Tata Power Company Ltd

To The Members,

The Directors are pleased to present their Ninety-Second Annual Report on the businessand operations of the Company and the statements of account for the year ended 31st March,2011.

1. FINANCIAL RESULTS

2.1 Standalone results

During the year, the Company reported a Profit After Tax (PAT) of Rs. 941.49 crores, asagainst Rs. 938.76 crores for the previous year. The Operating Revenue was lower at Rs.6,918.48 crores, as against Rs. 7,098.27 crores, a decline of 3%. Operating Revenue waslower mainly on account of lower fuel cost. The Operating Profit was lower by 15% mainlydue to lower generation and lower merchant tariffs in the year, as also due to one-timeimpact of an order of the Appellate Tribunal for Electricity (ATE) in the previous year.

Other Income was higher at Rs. 493.58 crores, as against Rs. 281.58 crores in theprevious year, a growth of 75%. This was mainly due to higher dividend income from theinvestments made by the Company.

Earnings per share (basic) was at Rs. 40.84, as against Rs. 40.77 in the previous year.

2.2 Consolidated results

The Consolidated Operating Revenue at Rs. 19,450.76 crores grew by 2% and PAT at Rs.2,059.60 crores grew by 5%, as against Rs. 18,985.84 crores and Rs. 1,966.84 croresrespectively, for the previous year. The increase in the Consolidated Operating Revenuewas primarily on account of the higher coal price realization in Indonesian CoalCompanies. The Consolidated PAT is higher mainly on account of higher profits in theIndonesian Coal Companies as compared to the previous year. The Consolidated PAT growthwould have been higher, but for foreign exchange gain of Rs. 358.13 crores in FY10 inCoastal Gujarat Power Limited as compared to Rs. 122.86 crores in FY11.

3. DIVIDEND

The Directors of your Company are pleased to recommend a higher dividend of 125% (Rs.12.50 per share) for the approval of the shareholders (FY10 dividend of Rs. 12 per share).

4 EXISTING BUSINESSES

As of 31st March, 2011, the Company had an installed generation capacity of 2,887 MWbased on various fuel sources: thermal (coal, gas, oil), hydroelectric power, renewableenergy (wind and solar photovoltaic) and waste heat recovery. The details of the installedcapacity are given in Table 1.

Table 1: Details of installed capacity

Thus, the Company has achieved 27.6% of MW capacity through non-Green House Gas (GHG)based generating sources. The Company also has businesses of Transmission, PowerDistribution cum Retail in Mumbai, and other value added businesses. Table 2: Detailsof other businesses

4.1 Operational Highlights

The Company registered sales of 16,060 Million Units (MUs) of power in FY11, as against15,574 MUs in FY10, a growth of 3%. The Company, however, generated 15,325 MUs of powerfrom all its power plants during the year as compared to 15,946 MUs in the previous year,a decrease of 4%. Owing to high oil cost, the Company purchased competitive energy and metthe growth needs.

4.2.1 Generation

The Company's power generation units in the Mumbai Operations Area are at Trombay,Bhira, Bhivpuri, Khopoli, Mulshi as also wind assets at various locations in Maharashtra.

• Trombay Thermal Power Station

The Trombay Thermal Power Station has an installed capacity of 1,580 MW, of whichprimarily 750 MW is coal fired, 650 MW uses oil and gas and the balance 180 MW uses gas asa fuel. However, Unit 5 also has multi-fuel firing capability.

During the year, the station recorded a generation of 9,530 MUs (previous best of10,168 MUs in FY10) with an all time high coal firing of 2.69 Million Tonnes (MT). Theoperational performance of the units is given in Table 3.

Table 3: Details of thermal power generation - Trombay

While the availability was maintained at higher levels as compared to the past year,the PLF was lower mainly on account of increased purchases of power to offset oil-basedgeneration, in order to deliver lower tariffs for consumers. The Company is also pursuingsourcing of Administered Price Mechanism (APM) gas with the Ministry of Power (MoP) toreplace oil-based generation on Unit 6 as well as to operate Unit 4, which is currently onstandby due to stringent environmental norms, and thus improve the utilisation of existingassets in Mumbai.

During the year, the Company successfully completed the overhaul of Unit 6, duringwhich the Unit underwent critical component upgradation.

• Hydroelectric Power Stations - Bhira, Bhivpuri and Khopoli

The Company has three hydroelectric power generating stations, totalling 447 MW,located in the Raigad district of Maharashtra.

During the year, the three hydroelectric power plants collectively generated 1,310 MUs,as against 1,455 MUs generated in the previous year. This reduction in generation wasprimarily on account of lower inflow in Bhivpuri and Khopoli lakes due to lean monsoon,resulting in lower lake levels. This has led to a lower PLF as compared to the previousyear. The Company has sustained the generation availability of about 97% even with outagestaken for the refurbishment of old units at Bhivpuri, major repairs to Bhira Pump StorageUnit guide vane servomotor and Bhivpuri new units' spherical valve seals.

Table 4: Details of hydroelectric power generation

• MulshiSolarPVplant

The Company has commissioned a 3 MW grid connected solar PV plant, one of the largestof its kind in Maharashtra, on 31st March, 2011.

• Wind generation assets in Mumbai Operations

The Company has generation assets at Supa, Bramanvel, Khandke, Sadawaghapur, andVisapur that supply wind power to its Mumbai Distribution business. During the year, theCompany commissioned an additional 6 MW of wind power capacity in Maharashtra, taking thetotal installed wind power capacity in Mumbai Operations to 106 MW.

Table 5: Details of installed wind power capacity in Mumbai Operations

During the year, the Company's wind farms in Mumbai Operations generated 168 MUs, asagainst 166 MUs in the previous year.

Table 6: Details of wind power generation in Mumbai Operations

4.2.2 Transmission

The Company has about 1,082 circuit kms. of transmission network in Mumbai Operationsarea, comprising 971 circuit kms. of 220 kV / 110 kV overhead lines and 111 circuit kms.of 220 kV / 110 kV underground cables, which connects Trombay and the hydro generatingstations to 17 receiving stations spread across the Mumbai Operations area. Thetransmission lines are used by Tata Power Distribution business, Brihanmumbai ElectricSupply and Transport Undertaking (BEST) and Reliance Infrastructure Limited (RInfra). Themajor highlights for the year were as below:

• During the year, the Company added 35.3 circuit kms. of network and upgradedexisting network and systems at several locations.

• 145 kVGas Insulated Switchgear (GIS) has been commissioned at Backbayfor meetingprojected growth in BEST area.

• A state-of-the-art SCADA system was commissioned at Dharavi, Parel, Malad andVersova with new Remote Terminal Units.

• Under 'Jan Jagruti Abhiyaan' initiative - an awareness campaign for communitysafety and overhead line fault reduction -awareness programs for school children were heldin Borivali and Kalyan section, covering 2,150 students from 5 schools.

During the year, transmission grid availability was 98.71% (previous year 98.86%), asagainst the Maharashtra Electricity Regulatory Commission (MERC) norm of 98%.

4.2.3 Distribution

The Company's distribution business in Mumbai has achieved significant growth duringthe year. The major highlights for the year were as below:

• System availability was maintained at a very high level, with an Average SystemAvailability Index (ASAI) of 99.988% in FY11, as against 99.986% in FY10. This wasaccompanied by a reduction in the number of technical complaints per 1,000 customers from13.34 to 11.

• To meet the increase in growth, 3 distribution substations and 65 consumersubstations (80 MVA capacity) were commissioned. 152.27 circuit kms. of HT cable networkand 97 circuit kms. of LT cable network were added to take the total network length tomore than 1,900 circuit kms. (including LT).

4.2.4 Retail

The Company's retail business in Mumbai grew significantly, with retail sales increaseof 58% to 4,393 MUs during FY11 from 2,782 MUs in the previous year. The major highlightsfor the year were as below:

• The Company acquired 98,590 changeover customers (Industrial - 2,396, Commercial- 14,354, Residential - 81,840) and 4,093 direct customers. The total customer base as on31st March, 2011 was 1,61,183 (34,323 direct customers and 1,26,860 changeover customers).

• Customer satisfaction indexfor direct customers improved to 85 as compared to84.5 lastyear. For changeover customers, the index was 80.

• A state-of-the-art meter testing lab was commissioned at Dharavi.The lab isequipped with 4fully automatic energy meter test benches by which 500 meters can be testedin an 8 hour shift, thus significantly increasing the Company's testing capacity.

• A number of services / customer convenience facilities were introduced:

• Master customer care center and 8 bill collection centers were opened.

• A new modern call center was made operational since 2nd July, 2010 forcommercial calls. The existing center continues to handle technical calls.

• The customer information portal was revamped with many new customer friendlyfeatures like bill calculator, demand side management (DSM) web page, etc.

• Mobile collection van was launched for facilitating cash payments by customers.

• Credit and debit card online payment facility was launched.

4.3.1 Jojobera Thermal Power Station

The Jojobera Thermal Power Station in Jharkhand has an installed capacity of 428 MW.During the year, the station recorded a generation of 3,078 MUs, which is also the highestever, as compared to 3,002 MUs in the previous year. The station also achieved highestever plant availability of 97% during the year. Unit 4 underwent complete turbine overhaulfor the first time since commissioning, resulting in improvement in the heat rate of theUnit due to significant improvement in vacuum.

4.3.2 Belgaum Thermal Power Station

The Belgaum Thermal Power Station, an Independent Power Producer in Karnataka, has aheavy fuel oil-based generation capacity of 81 MW. During the year, the plant generated300 MUs as compared to 394 MUs in the previous year, a decrease of about 24% due to lowerdemand by Karnataka Power Transmission Corporation Limited during the rainy season andmajor outages of Units 2, 4 and 5. Demand for the current year was affected due to abetter monsoon than the past year, since demand for oil-based generation is primarily forpeaking purposes.

4.3.3 Haldia Power Plant

Haldia Power Plant in West Bengal has an installed capacity of 120 MW consisting of 3Turbine Generator (TG) sets (2 of 45 MW and 1 of 30 MW) and 16 waste heat recoveryboilers. This is a green power plant based on waste heat recovery from flue gas from cokeovens of Tata Steel Limited (Tata Steel). One sixth of the power generated is sold to WestBengal State Electricity Distribution Company Limited and the balance is traded throughTata Power Trading Company Limited (Tata Power Trading). During the year, the collectivegeneration of all units was 760 MUs. The Company completed Unit 1TG overhauling and annualoverhauling (statutory obligations) of all 16 boilers.

During the year, Haldia division undertook several improvement initiatives forimproving plant availability and PLF like upgradation of DM plant capacity, flue gastemperature improvement, reduction of unplanned outages and reducing grid failures byimplementation of carrier protection and proper relay coordination, etc.

Table 7: Details of thermal power generation outside Mumbai Operations

4.4 Wind Generation outside Mumbai Operations

During the year, the Company acquired a 21 MW wind farm, taking the total installedcapacity outside Mumbai operations to 122 MW. The installed capacity for wind powergeneration at various locations outside Mumbai Operations is given in Table 8.

Table 8: Details of installed wind power capacity outside Mumbai Operations

* Total does not add up due to rounding off.

The collective generation by the wind farms outside Mumbai Operations was 179 MUsduring the year as against 154 MUs in the previous year.

Table 9: Details of wind power generation outside Mumbai Operations

* Acquired in FY11.

** Total does not add up due to rounding off.

4.5.1 Tata Power Strategic Electronics Division (SED)

SED has been a leading domestic player in the defence systems and engineering space forover four decades and has now emerged as a prime contractor to Ministry of Defence (MoD)for indigenous defence products and systems. During the year, SED has reinforced itsposition as India's premier private sector defence company in its role as a prime systemsintegrator with the capability of leading alliances of internationally reputed defencecompanies, in addition to being recognised as one of the leading suppliers of defenceequipment in India.

During FY11, SED had a turnover of Rs. 140.68 crores as against Rs. 122.48 crores inFY10, a growth of 14%. SED ended the year with an order backlog in excess of Rs. 1,500crores. During the year, SED scored a number of achievements. Notable among them are:

• SED was awarded a contract on Modernisation of Airfield Infrastructure - Phase Ifrom the MoD to modernise thirty Indian Air Force Airfields. SED is the first privateIndian company to win a prime contract against global competition under a tendercategorised as 'Buy Global' under Defence Procurement Procedure 2008.

• Indian Army declared its Pinaka regiment comprising 20 launchers and 8 commandposts developed and supplied by SED, as fully operational, after having exercised ittactically and technically in desert terrain in Rajasthan. This is a testimony to theengineering and technical skills of SED as the first private sector company in India tohave designed, developed and delivered a weapon system.

• SED successfully delivered the first lot comprising four launchers of Akash AirForce launcher programme to Bharat Electronics Limited.

• SED has received an Expression of Interest (Eol) for Tactical CommunicationSystem programme of Indian Army of over USD 1 billion from MoD.

To support MoD's agenda of achieving self-reliance for Indian Defence, SED has madesubstantial investments through advanced development programmes to realise world-classindigenous products and systems, which enables SED to address future programmes ofnational importance. With increased private sector participation in defence, SED has thenecessary credibility and capability to be a long term reliable partner for India'sdefence forces.

4.5.2 Power Services Business

The Power Services business is a new division created in FY09 within the Company with aview to leverage the Company's capability and experience in power plant O&M, projectmanagement, specialized testing services and related activities. It offers customizedsolutions to new as well as existing power plants and distribution networks. During theyear, the Power Services division has bagged contracts as below:

• O&M Service

• 2 Rs. 525 MW coal fired thermal power plant at Maithon, Jharkhand of MaithonPower Limited. . 120 MW coal fired thermal power plant at Jojobera, Jharkhand ofIndustrial Energy Limited. . 108 MW combined cycle power plant at Rithala, Delhi of NorthDelhi Power Limited. . 70 MW coal fired thermal power plant at Korba, Chhattisgarh.

• Specialised Services

• GIS testing services were delivered to a major manufacturer for HV testing of220 kV GIS at Kalwa, Thane.

• GIS and field testing services were delivered to large executing agencies fortheir 220 kV GIS at their Bhandup site, Mumbai.

• GIS testing was undertaken for a large EPC contractor relating to the 110 kV GISat projects in southern India. During FY11, the Power Services Business had a turnover ofRs. 45.45 crores as against Rs. 30.05 crores in FY10, a growth of 50%.

Table 10: Details of projects under construction

5.1.1 Coastal Gujarat Power Limited (CGPL)

CGPL, the Company's wholly-owned subsidiary, is implementing the 4,000 MW (800 Rs. 5units) Ultra Mega Power Project (UMPP) at Mundra in Gujarat. The project, estimated tocost Rs. 17,500 crores, is progressing as per schedule, with engineering, procurement andconstruction activities in full swing. The cumulative progress till the end of March 2011was approximately 77% with total capital commitments of 100% of total equipment orderingand a total actual expenditure of Rs. 13,166 crores. Civil, structural, mechanical,electrical and control and instrumentation work is underway with over 11,500 direct andindirect workmen deployed at the site.

Unit 1 boiler was lit up on 22nd March, 2011, and steam blowing is nearing completion.The first unit is expected to be synchronized with the grid in the second quarter of FY12.CGPL has been informed that there is a delay in commissioning of the transmission lines byPower Grid Corporation of India Limited (PGCIL), who are responsible for providingevacuation facilities on behalf of the procurers. However, both PGCIL and other Governmentagencies involved are making efforts to minimize the delay. The construction andcommissioning of balance four units is progressing satisfactorily. The jetties forunloading coal, by Mundra Port and Special Economic Zone Limited, were commissioned inDecember 2010 and three coal consignments totalling 0.25 MT of coal have already beenunloaded in CGPL's stockyard till date. As a part of ongoing efforts, adequate safetysystems have been put in place including training and systems developed with the help ofleading safety experts like DuPont. Outreach programs are organized with the help of anNGO to build bonds with and sensitize the supervisors, workers and safety stewards.

CRISIL has revised its outlook on the long term loan to 'Positive' from 'Stable', whilereaffirming the rating at 'A+'. The outlook revision reflects the significant progressmade on the project.

CGPL has taken several initiatives for the local community in the area of livelihoodand income generation, education and health as part of its community relationshipprogramme involving local communities. A green belt development plan is underimplementation to enhance environment improvement in the project area.

CGPL has a subsidiary in Singapore - Energy Eastern Pte. Limited (EEPL) for meeting itsfuel logistics.

5.1.2 Maithon Joint Venture Project

Maithon Power Limited (MPL), a joint venture (JV) between the Company (74%) and DamodarValley Corporation (26%), is constructing a 1,050 MW (2 Rs. 525 MW) power plant at Maithonin Jharkhand. The Company is rendering project management and O&M services to MPL.

Unit 1 has been successfully synchronized with secondary fuel oil on 28th March, 2011.Unit 1 coal firing and Commercial Operation Declaration (COD) is expected before end of H1FY12. Commissioning of water system, including RW pumps, CW pumps, IDCT 1, etc. iscompleted and DM plant operation has been put on automation. Stacker reclaimer has beencommissioned and coal bunkering for Unit 1 has commenced too. All the balance workpertaining to coal handling and ash handling systems, required for Unit 1 commissioning,is scheduled to be completed before end of H1 FY12.

In Unit 2, the stator was lifted on 31st January, 2011. Turbine erection commenced on25th March, 2011. Erection work of the boiler is progressing well and boiler light up isexpected to be completed by H2 FY12. The unit commissioning is expected to be completedbefore end of H2 FY12. As of 31st March, 2011, the Company has infused equity of Rs.1,162.92 crores in MPL. The debt drawn by MPL is Rs. 2,420.25 crores.

5.1.3 Diesel Generation (DG) Capacity

The Company has refurbished and converted for dual fuel (natural gas + oil) operationthe 4 DG sets to be commissioned at Lodhivali. The plant is scheduled to commencecommercial operation post receipt of gas from GAIL (India) Limited in H1 FY12.

5.1.4 Dagachhu Hydroelectric Power Project, Bhutan

The 114 MW (2 Rs. 57 MW) Dagachhu project is being implemented by Dagachhu Hydro PowerCorporation Limited (a JV of the Company [26%] with Druk Green Power Corporation Limited[59%] and National Pension and Provident Fund of Bhutan [15%]) in Bhutan. Diversion ofDagachhu river for weir construction has been completed and weir foundation is ready forconcreting. Concreting of the desilter is in progress. Work for head race tunnel, powerhouse access tunnel, etc. is in progress. Cumulatively, 3.12 kms. of tunnelling has beencompleted. Manufacturing activities pertaining to bifurcator, distributor, power housecrane, switchgear, generator, etc. are in progress and generator frames have already beendispatched to the project site. The project is expected to be commissioned in FY14.

• Wind Power

The Company is developing wind power projects of over 200 MW, of which 150 MW isproposed to be commissioned during FY12 across Maharashtra (50 MW) and Tamil Nadu (100MW).

• Solar Power

The Company is developing a 25 MW solar PV plant at Mithapur in Gujarat through itssubsidiary, Industrial Power Infrastructure Limited (IPIL). IPIL has signed a PowerPurchase Agreement (PPA) with Gujarat Urja Vikas Nigam Limited for the same. The purchaseorders have been placed for the development of solar fields and the project activitieshave commenced. The Company is also developing a solar PV plant of 10 MW between Mulshi onits own land and on the identified roofs of the plant premises of Tata Motors Limited atPune.

5.2.1 Coastal Maharashtra Project

During the year, the Company has made further progress in the Coastal Maharashtraproject at Dehrand, Maharashtra. All statutory clearances for commencement of initialphase of 1,600 MW are in place. Agreement for fresh water allocation for the project hasbeen signed with the Maharashtra Industrial Development Corporation (MIDC).

Subsequent to the issue of Gazette notification by Government of Maharashtra (GoM) u/s32(1) of the Maharashtra Industrial Development Act, 1961 (MID Act), a high poweredcommittee of GoM approved the land compensation payable to land owners. Actualcompensation disbursement to land owners commenced on 3rd August, 2010, by DistrictCollector as per provision under MID Act. MIDC has so far acquired more than 50% ofprivate land. Acquisition of balance land is in progress.

Socio-economic survey of project affected persons in respective villages has beencompleted. Economic options for coal logistics are under evaluation.

5.2.2 Tiruldih Power Project, Jharkhand

The process of land acquisition for the 1,980 MW project is in progress and the firsttranche of 101 acres of land has been transferred in the name of the Company on 28thMarch, 2011. The entire land acquisition process is scheduled to be completed by March2012. The Company is in discussions with the Government of Jharkhand (GoJ) for aMemorandum of Understanding (MoU) for allocation of water, various land relatedpermissions, right of way for transmission lines / water pipelines, coal allocation fromJharkhand State Mineral Development Corporation Limited in exchange for sale of power (25%capacity) from the proposed plant, etc. Application for water allocation of 62 cusecs forthe project has been made to the water resource department, GoJ. It is anticipated thatthe allocation of water will be from Chandil reservoir which is about 25 kms. away fromsite. In-principle clearance has been received from Railways for transportation of coalfrom Tubed coal block. On Environmental Clearance (EC), Terms of Reference (ToR) have beenapproved by Ministry of Environment and Forests (MoEF). Environmental monitoring has beencompleted and Environmental Impact Assessment (EIA) report is under finalization.Discussions have been initiated with Tata Steel for developing the captive unit andentering into a MoU for the same. The Company expects to issue Notice To Proceed (NTP) forthe project around Q4 FY12 (Zero date being considered in Q1 FY13).

5.2.3 Kalinganagar, Orissa 652.5 MW [3 Rs. 67.5 MW (Gas based) + 3 Rs. 150 MW (Coal andgas based)]

The project is being executed through Industrial Energy Limited, a JV of the Company(74%) with Tata Steel (26%). Tata Steel has commenced project related works for its 3 MTPAsteel plant and has requested the Company to initiate the enabling works related to powerplant. RITES, a Government of India (GoI) enterprise, has been appointed as the consultantfor preparation of combined Detailed Project Report (DPR) for Tata Steel and the Company'sprospective coal unloading arrangements, obtaining approval from East Coast Railways, etc.Tata Steel has already obtained EC for production gas-based plant along with their steelplant. Water allocation has also been obtained. Process has been initiated for obtainingcoal linkage, water allocation, EC, etc. for additional coal-based plant. The ToR has beenapproved by Orissa State Pollution Control Board (OSPCB). Tata Consulting EngineersLimited (TCE) has been engaged as the Owners' Engineer and DPR, plot plan, technicalspecifications for various packages, etc. are under finalization. Soil investigation iscurrently underway at the project site and zero date for the gas based project isenvisaged in H2 FY12.

5.2.4 Maithon Expansion - 1,320 MW (2 Rs. 660)

The Company has finalised the DPR and initiated studies for obtaining EC for theproject. No additional water allocation is required for expansion project as the WaterOptimization Study by TCE has confirmed that water allocated for Phase I will suffice thePhase II requirements also. Currently, the environmental consents are in progress.Subsequently, the Company expects to start the site related activities by H1 FY13 andplace orders for its main plant equipment in H2 FY13 (Zero date being considered in H2FY13).

5.2.5 Dugar Hydroelectric JV Project

The consortium of the Company and SN Power Singapore Pte. Limited (SN Power), asubsidiary of Statkraft, Norway, was successful in winning the Dugar hydroelectric powerproject through a competitive bidding process carried out by the Government of HimachalPradesh (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 SNPower (50% - 1 share). The capacity for the project is estimated to be between 236 MW-280MW. This is a Peaking-Run-of-the-River (PROR) project with storage, for peaking capacityin the lean season. It is the last project in cascade in Himachal Pradesh on the riverChandrabhaga (Chenab).

The letter of intent was issued to the Company on 5th April, 2011, and the letter ofallotment on 4th May, 2011. The Pre-implementation Agreement is to be signed with theDirectorate of Energy, GoHP, shortly. The Company is undertaking a detailed explorationand design study to plan and finalize the project implementation.

5.2.6 Naraj Marthapur Project, Orissa

The major clearances for the 660 MW Naraj Marthapur project have been obtained. The EChas been granted by MoEF, subject to clearance from National Board of Wild Life for whichthe process is on.

5.3.1 Tamakoshi - 3 Hydroelectric Power Project, Nepal

On 22nd July, 2010, the Company signed a Shareholders' Agreement (SHA) with SN Power toacquire an equity holding of 50% - 1 share in the project SPV to develop, own and operatethe Tamakoshi 3 Hydroelectric Power Project located at the Dolakha and Ramechhap districtsin Nepal. The SHA is pending approval of Government of Nepal (GoN).

5.3.2 Sorik Marapi Geothermal Project, Indonesia

On 2nd September, 2010, the consortium of Tata Power - Origin - Supraco was awarded the240 MW Sorik Marapi geothermal project in Indonesia based on the tariff of USD 0.081 /kWh. The development of the project will require a process of progressively proving thetechnical and commercial viability of the project while also meeting a range of regulatoryobligations.

From the assessment of existing resource data, preliminary locations have beenidentified for exploration wells within the inferred high temperature resource area.Initial surface exploration (geology, geochemistry and geophysics) have commenced alongwith community relations activities at the project area. The exploration phase would endby H1 FY13, after which the project implementation details will be finalised.

6.1 Industrial Energy Limited (IEL)

IEL is presently operating Power House 6 in Jamshedpur and Unit 5 in Jojobera. Duringthe year, IEL earned Revenues of Rs. 125.41 crores and a PAT of Rs. 24.88 crores, asagainst Rs. 70.74 crores and Rs. 9.46 crores respectively in the previous year. IELcommenced operations in May 2009.

6.1.1 Power House 6 (PH6) at Jamshedpur

120 MW PH6 is the first unit of IEL and is located inside Tata Steel works atJamshedpur. During the year, PH6 recorded a generation of 738 MUs while achievinggeneration availability of 93%.

Table 11: Details of thermal power generation for FY11 - IEL

6.1.2 Unit 5 at Jojobera

A 120 MW coal-based power plant has been commissioned at the Company's existing site atJojobera to cater to the increasing demand of Tata Steel. The COD was declared on 27thMarch, 2011.

6.2 Maithon Power Limited

MPL is constructing a 1,050 MW (2 Rs. 525 MW) power plant at Maithon in Jharkhand(Refer Section 5.1.2).

6.3 Powerlinks Transmission Limited (PTL)

PTL is a JV between the Company (51%) and PGCIL (49%). PTL transmits power from the1,020 MW Tala Hydro Electric Power Project in Bhutan and surplus power from the Eastern /North-Eastern region of India through its transmission lines between Siliguri (WestBengal) and Mandaula (Uttar Pradesh), spanning a distance of 1,166 kms. The availabilityof transmission line was maintained at 98.62% for Eastern Region and 99.78% for NorthernRegion in FY11, as against the minimum stipulated availability of 98%.

During FY11, PTL has earned revenues of Rs. 288.41 crores (previous year revenues ofRs. 300.98 crores) and a PAT of Rs. 105.68 crores (previous year PAT of Rs. 108.09crores). PTL has paid interim dividend of Rs. 1.4 per share (previous year interimdividend - Nil) and recommended final dividend of Rs. 0.70 per share for FY11 (previousyear final dividend Rs. 1.80 per share).

6.4 North Delhi Power Limited (NDPL)

NDPL, engaged in distribution of electricity in North and North West Delhi, is asubsidiary of the Company (51% share), the balance being held by Delhi Power CompanyLimited (a Government of Delhi undertaking). NDPL services over one million consumersspread over 510 sq. kms. in the North Delhi area. The peak load in this area is about1,313 MW, with energy consumption of over 7,300 MUs.

NDPL has earned revenues of Rs. 4,099.85 crores during FY11, a growth of about 21% overthe previous year (Rs. 3,393.81 crores). The Company earned PAT of Rs. 258.18 crores inFY11 compared to Rs. 350.73 crores in FY10. PAT for FY10 included reversal of deferred taxliability of earlier years amounting to Rs. 139.15 crores. The Aggregate Technical andCommercial losses have been reduced at the end of FY11 to around 13.2% against theregulatory target of 17%.

The Tariff Order for FY11 was not released by Delhi Electricity Regulatory Commissiondue to a stay order of Delhi High Court in a Public Interest Litigation filed before it.The stay has now been vacated and tariff for FY12 is under determination. Therefore, NDPLis currently billing its consumers at a rate which was projected for FY10 and based onpower purchase cost of Rs. 2.63 per unit as against actual cost of Rs. 3.68 and Rs. 4.21per unit respectively for FY10 and FY11. Due to the delay in release of tariff order,NDPL's current year revenues include Rs. 1,156.43 crores (previous year Rs. 672.68 crores)as income recoverable from future tariff.

NDPL estimates that it would need an appropriate hike in tariff to recover theregulatory assets. Regulator has issued a letter of comfort to NDPL clarifying that thesedues would be recognized in tariff order after prudence checks in course of tariffdetermination exercise and an amortization plan for these dues along with carrying cost atprevailing rates of interest would be provided in the tariff order expected to be issuedby August 2011.

During FY11, NDPL was bestowed the 'Asian Power Utility of the Year Award' for 2010, byAsian Power Awards, Singapore for the fourth year in succession, 'Excellence Award' byInstitute of Economic Studies and the Safety Innovation Award 2010 by the Institute ofEngineers (India).

6.5 Tata Power Trading Company Limited

Tata Power Trading, incorporated in December 2003 with an equity capital of Rs. 2crores, was the first company in India to receive a power trading license from the CentralElectricity Regulatory Commission (CERC) in June 2004.

Tata Power Trading transacted 4,354 MUs during the year as compared to 4,075 MUs in theprevious year and has shown a CAGR of 29% over the past 5 years. It was ranked the fifthlargest trader with a market share of 8% in 2011.The gross revenue for FY11 was Rs.1,933.12 crores as compared to Rs. 2,275.78 crores in the previous year. The decrease inrevenue was mainly due to the decrease in the average rate of power from Rs. 5.58 / kWh inFY10 to Rs. 4.43 / kWh in FY11. The PAT increased by 11% to Rs. 9.15 crores, as againstRs. 8.24 crores 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% isthrough power exchanges. With the advent of the power exchanges in 2008 and the prioritygiven to them by CERC for booking of corridors in the day ahead market, volumes on theexchange platform are on an increasing trend. Tata Power Trading has participated activelyin the exchange segment. Nearly one third of the total clients registered with the powerexchanges are now with Tata Power Trading. In addition to short term trading, Tata PowerTrading has also diversified its supply sources by entering into long term power purchasecontracts with various power developers for sale of their power in the long term as wellas in the merchant market.

6.6 Trust Energy Resources Pte. Limited (Trust Energy)

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

Trust Energy (along with EEPL, a wholly-owned subsidiary of CGPL) has organized a fleetof five Cape size vessels. Trust Energy has purchased two new vessels, Trust Agility,which was delivered in May 2011 and its sister vessel, Trust Integrity due to be deliveredin H1 of FY12, both built at STX Offshore and Shipbuilding Company Limited of South Korea.EEPL has entered into long term charters for another three cape size vessels. The shippingoperations are scheduled to commence from FY12 with the commissioning of the power plantat Mundra. With increase in the generation portfolio and hence, imported coal requirementof Tata Power, Trust Energy will play an increasingly important role in securitization ofcoal supply and shipping of imported coal for Tata Power's thermal power generationoperations.

6.7 NELCO Limited (NELCO)

NELCO, established in 1940, is listed on Bombay Stock Exchange Limited (BSE) andNational Stock Exchange of India Limited (NSE). The Company, along with its subsidiary,holds 50.1% stake in NELCO.

NELCO's current businesses cater to physical safety and security solutions for defenceestablishments, homeland security, mass transportation like railways, process monitoringsolutions for some specific industries like steel plants, refineries, energyestablishments, etc. and turnkey satellite communication networks in India and abroad,including related managed services. It also provides 24 Rs. 7 network management andcommunication services to more than 400 corporate and enterprise customers in India.Tatanet Services Limited (Tatanet), a subsidiary of NELCO, holds the requisite licensesfor providing the shared hub VSAT services. Apart from these, NELCO is providing nichemeteorology solutions to sectors like Indian Air Force and meteorology department.

With effect from 28th July, 2010, NELCO has transferred the undertakings which comprisetraction electronics, SCADA and industrial drives businesses as a 'going concern' on aslump sale basis to Crompton Greaves Limited for a total consideration of Rs. 81 crores.

During the 12 months period ended 30th September, 2010, NELCO has posted a Total Incomeof Rs. 142.82 crores and PAT of Rs. 21.40 crores.

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

Af-Taab is a wholly-owned investment subsidiary of the Company. During FY11, Af-Taabearned an operating income of Rs. 206.65 crores and PAT of Rs. 163.07 crores, as againstRs. 39.55 crores and Rs. 15.07 crores respectively in FY10. The growth in profit isprimarily due to sale of long term investments.

6.9 Chemical Terminal Trombay Limited (CTTL)

CTTL is a wholly-owned subsidiary of the Company offering warehousing facility fororganic and inorganic chemicals including petrochemicals. During FY11, CTTL earned anoperating income of Rs. 13.37 crores and PAT of Rs. 3.44 crores, as against Rs. 11.15crores and Rs. 3.41 crores respectively in FY10.

7. INVESTMENTS IN INDONESIAN COAL COMPANIES

The outstanding debt taken for the acquisition of a 30% stake in two major IndonesianCoal Companies, PT Kaltim Prima Coal and PT Arutmin Indonesia and related companies (CoalCompanies) stood at USD 240 million as on 31st March, 2011 compared to USD 695 million ason 31st March, 2010. The Coal Companies raised USD 450 million in April 2011 through ahybrid issue guaranteed by Tata Power. USD 242 million out of the USD 450 million raisedby the hybrid issue were used to prepay the non-recourse loan. The prepayment was witheffect from 10th May, 2011.

The performance of the two Indonesian thermal coal companies, viz. PT Kaltim Prima Coaland PT Arutmin Indonesia continued to be robust. The production during calendar year 2010was 60 MT as against 63 MT in 2009. The main reason for the drop in production was veryheavy monsoons during the third calendar quarter. Coal prices showed good recovery inCY10. Coal price realization for the year was USD 68 / tonne as compared to USD 50.6 /tonne in the previous year. These high prices of coal ensured that the profitability ofthe coal companies improved even with a marginal fall in production.

The equity interest in the two Indonesian Coal Companies provides a natural hedge forthe power business, which uses imported coal, against rising coal prices, besidesproviding security of fuel supply through the offtake agreements.

8. SUSTAINABILITY AT TATA POWER

Sustainability forms the core of the Company's vision - "To be the most admiredIntegrated Power and Energy Company delivering sustainable value to allstakeholders". In fact, the Company owes its very existence to its founder, MrJamsetji Tata's vision that "Clean, cheap and abundant power is one of the basicingredients for the economic progress of a city, state or country". The vision of theCompany's founder is the guiding principle for its sustainability initiatives.

At Tata Power, Sustainability integrates economic progress, social responsibility andenvironmental concerns with an objective of improving the quality of life for allstakeholders, now and for generations to come. The Company views it as an opportunity tomake a difference and remain committed to the issues of resource conservation, energyefficiency, environment protection and enrichment and development of local communities inand around its areas of operations. It is an integral part of the Company's objective of'Leadership with Care'.

In its drive towards a clean environment, the Company is trying to set standards in thedevelopment and implementation of advanced eco-friendly technologies and processes forenergy management. The Company is working with policymakers and regulators to advancetechnology, strengthen the renewable energy portfolio, accelerate the development ofcost-effective energy efficiency programs and manage consumers' demand for electricity.The Company has also tied up with various organizations engaged in cutting-edge researchin the renewables space and is piloting projects based on geothermal energy, solarconcentrators, biomass gasification, etc. - all with a view to bring these to commercialoperation and scale in the medium term. During the year, the Company has notched up anumber of achievements in relation to Sustainability, chief of which are as below:

• The Company has been bestowed two awards - 'Best performer in the PowerIndustry' at the Financial Express - Emergent Ventures India Green Business LeadershipAwards and Certificate of Merit - Global CSR Awards 2010.

• With a view to bring in external views and insights into the sustainabilityprocess, a Sustainability Advisory Council was constituted in FY11, with experts from thefield of climate change, community development and sustainable environment management. Thecouncil meets regularly and guides the Company in its sustainability and communityrelations journey, including contributing to strategy development.

• TataPowerEnergyClub(theClub)-

• In FY11, the Club has reached out to 285 schools nationwide (Mumbai, Delhi,Kolkata, Pune, Ahmedabad, Bengaluru, Lonavla, Jamshedpur, Belgaum), sensitised over 1.1million citizens and saved more than 2.4 MUs. The Club has a strong, sustainable andreplicable model to spearhead a movement. It has developed 26,895 Energy Champions, 39,356Energy Ambassadors and 154 self-sustaining mini energy clubs this year. This energybrigade is creating a self-sustaining movement on energy conservation across the nation.

• The Club has also been recognised internationally and was bestowed the 'MostInnovative Campaign' award at USA's The Energy Daily's 2010 Leadership Awards. TheAssociation of Business Communicators of India has bestowed a gold award on the Club for'Environment Communications' and it has also ranked 2nd among 22 participants in 'EarthCare' category for Siemens Ecovative Award 2010.

• Cumulatively, from 2008 onwards, the Club has reached out to more than 450schools across India, sensitised more than 2 million citizens and saved more than 3.4 MUs.The Club has an energy brigade comprising 40,445 Energy Champions and 70,450 EnergyAmbassadors.

• A BPO unit at Khopoli, a JV of the Company, Mannat Foundation (an NGO formed bythe Company) and Tata Business Support Services Limited, has provided jobs to 213 localpeople in the catchment areas of the Company's hydro power stations.

• Improvement of comprehensive education programme has benefited over 13,000students with over 600 learning centers in Maithon, Jharkhand.

• HIV/AIDS awareness covered 45,890 people across Mumbai.

• Mobile medical services and health camps by the Company serviced 19,640patients.

• 1,480 membersfrom 89 Self-Help Groups have saved aboutRs. 12 lakhs.

• Employee volunteers have contributed a total of 6,242 hours for various socialand environmental causes.

• The Company has a portfolio of five DSM programs for different category ofconsumers, thus becoming the first utility in India to launch five DSM programs withapproval from the regulator.

• Sustainability awareness sessions have been conducted at various locations oftheCompany.Atotal of 1,516employees have been covered till March 2011.

9. GLOBAL COMPACT COMPLIANCE

The Company has been reporting data since 2006 as per the Global Compact Initiativetaken up by the Secretary General of the United Nations in 2002. The Compact requiresbusinesses to adhere to Ten Principles in the areas of human rights, labour standards,environment and anti-bribery. The Company submitted to the Global Compact website its'Communication on Progress' as required in respect of implementation of the Ten Principlesin its business processes. In accordance with the Global Reporting Initiative (GRI)guidelines, the Company is in the process of conducting a Stakeholder and Materialityanalysis. The feedback from this study will be used to formulate the Company'sSustainability Report in accordance with the GRI G3 guidelines.

The Company has also adopted Corporate Sustainability Protocol (CSP) since FY11, whichis a score based system, intended to improve overall sustainability in the Company. Eachdivision must achieve the yearly target set for the Company. In order to achieve thetarget, the divisions must set up and implement action plans where the lacunae have beenidentified. This not only ensures a higher CSP score for their division but helps inachieving overall sustainability targets for the Company.

10. SAFETY

The Company has given safety a high priority, appointing DuPont as a consultant toguide it on its journey to Safety Excellence. A number of initiatives have been taken toembed a culture of safety and safe working practices in the organisation. A detailedcorporate safety action plan has been prepared, including the activities that will beguided and supervised by DuPont staff and by the Company staff on a monthly basis. An ApexSafety Committee (ASC) - chaired by the Managing Director - reviews the Company's safetyperformance every two months and guides the implementation of detailed action plansthrough Central Safety Committees and Site Implementation teams at all sites. FiveCorporate Committees for Safety Observations, Incident Investigation, Rules andProcedures, Capability Building and Contractors Safety Management act as 'Keepers ofStandards', introducing new and improved procedures, systems and processes forimplementation through the ASC and the local counterparts of the five corporatecommittees. An integrated Safety Management System based on Occupational Health and SafetyAdministration Process Safety Management Model was developed and has been implementedacross the Company.

New safety work procedures in line with DuPont methodologies have been implemented.Intensive training modules have been organised by DuPont as well as DuPont trainedtrainers. Various meetings were organised on safety, including a safety strategy meet, aconstruction safety meet organized at Maithon and an annual safety meet of safetyprofessionals. Safety requirements have been drilled down to the level of contractors'employees and made a part of all contracts.

The Company has also deployed software for recording, analyzing and reporting theresults of Safety Training Observation Program (STOP) audits, a proprietary DuPontmethodology for safety observations. Additionally, software for safety audits and incidentreporting including near-misses with tracking of implementation of recommendations hasbeen deployed. A cross functional audit team trained by DuPont has been conducting auditsagainst safety standards at the Company's project sites at regular intervals.

During the year, the Jojobera Thermal Power Station was bestowed the 'ShreshthaSuraksha Puraskar' award by the National Safety Council of India for the assessment periodof 2006 to 2008, and the Trombay Thermal Power Station was bestowed the Greentech Goldaward for safety in the Thermal Power Sector.

11. RENEWABLESAND NEW TECHNOLOGY

The Company is a member of the Cleantech Forum and various websites, which helps it tokeep abreast of the Research and Development (R&D) updates on clean technologies.Periodic visits to vendors and participation in conferences also assist in identifying andselecting companies for reviewing. Interactions are on with faculty members from theIndian Institute of Technology (IIT) - Bombay, Mumbai University Institute of ChemicalTechnology (ICT), Massachusetts Institute of Technology (MIT), University of California atBerkeley, Purdue and Washington Universities to stay updated on technology. Varioustechnologies in a variety of areas like CO2 absorption using algae, carbon capture reuseand storage, fuel cell (telecom tower application), gasification (biomass, coal), solar(PV, thin-film and concentrated thermal), micro-turbine wind energy generation, etc. arebeing evaluated. During the year, the Company has continued to expand its presence in thefield of renewable energy. Some key highlights are:

• Geothermal - The Company has invested in Geodynamics, a leading Australiancompany in enhanced geothermal systems with a view to bring the learnings from theinvestment to India. The Company has invested AUD 50 Million in the project so far.

• Solar Concentrated Thermal - The Company is working on two differenttechnologies - a 1 MW unit in association with IIT Bombay and a 500 kW unit with ICT andTata Steel. Further, field experiments are being carried out to minimize the waterresource for cooling purposes by implementing geo-exchange cooling.

• Floating Solar PV - Sunengy Pty. Limited (Sunengy) is an Australia basedstart-up company that has designed a floating concentrated PV system using Fresnel lenses.Tata Power is planning to test a 13.5 kW pilot unit at Walwhan lake. In order to bring thecost of the Sunengy units further down, talks are on with local vendors for supply ofparts and manufacturing in India. The project is expected to be completed in FY12.

• Micro-Wind - Windtronics wind turbines are 2 kW units with very low cut-inspeed. This makes them ideal for Indian conditions where the wind speeds are not veryhigh. Tata Power has completed installation of one of the 2 kW Windtronics micro-windturbines in the hydro generating area, and the installation of the other unit at TrombayPower station is currently under progress.

• Microwave applications in drying of coal - There are losses in efficiencydue to high moisture content in coal used in coal fired power plants. In order to reducethese losses and investigate the possibility of drying of coal using microwave,preliminary studies along with experiments were carried out. The success of the study willpave the way for establishing future capacity. This application would also be useful inthe Exergen process for removing the moisture from the coal.

• CO2 sequestration using algae - The Company is exploring options ofcapturing the CO2 generated from its thermal power stations using algae. This willessentially reduce the amount of CO2 generated from the plant while assuring sustainableutilization of the CO2. A 10 TPD CO2 capture pilot plant is proposed at Trombay andsubsequent usage of the CO2 for algae uptake.

12.1 Financing

In April 2011, the Company raised, through its wholly-owned subsidiary - BhiraInvestments Limited, a USD 450 Million 60 year (Non-callable for 5 years) hybrid capitalsecurities offering guaranteed by the Company, at 8.5% p.a., payable semi-annually. Theproceeds of the issue of the securities will be applied to fund its corporate andacquisitive activities and to repay outstanding loans.

The Company issued 15 year Non-Convertible Debentures (NCDs) aggregating Rs. 350 croresat a fixed interest rate of 9.15% p.a., in July 2010. The proceeds of this issue wereutilized to prepay an existing 10.95%, 10 year term loan from Indian Renewable EnergyDevelopment Agency Limited (IREDA) availed by the Company for funding its wind projects inGujarat and Karnataka. The Company issued further 15 year NCDs in September 2010,aggregating Rs. 250 crores, at a fixed interest rate of 9.15% p.a., for meeting itsgeneral corporate objectives and part funding wind power project requirements.

IREDA sanctioned a Rs. 450 crores line of credit to the Company at 9.60% p.a., with aninterest reset at the end of the 5th year and annually thereafter, for part funding thecapital expenditure requirements relating to wind power projects. This line is availablefor drawdown till March 2012.

The Company availed a term loan of Rs. 150 crores at an interest rate of 10% p.a. fromICICI Bank Limited (ICICI Bank) in July 2010, for partly funding the capital expenditurerequirements of its Mumbai Operations. The Company availed an unsecured term loan fromICICI Bank of Rs. 29 crores at the rate of 6% p.a. in March 2011. The proceeds of thisloan will be used for developing a few critical technologies in the area of CO2 captureand reuse (using algae) for the power sector and advanced electronics for defence sector.

Moody's has retained the Company's corporate family rating at Ba3 and senior unsecuredrating at B1 with a stable outlook, S&P has retained the corporate credit rating toBB- with a positive outlook and ICRA has reaffirmed its LAA rating on the Company's NCDsprogramme with 'Positive' outlook and also reaffirmed its A1+ rating on the Company'scommercial paper / short term debt programme.

Trust Energy secured a long term loan of USD 141.84 mn from ICICI Bank Limited(Singapore) on a debt equity ratio of 80:20 to finance the contract price of 2 ships. Till19th May, 2011, USD 112.21 million has been drawn down under the loan facility.

• Tata Business Excellence Model (TBEM)

During the year, the Company continued on its journey of business excellence bystrengthening its existing initiatives and introducing a few new ones to cater to thedemands of the changing business environment, including in the areas of customermanagement, process management, operational excellence and cost reduction. The TBEMassessment during the year resulted in a marginal drop in scores, and diagnosed that someof the processes in the organization were now ready for an improvement to the next higherlevel, and that the organization needs to focus on safety practices that can take thechallenge and complexity of doing mega projects in India with world-class safety systems.

• Organisation Transformation (OT)

The OT exercise rolled out during FY09 made significant progress. A total of twohundred officers in the management cadre, across functions, levels and sites have beencovered, which is close to the critical mass required for effective transformation. Theseofficers, in critical positions including divisional / departmental heads and functionalheads are supporting the organizational interventions like performance management,operational excellence, employee development through role-model leadership, improvingemployee engagement in their areas of improvement and taking part in improvementinitiatives themselves. The cultural shifts, though hard to quantify, include takingownership, collaborative responsiveness, taking decisions that address the greater commongood, and working on their own individual development plans. Another OT initiative, LASER(Learn, Apply, Share, Enjoy, Reflect), aimed at achieving high standards of shop-floorexcellence and strengthening the relationships between front-line officers and workmenachieved high levels of success, in terms of relationship building, improving operationalefficiencies, and improving the workplace through programmes like autonomous maintenance,5-S and focused improvement projects, overall equipment effectiveness, safety, etc. Theprogramme covered all operating sites, and resulted in a saving of Rs. 7 crores throughfocused improvement projects (most projects undertaken are being horizontally deployed,and savings accrual has not been taken on board), and impacted other performanceindicators like cycle time reduction in processes, savings in water consumption,improvement in customer facing processes, etc.

• Structured Problem Solving (SPS)

The SPS programme has been launched in the Company this year and is presently beingextended to the various locations. SPS attempts to analyse data available from the variousprocesses, using quality tools, and arrive at solutions for continuous improvements.

• Sankalp

Sankalp, a programme to bring in operational excellence, delivery excellence and costefficiency, would be launched in the Company early next year. The preparatory work of teamformation has been completed.

12.3 Human Resources Development

During FY11, net addition to manpower was 461 people, primarily to enhance projectexecution skills and build operations teams for upcoming power plants, taking the total to4,270. During the year under review, a number of HR initiatives were taken to supplementthe Company's effort towards business sustainability and growth.

• Employee Engagement

Based on the employee engagement and satisfaction survey by Gallup in FY10, VOICEScommunication and action planning workshops were conducted to communicate the surveyfindings and facilitate formulation of action plans at different divisions to addressareas of concern. In FY11, the engagement score crossed the '4' point mark.

• Training

A number of training programmes were conducted to ensure development of the requiredcompetencies. A training program on project management, developed by URS Corporation,jointly with Clemson University and Construction Industry Institute, was conducted for theCompany's engineers at Princeton, New Jersey in USA. Special training programmes wereinitiated through reputed premier institutes like IIT-Kharagpur and Birla Institute ofTechnology and Science, Pilani to enhance technical competency of employees. The Company'scentre for excellence and learning, Tata Power Training Institute at Ambernath, wasinaugurated with the start of training programme for cable jointers and linemen.

• Talent Management and Succession Planning

To identify the right talent and develop a pipeline of key resources, the Company has astructured talent management process whereby high potential officers were identified andindividual development plans prepared to hone their potential. In addition, four officerswere selected through ACE 2011, a specialized program to provide fast track career growthopportunities and leadership exposure to bright young officers. The succession planningexercise was reviewed and updated in view of various changes and developments in theorganization.

• Performance Management System (PMS)

The PMS is a well evolved system with appraisal letters being issued within a month ofclosure of the financial year, for the fifth year in a row.

• Compensation Benchmarking

Salary restructuring and revision were completed in 2010 for all officers in accordancewith the market benchmarks. Additional merit rise was given to retain key officers.

• Industrial Relations

On the industrial relations front, the Company enjoyed a cordial year. MumbaiOperations Union settlement was signed on 30th August, 2010 for a period of four years,i.e. January 2010 to December 2013.

12.4 Regulatory matters

The business of Tata Power is governed primarily under the Electricity Act, 2003 (EA2003) and the regulations framed by the regulatory commissions under EA 2003. Theregulations framed, and sometimes, the discretion of the regulatory commission, decide therevenue that is allowed for the Company and the tariff to be charged to the consumers.Every year, each regulated business of the Company is required to file two documents withthe concerned regulatory commission - an Annual Performance Review (APR) for the year goneby and Annual Revenue Requirement (ARR) for the coming year. The APR contains details ofthe actual performance of the business, including all relevant operational and financialdetails. The ARR contains the projected revenue requirement based on demand projections,fuel cost and plans for operational and capital expenditure.

The regulatory commission reviews both documents and subjects both to a publicscrutiny, which culminates in a public hearing, which is open for all to attend. In thehearing, the comments and observations of consumer representatives, consumer forums, powersector experts, individual consumers, etc. are heard by the regulatory commission andresponded to by the Company. Thereafter, the tariff is published through the tariff orderissued by the regulatory commission.

The legal provisions permit an appeal in the Appellate Tribunal for Electricity (ATE)against the decisions of the regulatory commission on tariff or other matters andthereafter, in the Supreme Court.

Of late, regulatory commissions have issued Multi Year Tariff (MYT) regulations, thatpropose a method to fix tariff for a period of 5 years, with a possibility of a mid-termreview.

12.4.1 MERC tariff order for FY11

MERC passed an order in September 2010 on the Company's tariff petition for FY11. Inits tariff order, certain expenditure for FY09 was disapproved by MERC. An appeal has beenfiled against such disallowances in the ATE.

12.4.2 Appeals against MERC Tariff Orders

The Company had filed appeals in the ATE with regards to certain disallowances in thetariff orders for FY10 passed in May-June 2010. The ATE passed an order allowing thecontentions of the Company on most issues. The Company will, in the next filings fortariff, ask MERC to implement the impact of the judgement of the ATE.

12.4.3 Power Sale to Mumbai during the year

Immediately after the judgement of the Supreme Court on the PPAs matter, the Companynotified RInfra of its intention to stop supplying 460 MW power to it from 1st April,2010, giving RInfra a notice of over 9 months to arrange power from elsewhere for itsconsumers. Further, the Company signed an agreement with BEST to supply 100 MW of theremaining capacity. RInfra had approached the GoM for relief. In response, the GoM issueda memorandum in which it suggested supply of certain quantum of power during FY11 toRInfra against which the Company had filed a Writ Petition in the Bombay High Court.

Despite the setting aside of the memorandum by the Bombay High Court (refer section12.6.3 for details), the Maharashtra State Load Despatch Centre (MSLDC) did not schedulethe power requisitioned by the Company. The Company has filed petitions / appeals invarious forums challenging the refusal of MSLDC to schedule power according to dispatchinstructions of the Company, including the supply from Tata Power (Generation) to TataPower (Distribution) towards additional power required by Tata Power (Distribution) tomeet the load requirement of its consumers in Mumbai Operations area. The matters arepresently pending. MSLDC has started scheduling additional power from Tata Power(Generation) to Tata Power (Distribution) according to its dispatch instructions witheffect from 1st April, 2011.

In the meantime, MERC on the advice of the GoM, initiated a suo motu hearing on thismatter in June 2010, seeking views of the public at large. The order of MERC is awaited.

12.4.4 Changeover of consumers to Tata Power

The Company has successfully changed over a large number of consumers from anotherpower distributor to Tata Power (Refer section 4.2.4 for details). It was contended thatsuch changeover is causing financial loss due to loss in cross subsidy and this loss needsto be recovered. A petition was filed in MERC, which decided that this would be consideredat the time of the tariff filings of the other distributor. The order on tariff filings isawaited.

12.4.5 MYT regulations of MERC

MERC has announced the MYT regulations for determination of tariff. The allowablerevenue for the Company's Mumbai Licensed Area for the period of 5 years from FY12 to FY16(called 'Control Period') would be governed by these regulations.

The present MYT regulations as compared with the previous regulations have brought inchanges in the norms for operation and the financial norms used for determination of theallowable revenue. The financial norms for return on equity and rates of depreciation havebeen revised upwards and are now in line with the norms prescribed by CERC. Further, thenorm for target availability of generating plants has been revised upwards to 85%.

• MYT regulations and ARR for Unit 2 and 3 at Jojobera

The Jharkhand State Electricity Regulatory Commission (JSERC) published the MYTregulations that will be applicable for determination of allowable annual revenue by Unit2 and Unit 3 for the period FY12 to FY16. The Company has filed a petition with JSERCbased on these regulations and the same is under the scrutiny of JSERC. The revenue fromUnit 2 and Unit 3 (120 MW each) was being governed by the terms of the PPA signed betweenTata Power and Tata Steel. As per the directions of JSERC, the revenue to be received fromTata Steel from these units would be as determined by these new MYT regulations.

• Capital Cost Approval for 1,050 MW Maithon Power Project

The Company has filed a petition for determination of capital cost and the tarifftherefrom with CERC. The order from CERC is awaited.

12.5 Risk Management

As part of the Risk Management Process (RMP), during the year, the Company reviewed thevarious risks and finalized mitigation plans. These were reviewed periodically by the RiskManagement Committee. Further, seven Risk Management Sub-Committees (RMSCs) closelymonitored and reviewed the risk plans periodically. Employees contribute to the riskidentification process through the web-based Risk Perception System.

The major risk areas identified by the RMP were covered by the Internal Audit Plan.Major risks were also discussed at quarterly meetings of the Audit Committee of Directors.

12.6.1 Standby Charges

On an appeal filed by the Company, the Supreme Court has stayed the operation of theATE order, subject to the condition that the Company deposits an amount of Rs. 227 croresand submits a bank guarantee for an equal amount. The Company has complied with both theconditions. RInfra has also subsequently filed an appeal before the Supreme Courtchallenging the ATE order. Both the appeals have been admitted and are listed for hearingand final disposal.

12.6.2 Energy Charges and 'Take or Pay' Obligation

MERC directed RInfra to pay Rs. 323.87 crores to the Company towards the differencebetween the rate of Rs. 1.77 per kWh paid and Rs. 2.09 per kWh payable for the energydrawn at 220 kV interconnection and towards its 'Take or Pay' obligation for the years1998 - 1999 and 1999 - 2000. On an appeal filed by RInfra, the ATE upheld the Company'scontention with regard to payment for energy charges but reduced the rate of interest. Asper the ATE order, the amount payable works out to Rs. 56.12 crores (including interest),as on 31st May, 2008. As regards the 'Take or Pay' obligation, the ATE has ordered thatthe issue should be examined afresh by MERC after the decision of the Supreme Court in theappeals relating to the distribution licence and rebates given by RInfra. The Company andRInfra filed appeals in the Supreme Court. Both the appeals have been admitted and arelisted for hearing and final disposal. The Supreme Court, vide its order dated 14thDecember, 2009, has granted stay against the ATE order and has directed RInfra to depositwith the Supreme Court a sum of Rs. 25 crores and furnish a bank guarantee for the balanceamount. Pursuant to the liberty granted by the Supreme Court, the Company has withdrawnthe above mentioned sum subject to an undertaking to refund the amount with interest, inthe event the appeal is decided against the Company.

12.6.3 Writ Petition in the Bombay High Court

The Company had filed a Writ Petition in the Bombay High Court challenging theMemorandum and Report of the GoM dated 7th May, 2010 inter alia directing the Company tosupply 360 MW power to RInfra upto 30th June, 2010 and thereafter, 200 MW upto 31st March,2011.

By an Order dated 18th January, 2011, the Bombay High Court has held that theMemorandum issued by the State Government on 7th May, 2010, was ultra vires and hasquashed and set aside the same.

13. FOREIGN EXCHANGE EARNINGS / OUTGO

The foreign exchange earnings of the Company during the year under review amounted toRs. 117.76 crores (previous year Rs. 57.68 crores), mainly on account of forex interest,etc. The foreign exchange outflow during the year was Rs. 1,241.25 crores (previous yearRs. 1,587.56 crores), mainly on account of fuel purchase of Rs. 1,016.83 crores (previousyear Rs. 1,254.97 crores), repayment of foreign currency loans with interest thereon, NRIdividends and Foreign Currency Convertible Bonds (FCCB) interest of Rs. 57.19 crores(previous year Rs. 69.41 crores) and purchase of capital equipment, components and sparesand other miscellaneous expenses of Rs. 173.85 crores (previous year Rs. 270.72 crores).

14. DISCLOSURE OF PARTICULARS

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

Particulars of Employees: In terms of the provisions of Section 217 (2A) of theCompanies 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 theDirectors' Report. However, having regard to the provisions of Section 219 (1)(b)(iv) ofthe Act, the Annual Report is being sent to all Members of the Company excluding theaforesaid information. Any Member interested in obtaining such particulars may write tothe Company Secretary at the Registered Office of the Company.

15. SUBSIDIARIES

Vide General Circular No.: 2/2011 dated 8th February, 2011, the Ministry of CorporateAffairs, GoI has granted a general exemption to companies from attaching the BalanceSheet, Profit and Loss Account and other documents referred to in Section 212 (1) of theAct in respect of its subsidiary companies, subject to fulfillment of the conditionsmentioned therein. Accordingly, the said documents are not being attached with the BalanceSheet of the Company. A gist of the financial performance of the subsidiary companies iscontained in the report. The Annual Accounts of the subsidiary companies are open forinspection 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 subsidiarycompanies who may be interested in obtaining the same. Further, the Annual Accounts of thesubsidiary companies will be kept open for inspection by any investor at the Company'sHead Office and that of the subsidiary company concerned and would be posted on thewebsite of the Company.

16. DIRECTORS

Mr P R Menon, Managing Director, retired on 31st January, 2011. The Board has placed onrecord its appreciation of the valuable contribution made to the Company by Mr Menon.

Mr Anil Sardana was appointed as an Additional Director with effect from 1st February,2011, in accordance with Article 132 of the Articles of Association of the Company andSection 260 of the Act. Mr Sardana holds office only upto the date of the forthcomingAnnual General Meeting (AGM) and a Notice under Section 257 of the Act has been receivedfrom a Member signifying his intention to propose Mr Sardana's appointment as a Director.The Board also appointed Mr Sardana as the Managing Director effective the same date. Hisappointment and the remuneration payable to him require the approval of the Members at theensuing AGM.

In accordance with the requirements of the Act and the Articles of Association of theCompany, Mr D M Satwalekar, Dr R H Patil and Mr P G Mankad retire by rotation and areeligible for re-appointment.

17. AUDITORS

Messrs Deloitte Haskins & Sells (DHS), who are the Statutory Auditors of theCompany, hold office until the conclusion of the ensuing AGM. It is proposed to re-appointDHS to examine and audit the accounts of the Company for FY12. DHS has, under Section 224(1) of the Act, furnished a certificate of its eligibility for re-appointment. The Memberswill be requested, as usual, to appoint Auditors and to authorize the Board of Directorsto fix their remuneration. In this connection, the attention of the Members is invited toItem No. 6 of the Notice.

Members will also be requested to pass a resolution (vide Item No.14 of the Notice)authorising the Board of Directors to appoint Auditors / Branch Auditors / Accountants forthe purpose of auditing the accounts maintained at the Branch Offices of the Company, inIndia and abroad.

In accordance with the requirement of the Central Government and pursuant to Section233B of the Act, the Company carries out an audit of cost accounts relating to electricityevery year. Subject to the approval of the Central Government, the Company has appointed NI Mehta & Co. to audit the cost accounts relating to electricity for FY12.

18. AUDITORS' REPORT

The Notes forming part of the Accounts referred to in Auditors' Report of the Companyare self-explanatory and, therefore, do not call for any further explanation under Section217 (3) of the Act.

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

19. CORPORATE GOVERNANCE

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

20. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Act, the Directors, based on the representationsreceived from the Operating Management, confirm that :

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

ii) they have, in the selection of the accounting policies, consulted the StatutoryAuditors and have applied them consistently and made judgements and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany 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 andability for the maintenance of adequate accounting records in accordance with theprovisions of the Act, for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;

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

21. ACKNOWLEDGEMENTS

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

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

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

Research and Development (R & D)

• Technology to improve boiler efficiency

The Company has adopted technology that aims to enhance the boiler performance byoptimising combustion process. It measures various air, fuel and flue gas circuits andcaptures deviation from desired performance. These deviations are analysed and correctiveactions are taken accordingly. The system has been commissioned in Trombay Unit 5.

• 500 MW training simulator

New PC based 500 MW training simulator at Trombay has been commissioned, which will beused for in-house training of O&M engineers. The new simulator is a high fidelitysimulator which simulates all the plant parameters closely within the specified limitunder different operating conditions.

• Mobile belt for transporting coal replacing coal movement

A mobile belt system has been installed which can be used to feed coal stored at coalberth to the coal conveying system. The coal conveying system at coal berth gets itsregular coal supply from the barge unloader. The mobile belt system has improved theflexibility of coal logistics at coal berth. During the collision between vessels MV MSCChitra and MV Khalijia - III, off the Mumbai coast, the coal receipt was affected and theportable conveyor was very useful.

• Radar at coal jetty for following unwanted vessels

As per statutory requirement of International Ships and Port Facility Security Code, itis mandatory to install Automatic Identification System (AIS) radar at port facility. Ithelps in monitoring and tracking the movement of ships, barges and boats plying in the seawith the help of AIS transponder fitted on it. AIS transponder and radar gives theinformation about the name, type of vessel, country it belongs to, its gross weight,speed, bearing and distance of vessel from the Company's location. This information helpsin establishing the identity of vessel and authorising its movement in port facilityjurisdiction. This system has been installed at coal jetty in March 2011.

• Reduction of particulate matter in flue gas at Jojobera

The environmental clearance for Unit 5 at Jojobera was accorded subject to reduction inSolid Particulate Matter (SPM) of existing units. Use of anhydrous ammonia spray wasidentified as a cost effective solution and tried out in one of the existing units. Thepilot test of anhydrous ammonia dosing was conducted and that resulted in SPM reduction of190 ppm as against the planned reduction of 175 ppm. Anhydrous ammonia dosing is now beingimplemented in other units at Jojobera.

• High ampacity conductor

New tower erection in Mumbai area is difficult due to various encroachments. The newAluminium Conductor Composite Reinforced (ACCR) conductor is a tailor made solution toaddress this issue. The ACCR conductor has double the current carrying capacity of similarconventional Aluminium Conductor Steel Reinforced (ACSR) conductor. About 192 kms. of ACCRconductor has been successfully strung on existing towers of the 110 kV Salsette-Saki andBorivli-Malad lines without affecting the ground clearance.

• Ultrasonic meter for measuring distances

Cable height meter is a handheld meter for accurate measurement of cable sag, cableheight distance and overhead clearance of conductors. It can be used in any weather and isan advanced alternative to the conventional telescopic measuring poles. It uses ultrasonicsignals to determine the height of overhead cables up to 23 metres (75 feet).

• Using of special tubing on bare conductors

In order to prevent the overhead faults, the bare conductors on the H frame werecovered with special tubing. These tubes have high IR value and are resistant to theUltraviolet rays effect. These properties are expected to increase the life of the tubingas compared to the tubing used previously.

• Cable cure life extension technique

Cable cure technology is a life extension technique used for the HT Cross LinkedPolyethylene (XLPE) cables. The XLPE cable over the years develops defects called watertrees which lower the insulation value of the cable, thereby causing premature failure. Incable cure, a silicon based compound is injected into the cable conductor for a length of250 meters which diffuses into the insulation and fills up the voids / water trees. Thisincreases the insulation level, thus enhancing the life of the cable by almost 20 years.This technology has been successfully adopted in the 22 kV THDC-Odyssey cable in October2010.

• Geographical Information System (GIS)

GIS will help the Company to carry out network analysis, network planning and networkmanagement, in a cost-effective manner and ensure network reliability to meet customerexpectations and regulatory requirements. GIS will provide geo-referenced maps which willhelp the Company in better providing customer services like connection feasibility, meterinstallation, meter reading, bill delivery and load enhancement. Integrating enterpriseGIS with SAP ISU module and CRM is expected to help in responding to customer queries andcomplaints and communicating more effectively in a timely manner.

• Unified SCADA for receiving station

Unified SCADA with distributed nodal backup has been commissioned for the Company'sreceiving stations. This new technology is expected to provide complete monitoring andcontrol capability of the Company's T&D network in unified manner. The Company hasreplaced old SCADA systems, which were operating on standalone basis for each station.This is expected to improve reliability of the power system.

• Online condition monitoring of power transformer using gas chromatography

Online condition monitoring of power transformers helps in averting forced outages. TheCompany has adopted online gas chromatography to detect abnormal conditions while thetransformer is in service.

• One Second Arc Proof Test for metal clad MV switchgear

The One Second Arc Proof Test has been introduced as an added safety feature in the 22kV / 33 kV switchgear to safeguard men and material. This will enable containing the arcwithin the enclosure in case of fault.

• Implementation of IEC61850 technologies

Implementation of IEC61850 technologies for integration of protection and controlsystem has been carried out at 33 kV level. This feature reduces hard wire requirement andensures faster commissioning of switchgear.

• Mobile work stations in consumer section

A special delight team has been constituted to visit the customers at their doorstepsand educate them on the services provided by the Company. The team registers them onportal for viewing bill details, receiving alerts, etc. and demonstrates the variousfacilities available on the portal. This activity is done using laptops and wirelessbroadband for ease of mobility.

• Paperless customer application processing

Paperless customer application processing helps in easy retrieval, thereby increasingthe efficiency of operations and improving cycle time to answer customer queries. All theapplications along with supporting documents are scanned and stored in the software'Customer Connect'.

• Hand held units for meter reading

Hand held units (HHUs) are used for meter reading of single phase as well as threephase supply given to the consumers. The energy meter readings are entered into the HHUand then directly downloaded into the system. The system has less manual intervention andhence, reduced possibilities of errors, reduced cycle time for meter reading and uploadingof data into the system. Additionally, site related issues can be captured with help ofidentified HHU codes and proactive action can be initiated.

• Synchronous Digital Hierarchy (SDH) protocol for fiber optic communicationnetwork

The old fiber optic terminal equipment has been replaced with new SDH which will allowthe Company's communication network to be managed efficiently and in a flexible way. Thiswill help in improving the reliability of communication network.

• River bed technology for bandwidth management

River bed technology does the data crunching and uncrunching over the WAN, henceoptimising the WAN bandwidth. This allows the Company to run its business applicationefficiently across the organisation.

• Documentum technology for documentation of land records

Electronic Land Record Management System has been implemented using Documentumtechnology. This will enable the Company to manage its land and estate recordsefficiently.

• Solar Roof Top PV System

The Company has installed a 60 kW solar rooftop PV system on top of the A Block of itsCorporate Office at Carnac, Mumbai. The system, provided by Tata BP Solar India Limited,has been synchronized with the grid. This is the first such system in Maharashtra. Thesystem was commissioned in January 2011 and has logged in a production of approximately25,000 kWh. The Smart Metering System that was ordered with the system, has beeninstalled.

• Hybrid Solar and Wind System

The Company has installed a hybrid solar PV (2.2 kW) and a micro-wind turbine (0.8 kW)of a total capacity of 3 kW on top of the Station B building at Trombay. This system isnot hooked to the grid but provides power to the lights in the passageway of 5th Floor.Further, the Company is in the process of installing a standalone micro-wind turbine (2kW) at the coal jetty to test the function of this micro-wind turbine.

• Automatic Meter Reading

The Automatic Meter Reading (AMR) system acquires energy data from consumer metersautomatically from remote locations, avoiding any human intervention. This data is usedfor billing, planning, monitoring, decision making and taking corrective actionsaccordingly. The AMR system also helps in carrying out energy audits, analyzing energyconsumption 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 theneed for peak-load capacity.

• Smart Grids

The 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. foraround 5,000 customers. In phase 1, meters for 1,500 customers will be installed byNovember 2011. With the implementation of this system, the Company's customers will beable to download their daily consumption through its website and analyze their consumptionpattern 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 toconsumers through a two way digital communication and control of appliances at consumers'homes. It also has the capability of integrating renewable energy effectively. With theimplementation of AMI system, the Company will be able to provide this facility to itscustomers in FY12. Thus, when power is least expensive one can switch on appliances athome and switch off when it is costlier. Hence, Smart Grid will enable every consumer tohave access to the Grid, and vary consumption dynamically, enabling use of technology toconserve energy and save energy cost.

• Coat for transmission line towers

Due to proximity of saline and corrosive atmosphere, the tower bracings onMalad-Versova lines are facing corrosion problems. Various polymeric and bituminous paintswere used for coating the towers, but the results were not encouraging. A new product thatforms elastic film and has zero permeability to water and air has been applied at locationNo. 19 of Malad-Versova lines. The performance of the coat will be monitored during themonsoon before applying it at the other locations.

• Consumer substations (CSS) on upper floor

The Company has been following the conventional practice of installing the CSS withstandard layouts on the ground floor. Mumbai is developing vertically and space is one ofthe major issues for installation of the CSS. Considering the customer's requirement ofinstalling substation in less space, a study was carried out along with other utilities.The Company has now designed for floor wise substation installation.

• CO2 Recovery and Reaction with Algae

The Company needs to have a long term strategy for CO2 mitigation. In addition toimproved energy efficiency, use of ultra super critical technology and high efficiencycombined cycle plants using natural gas, active CO2 mitigation may be required. TheCompany has ruled out CO2 Capture and Sequestration because it is very expensive, energyintensive and will result in a tariff increase of 70 to 80%. Therefore, the Company hasdecided to build a pilot plant to recover CO2 from the flue gas after the SO2 scrubber ofUnit 5 at Trombay and to react it with algae to create biomass as a supplementary fuel.Third generation solvents will be tested in this pilot plant (10 TPD CO2 equivalent to 0.5MW) so that the energy penalty of CO2 recovery is cut down by 50%. The concentrated CO2will be reacted with pre-selected algae so that the capital and operating costs of thePhoto Bio Reactor (PBR) is reduced by more than 50% as compared to those when using fluegas with 12% CO2 in the PBR.

• Fuel Cells with Methanol

The Company has been examining various technologies for distributed power systems inthe range of 1 kW to 5 kW. These can be used for telecom towers, for urban rich familiesas backup systems and once their costs are reduced when widely used, for the ruralcommunities who do not have power. One such technology that is being closely reviewed isDirect Methanol Fuel Cells (DMFCs). Methanol supply is, currently, far ahead of the demandworldwide and is expected to be so for 10 years. At current prices, if DMFCs are made inIndia, power can be produced at less than Rs. 10 / kWh. The purpose of this applied R& D project is to cut the capital costs down to USD 1.5 / W and to ensure that theCompany has a reliable supply of methanol.

• Microwave drying of coal

Studies have been carried out for utilizing microwave for moisture removal from coal.Preliminary studies indicate favourable results. Techno-economic analysis of the overallsystem for implementation is being taken up at a lab scale.

• Geo-Exchange Cooling

Field experiments have been conducted for heat rejection to the ground. To reduce /minimise the requirement of cooling water, the ground is being used as a sink andexperiments with buried pipes have been carried out to determine the potential of heatloss to the ground. Preliminary results show a heat loss of about 5 degrees on an average.The hardware for these experiments is further being optimsed.

• Introduction of 33 kV Isolator Ring Main Units (RMUs) for the first time in TataPower distribution network

33 kV Isolator RMUs have been installed at the Dahisar and Mira Road distributionsubstation (DSS) for capacity augmentation and easy isolation of the feeders in case ofemergency. These RMUs are operated from remote location on the existing distributionautomation system. Earlier, 33 kV source cables for Mira Road DSS had limited the firmcapacity of both DSS to 17 MVA only. To strengthen the existing network and to improve thereliability between Dahisar and Mira Road substations, the 33 kV ring network using gasinsulated RMUs has been installed.

• Ceramic pulley lagging on coal conveyor belts in Trombay

The original rubber lagging of coal conveyor belt in one of the junction towers, whichwas imported from South Africa, had worn out completely. The absence of lagging resultedin belt slippage on drive pulley and heavy vibrations to junction tower. The estimatedperiod required for replacement of pulley lagging job was at least nine days which couldinvolve removal of pulley, fixing of lagging and installing back the removed pulley withdrive alignment. Options were explored to look for non-conventional or innovativesolutions to achieve the desired goal of pulley lining with reduced cycle time. Theceramic pulley lagging was adapted for the pulley and the job could be completed within 24hours without necessity of removing the pulley.