Guaranteed return on capital under prevailing tariff regime. Pursuant to past and existing Government policies, electricity tariffs which may be charged by a power producer with respect to power supplied by it from a particular project is determined based on a formula which incorporates a guaranteed return on equity. For the previous tariff regime in effect from April 1, 2004 to March 31, 2009, the guaranteed rate of return on equity was 14%, and under the new tariff regime currently in effect from April 1, 2009 to March 31, 2014, the guaranteed rate of return on equity is 15.5%. Under Government policies, up to 30% of project costs in relation to a project is eligible for the guaranteed rate of return on equity. We obtained a special dispensation for the NJHPS, under which our tariff rate charged for power supplied from the NJHPS incorporates a guaranteed rate of return on equity on 50% of the project costs (being the amount of project costs which were financed by equity contributions).

Additional 0.5 % return on equity is also allowed for timely completion of projects.

Established track record of operational excellence. Since the commissioning of the NJHPS, we have consistently met or exceeded Government-set performance targets for our operations, and have been upgraded to a Schedule A public sector undertaking and designated as a Mini-Ratna Category-I public sector undertaking in recognition of our efforts. We have also obtained ISO quality certifications for our operations, and have obtained several awards for excellence in various fields, such as corporate leadership, engineering, financial and operational strength, health and safety management, hydroelectric power development, social contribution and environmental management. We believe that our established performance track record and experience in executing, operating and managing the NJHPS will give us a competitive advantage in developing large hydroelectric power projects going forward, both in India and abroad.

Stable revenue stream through long-term power purchase agreements with state electricity boards. We have entered into 14 power purchase agreements with state utilities in the Northern region of India, as well as the Government, under which all of the power generated by the NJHPS (except for 12% of our annual generation which is allocated to the state of Himachal Pradesh free-of-charge) is sold to state electricity boards. Payment for our sales of electricity to these state utilities are typically secured by forms of credit support such as letters of credit issued by reputable financial institutions or by state government guarantees. We have not experienced any significant delays in payment or payment defaults by such customers in the past, and we maintain strong working relationships with such customers.

Pursue diversification initiatives. The company intend to diversify its business operations into various alternatives such as wind power, solar power and power trading, We have obtained board approval to engage professional consultancies with the appropriate technical knowhow and expertise, with the objective of identifying any suitable business opportunities in wind energy projects. We have also agreed to take a minority stake in a joint venture company with certain other private sector parties for the development of an 86-kilometer power transmission line connecting India and Nepal. Further we are also exploring the possibilities of entering the business of power trading.

Power evacuation. Power generated by the generation units at the NJHPS is evacuated through two double-circuit 400 KV transmission lines to the Northern grid. The first transmission line of 180 kilometers in length connects the NJHPS with the Abdullapur sub-station of PGCIL in Haryana, and the second transmission line of 145 kilometers in length connects the NHJPS with Nalagarh sub-station of PGCIL in Himachal Pradesh. Both these transmission lines in turn transmit power to the Northern grid of India.

Power Transmission: In June 2009, we entered into a memorandum of agreement with Infrastructure Leasing & Financial Services Ltd, or ILFS, the Power Grid Corporation of India Limited, or PGCIL, and PTC Financial Services Ltd, or PTC, for the establishment of a joint venture to construct and maintain the Indian part of a transmission line of approximately 86 kilometres in aggregate length connecting Nepal and India. Pursuant to the terms of the memorandum of agreement, we have agreed to take a 26% equity interest in the joint venture, with ILFS, PGCIL and PTC taking equity interests of 37%, 26% and 11%, respectively.