Board of Directors. Contents

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3 Auditors M/s. R.Nagpal Associates, Chartered Accountants New Delhi Bankers/Lenders A. Indian Axis Bank Ltd. Bank of Baroda ICICI Bank Ltd. Indian Overseas Bank IDBI Bank Limited Industrial Investment Bank of India Ltd. IFCI Limited Life Insurance Corporation of India Oriental Bank of Commerce Punjab National Bank Power Finance Corporation Ltd. State Bank of Indore State Bank of Hyderabad State Bank of Mysore State Bank of India Yes Bank Ltd. B. Foreign Bayerische Hypo-und Vereinsbank AG - Germany Calyon, France Siemens Financial Services GmbH Board of Directors Jaiprakash Gaur, Founder Chairman Manoj Gaur, Chairman Sunil Kumar Sharma, Vice-Chairman S.K. Jain Gopi K. Arora B.K. Taparia B.B. Tandon B.K. Batra, IDBI Nominee B.K. Gupta, LIC Nominee Dr. Ramesh C. Vaish Dr.D.G. Kadkade G.P. Gaur Dr.R.L. Gupta S.D. Nailwal Narendra Singh Rajiv Bhardwaj J.N. Gaur, Whole-time Director & CEO Suresh Chandra, Whole-time Director R. K. Narang, Whole-time Director & CFO Contents Notice 2 Directors Report 5 Report on Corporate Governance 7 Management Discussion & Analysis Report 11 Auditors Report 12 Balance Sheet 14 Profit & Loss Account 15 Schedules (A-O) 16 Balance Sheet Abstract-Part IV of Schedule VI 24 Cash Flow Statement 24 Statement Under Section Auditors Report on Consolidated Accounts 25 Consolidated Accounts 26 Consolidated Cash Flow Statement 31 Annual Report of Subsidiary Company Jaypee Powergrid Limited 32 Proxy & Attendance Slip Registered Office JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat , Distt. Solan (H.P.) Corporate Office Sector-128, Noida Distt. Gautam Budh Nagar (U.P.) Tel. : Fax : Website & jhpl.investor@jalindia.co.in Registrar & Transfer Agents Alankit Assignments Ltd. 2E/21, Jhandewalan Extn. New Delhi Tel. : Fax : info@alankit.com

4 NOTICE NOTICE is hereby given that the Thirteenth Annual General Meeting of the Members of JAIPRAKASH HYDRO-POWER LIMITED will be held on Wednesday, the 6 th August, 2008 at A.M. at the Registered Office of the Company at JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat , Distt. Solan (H.P.) to transact the following business: Ordinary Business 1. To receive, consider and adopt the Audited Balance Sheet as at 31st March, 2008, the Profit & Loss Account for the year ended on that date and the Reports of Directors and Auditors thereon. 2. To confirm interim dividend and declare final dividend for the Financial Year To appoint a Director in place of Shri Gopi K. Arora who retires by rotation and, being eligible, offers himself for re-appointment. 4. To appoint a Director in place of Shri Manoj Gaur who retires by rotation and, being eligible, offers himself for re-appointment. 5. To appoint a Director in place of Shri Narendra Singh who retires by rotation and, being eligible, offers himself for re-appointment. 6. To appoint a Director in place of Shri S.D. Nailwal who retires by rotation and, being eligible, offers himself for re-appointment. 7. To appoint a Director in place of Shri S.K. Jain who retires by rotation and, being eligible, offers himself for re-appointment. 8. To appoint M/s. R. Nagpal Associates, Chartered Accountants, as Statutory Auditors of the Company, to hold office from the conclusion of this meeting until the conclusion of the next Annual General Meeting and to fix their remuneration. Special Business To consider and, if thought fit, to pass with or without modification(s), the following resolutions: AS ORDINARY RESOLUTIONS: 9. RESOLVED that Shri Jaiprakash Gaur be and is hereby appointed a Director of the Company, liable to retire by rotation. 10. RESOLVED that Shri B.B. Tandon be and is hereby appointed a Director of the Company, liable to retire by rotation. 11. RESOLVED THAT pursuant to the provisions of Sections 269, 198 and 309 read with Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956 and subject to such other approvals, as may be required, the consent of the Company be and is hereby accorded to the appointment of Shri Suresh Chandra as Whole-time Director of the Company for a period of five years w.e.f. 11th January, 2008 on the remuneration and terms and conditions as stated in the explanatory statement annexed to this notice. RESOLVED FURTHER that pursuant to Section 198 and all other applicable provisions of the Companies Act, 1956, the remuneration as set out in the explanatory statement annexed to this notice, be paid as minimum remuneration to Shri Suresh Chandra notwithstanding that in any financial year of the Company during his tenure as Whole-time Director, the Company has made no profits or profits are inadequate. RESOLVED FURTHER that the Board of Directors of the Company be and is hereby authorised to alter or vary the terms of appointment of the appointee including relating to remuneration, as it may at its discretion, deem fit from time to time so as not to exceed the limits specified in Schedule XIII to the Companies Act, 1956 (including any statutory modification or re-enactment thereof for the time being in force) or any amendments made thereto. 12. RESOLVED THAT pursuant to Section 293 (1) (a) and other applicable provisions, if any, of the Companies Act, 1956 and provisions of the Articles of Association of the Company, the consent of the Company be and is hereby accorded to the Board of Directors of the Company for mortgaging and/or charging immovable and movable properties of the Company as may be required by IFCI Ltd. and IDBI Bank Ltd. in consultation with other lenders, on pari-passu basis, to secure the following financial assistance sanctioned by them for pre-paying the existing high cost debts :- (i) Rupee Term Loan of Rs. 50 crores lent/agreed to be lent by IFCI Ltd.; and (ii) Rupee Term Loan of Rs.100 crores lent/agreed to be lent by IDBI Bank Ltd., together with interest, compound interest, additional interest, liquidated damages, premia on pre-payments, costs, charges, expenses and other moneys payable by the Company to IFCI Ltd. and IDBI Bank Ltd., under the respective Loan Agreement(s) entered/to be entered into by the Company in respect of the aforesaid financial assistance(s). RESOLVED FURTHER that the mortgage/charge created/to be created and/or all agreements/documents executed/to be executed and all acts done by and with the authority of the Board of Directors be and are hereby confirmed and ratified. Place : Noida Date : 25th April, 2008 Notes : By Order of the Board For JAIPRAKASH HYDRO-POWER LTD. R.K. NARANG Whole-time Director & CFO (i) Relevant explanatory statement pursuant to Section 173(2) of the Companies Act, 1956, in respect of resolutions set out under item nos.9 to 12 is appended below. ii) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUST BE RECEIVED BY THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE TIME OF MEETING. (iii) Corporate Members intending to send their authorized representatives are requested to send a duly certified copy of the Board Resolution authorizing such representatives to attend and vote at the Annual General Meeting. (iv) All documents referred to in the Notice and accompanying explanatory statement are open for inspection at the Registered Office of the Company on all working days, except holidays, between A.M. and 1.00 P.M. upto the date of the Annual General Meeting. 2

5 (v) The Register of Members and Share Transfer Books will remain closed from Saturday, the 2nd August, 2008 to Wednesday, the 6th August, 2008 (both days inclusive) for payment of final dividend. The dividend in respect of equity shares, as recommended by the Board of Directors, if declared at the meeting, will be payable to the Shareholders whose names appear in the Company s Register of Members as at the close of business hours on Friday, the 1st August, In respect of dematerialized shares, the dividend will be payable to Beneficial Owners of the equity shares whose names appear in the Statement of Beneficial Ownership, as at the close of business hours on Friday the 1st August, 2008, furnished by the National Securities Depository Limited and Central Depository Services (India) Limited. (vi) Members who are holding shares in physical form are requested to notify the change in their respective addresses or Bank details to the Registrar and Transfer Agent (RTA) and always quote their Folio Numbers in all correspondence with the Company and RTA. In respect of holding in electronic form, Members are requested to notify any change in addresses or Bank details to their respective Depository Participants. (vii) Any query relating to Accounts must be sent to the Company s Registered Office at JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat , Distt. Solan (H.P.) or Corporate Office at Sector-128, Noida at least 7 days before the date of the Meeting. (viii) (a) Additional details in terms of Clause 49 of Listing Agreement in respect of Directors being re-appointed are given hereunder. (b) The shareholding of all the Directors in the Company (including those of who are being re-appointed) have been disclosed in the Report on Corporate Governance. Shri Gopi K. Arora, aged 74 years holds a Master s Degree in History from Allahabad University and a Master s Diploma in Public Administration from Harvard University, Boston, USA. Shri Gopi K. Arora joined the Indian Administrative Services (IAS) in 1957 and has over 35 years of service with the Government of India. While in IAS, he has served in various positions in the Government of India including as the Economic Minister with the Embassy of India, Moscow, Russia from 1975 to 1978, as a Joint Secretary in 1983, as an Additional Secretary from 1984 to 1987 and as a Special Secretary in 1987 with the Office of the Prime Minister, Government of India. Further, he has also served as a Secretary in the Ministry of Information and Broadcasting, Government of India in 1988, as Finance Secretary with Ministry of Finance, Government of India from 1989 to 1990 and as the Executive Director representing India, Bangladesh, Bhutan and Sri Lanka at the International Monetary Fund, Washington D.C. from 1990 to Shri Gopi K. Arora is on the Board of Alps Industries Limited, Bengal Ambuja Housing Development Limited, ibn 18 Broadcast Limited, HGS India Limited, IL&FS Transportation Network Limited, Infrastructure Leasing and Financial Services Limited, Jaiprakash Associates Limited, Jaiprakash Power Ventures Limited, Jaypee Karcham Hydro Corporation Limited, Noida Toll Bridge Company Limited, Network 18 Media & Investments Limited, Roto Pumps Limited, Television Eighteen India Limited, Sowar Private Limited, Sara Fund Trustee Co. Pvt. Ltd., Krishvidur Services Private Limited and Capital 18 Acquisition Corp. (Foreign Co.). Shri Manoj Gour, aged 44 years, holds a Degree in Civil Engineering from Birla Institute of Technology and Science, Pilani. Shri Manoj Gaur is the Executive Chairman of Jaiprakash Associates Limited and has 22 years experience of various business of the Jaypee Group, i.e. Engineering Construction, Hydro-Power, Cement, Real Estate, Information Technology, Hospitality and Education initiatives. He is Chairman of Jaypee Infratech Limited, Jaiprakash Enterprises Limited & Gujarat Anjan Cement Limited, Vice-Chairman of Jaypee Hotels Ltd, Jaypee Karcham Hydro Corporation Limited & Jaypee Powergrid Limited, Managing Director of Bhilai Jaypee Cement Limited and Director of Jaiprakash Power Ventures Limited, Gujarat Jaypee Cement & Infrastruture Limited, Jaypee Ganga Infrastructure Corporation Limited, Madhya Pradesh Jaypee Minerals Limited, Himalayan Expressway Limited, Jaypee Arunachal Power Limited, and also Director of Jaypee Ventures Private Limited, Manumanik Estates Private Limited, Avni Housing Private Limited, Indesign Enterprises Private Limited and JPSK Sports Private Limited. Shri Narendra Singh, aged 74 years, holds Degree in Civil Engineering from University of Roorkee (now Indian Institute of Technology, Roorkee). Shri Narendra Singh has over 43 years experience in surveys, investigations, planning, detailed designing and construction of hydro-electric and multi-purpose river valley projects. He specialises in design and construction of underground works, powerhouses and hydraulic equipments. Shri S.D. Nailwal, aged 60 years, is a Fellow Member of the Institute of Company Secretaries of India and has rich experience of over 39 years in the fields of Secretarial, Project Financing, Corporate Planning and Finance & Accounts. Shri S.D. Nailwal is Whole-time Director & CFO of Jaiprakash Associates Limited Shri S.K. Jain, aged 70 years, is a Science Graduate and has over 47 years extensive experience of execution of various Engineering projects. Shri S.K. Jain oversees the construction activities and the hydro-power wing of the Jaypee Group. Shri Jain is Vice-Chairman of Jaiprakash Associates Limited, Whole-time Director in Jaypee Ventures Pvt.Ltd., Director of Jaypee Ganga Infrastructure Corporation Limited and Essjay Enterprises Pvt. Ltd. EXPLANATORY STATEMENT Following explanatory statements, pursuant to Section 173(2) of the Companies Act,1956 set out the material facts relating to item nos. 9 to 12 mentioned in the accompanying notice dated 25th April, Item 9 Shri Jaiprakash Gaur was appointed as additional Director w.e.f. 29th October, Pursuant to the provisions of Section 260 of the Companies Act, 1956, he holds office upto the date of forthcoming Annual General Meeting. The Company has received a notice in writing alongwith a deposit of Rs. 500/- from a member of the Company in terms of Section 257 of the Companies Act, 1956, signifying his intention to propose the candidature of Shri Jaiprakash Gaur for the office of Director at the forthcoming Annual General Meeting. Shri Jaiprakash Gaur, aged 77 years, is the Founder of the Jaypee Group and Founder Chairman of the Promoter Company i.e. Jaiprakash Associates Limited. Shri Jaiprakash Gaur, an alumnus of the University of Roorkee (now the Indian Institute of Technology, Roorkee), has been nominated by the President of India as Chairman, 3

6 Board of Governors of IIT Roorkee for 2 terms of 3 years each. Shri Jaiprakash Gaur has spearheaded the growth of the Jaypee Group that had an aggregate turnover of over Rs. 44,067 million in Financial Year Shri Jaiprakash Gaur is guiding force to the Group. Shri Jaiprakash Gaur is on the Board of Jaiprakash Associates Limited, Jaypee Ganga Infrastructure Corporation Ltd., Jaiprakash Power Ventures Limited, Jaypee Hotels Limited, Jaypee Infratech Limited, Ceekay Estates Private Limited, Manumanik Estates Private Limited, Samsun Estates Private Limited, Dhara Infra Developers Private Limited, Sunvin Estates Private Limited and Jaypee Ventures Private Ltd. None of the Directors, except the appointee himself and Shri G.P. Gaur, being his brother and Shri Manoj Gaur, being his son, may be deemed to be concerned or interested in the Resolution. The Directors commend the Resolution for approval of the Members. Item 10 Shri B.B. Tandon was appointed as additional Director w.e.f. 29th October, Pursuant to the provisions of Section 260 of the Companies Act, 1956, he holds office upto the date of forthcoming Annual General Meeting. The Company has received a notice in writing alongwith a deposit of Rs. 500/- from a member of the Company in terms of Section 257 of the Companies Act, 1956, signifying his intention to propose the candidature of Shri B.B. Tandon for the office of Director at the forthcoming Annual General Meeting. Shri B.B. Tandon, aged 67 years, holds Master s Degree in Economics and is LL.B. from Delhi University. He also holds the Associate Certificate of Indian Institute of Bankers (CAIIB). He was member of Indian Administrative Services (IAS) from 1965 to Shri B.B. Tandon had held various important positions in the Government of India and State Govt. of Himachal Pradesh (HP) including Principal Secretary, Power and Chairman, Himachal Pradesh State Electricity Board. Shri B.B. Tandon handled several key assignments in the Cabinet Secretariat, Department of Defence Production and Supplies, Ministry of Industry and Ministry of Mines. He was Chief Election Commissioner of India in Shri B.B. Tandon is on the Board of Ambuja Cement Foundation, Sagar Sugars & Allied Products Limited, Nagarjuna Fertilisers & Chemicals Limited, Cosmo Ferrites Limited, Precision Pipes & Profiles Limited, Adani Power Limited, Abhishek Global Ventures Limited, Birla Corporation Limited, Oriental Carbon & Chemicals Limited, The Dhampur Sugar Mills Limited, Smart Digivision Private Limited and Canara Bank. None of the Directors, except the appointee himself, may be deemed to be concerned or interested in the Resolution. The Directors commend the Resolution for approval of the Members. Item 11 Shri Suresh Chandra was appointed as Director w.e.f. 11th January, 2008 in the casual vacancy caused due to the resignation of Shri Har Prasad. Shri Suresh Chandra was also appointed as Wholetime Director of the Company. Shri Suresh Chandra aged 64 years, is an Electrical Engineer and has vast experience of over 43 years in planning, implementation, operation and maintenance of Hydro Power Project. The Board considers that the appointment of Shri Suresh Chandra as Whole-time Director of the Company for a period of five years w.e.f. 11th January, 2008 on the following remuneration, is in the best interest of the Company. Basic Salary : Rs.1,00,000/- per month in the Pay-Scale of & Pay-Scale Rs.1,00,000 12,500 1,62,500 15,000-2,37,500 (next increment shall be admissible on 11 th January, 2009 and thereafter on every 11 th January of the subsequent year) Perquisites : Besides the above salary, Shri Suresh Chandra shall be entitled to the perquisites which may include accommodation/hra, reimbursement of expenses for gas, electricity, water and furnishings, medical reimbursement, LTC, personal accident insurance, use of car and telephone, contribution to provident fund, superannuation fund or annuity fund, gratuity payable at a rate not exceeding half a month s salary for each completed year of service and leave encashment at the end of the tenure, etc. Perquisites would be restricted to an amount equal to the annual salary or the amount of entitlement in accordance with Schedule XIII to the Companies Act, 1956 as amended from time to time, whichever is less. None of the Directors except the appointee himself, may be deemed to be concerned or interested in the Resolution. This explanatory statement together with the accompanying notice is, and may be treated as an abstract of terms of appointment and memorandum of interest in respect of appointment of Shri Suresh Chandra under Section 302 of the Companies Act, The Directors commend the Resolution for approval of the Members. Item 12 In terms of the provisions of the Loan Agreements entered into by the Company with IFCI Limited and IDBI Bank Ltd. for Rupee Term Loans of Rs.50 crores and Rs.100 crores respectively, the mortgage or charge on all or any of the movable or immovable properties of the Company is to be extended in favour of IFCI Limited and IDBI Bank Limited. The Company has borrowed the said Rupee Term Loans of Rs. 50 crores and Rs. 100 crores to pre-pay high cost debts of such of the lenders who are not able to bring down the rate of interest to 10.5% per annum in terms of directions of the Hon ble HPERC. Section 293 (1)(a) of the Companies Act, 1956, inter alia, provides that the Board of Directors of a public company shall not, without the consent of such public company in general meeting, sell, lease or otherwise dispose off the whole or substantially the whole of the undertaking of the Company or where the Company owns more than one undertaking, of the whole, or substantially the whole of any such undertaking. Since the deed creating the mortgage and/or charge by the Company on its immoveable and moveable properties, as mentioned in the resolution in favour of the Institutions/banks/ Debenture holders/trustees provide for taking over the assets of the Power Station of the Company in the event of default, it is necessary for the members to pass a Resolution under Section 293 (1) (a) of the Companies Act, 1956 for creation of the said mortgage/ charge. None of the Directors except Shri B.K. Batra, Nominee of IDBI Bank Ltd., may be deemed to be concerned or interested in the Resolution. The Directors commend the Resolution for approval of the Members. 4

7 DIRECTORS REPORT To, The Members The Directors of your Company are pleased to present the Thirteenth Annual Report together with the Audited Accounts of the Company for the year ended 31st March, WORKING RESULTS The working results for the year under report are as under :- (Rs. in Crores) Current Year Previous Year Gross Revenue Less: Rebate for prompt payments Add: other income Total Income Profit before Depreciation & Taxation Less : Depreciation Add: Extra-Ordinary items - Insurance claim relating to earlier years Prior Period Adjustments Less: Provision for taxation Profit after taxation OPERATIONS The performance of the Plant and the Energy generation during the year under report is as under :- Plant Availability(%) Generation (million units) Net Saleable Energy The tariff for the year under report, as per the Tariff Order dated 24th February, 2007 and in accordance with the Power Purchase Agreement (PPA), works out to Rs per unit. The generation of the energy during the year was good MUs including 12% Free Power were delivered at Jhakri to Himachal Pradesh State Electricity Board/ Government of Himachal Pradesh. The Net Saleable Energy for the year was MUs, out of which MUs was the Primary Energy and the balance MUs was Secondary Energy. TARIFF The Company has filed the tariff application on 30th November, 2007 with Hon ble HPERC for determination of tariff for Financial Year to , which is in process. Pending determination of tariff, Hon ble HPERC has been requested that payment of monthly energy bills be paid as per the Tariff Order dated 24th February, DIVIDEND Your directors had declared and paid, in September, 2007 an interim dividend of 7.5% for the Financial Year ended 31st March, 2008 absorbing an amount of Rs crore (excluding Dividend Distribution Tax of Rs crore). Your Directors are pleased to report that the Board has decided to recommend a final dividend of 7.5% for the Financial Year ended 31st March, The final dividend will absorb an amount of Rs crore (excluding Dividend Distribution Tax of Rs.6.26 crore). The total dividend outflow for the year 31st March, 2008 aggregating Rs crore (excluding Dividend Distribution Tax of Rs crore ) represents 15% of the Company s Paid-up Equity Share Capital. INSURANCE CLAIMS The Directors wish to report that the Insurance Company has settled insurance claims at Rs crores for loss of generation during the period of suspension of energy generation (on account of damage to Pothead Yard) from 19th January, 2006 to 2nd May, 2006, out of which Rs. 60 crores had already been received. The Directors are pleased to report that the restoration works of barrage and installation of the Pothead Yard of the Power House had already been completed. The Protection works of cladding over the Pothead Yard is nearing completion. SUBSIDIARY COMPANY The Balance Sheet as at 31st March, 2008 of Jaypee Powergrid Ltd., a subsidiary of your company, is annexed to the Annual Report and Accounts. CONSOLIDATED FINANCIAL STATEMENTS A statement under Section 212 of the Companies Act, 1956 in respect of the subsidiary Company is annexed and forms an integral part of this Report. The consolidated financial statements of the Company and its subsidiary company prepared in accordance with Accounting Standards (AS)-21 Consolidated Financial Statements prescribed by the Institute of Chartered Accountants of India, form part of the Annual Report and Accounts. OUTLOOK The Directors are pleased to report that the generation of energy during the year under report was satisfactory. The Plant availability was 99.91%. The entire energy generated was purchased by HPSEB. HPSEB is making the payment regularly of the energy bills as per Tariff Order passed by Hon ble HPERC. The availability of water in River Baspa is satisfactory. The Company is hopeful that, barring unforeseen events, the Plant would generate full design energy during the current year. Jaypee Powergrid Limited formed in Joint Venture with Power Grid Corporation of India Limited is developing a transmission system to evacuate power of 1000 MW Karcham Hydro Electric Project and the same is progressing as per schedule. The Company alongwith its affiliate (Jaiprakash Power Ventures Ltd.) shall be investing upto 74% in the equity share capital of Jaypee Powergrid Ltd. (51% by the Company and 23% by its affiliate) and the balance 26% shall be subscribed by Power Grid Corporation of India Ltd. With the Power Station expected to generate full design energy coupled with the transmission system being set up through the Joint Venture Company, as aforesaid, the future outlook of the Company is bright. SHARE CAPITAL During the year under report, there was no change in the Paid-up equity Share Capital of the Company. AUDIT COMMITTEE The Audit Committee consists of Independent Directors, namely Shri B.K. Taparia (Chairman), Shri B.K. Gupta (LIC Nominee), Shri B.K. Batra (IDBI Nominee) and Shri S.D. Nailwal, satisfying the requirements of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement with Stock Exchanges. DIRECTORATE During the year under report, Shri Jaiprakash Gaur and Shri B.B. Tandon were appointed as additional directors w.e.f. 29th October, Shri Har Prasad and Shri D.N. Davar resigned as Directors w.e.f. 1st January, 2008 and 25th January, 2008 respectively. The Board places on record and acknowledges the valuable contribution of Shri Har Prasad and Shri D.N. Davar during their tenure as directors on the Board of the Company. Shri Suresh Chandra has been appointed as Director of the Company in the casual vacancy caused due to the resignation of Shri Har Prasad. Shri Suresh Chandra was also appointed as Wholetime Director w.e.f. 11th January,

8 Shri Gopi K. Arora, Shri Manoj Gaur, Shri Narendra Singh, Shri S. D. Nailwal and Shri S. K. Jain retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. CORPORATE GOVERNANCE As required under Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance together with Auditors Certificate on Corporate Governance is appended to the Annual Report. MANAGEMENT DISCUSSION AND ANALYSIS REPORT As required under Clause 49 of the Listing Agreement with the Stock Exchanges, a Management Discussion and Analysis report is appended to the Annual Report. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors, based on the representation received from the operating management, certification by the CEO and CFO to the Board of Directors and after due enquiry, confirm in respect of the audited annual accounts for the year ended March 31, 2008: i) that in the preparation of the annual accounts, the applicable accounting standards had been followed and that there were no material departures; ii) that the Directors had, in consultation with the Statutory Auditors, selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the year ended March 31, 2008 and the profit of the Company for that period; iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) that the Directors had prepared the annual accounts on a going concern basis. DEPOSITS The Company did not invite / accept any Fixed Deposits from the public during the year under report. PARTICULARS OF EMPLOYEES A statement showing the particulars of employees pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended vide Companies (Particulars of Employees) (Amendment) Rules, 2002 is annexed to this report and forms integral part of this report. PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Particulars with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo, as per Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors Report for the year ended 31st March, 2008, are annexed to this report. NOTES ON ACCOUNTS The Auditors Report and Notes on Accounts are self-explanatory. AUDITORS M/s. R. Nagpal Associates, Chartered Accountants, Auditors of the Company retire at the conclusion of this Annual General Meeting and, being eligible, offer themselves for re-appointment. PERSONNEL AND INDUSTRIAL RELATIONS The industrial relations continued to be cordial. The Directors wish to place on record their appreciation for the contribution of the workers and officers of the Company at all levels. ACKNOWLEDGEMENTS The Directors wish to place on record their gratitude to the Government of Himachal Pradesh and Government of India and their various Departments, Himachal Pradesh State Electricity Board, Himachal Pradesh Electricity Regulatory Commission, NHPC (Lenders Engineers), Reserve Bank of India, Financial Institutions and Public Sector / Foreign Banks, for their continued co-operation and support. The Board sincerely acknowledges the faith and confidence reposed by the shareholders in the Company. Place: Noida Date: 25th April, 2008 On behalf of the Board ANNEXURE TO THE DIRECTORS REPORT MANOJ GAUR CHAIRMAN INFORMATION IN PURSUANCE OF SUB-SECTION 2 A OF SECTION 217 OF THE COMPANIES ACT, 1956 IS GIVEN BELOW :- Name of Employees, Designation/Nature of Duties, Gross Remuneration (Rs.), Qualification, Age (in years), Total experience (in years), Date of commencement of Employment, Previous Employment A) Employed throughout the year and in receipt of remuneration aggregating Rs. 2,400,000/- or more - Shri R. K. Narang, Whole-time Director & CFO, Rs. 24,75,727, B.E. (Mechanical), 59 yrs, 37years, 16th May, 2000, IFCI Limited B) Employed for part of the year and in receipt of remuneration aggregating Rs. 200,000/- or more per month. Notes: NIL 1. Gross remuneration includes salary, house rent allowance and other perks like medical reimbursement, leave travel assistance, Company s contribution towards provident fund, etc. 2. The nature of employment of Shri R. K. Narang is contractual. ANNEXURE TO THE DIRECTORS REPORT THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 (A) CONSERVATION OF ENERGY Electricity consumption in Power House auxiliaries is mainly for running governor oil and cooling water pumps and for ventilation, air conditioning and lighting purposes. Effective energy conservation measures are being taken in general and also ensuring that electricity consumption in these auxiliaries is kept at the minimum. Information in Form A, as prescribed for certain industries, is not applicable to the Company. (B) TECHNOLOGY ABSORPTION The Hydro-Electric Power Plant was commissioned in May/June, Every effort was made to ensure that various equipments of the Power House correspond to state of the art technology. Himalayan rivers carry lot of silt (with large quartz content) during monsoons causing erosion on turbine runners and other underwater parts. To minimize this erosion due to silt, two more modern technology spare runners with Tungsten Carbide coating employing HVOF thermal spray have been procured/ ordered. One such runner was put in operation in May 2006 and performance thereafter during the monsoon period, had been quite satisfactory. Further, for proper maintenance of the plant, innovative technology is being adopted. No specific expenditure on Research and Development is envisaged for the same. (C) FOREIGN EXCHANGE EARNINGS AND OUTGO Particulars of Foreign Exchange earnings and outgo are given in Schedule O - Notes to the Accounts - under Note No.9. 6

9 COROPRATE GOVERNANCE REPORT ON CORPORATE GOVERNANCE Commitment to values, fairplay and transparency are the cornerstones of the principles of Corporate Governance. 1. COMPANY S PHILOSOPHY ON CODE OF GOVERNANCE The Company as a part of Jaypee Group, is committed to attain highest standards of Corporate Governance. The Company s philosophy on Corporate Governance emanates from its commitment for the highest level of transparency and accountability towards its shareholders, customers, employees, Financial Institutions and Banks and the Government while maintaining steady focus for creation of wealth for stakeholders on sustainable basis. 2. BOARD OF DIRECTORS The Board of Directors as on 31st March, 2008 consisted of 19 directors. As per Clause 49 of Listing Agreement, where there is Non- Executive Chairman, at least one third of the Board should comprise of independent Directors. The Board of Directors of the Company comprises 9 Independent Directors, besides three Whole-time Directors who are otherwise independent professionals. The details regarding the attendance of Directors at the Board Meetings, number of other Directorships and Committee positions held by them in other Companies, as on 31st March, 2008, are given below :. Name & Designation of the Directors Category/ Position Last Annual No. of Board No. of other Committee Positions General Meetings Attended Directorships Meeting out of 5 held excluding Directorship Member Chairman Attended during the year in Private Limited Companies Shri Jaiprakash Gaur * Non-Executive/ Promoter NA Shri Manoj Gaur, Chairman Non-Executive/ Promoter Yes Shri Sunil Kumar Sharma, Non-Executive/ Promoter Yes Vice Chairman Shri S.K. Jain Non-Executive/ Promoter No Shri Gopi K. Arora Non-Executive/ Independent Yes Shri B.K. Taparia Non-Executive/ Independent Yes Shri B.K. Batra (IDBI Nominee) Non-Executive/ Independent No Shrii B.K. Gupta (LIC Nominee ) Non-Executive/ Independent Yes Dr. R.C. Vaish Non-Executive/ Independent No Dr. D.G. Kadkade Non-Executive/ Promoter Yes Shri G.P. Gaur Non-Executive/ Promoter No Dr. R.L. Gupta Non-Executive/ Independent Yes Shri S.D. Nailwal Non-Executive/ Independent No Shri Narendra Singh Non-Executive/ No Non-Independent Shri J.N. Gaur Whole-time Director and Chief Executive Officer Executive Yes Shri R.K. Narang Whole-time Director and Chief Financial Officer Executive Yes Shri Rajiv Bhardwaj Non-Executive/ Yes Independent Shri B.B. Tandon* Non-Executive/ Independent NA Shri Suresh Chandra Executive NA Whole-time Director Notes: *S/Shri Jaiprakash Gaur and B. B. Tandon were appointed as Non-Executive Directors w.e.f. 29th October, 2007 and Shri Suresh Chandra was appointed as Executive Director w.e.f. 11th January, 2008 #Shri Har Prasad resigned as Director w.e.f. 1st January, He attended 3 Board Meetings and Shri D. N. Davar resigned as Director w.e.f. 25th January, He attended 5 Board Meetings. Number of Board Meetings held and dates thereof: During the financial year , 5 meetings of the Board of Directors were held. The meetings were held on 21st April, 2007, 27th July, 2007, 27th August, 2007, 29th October, 2007 and 11th January, The maximum time gap between two meetings was not more than 4 calender months. Information placed before the Board Information placed before the Board of Directors broadly covered the items specified in Clause 49 of the Listing Agreement and such other items which are necessary to facilitate meaningful and focused deliberations on issues concerning the Company and taking decision in an informed and efficient manner. Besides, the Directors on the Board have complete access to all information of the Company, as and when necessary. 3. CODE OF CONDUCT The Board of Directors has laid down a Code of Conduct for all Board members and Senior Management Personnel of the Company which is widely circulated amongst members 7

10 of the Board and Senior Management Personnel. The Code of Conduct has been posted on the Company s website: The Members of the Board and Senior Management personnel have affirmed compliance to the said Code of Conduct in writing. Requisite declaration of the CEO to that effect is attached and form part of this report. 4. AUDIT COMMITTEE As a measure of good Corporate Governance and to provide assistance to the Board of Directors in fulfilling the Board s oversight responsibilities, an Audit Committee had been constituted by the Board. The constitution of Audit Committee also meets the requirements under Section 292A of the Companies Act, The terms of reference of the Audit Committee are, as contained under Clause 49 of the Listing Agreement and also conform to the requirements of the Companies Act, All the four members of the Committee, including its Chairman are Non- Executive and Independent Directors. Four meetings of the Committee were held during the year i.e. on 21st April, 2007, 27th July, 2007, 29th October, 2007 and 11th January, The Audit Committee, inter-alia, reviews : Quarterly, half-yearly and yearly Financial Statements Annual Budget and Variance Reports Significant related party transactions Audit Reports including Internal Audit Reports Recommendation for appointment of Statutory Auditors. Management discussion and analysis of financial conditions and results of operations The constitution of the Committee and attendance at the meetings are as under : Name & Position Total Meetings held Number of during the tenure Meetings attended of the member Shri B.K. Taparia, Chairman 4 4 Shri B.K. Batra, Member (IDBI Nominee) 4 3 Shri B.K. Gupta, Member (LIC Nominee) 4 4 Shri S.D. Nailwal, Member REMUNERATION COMMITTEE The Remuneration Committee comprising of the following Non-Executive and Independent Directors is constituted to recommend /review the remuneration package of the Managing/Whole-time Director(s). Name Shri Gopi K. Arora Shri B.K. Taparia Shri B.K. Batra(IDBI Nominee) Position Chairman Member Member One meeting of the Committee was held on 11th January, 2008 and the same was attended by all the members of the Committee. The remuneration package of Shri Suresh Chandra, Whole-time Director was approved by the Remuneration Committee. The remuneration was paid to Whole-time Directors in the form of Salary and Perquisites. Details of Remuneration paid to all the Directors for the year: a) Executive Directors (Managing/Whole-time Directors) The details of aggregate value of salary and perquisites paid to Whole-time Directors for the year ended 31st March, 2008 and the number of shares of the Company held by them are as under: Name Designation Salary (Rs.) Perquisites Total (Rs.) No. of Including shares held P.F.(Rs.) as on 31st March, 2008 Shri J.N. Gaur Whole-time 12,75,000 10,83,392 23,58,393 10,000 Director & CEO Shri R.K. Narang Whole-time 12,75,000 12,00,727 24,75,727 2,000 Director & CFO Shri Suresh Whole-time 2,67,742 2,17,206 4,84,948 2,000 Chandra Director b) Non-Executive Directors The Company has not paid any remuneration to Non-Executive Directors except the Sitting Fee of Rs.10,000/- (increased to Rs.20,000/- w.e.f. 27th August 2007) per meeting for attending the meetings of the Board of Directors and Committees thereof. The criteria for payment of sitting fees to Non-Executive Directors is based on the decision of the Board and is within the statutory ceiling laid down under the provisions of the Companies Act, The details of the sitting fee paid to the Non-Executive Directors during the year under review and the number of shares of the Company held by each Non-Executive Director are as under :- Name of the Director Designation Total sitting No. of equity fee paid (Rs.) shares held as on 31 st March 2008 Shri Jaiprakash Gaur Director & Founder Chairman 40,000 *1,40,000 Shri Manoj Gaur Chairman 80,000 41,400 Shri Sunil Kumar Sharma Vice Chairman 70,000 - Shri S.K. Jain Director 70,000 *25,925 Shri Gopi K Arora Director 1,00,000 - Shri B.K. Taparia Director 1,60,000 5,000 Shri B.K. Batra Director (IDBI Nominee) #1,20,000 - Shri B.K. Gupta Director (LIC Nominee) 1,40,000 - Dr. R.C. Vaish Director - - Dr.D.G. Kadkade Director 1,60,000 57,100 Shri G.P. Gaur Director 50,000 - Dr. R.L. Gupta Director 1,60,000 10,000 Shri S.D. Nailwal Director 2,00, Shri Narendra Singh Director 60,000 28,000 Shri Rajiv Bhardwaj Director 80,000 - Shri B. B. Tandon Director 40,000 - Notes: 1. Sitting Fee represents payment to the Directors for attending meetings of the Board and Committees thereof. 2. # Sitting Fee was paid directly to IDBI. 3. * In addition to this, Shri Jaiprakash Gaur and Shri S. K. Jain hold 100 equity shares each jointly with Jaiprakash Associates Limited (JAL), the beneficial interest of such shares is with JAL 6. SHAREHOLDERS /INVESTORS GRIEVANCE COMMITTEE The Shareholders /Investors Grievance Committee comprises Dr. R.L. Gupta (Chairman), Dr. D.G. Kadkade, Shri J.N. Gaur and Shri S.D.Nailwal. The Committee has been constituted, inter-alia, to consider transfer and transmission of shares, rematerialisation of shares, transposition of names, consolidation of shares, issue of duplicate share certificates etc. and to look into redressal of 8

11 shareholders complaints. During the year, 5 meetings of the Committee were held and the record of attendance of the members is given below. Name & Position Total Meetings held Number of during the tenure Meetings of the member attended Dr. R.L. Gupta, Chairman 5 5 Dr. D.G. Kadkade, Member 5 5 Shri J.N. Gaur, Member 5 2 Shri S.D. Nailwal, Member 5 5 As on 1st April, 2007, there were no pending investors references. During the year, the Company had received 380 investors references and all the 380 investors references were addressed/resolved by 31st March, Thus, there was no pending reference as on 31st March, Subsidiary Company The Company has one non-listed Indian subsidiary company viz. Jaypee Powergrid Limited. The said company is a Joint Venture between the Company and Power Grid Corporation of India Ltd. Shri Manoj Gaur, Shri Sunil Kumar Sharma and Shri Rajiv Bhardwaj have been nominated by the Company on the Board of Jaypee Powergrid Limited. Shri Rajiv Bhardwaj is the Managing Director of Jaypee Powergrid Limited. 8. Risk Management The Company manages risks as an integral part of its decision making process and has a structured framework for risk assessment and minimization procedures. 9. CEO/CFO Certification In terms of the requirements of Clause 49 (v) of the Listing Agreement, the CEO and CFO have submitted necessary certificate to the Board at its meeting held on 25th April, 2008 stating the particulars specified under the said clause. 10. GENERAL BODY MEETINGS The details of last three Annual General Meetings are mentioned below :- Year Date and Time A.M A.M A.M. Venue of the Hotel Peter Hoff, Hotel Peter Hoff, JUIT Complex, Meeting Chaura Maidan, Chaura Maidan, Waknaghat P.O. Shimla Shimla Dumehar Bani, (H.P.) (H.P.) Kandaghat, Distt. Solan (H.P.) Details of NIL Appointment of NIL Special Shri J.N. Gaur, Whole-time Resolutions Director and CEO, being over 70 years of age. Note: No resolution was passed through Postal Ballot during last year. 11. DISCLOSURES a. There were no materially significant related party transactions i.e. transactions of the Company of material nature, with its promoters, the directors or the management, their relatives, etc. that may have potential conflict with the interests of the Company at large. The related party transactions are duly disclosed in the Notes on Accounts to the Balance Sheet. b. There were no cases of non-compliance by the Company and no penalties, strictures were imposed on the Company by Stock Exchanges or SEBI or any statutory authority, on any matter related to capital markets, during the last three years. c. No treatment different from the Accounting Standards, prescribed by the Institute of Chartered Accountants of India, has been followed in the preparation of Financial Statements. d. The Company has complied with the mandatory requirements of Clause 49 of the Listing Agreement. e. The Company at present has adopted the non-mandatory requirement in regard to constitution of Remuneration Committee. The Company has not adopted any formal whistle blower policy. The employees have access to approach the Management or the Audit Committee on any issue. 12. SECRETARIAL AUDIT FOR RECONCILIATION OF CAPITAL A qualified practising Company Secretary carried out quarterly secretarial audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audits confirmed that the total issued / paid-up capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL. 13. MEANS OF COMMUNICATION The quarterly, half-yearly and annual results were published in leading Newspapers which included Economic Times, Business Standard, Financial Express and Divya Himachal. The same were sent to Stock Exchanges and were also displayed on the website of the Company, and simultaneously posted on the Electronic Data Information Filing and Retrieval website, namely, The website is also accessible through a hyperlink EDIFAR from SEBI s official website, MANAGEMENT DISCUSSION & ANALYSIS REPORT The Management Discussion and Analysis Report (MD&A) forms part of the Annual Report. 15. COMPLIANCE OFFICER: The Board had designated Shri M.M. Sibbal, General Manager & Company Secretary as Compliance Officer. However, Shri Sibbal moved from your company to Jaiprakash Power Ventures Limited, another company belonging to Jaypee Group, w.e.f Necessary steps have been taken to appoint a Company Secretary in the vacancy so caused. In the meantime, however, the Board has designated Shri A. B. Chugh, Jt. President (Finance) as the Compliance Officer whose particulars are as under: Address: Sector-128, Noida (U.P.) ab.chugh@jalindia.co.in Phone: Fax: GENERAL SHAREHOLDERS INFORMATION 13th Annual General Meeting Day : Wednesday Date : 6th August, 2008 Time : A.M. Venue : JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat , Distt. Solan (H.P.) Dates of Book Closure : 2nd August, 2008 to 6th August, 2008 (both days inclusive) 17. FINANCIAL CALENDAR Details of announcement of Financial Results for different periods during the year are as under: Results Announced on For 1st Quarter ended on th July, 2007 For 2nd Quarter ended on th October, 2007 For 3rd Quarter ended on th January, 2008 For the year ended on (Audited). 25th April, 2008 The Financial Results were reviewed by the Audit Committee and thereafter approved by the Board. 18. DIVIDEND PAYMENT DATE For interim dividend for the year , the record date was fixed as 12th September, 2007 and dividend was paid within the stipulated time. For final dividend for the year , the 9

12 Company has fixed 2nd August, 2008 to 6th August, 2008 (both days inclusive) as the book closure dates and the dividend shall be distributed after declaration thereof at the forthcoming Annual General Meeting i.e. on or after 18th August, LISTING ON STOCK EXCHANGES The Equity shares of the Company are listed on the National Stock Exchange of India Ltd. and The Bombay Stock Exchange Ltd., Mumbai. The Company has paid annual listing fees due to the above Stock Exchanges for the year % Non-Convertible Debentures of Rs.10 lac each privately placed with Axis Bank Ltd. have been listed on The Bombay Stock Exchange Ltd., Mumbai. Stock Code The stock code of the shares listed on the Stock Exchanges, are as under: Name of Stock Exchange Code The Bombay Stock Exchange, Mumbai Ltd. (BSE) National Stock Exchange of India Limited (NSE) ISIN No. JPHYDRO INE351F Market Price Data and performance in comparison to BSE -Sensex The high and low of the share price of the Company during each month in the last financial year at NSE, BSE and BSE Sensex were as under :- Month Share Price at Share price at BSE-Sensex BSE (Rs.) NSE (Rs.) High Low High Low High Low April, , , May, , , June, , , July, , , Aug., , , Sept., , , Oct., , , Nov., , , Dec., , , Jan., , , Feb., , , Mar., , , REGISTRAR AND TRANSFER AGENTS: The details of Registrar & Transfer Agent appointed by the Company are as under: Alankit Assignments Limited Alankit House, 2E/21, Jhandewalan Extn., New Delhi Phone : , Fax : Website : address:info@alankit.com ID of the Company for redressal of investors complaints: jhpl.investor@jalindia.co.in 22. SHARE TRANSFER SYSTEM The Board of Directors has delegated the power of re-materialisation of shares, transfers and transmission cases, splitting/consolidation of share certificates and issue of duplicate share certificates etc. to Shareholders /Investors Grievance Committee comprising Dr. R.L. Gupta (Chairman), Dr. D.G. Kadkade, Shri J.N. Gaur and Shri S.D. Nailwal, Members. 23. DISTRIBUTION OF SHAREHOLDING The distribution of shareholding as on 31st March, 2008, was as follows: Share holding of Shareholders Shares nominal value of (Rs.) Number % to Number % to total Equity Upto 5, ,001 10, ,001 20, ,001 30, ,001 40, ,001 50, ,001-1,00, ,00,001 and above TOTAL Held by : % holding Promoters (Jaiprakash Associates Ltd.) Banks/Mutual Funds/FI/FIIs 3.08 NRIs 0.56 Indian Public Note : For the purpose of Regulation 3[e][i] of the Securities and Exchange Board of India [Substantial Acquisition of Shares and Takeovers] Regulations, 1997, the Group constitute Shri Jaiprakash Gaur, his associates and Companies as disclosed to Stock Exchanges which include Jaiprakash Associates Limited (JAL), its Subsidiaries, its Associates and other Companies namely, Jaiprakash Enterprises Limited, Siddharth Utility Private Limited, Ironwill Holdings Private Limited and Ironwill Investments Private Limited. 24. DEMATERIALISATION OF SHARES AND LIQUIDITY: At the time of listing of Equity Shares of the Company on 18th April, 2005, the entire share capital of the Company, except for 700 shares held by the original subscribers alongwith Jaiprakash Associates Ltd., was held in dematerialized form. Thereafter, 47,734 Shares have been rematerialized by certain shareholders. The shares of the company are in Futures and options segment on NSE & BSE and are actively traded. 25. UNCLAIMED DIVIDENDS Pursuant to Section 205C of the Companies Act, 1956, there were no unclaimed dividends to be transferred to the Investors Education and Protection Fund of the Central Government during the year. 26. OUTSTANDING GDRS/ADRS/WARRANTS OR ANY CONVERTIBLE INSTRUMENTS, CONVERSION DATE AND LIKELY IMPACT ON EQUITY The Company has not issued any GDR/ADR/Warrant or any other convertible instrument. 27. PLANT LOCATIONS The Barrage of the 300 MW Power Plant is located on the river Baspa and the underground Power House is on the left bank of River Satluj in Kinnaur District, about 210 KM from Shimla, the capital of Himachal Pradesh. 28. ADDRESS FOR CORRESPONDENCE Company s address : Registered Office : JUIT Complex, Waknaghat, P.O. Dumehar Bani, Kandaghat , Distt. Solan (H.P.) Corporate Office : Sector-128, Noida (U.P.) Distt. Gautam Budh Nagar. jhpl.investor@jalindia.co.in 10