on 31st
March, 2012. This debt was taken for the acquisition of a 30% stake in two major
Indonesian coal companies viz. PT Kaltim Prima Coal and PT Arutmin Indonesia and related
companies (coal companies) and for other investments out of coal companies including the
newly formed JV with Exxaro in South Africa. The debt consists of US$ 450 million of
hybrid issue and US$ 340 million of loan with recourse to your Company.

The equity interest in the two Indonesian coal companies provides a price hedge against
coal prices to the power business, which uses imported coal, against rising coal prices,
besides providing security of fuel supply through the off-take agreements.


8. Sustainability at Tata Power

Sustainability forms the core of your Company's vision - "To be the most admired
Integrated Power and Energy Company delivering sustainable value to all stakeholders'.

Your Company has always set a standard in adopting sustainable practices in its
business and has developed its sustainability model with the intent of 'Leadership with
Care'. The key elements of the sustainability model are - Care for our Environment, Care
for our Customers, Care for our Employees and Care for our Community.

Some of the key initiatives for community relations carried out by your Company are as
follows:

i) An Industrial Training Institute has been started at Mulshi (Maharashtra) to improve
employability options for youth in the area.

ii) Skill development trainings are conducted at Maithon (Jharkhand), Trombay
(Maharashtra), Naraj Marthapur (Odisha) and hydro power plant areas (Maharashtra) to
enable youth to undertake self employment.

iii) Improvement of Education Programs has benefited over 19,000 students in Maithon
(whole Nirsa block in Jharkhand), Tiruldih and Jawahar (Thane, Maharashtra).

iv) A rural BPO was set up in Khopoli (Maharashtra) and is currently providing
employment to ~400 youth.

v) Nursing courses have been conducted for 35 women in the areas adjacent to our hydro
power plants and all these women have been successfully employed.

vi) Mobile medical services and specialized medical camps organized by your Company
have serviced more than 23,300 patients.

vii) Over 1 million saplings have been planted in our hydro power plant areas
(Maharashtra), Naraj Marthapur (Odisha), Jojobera and Maithon (Jharkhand) towards a
greener environment.

viii) Tata Power Community Development Trust has played a major role in providing flood
relief to the Odisha flood victims in collaboration with NGOs.

ix) Your Company's employees are active volunteers and have contributed over 6,000
hours for various social and environmental causes.

Safety and health of employees are of prime importance to your Company. Further, we
have also introduced Greenolution wherein employees are encouraged to carry out green
initiatives voluntarily. During the year, your Company has notched up a number of
achievements in relation to Sustainability. Your Company adopted Global Reporting
Initiative (GRI) guidelines for sustainability reporting and prepared its sustainability
report entitled 'Responsible Growth and Beyond' for FY11 based on GRI G3 guidelines. This
Sustainability Report was externally assured and accorded A+ Application Level Check from
GRI. Your Company also submitted its response to The Carbon Disclosure Project (CDP), UK
an independent not-for-profit organization holding the largest database for investors.
Your Company secured 2nd position in Indian Utilities sector with Carbon
Disclosure Leadership Index (CDLI) of 71.

Care for the Environment addresses our commitment towards resource conservation, energy
efficiency, carbon footprint, renewable power generation, biodiversity and green
buildings. One of our major initiatives towards sensitizing the community on
sustainability is the Tata Power Club Enerji (the Club), previously known as Tata Power
Energy Club.

In FY12, the Club has reached out to 285 schools nationwide, sensitised over 1.5
million citizens and saved more than 2.48 MUs. The Club has a strong, sustainable and
replicable model to spearhead a movement. It has developed 25,348 Energy Champions, 26,273
Energy Ambassadors and 1,029 self-sustaining mini energy clubs this year. This energy
brigade is creating a self-sustaining movement on energy conservation across the nation.

The Club has been bestowed the Asian Leadership Award for 'Environmental Leadership and
Best Corporate Social Responsibility Practice, 2011'. CMO Asia Awards has recognised the
Club as the 'Best Marketing Campaign of the Year, 2011' at Singapore. The Club has also
been recognized internationally and was bestowed the 'Most Innovative Campaign' award at
USA's The Energy Daily's 2010 Leadership Awards.


9. United Nations Global Compact

Your Company has been reporting data since 2006 as per the Global Compact Initiative
taken up by the Secretary General of the United Nations in 2002. The Global Compact
requires businesses to adhere to ten principles in the areas of human rights, labour
standards, environment and anti-bribery. For the current year, the Company has submitted
response to the Global Compact for its 'Communication on Progress' on various principles
in its business processes.


10. Safety

In your Company, safety is considered of prime importance. Therefore, M/s, DuPont was
engaged over a period of three years to bring about a cultural change in the safety
processes. Significant advancements in the field of safety have been achieved in FY12 by
implementing various safety measures.

An Apex Safety Committee (ASC), chaired by the Managing Director, reviews the Company's
safety performance on a regular basis and guides the implementation of detailed action
plans through Central Safety Committees and Site Implementation teams at all sites. Safety
Management System (SMS) has been upgraded to meet the requirement of British Safety
Council (BSC) 5 star SMS model. Several new safety standards and procedures were
introduced to strengthen the SMS. Access control philosophy was introduced for controlling
safety-critical jobs.

Regional Apex Safety Committees were introduced to enable greater participation of line
management in safety activities. Dedicated Office Safety Committees were established to
drive improvement in offices.

Several risk-based third party safety audits were conducted on electrical, fuel and
fire protection systems. Electrical safety audits for customer's premises were introduced
to ensure safety of major customers. Several off-the-job safety measures were implemented
to enhance the safety awareness on Road safety and Home safety amongst employees' family
and amongst school children in the operating vicinity.


11. Renewables and New Technology

Your Company follows various websites and forums to keep abreast of the Research and
Development (R&D) updates on clean technologies. Interactions are on with faculty
members from the Indian Institute of Technology (IIT), Bombay, University of Mumbai,
Institute of Chemical Technology (ICT) and various other universities to stay updated on
new technologies in the clean and renewable energy space. Technologies in a variety of
areas like CO2 absorption using algae, carbon capture reuse and storage, fuel
cell (telecom tower application), gasification (biomass, coal), solar (PV, thin-film,
concentrated PV and concentrated thermal), micro-turbine wind energy generation, etc. are
being evaluated. During the year, your Company has continued to expand its presence in the
field of renewable energy. Some key highlights are:

i) Geothermal: Your Company has invested in Geodynamics, a leading Australian company
in enhanced geothermal systems with a view to bring the learning from the investment to
India. Your Company has invested AU$ 50 million in the project so far. Currently, the
fourth injection well is being drilled. Your Company has impaired the investment based on
current estimates of value.

ii) Solar Concentrated Thermal: A consortium led by IIT, Bombay is setting up a 1 MW
solar concentrated thermal power plant at the National Solar Centre in Gurgaon, outside of
New Delhi. Your Company will be providing technical manpower for O&M of this power
plant.

iii) Floating Solar PV: Sunengy Pvt. Limited is an Australia based start-up company
that has designed a floating concentrated PV system using Fresnel lenses. Your Company is
planning to test a 13.5 kW pilot unit at Walwhan Lake in Lonavala.

iv) Micro-Wind: Your Company is setting up a test bed of micro wind turbines for
installation and commissioning of selected turbines. This test bed will help the company
determine the most cost-effective forms of micro-wind energy. Micro turbines of capacities
of 2 kW from Windtronics, 5 kW and 12 kW from WePower and 5 kW from Unitron have been
installed at this site. Another 2 kW Windtronics turbine has been installed and
commissioned at Trombay generating station. The turbines are being studied for
understanding their performance in Indian conditions.

v) Biomass Gasification System: Your Company plans to set-up a power generation system
utilizing biomass gasification to generate synthetic gas that is fired in a gas engine to
generate power. The fuel source (biomass) will be grown in a plantation for the purpose of
harvesting in a sustainable manner. The first unit will be 250 KW in capacity and will
need 6 tonne/day of biomass.

vi) CO2capture using algae: Your Company is designing a pilot plant that can
capture ~10 TPD of CO2. This will be the first plant of its kind in India and
will have the flexibility to utilize different solvents so that we can compare the latest
CO2 capture processes. Most of the captured CO2 will be reused e.g.
for carbonation, dry ice manufacturing or as an algae feed. A part of the captured CO2
(1 TPD) will be fed to algae in a Photo Bio Reactor (PBR) system. The algae will be
harvested and then value added materials like fish food and neutraceuticals (for human
consumption) can be extracted from the algae.

vii) Microwave applications in drying of coal: There are losses in efficiency due to
high moisture content in coal used in coal fired power plants. In order to reduce these
losses and investigate the possibility of drying of coal using microwave, preliminary
studies along with experiments were carried out. The success of the study will pave the
path for establishing future capacity. This application would also be useful in the
Exergen process for removing the moisture from the coal.


12. Corporate Services

12.1 Financing

Your Company has issued perpetual debentures amounting to Rs. 1,500 crore in June,
2011.The key features are that these debentures are perpetual in nature with no fixed
maturity or redemption and are callable only at the option of the Company at the end of
the 10th year and annually thereafter. The coupon (which may be deferred at the
Company's option, subject to certain conditions being met) on the debentures is set at
11.4% p.a., with a step up of 100 bps if the debentures are not called after 10 years.
These debentures rank senior only to share capital of the Company.

Your Company arranged a long term loan of Rs. 800 crore from Infrastructure Development
Finance Company Limited (IDFC) for funding the capital expenditure requirements of its
Mumbai Operations. This loan carries an interest rate of 1.20% p.a. spread over and above
1 year IDFC benchmark rate prevailing on date of each disbursement. Of this, the Company
has availed Rs. 378 crore at an average cost of 11.20% p.a. in FY12.

TPREL tied up the debt requirement of Rs. 255 crore through a consortium of domestic
lenders consisting of State Bank of India and Export-Import Bank of India, at an interest
rate of 11.25% p.a. (SBI base rate plus 125 bps) with an interest reset at the end of
every 12 months.


12.2 Business Excellence

i) Tata Business Excellence Model (TBEM)

This year, exercising the option given by Tata Quality Management Services (TQMS) to
high scoring Tata companies, of getting assessed every alternate year, the Company did not
participate in the TBEM external assessment process. Instead, the Company implemented a
detailed internal assessment process across all the divisions in the Company. The internal
assessment process mimicked the external assessment process, to the extent possible.


ii) Organisation Transformation (OT)

Your Company continued its efforts in building leaders. As part of the structured OT
exercise for officers, 'Leher', provided an opportunity to two hundred officers in the
management cadre, across functions, levels and sites to consolidate their learning and
effectively spread their individual transformations to others in the Company and
enculturise them. The cultural shifts, include taking ownership, collaborative
responsiveness, taking decisions that address the greater common good, and working on
their own individual development plans. Another OT initiative, 'LASER' (Learn, Apply,
Share, Enjoy, Reflect), aimed at achieving high standards of shop-floor excellence and
strengthening the relationships between frontline officers and workmen has been
implemented. It achieved high levels of success, in terms of relationship building,
improving operational efficiencies, and improving the workplace. The programme covered all
operating sites and 109 projects were taken up with 42 projects having been completed,
yielding an estimated annualised saving of Rs. 1.60 crore.


iii) Structured Problem Solving (SPS)

The SPS programme launched last year in your Company has gathered momentum and over 400
officers from across sites have been trained on SPS. SPS attempts to analyse data
available from the various processes, using quality tools, to arrive at solutions for
continuous improvements. Of the 105 SPS projects taken up during the year, 62 projects
have been completed, reporting an estimated annualised saving of Rs. 34 crore.


iv) 'Sankalp'

Sankalp, a programme to bring in operational excellence, delivery excellence and cost
efficiency, using the Total Operational Management methodology has gained strength across
the Company. The Sankalp programme, which takes up projects that have a major effect on
the Company's profitability, has achieved a saving of Rs. 84 crore accrued during the
year. The key projects taken up in Trombay include improvement of heat rates of the 500 MW
Unit 5 and the 250 MW Unit 8.


v) Business Process Reengineering (BPR)

The BPR efforts in your Company were concentrated in the specific area of distribution
and retail sales in view of the rapid increase in the number of customers in Mumbai. Some
of the projects taken up were SAP based Customer Relationship Management (CRM) which would
provide a single window for all customer related information and automate workflows for
customer facing processes, SAP based Business Communication Management to enable customers
to use various channels of communication like interactive voice over telephone, email, SMS
and integrating it with CRM etc.

BPR has also undertaken an exercise to study the existing cost structure for
generation, transmission and distribution and validate the allocation methodologies.


12.3 Regulatory matters

The business of Tata Power is governed primarily under the Electricity Act, 2003 (EA
2003) and the regulations framed by the regulatory commissions under EA 2003. Every year,
each regulated business of your Company is required to file two documents with the
concerned regulatory commission - an Annual Performance Review (APR) for the year gone by
and Annual Revenue Requirement (ARR) for the coming year. The APR contains details of the
actual performance of the business, including all relevant operational and financial
details. The ARR contains the projected revenue requirement based on demand projections,
fuel cost and plans for operational and capital expenditure.

Of late, regulatory commissions have issued Multi Year Tariff (MYT) regulations that
propose a method to fix tariff for a period of five years, with a possibility of a
mid-term review. Such MYT regime has been brought by the state regulators of Maharashtra
and Jharkhand for a five year period commencing from 1st April, 2011 to 31st
March, 2016. Under this regime, a projection of the business parameters have to be made
for the five year period. In compliance therefore, this year the Company, in addition to
the APR petition, filed documents called the Business Plan and Multi Year Tariff Petition
for its Mumbai business as well as two of its units at Jojobera.


12.3.1 Mumbai Operations

i) MERC order for truing up of FY10 and FY11

MERC passed an order in February, 2012 on the Company's truing up petition for FY10 and
FY11. In this order, certain expenditures for FY10 and FY11 were disapproved by MERC. An
appeal has been filed against such disallowances in the Appellate Tribunal for Electricty
(ATE). Recently, the Company was allowed to recover Fuel Adjustment Charge (FAC) on ad-hoc
basis by MERC.


ii) Changeover of consumers to Tata Power

Your Company has successfully changed over a large number of consumers from another
power distributor. It was contended by the other licensee, that such changeover is causing
financial loss due to loss in cross subsidy and this loss needs to be recovered. A
petition was filed in MERC, which decided that this would be considered at the time of the
tariff filings of the other distributor. MERC, in its order on tariff filing of the other
distributor, has determined cross subsidy surcharge for various categories of such changed
over consumers. An appeal has been filed in ATE against such determination of cross
subsidy surcharge in the parallel licensee scenario.


iii) Laying of network in South Mumbai Area

MERC, in its order in February 2010, had directed your Company to lay distribution
network in South Mumbai area for supplying electricity to the consumers. Brihan Mumbai
Electricity Supply and Transport Undertaking (BEST), which also has a distribution license
in this area, had challenged this Order in ATE under the contention that the Company is
not allowed to lay distribution network in South Mumbai as BEST, a local authority already
has a network in South Mumbai. In February 2011, ATE dismissed the appeal of BEST and
confirmed the order of MERC. BEST then appealed the matter in the Hon'ble Supreme Court
and obtained a stay on the judgment of ATE in March 2011. The Hon'ble Supreme Court in
October 2011 remanded the matter back to ATE for hearing on merits. ATE, after hearing the
case on merits, has passed a judgement in April 2012, dismissed the appeal and upheld the
MERC order. The appeal has been admitted on 10th May, 2012. Pending disposal of the
appeal, status quo as of that date shall be maintained by the parties.


iv) Approval of PPA between Generation and Distribution businesses of Tata Power

The Generation and Distribution businesses of your Company entered into a PPA for
contracting 458 MW power from various units of its generation business with distribution
business to meet the rising demand due to change over consumers. The PPA was submitted to
MERC for approval under Regulation 25.1 of the MERC (MYT) Regulations, 2011. MERC, in its
order in October 2011, approved the above PPA at regulated tariffs.


12.3.2 Eastern Region Operations

i) JSERC Tariff Order of FY12 for Jojobera Unit 2 and Unit 3

The Jharkhand State Electricity Regulation Commission (JSERC) has issued tariff order
of Jojobera Unit 2 and Unit 3 for FY12 in August 2011. In its first tariff order for
Jojobera Unit 2 and Unit 3 under Generation Tariff Regulations 2010, JSERC has disapproved
certain revenue proposed by the Company. An appeal has been filed with ATE against such
disallowances and the judgment of ATE on the matter is expected soon.


ii) MYT Business Plan and Petition of Jojobera Unit 2 and Unit 3

Your Company has filed MYT Business Plan and Petition for Jojobera Unit 2 and Unit 3
for the control period (FY13-FY16) to the JSERC and the tariff order of the same is
expected soon.


iii) CERC Tariff Order for Maithon Power Project

CERC, after considering Petition No. 274/2010 along with Interlocutory Application Nos.
11/2011 and 14/2011, has passed the tariff order in November 2011 for sale of 150 MW from
525 MW Unit 1 to DVC for FY12. Unit 1 of MPL has been commissioned in September 2011.


12.4 Legal matters

12.4.1 Standby Charges

On an appeal filed by your Company, the Supreme Court has stayed the operation of the
ATE order, subject to the condition that the Company deposits an amount ofRs. 227 crore
and submits a bank guarantee for an equal amount. Your Company has complied with both the
conditions. RInfra has also subsequently filed an appeal before the Supreme Court
challenging the ATE order. Both the appeals have been admitted and are listed for hearing
and final disposal.


12.4.2 Energy Charges and 'Take or Pay' Obligation

MERC directed RInfra to payRs. 323.87 crore to your Company towards the difference
between the rate ofRs. 1.77 per kWh paid andRs. 2.09 per kWh payable for the energy drawn
at 220 kV interconnection and towards its 'Take or Pay' obligation for the years 1998 -
1999 and 1999 - 2000. On an appeal filed by RInfra, the ATE upheld the Company's
contention with regard to payment for energy charges but reduced the rate of interest. As
per the ATE order, the amount payable works out toRs. 34.98 crore (excluding interest), as
on 31st May, 2008. As regards the 'Take or Pay' obligation, the ATE has ordered
that the issue should be examined afresh by MERC after the decision of the Supreme Court
in the appeals relating to the distribution licence and rebates given by RInfra. The
Company and RInfra filed appeals in the Supreme Court. Both the appeals have been admitted
and are listed for hearing and final disposal. The Supreme Court, vide its order dated 14th
December, 2009, has granted stay against the ATE order and has directed RInfra to deposit
with the Supreme Court a sum ofRs. 25 crore and furnish a bank guarantee for the balance
amount. Pursuant to the liberty granted by the Supreme Court, the Company has withdrawn
the above mentioned sum subject to an undertaking to refund the amount with interest, in
the event the appeal is decided against the Company.


13. Foreign Exchange Earnings/Outgo

The foreign exchange earnings of your Company during the year under review amounted
toRs. 631.78 crore (previous yearRs. 117.76 crore), mainly on account of forex interest,
etc. The foreign exchange outflow during the year wasRs. 2,448.55 crore (previous yearRs.
1,241.25 crore), mainly on account of fuel purchase ofRs. 2,071.89 crore (previous yearRs.
1,016.83 crore), repayment of foreign currency loans with interest thereon, NRI dividends
and Foreign Currency Convertible Bonds (FCCB) interest ofRs. 72.73 crore (previous yearRs.
58.43 crore) and purchase of capital equipment, components and spares and other
miscellaneous expenses ofRs. 309.49 crore (previous yearRs. 173.85 crore).


14. Disclosure of Particulars

Particulars required by the Companies (Disclosure of Particulars in the Report of Board
of Directors) Rules, 1988 are given in the prescribed format as Annexure I to the
Directors' Report.

Particulars of Employees: In terms of the provisions of Section 217 (2A) of the
Companies Act, 1956 (the Act), read with the Companies (Particulars of Employees) Rules,
1975, the names and other particulars of employees are set out in the Annexure to the
Directors' Report. However, having regard to the provisions of Section 219 (1)(b)(iv) of
the Act, the Annual Report is being sent to all Members of the Company excluding the
aforesaid information. Any Member interested in obtaining such particulars may write to
the Company Secretary at the Registered Office of your Company.


15. Sub-division of equity shares

At the last Annual General Meeting of the Company, the Members approved sub-division of
the Company's equity shares having a face value ofRs. 10/- each into equity shares having
a face value ofRs. 1/- each. Accordingly, 24,29,47,084 issued equity shares of the
Company, having face value ofRs. 10/- each were sub-divided into 2,42,94,70,840 equity
shares having face value ofRs. 1/- each. 27th September, 2011 was fixed as the
Record Date for the purpose of the said sub-division. Corporate action to credit the demat
accounts of Members was taken on 28th September, 2011. Those who held their
shares in physical form, and did not opt to receive their holdings in electronic form,
were mailed the share certificate representing their holdings by 10th October,
2011.


16. Subsidiaries

Vide General Circular No: 2 / 2011 dated 8th February, 2011, the Ministry of
Corporate Affairs, Government of India, has granted a general exemption to companies from
attaching the Balance Sheet, Profit and Loss Account and other documents referred to in
Section 212 (1) of the Act in respect of its subsidiary companies, subject to fulfilment
of the conditions mentioned therein. Accordingly, the said documents are not being
attached with the Balance Sheet of the Company. A gist of the financial performance of the
subsidiary companies is contained in the report. The Annual Accounts of the subsidiary
companies are open for inspection by any Member/Investor and the Company will make
available these documents/details upon request by any Member of the Company or to any
investor of its subsidiary companies who may be interested in obtaining the same. Further,
the Annual Accounts of the subsidiary companies will be kept open for inspection by any
investor at the Company's Head Office and that of the subsidiary company concerned and
would be posted on the website of the Company.


17. Directors

Mr Banmali Agrawala, Executive Director, resigned from the services of the Company with
effect from close of business hours on 30th November, 2011. The Board has
placed on record its appreciation of the valuable contribution made to your Company by Mr
Agrawala.

Mr Cyrus P Mistry was appointed as an Additional Director with effect from 23rd
December, 2011, in accordance with Article 132 of the Articles of Association of the
Company and Section 260 of the Act. Mr Mistry holds office only upto the date of the
forthcoming Annual General Meeting (AGM) and a Notice under Section 257 of the Act has
been received from a Member signifying his intention to propose Mr Mistry's appointment as
a Director.

Dr R H Patil, Director, resigned from the Board with effect from 20th March,
2012. The Board has placed on record its appreciation of the valuable contribution made to
your Company by Dr Patil. Dr Patil expired on 12th April, 2012.

In accordance with the requirements of the Act and the Articles of Association of the
Company, Mr R N Tata, Dr H S Vachha and Mr A K Basu retire by rotation and are eligible
for re-appointment.


18. Auditors

M/s. Deloitte Haskins & Sells (DHS), who are the statutory auditors of the Company,
hold office until the conclusion of the ensuing AGM. It is proposed to re-appoint DHS to
examine and audit the accounts of the Company for FY13. DHS has, under Section 224 (1) of
the Act, furnished a certificate of its eligibility for re-appointment. The Members will
be requested, as usual, to appoint Auditors and to authorize the Board of Directors to fix
their remuneration. In this connection, the attention of the members is invited to Item
No. 6 of the Notice.

Members will also be requested to pass a resolution (vide Item No. 8 of the Notice)
authorizing the Board of Directors to appoint Auditors/ Branch Auditors/ Accountants for
the purpose of auditing the accounts maintained at the Branch Offices of the Company, in
India and abroad.

In accordance with the requirement of the Central Government and pursuant to Section
233B of the Act, the Company carries out an audit of cost accounts relating to electricity
every year.


19. Auditors'Report

The Notes forming part of the Accounts referred to in Auditors' Report of the Company
are self-explanatory and, therefore, do not call for any further explanation under Section
217 (3) of the Act.

The consolidated financial statements of the Company have been prepared in accordance
with Accounting Standard 21 on Consolidated Financial Statements, Accounting Standard 23
on Accounting of Investments in Associates and Accounting Standard 27 on Financial
Reporting of Interest in Joint Ventures, issued by the Council of The Institute of
Chartered Accountants of India.


20. Corporate Governance

To comply with conditions of Corporate Governance, pursuant to Clause 49 of the Listing
Agreements with the Stock Exchanges, a Management Discussion and Analysis Statement,
Report on Corporate Governance and Auditors' Certificate, are included in the Annual
Report.


21. Directors' Responsibility Statement

Pursuant to Section 217 (2AA) of the Act, the Directors, based on the representations
received from the operating management, confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have
been followed and that there are no material departures therefrom;

ii) They have, in the selection of the accounting policies, consulted the Statutory
Auditors and have applied them consistently and made judgements and estimates that are
reasonable and prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit of the Company for that period;

iii) They have taken proper and sufficient care to the best of their knowledge and
ability for the maintenance of adequate accounting records in accordance with the
provisions of the Act, for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;

iv) They have prepared the annual accounts on a going concern basis.


22. Acknowledgements

On behalf of the Directors of the Company, I would like to place on record our deep
appreciation to our Shareholders, Customers, Business Partners, Vendors, both
international and domestic, Bankers, Financial Institutions and Academic Institutions.

The Directors are thankful to the Government of India and the various Ministries, the
state Governments and the various Ministries, the Central and State Electricity Regulatory
authorities, Corporation and Municipal authorities of Mumbai and other cities where we are
operational.

Finally, we appreciate and value the contributions made by all our employees and their
families for making Tata Power what it is.

On behalf of the Board of Directors,


R N Tata


Chairman

Mumbai, 22nd May, 2012


ANNEXURE I TO THE DIRECTORS' REPORT

FORM B

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION

Research and Development (R&D)


  

    
1) Specific area in which R & D carried out by the Company
    
i) Secured IP-based voice and data communication systems have been developed in
    partnership with Defence Research and Development Organisation (DRDO) and other Indian
    Government organizations.
  
  

    

    
ii) Development of a cost-effective floating Concentrated Photo Voltaic (C-PV) System.
  
  

    
2) Benefits derived as a result of the above R & D
    
i) Imported products replaced by indigenous products for use by Indian Defence in the
    area of secure computing and communications.
  
  

    

    
ii) Potential to install up to 400 MW solar C-PV system on the lakes in the Company's
    hydro areas.
  
  

    
3) Future Plan of Action
    
i) Field trials under harsh tactical environments. ii) Test a pilot plant of 13.5 kW
    on Walwhan lake.
  
  

    
4) Expenditure on R & D (in Rs. crore)
    

  
  

    
a) Capital
    
13.41
  
  

    
b) Recurring
    
0.16
  
  

    
c) Total
    
13.57
  


Technology absorption, adaptation and innovation


  

    
1) Efforts, in brief, made towards Technology Absorption, adaptation and innovation
    
i) Prototypes for secure IP-based voice and data communication systems have been
    developed in partnership with DRDO and other Indian Government organisations are under Lab
    tests.
  
  

    

    
ii) The pilot plant installation is in progress and commissioning will be by August
    2012
  
  

    
2) Benefits derived as a result of the above efforts
    
i) State-of-the-art indigenous trustworthy solutions for communications viz. MANET
    routers, Voice switches etc. have been developed for use by defence and security agencies.
  
  

    

    
ii) The quality of the lens chosen in the prototype was not up to the mark and hence
    the quality check had to be relooked at. Improved quality lenses are now available and the
    system in the mean time has been upgraded to triple junction cells.
  
  

    
3) In case of imported technology (imported during the last five years reckoned from
    the beginning of the financial year), following information may be furnished:
    

  
  

    
a) Technology Imported
    
Yes
  
  

    
b) Year of Import
    
2010
  
  

    
c) Has technology been fully absorbed
    
Prototype has been tested in the lab. Field trials are to be carried out.
  
  

    
d) If not fully absorbed, areas where this has not taken place, reasons thereof and
    future plans of action
    

  



A) TECHNOLOGIES ADOPTED

1. Trombay

i) Technology to improve boiler efficiency by optimizing combustion :

Your Company has adopted technologies for improving boiler efficiency which is being
achieved by optimizing combustion. It involves various activities, prime among them being;

(a) Optimization of coal mills performance by carrying out various test such as Clean
air test, Dirty air test (Iso-kinetic mill sampling) etc.

(b) Measurement of combustion parameters at goose neck of the boiler by High Velocity
Traverse testing (HVT).

(c) Testing of Air Pre Heater performance by using special probes.

(d) Pressure mapping of entire flue gas which plays a major role in identification of
air ingress in the complete path. Using this method, the leakages were reduced from 38% to
18%

This has led to an overall improvement in boiler efficiency by 1.3%.

ii) Advanced Non-Destructive Testing (NDT): TOFD (Time of Flight Diffraction) is a new
advance Ultrasonic Technique (UT) in place of radiography for checking quality of weld in
high thickness pipes especially used in Boiler Feed Pumps. Earlier, for conducting
radiography, the Company required Cobalt source which required evacuation of the plant
premises due to dangers of radiation. This new technology, besides consuming very less
amount of time, is also found to be effective and safe.


2. Jojobera

i) Technology to improve environment :

The effluent treatment plant was installed at Jojobera power plant ofcapacity 100M3/Hr
which was based on the pilot study of sedimentation, flocculation and coagulation
characteristic of ash particles, followed by suitable selection of filter media to take
care of product quality below 5 parts per million of total suspended solids.

Operation of this plant is based on the concept of 3 R i.e. Reduce, Reuse & Recycle
and has resulted in a net savings in water consumption of 3,28,000 M .


ii) Use of Hi-Tech vibration sensors:

Previously vibration measurement was being done using a separate vibration transmitter
and a vibration sensor. New hi-tech vibration sensors have been introduced which is a
combination of a sensor and transmitter thereby eliminating the need of separate power
supply. These two wire sensor cum transmitters can also be directly connected with the
Digital Control Systems without the need of an intermittent interface.


iii) New Technologies for Safety :

Some of the new technologies for safe operations adopted in the year are as follows:

(a) Helmet - Mounted Mini Voltage Detectors: These testers are intended to warn the
lineman when getting close to energized areas, preventing the risk of accidents. It is
also planned to use these systems in substations, transmission and distribution lines and
areas where the energized lines are very close.

(b) Live voltage detector cum Insulation Tester.

(c) Non-contact type AC Voltage Detector. These do not require the maintenance
personnel to contact the probe with live bus bars and work on the principle of induction.

(d) INSULCOAT - High Build Epoxy Insulation Coating

To prevent exposure to leakage currents and short-circuits in switchgear panels, rubber
mats are used as floor covering to safeguard the life of workmen. These mats require
regular cleaning. Moreover while racking out the breaker; we need to shift the mat away
from front of the breaker panel to prevent damage to these mats. The dielectric strength
of rubber mat is only 11 kV. High build epoxy insulation coating is a technology which
requires coating of this paint in the floor surrounding the switchgear panel. Besides
providing a higher dielectric strength of 38 kV, the need for shifting of mat and regular
cleaning is avoided.


3. Transmission and Distribution (T&D)

i) New Technology for enhancing power handling capacity of Transmission Lines: In order
to enhance power handling capacity of the available transmission corridor, your Company
has adopted the technology of high ampacity conductor. 100 circuit kilometres have been
replaced in Borivali-Malad and Salsette-Saki sections. The current carrying capacity has
thus increased from 900 amperes to 1,872 amperes.

ii) Technologies for enhancing reliability: Silicon Coating Technology - This
technology has been adopted at Chembur for coating of bus post insulators, transformer
bushing, insulators and bay insulators to avoid insulator failures occurring due to
heavily polluted environment in industrial areas

iii) Transition Joints: Joints between High voltage Oil filled cables and XLPE cables
were previously using manually wound high voltage tapes which have a tendency to wear out
faster. Pre moulded Transition Joints have now been introduced which have better
electrical insulation properties. Moreover, the need for manual intervention is avoided.

iv) New Polycarbonate Spikes: As part of bird fault preventive measures, new
polycarbonate spikes have been installed on 50 towers of 22 kV voltage level. The present
system uses concentrated spikes which do not cover the entire areas that are prone to
birds. The polycarbonate spikes are flexible strips which are insulated from UV radiations
and are spread across the cross arm, thereby facilitating coverage of a larger area.
Moreover due to insulation from UV radiation, the lives of these spikes are higher.

v) New technique for Stringing ofOPGW conductor: New technology viz. Traction machine
method is being used for stringing of OPGW conductors without the need for taking outage
of line, thereby improving system availability. This technology has been used for
stringing a length of 10 kilometres between Trombay and Parel.

vi) Geographical Information System: GIS is being implemented in your Company to carry
out network analysis, network planning and network management, in a cost-effective manner
and ensure network reliability to meet customer expectations and regulatory requirements.
GIS also provides geo-referenced maps which will help in providing better customer
services like connection feasibility, meter installation, meter reading, bill delivery and
load enhancement. Integrating enterprise GIS with SAP ISU module and CRM is expected to
help in responding to customer queries and complaints and communicating more effectively
in a timely manner. The entire Mumbai license area land base is mapped in the GIS system
up to Mira Road and Bhayander. Mapping has been done for entire network of the Company
which includes Transmission lines, Receiving stations, Distribution Substation, Consumer
Substation, Customer Relation Centers, Bill collection centers, Cable Network ( EHV, HV
and LT), up to the Consumer's Metering point.


4. Retail

i) GPS Receiver for Cable Route and repaired joints Earlier, the cable routes were
identified using landmarks like manhole, lamp-posts etc. which may change in due course of
time due to the evelopment work at various places. Hence, it was difficult to trace the
cable route and repair joints.The GPS receivers are adopted to have unique identification
of cable route and repaired joints irrespective of such temporary landmarks and are fully
dependent on geographical co-ordinates.

ii) Common Meter Reading Instruments (CMRIs): CMRI is implemented for high value LT
consumers for providing accurate meter readings. While data obtained from CMRI provides
accurate meter readings, the benefit of identifying meter abnormalities cannot be ignored,
which ensures protection of Company's revenue. The Meter Data received through CMRIs is
stored in common folder from where it can be accessed by various departments such as
Vigilance and Customer Services etc. for data analysis and complaint management
respectively.


5. Power System Control Centre

Power System Control Centre has been set up at Trombay to monitor and control all the
transmission and distribution substations in Mumbai. The system operation and control is
carried out from a separate centralised SCADA for transmission and distribution in a
unified manner. This will improve reliability of the power system.


6. Electrical Testing and Condition Monitoring

Following new technologies / techniques have been adopted for improved condition
monitoring for electrical equipment:

i) Use of Radio Frequency technique for checking the health of Instrument Transformers.
This indicates presence of partial discharge which helps in giving early signal of
deterioration.

ii) Low frequency heating of transformers for removing moisture.

iii) Use of sweep frequency tan delta measurement for determining moisture absorption
and partial discharge in the insulation.

iv) Use of wireless Leakage Current Monitor for testing of Lightning Arrestors.

v) New technology for Protection: The Company has adopted power system protection
components based on IEC 61850 standard. Based on this technology the digital protection
signalling based on Generic Object Oriented Substation Events (GOOSE) messaging has been
implemented for the first time. This eliminates use of hard wired cabling and hence
improves reliability.


7. Strategic Electronics Division

The following Research and Development activities have been taken up :

i) Development of a rugged Tactical Router that is secure and trustworthy for use in
Harsh Environmental Tactical Mobile adhoc networks of security forces.

ii) Develop a secure, trustworthy and robust communications backbone for fixed and
mobile tactical communications.


8. Sustainability

The following new environment-friendly technologies are being pursued:

i) Micro Wind Turbines: Your Company is setting up a test bed of micro wind turbines at
one of its location. This test bed will help the Company determine the most cost-effective
forms of wind energy. Such units can be installed on rooftops or in remote areas wherein
there is sufficient wind energy. Three micro turbines of capacities of 2 kW, 5 kW and 12
kW, will be installed by July 2012.

ii) Anaerobic Digestion of Food Waste: The Company has set up one large and one small
biogas plant that can utilise the organic waste generated at the canteen. The first unit
is at the Trombay power plant where almost 0.5 tonne/day of food waste is used to create
enough gas so that two commercial LPG cylinders (34 kg of gas) are being replaced by the
gas generated. The smaller unit is installed at the canteen of the Corporate Center in
Carnac Bunder, Mumbai. The gas generated from this plant will be used for cooking and the
residue in the digester can be utilized as an organic fertilizer.

iii) Technologies to improve energy efficiency: The Company has undertaken several
initiatives to reduce energy consumption, prime among them being:

(a) Variable Frequency drives have been installed for load carrying oil pumps.

(b) LED street lights have been installed.

(c) A 650 watt Micro wind turbine has been installed at coal berth to cater to lighting
requirements.

(d) A hybrid Unit consisting of 650 watt wind turbine and 1,800 watt solar PV cells has
been installed to cater to lighting requirements for the office building.


B) TECHNOLOGIES BEING REVIEWED / ADOPTED

i) Continuous Hydro -Thermal Dewatering (CHTD) of Coal: Your Company is working with
Exergen - an Australian company, on a technology that alters chemical properties of coal
and makes it hydrophobic. Low grade coal (~ 50% moisture) is processed at 100 Bar pressure
and 250O C to produce good quality coal (25% moisture). A pilot (4 TPD) plant
has been built and operated for 4 years. Exergen and your Company are working on the
design and financing of a demonstration plant that will process 50 TPH coal.

ii) Microwave drying of Coal: The conventional method of drying coal is to heat it
using steam to evaporate the moisture. However, the amount of energy required is high
since the indirect contact dryers are less than 40% efficient. Besides, the temperature of
coal exceeds 100O C which can release some volatile compounds, thereby causing
a loss of heating value. The Company is carrying out experimental work with a partner to
utilize microwaves to dry the coal. One advantage is that the maximum temperature of the
coal using this method is 70O C. In addition, microwave dryers have high
efficiency (90%). If the water vapour is condensed by using boiler feed water, most of the
energy can be recovered. The microwave dryer and the condenser are expected to cost
significantly less than the steam rotary dryer. Currently, the lab experiments are showing
promising results and need to be optimized for a pilot plant.

iii) CO2 capture pilot plant: Your Company is designing a pilot plant that
can capture ~10 TPD of CO2. This will be the first plant of its kind in India
and will have the flexibility to utilize different solvents so that we can compare the
latest CO2 capture processes. The problems with the currently available CO2
capture processes are that the capital costs are high and the energy penalty can be as
much as 25% of the boiler output. The Company will test two, or three, latest processes,
that will cut down the capital costs and also the energy penalty by at least 30% from the
current levels. Most of the captured CO2 will be converted to dry ice.

iv) CO2 reuse to grow Algae: A part of the captured CO2 (1 TPD)
will be fed to an algae in a Photo Bio Reactor (PBR) system. Only three companies have
done R&D at this level in the world: one each in USA, Europe and Asia. The Company has
carried out lab-scale studies and the results are encouraging. Another unique aspect of
this work is that the Company has tested very high concentrations of CO2 (40
vol . %) and will test even pure CO2 to determine if the algae can handle such
high concentrations. If so, this will lead to much smaller size of the PBR and the energy
required to pump the CO2 through the PBR will be 8 times less than that
required to bubble flue gas with 12 vol . % CO2 through a vertical PBR. Our
technology partner has done such work at 1 TPD level in Indonesia. The algae will be
harvested and then value added materials like neutra-ceuticals (for human consumption) can
be extracted from the algae.

v) Advanced Metering Infrastructure (AMI): The Advanced Metering Infrastructure (AMI)
system acquires energy data from consumer meters automatically from remote locations,
avoiding any human intervention. This data is used for billing, planning, monitoring,
decision making and taking corrective actions accordingly. The AMI system also helps in
carrying out energy audits, analyzing energy consumption and load profile of various
consumers and detecting metering abnormalities. The system generates reports to highlight
demand violations, poor power factor condition, significant drop or increase in
consumption, improve services, reduce costs and reduce the need for peak-load capacity.
The system can also be used for remotely disconnecting defaulting customers and also for
reconnecting.

The Company has installed this system for 1,500 industrial and commercial customers.
The customers will be able to download their daily consumption through its website and
analyze their consumption pattern and optimize their utilization.

vi) Smart Grids: Your Company is in the midst of implementing AMR / Advanced Metering
Infrastructure (AMI) system. These meters will be provided for all the customers above 20
kW i.e for around 5,000 customers. The phase I of 1,500 customers has been completed. With
the implementation of this system, your Company's customers will be able to download their
daily consumption through its website and analyze their consumption pattern and optimize
their utilization, as also vary it based on the Time Of Day (TOD) use, leading to energy
and cost saving. A Smart Grid involves delivering of power to consumers through a two way
digital communication and control of appliances at consumers' homes. It also has the
capability of integrating renewable energy effectively. Hence, Smart Grid will enable
every consumer to have access to the Grid, and vary his consumption dynamically, enabling
him to use technology to conserve energy and save energy cost.