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NHPC Ltd.
Change Company : 
Chairman : R S T Sai Industry : Power Generation/Distribution
Last Price Today's Change Open Prev Close Day's Range 52 Week Range
21.70 0.75 20.95 20.95 (22.30)   (20.95) (29.60)   (15.90)
BSE Code 533098
ISIN Demat INE848E01016
Book Value (Rs.) 24.10
Dividend Yield (%) 1.38
Market Cap (Rs Mn) 240233.51
P/E 27.44
EPS (Rs.) 0.79
Face Value (Rs.) 10
Volume 2112272.00
March 2014 Select Base Year :

REPORT ON CORPORATE GOVERNANCE

1. Company's philosophy on Corporate Governance

Your Company has established a framework of Corporate Governance which emphasizes on commitment to quality of governance, transparency, disclosures, maximization of stakeholders' wealth and Corporate Social Responsibility. Your Company's Management recognizes its role as a trustee on behalf of the stakeholders of the Company. At NHPC, management is taking all possible steps to fulfil its commitment in a judicious, fair and transparent manner. Management believes that Corporate Governance is a way of life rather than a mere legal compulsion.

Besides adhering to provisions of Listing Agreement, we also follow the Guidelines on Corporate Governance for CPSEs issued by Department of Public Enterprises (DPE), Government of India.

2. Board of Directors

(i) Composition & Category of Directors:

NHPC Limited is a Government Company as defined under Section 2(45) of the Companies Act, 2013 as 85.96% of the total paid-up share capital of the Company is held by the President of India.

In terms of the Articles of Association of the Company, the strength of the Board shall not be less than four and not more than fifteen Directors, provided that the number of Independent Directors in any case shall not be less than half of the actual strength of the Board.

Presently, the Board of NHPC Limited comprises Chairman and Managing Director (CMD), Functional Directors, Government Nominee Directors and Independent Directors. As on 31st March, 2014, there were fourteen Directors, of which five were Functional Directors including Chairman and Managing Director, two Government Nominee Directors and seven Independent Directors. Shri G. Sai Prasad, Joint Secretary (Thermal), Ministry of Power was holding additional charge of Chairman and Managing Director till 7th June, 2014. Further, Ministry of Power vide letter no. 9/2/2013-NHPC dated 6th June, 2014 entrusted the additional charge for the post of Chairman & Managing Director, NHPC to Shri R. S. T. Sai, Chairman & Managing Director, THDC India Limited from the date of taking over the charge of Chairman & Managing Director, NHPC. Shri R. S. T. Sai assumed the additional charge of Chairman & Managing Director, NHPC w.e.f. 8th June, 2014. The composition of the Board of Directors as on 31st March, 2014 is given in Table 1.

(ii) Details of Board Meetings held:

Fifteen meetings of the Board of Directors were held during the year 2013-14. At least one Board meeting was held every three months and the maximum time interval between any two meetings did not exceed three months. Details of the Board meetings held during 2013-14 are given in Table 4.

(iii) Age limit and tenure of Directors: The age limit for Functional Directors is Sixty years. The Functional Directors are appointed for a period of five years from the date of taking over the charge or the date of superannuation of the incumbent or untill further orders from the Government of India, whichever event occurs earlier.

Government Nominee Directors representing Ministry of Power, Government of India, retire from the Board at the discretion of the nominating authority or on ceasing to be officials of the Govt. of India.

Independent Directors are appointed by Government of India usually for a tenure of three years.

(iv) Resume of Directors: The brief resume of Directors seeking appointment and/or re-appointment including nature of their experience in specific functional areas, names of companies in which they hold directorship and membership/chairmanship of Board/Committee is appended to the notice calling the Annual General Meeting. In addition to above, brief profiles of all the Directors are provided elsewhere in this Annual Report.

(v) Board Meetings, Committee Meetings and Procedures:

(A) Decision-making process:

The Company has laid down a set of guidelines for the meetings of the Board of Directors to professionalize its corporate affairs. These guidelines help in an informed and efficient decision-making during the Board meetings.

(B) Scheduling and Selection of Agenda Items for Board/Committee Meetings:

• Meetings of the Board/Committee of Directors are convened by giving appropriate notice with the approval of the Chairman of the Board/respective Committees. Detailed agenda notes, management reports and other explanatory statements are circulated in advance amongst the members to facilitate meaningful, informed and focused decision making. Whenever urgent issues need to be addressed, meetings are called at a shorter notice or agenda notes are placed on table or resolutions are passed by circulation.

• Whenever it is not possible to attach a document to the agenda notes due to its confidential nature, or in special and exceptional circumstances, or in case of additional or supplemental information, such documents are placed on the table during the meeting.

• Agenda papers are circulated after obtaining the approval of concerned Functional Directors/CMD.

• The meetings are held at the Company offices situated in Faridabad or in New Delhi.

• As and when required, presentations are made before Board/Committee(s) on the matters related to finance, operations, human resources, etc. to enable the members to take informed decisions.

• Members of the Board have complete access to the information pertaining to the Company. Board/Committee members are also free to recommend any issue which they may consider important for inclusion in the agenda. As and when necessary, senior management officials are called during the meeting to provide additional inputs on the matters being discussed by the Board/Committee.

(C) Recording of the Minutes of the Board/Committee Meetings:

Minutes of the proceedings of each Board/Committee Meeting are duly recorded in the minutes book. The minutes of each Board/Committee Meeting are circulated amongst the members for their confirmation/information in the next meeting of Board of Directors/Committee.

(D) Follow-up Mechanism:

Based on the guidelines laid down by the Board/Committee, an Action-Taken Report on the decisions of the Board/Committee is placed in subsequent meetings of respective Board/Committee, which helps in effective reporting on follow-up and review of decisions.

(E) Compliance:

It is our endeavour to ensure that all applicable provisions of the law, rules and guidelines are adhered to, at the time of preparation of agenda notes. The Company ensures compliance of all applicable provisions of the Companies Act, 1956, Companies Act, 2013 to the extent these are applicable, SEBI Guidelines, Listing Agreement, and other statutory requirements under different laws. The Board of Directors review the legal compliance report placed before it from time to time.

The following information are usually presented to the Board of Directors either as a part of the agenda papers or are tabled/presented during the course of the Board Meeting:

• Annual operating plans, budgets and related updates.

• Capital budgets and related updates.

• Quarterly financial results of the Company.

• Minutes of meetings of audit committee and other committees of the Board.

• Minutes of board meetings of subsidiary companies.

• Statement of all significant transactions and arrangements entered into by subsidiary companies.

• Fatal or serious accidents, dangerous occurrences at different locations/units.

• Major investment, formation of subsidiaries, joint ventures and strategic alliances.

• Quarterly information with respect to purchases/works/contracts awarded on nomination basis.

• Quarterly report on compliance of various laws.

• Disclosure of interest by the directors about their directorships and committee positions held by them in other companies.

• Significant capital investment proposals or award of large contracts.

• Action taken report on matters desired by the board.

• Status of arbitration cases.

• Changes in significant accounting policies and practices along with reasons thereof.

• Any other information required to be presented to the board either for information or approval as per the requirement of applicable laws.

(vi) Code of conduct:

The Company is committed to conduct its business in accordance with the highest standards of business ethics and comply with all applicable laws, rules and regulations. It is hereby confirmed that the code of business conduct and ethics for board members and senior management personnel was complied with by all concerned during the year 2013-14.

Declaration as required under Clause 49 of listing agreement and DPE guidelines on corporate governance

All the members of the board and senior management personnel have affirmed compliance to the code of conduct for the financial year ending 31st March, 2014.

(vii) Policies for Preventing Fraud and Risk Management:

The Risk Management System is integrated and aligned with corporate and operational objectives. Risk Management is undertaken as a part of normal business practices and not as a separate task at set times. The Company has separate policies for fraud prevention and risk management.

(viii)Training of Board Members:

The company has a training policy for its Board Members which aims at building leadership qualities and providing a platform to share the knowledge, skills and experience gained by the Directors. Further, it helps Board Level functionaries to understand the business model of the Company including risk profile.

Whenever a new Director is appointed on the Board, formal induction and orientation with respect to the Company's vision, strategic direction, core values, financial matters & business operations is given through necessary documents/brochures, reports and internal policies. This helps them to familiarize with Company procedures and practices.

In addition to the above, site visits are also arranged for the Directors including Independent Director(s). Independent Directors are also considered for nomination to participate in seminars and training programmes organized by reputed institutions.

(ix) Code for Prevention of Insider Trading in Securities of NHPC Limited:

In accordance with requirements of the Securities Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, NHPC Limited has implemented a comprehensive Code for Prevention of Insider Trading in its securities. Trading window remains closed for designated employees as and when price sensitive information is about to be placed before the Board.

3. Committees of the Board of Directors

The Board has constituted different Committees to look after various aspects of business. The following standing Committees have been constituted by the Board:

1. Audit Committee.

2. Stakeholders' Relationship Committee.

3. Nomination and Remuneration Committee.

4. Committee on Corporate Social Responsibility (CSR) and Sustainability.

5. Committee of Directors on Contracts.

6. Committee of Directors for Allotment and Post-allotment Activities of NHPC Securities.

7. Committee of Directors for Self-Insurance Fund.

8. Projects Investment Committee.

9. Committee on Management Controls.

10. Committee of Directors - Appellate Authority.

3.1 Audit Committee

The composition, quorum, terms of reference, etc. of the Audit Committee is in line with the Companies Act, 2013, provisions of Listing Agreement and Guidelines on Corporate Governance issued by Department of Public Enterprises, Govt. of India. As on 31st March, 2014, the Audit Committee comprised the following members:

Meetings and Attendance:

The Committee met six times during the year on 14th May 2013, 27th May 2013, 30th July 2013, 16th September 2013, 11th November 2013 and 31st January, 2014 respectively. Details of the Audit Committee Meetings attended by members are given in Table 5.

*Shri D. P. Bhargava, Director (Technical) and Shri J. K. Sharma, Director (Projects) were appointed on the Audit Committee by the Board in its 369th meeting held on 17th January, 2014.

Director (Finance), Head of Internal Audit department, Statutory Auditors and Cost Auditors were invited to the meetings of Audit Committee. Senior officers were also invited as and when required to provide necessary inputs to the Committee.

Shri A. K. Mago, Independent Director chaired all the meetings held till 17th January, 2014 during the financial year 2013-14. The meeting held on 31st January, 2014 was chaired by Shri A. Gopalakrishnan, Independent Director. The time interval between any two Audit Committee meetings had not exceeded three months during financial year 2013-14. Director (Finance) and head of Internal Audit department were present in all Audit Committee Meetings held during the year as invitees. The Company Secretary acted as the Secretary to the Committee. The Chairman of the Audit Committee was present in the last Annual General Meeting of the Company to answer shareholders' queries.

Terms of reference of Audit Committee:

The Board in its 374th meeting held on 7th July, 2014 altered the terms of reference of Audit Committee in line with the Companies Act, 2013, which inter-alia includes:

1. Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

2. Recommending fixation of audit fees to the Board.

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

4. Reviewing, with the management, the annual financial statements and auditor's report thereon before submission to the board for approval, with particular reference to:

a) Matters required to be included in the Directors' Responsibility Statement to be included in the Board's report;

b) Changes, if any, in accounting policies and practices and reasons for the same;

c) Major accounting entries involving estimates based on the exercise of judgment by management;

d) Significant adjustments made in the financial statements arising out of audit findings;

e) Compliance with listing and other legal requirements relating to financial statements;

f) Disclosure of any related party transactions; and

g) Qualifications in the draft audit report.

5. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval.

6. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems.

7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

8. Discussion with internal auditors and/or auditors of any significant findings and follow-up there on.

9. Reviewing the findings of any internal investigations by the internal auditors/auditors/agencies into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.

11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.

12. To review functioning of the Whistle Blower mechanism.

13. To review the follow-up action on the audit observations of the Comptroller & Auditor General of India (C&AG) audit.

14. To review the follow-up action taken on the recommendations of the Parliament's Committee on Public Undertakings (COPU).

15. Provide an open avenue of communication between the Independent Auditors, Internal Auditor and the Board of Directors.

16. Approval or any subsequent modification of transactions of the Company with related parties.

17. Review with the Independent Auditor the coordination of audit efforts to assure completeness of coverage, reduction of redundant efforts, and the effective use of all audit resources.

18. Consider and review the following with Independent Auditor and management:

- The adequacy of internal controls, including Computerized Information System Controls and Security, and

- Related findings and recommendations of the Independent Auditor and Internal Auditor, together with management responses.

19. Consider and review the following with management, Internal Auditor and Independent Auditor:

- Significant findings during the year, including the status of previous audit recommendations, and

- Any difficulties encountered during audit work, including any restrictions on the scope of activities or access to required information.

20. Review and monitor the auditor's independence and performance, and effectiveness of audit process.

21. Scrutiny of inter-corporate loans and investments.

22. Valuation of undertakings or assets of the Company, wherever it is necessary.

23. Evaluation of internal financial controls and risk management systems.

24. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/ prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.

25. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee pursuant to the provisions of the Companies Act 2013, Listing agreement and Corporate Governance Guidelines issued by DPE.

3.2 Stakeholders' Relationship Committee

The Board in its 374th meeting held on 7th July, 2014 changed the nomenclature of "Shareholders' Grievance Committee" to "Stakeholders' Relationship Committee" and altered its terms of reference in line with the Companies Act, 2013.

The Committee has been re-constituted by the Board in its 369th meeting held on 17th January, 2014. As on 31st March, 2014, the Committee comprised the following members:

i) Shri R. Jeyaseelan Independent Director - Chairman

ii) Shri A. B. L. Srivastava Director (Finance)

iii) Shri A. Gopalakrishnan Independent Director

Meetings and Attendance:

The Committee met twice during the year on 22nd July, 2013 and 10th March, 2014 respectively. Details of Committee Meetings attended by members are given in Table 6.

Table 6: Committee meetings

*Shri A. Gopalakrishnan, Independent Director and Shri R. Jeyaseelan, Independent Director were appointed on the Committee by the Board in its 369th meeting held on 17th January, 2014, in place of Shri Shantikam Hazarika, Independent Director and Shri Ashoke Kumar Dutta, Independent Director.

Terms of Reference:

1. The Stakeholders' Relationship Committee shall consider and resolve the grievances of the security holders of the company including complaints related to transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends.

2. Carrying out any other function as required by the provisions of the Companies Act, 2013, Listing agreement and Corporate Governance Guidelines issued by DPE.

Name and Designation of Compliance Officer:

Shri Vijay Gupta, Company Secretary is the Compliance Officer in terms of Clause 47(a) of the Listing Agreement.

Shareholders' Grievances:

During the financial year ended on 31st March, 2014, Company has attended grievances of its shareholders' expeditiously except for the cases constrained by disputes or legal impediments. The details of complaints received and resolved during the year are given in Table 7.

Investor complaints shown pending as on 31st March, 2014 have been attended subsequently.

SEBI Complaints Redress System (SCORES) - Online Portal of SEBI for lodging complaints against Listed Companies

Securities and Exchange Board of India (SEBI) has a web based complaints redressal system 'SCORES', through which a shareholder can lodge his/her grievances against a Company and check the status of the complaint. On registration of a complaint, a unique complaint registration number is allotted for future reference and tracking. The concerned entity (Intermediary or Listed Company) uploads Action Taken Report on the complaints electronically, which can be viewed by SEBI as well as by the complainant. The concerned entity and the complainant can also seek and/or provide clarifications online to each other. SEBI disposes the complaints if it is satisfied that the complaint has been adequately redressed.

An investor, who is not familiar with SCORES or does not have access to SCORES, can lodge the complaint(s) in physical form.

During the year 2013-14, shareholders' complaints received through SCORES have been promptly attended to and Action Taken Reports (ATRs) on these complaints as received from Registrar and Transfer Agent have been submitted to the SEBI through SCORES.

Number of pending share transfers:

No share transfer request was pending as on 31st March, 2014.

Share transfers have been affected during the year well within the time prescribed by the Stock Exchanges and a certificate to this effect duly signed by a Practicing Company Secretary has been furnished to Stock Exchanges.

3.3 Nomination & Remuneration Committee

NHPC being a Central Public Sector Undertaking, the appointment, tenure and remuneration of its Directors are decided by the President of India. As per the provisions of DPE Guidelines on Corporate Governance, a Remuneration Committee was constituted to decide the annual bonus/variable pay pool and policy for its distribution across the executives and non-unionized supervisors, within the prescribed limits. The Remuneration Committee has been re-constituted by the Board in its 369th meeting held on 17th January, 2014. The Committee comprised the following members as on 31st March, 2014:

i) Shri G. S. Vedi Independent Director

ii) Shri Shantikam Hazarika Independent Director

iii) Shri Ashoke Kumar Dutta Independent Director

iv) Shri R. S. Mina Director (Personnel)

The Board in its 374th meeting held on 7th July, 2014 changed the nomenclature of "Remuneration Committee" to "Nomination & Remuneration Committee" and altered its terms of reference in line with the Companies Act, 2013.

Meetings and Attendance:

The Committee met twice during the year on 23rd July, 2013 and 16th September, 2013. Details of the meetings of the Committee attended by the members are given in Table 8.

*Shri R. S. Mina, Director (Personnel) was appointed on the Remuneration Committee by the Board in its 369th meeting held on 17th January, 2014.

Terms of reference:

1. To formulate the criteria for determining positive attributes and independence of a director.

2. To recommend distribution of the Annual Bonus/Performance Related Pay (PRP) and policy for its distribution across the Board and below Board level employees including key managerial personnel.

3. To formulate the criteria for evaluation of Independent Directors and the Board.

4. To devise a policy on Board diversity.

5. To identify persons who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board their appointment and removal.

6. To examine and recommend other allowances and perks, etc. to the Board of Directors for approval.

7. Carrying out any other function as required by the provisions of the Companies Act, 2013, Listing agreement and Corporate Governance Guidelines issued by DPE.

3.4 Committee on Corporate Social Responsibility (CSR) and Sustainability

In line with DPE Guidelines on CSR and Sustainability for CPSEs, the Board in its 359th Meeting held on 29th June, 2013 has

constituted Committee on Corporate Social Responsibility (CSR) and Sustainability headed by an Independent Director. Further, the Board in its 369th meeting held on 17th January, 2014 reconstituted the above Committee.

As on 31st March, 2014, the Committee on Corporate Social Responsibility (CSR) and Sustainability comprised the following members:

i) Shri Atul Kumar Garg Independent Director - Chairman

ii) Shri D. P. Bhargava Director (Technical)

iii) Shri R. S. Mina Director (Personnel)

The Board in its 374th meeting held on 7th July, 2014 appointed Shri Mukesh Jain, Joint Secretary (Hydro), Ministry of Power on the Committee.

Meetings and Attendance:

The Committee met five times during the year on 24th July, 2013, 26th August, 2013, 25th October, 2013, 6th January, 2014 and 30th January, 2014. Details of the meetings of the Committee on Corporate Social Responsibility (CSR) and Sustainability attended by the members are given in Table 9.

Terms of Reference:

The terms of reference of the Committee of Directors on Contracts are as under:

(a) Award of Letter of Intent/contracts or making commitments referred to at 5 (a) (i), (ii) and (iii) of Annexure-A of Delegation of Powers (Powers excluded/excepted from the Delegation of Powers to the CMD, NHPC Limited) for contract amounts exceeding rupees hundred crore but not exceeding rupees two hundred crore.

(b) Variations in quantities with respect to quantities indicated in the Bill of Quantity (BOQ) of the Contract Agreement, introduction of new item(s), substitution of one item in the BOQ by another, and deviations from the terms of the contract resulting cumulatively in an increase in the contract value approved by the Board by more than 25 per cent or more than Rs. 75 crore but within Rs. 200 crore, whichever is less excluding increases already built in the contract agreement due to price variation, provision for contingencies, etc. and also due to new statutory requirement or changes in existing statutory requirements.

(c) Payments of idle charges, hire charges and interest to contractor for delay not attributable to contractor and not covered by force majeure of value not exceeding rupees ten crore.

(d) Acceptance of disputed claims of the value not exceeding rupees ten crore.

The Board in its 374th meeting held on 7th July, 2014 dissolved the Committee of Directors on Contracts.

3.6 Committee of Directors for Allotment and Post-allotment Activities of NHPC Securities

The Board in its 372nd meeting held on 1st April, 2014 altered the terms of reference of 'Committee of Directors for Allotment and Post- Allotment Activities of NHPC Securities'. As on 31st March, 2014, the Committee comprised the following members:

i) Shri A. B. L. Srivastava Director (Finance) - Chairman

ii) Shri D. P. Bhargava Director (Technical)

iii) Shri R. S. Mina Director (Personnel)

Meetings and Attendance:

The Committee met twenty six times during the year. Details of the meetings of the Committee of Directors for Allotment and Post-Allotment Activities of NHPC Securities attended by members are given in Table 11.

Terms of Reference:

1. Issue of certificate(s) relating to securities;

2. Transfer and transmission of securities;

3. Re-materialization of securities certificate(s);

4. Issue of duplicate certificate(s) relating to securities; and

5. Consolidation/splitting of NHPC's securities.

3.7 Committee of Directors for Self-Insurance Fund

As on 31st March, 2014, the Committee comprised the following members:

i) Shri A. B. L. Srivastava Director (Finance)

ii) Shri D. P. Bhargava Director (Technical)

iii) Shri J. K. Sharma Director (Projects)

iv) Shri R. S. Mina Director (Personnel)

Meetings and Attendance:

The Committee met once during the year on 19th November, 2013. The meeting was attended by all members except Shri J. K. Sharma.

Terms of reference:

The Committee has been authorized to invest the amount available with the self insurance fund in government securities, public sector bonds, and time deposits with nationalized banks. The Committee is also authorized to sell/realize the proceeds of such investments as deemed fit, considering the requirement of funds to compensate the losses occurred.

3.8 Projects Investment Committee

The Projects Investment Committee has been constituted by the Board in its 369th meeting held on 17th January, 2014. As on 31st March, 2014, the Projects Investment Committee comprised the following members:

i) Shri A. K. Mago Independent Director

ii) Shri Ashoke Kumar Dutta Independent Director

iii) Shri A. Gopalakrishnan Independent Director

iv) Shri D. P. Bhargava Director (Technical)

v) Shri J. K. Sharma Director (Projects)

No meeting of Projects Investment Committee was held during the year ended on 31st March, 2014

Terms of reference:

The Committee shall examine and make recommendations to the Board on proposals for investment in new/expansion Projects and Feasibility Reports of new projects.

Meetings and Attendance:

The Committee met once during the year on 31st January, 2014. The meeting was attended by all members.

Terms of reference:

The Committee shall establish transparent and effective system of internal monitoring. This committee inter alia, review the management control systems, significant deviations in project implementation and construction, operation & maintenance budgets, etc.

3.10 Committee of Directors - Appellate Authority

The Vigilance Committee has been constituted by the Board in its 369th meeting held on 17th January, 2014. Further, the Board in its 372nd meeting held on 1st April, 2014 changed the name of Vigilance Committee to 'Committee of Directors - Appellate Authority'. As on 31st March, 2014, the Committee comprised the following members:

i) Shri Shantikam Hazarika Independent Director - Chairman

ii) Shri Atul Kumar Garg Independent Director

iii) Shri Ashoke Kumar Dutta Independent Director

iv) Shri R. S. Mina Director (Personnel)

Meetings and Attendance:

The Committee met once during the year on 14th February, 2014. The meeting was attended by all members except Shri Ashoke Kumar Dutta.

Terms of reference:

The Committee is to act as an Appellate Authority for the cases submitted before it in terms of CDA rules.

Committee of Directors for Investment of IPO Proceeds

This Committee was dissolved by the Board in its 369th meeting held on 17th January, 2014.The Committee of Directors for investment of IPO proceeds comprised the following members as on the date of dissolution:

i) Shri Atul Kumar Garg Independent Director - Chairman

ii) Shri A. B. L. Srivastava Director (Finance)

iii) Shri D. P. Bhargava Director (Technical)

Meetings and Attendance:

The Committee met thrice during the year on 7th June, 2013, 10th July, 2013 and 26th August, 2013. Details of the meetings of the Committee of Directors for Investment of IPO Proceeds attended by members are given in Table 12.

A separate meeting of Independent Directors without the presence of any Functional Directors, Government Nominee Directors and management personnel of NHPC Limited, was held on 10th March, 2014 under the Chairmanship of Shri A. K. Mago. All Independent Directors were present in the meeting except Shri Ashoke Kumar Dutta and Shri A. Gopalakrishnan.

4. Remuneration of Directors

The remuneration payable to Functional Directors including Chairman & Managing Director is decided by the Government of India. As per DPE Guidelines, the Board of Directors of the Company is empowered to determine the sitting fee payable to Independent Directors within the ceiling prescribed under the Companies Act, 1956.

As per the decision of the Board in terms of extant guidelines issued by the Govt. of India, an amount of f 15000/- per meeting is being paid to Independent directors as sitting fees for attending meeting of the Board or Committees thereof. The Board in its 374th meeting held on 7th July, 2014 enhanced the sitting fee from f 15,000 to f 20,000.

Details of remuneration of functional Directors of the Company paid for the financial year 2013-14 are given in Table 13.

* Benefits include medical reimbursement, leave encashment, perquisites, lease rent, EPF (MC) and pension fund.

"Performance Related Pay (PRP) paid to Functional Directors is based on the incentive scheme of the Company as per DPE Guidelines.

The Company had not issued any Stock Options during the year 2013-14.

Details of payments of sitting fee paid to Independent Directors for the financial year 2013-14 are given in Table 14.

5. Subsidiary Companies

(i) NHDC LIMITED: NHDC Limited is a Subsidiary Company of NHPC Limited. NHPC holds 51 per cent share of the total paid-up equity share capital. During the year, the minutes of the meetings of the Board of Directors of NHDC Limited were placed before the Board of Directors of NHPC Limited. The Board of NHPC was also apprised of the significant transactions and arrangements entered into by the Subsidiary Company at periodical intervals.

NHDC is also covered under the definition of 'Material Subsidiary' as stipulated under DPE Guidelines on Corporate Governance. Shri G. S. Vedi, an Independent Director on the Board of NHPC Limited is on the Board of NHDC Limited with effect from 16th January, 2013.

Material Progress of NHDC Limited during Financial Year 2013-14:

(a) Diversification: NHDC Limited had signed a Memorandum of Understanding on 29th June, 2009 with Government of Madhya Pradesh for establishing super critical technology based 1,320 MW (2X660 MW) Rewa Thermal Power Project (RTPP), in Khandwa district of Madhya Pradesh. Proposal for Coal Linkage is already under consideration of the Government of India. NHDC has also applied for allotment of Coal Block in its endeavour to arrange coal for Rewa Thermal Power Project. The Company is also exploring the possibility of potential sites for wind & solar energy development in Madhya Pradesh.

(b) Other Activities: Government of Madhya Pradesh (GoMP) has offered NHDC to execute small & mini hydro power schemes in upper Narmada basin ranging between 10 to 25 MW. The gross capacities of these schemes are anticipated to be 100 to 150 MW. The Ministry of Power, Government of India has already accorded its approval for the draft Memorandum of Understanding between NHDC & GoMP, however the final consent from GoMP is awaited.

(ii) LOKTAK DOWNSTREAM HYDROELECTRIC CORPORATION LIMITED: Loktak Downstream Hydroelectric Corporation Limited (LDHCL) was incorporated on 23rd October, 2009. The Company was promoted as a Joint Venture between NHPC Limited and the Government of Manipur with equity shareholding of 74% and 26% respectively. The Company is not a material subsidiary as per the Guidelines on Corporate Governance for CPSEs issued by DPE. The minutes of meetings of the Board of LDHCL were placed before the Board of NHPC Limited.

All statutory clearances for execution of Loktak Downstream Hydroelectric Project have been obtained and pre-qualification of applicants for the award of contract for the execution of Project is under process.

7. Disclosures

(i) Related Party Transactions: There were no materially significant related party transactions having potential conflict with the interests of the Company at large during the Financial Year 2013-14.

Related Party Disclosures are included in the notes forming part of the accounts as per Accounting Standard - 18 notified by the Companies (Accounting Standards) Rules, 2006.

(ii) Disclosure Requirements as per Listing Agreement and DPE Guidelines on Corporate Governance: The Company has broadly complied with all the statutory requirements of the Listing Agreement with Stock Exchanges as well as regulations and guidelines prescribed by SEBI. The Company has also complied with all the requirements of the Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs) issued by Department of Public Enterprises (DPE), Government of India.

During the preceding 3 years, no penalty was imposed and/or stricture was made on it by any Stock Exchange or SEBI or any other statutory authority, on any matter related to the capital markets or issued by Government.

The periodic results and other communications are regularly published on Company's official website (www.nhpcindia.com >). Information on adoption of the non-mandatory requirements as prescribed under Listing Agreement and DPE Guidelines on Corporate Governance is provided in Annexure-A.

No presidential directives were issued to the Company during Financial Year 2013-14 and the preceding three financial years.

(iii) Accounting Treatment: In view of the Management, all applicable accounting standards are being followed in the preparation of Financial Statements. Wherever there is any deviation from the Accounting Standard, proper disclosure has been given in the notes to account.

8. CEO/CFO Certification

As required by Clause 49 of the Listing Agreement, a certificate duly signed by Shri R. S. T. Sai, Chairman & Managing Director and Shri A. B. L. Srivastava, Director (Finance), was placed before the Board of Directors at the meeting held on 7th July, 2014 and is annexed to the Corporate Governance Report as Annexure-B.

9. Means of Communication

Periodical financial results of the Company are announced with in the time specified in Listing Agreement. These results are published in the national and local dailies. While the Company did not send periodical results/records to every shareholder, these were placed on the Company's official website (www.nhpcindia.com ).

The Company has also issued official news releases on significant corporate decisions and activities which are also hosted on the Company's website.

Details of the audited/unaudited financial results as published by the Company are given in Table 16. Table 16: Audited/unaudited financial results

10. Information for Shareholders

(i) Annual General Meeting

Date: 26th September, 2014

Time: 3:00 PM

Venue: Municipal Corporation Auditorium, Faridabad

(ii) Financial calendar for year 2014-15

Particulars Date

Accounting period :1st April, 2014 to 31st March, 2015

Unaudited Financial Results for the first three quarters :Intimation to Stock Exchanges within fifteen minutes of conclusion of the Board meeting. Board Meeting to be held within forty five days from the end of each quarter.

Fourth quarter results/ annual audited financial results for the year ending on 31st March, 2015 :Intimation to Stock Exchanges within fifteen minutes of conclusion of the Board Meeting. Board Meeting to be held on or before 30th May, 2015.

AGM - 2015 : September, 2015 (Tentative)

The register of members and share transfer books of the Company will remain closed from 13.09.2014 to 26.09.2014 (both days inclusive).

(iv) Payment of Dividend

The Board of Directors of the Company has recommended a final dividend of f 0.30 per share (3% on paid up share capital) for the financial year ended 31st March, 2014.

The record date for the purpose of determining eligibility to receive dividend is 26th September, 2014 in respect of physical shares. In respect of dematerialized shares, the dividend will be payable to the "beneficial owners" of the shares whose names appear in the Statement of Beneficial Ownership furnished by National Securities Depository Limited and Central Depository Services (India) Limited as at the close of business hours on 12th September, 2014.

vi) Listing on Stock Exchanges

NHPC equity shares are listed on the following Stock Exchanges:

Bombay Stock Exchange Limited

Address: Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400001

Scrip Code: 533098

National Stock Exchange of India Limited

Address: Exchange Plaza, Plot No. C/1, G Block, Bandra (East), Mumbai - 400051

Scrip Code: NHPCEQ

ISIN : INE848E01016

ISIN : INE848E01016

The annual listing fee for the financial year 2014-15 has been paid to both National Stock Exchange of India Limited and Bombay Stock Exchange Limited before 30th April, 2014. Further, the annual custodian fee for the financial year 2014-15 has been paid to both Depositories i.e. Central Depository Services (India) Limited and National Securities Depository Limited before 31st May, 2014.

(ix) Registrar & Share Transfer Agent

M/s Karvy Computershare Private Limited,

Plot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081

Tel No.: +91 40 4465 5000 Fax No.: +91 40 2343 1551 E-mail ID: einward.ris@karvy.com

(x) Share Transfer System

Share transfer activities under physical segment are being carried out by M/s Karvy Computershare Private Limited. The share transfer system consists of activities like receipt of shares along with transfer deed from transferees, its verification, preparation of Memorandum of Transfers, etc. Share transfers are approved by Committee of Directors for allotment and post-allotment activities of NHPC securities.

Pursuant to Clause 47(c) of the Listing Agreement, certificate on half yearly basis confirming due compliance of share transfer formalities by the Company from Practicing Company Secretary have been submitted to Stock Exchanges within stipulated time.

(xi) Transfer of unpaid/unclaimed amounts to Investor Education and Protection Fund (IEPF)

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of Information regarding unpaid and unclaimed amounts lying with Companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 16th September, 2013 (date of Last Annual General Meeting) on the website of the Company (www.nhpcindia.com <http://www.nhpcindia.com>), and also on the website of Ministry of Corporate Affairs.

(xii) Buy Back of Shares by NHPC Limited

NHPC Limited has bought back 10% (123,00,74,277) of its total paid up equity share capital from existing shareholders through tender offer route during the financial year 2013-14, thereby reducing its total paid up share capital from f 12,300.74 crore to f 11,070.67 crore. After buy back, the holding of President of India has reduced from 86.36% to 85.96% of the total paid up share capital of the Company. Balance equity is held by FIIs, Mutual Funds and Indian Public.

(xiv) Dematerialization of Shares and Liquidity

The shares of the Company are in the compulsory dematerialized segment and are available for trading with both the depositories, i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). 

Share Capital Audit Report regarding reconciliation of the total issued capital, listed capital and capital held by depositories in a dematerialized form with respect to the Share Capital of the Company was obtained from the Practicing Company Secretary and submitted to the Stock Exchanges within the stipulated time.

The names and addresses of the depositories are as under:

1. National Securities Depository Limited

Trade World, 4th Floor, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013

2. Central Depository Services (India) Limited

Phiroze Jeejeebhoy Towers, 28th Floor, Dalal Street, Mumbai - 400 023

(xvi) Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, Conversion date and likely impact on equity:

NHPC has not issued any GDRs/ADRs/warrants or any convertible instruments which has likely impact on equity.

(xviii) Locations of NHPC Plants:

Bairasiul NHPC Limited, Surangani, Distt. Chamba, Himachal Pradesh – 176 317

Loktak NHPC Limited, P.O. Loktak, Komkeirap, Manipur- 795 124

Salal – I & II NHPC Limited, P.O. Jyotipuram, Via Reasi, Distt. Reasi, Jammu & Kashmir - 182 312

Tanakpur NHPC Limited, P.O. T.P.S. Campus, Banbassa, Distt. Champawat, Uttarakhand – 262 310

Chamera-I NHPC Limited, Khairi, Distt. Chamba, Himachal Pradesh – 176325

Uri-I NHPC Limited, Gingle, P.O. Mohra, Distt. Baramulla, Jammu & Kashmir- 193 122

Rangit NHPC Limited, P.O. Rangit Nagar, South Sikkim - 737 111

Chamera-II NHPC Limited, Karian Distt. Chamba, Himachal Pradesh –176310

Dhauliganga NHPC Limited, Post Box No.1, Tapovan, Dharchula, Distt. Pithoragarh, Uttarakhand - 262 545

Dulhasti NHPC Limited, Chenab Nagar, Sector-II, Kishtwar, Distt. Kishtwar, Jammu & Kashmir - 182 206

Teesta-V NHPC Limited, P.O. Singtam, East Sikkim - 737 134

Sewa-II NHPC Limited, Mashka, Distt. Kathua (J&K)

Chamera-III NHPC Limited, Village Dharwala, PO – 9, Distt. – Chamba, Himachal Pradesh – 176 311

Chutak NHPC Limited, P.O. Minji, Distt. Kargil (Ladakh), J & K – 194 103

Teesta Low Dam

Project – III

NHPC Limited, Rambi Bazar, P.O. Reang, Distt. Darjeeling (W.B.), PIN – 734 321

Nimmo Bazgo Project NHPC Limited, Alchi, Distt. Leh (Ladakh), J & K, PIN 194101

Uri II NHPC Offi ce cum Residential Complex, Nowpora, Uri, Distt. Baramulla, (J & K), PIN 193122

Parbati-III NHPC Limited, Village Behali, P. O. Larji, Distt. Kullu (H.P.), PIN 175122

(xix) Address for Correspondence:

Shri Vijay Gupta, Compliance Officer, 1st Floor, NHPC Office Complex, Sector - 33, Faridabad, Haryana - 121 003

E-mail: companysecretary@nhpc.nic.in

The phone numbers and e-mail reference for communication are given below:

Registered Office

Telephone Number 0129-2278421

Fax No.  0129-2277941

Investor Relation Cell :0129-2250437 -

E-mail ID :investorcellnhpc@gmail.com   , investorcell@nhpc.nic.in  

Public Spokesperson, Shri Jayant Kumar, Executive Director (Finance) :0129-2278232

E-mail ID:jayantkumar@nhpc.nic.in

As per Circular of the Securities & Exchange Board of India dated 22.01.2007, exclusive e-mail address for redressal of Investor Complaints is companysecretary@nhpc.nic.in

For and on behalf of Board of Directors

(R S T Sai)

Chairman and Managing Director

DIN: 00171920

Place: New Delhi

Date: 14th August, 2014

Non-Mandatory Requirements:

Besides the mandatory requirements as mentioned in the preceding pages, the status of compliance with non-mandatory requirements of the Listing Agreement and DPE Guidelines on Corporate Governance is as under:

a) The Board:

The Company is headed by Shri R. S. T. Sai who is holding additional charge of the Chairman and Managing Director in addition to his duties as Chairman & Managing Director, THDC India Limited. No Independent Director has been appointed for the period exceeding, in aggregate of 9 years, on the Board of the Company.

b) Remuneration Committee:

Please refer to paragraph 3.3 of this Report.

c) Shareholders' Rights:

A half-yearly declaration of financial performance, including a summary of significant events during the last six months is not sent individually to every shareholder. However, this information is m

d) Audit Qualification:

It is always Company's endeavour to present unqualified financial statements.

e) Training of Board Members:

Please refer to paragraph 2(viii) of this Report.

f) Mechanism for Evaluating Performance of Non-executive Board Members:

Presently, the Board of the Company comprises nine Non-executive Directors, including two Government Nominees. All of them have been appointed by the President of India through the Ministry of Power and, therefore, their performance evaluation is not done by the Board of the Company.

g) Whistle Blower Policy:

NHPC has defined and established a Whistle Blower Policy for reporting the instances of unethical/improper conduct and taking suitable steps to investigate and correct the same. No personnel have been denied access to the Audit Committee. In addition to this, a policy to prevent frauds has also been adopted by the Company for reporting on frauds or suspected frauds involving employees as well as representatives of vendors, suppliers, contractors, consultants, service providers or any other party doing any type of business with NHPC. All reports on frauds or suspected frauds are investigated with utmost speed. The mechanism for prevention of frauds is also included in the policy.

ade available on the Company's official website. Periodic financial results are published in the leading newspapers as mentioned under 'means of communication' in this Report.

d) Audit Qualification:

It is always Company's endeavour to present unqualified financial statements.

e) Training of Board Members:

Please refer to paragraph 2(viii) of this Report.

f) Mechanism for Evaluating Performance of Non-executive Board Members:

Presently, the Board of the Company comprises nine Non-executive Directors, including two Government Nominees. All of them have been appointed by the President of India through the Ministry of Power and, therefore, their performance evaluation is not done by the Board of the Company.

g) Whistle Blower Policy: NHPC has defined and established a Whistle Blower Policy for reporting the instances of unethical/improper conduct and taking suitable steps to investigate and correct the same. No personnel have been denied access to the Audit Committee. In addition to this, a policy to prevent frauds has also been adopted by the Company for reporting on frauds or suspected frauds involving employees as well as representatives of vendors, suppliers, contractors, consultants, service providers or any other party doing any type of business with NHPC. All reports on frauds or suspected frauds are investigated with utmost speed. The mechanism for prevention of frauds is also included in the policy.

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