Notes to the financial statements for the period ended 31st March, 2015

Note 1 Basis of Preparation of Financial Statements

The financial statements are brpared under historical cost convention, on accrual basis, on the principles of going concern, in accordance with the generally accepted accounting principles, the relevant accounting standards and the relevant guidance notes issued by the Institute of Chartered Accountants of India (ICAI) and the applicable provisions of the Companies Act, 2013.

Note 2 Summary of significant accounting policies

(a) Revenue Recognition

(i) (a) 300 MW Jaypee Baspa HEP : Revenue from sale of

electrical energy is accounted for on the basis of billing to Himachal Pradesh State Electricity Board (HPSEB) as per Tariff approved by Himachal Pradesh Electricity Regulatory Commission (HPERC) in accordance with the provisions of Power Purchase Agreement dated 4th June, 1997, Amendment No.1 dated 07.01.1998, executed between the Company and HPSEB.

(b) 400 MW Jaypee Vishnuprayag HEP : Revenue from sale of electrical energy is accounted for on the basis of billing to Uttar Pradesh Power Corporation Limited (UPPCL) as per Tariff approved by Uttar Pradesh Electricity Regulatory Commission (UPERC) in accordance with the provisions of Power Purchase Agreement dated 16.01.2007, executed between the Company and UPPCL.

(c) 1091 MW Jaypee Karcham Wangtoo HEP : Revenue from sale of electrical energy is accounted for on the basis of billing to various buyers as per long term/ medium term/short term Power Purchase Agreements executed with them and through Power Exchange.

(d) 500 MW Jaypee Bina Thermal Power Plant : Revenue from sale of electrical energy is accounted for on the basis of sale to Madhya Pradesh Power Management Company Limited (MPPMCL) as per Tariff approved by Madhya Pradesh Electricity Regulatory Commission in accordance with the provisions of Power Purchase Agreement dated 05.01.2011, executed between the Company and MPPMCL to the extent of 65% of installed capacity on regulated tariff basis for 25 years and 5% of net power generation on variable charge basis for life of Project and balance on merchant basis.

(e) 1320 MW Jaypee Nigrie Super Thermal Power Plant:

Revenue from sale of electrical energy is accounted for on the basis of sale to Madhya Pradesh Power Management Company Limited (MPPMCL) as per Tariff approved by Madhya Pradesh Electricity Regulatory Commission in accordance with the provisions of Power Purchase Agreement dated 05.01.2011 executed between the Company and MPPMCL to the extent of 30% of installed capacity on regulated tariff basis for 20 years, 7.50% of the total net power generation on variable charge basis for the life of Project and balance on merchant basis.

(ii) Revenue from sale of Verified Emission Reductions (VERs) is accounted for on receipt basis.

(iii) Insurance claims are accounted for on receipt basis or as acknowledged by the insurance company.

(iv) Other income and cost/expenditure are accounted for on accrual basis as they are earned or incurred.

(v) Sales of Fly Ash is net of Value Added Tax and exclusive of self consumption.

(vi) Dividend Income is recognized when right to receive payment is established.

(vii) Advance against debrciation claimed/ to be claimed as part of tariff in terms of PPA (in respect of Baspa II HEP and Vishnuprayag HEP) during the currency of loans to facilitate repayment installments is treated as "Deferred Revenue'. Such Deferred Revenue shall be included in Sales in subsequent years.

(viii)Interest is recognized on a time proportion basis taking into account outstanding and the rate applicable.

(b) Use of Estimates

The brparation of financial statements in conformity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known/materialised.

(c) Fixed Assets

Fixed Assets are stated at Cost of acquisition or construction inclusive of freight, erection & commissioning charges, duties and taxes, expenditure during construction period, Interest on borrowings, financing cost and foreign exchange loss/ gain, up to the date of commissioning. Foreign Exchange Rate Difference on long term monetary items arising on settlement or at reporting dates attributable to Fixed Assets is capitalised/adjusted in the carrying value of the Fixed Assets.

(d) Debrciation

(i) Premium on Leasehold Land is amortised over the period of lease.

(ii) Debrciation on Fixed assets has been charged as per provisions of Schedule II of the Companies Act, 2013.

(e) Expenditure during Construction Period

Expenditure incurred on projects/assets during construction/ implementation is capitalized and apportioned to projects/ assets on commissioning.

(f) Foreign Currency Transactions

(i) Transactions denominated in Foreign Currency are recorded in the Books of Account in Indian Rupees at the rate of exchange brvailing on the date of transaction.

(ii) Monetary Assets and Liabilities related to Foreign Currency transactions and outstanding, except assets and liabilities hedged by a hedge contract, at the close of the year, are exbrssed in Indian Rupees at the rate of exchange brvailing on the date of Balance Sheet. The exchange difference arising either on settlement or at reporting date is recognised in the Statement of Profit & Loss except in cases where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

(iii) Monetary Assets and Liabilities hedged by a hedge contract are exbrssed in Indian Rupees at the rate of exchange brvailing on the date of Balance Sheet adjusted to the rates in the hedge contracts. The exchange difference arising either on settlement or at reporting date is recognised in the Statement of Profit & Loss except in cases where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets. Premium paid in respect of Hedge Contracts are recognised in the Statement of Profit & Loss, except in case where they relate to the acquisition or construction of fixed assets, in which case, they are adjusted to the carrying cost of such assets.

(iv) The Company uses foreign currency contracts to hedge its risks associated with foreign currency fluctuations. The Company does not use derivative financial instrument for speculative purposes.

(v) Non Monetary foreign currency items are carried at cost.

(g) Investments

Investments are stated at Cost and where there is permanent diminution in the value of investments, a provision is made wherever applicable. Current Investments are carried at lower of cost or quoted/fair value.

(h) Inventories

(a) (i) Inventories are valued at Cost or Net Realisable

Value whichever is lower. Cost of Inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their brsent location and condition. Cost of Raw Materials, Construction Materials, Stores & Spares, Packing Materials, Operating Stores and supplies is determined on Weighted Average basis.

(ii) Work-in-Progress/Stock-in-Process are valued at cost. In case of Item Rate Contract, work in progress is measured on the basis of physical measurement of work actually completed as at the balance sheet date. In case of cost plus contracts work in progress is taken as cost not billed on the contractee.

(iii) Stock of Finished Goods lying in the factory brmises includes excise duty, pursuant to accounting standard [AS-2] [Revised].

(b) Material-in-transit is valued at cost.

(i) Retirement and other Employees Benefits

(a) Provident Fund and Pension contribution as a percentage of salary/wages as per provisions of Employees Provident Funds and Miscellaneous Provisions Act, 1952.

(b) Gratuity and Leave Encashment is defined benefit obligation. The liability is provided for on the basis on Projected Unit Credit Method adopted in the actuarial valuation made at the end of each financial year.

j) Borrowing Costs

Borrowing costs attributable to the procurement/construction of fixed assets are capitalised as part of the cost of the respective assets upto the date of commissioning. Other borrowing costs are recognized as expense during the year in which they are incurred.

k) Taxes on Income

Provision for current tax is being made after taking into consideration benefits admissible to the Company under the provisions of the Income Tax Act, 1961.

Deferred Tax Liability, if any is computed as per in accordance with Accounting Standard [AS-22]. Deferred Tax Asset and Deferred Tax Liability are computed by applying rates and tax laws that have been enacted up to the Balance Sheet date.

l) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degrees of estimation in measurement are recognized when there is a brsent obligation as a result of past events and if are probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes unless the possibility of an outflow of resources embodying economic benefit is remote. Contingent Assets are neither recognized nor disclosed in the financial statements. The Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

m) Earnings Per Share

Basic earnings per equity share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed by dividing adjusted net profit after tax by the aggregate of weighted average number of equity shares and dilutive potential equity shares outstanding during the year.

n) Impairment of Assets

At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash generating unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset's net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their brsent value using a br-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset.

Reversal of impairment loss is recognised immediately as income in the profit and loss account.

o) Intangible Assets

Intangible assets are stated at cost of acquisition less accumulated amortisation on straight line basis from the date the assets are put for commercial use.

(p) Lease Rentals :

(a) Operating Leases : Rentals are expensed with reference to lease terms.

(b) Finance Leases : The lower of the fair value of the assets and brsent value of the minimum lease rentals is capitalized as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to statement of Profit & Loss.

(q) Premium on Redemption of Debentures

Premium paid/payable on Redemption of Debentures are adjusted against Securities brmium reserve/Surplus.

(r) Segment Reporting

Revenue, operating results, assets and liabilities have been identified to rebrsent separate segments on the basis of their relationship to the operating activities of the segment. Assets, liabilities, revenue and expenses which are not allocable to separate segment on a reasonable basis, are included under "Unallocated".

Note 2

Corporate Guarantee

(a) The Company has given Corporate Guarantee of USD 1,500 Lacs in favour of State Bank of india, Hong Kong branch for the credit facilities granted by lenders to Jaiprakash Associates Limited.

(b) The Company has given Corporate Gurantee of Rs. 50,000 lacs in favour of State Bank of India, for the Short Term Loan granted by them to Prayagraj Power Generation Company Limited (a subsidiary of the Company).

Note 3

Pursuant to the Companies Act, 2013 becoming effective from 1st April, 2014, the Company has computed the debrciation based on the useful life of the assets as brscribed in Schedule II of the Act. This has resulted in reduction of debrciation of Rs. 9,113 Lacs for the year ended 31st March, 2015. The carrying amount of assets which have completed its debrciated period as on 1st April, 2014 amounting to Rs.1,393 Lacs have been adjusted against 'General

Note 4

(a) Pursuant to Revised Schedule-VI of the Companies Act and Guidance Note issued by the Institute of Chartered Accountants of India requiring recognition of MAT credit in the Books of Accounts, the MAT credit entitlement has been recognised in the Books of Accounts.

(b) As there is no taxable profit for the period up to 31st March, 2015 no income tax amount has been provided for the period up to 31st March, 2015. The MAT chargeable on book profit amounting to Rs. 2,725 Lacs (Previous year Rs. 282 Lacs) up to 31st March, 2015 has been treated as MAT credit entitlement.

(c) The Company has provided deferred tax assets (net) of Rs.716 Lacs (Previous year Rs. 629 Lacs) for the year ended 31st March, 2015.

Note 5

Jaypee Nigrie Super Thermal Power Project (JNSTPP) (1320 MW) was to get coal from two dedicated coal mines namely Amelia (North) and Dongri-Tal II. Both these mines were allocated to MP State Mining Corporation Ltd (MPSMCL), which in turn have formed two JV companies with Jaiprakash Associates Ltd(JAL)for supplying the Coal to JNSTPP.

However, the Hon'ble Subrme Court of India vide its judgement dated August 25, 2014 read with its order dt. September 24, 2014 had cancelled allotment of 204 coal blocks which included both, Amelia (North) & Dongri Tal II coal mine(s) allotted to MPSMCL. At the time of cancellation, Amelia (North) mine was operating mine and was supplying coal to JNSTPP Upon de-allocation Amelia (North) was permitted to continue mining and to supply Coal to JNSTPP upto 31.03.2015 only. After the cancellation of coal blocks Govt of India promulgated the coal mines (Special provisions) ordinance, 2014 on October 21, 2014. Accordingly Govt of India put up certain coal blocks under the aforesaid act for auctions which included Amelia (North) block as well.

With a view to secure coal availability for JNSTPP our company participated in coal mine auctions and was declared successful bidder for Amelia (North) (mineable reserves of 703 Lacs tonnes) and signed 'Coal Mine Development and Production Agreement' (CMPDA) on March 02, 2015

In compliance of the vesting conditions as per CMPDA, the Company has paid upfront payment and furnished Performance bank guarantee to 'Nominated Authority', Ministry of Coal. The 'Nominated Authority', has issued vesting order to the Company on March 23, 2015 covering immovable assets of the Amelia (North). Company is in the process of acquiring rest of the movable assets/other assets from erstwhile Mining JV of Amelia (North) and JAL as 'Mine Development Operator'.

In view of the above, the expenditure incurred is being treated as "Expenditure Pending Allocation" and will be capitalised once the Mine becomes operational.

Note 6

In respect of hiving off of 300 MW Jaypee Baspa HEP and 1091 MW Karcham Wangtoo HEP into subsidiaries through a Scheme of Arrangement with ultimate transfer of ownership of the said subsidiaries to TAQA India Power Ventures Private Limited led consortium. TAQA India Power Ventures Private Limited had withdrawn the acquisition arrangement of the said Power Plants mainly as a result of change in the business strategy and priorities of their group. TAQA has paid an amount of Rs.5,722.20 Lacs as break amount during financial year 2014-15 for the same.

Note 7

The Board of Directors of the Company in their meeting held on15th November, 2014 considered and approved the Scheme of Arrangement for transfer of businesses in relation to two of the Company's operating Hydro-electric Power plants namely, 300 MW Jaypee Baspa-II Hydro electric plant and 1091 MW Jaypee Karcham Wangtoo Hydro-electric plant, to Himachal Baspa Power Company Limited (HBPCL), a subsidiary of the Company, as a going concern on, slump exchange basis, subject to sanction of the said Scheme by the Hon'ble High Court of Himachal Pradesh at Shimla and such other approvals, as may be required. Further, pursuant to the approval accorded by the Board of Directors in its meeting held on 16th November, 2014, the Company entered into a Securities Purchase Agreement with JSW Energy Limited (JSW) regarding sale of securities of HBPCL to JSW, subject to satisfaction of conditions brcedent including approval of the said Scheme of Arrangement, as approved by the Board on 15th November, 2014. The proposed divestment will help the Company in deleveraging its Balance Sheet including reduction of debt and interest outgo.

The carrying amount of the assets of Baspa HEP and Karcham HEP were Rs.1,48,384 Lacs (Previous year-Rs.1,65,342 Lacs) and Rs.6,79,520 Lacs (Previous year-Rs.6,64,353 Lacs) respectively and its liabilities were Rs. 1,09,464 Lacs (Previous year-Rs.90,132 Lacs) and Rs. 5,70,970 Lacs (Previous year-Rs.5,80,879 Lacs) respectively. The following statement shows the revenue and expense of continuing and discontinuing operations.

Note 8

A Power Purchase Agreement (PPA) for sale of long term power from the Karcham Wangtoo HEP to Power Trading Corporation of India Limited (PTC) was executed on 21st March 2006 by erstwhile Jaypee Karcham Hydro Corporation Limited (since merged with the Company) for a term of 35 years. Contracted power under the PPA is 704 MW. The Company is supplying contracted power to PTC under the PPA w.e.f. 1st May, 2014 (200 MW), w.e.f. 1st June 2014 (additional 200 MW) and w.e.f. 1st October 2014 (additional 104 MW). The brsent day quantum of contracted power supplying to PTC is 504 MW. It is expected that Company will commence supply of balance contracted power of 200 MW to PTC shortly. The Company has filed a petition on 27th October, 2014 before Central Electricity Regulatory Commission (CERC) for determination of tariff for block year 2014-2019. The said petition is under consideration of CERC.

Note 9

MPERC has approved the final tariff of Jaypee Bina Thermal Power Plant on 26th November, 2014. Accordingly, the Company had raised bill on the procurers in respect of arrears of Rs.11,423.80 lacs and interest on arrears amounting to Rs.1,214.56 Lacs, which has been recognised as income. It also includes arrears on tariff amounting to Rs.7,096.26 Lacs and interest on arrears of Rs.1,032.85 Lacs for the period ended 31.03.2014.

Note 10

(i) The External Commercial Borrowings (ECBs) outstanding JPY 1,45,350 Lacs as on 31.03.2015 are fully hedged (JPY to USD) in respect of coupon as well as repayment. USD to INR portion has been hedged for 50% of outstanding i.e. JPY 72,675 Lacs (equivalent to USD 663.70 Lacs) and balance 50% portion is unhedged.

(ii) The Company has outstanding exposure of USD 1,753.30 Lacs (unhedged) as on 31.03.2015 against Foreign Currency Convertible Bonds (FCCBs).

Note 11

(i) 900 Lacs Equity Shares of Rs. 10/- each fully paid (Previous Year 900 Lacs) held by the Company of Jaypee Powergrid Ltd. (Subsidiary Company) are pledged with Security Trustees, IDBI Trusteeship Services Ltd., as collateral security for the financial assistance granted by lenders to Jaypee Powergrid Ltd.

(ii) 14,398.27Lacs Equity Shares of Rs. 10/- each fully paid (Previous Year 10,904.77) held by the Company of Prayagraj Power Generation Co. Ltd. (Subsidiary Company) are pledged with Security Trustees, SBI Cap Trusteeship Services Ltd., as collateral security for the financial assistance granted by lenders to Prayagraj Power Generation Co. Ltd.

Note 12

(a) The Company has brsently one operative segment i.e. Generation of Power. The Company has set up Cement Grinding Unit at Jaypee Nigrie Super Thermal Power Plant, for gainful utilisation of dry fly ash and as mandated by Ministry of Environment and Forests. Accordingly, now the Company has two segments, Power Generation and Cement. As total assetst employed in Cement Grinding Unit are less than 10% of the total assets of the Company, therefore, separate segment reporting is not applicable.

(b) The operations of the Company are carried with similar economic and political conditions having similar kind of risks, therefore geographical segments are not applicable.

Note 13

In terms of Accounting Standard (AS) 28', the assets are not impaired because the recoverable amount of fixed assets collectively determined by the brsent value of estimated future cash flows is higher than its carrying value.

Note 14

All the figures have been rounded off to the nearest rupees in lacs.

Note 15

Previous Year's figures have been regrouped/re-arranged, wherever considered necessary to make them conform to the figures for the current year.

For R. NAGPAL ASSOCIATES

Chartered Accountants

Firm Registration No. 002626N

R. Nagpal

Partner

M.No. 081594

For and on behalf of the Board

Manoj Gaur Chairman DIN 00008480

Suren Jain Managing Director & CFC DIN 00011026

Sunil Kumar Sharma Vice Chairman & CEC DIN 00008125

R.K. Porwal Sr. General Manager (F&A)

Y.K.Sharma Vice President (F&A)

M.M. Sibbal Sr. General Manager & Company Secretary

Place: Noida

Date: 30th May, 2015